Procurement and Contract ManagementStrategy and Practice

January 2012

POLICE SERVICE OF NORTHERN IRELANDPROCUREMENT AND CONTRACT MANAGEMENT STRATEGY AND PRACTICE

CONTENTS Page

The Purpose of this Document 2

Introduction 2

The Police Service’s Strategic Principles 2

The Police Service’s Procurement Principles 3

Current and Past Achievements: 6 Price / Cost Savings 6 Procurement Collaboration 7 Value for Money Benchmarking 7

Challenges Ahead 8 The Economic Legislative and Regulatory Context 8 New Initiatives and Targets for 2012 8

Procurement Strategy 11 Departmental Reviews and Contract Renewal 11 The Role of Heads of Business Services 11 Small and Medium Sized Contracts 12 Procurement Training 13

Risk Factors 14

Procedural Requirements 15 Procurement Policy and Procedures 15 Choice of Procurement Options 16 Competitive Tendering and Contract Approval 18 Direct Award Contract (DAC) –Request and Approval 19 Procurement Contract Management 20 Financial Monitoring of Contracts 20 Contract Variations 21

Record Management 22

Appendix 1 – Operational Agreement DFP/CPD/Police 23Appendix 2 – Contract Management and Monitoring Procedures 33Appendix 3 – Procurement Contract Approval Levels 52

PROCUREMENT AND CONTRACT MANAGEMENT

STRATEGY AND PRACTICE

The Purpose of this DocumentTo assure those who hold the Police Service of Northern Ireland to account that there are robust proceedures and governance of procurement.

To advise those within the Police Service of their responsibilities and how they will be held to account in this area in the future.

To ensure value for money and fit for purpose processes that will assist in achieving the Chief Constable’s strategic principles of personal, professional and protective policing.

IntroductionThe Police Service’s Procurement Policy is based on value for money and continuous improvement of procurement practices. Our aim is to establish and maintain effective planning, tendering and contracting for procurement of goods, works and services. Thereby securing and enhancing public confidence.

The emphasis is on improved professionalism, accountability and performance for procurement within the Police Service at the same time as raising the strategic awareness of Procurement and Contract Management among our Officers and Staff.

We must ensure the the Police Service carry out fully defensible procurement activities that safeguard the reputation of the Police . Uniform, equipment, weapons, works and services should be acquired by competition, unless there are convincing reasons to the contrary.

Improvement in procurement performance is measured through savings and efficiencies achieved and quality of services provided by suppliers. Procurement should lead to improved organisational effectiveness. The objective being to achieve best value for money as benchmarked against the marketplace.

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policy, procedure and practice. He manages the Operational Agreement (OA) with the Department of Finance and Personnel Central Procurement Directorate (CPD) and holds regular Procurement Reviews with all major spending Departments. He is responsible for measuring and reporting on the Procurement Performance of the Police Service.

The Head of Procurement & Logistic Services also reports twice yearly to the Risk, Demand and Resource Committee, chaired by the Deputy Chief Constable.

The OA, which is attached at Appendix 1, establishes CPD as a single source for all competitive tendering requirements of the Police Service. Each Department within the Police Service identifies and technically specifies their procurement requirements for goods, works and services and CPD undertakes quotation and tendering for all Police Service requirements. Sourcing decisions are made by the Police Service Evaluation Panel, supported by CPD, in accordance with Police Procurement Operating Procedures. All Police Officers and staff who are nominated on Procurement Evaluation Panels are subject to training and awareness on procurement issues with special emphasis on Police strategy, policy, processes and procedures. 670 staff have been trained to date.

Police Service’s Strategic PrinciplesPersonal, impartial and accountable police officers and staff, present and influential in the heart of all communities, in the right numbers to make a difference.

Responsive, flexible, 24 x 7 service; tailor made to the unique needs of the person or place, with a reputation for promise keeping and professionalism.

Resources and time focused upon genuine operational delivery. Ensuring we have the right people in the right place to prevent harm, protect from danger and inspire confidence.

Challenging the status quo, keeping red tape to a minimum, always at the forefront of value for money and effective practice.

Partnership at the heart of our outlook and actions, sharing expertise, information and responsibility. Open and transparent in line with over-riding Human Rights or legal obligations.

Police Service’s Procurement PrinciplesThe Head of Procurement & Logistic Services, who reports to the Director of Finance & Support Services (F&SS), is responsible for Procurement

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Since 2005 the Police Service have established improved planning, tendering and contracting of goods, works and services across the Police Service, with increased accountability and performance monitoring. Regular Procurement Reviews have been established with all Departments. The results of these efforts in terms of procurement savings and achievements are presented in our annual report to the Policing Board and are reflected in the high benchmarking VFM standing achieved by the Police Service of Northern Ireland when compared against other public sector Organisations.

Key success factors include:

• ProcurementCollaboration

• ProcurementOutsourcing,Contract&SupplierManagement

• 98%ofBusinesswithSuppliersthatisunderContract

• Price/CostSavingsAchieved

• EfficiencyandQualityofServiceImprovements

• IncreasedUseofGovernmentProcurementCard

• IncreasedUseofE-Procurement. 97%ofallordersareelectronic

• RationalisationofPoliceSupplyBase 8460to1650inlastsixyears

• BenchmarkingofProcurementinthePoliceServiceofNorthernIrelandAgainstOtherPublicServicesandPoliceForces

The Police Service believe it is important that both new and existing contracts are competitively tendered in a timely manner. We aim to have our tenders ready at least six months before the end of contract period. Police staff and Officers are directed and encouraged to invest quality time in identifying our business and technical requirements. Thus ensuring our specifications and terms of reference best capture our needs as part of our planning process.

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Contracts require ongoing management and action between competitions. Strong supplier and customer relationship management is imperative. That’s why we initiated contract and supplier management training across our organisation. This has been provided to all Heads of Business Services (HoBS) and Police employees who are responsible for managing suppliers. The focus being on contract management, key terms, supplier relations, risk and opportunity management and how to best deliver efficiencies and improvements together with our suppliers.

The Police Service must be able to matrix and client manage across our organisation as well as project manage suppliers who provide key services. It is imperative that Departments employ properly qualified personnel to client manage their key suppliers. People with proven ability to manage complex projects which involve supplier management.

All business critical contracts / suppliers are managed through regular high level performance reviews. This amounts to circa 25 suppliers, representing 85% of spend. These are mainly outsourced services. All new contacts, irrespective of value, initiated since September 2008 are subject to at least twice yearly scoring and review between Police Service/CPD/Supplier. Details are as set out in our contract/supplier training and illustrated on PoliceNet and attached as Appendix 2.

Fundamentally the skills required to manage major contracts/outsourced services are project management skills. The Contract/Project Managers must work closely with internal customers and external suppliers to ensure the potential for efficiencies and savings are optimised.

The unique thing about the Police Service is our commitment to train non-procurement officers and staff in best supplier management strategy and practice. 200 staff have been trained to date. This is leading to a significant increase in commercial awareness across our organisation.

The results are illustrated in our UK VFM Benchmarking performance. The Police Service of Northern Ireland is currently leading in procurement practice and results in UK Policing and is amongst the top half dozen performers in the UK Public Sector.

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CURRENT AND PAST ACHIEVEMENTSPrice / Cost SavingsThe Police Service has an annual procurement spend of £200m and a record of delivering Procurement savings greater than targets set by Treasury. From 2005 to 2008 £25.8m savings were achieved against £11.1m target set by ACPO / Treasury. In the three years since we have delivered £10.8 savings or 11.4% savings against new contracts awarded, as well as making significant in-year savings on existing contracts.

A summary of our record price/cost savings is illustrated here

Savingsarecalculatedinoneofthreeways:

1. Re-Tender Existing Contracts – compare current cost -v- new cost following competitive tender.

2. First Time Contracts – compare budget cost -v- new cost following competition.

3. Outsourced Services – compare in-house costs -v- costs from selected supplier following competition.

Savings are Net, ie we include increases as well as decreases. Savings do not allow for inflation and/or use of Government cost indices.

The Police Service has delivered £62.8m Net procurement savings over last ten years to March 2011.

Record Of Price/Cost Savings

Year

Value of Contracts

Awarded in Listed Year

Savings % Savings

1997/98 £43m £1.9m 4.4%

1998/99 £44m £3.2m 7.3%

1999/2000 £42m £3.0m 7.1%

2000/01 £76m £8.1m 10.7%

2001/02 £82m £8.0m 9.8%

2002/03 £89m £9.3m 10.5%

2003/04 £43m £3.1m 7.2%

2004/05 £45m £5.2m 11.6%

2005/06 £57m £4.6m 8.1%

2006/07 £76m £7.8m 10.3%

2007/08 £161m £14.0m 8.7%

2008/09 £38m £5.0m 13.0%

2009/10 £38m £4.4m 11.6%

2010/11 £18m £1.4m 7.5%

The Police Service has outsourced many services identified as key to delivering cost and efficiency savings now and in the future. £110m of our annual procurement spend of £200m is for outsourced services. These include:

• IT Managed Service; Property Maintenance; Property Management; Cleaning Services; Catering Services; Travel Services; Uniform Managed Service; Garage Services; Security Services; Civilian Detention Services; Police Recruitment; Civilian Recruitment; Leadership Training; Forensic Services; Managed Driving Services; Vehicle Recovery; Underwater Search; Internal Audit; Solicitors Services; Advertising and Event Management; Procurement Tendering

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Procurement CollaborationThe Police Service is engaged with National Procurement collaboration at all levels and disciplines.

