Procurement and Contract Management

Transcription

1 Procurement and Contract Management Strategy and Practice January 2012

2 POLICE SERVICE OF NORTHERN IRELAND PROCUREMENT AND CONTRACT MANAGEMENT STRATEGY AND PRACTICE CONTENTS Page The Purpose of this Document 2 Introduction 2 The Police Service s Strategic Principles 2 The Police Service s Procurement Principles 3 Current and Past Achievements: 6 Price / Cost Savings 6 Procurement Collaboration 7 Value for Money Benchmarking 7 Challenges Ahead 8 The Economic Legislative and Regulatory Context 8 New Initiatives and Targets for Procurement Strategy 11 Departmental Reviews and Contract Renewal 11 The Role of Heads of Business Services 11 Small and Medium Sized Contracts 12 Procurement Training 13 Risk Factors 14 Procedural Requirements 15 Procurement Policy and Procedures 15 Choice of Procurement Options 16 Competitive Tendering and Contract Approval 18 Direct Award Contract (DAC) Request and Approval 19 Procurement Contract Management 20 Financial Monitoring of Contracts 20 Contract Variations 21 Record Management 22 Appendix 1 Operational Agreement DFP/CPD/Police 23 Appendix 2 Contract Management and Monitoring Procedures 33 Appendix 3 Procurement Contract Approval Levels 52

3 PROCUREMENT AND CONTRACT MANAGEMENT STRATEGY AND PRACTICE The Purpose of this Document To assure those who hold the Police Service of Northern Ireland to account that there are robust proceedures and governance of procurement. To advise those within the Police Service of their responsibilities and how they will be held to account in this area in the future. To ensure value for money and fit for purpose processes that will assist in achieving the Chief Constable s strategic principles of personal, professional and protective policing. Introduction The Police Service s Procurement Policy is based on value for money and continuous improvement of procurement practices. Our aim is to establish and maintain effective planning, tendering and contracting for procurement of goods, works and services. Thereby securing and enhancing public confidence. The emphasis is on improved professionalism, accountability and performance for procurement within the Police Service at the same time as raising the strategic awareness of Procurement and Contract Management among our Officers and Staff. We must ensure the the Police Service carry out fully defensible procurement activities that safeguard the reputation of the Police. Uniform, equipment, weapons, works and services should be acquired by competition, unless there are convincing reasons to the contrary. Improvement in procurement performance is measured through savings and efficiencies achieved and quality of services provided by suppliers. Procurement should lead to improved organisational effectiveness. The objective being to achieve best value for money as benchmarked against the marketplace. 2

4 Police Service s Strategic Principles Personal, impartial and accountable police officers and staff, present and influential in the heart of all communities, in the right numbers to make a difference. Responsive, flexible, 24 x 7 service; tailor made to the unique needs of the person or place, with a reputation for promise keeping and professionalism. Resources and time focused upon genuine operational delivery. Ensuring we have the right people in the right place to prevent harm, protect from danger and inspire confidence. Challenging the status quo, keeping red tape to a minimum, always at the forefront of value for money and effective practice. Partnership at the heart of our outlook and actions, sharing expertise, information and responsibility. Open and transparent in line with over-riding Human Rights or legal obligations. Police Service s Procurement Principles The Head of Procurement & Logistic Services, who reports to the Director of Finance & Support Services (F&SS), is responsible for Procurement policy, procedure and practice. He manages the Operational Agreement (OA) with the Department of Finance and Personnel Central Procurement Directorate (CPD) and holds regular Procurement Reviews with all major spending Departments. He is responsible for measuring and reporting on the Procurement Performance of the Police Service. The Head of Procurement & Logistic Services also reports twice yearly to the Risk, Demand and Resource Committee, chaired by the Deputy Chief Constable. The OA, which is attached at Appendix 1, establishes CPD as a single source for all competitive tendering requirements of the Police Service. Each Department within the Police Service identifies and technically specifies their procurement requirements for goods, works and services and CPD undertakes quotation and tendering for all Police Service requirements. Sourcing decisions are made by the Police Service Evaluation Panel, supported by CPD, in accordance with Police Procurement Operating Procedures. All Police Officers and staff who are nominated on Procurement Evaluation Panels are subject to training and awareness on procurement issues with special emphasis on Police strategy, policy, processes and procedures. 670 staff have been trained to date. 3

5 Since 2005 the Police Service have established improved planning, tendering and contracting of goods, works and services across the Police Service, with increased accountability and performance monitoring. Regular Procurement Reviews have been established with all Departments. The results of these efforts in terms of procurement savings and achievements are presented in our annual report to the Policing Board and are reflected in the high benchmarking VFM standing achieved by the Police Service of Northern Ireland when compared against other public sector Organisations. Key success factors include: Procurement Collaboration Procurement Outsourcing, Contract & Supplier Management 98% of Business with Suppliers that is under Contract Price / Cost Savings Achieved Efficiency and Quality of Service Improvements Increased Use of Government Procurement Card Increased Use of E-Procurement. 97% of all orders are electronic Rationalisation of Police Supply Base 8460 to1650 in last six years Benchmarking of Procurement in the Police Service of Northern Ireland Against Other Public Services and Police Forces The Police Service believe it is important that both new and existing contracts are competitively tendered in a timely manner. We aim to have our tenders ready at least six months before the end of contract period. Police staff and Officers are directed and encouraged to invest quality time in identifying our business and technical requirements. Thus ensuring our specifications and terms of reference best capture our needs as part of our planning process. 4

