1.1. These Contract Procedure Rules (hereafter referred to as ‘the Rules’) are intended to promote good purchasing practice, public accountability and deter corruption. Following the Rules will result in open and transparent procurement practices that will contribute towards excellence in financial management and also provide a full audit trail to counter any allegations that a purchase has been made unfairly, incorrectly or fraudulently.
1.2. The Rules must be followed by the Council and its strategic partners where contractually binding. The Rules must also be followed by arms-length organisations when they are entering into contracts on behalf of the Council.
1.3. The Rules include grants; however, the Service also has to be aware of any further procurement requirements that the funding body may require within the terms and conditions of the grant.
1.4. These Rules must be considered along with the Council’s Financial Procedure Rules and Scheme of Delegation.
1.5. Head of Finance and the Monitoring Officer are responsible for keeping the Rules under review and may make amendments to them from time to time subject to the correct approval. The Head of Finance is also responsible for monitoring compliance with the Rules and for undertaking an annual review of the Rules.
Supporting documents (as well as these Rules) as referred to in these rules can be found on the East Sussex Procurement Hub Website as follows:
- PID
- Acceptance of Tenders
- Tender Record Form
- Exemption and Variation Form
- Software Extension Form
- Financial Procedure Rules
- Management Structure and Scheme of Delegation
- Wealden’s Policies and plans
Further advice regarding the rules and good procurement practice can be sought from the East Sussex Procurement Hub (ESPH).
East Sussex Procurement Hub
01323 443322
2. Basic Principles and Responsibilities
2.1.1. All purchasing and disposal procedures and contracts must be compliant with the latest Government Procurement Agreement (GPA), National and Council policies and regulations, including:
- Achieving value for money for all public money spent;
- Adopting the highest standards of integrity;
- Following the Council’s Anti-Fraud Framework;
- Ensuring fairness, equal treatment and transparency in allocating public contracts;
- Complying with UK law and all other legal requirements;
- Ensuring that non-commercial considerations, other than social value in accordance with the Social Value Policy, do not influence any contracting decision;
- Supporting the Council’s corporate aims and policies;
- Meeting the Council’s Data Protection, Information Security and Freedom of Information standards.
2.1.2. This list is indicative but not exhaustive, it is the officer’s responsibility to ensure compliance against the areas listed above, and any further service specific requirements. If in any doubt, please seek further advice from the ESPH. Any specific queries on complying with all other legal requirements must be handled by Legal Services.
2.1.3. All amounts quoted are exclusive of VAT. Any tenders or quotes sourced should also be exclusive of VAT.
2.2.1. Officers responsible for any purchasing activity must comply with the Rules, along with any guidance and updates provided by the ESPH. The latest information is available on the ESPH webpages. Officers must ensure that any agents, consultants and contractual partners acting on their behalf also comply with these Rules.
2.2.2. Officers must:
- Follow the Rules when purchasing goods, services and works;
- Seek early advice from the ESPH on how to proceed and thereafter have proper regard to all necessary financial and professional advice;
- Seek early advice from Legal Services on the Terms & Conditions to adopt for your contract and thereafter have proper regard to all necessary legal advice
- Declare any personal interest in a contract, financial or otherwise;
- Obtain all requisite approvals and ensure budgetary provision is in place before placing an order or raising a purchase order for any supplies, services or works;
- Check whether there is an existing corporate contract that can be used before seeking to award another contract; where a suitable contract exists this must be used unless there is a justifiable reason not to and an exemption has been approved; See Section 6 of these Rules for further information;
- Give due regard to the local economy, the economic, social and environmental wellbeing and value for the council area and any other sustainability factors;
- Ensure that, where appropriate, whole life cost consideration is given to the goods, service or works to be purchased.
- Match all orders with an official Purchase Order and all other requirements of the Financial Regulations from the Council’s Financial Management System.
2.3.1. Directors and Senior Management must ensure that their staff:
- Comply with the Contract Procedure Rules; the Financial Rules and the Scheme of Delegation to Officers;
- Forward any relevant documentation to the ESPH and forward electronic copies of all signed contracts to the ESPH and Legal Services; and
- Keep records of any exemptions to the Contract Procedure Rules.
2.4.1. Members should refer to the Code of Conduct at their Council.
3. Relevant Contracts
3.1.1. A relevant contract is any arrangement made by, or on behalf of, the authority for the carrying out of works or for the supply of goods, materials or services. All relevant contracts for goods, services or works must comply with the Rules. These include arrangements for, but not limited to:
- Works;
- The supply or disposal of products or goods;
- The hire, rental or lease of goods or equipment;
- The provision of consultancy or other professional services;
- The delivery of services.
3.1.2. Relevant contracts do not include:
- Contracts of employment which makes an individual a direct employee of the authority;
- Agreements regarding the acquisition, disposal, or transfer of land;
- Planning agreements under section 106 of the Town and Country Planning Act 1990;
- Use of external solicitors and counsel instructed by Head of Legal and Governance Services; or
- Grant Funding agreements (with conditions), however it should be noted that for the purposes of signing grant funding agreements the appropriate processes and signatories will be as set out in these Rules based on the value of the grant.
4. The Procurement Process
4.1.1. The Officer must confirm that they have the requisite authority to advertise and award the contract, please see Appendix A.
4.1.2. The Officer must appraise the purchase in a manner commensurate with its complexity and value, in consultation with the ESPH where appropriate by:
- Considering value for money and the Council’s Aims as set out in the Corporate plan;
- Appraising the need for the expenditure and its priority;
- Defining the objectives of the purchase;
- Assessing any risks associated with the purchase and how to manage them;
- Considering what procurement method is most likely to achieve the purchasing objectives;
- Determining whether an existing arrangement, framework agreements or contract can be used for the purchase, see note below.
- Considering whether the goods, service, or works can be delivered in-house. (The “make or buy” assessment).
- Assessing whether other neighbouring authorities, particularly members of the ESPH, have a similar requirement and where there is a potential for a joint procurement exercise.
- Drafting a detailed scope of services/ specification;
- Giving consideration to the economic, social and environmental benefits that are required or desirable from the competitive process and which the resulting contract can bring to the community.
The Officer must also seek legal advice as to the appropriate form of terms and conditions or contract to be used and take into account any guidance provided by ESPH.
NOTE – Where a strategic partnership is in place advice must be sought from the Head of Finance and Monitoring Officer on how to proceed with the award and/or any tender process for the same or similar services as those specified under the strategic partnership contract.
4.2.1. Prior to commencing a procurement process, it is the responsibility of the Officer to estimate the total value of the contract or project. This will indicate which procurement route must be followed in order to comply with the Rules and with the Public Contract Regulations 2015. The estimated value means the aggregated value payable in Pounds Sterling exclusive of Value Added Tax.
4.2.2. For the purposes of these Rules, contracts are referred to as Contract Types A, B, C, and D according to the value of the contract.
Contract Type A
- Goods and Services: less than £5,000.
- Works and Concessions: less than £25,000.
Contract Type B
- Goods and Services: From £5,000 up to less than £50,000.
- Works and Concessions: From £25,000 up to less than £200,000.