The Police Service embraces and supports the ACPO Procurement Strategy and Charter and is a strong collaborative player in Police Procurement. We are actively engaged with NPIA and Government Procurement Services, including transport, fuel and mobile telephone frameworks and UK wide IT initiatives.

Additionally, our ties with CPD gives us access to a range of other public sector contracts. We are a member of the North West Regional Procurement Group and we also subscribe to the Bluelight Procurement Database run by Dorset Police.

We have entered into many collaborative procurement exercises with other Forces such as the Ministry of Defence. UK Forces use Police Service of Northern Ireland established contracts for Limb Protection, Road Signs and Method of Entry. £38.5m of our £200m procurement spend is through collaborative contracts.

Value for Money BenchmarkingThe UK Audit Agencies combined to develop a set of indicators to measure the Value for Money (VFM) of procurement across the Public Sector.

CIPFA supported by KPMG, were appointed to undertake the research and development work and they on behalf of the Audit Agencies, publish an Annual VFM Benchmarking Report.

CIPFA / KPMG / VFM best practice benchmarking of UK public services, January 2011 report can be summarised as follows:

• The Police Service of Northern Ireland rated 1st in 3 our of 18 indicator categories

• The Police Service of Northern Ireland rated in best quartile in 13 categories and between median and best in 4

• Police Service of Northern Ireland judged number one Police Force and in Top 5 in Public Service overall

• One of the categories where the the Police Service of Northern Ireland was considered as 1st was modern management practices

• CIPFA/KPMG looked at 10 best practices and assessed the Police Service of Northern Ireland relative to the other public sector organisations. The areas they considered included:

• Strategic Orientation and Planning

• Target Setting and Achievement

• Understanding of Total Cost of Ownership

• Strategic Partnerships

• Ethical Procurement Standards

• Development of Procurement Skills and Capabilities Across the Organisation

• Customer Service

• The Police Service of Northern Ireland was judged 1st in class

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CHALLENGES AHEADThe Economic, Legislative and Regulatory ContextWith regard to procurement the increasing culture of litigation together with the change in Procurement Regulations airising from the EU Remedies Directive are leading to a more exhaustive, rigorous and slower procurement process. The evaluation process is under more scrutiny and it is easier for suppliers to challenge.

With the increased pressure on public sector finances, the Police Service is going to be under even greater pressure to drive efficiencies and savings through best value procurement and excellent supplier commercial and programme management.

New Initiatives and Targets for 2012ContractandSupplierManagementTrainingwillcontinuetobeprovidedtoallthosewhohaveresponsibilityformanagingcontracts.Guidanceonthekeytermsofcontract,supplierrelationsandhowbesttoidentifyanddeliverefficienciesandimprovement,togetherwithsupplierswillbegiventoThePoliceServiceContractManagers

Progress:• 180 Police and staff trained re Procurement

Procedures since May 2011

• 50 Police Service Contract Managers trained in Contract and Supplier Management in 2011/12

• The Police Service is up-to-date with Procurement and Contract Management training

Therewillbearenewedfocusonbusinessandtechnicalrequirementsandtermsofreferenceandhowimportantitistocapturetheseas

comprehensivelyaspossibleatthebeginningofthecompetitivetenderingprocess

Progress:• This is being reinforced in Departmental

Procurement Reviews and during Procurement and Contract Management training

• There is a specific training section “Improving Contract Documentation”

• Lessons are being learned and new approaches applied, for example, the new Terms of Reference for Security Guarding and Associated Services

BasicProcurementTrainingrePolicyandProcedurewillbemandatoryforallEvaluationTeammembers.BusinessServiceHeadsandManagerstogetherwithContractManagerswillundergorefreshertrainingin2011/12

Progress:• All Evaluation Team members trained• New and Refresher training has taken place

since May 2011, as above• Including Refresher training for Business

Service Teams

CPDaretoproduceaquarterlysummaryofallcontractsoutsidetheirrenewalperiod.TheHeadofPaLSwillfollowupwithHeadsofBranchestoensurecompliance

Progress:• CPD produced a summary in April 2011. At that

time it was CPD’s advice that the Police Service was able to extend contracts to allow extra time to complete new contracts

• In August the Police Service were advised that NIAO may view spend on contracts beyond their end date as “irregular” spend

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• Since August the Head of Procurement and Logistic Services has prepared and circulated a bi-monthly report highlighting contracts past their end date and those due for renewal in the next eighteen months

• The format and content of this report is agreed by and circulated within the Police Service and CPD

AlistofcontractstoberenewedoverthenexteighteenmonthswillalsobeissuedtoChiefOfficersaskingthemtoensureworkrequiredtoberenewedisplannedandcompletedbeforethecontractrenewaldates

Progress:• List of contracts to be renewed is updated bi-monthly and circulated to Contract Manager and their Heads of Department

• The Police Service have prioritised our requirements for CPD

• Specific dates have been agreed for: • Issue of Specifications by the Police Service; and • Renewal contracts dates by CPD

• Special DACs have been approved to cover “legacy” issues that might lead to potential “irregular” spend until new contract in place

• A monthly key performance indicator report will be advised to the director of F&SS. Highlighting exceptions to the contract plan and corrective actions to be taken.

• There are quarterly reviews at Director level between DFP, CPD and the Police Service to discuss resources; planning and outcome

Deliveryof£4mprice/costsavingsperannumonProcurementContracts.Thedetailswillbedevelopedwithallthemainspendingdepartmentsaspartofthefouryearefficiencyplan

Progress:

• The Police Service of Northern Ireland has so far identified £15.5m cash savings through procurement initiatives. PaLS, ICS, HR, Estates and Districts are main contributors as illustrated below

• New Cleaning Services Contract projected to realise £3.5m savings over five years

• All are additional reductions to the Police Service’s original integrated plan

2011/12 2012/13 2013/14 2014/15 Total

PaLS £900k £1,500k £1,500k £1,500k £5,400k

Estates £575k £925k £1,075k £1,200k £3,775k

ICS - £1,100k £748k £1,461k £3,309k

HR £1,200k £300k £250k £250k £2,000k

Districts - - £400k £400k £800k

Legal Services £45k £45k £45k £45k £180k

Total(s) £2,720k £3,870k £4,018k £4,856k £15,464k

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Thefocuswillbeonthetop25supplierswhopresent85%ofourannualspend

Progress:• Regular Police/CPD/Supplier reviews

continue

• Negotiations ongoing. Progress as above

• The Head of PaLS, together with the respective Heads of Department, will decide what value can be added by his greater personal involvement

TheHeadofPaLSwillsetoutthedifferentapproachesformanaginglarge,mediumandlowvaluecontracts

Progress:• The process for managing suppliers

and contracts is set out in PD08/04 and Police/CPD’s Contract Management and Monitoring Procedures

• Medium and low value contracts – please refer to the separate section in this paper

• Large contracts – the focus is on regular high level performance reviews

• The approaches are summarised in this paper under Contract Management, Financial Monitoring and Contract Variations

TogetherwithHeadsofDepartmentsandBranchestheHeadofPaLSwillassesstheroleandsuitabilityofContractManagerstoprojectmanagelargecontractsandcomplexsupplier/internalcustomerrelations

Progress:• Each Department should employ

senior staff based (in part) on their qualifications and proven ability to manage complex projects, which require supplier and end customer management

• The Head of PaLS, together with the respective Heads of Department, will assess this subject on a contract by contract basis

AstrategywillbedevelopedtobringaboutthegreaterengagementofHoBSinprocurementissuesgenerallyandinparticularonsmallercontracts

Progress:• Since April there has been greater

engagement of HoBS in procurement issues generally

• They have been taking the lead for small and medium sized contracts under devolved structures with positive results

• District HoBS have implemented robust purchasing procedures that provide greater control and management of all devolved expenditure

• Independent auditing of contracts and invoicing shows 94% pass rate

• HoBS for Crime, Ops, Finance and Support Services and HR/Criminal Justice are heavily involved in procurement strategy, planning and implementation for each of their areas

• They oversee Business Case, DAC preparation and approval

• HoBS are engaged in Departmental Procurement Reviews alongside their ACC / Director

• HoBS are also involved in certain Supplier Performance Reviews, for example Interpreting Services, Catering and Cleaning Services

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PROCUREMENT STRATEGYDepartmental Reviews and Contract RenewalJoint Police/CPD Contract Reviews are held regularly with all Departments. The number and regularity of these meetings is consistent, as is the attendance of Senior Police and Staff, including Heads of Departments and ACCs.

