CIHT Procurement Seminar Jamie Walker Strategic Manager (Place) - - PowerPoint PPT Presentation

CIHT – Procurement Seminar

Jamie Walker – Strategic Manager (Place) – Commercial and Procurement Mike O’Dowd-Jones – Strategic Commissioning Manager – Highways and Transportation

1.

Introduction and Housekeeping

2.

The Procurement Regulations 2015 – what are the key changes?

3.

Procurement in action within Highways and Transport at SCC

4.

Questions

What will we cover?

A look at some of the key changes and new rules in the Public Contracts Regulations 2015 focussing on:



Public Sector Co-Operation: Is this procurement covered by the regulations?



New procedures, and changes to existing ones



Lots and how they are used



Changes to the exclusion and selection processes



Changes to contract award and evaluation criteria



Pre-market consultation



The different rules for social and other services – the “light touch regime”



“Reserved” contracts



Treatment of subcontractors



Part 4 and the Young Reforms



Modifications to existing contracts

Background

PCR2015 incorporates the requirements of the EU Directive on Public Procurement that came info force on 26 Feb 2014, in addition to some UK specific requirements arising out of the Lord Young review. The proposed transcription in to UK Regulation went

• ut for consultation Sep-Nov 2014

The text of PCR2015 was laid before parliament 5th February 2015 A Procurement Policy Note (PPN) was published by Crown Commercial Services on 6th February 2015

What is Public Procurement?

• The government's activity of purchasing the

goods and services which it needs to carry out its functions

• Public procurement is the phrase generally used

now to refer to this activity in the English language

• Deciding which goods or services are to be

bought and when (procurement planning);

• The process of placing a contract to acquire

those goods or services which involves, in particular, choosing who is to be the contracting partner and the terms on which the goods or services are to be provided; and

• The process of administering the contract to

ensure effective performance.

The Three Phases

• Integrity
• Value for money.
• Accountability
• Equal treatment for providers
• Horizontal policies
• Opening up markets to international trade
• Efficiency in the procurement process

Objectives

The Regulatory Framework

• Public contracts regulations 2015
• Classic Directive 2004/18
• Remedies Directive 2007/66
• Interpretative Communications
• GPA
• 2014 Directive 2014/24

EU Trade and the Underlying Principles

• Equal treatment: that all processes of commissioning and procurement

are fair, and don't exclude potential providers. Breach of this would be if you are discriminated against based on location, nationality or any other bias.

• Transparancy: a duty to ensure all commissioning and procurement

processes are transparant, so that all potential bidders can easily see and understand the procurement process and the purpose and broad activity of the subsequent contract. As a part of this, public bodies must make available the criteria on which they will be evaluating bids/tenders - so that potential suppliers can respond accordingly

• Proportionality: a duty to ensure procurement process, evaluative

criteria for bids and contract terms are all proportionality to the size and technicality of the service and goods being purchased. For example, they cannot ask for financial standing well above the necessary level required to deliver the contract, or insist on qualifications and accreditations not necessary, or above national standards

• Free movement and non discrimination: a duty not to discriminate

between suppliers of member states. As a result of this, contracts cannot be awarded on the basis of a potential supplier being 'local'.

EU Trade and the Underlying Principles

• Contract value is key (different thresholds

depending on organisation)

• Different levels for types of contracts
• What is a publicly funded organisation?
• Strange contracts - property development,

service concessions and utilities

Contracts that are Regulated

Are you actually awarding in-house? – Reg. 12

Teckal codified Similar control (joint control possible) ↑80% activities from Contracting Authority No direct private capital “Reverse Teckal” possible

In-House – One parent (1)

Authority sets up, and awards contracts to, a separate legal entity Conditions:



Authority exercises control over entity similar to that which it exercises

• ver its own departments



More than 80% of the entity’s activities are for its parent



There is no direct private capital participation in the entity

In-House – One parent (2)

• ‘Similar control’ - where authority exercises a

decisive influence over both strategic objectives and significant decisions of the controlled body

• Control can be exercised by a third party which is

itself controlled by the parent

• ‘Reverse

T eckal’ – controlled body can award contracts to its parent

• ‘Horizontal

T eckal’ – controlled body can award contracts to another body controlled by the same parent

In-House – One parent (3)

SCC

SPV1 SPV2

horizontal reverse reverse

In-House – Joint Control

Where:

 Parents exercise jointly a control similar to

that which they exercise over their own departments

 More than 80% of the entity’s activities are

for its parents (or other entities controlled by the same parents)

