Procurement Journey Notes - GB - Version 8. Procurement Journey - SOC Mitigation

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1 Procurement Journey - SOC Mitigation The following notes should be considered when developing/ implementing all procurement strategies. It considers the strategy subject and determines whether enhanced procedures should be adopted if the strategy subject has a risk of Serious and Organised Crime (SOC) organisations being involved in potential suppliers. The Scottish Crime and Drugs Enforcement Agency (SCDEA) guidance is that organisations engaged in SOC tend to be chaotic in their nature and will find it difficult to maintain consistent systems and processes to the extent expected from bona fide companies. The guidance below focuses on identifying at risk procurements, limiting access to bona fide tenders and establishing that candidate companies and bidders have the ability to consistently deliver the required goods or services over the contract duration. This document is based on the Scottish Procurement Directorates Procurement Journey Route 2 (PJR2) and should be used to complete the Route 2 Strategy Document template. Market Assessment Stage - Review the scope and type of contract against the SCDEA - Sector Vulnerability guidance. This provides a review of business types which have been identified as having a high risk of involvement of SOC organisations. Follow this link : ps - If the above guidance identifies the Market as being at Risk proceed as set out in this document. If you are unsure refer this strategy to the Head of Procurement (HoP). HoP to seek further Sector Vulnerability information from Interventions Unit within SCDEA. The following boston box should be used as initial guidance: SOC Risk High Mitigate Via Candidate Selection Management (see below EU Guidance) Full Engagement with SCDEA (see Above EU Guidance) Maintain Awareness Review Market Vulnerability Regularly Low EU Threshold Value High Page 1 of 10

2 Strategy Development Phase When an organisation is considering the provision of goods or services a number of options should be considered in providing such goods or services. If a Market Sector has been identified as being at risk from SOC options to minimise the potential for such organisations to win Public Sector contracts would include: - Don t buy - Provide In-house - Develop a shared Public Sector Service - Use Exiting Frameworks The above considerations will determine whether a full tender process is required. Tender Phase On the basis that a purchase decision has been made for goods or services which fall into a market sector which is vulnerable to involvement of SOC organisations the following guidance should be considered prior to proceeding with any call for competition or tender phase. Below EU Threshold or Part B Services Tenders For such tenders the procurement legislation and Standing Financial Instructions require a fair and transparent competitive tender process. With the risk of SOC organisation involvement identified, steps should be taken to limit the potential for such organisations from being invited to tender whilst maintaining the application of fair competitive tendering. Options to consider include: - Implement a local tender process selecting at least 3 bidders from a pre-vetted* tender list. (no local advertising) - Consider the duration of the proposed contract. Shorter duration contracts (e.g. 1 year) should be adopted if there is a risk of SOC involvement so to provide flexibility of retendering frequently. *Tenderers pre-vetted by the Interventions Unit within SCDEA Above EU Threshold or Part A Services Tenders The EU legislation is specific with regards to call for competition, assessing the capacity of candidates and awarding contracts. The SCDEA provides guidance on the application of the legislation where SOC involvement is a risk. Follow this link: In considering the application of the EU procedures the following guidance should be considered: - Consider the duration of the proposed contract. Shorter duration contracts (e.g. 1 year) should be adopted if there is a risk of SOC involvement so to provide flexibility of retendering frequently. Alternatively longer duration contracts may be considered with an Page 2 of 10

