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7. The Public Procurement Process
A summary of the public procurement process is shown below, although for a large number of Low Value Procedures complex tender processes will not represent value for money and other methods may be used. These include use of Procurement Cards which are similar to credit cards, or obtaining a number of quotes, (typically three), prior to placing an order. The value at which different procedures apply will vary between organisations and depending on market conditions, but all procedures are subject to the legal requirement for adequate publicity of contract opportunities.
Suppliers should be aware of the following elements in the procurement process:
Preparing the Business Case - Before the procurement can proceed, a business case is needed. Information from users and market information should feed into the business case so that it presents a preferred option, including financing arrangements for the procurement. These early stages may involve meeting with a range of suppliers, (known as "market engagement"), to establish factors including:
- The scope of goods/services required.
- What products/services are currently available.
- Future Trends.
- Constraints.
Procurement Strategy - This relates to how the purchaser will approach the market, identify the opportunities available to the contracting authority and achieve value for money. It will include a decision on the procurement route to be pursued and the scope to include wider social and environmental considerations.
Advertising the Requirement - The Scottish Public Contracts Regulations place a legal obligation on Public Bodies to consider advertising contracts which do not have to be advertised in the EU Official Journal. It is for individual Public Bodies to determine the form and means of publication necessary to meet this obligation, taking into account the value of the contract and the extent to which it is likely to be of interest to the market.
Tendering - Procurements may be conducted by a number of routes. This may be done via mail or electronic tender. The most common procedures that are applied for procurements above EC threshold values19 are known as "Open Procedure" and "Restricted Procedure" and are briefly described below.
Open Procedures are used where there is likely to be limited interest in an opportunity. In this case anyone interested in the contract will be invited to tender.
Restricted Procedure is used for quite straightforward requirements where a lot of suppliers may be able to meet the requirements. This procedure has two distinct stages:
1. Selection stage - requires interested suppliers to complete a "Pre-qualification questionnaire" ( PQQ), principally used to assess the financial, technical and/or professional capability and capacity of suppliers. It does not relate to how suppliers would fulfill the requirement. At this stage the contracting authority will limit the number of suppliers invited to tender. To reduce bureaucracy, a core PQQ4 has been developed for use by the wider public sector.
2. Award Stage - Suppliers selected at stage 1 will be invited to tender for the requirement. At this stage you will be provided with the specification of the requirement and you will be asked how you would deliver it if your bid is successful. The relative importance of the component parts of the response and the format in which bid is required will be provided in the "Instructions to tenderers" provided by the contracting authority. Objective criteria will have been established by the contracting authority against which your response will be assessed.
Negotiated Procedure and Competitive Dialogue - This is used for more complex requirements.
Minimum timescales, intended to allow suppliers sufficient time to prepare their bids/responses, apply for all of the above procedures. The relevant contracting authority for any procurement will advise of the key dates by which responses are required. In many cases these will exceed the minimum timescales.
Standstill Period - For above EC threshold value19 procurements, the contracting authority must allow a period of 10 days between the date suppliers are notified about the outcome of the tender process and the date on which the contracting authority proposes to enter into the contract or to conclude the framework agreement. This allows unsuccessful bidders to request a review of an award decision by the relevant contracting authority.
e-Auctions - These are an electronic device for the presentation of new prices or values. The intention to conduct an electronic auction will be stated in the contract notice, (official OJEU advert) and details of the process will be included in the specification for the requirement. They occur towards the end of the procurement process, after full evaluation of tenders. The contracting authority may conduct an electronic auction, (e-auction), based on:
1. price, where the award criteria is lowest price; or
2. price and/or values of features from the specification to identify most economically advantageous tender.
Further details of all these procedures are available from the Scottish Public Procurement Toolkit. 20
Framework Agreements
In addition to conventional contracts, (where one supplier has been appointed to provide a specific good or service), authorities may also use Framework Agreements. These are normally used where there are likely to be a large number of lower value requirements over a period of time, as they may reduce the timescales required for commissioning such requirements. They may also be used to ensure that better value for money is obtained though economies of scale or to improve supplier relationship management.
Framework Agreements are required to be competitively tendered in the same manner as other contracts. Once the Framework is set up, organisations are usually required to seek 'mini-competitions' from all the Framework suppliers capable of meeting a specific requirement, i.e. a competition among parties to the framework agreement based on, for example, terms that have been tailored to reflect the specific requirement. The duration of Framework Agreements is limited to four years, except in exceptional circumstances e.g. where a large, upfront investment is required.
Once a Framework Agreement has been established for that period of time, further suppliers cannot be added to it.
Subcontracting opportunities
Many of the highest-value government contracts go to large companies. A means for smaller and newer companies to become engaged in a higher value government contract would be through sub-contracting or even partnering/consortia. Where it is not appropriate for small and new businesses to take on high-value and long-term contracts, there may be many opportunities for subcontracting and consultancy work.
Public-sector organisations may provide information about their main contractors, or you might identify and contact a supplier who has been short-listed for or won a major contract through the Public Contracts Scotland3.
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