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How to manage a procurement process
- 1 Plan the process
- 2 Write a specification
- 3 Make the procurement
- 4 Manage the contract
- 5 Extending a contract
- 6 Ending a contract
- 7 Review your process
- 8 Spending thresholds
The Department for Education (DfE) has published guidance on buying for schools. We refer to this guidance throughout this article.
Plan the process
As part of planning a procurement, you should create a business case that you can use to:
- Specify what is needed, why and by when
- Request approval for the procurement
- Record the decision-making process
Check that enough budget is available. If you’re a maintained school, you should ask your local authority (LA) about its rules for procurement spending.
When building the business case, the DfE recommends:
- Collaborating with other schools, for example by sharing resources, comparing prices and experiences, and buying items together
- Creating an outline specification of what you need to buy
- Estimating the ‘whole-life cost’ of the contract and checking whether this exceeds any spending thresholds
- Choosing a procurement process. The DfE recommends using a framework agreement for low-value purchases
- Following the school's established process for obtaining formal approval for the procurement
Chapter 1 of the DfE’s guidance has more detail on the points above.
Write a specification
A specification should allow suppliers to understand exactly what you need to buy, including the quality and delivery date.
The length of the specification will vary depending on the item needed. The specification should include:
- A precise description of the goods, works or services required
- An explanation of how these should meet the school’s needs
- The quantity and quality required
- Timeframes for delivery
When writing the specification, consult those who are likely to use the item to find out what they need and how they plan to use it.
This is set out in chapter 2 of the DfE's guidance.
2017 State of Education survey
Findings from The Key's 2017 State of Education survey show that more than 6 in 10 schools (64%) need to make savings to balance their budget in the 2017-18 financial year.
Many schools are working together to achieve economies of scale: nearly a quarter (21%) are sharing contracts for services with others nearby.
Make the procurement
There are 4 different ways a school can make a procurement, which are explained in chapter 3 of the DfE’s guidance. These are:
- Select a supplier directly from a framework
- Run a mini-competition between suppliers on a framework
- Run a procurement for lower-value tenders
- Run a procurement for high-value and EU tenders
You can find detailed information on these processes by following the links below:
Issuing an invitation to tender
If you decide to run a competition between suppliers or run your own procurement, you must write and send an invitation to tender.
Read our article on invitations to tender to see model letters and guidance on what to include.
Kings Langley School, a large secondary school in Hertfordshire, managed relationships with a number of contractors while being rebuilt through the government’s Priority School Building Programme (PSBP).
Headteacher Gary Lewis told us that the key to a successful relationship with building contractors is advanced planning and attention to detail.
The school gained the trust of the contractors, Gary explained, by demonstrating a capacity to manage contracts efficiently and professionally.
Every document relating to the project was read thoroughly by the SBM, and the school sent off all documents within 24 hours of receiving a request.
The SBM held regular meetings with contractors and ensured that smaller details, such as parking arrangements for contractors visiting the site, were arranged well in advance.
Manage the contract
You should review the performance of a supplier in regular contract management meetings. Regular meetings help to ensure that all parties understand their responsibilities. They also provide an opportunity to check the supplier’s progress and deal with any issues.
The meetings should become less frequent once you feel confident that the supplier is performing satisfactorily and is on course to meet your requirements.
These meetings could include discussion about:
- Progress against the requirements of the contract
- The service level agreement (SLA)
- Possible upgrades or improvements to the product or service
- Unforeseen problems and how to address them
This information comes from chapter 4 of the DfE’s guidance, which also looks at variation agreements, renewing and ending contracts, and carrying out a formal review when a contract ends.
Extending a contract
You should start preparing for the next contract period well before the end of the existing contract. This means you can allow sufficient time for negotiating a contract extension or running a new procurement process.
If you need to extend the contract beyond its end date, and if the existing contract is below the EU public procurement threshold (see below for more on this), you can choose to extend it to a "reasonable" point in the future.
Generally, the extension should be no longer than half the time of the original time agreed.
If your existing contract is above the EU procurement threshold, you must carry out a new tender process, and shouldn’t just renew the existing contract. However, you can extend the contract as long as you have a plan for running the new procurement process in a "reasonable" timescale.
This is explained in chapter 4 of the DfE’s guidance (linked to in the section above) in the section called 'Renew the contract'.
How to extend a contract
One of our associate education experts, Martin Owen, said that there is no fixed process to follow for contract extensions. You should contact the supplier to find out about terms and conditions for an extension, and ensure the duration of the extension is clear. He also advised documenting the reasons for the contract extension.
He added that if you keep extending or renewing a contract multiple times without doing another procurement round, questions about value for money could be raised.
If the extension will be short, for example a few months, you should start the new procurement process early on, so that you don’t run out of time.
The DfE's guidance says that when agreeing the length of time to extend the contract, you should consider:
- Value for money
- What performance you need from your supplier
Model contract variation agreement
The DfE has published a model contract variation agreement, which you could use for extending a contract. You can download it from the following page. It’s the document called ‘Example contract variation agreement’.
Ending a contract
You should start preparing for the end of the contract period well in advance. You may need to consider what you’ll need to do to:
- Return suppliers’ equipment
- End any joint arrangements with suppliers
- Remove or dispose of any unwanted items
If you need to end the contract early, you should follow the exit process according to the contract’s terms and conditions.
This is set out in chapter 4 of the DfE's guidance on buying for schools (linked to above), in the section called 'End the contract'.
Review your process
At the end of a contract, or when you’re planning to renew a contract, you should carry out a formal review. This should involve talking to stakeholders and, where appropriate, a sample of users of the product or service.
You should discuss how the supplier performed and what you have learned during the contract, such as:
- What went well
- What didn’t go well
- What you could do to improve the next procurement
Make sure you update your procurement documentation so that anyone managing similar procurements in the future can take this into account.
This is explained in chapter 4 of the DfE's guidance on buying for schools (linked to above), in the section called 'Review your procurement process'.
The DfE suggests typical spending thresholds for different types of purchases. The thresholds are:
- Under £10,000 for a low-value purchase
- Between £10,000 and £40,000 for a medium-value purchase
- Over £40,000 for a high-value purchase
You can view this information by following the link below and clicking on the section 'Estimate the whole-life cost of the contract'.
EU spending thresholds and regulations
The EU spending threshold for goods and services is £164,176. If the estimated cost of the contract is above this threshold, you must follow the EU procurement directives and advertise the contract in the Official Journal of the EU (OJEU).
Some services that are specifically for education provision may be subject to a higher threshold of £589,148. You should seek legal advice or contact the DfE to determine whether your procurement qualifies.
This is explained in chapter 3 of the DfE’s guidance, in the section on high-value and EU tenders.
Martin Owen is a chartered accountant (CPFA). He has more than 20 years' experience working with schools to improve their governance, leadership and management of financial, business and operational processes.
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