 No direct private capital participation

Are you just co-operating with another public body? – Reg. 12

Public Services ↓ 20% on open market

Only contracting authorities Co-operation to ensure public services are performed to achieve common objectives Co-operation governed solely by public interest considerations

New procedures and changes to existing ones

What does the process look like? Procedures (Regs 26 & 29-31) Open and restricted procedures remain largely unchanged “Competitive procedure with negotiation” (CPN) and “competitive dialogue” (CD) now both available where:



requirements “cannot be met without the adaption of readily available solutions”



contract “includes design or innovative solutions”; or



contract cannot be awarded without negotiations because of specific circumstances related to “complexity, legal or financial make-up or risk”

Innovation partnership (IP)



covers initial product development and subsequent purchases



tendered procedure – similar to CPN

Open & restricted procedures – minimum timescales (Regs 27, 28, 47)

Procedure Situation PQQ Tenders Open normal N/A 35 days* with PIN N/A 15 days accelerated N/A 15 days Restricted normal 30 days 30 days* (except central government) with PIN 30 days 10 days accelerated 15 days 10 days

* 5 days less if tenders submitted by electronic means Accelerated procedure available where:

 state of urgency “duly substantiated by the contracting authority”  makes normal time limits “impracticable”

Time limits must be sufficient to complete PQQs/tender (Reg 47)

Lots and contract limits (Reg 46)

Can limit the number of lots a tenderer can:



bid for; and/or



win

Maximum number must be stated in OJEU notice How lot contracts are awarded to bidders who “win” more than the maximum number of lots:



criteria must be “objective and non-discriminatory”



i.e. cannot simply “let contractor choose”

Contracting authority can choose to combine several (or all) lots in these circumstances as well provided they state this up front. Small lots rule remains the same.

Divide or explain

• Client must

justify decision not to break down contracts into separate lots

• Justification

must be set out in the procurement documents or the client’s procurement record

Being Ready - Procurement documents & e- tenders (Regs 2 & 53)

Online availability of procurement documents including:



Contract, specification, cost model



ITT, tender submission requirements and “additional documents”

Compulsory e-tendering & communications



From 18 April 2018 (buying clubs 2017)



Data integrity system requirements (e.g. no access to tenders until after deadline)



Must document verbal communications impacting

• n tender submission or evaluation

“Contracting authorities shall by means of the internet, offer unrestricted and full direct access free of charge to the procurement documents from the date of publication [of the OJEU notice]” Reg 53(1)

Exclusion (Regs 24 & 57)

New exclusion grounds

 “Significant or persistent deficiencies in the performance of

prior public contract which led to early termination, damages or

• ther comparable sanctions”

 Conflicts of interest, collusion, breaches of environmental

• r employment law etc.

“Self-cleaning” provisions

 “Active collaboration”, compensation & “active measures” to

prevent recurrence

 Default exclusion period - 3 years (for discretionary

exclusion) or 5 years (for monthly exclusion)

Reflected in the standard PQQ

Exclusion for previous contract delivery problems

• Problems must have

been “significant” or “persistent”

• Must be on a prior

public contract

• Deficiencies must

have led to “early termination, damages

• r other comparable

sanctions” – would not apply if termination was under a “break clause”

Selection - financial (Regs 56, 58 & 60)

Economic and financial standing information



Bank reference & insurance details



Published accounts and turnover statement



Group company info

Impact



No use of credit reference agencies



Need to identify “special risks” if using higher minimum turnover



Protections may be sought instead (e.g. payment in arrears, performance bond, retention) Financial

• Annual turnover

no more than 2 times contract value unless “special risks”

• Minimum

turnover in “area” (of work) covered by the contract unless “special risks”

• Financial ratios
• Minimum

insurances

Selection – technical (Regs 56, 58 & 60)

References

 Can be used only to establish a “sufficient level of experience”  Express ability to exclude for poor performance may limit the

• pportunity to regard this as part of technical ability

Information that can be requested:



subcontracting proportions



List of previous contracts - 5 years works or 3 years services/supplies



Technicians, technical facilities and workforce & managerial staff



Supply chain management & tracking systems (new)



Educational & professional qualifications



Environmental management



Average annual manpower



Tools, plant, technical equipment



Quality assurance certificates

Implied contract terms (Reg 73)

Compulsory termination



Implied into contract if not included



But implied terms may not deal with timing and consequences of termination

30 day payment terms



Apply if invoice “undisputed”



“Undue delay” in “verifying invoices” is no excuse



Must be cascaded down supply chain

Must terminate if:

