PAPER B

 

Purpose: For Decision

 

MODERNISING PANEL -

1 FEBRUARY 2002

 

NEW CONTRACT STANDING ORDERS

 

REPORT OF THE STRATEGIC DIRECTOR, FINANCE AND INFORMATION AND COUNTY TREASURER

SUMMARY/PURPOSE

 

This report is intended to consult the Modernising Panel on proposed changes to the Council’s Contract Standing Orders. Officers have been engaged in reviewing the existing procedures and have drafted a revised set which reflect the changes which have occurred since they were adopted on reorganisation in 1995. The panel is asked to consider the draft, to recommend any further modification or to endorse them for adoption by the Executive Committee.

 

BACKGROUND

 

The Council needs to keep its standing procedures and policies under review. One such procedure deals with the way in which the Council procures goods, services, or works, usually by way of competitive tendering. These rules set out the procedure to be followed when it has been decided to procure from an external source and could include services such as grounds maintenance, supplies such as ICT equipment or works such as a new building or a road scheme. Consequently, significant sums of money are involved and a successful outcome will depend to some extent on the rigour with which the procurement is managed.

 

Apart from this prime objective, Contract Standing Orders make a significant contribution to maintaining the Council’s reputation for fairness and propriety in its business practices, which in turn encourages prospective tenderers to bid for Council work. They can therefore, indirectly  influence the Council’s performance.

 

As members might expect the requirements of the rules escalate in proportion to the anticipated value of the procurement – small items do not need to be procured with such intense rigour as those services and projects of higher value. There are therefore thresholds which require increasing levels of competition and the draft being proposed sets these as follows:

 

Estimated Values

 

Competition Requirement

Supplies/ Services

Works

 

Up to £3000

Up to £5000

Written quotation and routine testing of the market

Supplies/ Services

Works

 

£3001 - £50,000

£5001 - £75,000

Minimum of three written quotations

Supplies /Services

Works

£50,000

over £75,000

 

Full competitive tendering by open, closed or negotiated procedure

 

In addition, when the anticipated value exceeds £154,000 (supplies/services) or £3.8m (works) then the Council must advertise the contract (as per E C directives) throughout Europe (via the Official Journal of the European Community – OJEC) and there are strict timetables governing such tenders. Contract Standing Orders set out in detail what each of these thresholds requires the Council and its officers to do. They also lay down how tenders are to be submitted opened, evaluated, and awarded.

 

Tender evaluation is worthy of special comment, since the draft Contract Standing Orders now reflect a modernised approach. Historically, price only was used as the criterion for awarding contracts and this was a requirement of Standing Orders. Nowadays, evaluation can involve identifying the ‘Most Economically Advantageous Tender’ (MEAT) and the new Standing Orders make this a requirement for all contracts valued over £50,000 (£75,000 works). This does mean, however, that pre-determined evaluation criteria must be established (and good practice suggests that they need to be communicated to prospective tenderers). The result is that the Council can take account of a range of factors, not just price, when awarding contracts.

 

Members should be aware that Contract Standing Orders are, with exception of the EC requirements mentioned above, rules which the Council itself determines. As such, they can include what members want them to and, when there is some justification, they can be set aside. Clearly, one would expect this to be the exception and not the rule. The procedure sets out how such exceptions are to be dealt with and also requires that contracts of a ‘strategically important or politically sensitive nature’ be referred to the Executive Committee.

 

Members can see a full copy of the draft Standing Orders in the Members’ lounge and they are also available on the Council’s web site. Click Here to view

 

OUTCOME OF CONSULTATIONS

 

Relevant staff within directorates and the Directors Board have been consulted. Any comments arising have been taken into account in the draft document.

 

FINANCIAL IMPLICATIONS

 

There are no significant implications of the revised procedures, although there may be some resource implications in the Central Purchasing function. A relaxation (by raising thresholds) should deliver reduced workloads in the tendering process across most directorates.

 

LEGAL IMPLICATIONS

 

The new Contract Standing Orders  continue to ensure that the Council is in line with the requirements of EC directives and protect the Council generally from challenges of unfairness, impropriety and illegality.

 

OPTIONS

 

1                    To recommend the draft to the Executive Committee

 

2          To recommend modifications to the draft before adoption by the Executive Committee

RECOMMENDATIONS

 

 

1          To recommend the draft without modification

 

BACKGROUND PAPERS

 

EC Procurement Directives  92/50, 93/36. 93/37, 93/38, 89/96 & 92/13

Delivering Better Services for Citizens – DTLR 2001

Existing Council Standing Orders as to Contracts 1995

 

ADDITIONAL INFORMATION

 

None

 

 

 

 

Contact Point: Bob Streets, F 823622

 

 

 

 

 

JOHN PULSFORD

Strategic Director for

Finance & Information

 & County Treasurer