Procurement and tendering
Standing financial instructions – Section 7
Tendering and contracting procedure
7.1 Duty to comply with Standing Orders and Standing Financial Instructions
The procedure for making all contracts by or on behalf of the Trust shall comply with these Standing Orders and Standing Financial Instructions (except where Standing Order No. 3.13 Suspension of Standing Orders is applied).
7.2 EU directives governing public procurement
Directives by the Council of the European Union promulgated by the Department of Health (DH) prescribing procedures for awarding all forms of contracts shall have effect as if incorporated in these Standing Orders and Standing Financial Instructions. When referring to these procedures, the user must check current guidance.
7.3 Reverse eAuctions
The Trust should have policies and procedures in place for the control of all tendering activity carried out through Reverse eAuctions. For further guidance on Reverse eAuctions refer to www.ogc.gov.uk.
7.4 Capital Investment Manual and other Department of Health guidance
The Trust shall comply as far as is practicable with the requirements of “Monitor’s Protection of Assets – Guidance for NHS Trusts”, and the “Capital Investment Manual” and “ESTATECODE” in respect of capital investment and estate and property transactions. In the case of management consultancy contracts the Trust shall comply as far as is practicable with Department of Health guidance “The Procurement and Management of Consultants within the NHS”.
7.5 Formal competitive tendering
7.5.1 General applicability
The Trust shall ensure that competitive tenders are invited for:
the supply of goods, materials and manufactured articles;
the tendering of services including all forms of management consultancy services (other than specialised services sought from or provided by the DH);
For the design, construction and maintenance of building and engineering works (including construction and maintenance of grounds and gardens); for disposals.
7.5.2 Health care services
Where the Trust elects to invite tenders for the supply of healthcare services these Standing Orders and Standing Financial Instructions shall apply as far as they are applicable to the tendering procedure and need to be read in conjunction with Standing Financial Instruction No. 8.
7.5.3 Exceptions and instances where formal tendering need not be applied
Formal tendering procedures need not be applied where:
(a) the estimated expenditure or income does not, or is not reasonably expected to, exceed £20,000;
(b) where the supply is proposed under special arrangements negotiated by the DH in which event the said special arrangements must be complied with;
(c) regarding disposals as set out in Standing Financial Instruction No. 13;
Formal tendering procedures may be waived in the following circumstances:
(d) in very exceptional circumstances where the Chief Executive decides that formal tendering procedures would not be practicable or the estimated expenditure or income would not warrant formal tendering procedures, and the circumstances are detailed in an appropriate Trust record;
(e) where the requirement is covered by an existing contract;
(f) where PASA agreements are in place and have been approved by the Board;
(g) where a consortium arrangement is in place and a lead organisation has been appointed to carry out tendering activity on behalf of the consortium members;
(h) where the timescale genuinely precludes competitive tendering but failure to plan the work properly would not be regarded as a justification for a single tender;
(i) where specialist expertise is required and is available from only one source;
(j) when the task is essential to complete the project, and arises as a consequence of a recently completed assignment and engaging different consultants for the new task would be inappropriate;
(k) there is a clear benefit to be gained from maintaining continuity with an earlier project. However in such cases the benefits of such continuity must outweigh any potential financial advantage to be gained by competitive tendering;
(l) for the provision of legal advice and services providing that any legal firm or partnership commissioned by the Trust is regulated by the Law Society for England and Wales for the conduct of their business (or by the Bar Council for England and Wales in relation to the obtaining of Counsel’s opinion) and are generally recognised as having sufficient expertise in the area of work for which they are commissioned.The Director of Finance and Information will ensure that any fees paid are reasonable and within commonly accepted rates for the costing of such work.
(m) where allowed and provided for in the Capital Investment Manual.
The waiving of competitive tendering procedures should not be used to avoid competition or for administrative convenience or to award further work to a consultant originally appointed through a competitive procedure.
Where it is decided that competitive tendering is not applicable and should be waived, the fact of the waiver and the reasons should be documented and recorded in an appropriate Trust record and reported to the Audit Committee at each meeting.
