FAREHAM BOROUGH COUNCIL
Procurement is the full range of activities that lead to the effective purchase of goods,
services or works. The process spans the entire ‘product lifecycle’ from initial concept
and definition of business needs through to the end of the useful life of an asset or
the end of a services contract. The procurement process is not just limited to the
purchasing function but also the ‘creativity’ involved in the design and packaging of
large or complex procurements.
This document sets out the Council’s approach to procurement of goods and services
which the Council requires, in order to carry out its functions.
In the summer of 2000 the Local Government Minister and the Chairman of the Local
Government Association asked Sir Ian Byatt to chair an independent taskforce, to
review the state of procurement skills and practice in Local Government in England,
in light of the duty of best value and its objective of continuous improvement. The
terms of reference and findings of the Byatt taskforce are contained in the document
Delivering Better Services for Citizens - June 2001.
This document incorporates the principles of the Byatt report and has been designed
to provide officers responsible for procurement through out the Council, with a good
understanding of the Procurement process and how it will assist the Council in
achieving it’s strategic objective to provide Best Value. The strategy on full
implementation will also deliver a framework for deciding how or whether to provide a
service in the future and if so, the process to be followed. This will ensure that
effective procurement is adopted within the Council and is carried out in accordance
with the regulatory framework.
The principal aims of the Strategy are:-
• to assist the Council in carrying out the Best Value process, including in
particular Best Value Reviews
• to support the Council’s Corporate Vision, Values and Objectives and other
policies. Fareham` Vision Statement:-
Fareham – the prosperous, safe and attractive place to be.
The vision is guided by a set of values: that underpin Council policy and
operational service delivery. These are:
- Dignity and user focus;
- Prosperity and conservation;
- Efficiency with effectiveness;
- Leading and achieving; and
- Listening and responding
There are Corporate Objectives that are the tool for delivering and
measuring our vision which are:-
- Protecting and enhancing our environment;
- Maintaining and extending prosperity;
- A safe and healthy place to live and work;
- Leisure for health and fun;
- A balanced housing market; and
- A dynamic, prudent, progressive, best practice Council.
• to make the best use of all available resources
• to promote a thriving local economy in the district
• to set a framework for the management and monitoring of the procurement
process, including reviews of existing processes and practices.
• to ensure that the Council’s procurement activities deliver a cost-effective and
sustainable services to the standard demanded by the Council’s customers.
• to ensure compliance with all relevant legislative and internal requirements,
including European procurement rules, and the Council’s own Contract Standing
Orders and Financial Regulations.
• to consult and give consideration to the views of service users when deciding how
services should be delivered.
In considering alternative forms of service delivery the Council will always be mindful
of the potential impact on employees and take appropriate measures to protect their
future employment prospects.
Where appropriate, the Council will seek to use its own staff to provide services,
except where it is considered that external sourcing is more appropriate.
The Council is committed to working in partnership to deliver services, and this will
include partnering with other authorities to procure services, and partnering with
contractors to ensure high quality in service delivery.
The Council believes that this Strategy will build on the good practice which is already
in place in respect of its procurement activities.
FAREHAM BOROUGH COUNCIL
1.1 As a local authority, Fareham Borough Council has to achieve “Best
Value” in the discharge of its functions. Specifically, under the Local
Government Act 1999, the Council is under a duty to make arrangements
“secure continuous improvement in the way in which its functions are
exercised, having regard to a combination of economy, efficiency and
1.2 Government guidance and best practice suggests that an integral part of
an authority’s approach to Best Value should be the preparation, adoption
and review of a Procurement Strategy. This document sets out the
Council’s approach to procurement of goods and services, and the
methods whereby such procurement will be monitored and maintained.
1.3 Government policy seeks to ensure that all procurement should be based
on best value for money, defined as taking into account the optimum
combination of whole life cost and quality necessary to meet the
1.4 In conjunction with relevant legislation (including the European
procurement rules) and the Council' Financial Regulations and Standing
Orders, the Procurement Strategy will guide officers and Members of the
Council in decision-making on procurement issues, including the source of
supplier and the tendering process. It will be used during the best value
review process when considering how a service should be provided (i.e.
whether this should be in-house, external contractor, joint commissioning,
etc), and also as and when services and supplies are sought at other
times (e.g. stationery supplies, tendering of building work contracts, etc).
1.5 This Strategy will be regularly reviewed by the Policy, Strategy and
Finance Overview Panel and the Executive to keep up with changes in
legislation, guidance, developing areas such as e-government and best
1.6 The Procurement Strategy supports the Council' aims and objectives
detailed in (Appendix A) and corporate policies. Except where specific
changes are proposed, the Strategy will not affect existing internal Council
controls (such as Financial Regulations and Standing Orders).
1.7 Similarly, the Strategy will not affect the need for all procurement exercises
to comply with relevant legal requirements. Such legal requirements
include in particular the European Procurement directives governing those
supplies contracts, and certain service contracts, which exceed European
thresholds (currently £154,477), and works contracts over the works
threshold (currently £3,861,932). In such cases, tenders must be
advertised in the Official Journal of the European Communities (OJEC)
and comply with a prescribed timetable. Below these thresholds, tender
processes should still comply with basic requirements including the
principle of non-discrimination.
2. THE PROCUREMENT TOOL
2.1 All aspects of how Fareham Borough Council operate, involves
procurement and because a significant proportion of the budget is
committed in this way, a regulatory framework exists to ensure that
appropriate auditable procedures are followed.
2.2 Whilst the intention of Fareham Borough Council is always to operate
within the rules, the procurement process will however be flexible enough
to encourage innovation and ‘out of the box’ thinking for the future
purchase of supplies and delivery of services.
