Procurement in Bassetlaw - Contract Procedure Rules

Amendments to Contract Procedure Rules

Previous issue - December 2020

Revised issue - May 2021

New EU Procurement Directives 2020/22

Changes to thresholds

• Goods - £189,330   
• Services - £189,330
• Works - £4,733,252

New Procedures

Innovation Partnership (Clause 31):

• Development of innovative products, services, or works not available on the market.

Competitive Negotiated Procedure (Clause 29):

• Open and Restricted still the 'default' options, but must be justified.
• Similar to previous Competitive Dialogue (CD) process.
• Should be used where the needs cannot be met without adaptation of readily available solution.
• Procurement includes design and innovation process.

Notable Changes

On 5th February 2015, the Public Contracts Regulations 2015 (SI 2015/02) were published. These Regulations will replace the Public Contracts Regulations 2006. New EU Procurement Regulations are effective from 26th February 2015.

No more Part 'A' and Part 'B' but a new 'Light touch Regime' LTR for health, social care and education. As set out in Schedule 3 Regulation 5(1) (d) and 74 Social and other Specific Services. Part 4 Regulations 105 to114 Lord Young’s report (UK interpretation).

Self-declaration for PQQ / ”European Single Procurement Document” - Regulation 59.

There is a new requirement for contracting authorities to draw up an Individual Report in relation to every contract, framework or dynamic purchasing system that it awards – Regulation 84 This can be replaced by a suitable contract award notice.

All procurement processes above £25,000 must be published (advertised) through the Governments Contracts Finder (CF) portal, after 1st April 2015. Regulations 106 to 112 Part 4 Regulations 105 to114 Lord Young’s report (UK interpretation).

For all electronic procurement process documents must be completed and available through the portal, prior to the OJEU notice publication.

All procurement processes must be achieved via an electronic process by 2018.

Most Economically Advantageous Tender (MEAT) will become the standard award criterion replacing the “lowest price”

Preliminary market consolation between contracting authorities and suppliers is encouraged to ensure that the specification reflects the true requirements and is in line with the supply market capability and capacity.                             

Contract Procedure Rules - General Changes

Changes to reflect new job titles and roles.

Amendments to reflect current terminology.

For all procurement processes, the Procurement Unit must be consulted. All tenders and Quotations are to be recorded through the Procurement Unit, and a Tender/Quotation reference number issued accordingly.

Notification of revised EU Threshold values.

Definition and Glossary of Terms moved to a new Appendix ‘I’

New section added – Single Use Plastics Policy – Appendix ‘J’

New clause 3.6 added to cover the requirements of advertising contracts over £25,000

New clause 3.7 added to cover the requirements of advertising ERDF contracts over £20,000

New clause 11.7.2 added to provide clarification on E-procurement

New clause 12.1 added to provide clarification on receipt of electronic tenders through the E-Tendering system.

New section relating to Apprenticeship Protocol

Revised OJEU thresholds 2018/19

Change to thresholds

• Goods - £189,330
• Services - £189,330
• Works - £4,733,252

 

Contents

• Introduction
• Scope of the Contract Procedure Rules
• How to Use the Contract Procedure Rules
• Before Starting
• Establishing a Procurement Route
• Factors to Take Into Account / Include in a Procurement Exercise
• Obtaining Authority to Proceed with Procurement
• The Competitive Procurement Process
• Selection of Suppliers / Contractors
• Low and Intermediate Value Procurement Procedures (Below £50,000)
• High Value Procurement Procedures (Above £50,000)
• Receiving and Opening Tenders (Above £50,000)
• Submitted Tenders - Errors and Variations
• Awarding Contracts
• Placing a Purchase Order
• After the Procurement Exercise
• Providing Services to External Bodies
• Where to obtain further Guidance, Information and Templates

 

Introduction

These Contract Procedure Rules (CPR’s) set out the rules by which we spend money on the supplies (goods), services and works we need to deliver services to the citizens of Bassetlaw. They are an integral part of the Council’s Constitution and must be used in line with the Council’s Corporate Procurement Policy and Strategy for any purchase or procurement exercise by ALL employees of the Council or any authorised person buying on behalf of the Council.

As a public authority the Council has a duty to allow the market the freedom of opportunity to trade with it. If the Council fails in this duty, a potential supplier or contractor may have a legitimate cause for complaint.

The CPRs have seven main purposes:

• To support the delivery of the Council's Corporate Procurement Policy and Strategy;
• To provide a legal framework for the Council's procurement activities; 
• To provide an auditable framework for the Council's procurement activities; 
• To help the Council obtain value for money so that in turn it may provide value for money services to the public;
• To comply with the UK law governing spending of public money;
• To comply with EU law as required through the EU Procurement Directives and
• To protect staff and members of the Council from undue criticism or allegation of wrong doing

Some of the rules set out in the document are required by law, others have to be put in place to provide a complete, clear and coherent framework in which people can work.

In producing the CPRs, it is recognised that they need to be written in plain English to reflect the fact that the great majority of spending is carried out by front-line services and, in line with the policy of the Council, they help ensure that decisions are made by the right people.

These CPRs recognise that the Council has certain responsibilities as a public authority for which it needs to act collectively:

• to make the best use of shared buying power;
• to produce information to comply with the law; and
• to understand the big picture of spending activity to allow the Council to plan, to measure and improve performance and to train and develop its people.

Further advice on any aspect of these CPRs and the Corporate Procurement Policy and Strategy can be obtained from:

• The Section 151 Officer (Head of Finance & Property)
• The Monitoring Officer (Director of Corporate Resources)
• The Council Solicitor
• The Lead Service Procurement Manager (LSPM)

Scope of the Contract Procedure Rules 

The CPRs apply to all the goods, services and works the Council buys, and any supplies/assets it might dispose of. The terms of ‘buy’, ‘purchase’, ‘procure’ and ‘commission’ are to be interpreted as one and the same thing throughout the document, and the term describes any transaction where the Council is paying any provider for supplies, works or services.

The Section 151 Officer and the LSPM are the custodians of the CPRs and are responsible for keeping them under review. If the European Union (EU) Directives or any other law is changed in a way that affects these CPRs, then that change must be observed until the CPRs can be revised. If our CPRs appear to conflict with EU Directives or any other legislation, then the Directives and legislation take precedence. It is intended that any changes to EU or UK legislation will be notified to Directorates in addition to any necessary changes being made to these CPRs.

Directorates will have their own operational procedures to achieve compliance with these CPRs. The operation of and compliance with these CPRs are also subject to internal audit procedures and review.

Contract Officers responsible for purchasing or disposal must comply with these CPRs, Financial Procedure Rules, Officers Code of Conduct, and with all UK Government legislation and EU binding legal requirements. Contract Officers must ensure that any agents, consultants, and contractual partners acting on their behalf also comply. It is the responsibility of officers to ensure that they are aware of and fully understand these requirements.

Chief Officers must ensure that their staff comply with these CPRs and they are suitably trained. They must also ensure that details of all current contracts are recorded on the Council’s Corporate Contract Register, and that all completed contracts are passed to Legal Services for safe keeping.

All relevant contracts must comply with these CPRs. A relevant contract is any arrangement made by, or on behalf of, the Council for the carrying out of works or for the supply of goods, materials or services. Relevant contracts do not include contracts of employment, interests in land, treasury management dealings, and the investment of assets of charities and trusts controlled by the Council.

How to Use the Contract Procedure Rules

Throughout the CPRs, references are made to other relevant documents. Therefore, these CPRs should be read in conjunction with those documents, but more specifically, the Corporate Procurement Policy and Strategy.

These CPRs start with the decisions and considerations that need to be made before any procurement exercise can begin. The document then moves on to outline who can buy the things the Council needs, before describing how to establish a procurement route. The CPRs then detail the considerations that may need to be taken into account prior to starting a procurement exercise, along with information on obtaining the authority to proceed.

The competitive process is explained, followed by the procedures required at various levels of spend and for EU Directives. In principle, the rules and procedures for higher-value procurements are stricter than for those of lower value. This is so that the benefits of a more thorough, complex process are not outweighed by its cost relative to the value of the supplies, services or works in question. As the Page 8 of 51 rules for supplies, services and works are similar but not identical, they are set out as a unified set of procedures, indicating where the rules differ for each category as appropriate.

The tender process is explained, followed by the evaluation of bids and quotes and details regarding the award of contracts. The ensuing sections are concerned with issues such as documentation, contract management and disposal procedures. The remainder of the document gives the exceptions to the CPRs and the procedures to follow to approve an exception. The document ends with particulars on where to find further guidance and advice. Finally, the document shows flow charts of the procurement process at each threshold level and provides definitions and a glossary.

The inherent theme throughout these CPRs is based on different rules for different financial values of contracts as follows:

• £1 to £1,000 – no restrictions within the requirements for quotations
• £1,001 to £5,000 – a minimum of one quote;
• £5,001 to £10,000 – a minimum of two competitive quotes;
• £10,001 to £50,000 – a minimum of three competitive quotes;
• £50,001 upwards – a formal tender process, with a minimum of three bids.

In all procurement processes over £25,000 they must be processed through the Procurement Unit to ensure that the procurement opportunity is processed and advertised on the Governments Contracts Finder (CF) portal.

For all ERDF funded projects over £20,000 they must be processed through the Procurement Unit to ensure that the procurement opportunity is processed and advertised on the Governments Contracts Finder (CF) portal.

Before Starting

The Council's Corporate Procurement Policy Strategy

All purchasing must be undertaken in line with the Council’s Corporate Procurement Policy and Strategy to ensure that all procurement activity contributes, as it should, to the delivery of the Council’s Corporate Plan priorities, prevailing at the relevant time.

Defining the Requirement and Deciding How to Proceed

Before starting any procurement process, Contract Officers need to make sure that they have carefully identified the requirement and fully assessed the options for satisfying it. Additionally, Contract Officers must check that there are no alternative procurement options already in place for fulfilling the requirement, which would remove the need for undertaking a separate procurement exercise. These can include but not necessarily be limited to:

• Use of In-house providers (see CPR 5.2);
• Corporate Contracts (see CPR 5.3);
• The use of Purchasing Consortia & Framework Arrangements (see CPR 5.4);
• Utilising Framework Arrangements already set up by other Local Authorities and CCS which have already been exposed to EU competition and allow access to them by other Councils (see CPR 5.4); and
• Collaborating with other Directorates and/or Local Authorities.

