Route 2 - Develop Documents - Specification
When developing your specification it is important to engage as early as possible with the supply base. This is important in terms of identifying the desired outcomes, risks and issues, as it permits suppliers to provide feedback on how the outcomes might be achieved, the risks and issues as they see them, along with feedback on timescales, feasibility and affordability. It is also best practice to ensure that suppliers are contractually required to provide line item spend details as part of the contract support.
[Whilst all the guidance in this station should be considered when procuring Care and Support Services, specific Care and Support Services guidance can be found in Developing the Service Specification.]
The specification should:
- Focus on outputs required without being prescriptive as to the method the supplier should use to provide it (output specification)
- Be sufficiently tight so that the product or service fits the user's needs, but not so explicit that it discourages the supplier from proposing innovative solutions that optimise Value For Money (VFM)
- Consider whether to include special conditions relating to the performance of the contract. This may cover economic, innovation-related, environmental, social or employment-related conditions e.g. community benefit clauses
- Include criteria for acceptance of the products or services
- Include service levels and a process for measuring ongoing performance
- Avoid over-specification of performance (more than "Fit for Purpose" or than is actually required) to ensure procurement at the optimum balance of whole life cost and quality
- Take account of any e-Commerce requirements
- Comply with the Sustainable Procurement Duty
- Detail environmental and climate performance levels, where appropriate
- Take into account suitability of design for all users and specify a conformity assessment e.g. ensuring a web site meets accessibility standards through specifying appropriate font sizes
- Take account of relevant legislation e.g. health and safety and equality
- Take account of all licensing requirements that a supplier must have in order to operate in a particular industry/sector and which are relevant to the performance of the contract, e.g. a supplier of water and waste water services must hold a current retail license for the provision of water and waste services in Scotland
- Provide for user instructions where appropriate
- Detail required packaging, marking and labelling
- Conformity to assessment procedures
- Outline required quality levels
- Outline performance, use of the product, safety or dimensions, including requirements relevant to the product as regards the name under which the product is sold. Please note you cannot specify a particular product or brand and must allow for the offer of equivalent products.
- Production processes and methods at any stage of the life cycle of the supply or service (for example to meet ethical, social or environmental objectives)
- Encourage fair participation and not be written in a way that distorts market competition or limits scope for entry to the procurement process by potential suppliers
- Ensure that any requirements for limits, tolerances, deliverables timescales etc. are practical and realistic
- Consider commercial and ongoing performance management aspects of the contract throughout the supply chain e.g. payment terms including those to sub-contractors
- Support a structured method of tender evaluation
- Be the basis of the formal contract between the Organisation and the supplier
- Define testing and test methods including any certification that may be required as proof from regulatory authorities or equivalent proof to meet the standards required
- The specification may also refer to factors of the production process, provision or trading, even where these factors do not form part of the material substance of the product, e.g. when technically describing the products or services you want to purchase, you may require that they do not involve toxic chemicals or are produced/provided using energy-efficient machines.
In addition, the technical specification may need to specify whether the transfer of Intellectual Property Rights (IPR) will be required. This may be important as potential suppliers are likely to find the contract much less attractive if they are being told that any intellectual property that they create would be the property of the buying organisation. This may prove to be an unnecessary barrier to competition to some potential suppliers who must supply similar goods or services to other customers. Also, in many cases the overall economic value of the IPR will be greater if left in the hands of a potential supplier which is able to exploit it commercially. The Organisation may, however, legitimately ask for access to intellectual property which it requires.
If the specification is flawed the result might be:
- Failure by the Organisation to meet its objectives
- Wasted money
- Unsuitable tenders
- Unsuitable bids
- Mis-interpretation of requirements
- Major difficulties in evaluating the bids
- Wrong or unsuitable products/services supplied
- Claims of unfair treatment being made by tenderers
- Difficult contract/project management
- Inability to resolve contract disputes
The Award Criteria must be linked to the specification. The award criteria must be relevant to the subject matter of the contract and not discriminatory.
Once a contract is awarded the scope to make changes to the specification (e.g. asking the contractor to deliver more, or less of something that was not specified at the time of tendering) is limited and any significant changes may be challenged in the Courts. If it is not possible for the supplier to deliver the contract as originally intended, as a result of omissions or errors in the specification, the contract may have to be terminated and a new procurement undertaken.