2.3 The Council is only required to provide services, goods or works that it is
obliged to provide under legislation or to which it is committed, to deliver
Council Policy and remains neutral on how, by who or whether at all they
are provided in the future. Such services, goods or works will therefore
continue to be identified and tested within the ‘Best Value’ framework and
procurement decisions will be made following careful consideration of all
options available to the Council including but not limited to: -
• The cessation of the service
• Public/Private Partnerships (PPP) through a contract or joint
• Private Finance Initiatives (PFI)
• Transfer or externalisation of the service to another provider
• Market testing all or part of the service
• Restructuring or repositioning of in-house services
• Re-negotiation of existing arrangements
• Joint commissioning or delivery of services
3. FAREHAM`S VISION, AIMS AND OBJECTIVES
3.1 The Council have adopted a clear vision statement, a set of values that
underpin Council policy and operational service delivery together with a set
of Corporate Objectives that are the tool for delivering and measuring the
vision.(Appendix A). These focus on maintaining the quality of life, health,
safety and the Borough' environment. The effectiveness of the
procurement process will often affect the achievement of the Council’s
3.2 The role an effective Procurement Strategy has to play is specifically
reflected in Value three of the Council` Corporate Vision, Values and
Objectives in achieving
Efficiency and Effectiveness
The Council will deliver the highest quality services commensurate
with resources available. Recognising that any extra money will need
to be taken directly from the Council Tax payers or service users we
will be prudent at all times. Accordingly, the Council will avoid
extremes in relation to market principles. We will be responsive and
welcome new ways of doing things, in particular the use of e-
government to reduce costs and provide open, inclusive, accessible
and transparent services.
Equally a number of the Corporate Objectives highlight the importance that
procurement has in the delivery of the Councils vision in particular:-
Objective Two - Maintaining and extending prosperity
Enabling partnership in economic development and giving businesses and
their workforces incentives to live and work in the Borough. Aim to ensure
that there are sufficient well-paid jobs in the Borough for residents who
wish to work here. Promoting the growth and creation of businesses that
exploit the new and emerging technologies to create sustainable well-paid
employment. Provide residents with the opportunity to up-skill and take
advantage of the high quality jobs on offer in the community. Encourage
commercial and retail development that adds value to local communities
and contributes to the attractive environment of Fareham. Fareham - the
place for modern business.
Objective Six - A dynamic, prudent, progressive and best practice
The Council will provide best practice e-government services, accessible
to all residents through web, telephone and personal contact. Our aim is to
promote easy to access services for all. Our direct service provision will
make use of the latest technologies to minimise cost and improve quality.
We will only hold the assets and resources necessary to meet our
responsibilities. We will invest in our assets and workforce to ensure we
deliver modern, inclusive, customer focused, efficient and effective
services. We will help to develop the social well-being of local people.
Fareham - a best practice Council.
3.3 Therefore an effective Procurement Strategy will support the Council in
achieving these objectives and key aims.
3.4 Service Performance Plans, are produced annually, and set out in more
detail how these objectives are to be fulfilled. Procurement issues should
be considered as part of these plans and be incorporated into the business
planning process which should be managed to comply with this
3.5 The Council' performance management system is being further
strengthened and developed to ensure the objectives are translated into
service delivery practice through budget related Service Performance
Plans and performance management processes. Key Council strategies
and policies plus local and national performance indicators have been
aligned towards achieving the Council' objectives.
4. DELIVERING BEST VALUE – THE 4”C`S”
The test to which all services will be subjected is driven by the "four Cs”: -
• Challenging current perceptions of service requirement and methods of
• Consulting with stakeholders on how services can be delivered and
• Comparing Fareham with other enablers/providers to further develop best
practice and benchmark cost and seeking…..
• Competition for services where the market is able to most effectively meet
the Council’s needs.
Fareham Borough Council will: -
• use consultation to make informed decisions on service design and
• compile effective and innovative contract specifications
• ensure that a process of continual review is carried out once a
contract is awarded
• no later than the penultimate year of a contract, review the need for
the service and how it should be delivered in the future
• consider other alternatives to current service provision (in-house,
commercial, voluntary and grant aided provision, or using
partnerships or PFI)
• compare its services with those provided by other local authorities
with similar characteristics
• compare its services with those provided by private sector
organisations where appropriate
• consult with a representative range of commercial providers where
• compile product and service specifications that attract the widest
range of interest
• clearly state its service requirements focusing as far as is practicable
upon service outcomes rather than procedural inputs to encourage
innovative service solutions
• be equitable and transparent in its procurement transactions. The
Council aims to be a ‘trading customer of choice’ among suppliers,
without compromise to its service objectives
5. ALIGNING PROCUREMENT, BEST VALUE AND POLICY DEVELOPMENT
5.1 Fareham Borough Councils duty under Best Value is to make decisions on
what services should be provided and how much they should pay for them
after consulting stakeholders in the service. The best value performance
plan will incorporate a strategic view of how procurement can be used to
assist the Council in meeting their objectives and deliver continuous
5.2 This can only be achieved if we have a clear understanding of “what and
when we buy” along with the synergies that exist between the various
products, works and services Fareham procure. A key objective therefore
is the alignment of the procurement, best value and policy processes.
6. FAREHAM`S CURRENT PROCUREMENT ACTIVITY
6.1 The Council has an annual budget of £43.8 million. Much of this is spent
on costs such as staff and accommodation. However, around 10% of the
annual budget, approximately £4.4 million per annum is spent on goods
and services, to allow the Council to carry out its functions.
6.2 The scale and breadth of this level of expenditure demands the highest
levels of efficiency to achieve the best possible value for money. The
procurement process is now seen as a key vehicle for change and
effective use of public money.
6.3 The goods and services which the Council requires are extremely wide-
ranging. They include refuse collection, energy, construction work,
grounds maintenance, leisure service provision, stationery and printing,
computer hardware, software and IT services, insurance, and professional
consultancy across a wide range of disciplines. This wide range of
services also covers a range of costs, contract periods, and providers. A
key objective of this Strategy is to ensure that these services are procured
in such a way that the Council can achieve, and demonstrate, Best Value.
6.4 In common with other local authorities, the Council now uses a
combination of directly employed staff and external contractors to provide
the services. Many core functions including refuse collection, street
cleansing, grounds maintenance, housing management, planning,
financial and revenue services, and building control remain in-house, but
other services have been outsourced. All of these services have been
won in open competition.
6.5 There is a significant volume of other smaller contracts, undertaken by
external contractors, all of which are essential to the Council in providing
the services and functions which it has set out to deliver.
6.6 In some larger authorities specialist “procurement officers” are employed,
who are responsible for the overall procurement functions of the authority
and have knowledge and expertise on general procurement issues. This is
not the case in Fareham. The basic procurement principles, policy and
procedures were developed by a dedicated Procurement Officer however
this post became vacant and the opportunity was taken to ensure that the
procurement process became embodied and built into the service
delivery/review process and the ‘culture’ of the organisation. It has now
become an integral way in which all supplies and services are procured.
