Buying for schools

3d. Run your own procurement: high-value and EU tenders

How schools can make high-value and EU-compliant purchases by advertising their contract and running their own competitive tender process between suppliers.

Where possible, we recommend using a framework agreement for purchases, because this will generally save you time and money.

However, if you feel that using a framework won’t allow you to meet your particular requirements, you may wish to run your own procurement.

To make a high-value purchase for your school, you can use the following procurement process to select the most economically advantageous tender (MEAT) - ie the bid that best combines cost and quality - from suppliers.

  1. Prepare and advertise your own contract (if your contract is over the EU procurement threshold you must advertise in the Official Journal of the European Union to comply with EU law).
  2. Seek bids from suppliers with an ‘invitation to tender’.
  3. Evaluate bids against pre-set criteria that you apply equally to all bidding suppliers.
  4. Award the contract to the highest-scoring bid.

The following describes this process in more detail.

Specify what you need

A specification should allow suppliers to understand exactly what you need to buy, including the quality and delivery date. You should finalise your specification before you begin the process of selecting a supplier.

More information on writing your specification is available.

Assess the market

You may have already spoken to potential suppliers as part of your initial planning process.

As you prepare for the tender process, we recommend developing your knowledge of the market. This can help you to:

You’ll need to find out:

Check your legal position in relation to the EU procurement thresholds to decide how you’ll advertise your contract

If the estimated whole-life cost of your contract is above the EU threshold for procurement spending, your school must follow the European Union Procurement Directives, which the UK enforces through the Public Contract Regulations 2015. The threshold for goods and services is £164,176 (until the end of 2017). If your contract’s whole-life cost is above this threshold, you must advertise it in the Official Journal of the European Union (OJEU).

If you don’t follow the regulations for purchases above the EU threshold, suppliers may be able to challenge your spending decisions and contracts on the grounds that you’ve treated them unfairly. You must not split your requirements into smaller orders to avoid advertising your contract in the OJEU.

A ‘light touch regime’, with a higher threshold of £589,148, applies for some services that are specifically for education provision. You should seek legal advice or contact DfE to determine whether your procurement qualifies.

Develop your service-level agreement (SLA) requirements

As you prepare the documents for your invitation to tender, you should consider what level of service you’ll need from the successful supplier.

An SLA sets out the standards of service you wish to receive from a supplier. Depending on what you’re planning to buy, you may wish to agree an SLA with the successful supplier as part of your contract with them, particularly if you require ongoing support or maintenance.

Suppliers may offer you a predefined SLA, which you may wish to accept or adapt to meet your specific requirements. Alternatively, you may wish to develop your own project-specific SLA. The supplier may charge you more if you adapt their SLA or use your own.

The SLA should include key performance indicators (KPIs) that clearly define what measures you’ll use to monitor the supplier’s performance. Effective KPIs should:

  • cover any important operating targets (eg you may need a supplier to fix any critical issues with an ICT service within 24 hours of reporting them)
  • specify all aspects of quality that are important to you (eg timeliness, reliability)
  • be measurable
  • define the level of service you require
  • allow you to assess whether you are getting value for money

Consider whether you need to include any requirements in case the supplier performs poorly (eg money back or service credits).

Check that you’re already collecting the relevant data to allow you to monitor the KPIs. If not, you may need to create a new management information (MI) process to collect and track the data or ask the supplier to do this for you.

Once the contract is in place, you should review the KPIs with your chosen supplier as part of regular contract management meetings.

Develop your contract

As you prepare the documents for your invitation to tender, you should:

  • develop your contract’s terms and conditions
  • develop a plan for managing your contract

Terms and conditions

The documents you prepare for your invitation to tender will form the basis of your contract. As part of this, you should start to develop your contract, including the terms and conditions. Example contracts for goods and services are available.

Suppliers may respond to your tender with proposals to change your contract’s terms and conditions or with their own terms and conditions. If it’s important to you to use your own, you should state this in your ITT. More information on finalising the contract is available.

