Procurement and purchasing arrangements must demonstrate value for money and be in accordance with the guidelines set out in Managing Public Money, the Framework Agreement and Cabinet Office Controls.

Further guidance can be obtained in the LGSCO Procurement Manual. 

Requisitions and new suppliers

7.1 The LGSCO uses an internet purchase ordering system (IPOS) to process all orders, goods received notes and approve invoices. The user guide is available on the intranet. 

7.2 Requisitions will be raised for the purchase and provision of all goods and services for LGSCO other than, office rent, pension payments, legal costs and purchases made using a Government Procurement Card (GPC Card).

7.3 All contract values over £25,000 are covered by a Procurement process to obtain competitive bids through the government’s Contract Finder website 

7.4 Before the end of the UK’s transition period for leaving the EU (31 December 2020), where a contract was estimated to be over the EU threshold then an EU compliant process needed to be adopted. After 31 December 2020, this process has been replaced by the UK’s ‘Find a Tender’ process. Under this process, there is a requirement for any tenders over a certain threshold† to be published on the ‘Find a Tender’ website Find a Tender (find-tender.service.gov.uk) (see 7.25 and 7.26)

7.5 In selecting a new supplier, where a transaction exceeds £1,000 or where there are any particular risks or concerns, Budget holders must take at least one reference from another user of the company’s service; this applies to all contracts with the exception of suppliers with a Crown Commercial Services (CCS) framework agreement or other appropriate local government purchasing consortia agreement (see 7.20 and 7.21).

7.6 A new supplier account will be created by submitting a completed and signed new supplier form showing who the account has been set up by and who has authorised the ‘contract’. All new suppliers must be authorised by a member of the Executive Team and entered onto the IPOS system by the Head of Finance and Management Accountant. Changes to supplier accounts must be audited periodically by either the CEO or the Head of Policy & Comms.

7.7 Failure to raise an official requisition or purchase order (other than for the exceptions detailed above) will be investigated by the Head of Finance, who will recommend appropriate action under the LGSCO’s existing policies.

7.8 Requisitions will be raised and approved in accordance with the IPOS approval matrix. (Appendix B)

7.9 Requisitions will be completed in as much detail as possible, including the estimated/actual cost of the item or service, the date upon which delivery is required and the item code (which determines which Budget line the expenditure is allocated against).

7.10 When a requisition is prepared for the provision of a contract/agency worker, the order should only cover the period in the business case approved by the Executive Team.

7.11 Contracts derived from a procurement process are to be kept in the Operational Support filing system with online copies electronically stored where practical.

Issue of purchase orders

7.12 Once a requisition is approved in IPOS, a purchase order will be created in IPOS and emailed automatically to the supplier (where an email address is available) or issued to the supplier by an employee authorised to do so.

7.13 If a purchase order has to be changed the purchasing employee must seek any necessary approval before reissuing to the supplier. If an order is cancelled, the user must enter a cancellation reason in IPOS.

7.14 If a purchase order has been prepared in the name of a supplier who proves unable to meet the order, under no circumstances can the Purchase Order be amended and allocated to a different supplier. The order must be cancelled and a fresh requisition/order prepared.

7.15 Purchase orders need not be used where the purchase has been made via Government Procurement Card (GPC).

Separation of ordering, certifying Goods Received Note (GRN) and payment functions

7.16 To ensure proper financial control the ordering, certifying and payment functions will be separated.

7.17 Authorised employees are responsible for approving orders for goods and services. (IPOS approval matrix. (Appendix B))

7.18 When goods are received/services delivered, they will be receipted on IPOS (with an electronic Goods Receipt Note or GRN). Certifying the receipt of goods or completion of services will normally be the responsibility of the Budget holder’s appointed representative.

7.19 Payment will be the responsibility of the Head of Finance who will not solely authorise requisitions for any goods or services. Suppliers will be asked to send all invoices directly to Finance who will enter, match and approve invoices for payment within allowed tolerances.

Goods and services purchased from Frameworks and Purchasing Consortia

7.20 Where available the LGSCO will utilise Crown Commercial Services (CCS) framework agreements allowing it to make purchases from suppliers awarded contracts for the provision of goods or services by CCS following an open market tendering process. The LGSCO has access to other purchase goods and services from the approved suppliers of appropriate local government purchasing consortia.

7.21 Whenever a CCS framework agreement or other appropriate local government purchasing consortia (together known as a contract) is available, items will normally be purchased under this contract. Exceptions to this instruction, other than where expenditure is £500 or less, must be authorised by the Executive Team.