You may consider variants on the requirements as long as it has been specified in the Procurement Documents and minimum requirements set out in the Procurement documents have been met.
Who Provides the Specification?
The User Intelligence Group (UIG) is responsible for developing the specification, but should ensure that other end-users, stakeholders and technical specialists are consulted where appropriate. Part of the role of the UIG is to challenge accepted thinking. At the specification stage the UIG should explore opportunities to incorporate economic development and sustainability considerations.
The foundation of a good specification is laid in the planning and research undertaken before writing begins. Allow sufficient time to create the specification.
There is often merit in discussing the specification with a broad range of potential tenderers. This must be done in a fair and transparent manner to avoid distorting competition and/or giving any potential tenderer an advantage. Care must be exercised to avoid not only genuine unfairness, but also the impression of unfairness to some tenderers. Under no circumstances should any commitments be made during this process.
Following discussions with the marketplace, care must be taken to ensure that innovative ideas and approaches which provide a supplier(s) with a competitive edge are not disclosed in the development of the specification e.g. inclusion of proprietary methods or Intellectual Property Rights (IPR).
Procurement Officers can also use their commercial influence to help improve the competitiveness of suppliers by encouraging them to produce innovative goods and services which will assist the Organisation to deliver evolving policies and strategies e.g. with regards to sustainability low carbon products.
Suppliers should not be put to unnecessary cost through casual enquiries for bids. Everyone is responsible for ensuring that best VFM is achieved through the procurement process.
Technical Specifications and Standards
You should avoid reference within a technical specification which has the effect of favouring or eliminating particular suppliers by specifying a particular material or goods of a specific make or source or to a particular process, or trademark, patent, type, origin or means of production e.g. do not specify "Hoover" when you mean a vacuum cleaner or "Intel" when you mean a Central Processing Unit of a PC. In exceptional circumstances such reference may be justified if either the subject of the contract makes the use of such references indispensable or where the subject of the contract cannot otherwise be described in a manner which is sufficiently precise and intelligible to all bidders. In either circumstance, such reference should be accompanied by the words "or equivalent".
In addition, the technical specification can specify whether the transfer of intellectual property rights will be required. This is important as bidders are likely to find the contract much less attractive if they are being told that any intellectual property that they create would be the property of the Organisation. This may prove to be an unnecessary barrier to competition to some bidders who must supply similar goods or services to other customers. The Organisation, however, may legitimately ask for access to intellectual property which they require if and when they are transferring the contract to a new supplier/s.
The specification should be written in "performance" terms, which focus on the function of the product or the output of the service required. It builds the specification around a description of what is to be achieved rather than a fixed description of exactly how it should be done and encourages innovation in the market place, thereby allowing and encouraging suppliers to propose modern (including environmentally preferable) solutions.
In very exceptional circumstances, for a very limited number of products or services, a "design" specification may be unavoidable. As the term implies, such a specification starts with exact details of the physical dimensions, the materials used, power input and output, the manufacturing processes required, and so on. The nature of the requirement may make it essential to narrow the options by writing a detailed full design specification.
Life Cycle Costing
You can apply life cycle costing as part of the specification and subsequent evaluation. Life cycle costing takes into account all of the identifiable costs attributable to a product or service from its acquisition through use, maintenance and end of life (recycling / disposal). These can be direct costs like scheduled maintenance and energy used through the life of a road sweeping vehicle but also include less apparent external environmental costs such as the cost of emissions of greenhouse gas based on the energy use of the road sweeping vehicle.
These costs can only be assessed when:
- They are based on objective criteria that don’t favour or disadvantage any potential bidders;
- The assessment method is accessible to all interested parties;
- The data required can be provided with reasonable effort from all interested parties, including those from third countries.
If using a life-cycle costing approach to award a contract, the Procurement Documents must state:
- The data to be provided by bidders
- The method that will be used to determine the life-cycle cost on that basis.
It is important to differentiate between Whole Life Costing, Lifecycle Costing and Lifecycle Impact Mapping:
Whole Life Costing: Focuses solely on cost (£) of a product or service from cradle to grave. It takes into account acquisition, operation, ownership and disposal costs.. It does not take into consideration any environmental or social costs.
