Selection criteria are focused on "the bidder" and award criteria are focused on "the bid”. Selection criteria assess things like the bidders economic standing or technical qualifications whereas as award criteria are concerned with how they will deliver the contract

You should maintain a clear distinction between both throughout the procurement process and you should note that you cannot use the same criteria at both selection and award stage

As a matter of procurement policy, and in order to meet obligations of transparency,

Organisations must publish details of the evaluation criteria to be used to either:

• select the bidders to be invited to bid for the contract or
• identify the supplier to whom the contract will be awarded.

It is best practice that evaluation criteria for both selection and award stages are agreed, along with respective weightings by the User Intelligence Group (UIG) before the Contract Notice is published and any documentation issued.

The evaluation criteria will comprise of (depending upon the stage of the competition):

• the selection or award criteria
• sub-criteria,
• weightings,
• minimum standards,
• pass marks (if any) etc.

If there is any doubt as to the level of detail that must be disclosed/published, you should seek specialist professional procurement or legal advice and guidance.

The agreed and advertised selection and award criteria and weightings must not be changed once they have been notified to the tenderers.

Evaluation criteria should be published under II.2.9 (Information about the limits on the number of candidates to be invited) of the Contract Notice or II.2.14 (Additional Information). of the Social and other Specific Services Contract Notice (if you decide to advertise your C&SS requirements)  This allows bidders to see how their responses will be evaluated.  

If the online PCS SPD Module is used, the scoring methodology needs to be detailed in the module, this does not need to be included in the Contract Notice.

If you are unable to publish these criteria in the Contract Notice or within the SPD Module, as an absolute minimum, you must state them in the published Procurement Documents.

The provisions in the Procurement (Scotland) Regulations 2016 in respect of selection criteria do not apply. However, you may choose to use the selection criteria (Regulation 10 of the Procurement (Scotland) Regulations 2016) and may choose to use the SPD for this purpose without amending the questions, and it is a matter of best practice to do so.

In order to check the bidder’s capability of delivering the contract, the buyer may require bidders to be enrolled in certain professional or trade registers. 

They may also require bidders to prove that they hold certain authorisation or memberships. Buyers should state these requirements upfront either in the contract notice or the PCS SPD module

For example: If the contract relates to the installation of gas boilers, the buyer may specify that the bidders need to be on the Gas Safe Register.

Buyers should assess the financial standing of bidders to ensure that they are financially stable enough to carry out the contract. In order to assess this you may ask for information such as financial ratios or turnover information from the bidders. 

In all cases, care should be taken not to set minimum standards that are disproportionate and/or which might exclude capable suppliers, especially SMEs and newly formed companies. 

For lower-risk procurement exercises – for example, where there are numerous suppliers capable of carrying out the contract, no time constraints, and payment is only to be made after the work completed – you should consider whether it is necessary (i.e. relevant and proportionate) to set any selection criteria relating to economic and financial standing.

Turnover 

Accounts

You may require bidders to provide annual account information for example showing the ratio between assets and liabilities. (The PCS SPD module includes a list of commonly used financial ratios for you to pick from). You can only exclude bidders on the basis of ratios identified in the Contract Notice so you should be sure that they are accurate and relevant.

You should also take into consideration that not all bidders have an audited set of accounts. As a result ,you must consider, on a case-by-case basis, what is essential information. This should be specified in the Contract Notice.

Insurance Levels

To assess the bidders capability you can ask them to provide relevant examples of previous work to demonstrate that they have sufficient  experience to deliver the contract. For goods and services, the examples provided by bidders must only be from the previous three years.

The examples requested should be relevant and proportionate to the procurement exercise.

You should be careful when creating the technical and professional ability minimum requirements to not exclude bidders who can demonstrate  that they have the capacity and capability to deliver the contract, but may not have delivered exactly the same goods or services previously. This will ensure opportunities are provided to bidders to access new markets or provide innovative solutions, no matter their size or status.

Remember that bidders do not need to submit examples from their existing organisation to meet the selection criteria.  They can submit relevant examples which they worked on in previous employment to demonstrate their previous experience.  This is particularly helpful to new businesses.  It is also acceptable for bidders to rely on other parties for certain parts of the selection criteria, for example, they may rely on a sub-contractor for experience in a certain area.