Contract Type C
- Goods and Services: From £50,000 up to less than UK threshold for supplies and services.
- Works and Concessions: From £200,000 up to less than UK threshold for works and concessions.
Contract Type D
- Goods and Services: UK threshold for supplies and services.
- Works and Concessions: UK threshold for works and concessions.
4.2.3. The Public Contract Regulations stipulate particular obligations for contracts valued above the UK threshold for services and supplies, regardless of whether that contract is for supplies, services or works.
4.2.4. The process for each Contract Type is described in full below, and summarised in the table in appendix A.
4.2.5. These thresholds apply to the aggregate (total) value of the contract. The aggregate value is determined as follows:
Annual value x contract period in years (including options to extend) = Aggregate value.
4.2.6. The UK Threshold for goods and services is reviewed regularly and officers should check the current thresholds in place here.
4.2.7. These Rules apply where there are no other procedures which take precedence over these Rules, e.g. existing contracts or where external funding has been obtained with supporting contractual requirements. If in doubt, Officers must seek the advice of the ESPH or Legal Services.
4.2.8. When purchasing goods the total contract value is based on the whole cost of ownership and therefore includes not only the purchase price but all the associated costs over the entire contract period (including any potential extension). These could include installation, training, maintenance, consumable items and disposal costs.
4.2.9. If the expenditure on an item or service or works from, by or with a particular supplier is recurring then the likely expenditure over a 12-month period must be determined and multiplied by the length of the contract. Where the contract is for an uncertain duration, then as per the requirements of the Public Contract Regulations 2015, the total value shall be determined as the value of the requirement over a period of 48 months.
4.2.10. Where the requirement covers several suppliers providing the same goods, services or works then the contract value shall be the combined sum of all the individual contracts.
4.2.11. Where the Council is collaborating or acting on behalf of other public bodies then the contract value shall be determined as the combined sum of all the individual public body’s requirements.
4.2.12. Where it is intended to package the contract into several different “lots”, e.g. based on geographical area or by particular type of requirements, then the contract value shall be the total value of all the combined lots. For example, a contract for services that is divided into 4 Lots of approx. £50,000 each would still be subject to the process for Type D Contracts as the total value of the contract exceeds UK thresholds.
4.2.13. In the case of concession contracts, (i.e. where the service users as opposed to the Council make payments to the contractor for use of the service) then the total value (i.e. turnover) of the contract must be used to determine the contract value. Procurements for Concession contracts should be undertaken in accordance with Section 12.
4.2.14. An Officer must not enter into separate contracts nor select a method of calculating the total value in order to minimise the application of these Rules.
4.3.1. Officers are required to use their purchasing power to work with local businesses wherever possible where this provides equal or better Value for Money for the Council than alternatives. However, it must also be noted that the Public Contract Regulations (PCR 2015) requires that any procurement activity should not discriminate, favour or show bias.
4.3.2. Officers should carefully review the required specifications of any Contract to ensure that small and medium sized enterprises are not being disadvantaged in their ability to tender for goods, works or services with the Council.
4.3.3. For large value contracts, consideration should be given as to whether the contract can be divided into Lots in order that small and medium sized enterprises can bid for local work. The decision not to divide into Lots should be clearly documented in the Procurement Initiation Document (PID). Where a contract is to be divided into Lots the process followed should still be in line with the total value of all requirements. (See 4.2.12)
4.4.1. The following relates to all purchases of goods and services and works that have adequate budget provision, where value for money can be demonstrated and, where necessary, Cabinet has approved both the advertising of the tender and award or variation through the Council’s procurement process. For any expenditure not in budget or for which approval from Cabinet has not been granted, the Service must obtain the relevant approval before commencing any tender or quote.
4.4.2. For ALL contracts valued over £50,000, the officer shall consult/instruct the ESPH and request advice on appropriate Terms & Conditions from Legal Services.
4.4.3. On occasions where there are not enough suitably qualified suppliers to meet the requirements, all suitably qualified candidates must be invited to quote or tender. So for example, for a goods contract of £10,000, if only two suitable suppliers can be found, both must be invited and a note made to evidence the research undertaken. An exemption to the Rules will be need to be sought (see section 6).
4.5.1. Officers should ensure they have calculated and anticipated the complete requirements of the purchase, service or project, in many cases it may not be possible to revise a contract or increase the goods or services bought without seeking new quotes or tenders. If this is not known consideration should be given to undertaking Soft Market Testing (see 4.6).
4.5.2. Officers should ensure good time is allowed for soft market testing, commissioning, procurement, contract and project design and involvement in order to help protect the Council from additional costs or delays.
4.5.3. Any interest which may affect the award of a contract under these Rules must be declared. Officers must declare to their line manager any interest which could influence their judgement in contracting matters. Officers must record their interest or any interest held by a close family member.
4.5.4. Where an officer has an interest which could influence their judgement in contracting matters, he or she must not take part in the procurement process and report the interest to the Council’s Monitoring Officer.
4.5.5. Budget approval by the Council is necessary before any procurement/contract process can commence. In certain cases it is not sufficient to have budget approval to commence a project and further member approval may be required, for example, a scheme with a high political profile.
4.5.6. As well as the process relevant to a particular contract type (A, B, C or D) Officers should read the GENERAL CONSIDERATIONS (Section 5).
4.6.1. Prior to undertaking a competitive procurement exercise, carrying out Soft Market Testing (SMT) can be a valuable tool in understanding changes in the market since any similar previous contract was let, how the packaging of the contract can stimulate the market to deliver better or added value and how innovative or alternative solutions can be included within the tender process.
4.6.2. Prior consultation also encourages interest in supplying the Council and thus creates greater competition and supplier diversity.
4.6.3. The Officer responsible for the purchase may consult potential suppliers prior to the issue of the Invitation to Tender in general terms about the nature, level and standard of the supply, contract packaging and other relevant matters, provided this does not prejudice any potential candidate, but the Officer must not seek or accept technical advice on the preparation of an Invitation to Tender or quotation from anyone who may have a commercial interest in the tender, as this may prejudice the equal treatment of all potential candidates or distort competition.
4.6.4. The Officer must seek advice from the ESPH in all instances prior to carrying out a SMT exercise.
4.7.1. Contract Type A applies to purchases valued below £5,000 for goods and services and below £25,000 for works and concessions. For details of what a concession contract is please see Section 12.
4.7.2. A minimum of one quote is required. Preferably quotes should be received and accepted in writing – email is acceptable for this purpose.
4.7.3. Officers should first consider if any current corporate contracts should be used for the purchase.
4.7.4. Alternatively the purchase may be called off from a compliant Framework (see Framework Agreements).
4.7.5. Officers should prioritise the use of local companies when soliciting a quote, except where this would not provide value for money.
4.7.6. Purchase order terms and conditions should be used for goods and a purchase order raised for the purchase.
4.7.7. Legal advice should be sought if contractors own terms and conditions are to be used or if the procurement is for services or works. A purchase order must be raised for the commission.
4.7.8. Whilst the Head of Service or delegated officer concerned shall have the authority to enter into any such contract this is subject to them being satisfied that the Council is receiving value for money.