The status of all contracts that go through CPD in each Department is summarised and all new and planned contracts are discussed in these reviews. Notes and actions arising are circulated within days of each meeting.

In addition to the Police/CPD Contract Reviews, the Head of PaLS circulates a summary of all contracts expected to be renewed over next eighteen months to Head of Branch and Contract Managers. Police Service Managers are reminded that work required in support of renewed contracts is planned well ahead of the current contract end dates.

Sufficient time should be allowed for determining the Police Service specification and terms of reference. Departments must start and complete the planning and initiation cycle as early as possible and at least six months before the existing contract end date.

Monthly reviews at Director level within DFP, CPD and Police have been established to review resource allocation, progress and delivery of specifications and contracts.

The Role of Heads of Business ServicesThe Police Service spent £200m on Procurement Services in 2010/11. 370 contracts in total with a Contract Manager and Senior Officer responsible for each contract. 85% of spend is covered by 25 suppliers, all of whom are subject to high level performance reviews. All major suppliers are managed by expert Police Project/Contract Managers, whose main focus and priority is to ensure the potential

for performance efficiencies available in the contract terms are delivered to our Organisation.

There is regular engagement of HoBS in procurement issues generally. HoBS for Crime Ops, Ops Support, Finance and Support Services, Criminal Justice and Human Resources are heavily involved in the Procurement Strategy and Process of their respective Departments. They oversee the Business Case, DAC preparation and approval process for their areas and are engaged in the Departmental Procurement Reviews with Head of PaLS, CPD and alongside their Director or ACC.

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Small and Medium Sized ContractsHoBS, under devolved structures, ensure that the ordering and payment of supplies for small and medium sized centrally established contracts is in accordance with the agreed terms and conditions. HoBS also ensure that contracts with a value less than £10k are established locally in accordance with PD08/04.The following checks and balances currently apply across Districts and Departments:

• Monthly Management checks on local systems for purchasing, ordering, receipting and invoice processing

• Each Purchase Invoice undergoes process set out by the Police Service Finance Manual

• Details of checks uploaded onto Integra

Where payments fail the checks, HoBS issue guidance and training to those who fall out of line. Many of the HoBS provide local training in relation to procurement and finance rules.

Additional checks arranged by Head of Financial Reporting have been in place between April and August. Three random checks per day run with paperwork supporting payments sent to River House. Such checks provide independent assurance on local compliance.

The annual CRSA programme at District/Department level further provides assurance that appropriate monthly checks are being carried out by HoBS. The value of fails as a proportion of the sample is low and indicates that there is little material financial risk.

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Procurement TrainingAll Police Officers and staff who are nominated on Procurement Evaluation Panels are subject to training and awareness on procurement issues with special emphasis on the Police Service Strategy, Policy, Processes and Procedures. All Panel Members must have been trained in the last twelve months prior to joining an Evaluation Team or else have been a servicing Panel Member in the previous year.

Additionally, the Head of PaLS has invited all Head of Branches, Business Service Managers and the Police Service Contract

Managers across the entire Organisation to refresher training. Twenty training sessions take place each year, involving 200 Police Service Staff and Officers.

All Police Service Contract Managers are subject to Contract Management training. This covers areas such as key Terms of Contract, Supplier Relationships, Risk and Opportunity Management and how best to identify and deliver efficiencies and savings together with suppliers. Ten training sessions take place each year involving 60 Police Service staff and officers.

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RISK FACTORSInconsistencyofapproachtoProcurementPolicyandpracticewithinthePoliceService

Mitigating Actions:

• New and Refresher Procurement Training of 200 Police and Staff in 2011

• Internal Audit Reports

ThePoliceService/CPDwillnothavenewcontractsinplacebeforeexistingcontractscometoanend

Mitigating Actions:

• The Police Service/CPD Departmental Contract Reviews

• Setting and monitoring of timetables with CPD for progressing procurement competitions

• Head of PaLS monthly report reminding Police/CPD Contract Managers of all contracts to be renewed in next eighteen months

• Monthly reviews at Director level between DFP, CPD and Police

• ‘Special’ DAC approval to cover the period and value of expenditure outside the contract period

ChallengefromsuppliersandoutsidebodiesleadingtopotentiallossofreputationofthePoliceService

Mitigating Actions:

• New and Refresher Procurement Training of 200 Police and Staff

• Internal Audit Report

Failuretomaximisepotentialofefficiencyandsavingsarisingfromconsistentandco-ordinatedprocurementaction

Mitigating Actions:

• The Police /CPD/Supplier Performance Reviews

• Greater engagement of HoBS in Procurement and Contract Management

• New and Refresher Contract Management Training of 60 the Police Service Contract Managers

Failuretodeliverbestvaluefortheorganisation

Mitigating Actions:

• Four Year Efficiency/Savings Plan to secure additional reductions to the Police Service’s original integrated plan

• The Police Service/CPD/Supplier Performance Reviews

• New and Refresher Contract Management Training of 60 the Police Service Contract Managers

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PROCEDURAL REQUIREMENTSProcurement Policy and Procedures (PD08/04)

PD08/04 is updated and re-circulated twice a year to take account of recommendations arising from both Internal and External Audits. It is circulated to all Police and Support Staff and any changes are separately highlighted. PD08/04 can also be found on PoliceNet. PD08/04 Issue 13 was last circulated December 2011.

In November 2010 the Head of Procurement & Logistic Services also sent

an additional note to the Chief, Deputy, All ACCs and Directors as well as Heads of large spending Departments and Heads of Business Services. This note highlighted the new directives from Department of Justice.

The responsibility for the financial monitoring of contracts together with the Procurement Contract approval levels are all set out in PD08/04. PD08/04 clearly states that “there is a requirement to monitor and control spend against all contracts awarded”. PD08/04 also states “Management of contracts and associated spend is by budget holders and Project Managers. They are responsible under devolved budgeting arrangements to monitor and manage spend within their areas of responsibility”.

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The Head of Procurement & Logistic Services wrote to all Heads of Business Services and Heads of large spending Departments in March 2011 reminding them of their responsibility for financial control of contracts and copying them with the relevant sections of PD08/04. A further reminder was forwarded on 12 October and this has been reinforced through the refresher Procurement and Contract training which took place in September and October 2011.

Choice of Procurement OptionsFor the Police Service any public procurement with a contract value in excess of the stipulated threshold for the Public Procurement Regulations to be applied, currently £113,037, must be undertaken within the constraints of the EU Procurement Rules following one of the prescribed procurement procedures, ie the open procedure, the restricted procedure, the negotiated procedure or the competitive dialogue (CD) procedure.

There are two basis for award either lowest cost or most economically advantageous, this takes account of whole life costs/quality/delivery/support.

Under current Consolidated EU Directive and UK Procurement Law constraints, the negotiated procedure can be discounted at this time, as guidance from OGC indicates that this procedure is not generally permissible except for hugely complex procurements where very specific circumstances apply as laid down by the regulations.

Open Procedure:Under this procedure any interested party is invited to tender and those who respond to the OJEU (Official Journal of the European Union) notice receive full contract documentation. There is no ability to shortlist candidates by undertaking a pre-qualification process and contract negotiations are not allowed. Typically the tender response time is set at 52 days and taking into account evaluation and standstill periods this can be one of the shortest procurement timelines. Overall procurements advertised under this procedure could be completed within 6 months. Under this procedure there is no restriction on the number of bidders submitting tenders and no pre-qualification of bidders; so the evaluation panel would have to evaluate every single tender received. The procedure can be effective and appropriate where there is a very simple goods or services requirement but it is not considered appropriate for procuring more complex services.

We use the open procedure quite a lot where there are a limited number of suppliers in the market and when there are no issues with the specification / terms of reference being issued to any interested party.

Restricted Procedure:Under this procedure Contracting Authorities undertake a pre-qualification process and invite only shortlisted candidates to tender. Contract negotiations are not allowed. Suppliers are allowed 37 days to respond at pre-qualification stage and a further 40 days to

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respond to the tender document. The first stage (pre-qualification) only involves an assessment of previous experience and financial standing and a shortlist is drawn up following assessment to a minimum of 5 suppliers who meet the minimum standards. The second stage is the invitation to tender where those shortlisted suppliers are issued with a terms of reference / statement of requirements and conditions of contract to enable them to submit a proposal against the particular requirement. The two stage evaluation process also increases the procurement timeline and can taken from 6 to 9 months to complete.

The restricted procedure does not permit negotiations or discussions with the bidders, although variants based on different scenarios are allowed.