Qualifications

Depending the on the requirement, it can be more appropriate to evaluate qualifications as part of the award criteria.
If you do decide to evaluate qualifications as part of the selection stage, you should ensure the required qualifications are set upfront and clearly stated in the contract notice (or PCS SPD Module)

Use of References 

Buyers may request references from bidders in order to review previous experience. If the bidder is unable to provide the reference required it may provide other evidence which you consider appropriate. 

Depending on the nature of the contract, you may require the bidder to confirm that they comply with certain quality management standards or hold certain certificates.
You should ensure that any minimum standards are proportionate to the contract and are not overly onerous. 

For example if you require BS EN ISO 9001 you should accept any accredited independent third party certificate of compliance in accordance with the relevant requirements.  You should also accept other examples of equivalent measures provided that the bidder proves that the proposed measures comply with the required standards e.g. documented quality management policies and procedures.

Health and Safety Legislation

The degree to which health and safety requirements are required will vary according to the procurement exercise.  Any measure you take must be relevant, proportionate and should not be overly burdensome and be stated in the contract notice.

You must not select any bidders if they do not meet the stated health and safety legislation minimum requirements.

You should put in place on going monitoring procedures throughout the duration of the contracts to ensure compliance with health and safety requirements.  Within the SPD, this should be specified as part of the quality management section.

Further help in setting these standards can be found in the standardised statements.

Depending on the nature of the contract, you may require the bidder to confirm that they comply with certain environmental management legislation.

You should ensure that any minimum standards are proportionate to the contract and are not overly onerous.

For example if you require BS EN ISO 14001 you should accept any accredited independent third party certificate of compliance in accordance with the relevant requirements.  You should also accept other examples of equivalent measures provided that the bidder proves that the proposed measures comply with the required standards e.g. documented environmental management policies and procedures.

Further help in setting these standards can be found in the standardised statements.

You must consider if bidders may use a supply chain to deliver the requirements, and if so, SPD question 4C.4 and its standardised statement should be included in the selection criteria. This will require bidders to provide evidence of their standard payment terms, their payment performance in line with those terms and if necessary, an improvement plan detailing timely remedies to achieve good payment performance.

For examples of payment performance evidence and improvement plan guidance please reference the prompt payment page.

You must consider whether Fair Work practices are relevant and proportionate to include in your selection criteria. 

It may be more appropriate to include Fair Work practices in the award criteria. This will encourage bidders to explain how existing or new Fair Work practices will positively impact on the way the contract is performed. 

The practical tool Developing a Fair Work practices criterion will help you consider how to structure and adapt Fair Work practices criterion to the needs of the contract. 

The bidder must be given the opportunity to provide evidence that they have taken sufficient and appropriate remedial action i.e. they have ‘self-cleansed’. If you are satisfied that the evidence provided is sufficient to demonstrate reliability, you should not exclude the bidder from the procurement procedure on those grounds

The bidder must satisfy that it has:

• paid, or undertaken to pay, compensation for any damage caused by the criminal offence or misconduct;
• provided detailed facts and circumstances by  collaborating with the investigating authorities; and
• taken appropriate concrete technical, organisational and personnel measures to prevent further criminal offences or misconduct.

In the case of tax and social security breaches, the bidder should not be excluded if they have fufilled their obligations by paying or entered into a biding agreed with the view to paying monies due or the obligation to repay otherwise ceases. 

When considering any self-cleansing measures, organisations must consider all relevant factors.  This includes the gravity and particular circumstances of the criminal offence or misconduct.

If you believe the bidder’s remedial action  is not sufficient to demonstrate reliability, you must provide the bidder with a statement outlining the reasons for the decision.  The statement of reasons must be provided in writing as soon as is reasonably practicable to allow the bidder to understand why the self-cleansing measures taken are insufficient.

Questions relating to the above exclusion grounds are contained in the SPD.  It is best practice, and will help promote consistency, to use the SPD document for all route 2 procurement exercises.

The standardised statement document has been developed to support you in explaining the exclusion criteria to bidders.  Within the standardised statement document is a standard paragraph of text that can be added to your contract notice in section II.2.14 (Additional Information) to explain the exclusion criteria.

Please note that if you use the online SPD module on PCS, there is no need to add information on the Exclusion Grounds to the Contract Notice as they are automatically added to the module.

