Constitution Part 4 - Contract procedure rules

Introduction

1. Contracts covered by the rules

  • i) The following procedure rules apply to contracts entered into by the Council whether under authority exercised by Full Council, a Policy Committee or a relevant Officer. The contracts to which they are applicable are contracts for the acquisition of goods, materials or services or for the execution of works, with certain exemptions set out in the rules.
  • ii) The rules do not represent a total procedure package – rather they stipulate a number of requirements that must be complied with within any contract letting procedures adopted.
    • Most Advantageous Tender (MAT) Price/Quality – contractor to be selected on basis of combination of price and quality, buyer of goods/services to be selected on basis of combination of price and benefits to Hartlepool residents;
    • Strategic Partnerships – arrangements to be developed between the Council and its strategic partners (including other public sector organisations), to exploit common resources, potential economies of scale, support local infrastructure or to secure continuing service provision.
    • To ensure that Social Value principles are applied in a way that enables the Council to maximise economic, social and environmental benefits for Hartlepool and its residents (Social Value Statement of Intent attached to these Procedure Rules as Appendix 1)

2. Procurement Exercises undertaken as a result of a successful challenge under the Localism Act 2011

  • i) Once a decision has been made to procure a service following acceptance of a challenge submitted under the ‘Community Right to Challenge’ legislation, the Council’s Contract Procedure Rules come into effect.
  • ii) As with all other procurement activities undertaken by the Council, the procurement procedure will be selected by assessing the value of the contract to be awarded – as described later in these rules.
  • iii) Given the possible nature of the services subject to challenge, care will need to be taken to ensure that evaluation criteria are utilised which reflect the Council’s obligation to secure Best Value and meet the requirements and principles laid down in the Public Services (Social Value) Act 2012, i.e. to consider how the procurement can promote or improve the social, economic or environmental well-being of the Authority’s area.
  • iv) In addition, care will be taken to ensure that Third Sector and Voluntary & Community Sector organisations are not excluded from bidding for services as a result of the Council incorporating requirements which are not proportional to the value of the service and any associated risks relating to public safety, service delivery, service continuity etc.
  • v) In addition to the above, any planned procurement activity will take into account any pre-existing contractual obligations the Council may have. This may result in decisions being required on whether to extend or terminate existing contracts. 

3. Central Purchasing Contracts and Framework Agreements

  • i) Where goods or services are to be acquired of a nature in respect of which a central contract or framework agreement has been established by the North East Procurement Organisation (NEPO), via a national, regional or other public sector collaborative arrangement, the Council’s Procurement Team, or is a contract designated as the Council’s preferred channel, such goods and services will be purchased through that contract or framework agreement unless the Chief Officer, following consultation with the Council’s Corporate Lead for Procurement considers a special exemption can be made.
  • ii) Goods or services for which the Council has; accepted an offer submitted to NEPO or the Council’s Procurement Team or, where they can be secured through a contract or framework agreement which has been designated as the Council’s preferred channel (as detailed in 3(i) above), are outside the scope of the Contract Procedure Rules and will be obtained from the relevant supplier in accordance with the applicable procedures. 

4. Select Lists of Contractors

  • i) Where goods, services or works are to be acquired of a nature in respect of which a Select List of Contractors has been established or adopted by the Council, such goods, services or works will be purchased through that arrangement unless the Chief Officer, following consultation with the Council’s Corporate Lead for Procurement considers a special exemption can be made.
  • ii) Goods or services for which the Council has accepted an offer submitted via a Select list are outside the scope of the Contract Procedure Rules and will be obtained from the relevant supplier in accordance with the procedures defined for using the Select List. 