4.8.1. Contract Type B applies to purchases valued between £5,000 and under £50,000 for goods and services and between £25,000 and under £200,000 for works and concessions. For details of what a concession contract is please see Section 12.
4.8.2. Officers are required to invite a minimum of 3 written quotes for goods, services and 5 written quotes for works and concessions.
4.8.3. If only one bid is received then advice must be sought from ESPH to ensure that value for money can be demonstrated.
4.8.4. Officers should firstly consider if any current corporate contracts should be used for the purchase.
4.8.5. A PID should be completed as a record of quotes being sought in accordance with these rules.
4.8.6. A record of the full quotation process, including completed tender record form and acceptance of tender form should be maintained for auditable purposes.
4.8.7. If fewer than the required written quotes (as set out in 4.8.2) are received, you must demonstrate best value and seek approval to proceed from the Procurement Business Partnership Manager.
4.8.8. Officers are required to use their purchasing power to work with local businesses wherever possible and where the rules allow. Therefore Officers are required to source a minimum of one of the quotes from a local supplier.
4.8.9. A local supplier is defined as a suitably qualified supplier whose main / registered office is located within the boundaries of the Council, if there are no suitably qualified suppliers within the Council boundary this may be extended across East Sussex.
4.8.10. If a suitable local supplier cannot be found after following 4.8.8 and 4.8.9, officers must record the reason why in the PID. This is not considered a variation from the rules but non-compliance must be reported to ESPH.
4.8.11. On occasions where there are not enough suitably qualified contractors to meet the requirements. For example, for a goods contract of £10,000, if only two suitable suppliers can be found, both must be invited. An exemption to the Rules will be need to be sought (see section 6).
4.8.12. Alternatively the purchase may be called off from a compliant Framework (see Framework Agreements).
4.8.13. Advice on contract terms must be taken from Legal Services.
4.8.14. A Purchase Order must be raised on the Finance system in accordance with the ‘No POP (Purchase Order Processing) No Pay’ policy of the Council.
4.8.15. The quotation acceptance details should be completed in the Acceptance of Tenders form and sent to the ESPH within 28 days of the quote being accepted.
4.8.16. The Public Contract Regulations 2015, require details of all contracts awarded of £25,000 or more to be placed on the Government’s Contracts Finder website. The Council must publish details of all contracts valued over £5,000 on the Council’s own Contracts Register. Completion of the Acceptance of Tenders form (point 4.8.15, above) will allow the Council to comply with these requirements.
4.8.17. Quotations may be received directly by the officer seeking the quote. Quotes must not be opened until after the deadline set for receipt of quotations. A Tender Record Form must be completed.
4.8.18. Officers should ensure that quotes are received and clearly marked with the name and reference of the contract via the E-tendering portal or email and opened at the same time where practicable.
4.8.19. Authority to accept the quote lies with the appropriate Head of Service. Details of quotes received and accepted are to be recorded on the Acceptance of Tenders form.
4.8.20. A signed original of all contracts are kept by Legal Services. See Section 7 for further information.
4.9.1. Contract Type C applies to all purchases of goods and services valued between £50,000 and the UK threshold for supplies and services; and £200,000 and the UK threshold for works and concessions contracts.
4.9.2. The UK thresholds are reviewed regularly. For the current thresholds please follow this link.
4.9.3. All contracts classified as Type C must be undertaken by or in conjunction with the ESPH unless otherwise agreed.
4.9.4. An open tender exercise is required. Officers should first consider if any current corporate contracts should be used for the purchase.
4.9.5. Selection or shortlisting of suppliers is not allowed, except in the following circumstances;
- For concessions, a Selection Questionnaire (SQ) may be used for contracts over a certain value (advice must be sought from ESPH), or
- Where suppliers can be approached through a relevant and compliant framework. Where there is a genuine need to use a closed process or where there is evidence that (after effective pre-procurement soft market testing) the market, and therefore the number of potential bidders, is very large.
4.9.6. There is a strong preference for the Open Procedure and this should be the normal default choice for Type C procurements.
4.9.7. In order to define the requirements, procurement route and assess how best value can be achieved for the contract, the Procurement Initiation Document must be completed and signed off by the ESPH, prior to starting any competitive exercise.
4.9.8. The purchase may require discussions or engagement with providers and suppliers prior to undertaking a tender. This can help define the specification, objectives and capacity of the market or inform budget considerations. Officers should ensure that the ESPH are involved before any such engagement begins.
4.9.9. In addition to the Procurement Initiation Document, the following documents should be prepared in advance of undertaking any procurement. These should be developed in consultation with the ESPH:
- Review of current provision and outcomes required for new contract.
- Draft specification and award criteria. (See 5.2 Award Criteria)
- Evaluation criteria, including basis for calculating total cost of bids.
- Form of Contract, terms and conditions. These should be developed in consultation with Legal Services.
4.9.10. The contract opportunity must be advertised on the Government’s Contracts Finder website.
4.9.11. All Contract Type C tenders are conducted electronically using the Councils e-Tendering facilities. This ensures that point 4.9.10 (above) is complied with and that the tender process is conducted in an open, fair and transparent manner, providing an auditable record of the process.
4.9.12. Where selection is not permitted, it is imperative that the Councils mandatory requirements are clearly defined in the tender documents. These are minimum standards that a bidder must achieve to be considered for evaluation of the quality and price of the offer. These will include:
- Grounds for Exclusion from Public Contracts.
- Financial Standing.
- Minimum Insurance Requirements (please note that a contractor is not required to hold the minimum levels of insurance, just confirm that should they be successful that these insurances will be 15 provided upon starting the contract). Officers should not enter into contract, or allow the service, supply or works to commence until these insurances have been provided.
- Compliance with all relevant Health and Safety, Equalities and Environmental legislation and regulation.
- Completed Forms: Form of Tender, Anti-Collusion Certificate and Bona-Fide Declaration.
4.9.13. If relevant to the provision of supplies, services or works, minimum standards may also include accreditations, professional membership, or compliance with industry standards or regulatory bodies. These should be clearly defined within the Invitation to Tender.
4.9.14. Mandatory requirements will be assessed on a pass/fail basis. All bidders who achieve a pass in these areas must have their tender fully assessed against the award criteria.
4.9.15. Communication during the tender should be conducted in a transparent and fair manner, ensuring that all clarifications and additional information is available to all parties who have expressed an interest in the Contract at the earliest opportunity.
4.9.16. Amendments and changes to either the specification or award criteria once the tender process has begun should be avoided. However, if necessary, minor changes may be made up until the deadline for receipt of tenders. It is important that officers treat all bidders equally throughout the process and communicate any changes in a transparent manner to all bidders. If necessary consideration of extensions to the deadline for receipt of tenders should be made to ensure these changes can be incorporated and responded to fully.
4.9.17. Changes to the specification, evaluation method or award criteria must not be made after tenders have been received.
4.9.18. All Type C Contracts should include instructions for the return of tenders, It should clearly state the time and date on which tenders must be received and that Tenders received after this time and date will be rejected.
