1.1. This Procurement Policy lays out Blackpool Teaching Hospitals NHS Foundation Trust, East Lancashire Hospitals NHS Trust and Lancashire Teaching Hospitals NHS Foundation Trust (referenced collectively throughout this document as “Contracting Authorities”) fundamental procurement principles and intended direction. It underpins the Lancashire Procurement Cluster’s (LPC) Procurement Strategy and supports key recommendations from the Lord Carter report and the latest NHS Guidance documents. This Procurement policy aims to provide overarching guidance on the Contracting Authorities procurement activities.
2.1. The policy covers the procurement of all goods, works and/or services including secondary commissioning of health and social care services, temporary staffing and capital expenditure, irrespective of funding source, procurement route or personnel involved in the procurement.
2.2. The Policy must be followed by everyone involved in a procurement process, including;
- All budget holders;
- Anyone who has contact with external suppliers;
- Anyone involved in raising requisitions;
- Anyone involved in evaluating equipment, goods, services or works for potential purchase;
- Anyone with operational responsibility for an outsourced service provision; and
- Anyone responsible for stock holdings.
3.1. To ensure that the Contracting Authorities operate within a statutory framework covering all aspects of procurement of goods and services.
3.2. To protect the Contracting Authorities and minimise risk through means of appropriate managerial and contractual arrangements.
3.3. To obtain value for money whilst providing a quality service.
3.4. To ensure the Contracting Authorities approach to procurement provides the maximum benefit in cost, service, quality and safety to the Contracting Authorities, its service users and staff.
3.5. To provide users with the most appropriate goods and service, when they need them and at the best value for money.
3.6. To comply with legislative and regulatory requirements relating to the procurement of goods, services and works.
3.7. To ensure that all procurement activity is covered by the appropriate terms and conditions of contract.
3.8. To support the delivery of patient care by ensuring goods and services procured are fit for purpose and meet relevant quality standards.
4.1. The Policy should be read in conjunction with the following Contracting Authorities policies and procedures:
- Standing Orders, Standing Financial Instructions (SFI’s) and Scheme of Delegation;
- Code of Practice for Company Representatives;
- Medical Devices Policy;
- Procurement Strategy;
- Conflicts of Interest; and
- Gifts, Hospitality and Sponsorship Policy
|CCS||Crown Commercial Service|
|DH||Department of Health|
|EU Treaty Principles||Transparency, Equal treatment, Proportionality, Mutual Recognition|
|LPC||Lancashire Procurement Cluster|
|NHSE&I||NHS England and NHS Improvement|
|NHS SC||NHS Supply Chain|
|PCR2015||Public Contracts Regulations 2015|
|SFI||Standing Financial Instructions|
|SME||Small Medium sized Enterprises|
|SSQ||Standard Selection Questionnaire|
|VFM||Value for Money|
|WLC||Whole Life Costs|
6.1. Director of Finance
6.2. The Directors of Finance have lead director responsibility to ensure that processes are in place for all Procurement related areas.
6.3. Director of Procurement
6.4. The Director of Procurement for the Lancashire Procurement Cluster will be responsible for ensuring the implementation of the procedures set out in this policy.
6.5. Role of the LPC Board
6.6. The LPC Board chaired by the Director of Finance on an annual rotation is to provide the Contracting Authorities Board the assurance:
- spend relating to goods and services is being effectively managed;
- the introduction of new products is being managed;
- efficiency targets are being delivered;
- the Lord Carter Report recommendations are being addressed;
- National policy and guidance considered and implemented accordingly and
- National and regional initiatives are explored.
6.7. All staff
6.8. It is an individual responsibility for all Contracting Authorities staff to be familiar with and adhere to this Procurement Policy.
6.9. Budget Holders
6.10. It is the responsibility of individual budget holders to ensure when making procurement related decisions that they adhere to the Procurement Policy.
6.11. Authorised Staff with Access to Procurement Systems
6.12. All staff that can access a procurement related system or NHS Supply Chain must ensure that they adhere to this Procurement Policy.
7.1. All public bodies are responsible for ensuring that they comply appropriately with their legal obligations. The legal framework for public procurement includes:
- EC and other international obligations as implemented in UK legislation or by direct effect, including the Public Contracts Regulations 2015;
- specific domestic legislation, for example, on unfair contract terms;
- contract and commercial law in general;
- domestic case law;
- specific product legislation, e.g. medical devices to be CE marked;
- The Human Rights Act 1998 and the Modern Slavery Act 2015. Ensuring suppliers support the principles of the United Nations’ Global Compact, UN Universal Declaration of Human Rights, as well as the 1998 International Labour Organisation Declaration on Fundamental Principles and Rights at Work
- Freedom of Information; and
- Bribery Act 2010
8.1. The Contracting Authorities procurement is subject to the EU Treaty principles of:
- free movement of goods;
- freedom to provide services; and
- freedom of establishment.
8.2. In addition to these fundamental treaty principles, some general principles of law have emerged from the case law of the European Court of Justice. The most important of these general principles of law which the Contracting Authorities should comply with in the procurement context are:
- equality of treatment;
- mutual recognition; and
9.1. Once the 2014 EU Procurement Directives came into force, the government prioritised the Public Contracts Directives for early implementation because it would deregulate and simplify the rules for where most procurement spend and activity takes places.
9.2. The changes enable buyers to run procurement faster, with less red tape and with a greater focus on getting the right supplier and best tender in accordance with sound commercial practice. The implementation of the Public Contracts Regulations 2015 (PCR2015) took effect from 26th February 2015.