6.7 Although the Council does not now have a dedicated Procurement Officer,
there is a significant degree of expertise in procurement issues in various
departments of the Council, where staff are skilled in contract document
preparation, tender processes, and contract administration. Whilst some of
these skills are adaptable and used in other departments, there is currently
no formal training programme for officers who are from time to time
responsible for procuring goods and services. Officers who do have
expertise through their professional backgrounds may be able to update
their skills in procurement practice through continuous professional
development and attendance on courses organised in house or through
6.8 A Procurement Group will be established made up of key officers that can
further develop the Councils approach to procurement and take this
7. THE REGULATORY FRAMEWORK
EC Procurement Rules
7.1 The EC Procurement Rules apply to all public service organisations and
set out procedures for the award of contracts above certain financial
thresholds. Their purpose is to open up the public procurement market and
to ensure the free movement of goods and services throughout the EU,
thereby increasing opportunities for competitive suppliers, contractors and
service providers to grow volume and in return provide the community with
more innovative service solutions and better value for money.
7.2 The financial thresholds are reviewed biannually and apply for the period
1st January to the 31st December.
Fareham Borough Councils Procurement Rules
7.3 Contained within Fareham` Financial Regulations (Section D Financial
Systems and Procedures) are a set of rules that apply to the procurement
of goods, services or works, including those that fall below the thresholds
established by the EU. These rules must be adhered to for the
procurement of all supplies and services.
7.4 Section A, Regulation 4 of the Financial Regulations also details the
Authorisation limits for the procurement of supplies and services.
7.5 The Financial Regulations are updated periodically and adjustments to the
financial limits are reviewed accordingly. It is therefore imperative that
officers responsible for procurement in Fareham are fully appraised of the
scope that these Financial regulations and Standing Orders provide.
7.6 It should be noted that the EC Regulations are mandatory and must be
applied without variation. The Financial Regulations and Standing Orders
on the other hand provide some flexibility, only however through
Monitoring Officer or Executive approval.
8. CURRENT INTERNAL PRACTICES, PROCEDURES AND GUIDANCE
8.1 Individual departments are responsible for procuring goods and services
which they require, however some supplies such as ICT, transport and
energy are procured by lead departments. A similar corporate approach
will be adopted and developed for the procurement of other supplies such
8.2 When procuring goods and services, departments are required to comply
with external legal requirements. In addition, the Council has Financial
Regulations and Contract Standing Orders by which goods and
services are to be procured. These have recently been updated and
reviewed and are available to all staff on the Council` Intranet.
8.3 There are also a number of procurement policies and guidelines, again
available for all staff to access on the Council' Intranet, that sets out the
Council's Competition Strategy and associated guidance and a Best
Value Service Delivery Strategy that provides guidance when
considering the most appropriate delivery option as part of the Best Value
Service Review process.
8.4 Guidance also exists on non-commercial considerations (as set out in
Section 17 of the Local Government Act 1988, as amended by SI
2001/909 (allowing workforce matters to be considered where relevant to
Best Value and/or TUPE issues)
8.5 In addition, some guidance notes have been produced, including
Environmental Purchasing Principles, and Guidance Notes relating to
purchasing and the tendering process (which give advice on purchasing of
certain types of services and goods and the use of standard order forms,
etc.) These Guidance Notes will be maintained and reviewed by the
Procurement Group so that, together with the Procurement Strategy, they
form a useful and comprehensive guide to all officers engaged in procuring
supplies and services.
8.6 The Procurement Strategy provides the opportunity not only to bring
together all the policies and guidance that relate to the procurement of
supplies and services but also to develop these in a co-ordinated
approach. This will be done through the work of the Procurement Group.
8.7 The development of a Procurement Handbook/Best Value Guide to
Procurement could further assist in bringing together existing polices and
guidance and provide a quick reference guide for staff that could also be
used as part of the induction training process.
8.8 The Financial Regulations and Contract Standing Orders must be
constantly reviewed to ensure that they facilitate the procurement process
and do not restrict or prohibit a structured approach to creative thinking.
8.9 Statutory guidance made under the best value provisions of the Local
Government (1999) Act requires Fareham Borough Council to review its
Financial Regulations and Contract Standing Orders, to ensure it complies
with the duty of Best Value. Because Best Value and procurement are
inextricably linked, the issues often associated with interpretation of these
where it affects procurement, are often addressed under a Best Value
review. It is important to ensure however, that the style and approach in
which the Financial Regulations and Contract Standing Orders are written,
promotes good procurement practice and regular reviews will ensure that
this is the case.
8.10 The Council` Financial Regulations and spending limits will be reviewed
in the light of best practice to ensure that sufficient flexibility exists to
encourage an innovative and creative approach to procurement but at the
same time safeguard probity and good governance.
8.11 Amendment of the Council` Financial Regulations and Standing Orders
as it affects procurement will be supported by appropriate training of
officers and elected members and communicated throughout the Councils
9 GENERAL APPROACH
9.1 In procuring goods and services generally, and in considering (as part of a
Best Value review) how services should be delivered, the Council will aim
to ensure that the procurement process:-
• complies with legislative requirements;
• complies with this Strategy;
• complies with internal rules and other guidance;
• delivers a cost-effective service;
• achieves a service that meets the requirements of sustainability;
• delivers to the standard demanded by the Council’s customers
9.2 The procurement process itself will require resources to ensure that it
meets these requirements. The major resource in most cases will be
officer time. This will be used to assess markets, prepare tender and
contract documents, evaluating tenders, and handle any changeover
between contractors. Technical, legal and financial advice may be required
to assist in these tasks. In addition, financial resources expenses such as
advertising and printing may be involved, as well as external consultancy
advice where appropriate.
10. MANAGING RISK
10.1 Risk management is neither the avoidance of risk or the acceptance of
unrealistic decisions. Good risk management is taking advantage of what
innovation has to offer, having given due consideration to what can go
wrong and putting in place established solutions to deal with it.