Buyers must ask if a bidder has been convicted by final judgement of one of the criminal offences contained in the relevant regulations

This includes:

• Participation in a criminal organisation
• Corruption
• Bribery and Fraud
• Terrorist offences or offences linked to terrorist activities
• Money laundering or terrorist financing
• Child labour and other forms of trafficking in human beings
   

Buyers must ask if a bidder has taken part in Blacklisting activites. 

Blacklisting refers to the practice of systematically denying individuals employment, who would otherwise be able to be employed.  Blacklisting is done on the basis of information, accurate or not, held in some type of database. The Scottish Government regards blacklisting or the compiling of a blacklist as totally unacceptable.

The Employment Relations Act 1999 (Blacklists) Regulations 2010 provide rights for individuals if blacklisting results in refusal of employment, detriment, dismissal or redundancy. 

The above are listed in regulations 8 and 9(1) of the Procurement (Scotland) Regulations 2016.

In exceptional circumstances you may disregard the mandatory exclusion grounds when selecting a bidder.  This can only be done where there are overriding reasons relating to the public interest. This provision is known as derogation from the mandatory exclusion considerations and ensures that organisations are able to respond to unforeseen emergency circumstances.

There is no definitive list of situations in which this derogation can be used and any decision should be made on a case by case basis. Organisations should be able to demonstrate that the actual or potential harm is so great, that the public interest in using the derogation outweighs the public interest in excluding a bidder.

An example may be where urgently needed vaccines or emergency equipment can only be purchased from a bidder to whom one of the mandatory exclusion grounds otherwise applies.

Each situation must be judged on its merits, but the following situations are, on their own, unlikely to meet this test:

• when a bidder which should be excluded is offering a substantially better quality / more economical product or service;
• when there would otherwise be a lack of competition.

Organisations may exclude a bidder where the bidder has breached its tax or social security obligations.  These may take the forms of judicial or administrative decision or other “appropriate means”.

Buyers can request the following examples of evidence to understand a bidder’s breach in tax or social security obligations:

• credit references, i.e. details of any outstanding tax debt;
• company accounts, depending on the size of the tax debt the bidder may be obliged to include this in their accounts;
• an admission by a bidder to an Occasion of Non-Compliance (OONC); or,
• an admission by a bidder of the failure of an avoidance scheme which they were involved in and was, or should have been, notified under Disclosure of Tax Avoidance Scheme (DOTAS).

In the case of tax and social security breaches, the bidder should not be excluded if they have fufilled their obligations by paying or entered into a biding agreed with the view to paying monies due or the obligation to repay otherwise ceases. 

Note – these examples relate to the UK tax regime, and there will be equivalents in other Member States which should be considered.

Bidders may be excluded if they have breached any the obligations in relation to environmental, social and labour law both in any relevant national and relevant collective agreements and specific international agreements.

Further information can be found in 9(5)(a) of The Procurement (Scotland) Regulations 2016.

When determining whether to exclude a bidder on this basis, a contracting authority should be proportionate in its decision, taking into account the size of the contract, the relevance of the breach, and its impact on the operational and reputational risk to the delivery of the contract.

Where a bidder is bankrupt or subject to insolvency proceedings, you can choose whether to exclude them from the procurement exercise.

Potential evidence could include:

• copies of accounts verifying they have sufficient liquidity to perform contract
• its business plan outlining steps the potential supplier will take to address concerns, or
• references from other recent customers
• when considering whether to exclude such a bidder you should consider contract delivery potential risks, such as:
• the impact this may have on the sub-contracting supply chain.
• the scale of the contract
• potential consequences of the contract failing.

Additionally, organisations should take into account the potential benefits of awarding a contract to such a bidder. These can include:

• providing opportunities to contribute to increased employment in communities
• the wellbeing of local and regional communities 
• helping unlock the innovation or economic potential with local businesses.

Bidders may be excluded if they are guilty of grave professional misconduct, which renders its integrity questionable;

Further information can be found in 9(5)(c) of The Procurement (Scotland) Regulations 2016.

When determining whether to exclude a bidder on this basis, a contracting authority should be proportionate in its decision, taking into account the size of the contract, the relevance of the breach, and its impact on the operational and reputational risk to the delivery of the contract.

Bidders may be excluded if a conflict of interest exists which may impact the procurement process.

Further information can be found in 9(5)(e) of The Procurement (Scotland) Regulations 2016.