Again, this procedure can be effective and appropriate where there is a straightforward goods or services requirement but it is not considered appropriate for procuring more complex services, eg major ICT Services.

Competitive Dialogue:This is a relatively new procedure introduced by the 2006 Regulations allowing Contracting Authorities to undertake a pre-qualification process and then invite shortlisted candidates to participate in a dialogue process during which any aspects of the project may be discussed and solutions developed. The Contracting Authority can continue the dialogue until it identifies one or more solutions capable of satisfying its requirements. It then closes dialogue and invites final tenders. Only limited discussion and clarification is permitted once the dialogue stage has closed although this cannot be further negotiated. Bidders are allowed a mandatory 37 days to respond at pre-qualification stage, however the dialogue, evaluation and clarification phases of this procedure can be a heavy draw on resource both for the Authority and Contractor, especially taking into account the need to meet with several service providers during the dialogue process. The full Competitive Dialogue Procedure could take up to 12 months to complete.

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The competitive dialogue procedure is available where the procurement is particularly complex. So, where the Authority is not able to prescribe in advance the requirements to enable early tendering of the technical solution best capable of meeting its needs and/or to prescribe the funding or contractual structure (such that an appropriate contract would not be able to be awarded under the Restricted Procedure), competitive dialogue would effectively be the only option. However, there have been concerns from both the public and private sectors around the potential length and cost of the procedure due to the time and resource commitment required from shortlisted suppliers and the Authority.

Negotiated Procedure:Under this procedure Contracting Authorities undertake a pre-qualification process and then issue an invitation to negotiate. There are no detailed rules as to how negotiations should take place and unlike the competitive dialogue procedure, there is no formal end to the negotiation phase before contract signature. In practice there has often been substantial negotiation following the appointment of a preferred bidder when there is no longer any competitive tension. While this procedure is not formally time bounded, the pre-qualification stage requires the pre-requisite 37 days for response and the full procedure may take up to 12 months to complete. As stated above this procedure has been effectively replaced by the competitive dialogue procedure.

Competitive Tendering and Contract ApprovalThe Police Service Department identifies their procurement requirement. They must ensure there is a Business Case or Business Justification, where appropriate. The Department also must insure that there is adequate budget available. The relevant levels of approvals under the Police Service’s financial approval levels are signed off by the Police.

Information Assurance Unit must be consulted by the Police Service Department to ensure the legislative and statutory requirements for protection of data are included in the Police Service’s Procurement Specifications.

The Police Service select an Evaluation Team of at least three Police Service members who must sign off that they have no conflict of interest. All Evaluation Team members must have attended Procurement Training.

CPD will then compile an Initiation Document setting out procurement strategy timetable and responsibilities of the Police and CPD. The initiation document will be signed off by the Police Head of Department.

CPD then prepare in consultation with the Police Service, Instructions to Tender including Terms and Conditions of Contract and Evaluation Criteria and submit to Head of Department for approval. Following approval by the Police Service, CPD issue tender documents. CPD provide advice and guidance to the Police Service of Northern Ireland Evaluation Panel throughout the evaluation process and are present at all Evaluation meetings in a non-scoring capacity.

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During the tender process all communication with potential suppliers must be directed through CPD.

When completed tenders are received on the eSourcing NI portal. CPD will forward bids to the Police Service Evaluation Team Members once they have confirmed they have no conflict of interest. Each tender is assessed individually and collectively according to the pre-determined and advertised Evaluation criteria. The Police Service Panel members assess and score with CPD’s professional guidance and support. Each scoring matrix is signed off by each member and CPD. After all tenders have been assessed the winning tenderer will be the one with the highest overall score.

CPD compile an Evaluation Report and following approval by CPD Senior Management it is agreed and signed off by all Panel members. Following approval of the Evaluation Panel, the Evaluation Report is presented to the Police Service Head of Department and Police Service Senior Management for approval in accordance with the relevant levels of financial approval.

CPD issue a Contract Award Letter to the successful supplier following a mandatory standstill period for contracts over the EU threshold. CPD will inform all other unsuccessful tenderers of the award decision.

Direct Award Contract (DAC) - Request and Approval

Only in exceptional circumstances which are substantive and defensible should DACs be considered. Possible examples:

• Technical necessity due to compatibility

• Exclusivity because of proprietary rights of supplier

• Health and Safety

• Security reasons

CPD should be involved at the beginning of the DAC consideration process. Prior approval for DAC to be recommended by Head of Branch and authorised by their Chief Officer. Clear business justification must be provided.The person preparing the business justification and all Officers who subsequently approve the DAC must declare that they have no conflict of interest with the proposed supplier. In all cases the Head of PaLS and CPD must study the merits of each application and provide professional guidance.

All DACs with a contract value greater than £30k must be authorised by the Deputy Chief Constable. All DACs greater than £100k must be authorised by the Chief Constable. Departmental Accountancy Officer approval is required for all DACs greater than £100k.

All DACs for consultancy, irrespective of value, must be authorised by the Chief Constable. The same procedures as above apply.

The Head of PaLS is responsible for maintaining a summary of all DACs. This is circulated to Senior Officers every three months.

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Procurement Contract ManagementAlthough contract management takes place following contract award, the nature of management of the contract should be considered at an early stage. Future contract monitoring and management arrangements should be included in the terms of reference in the Intention to Tender (ITT). The scale of contract management should be proportionate to the value and complexity of the contract involved. The management may involve a combination of informal and formal communication between customer and supplier.

Appropriate mechanisms must be in place to ensure that the Police Service and supplier meet their obligations under the contract and that services are performed to an acceptable standard. Guidance on Contract Management is available via the Procurement & Logistic Services page on PoliceNet and is attached under Appendix 2. This is a defined model for how we consistently manage contracts and suppliers. It sets out how to manage the performance of suppliers in terms of their and the Police Service’s contract obligations. Any issues that are proving problematic to resolve should be referred to CPD for advice and action as required.

Larger more complex contracts will require bi-annual The Police Service/CPD/Supplier performance monitoring review. The criteria for selecting contracts to be subject to formal performance monitoring meetings should be considered

at the outset of the Procurement process, arrangements recorded in the Procurement Initiation document and revisited during ongoing contract reviews and should include:

• Business Critical• Financial Value• New Suppliers• Outsourced Services

CPD must be involved in these reviews and a template to be followed during the reviews is included on PoliceNet and is attached under Appendix 2. End customers should, where practicable, be involved in the The Police Service/supplier contract monitoring process and be able to provide feedback on performance and be given the opportunity to influence future The Police Service/supplier relations.

Financial Monitoring of ContractsThere is a requirement on The Police Service to monitor and control spend against all revenue and capital contracts awarded irrespective of the size of the contract. The Police Service have determined that from 1st April 2012 contracts with a value of £30,000 or greater should normally be monitored individually utilising the formal coding structures within the General Ledger. Any Officer requiring clarification on coding structures and their use, should contact Management Accounting Branch within Finance and Support Services Department.Management of Contracts and associated spend within the Police is by Budget

20

Holders and Project Managers. They are responsible under devolved budgeting arrangements to monitor and manage spend within their areas of responsibility. Budget Holders/Project Managers are required to maintain locally, sufficient records to ensure all contract expenditure is within the contractual value on an ongoing basis. This may require records being maintained and expenditure analysed that cross one or more financial years. All accountable officers monitoring and controlling contracts should be aware that formal prior approval is required (within delegated limits), in advance of expenditure being incurred above the agreed contract value. Delegated limits are set out in PD08/04 and are included under Appendix 3.

Contract VariationsDepartments are required to maintain sufficient records to ensure all contract expenditure is within the contracted value on an on-going basis for individual contracts. Any change to the original contract will normally involve the generation of a Variation to Contract/Change Control document. Such variations should not be excessively beyond the scope and value of the original contract.

Any anticipated contract variation to contract/order value within the following bands must be advised to CPD and Head of Procurement & Logistic Services:

• £1k to £20k – variations greater than 20% of original value

• Over £20k and up to £100k – variations greater than 10% or £5k in value, whichever is greater

• Over £100k and up to £1m – variations greater than 10% or £20k in value, whichever is greater

• Above £1m – variations greater than 5% or £100k in value, whichever is greater

Consultation with the Branch will assess if the variations are of such value as to significantly alter the existing Procurement specification and contract.

Approval for these variation/change controls must be in line with any current Poilice Service contract delegation levels, listed in Appendix 3.

CPD will maintain a record of the documents and approvals on file.

21

RECORD MANAGEMENTAll relevant documentation in relation to a Procurement exercise will be held by CPD on file.

File StructureIt is important that the authorisation (sign-off) points in the Key Stages of the Procurement Process are clearly recorded and retained on file. For ease of reference, these Key Points should be ‘tabbed’ and easily located on file. A suitable index should be inserted in the file, listing the reference locations of these Key Points. CPD has implemented a Procurement E-Sourcing tool which records the key stages of the Procurement process.