6 Contracts require ongoing management and action between competitions. Strong supplier and customer relationship management is imperative. That s why we initiated contract and supplier management training across our organisation. This has been provided to all Heads of Business Services (HoBS) and Police employees who are responsible for managing suppliers. The focus being on contract management, key terms, supplier relations, risk and opportunity management and how to best deliver efficiencies and improvements together with our suppliers. The Police Service must be able to matrix and client manage across our organisation as well as project manage suppliers who provide key services. It is imperative that Departments employ properly qualified personnel to client manage their key suppliers. People with proven ability to manage complex projects which involve supplier management. All business critical contracts / suppliers are managed through regular high level performance reviews. This amounts to circa 25 suppliers, representing 85% of spend. These are mainly outsourced services. All new contacts, irrespective of value, initiated since September 2008 are subject to at least twice yearly scoring and review between Police Service/CPD/Supplier. Details are as set out in our contract/supplier training and illustrated on PoliceNet and attached as Appendix 2. Fundamentally the skills required to manage major contracts/outsourced services are project management skills. The Contract/ Project Managers must work closely with internal customers and external suppliers to ensure the potential for efficiencies and savings are optimised. The unique thing about the Police Service is our commitment to train non-procurement officers and staff in best supplier management strategy and practice. 200 staff have been trained to date. This is leading to a significant increase in commercial awareness across our organisation. The results are illustrated in our UK VFM Benchmarking performance. The Police Service of Northern Ireland is currently leading in procurement practice and results in UK Policing and is amongst the top half dozen performers in the UK Public Sector. 5

7 CURRENT AND PAST ACHIEVEMENTS Price / Cost Savings The Police Service has an annual procurement spend of 200m and a record of delivering Procurement savings greater than targets set by Treasury. From 2005 to m savings were achieved against 11.1m target set by ACPO / Treasury. In the three years since we have delivered 10.8 savings or 11.4% savings against new contracts awarded, as well as making significant in-year savings on existing contracts. A summary of our record price/cost savings is illustrated here Savings are calculated in one of three ways: 1. Re-Tender Existing Contracts compare current cost -v- new cost following competitive tender. 2. First Time Contracts compare budget cost -v- new cost following competition. 3. Outsourced Services compare inhouse costs -v- costs from selected supplier following competition. Savings are Net, ie we include increases as well as decreases. Savings do not allow for inflation and/or use of Government cost indices. The Police Service has delivered 62.8m Net procurement savings over last ten years to March Record Of Price/Cost Savings Year Value of Contracts Awarded in Listed Year Savings % Savings 1997/98 43m 1.9m 4.4% 1998/99 44m 3.2m 7.3% 1999/ m 3.0m 7.1% 2000/01 76m 8.1m 10.7% 2001/02 82m 8.0m 9.8% 2002/03 89m 9.3m 10.5% 2003/04 43m 3.1m 7.2% 2004/05 45m 5.2m 11.6% 2005/06 57m 4.6m 8.1% 2006/07 76m 7.8m 10.3% 2007/08 161m 14.0m 8.7% 2008/09 38m 5.0m 13.0% 2009/10 38m 4.4m 11.6% 2010/11 18m 1.4m 7.5% The Police Service has outsourced many services identified as key to delivering cost and efficiency savings now and in the future. 110m of our annual procurement spend of 200m is for outsourced services. These include: IT Managed Service; Property Maintenance; Property Management; Cleaning Services; Catering Services; Travel Services; Uniform Managed Service; Garage Services; Security Services; Civilian Detention Services; Police Recruitment; Civilian Recruitment; Leadership Training; Forensic Services; Managed Driving Services; Vehicle Recovery; Underwater Search; Internal Audit; Solicitors Services; Advertising and Event Management; Procurement Tendering 6