Lifecycle Costing: Life-cycle costing covers part or all of the following costs over the life cycle of a product or service:
(a) costs produced by the organisation or other users, such as:
(i) costs relating to acquisition;
(ii) costs of use, such as consumption of energy and other resources;
(iii) maintenance costs;
(iv) end of life costs, such as collection and recycling costs; and
(b) costs attributed to environmental externalities linked to the product or service during its life cycle, provided their monetary value can be determined and verified. This may include the cost of emissions of greenhouse gases and of other pollutant emissions and other climate change mitigation costs.
Lifecycle Impact Mapping: Focuses on social and environmental impact rather than cost. Life cycle impacts help the user identify and assess impacts. For example, it may help to focus attention on the disposal phase before the procurement is carried out, allowing the organisation to build end-of-life management requirements into both its performance clauses for successful contractors and its own internal management procedures.
Every product and service has a ‘life cycle’ or number of stages it goes through: from the extraction and sourcing of raw materials, such as mining to the transportation of sub-assemblies and parts, often through a global supply chain to the use of products or works and the delivery of services to the re-use, recycling, remanufacture and final disposal of materials
In the Marrakech Approach, the assessment of these risks and opportunities is broken down in to four key phases:
- Raw materials
- Manufacturing and logistics
- Disposal or end-of-life management
Please note: Life cycle impact mapping can be used alongside life cycle costing as part of the procurement process.
When you wish to purchase goods or services that have specific environmental, social or other characteristics it is possible to specify labels as a means of proof to show that the supplied goods or services correspond to the required characteristics (for example one of the available labels that addresses workforce issues is that provided by the Fairtrade Foundation).
Using Samples, Patterns, etc., in Specifications
If it is not possible to produce a detailed description of the requirement, samples or patterns may be issued to the tenderers or requested from them. It is best practice to keep a "sealed sample" for later comparison with the products supplied. Samples, patterns and drawings may also form part of a design specification.
Any samples that are no longer required should be returned to the tenderer.
Care should be taken that Copyright is not breached when using samples, patterns etc. for specification purposes. Consideration again needs to be given to the Intellectual Property Rights of the tenderers.
Simplification and Variety Reduction
Simplification and variety reduction techniques can help in reducing costs and in obtaining better VFM.
Simplification and variety reduction in a specification requires the elimination of complexities in design by omitting different types, sizes, grades etc. of products. At its simplest this might be seen as the reduction in the number of colours in which an item is purchased, or in the sizes of envelopes which are purchased and kept in stock and can be a valuable tool when seeking to establish a specification for large collaborative procurements.
As you develop your specification, especially an output specification, you will start to consider how the quality and performance aspects of the goods and services of the contract will be measured. These factors should be translated into the Management Information (MI) you will require from the supplier(s) and the Key Performance Indicators (KPIs) both of which will be included in the ITT and Terms and Conditions.
It is also best practice to ensure that suppliers are contractually required to provide line item spend detail as part of the contract support.
It is important to understand and specify what is specifically required. In some business areas internal customers or budget holders may over specify e.g in the case of consultancy services, specifying a Partner when an Associate could deliver the brief: someone who is suitable and can deliver at less than half the day rate.
Demand should be regularly assessed as it could be more cost effective to have a fixed term appointment than having an interim who stays in place for much longer than the initial contracted period. You should be aware of the approach whereby a supplier may put forward other additional services which are not necessarily required. Supplier led scope creep can occur and should be managed through effective demand management. An example of this would be an IT project aimed at procuring a records management system which links a number of record sources together and allows mutual sharing and updating of records. If a project like this is not fully scoped and requirements understood internally in the initial stages taking into account all multi site and individual user requirements, there is a possibility that suppliers are able to use gaps in planning and specification requirements to add additional products or services as a problem “resolution tool” increasing the scope, cost and timescales of the initial project. In order to avoid scope creep, it is essential to ensure that a robust scoping process is undertaken at the earliest possible opportunity.
Review and Sign-off
The key criteria that the UIG need to ensure in completing the specification are:
- Requirements are complete and accurate
- Stakeholders’ needs are taken into account
- Future developments have been taken into account
- Consistency with the Organisation’s requirements and objectives including business case, relevant legislation, procurement and contracts strategies, sustainability objectives and evaluation strategy
- Risk assessment completed to ensure that related risks are closed or managed