The first hurdle is terminology, which can be different in different public sector organisations.  Commissioning is the cycle of deciding that a service is needed, to drawing up what this service will look like, purchasing that service, delivery of the service and then the monitoring its effectiveness. 

Procurement is the specific aspect of the commissioning cycle which focuses on the competitive process of buying services, from initial advertising through to appropriate contract arrangements and a tender is a written invitation to suppliers to bid for that service (see more definitions below).

The procurement process is highly regulated, depending on the amount being spent on the service.  Under a certain amount, the public sector organisation will have a policy in place setting out the process – for example obtaining three quotes from suppliers before making a judged decision.  Over a certain amount, central and European legislation dictates how the public sector organisation must carry out the procurement process.

National & EU Policy Context

The EU public procurement rules apply where a local authority or the NHS purchases Part B services with a total contract value reasonably expected to exceed £156,442.   

Some services are designated as ‘Part A’ and these impose strict requirements in respect of advertising in the Official Journal of the European Union, as well as in relation to tendering, evaluation and award processes. Other services, including the majority provided by voluntary organisations, are designated as ‘Part B’ (such as certain education, health and social care services) and subject to lighter regulation.

Procurement rules and procedures set out how purchasers (the public sector organisation) will manage and enter into contracts with suppliers. The three main processes are: open, restricted and competitive dialogue.

The most common process is the restricted. After expressing an interest, you will be sent a PQQ (Pre-qualification Questionnaire), which asks for information on your organisation based on financial, expertise and quality. The PQQ basically checks that your organisation is able to deliver a goods or service to the satisfaction of the public sector purchaser, before a more detailed tender bid is requested.  Unless you get through this stage you will not be invited to tender.

In addition, Framework Agreements can be put in place for a maximum number of years (up to 4 or 5). These will be awarded to one or several organisations but no agreement will be made as to the quantity of work required or any guarantee that services will be purchased. During this period there will be ‘call offs’, sometimes competitive, against requirements. The benefit to the purchaser is a quicker turn around of contracts and a pool of suppliers that they know can deliver services and build up relationships with.

Tendering:

It is vital that one person (or a small team) takes on responsibility for writing the tender bid within your organisation.  In some ways they are similar to writing a grant application (though usually a lot more detail is required). 

You will be up against tight deadlines, competition from other providers and pressure to complete the tender to a high standard, so starting from a solid grounding is key: (Taken from Northumberland’s VCS Guide to Commissioning, Procurement, Tendering, Contracts, May 2009)

• Make sure your organisation and its mission fit the tender specifications

• Know what you do and exactly how much it costs

• Ensure your organisation can easily demonstrate and communicate outcomes and can show how you made a difference

• Think about whether a partnership approach might be an option – who will your partners be, which organisation would lead on the tender and how will you sub-contract

• Ensure your trustees / directors know what you are doing and their role in the process

• Have a set of the basic documents ready and updated – insurance certificates, business plan, audited accounts, health & safety policy, environmental policy, equality & diversity policy.

Then …

• Read the tender specification and complete it correctly

• Understand the evaluation criteria. The “Most Economically Advantageous Tender (shortened to MEAT) considers price, delivery, date, quality, technical support and technical merit, as well as sustainability

• Once you have been invited to tender make sure you receive the criteria for awarding the tender including the weighting between price and quality. These must be made available

• Do not write a tender that you know that you will struggle to deliver on in terms of price, resources and staffing, just to win

• Ask questions in writing, in good time, if you are not sure and build up a relationship with the procurement officer

• Make your best offer and be sure to follow the delivery instructions - a minute past the deadline, or packaging your tender incorrectly will often be enough for the bid to fail

• You may be asked to give a presentation to a panel as part of the tender – do your homework, practice your presentation and think about potential questions and answers

• Always ask for feedback whether successful or not as this can aid you the next time.

Contracts:

(Taken from Northumberland’s VCS Guide to Commissioning, Procurement, Tendering, Contracts, May 2009)

A contract is an agreement between two parties enforceable by law and recognised by a court. In this context it involves earning income from payment for goods or services delivered according to specific terms set out in the contract between a voluntary and community organisation and a purchaser.

Trustees and directors are legally responsible for a contract to which an employee has committed them. This is true even when the trustees have not directly authorised the employee to enter into the contract. Trustees & board members need to ensure internal controls are in place which prevents the charity being committed to significant contracts without their knowledge and approval.

The legal remedy for breach of conditions of a contract is the payment of damages. This could result in personal liability for board members. To mitigate this risk, trustees need to consider various options: form a limited company; insure trustees against risk, set up a trading arm. Good communication throughout the organisation is essential. Staff and volunteers need to be aware of what the organisation has to deliver, and what conditions the contract sets. The skills and procedures already in existence will need to be reviewed to accommodate contracts. Invariably time will be limited to turn around an application so who does what, when and how, should be established in advance. As past performance will be judged in any future contract it is critical to manage a contract well. Plan staffing and identify training requirements.