8 Procurement Collaboration The Police Service is engaged with National Procurement collaboration at all levels and disciplines. The Police Service embraces and supports the ACPO Procurement Strategy and Charter and is a strong collaborative player in Police Procurement. We are actively engaged with NPIA and Government Procurement Services, including transport, fuel and mobile telephone frameworks and UK wide IT initiatives. Additionally, our ties with CPD gives us access to a range of other public sector contracts. We are a member of the North West Regional Procurement Group and we also subscribe to the Bluelight Procurement Database run by Dorset Police. We have entered into many collaborative procurement exercises with other Forces such as the Ministry of Defence. UK Forces use Police Service of Northern Ireland established contracts for Limb Protection, Road Signs and Method of Entry. 38.5m of our 200m procurement spend is through collaborative contracts. Value for Money Benchmarking The UK Audit Agencies combined to develop a set of indicators to measure the Value for Money (VFM) of procurement across the Public Sector. CIPFA supported by KPMG, were appointed to undertake the research and development work and they on behalf of the Audit Agencies, publish an Annual VFM Benchmarking Report. CIPFA / KPMG / VFM best practice benchmarking of UK public services, January 2011 report can be summarised as follows: The Police Service of Northern Ireland rated 1st in 3 our of 18 indicator categories The Police Service of Northern Ireland rated in best quartile in 13 categories and between median and best in 4 Police Service of Northern Ireland judged number one Police Force and in Top 5 in Public Service overall One of the categories where the the Police Service of Northern Ireland was considered as 1st was modern management practices CIPFA/KPMG looked at 10 best practices and assessed the Police Service of Northern Ireland relative to the other public sector organisations. The areas they considered included: Strategic Orientation and Planning Target Setting and Achievement Understanding of Total Cost of Ownership Strategic Partnerships Ethical Procurement Standards Development of Procurement Skills and Capabilities Across the Organisation Customer Service The Police Service of Northern Ireland was judged 1st in class 7

9 CHALLENGES AHEAD The Economic, Legislative and Regulatory Context With regard to procurement the increasing culture of litigation together with the change in Procurement Regulations airising from the EU Remedies Directive are leading to a more exhaustive, rigorous and slower procurement process. The evaluation process is under more scrutiny and it is easier for suppliers to challenge. With the increased pressure on public sector finances, the Police Service is going to be under even greater pressure to drive efficiencies and savings through best value procurement and excellent supplier commercial and programme management. New Initiatives and Targets for 2012 Contract and Supplier Management Training will continue to be provided to all those who have responsibility for managing contracts. Guidance on the key terms of contract, supplier relations and how best to identify and deliver efficiencies and improvement, together with suppliers will be given to The Police Service Contract Managers Progress: 180 Police and staff trained re Procurement Procedures since May Police Service Contract Managers trained in Contract and Supplier Management in 2011/12 The Police Service is up-to-date with Procurement and Contract Management training There will be a renewed focus on business and technical requirements and terms of reference and how important it is to capture these as comprehensively as possible at the beginning of the competitive tendering process Progress: This is being reinforced in Departmental Procurement Reviews and during Procurement and Contract Management training There is a specific training section Improving Contract Documentation Lessons are being learned and new approaches applied, for example, the new Terms of Reference for Security Guarding and Associated Services Basic Procurement Training re Policy and Procedure will be mandatory for all Evaluation Team members. Business Service Heads and Managers together with Contract Managers will undergo refresher training in 2011/12 Progress: All Evaluation Team members trained New and Refresher training has taken place since May 2011, as above Including Refresher training for Business Service Teams CPD are to produce a quarterly summary of all contracts outside their renewal period. The Head of PaLS will follow up with Heads of Branches to ensure compliance Progress: CPD produced a summary in April At that time it was CPD s advice that the Police Service was able to extend contracts to allow extra time to complete new contracts In August the Police Service were advised that NIAO may view spend on contracts beyond their end date as irregular spend 8

10 Since August the Head of Procurement and Logistic Services has prepared and circulated a bi-monthly report highlighting contracts past their end date and those due for renewal in the next eighteen months The format and content of this report is agreed by and circulated within the Police Service and CPD A list of contracts to be renewed over the next eighteen months will also be issued to Chief Officers asking them to ensure work required to be renewed is planned and completed before the contract renewal dates Progress: List of contracts to be renewed is updated bi-monthly and circulated to Contract Manager and their Heads of Department The Police Service have prioritised our requirements for CPD Specific dates have been agreed for: Issue of Specifications by the Police Service; and Renewal contracts dates by CPD Special DACs have been approved to cover legacy issues that might lead to potential irregular spend until new contract in place A monthly key performance indicator report will be advised to the director of F&SS. Highlighting exceptions to the contract plan and corrective actions to be taken. There are quarterly reviews at Director level between DFP, CPD and the Police Service to discuss resources; planning and outcome Delivery of 4m price/cost savings per annum on Procurement Contracts. The details will be developed with all the main spending departments as part of the four year efficiency plan Progress: The Police Service of Northern Ireland has so far identified 15.5m cash savings through procurement initiatives. PaLS, ICS, HR, Estates and Districts are main contributors as illustrated below New Cleaning Services Contract projected to realise 3.5m savings over five years All are additional reductions to the Police Service s original integrated plan 2011/ / / /15 Total PaLS 900k 1,500k 1,500k 1,500k 5,400k Estates 575k 925k 1,075k 1,200k 3,775k ICS - 1,100k 748k 1,461k 3,309k HR 1,200k 300k 250k 250k 2,000k Districts k 400k 800k Legal Services 45k 45k 45k 45k 180k Total(s) 2,720k 3,870k 4,018k 4,856k 15,464k 9

