How Do I: Better Understand Public Sector Tendering?

Transcription

1 How Do I: Better Understand Public Sector Tendering? This guide is divided into three main sections: 1. An overview of tendering for food and drink contracts in Scotland and the rest of the UK 2. An introduction to the different types of public sector organisations tendering for food and drinks supplies in Scotland 3. Two examples of public sector agencies' tendering procedures education healthcare It is hoped that this guide will help Scottish food and drink suppliers to better understand the public sector tendering market and process. By the end of this guide you should be able to determine if this market is of interest and relevance to your business. OVERVIEW Public sector tendering for food and drink supplies is a process where local and national government agencies publish their future requirements for supply and attract responses from relevant manufacturers or distributors to fulfil these requirements. Legislation and Contract Types Food and drink tendering procedure is strictly governed by a legislative policy environment, including both UK and EU legislation. Relevant UK legislation: Goods and Services Act 1970 Local Government (Scotland) Acts 1973 and 1994 Food Safety Act 1990 Food Safety (General Food Hygiene) Regs 1995 Local Government in Scotland Act 2003 UK Public Supply Contracts Regulations EU legislation: Any tenders with a value of more than c. 150,000 are governed by the EU Consolidated Procurement Directive, and must be advertised in the Official Journal of the European Union. All publicly funded requirements above this value must be the subject of open tender; this may be by inviting responses to a pre-qualification questionnaire or by inviting full tenders. Details of tenders must appear in the OJEU before notices in the press or elsewhere. EU legislation prohibits the letting of contracts on the basis of the geographic location of the supplier. Hence, the tender cannot specify local products or suppliers. The statutory contract regulations are designed to: Ensure non-discrimination Set out clear procedures for tendering, particularly in relation to public accountability Set advertising thresholds Determine remedies for non-compliance Ensure compliance with Health & Safety legislation Contract Design When designing contracts for food and drink supply, an influence for all tenderers is the Scottish Executive's considerations for delivering the healthy eating agenda in a cost-effective manner which meets the legal standards and requirements governing public tendering.

2 A typical tender document will contain the following components: Conditions of Contract Specifications Schedule of requirements Questionnaire Environmental statement Statutory notices, eg: Non-collusion Equal opportunities Race relations The tendering environment must be designed to be fair to all potential suppliers. However, the reality is that it tends to favour larger suppliers that can more easily satisfy the technical requirements of the contract and are able to provide cost-effective delivery through economies of scale. These suppliers are better equipped to identify, bid for and win public tenders, and many have staff and departments dedicated to this purpose. Bidding Process The bidding process usually takes the following form: Offers invited by public advertisement, noting closing date and time Bids evaluated Details finalised with preferred supplier Contract awarded Internal notification Supply management, monitoring and benchmarking Contracts are generally awarded on the basis of the most economically advantageous bid, rather than simply on the lowest price, which usually means that ability to deliver, innovation compliance with healthy eating initiatives, spin off efficiencies in preparation, storage etc., will also be considered. Successful tendering depends on: Knowing and understanding the rules Looking for advertisements and notices OJEU national and local newspapers trade journals websites Responding to invitations to tender Understanding the requirements of the tender Bidding competitively Being realistic Checking bid before submission Asking for a debrief if unsuccessful The major failures in unsuccessful bids are: Specification not quoting to specification offering alternatives Failing to qualify offer eg: price reviews Failing to assess logistics insufficient resources inability to mobilise Late submissions Electronic Tendering eprocurement is the term used to describe the use of electronic methods in every stage of the purchasing process, from identification of requirement to tendering, ordering and payment, and potentially to contract management. etendering, where the tender documents are issued by the purchasing organisation electronically and completed and ed by the bidder, is being used increasingly by public sector organisations. An eauction (electronic reverse auction) is a development that uses secured internet-based technology. Suppliers compete by bidding lower against each other on-line in real time without knowing competitors identities. The time needed to carry out competitive negotiations is reduced since bidding starts at or near the market price. For the purchaser, this represents a considerable gain in value for money; efficiency improvements in public sector contracts of 20 25% are not uncommon.

