Route 3 - 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 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 public sector equality duty set out in the Equality Act 2010 specifically requires organisations to assess new or revised policies and practices on people with different protected characteristics, taking into account the three needs of the public sector equality duty – to eliminate discrimination; advance equality of opportunity; and foster good relations between people with different protected characteristics. The protected characteristics are age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation.
Organisations may also wish to consider the integration of human rights considerations into their impact assessments to help them to meet their obligations under the Human Rights Act 1998. Further information about how to conduct equality impact assessments is available on the Equality and Human Rights Commission (EHRC) website.
Organisations are permitted to conduct market consultation with a view to preparing both the procurement itself and the market for the coming process. To do this the Procurement Officer can speak with independent experts, regulatory authorities or suppliers to the market. They can then use any advice received in the planning and execution of the procurement process but must of course ensure that there is no distortion of competition and no detrimental effect on the principles of non-discrimination and transparency. It is important that all suppliers / bidders who join the process at a later date are provided with the same information as those who engaged during the period prior to the tender in order to ensure a fair process.
The specification must:
- Be set out in the relevant Procurement Documents
- Clearly describe what is required
- Lay down the characteristics required
- Not refer to the following except where justified by the subject-matter of the contract or on an exceptional basis where a sufficiently precise and intelligible description of the subject-matter of the contract is not possible. In which case the reference must be accompanied by the words “or equivalent”
- brands or trade names
- any particular process that is specific to a supplier in the market place
- trademarks, patents, types, or a specific origin or production.
- Provide equal access to bidders and not be written in a way that distorts market competition, creates unjustified obstacles or limits scope for entry to the procurement process by potential suppliers
- Take account of relevant policies e.g. is the requirement one that would be suited to attract community benefits? For procurements in which the estimated value of the contract is equal to or greater than £4,000,000, you must consider whether to impose a community benefit requirement as part of the procurement.
- Consider opportunities for sustainable procurement. Organisations must comply with the Sustainable Procurement Duty set out in the Procurement Reform (Scotland) Act 2014.
- Be drawn up to take into account accessibility criteria for persons with disabilities or design for all users except in justified cases and may specify a conformity assessment e.g. ensuring a web site meets accessibility standards through specifying appropriate font sizes.
The specification should also:
- Focus on outputs required without being prescriptive as to the method the supplier should use to provide them (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. Organisations are required by law to include such conditions as are reasonably necessary to ensure that the bidder which is awarded the contract complies with environmental, social and employment law in performing the contract, providing that these are linked to the subject matter of the contract, and are indicated in the call for competition or the procurement documents.
- 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 cost
- Take account of any e-Commerce requirements
- Take account of appropriate sustainability policies
- Detail environmental and climate performance levels, where appropriate
- 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 wastewater services in Scotland
- Provide for user instructions
- 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)
- 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
- Detail requirements relevant to packaging, marking and labelling
- 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
- Where certification e.g. via labels is required and bidders have no access to the specified certificates or test reports or equivalent and no way of obtaining them, you must accept appropriate proof (e.g. technical dossier from manufacturer) as long as the lack of availability is not the fault of the bidder and the proof provided by the bidder demonstrates that the requirements of the specification and award criteria are being fulfilled.
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 provided they are linked to the subject-matter of the contract and proportionate to its values and objectives 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 can specify whether the transfer of Intellectual Property Rights (IPR) will be required. This is important as 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 suppliers 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 the specification is wrong it may result in:
- A breach of procurement rules
- Failure by the Organisation to meet its objectives
- Wasted money
- Unsuitable tenderers
- 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
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 was specified at the time of tendering) is limited and any such 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 authorise or require variants on the requirements as long as it has been specified in the Contract Notice or, where a PIN is used as a means of calling for competition, in the invitation to confirm interest. The Procurement Documents must set out the minimum requirements and how the variant will be evaluated. Variants cannot be considered unless this has been done, they are linked to the subject matter and they meet the minimum requirements.
An organisation should also consider whether to allow potential service providers to set out options in relation to different TUPE scenarions within its tenders. If so, it should provide clear directions to tenderers to ensure that bids can be compared on a like-for-like basis.
All variant bids should be evaluated using the same criteria as the standard bids and compared on a like-for-like basis.
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 disclosed by a potential supplier which provide that supplier with a competitive edge are not disclosed by the Organisation in the development of the specification e.g. inclusion of proprietary methods or Intellectual Property Rights (IPR).
Procurement Officers should also consider how they can encourage potential suppliers 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. As with all aspects of the Procurement Journey, the activities at this stage must be carried out in a carefully managed manner that supports the Principles of Procurement.
Suppliers should not be put to unnecessary cost through casual enquiries for bids. Procurement Officers are responsible for ensuring that best VFM is achieved through the procurement process.
Technical Specifications and Standards
The Public Contracts (Scotland) Regulations 2015 set extensive rules on how organisations may define and incorporate technical specifications and standards.
Public standards can be used as a basis for specification (where EU Standards exist these must be given preference) or these can be supplemented or replaced by output/performance specifications.
As a minimum rule you must avoid a reference within a technical specification which has the effect of favouring or eliminating particular suppliers by specifying 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 we mean a vacuum cleaner or "Intel" when we mean a Central Processing Unit of a PC. Such reference may only be justified if either the subject of the contract makes the use of such references indispensable or in exceptional circumstances 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 must be accompanied by the words "or equivalent".
The specification should be written in "performance" terms, which focus on the function of the product or the output of the service required. This means building the specification around a description of what is to be achieved rather than a fixed description of exactly how it should be done and encouraging 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. However, these assertions should be tested and guidance sought, as a "design" specification may restrict competition.
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 includes less apparent external environmental costs such as the cost of emissions of greenhouse gas based on the energy use of the road sweepeing vehicle provided that their monetary value can be determined and verified.
Attributable costs can only be assessed when:
- They are based on objective criteria that don’t favour or disadvantage any potential bidders and which are not established for repeated or continuous application
- 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 other EU states and countries party to international agreements by which the EU is bound, such as the World Trade Organisation Government Procurement Agreement (e.g. USA).
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
Note that whenever a common method for the calculation of life-cycle costs has been made mandatory by a legislative act of the EU, that common method must be applied for the assessment of life-cycle costs.
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 – Fair Trade). To use this approach it is necessary to meet the following criteria:
- The labels can only concern criteria that are linked to the subject matter of the contract and are appropriate to define characteristics of the supplies or services
- They have to be based on objective and non-discriminatory criteria
- The label itself is established in an open and transparent procedure and can be accessible to all interested parties
- The label requirements are set by a third party over which no potential bidder has decisive influence
Rather than apply a label on a broad “all applies” basis, if it is more proportionate you can detail which label requirements are to be met for your process and so reduce the burden on bidders to meet them. This could expand the number of capable bidders for your process.
Equivalent labels must be accepted, and where the bidder can demonstrate that it has not possible to obtain either the label or an equivalent through no fault of its own you must accept other appropriate means of proof.
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. In this case, a "sealed sample" must be kept for later comparison with the products supplied. Samples, patterns and drawings may also form part of a design specification.
Any samples provided by tenderers 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 also 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, sustainability 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 Organisations' requirements and objectives including: business case; the Procurement Reform (Scotland) Act 2014, the Public Contracts (Scotland) Regulations 2015, the Procurement (Scotland) Regulations 2016 and other relevant legislation; procurement and contracts strategies; sustainability objectives and evaluation strategy
- Risk assessment is completed to ensure that related risks are closed or managed.