Corporate Procurement Strategy

Transcription

1 Corporate Procurement Strategy

2 Title Owner Corporate Procurement Strategy Declan Allen Issue and Date June 2011 Location of Record Change Authority Corporate Procurement Unit Declan Allen, Jennifer Elliot Issue/Draft Author Date Details of Change 0.01 Tim Gough June 2011 First Draft 0.02 Declan Allen 30/8/12 Update 0.03 Declan Allen 05/12/12 Review and Update 0.04 Declan Allen 20/3/13 Update Declan Allen 20/3/13 Update 0.05 Declan Allen 25/3/13 Review and Update 1

3 CONTENTS 1.0 INTRODUCTION Governance Structure for Northern Ireland Public Sector Procurement Procurement Strategy Procurement Strategic Framework Legislative Framework NIHE Procurements Management of Contracts Scope and Scale of Procurement Procurement Related I.T. Systems Standing Orders Achieving Excellence in Construction E-procurement Performance Management Supplier Risk Management Reviewing the Strategy Summary of Procurement Process Corporate Procurement Unit (CPU) Conclusion...31 ANNEX 1 Achieving Excellence in Construction Principles:...33 Annex 2 Governance Structure Public Procurement...33 ANNEX 3 Procurement Network...34 ANNEX 4 Procedure for the management of poor performance on Contracts...35 ANNEX 5 Extract from Northern Ireland Housing Executive Standing Orders...40 Annex A: Guidelines for Purchases up to 5,

4 1.0 INTRODUCTION 1.1 Aims 1.2 The aim of this procurement strategy is to set a clear framework for procurement within the Northern Ireland Housing Executive (NIHE), reflecting the corporate vision detailed in its Corporate Plan and taking account of the core values of: Fairness and equity; Integrity and honesty; Sustainability and protection of the environment; Responsiveness to customer needs; Best value services; 1.3 Corporate Vision Promoting active citizenship; Valuing and developing staff; and Openness and accountability. 1.4 To provide everyone with the opportunity to access decent, affordable housing in safe and sustainable communities, deliver excellent housing services, develop strategies to influence the wider housing market and work with others to foster urban and rural renewal and contribute to improved health and social well-being. 1.5 Key Drivers 1.6 The Strategy will support the delivery of the NIHE s Corporate Plan and, in particular the following strategic objectives: 1.7 Strategic Objective 1 Delivering the Decent Homes Standard The NIHE is responsible for delivering the Decent Homes Standards to its dwellings in Northern Ireland (NI). A decent home is one that meets modern standards in relation to fitness, structure, energy efficiency and facilities. This objective includes the application of the Achieving Excellence in Construction principles ( ANNEX 1 ) to construction works and related construction services. 3

5 1.8 Strategic Objective 2 Promote Independent Living The NIHE aims to improve the quality of housing for people with disabilities. This can be achieved through the Major, Minor and Heating Adaptations programmes. 1.9 Strategic Objective 6 Better Public Services The NIHE is proud of its record in delivering high quality housing services. We will always try to improve the services provided and for those not satisfied with any part of them there is a formal complaints procedure.

6 2.0 Governance Structure for Northern Ireland Public Sector Procurement 2.1 The governance structure for public sector procurement in Northern Ireland is: Procurement Board - Membership of the Board comprises the Permanent Secretaries of the 12 Northern Ireland Departments, the Treasury Officer of Accounts, the Director of CPD and 2 external experts. A representative of the Strategic Investment Board Ltd attends as an observer. The Board meets twice yearly and is responsible for the development of Public Procurement Policy and overarching procurement strategy within Northern Ireland which has a direct impact on the NIHE. Central Procurement Directorate (CPD) - was established in 2002 as the lead professional procurement body for Northern Ireland. One of its primary functions is to support the Procurement Board in the development and implementation of Public Procurement Policy, monitoring its implementation and developing best practice guidance in association with PPG. CPD also provides a centralised professional procurement service to the Northern Ireland public sector. Centres of Procurement Expertise (CoPEs) - eight CoPEs, of which the NIHE is one, exist to provide a procurement service to public bodies throughout the public sector and to contribute to the development of policies and best practice. Procurement Practitioners Group (PPG) - comprises the Head of each of the CoPEs, together with the Divisional Directors from CPD. It is chaired by the Director of CPD. The group provides a strategic, direction-setting role for CoPEs, providing the leadership and mandate for the effective delivery of the Procurement Board s Strategy/ It is also the main conduit for the development of policy guidance, best practice and information dissemination. See ANNEX 2 Governance Structure 5

7 3.0 PROCUREMENT STRATEGY 3.1 Procurement Vision 3.2 The Housing Executive will demonstrate Value for Money and deliver Continuous Improvement for its Customers through the effective procurement of Works, Services and Supplies Contracts in support of its Corporate Objectives 3.3 Procurement Core Values To ensure that the procurement process is clear and focused on achieving and demonstrating sustainable value for money. To ensure that the procurement options are chosen on the basis of the degree to which they fulfil the NIHE s corporate aims and objectives and those of specific purchasing areas within the organisation. To ensure that each procurement is run as a project and is conducted with probity, transparency, equity and accountability at all stages and in accordance with the core values of the organisation. To ensure that all contracts entered into are fit for purpose and deliver the needs of the business. To embrace continuous improvement. To ensure and demonstrate that contract performance, service and commercial management are to the highest standards. To ensure that in choosing the best value procurement method, the process of balancing cost against community benefit is made in a transparent way and supported and monitored where appropriate with clear evidence; and To continue to explore innovative ways to improve procurements and to work in partnership or in collaboration with others.