When determining whether to exclude a bidder on this basis, a contracting authority should be proportionate in its decision, taking into account the size of the contract, the relevance of the breach, and its impact on the operational and reputational risk to the delivery of the contract.

Bidders may be excluded if a distortion of competition may arise from the prior involvement of the bidder in the preparation of the tender.

Further information can be found in 9(5)(f) of The Procurement (Scotland) Regulations 2016.

When determining whether to exclude a bidder on this basis, a contracting authority should be proportionate in its decision, taking into account the size of the contract, the relevance of the breach, and its impact on the operational and reputational risk to the delivery of the contract.

Bidders may be excluded if they have shown significant or persistent deficiencies in the performance of a substantive requirement (under a prior public contractor or a prior concession contract which led to early termination of that prior contract, damages or other comparable sanctions).

Further information can be found in The Procurement (Scotland) Regulations 2016

When determining whether to exclude a bidder on this basis, a contracting authority should be proportionate in its decision, taking into account the size of the contract, the relevance of the breach, and its impact on the operational and reputational risk to the delivery of the contract.

Bidders may be excluded if they are found to have:

• seriously misrepresented the supply of information or have withheld information (when this information would be used to confirm there are no grounds for their exclusion from the procurement exercise, and therefore the bidder meets the selection criteria) OR

the bidder has:

• unduly influenced the decision making process
• obtained confidential information which may give them undue advantages in the procurement procedure
• negligently provided misleading information that may have a material influence on decisions

Further information can be found in The Procurement (Scotland) Regulations 2016

You must consider how, in conducting your procurement, you can involve small and medium enterprises, third sector bodies and supported businesses.  This can include the use of sub-contractors to support the delivery of the contract.

The Procurement (Scotland) Regulations 2016 do not include applying mandatory and discretionary exclusion grounds to sub-contractors for contracts below the GPA Procurement Threshold contract value.  However you should consider the circumstances where this approach needs to be applied to safeguard effective contract delivery.

Exclusions grounds apply to a person who is:

• a member of the administrative, management or supervisory body of the bidder or
• has powers of representation, decision or control in relation to such bidder.

In the case of Care and Support Services the mandatory exclusion grounds Regulation 8(1) of the Procurement (Scotland) Regulations 2016 must be applied to all procurements, and you can also choose to apply the discretionary exclusion grounds.

Exclusion statements should be put under section II.2.14 Additional Information of the Social and other Specific Services Contract Notice.

The distinction between selection and award criteria is crucially important:

• Selection criteria are focused on "the bidder"
• Award criteria are focused on "the bid”.

You must maintain a clear distinction between both throughout the procurement process.

This means that issues/questions which are appropriate to the selection criteria must be addressed at that stage and cannot form part of the award stage. This is the case even if they were omitted from the selection stage in error.

Example areas that are commonly known as "selection" and "award" criteria are listed in the table below:

The selection and award criteria must be developed and managed  separately.  It is possible to conduct these stages simultaneously or in any order where the procedure allows. 

For example: when conducting a two stage procedure you  may assess the award stage prior to checking the minimum selection criteria are met when only a small number of bids have been received.

By applying exclusion grounds and developing relevant and proportionate selection and award criteria you can ensure the successful bidders are well placed to deliver best value for the Scottish public sector.

A supported business:

• has a main aim of the social and professional integration of disabled or disadvantaged persons;
• has at least 30% of its employees who are disabled or disadvantaged workers

You can “reserve” your competition to  supported businesses where it is assessed as appropriate. This is referred to as a Reserved Contract.

It is also possible for your Organisation to provide for a contract to be performed in the context of an employment programme operated by a supported business. This is a way Buyers can encourage involvement of disabled and disadvantaged persons.

The Procurement Reform (Scotland) Act 2014 places a requirement on an organisation to consider:

• how it may involve supported businesses.  This can be facilitated by how the procurement process is conducted

• acting in a way to best bring about the involvement of supported businesses where it occurs 

SPPN 4/2017 provides further information and guidance on reserving contracts for supported businesses, including:

• Determining whether an organisation meets the definition of a supported business (for the purposes of public procurement legislation)
• Identifying supported businesses
• Monitoring and reporting.

Groups of suppliers can act together to bid and do not need to take a particular legal form to do so.

You can set contract conditions which are specific to a group bid.