7.22 Framework agreements are available through CCS. The award of goods and services should be made based on value for money. The concept of value for money is based on an assessment of price and quality (e.g. product durability, delivery dates etc), Where:

• (i) assessment is on a price only basis and the lowest price is not recommended or 
• (ii) where a bid offering value for money is not recommended, 

then the Executive Team must authorise acceptance. In all cases a requisition must be raised within the IPOS system.

Quotations for goods and services 

7.23 The tendering and quotation limits are listed below. Contracts for services will be reviewed annually, but, subject to the performance of the supplier being satisfactory and any price increases for inflation being reasonable, the contracts may be allowed to run on for three years, (five years in the case of banking, audit and legal services). Where a contract is extended in this way the Head of Finance will be advised annually of the extension. At all levels of spend the Budget holder must obtain value for money for the LGSCO.

7.24 The monetary thresholds referred to below apply to both; single contract value or an annual amount to one supplier in a financial year, that is, the total of more than one contract.

Goods or services estimated to cost £5,000 or less (net of VAT)

An order for goods or services of estimated value not exceeding £5,000 should have at least one written quotation and Budget holder approval.

Goods or services estimated to cost greater than £5,000, not exceeding £10,000 (net of VAT)

An order for goods or services of estimated value greater than £5,000 but not exceeding £10,000 should have at least two written quotations and Budget holder approval.

Goods or services estimated to cost greater than £10,000, not exceeding £50,000 (net of VAT)

The Budget holder must have prior Executive Team approval to purchase goods or services for this value and seek at least three written quotations. A member of the Executive Team must approve the IPOS requisitions. 

Goods or services estimated to cost over £50,000 (net of VAT)

The Budget holder must have prior Executive Team approval and the approval of Chair of the Commission to purchase goods or services for this value and seek at least three written quotations. A member of the Executive Team must approve the IPOS requisitions. 

Large Contracts – Using the ‘Find a Tender’ Process

7.25 It is important to establish whether UK Government rules compelling advertising of public sector contracts are appropriate to the procurement and reference must be made to the type of procurement and the value attaching to that contract. In such cases the advice of the Head of Finance must be sought. (Compliance with the UK ‘Find a Tender’ process is a legal requirement.)

7.26 Where a contract is estimated to be over the UK threshold† then a ‘Find a Tender’ compliant process needs to be adopted.

Inviting tenders and quotations for contracts

7.27 Contractors invited to tender or provide a quotation will be selected as follows:

• as a result of information placed on the governments Contract Finder website;
• as a result of the use of an appropriate CCS or other framework;
• in compliance with the UK ‘Find a Tender’ procurement regulations for goods or services over the relevant values; and
• for goods and services less than £10,000; through researching via websites, trade magazines, approved lists, and general good purchasing practices.

7.28 Employees involved in procurement must make sure the Staff Code of Conduct is adhered to in order to ensure they are not involved in any way in contracting with firms where there is a potential conflict of interest.

7.29 As well as providing details of their proposals and costs, bidders may be asked to include with their quotation or tender:

• a list of their major clients, with particular reference to clients in the public sector or who are bodies similar to the LGSCO;
• the names of at least three referees to whom they have provided a similar service, in terms of size and nature of the contract, whom the LGSCO may approach;
• a copy of their customer care policy; 
• a description of their quality control systems;
• details of organisational structure for management of the contract;
• financial details enabling any checks to be carried out;
• equal opportunities policy; and 
• environmental policy.

7.30 The invitation to tender must include the award criteria upon which each bid will be assessed and upon which the evaluation and comparison of the tenders will be based.

7.31 Where any bidder asks a supplementary question before the expiry of the tender, then the question and the answer will be sent to all bidders, to ensure clarity and consistency.

7.32 It is a requirement for all closed tenders that the documentation is dispatched by a responsible person other than the procuring manager to ensure suitable segregation of duties.

7.33 Examples of closed tenders occur where bids are obtained by those organisations on a national framework or from those firms who have expressed an interest in bidding in response to an advert.

7.34 Under no circumstances should a contract to deliver one service or one purchase of goods be divided into separate parts to bring it below the normal acceptance limits.

7.35 The Staff Code of Conduct sets out the action to be taken by employees who have, or believe they may have a financial or non-financial interest in the award of any LGSCO contracts.

 Contract Specifications included in tenders

7.36 All tenders must include a clear specification of the LGSCO’s requirements which will form part of the subsequent contract. In preparing a specification, staff should consider including the following:

• modifications to any previous specification for the supply of goods or the service in the light of experience of previous contracts;
• duration of the contract;
• health and safety requirements;
• membership by the contractor of an appropriate trade association;
• quality standard matters (e.g. processes for monitoring performance and processing complaints about that performance);
• possession by the contractor of appropriate insurance cover;
• arrangements for the termination of the contract this may include a penalty clause for failure to meet agreed standards or deadlines and/or remedies;
• payment arrangements (i.e. whether payment will be by instalments and any milestones to be achieved before making such payments);
• net price, VAT and any other applicable taxes;
• applicable legal requirements such as Freedom of Information, Data Protection, etc;
• the process for varying contracts;
• key policy documents such as equality, environmental; and
• any recurring costs, including a price cap, the method for pricing etc. 