10.2 In order to ensure that the procurement process delivers best value in the
widest sense, it is appropriate to adopt an approach based on risk
management principles. In this way, contracts involving a high level of risk
(whether that risk is in terms of impact on customers, finance, time, the
environment, or safety) should involve a more detailed process, whereas
low risk projects would not generally justify a resource-intensive
10.3 Generally, “high-risk” projects will also be “high-value”. However, where
“high-value” contracts involve a low risk (in terms of time or safety factors),
they would normally still be subjected to a more detailed process, given
the expenditure which will be incurred.
10.4 The involvement of the Risk Management Group in the procurement
process, the introduction of project management and the roles of the
Council' Scrutiny Overview Panels provides further safeguards here.
10.5 It is however essential that officers responsible for procurement are
provided with the skills required to effectively manage risk through the
10.6 A comprehensive project and risk management framework needs to be
developed for use in all unique or complex projects.
11 Purchasing Procedure
11.1 Although the situation will be kept under review, it is not considered that
the central procurement officer post needs to be replaced. However, the
present devolved system of procurement needs to be strengthened, and
the following measures are proposed:-
11.1.1 The formation of a Procurement Group made up of key officers within
11.1.2 Corporate and departmental training plans to include training for
appropriate employees and members on:-
• the Procurement Strategy
• Council Procedure Rules and Guidance on Procurement, including
environmental purchasing principles
• project management
• new procurement practices, including partnership working, e-
• the role of procurement in service/Best Value reviews.
11.1.3 The Procurement Strategy will include a review of these training plans
to ensure that the Council’s corporate expertise on procurement
continues to develop and improve. In addition:
• The competencies required for each post involved in procurement
need to be reviewed.
• Training needs analysis of all existing post holders will be
undertaken as part of their Personal Development Interviews
• The role that members have in the procurement process.
11.1.4 Expertise within the Council should be documented to act as a resource
for procurement projects.
11.1.5 Details for monitoring the effectiveness of the procurement process
itself will need to be reviewed and enhanced where necessary (see
section 17 and 24).
11.2 There are some goods and services where a central procurement point
has clear advantages, either in terms of savings from volume purchasing
(e.g. paper purchase, energy, etc) or corporate control (such as mobile
telephones, ICT equipment, transport etc). In these cases, the
procurement process is managed through a “lead department”, and
(subject to a review process being carried out) it is proposed that these
arrangements continue. Details on the goods and services covered, lead
departments and officers involved, contract periods, and the processes to
be used to procure such items, will be documented and publicised to all
departments. Lead Officers will be responsible for ensuring that the
arrangements are kept up to date, in accordance with the other principles
included in this Strategy.
11.3 Volume discounts, corporate control, and beneficial maintenance
arrangements can be obtained through central procurement, which may
not be the case where individual procurement arrangements are entered
into. Part of the review process of this Strategy will include an assessment
of whether other items should be included in the list of central procurement
11.4 It may be possible to use good practice and procedures that already exist
within the Council and adapt them for use in other areas. For example, the
procedure for procuring new ICT equipment requires departments to
submit a Business Case to the ICT Control Group, clearly recording the
type of equipment required, key dates, and a business case for the
requirement. As part of the action plan, consideration will be given to
extending this approach to other areas.
11.5 Other than those goods and services where procurement will be controlled
by a lead department, the procurement process will continue to be led by
individual departments. Advice (on financial matters, legal aspects, and
best value) will be available to departments and generally this will be
provided from within the support services of the Council and supported by
the Procurement Group. Where there are particular reasons where
external advice is required, this Strategy will be used to determine how this
advice should be procured.
11.6 Departments undertaking procurement (whether in a central role or as an
individual department) will be required to comply with relevant legislation,
the Council’s Financial Regulations and Contract Standing Orders this
Strategy and related guidance on procurement matters.
11.7 Lead officers are responsible for the success of their procurement projects,
initially to their own Directors/Chief Officers, through the Chief Executive
Officer’s Management Team, and to Members. Members will usually be
considering performance through the Service Performance Plans, or
through service review exercises carried out by the principal Overview
12. PROCUREMENT PLANS
12.1 Other than routine requirements, most procurement exercises should
require a formal Procurement Plan that would supplement the business
case. In many cases, procurement will be an element of an existing project
(e.g. the replacement of an existing ICT system), and the procurement
plan will be a sub-set of the main project plan. Where this is not the case,
Lead Officers will be responsible for producing a stand alone Procurement
Plan. The Procurement Plan will show how the option appraisal for
procurement will be undertaken, who will be involved in the decision, what
documentation is required for the process (and who will be responsible for
preparing it), and the key dates for the procurement exercise. The plan will
be refined once the option appraisal has been completed, to indicate the
detailed timetable for the procurement (e.g. advertisement, tenderer
selection, evaluation of tenders, contract award, etc). In some cases, such
as building maintenance contracts, which are undertaken on a regular
basis, it maybe possible to require a less detailed Procurement Plan.
12.2 Procurement Plans will require approval of the Lead Officer’s Director/
Chief Officer, any project working group responsible for the procurement
exercise, and (where the letting of any contract would require Member
approval), any relevant Member body (usually Executive). The Lead
Officer will be responsible for ensuring that the Procurement Plan is in
accord with this Strategy.
12.3 Lead Officers are responsible for ensuring that adequate time is allowed
for the procurement process (including a review of the service in question)
in respect of term contracts, where a service is provided by an external
supplier on an ongoing basis. As a safeguard to this, a Corporate
Business Plan should be prepared that includes a list of major term
contracts, setting out contract periods, and trigger dates for retendering of
the service, to ensure that adequate time is allowed for the procurement
13 PROCUREMENT OPTIONS AND ISSUES
13.1 Where goods or services are required by the Council, or an existing
service is being considered as part of a Best Value review, a number of
options will usually be available for these goods or services to be
procured. In either case, this Strategy will inform the procurement decision.
13.2 In all Best Value reviews, this option appraisal will be an integral part of
the review process. This is set out in detail in the Council's Best Value
Service Delivery Strategy. In other procurement processes, although all
options will be examined, the depth of such examination will depend on
the level of risk or value. The Procurement Plan should set out how the
option appraisal is to be assessed, and the process of option appraisal
itself should be fully documented and authorised in the same way as the
Procurement Plan. The possible options are set out below.