Tender SubmissionsCPD will retain ‘original’ copies of all tenders/quotations received. Following Award of Contract, the winning tender will be retained with the contract file. Unsuccessful tender submissions will be stored separately. The period for retention of both successful and unsuccessful tender submissions will be in accordance with the Poilice Service Document Retention Policy. CPD will store securely all tender submissions, associated tender process documentation files and contract files to maintain confidentiality of the documentation.

File ReviewContract files will be subject to periodic review during the life cycle of procurement to ensure compliance at all stages enabling any issues identified to be addressed accordingly. The primary purpose of these reviews will be to ensure that the Key Stages of the Procurement Process have been adhered to and that the QA Process has been properly applied. The reviews will be undertaken by Buying staff from other Sections of CPD.

22

APPENDIX 1

OPERATIONAL AGREEMENT

AS AN ADDENDUM TO THE NORTHERN IRELAND OFFICESERVICE LEVEL AGREEMENT WITH DEPARTMENT OF FINANCE & PERSONNELCENTRAL PROCUREMENT DIRECTORATE

COVERING PROCUREMENT REQUIREMENTS OF THE POLICE SERVICE OF NORTHERN IRELAND

December 2011

23

This operational agreement is an addendum to the Service Level Agreement between Northern Ireland Office and Central Procurement Directorate (CPD) of Department of Finance and Personnel covers the specific procurement requirements of the Police Service of Northern Ireland.

Whereas:

CPD will provide the Police Service with procurement service for all goods and services over £10k.

1. DETAILED RESPONSIBILITY OF THE PARTIES

1.1 Responsibility of CPD

• Undertake quotation and/or tender action on all requirements at or above £10k submitted by the Police Service and agree Contract Terms and Conditions with Suppliers

• Evaluate tender submissions in conjunction with the Police Service

• Debrief tenderers following contract awards

• Compliance with CPD Procurement Procedures and ISO Quality Assurance process and the Police Service Procurement Operating Procedures, where they do not conflict

• Monitor and report supplier performance against Contract Terms and Conditions, in association with the Police Service

• Maintenance of up-to-date information on contract matrices

• Provide professional procurement advice and guidance to the Police Service on procurement issues

• Establish and maintain benchmarking of the Police Service procurement prices and costs

• Ensure that adequate staffing and procurement specialists are employed to provide the purchasing services required by the Police Service

1.2 The Police Service of Northern Ireland

• Comply with Northern Ireland Public Procurement Policies as established by CPD and approved by the Procurement Board

• Compliance with CPD Procurement Procedures and accredited ISO Quality Assurance Process

• Provide annual spending plans for all goods and services, updated quarterly

• Provide, on request, historical spend analysis of all goods, services and works to assist CPD in the development of future procurement strategies

• Identify within spending plan opportunities to integrate sustainability into the contract

• Identify and prioritise sourcing requirements for all goods, works and services, including consultancy

• Provide technical specification of requirements

24

• Advise price and cost parameters

• Advise delivery schedule requirements

• Provide quality requirements

• Advise of any special contract arrangements • Appointment of Evaluation Panel members and ensure no conflict of interest throughout process

• Agree award of contract criteria for purposes of evaluation

• Arrange for evaluation of samples and prepare reports arising

• Final agreement and ratification of Contract Terms and Conditions following each supplier selection competition

• Provide support, if required, for debriefing of unsuccessful tenders

• Provide accommodation and support services for agreed number of CPD staff who will be based within the Police Service premises

2. PROCUREMENT POLICY

2.1 Objective

• To ensure that all the Police Service procurement is carried out:

- In compliance with Public Contracts Regulations (2006).

In particular:

In compliance with Northern Ireland Central Government Public Procurement Policy.

- Open and transparency of award procedures.

- Genuine competition in the award of contracts.

- No unlawful discrimination on the ground, of nationality.

- Address sustainable procurement objectives as set out within Equality of Opportunity and Sustainable Development in Public Procurement.

- Achieve best value for money as defined within the Northern Ireland Public Procurement Policy.

25

2.2 Guiding Principles

• Transparency

• Competitive supply

• Consistency

• Effectiveness

• Efficiency

• Fair Dealing

• Integrity

• Informed decision making

• Legality

• Integration

• Responsiveness

• Accountability

2.3 Tendering Process

Up to £1,500 - for all requirements not covered through centrally negotiated contracts purchasing decisions can be made locally on a non evidence based value for money basis without obtaining quotations

£1,500k to £10k - written quotation, 3 selected tenders For all requirements greater than £10,000 the Police department must contact CPD, who will undertake all tender and quotation exercises on behalf of the Police Service

£10k to £30k - written quotation, 5 selected tenders

£30k to £113,057 - full tender action, publicly advertised

£113,057 and over - European Procurement Rules apply for all supplies and services except for Public Contracts Regulations (2006) apply works which is £4,348,350

26

2.4 CPD will endeavour to make available to the Police Service any other contracts for goods, works and services, which have been established for any other part of the Northern Ireland public sector by CPD or through collaboration with another Centre of Procurement Expertise (CoPE).

2.5 CPD will undertake all tender and quotation exercises on behalf of the Police for requirements at or above £10k.

2.6 All tenderers wishing to undertake quotations or tenders with CPD must be pre-registered on the eSourcing NI portal. It is the vendors responsibility to ensure the information held on this system is valid and up-to-date. Failure to maintain this information could result in a vendor being excluded from a competition.

2.7 Where goods and services are available on frameworks and call-off arrangements in which the Police Service have been named, then the Police Service must use these arrangements.

3. INTERFACE WITH POLICE BRANCHES

3.1 The Departments, Regions, Districts and Branches to whom the CPD will provide procurement services will include:

• Logistic Services

• Transport

• Estates

• Finance

• Human Resources

• Training & Development

• Media & PR

• ICS

• Legal Services

• Operational Support

• Criminal Justice

• Crime Operations

It is recognised that the Police Service of Northern Ireland has an in-house Estate Management Branch that acts as an informed client configuring policy, strategy and outsourcing arrangements across their specialist estate. They fulfil the Project Sponsor/Project Manager role for capital programmes. The Branch also fulfils the programme management and co-ordination roles with project management and professional services provided through outsourcing to the private sector or by engaging CPD. The present autonomy will remain for the Branch to configure policy, strategy and outsourcing arrangements which adheres to the broad policy parameters supported by Government with the arrangement of contracts/frameworks by CPD Construction and Advisory Division. The option of accessing CPD Works Procurement, as necessary and by request, will be available to the Police Service of Northern Ireland to provide Project Management and Advice.

27

4. PERFORMANCE REVIEWS

4.1 CPD will hold regular reviews with the key branches of the Police Service as in 3.1 above. The recommendation is that these should be held at least quarterly. However, it is recognised that some will not need to meet as regularly.

4.2 The review will cover performance related to this operational agreement.

• Contracts – live, subject to tender, under consideration

• Requisitions – pending, placed, on schedule, late

• Supplier evaluation and development

• Forward planning based on future requirements

Joint proforma reports covering the issues above will be prepared jointly by the Police Branch and CPD ahead of each review.

CPD will schedule, as required, meetings and record actions and progress.

4.3 The Police Branch Heads should be proactive in identifying and requesting information from CPD.

5. KEY PERFORMANCE INDICATORS (KPIs) Performance will be measured based on progress on the following KPIs.

The Police Service of Northern Ireland:

• Provision of accurate and up-to-date spending plans provide annually with quarterly updates

• Provision of historical spend analysis

CPD:

• Provision of contracts that provide best value for money

• Provision of key management information including:

- Contract awards

- Contract initiations

- Cash releasing savings

- Input resources

- Freedom of Information requests

- Complaints

28

6. COSTS OF SERVICES

6.1 The costs of services will be based on the agreed Department of Justice (DOJ) / CPD Business Development proposal to be allocated by DOJ.

7. ADMINISTRATION OF THE OPERATIONAL AGREEMENT

7.1 The Police Service of Northern Ireland and CPD will each nominate a person through whom they will conduct all communications concerning the agreement.

The Police Service nominee is Campbell Browne, Head of Procurement & Logistic Services, The Police Service of Northern Ireland

CPD nominee is Tom Gilgunn, Head of ICT & Strategic Procurement, CPD

They will be responsible for managing the operational agreement, including dealing with any complaints and feedback from the Police Service Branches and/or CPD staff.

7.2 The respective nominees will meet quarterly to review progress against the performance reviews referred to herein.

They will also consider any proposed amendments to this operational agreement which will in turn be fed into the strategic review meetings.

8. INDEPENDENT QUALITY ASSURANCE As a Centre of Procurement Expertise, CPD will be independently reviewed every three years to maintain their CoPE status. The recommendation will be reported to the Procurement Board.

