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!
• To encourage colleagues to be more risk aware and
understand how poor procurement practice carries a cost
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
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.
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
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
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
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
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
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.
Questions