4.9.19. If a bidder gives advanced notice that a tender has been delayed and will not be received by the deadline, advice must be sought from the ESPH as to whether the tender may be accepted. Ordinarily a late tender may only be accepted if no advantage could be derived by the bidder by its acceptance (i.e. they will have had a longer period to complete the tender).
4.9.20. The use of the Councils e-Tendering system will ensure that a fair, transparent and compliant receipt process is in place.
4.9.21. If using an open tender a minimum of three compliant* tenders must be received. If three compliant tenders are not received authority must be gained from the Head of Finance to proceed with the evaluation.
*Compliant in this instance means tenders which meet all of the mandatory requirements of the tender and can be evaluated against the award criteria.
4.9.22. All tenders received via a compliant e–Tendering portal must be opened using the system opening procedure and where practicable have two officers nominated by the Procurement Business Partnership Manager to monitor the process.
4.9.23. Tenders must then be evaluated in accordance with the published evaluation method and award criteria. Evaluation of mandatory requirements must be completed before full evaluation is undertaken.
4.9.24. A written record of scores and justification of scores for all bids should be kept.
4.9.25. Tenders may be accepted by the appropriate Head of Service together with the Head of Finance.
4.9.26. It is good practice to offer feedback to unsuccessful bidders if requested. Feedback should be kept only to those areas relevant for the decision to award and avoid details which may be considered commercially confidential. It is good practice to provide the unsuccessful bidders scores or weighting and those of the successful bidder.
4.9.27. Prior to acceptance of a tender, the Acceptance of Tenders Form should be completed, and a copy held on file by Procurement and Legal Services.
4.10.1. Contract Type D applies to all purchases valued at, or above the UK threshold.
4.10.2. All Contracts classified as Type D must be undertaken by or in conjunction with the ESPH unless otherwise agreed.
4.10.3. The UK threshold for goods and services is reviewed regularly. For the current threshold for supplies, services and works please follow this link.
4.10.4. All Contract Type D procurements must be conducted in accordance with the Public Contract Regulations 2015. These regulations set out the types of procurement procedures allowed.
4.10.5. The types of procedures are as follows:
- Open Procedure
- Restricted Procedure
- Competitive Procedure with Negotiation
- Competitive Dialogue
- Innovation Partnership
4.10.6. Each Procedure has a number of requirements which the Council must adhere to, such as:
- Minimum time allowed for each stage of the process
- Publication of the opportunity on the Governments “Find a Tender” website.
- All procurement documents to be available at the start of the procedure.
- Assessment of social, economic or environmental benefit.
- Mandatory exclusion criteria.
- Discretionary selection criteria.
- Award criteria.
- Division of contracts into Lots.
- Electronic tendering.
- Technical specifications.
- Award and standstill procedures.
4.10.7. All Type D tenders must be conducted in an open, transparent manner which allows for equal treatment and does not discriminate against a particular economic operator or group of economic operators.
4.10.8. Type D contracts must be conducted electronically, this means that the advertisement and all procurement documents are available electronically and tenders are accepted in a secure electronic environment. The Council has an e-Tendering system to allow for this.
4.10.9. It is vital that all Type D contracts allow for early involvement from ESPH and Legal Services, ideally at the business case or project initiation stage.
4.10.10. Tenders may be accepted by the appropriate Director together with the Head of Finance.
4.10.11. Contract Management is a crucial part in the procurement lifecycle and ensures the ongoing success and sustainability of a contract. All Type D contracts should have a defined governance structure for contract management and defined Key Performance Indicators, relevant to the successful performance and monitoring of a contract.
4.10.12. All Type D contracts must have a named Client Contract Manager (CCM); the CCM will be reviewing, monitoring and evaluating the contract to ensure that its provisions and services are being followed.
4.10.13. During the life of the contract, the CCM must monitor the contract in respect to the following:
- Performance
- Compliance with specification and contract terms
- Cost
- Any Best Value requirements
- User satisfaction and;
- Risk management.
4.10.14. Where this contract is due to be re-let, this information should be available and reviewed to inform the procurement approach.
4.10.15. Contract terms should allow for continuous improvement and the ability for the Council to benefit from changes in technology and market innovation during the life of the contract. The contract should also allow for demand to be varied within reasonable thresholds.
4.10.16. Any changes to contracts must not constitute a material change to the scope or value of the contract. Advice should be sought from ESPH and Legal Services if there is any doubt about the changes sought.
4.10.17. For the avoidance of doubt, variations cannot be agreed if they result in additional expenditure beyond the approved budget. In these circumstances, appropriate approvals must be obtained.
5. General Considerations for all Contract Types
5.1.1. A Framework Agreement is a contract that has been officially tendered for by another local authority, public sector organisation, Purchasing Consortium, or central Government. The contract is awarded to one or more suppliers and has provision to allow other public sector bodies to use the contract without having to undertake their own tender process so long as these public bodies have been clearly identified in the advert which led to the creation of the Framework Agreement. Acquiring goods, works or services under a Framework Agreement can be a very efficient method of procuring the Council’s requirements.
5.1.2. Frameworks will have specific procedures that have to be followed in order to make a purchase or enter into a contract (call off). This may range from direct order to mini competition. Officers must comply with all terms, including award procedures, of the framework agreement.
5.1.3. The ESPH must be consulted before using (calling off a contract from) any framework agreement.
5.1.4. A PID must be completed, specifying your intent to use a Framework Agreement.
5.1.5. Where there has been a mini competition under a framework a Tender Record Form (if applicable) and an Acceptance of Tender form must be completed and returned to ESPH on completion of an award.
5.1.6. Using an existing framework agreement may reduce the need to follow a competitive procedure. A Contract is still required and Legal Services must be consulted on the form of the framework Contract before any commitment is made.
5.1.7. Any frameworks used or set up by the Council must comply with all relevant legislation, including the length of Contracts called-off from the framework and the ESPH will advise in this regard.
5.1.8. Where the Council sets up a framework arrangement for use by other public bodies, the Council must be protected, so far as possible, from liabilities arising as a result of third party use of that framework agreement.
5.1.9. An electronic auction (eAuction) is a procurement tool that uses web-based software to allow potential suppliers to compete online, in real time, to provide prices for the goods/services under auction.
5.1.10. eAuctions can be based on price alone or other criteria such as quality, delivery or service levels can also be taken into account.
5.1.11. When it is proposed that the Council will undertake a collaborative procurement with another authority or authorities, a PID shall be required even in cases where budgetary provision has already been made and that the cost of resources have been identified, considered, and recouped where possible and appropriate.
5.1.12. All participating Authority’s must provide confirmation of their authority to proceed with the procurement and that they have delegated powers to enter into a contract.
5.1.13. Where collaboration is authorised, the lead organisation’s Contract Procedure Rules may be followed and will be deemed to be in compliance with these Contract Procedure Rules so long as the lead purchasing organisation’s Contract Procedure Rules are in compliance with all applicable procurement legislation. Legal Services will advise in this regard.
5.1.14. Collaborative procurements and contracts should, where possible, include the ability for the Council to request details and information relating to the procurement process necessary for audit purposes.
5.1.15. A Contract is still required and Legal Services must be consulted on the terms and conditions of the collaborative Contract before any commitment is made.