8 3.4 Purpose of this Strategy 3.5 Taking account of current guidance and trends in procurement, this strategy sets out: The priorities for procurement in supporting the NIHE s vision and objectives. The principles which underpin all procurement activity across the NIHE. The nature of the NIHE s procurement activity. The roles of the Corporate Procurement Unit (CPU) within the Housing Executive. A common framework within which all procurement projects embarked upon by the NIHE irrespective of cost and complexity, are to be managed. How to communicate clearly to all stakeholders including Board members, staff and suppliers/contractors of all types and in all markets, the NIHE s vision for the way forward in the procurement of services, supplies and works so that they may play a meaningful role in the implementation of that vision. How continuous improvement will be demonstrated through the use of robust KPI measurements and regular reporting to the Senior Responsible Officer. How the core values will be delivered. 3.6 The NIHE will draw up and publish its forward plan for service delivery and supplier requirements on the internet. This will set out its likely demand, for goods, works and services from outside suppliers and contractors in the medium term and will give the CPU advanced warning of forthcoming procurement projects giving the opportunity to plan the process and to advise their (internal) clients on the most appropriate procurement options. This plan will contribute to the Procurement Board s Strategic Plan/ 7

9 4.0 Procurement 4.1 Procurement has been defined by the Northern Ireland Executive as: The process of the acquisition, usually by means of a contractual arrangement after public competition, of goods, services, works, and other supplies by the public service. This definition covers both conventionally funded, more innovative types of procurement such as PPP/PFI and contracting out of services previously delivered by the public sector. The process spans the whole life cycle from initial conception and definition of need to the end of the useful life of an asset or the end of a contract. 4.2 In November 2010, the Procurement Board endorsed a refinement of best value for money to read. The most advantageous combination of cost, quality and sustainability to meet customer requirements. 4.3 In this context, cost means consideration of the whole life cost; quality means meeting the specification which is fit for purpose and sufficient to meet the customer s requirements; and sustainability means economic, social and environmental benefits, considered in the business case, in support of the Programme for Government. 4.4 The NIHE has an obligation to achieve best value by making arrangements to secure continuous improvement in the way it exercises its functions, having regard to a combination of economy, efficiency and effectiveness. 4.5 Examples of each of these different kinds of procurement within the NIHE are given below: Supplies procurement (office supplies, vehicles, equipment). Services procurement (e.g. externally managed ICT systems. consultancy, facilities management services), and Works procurement (e.g. construction & maintenance). 4.6 Procurement includes pre-contract activities such as market sounding, sourcing and post contract activities such as contract management and supplier relationship management. 4.7 This Strategy provides the strategic context for the best value reviews and other procurement decisions to be made by the Housing Executive.

10 4.8 All procurement projects with estimated values in excess of the limit for competitive procurement (see Standing Orders) will be overseen by the Corporate Procurement Unit (CPU) who, shall follow a procurement process which is in proportion to the scale and risks associated with the project. 4.9 The CPU shall collect and collate management information; oversee devolved buying; co-ordinate procurement awareness and training; and establish and manage a detailed and dedicated contracts register of all the Housing Executive s contracts and procurement requirements. 9

11 5.0 Strategic Framework 5.1 The procurement approach outlined within this document is an integral part of the performance management and investment approach of the NIHE and provides a link between the strategic aims and its role in providing services to the community throughout Northern Ireland. 5.2 The Corporate Procurement Strategy is a key element of the strategic framework both to deliver the aims of the NIHE and set the standards, procedures and policies to be met in assisting the NIHE to fulfil its strategic role. 5.3 The NIHE takes the view that it should draw service provision from the best service providers, whether in-house, other public providers, private or voluntary sector. What matters, is what works best, in particular circumstances there will most likely not be a single solution for all scenarios. 5.4 The procurement of goods and services should also take into account the wider economic and social role of the NIHE in Northern Ireland and work in partnership with other COPEs and Public Sector Bodies to identify, prioritise and plan how service provision might be delivered in the future. The key criteria for developing such a partnership should be the identification of community, economic and environmental needs for local people and businesses. 5.5 The benefits of such partnership working would be: Economies of scale Improved quality service and Improved contingency planning