5. Strategic partnerships 

  • i) Where goods or services are to be acquired of a nature in respect of which the Council has established a Strategic Partnership with another provider, such goods and services will be acquired through that Strategic Partnership. Only in exceptional circumstances and following consultation with the Council’s Corporate Lead for Procurement and the Director of Legal, Governance and Human Resources, will exemptions be made.   
  • ii) Strategic Partnerships of the kind intended in these Contract Procedure Rules are likely to be of a lengthy duration and as a result, will typically represent a monetary value well in excess of the threshold detailed in the prevailing Public Contracts Regulations.
  • iii) The Public Contracts Regulations impose specific requirements in relation to the setting up of strategic partnerships (as opposed to letting contracts through the normally required competitive procurement routes) with the main considerations revolving around structural control, economic dependency, and the pursuit of objectives in the public interest.
  • iv) This is a highly complex area and as such, any Council activities identified as possibly suitable for the creation of a Strategic Partnership must be referred to the Council’s Legal Division for consideration. 

6. The rules and in-house provider

  • i) These rules do not apply when a decision is taken to have work executed by an in-house provider such as Neighbourhood Services, without competitive process provided that the service is not subject to a challenge under the ‘Community Right to Challenge’ legislation.
  • ii) Should such a challenge exist, contracts will not be awarded until the outcome, either successful or unsuccessful of the challenge has been ascertained.
  • iii) In such circumstances, the provider being a department or division of the Council, there is no contract as it is a fundamental principle of contract law that a party cannot contract with itself.  Even where a competitive process has taken place and the work is awarded to the in-house provider on the basis of their bid, there is no contract.
  • iv) This has the consequence that, when it is necessary for the in-house provider to have some part of the work done by an outside contractor, the contract with the outside contractor is a 'contract', rather than a 'subcontract' (requiring specific contract provision regulating the relationship between the in-house provider and the external contractor which is outside the scope of this commentary).  

7. Recording of decision making process with regard to Procurement Strategy

  • i) As part of their specification writing and procurement documentation  preparations, procurers must record details of and the rationale behind the procurement strategy to be employed.  As a minimum, the details must include the following:
    • Scope of the contract
    • Reasons for requirement packaging and structure of lots
    • Basis of any price/quality split to be used in the evaluation process 
  • ii) This information is to be retained for audit purposes and in the event that the relevant Policy Committee requests a review of the procurement process followed.
  • iii) Considerations which will inform decisions around the procurement strategy to be employed are likely to include:
    • Value of contract and method of payment
    • Nature of project - e.g. is the work involved of a specialist nature where the contractor's techniques, design talents, contacts with government departments, national agencies etc are likely to be material to any choice
    • Length of contract and any extension arrangements
    • Frequency of need for services/work
    • Importance of adherence to budget and cost monitoring
    • Client input and contract management throughout the project
      • In the event of the contract arising as a result of a successful challenge under ‘Community Right to Challenge’ legislation the Council will consider its obligations and stated preferences in relation to delivery of services and the opportunities the contract may provide to support and develop the Third and Voluntary Sectors in the locality. 

8. Roles and responsibilities

  • i) Responsibility for decision making and action under contract letting procedures and for monitoring of the application of the contract procedures will be spread over the Council, in the interests of both efficiency and probity.

The role of Policy Committees or the Council

  • ii) Most contracts will relate to ‘policy’ functions and regulations, provided that those functions may only be discharged by Full Council, a Policy Committee or a relevant Officer, as the case may be. In respect of contracts relating to their policy functions, Policy Committees of the Council will have the responsibility:
    • To determine the policy aims of the project, or service to be acquired
    • To establish the level of expenditure for the project or service.
    • To waive any element of the Contract Procedure Rules in the case of an individual project / service or class or group of contracts / services and to delegate such decisions to the Director of the Department requesting the waiver in consultation with the Director of Finance, IT and Digital and Director of Legal, Governance and Human Resources where deemed appropriate.

The Finance and Corporate Affairs Committee

  • iii) In order to ensure monitoring in the award of contracts, the Finance and Corporate Affairs Committee will review outcomes after the completion of a tender procedure or a quotation with a value in excess of £60,000 (Goods and Services) or £100,000 (Works). In respect of any tender the Committee will have the responsibility:
    • The same functions under 8(ii) above in its role as a Policy Committee.
    • To receive and examine quarterly reports on the monitoring and outcome of contract letting procedures including outputs, values, value for money considerations and performance (incorporating if necessary provider comparative analysis) where lowest/highest price is not payable/receivable.
    • To receive and examine reports on any exemptions granted to these Contract Procedure Rules
  • iv) The Audit and Governance Committee

To monitor contracts (at the discretion of the Committee) subject to the formal quotation and tendering procedures.

