Procurement - policy

What is procurement? 

Procurement is the process of acquiring goods, works and services, covering both acquisitions from third parties and from in house providers. It is a much broader term than ‘purchasing’. 

The process spans the whole cycle from identification of needs through to the end of a service contract or the end of the useful life of an asset. It involves options appraisal and the critical ‘make or buy’ decision that may result in the provision of services in-house.

All procurement of goods, works and services is based on value for money, having due regard to propriety, regularity and our legal obligations. 

Value for money as a contract award criterion is defined for the purposes of our Contract Procedure Rules as “the optimum combination of whole life cost and quality - or fitness for purpose - to meet the customer's requirement” consistent with government procurement policy. 

In a procurement process ‘obtaining best value for money’ means choosing a bid that offers the best combination of costs and benefits to meet our requirement. It means assessing the ongoing revenue costs as well as the initial capital investment. Our requirement can include social, environmental and other strategic objectives and is defined at the start of the procurement cycle.

What is a Procurement Strategy?

The corporate procurement service is central to procurement. Our main aims of the service are to provide information, guidance, advice and support to other departments during the procurement process, to manage its own specialist categories and to maintain policy and strategy with central government objectives and guidelines. 

Our procurement strategy is being reviewed at present. It will be made public after the strategy is approved.

There is a National Strategy for Local Government Procurement which is available on the Department for Communities and Local Government website. 

Consortia and collaborations

We work with other local councils, procurement agencies and consortia where efficiencies can be delivered through sharing services or leveraging spend. We are currently working with other local councils for Highways and Waste Management and through meet the Buyer/ Supplier Events, as well as with buying consortia like: the Eastern Shires Purchasing Organisation (ESPO) and Government Procurement Service (formerly Buying Solutions).

Do you work with small medium enterprises?

We are a signatory to the Small Business Concordat, a voluntary code of practice for local authorities working with Small and Medium sized enterprises.

What about the voluntary sector?

We are a signatory to the Derby Compact Agreement. This is a voluntary framework which aims to improve relationships, communication and participation through open, transparent and fair working practices between statutory and voluntary and community partners. 

Are there Procurement Regulations and Procedures in place?

To secure value for money and to ensure the fair distribution of contracts to potential suppliers we procure goods and services in the most competitive and equitable way possible. There are a number of rules that govern the way in which we purchase our supply requirements. These are summarised as follows: 

• Financial and Contract Regulations and Standing Orders.

These rules govern the way we function in all of our activities and with particular reference to the control of all financial expenditure. There are a number of regulations that specifically control the way in which goods, services and works are purchased. In summary these are:  

• If we have a corporate contract (approved supplier) for a particular supply or service item, all of our employees must use the contract (these suppliers) to meet their requirements in these specified areas. 
• If we do not have a corporate contract (approved supplier) and the estimated value of the requirement is over £5,000 but less than £30,000 a quotation process will begin. At least three quotations must be requested to ensure competition and value for money. 
• If the item is for a supply or service that does not have a corporate contract (approved supplier list) and the estimated amount of the purchase is likely to exceed £30,000 a tender process must be used to select the supplier. Two types of tender procedures are used: 
  • An open procedure where all interested parties are able to tender.
  • A restricted procedure where a pre qualification stage will be used to select a short list of companies who will then be invited to tender. 

The amount of information required about the supplier will be more detailed than in the case of quotation process. 

• Tenders over the value of £30,000 will be openly advertised on Source Derbyshire. 
• Where requirements for work contracts are met through the use of the Standing lists the same financial cut off points above applies to determine whether a quotation or tender process will be used.

What are the European Procurement Directives?

In addition to our own rules, we are subject to a number of pieces of legislation which also control the procedures that must be adopted in purchasing goods, services and works. We are subject to European Union (EU) procurement rules, as detailed in the Public Contracts Regulations. 

The European Procurement Directives are the secondary legislation adopted by the European Parliament and the Council (Member States) on the co-ordination of procedures for the award of public contracts. The EU procurement directives are intended to reinforce the European Treaty's provisions on the free movement of goods and freedom to provide services within the internal market to ensure compliance in all member states with the treaty principle of equality of treatment, non-discrimination and transparency. The EU procurement directives apply to all public sector contracts equal or above specific thresholds.

The thresholds which apply from 1st January 2012 – 31st December 2014 are:

Goods and services: £173,934 
Works: £4,348,350

Most contracts for goods and services above £173,934 must be advertised in the Official Journal for the European Union (OJEU), as well as on Source Derbyshire.

Contracts for building or highway works above £4,348,350 must be advertised in the OJEU and on Source Derbyshire. 

The directives set out clear procedures and standards to be followed by us when choosing tenderers and awarding contracts. 

Terms and conditions for goods and services

Standard Terms and Conditions for the supply of goods and services apply to our orders except where contracts have been awarded against tender or quotation exercises which may have their own specific terms and conditions in addition to these.

Terms and conditions for works contracts

Works contracts are usually subject to specific industry terms and conditions which will be identified at the time of the procurement exercise.

Useful links

• Cabinet Office
• National Strategy for Local Government Procurement