Members' library

• Leading schools
  • Managing schools
    • Helping schools use resources well
      • Securing the best for less
      • The principles of school finance
      • Financial planning and budgeting
      • Strategic financial management and budgeting
      • Financial monitoring, reporting and evaluation
      • Cash management
      • Evaluating financial resource management
      • Creating capacity for strategic and operational leadership
      • Procurement
      • Personnel and benefits management
      • Leading learning and teaching
      • Managing the organisation
      • Effective use of resources: case studies

Procurement

An introduction to good practice in procurement, tendering and contracts in schools, and how to use these processes to obtain value for money.

The procurement process

Procurement refers to the whole process of evaluating the need for goods and services and is made up of the following steps:

• assessing options, including leasing, renting and purchasing
• planning the process
• choosing within a competitive market
• making the purchase
• managing the purchase through the life of the contract or use of goods
• disposal or completion of contract
• identifying lessons learnt through the process

Good practice principles

As goods and services bought for schools are paid for with public funds, schools need to be seen to maintain the integrity of those funds. This involves adhering to four principles of good procurement practice:

• Probity: demonstrating that all parties are dealt with on a fair and equal basis and that there is no private gain, favouritism or corruption involved in the school’s contractual relationships. Segregation of duties - where no single person can both process and pay for purchases - supports probity and reduces the risk of error and fraud.
• Accountability: ensuring that the school is publicly accountable for its expenditure and procurement conduct.
• Best value: demonstrating best value in the use of public funds. The principles of best value require schools to challenge their own practices, compare their performance with other schools, consult with stakeholders and provide or buy services at a competitive price.
• Appropriate processes: ensuring that purchasing processes are appropriate in terms of cost and efficiency.

In effective procurement, planning and management is matched to the value and inherent risk of each purchase. Everyday, low value purchases may require only a moderate level of planning and consideration, such as ordering from approved suppliers on framework contracts held by the local authority. For larger orders, contracts and capital projects, schools must follow procurement procedures set out by their local authority. These procurement procedures will usually require the school to follow set procedures for advertising and evaluating open market tenders.

Tendering

Tendering is the formal procedure through which suppliers are invited to submit sealed bids to a purchase for goods or services above a certain value. The aim of the tendering process is to identify the best supplier for the order. In an open tender process, all potential suppliers are invited to tender. In a restricted tender process, only certain suppliers are invited to tender.

There are three key stages in the tendering process:

• Specification: initial tender specifications should focus on what you want the goods or services to deliver and be as precise as possible.
• Invitation to tender: the invitation to tender should provide instructions to those submitting tenders and describe the objectives of the project, the technical requirements and relevant terms and conditions.
• Receiving and evaluating tenders: tenders should be submitted as sealed bids and stored unopened until the specified date and time for opening. Tenders should be evaluated against agreed criteria by a team normally made up of the user, the purchaser and a technical expert if appropriate. The governing body or a committee should be involved in decisions concerning larger contracts.

Contracts and payments

All contracts should be as detailed as possible to eliminate the likelihood of misunderstanding or the delivery of goods and services which do not meet requirements. It is essential that schools continually monitor all contracts to ensure satisfactory delivery. Contracts should cover key areas including:

• level of service
• scope of work
• frequency and timing
• calculation of charges
• criteria for successful delivery of the contract
• means of redress if delivery is not successful
• cancellation costs
• due date for payment

To avoid the possibility of goods and services not being received, payment should only be made after the receipt of goods. Schools should consider the degree of risk before approving advance payments. The governing body must satisfy itself that arrangements are in place to ensure that bills are paid promptly, with discounts for prompt payment where appropriate. Schools may wish to adopt the Better Payment Practice Code.

Further information

• Better Payment Practice Campaign

Collaborative procurement and e-procurement

Greater purchasing power and better discounts can often be achieved when schools organise themselves into groups or consortia to undertake collaborative procurement. This approach has the added advantage of spreading the effort of sourcing and negotiating prices and contracts across a number of school business managers.

E-procurement can bring benefits to the administration side of the procurement process, from sourcing suppliers to paying for services. A number of local authorities have their own e-procurement facility which schools can use. The government has also developed the OPEN e-procurement tool for schools.

Further information

• OPEN - Online Procurement for Educational Needs

Further information

• Certificate of School Business Management
• Teachernet - Educational Procurement Centre
• Office of Government Commerce - procurement guidance