7.5.4 Fair and adequate competition
Where the exceptions set out in SFI Nos. 7.1 and 7.5.3 apply, the Trust shall ensure that invitations to tender are sent to a sufficient number of firms/individuals to provide fair and adequate competition as appropriate, and in no case less than two firms/individuals, having regard to their capacity to supply the goods or materials or to undertake the services or works required.
7.5.5 List of approved firms
The Trust shall ensure that the firms/individuals invited to tender (and where appropriate, quote) are among those on approved lists. Where in the opinion of the Director of Finance and Information it is desirable to seek tenders from firms not on the approved lists, the reason shall be recorded in writing to the Chief Executive (see SFI 7.6.8 List of Approved Firms).
7.5.6 Building and engineering construction works
Competitive Tendering cannot be waived for building and engineering construction works and maintenance (other than in accordance with CONCODE) without Department of Health approval.
7.5.7 Items which subsequently breach thresholds after original approval
Items estimated to be below the limits set in this Standing Financial Instruction for which formal tendering procedures are not used which subsequently prove to have a value above such limits shall be reported to the Chief Executive, and be recorded in an appropriate Trust record.
7.6 Contracting/tendering procedure
7.6.1 Invitation to tender
(i) All invitations to tender shall state the date and time as being the latest time for the receipt of tenders.
(ii) All invitations to tender shall state that no tender will be accepted unless:
(a) submitted in a plain sealed package or envelope bearing a preprinted label supplied by the Trust (or the word “tender” followed by the subject to which it relates) and the latest date and time for the receipt of such tender addressed to the Chief Executive or nominated Manager;
(b) that tender envelopes/ packages shall not bear any names or marks indicating the sender. The use of courier/postal services must not identify the sender on the envelope or on any receipt so required by the deliverer.
(c) In the case of electronic tenders they are returned to a secure Trust specific email address (referred to as a safe) until the agreed tender closing date and time.
(iii) Every tender for goods, materials, services or disposals shall embody such of the NHS Standard Contract Conditions as are applicable.
(iv) Every tender for building or engineering works (except for maintenance work, when ESTMANCODE guidance shall be followed) shall embody or be in the terms of the current edition of one of the Joint Contracts Tribunal Standard Forms of Building Contract or Department of the Environment (GC/Wks) Standard forms of contract amended to comply with CONCODE; or, when the content of the work is primarily engineering, the General Conditions of Contract recommended by the Institution of Mechanical and Electrical Engineers and the Association of Consulting Engineers (Form A), or (in the case of civil engineering work) the General Conditions of Contract recommended by the Institute of Civil Engineers, the Association of Consulting Engineers and the Federation of Civil Engineering Contractors. These documents shall be modified and/or amplified to accord with Department of Health guidance and, in minor respects, to cover special features of individual projects.
7.6.2 Receipt and safe custody of tenders
The Chief Executive or his nominated representative will be responsible for the receipt, endorsement and safe custody of tenders received until the time appointed for their opening.
The date and time of receipt of each tender shall be endorsed on the tender envelope/package. 7.6.3 Opening tenders and register of tenders
(i) As soon as practicable after the date and time stated as being the latest time for the receipt of tenders, they shall be opened by the allocated tender officer and two senior officers/managers designated by the Chief Executive and not from the originating department.
(ii) A member of the Board of Directors will be required to be one of the two approved persons present for the opening of tenders estimated above £5M. The rules relating to the opening of tenders will need to be read in conjunction with any delegated authority set out in the Trust’s Scheme of Delegation.
(iii) The ‘originating’ Department will be taken to mean the Department sponsoring or commissioning the tender.
(iv) The involvement of Finance Directorate staff in the preparation of a tender proposal will not preclude the Director of Finance and Information or any approved Senior Manager from the Finance Directorate from serving as one of the two senior managers to open tenders.
(v) All Executive Directors will be authorised to open tenders regardless of whether they are from the originating department provided that the other authorised person opening the tenders with them is not from the originating department.The Trust’s Board Secretary will count as a Director for the purposes of opening tenders.
(vi) Every tender received shall be marked with the date of opening and initialled by those present at the opening.
