Scottish Government Procurement Policy Manual

DescriptionScottish Government's Procurement Policy Manual
ISBN
Official Print Publication Date
Website Publication DateMay 16, 2006

This replaces all previous versions. A printable version is available in PDF.

Documentation control

This guidance is owned and maintained by the Scottish Procurement and Commercial Directorate (SPCD). For the purposes of this document hereafter referred to as Scottish Procurement.

 

Effective date

Changes made

Version 1.0

16th May 2006

 

Version 2.0

19th March 2010

Complete review to reflect complementary policy documents, primarily the Scottish Procurement Policy Handbook

Version 3.0 6th May 2011 Complete review to clarify scope and update complementary policy documents
Version 4.0 19th July 2011 Update on separation of duties (Section 4.3)

Version 5.0

28 November 2011

Clarification on Delegated Purchasing Authority (Section 4.1)

Version 6.0 12 March 2012 Update on consultancy and staff with Delegated Purchasing Authority

Version 7.0

23 October 2012 Update on Delegated Purchasing Authority (section 4.1)
Contents
1. Introduction and scope

This manual provides guidance on the rules that apply to Scottish Government staff who are involved in procurement activity. Adherence to the policies set out in this manual is mandatory for Scottish Government directorate staff, and to any agencies and Non Departmental Public Bodies whose procurement is managed by Scottish Procurement on a shared service basis.

This manual should be read in conjunction with the Scottish Procurement Policy Handbook (applicable to the wider public sector, including the Scottish Government), the Construction Procurement Manual (managing or delivering construction/works projects), the " Procurement Journey" (a toolkit providing practical guidance on procurement procedures) and other guidance issued by the Scottish Procurement, including Scottish Procurement Policy Notes (which provide updates on legal and procurement policy developments).

The rules set out in the Scottish Procurement Policy Handbook and this manual are designed to ensure that procurement activity is:

  • focussed on the delivery of Value for Money (VfM);
  • conducted to high professional standards and to the relevant legal requirements; and
  • overseen by appropriately trained and authorised staff to minimise the risk of legal challenge to the Scottish Government and its employees.
2. Definition

'Procurement' is the process of buying goods, services and works from external suppliers. The procurement process begins when a need to buy something is identified and will generally end after the contract is awarded. Contract management will be carried out throughout the duration of the contract. The role of contract manager is usually performed by the business area for whom the contract has been awarded (with support from Scottish Procurement). Information on contract management is available in the Procurement Journey.

3. Key principles of procurement policy

EU procurement obligations and principals
All procurement activity must comply with European Union (EU) principles of:

  • transparency;
  • equal treatment and non-discrimination;
  • proportionality; and
  • mutual recognition.

Legal aspects
Contracts for the procurement of goods, services and works must be in writing and awarded by a Delegated Purchasing Officer (DPO)  with relevant Delegated Purchasing Authority (DPA) (see section 4.1).

Value for Money
Contracts should be awarded on the basis of VfM (see section 6).

Competition
Contracts must be awarded through genuine and effective competition unless there are exceptional reasons to the contrary (see section 8).

Ethical standards
DPOs must adhere to and apply the highest ethical standards in their procurement activity (see section 10).

Buying sustainably
DPOs must consider sustainability in their procurement activity (see section 7).

Separation of duties
The roles of budget holder/customer and DPO should be kept separate (see section 4.3).

Consultancy services
The procurement of consultancy services must adhere to the Scottish Government Consultancy Procedures (see section 8.2).

Contents

4. Procurement roles/responsibilities and compliance

(Policy Handbook Reference: http://www.scotland.gov.uk/Publications/2008/12/23151017/4)

4.1 Delegated Purchasing Authority (DPA)

 

4.1 Delegated Purchasing Authority (DPA)

Scottish Procurement is responsible for the scheme of Delegated Purchasing Authority (DPA) across Scottish Government directorates.

DPA is the authority to enter into a contract for goods, services and works and oversee the process leading up to and including the award of a contract and any subsequent contract changes.