3 entitlement to terminate by the authority on a unilateral basis. Contracts which allow for unilateral termination by the authority can often be terminated and then re-tendered in circumstances simply where the authority considers it an opportune time to re-test the market - Consider whether the subject matter falls under the Public Contracts Regulations or are either an excluded contract or an Annex II B service contract (Section 3 of EU combined directives) See annex 1 attached. - In the event of a significant risk to direct patient care and where other procurement options are not available a Direct Award of business together with the issue of an Ex-Ante Transparency Notice may be considered. Any such notice must be approved by HoP prior to issue. [Guidance note: Except in the circumstances of a conviction as detailed in Regulation 23, there is no grounds within the regulations upon which a Contracting Authority could elect to exclude an organisation from a procurement process because of suspected SOC involvement or, to simply make a direct award for that reason using the negotiated procedure without prior publication of a contract notice. Clearly, there may be particular circumstances where a Contracting Authority elects to simply assume any procurement risk in taking steps which it considers are in the best interests of patients]. In the event that a tender under EU procurement rules is required the following protocols must be followed: - A Restricted Procedure must be selected. - The Notice must refer to this being identified as a sector at risk from involvement of SOC organisations and the Contracting Authority reserves the right to include enhanced probity checks/ requirements at both the selection of candidate and award of business stages. - The Notice must set out the number of candidates to be invited to tender would be 5. - The Enhance PQQ must be used. This includes the following additional features: Enhanced probity questions in relation to the business, directors, owners, beneficial owners, shareholders and those with a controlling interest or power of decision making. Additional background financial information including: appropriate statement from principle bankers providing information as to funding and cash-flow capacities; full audited accounts for past 3 years. Prior equivalent performance over the past 3 years with documented quality history from 4 different reference contracts with at least one from each year. Specific licences to operate (e.g. SIA, Care Commission etc) Specific authorised quality capacities (ISO standards etc) ITT Short listing The following guidance should be followed when short listing candidates for the ITT stage. - Failure to provide any of the detail required will be an immediate Knock Out. - Failure to provide information which provides evidence of capacity in respect of the enhanced PQQ questions will be an immediate knock out. - For PQQ questions subject to scoring a high pass mark should be set (e.g. 80%) Page 3 of 10

4 - The number of companies short listed for ITT should be limited to 5. Procurement Officers should review the SCDEA guidance identified above. Candidate companies can only be excluded for reasons of business or personal probity if the reasons are on the public record. This means there must be a conviction in a court with recognised jurisdiction. Additionally candidates can be excluded on the basis of Grave Misconduct in the course of their business or profession (Regulation 23(4)). To rely on this basis for exclusion you must be able to be evidence the grave misconduct. This will require a formal record of the misconduct from an authoritative body (e.g. minute of hearing of trade body, finding from a court with recognised jurisdiction, outcome of action taken by a regulating body). It could also include consideration of such matters as a candidates health and safety record and the extent of infringement notices served by SEPA. Background intelligence reports from Police Authorities are useful to raise awareness of potential SOC involvement but can not be relied upon as a basis for exclusion. All companies short listed for ITT should be checked against the SCDEA database of known companies with a high risk of SOC involvement. Proceed to tender? - If a Candidate company short listed appears on the SCDEA SOC database proceed as follows: Reconsider whether the procurement is required. Reconsider PQQ Assessment. Reconsider ITT Short listing. - If the Candidate company at risk of SOC involvement remains on the ITT short list proceed as follows: Require that all candidate companies sign a declaration of non-involvement in serious and organised crime (annex 2 hereto). Any companies not prepared to do so should be excluded from the process under the Board s liabilities under Section 28 of the Criminal Justice and Licensing (Scotland) Act Assess risk of company being awarded a Public Sector contract. Seek further guidance from SCDEA and obtain a Crime History Report if an individual is identified. Seek guidance from CLO on options and risks of excluding company at risk. Report to be prepared by Procurement Officer for HoP approval prior to issue to End Users and their line Director with options to: proceed at risk; exclude Candidate Company; revert to initial strategy review. Should the option to proceed including a company identified as being at risk, then this must be approved by the CEO prior to proceeding to tender. Tender Specification Stage In addition to the enhanced process for candidate selection the following additional requirements should be established in the tender specification. Page 4 of 10

5 Enhance Specification of Need: The following areas of the specification should be clearly established to ensure only bona fide companies with a strong emphasis on quality and service delivery that can meet the standards expected of this contract are awarded business. - Quality Management Systems to track and report on performance. - Continuous improvement requirements post award including open book audits. - Disclosure Scotland Protecting Vulnerable Groups (PVG) disclosures. - Proposals for ongoing delivery of Equality and Diversity Systems and Training to the extent relevant to the Contract. - Proposals for Quality Assurance of the Service to be delivered under the Contract. The above requirements should form part of the Award Criteria and should be on a pass/fail basis of assessment. Procurement Officers should ensure that the specification document is entirely clear in setting out the minimum requirements which will be used for the purposes of assessing pass/fail in regard to each of the above criterion. The following additional terms of the contract should be included as part of the ITT documentation: - Early termination clauses (no fault termination with 30days notice) - Entitlement for the authority to terminate immediately if the contractor is convicted of specified offences at any time during the term of the contract - Max. Contract duration of 1 year with options to extend at Purchasers discretion. - Specific performance KPI s to be provided by contractor - Consumer Surveys. Tender Return Stage To ensure only well organised and competent businesses tender for business a fixed tender return date should be set within the tender documents. No extensions should be granted and any late tenders will be rejected. Tender Assessment Stage For tenders within vulnerable sectors, the assessment process should be set out in the ITT documentation. Assessment should comprise determination of whether or not bids meet or exceed the mandatory requirement in relation to a pre-defined pass mark which is detailed in the ITT documentation and relates to technical quality and service award criteria. The pass mark should represent a high standard, e.g. 80% or more. A commercial assessment would then only be carried out against the award criteria for those bids which meet or exceed such mandatory requirements. The ITT documentation must clearly state this assessment process. To ensure only competent businesses are considered tender clarification questions should only be issued if a tender is generally well presented but unclear in a number of minor aspects. Any tender which was incapable of being evaluated without extensive clarification may be considered to be non-compliant. Page 5 of 10

