A.6 ELECTRONIC COMMERCE

A.6.1 Contents

General
Targets and Progress
Sources of Additional Information

The use of information and communication technologies is central to what is described as the knowledge driven economy. Public procurement must make effective use of new technology in order to support the development of electronic forms of commerce (e-commerce) and to attain best in class status.

DTI has a lead role within Government to promote e-commerce throughout industry. DTI’s procurement practices are therefore expected to be keeping pace with the opportunities afforded by new technology and to incorporate the changes required to ensure full benefit can be taken.

The Government’s White Paper "Modernising Government" - Cm 4310, March 1999 committed government to acting as a champion of electronic commerce and set a target of 90% by value of low value purchases by central government to be carried out electronically by March 2001.

This target was re-affirmed in a slightly different form in the Government’s White Paper "Our Competitive Future: Building the Knowledge Driven Economy" December 1998 Cm 4176, which requires 90% by volume of routine procurement of goods by central government to be conducted electronically by March 2001. The implementation plan following this White Paper also contained an interim target of 50% by volume of routine procurement of goods by central government to be conducted electronically by March 2000.

At the time of writing this Manual, the Department had commissioned two studies into the possible benefits of electronic commerce to be undertaken by our IT partner UNITAS. One study focuses on an investigation into electronic solutions to support procurement transactions of all values of DTI’s procurement activities up to and beyond March 2001. The other study is focused more closely on the benefits and opportunities of introducing electronic commerce into the Department’s framework contracts.

The Department has also introduced the Government Procurement Card for small value purchases, which it sees as an introduction to electronic commerce. See also Section E.15.3.

The arrangements for giving effect to the government’s e-commerce targets (and which are referred to where they apply in other parts of this Manual) are still being developed and will be under regular review. To obtain the latest information you should consult the Common Good Projects team in IMPE.

A.7.1 Contents

General
Sources of Additional Information

All procurement must be fully consistent with the Government's international obligations under relevant EU Directives and the World Trade Organisation (WTO), formerly General Agreement on Tariffs and Trade (GATT) Government Procurement Agreement.

International obligations governing public sector procurement exist to ensure the development of effective competition in the field of public procurement, and ensure the removal of obstacles to the free movement of goods and services and to the freedom of establishment in respect of works. They are embodied in UK Regulations and must be followed otherwise UK Law will be broken, procedures may be suspended, decisions set aside or corrections made. In extreme cases of breach of obligations the Secretary of State may be taken to court.

For detailed information on the provisions of the EU Procurement Directives and on the WTO (GATT) Government Procurement Agreement see Chapter E.8.

A.8.1 Contents

General Policy Objectives
Encouraging SME Participation
Statistics
Sources of Additional Information

There is a good case on value for money grounds for taking steps to remove barriers to participation by small and medium enterprises (SMEs) in public procurement It is also a DTI objective to foster the creation and development of small and medium sized enterprises. (For procurement purposes, a small company is defined as one employing 200 people or less; a SME is one employing 500 staff or less.) Insofar as it is consistent with obtaining value for money, they should be included on appropriate lists of companies invited to quote or tender.

SMEs can be encouraged to participate in public sector contracts in many ways which do not discriminate against larger firms and which help to improve value for money by increasing competition. Particular steps that can be taken are:

1. by improving access to procurement information - the publications listed in Section A.8.5 provide a useful starting point and should be drawn to the attention of small firms.
2. by sub-dividing large contracts in appropriate circumstances so that small and medium companies can bid (care needed when splitting contracts - watch for impact on EU procurement thresholds – see Section E.8.4).
3. by taking a flexible approach when seeking quality assurance - BS EN ISO 9000 (BS5750) is not a mandatory requirement for Government contracts and certification may be inappropriate for a number of small firms, so you should consider the alternatives.
4. by paying special attention to the prompt payment of invoices and by being helpful particularly in redirecting enquiries.

Those new to procurement should read the booklet and watch the accompanying video entitled "Think big ...... buy small" (obtainable from Management Unit Procurement Officers).

When dealing with small firms, you should adhere to the following checklist of best procurement practice:

• know where suitable small firms are;
• explore local suppliers;
• include a new firm on every bid list;
• have a quality approach;
• keep documentation simple;
• specify by function and standard;
• consider using part orders;
• be realistic about timing;
• use post-tender negotiation fairly;
• avoid making changes after the order is placed;
• give feedback to unsuccessful bidders;
• pay bills on time;
• check what all suppliers think of you.

Most of the topics raised in the checklist above are in any event part of general best practice and are covered in more detail as they arise elsewhere in this Manual.