9.3. Above set financial thresholds, if you are buying supplies, services or works, the Contracting Authorities must follow the procedures laid down in the PCR2015 before awarding a contract to suppliers
10.1. The SFI’s state the Contracting Authorities shall comply with the following process dependent on the value inclusive of any VAT and any options or extensions:
|<£10,000||A MINIMUM of 1 written quote retained by the requestor to establish best value.|
|£10,000 - £30,000||A MINIMUM of 3 written quotes retained by the requestor to establish value for money|
|£30,000 +||Please contact Procurement to discuss sourcing options and compliance with the SFI’s|
10.2. Contracting Authorities staff should seek advice from the LPC before embarking on seeking competition, as they will check to see if the goods or services required are available through existing contract arrangements which may have been negotiated nationally, regionally or locally, negating the requirement for seeking further competition.
10.3. NHS Supply Chain will be a prime provider of consumable items to the Contracting Authorities as this consolidated service provides benefits in terms of efficiency, delivery, process and reduced carbon impact. The LPC will be responsible for benchmarking NHS Supply Chain costs to ensure that they provide value for money to the Contracting Authorities.
10.4. The supply chain and route into the Contracting Authorities for products and/or services varies according to the requirement. The over-riding principle is that the supply chain must complement the aims of achieving value for money in process as well as product or service cost, e.g. purchasing from a particular supplier may not be the lowest priced product but, when taking the cost of process, delivery and administration into account, may provide the best value for money.
10.5. For all future purchases or contracts which exceed the European financial thresholds, staff must consult with the LPC to ensure compliance with the Public Contracts Regulation 2015.
10.6. The financial threshold for the Public Contracts Regulation 2015 is normally amended every two years and the current thresholds are listed in Table 1
|TYPE OF CONTRACT||EU PROCUREMENT THRESHOLD FOR EAST LANCS*||EU PROCUREMENT THRESHOLD FOR BLACKPOOL AND LANCS TEACHING*||GUIDANCE|
|Supply of goods and/or services||£122,976||£189,330||The calculation of the potential value of the procurement shall be based on the total amount payable, net of VAT, including any form of option and renewals.|
|Light touch regime threshold for public service contracts for social and other specific services.||£663,540|
*The calculation of the estimated value of the procurement shall be based on the total amount payable, net of VAT, including any form of option and renewals
10.7. In addition, the Public Contracts Regulations 2015 include a requirement that all documentation, including specification and evaluation criteria, must be made available free of charge to any interested parties at the time of the advert being published.
10.8. The LPC can advise on the thresholds current at the time a requirement is identified and which Services fall within the “Light Touch Regime”.
10.9. The OJEU process has minimum timescales that have to be applied and failure to plan in time to allow these timescales is not accepted under the Public Contracts Regulations as a reason for not following the process.
10.10. Failure to comply with EU and UK Public Contracts Regulations could result in:
- Claim for “grounds for ineffectiveness”
- The High Court setting aside a contract;
- High Court claims for damages from companies denied the opportunity to participate in competitive tenders;
- Infringement proceedings in the European Court of Justice
11.1. Contract splitting is the practice of artificially breaking up purchases of goods and services to bring total expenditure below organisational and legislative thresholds in order to avoid formal procurement rules.
11.2. The EU Procurement Directives and UK procurement legislation state that a procurement opportunity should not be subdivided for the purpose of reducing the total value so that it falls underneath the EU threshold and thereby becomes exempt from procurement regulations. Procurement regulations require procurement activity above specific thresholds to be publicly advertised and competitively tendered, which can be seen to be a longer, albeit more transparent process.
11.3. The LPC will undertake regular audits and disaggregated spend analysis, collate spend data against each supplier over the course of a financial year and compare this information the LPC contracts register to ensure there is no contract splitting.
12.1. For spend exceeding £30,000, Procurement will assess the opportunity and take into account time and proportionality when assessing the following sourcing options:
- Utilise a valid Dynamic Purchasing System (DPS);
- Call off from a valid framework (either direct award or mini competition); or
- Tender the requirements on a Contracting Authorities alone basis or collaboratively with other interested contracting authorities.
12.2. For spend exceeding the EU Financial Thresholds the following options and procedures will be considered:
- Tender the requirements on a Contracting Authorities alone basis or collaboratively with other interested contracting authorities;
- Utilise a valid Dynamic Purchasing System;
- Call off from a valid framework (either direct award or mini competition) or
- In exceptional cases and where risk is mitigated issue a Voluntary Ex Ante Transparency (VEAT) notice.
12.3. With the options in 12.2, compliance with the PCR2015 is paramount and LPC advice must be sought before proceeding.
12.4. The PCR2015 Procedures available for consideration if the requirement is to tender are:
- Open procedure;
- Restricted procedure;
- Competitive procedure with negotiation;
- Competitive Dialogue;
- Innovation Partnership; and
- Negotiated procedure without prior publication.
12.5. The PCR2015 procedures have minimum timescales that have to be applied and failure to plan in time to allow these timescales are not accepted under the Public Contracts Regulations as a reason for not following the process.
12.6. The PCR2015 apply irrespective of the identity and nature of the body whom a contract is awarded. It is therefore not possible to award a contract to another contracting authority or public sector body unless it falls within the scope of Regulation 12 which lists exemptions from the requirements of the Regulations. Therefore before sub-contracting a service to another contracting authority Procurement advice must be sought.
13.1. Public contracts for social and other specific services (typically where no cross border interest) listed in Schedule 3 of the PCR2015 fall under the “light touch regime” and as the name suggests there are only a small number of procedural rules that apply compared to those services that fall under the full Regulations:
- Publication of an OJEU notice or PIN
- Publication of a contract award notice
- Compliance with the Treaty Principles – transparency, equal treatment, non-discrimination etc.