DPA is:

  • required for competition of contracts where there is not an existing contract/framework agreement. It is also required for running mini competitions against an authorised Scottish Procurement framework agreement
  • granted to permanent Scottish Government individuals, by the Director, Commercial and Procurement (or his nominated representative) and will be in writing based on the business need and training/experience of staff concerned. It will specify the value of contracts (excluding VAT) that the individual will be authorised to award;
  • intended to allow directorates the opportunity to manage requirements within the local business area. Separate arrangements apply in the case of social research; and
  • personal to an individual only whilst occupying their current position unless they are seconded to another post within the Scottish Government to carry out their procurement role in that post. DPA does not automatically transfer to their successor should they leave their current post nor does it transfer with them to another post. If DPA is to be withdrawn by the Director, Commercial and Procurement for any reason this will be confirmed in writing.

DPA is not:

  • to be confused with financial/budgetary authority which is detailed in the Scottish Government Scheme of Delegation (available on the intranet);
  • required to purchase goods, services or works from single supplier framework agreements awarded or approved by Scottish Procurement; and
  • the authority to approve a contract without following a genuine and effective competition - Non Competitive Action (NCA) (see section 8.1)

Scottish Government individuals with DPA are known as a DPO.

Details on existing contracts and framework agreements awarded or approved by Scottish Procurement are available for Scottish Government staff.

4.2 Commitment of a contract

A contract is a legally binding agreement between the Scottish Government and one or more suppliers for the supply of specified goods, services or works. The contract sets out the details of what the Scottish Government is buying from whom and the rights and obligations of the parties.

It is Scottish Government policy that all contracts except as mentioned above existing single supplier framework agreements are awarded by a DPO with the appropriate level of authority.

All Scottish Government contracts must be in writing using the template document from the Procurement Journey, although legally contracts can be made by word of mouth, or implied by the action of the parties. Therefore in discussions with suppliers it is essential that staff take care to ensure that a contract is not unintentionally created.

All purchases made using the Government Procurement Card (GPC) must comply with the GPC procedures (available on the intranet).

All contracts awarded by the Scottish Government should normally be subject to Scots Law. This is provided in the Scottish Government Terms and Conditions (SGTCs). SGTCs have been designed for straightforward or routine purchases of goods or services. Any proposed change, amendment or alternative form of conditions by the DPO or supplier should in the first instance be referred to Scottish Procurement for approval and, in the case of high risk or high value contracts, Scottish Government Legal Directorate advice should be sought before agreeing to non-standard contract conditions.

4.3 Separation of duties

(Policy Handbook Reference: http://www.scotland.gov.uk/Publications/2008/12/23151017/4)

It is Scottish Government policy that there are at least two defined roles in a procurement process:

  • the budget holder/customer who perceives the need and makes out the business case to obtain any necessary approval to spend; and
  • the DPO who is responsible for ensuring that the procurement process fully complies with procurement policy.

A DPO should not:

  • be responsible for any financial approvals connected with contracts that they have authority to approve;
  • act as Budget Centre Liaison Officer (BCLO)/Business Manager; or
  • be an approver on the Scottish Government's purchasing system EASEbuy.

These roles must be separated in order to protect the staff concerned from accusations of impropriety.

In the case of works contracts, roles and responsibilities are set out in the Scottish Public Finance Manual (SPFM)

4.4 Contract documentation

It is Scottish Government policy that documentation covering the key stages of the procurement of goods, services and works is retained on the electronic Record and Document Management system (eRDM). The DPO member of staff is responsible for ensuring that there is a file on eRDM for each contract and for ensuring that key documents are filed timeously.

4.5 Contracts register

The DPO who has awarded the contract must complete the Scottish Government contract register to ensure that the register is updated to reflect the new contract award. The register template is available on the intranet.

Contents

5. Legal framework

(Policy Handbook Reference http://www.scotland.gov.uk/Publications/2008/12/23151017/5)

Public sector procurement in Scotland takes place within a framework of rules including:

  • Treaty on the functioning of the European Union (EU);
  • EU Procurement Directives;
  • The Public Contracts (Scotland) Regulations 2012; and
  • European Court of Justice and national caselaw.