In order to permit the evaluation of small firms' success in winning government contracts, you should ensure that the "Statement on Size of Organisation" is completed on the Invitation to Tender/Quotation Request form (PF30) and that the size of companies bidding for government contracts, whether or not they are subsequently awarded the work, is recorded on your procurement information system.

The following publications provide procurement information for potential suppliers:

1. "Guide for Suppliers" - available on the DTI website –  www.dti.gov.uk/about/suppliers/strategy.htm.
2. "Tendering for Government Contracts" is available to help SMEs bid for contracts. It gives information on procurement in Government Departments. The DTI entry lists the main centres of procurement (IMPE for IT goods and services; EFM for building services; and PIC for publicity), as well as the procurement contacts in Radio communications Agency, the Insolvency Service, Companies House and the Patent Office available on the DTI website – www.dti.gov.uk/SMEP/SFIRMS/index.html.
3. "Government Opportunities" gives details of tendering opportunities for suppliers wishing to bid for government work (publication available from Business Information Publications Ltd. – www.bipcontracts.com.
4. The DTI Key Contacts helps potential bidders in identifying appropriate contacts within the Department - available on the DTI website – www.dti.gov.uk/contacts/pub.htm.

A.9.1 Contents

Introduction
Action for Procurement Staff
Sources of Additional Information

The Special Contracts Arrangement (SCA) was introduced in November 1994 to replace the Priority Suppliers Scheme (PSS). The SCA was developed to assist eligible employers of severely disabled people within the European Union and the European Economic Area to compete for business with UK Government Departments and their Agencies, whilst taking account of the principle of accepting the bid that offers best value for money.

Enterprises that satisfy the eligibility criteria may register at any time with the Employment Service, which is an Agency of the Department for Education and Employment. An invitation to register is published annually in the EU Official Journal. This does not apply to prison workshops.

SEPACS (Supported Employment Procurement and Consultancy Services), part of the Employment Service, are responsible for monitoring supported employment contracts. They seek to promote the potential of the supported employment enterprises registered under the SCA.

A list of registered enterprises is available from the Employment Service Disability Services Division. For further information see the contact details listed at the end of this Section.

The SCA applies only to those contracts that are below the relevant threshold of the EU/WTO(GATT) rules see Section E.8.4 and contracts to which those rules do not apply.

You should endeavour to increase business with enterprises registered under the SCA, while continuing to ensure fairness to other suppliers. Provide registered enterprises with every opportunity to supply the widest range of commodities by including them in suitable tender lists and using the "offer back" facility described in the next paragraph where appropriate, whilst still taking account of the principle of obtaining best value for money.

When awarding a contract covered by the SCA, you should:

1. award the contract to the supplier whose bid offers best value for money;
2. award the contract to a registered enterprise if its bid offers the same value for money as the most competitive bid from a non-registered firm;
3. give a registered enterprise the opportunity to submit a revised offer ("offer back") for all or part of the contract if that enterprise's bid is unacceptable on price alone (that is, quality, volume and delivery are acceptable);
4. accept the registered enterprise's revised bid if, on offer back, it matches the best offer;
5. maintain records on the use and outcome of offer back.

Do not use offer back as a means of subsequent negotiation with non-registered firms in order to reduce bid prices further.

You are not required:

6. to transfer existing contracts from satisfactory non-registered firms where the maintenance of suitable commercial manufacturing capacity is necessary for strategic reasons, even if a registered enterprise is able to match a non-registered firm's bid;
7. to split contracts where to do so would result in an increase in the overall cost of meeting your requirement.

Supported employment enterprises should be given a reason for their failure to obtain any business.

SEPACS should be consulted if the intention is to split orders between supported employment enterprises or if any difficulties arise.

For additional information contact the Employment Service, Disability Services Division DS4, Level 3, Rockingham House, 12 West Street, Sheffield, S1 4ER – Telephone 0114 259 5338.

A.10.1 Contents

Introduction
Action for Procurement Staff
General Points
Sources of Additional Information

Procurement presents opportunities to apply the Department's commitment to adopting good environmental practice. Our purchasing decisions, which collectively are significant in terms of expenditure and scale, and the message that we convey to industry through our references to environmental considerations, play a significant role in meeting the Government's green policy objectives, and also stimulate UK business to seize environmental market opportunities. Thus wherever possible, procurement specifications should include requirements to safeguard the environment.