7.37 In the case of certain contracts, the Budget holder preparing the specification will obtain legal advice and the Head of Finance’s views before invitations to tender are issued.

7.38 Where a framework is used it generally has a set of specific terms and conditions that have to be used.

Receipt of tenders

7.39 Tenders and quotations should be received by the published due date and time. Upon receipt a record of date, time and recipient will be kept for each tender. If a time deadline was included in the invitation to tender, those tenders or quotations received on the closing day should also be endorsed with the time of receipt.

7.40 Closed tenders (i.e. those invited for major contracts) will be submitted in sealed envelopes, bearing the word ‘Tender’, the return date, and the subject to which they relate. Emails with electronic attachments are also acceptable.

7.41 Envelopes containing closed tenders will be endorsed with the date and time of receipt, and the endorsement will be signed by the employee receiving the envelope. They will not be opened, but will be passed to the Head of Finance who will retain them unopened under secure conditions until the tendering period has expired. If the tender response is by email, the email subject line should include the words ‘Closed Tender’ to ensure the email is not opened until the closing date.

7.42 The Head of Finance and the Budget holder are responsible for inviting the tenders. The Head of Finance will sign the pages of the tender documents showing the price offered. Details of the tenders will be entered in a tender register maintained by the Head of Finance.

7.43 Any closed tender received after the specified date and time will be returned promptly to the bidders, unless good reason for the late receipt can be provided. In such cases, the circumstances will be recorded in writing on the file.

7.44 In the case of contracts exceeding £50,000, tenders submitted by unsuccessful bidders will be retained by the Head of Finance for one year.

7.45 Where the bids are received through electronic means (e.g. email or web portal) then there will be electronic details of the time of bid receipt.

Tender evaluation 

7.46 The Budget holder inviting the tenders will evaluate the tenders, who will ensure that the tenders/quotations received meet all aspects of the specification.

7.47 Tenders must be evaluated on a like for like basis. Therefore, a comparison chart will be drawn up that clearly demonstrates the evaluation process where each bidder responds to LGSCO requirements.

7.48 The award criteria upon which the evaluation is made must be specified in the invitation to bid documents and must be complied with in the evaluation, with evidence to this effect kept for at least three years after the end of the contract.

7.49 Before recommending approval of a tender, references will be taken up, preferably from bodies similar to the LGSCO in type and size. The references will be specific, including, for example, enquiries as to efficiency, time-keeping, dealing with complaints, management, etc. The reference, however favourable, will supplement, but will not be a substitute for a full and proper evaluation of the tender.

7.50 Consideration should be given to carrying out a financial check on bidders where the value of the contract is worth at least £10,000 in a 12-month period. Where the value of the contract is more than £50,000 in a 12-month period then a financial check must be carried out. For all contracts where the spend exceeds £10,000 in a 12-month period; before inviting bids, the Head of Finance should be consulted to determine the nature of the required checking and, if appropriate, to do the checking. The results of such checks can be part of the evaluation process and can also be carried out on a periodic basis if the contract is due to last multiple years. It should be noted that where a framework is used financial checks may have already been carried out by the authority managing this arrangement and may also take place on a periodic basis.

7.51 A tender evaluation report, and the conclusions reached, will accompany the submission of the contract acceptance form to the Executive Team or the Chair of the Commission. This report will be retained on file. All employees who are involved in the evaluation will approve the report. The report will clearly set out reasons if a recommendation is being made to accept a tender from a bidder other than that submitting the lowest tender, or if fewer than the stipulated number of tenders have been received. It should be noted that compliance with the UK ‘Find a Tender’ process is mandatory and cannot be overridden.

Post-tender discussion

7.52 Circumstances may arise where it will be appropriate to enter into discussions with contractors after tenders/quotations have been received. This is restricted to clarification of bids and in no circumstance can negotiations take place. 

7.53 Where examination of a quotation or tender reveals errors or discrepancies affecting the tender figure in what otherwise would have been a successful tender, the bidder will be given details of the errors or discrepancies and given the opportunity to confirm or withdraw their offer. If the bidder withdraws, the next tender in competitive order will be examined and dealt with in the same way.