5.1.16. For all Contracts called off from a framework or collaborative arrangements, including the Council’s own frameworks, authority to commit/enter Contract is still required at the relevant thresholds for Contract authorisation.
5.2.1. All contract Types B, C and D must have clear instructions detailing on what basis a quote or tender will be accepted. This is known as the award criteria.
5.2.2. Most Type B contracts will not require a complex or long award criteria, and it is acceptable to accept Type B quotes on a lowest price basis. If any other quality criteria (such as experience, method statement, timescales), are to be used to determine the best value quote these must be detailed in the quote so that organisations know what elements are important to the Council.
5.2.3. Type C & D contracts can only be awarded on the basis of Most Economically Advantageous Tender (M.E.A.T).
5.2.4. M.E.A.T shall be identified on the basis of the price or cost, using a cost-effectiveness approach, such as life-cycle costing and may include the best price-quality ratio. M.E.A.T involves a combination of factors including price, quality and other factors (such as social, economic or environmental benefits) to determine the best value offer.
5.2.5. Whole Life Cost will combine those factors in M.E.A.T above with consideration about the total cost of ownership, such as cost of acquisition, usage, disposal and lifecycle costs.
5.2.6. Officers must define Award Criteria that are appropriate and relevant to the purchase. The Award Criteria must be designed to secure the outcome representing the best Value for Money for the Council (which may or may not be the lowest price).
5.2.7. Any award criteria used should not discriminate against bidders or be designed to restrict competition.
5.2.8. The ESPH will advise on the use of any award criteria for Contract Types C & D.
5.3.1. Discussions with bidders after submission of a tender and before the award of a contract can only be with a view to clarifying mistakes or errors in the tender submitted, confirm operational provision, terms and conditions of contract or requesting information for due diligence.
5.3.2. Where such discussions are to take place with a supplier, all bidders involved in the respective exercise must be notified and given the opportunity to clarify their bid if necessary, to ensure equal treatment.
5.3.3. If mistakes in pricing are discovered and it is clear that this is due to miscalculation then the bidder may be given the opportunity to revise the mistake as long as it does not lead to the total tender price which was submitted from being increased or decreased. Where the mistake or error is in relation to the total price the bidder should be given the opportunity of confirming the price submitted or be allowed to withdraw the tender. No other form of amendment to price is allowed.
5.3.4. Discussions with bidders after submission of a Tender and before the award of a contract with a view to obtaining adjustments in scope, price, delivery or content (i.e. post Tender negotiations) must not be conducted – this is a distortion of competition.
5.3.5. Where post-Tender clarification results in a fundamental change to the specification (or contract terms) the contract must not be awarded but re-Tendered, following guidance from the ESPH.
5.4.1. When any employee either of the Council or a current service provider may be affected by any transfer arrangement, for example, when a contract is retendered or service outsourced or brought in-house, officers must ensure that the Transfer of Undertaking (Protection of Employment) (TUPE) issues are considered and obtain advice from Legal Services and Human Resources (HR) before proceeding with invitations to tender or quote.
5.4.2. Officers should ensure that sufficient time, particularly with regards to mobilisation of the new arrangements is given in instances where TUPE applies.
5.5.1. Section 20 of the Landlord and Tenant Act 1985 (or more commonly known as Section 20, or S20 consultation) is a process that applies to landlords where work or services that are recharged to leaseholders requires consultation prior to commencement. Landlords can recharge any works or services up to a value of £250 (including VAT) without consultation. Above £250, and Section 20 consultation must be carried out. Advice should be sought from ESPH and Housing Services. Section 20 is a process that takes a set period of time, and is carried out at certain points of the procurement process, consideration to these timeframes needs to be addressed. They are typically split into 3 stages:
- Stage 1 – notice of intention. This is usually carried out before any works commence.
- Stage 2 – statement of estimates. This is when potential costs are determined.
- Stage 3 – notice of reasons. Stage 3 is only usually carried out if a landlord did not secure services or works with the cheapest contractor, outlining the reasons why.
5.5.2. It is the responsibility of the client to ensure Section 20 requirements are adhered to.
5.6.1. Tenders and quotations for Contract Types B (where practicable), and C & D must not be opened until the deadline for receipt has passed.
5.6.2. Tenders are to be opened in accordance with the following:
Contract Type A
Officers to be present: Officer conducting the procurement nominated deputy.
Timescale: As agreed by Head of Service.
Contract Type B
Officers to be present: Officer conducting the procurement and relevant Head of Service or nominated deputy.
Timescale: As agreed by Head of Service.
Contract Type C
Officers to be present: Two officers nominated by Procurement Business Partnership Manager.
Timescale: Within 5 days of deadline for receipt.
Contract Type D
Officers to be present: Two officers nominated by Procurement Business Partnership Manager.
Timescale: Within 5 days of deadline for receipt.
5.7.1. For all supplies, works and most service contracts tendered under Public Procurement Regulations (Type D contracts), a ten-day ‘standstill period’ must be observed between the decision to award and contract conclusion. Once the decision to award a contract is made, after you have received all necessary approvals, each bidder must be notified in writing on the outcome of the tender process. If a selection questionnaire (SQ) or an expression of interest prior to SQ was used, all those bidders must be given feedback at the relevant stage. Advice on the use of SQ and expressions of interest can be provided by the ESPH. Please see Section 5.8 regarding de-briefing bidders.
5.7.2. The ESPH will provide advice and support with regards to Contract award letters, feedback to bidders and arranging Contract Completion with the supplier and Legal Services will provide advice and support with the contract Terms and Conditions, including any incidental documentation. Officers may accept quotations and Tenders received in respect of proposed contracts, provided they have been sought and evaluated fully in accordance with these Rules and in respect of the Scheme of Delegation.
5.7.3. The ESPH will be responsible for sending out the contract award letter and contract for signing by the winning contractor. Once signed, Legal Services will arrange for the contract to be signed by the Council having checked that the appropriate authorisation is in place.
5.7.4. For Type B contracts Officers must notify all bidders of the outcome and liaise with Legal Services to complete the contract. Forward all the documents relating to the successful bidder (including your original quotation documents, the supplier’s submission, the Quotation Record Form and Authority to Award Form) to Legal Services.
5.7.5. The Service must ensure any contract documentation is stored electronically and a signed original is kept by ESPH and Legal Services. See Section 8 for further information.
5.7.6. A Purchase Order must be raised in the eProcurement system for all orders. A quotation and a purchase order will create a legally binding contract for contracts whose total value is under £5,000. The purchase order is used to formalise the terms of the contract. Please see Section 8 for further details.
5.7.7. If the amount of the tender proposed to be accepted exceeds the amount of the budgetary provision, the tender should not be accepted until the Head of Finance is satisfied that budget provision has been made for the additional cost.
5.8.1. The confidentiality of quotations, Tenders and the identity of candidates must be preserved at all times and information about one candidate’s Tender submission must not be given to another candidate.
5.8.2. The Officer must notify all candidates simultaneously and as soon as possible of the intention to award the contract to the successful candidate.
