What is a procurement policy?

Transparency in the public sector is a must, so government bodies must be fair, honest, and professional in the way they choose suppliers and in any dealings with them.

The public sector procurement arena encourages free and open competition and value for money, in line with internationally and nationally agreed obligations and regulations. To ensure that these goals are met, the public sector establishes procurement policies.

Adhering to procurement policy can support your organisation to make good decisions and achieve rational outcomes.

 

What is a PPN?

Any buying authority must be able to understand and be able to readily access the regulations and policies that relate to procurement.

A Procurement Policy Note (PPN) sets out information and guidance for public bodies. PPNs are issued by the UK and devolved governments.

For example, during the Coronavirus pandemic the UK government released a Procurement Policy Note (PPN) which sets out information and guidance for public bodies on payment of their suppliers to ensure service continuity during and after the current coronavirus (COVID-19) outbreak.

You can find a collection of procurement policy notes on the official UK government website.

This is an excellent resource for buying authorities as it brings together all procurement policy notes, providing guidance on the latest best practice for public sector procurement.

 

What is the purpose of procurement policy?

A procurement policy should ensure a consistent, efficient, and best practice approach to procurement.

Procurement policy can support purchasing processes and sourcing strategies. Having structure in place ensures that, when an organisation acquires goods, services and/ or works, this is so in a transparent, timely and cost-effective way.

We list some of the key polices your organisation should consider below.

Value for money

The Cabinet Office is committed to iterating the spend controls process to increase government efficiency and collaboration.

On the government website it states that an:

“Over-riding procurement policy requirement is that all public procurement must be based on value for money, defined as “the best mix of quality and effectiveness for the least outlay over the period of use of the goods or services bought”. This should be achieved through competition unless there are compelling reasons to the contrary.”

 

On the government website there are several policies which can support buyers to achieve value for money and savings, e.g. guidance on managing public money and spending controls.

It is worth noting that value for money in procurement is not the same as ‘lowest purchase price’. A good value for money policy would encourage consideration of elements such as life cycle costing.

You can find policies on value for money here.

 

Ethical sourcing

In recent years, public sector organisations have been expected to look further than price when making decisions around purchasing.

Buying organisations have the responsibility to ensure that the products they are procuring are sourced in a responsible and sustainable way and that the workers involved in the creation of these goods are making them in a safe and fair environment. This area of policy includes the requirement for public sector bodies to ensure that their contractors and the wider supply chain are not involved with sweatshops and modern slavery.

When a public sector organisation is deciding on suppliers to work with, environmental and social impacts should also always be taken into consideration. Public sector organisations include ethical sourcing policies in their operational standards and principles.

 

Support of enterprise and growth

After the government exceeded its aspiration for 25% of government spending to go to SMEs by 2015 it set a new target for a third of central government buying to be with small businesses by 2020, whether directly or as part of the supply chain.

The UK government has taken major steps to ensure SME suppliers get the most out of procurement opportunities that are relevant to them. These include:

  • simplifying processes by abolishing Pre-Qualification Questionnaires (PQQs) for contracts below the EU threshold and mandating the use of a standard selection questionnaire above threshold contracts
  • making contract opportunities more accessible by advertising them on an improved single online portal – Contracts Finder, Public Contracts Scotland and eTendersNI
  • ensuring small firms are treated fairly by mandating prompt payment terms throughout the public procurement supply chain

 

Transparency

As we have mentioned previously, transparency in the public sector is a must, so government bodies must be fair, honest, and professional in the way they choose suppliers and in any dealings with them.

The government website states that:

“Government policy is to adopt and encourage greater transparency in its commercial activity. All in-scope bodies must, as a minimum, follow the legal requirements to publish advertised opportunities and awards on Contracts Finder covered by the Public Contracts Regulations 2015.

 

Prompt Payment

It has been nearly two years since the government announced that any organisation that bids for a central government contract worth in excess of £5 million a year will need to demonstrate it has effective payment systems in place to ensure a reliable supply chain.

The government has set a standard requiring 95% of all supply chain invoices to be paid within 60 days for organisations that want to do business with government.

Suppliers that do not comply with this standard could be prevented from winning future government contracts.

Having a contract management framework in place can support your organisation to stay in control of payments and gain visibility of your suppliers’ activity across the entire contract lifecycle.

