Tendering, Commissioning and Procurement

The topic for this briefing is Tendering, Commissioning and Procurement with a specific focus on tendering as a Consortium. Public Authorities are starting to use the Commissioning process to fund Voluntary and Community Sector organisations, rather than grant funding. It is therefore very important to understand this new source of funding. This information has either come from two events – the Peninsula VCS Engage Conference & Tendering as a Consortium training, or some basic internet research to inform the writing of this.


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Introduction to Tendering, Commissioning and Procurement

For the purposes of this briefing Tendering, Commissioning and Procurement are all terms used when a Public Authority (e.g. Local Council, Health, Police etc.) seek to buy a service or good from another organisation or individual. Procurement and Commissioning are often used interchangeably so we need a quick definition for this briefing, with the caveat that elsewhere the terms may be used differently. These definitions have come from Tendering for Care http://www.tenderingforcare.com

Procurement -
the purchase of goods and/or services by publicly funded bodies at the best possible total price, in the right quantity and quality, at the right time generally via a contract. The functions of procurement are a) ensuring legal compliance; b) purchasing supplies or services; c) entering into contracts. Procurement must be kept separated from Commissioning.

Commissioning -
the process by which local authorities decide how to spend their money to get the best possible services for local people. Involves anticipating future needs and expectations rather reacting to present demand.

A simplified procurement process:

1. Definition of need & service specification
2. Contract advertised (tender advert)
3. Tender documents sent out
4. Potential suppliers (You!) submit bids (like funding application forms)
5. Purchaser (the Public Authority) selects the best bid
6. Contract awarded
7. Contract Management

There can be some intermediate steps in certain cases, but these are the main steps.

To find out what tenders are currently being advertised go to https://www.devontenders.gov.uk/systems/devoncms.nsf.

Some introductory points to make about Procurement & Commissioning: 

• Public authorities can choose between Best Value and Lowest price. These decisions are made at very senior levels within the organisation and are difficult to influence, but it is important for the VCS that Best Value is used.
• Public authorities must keep evidence for any decision they make to ensure compliance. If they are breach of the regulations there are heavy penalties and so Authorities tend to err on the side of caution.
• Nothing must be done to distort or hinder competition
• Contracts to the private sector have historically been longer term than those made to the VCS, this can be challenged.
• Under full regulations there is a legal right to challenge the PROCESS by which a decision is made, not the actual decision itself. There is a legal obligation for authorities to meet you face to face and delay the decision for 10 days.

The general principles of procurement are:

• All procurement should be subject to competition.
• All procurement should be conducted on a value for money basis. (includes both whole life costs and quality)
• Sustainability issues can be considered where appropriate and when relevant to the contract.
• All procurements should be fair, open and transparent (not favouring or putting any potential supplier to a disadvantage, acting in a fair manner, a well defined requirement from the outset)

Please follow this link for more information:
http://www.ogc.gov.uk/introduction_to_procurement_procurement_principals.asp


It gets slightly more complicated now, sorry!

The above points ONLY apply if the Public Authority has ‘opted in’ and is using the full regulations. You can tell if they have ‘opted in’ if they have advertised in the Official Journal of the European Union (OJEU). However, this will only apply to contracts worth over approximately £140k (will vary depending on exchange rate). If the contract is worth under £140k there is no obligation for the Authority to use the procurement process or identify whether they are following the full regulations or a ‘relaxed’ locally determined process. You must ask them if you would like to know. It can be important to know because:

If they are not following the full regulations they can put demands on the tender that would not normally be allowed such as specifying ‘how’ the contract must be delivered (e.g. in partnership with another organisation). This is not normally allowed because it is hindering competition and placing unnecessary limits on the market place.

Authorities can ‘opt out’ if they are advertising for PART B services, which include education, culture, leisure, health & social care and vocational services.

However, as case law is developing, the principles of the full regulations tend to be upheld when challenges are made against PART B procurement processes not using full regulations.

This means if you feel the Authority is unjustified in any restrictions or conditions it is placing on the contract, raising it as a concern may result in future contracts not having the restriction placed on them.

Another few points to make

• Grants are still legally allowed
• A variant tender may be submitted if the organisation feels they can deliver a better service, without sticking to the criteria. They normally must submit a ‘normal’ bid at the same time.

Key questions

• On what basis has the local authority decided to use a tendering process (e.g. standing orders, regulations, etc)?
• Do the regulations apply?
• Is it a public services contract?
• Is it part B?
• How much is it for?
• Is the tendering process fair?
• Has it been operated fairly towards all tenderers?

Some interesting articles:
http://www.thirdsector.co.uk/Resources/Fundraising/Article/836822/cfNews2ecfc2031191008$funcGETSEOURLTITLE@8dc8d4/
http://www.dsc.org.uk/NewsandInformation/News/Commissioningonecharitysmeatisanotherspoison