6 Alternatively a tender assessment scoring mechanism can be established which awards scoring in relation to the quality and presentation of the tender and the clarity of the responses provided. Tender Award Stage Should a company identified as being at risk of SOC involvement be short listed for Award the following actions should be followed: - Procurement Officer to prepare a formal report to the HoP with full history of market review, strategy options, SCDEA back ground reports, and assessment of risk. - The HoP will prepare a recommendation paper for the CEO setting out the options and recommendation. - Only following CEO approval would the process move to Contract Award or revert to strategy options. Post Tender Stage Guidance from the SCDEA identifies poor quality of contract delivery as a common failure of companies involved in SOC. Post tender management is an important stage in identifying such issues and concluding such contracts. Enhanced contract management would include: - Specific performance KPI s to be provided by contractor. - Enhanced Supplier Management (regular formal meetings) - Continuous Improvement Audits, including open book cost reviews. - Consumer surveys to assess delivery performance. Failure to provide such information and/or poor outcomes would be considered under defect remedies including early termination. During the duration of the contract the Procurement Office should maintain regular contact with SCDEA to maintain an up-to-date awareness of the companies SOC profile. Should there be a material change which brings the company into conflict with prevailing legislation and becomes a matter of public record then early termination of the contract should be implemented. Page 6 of 10

7 Annex 1 : EU Combined Directive, Section 3 - Excluded contracts Article 12 Contracts in the water, energy, transport and postal services sectors This Directive shall not apply to public contracts which, under Directive 2004/17/EC, are awarded by contracting authorities exercising one or more of the activities referred to in Articles 3 to 7 of that Directive and are awarded for the pursuit of those activities, or to public contracts excluded from the scope of that Directive under Article 5(2) and Articles 19, 26 and 30 thereof. However, this Directive shall continue to apply to public contracts awarded by contracting authorities carrying out one or more of the activities referred to in Article 6 of Directive 2004/17/EC and awarded for those activities, insofar as the Member State concerned takes advantage of the option referred to in the second subparagraph of Article 71 thereof to defer its application. Article 13 Specific exclusions in the field of telecommunications This Directive shall not apply to public contracts for the principal purpose of permitting the contracting authorities to provide or exploit public telecommunications networks or to provide to the public one or more telecommunications services. Article 14 Secret contracts and contracts requiring special security measures This Directive shall not apply to public contracts when they are declared to be secret, when their performance must be accompanied by special security measures in accordance with the laws, regulations or administrative provisions in force in the Member State concerned, or when the protection of the essential interests of that Member State so requires. L 134/132 EN Official Journal of the European Union Article 15 Contracts awarded pursuant to international rules This Directive shall not apply to public contracts governed by different procedural rules and awarded: (a) pursuant to an international agreement concluded in conformity with the Treaty between a Member State and one or more third countries and covering supplies or works intended for the joint implementation or exploitation of a work by the signatory States or services intended for the joint implementation or exploitation of a project by the signatory States; all agreements shall be communicated to the Commission, which may consult the Advisory Committee for Public Contracts referred to in Article 77; (b) pursuant to a concluded international agreement relating to the stationing of troops and concerning the undertakings of a Member State or a third country; (c) pursuant to the particular procedure of an international organisation. Article 16 Specific exclusions This Directive shall not apply to public service contracts for: (a) the acquisition or rental, by whatever financial means, of land, existing buildings or other immovable property or concerning rights thereon; nevertheless, financial service contracts concluded at the same time as, before or after the contract of acquisition or rental, in whatever form, shall be subject to this Directive; (b) the acquisition, development, production or co-production Page 7 of 10

