Engage with your procurement team

Here are some best practices for a local authority energy officer when engaging with their procurement team.

Early involvement

Engage with the procurement team as early as possible in the project planning phase. This allows you to influence the procurement strategy and ensure that energy efficiency requirements are considered from the outset.

Education and awareness

Ensure that the procurement team is well informed about the organisation’s sustainability and energy goals. Provide them with relevant information and training on energy-efficient technologies and practices to help them understand the importance of energy considerations in the procurement process.

Clear objectives and requirements

Clearly define the energy-related objectives and requirements for the project. This could include energy performance targets, renewable energy utilisation, energy-efficient equipment, and other relevant criteria. Specific and measurable requirements will help the procurement team in their decision-making process.

How can you work effectively with your procurement team?

Understand your organisation’s procurement strategy

The procurement team has a set of processes and approaches that will be derived from your organisation’s procurement strategy. Make sure you are up to speed on this strategy as anything you need to procure should align.

Develop a clear procurement plan

The procurement process continues through the lifecycle of the project, from engaging the procurement team to contract management. Procurement needs to be considered from an early stage in a project as it has a fundamental impact on how a project is organised.

The procurement plan influences:

• how the project/programme is structured and how it manages risk
• who is contractually responsible for project risks
• who is responsible for the design and when specialists become involved in the design work
• how and when the design team is employed
• how the construction/installation teams are appointed and when their involvement can start
• how the operational phase will be managed
• how the project/programme is evaluated.

Engage early

Consider inviting procurement teams into projects at the earliest possible stage to deliver maximum impact.

• Influencing procurement strategy: By getting involved at the planning phase, the energy officer can provide valuable insights into energy-related opportunities and challenges. This ensures that energy considerations become an integral part of the overall project strategy and align with the organisation’s sustainability goals.
• Avoiding costly changes later: Waiting until later stages to address energy or carbon-related issues can lead to costly changes or missed opportunities. Early involvement allows the procurement team to consider low-carbon solutions from the beginning, avoiding the need for major modifications to the procurement plan later on.
• Risk mitigation: Identifying requirements early on helps in risk assessment and mitigation. For instance, considering energy-efficient equipment may reduce the project’s exposure to future energy price fluctuations, enhancing long-term financial stability.

Build education and awareness

Building awareness and knowledge within the procurement team about energy efficiency is vital for effective decision-making:

• Importance of energy efficiency: The energy officer should emphasise the significance of energy efficiency, not only in terms of cost savings but also in reducing the organisation’s environmental footprint and contributing to broader sustainability objectives.
• Low-carbon technologies and practices: Providing training and resources on various low-carbon technologies, building design considerations, and best practices equips the procurement team to evaluate and select appropriate options.
• Regulatory and policy landscape: Keeping the procurement team updated on relevant energy-related regulations, incentives, and policies helps them make decisions that comply with local, regional, or national energy requirements.

Define clear objectives and requirements

Defining specific energy and carbon-related objectives and requirements ensures a focused procurement process:

• Measurable goals: Objectives should be measurable and aligned with the organisation’s broader energy and sustainability targets. For instance, reducing energy consumption by a certain percentage, increasing the use of renewable energy sources, or obtaining specific energy certifications.
• Energy performance standards: Establishing minimum energy performance standards for products and services ensures that purchased items meet certain efficiency criteria. This can be achieved through benchmarking against industry standards or using energy labels.
• Sustainable procurement policy: The energy officer and procurement team should collaborate to integrate energy considerations into the organisation’s overall sustainable procurement policy. This policy can guide decision-making and set a clear direction for future projects.

Other considerations for good team relationships

Use good project management

• Treat procurement as a project or a work package within your project. Focus on results. Adopt a lean, structured approach for all medium- and high-risk projects. Involve procurement and other professional advisers from an early stage.
• Ensure coordination between teams.

Create clear understandable documentation

• Where a design uses technology or an approach new to the procurement team, make sure it is simply described along with any supporting information such as risks, lessons learned, and case studies to enable the procurement team to understand what you are trying to achieve and how.
• Ensure a comprehensive set of information for each stage and tendering.
• Lock down key aspects of the design or approach critical to the quality of the outcome before tendering at the right time with detailed information.