You  can explicitly state requirements regarding group economic and financial standing or the criteria relating to technical and professional ability.  Such conditions must be justified by objective reasons and be proportionate to the contract. 

Depending on the extent to which suppliers will be relied on to perform the contract, you may require particular members of the supplier group to meet all or some of the election criteria.

You may request the supplier group to take a legal form, if required for the performance of the contract, if the supplier group is to be awarded the contract.

Consider the involvement of people who use the services and their carers (and the nature and level of support they will require), in developing any criteria and preparing questions for use in interviews with potential service providers.  An organisation must determine at the planning stage what criteria it will use to select potential suppliers, and what criteria it will use to evaluate tenderers. The mandatory exclusion grounds must be applied and an organisation may also choose to apply discretionary exclusion grounds, selection criteria and award criteria.

Additional guidance on award criteria can be found in C&SS Award Criteria Guidance document and please read the Guidance on Contract Renewal and Direct Award without Competition which can be found at the bottom of the page in the documents section.

Exclusion Criteria

Care and Support Services mandatory exclusion grounds (Regulation 8(1) of the Procurement (Scotland) Regulations 2016) must be applied to all procurements, and you can also choose to apply the discretionary exclusion grounds.

Selection Criteria

The provisions in Procurement (Scotland) Regulations 2016 in respect of selection criteria do not apply. However, you may choose to use the SPD for this purpose without amending the questions, and it is a matter of best practice to do so.

Evaluation Criteria

An organisation may take account of some other issues when procuring services including:

• the quality of the service;
• the continuity of the service;
• the affordability of the service;
• the availability and comprehensiveness of the service;
• the accessibility of the service;
• the needs of different types of service users;
• the involvement of service users; and
• innovation.

This is not an exhaustive list and there may be other considerations that an organisation may also take account of and which are relevant on a case-by-case basis.

Please read the Guidance on Contract Renewal and Direct Award without Competition which can be found at the bottom of the page in the documents section. 

If your contract will require sub-contractors (and sub-sub contractors) you should evaluate at award stage how bidders will ensure payment of sub-contractors   throughout your supply chain.  Payment should be made within the standard 30 day payment terms and bidders should communicate how this will be managed.

All public bodies advertising requirements which may require the use of sub-contractors should adopt the statement:

Standard Prompt Payment Statement

Confirmation that you will include the standard clause in all contracts used in the delivery of the requirements, ensuring payment of sub-contractors at all stages of the supply chain within 30 days,  include a point of contact for sub-contractors to refer to in the case of payment difficulties and provide evidence and reports to the contracting authority on a regular basis.

If a bidder is unable to confirm acceptance of the award statement then they should be removed from the tendering process.

Whilst all the guidance in this station should be considered when procuring, specific Care and Support Services guidance can be found in Developing the Service Specification.

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 of a product or service from its purchase, 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, and also less obvious external environmental costs, such as the cost of greenhouse gas emissions based on the energy use of the road sweeping vehicle.

These costs can only be assessed when:

• based on 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 parties from other countries.

If using a life-cycle costing approach to award a contract, the Procurement Documents must state:

• the data bidders will provide;
• the method used to calculate the life-cycle cost.

It is important to differentiate between Whole Life Costing, Life-cycle Costing and Life-cycle Impact Mapping:

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
• Consider and communicate minimum cyber security requirements where these form part of award criteria
• 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

Cyber Risks

If the contract will involve, support or rely on the digital processing of information, organisations should ensure that appropriate consideration is given to potential cyber risks and their management.

Further information on how to assess and manage cyber risks as part of the procurement process can be found in the Scottish public sector Guidance Note on Supplier Cyber Security 

Buyers should assess cyber risks and develop appropriate cyber security requirements as part of award criteria. 

If you purchase goods or services with specific environmental, social or other characteristics labels can be used as a means of proof.  The label will show the supplied goods or services correspond to the required characteristics.  An example of a label that addresses workforce issues is that provided by the Fairtrade Foundation.

Samples or patterns may be issued or requested from suppliers when you cannot produce a detailed description of the requirement.

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 bidder.

Care should be taken that copyright is not breached when using samples, patterns etc. for specification purposes. Consideration needs to be given to the Intellectual Property Rights of the tenderers.

Simplification and variety reduction techniques can help in reducing costs and in obtaining better Value for Money (VFM).

