Contents
Procurement Document No.1
What is procurement? P2
Strategic procurement vs contracting
P2
Commissioning/
Procurement: what’s
the difference?
P3
Acquiring procurement skills
P5
Strategic procurement – potential pitfalls for
the novice
P5
Contracting – potential pitfalls for the novice
P5
Procurement and the Joint Planning and
Commissioning Cycle
P7
Applying procurement skills early
P8
Why commissioners should
know about procurement
Overview
This paper provides an overview of the two key
strands of procurement activities – strategic
procurement and contracting – and how they can
both benefit commissioners and support them in
delivering outcomes.
Further details on both strands can be found in later
parts of this suite of documents.
The paper provides a short description of the difference
between commissioning and procurement – an area
where there has been considerable confusion.
The paper also emphasises the need to ensure that
procurement skills are available to commissioners,
and the importance of involving procurement expertise
as early as possible in the commissioning cycle to
maximise procurement’s potential to contribute to
improved outcomes.
Contacts
[email protected]
Look at outcomes
for children and
young people
Look at particular
groups of children
and young people
Monitor and
review services
and process
Plan for workforce
and market
development
Develop needs
assessment with
user & staff views
Process for joint
planning and
commissioning
Commission –
including use of
pooled resources
Decide how
to commission
services efficiently
Identify resource
and set priorities
Plan pattern of
services and focus
on prevention
Contents
Procurement Document No.1
Why commissioners should know about procurement
What is procurement? P2
Strategic procurement vs contracting
P2
Commissioning/
Procurement: what’s
the difference?
P3
Acquiring procurement skills
P5
Strategic procurement – potential pitfalls for
the novice
P5
Contracting – potential pitfalls for the novice
P5
But procurement also offers strategic activities that can
help to maximise effectiveness, efficiency and value for
money across the Joint Planning and Commissioning
Cycle and significantly influence the ability of Children’s
Trusts to deliver better outcomes in the most efficient
and effective way.
Procurement and the Joint Planning and
Commissioning Cycle
P7
Strategic procurement vs contracting
Applying procurement skills early
P8
As the definition above suggests, procurement
activities can be applied at two main levels in
any organisation:
Contacts
[email protected]
What is procurement?
Procurement is the process of acquiring goods, services
or construction-type works, from (usually) external
providers/suppliers and managing these through to
the end of contract or the disposal of assets.
• A
strategic level where intelligence is gathered
and key management tools applied to improve
procurement performance across the organisation
e.g. the Children’s Trust
• A contracting level which comprises the process (see
Diagram, p4) for setting up a contract or service level
agreement with a provider to meet a requirement.
This is a key element of many commissioning projects.
2
At a strategic procurement level, robust
management will ensure that, for example:
• O
pportunities for value for money are identified
and managed on an ongoing basis
• Staff are appropriately trained in procurement
and have access to clear procurement rules and
processes which protect against illegal/fraudulent
activities but which are as streamlined as possible
• There is clear visibility of:
- Overall expenditure levels and financial
commitments, including grants
-Spend patterns for categories of goods and
services which allow strategies to be developed
for key areas
-Contracts awarded without adequate competition
• There are ongoing, active relationships with:
-Critical providers, and risk strategies for
managing these
-Procurers of similar goods and services internally
and externally, and an understanding of the
opportunities offered by collaboration
-Strategic procurement bodies such as
Professional Buying Organisations and Regional
Improvement and Efficiency Partnerships (RIEPs)
• There is an ongoing drive to identify latest
developments in the market.
Strategic procurement tools should be applied at
the highest possible level, preferably across partner
organisations in a Children’s Trust, to get the full benefit
of their ability to facilitate prioritisation and joint planning.
Contents
What is procurement? P2
Strategic procurement vs contracting
P2
Commissioning/
Procurement: what’s
the difference?
P3
Acquiring procurement skills
P5
Strategic procurement – potential pitfalls for
the novice
P5
Contracting – potential pitfalls for the novice
P5
Procurement and the Joint Planning and
Commissioning Cycle
P7
Applying procurement skills early
P8
Procurement Document No.1
Why commissioners should know about procurement
At the contracting level, good management
ensures that, for example:
• T he legal and ethical framework within which the
organisation must work is widely understood
• All legal and ethical requirements are met
• The responsibilities of those involved in
procurement are widely understood
• The best value for money provider for now and
the future is identified
• The provider is tied into an unambiguous and
binding contract or service level agreement (SLA)
which accurately reflects your requirements
• The contract or SLA reflects the roles and
responsibilities of the parties and the necessary
contract and performance management activities
• There is a clear view of the costs you will incur and
how these might vary over time
• The most professional providers will want to do
business with you.
Contracting is largely addressed through the step
by step process in Diagram 1 (page 4). Getting the
contracting process wrong can be expensive in many
ways such as:
Contacts
[email protected]
• The costs of delivering a poor quality service
• Negative impacts on your reputation
• Cost and time implications of re-competition and
dealing with challenges from disgruntled providers
and/or the European Commission.
3
Commissioning/Procurement –
what’s the difference?
