Introduction to Procurement and Step by Step Guide

Transcription

1 Introduction to Procurement and Step by Step Guide Why would you use it? Not sure where to start with your school's procurement issues? Don't know what, or who, is involved in successful procurement? How does it work? This tool introduces the concept of what is "good-practice procurement". The three key stages of procurement are explained, and a checklist of key steps in each stage helps you to keep track of what schools need to do to ensure that their procurement delivers optimal value for money.

2 Introduction to Procurement Procurement Overview Procurement is the process of acquiring goods and services. A school will procure many goods and services, from cleaning and payroll, to stationery and desks. Any spend that is not staff-cost will fall under the banner of school procurement. Procurement usually accounts for between 10-15% of a school s budget. With rising pressure on schools to display good value for money on their non-staff spend, effective procurement is becoming increasingly important. What is this tool? This tool provides an introduction to Procurement, an explanation of what constitutes good procurement and a three-stage process that you can follow to ensure that they procure products and services that a way that delivers the best possible value for money. The checklists at each stage help you keep track of where you are in your procurement exercise, and the key tasks that need to be completed. You can re-use these procurement checklists for any future procurements. Throughout this introduction to Procurement, we reference other VfM tools that you may find useful. These are in the Procurement Resource Library which you can access on the VfM Website.

3 What is Procurement? What is procurement? Procurement is simply the process of acquiring goods and services. A school will procure many goods and services, from cleaning and payroll, to stationery and desks. Any spend that is not staff-cost will fall under the banner of school procurement. Good procurement is getting goods and services at the best possible price, in the right quantity and quality, in the right place and from the right source. Benefits of good procurement: By devoting time and effort to good procurement, you will lower the overall costs of your non-staff spend thereby allowing you to invest in the things that really matter to your school. Additionally, well-run contracts will save you time and allow you to focus on running your school and educating children. There are three key stages in good procurement: Planning, Purchasing, and Managing. Together, these make the procurement cycle. The procurement cycle The procurement cycle Planning, Purchasing and Managing are the key stages of a good procurement exercise. Within each stage there are a number of steps that you can take. Following these steps will help ensure that you are getting the best possible value for money on your non-staff spend. The following pages will go through each stage in more detail, provide you with a checklist of suggested steps and point you in the direction of further tools in this document to help you. The higher the value of the contract, the more important it is for you to follow each step in the process.

4 Procurement cycle: Planning The planning stage kicks off at the point where your school identifies the need for a new good/service or decides to review an existing one Steps Checklist 1. Demand management. Before you jump into a procurement exercise, take a step back and consider: do you actually need this product or service? How important is it to the operation of your school? Does it contribute to the objectives of the school? Internal view 2. Understand your requirements. What exactly do you need to buy, and how much of it? Consider: did you buy too little/much last time? Is demand going to change (e.g. because of changes to pupil or teacher numbers)? 3. Take a school-wide view. Are different departments buying the same goods separately? Could you centralise buying and buy in bulk? Can you collaborate with other schools in your area or cluster? Remember it is more effective to buy in bulk, and you have more customer power as a result. Key guidance to help you with this stage can be found in the Procurement Resources Library Info on 4 buying channels Demand management Benchmarking guide What is TUPE? Sourcing guide for schools External view 4. Benchmark your school. Use the schools financial benchmarking website to understand how your spend per pupil on this contract compares with other schools of similar size. This will give you an indication of whether you can achieve better value for money by switching suppliers or altering the terms of your contract. Also consider: how feasible is it for you to change suppliers are there termination clauses in your contract? Will TUPE be an issue? 5. Understand where you can buy from. By shopping around you are more likely to find a contract that best meets your requirements. Have you considered all key four buying channels that schools can access? These are your LA, the OGC, Education consortia and local/private market suppliers. Can you access a framework contract? Pull together a shortlist of potential suppliers. 6. Make a decision. Decide next steps: do you want to proceed to the next stage?