In line with best practice, Contract Officers should undertake a formal, evidence-based analysis when considering options for the delivery of a requirement (these principles should be applied equally to supplies, services or works). This is commonly referred to as an ‘Options Appraisal’. Further guidance on conducting an Options Appraisal can be sought from the LSPM. The options include:

• Not providing the service/supplies/works at all;
• Alternative methods of providing the service/supplies/works;
• Providing the service/supplies/works in-house; or
• Utilising another method of provision (see CPR 5.1).

In advance of undertaking any procurement process it must be ensured that:

• the requirement being procured is in line with the Council’s Corporate Procurement Policy and Strategy, and the Value for Money Strategy, and contributes towards the achievement of the Council’s Corporate Plan priorities;
• an options appraisal has taken place (where appropriate given the requirement);
• the budget is available, and the business case established using whole life costings (see CPR 4.3);
• the project size, type and scope established (where appropriate in accordance with the Project Management Guidelines) (See CPR 6.4);
• Project team is established for contracts valued at £100,000 and over (see CPR 6.4), and where appropriate in accordance with - Project Management Guidelines;
• the size, scope, whole life costings and specification of the supplies, services or works required is established (although this may be in the most general terms where the negotiated or competitive dialogue procedures are being pursued); and
• The correct authority to proceed has been obtained (see CPR 4.4 and CPR 7).

Whole Life Costings

In order to establish the correct value of a procurement the ‘whole life costing’ needs to be taken into account. This means the value of the supplies, services or works over their lifetime from inception to disposal including any appropriate sustainability issues. For example, in respect of vehicles:

• When purchasing vehicles, the whole life cost should include the cost of purchase, running and maintenance costs, training, environmental impact and residual values or opportunities for recycling at the end of the contract as well as any cost of disposal.
• For leasing vehicles, whole life costing can mean the costs of leasing including the cost of restoring the vehicle back to the condition required by the lessor prior to returning it, additional mileages etc.

Whole life costings should be used when informing the business case for undertaking procurement as well as any other decisions around options appraisal e.g. the decision whether to lease or buy, and provide in-house or buy in respect or supplies, services and works.

Who Can Buy and Authorise Payment

Each Director/Head of Service is responsible for carrying out their functions and providing services within the annual budget delegated to them. Authority is delegated by the Council’s Constitution to the Chief Executive, Director/Head of Service to procure supplies, works and services in accordance with these CPRs.

To carry out their functions and to provide the relevant services, each Director/Head of Service will need to purchase various supplies, works and services. These supplies, works and services will be procured from a range of internal and external providers.

It is the responsibility of the Chief Executive and Director/Head of Service to ensure that all Council policies, strategies, procedures and good practice relating to procurement are understood and followed by staff.

Wherever possible each Director/Head of Service should delegate authority to appropriate Contract Officers within their Directorate/Service Area to procure on their behalf. It is the Director/Head of Service’s responsibility to ensure that staff undertaking procurements have the necessary training and knowledge to undertake the procurement in line with CPRs.

Each Director/Head of Service must provide a list of Contract Officers who can buy and authorise payment on their behalf, specifying a maximum financial limit for each transaction to the Accountancy Section, who will update and maintain the list annually. Any starters/leavers during the year also need notifying to the Accountancy Section.

For any procurement of a value which exceeds the EU threshold, the ‘Authority to Proceed’ process detailed in CPR 7 must be followed. For procurement activity of a strategically important or politically sensitive nature*, the Director/Head of Service must:

• Seek a decision from the Cabinet whether bids are to be invited under the Director/Head of Service’s recommended strategy for procurement of the requirement; and
• Once bids have been evaluated, seek a further decision from the Cabinet whether a contract is to be awarded.

* Examples of ’politically sensitive’ procurement can include but are not limited to:

• Disposal of significant assets;
• Externalisation of major services or contracts;
• Transfer of significant numbers of staff;
• Procurement involving amendments to frontline service delivery; and
• Any procurement which has the potential to result in adverse publicity for the Council.

Each Director/Head of Service must ensure that any staff with delegated authority to purchase complies with the Council’s Corporate Procurement Policy and Strategy to ensure that:

• Any procurement activity carried out is in accordance with the Council’s corporate objectives;
• Information is provided quarterly to the LSPM of all contracts valued £5,000 and over to ensure that the Councils Corporate Contracts Register is kept up to date;
• Advice is sought from the LSPM as appropriate.

Establishing a Procurement Route 

Looking at Procurement Options 

Once the need for conducting a procurement exercise has been established, consideration should be given to the most appropriate procurement routes to take, and it will be necessary to decide upon a strategy by which the supplies, works or services will be acquired. This means taking a step back from the traditional purchasing process and assessing the options, this applies particularly to the provision of services. The LSPM can advise, but examples of procurement options available include, but are not limited to:

• provision via an existing corporate contract or framework arrangement;
• getting someone else to provide the service (“outsourcing”/ provision by the private or voluntary sector);
• providing the service in partnership with someone else (with the private or voluntary sector);
• by commissioning jointly with one or more other local authorities;
• through shared services arrangements.

These CPRs govern any option that results in a contract.

Where an option to proceed with a competitive procurement exercise has been chosen, the following flow chart will determine the appropriate procedure to be used:

 

 

As an alternative to seeking individual quotations, expressions of interest can be sought from the SourceNottinghamshire website. Please contact the LSPM for further details.

Use of Lead Services and In-House Providers 

The Council prescribes a number of Lead services, and any Directorate/Service Area undertaking procurement in these areas must be guided by that service. The Lead services are as follows:

• All Information Communication Technology (ICT) requirements/service - the Council’s ICT service;
• Specialist Services (Architects, Facilities and Estates Management Service etc.) for the commissioning of building works, accommodation and facilities management. These works are where a permit for work MUST be obtained – Property Services;
• Engineering Services for the commissioning of engineering and non-building construction works – Property Services;
• Fleet Operations Manager, Environmental Services for the procurement of all vehicles/plant.

It should be noted that ‘Procurement’ is not the same as ‘Commissioning’, although you may hear them used interchangeably. Commissioning is the process of specifying, securing and monitoring services to meet people’s needs at a strategic level. An ongoing process, it deals with whole groups of people, which distinguishes it from the process of buying individual services.

Where there is an in-house provider, they should be considered as potential providers of the required supplies, services or works, and should be invited to submit bids as part of the competitive process.

Use of the Corporate Contracts Catalogue (CCC)

The use of the Council’s Corporate Contracts Catalogue is mandatory and must be used unless the conditions existing in CPR 5.3.4 arise.

Corporate contracts are those where prices and terms are agreed with a supplier for an estimated quantity of supplies or services without commitment until confirmed by a separate purchase order. They offer benefits of bulk buying, improved service and reduced administration costs. Currently only a small number of corporate contracts are linked to the finance system. For details of corporate contracts please refer to the procurement Team at procurement@bassetlaw.gov.uk

A corporate contract is where it has been competitively tendered in line and compliance with the Councils CPRs, and is appropriate to its estimated contract value.

Where, for reasons of specification, timescale or availability, a Directorate/Service Area needs to deviate from a corporate contract for the supplies or services that they require, then they must complete and submit an exception report to the Procurement Manager for consideration. (See CPR 19 and Appendix G).

Use of Purchasing Consortia and Other Framework Arrangements

A Framework Arrangement is a general term for agreements with suppliers/contractors which set out terms and conditions under which specific purchases (or “call offs”) can be made during the period of the Agreement, which must not exceed four years.

Some contracts and framework agreements have been negotiated by other Local Authorities, Local Authority Purchasing Consortia such as Eastern Shires Purchasing Organisation (ESPO), or Central Government agencies such as the Crown Commercial Services (CCS) e.g. Central Purchasing Bodies (CPB’s) e.g. PRO5 or East Midlands Efficiency (EEM) Ltd. These may be used provided that the requirements of EU Regulations, these CPRs and Value for Money considerations have been taken into account. The Council may then benefit from using those contracts without entering into a separate procurement exercise. However, the terms of such Framework Arrangements and the appropriate Contract Award processes must be followed, including ALCATEL Standstill periods where appropriate. Advice will be sought as appropriate from the LSPM.

Framework Arrangements via Purchasing Consortia are used where the Council wishes to contract for the provision of supplies, services or works without conducting a new procurement exercise. However, the Framework Arrangement may include within its terms a requirement for a mini competition exercise between those suppliers/contractors who are parties to the Framework Arrangement.

The use of these are authorised, except where the Council’s own corporate contracts exist for these supplies and services or a particular Consortia or Government contract has been specified for use within the CCC.

There are specific framework agreements that can be used by the Council as follows:

• Constructionline – This is an accreditation service previously maintained on behalf of the central government to pre-qualify companies in the construction sector rather than use a Pre-Qualification Questionnaire. It is not a Standing List, as it has already qualified companies for the elements required, such as financial standing, health and safety etc. It should only be used to extract a long list of prequalified suppliers/contractors for construction projects under the EU threshold.
• It should be noted that Constructionline must not be used where a scheme is to be funded through ERDF funding.
• East Midlands Property Alliance (EMPA) – The Alliance has worked together to produce a number of Construction Frameworks for such examples as “Intermediate Construction Projects” up to £7.5 million, and “minor works projects” up to £2.5 million for small projects and refurbishments. The Council can use these Frameworks to avoid the Invitation to Tender process as it has already been undertaken by the Alliance in creating the Frameworks. Hence the Council would be able to run “mini-competition” from a number of construction companies. The existing Frameworks can be found on the EMPA website.

Use of Consultants to Provide Services

Consultants, including technical and management consultants, shall be selected and commissions awarded in accordance with the procedures detailed in these CPRs.

The engagement of a consultant shall follow the agreement of a brief that adequately describes the scope of the services to be provided and shall be subject to completion of a formal letter or contract of appointment.

Consultants shall be required to provide evidence of, and maintain professional indemnity (PI) insurance policies to the satisfaction of the Director/Head of Service after consultation with the Section 151 Officer, for the periods specified in the respective agreement and any subsequent liability.

Use of Sub-Contractors/Suppliers

This section shall apply where a sub-contractor or a supplier is to be nominated to a main contractor

The same principles that apply to all contracts under these CPRs shall apply to sub-contractors i.e. quotations for contracts under £50,000 and formal tender in excess of £50,000.

The terms of any invitation for nominated sub-contractors or suppliers must require that, if selected, the firms would be willing to enter into a contract with the main contractor on terms that indemnify both the main contractor and the Council on the areas of work or services that they undertake. We have a policy to achieve Payment Terms of, 10 days as standard.