Define clear governance, organisation, and assurance

• Be clear about roles and responsibilities including councillors, senior managers, and the project team. The project needs to be owned at senior level. There must be a dedicated project manager.
• Carry out an independent review of major procurement projects at key points in the cycle.

Use robust risk management

• Be clear and robust about the process of identifying, analysing, and controlling risks throughout the project. The procurement team needs to have a clear view of the potential risks of working with a technology, contractual arrangement, project timeline, and partners.

Understand the procurement cycle from the procurement team’s point of view and where your work needs to fit in

• More than tendering, procurement is a cycle beginning with the identification of needs and a business case, through market engagement and contract management.

Understand the basics of contract management

• Foundations are laid during the procurement process, including the specification and setting of service level agreements and KPIs. Determine approach, roles, and responsibilities and involve the contract manager at an early stage. Focus on delivery of benefits.

Work with the procurement team to understand strategic supplier relationships

• Focus on relationships with strategic suppliers (value and risk / dependency) as well as controlling the contract.

Consider procurement by outcomes

• Procuring by outcomes rather than services or products allows bidders to present their best solution rather than being constrained by previous assumptions.

Market Assessment

There are several activities that can be carried out to assess the market.

Some examples are:

1. engaging with potential suppliers of the service or technology provided
2. participating in conferences
3. issuing market surveys
4. collecting case studies
5. desktop research.

Additionally, it is advised to engage with other local authorities that have tried to reach or are trying to reach a similar outcome.

You should be asking the following questions:

1. When do your contracts end and can you extend them?
2. What are the strengths and weaknesses of the current service?
3. What are your key drivers? What are your objectives?
4. Do you have a procurement strategy in place? How does it fit with your other strategies?
5. How long should the contract be?
6. What type of contract should you have?
7. What is the scope of work?
8. Have you got the internal resources to deliver this?
9. What timetable are you working to? What are your key milestones?

This will allow a local authority to further shape your specification, gather ideas on new innovative products, and understand if there are any changes within the market that may influence your requirements.

Early market engagement provides the foundation for a successful procurement by helping buyers make fully informed decisions.

What is “early market engagement” (EME)?

Early market engagement (EME), also known as soft market testing, is the process of engaging with potential suppliers before you begin buying goods or services for your organisation. It gives suppliers the opportunity to both inform the specification and get ready to meet the demand.

Taking the time to carry out EME and gather market intelligence is regarded as ‘best practice’ and recommended as part of the preparation process for any future contract, especially where procurements are complex or of significant value.

Why should you talk to suppliers before you buy?

EME enables you to ask suppliers questions on important issues or decisions that will help you to refine your requirement. It can help you gain a better understanding from the market about what is possible, for example what resources (such as staff, products, or equipment) would be needed to fulfil a contract. 

Imagine procuring a very specialised asset or building, say a community swimming pool – EME could help you to understand the technical requirements of the project, as well as supplier interest and capacity. Suppliers should be able to give you a few best practice examples to help you when designing your facility. For example, they may be able to advise you on which pool tiles to choose to maximise safety and thermal performance. They may also help you to identify suitable pool types and discuss any technical design issues you have ahead of putting your project out to tender.

EME also increases awareness and interest in your potential procurement and encourages competition, meaning that you will have more suppliers, products, and services to choose from when you’re ready to tender.

EME can help you to:

• openly and transparently discuss ‘the problem’ and possible solutions
• write clearer requirements to include in your specification and business case
• encourage competition and ensure a good number of applications
• gain a better understanding at an early stage of how much a contract could cost and how long it could take
• explore any opportunities for delivering aspects such as innovation, social value, or carbon Net Zero.

How and when to talk to suppliers

It’s a myth that it’s unethical to talk directly with suppliers about your requirements before launching a formal procurement process. 

