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Procurement – What can possibly go wrong

Procurement – What can possibly go wrong. Barbara Grange, Procurement Manager Peterborough Regional College Noel Cassidy, Procurement Officer Cambridge Regional College. Aims and Objectives To help mitigate risk for your organisation To give you some food for thought!

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Procurement – What can possibly go wrong

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  1. Procurement – What can possibly go wrong Barbara Grange, Procurement Manager Peterborough Regional College Noel Cassidy, Procurement Officer Cambridge Regional College

  2. Aims and Objectives • To help mitigate risk for your organisation • To give you some food for thought! • To encourage colleagues to be more risk aware and understand how poor procurement practice carries a cost

  3. Poorly trained staff – Anyone can be a buyer ! • Issues • Everyone can be a buyer or contracts manager regardless of skills and training! • Your organisation purchases goods or services that are not fit for purpose • Budgets are exceeded and poor deals negotiated • Suppliers not properly vetted • Financial regulations breached • Solution • Ensure staff with budget responsibility have been trained in the basics of procurement and contract management as a minimum • Ensure staff with significant spend responsibility involve the procurement team in contracting activities and ensure suppliers are vetted properly • Get support at the highest level for project involvement

  4. Writing a specification – getting it right • Issues • Too complex, are you paying for “stuff” that you do not really need? • Too weak, are you going to buy a “pup” that compromises quality and leaves you needing to buy something else? • Solution • Work as a team to prepare specifications to minimise potential future problems • Eliminate waste and maximise quality • Review your requirements including use of tools such as site surveys and multiple supplier engagement before going to tender.

  5. Get your contracts correct first time • Issues • Contracts are signed and have clauses that come back to “bite” • Excessive price escalation clauses • Minimum contract terms e.g. 10 years • Rollover at the end of contract for another additional term • Termination requires a distinct notice period • Onerous late payment charges • Intellectual property rights

  6. Get your contracts correct first time • Solution • Don’t let unqualified colleagues sign anything! • Ensure all contracts are vetted and approved prior to signing at Executive / Director level • Log all contracts on a contract register and check for reviews • Issue terms and conditions of trading with all purchase orders

  7. Colleagues make potentially illegal contract awards • Issues • They award contracts in excess of EU thresholds and do not tender in accordance with public sector procurement regulations or their own institutions financial regulations. • They add their own suppliers to framework mini competitions or run mini competitions from 2 consortia simultaneously • Using procurement consultants for tendering who do not tender in accordance with public sector procurement regulations. • They mix up selection and award criteria or assess them twice • They don’t provide feedback or adhere to mandatory standstill period • Your institution receives a formal challenge to the contract award

  8. Colleagues make potentially illegal contract awards • Solution • Ensure all colleagues are aware of all financial thresholds • Where an EU contract or framework is required, involve the procurement team and if no procurement team is in place ensure procurement consultants are suitably experienced and qualified to tender in accordance with public sector procurement rules. • Train colleagues to prepare compliant EU tenders • Train colleagues on running mini competitions and the use of standstill periods for EU procurement • Always be transparent throughout the process to mitigate the risk of challenge

  9. Classic Examples of how it goes wrong • College A signed a lease contract for a desktop copier with a purchase value of £2000. Because of the terms of that contract, and because there was no centralised vetting, meaning anyone could sign anything, by the time procurement extricated the College from the contract (10 years later) the College had paid in excess of £18,000 to the dealer. • College B ran a mini competition via a consortia framework for the supply of PC’s and included their existing supplier, who was not on the framework. They awarded the contract to their existing supplier and were subsequently challenged by framework suppliers for breach under EU regulations

  10. Classic Examples of how it goes wrong • College C used a procurement consultant to tender a contract which exceeded the EU tender threshold limit. The consultant whilst skilled at obtaining savings for the private sector had no knowledge of the legal requirements a public sector body has to comply with in relation to procurement of goods and services. They just picked three suppliers they had a previous relationship with and issued the tenders. The College ended up with a non-compliant contract. In addition the College had signed the consultants own terms and conditions which limited the consultants liability. The above was picked up by a procurement professional after they had joined the College. • College D had an IT agreement for a web based solution which had reached the end of its 1 year term however the College staff member who had set up the agreement left and no one kept track of the agreement meaning it automatically rolled over for another year which would have been fine if the College wanted to keep the solution. They ended up having to negotiate to terminate the agreement which was messy and costly.

  11. Questions

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