12 6.0 Legislative Framework 6.1 Public procurement is regulated throughout the European Union (EU) through the provisions of the Treaty on the Functioning of the European Union (TFEU, formerly known as the EC Treaty) and the EU Directives. 6.2 Within the EU all public procurement is subject to the principles of TFEU and in particular the principles of: Freedom of movement of goods Freedom of establishment, and Freedom to provide services. 6.3 And the principles derived from these such as: Equal treatment Non-discrimination Mutual recognition Proportionality, and Transparency. 6.4 The award of contracts within the Member States is further subject to EU Procurement Directives, the purpose of which is to open up the public procurement market and to ensure the free movement of supplies, works and services within the EU. The Directives set Europe-wide standards which must be achieved in every Member State by transposition of the Directives into national legislation. 6.5 The current EU Procurement Directives were transposed into UK National law on 31st January 2006 as The Public Contracts Regulations (2006) SI 2006 No.53 (as amended) and The Utilities Contracts Regulations (2006) SI 2006 No.64 (as amended). 6.6 Under the Northern Ireland Act 1998 procurement is a transferred matter. The Assembly may make its own laws in respect of all transferred matters but, as the UK Public Contracts and Utilities Contracts Regulations were made prior to the restoration of a Devolved Administration in Northern Ireland, the UK took the lead in drafting these Regulations and subsequent amendments. As a result, 11

13 public sector procurement in Northern Ireland falls within the scope of UK Procurement Regulations (which cover England, Wales and Northern Ireland). Scotland separately transposed these Directives into Scottish Law. 6.7 In setting out the NIHE s procurement framework a number of key procurement documents have been considered including: NI Public Procurement Policy. The NIHE is a body to which this policy applies see: NI Public Procurement Handbook (January 2011) see: 5/cpd_policy_ni_public_procurement_policy_handbook.htm Construction Industry Forum NI (CIFNI) Reports see: sk_group_report CPD Guidance Notes which the NIHE is required to take account of in its procurements see: policy-and-legislation/content_-_cpd_-_policy_- _procurement_guidance_notes.htm 6.8 The Public Procurement Policy Handbook sets out the following 12 guiding principles to govern the administration of procurement as follows: Accountability ensure that effective mechanisms are in place to enable the Accounting Officer for the NIHE (the Chief Executive) to discharge his responsibilities on issues of procurement risk and expenditure. Transparency ensure that as far as possible there is openness and clarity in policy and its delivery. Competitive Supply procure using competitions unless there are convincing reasons to the contrary. Consistency - suppliers can expect that NIHE s procurement policy will be consistent with other Centres of Procurement Expertise. Effectiveness meet the commercial, regulatory and socioeconomic goals of Government in a manner appropriate to the procurement requirement.

14 Efficiency carry out all procurement processes cost effectively. Fair Dealing treat suppliers fairly, protecting commercial confidentiality where required. It will not impose unnecessary burdens or constraints on suppliers or potential suppliers. Integrity ensure that there is no corruption or collusion with suppliers or others. Informed Decision Making base decisions on accurate information and monitor requirements to ensure that they are met. Legality conform to EU and other legal requirements. Integration policies will pay due regard to Government s other economic and social policies. Responsiveness endeavour to meet the aspirations, expectations and needs of the community served by the procurement. 6.9 Against the background of key reports on procurement in the construction industry the Government has taken forward a number of initiatives to improve performance For example, the Achieving Excellence Guide builds on government client s experience/ Achieving Excellence suggests the key areas for delivering best value are: Management including: o Commitment and leadership; o Empowerment and skilling; and o Consistent and skilled project management. Measurement including: o Standard Key Performance Indicators; o Post project implementation reviews; and o Client performance surveys Standardisation 13

15 6.11 Key standard practices discussed in Achieving Excellence include: Procurement decisions on total value for money; Use of risk and value management; Output/performance specifications; Whole life costing; Robust change control; Information technology and standardised document handling; Integration; Teamwork and partnering; and Focus on design and build, design/build and maintain, prime contracting 6.12 The majority of the guides and reports have tended to concentrate on large capital contracts, although they do provide a direction of travel that can be integrated into smaller works and maintenance contracts, and other procurement.