13.3 In all procurement exercises, the principles of Best Value will be applied.
Option appraisals should include consideration of the following principles:
• the standards required for the service in question (including whether the
existing standard needs to be improved);
• sustainability criteria required for the service in question
• the current markets for the services required;
• likely changes in the future for the service;
• the capacity of suppliers to provide the service (including expertise,
experience, financial record, and staffing resources);
• the costs of the procurement process, and how these can be minimised,
whilst ensuring compliance with legislative and internal requirements,
and minimising the risk to the Council;
• ways in which the service could be procured in conjunction with other
services, or with other partner organisations.
13.4 These are included in the existing Best Value Service Delivery Strategy
that provides a guide to when considering the most appropriate service
delivery option as part of the Best Value review process.
Some of the Council’s services are already externalised or have no in-
house provision. Where in-house capability does exist, the Council’s policy
is to use in-house employees where possible. In making such a decision,
the experience of the employees concerned, previous performance
against set targets, the impact on other work if in-house employees were
to take on or continue the services, and the management provision
required, should all be examined. A risk assessment of outsourcing the
work will also be required, including the lack of direct employee
management and potential for the contractor being wound up. If it is
decided to use in-house employees, targets for provision of the work
should be agreed with the client department and performance against
such targets measured on a regular basis and reported to the respective
Overview/Scrutiny Panel and the Executive.
Given the “compete” element of Best Value, a decision to procure
internally should always address whether the service can be provided
externally, and if it can, the procurement process should examine whether
internal provision is both a) competitive and b) the most efficient and
effective option before proceeding to source from within the Council.
13.6 Joint Contracting
This includes the use of consortia and contracting jointly with, or on behalf
of, other bodies. The Council uses the Central Purchasing Consortium (of
which Hampshire County Council is a founding member), and will consider
this route provided appropriate safeguards are built in to secure the
Council’s position. Needless to say, extensive opportunities therefore exist
to procure products and services at more competitive prices.
Through the consortia the Council will review the products and services
currently on offer and seek to extend the number of contracts, with the
objective of delivering competitive advantage to the Council as well as
other consortia partners.
13.7 Joint Commissioning
Joint commissioning involves a sharing of the procurement process with
one or more other authorities, and (unlike Joint Contracting), the outcome
will usually be separate contracts with the successful tenderer. The
Council has experience of working with other authorities in joint
procurement, notably Gosport Borough Council in the provision of a joint
CCTV control system. Joint procurement can produce savings by sharing
the costs of the procurement process, and the Council will continue to
consider using joint commissioning, provided that the savings and other
benefits outweigh any additional management required as a result of such
a decision. Whenever this route is chosen, it will be necessary to ensure
that clear agreement is reached between the authorities as to their
respective roles and responsibilities in the process.
13.8 Public/Private Partnership
This vehicle may include the creation of a joint venture company between
the Council and a private sector provider. Partnership arrangements will
have to be agreed between the partners, as to how the service will be
provided by the company.
13.9 Market Testing by Competition
Where a service has been provided in-house, and it is considered
desirable to test this provision against the private sector market, market
testing may be carried out, usually by inviting bids from third party
providers, against which bids from the in-house provider will be compared.
13.10 Externalisation with no in-house bid
This will be considered where:-
• the existing in-house provision is failing and is not considered
capable of performing to the standard required (either at all, or
within a reasonable time);
• where there is no existing in-house provision (e.g. where the service
has been externalised in the past) and it considered impractical or
uneconomic to set up a suitable in-house team for the purpose;
• (in the case of an existing contract with an extension option) where
an existing contractor is not performing adequately or where the
market has changed since the contract was let.
Legal requirements may also require the tendering of a service, such as
where the service must be tendered in accordance with European
Union procurement rules.
13.11 Delegation to another local authority
In some cases, it is permissible for a local authority to delegate its
functions to another local authority. An example is the delegation of
certain highway maintenance functions by the County Council to the
Council. Best Value Reviews should consider, as part of the “challenge”
element, whether there may be another local authority which may be
able and prepared to take over the whole or part of the function, and
whether such an arrangement would be more efficient, effective and
13.12 Joint Working by Local Authorities
When a single function is carried out jointly by two local authorities as is
the case with the Fareham and Gosport Building Control Partnership.
13.13 Current Contractor
The performance of an existing contractor will also be monitored during
a contract and reviewed before deciding whether to exercise any option
to extend the contract period.
13.14 Extent of Market
In all cases where external procurement is under consideration, the
extent of the market for the delivery of the services in question should
be examined. This examination will vary depending on the type and size
of the procurement, and may include client officer knowledge,
discussions with other authorities, advice from suitable consultants,
items on the Council’s Website, public advertisement for views from
contractors (the latter could also an exploration with potential
contractors of the way in which a contract might be packaged).
Feedback will be obtained in a variety of ways, including responses to
the Website, oral discussions, written feedback and seminars.
13.15 Cost of Competition
The costs of carrying out a form of tender exercise, including preparation
of tender documents, selection of tenderers, administering the tender
process, and evaluating tenders, will be taken into account when deciding
the length of any contract period, whether to exercise an option to extend
or whether to go out to external competition. The costs which a tender
exercise will entail will be weighed against the likely value of any savings
which may be achieved, although the decision should always be fully
documented, in order to ensure transparency of decision making and allow
auditing of the procurement process.
13.16 Reliance on a Single Provider
The potential significance of a procurement decision, which may lead to a
single provider providing a particular service and possibly affect future
procurement decisions across the Council, will always be considered
before the extent and terms of a procurement package are determined.
Provision of software in one department, for example, may have a knock-
on effect in other departments which link to the procuring department.
Before a procurement exercise commences, departments will be required
to show that either that the potential impact on other departments and the
Council’s future procurement options is not material or that these impacts
have been fully considered and assessed. Where the impact is likely to be
material, the Chief Executive Officer’s Management Team will have to be
satisfied that the procurement process fully takes this impact into account
and that Members are aware of all such implications.
14 FORMS OF CONTRACT
14.1 The Council’s Contract Procedure Rules sets out detailed procedures for
the processes to be undertaken whenever goods or services are to be
procured from outside the organisation (i.e. where the Council is to enter
into a contractual arrangement with a third party, whether this be express
or implied, written or oral). Detailed guidance is contained within
comprehensive Contract Standing Orders which are reviewed regularly
and which are available centrally on the Council' system for all staff to
access and follow.