13.2. Everything else we as Contracting Authorities have the flexibility to use any process or procedure we choose (includes timeframes providing reasonable and proportionate) as long as it respects the above three requirements hence “light touch”.
14.1. Key contractors will be regularly monitored to ensure that the Contracting Authorities gain full value from the supplier, ensuring that suppliers adhere to agreed policies and key performance indicators and work with the Contracting Authorities to achieve continuous improvement and cost benefits.
14.2. Contracting Authorities Managers will ensure that the LPC are involved in the formal contract monitoring process and that appropriate monitoring records are retained.
14.3. In line with NHS Counter Fraud guidance, the following will be put in place by the LPC:
14.3.1. the LPC Board will scrutinise contracts above with an annual value of more than £1million;
14.3.2. separation of duties so that no single individual has control over the whole process;
14.3.3. maintain an up-to-date contracts register that incorporates contracts from all corners of the Contracting Authorities;
14.3.4. single item, low value and rolling contracts are also prioritized for scrutiny as these may be overlooked, thereby increasing the risk to fraud.
14.3.5. A contract monitoring programme with clear parameters to assess the level of contract management required (determined using a risk-based approach) and ensures that the correct contract management protocols are applied. Contract monitoring should employ the use of the following tools to assess the effectiveness of a contract:
- Standard templates for document contract reviews, meetings, KPI management and any contract variances;
- A SOP/policy in place for the management and frequent monitoring of KPIs and contract variances. The SOP/policy should lay out actions to take if contract KPIs, variances, and deliverables occur outside agreed protocol;
- Monitoring pattern of spending with suppliers;
- Minuted supplier meetings;
- Accurate Record keeping; and
- Escalation routes for staff to report concerns.
14.3.6. Conflict of interest register held centrally for both NHS employees and contractors. Declarations of interest should be recorded at contract sourcing stage as well as at regular intervals throughout the contract lifecycle by all (staff, suppliers, and sub-contractors) involved in the process. Undeclared interests that subsequently come to light should be treated as a breach of contract and a disciplinary offence.
15.1. Advice on Procurement Issues
15.2. The Policy is to ensure the Contracting Authorities has a consistent approach to all its commercial dealings and to clarify best practices that must be followed at all stages of the procurement cycle. The LPC will produce detailed operational procedures as necessary to complement the Policy.
15.3. Advice from the LPC can be sought prior to any non-contract procurement not linked to routine stock replenishment. Specialist advice on quotation/tender and contractual issues must be obtained prior to any procurement with a value of £30,000 or more.
16.1. As part of the Contracting Authorities obligations to meet the Government’s transparency requirements, all areas of this policy will remain in line with the current transparency procedure. All Contracts over the value of £25,000 should be advertised accordingly on Contracts Finder, utilised for tenders
17.1. Responsibilities and Authority
17.2. All requests to purchase goods and services must be appropriately authorised under the Contracting Authorities’ Scheme of Delegation defined by the Contracting Authorities’ Finance department and held by directorate managers and budget holders.
17.3. Requests to Purchase Goods and/or Services
17.4. It is Contracting Authorities policy that all requests to purchase goods and services shall be made through the LPC in the form of an internal electronic requisition. The only exceptions are purchases that are made via Delegated Purchasing Authority e.g. the Pharmacy Department for medicines.
17.5. Good Practice
17.6. Good practice dictates that all procurements over £5,000 must be competitive and all procurements with a contractual value of over £25,000 are advertised accordingly and open to full competition. Procurements exceeding EU procurement limits will let in compliance with the PCR2015.
17.7. Effective Competition
17.8. Goods and services must be acquired through open competition unless there are convincing reasons why this cannot be achieved.
17.9. Requirement for Competitive Action
17.10. Competition avoids any suggestion of favouritism and discourages supplier monopoly. It also contributes towards achieving best value for money, (VFM). The form of competition should be appropriate to the value and complexity of the requirement. The only exception to this is for requirements below £10,000, where the resource costs involved in obtaining competitive quotes are likely to exceed any VFM that may be secured by competition. Nonetheless, where improved VFM can be achieved by competition, taking into account the resource costs involved, then this may be adopted at the LPC’s discretion, by agreement with the budget holder. The LPC, in consultation with internal customers, is responsible for identifying markets and procurements most likely to offer best VFM and for encouraging suppliers to compete for Contracting Authorities business.
17.12. Sometimes known as ‘Single Tender’ or ‘Waiver’ action, Non-Competitive Action (NCA) is required when procurements over £10K need to be made which cannot satisfy the minimum competition requirements. Great care is needed in authorising waivers, as it remains essential to achieve best VFM, and to ensure that the procurement process undertaken is fully defensible. The only situations where waivers may be justified are clearly identified in the Contracting Authorities’ Standing Financial Instructions.
17.13. The use of single quotation/tender waivers will be the exception and cannot be used where the OJEU threshold applies. Waivers can only be authorised only by the LPC Director of Procurement and the relevant Director of Finance. Single tender waivers are monitored by the Audit Committee. Competitive quotations and tenders should be sought whenever possible.
17.14. Where users require goods or services to be ‘waivered’ the budget holder must complete a Waiver template form (Appendix 1 – Waiver template form) and provide suitable evidence to support the reason for a non-competitive action, e.g. the clinical reason, standardisation or compatibility etc.
18.1. Irrespective of the form or value of a contract, no Contracting Authorities employee is permitted to sign or authorise with his or her signature unless as per the Scheme of Delegation and only then once prior approved by the LPC.