Specification simplification and variety reduction involves removing design complexities.  For example by removing different design types, sizes, grades etc. by reducing:

• the number of item colours purchased; and
• the sizes of envelopes purchased and kept in stock and

This can be a valuable tool when creating a specification for large collaborative procurements.

You will consider how the contract quality and performance will be measured as you develop your specification, especially an output specification.

These factors should be included into the Management Information (MI) and Key Performance Indicators (KPIs) you require from your supplier(s).  MI and KPIs will be included in your ITT and Terms and Conditions.

It is also best practice that suppliers are contractually required to provide line item spend detail as part of their contract support.

Demand should be regularly assessed. In some business areas internal customers or budget holders may under or over specify e.g. for consultancy services, specifying a Partner when an Associate could deliver the brief; they are suitable and can deliver at less than half the day rate.  It could be more cost effective to have a fixed term appointment rather than an interim who stays in place for much longer than the initial contracted period.

In order to avoid scope creep, it is essential to ensure that a robust scoping process is undertaken at the earliest possible opportunity. Otherwise a supplier may offer additional services which are not required. Supplier led scope creep can occur and should be demand managed. An example is an IT project aimed at buying a records management system which links, shares and allows the updating of records. If a project like this is not fully scoped and requirements understood early on, the supplier may exploit planning gaps.  The supplier may add additional products or services as a problem “resolution tool”.  This would increase the scope, cost and timescales of the initial project.

The key criteria that the User Intelligence Group (UIG) needs to ensure are met when 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.  This includes: business case; relevant legislation; procurement and contracts strategies; sustainability objectives and evaluation strategy; and
• risk assessment are completed to ensure that related risks are closed or managed.

For Care and Support Services, please read the Care and Support Services Lessons Learned Guidance.

The overarching vision of Contract and Supplier Management is that it should :

• ensure that the service/contract is delivered to the required standards;

• provide value for money;

• proactively identify and manage any risks e.g. which may impact on a supplier’s service delivery/ fulfilment of contract requirements;

• improve and develop contract and supplier performance across organisations, sectors and nationally.  A consistent approach will maximise efficiencies and promote adding value across the supply base;

• appropriately influence supplier activity and decisions improving value for money, over and above cost savings;

• ensure the contract is effectively administered, for example from a change management perspective.

You should frequently aim to improve your own and supply base performance by various techniques.

Definition

Contract Management and Supplier Management differ.

Supplier Management refers to activities across a supplier’s whole portfolio of contracts.  These activities are normally more strategic, longer term activities.  Some examples could be:

• a project to move to reuseable pallets for all products and contracts delivered by the supplier
• a stationery supplier, moving to a new on-line catalogue ordering system.

Contract Management applies to the specific contract for the good(s) or service(s) being procured. For example:

• increasing the quality of refuse sacks to meet UK requirements
• amending the hours worked by staff on a security contract

Although different, Contract Management and Supplier Management are linked.  It is very difficult to perform effective Supplier Management if basic Contract Management disciplines are not in place. It would be difficult to discuss strategic partnerships, innovation or joint ventures if you do not understand the supplier contract details .  You need to understand how the supplier is performing day to day.

Effective Contract Management is therefore necessary for successful Supplier Management.

Importance of Contract Management at Board/Senior Management Level

An effective Contract Management strategy should be a high priority for Chief Financial Officers (CFOs) or Chief Operating Officers (Accounting Officers) and the Senior Management Teams.

Effective contract management is necessary for an efficient and compliant business. Contracts must be managed: especially those which deliver services, provide infrastructure or third party essentials.

Central functions of an Organisation’s Contract Management strategy should include:

• complying with corporate governance regulations,

• managing risk

• eliminating or reducing cost (not by impacting supply chain efficiency or profit) and

• maximising revenue streams.

Managing the contract information, obligations and the  contract lifecycle are critical to meeting compliance regulations. This means that the entire process needs to be sponsored at an executive level.  This includes:

• contract creation,

• clarity of final agreement,

• electronic contract management system

• integration of contract data with back-end systems and contract performance reporting.

The above need to be rolled-out to the entire organisation (for at least the most critical/high impact contracts).

Robust Contract Management will reduce risk to your Organisation.  This includes issues such as Conflicts of Interest and Fraud.

Your Organisation must consider these areas as a vital part of its governance.  You must ensure all appropriate measures are taken to prevent, identify and remedy conflicts of interest, and Include measures to combat fraud throughout the life of the contract.