Develop a contract management plan

As you develop your contract’s terms and conditions, we recommend that you also create a plan for how you’ll manage your contract. You may wish to include:

Develop an exit strategy

With complex, high-value and high-risk contracts you should include an exit strategy. This should allow you to end the contract effectively and efficiently. By agreeing exit roles and responsibilities, scope, cost and duration with the supplier, you can:

  • remove uncertainty
  • reduce risk and unnecessary costs
  • develop a strong relationship with the supplier

An exit strategy should clearly define:

  • the responsibilities of both parties to the contract if:
    • it expires after its specified completion date
    • you end the contract early
    • you end the contract with immediate effect
  • who owns what at the end of the contract, such as data, assets or intellectual property
  • what information the contracting supplier will provide, by when and under what circumstances
  • what access the contractor will allow to procedures, systems and people, by when and how
  • what active support the contractor will provide to support the ending of the contract
  • how long the contractor will provide support while there is a transition to a contract with another supplier, if appropriate
  • who pays for what, by when and how
  • under what conditions either side can end the agreement, such as if:
    • the supplier doesn’t meet the SLA
    • there are changes in circumstances
    • there is any misconduct

Decide whether to use an expression of interest (EOI) process and/or a selection stage to reduce the number of bids at the award stage

The process of evaluating suppliers’ tenders is known as the award stage. The following are 2 optional processes you can use in advance of the award stage to reduce the number of tender bids to evaluate at the award stage.

Expression of interest (EOI)

You can use an EOI process to gauge interest in your contract and help you plan how much time and resources you’ll need to evaluate suppliers’ bids at the award stage.

For example, you might advertise and request EOI to a market of around 80 suppliers. If 20 suppliers respond to your advert to say they’re interested in submitting a tender, then you would only send your invitation to tender to those 20 suppliers.

You can also use an EOI to test the market if you have a particularly unusual requirement within your specification. If you get no responses from suppliers, this can indicate that you’ll need to make further refinements to your specification, and/or research the market further, before continuing with the procurement.

Selection stage using a pre-qualification questionnaire (PPQ)

If your assessment of the market or EOI process has shown you that there’s a large number of possible suppliers for your requirements, you may wish to use a selection stage to reduce the number of bidding suppliers at the award stage.

It’s important to note that:

  • a selection stage uses selection criteria to evaluate suppliers’ general suitability to perform the contract, such as their technical capabilities, experience, accreditations and financial standing
  • the award stage uses award criteria to evaluate each bidding suppliers’ response to the tender specification (ie how they would implement the contract)

You must only use selection criteria at the selection stage and award criteria at the award stage.

A selection stage usually involves using selection criteria in the form of set of questions, known as a pre-qualification questionnaire (PQQ), which will enable you to shortlist a set of suppliers quickly.

There are 2 ways of doing this. You can:

  1. Send a PQQ before you send out the ITT.
  2. Shortlist suppliers’ responses to your PQQ (selection stage).
  3. Only send the ITT to shortlisted suppliers.
  4. Assess suppliers’ tenders (award stage).

Or, to speed up the process, you can:

  1. Combine the PQQ with the ITT so that the ITT is divided into selection and award stages.
  2. Ask suppliers to send you PQQ responses and a tender bid at the same time.
  3. Shortlist suppliers’ responses to the PQQ (selection stage).
  4. Only assess shortlisted suppliers’ tenders (award stage).

Either way, you should first advertise your requirements and state that you are using selection and award stages.

When you create the PQQ, set a limit on the number of suppliers you’ll select to assess at the award stage using the full evaluation and scoring process. For example, you could specify that only the 5 highest-scoring suppliers from the PQQ stage will go on to the award stage.

The questions in your PQQ should:

  • allow you to gather simple and consistent information
  • ask about the suppliers’ general suitability for the contract, not about how they would implement the contract

You could ask about suppliers’:

  • technical capabilities
  • resources
  • relevant experience
  • accreditations
  • financial standing

Establish the award criteria, scoring system and weightings you’ll use to assess suppliers’ bids

Before you invite suppliers to tender, you should decide what award criteria you’ll use at the award stage to assess the suppliers’ bids.

Award criteria allow you to evaluate each bidding suppliers’ response to the tender specification ie how they would implement the contract. You shouldn’t use award criteria to evaluate suppliers’ general capability to perform the contract (although you can cover this in a separate, earlier selection stage).

Award criteria can include:

  • the supplier’s quoted price
  • how the supplier plans to meet your requirements
  • how well the supplier will meet your timescales
  • the quality of the goods or services the supplier is offering

Together, your award criteria should allow you to assess which of the suppliers’ bids:

  • best meets the requirements in your specification
  • is the ‘most economically advantageous tender’ (MEAT) ie that best combines cost and quality

Each of the criteria should have a range of possible scores (eg from 1 to 5, where 5 is the highest score) and a weighting (ie a figure by which to multiply the score depending on its relative importance to you). For example, if price is the most important criterion for you, give it a higher weighting than the other criteria.

You must use award criteria with high-value purchases to make sure that your decision to award a contract is fair. You must include the criteria, scoring system and weightings in your ITT.