(vii) A register shall be maintained by the Chief Executive, or a person authorised by him, to show for each set of competitive tender invitations despatched:
– the name of all firms/individuals invited;
– the names of firms/individuals from which tenders have been received;
– the date the tenders were opened;
– the persons present at the opening;
– the price shown on each tender;
– a note where price alterations have been made on the tender.
Each entry to this register shall be signed by those present.
A note shall be made in the register if any one tender price has had so many alterations that it cannot be readily read or understood.
(viii) Incomplete tenders, i.e. those from which information necessary for the adjudication of the tender is missing, and amended tenders, i.e. those amended by the tenderer upon his own initiative either orally or in writing after the due time for receipt, but prior to the opening of other tenders, should be dealt with in the same way as late tenders. (Standing Order No. 7.6.5 below).
(i) If for any reason the designated officers are of the opinion that the tenders received are not strictly competitive (for example, because their numbers are insufficient or any are amended, incomplete or qualified) no contract shall be awarded without the approval of the Chief Executive
(ii) Where only one tender is sought and/or received, the Chief Executive and Director of Finance and Information shall, as far as practicable, ensure that the price to be paid is fair and reasonable and will ensure value for money for the Trust.
7.6.5 Late tenders
(i) Tenders received after the due time and date, but prior to the opening of the other tenders, may be considered only if the Chief Executive or his nominated officer decides that there are exceptional circumstances, i.e. despatched in good time but delayed through no fault of the tenderer
(ii) Only in the most exceptional circumstances will a tender be considered which is received after the opening of the other tenders and only then if the tenders that have been duly opened have not left the custody of the Chief Executive or his nominated officer or if the process of evaluation and adjudication has not started
(iii) While decisions as to the admissibility of late, incomplete or amended tenders are under consideration, the tender documents shall be kept strictly confidential, recorded, and held in safe custody by the Chief Executive or his nominated officer.
7.6.6 Acceptance of formal tenders (See overlap with SFI No. 7.7)
(i) Any discussions with a tenderer which are deemed necessary to clarify technical aspects of his tender before the award of a contract will not disqualify the tender.
(ii) The lowest tender, if payment is to be made by the Trust, or the highest, if payment is to be received by the Trust, shall be accepted unless there are good and sufficient reasons to the contrary. Such reasons shall be set out in either the contract file, or other appropriate record.
It is accepted that for professional services such as management consultancy, the lowest price does not always represent the best value for money. Other factors affecting the success of a project include:
(a) experience and qualifications of team members;
(b) understanding of client’s needs;
(c) feasibility and credibility of proposed approach;
(d) ability to complete the project on time.
Where other factors are taken into account in selecting a tenderer, these must be clearly recorded and documented in the contract file, and the reason(s) for not accepting the lowest tender clearly stated.
(iii) No tender shall be accepted which will commit expenditure in excess of that which has been allocated by the Trust and which is not in accordance with these Instructions, except with the authorisation of the Chief Executive.
(iv) The use of these procedures must demonstrate that the award of the contract was:
(a) not in excess of the going market rate/price current at the time the contract was awarded;
(b) that best value for money was achieved.
(v) All tenders should be treated as confidential and should be retained for inspection.
7.6.7 Tender reports to the Board of Directors
Reports to the Trust Board will be made on an exceptional circumstance basis only.
7.6.8 List of approved firms (see SFI No. 7.5.5)
(a) Responsibility for maintaining list
A manager nominated by the Chief Executive shall on behalf of the Trust maintain lists of approved firms from who tenders and quotations may be invited. These shall be kept under frequent review. The lists shall include all firms who have applied for permission to tender and as to whose technical and financial competence the Trust is satisfied. All suppliers must be made aware of the Trust’s terms and conditions of contract.
(b) Building and engineering construction works
(i) Invitations to tender shall be made only to firms included on the approved list of tenderers compiled in accordance with this Instruction or on the separate maintenance lists compiled in accordance with ESTMANCODE guidance (Health Notice HN(78)147).
ii) Firms included on the approved list of tenderers shall ensure that when engaging, training, promoting or dismissing employees or in any conditions of employment, shall not discriminate against any person because of colour, race, ethnic or national origins, religion or sex, and will comply with the provisions of the Equal Pay Act 1970, the Sex Discrimination Act 1975, the Race Relations Act 1976, and the Disabled Persons (Employment) Act 1944 and any amending and/or related legislation.
iii) Firms shall conform at least with the requirements of the Health and Safety at Work Act and any amending and/or other related legislation concerned with the health, safety and welfare of workers and other persons, and to any relevant British Standard Code of Practice issued by the British Standard Institution. Firms must provide to the appropriate manager a copy of its safety policy and evidence of the safety of plant and equipment, when requested.