A contract management tool like Delta’s can maximise efficiencies within an organisation because it automates some of the processes which arise from managing a contract. This saves countless man hours and supports procurement teams to gain a more efficient style of working.

 

Conduct of procurement

There are several policies which fall under this bracket, e.g. procurement processes, lean sourcing, and early market engagement.

Central government encourages buyers to operate an open door for current and potential providers to discuss upcoming procurement opportunities, by making greater use of Prior Information Notices (OJEU) or speculative notices if they relate to a specific procurement or industry sector-specific market engagement activity, to promote early market engagement.

Contracting authorities can make use of the following notices on Contracts Finder to advertise early engagement activities:

  • Future Opportunity Notices (PIN equivalent) and
  • Early Market Engagement notices which can be used to announce engagements such as meet the buyer events etc.

 

It is also important that your organisation is using an eProcurement solution to conduct procurements.

Under Regulation 22 of the Public Contract Regulations 2015, all public sector organisations must, by law,  make sure that communication and information exchange for above-threshold procurement is carried out using electronic means of communication.  This regulation is designed to improve transparency and visibility throughout the supply chain.

Communication and information exchanged during the tender process (for contracts above the EU thresholds) is now required to be carried out electronically. This includes the electronic submission of pre-qualification questionnaires and tenders, as well as call-offs under framework agreements.

Buyers should use tender management systems at every stage of the tendering process. Such systems allow secure document creation, exchange and storage, as well as creating a full communications audit trail.

Communication is one of the biggest advantages of eProcurement as buyers and suppliers can submit questions and answers in relation to the bid, 24 hours a day. This flexibility speeds up the process and makes the market more accessible for suppliers with less experience. In addition, electronic communication creates an audit trail which is readily accessible should it be needed.

Other benefits include cost savings and compliance. By using an eProcurement solution, buyers save on printing, postage and physical document storage, and remain compliant with the regulations.

Delta tools which can help you throughout this process include:

  • Compliant eNotice Tool

Facility to create, manage and stream both above and below EU threshold contract notices, RFQs and RFIs.

  • Evaluation Tool

Create a bespoke evaluation plan for your questionnaire and conduct your evaluations online through this tool, creating a complete audit trail.

  • Tenderbox Document Exchange

Online Tenderbox facility for exchanging tender-related documents with suppliers.

The Tender Management module is a web-based service that allows buyers and suppliers to engage with each other to achieve greater efficiency in all aspects of the tender process.

Public sector organisations can use the tenderbox for document exchange, which will support your organisation’s efforts to stay compliant with Regulation 22.

Privacy and Security

On 25 May 2018, the EU’s data privacy and security law was implemented across Europe. It included hundreds of pages worth of new requirements affecting organisations around the world.

The General Data Protection Regulation (GDPR) is the toughest data privacy and security law in the world. Though it was drafted and passed by the European Union, it imposes obligations on organisations anywhere, so long as they target or collect data related to people in the EU. This means that it will continue to apply in the UK despite the country’s departure from the EU on 31 January 2020.

Personal data is often shared throughout the procurement process and your organisation is responsible for protecting the privacy of this data in all circumstances. Under GDPR, public sector organisations must consider how the change in regulations will affect the daily tasks which are conducted by your employees and the data which is stored by your organisation.

One key part of GDPR is being cyber compliant. When buying technology products and services for central government contracts which involve handling personal information, buyers must ensure that suppliers are certified by Cyber Essentials.

Cyber Essentials was developed by the government in consultation with industry. It is a great solution for businesses looking to improve their cyber security settings and standing.

By implementing five simple key controls, organisations can stay protected from up to 80% of common cyber security threats.

Strategic supplier management

As we have mentioned above, the very essence of public sector procurement is ensuring that buyers achieve the maximum return from the public money that is being spent.

Public sector buyers need to be able to demonstrate they are squeezing the most out of every pound they spend, and that each decision is carefully informed by data.

Does your organisation need support to comply with central government spending controls?

Delta champions supplier management seamlessly, by providing the tools and resources buyers need to work more effectively with their suppliers, no matter where they are in the world.

Find out more about Delta’s Supplier Management software and how our tools can help your organisation improve your supplier management strategy.