Preliminary market engagement under the Procurement Act 2023 (Act) takes place before the publication of a tender or transparency notice and helps contracting authorities and the market prepare for the procurement. This engagement is of particular importance under the Act, where contracting authorities have significant flexibility to design and tailor their competitive procurement procedures. However, this engagement must be conducted in a way that does not give a supplier an unfair advantage or distort competition.

In practice, this means that you must ensure you don’t give any supplier a competitive advantage and that you must:

• be open and transparent
• maintain commercial confidentiality (such as respecting Intellectual Property Rights)
• keep a record of discussions
• ensure a process that is fair to ALL suppliers throughout the process
• make suppliers aware that any resulting procurement will be conducted competitively.

To be most effective, EME activities should begin at the concept stage.

How to identify suppliers to engage with​​

There is no ‘right’ number of suppliers to speak to, and more isn’t necessarily better. As a rule you should aim to speak to a wide range and mix of suppliers to represent a reasonable sample of the sector. 

If you have chosen to purchase through a framework, it is usually possible to carry out EME with the approved suppliers listed, if this has been specified as allowable by the Public Buying Organisation (PBO) responsible for the framework. 

For lower value or one-off purchases, for example if you are a school purchasing sports equipment, some simple internet research should be sufficient to identify potential suppliers. 

Remember that EME costs suppliers time, effort, and money; they need to feel that this investment could be worthwhile, so try to keep the process proportionate to the scale and value of the project.

How to carry out early market engagement

It’s your responsibility as a buyer to decide how you’re going to run the EME process. For particularly sensitive or complex projects, you should seek commercial or legal advice before you start.

The more detail you can give to suppliers about your requirements the easier it will be for them to provide a thorough response. As a minimum, they would expect to know:

• the background to your organisation and project
• what you want to achieve from the contract
• the location of the contract and an indication of timescales/duration
• the dates for the conclusion of the EME process and for the submission of any information by suppliers.

Obtaining information from suppliers

Processes that can be used to engage with the market vary from the transactional, such as emailed questionnaires, surveys or 1-2-1 meetings, through to more complex and collaborative supplier webinars, conferences or workshops.

The procurement process following EME

Once you’ve completed the EME process it’s essential that any information obtained does not unduly influence the procurement process that follows, for example that it:

• is not used to discriminate for / or against any suppliers such as small and medium-sized enterprises (SMEs), for example by writing your requirements in a way that unfairly excludes a particular supplier or favours one specific supplier
• has not been acquired under “false pretences”, e.g. you shared information about your requirements with one supplier that you didn’t share with another supplier
• could breach supplier commercial confidentiality

Finally, following the market engagement process it’s important to let potential suppliers know that you’ve heard and responded to feedback. Not only will this improve the market interest in the procurement process for the specific project, it will also encourage higher levels of engagement in future market engagement processes.

Assess internal capabilities

Experience required to manage and run a procurement in most cases will be provided by your organisation’s procurement team. However, there are likely to be a number of activities you will need to support the procurement team with. This includes writing a tender specification and evaluating the tenders. Both of these activities are likely to need technical expertise on decarbonisation technologies and solutions so your team can ensure that what potential installers are proposing are sound and deliverable options and the benefits being set out are credible.

The following are areas you will also need to ensure are adequately supported by your team:

• Identifying what resources are needed to support the procurement
• Developing the procurement strategy
• Writing a high-quality tender and the evaluation of bids
• The ongoing activities of contract/supplier management
• Implementation and monitoring of the project as it is delivered
• Compliance and benefits tracking after project completion.

These skills could come from your strategy team, or teams who are already involved in delivering construction or maintenance projects across your estate. You will also want to consider the other stakeholders that will be involved directly or indirectly in procurement activities, for example the legal team and the governance structures that will ultimately sign off the spend.

Useful skills in this area are likely to include the following and may be found within your strategy team:

• Identifying stakeholder expectations and working out how to meet them
• Gaining their buy-in throughout all stages of the process
• Ensuring that they support the contract after it has been implemented.

You may also wish to consider if it is worth upskilling your procurement team, governance structures, and legal team on the basics of decarbonisation to make them feel more comfortable with the material they are dealing with on your project.

Pre-procurement activities

There are a number of activities to support this.