5 Procurement cycle: Purchasing The purchasing stage is where you actually acquire the product or service Steps 1. Establish value of good or service. Estimate the cost of the value of good or service over the full life of the contract (e.g. if it is a three-year contract, multiply the annual cost by three). This will influence your decision in step 2. Checklist 2. Establish route to market (simple quote/formal tender/framework/existing supplier?) If Step 1 has highlighted that the value of the good or service exceeds 156,000, then you have to follow an OJEU process or access an existing framework contract (see tool below). For medium -high value contracts (typically k) aim to carry out a formal tendering process and obtain 3 quotes. For low value contracts (less than 10,000), a simple quotation exercise may suffice. Alternatively, if your Planning stage has suggested that you are completely satisfied with your current supplier, you may wish to simply extend the contract. However, we would recommend that for medium-large value contracts, you test the market by collecting quotes to ensure that you continue to achieve the best possible value for money. Key tools to help you with this stage: How to write a specification What is OJEU? Tendering 3. Develop specification. Using your findings from the Planning stage, summarise your requirements in a specification. Try to consult with the key users of the good or service when you are writing your specification. E.g. for field maintenance, consult your caretaker, and sports teachers, as they may know more about what is required than you! 4. Run competition: Issue your specification to your shortlisted suppliers, include a deadline. Include your evaluation criteria which will inform suppliers what the key factors are which influence your decision. E.g. you will score suppliers 50% cost, 30% quality, and 20% flexibility. 5. Evaluation: Evaluate the suppliers based on your criteria. Depending on the value and nature of the good or service, you may wish to involve your governing body, or other stakeholders (e.g. parents, teachers) in the decision making process. 6. Choose supplier: Based on your evaluation, choose a supplier and inform them of their success. Negotiate any final terms, carefully read all terms and conditions and sign the relevant paperwork. Inform the remaining bidders that they were unsuccessful and provide feedback if possible.

6 Procurement cycle: Managing At the Managing stage you monitor the performance of your supplier to ensure that you continue to receive the agreed level of service and quality Steps Checklist 1. Agree working relationship: Confirm logistical and operational issues, e.g. time of delivery, key contact personnel etc. Also agree the Key Performance Indicators (KPIs) you would like to monitor to ensure that the supplier is delivering against your specification. An example KPI is % of deliveries on time you may have specified in your specification that you require a minimum of 95% deliveries on time. Key tools to help you with this stage: Contract Management 2. Monitor performance: Actively monitor your supplier s performance. Record any issues, evidence of poor/excellent performance (you can do this using a Contract Scorecard see Contract Management tool below. Schedule regular meetings to discuss performance. Try to encourage a two-way mutually beneficial relationship by asking your supplier what could I do better?. Having a good working relationship will benefit both you and your supplier. 3. Closing down and/or preparing for contract renewal: As the contract approaches its expiry date, ensure that you have left sufficient time to run through the Procurement Cycle again. Ensure any outstanding issues and balances are resolved before the contract end date. Review the contract: what worked well, what didn t work well? Did you order too little/too much? What could be improved? This is all useful information that will help you in your next procurement exercise.

7 Procurement key principles Throughout any procurement exercise, keep in mind these key principles of procurement: Collaborate & network Public sector procurement rules Can you combine your buying power by collaborating with other schools? Can you aggregate your spend and combine services within your school? Are you part of a buying consortium? For low-value contracts (typically below 10,000), try to obtain at least three quotes For medium-value contracts (between 10,000-50,000), obtain at least three written Have good knowledge of your school quotes. Follow a formal tendering process if possible. For high value contracts ( 50,000+) follow a formal tendering process. Any value above 156,000 (goods & services) or 3.9m(works), you have to follow an OJEU process. If your procurement will have an effect on staff, you have to take into account TUPE Understand the financial challenges your school faces? Is this procurement really necessary? Is it vital to the operation of your school? Will it contribute to the objectives of the school? Have you consulted the necessary stakeholders? (teachers, parents, pupils, governors) Is there external funding available to support this procurement? Sustainability can environmental impacts be reduced? Key tools to help you with this principle: Sourcing guide Information on 4 key buying channels What is OJEU? What is TUPE? Demand management Also remember: regularly benchmark your school & contracts Do you know how your spend on products and services compares with other schools with similar characteristics to yours? When was the last time you compared your current suppliers to what other suppliers could offer you? Guide to benchmarking