Commissioning is the process of using internal and
external resources in the most effective and efficient
way to deliver the required outcomes for children,
young people and their families.
Procurement, using the contracting process, is just one
of the many tools that commissioners might use to help
achieve this. There are alternative tools such as influencing
external organisations to focus their resources on achieving
your outcomes, delivering the outcomes through a new
internal project, or redesigning existing internal or external
services. (Please note however that information gathered
through strategic procurement activities is likely to be
helpful at all stages of the commissioning cycle whether or
not contracting is the chosen tool).
In a commissioning environment the first two steps of the
traditional contracting process (‘Identify the requirement’
and ‘Justify a procurement’, see Diagram 1) would often
be subsumed into commissioning activities led by
commissioners, with input from procurement professionals.
Once the contracting process has been identified as the
most suitable option, staff trained in procurement would
take a greater leading role for the remaining steps.
Activities following award of contract, such as
implementation, contract management and lessons
learnt, may be undertaken by suitably trained
commissioners or other staff depending on the
structure of the organisation. Staff with procurement
training should also be involved in these activities.
Contents
What is procurement? P2
Strategic procurement vs contracting
P2
Commissioning/
Procurement: what’s
the difference?
P3
Acquiring procurement skills
P5
Strategic procurement – potential pitfalls for
the novice
P5
Contracting – potential pitfalls for the novice
P5
Procurement and the Joint Planning and
Commissioning Cycle
P7
Applying procurement skills early
P8
Procurement Document No.1
Why commissioners should know about procurement
Identify
requirement
4
Procurement Activities
Justify a
procurement
Investigate
provider market
Procurement
approach
Specify
requirement
Co
nt
ra
ct
ing
Redesign
Recommission
Decommission
Invite proposals
Pro
ce
ss
Evaluate proposals
Award and
implement
Manage contact
Closure/
lessons learnt
Diagram 1: Procurement Activities showing the Contracting Process
and Strategic Procurement
Contacts
[email protected]
Contents
Procurement Document No.1
Why commissioners should know about procurement
What is procurement? P2
Strategic procurement vs contracting
P2
Commissioning/
Procurement: what’s
the difference?
P3
Every organisation should have a structured,
managed approach to the strategic and contracting
levels of procurement.
Acquiring procurement skills
P5
Strategic procurement – potential pitfalls for
the novice
P5
Contracting – potential pitfalls for the novice
P5
Procurement and the Joint Planning and
Commissioning Cycle
P7
In many cases both levels are led and delivered
successfully for the organisation as a whole by a central
procurement unit (CPU), perhaps with satellite teams
in Services Units such as Children’s Services who sit
alongside commissioners. The CPU will comprise
professional procurement staff, but their success will
depend on working closely with Service Units and
commissioners to use their specialist knowledge and
skills to meet required outcomes.
Applying procurement skills early
P8
Acquiring procurement skills
This centralised approach will enable prioritisation
and planning at a corporate level. Where these services
are not provided by a CPU, commissioners should still
seek to ensure that they have access to strategic and
contracting procurement capability.
If a commissioner does not have the skills
themselves, they can ensure that they are
available in a number of ways, such as:
Contacts
[email protected]
• U
ndertaking training in the form of an accredited
course, or through mentoring from procurement
professionals
• Including procurement professionals as full time
members of the commissioning team
• Agreeing the ad hoc provision of procurement
resource by the central procurement unit
• Buying-in ad hoc procurement advice from a third party.
5
It is important for a CPU and Service Units to have a clear
understanding of their relative roles and responsibilities
with regard to strategic procurement and contracting.
Strategic procurement – potential
pitfalls for the novice
The greatest problems for the novice in strategic
procurement are likely to be:
• F ailing to recognise the benefits strategic
procurement tools can have for them
• The potentially overwhelming nature of the task.
As outlined above, strategic procurement tools provide
information on spend, demand and the supplier base
that is crucial to delivering commissioning activities.
Although they involve the use of numerous tools,
strategic procurement activities can be undertaken
in a controlled manner that takes account of limited
resources. This is largely through using the tools to
identify quick wins and areas of key risk/urgency, and
focusing attention and resources on these. For further
information see the ‘Strategic procurement – an
overview’ document in this series.
Contracting – potential pitfalls for
the novice
An array of legislative and ethical considerations needs
to be taken into account in the contracting process.
A failure to follow these may well result in a challenge
from a disgruntled provider or, in the worst cases, from
the European Commission.
Contents
What is procurement? P2
Strategic procurement vs contracting
P2
Commissioning/
Procurement: what’s
the difference?
P3
Acquiring procurement skills
P5
Strategic procurement – potential pitfalls for
the novice
P5
Contracting – potential pitfalls for the novice
P5
Procurement and the Joint Planning and
Commissioning Cycle
P7
Applying procurement skills early
P8
Procurement Document No.1
Why commissioners should know about procurement
6
The questions in the table below highlight some of the detailed procurement knowledge that should
be available to commissioners to allow them to successfully carry out contracting activities.