(c) Financial standing and technical competence of contractors
The Director of Finance and Information may make or institute any enquiries he deems appropriate concerning the financial standing and financial suitability of approved contractors. The Director with lead responsibility for clinical governance will similarly make such enquiries as is felt appropriate to be satisfied as to their technical/medical competence.
7.6.9 Exceptions to using approved contractors
If in the opinion of the Chief Executive and the Director of Finance and Information or the Director with lead responsibility for clinical governance it is impractical to use a potential contractor from the list of approved firms/individuals (for example where specialist services or skills are required and there are insufficient suitable potential contractors on the list), or where a list for whatever reason has not been prepared, the Chief Executive should ensure that appropriate checks are carried out as to the technical and financial capability of those firms that are invited to tender or quote.
An appropriate record in the contract file should be made of the reasons for inviting a tender or quote other than from an approved list.
7.7 Quotations: competitive and non-competitive
7.7.1 General position on quotations
Quotations are required where formal tendering procedures are not adopted and where the intended expenditure or income exceeds, or is reasonably expected to exceed £5,000, but not exceed £20,000 inclusive of VAT, irrespective as to whether it is reclaimable.
7.7.2 Competitive quotations
(i) Quotations should be obtained from at least three firms/individuals based on specifications or terms of reference prepared by, or on behalf of, the Trust.
(ii) Quotations should be in writing unless the Chief Executive or his nominated officer determines that it is impractical to do so in which case quotations may be obtained by telephone. Confirmation of telephone quotations should be obtained as soon as possible and the reasons why the telephone quotation was obtained should be set out in a permanent record.
(iii) All quotations should be treated as confidential and should be retained for inspection.
(iv) The Chief Executive or his nominated officer should evaluate the quotation and select the quote which gives the best value for money. If this is not the lowest quotation if payment is to be made by the Trust, or the highest if payment is to be received by the Trust, then the choice made and the reasons why should be recorded in a permanent record.
7.7.3 Non-competitive quotations
Non-competitive quotations in writing may be obtained in the following circumstances:
(i) the supply of proprietary or other goods of a special character and the rendering of services of a special character, for which it is not, in the opinion of the responsible officer, possible or desirable to obtain competitive quotations;
(ii) the supply of goods or manufactured articles of any kind which are required quickly and are not obtainable under existing contracts;
(iii) miscellaneous services, supplies and disposals;
(iv) where the goods or services are for building and engineering maintenance the responsible works manager must certify that the first two conditions of this SFI (i.e.: (i) and (ii) of this SFI) apply.
7.7.4 Quotations to be within financial limits
No quotation shall be accepted which will commit expenditure in excess of that which has been allocated by the Trust and which is not in accordance with Standing Financial Instructions except with the authorisation of either the Chief Executive or Director of Finance and Information.
7.8 Authorisation of tenders and competitive quotations
Providing all the conditions and circumstances set out in these Standing Financial Instructions have been fully complied with, formal authorisation and awarding of a contract may be decided by the following staff to the value of the contract as follows:
Head of Supplies or Procurement or Assistant Director (Estates) Up to OJEU threshold
Head of Supplies or Procurement or Assistant Director (Estates) From OJEU Threshold and
Executive Director To £249,999
Chief Executive and Executive Director Over £250,000
These levels of authorisation may be varied or changed and need to be read in conjunction with the Board of Directors Scheme of Delegation.
Formal authorisation must be put in writing. In the case of authorisation by the Board of Directors this shall be recorded in their minutes.
7.9 Instances where formal competitive tendering or competitive quotation is not required
Where competitive tendering or a competitive quotation is not required the Trust should adopt one of the following alternatives:
(a) the Trust shall use the NHS Supply Chain for procurement of all good sand services unless the Chief Executive or nominated officers deem it inappropriate. The decision to use alternative sources must be documented.