29

9. STRATEGIC REVIEWS

9.1 There will be a strategic review held twice a year.

These will be chaired by Director of Finance and Support Services, The Police Service of Northern Ireland and Divisional Director, CPD.

9.2 The purpose of the review will be to:

• Discuss the service delivery in previous six (6) months

• Discuss the Police Service procurement plans

• Update on developing procurement policy within CPD

10. DURATION OF AGREEMENT In accordance with the conditions contained within DOJ / CPD SLA.

30

AMENDMENT TO OPERATIONAL AGREEMENT

This operational agreement may be amended at any time with consent of both parties.

Signed for and on behalf of Police Service of Northern Ireland.

NAME:

POSITION: HEAD OF PROCUREMENT & LOGISTIC SERVICES

DATE:

Signed for and on behalf of Department of Finance & Personnel, Central Procurement Directorate.

NAME:

POSITION: DEPUTY DIVISIONAL DIRECTOR

DATE:

31

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32

APPENDIX 2

POLICE SERVICE OF NORTHERN IRELAND

AND

CENTRAL PROCUREMENT DIRECTORATE(CPD)

CONTRACT MANAGEMENT AND MONITORING PROCEDURES

June 2011

33

CONTENTS

Section 1 - WHY ARE CONTRACT MANAGEMENT PROCEDURES NECESSARY?

Section 2 - PROCEDURES FOR MANAGING CONTRACTS & CONTRACTORS

Section 3 - OVERVIEW OF CONTRACT MANAGEMENT

APPENDICES

A1 Performance Assessment Form (CMO1) for Suppliers of Goods

A2 Performance Assessment Form (CMO1) for Contractors providing Services

A3 Flowchart for dealing with Unsatisfactory Performance (Goods or Services)

A4 Letter PR01 - Formal Written Warning of UNSATISFACTORY PERFORMANCE

A5 Letter PR02 - Contract Performance - IMPROVED PERFORMANCE

A6 Letter PR03 - Contract Performance - PARTIALLY IMPROVED or HAS AGAIN FAILED TO MEET REQUIREMENTS

A7 Letter PR04 - UNSATISFACTORY CONTRACT PERFORMANCE - AT END OF TIMESCALE GIVEN FOR IMPROVEMENT, PERFORMANCE STILL DOES NOT MEET REQUIREMENTS

A8 Central Register of Complaints Against Suppliers

34

INTRODUCTION

Contract Management is the process that enables both parties to a contract to meet their obligations in order to deliver the objectives required from the contract. It also involves building a good working relationship between customer and provider. It continues throughout the life of a contract and involves managing proactively to anticipate future needs as well as reacting to situations that arise.

1. WHY ARE CONTRACT MANAGEMENT PROCEDURES NECESSARY? Contract Management Procedures are necessary to ensure:

• that the goods or services actually provided comply fully with the customers requirements • that the roles and responsibilities of those involved at the various stages in contract development and control are clear • accountability and more effective control of budgets

2. PROCEDURES FOR MANAGING CONTRACTS & CONTRACTORS

2.1. The Aim of Contract Management

The central aim of contract management is to obtain the services as agreed in the contract and achieve value for money. This means optimising the efficiency, effectiveness and economy of the service or relationship described by the contract, balancing costs against risks and actively managing the customer-provider relationship. Contract management may also involve aiming for continuous improvement in performance over the life of the contract

2.2. The Objectives of Contract Management

The objectives of contract management are to ensure that:-

(a) the contract terms and conditions are met;

(b) the goods/services provided by the Contractor meet the customers requirements;

(c) documented evidence of good performance is available to assist in demonstrating the achievement of value for money; and

(d) documented evidence of poor/unsatisfactory performance is available:-

• to facilitate improvement and to build up a performance history; • in exceptional cases, to permit early recourse to the Department’s rights under the default provisions.

35

2.3. The Essential Aspects of Contract Management

2.3.1 The essential aspects of Contract Management are:

• Procurement – Awarding the Contract • Managing/Supervising – Monitoring the work on site through Random Spot Checks • Certification – confirming that the work has been completed to the required standards • Payment – checking invoices, times, rates, workload and paying for the work • Performance Assessment – assessing a contractors’ performance • Records – Keeping appropriate records for audit purposes

3. OVERVIEW OF CONTRACT MANAGEMENT

3.1. Day-to-Day Management/Supervision

Contract management, day-to-day management and supervision is the responsibility of the customer. Minor slips in performance, indicated by a mark of 3 or 4 on the CMO1 form (attached), can be dealt with verbally. However where performance is poor, indicated by a mark of 0, 1 or 2 on the CMO1 form, the contractor should be advised of this immediately in writing and given a specified time to remedy it.

If this is the first instance of unsatisfactory performance, then this is done using the standard letter PR01 that is issued by the customer and copied to the Contract Manager in CPD along with all related papers.

This informs the Contractor of the improvement(s) required and the timescale and indicates that failure to effect the necessary improvement(s) within the timescale may lead to termination of the contract and may affect their suitability for future work with the Department.

The procedure is detailed in a flowchart in Appendix A3.

At the end of the given time for improvement there are three possibilities:-

• Performancenowmeetsrequirementsfully Issue letter PR02 (Appendix A5) to inform the contractor that their performance has improved, but will continue to be more closely monitored. This is issued by the customer and copied to the Contract Manager in CPD for information.

• Performancehaspartiallyimproved,butnotdoesnotyetfullymeet requirements OR where this is not the first occasion of unsatisfactory performance. Issue letter PR03 (Appendix A6) to inform the Contractor that although they have taken steps to address this or previous problem(s), performance has not sufficiently improved and still* or again* does not meet the requirements. (*deleted as appropriate). A further timescale is given for effecting the necessary improvement(s). This is issued by the customer and copied to the Contract Manager in CPD for information.

36

• Performancehasnotimproved Issue letter PR04 (Appendix A7) to inform the Contractor that performance has not improved and still does not meet the requirements. This is also issued by the customer but is copied to the Contract Manager in CPD along with all related papers for follow up action by the Contract Manager. The Contract Manager will arrange a meeting with the Contractor to discuss the way forward.

All necessary documentation must be available to the Contract Manager meeting with the Contractor and should the Contract Manager subsequently need to enter into discussions with the Departmental Solicitor regarding possible termination of the contract.

The Contract Manager will keep the customer appraised of actions that may be taken.

ONLY THE CPD CONTRACT MANAGER IN DISCUSSION WITH THE CUSTOMER AND DEPARTMENTAL SOLICITOR WILL INSTIGATE ALL DISCUSSIONS ABOUT ACTUAL TERMINATION. UNDER NO CIRCUMSTANCES ARE ACTUAL TERMINATION PROCEDURES TO BE COMMENCED BY THE CUSTOMER ALONE.

3.2. Assessment of Contractor’s Performance

The assessment of each individual Contractor’s performance is necessary:-

(i) to ensure that performance at least meets the customers requirements;

(ii) to ensure that performance also meets the standards offered by the contractor in the tender submission;

(iii) to discover any poor or unsatisfactory performance at the earliest opportunity and to implement immediate corrective action; and

(iv) to provide a historical record of the contractor’s performance for future reference. This is particularly necessary where continued unsatisfactory performance could lead to termination of the contract and/or legal proceedings. In such cases documentary evidence is essential.

Completing a CMO1 form assessment.

There is a separate form for assessing the Suppliers of Goods and the Contractors of Services. Each comprises :-

Category D Availability & Delivery/Completion

Category Q Quality / Service Provided

Category F Finance & Administration Procedures

The appropriate CMO1 form can be used at any time to highlight a Contractor’s or Supplier’s POOR or UNSATISFACTORY performance.

37

Routine monitoring should occur throughout the period of each contract.

CPD will seek formal performance assessments (CMO1s) from the customer for each Contractor/Supplier on each contract as follows:-

Either form is easy to complete, using a scale of satisfaction marking (0 to 10), and can be completed by the person most closely associated with the day to day management of the contract and should only take about 10 minutes. There is space for including any appropriate comments.

All completed CMO1 forms must be returned to CPD through the appointed customer representative within 2 weeks of issue.

Any other performance issues can be brought up formally at the regular contract review meetings.

Records

Records must be kept for audit purposes and to help guard against fraud. Also, management information is essential to help ensure that work is carried out to the appropriate standards and that appropriate control checks are in place and documented to give assurances in regard to quality and cost; i.e. that details are correct in terms of volumes, times, skills, rates, any variations, overall cost, and that total expenditure is within budget. This also helps provide historical data and trend analysis for future requirements.

