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Public procurement

A complete guide
By Mick O'Donnell on 21 September 2021

There is a substantial amount of public procurement that occurs in our everyday lives without which, institutions, public bodies and infrastructure would not be able to function. In this guide, we will provide a better understanding of what public procurement is, and the rules that govern it.

eXceeding was founded based on the principle of providing impartial, best practice, procurement advice and has advised organisations such as UNICEF, the NHS, Local Authorities and Housing Associations over the last decade. With this experience and knowledge, this guide will cover many of the topics organisations face when dealing with public procurement.

This guide will cover topics that include, what procurement is, what public procurement policy covers, public procurement principles, regulations and frameworks and the tender selection process and evaluation.

What is Procurement?

Procurement is a defined structure, method and technique used by organisations to streamline the purchasing processes of services and materials whilst reducing costs, establishing relationships with suppliers and improving time efficiency in the process. Procurement can be direct, indirect, reactive, or proactive.

From identifying suppliers, choosing the right communication tools with these suppliers, evaluating proposals/tender responses and requests, procurement is about saving time and money with improved efficiency for any organisation that undertakes a structured procurement process.

What is Public Procurement?

When a public sector organisation procures goods, works and services that is public procurement. All of the elements that constitute private sector procurement in terms of supplier relationships, improving time and efficiency still apply. The other main difference is the regulations that apply to all public sector contracts over a certain value or “threshold”.

In public procurement, you will go through what is known as a ‘tender’ process where companies will submit their information (including elements such as accreditations, staff numbers, capacity, costs) to be considered for evaluation. The overall process involves regulations that can appear to be confusing but in essence, these regulations ensure that the procurement process is fair for all those involved.

An alternative approach to buying via tenders is buying from established frameworks. There are many out there such as CCS, ESPO and YPO and eXceeding can select the right solution for your needs.

Public procurement is an essential service in enabling our public bodies which are funded by taxpayers to limit overspending and using the money to select suppliers who can meet the requirements of the service that is being provided to the general public. Having the right partners and cost base is good for both the taxpayer and the suppliers that are chosen.

Public Procurement Policy

As with all public procurement contracts, there is a policy that dictates the selection of suppliers and must be based on value for money, defined as “the best mix of quality and effectiveness for the least outlay over the period of use of the goods or services bought”.

Public procurement is “subject to a legal framework which encourages free and open competition and value for money, in line with internationally and nationally agreed obligations and regulations.”

By encouraging open competition between suppliers, via tenders or frameworks, costs will be reduced leading to better value acquisitions at a public level – again benefitting the taxpayer in where and how much money is being spent.

As public procurement has included organisations within the EU tendering for projects, we will cover that there have been some changes since the Brexit vote in June 2016 and subsequent updates as of January 2021 later on in this guide.

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Public Procurement Law

Again, all public procurement contracts will fall under a series of procurement laws designed to protect organisations and the taxpayer from fraudulent activities amongst many other things.

All public procurement in the UK is subject to these laws and compliance is essential from every party involved. From the tendering of contracts to awarding and even payments made.

Since the Brexit vote of 2016, parliament has introduced bills and legislation into practise that are shaping a post-EU relationship between the UK and EU when it comes to public procurement. The stated aim of the proposals is to speed up and simplify procurement processes, deliver value for money and allow small businesses, charities and social enterprises to innovate in public service delivery.

The Green paper which was submitted in March 2021 has invited organisations to comment on the differences and review the new legislation. “The Trade Cooperation Agreement (the TCA), which applied with effect from January 1, 2021 frames the economic relationship between the European Union and the United Kingdom and seeks to create a level playing field for open and fair competition and sustainable development. A key objective of the TCA is to guarantee access to EU and UK suppliers and requires the UK to maintain many aspects of the EU public procurement remedies’ regime.”

For a detailed inspection of what public procurement laws cover including changes to the EU and UK relationship on public procurement, check out the following government guide sheet attached here.

Public Sector Procurement, Tendering and Frameworks

Tendering and purchasing via frameworks are two of the mechanisms used within public (and private) procurement to ensure that costs are driven down and that suppliers can meet their contractual obligations. Once again, since the Brexit vote, regulations have changed however, the EU procurement laws & rules have been transposed into UK law.

The EU Directives set out the relevant contract value thresholds that apply to procurement procedures. If public sector authorities wish to undertake procurement above this threshold, then EU procedures will apply. In the main*, the thresholds FROM 1 JANUARY 2018 are:

  • Supplies: £181,302 (EU221,000)
  • Services: £181,302 (EU221,000)
  • Works: £4,551,413 (EU5,548,000)

The legislation is in place to ensure that all public sector procurement is done to avoid inconsistency, bias and corruption. As stated in the legislation, ‘all bidders should be treated equally, without discrimination and contracts should be awarded transparently.’

We will now look in more detail at the systematic approach for tendering.

Pre-procurement Market Engagement

Public sector organisations have started adapting a pre-procurement market engagement where the aim is to engage with suppliers to see what they can offer in terms of services and if they can meet the complexities of their requirements to get ideas on what goods and services are available in the marketplace.

By engaging with suppliers at an early stage, the procurement process becomes more refined and fit for purpose – also, it highlights any opportunities for better deals, criteria for selecting the best bidder and even developing relationships down the line.