11 The focus will be on the top 25 suppliers who present 85% of our annual spend Progress: Regular Police/CPD/Supplier reviews continue Negotiations ongoing. Progress as above The Head of PaLS, together with the respective Heads of Department, will decide what value can be added by his greater personal involvement The Head of PaLS will set out the different approaches for managing large, medium and low value contracts Progress: The process for managing suppliers and contracts is set out in PD08/04 and Police/CPD s Contract Management and Monitoring Procedures Medium and low value contracts please refer to the separate section in this paper Large contracts the focus is on regular high level performance reviews The approaches are summarised in this paper under Contract Management, Financial Monitoring and Contract Variations A strategy will be developed to bring about the greater engagement of HoBS in procurement issues generally and in particular on smaller contracts Progress: Since April there has been greater engagement of HoBS in procurement issues generally They have been taking the lead for small and medium sized contracts under devolved structures with positive results District HoBS have implemented robust purchasing procedures that provide greater control and management of all devolved expenditure Independent auditing of contracts and invoicing shows 94% pass rate HoBS for Crime, Ops, Finance and Support Services and HR/Criminal Justice are heavily involved in procurement strategy, planning and implementation for each of their areas They oversee Business Case, DAC preparation and approval HoBS are engaged in Departmental Procurement Reviews alongside their ACC / Director HoBS are also involved in certain Supplier Performance Reviews, for example Interpreting Services, Catering and Cleaning Services Together with Heads of Departments and Branches the Head of PaLS will assess the role and suitability of Contract Managers to project manage large contracts and complex supplier / internal customer relations Progress: Each Department should employ senior staff based (in part) on their qualifications and proven ability to manage complex projects, which require supplier and end customer management The Head of PaLS, together with the respective Heads of Department, will assess this subject on a contract by contract basis 10

12 PROCUREMENT STRATEGY Departmental Reviews and Contract Renewal Joint Police/CPD Contract Reviews are held regularly with all Departments. The number and regularity of these meetings is consistent, as is the attendance of Senior Police and Staff, including Heads of Departments and ACCs. The status of all contracts that go through CPD in each Department is summarised and all new and planned contracts are discussed in these reviews. Notes and actions arising are circulated within days of each meeting. In addition to the Police/CPD Contract Reviews, the Head of PaLS circulates a summary of all contracts expected to be renewed over next eighteen months to Head of Branch and Contract Managers. Police Service Managers are reminded that work required in support of renewed contracts is planned well ahead of the current contract end dates. Sufficient time should be allowed for determining the Police Service specification and terms of reference. Departments must start and complete the planning and initiation cycle as early as possible and at least six months before the existing contract end date. Monthly reviews at Director level within DFP, CPD and Police have been established to review resource allocation, progress and delivery of specifications and contracts. The Role of Heads of Business Services The Police Service spent 200m on Procurement Services in 2010/ contracts in total with a Contract Manager and Senior Officer responsible for each contract. 85% of spend is covered by 25 suppliers, all of whom are subject to high level performance reviews. All major suppliers are managed by expert Police Project/Contract Managers, whose main focus and priority is to ensure the potential for performance efficiencies available in the contract terms are delivered to our Organisation. There is regular engagement of HoBS in procurement issues generally. HoBS for Crime Ops, Ops Support, Finance and Support Services, Criminal Justice and Human Resources are heavily involved in the Procurement Strategy and Process of their respective Departments. They oversee the Business Case, DAC preparation and approval process for their areas and are engaged in the Departmental Procurement Reviews with Head of PaLS, CPD and alongside their Director or ACC. 11

13 Small and Medium Sized Contracts HoBS, under devolved structures, ensure that the ordering and payment of supplies for small and medium sized centrally established contracts is in accordance with the agreed terms and conditions. HoBS also ensure that contracts with a value less than 10k are established locally in accordance with PD08/04. The following checks and balances currently apply across Districts and Departments: Monthly Management checks on local systems for purchasing, ordering, receipting and invoice processing Each Purchase Invoice undergoes process set out by the Police Service Finance Manual Details of checks uploaded onto Integra Where payments fail the checks, HoBS issue guidance and training to those who fall out of line. Many of the HoBS provide local training in relation to procurement and finance rules. Additional checks arranged by Head of Financial Reporting have been in place between April and August. Three random checks per day run with paperwork supporting payments sent to River House. Such checks provide independent assurance on local compliance. The annual CRSA programme at District/ Department level further provides assurance that appropriate monthly checks are being carried out by HoBS. The value of fails as a proportion of the sample is low and indicates that there is little material financial risk. 12

14 Procurement Training All Police Officers and staff who are nominated on Procurement Evaluation Panels are subject to training and awareness on procurement issues with special emphasis on the Police Service Strategy, Policy, Processes and Procedures. All Panel Members must have been trained in the last twelve months prior to joining an Evaluation Team or else have been a servicing Panel Member in the previous year. Additionally, the Head of PaLS has invited all Head of Branches, Business Service Managers and the Police Service Contract Managers across the entire Organisation to refresher training. Twenty training sessions take place each year, involving 200 Police Service Staff and Officers. All Police Service Contract Managers are subject to Contract Management training. This covers areas such as key Terms of Contract, Supplier Relationships, Risk and Opportunity Management and how best to identify and deliver efficiencies and savings together with suppliers. Ten training sessions take place each year involving 60 Police Service staff and officers. 13