5.8.3. Advice must be sought from The ESPH in all instances before de-briefing bidders. Feedback must provide sufficient justification for the Council’s decision-making process. All feedback should provide an objective analysis of the bidder’s response to the relevant criteria and the relative advantages of the successful bidder by way of comparison.
5.8.4. Any request for face to face or telephone debriefing or feedback must be referred to the ESPH.
5.9.1. If a complaint is received or if any of the bidders challenge any decisions made under these rules, Legal Services and the ESPH should be notified immediately. No further communication should be made without approval from Legal Services.
6. Variations to the Rules
6.1.1. In order to maximise the Council’s efficiency through the procurement process and to avoid any resulting contractual delays which could impact upon project delivery, delegated authority from Cabinet should always be sought to advertise, award and authorise signatures to the contracts.
6.1.2. In addition delegated authority from Cabinet may also be required for existing contracts which require variations, extensions or an exemption from these Rules. For operational reasons, a variation, extension or exemption may be required to minimise costs and allow the Service to consider longer term requirements given the high level of change which the Council is currently facing.
6.1.3. In these circumstances, the following may apply:
6.1.3.1 A contract may be awarded or extended through an existing framework agreement or collaborative agreement where it offers value for money and efficient use of resources by avoiding the Council having to undertake a full above threshold procurement process from scratch. No awards of this nature should be sought without considering the local economy and opening up the market to small and medium enterprises first.
6.1.3.2. Extensions/variations/exemptions will only be applied where the
following criteria are fulfilled. The request must be:
- Compliant with UK legislation and the Council’s Contract Procedure Rules;
- Within an existing budget and value for money can be demonstrated;
- Approved by the relevant Service Director(s) and a relevant exemption from the Contract Procedure Rules is agreed in advance with the appropriate personnel (see 6.2.3).
- Consideration has been given to the local economy and the ability for the market to be opened up to small and medium enterprises.
NOTE – no exemptions from UK legislation are possible.
6.2.1. To apply for an exemption or a contract modification, you must fill in the Exemption Form available on the Council’s Intranet or the ESPH website. This form MUST be signed in accordance with the Council’s Scheme of Delegation. It should be sent to those with authority to approve exemptions as set out in the Council’s Scheme of Delegation before forwarding to Head of Finance for signing.
6.2.2. All forms and records must still be completed in accordance with the relevant contract type as set out in 4.7 – 4.10.
6.2.3. All officers must ensure that the form provides full details of the request and any supplementary documentation to support the request. Incomplete forms will be returned and could result in a delay in the request being considered.
6.2.4. Applications for exemptions where the value is under £25,000 can be signed by the Procurement Partnership Manager and appropriate budget holder. Applications where the value is over £25,000 must be signed by a Director and the Head of Finance. Any Variation where the value is over £50,000 must be approved by the Head of Finance, Director and Cabinet Portfolio Holder.
6.2.5. No commitment should be made to the supplier, prior to authorisation and an exemption or extension cannot be given where this would contravene UK procurement rules.
6.2.6. Contracts awarded above £25,000 as a result of an exemption must still be published on the Contracts Finder website and included on the Councils Contract Register.
6.2.7. A record of the decision approving an exemption and the reasons for it will be stored electronically, for ALL requests a hard copy of the relevant contract and incidental documentation must be kept by ESPH and all contracts must be kept by Legal Services.
6.2.8. If an exemption has been granted to these rules, the Rules relating to Contract Documentation and Financial Procedure Rules must still be followed and a Purchase Order raised accordingly. For further guidance please refer to the Financial Procedure Rules.
6.2.9. The Head of Finance is responsible for holding a complete record of all exemptions and is expected to report to Cabinet annually.
6.3.1. Exemptions will only be considered for the following reasons:
- The nature of the market for the works to be carried out, or the goods or services to be provided, has been investigated and is demonstrated to be such that a departure from the requirements of the Rules is justifiable, for example, if there is no real competition;
- The contract offered by a supplier is to undertake investigative spend and/or contract analysis with the intention of achieving savings;
- Where the subject matter of the contract can only be arranged through one supplier.
- Where the minimum invited to quote cannot be met (4.8.2)
- The contract is for works, supplies or services which are required in circumstances of extreme urgency which a diligent contracting authority could not have foreseen;
- Extending an existing contract; it must be in our interests to negotiate with the existing supplier and must be tied to the Scheme of Delegation;
- Price control- if the price is controlled by trade organisations or government order and there is no reasonable alternative;
- Repairs or parts — if the only option is to repair or buy new parts for existing equipment or buildings, and there is only one supplier;
- Purchase is to be made by auction (including online auctions);
- Purchase is for a patented article;
- The Purchase has been agreed by the Cabinet or Corporate Management Team to be for the good of the Authority;
- IT contracts or
- There are other circumstances that the Head of Legal and Governance Services in consultation with the Head of Finance agrees.
6.4.1. For Type A and Type B (goods and services) contracts the Head of Service may vary or extend a contract, providing that to do so is consistent with the provisions of Financial Procedure Rules.
6.4.2. For Type B (works) and Type C contracts subject to any statutory restrictions, compliance with these Rules and seeking advice from ESPH, a Head of Service, in conjunction with the Legal Services, may authorise the following modifications to an existing contract:
- An extension for a particular period provided for within the terms and conditions of the contract (but subject to satisfactory outcomes of contract monitoring); or
- A single extension of the contract by up to six months, or half the contract term (whichever is less); and
- Any other variation, and, if relevant a consequent change in price, determined in accordance with the contract terms.
6.4.3. Type D Contracts must not be extended or varied without consulting the ESPH and Legal Services.
6.4.4. It is good practice to detail within the original contract if it can be extended, along with details of how long the extension is in place for. However the length or number of extensions detailed should not be made in order to avoid competitive process and the contract should only include extensions which are appropriate to the life cycle of the product/service and would not harm competition or value for money.
6.4.5 A new procurement exercise shall be required rather than a contract modification if it:
- Materially alters the contract from the one initially awarded;
- Introduces conditions that if they had been part of the original procurement would have allowed other suppliers to participate;
- Changes the economic balance of the contract in favour of the contractor in a manner which was not provided for in the initial contract;
- Extends the scope of the contract considerably;
- Introduces a new contractor to replace the initial contractor for any reason other than due to company takeover, merger, acquisition, insolvency, etc.;
- Proposes a contract modification other than those provisions outlined above.
7. Exception – IT Contracts
7.1. IT software contracts will be let in accordance with the Rules. All software should be reviewed for its fit with business requirements on a regular basis.
7.2. IT business manager must be consulted and a business case provided before any digital procurement takes place.
7.3. Upgrades to existing computer systems.
In computing an upgrade is generally a replacement of hardware, software or firmware with a newer or better version, in order to bring the system up to date or to improve its characteristics. Upgrading is necessary for security and reliability and should usually be included as part of the contract.
7.4. Software extension justification form, available from the ESPH, should be completed.
7.5. All IT contracts shall assume that upgrades or contract extensions are to be taken for systems and there will be no requirement to retender the contract at that point nor to seek an exemption, unless the value of the upgrade or extension takes it above the current UK threshold. In computing an upgrade is generally a replacement of hardware, software or firmware with a newer or better version, in order to bring the system up to date or to improve its characteristics.