14.2 Clear procedural rules as to the procedures which must be followed in any
procurement process are essential to ensure transparency, fairness, and
value for money. The current Contract Standing Orders have ensured the
financial integrity of the Council’s procurement process. It is important,
however, that such rules do not hinder the Council’s objectives and
obligations to secure Best Value, which are made reference to in the Aims
and Objectives of the Contract Standing Orders and a quality service.
14.3 Where the Council does contract with third parties, the terms of these
contracts will vary greatly. The Council may contract on the supplier’s own
terms, especially for routine purchasers or low value transactions. It may
have to modify its own requirements if the preferred supplier (or all
suppliers) will either not accept these terms or the costs of adhering to the
requirements outweigh the financial or other risks which arise if the
modification is agreed to. In other cases, the Council will be able to specify
the terms and conditions it will be contracting on, as part of a tender
exercise. However any variation should first be discussed and agreed with
the Council' Solicitor and be in line with the Council' Financials
Regulations and Standing Orders.
14.4 The Council already uses standard forms of contract. In other large
contracts, the Solicitor to the Council will usually prepare an appropriate
contract, usually based on conditions which have been used in earlier
contracts of a similar nature. In order to minimise the costs and risks of
contracting, the Council have, as part of the implementation of this
Strategy, prepared standard forms and purchasing procedures and
guidance together with contract conditions, which can be used in
appropriate circumstances. These are based on documentation already in
use, and cover the common contracts which are regularly tendered. They
will be refined from time to time to take account of experience.
15. ENVIRONMENTAL PURCHASING PRINCIPLES
15.1 Fareham have set out a Purchasing Policy that contain Environmental
Purchasing Principles detailing the Purchasers, Suppliers and Councils
responsibilities when purchasing and supplying goods and services.
15.2 As part of the implementation of this Strategy, these principles will be re-
emphasised to those officers responsible for procurement decisions,
however they will be reviewed to take account of wider sustainability
issues, and any revisions incorporated into the Strategy.
15.3 The Government’s definition of value for money has sustainability
implications. ‘Whole life costing’ means taking account of all aspects of
cost, including running costs and cost of disposal, as well as the initial
purchase price. This also implies consideration of lifespan. ‘Quality to
meet customers requirements’ will involve what departments need to meet
their own operational and business plan objectives, as well as meeting
corporate sustainability objectives.
15.4 In order to progress the sustainability, the Council will continue to include
sustainability factors in procurement exercises. This will involve including
environmental and sustainability criteria in technical specifications, using
sustainability criteria in evaluating tenders, and including environmental
and sustainability issues when monitoring contractor performance. The
weight to be given to such factors will be assessed as part of the
15.5 Procurement training will include environmental and sustainability
considerations, and guidance will be produced to ensure that those
responsible for procurement can include sustainability in their criteria
quickly and easily.
16 OTHER POLICIES
16.1 All procurement should further the Council’s duties under Best Value,
including in particular:-
• the need to ensure economic, efficient, and effective services;
• the need for continuous improvement in services.
16.2 Employees affected by the procurement process (and their respective
trades unions) should be consulted in all cases. The Council will seek to
ensure that all employees who may transfer as a consequence of the
procurement decision are fully protected under TUPE and have broadly
comparable pension rights.
16.3 The Council will continue to promote equality in all areas in its
procurement activities. To the extent permitted by the law, selection of
tenderers, an evaluation of tenders, will take into account the extent to
which service providers subscribe to these values.
16.4 In accordance with its Corporate Objectives, the Council will aim to
enhance the local economy wherever possible. This will include the use of
local advertisements for services where appropriate and the
encouragement of local markets. However, in all cases, legal requirements
(including in particular the European procurement rules) will be followed,
and the objective of securing overall value for money in all contracts will be
16.5 All procurement decisions and processes should be properly documented,
to ensure that there is a clear audit trail, demonstrating that the process
has been undertaken in accordance with all relevant procedural
16.6 Clear rules of behaviour exist for both officers and members, which have
particular relevance to the procurement process. All who are involved
(directly or indirectly) in the procurement of a service should be aware of
the potential for abuse and impropriety. Any instance which may breach
the expected standards should be reported immediately to the Council’s
16.7 A partnership approach will be sought in all contractual relationships.
Whilst it will be necessary to ensure that contracts include adequate
measures to protect the Council’s interests, the Council will seek to
achieve an approach of working with, as opposed to working against, its
contractors and suppliers.
16.8 All contracts should include clear performance requirements, and methods
and procedures for measuring and reviewing performance. Appropriate
sanctions should be included to ensure compliance with these standards.
17 PERFORMANCE MONITORING OF PROCUREMENT
17.1 Monitoring of performance of the Council’s procurement activities is
primarily focussed on the product rather than the process. Service
contracts include performance measures and a contractor’s performance
against the required contract standard is monitored. Through the Service
Performance Plans, and the Annual Performance Plan, the Overview
Panels and the Executive will monitor the performance of services and the
procurement decisions made.
17.2 The Council recognises that monitoring of the procurement process itself is
important. Compliance checks already exist and internal audits undertaken
to ensure that this is the case. This would include ensuring that the
procurement method is chosen applying the principles in this Strategy and
that relevant Financial Regulations and Standing Orders are complied
18 MEMBER INVOLVEMENT
18.1 Routine procurement is almost exclusively delegated to officers. Members
are involved in other procurement exercises, at a number of levels:-
• In the Best Value Review (as members of the team and as members of
the relevant Overview Panel);
• At Executive, where executive decisions on procurement are made
(including the method of procurement, selection of tenderers, evaluation
of tenders, and contract award);
• As Members sitting on evaluation panels (prior to a report to Executive)
• At the principal Overview Panels, in assessing the effectiveness of the
procurement process, and the performance under contractual
• At Standards Committee, when considering probity issues in respect of
• Members of the Council also take a strategic role in ensuring the
Council` objectives on procurement are satisfied through the
• Quarterly reporting of performance indicators to the Executive.
19 CONSULTATION AND CUSTOMER INVOLVEMENT
19.1 Best Value includes the requirement to consult. In the context of the
procurement process, this includes consultation with:-
• existing suppliers
• potential suppliers
• users of the service
• the wider public
• partner organisations
• employees (whether or not the provisions of “TUPE” will apply).
