6. Preparing to Purchase

The Procurement Cycle

It is helpful to think of the procurement process as a cycle.  The procurement cycle comprises the steps shown in Figure B below.  Viewing a procurement project in this way emphasises the importance of the business case and ensures that procurement is not mistakenly regarded as simply the process of advertising and evaluating tenders.

Tailoring

All procurements should be carried out in accordance with the principle of the procurement cycle at Figure B*.

*Figure B – The procurement cycle and gateway reviews

 Click on image to enlarge

Steps in the Procurement Cycle

Each of the key steps of the procurement cycle is outlined below:
 

6.1     Identifying Needs – Needs may be recognised in a number of ways such as a demand from members, the identification of weaknesses through Comprehensive Performance, Best Value reviews or inspections, the end of an existing contract or the failure of a contact.

6.2     Developing the business Case – The business case is an essential document for project success.  It provides justification for the procurement in terms of its alignment with the objectives of the authority; it also provides the basis for managing the delivery of the project on time, within budget and to agreed quality standards.  The business case will be an evolving document throughout the procurement cycle and include all key stakeholders e.g. Human Resources for TUPE requirements.

6.3     Defining the procurement approach – It will be essential for authorities to communicate with suppliers throughout the procurement cycle to create a dialogue (taking care not to show favouritism or provide representatives with an unfair advantage).

6.4     Competition – Advertising provides an important link between the authority and suppliers.  Contract notices should aim to attract an adequate number of suitable suppliers and therefore they should be carefully worded and the publications used should be project specific.   For contracts covered by the procurement regulations, there are clearly defined rules on advertising and the number of suppliers to be invited to tender.

6.5     Evaluating tenders – Traditionally, tenders have been assessed on the basis of lowest initial price alone.  This can lead to tenderers reducing prices in the hope of making up the difference by cutting corners, inflating prices for variations to contract and pursuing claims.  However, you should produce a strong evaluation matrix which is weighted to the priorities required within your project.  A robust tendering process is key to the success or failure of any contract.
  
6.6     Awarding and implementing the contract – In major projects, the mobilisation and implementation phases of the procurement process are critical to success.  They may involve the transfer of staff, assets, data and third party contracts.  The management of change more generally will be a key task and HR professionals will need to be involved from an early stage.  There are two other activities to carry out following the award of the contract:
 

• Debriefing
• Post-implementation review

6.7     Managing the contract and supplier relationship – Effective contract management is a vital and often neglected part of the procurement process.  In many people’s minds, procurement ends when the contract is awarded!  Once the contract is handed over to the Contract Manager he must ensure that all the necessary provisions are in place for the contract to continue, be aware of and plan for any risks associated with the contract, manage the relationship with the supplier and measure that performance is in accordance with the terms of the contract.  Unless pro-active and professional contract management takes place, even the best specified and procured contracts can fail to deliver what was expected of them.  

6.8     Closure and lessons learned – The exit strategy for every contract must be clearly defined (including contingency plans for early termination) and the period running up to the exit managed to ensure that there is no loss of service delivery if this is still appropriate.  Decisions on future arrangements must be made in adequate time to allow for a full procurement process should a further procurement be required.

• Introduction
• Regulatory Framework
• Project Management
• Options Appraisal
• Code of Conduct for Employees and Councillors
• Preparing to Purchase
• Kent Authorities' Contract Standing Orders and Purchasing Guide at Thanet
• Collaborative and Partnership Working
• Pre-qualification and Accreditation
• EC Procurement Regulations
• Standard Contract Documentation
• e-Procurement
• Sustainability and Best Value

E-mail: contracts@thanet.gov.uk

Tel: 01843 577111