15 RISK FACTORS Inconsistency of approach to Procurement Policy and practice within the Police Service Mitigating Actions: New and Refresher Procurement Training of 200 Police and Staff in 2011 Internal Audit Reports The Police Service/CPD will not have new contracts in place before existing contracts come to an end Mitigating Actions: The Police Service/CPD Departmental Contract Reviews Setting and monitoring of timetables with CPD for progressing procurement competitions Head of PaLS monthly report reminding Police/CPD Contract Managers of all contracts to be renewed in next eighteen months Monthly reviews at Director level between DFP, CPD and Police Special DAC approval to cover the period and value of expenditure outside the contract period Challenge from suppliers and outside bodies leading to potential loss of reputation of the Police Service Mitigating Actions: New and Refresher Procurement Training of 200 Police and Staff Internal Audit Report Failure to maximise potential of efficiency and savings arising from consistent and co-ordinated procurement action Mitigating Actions: The Police /CPD/Supplier Performance Reviews Greater engagement of HoBS in Procurement and Contract Management New and Refresher Contract Management Training of 60 the Police Service Contract Managers Failure to deliver best value for the organisation Mitigating Actions: Four Year Efficiency/Savings Plan to secure additional reductions to the Police Service s original integrated plan The Police Service/CPD/Supplier Performance Reviews New and Refresher Contract Management Training of 60 the Police Service Contract Managers 14

16 PROCEDURAL REQUIREMENTS Procurement Policy and Procedures (PD08/04) PD08/04 is updated and re-circulated twice a year to take account of recommendations arising from both Internal and External Audits. It is circulated to all Police and Support Staff and any changes are separately highlighted. PD08/04 can also be found on PoliceNet. PD08/04 Issue 13 was last circulated December In November 2010 the Head of Procurement & Logistic Services also sent an additional note to the Chief, Deputy, All ACCs and Directors as well as Heads of large spending Departments and Heads of Business Services. This note highlighted the new directives from Department of Justice. The responsibility for the financial monitoring of contracts together with the Procurement Contract approval levels are all set out in PD08/04. PD08/04 clearly states that there is a requirement to monitor and control spend against all contracts awarded. PD08/04 also states Management of contracts and associated spend is by budget holders and Project Managers. They are responsible under devolved budgeting arrangements to monitor and manage spend within their areas of responsibility. 15

17 The Head of Procurement & Logistic Services wrote to all Heads of Business Services and Heads of large spending Departments in March 2011 reminding them of their responsibility for financial control of contracts and copying them with the relevant sections of PD08/04. A further reminder was forwarded on 12 October and this has been reinforced through the refresher Procurement and Contract training which took place in September and October Choice of Procurement Options For the Police Service any public procurement with a contract value in excess of the stipulated threshold for the Public Procurement Regulations to be applied, currently 113,037, must be undertaken within the constraints of the EU Procurement Rules following one of the prescribed procurement procedures, ie the open procedure, the restricted procedure, the negotiated procedure or the competitive dialogue (CD) procedure. There are two basis for award either lowest cost or most economically advantageous, this takes account of whole life costs/ quality/delivery/support. Under current Consolidated EU Directive and UK Procurement Law constraints, the negotiated procedure can be discounted at this time, as guidance from OGC indicates that this procedure is not generally permissible except for hugely complex procurements where very specific circumstances apply as laid down by the regulations. Open Procedure: Under this procedure any interested party is invited to tender and those who respond to the OJEU (Official Journal of the European Union) notice receive full contract documentation. There is no ability to shortlist candidates by undertaking a pre-qualification process and contract negotiations are not allowed. Typically the tender response time is set at 52 days and taking into account evaluation and standstill periods this can be one of the shortest procurement timelines. Overall procurements advertised under this procedure could be completed within 6 months. Under this procedure there is no restriction on the number of bidders submitting tenders and no prequalification of bidders; so the evaluation panel would have to evaluate every single tender received. The procedure can be effective and appropriate where there is a very simple goods or services requirement but it is not considered appropriate for procuring more complex services. We use the open procedure quite a lot where there are a limited number of suppliers in the market and when there are no issues with the specification / terms of reference being issued to any interested party. Restricted Procedure: Under this procedure Contracting Authorities undertake a pre-qualification process and invite only shortlisted candidates to tender. Contract negotiations are not allowed. Suppliers are allowed 37 days to respond at prequalification stage and a further 40 days to 16

