Negotiating contracts and managing supplier relationships can be a daunting prospect, particularly for school business management professionals facing considerable pressure to secure the most cost effective deal whilst ensuring excellent service delivery. They are responsible for the full process of purchasing pretty much everything for their school and must consider numerous factors, not only in relation to price, delivery and quality, but also to ensure that these services are fully compliant with procurement rules and regulations.
Collectively, schools spend approximately £9.2 billion in areas other than teaching staff. With many schools feeling the squeeze, the pressure is on school business management professionals to find ways to maximise their school or academy’s finances and deliver cost savings. However, with the freedom to choose how they spend, and with countless choices on offer, how can SBM professionals get the best out of their budget?
Guidelines
There are some basic budget management rules to follow when purchasing goods, works or services. Set out by the EU Procurement Directives, they are designed to ensure that spending choices and decisions are both transparent and defensible should they be scrutinised. The rules set out formal procedures about how a public organisation should buy when they are spending over a certain amount of money. The threshold is currently set at £173,394. For amounts exceeding this, organisations must follow the formal procedures set out by the EU Procurement Directives. For amounts under the threshold, it is not compulsory but is still best practice.
If not followed, however, there could be an impact on a school or academy’s ability to operate effectively. Bad decisions result in budgets not stretching as far as they could and potentially lead to legal challenges, cancellation of contracts, financial penalties and damage the school’s reputation.
The good news is that schools and academies could potentially make 11 per cent savings simply via smarter purchasing, and they don’t have to do it alone. A number of organisations exist to help guide SBM professionals through the often perplexing procurement process.
Organisations
Not-for-profit organisations, such as YPO, provide goods and services to schools and other public authorities. Deals are negotiated both nationally and more locally as appropriate with suppliers, ensuring quality, efficiency and compliance with procurement legislation, saving both time and money. Some are also publicly owned, meaning their profits are directly reinvested back into public services and not pocketed elsewhere.
Privately-owned buying trusts negotiate deals on schools’ behalf and achieve cost savings by combining their spend with that of other schools. In this way, they achieve economies of scale. They’re set up on the basis that they take a percentage of the money saved or, alternatively, they take a commission from the supplier you choose.
A consortium is an association of organisations which work together or pool their resources in order to achieve cost savings. Some of these are publicly owned, meaning their profits are directly returned to the public sector. Others are private, and may take a percentage of the money saved as profit from you and/or the suppliers they deal with. YPO, which is owned by local authorities, is also a founding member organisation of Pro5, a consortium of the public sector buying groups in the country. This consortium aims to achieve better value for money through combined buying power for commonly bought goods and services.
Regardless of which type of organisation you choose, typically they will operate in both goods and services that may be available directly or via a framework arrangement containing approved suppliers. They provide cost savings by combining their customer’s spend to bulk buy, which achieves better prices.
Working with a procurement organisation or consortium can provide additional support, giving school business management professionals the help and guidance they need to make the right decisions for their school or academy’s future.
When it comes to selecting a procurement organisation, there are a number of important considerations to bear in mind, such as preparing clear specification briefs and practising good contract management. This will ensure that efficiencies and cost savings are achieved after the contract is awarded, and that the goods or services remain fit for purpose in the future.
The benefit of working with a procurement organisation is that they can manage the process from start to finish and provide as little or as much support as you need. For example, YPO offers varying levels of support through its procurement service, from basic level, which provides school business management professionals with a direct line to skilled procurement advisors and access to 150 EU compliant arrangements, right through to full project delivery, which is a bespoke service that offers full contract management and specification development.
Writing a brief
The specification brief is a key part of the procurement process, as it is contains a clear statement of your needs. Its main purpose is to provide suppliers wishing to tender for your requirements with a straightforward and accurate description of the supplies, services or works that the school requires, meaning they can offer you the right solution.
Before writing the brief, make sure that you have a clear understanding of what is needed. If you are writing a specification for someone else, identify, agree and ensure you fully understand the user’s requirements. For works, evaluate any existing provision to determine the impact of new proposals and the relationship of new to existing arrangements. Research the market by talking to suppliers, other purchasers, industry associations, etc. to identify possible solutions, costs and delivery timescales. Identify any potential risks associated with the procurement process, so that ways of controlling these can be built into the specification, and plan the scope of the contract and the range of goods and services which the supplier will be asked to deliver. Finally, identify the evaluation criteria so that the specification will reflect their importance and determine how you will monitor performance of the contract.
Structuring the specification
Specifications will vary in length and complexity depending on the type of product or service required. However, the three most important areas within any specification will include the scope, which is your opportunity to be clear on the exact requirements. You should consider what you’re asking – how many, whether you want it supply only, supply and install, provide training and support documentation, post supply support and management etc. Where appropriate, it should identify what is not to be included.
Also consider the background – you will need to provide more information (reasoning, expectations, and any implications) on what goods and services you require in order that suppliers can respond in the best way on product, service and price. Finally, there is the statement of requirements, which should describe what you expect from the performance of the goods and services, including how you will monitor and assess them throughout the contract.
The evaluation criteria you use to assess the tenders must be developed at the same time as the specification. It must reflect the key needs of users and should be included in the specification so tenderers can construct their bids properly. Only evaluation criteria which were included in the tender should be used when bids are assessed, so it is important to identify all the relevant criteria early. If the contract is subject to the EU procurement rules, then the evaluation criteria must be selected from the criteria allowed under the EU rules and must be weighted.
Further information
www.nasbm.co.uk
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