Exceptions to tenders or quotation

7.54 Tenders or quotations need not be invited if it is:

• an extension or variation of an existing contract (to be approved by the Budget holder and CEO);
• required so urgently as not to permit the invitation of quotations and cannot be obtained through variation or direct order through a framework and is less than £10,000 in value. Such cases will be reported to the next meeting of the Executive Team;
• repairs to or the supply of parts of existing proprietary machinery or plant as part of or as a variation to an existing contract.

Waiving of financial instructions 

7.55 Financial Instructions may be waived by the Accounting Officer provided sufficient reason is given. Where there is:

• any variation by way of bids less than the required number of quotes, or
• acceptance of a tender other than the lowest in price, or 
• acceptance of a tender other than that assessed to be lowest in terms of price and quality (best value for money) 

this will be reported to the Head of Finance and Executive Team. The Head of Finance must report any waiver of Financial Regulations and the reasons for the waiver to the Audit and Risk Assurance Committee at its next meeting.

The contract

7.56 Every contract will be in writing and will include standard clauses relating to and requiring performance in line with a specification. If a supplier or contractor has a standard letter of conditions this will be scrutinised and any conditions which are unacceptable will be drawn to notice. If required, legal advice will be sought and the text of major contracts may be approved by them.

7.57 The contract can be signed by the Budget holder or superior, in accordance with the scheme of delegated authority found in Appendix A.

7.58 If in case of emergency or urgent necessity a contractor is advised orally of the award of a contract, the signed contract acceptance confirmation will be issued no later than the next working day, and will be clearly marked ‘Confirmation of oral instruction’. The notification of the award of a contract will, in addition, be supported by an official order, which will confirm the accepted price.

7.59 Every contract will specify:

• work, materials, matters or things to be furnished, had or done (including any appropriate technical specifications);
• price to be paid, with a statement of discounts or other deductions;
• time or times within which the contract is to be performed; and
• a set of general conditions that deal with various items such as dispute resolution, payment process, termination, freedom of information, data protection, confidentiality etc.

Consideration should also be given to including penalty clauses for late delivery or under performance by the contractor.

Contract variations and extensions

7.60 In some cases it may be necessary to vary or to extend a contract once it has been entered upon, to take account of changed circumstances. The Accounting Officer must authorise any change when a contract will be extended by more than 25% of its original value or duration.

7.61 In the event that an extension of a contract becomes necessary and it is below 25% in value or duration the extension will normally be authorised by the Budget holder who authorised the placing of the original contract or his/her successor.

7.62 Care must be taken where the value of a contract takes it above the UK ‘Find a Tender’ threshold (see 7.25). Where this occurs then legal advice should be sought over the next steps to protect the interests of the LGSCO.

7.63 All contract extensions must be covered by the approved Budget limit.

Contract management

7.64 The Budget holder will be responsible for the management of each contract. They are responsible for monitoring performance and will keep a record of any incidents of serious under performance. Such incidents will be promptly reported to the contractor for remedy and may be used as a basis for termination of the contract. A note will be placed on file recording any warnings given to the contractor for under performance. Similarly, a file note will be made recording good performance.

Termination of contracts

7.65 A decision to terminate a contract for unsatisfactory performance or for other special circumstances will be made on the basis of written file notes, setting out reasons for termination including supporting evidence. Before a contract is terminated, the Budget holder managing the contract will consult with the Head of Finance, and, if required, legal advice will be sought.

7.66 Authority to terminate a contract will be the same as the authority for accepting the original tender or quotation.

Authorisation of purchase order (PO) Requisitions

7.67 Details of authorisation requirements and thresholds for approval of PO requisitions are listed in Appendix A. Also see IPOS approval matrix (Appendix B).

Certifying invoices for payment

7.68 When goods are received/services delivered, requisitioners will need to confirm this on IPOS by the entry of an electronic Goods Received Note (GRN). Where a delivery note is received from a supplier, details must be checked and verified before entering a GRN. Invoices will be received by the Finance Team and entered into IPOS. For invoices with a Purchase Order (PO), Finance will check the invoice and ensure a GRN has been entered onto IPOS. The Budget holder will be notified where any invoice does not match the PO within the tolerance level (the lower of 20% of the PO or £50). An additional PO line must be raised where necessary and the Budget holder must approve any additional PO line. The Finance Team will authorise the invoice. For invoices without a PO (office rent and legal fees) the invoice will be entered onto IPOS by the Finance Team and the invoice will be approved by the Budget holder (via the IPOS approval matrix). No invoice will be paid unless it has been duly checked and authorised for payment.

7.69 In cases where an invoice covers only part of an order, the GRN should only include the part of the order received.

7.70 In cases where the amount of an invoice differs from that on the purchase order, a short explanation should be endorsed on the invoice. This is particularly important where a contract is being paid for by instalments.