Check your organisation’s procurement strategy

If your organisation doesn’t have one, then you should support your strategy team in developing one that includes the types of project and outcome that you are looking for.

Create a procurement plan for your project

By this point you should be clear about what your procurement is trying to achieve, and the potential risks, responsibilities, benefits, and outcomes of the project. You can capture your current understanding in a procurement plan. This can be part of the business case – commercial dimension, or as a separate annex or document. Talk to your procurement team to understand how they want you to engage.

The procurement plan / business case – commercial dimension contains:

• how the project/programme is structured and how it manages risk
• who is contractually responsible for project risks
• who is responsible for the design and when specialists become involved in the design and delivery work
• how and when the design team is employed
• how the construction/installation teams are appointed and when their involvement can start
• how the operational phase will be managed
• how the project/programme is evaluated.

Check your internal procurement policy

• By now, you should have engaged with your procurement team to be clear on the processes and requirements.
• Every local authority should have an internal procurement policy. Being tailored to the specific needs of the local authority, these policies have higher priority than central government’s procurement guidelines. Thus, it is always advised to consult the internal procurement policy at the very beginning of the pre-procurement activities.
• It is worth mentioning that internal procurement policies may imply a variation of the steps presented in this page.
• Refer to your procurement team or legal department.

Your internal policies will help you cover:

• institutional due diligence (to assess the capacity of the authority to handle the project and how the deficiencies can be met)
• defining the whole procurement process, including identification of the stages at which governance approval is required (if not already defined)
• project development and due diligence (feasibility study, business case analysis, structure of a bankable project deal, basic terms of contract, etc.)
• evaluation criteria and committees
• a contract negotiation team (needed at a later stage).

Procurement Options Appraisal

Procurement options appraisal: Define procurement approach

• Review the different procurement procedures.
• Take into account that some grants or public funding will require specific procurement procedures. Check with your procurement team or legal department.

Assess the possibility of using commercial purchasing tools (frameworks and dynamic markets)

You may decide that a framework or dynamic purchasing system (DPS) is the right approach for your project. You should understand what these are, the limitations, and how to identify and triage the available frameworks.

Framework agreements and dynamic purchasing systems (also now dynamic markets) are the preferred commercial purchasing tools for local authorities procuring products, works, and services. Utilisation of existing frameworks and DPSs that meet project requirements can help speed up the procurement process, which is often one of the major bottlenecks of local energy projects.

Review your business case

A well-prepared project business case performs a number of functions. It enables the organisation and its key stakeholders to understand, influence, and shape the project’s scope and direction early on in the planning process. It assists decision-makers to understand the key issues and the available evidence base, and to avoid committing resources to schemes that should not proceed. It demonstrates to senior management, stakeholders, customers, and decision-makers the continuing viability of the project, and provides the basis for management, monitoring, and evaluation during and after implementation.

• Review best practices for developing a business case.
• Take into account potential changes that may have occurred while gathering information or engaging with stakeholders.

Gain internal sign-off

Getting the buy-in of senior managers and other key stakeholders is vital for a successful project. Without firm support, you will never get the project off the ground.

Prepare tender documents

A tender document is the basis of a tendering process which helps a buyer select qualified and interested suppliers based on certain contract criteria.

The following is a list of documents that should be included in a tender pack.

Instructions to Tenderers (ITT)

An ITT are a set of instructions to be followed during the tender process, for example:

• When the closing date is
• How to submit the tender
• Tender timetable
• Evaluation criteria, etc.
• Lotting Strategy*

* Tenderers may be split into multiple Lots, this may be by geographical location or by a certain group of goods etc. Tenderers must ensure that they have the capacity to deliver all the Lots bid for. Wording will be included in the tender documentation if the Council is limiting the number of Lots that may be awarded to one supplier.

Specification

This is the description of the goods, services or works required and background information about the contract:

• Details of what we want to buy and consequently what the successful supplier is required to supply
• Outline the relationship between the Council and the supplier and who is responsible for what
• Requirements in relation to staff training, recruitment, etc.
• Policies and procedures to be considered such as complaints, health and safety, data processing or confidentiality.
• Contract monitoring, management, KPIs and quality control.
• Issues relating to sustainability e.g. disposal requirements, use of recycled materials etc
• Any other details that are relevant to the contract e.g. timescales, meetings, progress reports and delivery schedules.