Apprenticeship Protocol

Apprenticeship training costs can range from £3,000 to circa £21,000 for a degree-equivalent programme and we would foresee the following protocol to be used where costs fall below £25,000:

• Search the Government apprenticeship levy website for suitable providers of the identified apprenticeship programme
• Identify a minimum of three providers, or all organisations if there are fewer than three which offer delivery of this learning within the Council’s geographical area
• Invite the identified organisations to provide information on the apprenticeship programme delivery by the deadline provided
• Collate and review the returned information to select the successful provider against the following considerations:
  • Cost
  • Provision delivery model
  • Quality data (provided by the Government platform)
  • Length of programme
  • Location/ proximity to Bassetlaw District Council (provided by the Government platform)
  • Confirm the outcome to providers

Find an apprenticeship training course (external link)

Factors to Take into Account / Include in a Procurement Exercise

Ethos of Procurement

The approach adopted by the Council in respect of undertaking procurement is one of adhering to the EU Directives, regardless of the value of the contract. This means that the process should be fair, open, transparent and auditable.

The Corporate Procurement Policy and Strategy aims to ensure that value for money or best value is achieved within all procurement activity. This may not necessarily mean choosing the cheapest option, as it also takes account of quality issues (see CPR 14 with regard to evaluating bids).

The Council aims to achieve sustainability wherever possible within its procurement activity. Sustainability is the term used to recognise that social, economic and environmental issues are linked and must be addressed together. Taking sustainability into account in the procurement process (within the constraints of achieving value for money) means:

• Ensuring that the needs of different local communities and service users are met when assessing the business need for a requirement, in writing specifications, evaluating tenders and throughout the delivery of the requirement.
• Addressing environmental issues throughout the tender process, in the delivery and design of contracts, which continue to improve in quality and Value for Money.
• Developing an approach to whole life costing for each requirement, including the life cycles from inception to final disposal.
• Linking the whole process into the Equality and Diversity Strategy and compliance with the requirements of the Equality Act 2010.

The Council will ensure an equality of opportunity within its procurement activity by operating an open and transparent procurement process that is easily accessible to all (see CPR 6.8).

Consideration will be given to ethical sourcing e.g. ‘fair trade’ and Corporate Social Responsibility (CPR) issues through the procurement process, particularly in terms of the management of supply chains and labour sourcing.

Developing a Contract Strategy

Directors/Heads of Service will ensure that adequate planning of all anticipated procurement projects within a financial year are submitted within their Directorate’s Service Improvement Plan as part of the ongoing business planning process. The LSPM should be advised of any additional large-scale projects as soon as possible once the initial Directorate’s Service Improvement Plan has been approved. This is to ensure that any collaborative opportunities can be identified, and any necessary resources can be considered.

Once the decision has been taken to procure supplies, services or works, a contract strategy should be determined at the outset of the procurement exercise. This is particularly important when undertaking intermediate and high value procurement exercises. There are many areas that may need to be considered to ensure that the contract is beneficial both to the Council and the potential suppliers/contractors. As the strategy is developed a timetable will emerge, and it will be essential that Contract Officers allow enough time to comply with these CPRs (see CPR 6.3). If the contract is subject to EU Regulations, the timetable will need to include mandatory minimum time periods e.g. 10 days Alcatel standstill period. Guidance from the LSPM should be sought.

Establishing a Procurement Timetable

The timetable for a procurement exercise has many contributory factors. However, the success or failure of a procurement exercise and delivery of the required supplies, services or works on time can be dependent upon understanding the factors that can influence the timetable for procurement, these can include but are not limited to:

• Use of pre-existing arrangements where available – useful when a requirement must be speedily procured. (See CPR 5.2 – 5.4);
• Size of the procurement exercise – which procedure must be followed. Higher value procurement exercises usually mean longer timescales are involved. EU procurement timetables can mean longer mandatory timescales that need taking into account. (See CPR 10 and 11 and Appendices A - F);
• Use of the Project Management Guidelines;
• Time to obtain approval to proceed;
• Time required to compile tender documents including specification, tender evaluation plans where appropriate etc.
• Time required for the advertisement and return of bids where applicable (see CPRs 11.4 and 11.6 and Appendices C-F);
• Time required for evaluation of bids received (including meetings of evaluation team, site visits, examination of technical/financial/reference data etc.);
• Time to obtain appropriate approval to proceed with award of contract (see CPR 15);
• Time to prepare the formal contract;
• Lead time needed for rolling out of the service, works or manufacture and supply of goods;
• The date by which an existing contractual arrangement will expire.

Use of Project Teams

Directors/Heads of Service should ensure that any procurement is undertaken in line with the Project Management Guidelines, where appropriate. However, any procurement exercise for Services and Works likely to cost in excess of £100,000 will benefit from the formation of a Project Team established for that purpose.

A Project Team approach should also be considered where a purchase falls below £100,000, and any of the following criteria apply:

• Where the procurement is of a strategic or politically sensitive nature (see CPR 7.2);
• Where the procurement being undertaken is high risk or complex; and
• Where a Project Team approach would be beneficial to the Council.

The Project Team structure should be tailored to the procurement activity being undertaken. However, it is recommended that a core team be recruited and in addition, specialist input and advice sought from the following:

• Finance;
• Human Resources (where there are TUPE, HR and Training implications);
• Legal Services (where specialist advice is required, including advice on the form of contracts prior to seeking tenders); and
• The LSPM (where specialist advice is required).

Wherever it is anticipated or there is a potential that Transfer of Undertakings (Protection of Employment) (TUPE) will be encountered as part of a procurement exercise, a Union representative should be recruited to the Project Team at its inception.

It should be noted that project members may not be required to attend every Project Team meeting, and instead should provide advice or attend at appropriate stages of a project. This is to ensure that officers provide their most effective and efficient contribution to the procurement project and best use is made of officer time.

Further guidance on projects and project teams can be found in the Project Management Guidelines.

Risk Management

The Council is exposed to many types of risk, i.e. the probability of incurring misfortune or loss, and has developed a Risk Management Strategy to help staff assess the risks involved when conducting a procurement exercise. For further information, please refer to the Risk Management Strategy which is published on the Council’s intranet.

For all procurements, an appropriate level of risk assessment will be undertaken as part of the options appraisal and business case development, and shall be reviewed and updated as part of the procurement process. For the avoidance of doubt, it is a requirement of the Constitution that Directors/Heads of Service must be satisfied that an appropriate risk assessment has been undertaken when either (i) exercising delegated powers or (ii) submitting reports to Elected Members.

If an EU procurement exercise is contemplated, a risk assessment must be undertaken. In all cases, where the establishment of a Project Team is required by these CPRs, the Monitoring Officer as Corporate Risk Manager should be notified.

Aggregating Requirements and Purchases

Whenever possible, requirements for supplies, services and works must be aggregated. On no account should any requirement be split in an attempt to avoid using the proper procedure under these CPRs or EU Directives.

Where a recurring pattern of purchases can be seen for supplies, services or works, consideration should be given to whether one or more corporate contracts would represent better value in terms of price, service, invoicing or other administration costs. Where the aggregate annual spend on a given category of supplies or services exceeds the relevant EU threshold, all such requirements must be advertised under EU Directives (i.e. be published in the Official Journal of the European Union (OJEU) in conjunction with the LSPM).

Calculating Contract Values

Future contract values should be calculated using estimated annual costs (taking into account whole life costings – see CPR 4.3). All periods of a future contract need to be taken into account including any proposed extensions. For example, a two-year contract with two 12-month extension periods (giving a total of 4 years) valued at £25,000 would mean an overall contract value of £25,000 x 4 years = £100,000. All calculations should be made exclusive of VAT.

When considering the value of a procurement requirement, and which procurement procedure to use, it is the contract value calculated as shown above at CPR 6.7.1 that should be used for informing decisions.

Public Procurement, Legislation and Council Policy

Equality and Diversity Legislation

The Council provides a wide range of services to the community and businesses in the District. In some cases, these are provided directly by officers employed by the Council, but in other cases, contractors and partners may provide them on its behalf. Each year the Council enters into contracts worth many millions of pounds for buying goods, works and services on behalf of the Bassetlaw District community. Therefore, the services provided to the community should be geared towards their diverse needs and requirements. Spending by the Council sustains and maintains a significant number of jobs within the District, and the Council has a statutory duty to ensure that public money is spent in a way that ensures value for money and does not lead to unfair discrimination and social exclusion.

Much of the legislation around Equalities and Diversity was amalgamated within the Equality Act 2010. One of the Act’s main objectives is “to enable duties to be imposed in relation to the exercise of public procurement functions”. The Act and Codes of Practice do this by strengthening the Equality Statutory Duty on Public Bodies and their suppliers through Public Procurement (Equality Act 2010, Part II Advancement of Equality Chapter 1 Public Sector Equality Duty Clauses 149 to 157). The requirement requires that all public authorities must, in the exercise of their functions, have due regard to the need to eliminate discrimination, harassment and victimisation, advance equality and foster good relations.

Other Legislation to Consider

Along with the Equality and Diversity legislation, there are other legal requirements that must be considered when tendering for supplies, services and works. These include, but are not limited to: 

• Human Rights Act 1998;
• Health & Safety Legislation;
• Freedom of Information Act 2000;
• Data Protection 1998;
• General Data Protection Regulations 2018
• Modern Slavery Act 2015 
• 2006 Transfer of Undertakings (Protection of Employment) regulations known as 'TUPE'.

Council Policies

All procurement activity must take place in line with Council policies and procedures, including the Council’s Corporate Procurement Policy and Strategy and these CPRs. These are constantly being improved and amended, and it is important that those undertaking procurement do check to ensure which policies will apply to the procurement exercise and they are using the most up-to-date policy. These policies could include, but are not necessarily limited to:

• The Corporate Plan;
• Environmental Policies;
• Value for Money Strategy;
• Project Management Guidelines;
• Risk Management Strategy;
• Health and Safety Policy;
• Whistleblowing Policy.

Building Innovation into Contracts

When procuring a new requirement or re-tendering for an existing requirement, consideration should be given to allowing potential for innovation, such as the use of new technologies and different methods of delivery. It is not necessarily the best value for money to continue to provide supplies, services or works in the manner they were provided previously. This requires re-assessment wherever possible before undertaking procurement.