Formal challenges and complaints may be brought against the Scottish Government alleging a breach of these rules. The consequences of a successful challenge may, depending on the nature of the breach, result in the Scottish Government being fined; the duration of a contract being shortened; award of damages against the Scottish Government; and reputational damage to the Scottish Government.

Any challenges must be raised with Scottish Procurement and any correspondence from legal advisors challenging the procurement process or contract award decision must forwarded to Scottish Procurement.

6. Value for Money (VfM)

(Policy Handbook Reference http://www.scotland.gov.uk/Publications/2008/12/23151017/6)

VfM is defined as the optimum combination of whole life costs and quality to meet the customer's requirements. Whole life cost takes into account all aspects of cost over time of the contract, and can include capital, maintenance, management, operating and disposal costs.

It is Scottish Government policy that contracts must be awarded on the basis of VfM. Only in exceptional cases can contracts be awarded on the basis of lowest price. If a contract is to be awarded using lowest price, prior approval of a robust business case by a DPO is required.

7. Buying sustainably

(Policy Handbook reference: http://www.scotland.gov.uk/Publications/2008/12/23151017/11)

The Scottish Government is committed to buying goods, services and works in a sustainable manner.

This is done in a way that:

  • achieves VfM on a whole life cost basis; and
  • delivers benefits not only for the organisation but for society, the economy and the environment.

The Scottish Government will derive the greatest benefits through ensuring that sustainability is embedded and proportionately applied to all its procurement decisions and activities. At the heart of this process will be a sustainability test. To find out more on this and further advice on sustainable procurement access the Scottish Sustainable Procurement Action Plan.

Contents

8. Competition

(Policy Handbook Reference http://www.scotland.gov.uk/Publications/2008/12/23151017/7)

It is Scottish Government policy that goods, services and works must be awarded through genuine and effective competition unless there are convincing reasons to the contrary (see section 8.1). DPOs are responsible for identifying the most appropriate procurement process that is likely to offer the best VfM. Procurement processes for each form of competition are outlined within the Procurement Journey and must be used for all procurements.

Before commencing a new competition, the availability of existing contracts and framework agreements awarded or approved by Scottish Procurement must be considered. New competitions should normally only be launched where the requirement cannot be met through an existing contract.

It is Scottish Government policy that DPOs must use the Public Contracts Scotland (PCS), national advertising portal when advertising all goods, services and works contracts.

All contracts with an anticipated value of £50,000 and above (excluding VAT) should be advertised on PCS. The value of the contract is the total amount, net of VAT, which the Scottish Government expects to pay over the full duration of the contract (including any options to extend). Decisions not to use PCS should be objectively based and documented on eRDM.

All contracts with an anticipated value of less than £50,000 (excluding VAT) will require a DPO to use QuickQuote (an online competition process within PCS). QuickQuote must only be used where the DPO:

  • ensures that there is no existing contract/framework agreement which could be accessed;
  • satisfies themselves that using QuickQuote meets their obligations for adequate publicity, and
  • ensures that the procurement/mini-competition is for low value/risk goods, services or works.

All purchases made using the Government Procurement Card (GPC) must comply with the GPC procedures (available on the intranet).

8.1 Non Competitive Action (NCA)

It is Scottish Government policy that goods, services and works must be bought by genuine and effective competition. NCA is only granted in exceptional circumstances. It is strictly limited to situations where competition is not deemed appropriate (further information is available on the intranet).

A DPO must be consulted about any proposal to award a contract without competition before using the Application for NCA form. For NCA procurements up to £10,000 (excluding VAT), approval must be obtained in advance by at least Deputy Director level. All requests to proceed with NCA for procurements over £10,000 must be approved in advance by Scottish Procurement.

In all cases the guiding principles are that NCA approval is by someone other than the DPO who will undertake the procurement to ensure adequate separation of duties. The NCA justification and approval must be formally recorded on eRDM. 