• European Court

decides serious breach of Treaty / EU Directives

• substantial change
• ccurs
• contractor should

have been disqualified (mandatory exclusion)

Compulsory termination

Contract Award Criteria (Regs 67 and 68)

MEAT

Identified on the basis of price or cost using a cost effectiveness approach



Best price-quality ratio



Can include environmental/social aspects



Linked to the subject matter of the contract



Where the cost element takes the form of a fixed price or cost bidders can compete on quality criteria only

LIFE-CYCLE COSTING



This must be stated in the procurement documents if used



Objective and non discriminatory



Accessible

Pre-Market Consultations (Reg 40)

Preliminary market consultations

40.—(1) Before commencing a procurement procedure, contracting authorities may conduct market consultations with a view to preparing the procurement and informing economic operators of their procurement plans and requirements. (2) For this purpose, contracting authorities may, for example, seek or accept advice from independent experts or authorities or from market participants. (3) Such advice may be used in the planning and conduct of the procurement procedure, provided that it does not have the effect of distorting competition and does not result in a violation of the principles of non-discrimination and transparency.

Subcontracting arrangements



Contracting authority can ask tenderers to indicate any share of the contract they intend to subcontract and any proposed subcontractors



Without prejudice to the main contractor’s liability



For works contracts (and services at a facility under the direct oversight of the client) the contracting authority must:

• require from the main contractor the names, contact details

and legal representatives of its subcontractors

• Require the main contractor to notify it of any changes,

including any new subcontractors



Provisions may be extended down the supply chain at the contracting authority’s discretion



Mandatory exclusion can be extended to subcontractors

Regulation 71 (Subcontracting)

Part 4 and the Young Reforms



Ostensibly about making procurement opportunities more accessible to smaller businesses and voluntary organisations



See CCS PPN 03/15 CCS guidance on PQQs CCS Standardised PQQ



Not applicable to:

• NHS bodies (at the moment)
• Academies and maintained schools

Part 4 Using Contracts Finder “where contract notices are

used” – Regulation 106



“Where a contracting authority sends a contract notice…..”



Information to be published – Regulation 106(2) (advertisement)



Have regard to Cabinet Office Guidance



When does a contracting authority identify an opportunity? – see Regulation 110(5)

Below Threshold Procurement – Regs 109 - 111



Apply to contracts between £25,000 and the threshold for services (£172,215) – whether for works, supplies, services or “light touch regime” services



Contracts Finder:

Where the contracting authority advertises a contract award opportunity Not where the contracting authority makes an opportunity available to only a number of particular economic operators selected for that purpose (whether ad hoc

• r under a framework agreement)



PQQs:

Contracting authority cannot use one between those thresholds e.g. for light touch regime you can use PQQs if above £172,215

PQQs - Regulation 111 – below threshold



No PQQ stage in procurement for below threshold contracts (at services level for all procurements)



But, in any event, contracting authorities can ask suitability assessment questions!



“Suitability assessment questions” means … “a question which relates to information or evidence which the contracting authority requires for the purpose of assessing whether candidates meet minimum standards of suitability, capability, legal status

• r financial standing.”



Have regard to Cabinet Office guidance



Reportable deviation

PQQs - Regulation 107 – above threshold



Have regard to guidance about qualitative selection, which says:

• Only use the standard PQQ or otherwise PAS91 for public works contracts

above threshold

• T

echnical and Professional Ability – Paragraph 8 of the CCS Guidance

• “Contracting authorities are permitted to ask further project specific questions

…. as part of selection.”



Is silent on:

• Works contracts between the threshold for services and the threshold for works
• Light touch regime services between the €207,000 and €750,000.

Payment of undisputed invoices (Reg 113)

Payment within 30 days by contracting authorities, contractors and subcontractors:



Except for health and schools/academies



Mandatory provisions in contract conditions



Publication of payment record

Modifications & Codifications

A contract/framework may change without re-advertisement in OJEU where: minor changes that do not affect its nature and not exceed the relevant threshold and not exceed 10% services/supplies)

• r 15% (works) of the initial value

minor changes that do not affect its nature and are explicitly provided for in review or option clauses in the procurement documents A contract/framework may change without re-advertisement in OJEU where: additional works, services or supplies that ‘have become necessary’ where a change of supplier would not be practicable(for economic, technical or interoperability reasons) or involve substantial inconvenience/duplication of costs (limited to 50% of original contract price)

Reg 72

Modifications & Codifications

the change that arises is unforeseeable by a ‘diligent’ authority, provided these changes do not affect its nature or exceed 50% of the price of the original contract in these two cases the authority must publish in OJEU a ‘Notice of modifications of a contract during its term’ A contract/framework may change without re-advertisement in OJEU where certain corporate changes have occurred in the supplier linked to merger, takeover or insolvency or the modification is not ‘substantial’ i.e. would not have led to other suppliers participating, becoming qualified or having an offer accepted if known initially have changed the economic balance in favour of the supplier have extended the contract/framework ‘considerably’

• Competitive with Negotiation Procedure: Somerset/ Devon/

Plymouth Collaborative Highway Term Maintenance Contract.