18 respond to the tender document. The first stage (pre-qualification) only involves an assessment of previous experience and financial standing and a shortlist is drawn up following assessment to a minimum of 5 suppliers who meet the minimum standards. The second stage is the invitation to tender where those shortlisted suppliers are issued with a terms of reference / statement of requirements and conditions of contract to enable them to submit a proposal against the particular requirement. The two stage evaluation process also increases the procurement timeline and can taken from 6 to 9 months to complete. The restricted procedure does not permit negotiations or discussions with the bidders, although variants based on different scenarios are allowed. Again, this procedure can be effective and appropriate where there is a straightforward goods or services requirement but it is not considered appropriate for procuring more complex services, eg major ICT Services. Competitive Dialogue: This is a relatively new procedure introduced by the 2006 Regulations allowing Contracting Authorities to undertake a pre-qualification process and then invite shortlisted candidates to participate in a dialogue process during which any aspects of the project may be discussed and solutions developed. The Contracting Authority can continue the dialogue until it identifies one or more solutions capable of satisfying its requirements. It then closes dialogue and invites final tenders. Only limited discussion and clarification is permitted once the dialogue stage has closed although this cannot be further negotiated. Bidders are allowed a mandatory 37 days to respond at pre-qualification stage, however the dialogue, evaluation and clarification phases of this procedure can be a heavy draw on resource both for the Authority and Contractor, especially taking into account the need to meet with several service providers during the dialogue process. The full Competitive Dialogue Procedure could take up to 12 months to complete. 17

19 The competitive dialogue procedure is available where the procurement is particularly complex. So, where the Authority is not able to prescribe in advance the requirements to enable early tendering of the technical solution best capable of meeting its needs and/or to prescribe the funding or contractual structure (such that an appropriate contract would not be able to be awarded under the Restricted Procedure), competitive dialogue would effectively be the only option. However, there have been concerns from both the public and private sectors around the potential length and cost of the procedure due to the time and resource commitment required from shortlisted suppliers and the Authority. Negotiated Procedure: Under this procedure Contracting Authorities undertake a prequalification process and then issue an invitation to negotiate. There are no detailed rules as to how negotiations should take place and unlike the competitive dialogue procedure, there is no formal end to the negotiation phase before contract signature. In practice there has often been substantial negotiation following the appointment of a preferred bidder when there is no longer any competitive tension. While this procedure is not formally time bounded, the pre-qualification stage requires the pre-requisite 37 days for response and the full procedure may take up to 12 months to complete. As stated above this procedure has been effectively replaced by the competitive dialogue procedure. Competitive Tendering and Contract Approval The Police Service Department identifies their procurement requirement. They must ensure there is a Business Case or Business Justification, where appropriate. The Department also must insure that there is adequate budget available. The relevant levels of approvals under the Police Service s financial approval levels are signed off by the Police. Information Assurance Unit must be consulted by the Police Service Department to ensure the legislative and statutory requirements for protection of data are included in the Police Service s Procurement Specifications. The Police Service select an Evaluation Team of at least three Police Service members who must sign off that they have no conflict of interest. All Evaluation Team members must have attended Procurement Training. CPD will then compile an Initiation Document setting out procurement strategy timetable and responsibilities of the Police and CPD. The initiation document will be signed off by the Police Head of Department. CPD then prepare in consultation with the Police Service, Instructions to Tender including Terms and Conditions of Contract and Evaluation Criteria and submit to Head of Department for approval. Following approval by the Police Service, CPD issue tender documents. CPD provide advice and guidance to the Police Service of Northern Ireland Evaluation Panel throughout the evaluation process and are present at all Evaluation meetings in a non-scoring capacity. 18

20 During the tender process all communication with potential suppliers must be directed through CPD. When completed tenders are received on the esourcing NI portal. CPD will forward bids to the Police Service Evaluation Team Members once they have confirmed they have no conflict of interest. Each tender is assessed individually and collectively according to the pre-determined and advertised Evaluation criteria. The Police Service Panel members assess and score with CPD s professional guidance and support. Each scoring matrix is signed off by each member and CPD. After all tenders have been assessed the winning tenderer will be the one with the highest overall score. CPD compile an Evaluation Report and following approval by CPD Senior Management it is agreed and signed off by all Panel members. Following approval of the Evaluation Panel, the Evaluation Report is presented to the Police Service Head of Department and Police Service Senior Management for approval in accordance with the relevant levels of financial approval. CPD issue a Contract Award Letter to the successful supplier following a mandatory standstill period for contracts over the EU threshold. CPD will inform all other unsuccessful tenderers of the award decision. Direct Award Contract (DAC) - Request and Approval Only in exceptional circumstances which are substantive and defensible should DACs be considered. Possible examples: Technical necessity due to compatibility Exclusivity because of proprietary rights of supplier Health and Safety Security reasons CPD should be involved at the beginning of the DAC consideration process. Prior approval for DAC to be recommended by Head of Branch and authorised by their Chief Officer. Clear business justification must be provided. The person preparing the business justification and all Officers who subsequently approve the DAC must declare that they have no conflict of interest with the proposed supplier. In all cases the Head of PaLS and CPD must study the merits of each application and provide professional guidance. All DACs with a contract value greater than 30k must be authorised by the Deputy Chief Constable. All DACs greater than 100k must be authorised by the Chief Constable. Departmental Accountancy Officer approval is required for all DACs greater than 100k. All DACs for consultancy, irrespective of value, must be authorised by the Chief Constable. The same procedures as above apply. The Head of PaLS is responsible for maintaining a summary of all DACs. This is circulated to Senior Officers every three months. 19