8 of programme material intended for broadcasting by broadcasters and contracts for broadcasting time; (c) arbitration and conciliation services; (d) financial services in connection with the issue, sale, purchase or transfer of securities or other financial instruments, in particular transactions by the contracting authorities to raise money or capital, and central bank services; (e) employment contracts; (f) research and development services other than those where the benefits accrue exclusively to the contracting authority for its use in the conduct of its own affairs, on condition that the service provided is wholly remunerated by the contracting authority. Article 17 Service concessions Without prejudice to the application of Article 3, this Directive shall not apply to service concessions as defined in Article 1(4). Article 18 Service contracts awarded on the basis of an exclusive right This Directive shall not apply to public service contracts awarded by a contracting authority to another contracting authority or to an association of contracting authorities on the basis of an exclusive right which they enjoy pursuant to a published law, regulation or administrative provision which is compatible with the Treaty. Section 4 Special arrangement Article 19 Reserved contracts Member States may reserve the right to participate in public contract award procedures to sheltered workshops or provide for such contracts to be performed in the context of sheltered employment programmes where most of the employees concerned are handicapped persons who, by reason of the nature or the seriousness of their disabilities, cannot carry on occupations under normal conditions. The contract notice shall make reference to this provision. CHAPTER III Arrangements for public service contracts Article 20 Service contracts listed in Annex II A Contracts which have as their object services listed in Annex II A shall be awarded in accordance with Articles 23 to 55. Article 21 Service contracts listed in Annex II B Contracts which have as their object services listed in Annex II B shall be subject solely to Article 23 and Article 35(4) EN Official Journal of the European Union L 134/133 Article 22 Mixed contracts including services listed in Annex II A and services listed in Annex II B Contracts which have as their object services listed both in Annex II A and in Annex II B shall be awarded in accordance with Articles 23 to 55 where the value of the services listed in Annex II A is greater than the value of the services listed in Annex II B. In other cases, contracts shall be awarded Page 8 of 10

9 DECLARATION OF NON-INVOLVEMENT IN SERIOUS ORGANISED CRIME Annex 2 The Scottish Crime and Drug Enforcement Agency has identified that the scope of this tender falls within an industry in Scotland which is a business type which may be attractive to infiltration by serious organised crime groups. Involvement in Serious Organised Crime Section 28 of the Criminal Justice and Licensing (Scotland) Act 2010 states that: (1) A person who agrees with at least one other person to become involved in serious organised crime commits an offence. (2) Without limiting the generality of subsection (1), a person agrees to become involved in serious organised crime if the person (a) agrees to do something (whether or not the doing of that thing would itself constitute an offence), and (b) knows or suspects, or ought reasonably to have known or suspected, that the doing of that thing will enable or further the commission of serious organised crime. (3) For the purposes of section 28 serious organised crime means crime involving two or more persons acting together for the principal purpose of committing or conspiring to commit a serious offence or a series of serious offences, serious offence means an indictable offence (a) committed with the intention of obtaining a material benefit for any person, or (b) which is an act of violence committed or a threat made with the intention of obtaining such a benefit in the future, and material benefit means a right or interest of any description in any property, whether heritable or moveable and whether corporeal or incorporeal. To ensure that the Board (NHS Greater Glasgow and Clyde) do not unwittingly engage with serious organised criminals through the contracting of services it is considered necessary to obtain a declaration of non-involvement in serious organised crime from each economic operator for contracts identified as being at risk of infiltration by serious organised criminals To satisfy the requirements of that declaration it is considered necessary that an authorised signatory confirms that the content of the following statement is applicable to your company or each of the companies within the group or consortia. I can confirm that no director, shareholder, or other persons who have power of representation, decision or control over or in respect of this economic operator are engaged in serious organised crime as defined in the Criminal Justice and Licensing (Scotland) Act 2010 Page 9 of 10

10 and in making this declaration I confirm that I have taken all necessary steps to ensure the accuracy of my attestation and understand that the wilful provision of misleading or inaccurate information may constitute Fraud. Name: Company: Signature: Designation: Page 10 of 10

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