When compiling specifications ready for undertaking procurement, consideration should be given to allowing bidders the latitude to introduce suggestions for innovation as well as bidding against the specification as laid out. Additionally, consideration should be given to whether an ‘outcome’ based specification would be appropriate, which looks at the end results rather than the means of delivery, as opposed to a traditional ‘input’ based specification that needs to be prescriptive in all its aspects. A hybrid of these two approaches tends to be the most suitable.

In this regard, suitable and adequate controls need to be in place as part of the contracting procedure, and the evaluation model notified to potential bidders should clearly explain the scoring criteria.

E-procurement

Increasingly, E-procurement methods are becoming more prevalent and accessible. With this in mind consideration should be given to usage of the following, either in the tender process, or the resultant contract:

• E-auctions;
• E-tendering;
• E-catalogues;
• E-ordering and invoicing;
• Web access;
• Electronic contract monitoring and management (including web access).

Further advice on the above should be sought from the LSPM.

Standards

Where an appropriate European or British Standard Specification or British Standard Code of Practice exists, this should be stated within the specification and the contract. This is to ensure that supplies, services or works are provided to a minimum acceptable standard, and ensure compliance with Council policies. For EU tenders the ISO standards should be specified.

Where standards do not exist, consideration should be given to using generally accepted and appropriate trade standards or their equivalent. Contracts shall contain all requirements and procedures that are necessary to ensure compliance with the Council’s Health and Safety, and Environmental policies.

Bonds and Parent Company Guarantees

The Contract Officer, when assessing the supplier’s/contractors financial viability shall consider whether the Council requires security for due performance of the contract.

The Contract Officer must consult the Section 151 Officer about whether a Parent Company Guarantee is necessary when a candidate is a subsidiary of a parent company and the total value exceeds the EU threshold.

Where security is considered to be appropriate and required, the Contract Officer in consultation with the appropriate officers, shall specify in the tender the nature and amount of the security to be given. This shall apply to all works contracts in excess of £500,000, and as a minimum shall be at least 10% of the total value of the contract.

The security shall be obtained by the supplier/contractor from an institution or bank, and in the format approved by the Section 151 Officer. As an alternative, the supplier/contractor may deposit the equivalent sum of money with the Council.

In the case of works provided by other local authorities, a bond guarantee will not be required.

Insurance

In connection with the carrying out of all works, irrespective of value, the supplier/contractor shall indemnify the Council and provide such insurance as may be required under the conditions of the contract. This shall, as a minimum, indemnify the Council against injury and damage to persons and property. The minimum value for any one occasion or series of occasions arising out of one event shall be based upon:

• Circumstances relevant to the particular contract in question;
• A minimum value periodically determined by the Section 151 Officer (currently £5,000,000 or a higher value where considered appropriate).

The Contract Officer shall ensure that the appropriate insurance documents have been submitted by the supplier/contractor in conjunction with the contract conditions.

The Contract Officer shall ensure that the adequacy of the submitted insurance documents is confirmed by the Council’s Insurance Officer.

The Contract Officer shall ensure that insurance cover is maintained throughout both the period of the contract and the maintenance period, where appropriate.

Health and Safety

In connection with the carrying out of all works, irrespective of value, the supplier/contractor shall provide to the Council all of the Health and Safety details as may be required by Statute and under the conditions of the contract.

Income Generating Contracts

Contracts that generate income shall only be entered into if the relevant Director/Head of Service is satisfied that:

• The relevant power to provide a service (for a service contract) and the resources and time required have been properly identified, and the proposed contract is in the best interest of the Council;
• Where the income is to be generated by the granting of a concession e.g. the opportunity to an external provider to provide an income generating service at Council events/premises, then the opportunity in terms of contract value should follow the guidance outlined in Section 8 of these CPRs. The offers submitted should be evaluated to assess which offer is most economically advantageous to the Council, and the terms of any contract shall be clearly set out in writing.

Prevention of Corruption and Collusion The Contract Officer must comply with the Council’s Code of Conduct and must not invite or accept any gift or reward in respect of the award or performance of any contract. It will be for the Contract Officer to prove that anything received was not received corruptly. High standards of conduct are obligatory, and corrupt behaviour will lead to dismissal and is a crime under the statutes referred to  below.

The following clause must be put in every written Council contract:

“The Council may terminate this contract and recover all its loss if the Contractor, its employees or anyone acting on the contractor’s behalf do any of the following things:

• Offer, give, or agree to give anyone any inducement or reward in respect of this or any other Council contract (even if the contractor does not know what has been done), or
• Commit an offence under the Prevention of Corruption Acts 1889 to 1916 or Section 117(2) of the Local Government Act 1972, or
• Commit any fraud in connection with this or any other Council contract whether alone or in conjunction with Council members, contracts or employees.

Any clause limiting the contractor’s liability shall not apply to this clause.”

The LSPM, Section 151 Officer, and the Monitoring Officer shall undertake periodic reviews of tenders submitted by successful suppliers/contractors to consider the potential for tenderer collusion and cartels.

All officers, Members, and potential and existing suppliers/contractors must be aware of the Council’s Whistleblowing policy.

Declaration of Interests

If it comes to the knowledge of a Member or an employee of the Council that a contract in which he/she has a personal or prejudicial interest that has been or is proposed to be entered into by the Council, he/she shall immediately give written notice to the Monitoring Officer, who will report such declarations to the Audit and Risk Scrutiny Committee.

Value for Money

All purchasing procedures should ensure that value for money in terms of spending public money is achieved. Value for money is not always the lowest possible. For goods and services, it is a combination of the price and quality aspects of the bid that identifies the highest overall combined score. The quality aspect can be a combination of requirements to meet the Council’s needs, including but not limited to quality management systems, compliance with the specification, project plan, health & safety aspects, environmental, on-time delivery, previous experience, references, etc. The winning bid should be demonstrated through the evaluation matrix, with the winning score being the highest overall combined score for price and quality.

Obtaining Authority to Proceed with Procurement

Having obtained approval for the business case and budget, a procurement process must only be undertaken once the approval has been obtained:

Authority Levels to Proceed with Procurement – Below EU Threshold Levels

A) Where the contract is for a Services / Supplies contract below the EU Threshold and is:

• below £10,000 approval to proceed with procurement must be obtained from the relevant Service Manager.
• above £10,000 and below £50,000 approval to proceed with procurement must be obtained from the relevant Director/Head of Service or their nominee
• exceeds £50,000 and is below the EU Threshold approval to proceed with procurement must be obtained from the relevant Director/Head of Service in consultation with their Portfolio Holder.

B) Where the Contract is a Works contract below the EU Threshold and is:

• below £10,000 approval to proceed with procurement must be obtained from the relevant Service Manager.
• above £10,000 and below £50,000 approval to proceed with procurement must be obtained from the relevant Director/Head of Service or their nominee
• exceeds £50,000 and is below the EU Threshold approval to proceed with procurement must be obtained from the relevant Director/Head of Service in consultation with their Portfolio Holder

Authority Levels to Proceed with Procurement – Above EU Threshold Levels

C) Where the proposed contract value exceeds the relevant EU threshold and the EU procurement legislation applies, no procurement should be undertaken until approvals have been obtained using the ‘Authorisation to Conduct EU Procurement Exercise’ form (see Appendix H). Additionally:

• In the first instance advice must be obtained from the Procurement Manager;
• Provided advice has been obtained from the Procurement Manager, initial approval must be sought from the relevant Director in consultation with the relevant Portfolio Holder;
• The request for an EU procurement must then be forwarded to the Monitoring Officer for final approval whether the procurement process is required to be approved by Cabinet, or may proceed under delegated powers;
• The final completed form must be copied to the Procurement Manager who will retain the copy and assist in placing any notices in the Official Journal of the European Union and advise on how the procurement should proceed e.g. the establishment of a Project Team.

For procurement activity of a strategically important or politically sensitive nature*, Directors/Heads of Service must:

• Seek a decision from the Cabinet whether bids are to be invited under the Directors/Head of Service’s recommended strategy for procuring the requirement; and
• Once bids have been evaluated, seek a further decision from the Cabinet whether a contract is to be awarded.

* Examples of ’politically sensitive’ procurement can include but are not limited to:

• Disposal of significant assets;
• Externalisation of major services or contracts;
• Transfer of significant numbers of staff;
• Procurement involving amendments to frontline service delivery; and
• Any procurement, which has the potential to result in adverse publicity for the Council.

The Competitive Procurement Process

Having calculated the value of the contract, the most appropriate procurement route must be established. In principle, the rules for higher-value orders and contracts are stricter than those for lower-value ones. This is so that the benefits of a more thorough, complex process are not outweighed by its cost relative to the value of the supplies, services or works in question.

Contract values will fall into different threshold levels, and this will determine which procurement procedure is to be followed. In brief the procedures are outlined below:

 

Contract Value	Procurement Procedure
Between £0 and £1,000	No restrictions and no requirement to get quotations
Between £1,001 and £5,000	One quote required
Between £5,001 and £10,000	Compare prices or seek two comparable quotations. Alternatively, expressions of interest can be attained through the Source Nottinghamshire or Derbyshire website for a competitive process - contact the LSPM for further advice)
Between £10,001 and £50,000	Obtain a minimum of three written quotations
Above £50,000	Formal tender process

The above thresholds are subject to a tolerance of 5% where the value of any quotation exceeds the original estimate and is below the EU thresholds.

Directors/Heads of Service or their nominees must be aware that when selecting suppliers/contractors, a single company is not consistently favoured at the detriment of others. This means that the shortlisted companies should be varied between individual contracts to avoid the over-use of a single supplier/contractor.

Selection of Suppliers / Contractors 

For contracts under £50,000, these Contract Procedure Rules expect that a number of quotations are sought before selecting a successful supplier/contractor.

These quotations can be sought from local suppliers/contractors at the discretion of the Head of Service or their nominee.

For contracts in excess of £50,000, Contract Officers must consider the following process in conjunction with guidance from the LSPM:

• Publish / advertise requirement;
• Suppliers respond to advert;
• Council issues tender documents through the Due-North e-Tendering system www.eastmidstenders.org
• Suppliers submit their tender bid and associated documentation through the system

Low and Intermediate Value Procurement Procedures (Below£50,000)

Low-Value Transactions (Between £0 and £1,000)

For transactions between £0 and £1,000 there are no restrictions and no requirement to obtain competitive prices.

In all cases, a formal purchase order shall be issued.

