Our contracts are governed by a number of procedure rules and financial regulations which regulate our procurement of goods, services and works.
Our constitution
Our constitution sets out the rules governing the operation of the council. There are two sets of rules that regulate how we buy works, services and goods. These are the financial regulations and the contract procedure rules.
European Union directives (public procurement regulations)
In addition to the constitution, we have to comply with national and European legislation.
The national law requires us to get 'best value' in all our procurements. For the purposes of procurement, best value means "the optimum combination of whole life costs and benefits to meet the customer's requirements".
Put simply, it means that we have moved away from always buying the cheapest product or accepting the lowest tender (although price remains of fundamental importance) and now look at quality and price to make sure that the product or service or works that we buy are the most suitable that we can afford.
The European Procurement Directives are implemented in the following legislation:
- Public Works Contracts Regulations 1991
- Public Services Contracts Regulations 1993
- Public Supply Contracts Regulations 1995
The effect of the directives and regulations is:
- to require us to advertise tenders for all its contracts over a certain value in the Official Journal of the European Union. The value of a contract is not the annual value but the amount that we will pay to the supplier over the whole life of the contract (including any possible extension)
- to limit the factors that it can consider in drawing up the shortlist of suppliers to be invited to tender
- to require us to ensure that the specification is not drawn up in such a way as to make it more difficult for an EU (non-UK) company to bid for the contract
There are three ways in which procurement can be carried out under the directives and regulations. These are the:
- open procedure where we advertise a tender and everyone who is interested is invited to tender
- restricted procedure where we advertise for 'expressions of interest' and draws up a shortlist of companies to be invited to tender from those expressing an interest
- negotiated procedure where the procuring body negotiates with the bidder of its own choice. There are only very limited circumstances in which the negotiated procedure may be used such as for major externalisations and PFI (public finance initiative) contracts. There is more scope to use a negotiated procedure for service contracts than supply contracts.
Our contracts
We use a variety of contracts. The type of contract depends on the nature of the procurement. Our terms and conditions apply to all procurements.
Letter of agreement
For low value, simple procurements a letter of agreement referring to our standard terms and conditions can be sufficient but for the provision of an important service or purchase of valuable equipment or construction of a new building, a contract may run to several volumes.
Purchase orders
A purchase order (PO) will usually be issued for supplies and sometimes for works or services.
One off contracts
These are contracts which meet a specific need and will generally be short term contracts to supply goods or services or works to meet an individual need. Quite often standard form contracts, for example JCT (Joint Contracts Tribunal) or ICE (Institute of Civil Engineers) contracts, are used.
Examples of this type of contract are:
- a consultancy for a one off project
- the purchase of a particular piece of equipment
- a one off building project
Call-off or framework contracts
This sort of contract is becoming more popular and the terms are used interchangably.
It is an arrangement whereby the terms, conditions and prices (or at least the pricing strategy) are agreed with a supplier or sometimes a number of suppliers, for the supply of goods and services. Making orders under the contract is thereafter a mechanical exercise with usually nothing further to agree.
There is no promise by us to make any or any particular volume of purchases. These contracts are usually longer term, for example between three and five years.
Examples of this type of contract are:
- market research services over a period of years
- supply of temporary staff
- supply of stationery materials
- the supply of building materials
Partnership contracts (or partnering contracts)
These are contracts where we are seeking to develop a true partnership with the service provider in order to meet our requirements for a service.
Often the service provider will have a substantial say in how the service (or works) is developed throughout the life of the contract. Where services are concerned partnership contracts will be long term (often five to seven years).
Examples of this type of contract are:
- maintenance of housing stock
- design and construction of large scale building work
Executing a contract
If the contract is of a relatively low value you will be asked to get the contract signed on behalf of the company.
This can only be done by a director, by the company secretary (if you are a company), or by a partner if a partnership. If you are signing a document your signature will have to be witnessed by someone who is not related to you.
If you are asked to execute a contract as a deed (all contracts with us over £50,000 are executed as deeds) you will either:
- have to put your company seal on the document (if you are a limited company and have a seal) and get it signed by two directors, or
- one director and the company secretary, or
- (together with another director or the company secretary) sign to say that they are executing the contract as a deed.
If you are signing the document as a deed you will need to get the signatures witnessed.
The difference between an ordinary contract and a deed is that legal action can be taken in respect of a deed for 12 years after completion of the contract whereas an ordinary contract is only actionable for a six year period after its completion.
Once a contract has been executed by your organisation and us and dated then both sides are bound by the terms of the contract and each must do what it has said it will do.
For procurement questions, email Debbie Quincey, the strategic procurement advisor, or call 01223 457400.