Evaluation criteria

Sometimes referred to as ‘award criteria’. This outlines the price/cost and quality criteria and the weightings for each. Any sub-criteria will be clearly outlined along with their weightings.

Terms and conditions of the contract

The general terms and conditions set out the basis of the relationship with between the local authority and the successful supplier, to which the successful supplier and the Council must adhere to throughout the duration of the awarded contract.

Typical terms and conditions will include:

• Obligations of both parties
• Timescales/meeting milestones
• Performance measures/KPIs
• Payment terms/invoicing
• Provision for termination
• Resolution of disputes

Policies

These are our specific policies relevant to the contract in question, and the tenderer is expected to comply with the policy listed in the tender. For example:

• Safeguarding
• Equality and diversity
• Whistleblowing
• Health and safety
• Disclosure and barring service
• Alcohol and substance misuse
• Smoke free

You must make sure you understand all the requirements for each policy before submitting your tender.

Form of Tender

This forms the basis of the offer to the local authority should it be accepted i.e. that the company is committed to providing the service as stated within the tender submission. This also asks tenderers to confirm no canvassing or collusion has taken place in preparing their response.

The Form of Tender must be signed by the appropriate level of decision maker. See your internal policies for details.

It is essential that the Form of tender is completed and signed and returned with the rest of the documents. Failure to comply with this requirement may result in the Tender being rejected.

Pricing/costing schedule

This is a list of all items that must be individually priced or costed for. For construction based contracts, these will be priced bills of quantities or schedule of rates.

When completing the schedule of prices it is important to refer to the specification and include all items specified.

 Confidentiality document

Under the Freedom of Information Act 2000 (“the Act”) and The Environmental Information Regulations 2004 (“EIR”) there may be requirements to disclose information concerning the procurement process or the contract to a person who makes a request.

In this confidentiality document tenderers may include details of information provided in their tender they consider should be withheld from disclosure, for example, because it would be likely to prejudice their commercial interest if disclosed to a third party including valid reasons for the exemption.

The tender document must be treated as private and confidential. Tenderers should not disclose the fact that they have been invited to tender or release details of the tender document other than on an “in confidence” basis to these who have legitimate need to know or whom they need to consult for the purpose of preparing the tender.

Community benefits

Suppliers may be required to deliver wider benefits as part of the awarded contract and in some tenders this will form part of the scored quality questions. We are committed to pursuing community benefits in our procurement activity to contribute to the social, economic and environmental well-being of the wider community.

Where this is required, you must answer the community benefits question as part of you tender.

 Equality and diversity

Local authorities are fully committed to treating residents and communities fairly and as a public body, have a statutory duty under the Equalities Act 2010, the Public Sector Equality Duty and the Specific Duties for Wales. Your Strategic Equalities Plan sets out the principles of commitment to equality and diversity and outlines how you intend to fulfil our provider and as a community leader.

Make sure that you do not discriminate against people because of their age, disability, ethnicity, religion, belief or non-belief, socio-economic background, gender, sexual orientation, gender reassignment, marital or civil partnership status, responsibility for dependents or for any other unfair reason.

Local authorities play an important role in raising awareness of sexual orientation and gender identity issues within supply chains and partner organisations. Any policy should explicitly ban discrimination, bullying and harassment based on sexual orientation and gender identity.

The discussion about equality and diversity should be introduced at the beginning of a contract with suppliers and that there is an understanding of why this is important.

Run tendering process

Both procedures must ultimately result in awarding to the “most advantageous tender” – i.e. the best overall bid according to your stated award criteria​. The difference lies in how you get to that point (single step vs multiple steps).

• Open is straightforward but limited to evaluating whatever bids come in
• Competitive Flexible lets you interact with bidders and shape solutions, which can be very beneficial for achieving net zero outcomes (for instance, encouraging bidders to propose innovative methods to cut carbon).

