E.1 Arrangements and Responsibilities

E.2 The Business Case

E.3 Specifications

E.4 Sourcing and Supplier Appraisal

E.5 Contract Strategy

E.6 Gateway Reviews

E.7 Risk Management

E.8 European Union Directives

E.9 Frameworks

E.10 Quotations

E.11 Tendering

E.12 Tender Evaluation

E.13 Debriefing

E.14 Post Tender Negotiation

E.15 Ordering & Issuing the Contract

E.16 Payment

E.17 Contract Management

E.18 Disposals

E.1.1 Contents

Key Stages in Procurement
Responsibilities and Roles
Sources of Additional Information

E 1.2 Key Stages in Procurement

Procurement arrangements in DTI, involving a mixture of centralised and decentralised procurement, are designed to ensure the benefits of economies of scale where appropriate without unnecessary central procurement bureaucracy. Managers are responsible for ensuring they deliver procurement needs using the procurement route that provides best value for money.

While precise procurement arrangements vary according to size and type, every procurement should involve the following key stages:

1. preparing a clear plan for the procurement
2. determining the requirement and obtaining the finance;
3. identifying sources and choosing the supplier appropriate to the type and scale of procurement; and
4. receiving and managing the goods or services supplied (including payment and, where appropriate, contract management).

Responsibility for following the key stages appropriately rests with those involved in the procurement chain, as follows:

• End Users need to be clear about their requirements,
• Procurement Staff need to be appropriately trained to dispense their procurement responsibilities professionally, effectively and in accordance with legislative & administrative requirements,
• Finance Staff need to have appropriate procedures in place for ensuring expenditure has been properly authorised and that proper payments issued in a timely manner,
• Managers need to have robust mechanisms for managing each stage of the procurement, and
• Budget Holders need to ensure proper arrangements for approving expenditure that are consistent with delegated authorities.

The following two tables illustrate the division of responsibilities for various stages in the procurement process:

E.1.4 Sources of Additional Information

This Section of the Procurement Manual (Part E) comprises detailed arrangements for managing the procurement process. While it covers most of the situations likely to be faced by procurement staff in DTI, it cannot answer every possible question that may arise. Procurement Staff should make full use of the expertise available throughout the Department if they encounter any issues or situations about which they are unsure. Refer to Section C - Organisations, Sources of Advice and Training of the Manual for general sources of information and advice. Details of finance payment systems can be found in the guidance for the MENTOR system.

In addition the Office of Government Commerce (OGC) developed the Successful Delivery Toolkit (click link to access). The Toolkit describes proven good practice for procurement, programmes, projects, risk and service management. The Toolkit brings together policy and best practice in a single point of reference. It helps you to ask critical questions about capability and project delivery and gives practical advice on how to improve the issued guidance on best practice techniques to be adopted at each stage of the procurement lifecycle. 

E.2.1 Contents

Introduction
Coverage of the Business Case
Approval of the Business Case
Special Cases

It is a fundamental principle that public money should not be spent unless the need has been demonstrated. The business case, the first stage in the procurement process, is a statement defining in a rational manner the need for the purchase. Approval of a business case must always be sought before proceeding further with the procurement.

The end user or customer should be responsible for writing the business case except where they do not have the required detailed knowledge, for example when procuring IT equipment. The appropriate procurement specialist should then draw up the business case in consultation with the end user or customer.

In a number of parts of the Department formal structures ensure procurement proposals are adequately researched, properly documented and processed through to approval of funding. This sub-section of the Manual sets out the general principles which should underpin such standing arrangements and which should be applied wherever more ad hoc arrangements are needed.

Special procedures apply to the approval of proposals for professional services (E.2.5a), media services (E.2.5b) and to the procurement of legal advice (E.2.5c).

The amount of detail included in the business case should be proportional to the value and complexity of the proposed purchase. A full case paper would be expected for a high value complex piece of work, whereas a short minute or email might suffice for a relatively cheap off-the-shelf item. The amount of effort in producing the case should be commensurate with the value of the intended purchase.

A good business case should contain the following:

1. Summary. This should highlight the main features, detailed in the remainder of this list, of the business case. For relatively small purchases the summary itself will be sufficient.
2. Purpose of Goods, Services or Works. This is the essence of the case and sets out in clear terms how the intended purchase will assist the Management Unit in achieving its aims and objectives.

1. Framework Arrangements. Research must take place into whether there is an existing Framework Arrangement or Agreement for these goods or services and, where there is, why it has not been used.  

2. Contract Management Arrangements.  Effective contract management is important for service contracts where contract monitoring and control play a major role.  Always appoint a contract manager (liaison officer) whatever the size or type of contract.  Also, since contract management is about the management of the whole procurement process, from defining the requirement through to disposal of any surplus or redundant goods, consider setting out who will be responsible for managing the various stages of the process, such as specification writing, evaluating the bid and monitoring and control.  For consultancy contracts make clear what the division of work between the contractor and in-house staff is expected to be.

3. Currency of the Contract. Government Accounting has always advised that contracts wherever possible should be negotiated in sterling. The major aim was to avoid wherever possible exchange risk fluctuations. The introduction of the Euro is not expected to have a significant impact on procurement within the Department. However some contractors may prefer to tender in Euros and may offer more competitive terms for the opportunity of doing so. Consideration should be given to the need to secure value for money in sterling terms and the guidelines for minimizing foreign exchange risk still need to be followed. In any advance advertisements it should be made clear whether bids will be accepted in anything other than sterling.

4. Total costs. The total estimated costs, including those associated with equipment maintenance, disposal and contract management, should be set out. Where applicable, the VAT element must be included in the cost. Identify where costs fall to different budgets or ledger headings (for example running costs for management and programme costs for the project). Take into account the requirements of EU Public Procurement Directives and the WTO(GATT) Government Procurement Agreement (see Chapter E.8 - European Union Directives).

5. Related action. Indicate plans for implementing follow-on or related actions associated with the procurement including:
   - any requirement for consultancy advice or customer surveys to help define the specification or for training where software is being bought;
   - the timing of organisational or policy changes following a review; or
   - arrangements for an evaluation at the end of the procurement exercise.

Where procurement (e.g. of contracted-out services), follows an appraisal of options, such as market testing, that appraisal should have identified key issues that form the business case. It may still, nevertheless, be necessary to submit the results of the prior appraisal exercise, together with detailed postings and plans for the conduct and management of the procurement, for formal approval (and authorisation of funds) prior to initiating further procurement action.

The customer or purchaser placing the order must obtain approval for the business case from a manager with both the appropriate level of delegated financial power to authorise expenditure and an allocated budget for the goods, services or works.

Within the approval process, maintain a clear separation of duties as a control against any potential impropriety. Ideally, the person who authorises expenditure from a budget should not also be responsible for placing the order (making the commitment).

The person approving the business case will need to ensure that it is persuasive in all respects and in particular that:

1. the purchase is necessary to assist the Management Unit in its work and is not merely desirable;
2. the procurement provides value for money;
3. a budget exists to cover the cost of the proposed purchase including any VAT;
4. due attention has been paid to contract monitoring and control, particularly in the case of large service contracts;
5. private sector contributions have been sought where the work will benefit industry, and
6. arrangements have been made for reviewing the success of the project on completion, especially the performance of the contractor. 

If necessary, obtain expert opinion before approving a business cases.

Approval of the Business Case must be given in writing. 

Formal business cases can be dispensed with for routine, low value (i.e. less than £500) purchases. Separation of duties should still be maintained (see Section B.1.4 - Separation of Duties) and the person placing the order should seek approval for the purchase.