19.1. As good practice for any new requirements or requirements that may exceed the budget, a business case should be devised and the LPC consulted before seeking final approval of the business case.
20.1. Due diligence is an essential tool in a risk management framework and it helps identify and manage fraud risks that may arise in transacting or dealing with a third party or supply chain (e.g. a supplier or subcontractor).
20.2. The purpose of due diligence is to understand the credibility and status of a third party’s business and how it fits with your organisation. By doing this, Contracting Authorities are able to ensure its supply chain delivers its prescribed goods and services in an honest and ethical manner.
20.3. The LPC will undertake:
20.3.1. Financial due diligence - the process to verify the financial information provided to it and to assess the underlying performance of a potential supplier. The benefit of undertaking financial due diligence is that knowledge of the current and historical performance of a potential supplier and their viability to perform the services required.
20.3.2. Commercial due diligence - considers the market in which a business sits, providing a full overview of the business’s internal and external environment, an assessment of competitors and a full analysis of the structure and performance of the business. All of this is intended to assist in making an informed risk management decision as to whether they should engage with the supplier or not.
20.3.3. Third-party due diligence - the process to validate and mitigate risk when looking at outsourced work to an external company. Following the launch of the Bribery Act 2010, there is a requirement placed on Contracting Authorities to provide evidence that they have sufficient anti-bribery measures in place.
21.1. The LPC and the Contracting Authorities for contracts, waivers, new supplier setups, change to supplier details and product evaluation forms etc. may utilise an e-form system for capturing the data including electronic signatures. In all cases an electronic e-form with electronic workflow must be used.
22.1. All Contracting Authorities operate on a ‘No PO No Pay’ procedure, where all invoices received into the Contracting Authorities without a valid purchase order number will be rejected and returned to the supplier as not compliant with Contracting Authorities policy, and may result in payment delays, or even non-payment.
22.2. The purchase order number forms a contract of purchase and provides the Contracting Authorities with legal protection via the standard NHS Terms and Conditions in the event something goes wrong.
22.3. There is a No PO, No Pay exceptions list detailed in Appendix 2 which details those goods, services and or works not requiring a Purchase Order.
22.4. The LPC through the Balanced Scorecard will monitor and note the rate and value of non-compliant transactions and spend against the established control mechanisms.
22.5. The LPC will ensure appropriate segregation of duties and job rotation to increase protection from fraud and error. The process of raising a purchase order will be divided up between two or more people so that no one person is responsible for the entire purchasing process.
23.1. Definition of Value for Money (VFM)
23.2. The prime objective of public procurement is to achieve Value For Money (VFM). VFM is the optimum combination of whole life costs and quality to meet the requirement, not just the lowest short-term price. Contracting Authorities policy is that best overall VFM in terms of whole life costs and quality be achieved in the purchase of all goods, services and works.
23.3. Whole Life Cost Analysis (WLC)
23.4. Meeting an internal customers requirements in order to benefit patient care and organisational efficiency is fundamental. However, the LPC should ensure that end-user needs are tested critically for cost effectiveness. This is done by ensuring the Contracting Authorities only goes out to the supplier market once a robust specification for the goods, services and works has been developed and a clear, documented agreement has been reached on how suppliers’ offers are to be evaluated.
23.5. Whole life cost evaluations take into account all aspects of cost over an agreed period of time, to include: capital costs, inflationary projections, service and maintenance, management, the expected lifespan of the product, energy consumption and the disposal costs (of both unit and consumables), whenever they occur. All members of staff involved in the procurement process are responsible for ensuring that best VFM is achieved through the procurement process and throughout the whole procured lifecycle of goods, services and works.
23.6. Weighted Evaluations
23.7. All PCR2015 exercises will have a weighted evaluation model which takes into account both qualitative and financial/economic aspects of bids. Tenderers will be made aware of the model which will be published at the time of advertising.
23.8. All Contracting Authorities staff involved in evaluating tenders will be provided with training by the LPC (Appendix 3 – LPC Evaluation Training Presentation).
24.1. Weighted evaluations models must be agreed with the key decision makers prior to procurements for all purchases, where qualitative aspects of both goods and services need to be evaluated. Key decision makers will include budget holder(s), key person/personnel leading the qualitative assessment of suppliers’ bids and Finance department representation.
24.2. As an NHS body, the Contracting Authorities is able to access contracts for goods, services and works already let by national/regional authorities to achieve optimum quality and VFM for the NHS. These include:
- Regional Collaborative Hub Contracts
- National Contract/Framework Arrangements, such as Crown Commercial Services (CCS), NHS SC, or Health Trust Europe (H.T.E)
- National Pharmacy Frameworks such as Commercial Medicines Unit (CMU)
- Joint health economy contracts, such as internally tendered frameworks let by the local health economy
24.3. NB. Utilising these types of arrangements need to be checked to ensure the Contracting Authorities meets its obligations; In particular, whether the use of particular frameworks.
25.1. Many national framework agreements have been set up in order to allow Contracting Authorities to undertake ‘mini-competitions’. This is a facility that allows the Contracting Authorities to provide detailed information on requirements to all the suppliers on the framework allowing them to provide a tailored bid specifically for the Contracting Authorities but in line with the terms and conditions of the framework agreement.
25.2. Wherever feasible the Contracting Authorities will undertake mini-competitions against framework agreements to ensure value for money is obtained. Mini-competitions will be undertaken in all circumstances where it is a requirement of the framework agreement.