19.2 The Council will make best use of statutory and non statutory
arrangements to protect the legitimate interests of employees.
19.3 Whilst the extent of consultation will vary according to the service in
question, Lead Officers will have to show in their Best Value requirement
and where necessary their Procurement Plan what consultation is
proposed, and how this will be assessed and fed into the procurement
20 ELECTRONIC PROCUREMENT
20.1 In its Implementing Electronic Government Statement the Council has
committed itself to working towards full electronic delivery of its services by
2005, in accordance with Central Government requirements. The
Statement concentrates on the delivery of services to customers
electronically rather than the procurement of goods and services from
20.2 The Council approved an e-Finance Strategy which contains a section on
e-Procurement. This will allow the rules set out in the Financial
Regulations and Standing Orders for electronic procurement. It is
essential that all of these checks should be replicated so that the Council
may not be at any greater risk as a result of the introduction of an e-
20.3 The Council will ensure that any new electronic solutions for purchasing
goods and services retains a level of control which is at least equivalent to
the level of security which would be afforded if the transaction were to be
completed using non-electronic means.
20.4 Electronic procurement is currently limited, however the e-Finance
Strategy contains a comprehensive section on e-procurement that covers
the range of areas where this can be applied and progressed. This will
occur as the Council' e-Finance Strategy is implemented.
20.5 The possibilities of wider electronic procurement have been identified and
flexibility for its application has been included within the e-Finance
Strategy and the Financial Regulations and Standing Orders. Future
planned review of these Rules and Regulations will include an examination
of how enhanced use of e-procurement can be achieved.
20.6 Options for e-procurement are already included in the E-Finance Strategy.
20.7 Increased use will be made of the Council’s Website to advertise
opportunities for suppliers to assist the Council in delivering services. This
will include general information on the Council’s plans for future
requirements, as well as specific formal notices to potential suppliers as
part of the tender process.
20.8 To encourage the local economy, business and markets the development
of a ‘How to do business with the Council’ guide on the web site together
with a schedule of contracts to be awarded over the next year.
20.9 The development of e-mailing lists for contractors to receive copies of
20.10The development of a web page ‘Notice Board’ for businesses to advertise
20.11The Council, will also be looking to consolidate where possible, low value
and routine products and services for which transaction costs represent a
high proportion of total expenditure. E procurement and e commerce
systems are helpful in controlling the total spend in these areas through
the aggregation of such services.
21. EVALUATING AND ASSESSING TENDERS
21.1 The criteria used for awarding individual contracts could place the Council
at risk if not carefully administered and must therefore be decided upon at
the project planning stage. A tenderer should only progress to the next
stage of the process following objective assessment of his various tender
documents. All tenders are to be reviewed on equal terms and subjective
opinion must not enter into the process unless substantiated.
21.2 The criteria used should not detract from the need for clear and prioritised
objectives and should also be transparent and auditable.
21.3 The Council has developed core evaluation criteria, which will be reviewed
not only to incorporate the Councils Values and objectives but also the
contractor’s ability to partner the Council through investment and
22 REVIEW OF EXISTING CONTRACTS
22.1 As part of this Strategy, the Council intends to introduce a system of
reviewing existing contracts to ensure that they achieve continuous service
improvement, as part of the general Best Value requirements. If
necessary, contract variations or negotiated changes to the contract will be
considered to secure this improvement.
22.2 The service contracts operated by the Council are reported to and
monitored by the Executive.
23. CONTRACT MANAGEMENT – GOOD CLIENTING
23.1 The procurement process involves the full range of activities that lead to
the effective purchase of goods, services or works. This includes the
management of the service provider during the life of the contract.
23.2 A robust contract management process ensures that all parties to a
contract fully understand their respective obligations enabling these to be
fulfilled as efficiently and effectively as possible to provide even better
value for money. The process runs from the identification of a procurement
need through to the end of the contract (the complete life cycle) and
involves two key objectives:
• Management of the relationship between the client and
• Identification, allocation and management of the risks
associated with the performance of the contract
23.3 It is therefore imperative that development of the partnership with a
contractor or in-house service provider is addressed early on in the
procurement process and nurtured to the mutual benefit of both
organisations. A commitment to ‘foster partnerships built on trust’ and to
‘operate an open book accounting system’ must be supported by a clear
set of deliverables.
23.4 The development of a ‘Contractors Charter’ that sets out the principles
and values that a successful contractor must be expected to meet.
VALUE FOR MONEY
Successful contract management relies on a combination of many factors
but the overriding principle is to provide value for money and this is more
likely to be achieved through: -
• Accurate assessment of the service requirement
• Good supplier selection procedures
• Clear output based specifications
• Well written and clearly defined contracts
• Planned active relationship management
• Clear roles and responsibilities
• Appropriate user behaviour
• Reduction and control of risk
• Objective measurement of the contract performance
• Management of change
• A mechanism for demonstrating continuous improvement in the service
• Good management of performance shortfalls
• Reliable cost control and payment mechanisms
SETTING THE DIRECTION
Successful contract management of the client/service provider relationship
also requires a thorough understanding of the environment to be managed
and associated risks, before selecting the style of contract management to
The environment and risks should be assessed early on in the process
and kept under review.
• Service type
• Critical success factors
• Type of agreement
• Contract term
• Nature of contractual relationship
• Stability of the service requirement
• Performance measurement (KPI’s)
The level of risk involved will depend on the type and length of contract,
stability of the service and external market conditions. There are five
elements to risk assessment: -
• Identify potential problems and their causes
• Assess the probability of occurrence
• Assess the impact on the Council
• Identify which party is best able to manage the risk
• Develop strategies to manage the risk
Fareham Borough Council will: -
• Adopt a true partnership approach and also encourage potential
partners to do likewise through clear objectives and measurable
outcomes being included in the procurement process.
• Place more emphasis on stating the desired outcomes and inviting
tenderers to commit to benchmarks (linked to the default process) they
are happy to be measured against.
• Develop a generic performance management template through which
the service provided can be objectively assessed.
24.1 Plans are reported already to the Overview Panels and Performance
Monitoring against agreed performance (BVPI' and local indicators are
reported to the Executive every six months as well as part of the service
and annual performance plan.