16 7.0 NIHE Procurements 7.1 An initial outline of anticipated future procurement needs, based on the Corporate Contracts Register for Supplies, Works and Services, is the starting point for the development of a three/five year procurement plan. Outlining likely future requirements helps to develop better planning, a better consideration of options and inform future discussions with stakeholders. The plan should be updated on a rolling basis. A Category Management based approach embracing, budget/spend, risk, market, industry and value analysis will be adopted which enables differing procurement strategies to be developed appropriate to the type and complexity of the specific procurement/business area. 7.2 Procurement strategies for all procurements will be developed in accordance with this Corporate Procurement Strategy. 7.3 For all major procurements the senior responsible officer, who is normally the appropriate director, will request the Head of Procurement (HoP) to take forward the procurement to deliver the specific requirement. The HoP, or his appointed procurement responsible officer (Corporate Procurement Manager), will in turn lead a project team, comprising of relevant stakeholders to assist in the delivery of an appropriate procurement. This project team should consist of the SRO s lead appointed responsible officer (Project Sponsor) and other members as he/she deems appropriate. 7.4 Within each individual procurement the key roles have been identified as: 7.5 Senior Responsible Officer (SRO) The Senior Responsible Officer (SRO) is normally the Director or his/her nominee and is the individual responsible for ensuring that a project or programme of change meets its objectives and delivers the projected benefits. The SRO is the owner of the overall procurement project and ensures that the project maintains its business focus, has clear authority and that the context, including risks, is actively managed. 15

17 7.6 Head of Procurement (HoP) The Head of Procurement will be responsible for the delivery of all procurements within the NIHE, both planned and unique. He/She will provide strategic procurement leadership and ensure that Northern Ireland Procurement Policy and Procurement Regulations are adhered to. The HoP will appoint a Corporate Procurement Manager(CPM) to lead procurement projects in line with this Corporate Procurement Strategy. The main responsibilities of the HoP include: - Appointment of a Corporate Procurement Manager to lead the procurement project Development of the Procurement Strategy in conjunction with the Project Team Ensuring that Gateway reviews are undertaken as necessary Assisting the Management of the department s interest s in the project by: Facilitating the preparation of the project brief. Ensuring that the project is delivered effectively and in accordance with the Corporate Procurement Strategy and the project plan. Making the key organisational/commercial decisions for the project. Establishing formal reporting arrangements and communication channels on the progress of the project. 7.7 Project Sponsor/Senior Business Representative The Project Sponsor (PS) is appointed by the SRO and is normally a senior member of staff with a relevant area of responsibility that will be affected by the outcome of the project. The PS should be able to articulate the client s needs and have an understanding of the business (functional activity) that the project is to support. The PS will report directly to the SRO and have the authority to make operational decisions including requesting adequate departmental resources to ensure the effective delivery of the project. He/She is involved from the start of the project.

18 The PS (or his/her Senior Business Representative) will: Support the CPU by: o Preparing the business case o Managing the departmental resources allocated by the SRO in conjunction with the CPU Manage the department s interest s in the project by. o Preparing the project brief Managing the project budget and risks Assuring availability of essential project resources The PS (or his/her Senior Business Representative) is responsible for the operational delivery of the procurement from inception to the successful implementation of the service/supply. The PS will support the CPU in the development of the individual Procurement Strategy in compliance with the Corporate Procurement Strategy. They will prepare a Project Plan in line with the Corporate Generic Plan and will ensure the project is delivered in line with the approved plan. They will also support the CPU to ensure Gateway Reviews are carried out as required. The PS (or his/her Senior Business Representative) uses the application of knowledge, skills, tools, and techniques to describe, organise, oversee and control the various operational project processes. 7.8 Corporate Procurement Manager (Procurement Project Manager) The Corporate Procurement Manager (CPM), as the nominated responsible officer of the HoP, is responsible for developing a suitable procurement strategy, managing the commercial interests of the organisation, co-ordinating, developing and reviewing procurement (in its broadest definition) and procurement expertise across the organisation in conjunction with the Project Sponsor. The CPM will: At the outset ensure that a robust procurement strategy is developed. 17

19 Ensure adequate procurement resources are available to deliver the procurement and manage commercial activities. Where necessary ensure that Gateway Reviews are carried out. Provide strategic procurement advice and guidance. Help develop, promote and implement appropriate procurement strategies and procedures to meet customers needs. Ensure best value for money in the procurement of supplies, works and services is achieved. Help to ensure that customers business needs and requirements are met through the procurement of supplies, works and services. Ensure that all procurement exercises are compliant with current procurement regulations. Support delivery of sustainable procurement and equality through the procurement process. Support the delivery of innovation in procurement solutions. Manage and develop the supplier base including Small and Medium sized Enterprises (SMEs) and the Social Economy Enterprises (SEEs). Enable opportunities for collaboration, innovation, working with other CoPEs and drawing on market knowledge and Enable the benefits of electronic procurement to be realised. Support the HoP in the overall delivery of his responsibilities. In support of each individual procurement the CPM will: Lead a project team consisting of relevant stakeholders from with the organisation and specifically the department requiring the product/service. Report on a regular basis to a Project Board appointed by the SRO. Complete a procurement plan and have the plan agreed by the project team. Advise on all contractual aspects of individual packages, frameworks and or projects. Ensure that the procurement project is compliant with NI Public Procurement Policy and NIHE s Procurement Strategy/ In conjunction with the PS prepare a Risk Potential Assessment (RPA) under the Gateway Review process. Advise on contract disputes, arbitrations, bankruptcies etc during the life of the project. Make organisational/commercial decisions for the project in conjunction with the HoP and the PS who in turn report to the SRO.