25.3. With some frameworks there is the opportunity to ‘direct award’ providing the Contracting Authorities meets the requirements. In the case of ‘direct award’, VFM has to be demonstrated and therefore the advice is to speak with the LPC Procurement Team before proceeding.
25.4. Managing Inflation
25.5. The Contracting Authorities manage inflation in a fair and transparent manner, for goods and services where there is a contractually agreed price review mechanism in place. Where goods and services are procured on an ad hoc basis the Contracting Authorities aims to challenge and resist all price increases. All applications for price uplift must be notified in advance, in writing and in accordance with the provisions of the contract to the LPC.
25.6. Any Contracting Authorities staff member receiving notification of an inflation increase must forward through to the LPC.
26.1. Environmental Impact / Sustainable Procurement/ Local Procurement
26.2. The Contracting Authorities understands its need to take action on climate change and in consultation with organisations, local suppliers and the local health economy. The Contracting Authorities recognises the impact in ensuring we work in partnership with suppliers to lower the carbon impact of all aspects of procurement, make decisions based on whole life cycle costs and to minimise waste.
26.3. The Contracting Authorities are mindful of its position in the local health economy and will encourage local suppliers to bid for the supply of goods and services, promoting the use of local businesses whenever possible but ensuring that any such activity is within the Public Contracts Regulations 2015.
26.4. Expectation on the inclusion of local businesses within the Lancashire and South Cumbria region on quotation exercises below the OJEU threshold.
26.5. This policy complements and supports the aims incorporated within the Sustainable Procurement Policy.
26.6. Equal opportunities
26.7. It is Contracting Authorities policy that appropriate equal opportunities considerations be incorporated into the production of specifications in a proportionate way, the evaluation of tenders, and contractor performance management. The Contracting Authorities will consider equality issues upfront before the procurement process starts. This will help identify the specific needs of different potential users and allow them to be appropriately reflected in the process. Properly done, this will help achieve better outcomes and therefore achieve value for money, while helping meet corporate objectives.
26.8. The aim is to ensure that suppliers work to eliminate the potential for unlawful or unfair discrimination to occur in relation to their employment practices and through the provision of goods, services and works to the Contracting Authorities. Specifications and/or conditions of contract used by the Contracting Authorities will make clear contractors’ obligations and will include specific reference to the requirements of the Contracting Authorities’ Equality and Diversity Policy.
27.1. It is the Contracting Authorities policy that all contractors working for the Contracting Authorities, and not just in areas within the hospital grounds, abide by the Contracting Authorities health & safety procedures and all relevant health & safety legislation. Where relevant, all contractors must come through Estates and Facilities and comply with the Management of Contractor’s Policy and procedures.
27.2. Any work carried out by Contracting Authorities staff that may cause potential risks to any suppliers or contractors will be assessed, and control measures put in place to eliminate or reduce those risks. Relevant information must be given to contractors to ensure that, when working on Contracting Authorities property, they fully comply with its H&S policies. Any work carried out by contractors, which may cause potential risks to other users of Contracting Authorities’ premises, must be assessed and control measures put in place to eliminate or reduce those risks. Relevant information must be given to all those potentially affected. Additionally, all reasonable steps must be taken to ensure that potential contractors have effective H&S policies and procedures in place.
28.1. The Act requires the Contracting Authorities to consider the social implications of the tendering exercise within the local area. It will cover, looking beyond the price of each individual contract and looking at what the collective benefit to a community is when a public body chooses to award a contract. Although the Act only applies to certain public services, contracts and framework agreements to which the EU Regulations apply, the Contracting Authorities intends, as a matter of good practice, to demonstrate how what is proposed to be procured might improve social well-being, in order to maximise value for money. The considered application of the provisions of this Act will provide the Contracting Authorities with the means to broaden evaluation criteria to include impact on the local economy. The Contracting Authorities may consider ensuring that any social requirements are mentioned in the advertisement for any competitive procurement. Wherever it is possible and does not contradict or contravene the Contracting Authorities procurement principles, or the provisions allowable under the Public Service (Social Value Act 2012), the Contracting Authorities will work to develop and support a sustainable local health economy
28.2. Ethical Standards
28.3. It is Contracting Authorities policy that all suppliers must be treated fairly and equitably and purchasers and Contracting Authorities staff engaged in the procurement process must always act with integrity and honesty.
28.4. NHS Employees’ Responsibilities
28.5. All members of staff must comply with the Contracting Authorities policy on Standards of Business Conduct for Contracting Authorities Staff. Additionally, the LPC are expected to abide by the Chartered Institute of Purchasing and Supply’s Professional Code of Ethics.
28.6. Relationship Management
28.7. The LPC, Contracting Authorities staff, contractors and management consultants involved in the procurement process, must always be honest, fair and impartial in their dealings with suppliers. Relationships with suppliers must always be conducted on a professional basis, with proper regard to ethics and propriety.
29.1. Contracting Authorities and the LPC appreciates the role that current and potential suppliers play in supporting health practitioners in providing safe, effective, and economic products and services to the patients in their care, and other staff within the NHS in the delivery of their duties.
29.2. It is the policy of the Contracting Authorities, therefore, to ensure that an effective, efficient, and consistent approach is adopted in developing excellent relationships with the Contracting Authorities’ current and potential suppliers and their representatives.
29.3. Visitors and Contracting Authorities staff are required to follow the Code of conduct for Company Representatives which details the requirements and conditions to abide by.
30.1. It is Contracting Authorities policy that all Contracting Authorities staff must declare and record any personal interest that might influence, or be seen by others to influence, their impartiality in arriving at a purchasing decision. Those who have business or personal relationships with, or friends/relatives employed by, outside organisations bidding for Contracting Authorities contracts must inform their line manager at the outset of the procurement.