Examples of knowledge expected of skilled procurement staff
Contacts
[email protected]
• A
re you confident working with the market to identify
what is already available and what could be developed
to meet your requirements, without leaving yourself
open to allegations of unfair behaviour?
• Have you a detailed knowledge of the EU
Procurement Directive?
- What are the current procurement thresholds?
-Which services fall into Part B and how must these
be dealt with if they are over the threshold?
-When should the negotiated and competitive
dialogue procedures be used?
-What restrictions apply to negotiating
with providers?
-What restrictions apply to the description of goods?
-What restrictions apply to the extension of
current contracts?
• Do you know the difference between a contract
and a grant?
• Do you understand when single tender action will
be legal?
• Do you have a basic understanding of contract
law and the implications of offers, counter-offers,
acceptance and consideration?
• D
o you know what internal rules your organisation
has on procurement such as procurement manuals,
financial delegations or, in local authorities,
Contract Standing Orders?
• Have you access to suitable Standard Terms and
Conditions of Contract? If not, what will you use?
• Are you able to produce a specification that does not
conflict with the Terms and Conditions of Contract, does
not discriminate against a provider or group of providers,
and which clearly describes your requirement?
• Are you able to identify the pricing method that will
best incentivise the provider to deliver as agreed?
• Are you able to produce a pricing template for
bidders to complete which provides you with a clear
breakdown of costs now, and in the future?
• Are you able to produce weighted evaluation criteria
which identify the provider offering the best value
for money?
• Are you able to evaluate the financial stability of
bidders to minimise the risk of delivery interruption?
• Do you understand the importance of involving the
contract manager in the drafting of the specification
and the evaluation process?
• Do you know how to undertake benefits management
to get the best out of a contract?
Contents
What is procurement? P2
Strategic procurement vs contracting
P2
Commissioning/
Procurement: what’s
the difference?
P3
Acquiring procurement skills
P5
Strategic procurement – potential pitfalls for
the novice
P5
Contracting – potential pitfalls for the novice
P5
Procurement and the Joint Planning and
Commissioning Cycle
P7
Applying procurement skills early
P8
Procurement Document No.1
Why commissioners should know about procurement
Commissioners must ensure that someone, if not
themselves, has the skills and knowledge to address
these questions should contracting arise in the
commissioning cycle. This will minimise the risk of
challenge and increase the opportunity for achieving
value for money.
Procurement and the Joint Planning
and Commissioning Cycle
The intelligence gathered through strategic
procurement tools will be essential to support
commissioning decision-making. It will contribute
in particular to Stages 4 (Identify Resources and Set
Priorities), 6 (Decide how to Commission Services
Effectively), 8 (Plan for Workforce and Market
Development) and 9 (Monitor and Review Services
and Processes) of the DCSF Joint Planning and
Commissioning Cycle (see Diagram 2 opposite).
7
Look at outcomes
for children and
young people
Look at particular
groups of children
and young people
Monitor and
review services
and process
Plan for workforce
and market
development
Develop needs
assessment with
user & staff views
Process for joint
planning and
commissioning
Commission –
including use of
pooled resources
Identify resource
and set priorities
Decide how
to commission
services efficiently
Plan pattern of
services and focus
on prevention
Summary of Cycle
Review
Understand
Diagram 2: DCSF Joint Planning and
Commissioning Cycle with Summary
Contacts
[email protected]
Commissioning
Do
Plan
Contents
What is procurement? P2
Strategic procurement vs contracting
P2
Commissioning/
Procurement: what’s
the difference?
P3
Acquiring procurement skills
P5
Strategic procurement – potential pitfalls for
the novice
P5
Contracting – potential pitfalls for the novice
P5
Procurement and the Joint Planning and
Commissioning Cycle
P7
Applying procurement skills early
P8
Procurement Document No.1
Why commissioners should know about procurement
The contracting process will contribute to Stages 6
(Decide how to Commission Services Efficiently) and
9 (Monitor and Review Services and Process) of the
Commissioning Cycle in particular.
The Joint Planning and Commissioning Cycle aligns
with the Department of Health’s World Class
Commissioning Cycle.1
Useful links
Procurement essentials (I&DeA) – A useful overview
of what procurement is and how to deliver it in the
public sector.
Applying procurement skills early
Staff with procurement skills should be involved from
the outset of the commissioning cycle to help ensure
proposals offer value for money and to advise on, for
example, feasible timescales and market conditions.
Early involvement will also allow them to plan any
necessary support from a central procurement
unit, if required, and reflect these in their corporate
procurement strategy and plan.
Children’s Trusts should consider how they might
benefit from the inclusion of senior procurement
staff at Board and other levels.
Contacts
[email protected]
1Securing Better Health for Children and Young People Through World Class Commissioning Department for Children, Schools
and Families and Department of Health (Feb 2009).
8
Sharing knowledge and experience
Sharing the knowledge and experience of procurement
professionals already working within local government
will further support skill development.
If you are interested in working with us to further
this agenda; whether by contributing directly or
by inputting into our thinking on this, please email
[email protected]
Keeping up to date
More useful procurement tools, case studies and guidance
will be published in the near future, please email us to
register to receive information as soon as it is available.