7.6. Companies usually make software upgrades for the following reasons:
- to support industry regulatory requirements;
- to access emerging technologies with new features, and tools;
- to meet the demands of changing markets;
- to meet user requests for enhancements;
- to meet legislative changes imposed on users; and
- to continue to receive comprehensive product support.
8. Contracts
8.1.1. Unless Purchase order terms and conditions may be used, a contract is required. Legal Services are to be instructed for all contracts. Contracts must be in writing and set out the parties’ obligations, rights and risk allocations. Legal Services will confirm the appropriate form of contract to use (unless consultants have been appointed, in which case the consultant should be instructed to liaise with Legal Services).
8.1.2. All relevant contracts, irrespective of value, shall clearly specify:
- What is to be supplied (i.e. the works, materials, services, matters or things to be furnished, had or done).
- The provisions for payment (i.e. the price to be paid and when). The use of interim certificates and practical completion certificates may be appropriate for works contracts.
- The time, or times, within which the contract is to be performed.
- The provisions for the Council to terminate the contract including break clauses.
- The provisions for managing performance such as incentives, defaults and determination.
- The provision for collateral warranties from sub contractors.
- Provisions for any payment due from the contracting authority to the contractor under the contract to be made no later than the end of a period of 30 days from the date on which the relevant invoice is regarded as valid and undisputed.
- Provisions that any subcontract awarded by the contractor imposes a similar requirement for payment to be made.
- Provisions for sharing confidential procurement information with other public sector organisations.
8.1.3. The Council’s terms and conditions of contract must be used wherever possible rather than the suppliers. If a supplier provides their own terms, advice must be sought from Legal Services.
8.1.4. All Type D contracts must include performance indicators and an appropriate formal review structure.
8.1.5. The ESPH will provide further advice on contract specific specifications.
8.2.1. Once the Director or delegated Officer has accepted the winning bidder, all agreements shall be completed as follows in below unless otherwise advised by Legal Services:
Type A & B:
Method of Completion: By Signature
By who: Authorised Signatory
Type C:
Method of Completion: Under Signature
By who: Authorised Signatory
Type D:
Method of Completion: Under Seal
By who: Authorised Signatory under seal
8.2.2. All relevant contracts must be concluded formally in writing before the supply, service or construction work begins, except in exceptional circumstances, and then only with the prior approval from the Procurement Partnership Manager, Head of Finance, Legal Services and Monitoring Officer in line with the values in the table above. A letter of intent is insufficient.
8.2.3. All orders must be matched with a Purchase Order and be in line with the Council’s Financial Regulations.
8.3.1. The Officer responsible for securing signature of the contract must ensure that the person signing for the other contracting party has authority to bind it. The Officer signing the contract on behalf of the Council must check to ensure that he/she has the relevant authorisation to sign the contract.
8.4.1. A contract must be sealed where:
- The Council wishes to extend the liability period under the contract and enforce its terms for up to 12 years; or
- The price to be paid or received under the contract is a nominal price and does not reflect the value of the goods or services;
8.4.2. Where contracts are completed by each side adding their formal seal, such contracts shall be attested by an officer so authorised under the Council’s Constitution.
8.4.3. Every Council sealing will be consecutively numbered, recorded and signed by the person witnessing the seal. The sealing process must be undertaken by Legal Services.
8.5.1. In appropriate circumstances, the Council may agree to transfer a contract by way of a novation agreement.
8.5.2. This decision must be taken by the Cabinet for contracts of a value in excess of £250,000 (or the relevant Committee for non-executive functions), and by the relevant Directors for contracts of a value of up to £250,000. Agreement must also be obtained from the Head of Finance and the Monitoring Officer.
8.5.3. Legal Services must hold a complete record of all transfers so that it is clear that all contracts have been novated and liability under them transferred.
9. Managing Risk
9.1.1. The Officer must comply with the Officer Code of Conduct and Anti-Fraud Framework and must not invite or accept any gift or reward in respect of the award or performance of any contract. High standards of conduct are obligatory; it will be for the Officer to prove that anything received was not received corruptly. Corrupt behaviour will lead to dismissal.
9.2.1. Any interest which may affect the award of a contract under these Rules must be declared. Officers must declare to their line manager any interest which could influence their judgement in contracting matters. Officers must also record their interest or any interest held by a close family member.
9.2.2. Where an officer has an interest which could influence their judgment in contracting matters, he or she must not take part in the procurement process.
9.2.3. No gifts or hospitality should be accepted from any bidders to any contract being let by the Council, and to do so is a disciplinary offence. You must inform the Head of Finance, the Head of Business Services and the Monitoring Officer if you are dealing with a contract for the Council and have been offered such a gift or hospitality.
9.2.4. All officers involved in contracting matters must have regard to the Officer Code of Conduct.
9.3.1. Certain contracts, mainly for works, will require guarantees, bonds and other performance measures to protect the Council against delays, increased cost, loss of revenue or contractor performance.
9.3.2. When a Contractor is the subsidiary of a parent company a Parent Company Guarantee (PCG) will be requested if the following conditions are met:
- The Candidate does not meet the minimum financial requirements of the assessment process.
- The Parent company has been assessed and meets the minimum financial requirements.
9.3.3. A Performance Bond is needed:
- where it is proposed to make stage or other payments in advance of receiving the whole of the subject matter of the contract, and
- Works contracts where the contract value is in excess of £500,000.
9.3.4. Liquidated damages should be included for all works contracts. These should be calculated at an appropriate daily rate to cover any potential loss of revenue, income or additional associated costs concerned with the delay.
9.3.5. Finance must be consulted for advice on the use of all of the above.
10. Records
10.1. The following records must be kept for a period of six years:
- Invitations to quote and quotations;
- A record of any exemptions to the procurement process and the reasons for them;
- A record of the reason if the most economically advantageous tender is not accepted;
- Written records of communications with the successful contractor or an electronic record if a written record of the transaction would normally not be produced;
10.2. The original signed or sealed contract along with all tender documents should be scanned and stored electronically on the SE Shared Services e-Portal, and all contracts over £50k should be stored in the archive for a period of 20 years.
11. Disposal of Assets
11.1. Please consult the Head of Finance before disposing of any goods or assets to ensure the latest guidance is followed.
11.2. All disposals must be in line with Financial Regulations.
12. Concession Contracts
12.1. There may be a circumstance where a contract arises that involves no cost to the Council but a commercial advantage would be gained from it by the company who is awarded the contract. In such circumstances advice must be sought from the ESPH.
12.2. The below are what could be considered as a Concession arrangement:
- A concession contract is a mutually binding contract for buying works or services by the Council to entrust the delivering of outcomes to one or more concessionaire.
- Consideration in a Concession arrangement consists in the right to exploit the work, or services, that are the subject of the contract, or that right to exploit together with a payment.
- The transfer to the concessionaire of the right to exploit the works or services shall always imply an operating risk of economic nature involving the possibility that it will not recoup the investments made and the costs incurred in operating those works or services. This means that under the contract, the concessionaire should not enjoy a guarantee of breaking even on investments and costs incurred.