24.2 The current Thematic Service Review Process encourage ideas and
proposals for innovation and service improvement in the provision of
services which either flows into and/or out of the Procurement Process as
identified in this Strategy.
24.3 Each officer responsible for the management of contracts should hold
regular meetings with the contractor’s management staff. These meetings
will usually include discussions about how the service can be delivered
more efficiently and effectively. Officers will be required to examine, as
part of their annual business plans, the operation and performance of
contracts under their control. Although the terms of existing contracts may
not be specific on the question of continuous improvement, officers will
consider the use of variation provisions, whereby the specification can be
altered to improve delivery of services for the same cost, or achieve the
same level of service at a reduced cost to the Council.
25. MANAGING WITHIN THE LAW
25.1 The Government is currently considering how intelligent procurement
might be achieved within the EU Procurement Regulations. This could
involve more flexibility, allowing the potential for framework agreements
and negotiation to play a greater part in the procurement process along
with a relaxation of the restrictions that currently prevent joint delivery of
goods, works and services.
25.2 The Council will assist where possible in the work currently being
undertaken by Central Government agencies and will also review the
Councils own Contract Rules to ensure that sufficient flexibility exists to
encourage intelligent procurement.
26. ACTION PLAN
26.1 This Procurement Strategy will be reviewed on a regular basis. A number
of issues are identified above, and the Action Plan included as Appendix B
highlights these and the timescales and responsibilities for resolving these
CORPORATE VISION, VALUES AND OBJECTIVES
(See report by the Director of Corporate and Community Strategy to Council on 30
January 2003 – Comprehensive Performance Assessment – Corporate Vision,
Values, Objectives and Action Plan.)
DRAFT ACTION PLAN
STRATEGY Action Action by (date) Action By (Responsibility)
Report to Executive for approval March 2003 DF&R
6.8,11.1.1 Establish a Procurement Group made up of Key April 2003 Chief Executive Officer’s
Officers within the Council that can take the strategy Management Team
11.1.4 Identify document expertise, central source of April 2003 Procurement Group
expertise within the Council
11.2 Identify all supplies and services that should be April 2003 Departmental/Procurement
centrally procured and inform all departments Group
10.5, 10.6 The role of risk management and project April 2003 Procurement Group,
management need to be promoted and highlighted in Strategic Risk Management
how they can contribute to the procurement process. Group/Project management
12.3 Development of ‘Corporate Business Plan’ setting April 2003 Procurement Group/
out the major contracts, trigger dates to ensure Departments
adequate time is allowed for the procurement
3.4 Procurement to be included in Business Planning April 2003 Procurement Group/Depts
12.3 Corporate ‘Business Plan’ - document and list all April 2003 Departmental/Procurement
contracts the Council has, identifying lead officers, Group
value of contracts and review dates.
8.5 Existing guidance notes on procurement to be May 2003 Procurement Group
reviewed. To develop a comprehensive guide to
17.2 Review compliance checks to ensure that the May 2003 Procurement Group/Internal
Procurement Strategy / Standing Orders and Audit
STRATEGY Action Action by (date) Action By (Responsibility)
Financial Regulations are being complied with.
8.6 Ensure that all the existing policies/guidance relating May 2003 Procurement Group
to the procurement of supplies and services are
linked together by the Procurement Strategy to
ensure a co-ordinated approach.
8.7 Development of a Procurement Handbook/ Best June 2003 Procurement Group
Value Guide to Procurement/code of practice for the
procurement of supplies and services.
11.1.2, 18.1 Develop Corporate Procurement Training June 2003 Procurement Group/
programme for managers and members. Personnel Services
11.1.2 Identify areas of good practice and incorporate in June 2003 Procurement Group
training plan/cascade to other departments.
11.4 Audit/business case proforma/checklist to be June 2003 Procurement Group
developed for the purchase of goods and services
12.1 Develop a Procurement Plan template June Procurement Group
As part of the annual review of the Council` Best July 2003 Procurement Group
Value Review Strategy review the evaluation criteria.
21.3, 5.1 The Best Value Review Strategy should incorporate July 2003 Procurement Group
how the procurement of the particular supply /
service contributes to achieving the key strategic
15.2 Review the Environmental Purchasing Principles / September 2003 Procurement Group
20.4 Progress e-procurement as detailed in the Council` s September 2003/4 Head of Revenues and
e-finance strategy. Exchequer
20.8 Develop a ‘How to do business with the Council’ guide September 2003/4 Procurement Group,
on the Councils web site together with a schedule of E Envoy, ICT
contract to be awarded over the next three years.
STRATEGY Action Action by (date) Action By (Responsibility)
13.14, 20.7 Procurement web pages that lists all contacts September 2003/4 Procurement Group,
currently in place, provider/contact details, annual E Envoy, economic
value and expiry date. development and ICT
20.7 Development of an emailing list where all September 2003/4 Procurement Group,
subscribers receive copies of contract details. E Envoy, ICT
13.14, 20.10 Web page ‘Notice Board’ for businesses to advertise September 2003/4 Procurement Group,
their contacts. E Envoy, ICT
23.4 Development of a ‘Contractors Charter’ October 2003 Procurement Group
8.8, 8.9, 8.10 Financial regulations and Standing Orders to be Annually Audit, Finance
1.5 Review the Procurement Strategy Every three years DF&R, PSFOP / Executive
3.4, 5.1 Procurement to become an integral part of Best Ongoing Lead Officers responsible for
Value,Service Reviews and the continuous undertaking Service
improvement process. Reviews/ Thematic Reviews
13.6 Maintain links with Hampshire Buyers Consortium Ongoing Procurement Group
Lead Officers to prepare a Procurement Plan in Ongoing Departmental
12.1 conjunction with any service review 18 months
before contract renew due.
8.3, 8.5, 14 Ensure that everyone has access to and is using the Ongoing Departmental
Councils Standard Conditions of Contract
17.1, 2.2.1, Monitoring/reviewing contract performance. Ongoing Chief Officers/Directors,
24.1, 24.3 Executive
23.2 Robust contract management process through clear Ongoing Lead Officers
objectives and measurable outcomes
18. 1 Service performance reported to the Executive on a From April 2003 Chief Officers / Directors