As Departmental purchasers you are asked to consider the costs and benefits associated with green procurement by taking note of the following:

1. Determine if precedents have been established, by reference to any existing sources within DTI, OGDs or in industry, when considering whether or not to specify environmentally friendly goods or services. If not, consider whether there is sufficient information to include environmental costs in the procurement life cycle cost analysis.
2. Always ensure that environmentally friendly products are fit for the purpose for which they are intended.
3. Carry out regular reviews of the costs and benefits where green procurement involves paying a "premium".
4. Where applicable, ensure specifications, as a minimum, reflect the local green housekeeping strategy.
5. Make environmental considerations plain and unambiguous where they are included within specifications. As a simple example, if ordering say furniture one might include within the specification that if woods are utilised they should be from sustainable sources.
6. Procure goods and services whose specifications include environmental criteria in the normal manner, using competition and seeking best value for money.
7. Observe EU Directives and UK Regulations by not excluding tenderers from bidding on non-economic grounds. Bidders can only be excluded if they fail to meet specific green procurement requirements, not because of general environmental considerations.
8. Consider the costs and benefits in relation to any environmental advantages in use and disposal during the evaluation of bids.
9. Give preference to products with Eco-Labels or suppliers with BS7750 or equivalent (including EMA registered sites) where environmentally friendly products or services have been specified and the decision between competing bidders is extremely close.
10. seek environmentally friendly products from amongst those who offer value for money where no environmental requirements are specified, and all other things are equal, including quality.

This policy applies to the whole of the DTI. Responsibility for implementation of the Department’s procurement policy relating to environmental issues rests with management with the authority to commit or incur expenditure and individual purchasers.

In addition, DTI is accredited to the environmental management standard ISO 14001, in relation to management of the headquarters estate. Advice on the procurement implications is available from EFM.

When implementing DTI's green procurement policy do not lose sight of the fundamental value for money and UK supplier competitiveness objectives of Government procurement.

Green procurement should be viewed as a market opening measure for industry as well as a contribution to sustaining natural resources and the prevention of pollution. Both Europe and the USA have well-developed environmental markets and you can increase business opportunities by encouraging UK suppliers to think green when bidding for Government contracts. However, before specifying green products or services ensure that suppliers are prepared or able to meet your requirements and that UK suppliers in particular are not disadvantaged.

In order to successfully pursue DTI's procurement policy you need to be an intelligent customer who is familiar with the products that you are seeking to purchase, have a good knowledge of the market you are operating in and maintain a dialogue with your potential suppliers. This is particularly relevant for environmental issues in purchasing so that you can keep track of developments. If you do not have this basic knowledge you should seek expert advice from a procurement professional in your purchasing field.

General life cycle costing is covered in CUP Guidance No 35, but this does not take into account environmental issues. Environmental life cycle costing is a relatively new area. Information is often patchy and unreliable and it should not be attempted by the inexperienced. As a general rule you should aim to use existing information whenever possible. ENV are able to provide advice in some instances where sufficient information exists.

Financial savings, increased efficiency and a better environment can also be obtained by considering more environmentally friendly alternatives such as:

• the re-use or reallocation of assets in preference to buying new;
• minimisation of waste;
• revising procedures to minimise their environmental impact; and,
• recycling goods and waste.

If the purchase cost for the Department includes a saving that is due to the recycling of assets, which are returned to suppliers, the saving should be separately identified and may need to be treated as an "appropriation in aid". Guidance in this Manual on the disposal of goods (Chapter E.18) should be consulted where they are sent for recycling. Any receipts should be handled in accordance with the Accounting Memoranda.

When evaluating bids, give appropriate weight to the environmental considerations in the light of your priorities. Do not accept unsubstantiated claims by suppliers and unrecognised environmental labels on products. Environmental considerations must be based on available scientific evidence and not simply on good intentions.

Remember that environmental criteria should always be included in the specification part of a contract rather than in a contract's general terms and conditions.

ENV should be consulted about products with Eco-Labels (products which meet certain environmental performance criteria). The Department of the Environment, Transport and the Regions (DETR) has information on registered Eco-Management and Audit sites (which provides an ISO 9000 type certification for environmental management systems).

Other sources of information include:

1. "Green Guide for Buyers" - produced by Business in the Environment, the Chartered Institute of Purchasing and Supply and KPMG for integrating the environment on to the purchasing and supply chain. Published by Business in the Environment, 8 Stratton Street, LONDON W1X 5FD.
2. "Environmental Action Guide" (produced by DETR) for building and construction works, building maintenance and property management. Published by HMSO (ISBN 0-11-752311) and available on the DETR website – www.detr.gov.uk.

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