20 Monitor the contract to ensure that change management does not extend the scope of the project beyond the original procurement and cause a breach of procurement law. Ensure contract documentation is prepared. Liaise with external third parties as required in connection with securities and performance guarantees. Report on contractual and or commercial matters to the HoP and PS. Ensure contractual terms minimise legal and commercial risks and support internal customers in the operational management of the contract for the project lifecycle. Liaise with internal customers, IT, legal and other functions as necessary to ensure that all commercial, business and legal requirements are covered. Agree with internal customers the procurement process from definition of strategy to completion of contract. Advise the Contract Manager in cases of underperformance and where decisions have to be taken in relation to determination. Advise on and be involved in financial matters in relation to extension of contracts etc. 7.9 The procurement strategy will identify the best way of achieving the objectives of the project and value for money, taking account of the risks and constraints. The aim of the procurement strategy is to achieve the optimal balance of risk and control within available funding. The individual strategy will use the Corporate Procurement Project Plan ANNEX 3 as a template of the stages that should be considered in any procurement The CPM will prepare Risk Potential Assessments (RPA) under the Gateway Review process. The NIHE is required to submit an RPA to the Department of Finance and Personnel s Centre of Excellence for supplies and services procurements estimated to cost in excess of 500,000 and for construction projects estimated to cost in excess of 1 million pounds. In addition, there is a mandatory requirement to subject programmes/projects estimated to cost in excess of 20 million to the gateway review process. The Gateway Review process can be accessed at

21 7.11 The project procurement strategy, together with the outcome of the RPA, will be submitted for Corporate approval as required by Standing Orders prior to proceeding with the procurement In the case of construction works and services the CPU recommend the appropriate procurement route taking account of the agreements with the Construction Industry Forum for Northern Ireland (CIFNI). The NIHE preferred routes are Frameworks or traditional procurements. Frameworks provide better value for money compared with procurement on an individual project basis. They allow long-term relationships (up to 4 years) to be developed which allow better programming of work and planning of resources. This allows firms to develop the skills and competence of the workforce in order to make use of their experience on successive projects. Frameworks within the NIHE context allow for appointment of contractors to specific areas or call offs by way of mini-competition The procurement will take account, in particular, of CPD Guidance Note 06/10 available at and-legislation/content_-_cpd_-_policy_- _procurement_guidance_notes/pgn htm 7.14 This Guidance includes in the Annexes full details and recommendations relating to: 1. AEC Initiative 2. NEC3 form of contract 3. Promoting equality and sustainable development by sustainable procurement in construction 4. CIFNI Procurement Task Group Report 5. Health and Safety Buildsafe-NI 6. Key Performance Indicators application and collection of data and reporting

22 8.0 Management of Contracts 8.1 The Senior Responsible Officer (SRO) as the owner of the contract will appoint a Contract Manager who will be responsible for the effective operational management of the contract and contractors within an Area. The role of the Contract Manager is identified as: 8.2 Contract Manager Reports to: Area Manager/Assistant Director The Contract Manager executes the authority delegated to him by the Senior Responsible Officer (SRO) to act on behalf of the organisation as the Employer under the contract. He/she will monitor the contractor s/supplier s progress and performance to ensure that the service provided conforms to the contract requirements and initiate remedial action, as appropriate, where a contractor s/supplier s performance is deficient. The main functional responsibilities of the contract manager will be to: Ensure contractor/supplier compliance with delivery, performance and costs. Ensure NIHE complies with its contractual obligations In partnership with the CPM advise on cases of poor performance and advise on escalation to determination if necessary. In cases of determination work with the CPM in filling the vacant procurement slot. Act as contractual advisor to the Operational Mangers as identified in the specific procurement strategy. Act as single point of contact for all advice relating to the contract. Act as contractual middleman between operational managers and contractor/supplier, ensuring timely review and approval / reconciliation of variations. Maintain the specification of the contract and establish controls to track and verify changes. Monitor contract performance and report on business outcomes through the governance structure to senior level. Hold review meetings and ensure all stakeholders are involved and views considered. Manage the dispute resolution process. 21

23 8.3 Each contract will have operational staff identified to manage the day to day deliver of the works/service and their roles and responsibilities will be identified in each individual procurement strategy. 8.4 Each procurement must have a procedure identified in the strategy that clearly explains how poor performance on the contract will be managed and how the issue should be escalated within the governance structure for resolution should the need arise. The general guidelines for this are detailed in ANNEX Scope and Scale of Procurement 9.1 The Housing Executive s annual procurement spend is approximately 340 million.