Low-Value Transactions (Between £1,001 and £5,000)

For transactions valued between £1,001 and £5,000 only a single quote is required. Written formats may include, e-mail, catalogue and website pages or copies, advertisements or marketing material, price lists, letters, etc. A formal purchase order shall be issued specifying the supplies, services or works and setting out prices and terms of payment.

In all cases, the successful quotation shall be accepted by means of a formal purchase order.

Low-Value Transactions (Between £5,001 and £10,000)

For transactions valued between £5,001 and £10,000 where a Directorate/Service Area does not elect to pursue a purchase using a pre-existing arrangement in accordance with CPR 5.2 to CPR 5.5, prices should be compared, or two quotations should be sought. Written formats may include fax, e-mail, catalogue and website pages or copies, advertisements or marketing material, price lists, letters, etc. A formal purchase order shall be issued specifying the supplies, services or works and setting out prices and terms of payment. See Appendix A for a diagram of the procurement procedure for purchases below £10,000.

In all cases, the successful quotation shall be accepted by means of a formal purchase order.

All such purchases must be recorded and noted as a purchase which should be reported as required by the Transparency Code 2014.

Intermediate-Value Transactions (Between £10,001 and £50,000)

For transactions valued between £10,001 and £50,000 that cannot be satisfied using a pre-existing arrangement, ordinarily a minimum of 3 written competitive quotations i.e. e-mail or letter to a designated officer and address, must be sought (or 4 if inviting an in-house provider). See Appendix B for a diagram of the procurement procedure for purchases between £10,001 and £50,000. Additionally, where appropriate, an advertisement may be placed on the Council website and/or on SourceNottinghamshire (or SourceDerbyshire) website if appropriate.

In all cases, the successful quotation shall be accepted by means of a formal purchase order.

Quotation Procedure

Quotations in a non-electronic format should be returned in a plain sealed envelope bearing the words “quotation for…” but with no other name or mark identifying the sender. The quotations must remain in the custody of the Director/Head of Service or their nominee until the date and time specified for the opening. All quotations (including electronic submissions) should be opened and recorded at the same time in the presence of two officers designated by the Director/Head of Service, and these officers must sign and date each individual quotation at the time of opening, plus the summary list.

High-Value Procurement Procedures (Above £50,000)

Introduction

For transactions valued over £50,000 that cannot be satisfied using a pre-existing arrangement, a formal tender process must be conducted and tenders must be sought and obtained using a formal Invitation to Tender (ITT) process.

An advertisement must be placed on the Council’s and SourceNottinghamshire or SourceDerbyshire websites.

As previously indicated all procurement activity should be conducted so that it contributes to the achievement of the priorities within the Council’s Corporate Plan. When conducting a procurement exercise, a ‘contract strategy’ should be developed to assist in the decision making process. 

It is recommended that a Project Team be established for all procurement exercises where the contract value exceeds £100,000.

The Tender Process

In line with the EU Consolidated Directives there are a range of procurement processes available for Tenders over £50,000. The ones most appropriate to the Council are listed below:

1. Open Procedure;
2. Restricted Procedure (an accelerated version of this procedure may be available in extreme circumstances – contact the LSPM for further information);
3. Negotiated Procedure (In all circumstances the use of the Negotiated Procedure must be approved by Cabinet);
4. Competitive Dialogue (In all circumstances the use of the Competitive Dialogue Procedure must be approved by Cabinet); and
5. E-auctions (It should be noted that e-auctions are a tool that can be used if appropriate as one of the final processes of a procurement exercise, and it is not a ‘standalone’ procurement procedure).
6. Modify to reflect new procedures

The first two procedures are usually the most appropriate for the majority of procurement exercises.

The same general procedures will apply to all procurements over £50,000. However, different approval levels, different minimum timescales, and additional steps apply for procurement exercises that are above the EU threshold level. The table on page three (3) shows the contract values at which the different approval levels, timescales and steps apply.

The EU Directives have been implemented into UK law by the Public Contracts Regulations 2015 (SI 2015/102).  There are additional requirements for procurement projects valued above the EU threshold levels. Post-Brexit from 1 January 2021, above threshold tenders in the UK are published on the Government’s new procurement portal, Find a Tender (FTS).

The EU thresholds introduced on 1 January 2020, will remain in place until 1 January 2022. Future thresholds will be determined by the World Trade Organisation’s (WTO) Government Procurement Agreement (GPA) – which the UK has been a member of since 1 January 2021.

The EU thresholds are subject to review and change on a Bi-Annual period. The thresholds that apply will be those advised from time to time by the Crown Commercial Services (CCS) and shall supersede those detailed in these CPRs (where they differ as noted on page 3 of this document).

Please refer to Appendices C - F for process maps showing the procedures and time guidelines to follow for both open and restricted procedures above and below EU threshold levels.  For additional information on the procedures please contact Procurement.

Timetable

As indicated in CPR 6.3 it is important to establish a procurement timetable at the commencement of a procurement exercise. These differ dependent on the tender process being used (see CPR 11.2), and if EU procurement thresholds apply, additional mandatory timescales come into play. Please refer to Appendices C - F for examples of differing timescales.

Advertisements and EU Notices

Advertisements can be used to generate expressions of interest (in the case of the restricted procedure), or requests for Invitations to Tender documents (in the case of the open procedure).

All procurements over the EU threshold from 1^st January 2021 must be published on the Government’s new procurement portal, Find A Tender (FTS).  NB - No advertisement should be placed in any other publication or format prior to the FTS notice being published.  It is also important to note that only information published on the FTS notice can be included in any subsequent advertisements placed.

In all circumstances, an advertisement for contracts over £25,000 should be published in the:

• Tender pages
• Council's Buy Local Bulletin Board;
• Projects are advertised on the East Midlands/Proactis E-Tendering portal (external link) and Source Nottinghamshire (external link).
• Find A Tender (FTS) for above EU threshold limits
• Contracts Finder (particularly for EDRF funded schemes)
• Where appropriate trade journals in order to target the appropriate market

(Please note that all advertisements and Notices should be made in conjunction with the LSPM).

In addition to the formal advertising, direct marketing of the tender is permissible to include suppliers/contractors that may not see the opportunity to ensure local / regional / national competition. This should be documented as to who and the reasons why.

The advertisement or notice should specify a deadline by which bids or notifications of interest should be submitted. This deadline should be appropriate to the complexity of the tender opportunity. Please refer to the Appendices C to F for the specific deadlines involved in each different procedure.

Pre-Qualification Questionnaires (PQQ)

The new Public Contracts Regulations 2015 have resulted in a profound change in the use of Restricted (2-Stage) process.

Contracting Authorities (CA) may not include a Pre-Qualification Questionnaire (PQQ) stage in any procurement process where the value of the procurement is below the OJEU threshold for goods and services. This therefore precludes the use of the 2-Stage process.

This also applies for tenders for Works where the threshold value is significantly higher. PQQs are not permitted, but CA may ask questions relating to potential suppliers providing that the questions are relevant to the matter of the procurement and proportionate.

A Restricted tendering procedure, Pre-Qualification Questionnaires may be used where the value is greater than the specified threshold to ascertain certain information from potential suppliers / contractors.

Where a restricted tender process is used it should be noted that Company information requested in the 1st stage PQQ process, cannot be asked for in the resulting ITT process.

If successful after the shortlisting process has been concluded, suppliers/contractors will be given an Invitation to Tender.  If unsuccessful, a formal letter should be issued to inform them that they have not been successful on this occasion. The letter should identify their scores in relation to the cut-off which should have been noted in the PQQ document. 

Invitation to Tender (ITT)

The Invitation to Tender must state that no tenders will be considered unless it is received by the date and time stipulated in the tender documentation. No tender delivered in contravention of this CPR shall be considered.

All Invitations to Tender should include a prescribed address label or pre-printed envelope that must include the date and time of the deadline for the return of tenders.

Tenders may be invited for submission by electronic methods. Contract Officers wishing to conduct electronic tender exercises should contact the LSPM. Only portals approved by the Monitoring Officer may be used. This is currently the Due-North system (external link).

Return of Invitations to Tender (ITT) 

Every Invitation to Tender for a transaction valued over £50,000 should state that:

For e-Tenders

• Where possible and practical all bids (tenders, Quotations and RFQs), correspondence, clarifications and dialogue must be processed through the e-Tendering (Proactis) system (DueNorth).
• Bids must be received through the e-Tendering system, by the return date and time identified through the system. The e-Tendering system operated a locked vault which will close at the precise date and time. Therefore, late bids will not be accepted by the system.
• Any bid received from outside the e-Tendering system through e-mails, post or other means must be rejected and not evaluated. In this situation suppliers should be informed accordingly as a matter of priority.
• Certain Framework agreements only allow for the mini-competition to be run as paper exercises. This requirement will be set out in the Terms and Conditions of the Originator of the Framework agreement, e.g. Eastern Shires Purchasing Organisation, Yorkshire Purchasing Organisation, and Crown Commercial Services, etc.

Receiving and Opening Tenders (Above £50,000) 

All tenders and bids received, including any electronic tenders, should be opened and receipted using the following protocols.

Receiving and Opening Tenders and Bids – Above £50,000

e-Tenders

• For Electronic processed tenders and quotations, the bid documents will only be received through the e-Tendering system. 
• Through the system the complete electronic procurement process will be auditable, though actions, names, dates, times, etc. of people involved in the process. This information will be available to all relevant parties through the system, providing they are set up with the appropriate access by the Contracts Manager.
• The recorded information must include:

1. the nature of the supplies, works or services to be provided;
2. the name of the supplier/contractor submitting the tender;
3. the name of any supplier/contractor submitting an invalid tender with brief details of the reasons for the tender’s invalidity;
4. where practicable, the amount of the tender. All officers present should initial the amount on the tender document. Where it is not possible to insert the amount of each tender at the time of opening, this information shall be added, as soon as possible;
5. the date and time of opening the tenders;
6. the names and signatures of all persons present at the opening of the tenders; excluding observers; and
7. when a tender has been marked with additional information (e.g. reason for nonvalidity), the date and time and name and signature of the officer making the insertion should be recorded.

Submitted Tenders - Errors and Variations

Clerical Errors (Other Than Errors Affecting the Tender Figures)

Where it is apparent that there is a clerical error in the tender and the error makes the terms of the tender unclear, the tender shall be considered by the Director/Head of Service in consultation with the Council Solicitor as to its validity. Where, despite the error, the terms of the tender are still clear, the tender shall be considered, as if the error has been corrected.