8.2 Consultancy services

It is Scottish Government policy that robust procedures must be followed for the engagement of consultancy services to ensure that these resources are used sparingly, appropriately and effectively. Before any procurement process takes place a business case must be prepared and approved based on the amount that the Scottish Government expects to pay for the requirement:

Value Approver
Up to £10,000 Deputy Director
Over £10,000 to £50,000 Director General
Over £50,000 Cabinet Secretary for Infrastructure, Investment and Cities and the Cabinet Secretary for Finance, Employment and Sustainable Growth

The consultancy procedures are available.

Contents

9. Contract management

A Scottish Government contract manager should always be appointed to manage any contract for goods, services or works. Contract management guidance is provided in the Procurement Journey.

10. Ethical standards

It is Scottish Government policy that staff must preserve the highest standards of honesty, integrity, impartiality and objectivity in all dealings with suppliers and potential suppliers as detailed in the Scottish Procurement Policy Handbook.

Detailed guidance on most ethical issues which relate to purchasing is contained in the Scottish Government Staff Handbook at Section 4 (available on the intranet). DPOs and all other staff involved in procurement, (including line managers), must read and familiarise themselves with this guidance and its associated documents.

11. Fraud response procedures: external fraud

The Scottish Government policy on the detection, reporting and handling of fraud is available in the SPFM and will be in accordance with the Fraud Response Procedures which includes reporting it to the Fraud Response Co-ordinator without delay. All cases of external fraud should also be reported to the Co-ordinator.

Annex A: related areas of interest

The Scottish Procurement Policy Handbook also provides policy on:

Further information on Scottish Procurement is available.

Contents

Annex B: glossary
  • Competition
    contracts must be awarded through genuine and effective competition unless there are convincing reasons to the contrary.
  • Contract
    is a legally binding agreement between the Scottish Government and one or more suppliers for the supply of specified goods, services or works. The contract sets out the details of what the Scottish Government is buying and being delivered with and the rights and obligations of both of the parties.
  • Contract register

    register of all Scottish Government contracts. Each DPO is responsible for submitting it to Scottish Procurement on the award of each contract.

  • Delegated Purchasing Authority (DPA)
    is the authority to enter into a contract for goods, services and works and oversee the process leading up to and including the award of a contract and any subsequent changes.
  • Delegated Purchasing Officer (DPO)

    a permanent Scottish Government individual with Delegated Purchasing Authority.

  • Electronic Record and Document Management (eRDM)
    the Scottish Government's official electronic record and document management system.
  • Framework agreement
    is an agreement between the Scottish Government and one or more suppliers for the supply of specified goods, services or works over a set period of time. The framework agreement has agreed terms and conditions and a pricing structure defined. The main difference between framework agreement and a contract is that a framework does not state the quantity of the goods, services or works, or when they will be bought. Individual contracts specifying the quantity and timescale are awarded under the terms of the framework agreement.
  • Government Procurement Card (GPC)
    is a corporate charge card used for low value, ad-hoc purchases that are not covered by existing contracts or framework agreements for transactions £5,000 (excluding VAT) or less.
  • Non Competitive Action (NCA)
    is an approval process which permits a contract without competition to be awarded.
  • Procurement
    is the process of buying goods, services or works from external suppliers.
  • Procurement Journey
    a toolkit providing practical guidance on procurement procedures.
  • Public Contracts Scotland (PCS)
    the national advertising portal used to advertise all Scottish Government goods, services or works contract opportunities.
  • Scottish Procurement Policy Notes (SPPN)
    guidance issued by Scottish Procurement providing updates on legal and procurement policy developments.
  • Scottish Public Finance Manual (SPFM)
    provides guidance to the Scottish Government and other relevant bodies on the proper handling and reporting of public funds.
  • Sustainability
    a process whereby the Scottish Government meet their needs for goods, services, works in a way that achieves VfM on a whole life basis and generates benefits not only to the Scottish Government, but also to society, the economy and the environment.
  • Value for Money (VfM)
    the optimum combination of whole life costs and quality to meet the customer's requirement.

Contents