24 10.0 Procurement Related I.T. Systems 10.1 The Housing Executive has a number of financial and operational systems which input to procurement in various forms and at various stages of the procurement process. Purchasing is currently carried out through a combination of manual purchasing, Purchase Order Processing (POP) module of e-financials (Cedar Financials), RESUS (which is currently being withdrawn) and EROS (the CPD system which is used for requisitioning office supplies); and Maintenance and repairs procurement is provided through the Housing Management System (HMS) which facilitates the electronic invoicing by Achieving Excellence in Construction (AEC) contractors to NIHE and Management Information System is used for monitoring individual contracts and contractors (Plans are advanced for the replacement of this system) 11.0 Standing Orders 11.1 The procurement of goods, services and works within the NIHE is governed through the use of Standing Orders (which are currently being revised). Standing Orders set out the tender action to be followed according to the value of the requirement, see ANNEX Achieving Excellence in Construction 12.1 The AEC contracts currently in place and planned are summarised in ANNEX 6 23

25 13.0 E-procurement 13.1 Measures introduced to date include: The publication of tender opportunities on the Housing Executive s internet site- The use of the Government Purchasing Card within two departments for the procurement of travel, conferences and training; The production of tender documents on CD which allows the tenderer responding to complete and print off one copy to be returned to the Executive; The use of electronic payment methods (e.g. BACs and CHAPS); and The use of the Central Procurement Directorate (CPD) Electronic Requisitioning of Office Supplies (EROS) for CPD managed and maintained framework contracts and catalogues maintained framework contracts and catalogues. A phased introduction for the procurement of all works, services and supplies through esourcingni has commenced Performance Management 14.1 The CPU shall establish a contracts register detailing all current contracts including commencement date, completion date, contract value and name of Contractor/Supplier On each procurement, the NIHE will develop performance measures such as the AEC Key Performance Indicators (KPIs) to evaluate suppliers and also demonstrate the contribution to overall objectives of the Housing Executive. An appropriate suite of KPIs will be developed for each supply/works category to maximise performance and to promote continual improvement.

26 15.0 Supplier Risk Management 15.1 Key suppliers will be identified by CPU and a strategy developed for building and maintaining a good working relationship. An understanding of the strengths and weaknesses of each major supplier, will contribute towards evaluating potential risks to supplier continuity It is intended that a report on the key supplier analysis with associated risks is presented to the Project Board/SRO prior to the commencement of any procurement Reviewing the Strategy 16.1 The Housing Executive s Corporate Procurement strategy shall be reviewed and updated by the CPU annually, in consultation with stakeholders on significant amendments. 25

27 17.0 Summary of Procurement Process 1. Identify needs The starting point for any procurement is the identification of a particular set of needs. This may come about in a number of ways including the expiry of an existing contract, the identification of a requirement, a desire to improve service levels and efficiency, the implementation of new legislation or government policy. 2. Consult Once a need has been identified it is crucial that the needs of all of those who could be affected by the contract are taken into account. This process will help to ensure that the contract achieves its objectives, and does not have an adverse impact on anybody. The nature and extent of the consultation will depend largely on the subject matter of the contract. 3. Select the right contract Following consultation, the CPM will recommend an appropriate procurement strategy through the Project Team to the SRO. This will be largely determined by the subject matter of the procurement, which could be a term contract, framework agreement, partnership proposal, consortia agreement, CPD call off contract or through the use of one of the Northern Ireland Centres of Procurement Expertise (CoPE). 4. CXBC / Board approval The SRO will seek the required approval to the specific project strategy in order to allow the CPU to proceed with the procurement. 5. Advertise the contract The contract notice or advertisement will invite companies to submit an expression of interest for a contract. The advertisement will provide information on the scope of the contract, detail the procedure and what information is required. It is important that companies supply all of the requested information and respond by the due date as late responses can not be considered. 6. Selection of applicants The purpose of a pre-qualification questionnaire is to assess the potential bidder s financial and technical capability to supply the NIHE and ability to satisfy the contract before tenders are issued. It saves time and effort being unnecessarily spent on completing tenders by a bidder. This is generally established through the completion of a Pre Qualification Questionnaire (PQQ), typically this includes company information, financial information, technical information, equal opportunities (Section 75), health & safety and references.

28 7. Invite tenders Following the selection stage companies will be invited to tender. The tender package may consist of a number of documents (e.g. Invitation to Tender, Instructions to Tenderers, Terms and Conditions of Contract, Background Information, Specification of Requirements, Form of Tender and Attachment Checklist). 8. Evaluate tenders Returned tenders will be evaluated against the predetermined criteria as specified in the tender documentation. Evaluation will focus on examining how the tender proposals will deliver the service (quality) and the cost of the service (price). Normally the NIHE will award the contract on the basis of the most economically advantageous tender and the balance between quality and price will depend on the particular service area. The successful tenderer will be notified in writing either by letter or official electronic communication. 9. Seek approval to enter into contract the approval required will be obtained in accordance with Standing Orders. 10. Award contract and were required comply with Standstill requirements Regulation 32 as amended by the Public Contracts (Amendment) Regulations Post Procurement Review for all major procurements the Procurement Project Team will undertake a review of the procurement exercise to establish if the process and outcome achieved the original aims of the procurement. A report on the review detailing lessons learned will be submitted to the SRO 12. Establish and Manage contract NIHE has to monitor the performance of suppliers and contractors to assess their compliance with pre-defined performance criteria. Contracts have to be performed in accordance with the requirements set out in the contract documentation. 13. Purchase off contract Where the contract is for goods and services (e.g. generally through the establishment of a framework contract) purchasing off the contract will be undertaken by approved requisitioners across the NIHE with all documentation, using a predefined process (e.g. requisitions, purchase orders, goods received notes and invoices) relating to the framework contracts allocated to it in the financial/purchasing system. 14. Post Project Review the SRO will convene a meeting of all relevant parties to review the project to ascertain if outcomes are those expected and what lessons can be learned. 27