3 TYPES OF ORGANISATIONS TENDERING FOR FOOD AND DRINK SUPPLY The public sector in Scotland may be defined as comprising six main segments from the point of view of food and drink purchasing: Local Authorities The Health Service Colleges and Universities The Police Service The Prison Service Armed Services Four of these segments purchase the bulk of their food and drink through tender procedure: Local Authorities, the Health Service, the Prison Service and Colleges & Universities. Local Authorities manage their own tenders; however, most Local Authorities in Scotland are part of one of 6 consortia which cover 23 of the 32 local authorities; the remaining 9 manage their tenders individually. Together, the sector purchases food and drink to the value of around 57M The Healthcare Sector purchases most of its food and drink supplies through national tenders which are managed by National Procurement on behalf of NHS Scotland; food and drink and related national and local contracts, arranged by product type, are worth around 25M annually Prison Sector tendering is managed by the Scottish Prison Service which has 5 national contracts, again arranged by product type, worth around 3.5M annually Colleges and Universities, although funded by the Scottish Funding Council, manage their own tenders; however, a number are associate members of one of the 6 consortia mentioned above Police Forces throughout Scotland generally use contract caterers, such as Compass, for staff meals, supplied by foodservice distributors such as 3663 and Brakes Armed Services food and drink procurement is administered by the Food Supply Contracts Team of the Defence Catering Group s Operations Business Unit, which manages the MoD food supply contract TWO EXAMPLES OF PUBLIC SECTOR AGENCIES TENDERING PROCEDURES 1. EDUCATION Education Authorities, as part of the Local Authority network, manage their own tenders. However, the majority of Local Authorities act as part of a purchasing consortium which allows members to obtain better prices than could be obtained by local negotiation. The Authorities Buying Consortium (ABC) is the largest consortium in Scotland, and purchases for 11 Local Authorities: Argyll & Bute East Ayrshire East Dunbartonshire East Renfrewshire Inverclyde North Ayrshire North Lanarkshire Renfrewshire South Ayrshire South Lanarkshire West Dunbartonshire Tayside Contracts purchases for 3 Local Authorities: Angus Dundee Perth and Kinross There are 4 groups of Local Authorities which co-operate on food and drink purchasing: East and West Lothian Edinburgh and Midlothian Falkirk and Clackmannanshire Aberdeen, Aberdeenshire and Moray

4 9 Local Authorities manage their tenders individually: Borders Dumfries & Galloway Fife Glasgow Highland Orkney Shetland Stirling Western Isles ABC: An Example of Public Tendering For Schools ABC, based in Paisley, has a turnover of around 20M in food and drink purchases. It invites tenders and manages contracts for 11 Local Authorities together with a number of associate members, such as further education colleges. All products are purchased on the basis of direct delivery to the point of use. ABC has food and food related contracts for the following: Bakery Products Butcher meat Crisps, Confectionery and Soft Drinks Frozen Foods Fruit and Vegetables fresh prepared Groceries and Provisions supply only supply and delivery distribution Pasteurised Milk Soft Drinks Equipment Water Coolers Tender Notification Calls for tender may be advertised in the OJEU, The Herald, on the ABC website and in local newspapers appropriate to the Local Authority. The advertisement will contain brief information about the tender together with a closing date and time. ABC also has an approved list of tenderers which may be invited to offer for contracts where the aggregate value is below the EU procurement threshold. Responses There are two methods of tendering. In open tendering, suppliers responding to advertisements are invited to submit a tender. In restricted tendering, suppliers first submit expressions of interest in the form of a questionnaire. A shortlist of companies is then prepared and formal tenders invited. Tender documents will be structured as in the example above: Conditions of Contract Specifications of products covered Questionnaire for supplier Schedule of requirements - volumes, delivery, etc Environmental statement Statutory notices What is ABC looking for? ABC has 6 key requirements for suppliers and their bids: Value for money High quality products Certainty and continuity of supply Price stability Good administration Exceptional customer service Evaluation Once the closing date and time has passed, all bids will be evaluated against award criteria on the basis of the lowest or the most economically advantageous offer. The purchasing team's recommendations will be finalised and placed before the Joint Committee, which will review the recommendations and award the contract as appropriate. Both the successful supplier and the customers (Local Authority) will be notified.