30.2. In addition, the LPC will utilise for tenders a “Tender evaluation panelist – declaration regarding any conflict of interest and confidentiality undertaking”. (Appendix 4)
30.3. Personal Gain and Gifts
30.4. The confidentiality of information received in the course of employment should be respected and never used for personal gain.
30.5. It is Contracting Authorities policy that staff involved in procurement activity, or others who may be perceived to be in a position of influencing purchasing decisions, may not solicit or accept contributions of any kind from existing suppliers, those currently bidding for Contracting Authorities contracts, or suppliers who could conceivably be bidders for future contracts.
30.6. Contracting Authorities staff may only accept small “desk top” gifts such as diaries, pens and calendars. Records of any other gifts offered, whether or not they were accepted, must be kept. It is a disciplinary matter for Contracting Authorities staff to accept gifts or consideration as an inducement or reward for:
- Doing or refraining from doing something
- Showing favour or disfavour to any person or organisation
30.7. All Contracting Authorities staff must adhere to the Contracting Authorities Standing Financial Instructions and the Contracting Authorities Gifts, Hospitality and Sponsorship Policy.
31.1. The Bribery Act 2010, which repeals existing corruption legislation, has introduced the offences of offering and or receiving a bribe. It also places specific responsibility on organisations to have in place sufficient and adequate procedures to prevent bribery and corruption taking place. Bribery is defined as “Inducement for an action which is illegal unethical or a breach of Contracting Authorities. Inducements can take the form of gifts loans, fees rewards or other privileges". Corruption is broadly defined as the offering or the acceptance of inducements, gifts or favours payments or benefit in kind which may influence the improper action of any person; corruption does not always result in a loss. The corrupt person may not benefit directly from their deeds; however, they may be unreasonably using their position to give some advantage to another. To demonstrate the organisation has sufficient and adequate procedures in place and to demonstrate openness and transparency all staff are required to comply with the requirements of Standing Financial Instructions and Standing Orders policy. For a more detailed explanation see the Anti-Fraud and Bribery Policy. Should members of staff wish to report any concerns or allegations they should contact their Local Counter Fraud Specialist and/or Director of Finance.Add
32.1. It is the Contracting Authorities policy to promote openness and accessibility, particularly in relation to its communications with the public and with all external organisations.
33.1. The Freedom of Information Act 2000 identified NHS Contracting Authorities as ‘public authorities’ and therefore subject to the provisions and obligations of that Act. This means that, from 1 January 2005, any person who makes a valid request for recorded information held by the Contracting Authorities will be entitled to receive it - unless all or part of that information can justifiably be withheld as a result of the exemptions contained in the Act. The Freedom of Information Act also requires each public authority to produce and maintain a “publication scheme”. The following procurement-related information is currently published within the Contracting Authorities’ publication scheme:
- Procurement Strategy
- Supplier Representatives’ Policy
33.2. The Contracting Authorities will consider all requests made about procurement matters with regard to potential commercial sensitivity.
34.1. A supplier may wish to make a press announcement or issue an article (perhaps including photographs) about a contract they have been awarded. Before agreeing to such an announcement, the member of staff approached must provide full details to the Contracting Authorities Communications Department, who will consult with the Head of Procurement on the appropriateness of granting any approval.
35.1. From time to time, references may be sought from potential customers of Contracting Authorities contractors. Before references are provided, either verbally or in writing, prior advice must be obtained from the Head of Procurement. References may only be provided by the relevant budget holder or staff of a higher grade. A copy of all references provided must be sent to the LPC for its records.
36.1. The Contracting Authorities understand the importance of commercial benchmarking and is committed to completing regular benchmarking exercises for Procurement; the Contracting Authorities also conducts regular benchmarking exercises for all other corporate functions.
36.2. Use of the NHS Improvement Spend Comparison tool is seen as best practice.
36.3. The objective of the spend comparison tool is to enable Contracting Authorities teams to be better informed about product purchase price and save money through greater transparency of purchasing information.
37.1. All of the Contracting Authorities procurement systems are electronic and have the facility to fully integrate with able suppliers where applicable.
37.2. The Contracting Authorities use electronic systems for the advertising, receipt of all tenders and evaluation of tenders where possible.
37.3. Receipting of tenders
37.4. All tenders are advertised electronically utilising an e-tendering system. Tenders received cannot be opened before the tender deadline.
37.5. Once the tender deadline has passed procurement will assign themselves as a verify and acknowledge the suppliers who have:
- Expressed an interest
- Opted out;
- Submitted a tender submission within the time parameters
- Submitted a tender submission outside the time parameters (i.e. submitted late)
37.6. In all cases the verification is open and accepted as is. Any late submissions will be rejected. Given the advice when the advert is issued to prospective bidders about ensuring they submit their bids in plenty of time, there are no exceptions to this rule. All late bids will be rejected.
38.1. The Department of Health (DH) published its eProcurement strategy in 2014. It set out a range of measure to enable transparency and efficiency in NHS Procurement to help support patient safety.
38.2. The strategy includes a mandate that means any service or product procured by an NHS Acute Contracting Authorities in England must be compliant with GS1 Standards
38.3. GS1 Standards
38.4. GS1 standards provide globally unique identification of every product, person and place within the NHS. As part of the eProcurement strategy GS1 standards are used for three core enablers that will drive operational efficiencies, improved patient safety and regulatory compliance:
- Catalogue management
- Patient identification
- Location numbering
38.5. These three core enablers will underpin the three primary use cases identified by the DH:
- Inventory management
- Patient safety recall
39.1. All internal requisitions and subsequent purchase orders will be placed via the Contracting Authorities’ electronic ordering system and transparent to end users.