29 18.0 Corporate Procurement Unit (CPU) 18.1 In support of the Procurement Strategy the NIHE has established the Corporate Procurement Unit (CPU) which is one of the seven Centres of Procurement Expertise (CoPE) The granting of CoPE status by the Procurement Board is recognition of its competency to deliver an effective procurement service in relation to its unique portfolio, namely Social Housing The Head of Procurement has responsibility for: Developing procurement expertise in line with the CPD competency framework; Considering the involvement of other stakeholders; Overseeing supplier intelligence (repository of knowledge); Having an overview of collaborative arrangements; Providing strategic procurement advice and guidance Developing a three/five year corporate procurement plan; and Establishing targets in relation to procurement related savings which can be generated through more efficient and effective procurement 18.4 The CPU employs procurement professionals and is subject to independent accreditation to validate their procurement expertise. The criteria against which organisations are currently assessed as CoPEs are given at 2/cpd/cpd_publications/cpd_review_of_centres_of_procurement_exp ertise/review_of_centres_of_procurement_expertise.pdf 18.5 The CPU is responsible for co-ordinating, developing and reviewing procurement (in its broadest definition) and procurement expertise across the organisation. The procurement expertise provided by the CPU will, as defined in the NI Public Procurement Policy Handbook: Provide strategic procurement advice and guidance. Develop, promote and implement appropriate procurement strategies and procedures to meet customers needs. Deliver best value for money in the procurement of supplies, works and services. Help to ensure that customers business needs and requirements are met through the procurement of supplies, works and services. Ensure that all procurement exercises are compliant with

30 o EU Directives. o UK Regulations. o Northern Ireland Public Procurement Policy. o NIHE Standing Orders. o Other relevant policies and best practice. Support delivery of sustainable procurement and equality through the procurement process. Support the delivery of innovation in procurement solutions. Manage and develop the supplier base including Small and Medium sized Enterprises (SMEs) and the Social Economy Enterprises (SEEs). Enable opportunities for collaboration and innovation, working with other CoPEs and drawing on market knowledge and Enable the benefits of electronic procurement to be realised The CPU will continue to offer its expertise to other public bodies as a centre of procurement expertise and shall ensure that it retains its status as a CPD Centre of Expertise The CPU shall ensure that it liaises and consults with stakeholders including: The appropriate client division within the NIHE The Department for Social Development Central Procurement Directorate, through representation on the Procurement Practitioners Group and its working groups The construction industry through the Construction Employers Federation and other representative bodies Participation in and attendance at various Meet the Buyers events Regular meetings with the Housing Association Procurement Groups, suppliers, tenants etc. as appropriate in the procurement process Supplier representative groups and Other bodies appropriate to the particular procurement 29

31 18.8 In addition to the above the CPU will advise on contract disputes, arbitrations, bankruptcies etc and advise the Housing Associations in all procurement related matters The professionalism of procurement staff is underpinned by the Procurement Competence Framework for the Northern Ireland public sector, which provides the link between the individual procurement professional s development needs and training/ The NIHE will draw up and publish its forward plan for service delivery and supplier requirements on the internet. This will set out its likely demand, for goods, works and services from outside suppliers and contractors in the medium term and will give the CPU advanced warning of forthcoming procurement projects giving the opportunity to plan the process and to advise their (internal) clients on the most appropriate procurement options.

32 19.0 Conclusion 19.1 The key benefits of this Strategy document are: That it is treated as a live Procurement Strategy that will be reviewed on an annual basis by the Director of Personnel and Management Services and will be presented annually to the Housing Executive Board for approval That the revised Core Values clearly reflect that: o Procurements are run as projects o Contracts are fit for the purpose and deliver the needs of the business o Contracts embrace continuous improvement o Contract performance, service and commercial management are to the highest standards It provides clear instruction on how procurements should be rolled out and managed with individual procurements having a named Corporate Procurement Manager who will: o Ensure a robust procurement strategy will be developed o Carry out market sounding and provide market intelligence to the project o Ensure supplier stakeholder communication o Manage the commercial interests of the organisation o Ensure best value for money o Ensure that Gateway Reviews are carried out on the procurement o Ensure the delivery of sustainable procurement 31

33 That provides clear guidance on the roles and responsibilities of the individual officers involved in procurement That provides for better governance reporting at both pre and post contract stages of any procurement Provides for better measurement of supplier/contractor performance, drives behavioural change and details clear guidance on the management of poor performance or breaches of contract on how to escalate if necessary through the governance structure.

