July 2013

What you need to know about procuring suppliers

Deborah Ramshaw and Lois Shield

Introduction

Deborah Ramshaw• Director• Head of Procurement Team within Projects & ProcurementLois Shield • FCIPS• Procurement Consultant within Projects & Procurement

Agenda

• What does procuring suppliers mean to me and my school/academy

• Where do I start and what do I need to do?• Do I need to procure? Are there other options?• Supplier relationship management

• current and new suppliers• making them work for/with you

• Specification of requirements – which type best fits your needs• Value for money – what is it and how to achieve it• Proactive contract management

• contracting on the right terms and payment arrangements• use of KPIs and SLAs

• Dispute resolution, contract termination and service continuity

What does procuring suppliers mean to me and my school/academy

• Public procurement itself can be described as the process whereby public sector organisations acquire goods, services and works from third parties. It ranges from routine items like stationary to complex items such as construction projects and public private partnerships

• Contracting Authority• Academies Financial Handbook• Public Sector Procurement Requirement

• HM Treasury’s “Managing Public Money”• Value for Money

• Audit, governance and compliance

The case study

Grange Hill Academy

Contract for school uniform requirements with “Uniforms R Us”

Discussion point 1 Cancel the contract and set up a new one?

Red Tomato if you think “yes”, Grange Hill should cancel the contract and go with the new supplier?

Green Pepper if you think “no”, Grange Hill should not cancel the contract and/or go with the new supplier?

Discussion point 2 How might you resolve issues under the existing contract?

• Escalate the complaints?• Always check the contract provisions • Alternative to termination is dispute resolution or mediation

Grange Hill are minded to terminate and seek a new supplier …

How would you deal with the problems under the contract?

Discussion point 3 Time to vote!

Red Tomato if you would try a dispute resolution process first?

Green Pepper if you would move straight to termination?

Following slides show the types of clauses often found in contracts dealing with dispute resolution

Dispute resolution

1. If a dispute arises out of or in connection with this agreement or the performance, validity or enforceability of it (“Dispute”) then the parties shall follow the procedure in this clause

2. Either party shall give to the other written notice of the Dispute, setting out its nature and full particulars (“Dispute Notice”), together with relevant supporting documents. On service of the Dispute Notice, the Customer Service Officer of Uniforms R Us and the Business Manager of the Academy shall attempt in good faith to resolve the dispute

Dispute resolution

3. If the Customer Services Manager of Uniforms R Us and the Business Manager of the Academy are for any reason unable to resolve the Dispute within 30 days of service of the Dispute Notice, the Dispute shall be referred to the Business Director (“BD”) of Uniforms R Us and the Principal of the Academy who shall attempt in good faith to resolve it

4. If the BD of Uniforms R Us and the Principal of the Academy are for any reason unable to resolve the Dispute within 30 days of it being referred to them, the parties will attempt to settle it by mediation in accordance with the CEDR Model Mediation Provision

Dispute resolution

Unless otherwise agreed between the parties, the mediator shall be nominated by CEDR Solve. To initiate the mediation, a party must serve notice in writing (“ADR Notice”) to the other party to the Dispute, requesting a mediation. A copy of the ADR Notice should be sent to CEDR Solve. The mediation will not start later than 14 days after the date of the ADR Notice

5. If the Dispute is not resolved within 30 days after service of the ADR Notice, or either party fails to participate in or continue to participate in the mediation before the expiration of the said period of 30 days, the Dispute shall be finally resolved by the courts of England Wales in accordance with clause [ ] of this Agreement

Mediation

If any dispute arises in connection with this Agreement, the parties will attempt to settle it by mediation in accordance with the Centre for Effective Dispute Resolution (CEDR) Model Mediation Procedure. Unless otherwise agreed by the parties, the mediator will be nominated by CEDR

Decision time

The Academy decide to terminate …

but do you rely on:

Termination clause 1

OR

Termination clause 2

Termination clause 1

Without affecting any other right or remedy available to it, either party may terminate this agreement on giving not less than three months’ written notice to the other party

Termination clause 2

Without affecting any other right or remedy available to it, either party may terminate this agreement with immediate effect by giving written notice to the other party if the other party commits a material breach of any term of this agreement which breach is irremediable or (if such breach is remediable) fails to remedy that breach within a period of 30 days after being notified in writing to do so

Time to vote!

Red Tomato termination clause 1

Green Pepper termination clause 2

Discussion point 4 Do I need to procure? Are there other options?

• Options analysis• Collaboration arrangements • Frameworks • “In house” provision • Multi supplier contract arrangements

Discussion point 5 Should you make a direct award to the company used by the neighbouring academy?

Red Tomato yes

Green Pepper no

Reasons for vote?

Discussion point 6 Seeking a new supplier - where do I start and what do I need to do?

• Define requirements• procurement planning and market engagement• research and options analysis• consult with stakeholders• consult with incumbent supplier

• Follow the guidelines in Academies Financial Handbook or relevant financial regulations

• Ensure transparency, auditability and a fair, non-discriminatory process

• Follow the procurement cycle

Discussion point 7 What issues will you need to think about moving forward

• Requirements• Proactive contract management• Supplier Relationship management• Payment arrangements• Communication • Enablers•Key terms and specified outputs•Key Performance Indicators and Service Level Agreements•Dispute Resolution•Risk Management

 

Grange Hill have commenced a formal tender process for a new supplier …

Time to vote!

Red Tomato accept the cheapest tender from Uniform Stars

Green Pepper do not accept the cheapest tender from Uniform Stars

Discussion point 8 Value for money

• VfM is the consideration of economy, effectiveness and efficiency applied to the requirement

• Via defined well written specifications

• communicates to a supplier what the specifier wishes to have supplied to them in terms of services, supplies and/or works

• provides criteria against which the services, supplies and/or works actually supplied can be compared and evaluated

• Which specification suits your needs?

Discussion point 9

• Conflicts of interest

• EFA letter to academies of 17 June 2013

• Consider how you deal with conflicts during tendering processes

Thank you!

Any questions?

Contact

Deborah RamshawHead of Procurement0191 279 9836deborah.ramshaw@bonddickinson.com

Lois Shield FCIPSProcurement Consultant0191 230 8316lois.shield@bonddickinson.com

Contents of all slides © Bond Dickinson LLP 2013