• Dynamic Purchasing: Somerset Passenger Transport Contracts.

Procurement Case Studies Highways and Transport

Competitive Process with Negotiation Procedure: Somerset/ Devon/ Plymouth Collaborative Highways Term Maintenance Contract

Somerset/ Devon/Plymouth Collaborative Highways TMC Objectives

Cost Effective High quality

Collaborative working

Innovation across the supply chain

Opportunity for single provider efficiencies & synergies

Provider(s) to work in partnership

Wider economic benefits

Maximise common works specifications in line with HMEP Further ‘in- contract’ improvement and efficiency

Desired Collaborative Outcomes

Mitigating the effects of the changing market dynamics. Aggregating demand across contracts - economies of scale efficiencies Collaboration on governance and contract management to realise greater synergies. Achieving sustainable savings – initially; and through the life

• f the contract.

Collaboration between contractors if there is more than one. Cultural alignment – Client contractor relationship – improvement – issue resolution. Helping the Authorities ‘co- client’ (e.g. through common management tools/ dashboard)

• Requires authorities to align their requirements to achieve

collaborative benefits.

• Aligning procurement timetables. South West Highway Alliance.
• Developing an early understanding of the potential benefits of

collaboration – risk/ reward - is it going to be worth it?

• Creating joint governance arrangements and aligning decision

making processes.

• Developing a procurement process that meets everyone’s needs

and deals with potential outcomes in a compliant way.

• Dedicate the required resources and create joint teams.
• Share costs.
• Set out the relationship in a collaboration agreement.
• Aligning/ converging specifications and service information and

methods of measurement as far as possible; being clear on areas that cannot be aligned and why. Opportunity to pick the best/ most cost effective practice from each.

Collaborative Working

Governance

Joint Highways Contract Board Joint Highways Project Team Joint Procurement Group Joint Comms Group Joint Technical Group

Joint SRO’s/ Heads of Service

External Legal Advice

Project Manager/ Director

PCC/ DCC/ SCC Internal resources

• Competitive Process with Negotiation Procedure.
• A need for design or innovation.
• Necessary because of the complexity, legal or financial make-up or risks
• f the project.
• Specification cannot be established with sufficient precision.

Procurement Procedure

P r e

• Q

u a l i f i c a t i

• n

Q u e s t i

• n

n a i r e ( P Q Q ) I n v i t a t i

• n

t

• S

u b m i t I n i t i a l T e n d e r ( I S I T ) I n i t i a l T e n d e r N e g

• t

i a t i

• n

s I n v i t a t i

• n

t

• S

u b m i t F i n a l T e n d e r ( I S F T ) F i n a l T e n d e r C

• n

t r a c t A w a r d

2 1 4 3

Initial Tender Final Tender P I N & S u p p l i e r E v e n t O J E U C

• n

t r a c t N

• t

i c e

Aug ‘15 Nov ‘15 Jan ‘16 Mar ‘16 Aug ‘16 Oct‘16

6 Months 4 Months

• 7 year term extendable to 10 years.
• Indicative combined volume £65m per

annum.

• PCC (£9m), DCC (£35m), SCC (£21m)
• Contract notice allows combined value up

to £1.2bn including an allowance for ad-hoc

and non routine requirements.

• Individual lots for each authority.
• Invites ‘multi-lot’ bids.
• Suppliers submitting multi-lot tenders (e.g.

Devon & Plymouth combined) must also submit separate tenders for the individual authorities.

Contract Details

• Each Authority will select the most economically advantageous tender

based on:

• Financial.
• Additionality (ongoing ‘value added’ benefits which could arise through the

collaborative opportunity).

• Technical Quality.
• Process for selection of tenders involving multiple lots avoids any

authority being worse off as a result of conducting a collaborative procurement:

• ‘Baseline’ highest scoring single-lot tender for each authority - the best

tender each would have received in the absence of any collaboration.