Less than 1 Year

1 Year

2 Years

3 Years

4 Years

5 Years

3

3

3

3

3

3

N/A

9

12

12

12

12

N/A

N/A

18

18

18

18

N/A

N/A

N/A

30

30

30

N/A

N/A

N/A

N/A

42

42

N/A

N/A

N/A

N/A

N/A

54

Length of Contract

Performance Assessment – Months After Contract Commence Date

1stAssessment

2ndAssessment

3rdAssessment

4thAssessment

5thAssessment

6thAssessment

38

3.3. IMPROVING CONTRACT DOCUMENTATION

3.3.1 When contracts are being developed initially or are to be relet, it is essential to invite constructive comments from the end users most familiar with the activity on the ground. The combination of CPD’s procurement expertise together with the Police Service of Northern Ireland’s operational and technical expertise ensures:-

• a clear, concise and unambiguous statement of need which is set out in the Police Service’s specification

• tenderers have sufficient information to enable them to competitively cost the goods/services that they will offer

• each tenderer has an equal opportunity to bid

• tender documentation complies with European legislation, particularly in relation to aggregation (grouping together similar activities)

• there is no breach of EU/UK Procurement legislation

• specifications do not restrict competition

• all standards quoted reflect appropriate British/European standards, etc.

• due account is taken of previous contract experience on this or similar contracts

• opportunity to refine workloads on the basis of historical data and informed future trends to determine the workloads throughout the contract period

• opportunity is taken to reflect improvements in quality, health and safety, environmental and personnel matters, etc.

• opportunity is also taken to introduce innovation where possible and to simplify the pricing mechanism towards a greater output driven and performance related approach.

• standardisation of documentation

• refinement of the tender evaluation criteria

• that social, environmental and skills issues if relevant to the contract have been considered.

All of this helps ensure maximum competition towards securing improved quality and value for money.

39

3.3.2. Timing

CONTRACT DOCUMENTATION IS REVISED ABOUT SIX TO NINE MONTHS PRIOR TO RE-RUNNING A TENDER COMPETITION, thus giving sufficient time to examine the scope for specifying performance improvement criteria and to collate users comments and suggestions for improvement and integrate these appropriately into the replacement tender documents.

3.3.3. Details

CPD issues tenders nearing the end of their contract period to the appropriate Contract Initiator for updating. With input from the end users (such as staff responsible for services, etc.) the contract details are examined and workload information updated for future requirements. The opportunity is also taken to revise the specification and the pricing arrangements to take account of any innovation in the quality of goods or in the way in which services are provided or the possibility of aggregating contracts, rather than having two separate contracts, thus avoiding dispute about which contractor is responsible for different areas, etc.

In line with government initiatives, opportunities are explored to develop output based pricing mechanisms and performance criteria, with the emphasis on quality of the goods or service provided. The updating of the contract documents should also explore the evaluation criteria used previously and make any necessary adjustments in light of experience gained and the market capacity and interest.

40

PERFORMANCE ASSESSMENT

During the contract, the performance of the successful tenderer will be regularly monitored and reported on.

Performance will be measured on a scale of satisfaction against 10 different categories under 3 general headings:

• Completion

• Quality

• Finance and Administration

Assessment reports will be completed by end-users directly responsible for managing the contract and most familiar with the tenderer’s performance on a day to day basis. These will be copied to the Procurement Unit.

The tenderer will be made aware of any areas of ‘poor’ or ‘unsatisfactory’ performance.

Typical proformas (CM01) are included overleaf for information.

These forms may be subject to revision by CPD.

CENTRAL REGISTER OF SUPPLIER NON-PERFORMANCEAll instances of poor performance will be brought to the attention of CPD Purchasing Manager, who will record the relevant information on a Central Register of Supplier Non-Performance (Appendix A8).

41

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D3

Com

plet

e an

d A

ccur

ate

Del

iver

ies

D4

Ease

of C

onta

ct /

Res

olut

ion

of Q

ueri

es

QU

ALI

TYQ

1 Tr

ansp

orta

tion

and

Unl

oadi

ng o

f Goo

dsQ

2 P

acki

ng/P

rote

ctio

n of

Goo

ds/a

nd E

nvir

onm

enta

l asp

ects

Q3

Qua

lity

on R

ecei

pt &

Pro

mpt

Rep

lace

men

t of D

amag

ed It

ems

Q4

Qua

lity

in S

ervi

ce /

Suita

bilit

y fo

r P

urpo

se

FIN

AN

CE

and

AD

MIN

ISTR

ATIO

NF1

A

ccur

acy

of In

voic

es /

Stan

dard

of S

uppo

rtin

g D

ocum

enta

tion

F2

Invo

ices

Sub

mitt

ed P

rom

ptly

To

tal S

core

out

of 1

00

Nam

e of

Per

son

Com

plet

ing

Ass

essm

ent

____

____

____

____

____

____

____

____

____

____

__

O

ffic

e _

____

____

____

____

____

____

__

Tele

phon

e N

o___

____

____

____

____

____

_ D

ate

____

____

___

D

ate

of p

revi

ous

poor

per

form

ance

mar

king

(if a

pplic

able

) __

____

____

___

The

repr

esen

tati

ve o

f the

cus

tom

er m

ost f

amili

ar w

ith

the

Goo

ds S

uppl

ied

shou

ld c

ompl

ete

the

Scal

e of

Sat

isfa

ctio

n m

arki

ngs.

C

MO

1 G

oods

.

42

CO

NTR

ACTO

R’S

PER

FOR

MA

NC

E A

SSES

SMEN

T

(SER

VIC

ES)

Scal

e of

Sat

isfa

ctio

n C

MO

1 G

oods

9 or

10

= ve

ry g

ood

7 or

8 =

hig

hly

satis

fact

ory

to g

ood

5 or

6 =

sat

isfa

ctor

y (s

ome

prob

lem

s m

ay n

eed

reso

lved

)3

or 4

= u

nsat

isfa

ctor

y (n

eeds

incr

ease

d m

onito

ring

) (S

uppl

ier

info

rmed

ver

bally

)0,

1 o

r 2

= p

oor

(Sup

plie

r in

form

ed in

wri

ting)

AP

PEN

DIX

A2

Con

trac

t titl

e _

____

____

____

____

____

____

____

___

C

ontr

act R

ef _

____

____

____

____

____

____

Mon

itori

ng P

erio

d (3

/9/1

2/18

/24/

30 m

onth

s) _

____

__

Con

trac

tor

____

____

____

____

____

____

___

Wei

ghtin

gSc

ale

of

Satis

fact

ion

Wei

ghte

d Sc

ore

Ref

. C

ATEG

OR

YC

OM

MEN

TS a

s ap

prop

riat

e (u

se b

ack

of s

heet

if n

eces

sary

)

10 10 10 10 10 10 10 10 10 10

C

OM

PLE

TIO

ND

1 A

dher

ence

to R

espo

nse

Tim

esD

2 W

ork

Com

plet

ed e

xped

itiou

sly

D3

Ease

of C

onta

ct /

Res

olut

ion

of Q

ueri

es

SER

VIC

E P

RO

VID

EDQ

1 Q

ualit

y on

Initi

al C

ompl

etio

nQ

2 Q

ualit

y of

wor

k or

ser

vice

on

Fina

l Com

plet

ion

Q3

Com

pete

ncy/

Skill

s of

Wor

kfor

ce &

sui

tabi

lity

of P

lant

Q4

Hea

lth

& S

afet

y -

Equi

pmen

t/P

roce

dure

s/W

orki

ng M

etho

d

FIN

AN

CE

and

AD

MIN

ISTR

ATIO

NF1

A

ccur

acy

of In

voic

es /

Stan

dard

of D

ocum

enta

tion

F2

Invo

ices

/ C

ontr

act D

ata

Ret

urne

d Fu

lly &

Pro

mpt

lyF3

C

osts

in li

ne w

ith te

nder

ed r

ates

To

tal S

core

out

of 1

00

Nam

e of

Per

son

Com

plet

ing

Ass

essm

ent

____

____

____

____

____

____

____

____

____

____

__

O

ffic

e _

____

____

____

____

____

____

__

Tele

phon

e N

o___

____

____

____

____

____

_ D

ate

____

____

___

D

ate

of p

revi

ous

poor

per

form

ance

mar

king

(if a

pplic

able

) __

____

____

___

The

repr

esen

tati

ve o

f the

cus

tom

er m

ost f

amili

ar w

ith

the

Goo

ds S

uppl

ied

shou

ld c

ompl

ete

the

Scal

e of

Sat

isfa

ctio

n m

arki

ngs.

C

MO

1 G

oods

.

43

PROCEDURE FOR DEALING WITH UNSATISFACTORY PERFORMANCE

Routine (informal)Monitoring

Is performanceSatisfactory?

Is this the first unsatisfactory performance by this contractor

on this contract?

Day to day CLM completes Form CM01Issue PR01 letter from Customer to Contractor advising what

needs improved and timescale for improvement.Copy these to CM for information. Continue to monitor Contractor’s

performance throughout the specified timescale for improvement

At end of the time specified does performance

meet requirements?