(b) If the Trust does not use the NHS Supply Chain – where tenders or quotations are not required, because expenditure is below £5,000, the Trust shall procure goods and services in accordance with procurement procedures approved by the Director of Finance and Information.
7.10 Private finance for capital procurement (see overlap with SFI No. 12)
The Trust should normally market-test for PFI (Private Finance Initiativefunding) when considering a capital procurement. When the Boardproposes, or is required, to use finance provided by the private sector thefollowing should apply:
(a) The Chief Executive shall demonstrate that the use of private financerepresents value for money and genuinely transfers risk to the privatesector.
(b) Where the sum exceeds delegated limits, a business case must bereferred to the appropriate Department of Health Section for approvalor treated as per current guidelines.
(c) The proposal must be specifically agreed by the Board of Directors.
(d) The selection of a contractor/finance company must be on the basis ofcompetitive tendering or quotations.
7.11 Compliance requirements for all contracts
The Board may only enter into contracts on behalf of the Trust within the statutory powers delegated to it by the Secretary of State and shall comply with:
(a) The Trust’s Standing Orders and Standing Financial Instructions.
(b) EU Directives and other statutory provisions.(c) Any relevant directions including the Capital Investment Manual, ESTATECODE and guidance on the Procurement and Management of Consultants.
(d) Such of the NHS Standard Contract Conditions as are applicable.
(e) Contracts with Foundation Trusts must be in a form compliant withappropriate NHS guidance.
(f) Where appropriate contracts shall be in or embody the same terms and conditions of contract as was the basis on which tenders or quotations were invited.
(g) In all contracts made by the Trust, the Board shall endeavour to obtain best value for money by use of all systems in place. The Chief Executive shall nominate an officer who shall oversee and manageeach contract on behalf of the Trust.
7.12 Personnel and agency or temporary staff contracts
The Chief Executive shall nominate officers with delegated authority to enter into contracts of employment, regarding staff, agency staff or temporary staff service contracts.
7.13 Healthcare services agreements (see overlap with SFI No. 8)
Service agreements with NHS providers for the supply of healthcare services shall be drawn up in accordance with the NHS and Community Care Act 1990 and administered by the Trust. A contract with a Foundation Trust, being a PBC, is a legal document and is enforceable in law.
The Chief Executive shall nominate officers to commission service agreements with providers of healthcare in line with a commissioning plan approved by the Board.
7.14 Disposals (see overlap with SFI No. 14)
Competitive Tendering or Quotation procedures shall not apply to the disposal of:
(a) any matter in respect of which a fair price can be obtained only by negotiation or sale by auction as determined (or pre-determined in a reserve) by the Chief Executive or his nominated officer;
(b) obsolete or condemned articles and stores, which may be disposed of in accordance with the supplies policy of the Trust;
(c) items to be disposed of with an estimated sale value of less than £5000, this figure to be reviewed on a periodic basis;
(d) items arising from works of construction, demolition or site clearance, which should be dealt with in accordance with the relevant contract;
(e) land or buildings concerning which DH guidance has been issued but subject to compliance with such guidance.
7.15 In-house services
7.15.1 The Chief Executive shall be responsible for ensuring that best value for money can be demonstrated for all services provided on an in-house basis.The trust may also determine from time to time that in-house services should be market tested by competitive tendering.
7.15.2 In all cases where the Board determines that in-house services should be subject to competitive tendering the following groups shall be set up:
(a) Specification group, comprising the Chief Executive or nominated officer/s and specialist.
(b) In-house tender group, comprising a nominee of the Chief Executive and technical support.
7.15.3 All groups should work independently of each other and individual officers may be a member of more than one group but no member of the in-house tender group may participate in the evaluation of tenders.
7.15.4 The evaluation team shall make recommendations to the Board.
7.15.5 The Chief Executive shall nominate an officer to oversee and manage the contract on behalf of the Trust.
7.16 Applicability of SFIs on tendering and contracting to funds held in trust (see overlap with SFI No. 8)
These Instructions shall not only apply to expenditure from Exchequer funds but also to works, services and goods purchased from the trust’s trust funds and private resources.