Errors Affecting the Tender Figures

Where examination of tenders reveals an error or discrepancy, which would affect the tender figure(s) in an otherwise successful tender, the supplier/contractor shall be offered the opportunity of continuing or withdrawing the tender. Following any withdrawal, the next lowest tender may be dealt with in the same manner as if the tender in question was the lowest that had been received. The supplier/contractor shall not be given any opportunity to amend his tender once it is submitted (except under CPR 13.3.1 below) and, in the event of his electing to stand by his offer, the tender, quotation, priced Bill of Quantities, priced Specification or priced Schedule of Rates or other relevant document, the tender shall be endorsed to that effect by the supplier/contractor with the correct prices. The application of this CPR shall be in consultation with the Council Solicitor in order to ensure that any supplier/contractor does not secure an unfair competitive advantage through using either contrived or deliberate errors within their tender.

Permitted Variations to Tenders

If variations to tenders are required by the Cabinet or the Director/Head of Service, such alterations may be negotiated by the Director/Head of Service with the supplier/contractor submitting the lowest (or Page 28 of 51 highest scoring) bid. Only if those negotiations fail, shall the supplier/contractor who has submitted the next lowest valid tender in respect of that Contract be approached with a view to negotiating those variations.

Details to be Recorded

All variations made under this CPR shall be recorded in writing.

Evaluating Tenders and Quotations

The award of any contract as an outcome of the evaluation of a quotation or tender should reflect value for money and the most economical use of resources in furtherance of the Council’s corporate priorities.

The method used to achieve this outcome can be an evaluation using either: -

• the Most Economically Advantageous Tender (MEAT) to the Council, or
• the lowest compliant price (but also taking into account all quality criterion considerations within the specification, including whole life costing, etc.)

The method of evaluation and relevant weightings must be made clear in the Request for Quotation (RFQ) or Invitation to Tender (ITT) documentation.

Further to this, where MEAT is selected, the individual criteria should also be included in the RFQ or tender documentation. These evaluation criteria cannot be changed once it is declared in the adverts/documents, and no variations of such can be made. Therefore, it is important that all areas of the tender are addressed in the evaluation criteria to assess a successful tender.

For above EU threshold tenders if any changes are made to the evaluation criteria and/or scoring methodology, post tender notice advert this will lead to challenges through the tender award process. Therefore, once an FTS notice has been published no changes should be made or considered.

Where MEAT is chosen, the individual criteria should be translated into a formal tender evaluation plan, which must be finalised in advance of the deadline for the receipt of quotations or tenders.

For above EU threshold tenders the evaluation process, Team and timescales should be set prior to the tender notice being published through Find A Tender (FTS).

For contracts of a value below £100,000 the evaluation should be conducted within the lead procuring Directorate/Service Area, using officers from other Directorates as appropriate (including Finance). For contracts above £100,000 evaluations should be conducted by the Project Team (see the Project Management Guidelines) with the procuring Directorate taking the lead.

All decisions and outcomes of the quotation or tender evaluation must be recorded in writing and maintained for the audit trail. It is seen as good practice to use an evaluation matrix.

Negotiations with potential suppliers/contractors or successful suppliers/contractors are permitted provided they are carried out in accordance with the agreed protocols.

Where the lowest price has been selected as the basis for contract award, and the Director/Head of Service is not satisfied that they can accept it, they may accept the next lowest tender with the agreement of either the Chief Executive or Monitoring Officer. Reasons for doing this must be recorded for the audit trail.

 Awarding Contracts

The results of the tender evaluation process must be recorded in writing.

A contract may only be awarded and signed by a person(s) authorised to do so, who should ensure, prior to any award, that the budget holder has the funds in place to sustain the contract. Persons authorised to award contracts are as follows:

Procurements below the EU Directive Threshold Value (Non-EU procurement)

A procurement process must only be undertaken once the approval has been obtained in accordance with CPR 7 – Obtaining Authority to Proceed with Procurement.

Where the contract is for a Services / Supplies contract below the EU Threshold and is:

• below £10,000 an award of contract shall be approved by the relevant Service Manager;
• above £10,000 and below £50,000 an award of contract shall be approved by the relevant Director / Head of Service or their nominee;
• exceeds £50,000 and is below the EU Threshold an award of contract shall be approved by the relevant Director/Head of Service in consultation with their Portfolio Holder.

Where the Contract is a Works contract below the EU Threshold and is:

• below £10,000 an award of contract shall be approved by the relevant Service Manager;
• above £10,000 and below £50,000 an award of contract shall be approved by the relevant Director/Head of Service or their nominee;
• exceeds £50,000 and is below the EU Threshold an award of contract shall be approved by the relevant Director/Head of Service in consultation with their Portfolio Holder

Once approval to award a contract has been obtained as per above, all contracts over £50,000 must be executed under the hand of the Council Solicitor, by attesting the Common Seal of the Council. Legal Services will also retain a copy of the sealed contract. 

Procurements above the EU Directive Threshold Value (EU procurement)

A procurement process must only be undertaken once the approval has been obtained in accordance with CPR 7 – Obtaining Authority to Proceed with Procurement.

A Contract Award Recommendation for the outcome of an EU procurement exercise must follow the same approval process as per CPR 7 for the Approval to Proceed obtained for that exercise (i.e. if the approval to proceed was obtained via Cabinet, the Contract Award Recommendation must be likewise approved by Cabinet) prior to that contract being awarded.

Once approval to award a contract has been obtained as per above, all contracts must be executed under the hand of the Council Solicitor, by attesting the Common Seal of the Council. Legal Services will also retain a copy of the sealed contract.

PLEASE NOTE: The above list is indicative and contracts should be authorised at a level appropriate to their value, strategic and political sensitivity.

All contracts awarded under EU Directives must include a mandatory minimum ten (10) day standstill period (commonly known as Alcatel) following the announcement of the preferred bidder status to all suppliers/contractors. All letters to the suppliers must be in accordance with the requirements of the Page 30 of 51 Remedies Directive (2009). The advice of the LSPM must be obtained regarding the content and application of the “Alcatel” process.

All contracts awarded under EU Directives, including contracts for Residual Services – Part B, must be announced by means of a Contract Award Notice in OJEU transmitted no later than 48 calendar days after the date of award. (No Part ‘B’ Service in the latest EU Regulations)

All contracts over a value of £50,000 must be executed under the Common Seal of the Council and the successful supplier/contractor(s). (The standard period for restitution in respect of contractual arrangements is ordinarily limited to 6 years; this period may be extended to 12-years where a contract is made under Seal). Copies of all contracts over £50,000 (i.e. those signed under Seal) will be retained by Legal Services, and the contract detail should be provided to the LSPM by the relevant Directorate/Service Area for inclusion within the Council’s Corporate Contracts Register.

Regardless of value, where a contract is of a strategically important or politically sensitive nature, or where the extended limitation period mentioned above would be of value, consideration should be given to execution under Seal. The advice of the Council Solicitor must be sought.

All suppliers/contractors should be advised of the outcome of the tender exercise by means of writing. The acceptance of the successful supplier/contractor should be obtained in writing prior to sending the notification to unsuccessful suppliers/contractors, unless it is an EU procurement exercise and Alcatel procedures are being used.

All unsuccessful suppliers/contractors should be given the opportunity to receive a debriefing.

Standard templates for intention to award and final award letters, together with letters for unsuccessful tenders are available from Procurement.

Placing a Purchase Order

Wherever possible, purchase orders should always be placed in accordance with existing protocols.

As part of the finance system, all purchase orders will be submitted electronically. The only exception to this is where the system is unavailable to satisfy the request, and an emergency order is required. Please contact the Accountancy Section for further information.

After the Procurement Exercise

Introduction

A useful test of the outcome of a procurement exercise is the achievement of the seven “Rights” to help in evaluating, monitoring and managing the contract. This will contribute to ensuring that the procurement exercise has been effective, and contributed to the achievement of the Council’s priorities. It will also assist when preparing the business case for the renewal of the contract. The seven ‘rights’ are:

• Right Product/Service;
• Right Price;
• Right Time;
• Right Place;
• Right Quality;
• Right Quantity;
• Right Provider.

Records and Documentation

Clear and comprehensive records of the procurement process should be maintained as it may be subject to internal or external audit. Legal should be contacted for any point of clarification on this matter.

For e-tenders the information will be available through the Due-North system for any Audit requirements.

The original signed copy of the contract should be kept with the rest of the procurement documents unless:

• The contract has been signed under seal;
• The contract value is above the EU threshold level;
• The contract is of political sensitivity.

All documents should be stored in accordance with the Council’s approved document retention policy, prevailing at the relevant time.

Contract Management

For contracts valued over £10,000 the Director/Head of Service must designate a Contract Manager, whose name should be notified to the contractor and whose responsibilities should include:

• Monitoring performance of the supplier/contractor against the agreed programme or service level, as appropriate;
• Monitoring the continuing level of operational and financial risk (including the risk of fraud) to which the Council may be exposed;
• Facilitating the resolution of issues between the supplier/contractor and the key user(s); and
• Ensuring the prompt settlement of invoices / payments correctly and properly submitted by the supplier/contractor in accordance with the contract.

Contracts Register

Each Director/Head of Service shall maintain a Contracts Register in line with the Council’s Corporate Procurement Strategy.

For all transactions valued over £10,000 details of the contract must be sent to the LSPM.

Disposal of Assets, Land and Property

The same competitive process for buying supplies, services and works must also be applied to the disposal of supplies and assets, though separate procedures apply to the sale of land and/or property. For further information regarding disposals please refer to the Financial Procedure Rules, or take advice from the Section 151 Officer, or Property Manager.

Variations to Contracts

Instructions requiring the supplier/contractor to vary the specification of a written contract shall be made in writing, a copy of which will be retained by the Director/Head of Service or their nominee.

Instructions for the variation of a contract shall, wherever possible, include an estimate of the price which is to be added or deducted from the total price paid under the contract. Where a supplier/contractor is instructed to act in an emergency, or where he makes emergency variations in accordance with the conditions of a contract, a suitable written and priced instruction shall be created at the earliest opportunity.

Major changes which would have substantial financial implications for which no budgetary provision exists shall not be commenced until approval has been obtained from the Cabinet in line with the Financial Procedure Rules. As an exception, the relevant Director may make written authorisation of major changes to a project where the changes are urgent in nature because of unforeseen ground conditions; health and safety considerations; or some other genuine emergency that requires immediate action.