Both you and the supplier should be motivated and enabled to deliver additional value.  This should be done within legal limits and, over and above that  specified in the original contract, e.g. not simply extending the expenditure. The process should deliver benefits such as:

There are a number of formal and informal continuous improvement methods.  These range from: full continuous improvement programmes; to organisational collaboration; and improved internal and external communication.

One of the key continuous improvement tools used in the Scottish Public Sector is the Procurement and Commercial Improvement Programme (PCIP).  This is designed to drive forward best practice and develop procurement activity.

 Contract & Supplier Management can be considered successful when:

• the arrangements for service delivery continue to be satisfactory to both parties, and the expected business benefits and value for money are being achieved or exceeded

• the supplier is efficient, co-operative and responsive

• the Organisation understands its obligations under the contract

• there are no surprises

• there are no disputes

• professional and objective discussions over changes and issues are straightforward and easily managed

• efficiencies are being realised

• the Organisation’s procurement department contract and market knowledge improves, and benefits future contracts

If entering a joint procurement exercise with one or more public sector organisations you must have already agreed the legal status and requirements of such an exercise.

A “lead” authority may have been agreed at strategy stage.  Legally they are responsible for forming the contract with the awarded supplier(s.

Alternatively a truly “joint” exercise may be initiated.  Here procurement conduct is  carried out in the joint name(s) of the participating organisations. 

In either case, the organisations each remain responsible for meeting their contractual obligations.

Where you have determined only part of the procurement will operate as a joint exercise, the organisations will be jointly responsible for those activity areas declared as joint.  Each organisation will retain sole responsibility for the activities carried out on its own behalf.

All of above factors determine the subsequent approach to contract management.  Although considered at Strategy Development stage when deciding subsequent practical considerations these must remain a factor when determining the operational approach such as:

• who is responsible for contract management,
• how Key Performance Indicators (KPIs) will be managed and communicated and
• the reporting / communication network needed both between your organisations and the supplier(s).

Organisations should build sufficient checks into their contract management activities.  This includes ensuring suppliers are meeting the Data Protection Legislation .

If these obligations are not being met you should take urgent remedial action with the supplier to address issues and risks.

More detailed information can be found in Additional Resources.

Having completed the procurement to the point of award it is essential that it be correctly communicated. Communication of the contract award and of the subsequent procedures is an important part of ensuring compliance.  It also maximises the planned benefit(s) from the procurement exercise.

You must know who you are targeting with your communications. During  strategy development you should have identified all key stakeholders from suppliers to end users. You should consider communications in terms of the three areas below, for each of the identified stakeholder groups.

What is your communication about? Be clear on and decide your key and supporting messages. Ensure that the subject is appropriate for the correct audience (stakeholder group) and  the communication stays focused on the appropriate subject, what they need to know and what is expected of them.

Plan and consider  your communications timings carefully, in line with the implementation process.  Your communications must

• arrive in good time
• allow  the audience to understand t the information
• allow the audience to then act upon or respond within the timescales.

 Communication should take place at the start, throughout and at the end of the process..

You must consider how you communicate to your audience.  This can be determined by the stakeholder audience you are targeting. You may also wish to consider (but not limited to):

• Newsletters – stakeholder community
• Intranet/internet article – public audience
• e-zines – targeted group
• e-mail – small targeted group
• Roadshows – specific bidders or the general supplier community

Accessibility requirements of your audience and accessibility legislation should be considered.

Communication with people who use services and their carers

Having finalised and agreed the procurement plan, an organisation should communicate its intentions to people who use the services and also their carers/representatives. It is important that an organisation provides clear and unambiguous information at this stage and that this information is tailored to the particular audience.

In these communications an organisation should explain:

• how long it will take to decide who will provide the service;

• what will happen at different times in the process;

• how people who use the services and their carers will be involved in the process;

• who will make the final decisions and how these will be made;

• (where appropriate) why there may be a change in service provider; and,

• how service provision may change as a result of the procurement process.

An organisation should also provide contact details for further information.

An organisation should ensure that people who use services and also their carers have help to understand the process and what, if anything, they are being asked about. It should also ensure that these people have sufficient time to consider how they might be affected and to formulate their views before having to respond

Transitional Arrangements

It is important that this stage of the procurement process is managed successfully to ensure minimum disruption to people who use services and their carers. This will require close co-operation between different teams within an organisation and between it and service providers.