21 Procurement Contract Management Although contract management takes place following contract award, the nature of management of the contract should be considered at an early stage. Future contract monitoring and management arrangements should be included in the terms of reference in the Intention to Tender (ITT). The scale of contract management should be proportionate to the value and complexity of the contract involved. The management may involve a combination of informal and formal communication between customer and supplier. Appropriate mechanisms must be in place to ensure that the Police Service and supplier meet their obligations under the contract and that services are performed to an acceptable standard. Guidance on Contract Management is available via the Procurement & Logistic Services page on PoliceNet and is attached under Appendix 2. This is a defined model for how we consistently manage contracts and suppliers. It sets out how to manage the performance of suppliers in terms of their and the Police Service s contract obligations. Any issues that are proving problematic to resolve should be referred to CPD for advice and action as required. Larger more complex contracts will require bi-annual The Police Service/ CPD/Supplier performance monitoring review. The criteria for selecting contracts to be subject to formal performance monitoring meetings should be considered at the outset of the Procurement process, arrangements recorded in the Procurement Initiation document and revisited during ongoing contract reviews and should include: Business Critical Financial Value New Suppliers Outsourced Services CPD must be involved in these reviews and a template to be followed during the reviews is included on PoliceNet and is attached under Appendix 2. End customers should, where practicable, be involved in the The Police Service/supplier contract monitoring process and be able to provide feedback on performance and be given the opportunity to influence future The Police Service/supplier relations. Financial Monitoring of Contracts There is a requirement on The Police Service to monitor and control spend against all revenue and capital contracts awarded irrespective of the size of the contract. The Police Service have determined that from 1st April 2012 contracts with a value of 30,000 or greater should normally be monitored individually utilising the formal coding structures within the General Ledger. Any Officer requiring clarification on coding structures and their use, should contact Management Accounting Branch within Finance and Support Services Department. Management of Contracts and associated spend within the Police is by Budget 20

22 Holders and Project Managers. They are responsible under devolved budgeting arrangements to monitor and manage spend within their areas of responsibility. Budget Holders/Project Managers are required to maintain locally, sufficient records to ensure all contract expenditure is within the contractual value on an ongoing basis. This may require records being maintained and expenditure analysed that cross one or more financial years. All accountable officers monitoring and controlling contracts should be aware that formal prior approval is required (within delegated limits), in advance of expenditure being incurred above the agreed contract value. Delegated limits are set out in PD08/04 and are included under Appendix 3. Contract Variations Departments are required to maintain sufficient records to ensure all contract expenditure is within the contracted value on an on-going basis for individual contracts. Any change to the original contract will normally involve the generation of a Variation to Contract/Change Control document. Such variations should not be excessively beyond the scope and value of the original contract. Any anticipated contract variation to contract/order value within the following bands must be advised to CPD and Head of Procurement & Logistic Services: 1k to 20k variations greater than 20% of original value Over 20k and up to 100k variations greater than 10% or 5k in value, whichever is greater Over 100k and up to 1m variations greater than 10% or 20k in value, whichever is greater Above 1m variations greater than 5% or 100k in value, whichever is greater Consultation with the Branch will assess if the variations are of such value as to significantly alter the existing Procurement specification and contract. Approval for these variation/change controls must be in line with any current Poilice Service contract delegation levels, listed in Appendix 3. CPD will maintain a record of the documents and approvals on file. 21

23 RECORD MANAGEMENT All relevant documentation in relation to a Procurement exercise will be held by CPD on file. File Structure It is important that the authorisation (sign-off) points in the Key Stages of the Procurement Process are clearly recorded and retained on file. For ease of reference, these Key Points should be tabbed and easily located on file. A suitable index should be inserted in the file, listing the reference locations of these Key Points. CPD has implemented a Procurement E-Sourcing tool which records the key stages of the Procurement process. Tender Submissions CPD will retain original copies of all tenders/quotations received. Following Award of Contract, the winning tender will be retained with the contract file. Unsuccessful tender submissions will be stored separately. The period for retention of both successful and unsuccessful tender submissions will be in accordance with the Poilice Service Document Retention Policy. CPD will store securely all tender submissions, associated tender process documentation files and contract files to maintain confidentiality of the documentation. File Review Contract files will be subject to periodic review during the life cycle of procurement to ensure compliance at all stages enabling any issues identified to be addressed accordingly. The primary purpose of these reviews will be to ensure that the Key Stages of the Procurement Process have been adhered to and that the QA Process has been properly applied. The reviews will be undertaken by Buying staff from other Sections of CPD. 22

24 APPENDIX 1 OPERATIONAL AGREEMENT AS AN ADDENDUM TO THE NORTHERN IRELAND OFFICESERVICE LEVEL AGREEMENT WITH DEPARTMENT OF FINANCE & PERSONNELCENTRAL PROCUREMENT DIRECTORATE COVERING PROCUREMENT REQUIREMENTS OF THE POLICE SERVICE OF NORTHERN IRELAND December