Liquidated and Ascertained Damages

Every contract for works or services shall provide, where practicable, for Liquidated Ascertained damages (LADs) to be withheld from the supplier/contractor if the terms of the contract are not duly performed. This action must be taken in conjunction with the Council Solicitor.

Contract Extensions

Subject to any statutory restrictions and compliance with these Contract Procedure Rules, a Director/Head of Service may authorise an extension to a supplies/services contract for a particular period providing that it was included within the original terms and conditions of the contract. This will naturally be subject to satisfactory outcomes of contract monitoring during the primary period. Any contract extension shall only be allowable up to the maximum extension period specified in the contract and shall be subject to satisfactory performance by the contractor / supplier.

Any request for contract extensions where they did not exist in the initial contract must be discussed with the Council Solicitor.

Transfer/Novation of Contracts

In appropriate circumstances the Council may agree to transfer/novate/assign a contract. This decision must be taken in conjunction with the Council Solicitor.

Post Project Evaluation

It is regarded as good practice if the Contract Officer undertakes post project evaluation within six months of the end of the contract.  Any lessons learnt must then be forwarded to Procurement to advise and influence any future projects.

Determination of Whether a Contract has an Embedded Lease

Accounting policies now require that for each new contract over £10,000 and greater than one year in length, these must be assessed to determine if there is an embedded lease that needs to be declared within the Annual Statement of Accounts.

A flowchart that must be followed by the Contract Officer is provided at Appendix K (i). If this process identifies that there is an embedded lease within the contract, then a further flowchart is provided at Appendix K (ii). Please contact the Finance Manager for any further information and assistance with this part of the CPRs.

When the Contract Procurement Rules do not apply

These CPRs apply to all the supplies, services and works the Council buys, with the following exclusions:

Where important urgent repairs are necessitated by breakdown or other failure of buildings, plant, appliances, machinery or ICT equipment or software, necessary to maintain and ensure efficient and continuous service delivery. (This is particularly aimed at peacetime emergency situations Page 33 of 51 and situations of reactive maintenance and emergency repair type work, where service delivery would be adversely affected).

• The EU definition of ‘emergency’ or ‘urgent’, which applies to these CPRs, describes ‘urgency’ as “brought about by events unforeseeable by, and not attributable to the contracting authority”.
• Any expenditure over £10,000 must be reported to the next appropriate meeting of the Corporate Management Team.
• Any other matters in relation to merely “urgent situations” shall be dealt with by exception report
• The application of this CPR is always subject to compliance with the EU Directives, should they apply.

Where renewals, repairs and upgrades to buildings, plant, appliances, machinery, vehicles or ICT equipment or software can only be efficiently carried out and most economically supplied with regards to time, cost and speed of delivery, by the original contractor or supplier, or their successors or other sole specialists, subject to it not exceeding the EU thresholds when aggregated.

Where urgent alternative arrangements are required to maintain the delivery of critical services due to the failure of an existing service provider or supplier.

Where an emergency situation exists as defined in the Council’s Emergency Plan and Disaster Recovery Strategy.

Activities when the Council is required to adopt other procedures by a government body. Also where the Council is operating as a partner in any joint arrangement with other outside bodies, then any contracts procured on behalf of the partnership may be undertaken under the auspices of the lead partner’s Contract Procedure Rules. Equally where the Council is acting as an agent in the procuring of contracts for any outside body, then the CPRs of that organisation may be adopted in place of these CPRs. This can apply to any shared service or consortia arrangement.

Contracts for supplies, works or services, where a related contract award following a competitive tender exercise was made during the previous twelve months, up to a maximum of 50% of the value of the original contract subject to it not exceeding EU thresholds. Where a supplier/contractor will not maintain the original tender price in respect of such additional contracts, any variation in such price shall be reported to the Section 151 Officer for his approval. “Related” shall be defined as having a direct relationship to the original project in the case of works, or, for additional quantities of the services or supplies (or associated components) previously delivered in the case of services and supplies.

Works orders placed with utility companies (e.g. for re-routing cables or pipework).

Orders placed against corporate contracts or other approved standing arrangements.

Where the Section 151 Officer, Monitoring Officer and LSPM are satisfied that there is only one potential supplier of the required supplies, services or goods.

Where the Section 151 Officer, Monitoring Officer and LSPM are satisfied that the use of a recognised regional or national framework arrangement will provide the most cost effective procurement solution.

Contracts for the acquisition or disposal of land and/or property

Contracts of Employment.

Where the supplies, works or services are purchased for testing, assessment or research and development purposes (this provision is intended to cover ascertaining whether particular products or services are fit for future purpose).

Contracts for Legal Counsel and other legal and financial advisers (excluding consultants).

Where there are other exceptional circumstances, and then only with the approval of the Section 151 Officer and Monitoring Officer.

Obtaining permission to waive the Contract Procedure Rules - Exception Reports

An Exception Report must be submitted to the Section 151 Officer and Monitoring Officer in the following circumstances.

• Where any of the exclusions listed in CPR 18 apply;
• Where there is no genuine market/competition for the proposed contract/procurement (with supporting evidence);
• Where the proposed contract/procurement is of a specialist nature

Where the requirement for supplies, works or services meets the criteria identified at CPR 19.1, an exception report (see Appendix G) must be completed and approved prior to that procurement exercise commencing.  A copy of the approval will be provided to the originator.

Procurements between £5,001 and £50,000

Exception report to be completed and evidenced

• Report to be signed by a Director/Head of Service.
• Submit signed report to LSPM, who will register the report and forward it on to the Section 151 Officer and Monitoring Officer for consideration and approval.
• Once approved, the Exception Report shall be passed to the LSPM for retention, and a copy to the relevant Director/Head of Service.

Procurements between £50,000 and EU Thresholds

Exception report to be completed and evidenced.

• Report to be signed by a Director/Head of Service in consultation with their portfolio holder.
• Submit signed report to LSPM, who will register the report and forward it on to the Section 151 Officer and Monitoring Officer for consideration and approval.
• If there are any issues (e.g. political sensitivity), which require the attention of a higher level approval (e.g. Cabinet), then the submitted Exception Report shall be processed as appropriate.
• All requests in excess of £100,000 are a key decision and must be reported to Cabinet for consideration and approval.
• Once approved, the Exception Report shall be passed to the LSPM for retention, and a copy to the relevant Director/Head of Service.

No Exception Report can be approved that would contravene EU Directives or any other relevant legislation.

Providing Services to External Bodies

Where the Council proposes to supply services or to carry out work for external bodies, prior written advice should be obtained from the Monitoring Officer. The proposed contract should be assessed to ensure that the required standards of financial and business efficacy are met. The advice given will determine if the outside body is one to which the Council can provide the service or conduct work and whether a charge can be lawfully made.

Where to obtain further Guidance, Information and Templates 

A number of documents are being developed by the LSPM to assist with the procurement of supplies, services and works, and these are readily accessible on the Council’s intranet.

Documents that are required to be distributed to potential suppliers/contractors are also available on the Council’s internet.

Any additional advice can be obtained from the LSPM, Section 151 Officer, and the Monitoring Officer.

Appendix A

An alternative exists whereby Contract officers could follow a competitive process via expressions of interest on the Source Nottinghamshire website. Restricted timescales can then apply for evaluation and award.

 

Appendix B

An alternative exists whereby Contract officers could follow a competitive process via expressions of interest on the Source Nottinghamshire website. Restricted timescales can then apply for evaluation and award. The Contract requisitioner will obtain appropriate approval where the contract payment exceeds the £10,000 threshold, suitable evidence of this process will be retained, i.e. e-mail trail.

 

Appendix C

An alternative exists whereby Contract officers could follow a competitive process via expressions of interest on the Source Nottinghamshire website. Restricted timescales can then apply for evaluation and award.

 

Appendix D

 

Appendix E

 

 

Appendix F

 

Appendix G

Appendix G
Contact name:	Telephone number:
Head of service:
Director:
Description of Contract: (Including Estimated Value) - You should include full background / details of the intended contract or procurement, including contract duration.
Reasons for Request - You should identify the CPR against which you are seeking an Exemption, together with full supporting information.  The space provided is not indicative of the information required - please use another sheet if required.
Head of service:	Dated:
Director:	Dated:
Portfolio Holder:  (in excess of £50,000)	Dated:
Recorded by:
Procurement unit:	Dated:
Approved by:
Monitoring Officer:	Dated:
Section 151 Officer:	Dated:
Note 1: Where the Contract Officer considers the waiving of CPRs to be appropriate, this form must be completed and approved prior to that procurement exercise commencing. NOTE 2: All requests for waiving of CPRs over a value of £100,000 (key decision) must be reported to Cabinet for consideration and approval first (exception being urgent works as defined under CPR 18.1, which will require a Cabinet report afterwards).

  

Appendix H

Approval Process

Initial Advice obtained from (LSPM)? (Please attach any written comments provided by the LSPM on a separate sheet)

Date advice obtained from LSPM:	LSPM recommend proceeding with procurement? Yes / No:	Cabinet approval recommended by LSPM? Yes / No:
Body Text 1	Body Text 2	Body Text 2

Approval obtained from Director and Portfolio Holder? (Please attach any written comments provided by Director and Portfolio Holder on a separate sheet)

Name	Position	Refer procurement request to Cabinet? - Yes/No	Signature	Date
	Director:
	Portfolio Holder:

Approval obtained from Monitoring Officer:

Name	Position	Refer procurement request to Cabinet? - Yes/No	Signature	Date
	Monitoring Officer

 