This is particularly important where the outcome of the procurement exercise involves the transfer of an existing service to a new service provider. This is because there is some potential for the transfer process to be demanding and consume significant amounts of staff time. An organisation should facilitate the transfer of accurate, up to date information to the new service provider and ensure that the handover arrangements are appropriate and fully implemented.

Service providers will need to satisfy the Care Inspectorate that it can adhere to the Public Services Reform (Scotland) Act 2010 and Regulations and also meet the relevant National Care Standards. The Care Inspectorate can take up to approximately six months to register a new care service. This depends on a range of issues, including provision of a competent application and the complexity of the service being provided.

Where an existing service provider seeks to deliver a new service under the existing registered care services, this should be discussed with the Care Inspectorate. It may be possible to vary the registration to include the new contract. However, consideration would need to be given to: the current conditions of registration; the size of the service; management and staff support arrangements; geography; client group and needs of those people who use the services; transferability of staff across the service; staff skills and training; and the aims and objectives of the service.

If a service provider applies to cancel its registration, it is legally required to state whether notice has been given to those people who use the services and their carers about the changes to its service and how their needs will be met if the application to cancel is approved by the Care Inspectorate. An organisation should provide the necessary support and information to a service provider to enable it to meet its legal obligations.

An organisation which is outsourcing a service or bringing a service back in-house will have to meet its legal obligations under the TUPE Regulations. It should, in all such cases, seek legal advice on application of the TUPE Regulations. In other cases involving the transfer of an existing service, an organisation should consider whether it needs to take any action, for example to facilitate the exchange of information between service providers, should the TUPE Regulations apply.

The first meeting with the successful supplier should be held as soon as possible after contract award.

The purpose of this meeting is to:

• discuss the contract implementation phase
• agree roles and responsibilities,
• identify activities
• agree timescales.

You must keep in regular contact with the supplier during the contract implementation phase, scheduling additional meetings and communications as required.

If your commodity/service is deemed catalogue able you should set up the successful tenderer on the Pecos Content Management (PCM) system.  This ensures you can prepare the catalogues.

PCM will not be appropriate for Care and Support Services.

The process of content management from start to finish can take weeks.  It is mainly dependent on the size (number of line items) and number of catalogues involved.  This process involves:

• receiving initial catalogue data from suppliers

• checking catalogue content

• validation checks and clarifications

• testing (of data and systems used)

• training (internally and of stakeholders)

• communications (internally and to stakeholders)

• issue catalogues to end user organisations. 

• ongoing data checks, updates and system upgrades (following the above stages)

It is essential to allow enough time  for the completion of the above prior to the contract or framework go live.

You may wish to create an information pack for organisations and/or users which contains key contract information including:

• details of the contract goods and services available
• contract prices
• supplier contact details
• ordering information
• returns and delivery processes
• complaints process
• escalation process
• contract and supplier management process

This information pack should demonstrate how the contract delivers best value and provides information  on contract benefits e.g. savings, KPIs, improvements in quality and service, prompt payment of the full supply chain, sustainable procurement and community benefits expected, etc.

An example of an information pack is provided in the Postal Services End User Guide example below. This is a detailed example.  Every information pack must be proportionate to the size and complexity of the procurement, therefore your information pack may be much smaller.

A useful way to raise awareness of the contract amongst potential customers is to organise Supplier/Buyer events to give both parties an opportunity to meet each other.  An example of the presentation can be found in the Contract Implementation Slides.

This is also a good opportunity to distribute information packs/ buyers' guides.

Where tenders appear abnormally low in relation to the supplies and services being offered, organisations should clarify the price or costs proposed in the tender.

These clarifications may relate to some of the following:

• The cost of the manufacturing process for the services provided;
• The proposed technical solutions;
• The originality of the supplies or services proposed by the bidder;
• The bidder's subcontracting arrangements;
• Whether the price or costs take into account the grant of subsidies.

If it is found that the tender is abnormally low due to a breach of environmental, social or employment law obligations, you should reject the tender. This includes collective agreements and certain international law measures.

Before awarding the contract you should ensure you receive the most up-to-date supporting documents e.g. certificates.  These documents should be requested in the selection stage of the tender. For Framework Agreements this should be done prior to a contract based on the Framework being awarded.