The Role of Officers - The Chief Officer/Officer Team

  • v) The Chief Officer/Officer Team will have the responsibility:
    • To record the specification and procurement strategy in accordance with section 7 of this introduction.
    • To approve use of selected tendering lists or frameworks or, if none available, to determine the quotation list for the contract.
    • To advertise/issue invitations for expressions of interest, where appropriate.
    • To determine a marking mechanism for each contract or for categories of contracts.
    • To select contractors for participation in contracts procedures.
    • To evaluate proposals and contractors and allocate scores.
    • To approve the successful contractor.
    • To work with the Corporate Procurement Team to ensure all relevant transparency requirements are met including the relevant notices are placed on the Central Digital Platform for projects 
  • vi) The Corporate Procurement Officer must:
    • Open all quotations / tenders in excess of £30,000
    • Record the outcome of all tenders / quotations with a value in excess of £60,000 (Goods and Services) or £100,000 (Works) indicating:
      • Contract Name and Reference number;
      • Description of Goods / Services being procured;
      • Department / Service area procuring the Goods / Services;
      • Bidders;
      • Prices (separate to Bidders details to preserve commercial confidentiality);
      • Identity of successful Bidder.
      • To update the Central Digital Platform with all relevant notices

And report the above information to the Finance and Corporate Affairs Committee on a quarterly basis.

  • vii) It is presumed that Officers responsible for procuring goods, works and services under these rules are familiar with the powers delegated to Officers under the Council's delegation scheme, at least to the extent that those powers enable an Officer to take action without a specific authority from Elected Members.  Where an Officer is given power to take action (e.g. to incur expenditure for which budgetary provision has been made), that power includes the power to enter into any contract necessary to secure the goods, works or services involved.  In the interests of transparency, the requirement for the outcome of a Contract letting procedure to be reported to the Finance and Corporate Affairs Committee applies to contracts undertaken by an Officer under delegated powers, but the responsible Officer, rather than the Director of Legal, Governance and Human Resources would sign such a contract.  

9. Electronic Procurement (e-Procurement)

  • i) It is the Council’s policy that, whenever possible, procurement shall be carried out electronically.  All procurement carried out, on any eprocurement system approved by the Director of Legal, Governance and Human Resources and the Council’s Corporate Lead for Procurement, is subject to these Rules.

10. The Public Services (Social Value) Act 2012 & National Procurement Policy Statement 

  • i) The Public Services (Social Value) Act and National Procurement Policy Statement places a number of statutory obligations on the Council, in relation to certain elements of its procurement practices including on what is classed as below threshold tenders.
  • iii) As the Act covers service contracts as defined in the Public Contracts Regulations 2015 and the Procurement Act 2023 the duty appears to extend to contracts for ‘Social and Other Services’ since these service contracts are covered by the Public Contracts Regulations albeit the requirements for the procurement of such contracts are less onerous.
  • iv) The Act also includes an amendment to section 17 of the Local Government Act 1988 (exclusion of non-commercial considerations in the case of local and other public authority contracts) which basically enables the Council to consider non-commercial matters when awarding business, provided this is done in pursuit of the duties imposed by the Public Services (Social Value) Act 2012.
  • v) The Council confirms that it will consider the following when proposing to procure or make arrangements for procuring services and will ensure that the Council’s Key Social Values, are taken into account: 
    • How what is being proposed to be procured might improve the economic, social and environmental wellbeing of the relevant area (and this is the Authority’s own area (or combined areas if it is a joint procurement) in which it ‘primarily exercised its functions’);
    • How, in conducting the procurement process, it might act with a view to securing that improvement (although the Act makes it clear, in order to remain in line with EU law, that anything under this limb much be relevant and proportionate in respect of the proposed contract);
    • Whether they need to undertake any consultation about the two limbs of the duty as set out above. 
  • vi) Where appropriate, procurement documentation will include a reference to the Act and will provide the opportunity for bidders to propose the delivery of ‘Social Value’ as part of their submission with such proposals being considered and scored as part of the tender / quotation evaluation process.
  • vii) Whilst the ‘Public Services (Social Value) Act 2012’ places a requirement on the Council to consider the issues described above, the Council is committed to the principles of the Act in all of its procurement activities, regardless of the value of the procurement or the nature, i.e. not solely service contracts to the exclusion of supply and/or works contracts, and will endeavour to apply these principles in a relevant and proportionate way. 