5 Contract Management After award, ABC will manage the contract on behalf of the Local Authority. The management procedure comprises: Monitoring: Regular review meetings with supplier Vendor rating programme Complaints procedure Management Information: Contract uptake Environmental Services: Regular inspections of supplier 2. HEALTHCARE Most catering provisions and supplies for the healthcare sector in Scotland are purchased through National Procurement, which is tasked with negotiating national contracts for NHS Scotland. Food and drink and related national contracts are worth approximately 21M annually: Bread, rolls and teabread Butchermeat and sundries Chilled goods Chilled prepared sandwiches Fresh milk Frozen food Frozen prepared ready meals Prepared vegetables and potato products Provisions Catering disposables and sundries National contracts account for around 85% by value of all food and drink purchases; locally arranged contracts, for products such as eggs, fresh fish, fresh fruit and fresh vegetables, make up the balance. The total spend for all food and drink purchases in this sector is approximately 25M annually. There are 12 mainland Health Boards, 3 island Health Boards and 8 special Health Boards, including National Services Scotland and Scottish Ambulance Service. Mainland Health Boards: Argyll & Clyde Ayrshire & Arran Borders Dumfries & Galloway Fife Forth Valley Grampian Greater Glasgow Highland Lanarkshire Lothian Tayside Island Health Boards: Orkney Shetland Western Isles All products are purchased on the basis of direct delivery to the point of use. In total, there are 120 delivery points for food and drink and related supplies. Tender Notification All tenders managed by National Procurement are subject to the EU Consolidated Procurement Directive, and may therefore be advertised in the OJEU. Additionally, advertisements may appear in Scottish national press.

6 Responses Suppliers must pre-qualify for the individual contract for which they propose to bid. This requires meeting criteria which will vary according to the particular sector of the food and drink industry within which they operate. Pre-qualified suppliers will receive tender documents which will detail the following: Conditions of Contract Specifications and volumes for each item required Schedule of delivery requirements for each delivery point Evaluation criteria that will be used to award the contract Statutory notices Evaluation After the published closing date and time, all bids are evaluated against award criteria which are based on: Price Quality Technical support Ability to meet delivery requirements Successful completion of an audit on the tenderer s premises, processes and procedures All suppliers are audited against the NHS Code of Practice for the manufacture, supply and distribution of food, ingredients and food related products. This is based upon the requirements of the Technical Standard of the British Retail Consortium for Companies Supplying Retailer Branded Food Products. Contract Management Contracts are usually awarded for a period of 5 years, and are audited both prior to contract award and throughout the contract life cycle. Should a supplier fail an audit during this period, their contract will be suspended until such time as they can demonstrate compliance. OTHER USEFUL SOURCES OF INFORMATION: Visit and choose Marketing & Sales or Foodservice Zone: - Marketing & Sales Zone: access relevant data sources available on markets, sectors, exports and more. The Business Directory also features a constantly updated list of specialist marketing suppliers. - Foodservice Zone: access foodservice-specific market data and download free profiles on the UK s largest catering operators. - There are many other How Do I? Guides which can help you grow your business The Institute of Grocery Distribution Tenders Direct The Scottish Prison Service The Police Service The Defence Catering Group Authorities Buying Consortium National Health Service Procurement The information service tailored to the food and drink industry. Contact the Scotland Food & Drink Helpline on