34 ANNEX 1 Achieving Excellence in Construction Principles: 1. Contracts should be awarded on the basis of achieving long term sustainable value for money, not just the lowest price. 2. Design should not be a separate process but should be integrated with the whole construction process. 3. Good planning, involving risk and value management, should be carried out. 4. Project management should be in place. 5. Contractors should be remunerated in a way which incentivises them to deliver good quality construction on time and to budget. 6. The performance of construction projects should be measured to assess whether costs, time and quality requirements are being met and the outcome being used to learn and disseminate lessons for future projects. 7. Contractors will be penalised for performance failures 33

35 Annex 2 Governance Structure Public Procurement

36 ANNEX 3 Procurement Network Procurement Network Management structure Outline structure Agree Structure at PB Appoint Corporate Procurement Project Manager Appoint Project Sponsor / Project Team Define Project stream Procurement Strategy Risk Assessment Complete RPA Project Board Meeting 2 CXBC Review Contract Terms and Conditions Review Schedule and Specification Develop Specific KPI measure for this contract type Consult with Suppliers Agree Selection and Award Criteria Agree PQQ information Memorandum Agree Instruction to tenderers Legal Services Sign Off Strategy and Documentation Project Board Approval CXBC/Board Approval Publish Contract Notice in OJEU Issue PQQs Receive completed PQQS 37 days Following OJEU Notice Evaluate PQQs Inform applicants of PQQ outcomes Issue Tender Documents Tender Return 40 days From Tender Issue Evaluate Tenders Analyse Tender Prices Prepare Tender Report for Project Board Project Board Approval NIHE Board Approval Issue ALCATEL Letters Award Contracts 15 days Following issue of ALCATEL DOP

37 ANNEX 4 Procedure for the management of poor performance on Contracts 1.0 The Housing Executive has the right to expect its Contractors/Suppliers to abide by the terms and conditions of their contract 1.1 It is recognised that day to day issues relating to performance will be resolved by management and employees through the normal means of communication. However where normal communications fail to resolve matters, and where the escalation of the problem is deemed applicable, any resultant action will seek to be corrective in nature, be justifiable and be aimed at achieving acceptable standards of performance. 2.0 OBJECTIVES 2.1 The basic objectives of this Procedure are: (1) To advise contractors/suppliers of poor performance so that the contractor/supplier can take the appropriate corrective action at the earliest opportunity. (2) To identify the authority of management, at various levels, to initiate appropriate action. (3) To identify the process to be followed by management when instituting action. (4) To provide for the fair, consistent and objective application of the procedure. 3.0 APPLICATION 3.1 This Procedure applies to all contractors/suppliers who have entered into a contract with the Housing Executive for the provision of works/supplies. 4.0 KEY PERFORMANCE MEETINGS 4.1 KPI scoring must be carried out prior to the monthly KPI meeting. The scores will then be presented to and discussed at the KPI meetings where representatives from the Contractor/Supplier Management Team and Contract Operatives must be present. 4.2 Representatives can attend on behalf of the above but must be au fait with the Contract and must have the knowledge required to score the KPIs.

38 5.0 SCORING OF THE KPIs 5.1 The scores are entered into the procurement specific KPI Matrix (as detailed in the individual procurement strategy) and will be reported on a green, amber and red colour rating. These coloured score bandings will have been predetermined for each procurement type with each colour indicating the following: Green - Amber - Level of service/product satisfactory and is being delivered in line with the contract Contract Failure - level of service/product not meeting the requirements of the contract - corrective action required by the contractor to meet the standards Red - Contract Failure - level of service/product is unacceptable decision required by Employer on course of action to be taken 5.2 For ease of measurement we count three AMBER scores as equal to one RED even if they are across a number of KPIs. All AMBER or RED scores require a signed action plan submitted by the contractor showing how the contractor/supplier proposes to improve the service. This action plan must be agreed by the Contract Manager/District Manager. This measurement may vary across procurements but the specific detail must be predetermined and included in the specific strategy. 6.0 INITIAL WARNING BY CONTRACT MANAGER/DISTRICT MANAGER 6.1 Failings up to one RED or equivalent 6.2 The Contract/District Manager must send the appropriate warning letter to the Contractor/Supplier copied to the Assistant Director/Area Manager. 6.3 The Contractor/Supplier submits a signed action plan to the Contract/District Manager indicating the corrective action he is taking to address the failure. This is to be reviewed continually and will appear as an agenda item at the monthly KPI meetings until the KPI is scoring GREEN. Normally the Contractor will be expected to reach a GREEN rating within 2 months.