Ashford Management Limited, Mercury House, Shipstones Business Centre, North Gate, New Basford, Nottingham NG7 7FN Phone 0870 405 0077 E info@ashford-management.co.uk

Understanding Public Sector Procurement

13 December 2006

What drives competition

• Government initiatives to obtain better value for money

• Best value/Competitive tendering– Introduced April 2000– Replaced compulsory competitive tendering

• PFI/PPP initiative

• OGC Best practice initiative

Gershon report onLocal Government (LG)

• Efficiency savings from 6 areas– Procurement of goods and services– Procurement of construction – Back office– Transactional services– Staff productivity– Reducing regulations

• LG Targets– £6.5Bn over 3 years from 2005/6 on current base

• In addition– £3.8 Bn from schools – £5Bn Whitehall savings on services provided by LG

Why bid?

• Limit competition for 3 to 5 years

• Greater ability to schedule work

• Payment guaranteed

• Last years contracts valued at:– Defence £30bn– NHS £60bn– Local Government £40bn

• Often repeat business

Organisations & Departments

• MoD• NHS• Hospital Trusts• Fire• Police• Ambulance• Education• Universities• DTI• Home Office• CSA• Job Centre Plus

• City Councils• Borough Councils• County Councils• Department of Transport• Highways Agency• ESPO• BAA• DVLA• Treasury• Courts• HM Revenue and Customs• Development Agencies• Etc.

To put a few numbers on things

• 500 Local authorities in England and Wales• 303 National Health Trusts• 42 Police Authorities• 334 Universities• 24,000 Primary Schools• 3,500 Secondary Schools• 39 Ambulance Services• Defence

Regulated system

• Public Sector Procurement Regulations

• Regulated by the Minister of Finance under

Statutory Instruction 329 of 2006

• Regulations for:– Buyers– Suppliers

• Audited by:– Public Accounts Committee

Disadvantages

• Lengthy (expensive) process to win work

• Political impact can have an unexpected effect

• Decision making process long

• Different format, forms and tendering process

Where is the catch?

Have 3 years submitted accounts Registered Quality System Health and Safety PolicyEnvironmental PolicyPl Insurance Limited or LLP CompanyContracts of employmentRecruitment policyEqual opportunities policy

Where is the catch

DDA compliantAge discrimination policySecurity policy

BuildingsFiling systemsIT systems

Meet current legislationEtc. Etc. Etc.

Policies and procedures

• Policies and procedures must be documented and controlled

• DO NOT COPY DIRECTLY FROM THE INTERNET WITHOUT

PERSONALISING TO YOUR COMPANY

Acquisition cycle

Disposal

In Service

Manufacture

Demonstration

Assessment

Concept

Acquisition cycle

Initial Gate

Main Gate

Planning to tender

Tips for Successful TenderingPreparationUnderstand the RequirementsSchedule the WorkClarity in Proposal

BE PERSISTENT AND LEARN

Develop a Tender Template

80% information required will be the same for all contracts although the terminology may differ

Company information- Legal Structure- Organisational Structure- Services Statement

Develop a Tender Template

• Financial information- Accounts

- Bank references

- Insurance cover

• Policies and Procedures- Health and Safety

- Equal Opportunities

- Environment

Take note

• Take note and understand TUPE

Evaluation of Tender Response

Points are awarded for compliance

- 2 for fully accurate response

- 1 for partially accurate response

- 0 for incorrect response

Totals added to determine most compliant response

Evaluation of Tender Response

• Now there is more

- Some elements have greater value

-Therefore a weighting system is applied

3 points for high priority

2 points for medium priority

1 point low priority

Cost Model

• Cost all activities or they will not be paid

• Provide costs for through life management

• Identify clearly how costs are made up

• Carry out competitor analysis

• Determine stage payment points

• Lowest cost will normally win contract

• Awarded contracts are fixed price

Appropriate Policies

• Make an Assessment- Nature of the Product/Service- Scope and Size of the contract- Appropriate to your company- Will you use sub contractors