40.1. All internal requisitions will be via a catalogue. Only in exception circumstances will the use of non-catalogues requisitions be permitted.
41.1. VAT is not charged on healthcare related services whether supplied to the Trust by another NHS provider or a non-NHS body. While there are exceptions, goods and most other services are subject to VAT, typically at 20%.
41.2. However, in order to level the playing field between outsourcing and in-house provision, the Trust can reclaim VAT paid to suppliers of certain non-healthcare related services. A list of these services, known as ‘contracted out services’ is maintained by HMRC.
41.3. Before proceeding with an order or contract award where the “contract out services” provision is to be applied, documented advice from the Trust VAT advisor must be sought and provided with the order and/or award report.
42.1. In any progressive organisation, there will be a need to introduce new products or services or to change existing products or services. This must, however, be undertaken in a controlled manner to ensure that unfunded development does not take place, and that staff receive the appropriate training in the use of new products or guidance on the new service.
42.2. In order to maintain a level of control, the Contracting Authorities must be assured that new products services or changes to products or services are fully supported and have been evaluated rigorously to ensure cost effectiveness. Evaluation of new reusable products and equipment must include the ability to decontaminate.
42.3. The policy is that all new products and/or services to be introduced should be subject to scrutiny by the LPC comprises the relevant senior skill mix to make informed decisions.
43.1. Goods and services should be receipted promptly by receiving departments in order to ensure that prompt payment can be made to suppliers.
43.2. Managers should ensure that the goods and services that have been received are exactly as ordered and the resulting invoice accurately reflects the goods or services actually supplied. Any suspicion of impropriety must be referred to the Contracting Authorities’ Counter Fraud Specialist.
44.1. All Tenders and related tender advert notices are placed through the Contracting Authorities integrated e-tender system.
45.1. All equipment procurements will be undertaken in line with the financial thresholds for competitive sourcing. Equipment contracts with a value above the tender threshold will be subject to open competition and advertised to the supplier market.
45.2. A generic specification will be produced by the agreed project owner for the procurement which will allow suppliers’ offers to be clearly evaluated. It is the responsibility of the Project Owner to confirm to their satisfaction that the Contracting Authorities has available the necessary level of expertise in-house to identify the requirement and to develop the specification. When this is not the case the use of outside agencies/consultants to provide this expertise must be considered.
45.3. Trials of equipment will only be undertaken within a clear framework for the evaluation process, identifying the key criteria that are to be assessed. This framework must be agreed in advance with the Head of Procurement and only after a source of funding has been formally agreed. Unmonitored equipment trials may compromise existing contracts if not notified to the LPC.
45.4. Confirmation that the supplier is listed on the National Master Indemnity Agreement should be sought prior to the trial of all medical equipment. If they are not, a separate NHS Indemnity Form must be completed by the supplier and the Contracting Authorities, prior to the trial, to minimize the Contracting Authorities’ liability should the equipment malfunction and cause harm or misdiagnosis.
45.5. Weighted evaluation criteria for equipment procurement evaluations will be agreed in advance by the evaluation team. A clear distinction will be agreed between ‘qualitative’ and ‘financial’ aspects. This will enable the whole-life costs to the Contracting Authorities of owning the equipment to be assessed in conjunction with the suitability of the equipment for its intended purpose.
45.6. Prior to purchase the Contracting Authorities will ensure appropriate technical information/advice is provided by the supplier for any decontamination/cleaning protocols required.
45.7. Any equipment to be used for diagnostic or treatment purposes will only be purchased following the completion of a Pre-Purchase Questionnaire (PPQ) that has been reviewed and authorised by the Contracting Authorities’ Medical Equipment Manager.
45.8. Contracts must contain relevant provisions for all necessary training to be provided and for instruction/user manuals to be available for those who will operate the equipment.
45.9. Contracts will only be awarded once relevant budget holders have confirmed their acceptance of all revenue consequences for the procurement, including those for maintenance and consumables.
45.10. The Contracting Authorities should not accept donated equipment for use but should ask for financial donations to be made to the Contracting Authorities’ charitable funds. This is to ensure the Contracting Authorities is the contracting party with the equipment supplier and not a third party. If a third party contracts on the Contracting Authorities’ behalf the Contracting Authorities will not have the necessary rights of redress in contractual law. It is therefore more beneficial to the Contracting Authorities to purchase the equipment direct from the supplier concerned to ensure a direct contractual relationship is established. When equipment is purchased from donated funds, it is the responsibility of the budget holder(s) in the areas the equipment will be utilised to ensure that any on-going revenue consequences of using the equipment, e.g. consumables, maintenance are affordable, offer value for money and can be funded from existing revenue streams.
46.1. It is Contracting Authorities policy that there will be an on-going programme of product rationalisation and where appropriate, standardisation. This will help to maximise the value for money the Contracting Authorities can obtain through the consolidation of requirements. Product standardisation can also reduce clinical risk through eliminating unnecessary variation in the ranges of clinical products used for the same procedures as well as reducing training and maintenance requirements.
47.1. The policy is that stockholding will be kept to a level sufficient to provide safe patient care but stockholding levels should be monitored regularly by user departments in order to ensure excess stock is not held at any location, and that stock is rotated to minimise obsolescence.
47.2. The Contracting Authorities will take advantage of consignment stock where appropriate and cost effective to do so in order to reduce the money tied up in stock.
48.1. The LPC Director of Procurement has overall responsibility for ensuring that the procurement of all goods, services and works is executed within the agreed procurement policy.