Open Procedure

The open procedure is a single stage procedure where there is no restriction on who can submit tenders and all information needs to be provided at the point of tender and is made available to all suppliers.

Single-stage process

• The open procedure allows anyone to submit a tender (no restrictions).
• All relevant information must be provided upfront by bidders.

An Open Procedure means that any organisation can respond to the advertised Contract Notice, request/download the procurement documents and submit a tender. All tenders must be evaluated in line with the methodology and criteria set out in the procurement documents.

The open procedure is best used where the requirements are straightforward, with a relatively simple selection and award process, and where it is anticipated that only a small number of organisations will respond to the advertised contract notice.

Competitive Flexible Procedure

Under the 2023 Act, the Competitive Flexible Procedure is very versatile.

The Act lets you decide how many phases and what methods to use (e.g. multiple negotiation rounds, solution presentations, etc.), as long as the process stays competitive and transparent.

Best practice is to outline the intended procedure in your initial tender notice (e.g. “Phase 1: submit outline solutions; Phase 2: competitive dialogue with shortlisted bidders; Phase 3: final tender submission”).

You can use selection criteria in early phases to winnow the field – for example, require bidders to demonstrate relevant renewable energy experience to make a shortlist – and then use award criteria to pick the winner in the final phase.

There are no minimum timescales mandated by law for the flexible procedure stages (unlike the old EU rules)​, but you must set reasonable time limits that give all participants a fair chance. Make sure any deadlines or interim steps are the same for everyone and proportionate to the task (e.g. give adequate time if you expect bidders to prepare detailed carbon calculations).

Framework Agreements and Dynamic Markets 

Two key mechanisms are Framework Agreements and Dynamic Markets (an evolution of the Dynamic Purchasing System concept). Understanding these can help you efficiently source goods and services that contribute to net zero goals through longer-term arrangements.

Framework Agreements

A framework is basically an agreement with one or multiple suppliers establishing terms (like price or quality standards) for future call-off contracts, without committing to buy a specific amount upfront. Frameworks are handy when you need a ready supply of certain products or services over time – for example, a framework for electric building materials or for cycle lane construction services, from which you draw down as projects arise. Under the new Act, frameworks are still allowed with largely similar rules, but pay attention to any updated limits or conditions

Dynamic Markets

A Dynamic Market (DM) is a new concept replacing and expanding the idea of Dynamic Purchasing Systems. Like a DPS, a Dynamic Market is an electronic system you can establish for a certain category of procurement where new suppliers can join at any time if they meet the criteria​

It’s like maintaining a continuously open framework. This is excellent for areas where the supplier landscape or technology is rapidly changing – for instance, a dynamic market for energy efficiency solutions could allow new start-ups with breakthrough tech to join when they emerge, rather than waiting years for the next tender.

Contract Management

The fundamentals of contract management

When two companies wish to do business with each other, a contract specifies the activities entered into by both organisations and the terms through which they will each fulfil their parts of the agreement. Contracts affect project delivery and outcomes through costs, revenues and quality of delivered products or services.

Effective contract management can ultimately create a effective relationship, but only when managed correctly. It’s a good idea to include a legal department or a lawyer in contract management discussions. The precise wording of contracts is crucial to contract management.

Contract management framework

The focus of the framework is on the activities to be undertaken during the operational phase of the  contract, i.e. after the contract has been awarded and once the service is up and running.

This fits within the ‘contract management’ domain of our commercial relationships audit framework published in November 2016. This good practice framework defines the four blocks – structure and resources, delivery, development, and strategy – comprising 11 areas (Figure 1) that organisations should consider when planning and delivering contract management. It outlines, the key activities that fall under each of the 11 areas. 

Closure lessons/learned

Capturing lessons learned

Lessons learned is a useful means of sharing information from previous programmes and projects with others. Lessons are usually presented in the form of recommendations on the way forward or highlighting where potential improvements or modifications could be applied.

Programmes or projects where methods such as Managing Successful Programmes (MSP) or PRINCE2 are used are required to produce formal lessons learned as part of a structured approach.