• Demonstrate how this policy is implemented and adds value

Document Check List

• Presentation – First impressions of your company – make it count

• Content – Clarity, don’t make the buyer look for information

• Compliant – Check that you have provided all of the information required

Submitted Documentation

• Create

- Index

- Tag pages

- List of abbreviations

• Any agreements as an Annex

• Document any cross references

• Special instructions as an Annex

Tips

• Decisions reached with contract office, get in writing

• Ensure bid is easily understood

• Bid must be in on time

• It must be anonymous

• Get a receipt

• Request feedback

REMEMBER

• If it is not identified it cannot be

charged for

• The Contracts Officer is there to help

WHAT’S NEW

Message from Government

“Public procurement opportunities need to be more accessible for small firms. Procurement also has an important role to play in supporting regeneration and providing access for social enterprise and groups who are underrepresented in the business community”

Alun Michael. Small Business Minister

DTI report stated

“Small businesses can deliver value for money and innovative solutions for local and central government”

“Small businesses provide evidence of cost savings and other benefits they bring to the public sector market. It highlights the benefits the public sector can gain from using small firms through, better levels of service, innovative solutions and increased competitiveness in the long term”

Clusters

• Clusters are similar to a consortia

• One member must assume lead role

• Cluster is responsible for all members

• Develop project plan

• Manage interfaces

• Cost elements of cluster involvement

• Billing through cluster lead member

Clusters

• Clusters will be made up of:– Team Lead– Partners– Sub contractors

• Partner with a prime contractor as:– Identify prime contractor – Act as sub contractor

Operating a clusters

• Must have legal structure• Interface agreements created between all parties • Lead responsible for all members• Planning and scheduling essential• Lead must invoice client and reimburse members• All costs must be agreed before commencement • Regular review meeting with all parties essential• Review/amend plans and agree with members &

client

Acting as a sub contractor

• Prime contractors may not be able to produce or resource all requirements

• Research likely prime contractors

• Make them aware of your skills

• Identify when and when services are required

• Sub contractors do not have to bid in their own right

E Procurement

• E Sourcing: for contractual processes, to include e tendering, e RFQ, e Auction

• E Procurement: for transactional processes, including marketing and e cataloguing

• E Payment: to include embedded GPC, e invoicing and self billing

Contract Value Thresholds

• £0 - £4,999 Purchase Order

• £5,000 - £49,999 Mini Tender

• £50,000 - £153,999 Full Tender

• £154,000 Upwards OJEU

OJEU Overseas Journal of European Union

Tenders are advertised @

• EMIN web site has a free “Tender Alert” page

• Encourage clients to register on web site

• View daily

www.emincubation.co.uk

Information available @

• Defence contracts bulletin up to £154K• OJEC contracts over £154K• Contracts weekly magazine (via BIP solutions)• TRACKER www.tendermatch.co.uk • Government portal www.supply2.gov.uk • MoD contracts www.contracts.mod.uk • Local authorities www.sourcederbshire.co.uk• MoD agents www.bipsolutions.com • TED Tender Electronic Daily

• Information Hot Line 0800 282 324

7 Deadly Sins

- Lack of Planning

- Total Disregard of Stakeholders

- Absence of Leadership

- Ineffective Documentation

- Lack of Benefits Focus

- Risks Not Addressed

- Neglect of Interface Control

How can Incubation Managers add value

• Encourage incubates to be aware of Public Sector market

• Help prepare organisations• Work to develop bid response• Encourage clustering or sub contracting • View contract bulletins daily • Identify potential providers• Help manage the 7 deadly sins

How can we help you

• Business analysis to determine

- Can you win a bid

- Are all required systems in place

- Assistance to reach required standards

• Advice on bidding

- How to structure response

- Getting your bid noticed and selected

• Provide full bid management service

- Writing the response

• PRINCE 2 project managers

Ashford Management Limited, Mercury House, Shipstones Business Centre, North Gate, New Basford, Nottingham NG7 7FN Phone 0870 405 0077 E info@ashford-management.co.uk

Q&A

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