- The concessionaire must be exposed to a potential loss on its investments and costs, and it should not be merely nominal or negligible risk.
- Concession arrangement may involve a transfer of ownership to the Council.
- The Council will always obtain the benefits of the works or services in question rather than the concessionaire.
13. Light Touch Contracts
13.1. Contracts for health care, social care, education, and cultural services may be classified as Light Touch. These are services that are provided directly to individuals or groups of people. A full list of services that may be classified as Light Touch is available here:
13.2. Light Touch Contracts are subject to different UK thresholds that are reviewed regularly. Different regulations govern the procurement of Light Touch Contracts.
13.3. Always seek advice from ESPH for potential Light Touch Contracts.
14. Subsidy Control
14.1. Subsidy Control is the new name for State Aid after Brexit and can be defined as any assistance offered by a public sector body in any form whatsoever that distorts or threatens to distort competition by favouring certain organisations and / or Suppliers or the production of certain goods. Such subsidy may take the form of a grant (capital injection), business tax relief, a reduction in rent or preferential finance (this is not an exhaustive list).
14.2. Where the Council wishes to administer subsidy in this manner careful consideration must be given prior to such a grant so as to ensure that it is compatible with UK law. Subsidy that is not compatible with UK law may be recovered from the beneficiary with interest.
14.3. Please seek advice from Legal Services if you have any questions about the new Subsidy Control regime.
15. Development Agreements
15.1.1. A development agreement can be defined as an arrangement between a public sector body and a third party about the use or development of land or property, the nature of which invariably involves the transfer of land that would be otherwise be considered commercially undesirable, which becomes commercially desirable as a result of incentivisation by the public sector body.
15.1.2. Where the Council wishes to establish a development agreement that meets the definition above, again careful consideration must be given prior to such an agreement being established so as to ensure that it is compatible with UK law. A development agreement that is not compatible with UK law may be said to be a public works or Concession Contract and may therefore be subject to the legislation on public procurement. Advice must be sought from Legal Services in all cases.
15.1.3. For a development agreement to be considered as not triggering the public procurement legislation some or all the following characteristics must be met:
- The proposed development (or a significant part) is to be undertaken at the initiative and autonomous intention of the developer. (This may be particularly likely if the developer already owns or has control of land to be developed);
- The development agreement is ancillary or incidental to a transfer or lease of land or property from the Council to the developer, and is intended to protect the interests of the Council which is the lessor or otherwise retains an interest in the land or property;
- The development agreement is based on proposals put forward by the developer, rather than requirements specified by the Council, albeit that these proposals may be sought, and the “winner” chosen by the Council;
- There is no pecuniary interest passing from the Council to the developer as consideration for undertaking the development, either through direct payment or indirectly, for example by the assumption of obligations such as contributions towards project finance or guarantees against possible losses by the developer;
- The development agreement does not include specific contractually enforceable obligations on the developer to realise a work or works (even if that work or works is recognised as being the general intent of the parties to the agreement);
- The development does not consist of or contain works for the direct economic benefit of the Council. The involvement of the Council consists only in the exercise of statutory land-use planning powers.
15.1.4. Where a development agreement cannot be said to meet the criteria defined above a public works or Concession Contract must be awarded in accordance with the public procurement legislation.
Appendix A: Summary
Value for Supplies and Services: Up to £5,000.
Value for Works and Concessions: Up to £25,000.
Procedure: Minimum of one written quote or suitable framework.
Evaluation Criteria: Lowest Cost.
Selection of Suppliers: If possible quote should be from a local supplier.
Minimum number of quotes or tenders required: 1
Minimum Advertising Requirements: None.
PID requirements: None.
Form of Contract Required: Council’s terms and conditions, bespoke or industry standard. Advice must be sought from Legal Services. Purchase order terms may only be used for Goods.
Opening: Officer seeking quote.
Acceptance of procurement process: Line Manager if delegated.
Authority: In accordance with the Scheme of Delegations.
Contract Completion: PO terms or if contract required – authorised signatory via Legal Services.
Value for Supplies and Services: £5,000 to < £50,000.
Value for Works and Concessions: £25,000 to < £200,000.
Procedure: Minimum of three written quotes or suitable framework.
Evaluation Criteria: Lowest Cost or Quality vs Cost (M.E.A.T).
Selection of Suppliers: One quote must be from a local supplier.
Minimum number of quotes or tenders required: 3
Minimum Advertising Requirements: None.
PID requirements: e-PID.
Form of Contract Required: Council’s terms and conditions, bespoke or industry standard. Advice must be sought from Legal Services.
Opening: Head of Service & Officer seeking quote.
Acceptance of procurement process: Head of Service if delegated.
Authority: Cabinet approval or in accordance with the Scheme of Delegations (subject to the levels set out in the Financial Procedure Rules).
Contract Completion: Authorised signatory via Legal Services.
Value for Supplies and Services: £50,000 to < UK threshold for supplies and services.
Value for Works and Concessions: £200,000 to < UK threshold for works or concessions (as appropriate).
Procedure: Tender procedure or suitable framework.
Evaluation Criteria: Quality vs Cost (M.E.A.T).
Selection of Suppliers: No selection allowed except for works or concession contracts in certain circumstances but advice must be sought from ESPH or Legal Services on case by case basis.
Minimum number of quotes or tenders required: 3
Minimum Advertising Requirements: Contracts Finder.
PID requirements: e-PID.
Form of Contract Required: Council’s terms and conditions, bespoke or industry standard. Advice must be sought from Legal Services.
Retentions: Works – min. 2.5% of contract sum.
Liquidated Damages: Works – an appropriate daily rate for liquidated damages should be included.
Opening: Head of Finance and Procurement Partnership Manager or nominated deputies.
Acceptance of procurement process: Head of Finance and Head of Service.
Authority: Cabinet approval.
Contract Completion: Authorised signatory via Legal Services.
Value for Supplies and Services: UK Threshold for supplies and services.
Value for Works and Concessions: UK Threshold for works or concessions (as appropriate).
Procedure: UK compliant tender procedure or suitable framework.
Evaluation Criteria: Quality vs. Cost (M.E.A.T) and / or Whole Life Cost.
Selection of Suppliers: UK Compliant tendering procedure which may follow the restricted procedure.
Minimum number of quotes or tenders required: 3
Minimum Advertising Requirements: OJEU (with the exception of works contracts under UK threshold for works) & Contracts Finder.
PID requirements: e-PID.
Form of Contract Required: Council’s terms and conditions, bespoke or industry standard. Advice must be sought from Legal Services.
Bonds and Guarantees: Works contracts >£500,000 Performance Bond for 10% of total contract sum. Parent Company Guarantee if applicable.
Retentions: Works – min. 2.5% of contract sum.
Liquidated Damages: Works – an appropriate daily rate for liquidated damages should be included.
Opening: Head of Finance and Procurement Partnership Manager or nominated deputies.
Acceptance of procurement process: Head of Finance and Executive Director.
Authority: Cabinet approval.
Contract Completion: Under seal via Legal Services.