 Form forwarded to LSPM? Yes/No

Date:______________________

Appendix I

Definition and Glossary of Terms
Aggregation	The identification of similar purchases made and combined aggregated requirements over a specified period of time.
Appropriate Officer	Member of staff who has delegated authority to conduct procurement exercises.
Cabinet Member	Elected member of the Council who is responsible for the Cabinet Portfolio under which the service area sits
Commissioning	Is the process of specifying, securing and monitoring services to meet people’s needs at a strategic level.
Competitive Dialogue	This is used when the Council is unable to provide a precise specification and where there is scope to negotiate about what services a contractor can provide. The purpose of this procedure is to negotiate on the specification of the project and not on the price. Contractors are allowed to individually discuss all aspects of the contract with the Council, and workable solutions are built up with each contractor. Once this process is completed, then all contractors are invited to tender based on their individual and unique solutions
Constitution	The set of legal, administrative and legislative principles by which the Council is governed, especially in relation to the rights of the people it governs.
Contract	Document setting out various particulars for the provision of supplies, services and works.
Corporate Plan	The document by which the Council sets out its priorities and objectives, and how it will achieve them.
Corporate Procurement Strategy and Policy	The document by which the Council sets out its procurement priorities and objectives, and how it will achieve them.
Council	Bassetlaw District Council.
CPRs	Contract Procedure Rules.
Directorate	An area of the Council that is responsible for specific service delivery.
Director/Head of Service	Member of staff who is responsible for a Directorate/Service Area of the Council.
Framework Arrangement	An overarching agreement with a supplier where prices, specifications and terms are pre-agreed, but where there is no obligation to purchase.
Project Management Guidelines	The Project Management Methodology employed by the Council for the management and delivery of all projects.
Manual of Guidance	Document giving further advice and clarification regarding procurement and templates for use within the procurement process.
Monitoring Officer	The Monitoring Officer ensures the lawfulness and fairness of Council decision making and serves as the guardian of the Council's Constitution and the decision making process. Responsibilities include advising the Council on the legality of its decisions, providing guidance to Councillors and Officers on the Council's Constitution and its powers, and assisting the Standards Committee in its role of promoting and maintaining high standards of conduct and probity within the Council.
Negotiated Procedure	This allows for negotiations to be undertaken with contractors on the advertised terms of the contract, but only in restricted circumstances.
Open Procedure	An advert will be placed in OJEU, the relevant press and trade journals. The tender is open to all interested parties who submit an expression of interest.
Option Appraisal	The assessment of options in order to establish the most viable or feasible course of action.
Priorities	The areas that the Council believes are important in order to deliver services to citizens.
Purchasing Consortia	A group of organisations joining together for the shared purpose of purchasing supplies, services or works.
Restricted Procedure	An advert will be placed in OJEU, the relevant press and trade journals. Interested parties which express an interest will be required to complete a Pre-Qualification Questionnaire, and the Council will evaluate these and produce a shortlist of suitable organisations which will then be invited to tender.
Standing List	A list of suppliers/providers who have already been approved as suppliers to the Council.
Threshold Level	Sets out the amount of money (or contract value) by which different procurement procedures are followed.
Value for Money	Obtaining the most economical, efficient, and effective solution.

 

Glossary of Terms
CCC	Contract Catalogue
CPRs	Contract Procedure Rules
EU	European Union
ITT	Invitation to Tender
MEAT	Most Economically Advantageous Tender
OJEU	Official Journal of the European Union
PIN	Prior Information Notice
PQQ	Pre-Qualification Questionnaire
RFQ	Request For Quotation

 

Appendix J

Bassetlaw District Council - Plastic pollution Policy

The authority is looking at the use of plastic across all of its buildings with a view to phasing out all unnecessary usage.

We are committed to reducing the use of plastics, which as we know has a devastating effect on the environment we live in and our wildlife.

Around eight million tonnes of plastic end up in our oceans every year and it’s an obvious step to see what we can do as a council to play our part in getting rid of plastic from all the buildings we own and manage. This should be quite a simple step for the council to proactively take and to be able to demonstrate how the council are able to contribute to this improvement.

The council will also, where possible be working with local schools, community groups, local businesses and its waste management services with the aim of seeing a reduction in the use of plastic across the district as a whole.

People can also be assured that none of the plastic collected through Bassetlaw’s waste and recycling service will ever find its way into the ocean.

The council offers a recycling service for plastic bottles, pots, tubs and trays. These should be washed and/or rinsed before being placed in the recycling banks, waste collection bins or wheelie bins.

 

Appendix K

Determination of whether a Contract has an Embedded Lease

Flow chart A - determine whether a contract contains a lease Any queries completing this flowchart, please contact Governance Accountant on Ext 3295

 

Is the contract for the use of an asset that would cost more than the Authority’s de minimis limits?

If the contract gives the Council the right to use an asset, that if we bought it outright would be added to the Balance Sheet because it costs more than the de minimis limits:

• Property (including just rooms within a property) – no de minimis, all considered.
• Vehicles, Plant & Equipment – cost more than £10,000

Answer “Yes” and complete Flowchart B - the answers to which should be found in the contract terms and conditions. The Estates Team can assist with the assessment of any property that is leased.

Is there the use of a specific asset?

Where an agreement is not for the direct use of an asset, but for a product or service that requires a specific asset to be used by the supplier to deliver it, and it is not economically feasible or practicable for the supplier to fulfil its obligations through the use of an alternative asset, this is when there is use of a specific asset - answer “yes”.

An example might be that if the firm who supplies our wheelie bins had to obtain a specialised machine to produce them, then the specialised machine would be the specific asset, because the supplier could not economically or practically fulfil the contract with any other asset.

If an asset is explicitly identified in an arrangement, it is not the subject of a lease if fulfilment of the arrangement is not dependent on the use of the specified asset - answer “No”.

A warranty obligation that permits or requires the substitution of the same or similar assets when the specified asset is not operating properly does not rule out lease treatment.

Can we control the use of the service suppliers’ asset?

An arrangement conveys the right to use an asset if the arrangement conveys to the lessee the right to control the use of the asset. This is the case if any one of the following conditions are met:

1. We have the ability or right to operate the asset, or direct others to operate the asset in a manner we determine while obtaining or controlling a significant amount of the output of the asset;
2. We have the ability or right to control physical access to the underlying asset while obtaining or controlling a significant amount of the output of the asset;
3. It is unlikely that anyone other than Bassetlaw DC will take a significant amount of the assets output during the arrangement, and the price we pay for it is not fixed per unit of output nor equal to the current market price per unit of output.

If any of the above conditions apply – answer “Yes”. If none of the conditions apply – answer “No”.

In terms of the above wheeled bin example, if we stipulated that the supplier could not use the specialised machine to produce bins for any other organisation without our agreement, and we obtained all or most of the output from the machine, this would indicate that we had the right to use the asset.

Is the contract for the use of an asset that would cost more than the Authority’s de minimis limits?

If the contract gives the Council the right to use an asset, that if we bought it outright would be added to the Balance Sheet because it costs more than the de minimis limits:

• Property (including just rooms within a property) – no de minimis, all considered.
• Vehicles, Plant & Equipment – cost more than £10,000

Answer “Yes” and complete Flowchart B - the answers to which should be found in the contract terms and conditions. The Estates Team can assist with the assessment of any property that is leased.

Is there the use of a specific asset?

Where an agreement is not for the direct use of an asset, but for a product or service that requires a specific asset to be used by the supplier to deliver it, and it is not economically feasible or practicable for the supplier to fulfil its obligations through the use of an alternative asset, this is when there is use of a specific asset - answer “yes”.

An example might be that if the firm who supplies our wheelie bins had to obtain a specialised machine to produce them, then the specialised machine would be the specific asset, because the supplier could not economically or practically fulfil the contract with any other asset.

If an asset is explicitly identified in an arrangement, it is not the subject of a lease if fulfilment of the arrangement is not dependent on the use of the specified asset - answer “No”.

A warranty obligation that permits or requires the substitution of the same or similar assets when the specified asset is not operating properly does not rule out lease treatment.

Can we control the use of the service suppliers’ asset?

An arrangement conveys the right to use an asset if the arrangement conveys to the lessee the right to control the use of the asset. This is the case if any one of the following conditions are met:

• We have the ability or right to operate the asset, or direct others to operate the asset in a manner we determine while obtaining or controlling a significant amount of the output of the asset;
• We have the ability or right to control physical access to the underlying asset while obtaining or controlling a significant amount of the output of the asset;
• It is unlikely that anyone other than Bassetlaw DC will take a significant amount of the assets output during the arrangement, and the price we pay for it is not fixed per unit of output nor equal to the current market price per unit of output.

If any of the above conditions apply – answer “Yes”. If none of the conditions apply – answer “No”.

In terms of the above wheeled bin example, if we stipulated that the supplier could not use the specialised machine to produce bins for any other organisation without our agreement, and we obtained all or most of the output from the machine, this would indicate that we had the right to use the asset.

 

 

 Is the transaction in substance a purchase or disposal?

If a premium lump sum has been paid upfront for the lease, and the amount of the premium is approximately equal to what the asset being leased could be purchased for on the market – answer “Yes”. Other indicators of a “Yes” answer are a peppercorn rent thereafter the premium, and a rental period of material length e.g. 50 years or more. E.g. you pay £25k up front to hire a piece of equipment for five years, and then don’t make any (or only very small e.g. £1 per year) further rentals over the five-year period. If this is the case, please complete the Leased Asset recording sheet and forward with a copy of the lease agreement to the Accountancy Section.

Is the lease term for more than 50% of the economic life of the asset?

The economic life of an asset is the lifetime of the asset over which it could be leased out or used internally by the lessor, which may be more than the length of time that we are leasing it for. E.g. if a vehicle will be not fit for purpose in 10 years’ time and we are leasing/hiring it for 5 or more of those years then the answer to this question is “yes”.

Does the lessee have the option to purchase the asset at a price that is less than what it is really worth at the end of the lease?

The value of the asset is the value that an equivalent asset e.g. in type, age, condition, could be purchased for, in an open market transaction. E.g. If you hire a cherry picker for 5 years, and in 5 years’ time you have the option to purchase that picker (instead of returning it to the hire company), for much less money than you could if you went out and bought one in the same condition - answer “Yes”.

Are the leased assets of a specialised nature so that only the lessee can use them without major modifications?

For example, trademarks, or assets in locations where other entities couldn’t use them. E.g. if you hire a piece of equipment that no one else could use, or would want to use, without major modifications being done to it as it is specialised to a function that only the council carries out, then the answer to this question is “Yes”.

Will the gains and losses from the fluctuation in the fair value of the residual value fall to the lessee?

For example, if the lessor sells the asset to a third party at the end of the lease for less than the expected residual value, the former lessee will make up the difference, or if it is sold for more, then the former lessee receives the ‘profit’. The residual value is the value that an asset of equivalent type, age, condition etc that the asset is expected to be in at the end of the lease, could be purchased for, in an open market transaction, at the beginning of the lease. E.g. if the company we hire a vehicle from intends to sell the vehicle on when we have finished with it, and it is sold for less than it should be worth when we hand it back, and we promise to make up the shortfall between what it was sold for and what it should be worth then the answer to the question is “Yes”. Similarly, if the company sells the vehicle on for more than what it is worth, and the agreement is that we receive the profit they make, then again the answer to the question is “Yes”.

 

 

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Last Updated on Wednesday, May 8, 2024