Tender Notifications

One condition of tender notifications is that all public sector procurements above the EU thresholds must legally be publicised through the Official Journal of the EU (OJEU) – but this requirement has been changed by Brexit and the new UK e-notification service called Find a Tender (FTS) must be used instead.

There is a standardised system that all countries who apply in the tender process must follow in order ‘to ensure non-discrimination and transparency’. All OJEU tender notices follow the same format and there are 22 different types of tender notice, ranging from contract notice and contract award, to design contest and works concession.

Terms such as PIN (Prior Information Notice), EOI (Expression Of Interest), Contract Notice and Contract Award Notice are all used in these tender notifications and it’s important to learn what they mean and to understand that they form part of the wider tender notification process.

Framework Agreements and Dynamic Purchasing Systems (DPS)

Framework arrangement and Dynamic Purchasing Systems (DPS) are slightly different ways of awarding contracts rather than being contracts between the buyer and the supplier.

Suppliers will typically go through a selection process in the same way as a direct contract tender process but if they are successful, they will be appointed a place on the framework/DPS. This means that whilst they may not be guaranteed any volume of work, it limits the award of any specific contract to only those suppliers appointed.

A Dynamic Purchasing System is a specific type of framework that remains open (dynamic) for bidders to apply to join throughout the length of the agreement. The application and selection process may sometimes operate in rounds, e.g., every year, or continuously (at any time).

A Dynamic Purchasing System (DPS) is an electronic tool that is used to purchase goods, works and services that are both commonly used by your organisation and readily available on the market. It has all the functionality of adding new suppliers and allowing bidders to apply to join throughout the length of the agreement at any time and is 100% electronic, however, whilst it is similar to a framework it acts in a slightly different way to one.

Tender/Framework Selection Process

The Tender/Framework Selection Process is the way that a public sector buyer determines the most appropriate suppliers to go through to the tendering/selection stage. This is based on their ability to deliver on the contract assessing capability, best offers and even delivering on requirements set out in the tender or framework questionnaire.

If suppliers cannot meet these requirements, they are excluded from the selection process – after all, there is no need to continue with a supplier who cannot meet the needs of the job. Things such as financial information and references are used to understand if a supplier will make the cut or not – not having this information will exclude them from the list.

Shortlisting for example is a tactic that is regularly used but must be outlined in the contract notice. There will be minimum requirements that will be outlined and where responses are pass/fail and somewhere responses will be given a score. Any bidders that do not meet the minimum requirements have a right to feedback, with reasons as to why they were not selected.

Tender/Framework Response Stage Evaluation

When it comes to tender and framework evaluation stages one of the most important aspects to understand is that each tender and framework evaluation is different and contracting authorities will have different criteria for evaluating the specific requirements. I.e., a construction tender for the NHS will be different to one for a housing association.

Once again, whilst there are differences in the questions being raised, the evaluation of a tender or framework response will follow the same principles and will be based on how the supplier will perform the contract. Most tenders and framework questionnaires will include questions on quality assurance, service delivery, implementation, technical details, compliance, staff, resourcing, contingency planning, continuous improvement, innovation, implementation, cost effectiveness and pricing. Elements such as sustainability, social values and supply chain management are becoming more important in the selection criteria.

Given the more recent objectives of public sector organisations, there are also likely to be additional questions on sustainability/environment, social value and supply chain management.

Post-Brexit Public Procurement

Public procurement since Brexit has changed, The Public Procurement (Amendment etc.) (EU Exit) Regulations 2020 sets out the new rules that are included for ongoing procurements following the Withdrawal Agreement signed in November 2020.

The main changes include procuring entities are required to publish notices on the new UK e-notification service called Find a Tender (FTS) instead of in the OJEU. The EU Exit Regulations also amend specific EU references within the legislation.

One other important aspect about post-Brexit procurement is that the procurement thresholds remain the same as they were before the end of the transition period given that these thresholds are set under the WTO’s Agreement on Government Procurement.

Finally, one of the key areas about EU procurement law is that “for framework agreements which were commenced before the end of the transition period, contracts will continue to be bound by EU procurement law as transposed into UK law.”

We have seen that there is a substantial amount of public procurement that occurs in our everyday lives without which, institutions, public bodies and infrastructure would not be able to function. Public procurement is an essential service in enabling our public bodies which are funded by taxpayers to limit overspending and using the money to select suppliers who can meet the requirements of the service that is being provided to the general public.

eXceeding specialises in delivering solutions and helping organisations get to grips with their procurement processes. This can start with creating a strategy that suits them to deliver not only cost savings but also a streamlined process saving time and reducing human error in this field. With over a decade of experience in helping the public sector in their procurement requirements, eXceeding is not only well-positioned to advise but also lead high-delivering solutions to businesses in this field. From the NHS to UNICEF, eXceeding has shown time and again how knowledge and experience can help businesses.

If you’re looking for a strategic partner to help you with your public sector procurement requirements, then drop us a line today.

If you want to learn more about procurement, why not download our eBook which has more on the subject and useful information.

Image of BD & Sales Director, Mick O'Donnell

Mick O’Donnell

Mick spent 20+ years working for EDS and HP in the IT and BPO outsourcing industry, solutioning and managing complex Pan-European delivery models. This background has created a real passion for service excellence and delivering solutions that deliver true value.

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