Introduction to Purchasing and Procurement (part-2)

Video Transcript

Slide 1:

0:05: When planning your procurements it is useful to separate them into different categories to help decide what procurement process would be most suitable. Examples of the categories of procurements can include:

Routine or regular purchases, such as stationery, food or energy are often purchased via call-off contracts from framework agreements where you run a further competition or direct award under framework terms

Seasonal requirements such as replacing ICT equipment or furniture are usually purchased following a tender or quotation exercise, or further competitions under a framework.

Emergency requirements such as after a fire or storm can be set up by tendering for maintenance contracts. These might be run for your institution on its own or via a framework.

Capital expenditure for buildings or expensive pieces of specialist equipment are likely to be purchased though a formal tender or a detailed further competition exercise if there is a suitable framework.

Major projects such as building work or specialist support services are likely to be bespoke and procured via a formal tender.

There are a wide range of frameworks available for key spend areas from consortia including Energy, Professional services such as legal services, audit and insurance. There are frameworks for office supplies and facilities management services, as well as many ICT related frameworks and specialist education vocational requirements.

Slide 2:

1:54: Public procurement law regulates purchasing by public sector bodies when they award contracts for goods, works or services. The law is designed to open up the European Union’s public procurement market to competition and to promote the free movement of goods and services.

The fundamental principles when conducting procurement activities subject to the Regulations are transparency, non-discrimination, equal treatment, proportionality and mutual recognition of standards and qualifications.

The EU Procurement Directives are adopted into UK law under the Public Contracts Regulations 2015. These govern public sector procurements now and it is anticipated that the regulations will be very similar when the UK leaves the EU

The current EU Thresholds are: £181,302 for the Supply of goods and Services, £4,551,413 for Works and £615,278 for Services that fall under the Light Touch Regime.

If your contract value exceeds the EU thresholds, you must normally advertise the contract in the Official Journal of the European Union and on Contracts Finder; following the procedures in the Regulations.

There is also a requirement for Further Education Colleges, when procuring contracts above £25,000, to publish contract award notices and potentially contract opportunities, where these are already being openly advertised, on Contracts Finder. This does not apply to schools, academies or Sixth Form Colleges.

There will be more detailed training available on EU rules, The Public Contracts Regulations and Contracts Finder in a dedicated training video. In the meantime guidance to the regulations is available on FELP or through your CPC Regional Procurement Advisor.

Slide 3:

4:13: What is Value for Money? Value for money includes financial savings that can be re-invested in your institution’s priorities. Value for money can be the confirmation that the goods or services purchased are fit for purpose, ensuring that your suppliers deliver as agreed with you and that your legal and financial obligations are complied with.

How can you achieve value for money? Paying less for the same product or paying the same amount for a better quality of product, when better quality is a benefit. You might get added value at no extra cost, such as additional training or enhanced support. Value for money might be reducing your institution’s exposure to risk, streamlining your processes in procuring goods or services or by becoming more sustainable in what or how you buy.

One way of ensuring that value for money is obtained is to consider whole lift costs when procuring goods or services. This starts with the initial set-up costs, including the purchase price, installation costs and training. Then consider the running costs, along with any consumables you’ll need or maintenance costs. Finally you should evaluate the end of life of the purchase, with goods this might be potential income from a sale of an item or the cost to dispose of it.

For further information we recommend you access the information on FELP concerning whole life costing.

Slide 4:

6:00: You might wonder where to begin with procurement, these are some ways to get started:

If you are not already using consortia frameworks, they are a great way to start, enabling you to access compliant and competitive arrangements. The CPC have established over 50 frameworks for commonly bought goods and services available for you to access free of charge.

Analyse expenditure so you know what you are spending and with whom.

Review your contracts. This is a great opportunity to find out what contracts you have and when they are coming up for renewal. It’s also worthwhile looking at the procurement practices of other institutions and sharing best practice.

We recommend downloading A Guide to Supplier Spend Analysis which is available from the Guidance section of FELP

A review of expenditure is likely to identify opportunities for rationalisation which can help you to deliver administration savings. You might consolidate orders and simplify the invoicing process within your institution and in collaboration with suppliers. You could consider all payment mechanisms where cost can be reduced with electronic billing or payment cards for low value items.

Further information on the use of payment cards is available in Step 4 of the procurement route map on FELP, which also provides additional information on the payment of invoices.

Ensure there is collaboration across key spend areas in your institution such as cleaning, catering, stationery, maintenance and transport. Collaboration avoids the duplication of resource and is a process whereby significant savings can be achieved. You may also consider collaborating with other institutions in your region.

The CPC organises regional procurement network meetings to help facilitate collaboration in the education sector. Visit the CPC website for further information on the Procurement Advisory Group network meetings.

Benchmark suppliers you are using and compare them with other institutions or consortia frameworks. CPC offer a free benchmarking service, comparing your purchases with the alternatives available under their frameworks.

Slides 5 and 6:

8:47: We hope you have found this training video useful, as an introduction we hope it inspires you on to further development. To assist in your procurement journey we have included details about organisations in the sector who can help you, including CPC, the Further Education Library of Procurement and the Department for Education.

There are a number of helpful exercises available online for you to work through following this video.

We welcome feedback and hope you will come back soon for our future training videos, including Procurement Strategy, European Union Public Contracts Regulations, Legal Training and more.

We would like to thank Shirley Lewington for the use of her training material which was the foundation for this video. We are very grateful to Trafford College for creating the animation and recording the audio, last but not least we would like to thank you for taking the time to watch the video.

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The Introduction to Purchasing and Procurement videos are the first in a suite of procurement training videos to be launched throughout 2018. Future videos will include topics such as Effective Procurement Strategies and Procedures, EU Procurement Regulations, Outsourcing Services and Negotiation Skills.

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