11. Prompt payments in the supply chain

  • i) The Council is keen to ensure that prompt payment of valid invoices takes place throughout its supply chains.
  • ii) The Council has a good record in paying its suppliers promptly and it has expressed the aim of ensuring this good performance is extended throughout it supply chains. 
  • iii) To achieve this aim, the Council has amended its contractual terms and conditions to impose the following payment related obligations on its suppliers:

Purchase Order Terms and Conditions:

Where the supplier enters into a sub-contract, the Council expects that all sums due by the supplier to the sub-contractor are paid within a specified period not exceeding 30 days from the receipt of the invoice.

Standard Terms and Conditions for the Purchase of Goods and Standard Terms and Conditions for the Purchase of Services:

Where the Contractor enters into a sub-contract they must ensure that a provision is included which:

  • Requires payment to be made of all sums due by the Contractor to the sub-contractor within a specified period not exceeding 30 days from the receipt of a valid invoice as defined by the sub-contract requirements and provides that, where the Council has made a payment to the Contractor in respect of the services and the subcontractor’s invoice relates to such services then, to that extent the invoice must be treated as valid and, provided the Contractor is not exercising a right of retention or set-off in respect of a breach of contract by the sub-contractor to the Contractor, payment must be made to the sub-contractor without deduction;
  • Notifies the sub-contractor that the sub-contract forms part of a larger contract for the benefit of the Council and that should the subcontractor have any difficulty in securing the timely payment of an invoice, that matter may be referred by the sub-contractor to the Council.

Construction related contracts will be amended to incorporate clauses which conform to the principles outlined in the above clauses.

12. Blacklisting

  • i) The Council operates a policy of not contracting with organisations who undertake ‘blacklisting’ in relation to their employees on the basis of their trade union membership or union activities.
  • ii) This policy is enacted through the content of Selection and Suitability questionnaires, and the Council’s contract terms and conditions.
  • iii) The questionnaires referred to above contain the following warranty which bidding organisations are required to offer: 
    • ‘The organisation (or its directors or any other person who has powers of representation, decision or control of such organisation) confirms that:
      • Being an organisation, it has not complied or disseminated any ‘blacklist’ which is intended to discriminate against workers on the grounds of their Trade Union membership or union activities.
      • It is understood that such activities are expressly prohibited by law and that should the organisation engage in such practices, the Council has the right to exclude the organisation from tendering for any Council contracts.
      • Furthermore the organisation warrants that they have not been convicted of any offence under the Employment Relations Act 1999 (Blacklists) Regulations 2010.   
  • iv) The Councils’ contract terms and conditions incorporate the following clause: ‘Subject to the provisions of the Force Majeure clause in these terms and conditions the Council may terminate this contract with immediate effect by notice in writing to the Contractor/Supplier at any time if the Contractor/Supplier or any subsidiary company of the Contractor/Supplier is convicted of any offence under the Employment Relations Act 199 (Blacklists) Regulations 2010. 

13. General

  • i) In the event of conflict between this Introduction and the following Contract Procedure Rules 2015 and the Procurement Act 2023, national procurement legislation shall prevail.
  • ii) These rules are made in pursuance of Section 135 of the Local Government Act 1972 and any statutory modification or amendment thereto.