Issue PR03 letter from Customer to Contractor tailored to refer to past performance and present area of concern OR performance only partially improved, with further timescale for improvement

& copied to CM for information.Continue to monitor Contractor’s performance throughout

the specified timescale for improvement.

At end of time specified does performance meet requirements?

Issue PR04 letter from CLM to Contractor & copy to CM (for action).CM will liaise with Dept. Solicitor regarding Termination of Contract.

CM will apprise CLM of actions that may be taken

Issue PR02 letter from Customer to Contractor

advising performance improved and need

to maintain standard.Copy these to

CM for information.

(A minor lapse in performance can be dealt with by a telephone call by the Customer to the Contractor /Supplier, giving a timescale for remedying the poor performance.A record of the call should be kept)

YES

YES

NO

YES

NO

NO IMPROVEMENT

NOT FULLYIMPROVED

YES TOTALLY

C = CustomerCLM = Customer Line ManagerCM = Contract Manager (CPD)Contractor = Contractor for Services or Supplier of Goods

APPENDIX A3

44

APPENDIX A4Letter Ref: PR01

To (Supplier’s / Contractor’s Name & Address)

Date...../...../200...

Dear Sir/Madam

FORMAL WRITTEN WARNING UNSATISFACTORY CONTRACT PERFORMANCE

CONTRACT TITLE........................................

As part of its contract monitoring procedures, the (customer) routinely assesses performance on all contracts.

It has come to our attention that your performance on the above contract is NOT satisfactory in the following area(s) :-

[Specify performance deficiencies.]

You will be given [specify timescale for improvement]

to improve your performance in this/these area(s).

You should note that failure to meet the necessary requirements may result in termination of the contract.

Yours faithfully

Joe Bloggs

Note. Copies of this letter are being sent to the CPD Contract Manager.

45

APPENDIX A5Letter Ref: PR02

To (Supplier’s / Contractor’s Name & Address)

Date...../...../200...

Dear Sir/Madam

CONTRACT PERFORMANCE - IMPROVED PERFORMANCE

CONTRACT TITLE........................................

I refer to my letter of [Date].............. which advised of unsatisfactory performanceon the above contract in relation to [specify previous deficiencies].............

[Then summarise current performance] ...................................................... Your performance has since IMPROVED and meets requirements. It is however necessary that this level of performance be maintained and to ensure this, the Department will continue to monitor your performance closely until such time as the Department considers that it can return to routine monitoring. If however, performance deteriorates, consideration may be given to terminating the contract.

Yours faithfully

Joe Bloggs

Note. Copies of this letter are being sent to the CPD Contract Manager.

46

APPENDIX A6Letter Ref: PR03

To (Supplier’s / Contractor’s Name & Address)

Date...../...../200...

Dear Sir/Madam CONTRACT PERFORMANCE - PARTIALLY IMPROVED* * delete as appropriateOr PERFORMANCE IS AGAIN UNSATISFACTORY*

CONTRACT TITLE........................................

I refer to my letter of [Date].............. which advised of unsatisfactory performanceon the above contract in relation to …[specify previous deficiencies and the timescale given for addressing them]............. Although you have taken steps to address the problems set out above your performance has not sufficiently improved and STILL DOES NOT MEET THE REQUIREMENTS*Or although your performance improved following notification of previous unsatisfactory performance, YOUR PERFORMANCE IS AGAIN UNSATISFACTORY*

[Then summarise current performance] ......................................................

Unless you effect the required improvements within, [specify further short timescale for improvement] (customer) may terminate the contract.

Yours faithfully

Joe Bloggs

Note. Copies of this letter are being sent to the CPD Contract Manager.

47

APPENDIX A7Letter Ref: PR04

To (Supplier’s / Contractor’s Name & Address)

Date...../...../200...

Dear Sir/Madam

UNSATISFACTORY CONTRACT PERFORMANCE -AT THE END OF THE TIMESCALE GIVEN FOR IMPROVEMENT, PERFORMANCE DOES NOT MEET THE REQUIREMENTS.

CONTRACT TITLE........................................

I refer to [Joe Bloggs letter of [Date].............. which advised of unsatisfactory performance on the above contract in relation to …

[specify previous deficiencies and the timescale given for addressing them].............

AT THE END OF THE TIMESCALE GIVEN FOR IMPROVEMENT, YOUR PERFORMANCE DOES NOT MEET THE REQUIREMENTS.

A copy of this letter is being sent to CPD’s Contract Manager. He will contact you to arrange an urgent meeting to discuss the possible termination of the contract and resulting implications.

Yours faithfully

Joe Bloggs

Note. Copies of this letter are being sent to the CPD Contract Manager.

48

Con

trac

t Det

ails

Supp

lier

Dat

e C

ompl

aint

Rai

sed

Per

form

ance

Issu

eA

ctio

n Ta

ken

CEN

TRAL

REG

ISTE

R O

F C

OM

PLA

INTS

AG

AIN

ST S

UP

PLI

ERS

AP

PEN

DIX

A8

49

POLICE SERVICE OF NORTHERN IRELAND / SUPPLIER PERFORMANCE MONITORING MEETING

1. Contract Performance

1.1 Delivery Schedule Performance

1.2 Quality of Goods/Services Replacement Policy

1.3 Invoicing/Payment

1.4 Contract Amendments

2. Relationship Assessment

2.1 Communication, Aligning Personnel and Agendas

2.2 Identify Risks and Opportunities

2.3 Clarity of Objectives

3. Efficiencies, Continuous Improvement

3.1 Identify Efficiencies, Cost Savings

3.2 Benchmarking

4. E-Procurement

50

SUPPLIER RELATIONSHIP MANAGEMENT

• Pre-Contract tends to be formal, even adversarial

• Important to have good contract with clear responsibilities – but with flexibility and encouragement to share ideas between the Police and Supplier

• Relationship management is key to success, but suppliers do need to be actively managed

• Once contract is in place concentration should be on:

• Delivery • Project Management • Partnership • Building Relationships

• What are both “sides” hoping to achieve?

• Share medium / long term needs / requirements

• Manage strategically but make sure short term requirements are met

• Clarify objectives and measure outcomes

• Specific and measurable improvement plans with suppliers

• Good communications is key to managing expectations

• Helps create certainties • Minimises surprises

• Communicate bad as well as good news

• ‘Don’t be constrained by the limits of our own knowledge’

51

Supplies Service and Maintenance for:

All goods, works, servicesand equipment, includingContract Variations and Extensions

Non ITD/Chief Constable: above £3 millionChief Officer/Head of Department: above £1 million and up to £3 millionC/Superintendent/Senior Civilians (G7 and above): £1 millionSuperintendent/DP: £100,000C/Inspector/SO: £75,000Inspector/EOI: £50,000Sergeant/EOII: £25,000

IT New ServicesD/Chief Constable: above £500kChief Officer/Head of Department: £300k - £499kGrade 5/Grade 6/Chief Superintendent/Superintendent: £200k-£299kICT Level 7 / Chief Inspector: £100k - £199kICT Level 6 / Inspector: up to £99k

Direct Award Contract (DACs)

Service Level AgreementThose between Public Service bodies

Employment of Consultants *

Capital Expenditure

Compensation Payments

Legal Fees for Initiation of Legal Proceedings and Defence of Criminal Proceedings

Chief Constable: All DACs for ConsultancyD/Chief Constable: Above £30kChief Officer: £30k

Chief Officer/Head of Department: £3 millionC/Superintendent/Senior Civilians (G7 and above): £2 million

Chief Officer/Head of Department/Senior Civilians (G7 and above): £50,000

Non IT Capital ExpenditureD/Chief Constable: £3 millionChief Officer/Head of Department: £1 millionC/Superintendent/Senior Civilians (G7 and above): £750,000Superintendent/DP: £200,000C/Inspector/SO: £100,000

IT Capital ExpenditureD/Chief Constable: above £500kChief Officer/Head of Department: £300k - £499kGrade 5/Grade 6/Chief Superintendent/Superintendent: £200k-£299kICT Level 7 / Chief Inspector: £100k - £199kICT Level 6 / Inspector: up to £99k

May settle up to amounts stated provided DOJ approval is obtained for settlement over the delegated limits.C/Superintendent/Senior Civilians (G7 and above): £100,000Supt/DP: £75,000C/Insp/SO: £50,000Insp/EOI: £25,000Sgt/EOII: £5,000

Chief Officer/Head of Department: No financial limits, subject to NIPB approvalC/Superintendent/Head of Group/Senior Civilians (G7 and above) : £10,000

Spend Category Sub Delegation by Chief Constable

* Further guidance on the use of Consultants can be found on PoliceNet – Policy on the Use of External Consultants – and should be viewed before any appointment process is considered

PROCUREMENT CONTRACT APPROVAL LEVELS

APPENDIX 3

December 201152