25 This operational agreement is an addendum to the Service Level Agreement between Northern Ireland Office and Central Procurement Directorate (CPD) of Department of Finance and Personnel covers the specific procurement requirements of the Police Service of Northern Ireland. Whereas: CPD will provide the Police Service with procurement service for all goods and services over 10k. 1. DETAILED RESPONSIBILITY OF THE PARTIES 1.1 Responsibility of CPD Undertake quotation and/or tender action on all requirements at or above 10k submitted by the Police Service and agree Contract Terms and Conditions with Suppliers Evaluate tender submissions in conjunction with the Police Service Debrief tenderers following contract awards Compliance with CPD Procurement Procedures and ISO Quality Assurance process and the Police Service Procurement Operating Procedures, where they do not conflict Monitor and report supplier performance against Contract Terms and Conditions, in association with the Police Service Maintenance of up-to-date information on contract matrices Provide professional procurement advice and guidance to the Police Service on procurement issues Establish and maintain benchmarking of the Police Service procurement prices and costs Ensure that adequate staffing and procurement specialists are employed to provide the purchasing services required by the Police Service 1.2 The Police Service of Northern Ireland Comply with Northern Ireland Public Procurement Policies as established by CPD and approved by the Procurement Board Compliance with CPD Procurement Procedures and accredited ISO Quality Assurance Process Provide annual spending plans for all goods and services, updated quarterly Provide, on request, historical spend analysis of all goods, services and works to assist CPD in the development of future procurement strategies Identify within spending plan opportunities to integrate sustainability into the contract Identify and prioritise sourcing requirements for all goods, works and services, including consultancy Provide technical specification of requirements 24

26 Advise price and cost parameters Advise delivery schedule requirements Provide quality requirements Advise of any special contract arrangements Appointment of Evaluation Panel members and ensure no conflict of interest throughout process Agree award of contract criteria for purposes of evaluation Arrange for evaluation of samples and prepare reports arising Final agreement and ratification of Contract Terms and Conditions following each supplier selection competition Provide support, if required, for debriefing of unsuccessful tenders Provide accommodation and support services for agreed number of CPD staff who will be based within the Police Service premises 2. PROCUREMENT POLICY 2.1 Objective To ensure that all the Police Service procurement is carried out: - In compliance with Public Contracts Regulations (2006). In particular: In compliance with Northern Ireland Central Government Public Procurement Policy. - Open and transparency of award procedures. - Genuine competition in the award of contracts. - No unlawful discrimination on the ground, of nationality. - Address sustainable procurement objectives as set out within Equality of Opportunity and Sustainable Development in Public Procurement. - Achieve best value for money as defined within the Northern Ireland Public Procurement Policy. 25

27 2.2 Guiding Principles Transparency Competitive supply Consistency Effectiveness Efficiency Fair Dealing Integrity Informed decision making Legality Integration Responsiveness Accountability 2.3 Tendering Process Up to 1,500 - for all requirements not covered through centrally negotiated contracts purchasing decisions can be made locally on a non evidence based value for money basis without obtaining quotations 1,500k to 10k - written quotation, 3 selected tenders For all requirements greater than 10,000 the Police department must contact CPD, who will undertake all tender and quotation exercises on behalf of the Police Service 10k to 30k - written quotation, 5 selected tenders 30k to 113,057 - full tender action, publicly advertised 113,057 and over - European Procurement Rules apply for all supplies and services except for Public Contracts Regulations (2006) apply works which is 4,348,350 26

28 2.4 CPD will endeavour to make available to the Police Service any other contracts for goods, works and services, which have been established for any other part of the Northern Ireland public sector by CPD or through collaboration with another Centre of Procurement Expertise (CoPE). 2.5 CPD will undertake all tender and quotation exercises on behalf of the Police for requirements at or above 10k. 2.6 All tenderers wishing to undertake quotations or tenders with CPD must be pre-registered on the esourcing NI portal. It is the vendors responsibility to ensure the information held on this system is valid and up-to-date. Failure to maintain this information could result in a vendor being excluded from a competition. 2.7 Where goods and services are available on frameworks and call-off arrangements in which the Police Service have been named, then the Police Service must use these arrangements. 3. INTERFACE WITH POLICE BRANCHES 3.1 The Departments, Regions, Districts and Branches to whom the CPD will provide procurement services will include: Logistic Services Transport Estates Finance Human Resources Training & Development Media & PR ICS Legal Services Operational Support Criminal Justice Crime Operations It is recognised that the Police Service of Northern Ireland has an in-house Estate Management Branch that acts as an informed client configuring policy, strategy and outsourcing arrangements across their specialist estate. They fulfil the Project Sponsor/Project Manager role for capital programmes. The Branch also fulfils the programme management and co-ordination roles with project management and professional services provided through outsourcing to the private sector or by engaging CPD. The present autonomy will remain for the Branch to configure policy, strategy and outsourcing arrangements which adheres to the broad policy parameters supported by Government with the arrangement of contracts/frameworks by CPD Construction and Advisory Division. The option of accessing CPD Works Procurement, as necessary and by request, will be available to the Police Service of Northern Ireland to provide Project Management and Advice. 27