48.2. Regular and appropriate independent audits will be carried out on procurement activity.
49.1. The recommendations from the Lord Carter report, “Operational productivity and performance in English NHS Acute Hospitals: Unwarranted Variation” included the adoption of some key Contracting Authorities performance metrics which included:
- Spend per Weighted activity unit (WAU);
- % of transaction on e-catalogue;
- % of transactions ePO;
- % spend on contract;
- Inventory level; and
- Standards of Procurement assessment score
49.2. The Metrics are recorded on the LPC balanced scorecard and reported via the Audit Committee and Contracting Authorities Board on a quarterly basis.
50.1. Effective and relevant procurement training is a key element in the drive to increase the level of professionalism among all staff involved in the procurement process. The LPC will commit to supporting and encouraging relevant developmental training and procurement qualifications. The LPC will provide a formal training strategy for all staff involved in the procurement process with particular emphasis on Chartered Institute of Purchasing and Supply standards and qualifications. In addition, all LPC staff will have an agreed Personal/Professional Development Plan.
51.1. There is a good case on value for money (VFM) and social/economic grounds for taking steps to remove barriers to participation by SMEs in public procurement. The Contracting Authorities supports this approach. SMEs are defined as follows:
|Company Category||Staff headcount||Turnover||Or||Balance sheet (assets)|
|Medium||Less than 250||Less than £50m||Less than $43m|
|Small||Less than 50||Less than £10m||Less than £10m|
|Micro||Less than 10||Less than £2m||Less than £2m|
51.2. There are many ways in which this can be done, such as improving access to procurement opportunities and information, in a manner that does not discriminate against larger firms and which helps to improve VFM by increasing competition.
51.3. It is the Contracting Authorities policy to actively remove barriers to participation by SMEs in Procurement processes. The Contracting Authorities will endeavor to advertise all low contract opportunities (e.g. below the EU threshold) on the Contracts Finder portal and invite expressions of interest from SMEs who may be suitable for inviting to tender.
51.4. In addition the Contracting Authorities will include within its core requirements of contract for prime contractors, to support small, specialist or voluntary sector organisations where sub-contracting may be involved.
52.1. The LPC will always be open to new and innovative ways of delivering a service better which will in turn provide better patient care and maximise cash releasing savings opportunities to the Contracting Authorities. The LPC will proactively work with Suppliers and NHS colleagues on future innovative projects, and will embrace new ideas and working practices.
53.1. Working collaboratively is a key financial driver when negotiating costs and is embedded into the core purchasing principles and procedures within the LPC. Where there is benefit identified through legislative processing costs or consortium discounts/savings identified from a collaborative approach this will be the favoured option.
54.1. Through strategic approach, the LPC key objective is to work with clinical leads and budget managers to achieve cash releasing savings to support the Contracting Authorities Efficiency Programmes, whilst maintaining or improving the quality of goods and services for the benefit of patients at the Contracting Authorities. Through compliant purchasing techniques and procedures the LPC aims to achieve its contribution towards the Contracting Authorities savings targets.
55.1. All new starters will be informed throughout the respective corporate inductions about Contracting Authorities Procurement policies and procedures.
|Standard to be monitored||Process for monitoring||Frequency||Person responsible for: Undertaking Monitoring & developing||Committee accountable for: Review of results, Monitoring action||Frequency of monitoring e.g. monthly, quarterly|
|Procurement Transparency||Audit||Yearly||Director of Procurement||F&PC||Yearly|
57.1. All contracts must be awarded and delivered in a way which is nondiscriminatory, and promotes equality of opportunity for staff, service users, the general public and businesses.
57.2. There must be consistency in approach at all stages of the procurement process.
57.3. There must be a level playing field for all potential contractors, regardless of size or ethnicity of ownership.
57.4. Terms and Conditions of Contract will include clauses with regard to Equality and Diversity, and the Contracting Authorities will work with its suppliers so that they are aware of and understand the Contracting Authorities’ requirements, and have the appropriate policies and practices within their organisation.
57.5. The Contracting Authorities will promote its commitment to diversity, equality, human rights and social inclusion through the procurement activity.
58.1. The first draft of this revised policy was discussed and re-worked through communications with LPC Procurement staff and Financial Controllers.
59.1. This policy and procedure will be communicated to the Executive Team and all staff via team briefings and the Contracting Authorities training programme. Directorate Managers will cascade the policy and procedure to their immediate delegates, who will in turn cascade to their own staff at team meetings. Thereafter, it will be available for all employees to access the Supplies intranet page.
59.2. Following final ratification, the policy will be implemented across the Contracting Authorities. Managers will thereafter revert to this document and will refer employees to this document as appropriate, following the dissemination referred to above.
60.1. The procurement policy documents will be reviewed no less than every three years.
60.2. Revisions will be made ahead of the review date when the procedural document requires updating. Where the revisions are significant and the overall policy is changed, the author will ensure the revised document is taken through the standard consultation, approval and dissemination processes.
60.3. Where the revisions are minor, e.g. amended job titles, financial limits, or changes in the organisational structure, approval will be sought from the Executive Director responsible for signatory approval, and the revised policy will be re-published accordingly without having gone through the full consultation and ratification process.
60.4. Any revision activity will be recorded in the version control table as part of the document control process.
- Transparency Guidance - Finance & NHS Directorate, Procurement, Investment & Commercial Division (PICD) – Published March 2014
- DoH NHS eProcurement Strategy – April 2014.
- Operational productivity and performance in English NHS acute hospitals: Unwarranted variations. - An independent report for the Department of Health by Lord Carter of Coles