• Identifies the combination of tenders that offers the highest combined

score – may be three single tenders, a single tender and ‘two lot’ tender

• r a ‘three lot’ tender.

Evaluation

• At the initial tender stage SCC intends to undertake a value for money

comparison between its most economically advantageous tender and an extension of incumbent supplier and has an option to withdraw from the process at that stage.

Evaluation

• New procurement regulations require all contract documents to be

published at the outset including detailed specification/ instructions terms of contract etc.

• Documents are complete (i.e able to form a contract), but published

in draft to enable agreed changes to be introduced through the procurement process.

• Can award based solely on initial tenders (without negotiation).
• Negotiation is to optimise submissions rather than haggle on price.
• Restricted to set topics to avoid open ended negotiation. E.g.
• ‘Additionally’ and Quality undertakings;
• Pain/ gainshare proposals;
• Depots/ use of premises.
• Carefully managed to keep to timetable - defined time period.

Negotiation

Dynamic Purchasing Somerset Passenger Transport Contracts

Passenger Transport Contracts (April 2015)

• 650 Mainstream School/SEN - £11.9m
• 648 Regular Health & Social Care - £1.5m
• 70 Public Transport - £3.6m
• 11,000 Ad-hoc Health & Social Care trips per annum

Previous Systems:

• E-Tendering through @uk
• Call off contract for Ad-hoc Health and Social Care re-let every 6

months

• Public Transport contracts by individual manual tenders.

Passenger Transport Contracts

Operator feedback in market testing

Feedback

Missing out on opportunities as Frameworks are closed to new entrants. Sign up fees and an annual cost for access. Duplication of time and effort when bidding. The current system is difficult to use. Missing out on opportunities with a short turnaround time when away from a computer I can’t see all of my awarded contacts in one place I can’t manage all of my documents

• n the system.

I can’t see all of the opportunities available to me in one place because

• f the different systems and

Frameworks in place.

Solution

A system which remains open to allow you to join at any time.. No access or annual fee. Pre-populate with responses previously given. Clearly and logically laid out. Simple to use and touchscreen and PC/Laptop compatible. Being able to use a Smartphone/Tablet. Pre-populated so

• nly enter route specific (such as

price) information. A dedicated ‘Contracts’ area to view this information. A dedicated ‘Documents’ area to save this information. A dedicated ‘Opportunities’ area which will show all the available

• pportunities unique to your vehicle

sizes and geographical coverage.

Dynamic Purchasing System (DPS) Objectives

Streamlin e processe s Reduce admin

• verheads

Ease of access to contracts Financial Savings

Reduce Prescriptio n

Enable innovation in supply

Future legislative change

One system

Dynamic Purchasing System (DPS)

Flexible electronic system which allows suppliers to be added during the life of a framework agreement.

Suppliers are pre approved to bid against work packages improving speed

• f response & can join at

any time. Management information provided by the system will improve future tenders and aid operational contract management Simple invoicing process for suppliers, improving quality

• f information for finance

teams

Proactis System

• Clear and simple navigation

54

One off multiple routes Price & quality Price

• nly

Urgent Long term

Accessing Contracts

PQQ

• Pass/Fail

questions

• General to

all Lots

Quality

• Lot Specific

Information

Qualification

Suppliers are not required to enter duplicate information, even when applying for multiple Lots

Multiple Call Off Options

Simple and flexible call

• ff process

Split by Lot and geographical area

Project Plan & Timescales for DPS

April - July 14 Aug 14 - Oct 14 Nov 14 – Feb 15 Mar 15 – April 15 DPS Market Research (Procurement) Services in Scope (Procurement & Commissioning) Project Management Procurement Activity Commissioning Activity

DPS research DPS Demos Review of LA’s with DPS Scoping exercise Contract Design

Decision

Create Project Team Non-Key or Key Decision Procure and Implement DPS Work with DPS provider to set-up supply chain for each service category Market Engage- ment Supplier event Supplier workshops Operation Teams engagement, change management and training Create Outcomes based Specifications for all services. Set-up of Accreditation and Enrolment criteria

• n DPS

Go Live

Agree design Provider qualification and enrolment on to the DPS

DPS roll-out

(School & Some Public Transport)

• Currently DPS has saved just over £600k per

annum.

• Derived from approximately 60 school / mainstream

routes retendered on expiry of legacy contracts.

• Excludes new transport provisions where there is

no basis for comparison.

• Excludes savings for individual/health/NHS

transport which are largely bespoke requirements for a particular need cannot be tracked in the same way.

DPS Savings to date

Thank You Any Questions?