More information is available on evaluating suppliers’ bids.

Create a timeline for the tender process

Before you send invitations to tender to suppliers, you should create a timeline for the tender process. Set out the:

  • dates of the clarification period (ie when suppliers can ask you questions about your requirements), with deadlines for:
    • suppliers’ final questions
    • when you’ll provide your final responses
  • deadline for submitting tenders
  • date when you expect to award the contract

When you’re determining the deadlines, allow enough time for the suppliers to:

  • understand the requirements
  • ask questions for clarification and use the information you respond with
  • prepare a detailed proposal with costs

If you’re following the EU-compliant procurement process, you must allow a minimum of 35 days between the date of advertising the contract notice and the deadline for bids. You can shorten this to 15 days, under certain circumstances - check with your legal adviser or contact us for clarification.

Prepare the invitation to tender (ITT)

An invitation to tender (ITT) is the set of documents that you send to potential suppliers to invite them to submit a bid for your contract. The ITT documents form the basis of your final contract.

See also selecting suppliers for the ITT.

An ITT should include:

If you’re combining a selection stage with the ITT, then you should create a separate selection stage section that includes:

  • your pre-qualification questionnaire (PQQ)
  • instructions on how to complete the PQQ
  • details about the PQQ process and the minimum score to qualify for the award stage

A supplier doesn’t have to respond to an ITT. If they do respond, their response becomes a formal offer committing the supplier to what they’ll provide if you award them the contract.

A model invitation to tender letter is available.

You should advertise your contract in a place where suppliers are likely to look, such as:

Your advert should:

  • clearly explain the procurement requirement
  • let suppliers know what information you need from them
  • explain how to access the ITT documents
  • set out the timescales
  • state that you’ll be using evaluation criteria to award the contract to the ‘most economically advantageous tender’ (MEAT)
  • state if you’re using a selection stage as well as an award stage

There are particular requirements for advertising contracts that are over the EU public procurements threshold.

EU-compliant procurements

If the cost of your contract is over the EU public procurement threshold, you must publish a ‘contract notice’ in the Official Journal of the European Union (OJEU) advertising your ITT in order to comply with EU regulations.

To do this, register with and use eNotices, an online tool for preparing public procurement notices and publishing them in the OJEU.

Contract notices for open and restricted procedures

The most common ways to tender contracts under the EU public procurement regulations are ‘open’ and ‘restricted’ procedures.

If you know there aren’t many suppliers available and you want to encourage as many responses as possible, use the open procedure. This is where you publish a contract notice in the OJEU to advertise your ITT and suppliers send you their responses.

If you have a large range of potential suppliers that you wish to narrow down fairly, use the ‘restricted’ procedure. This is where you advertise a selection stage (using a PQQ) and award stage in the OJEU. You must indicate in the advert if you’re using the restricted process.

Prior information notices (PIN)

A PIN advertises the purchases that you’re planning in the future. The 2 main reasons for doing this are to generate interest in the market and to reduce the timescale for the procurement process. You can publish a PIN in the OJEU up to a year in advance using eNotices.

The PIN can cover multiple contracts, providing that it:

  • appears continuously in the OJEU
  • contains the required information in the OJEU’s PIN form
  • refers specifically to the services that you’ll require from the contracts

Run the tender process and provide clarifications

Keep track of the progress of the tender process against your timeline.

You should allow time for a clarification stage where suppliers can ask questions about your requirements. Regardless of which supplier asked a question, you must:

  • respond to all bidding suppliers with the same information
  • anonymise questions and answers

We recommend that you:

  • ask suppliers to send questions via an email mailbox, as it is harder to keep track of phone calls
  • keep a question and answer log, so that you can keep track all the questions suppliers have asked and circulate all answers to all suppliers

Evaluate suppliers’ tender responses

Once the tender submission deadline has passed, you can evaluate suppliers’ tenders using the award criteria, scores and weightings set out in your ITT.

To avoid any legal challenges, you should:

  • not open any tenders before the deadline
  • make sure you treat all bidding suppliers fairly and equally
  • ensure that you clearly record how you’ve made your decisions so that you’re able to defend them
  • keep confidential, secure and auditable records of all the documents involved in the evaluation
  • be aware that you may have to disclose records of the process under the Freedom of Information Act

It is best practice to have at least 2 people separately evaluate and score each bid. They should compare their scores only after each has completed their evaluation. During this ‘moderation’ process, they can discuss any disagreements and must agree overall scores. Bear in mind that the more people involved in evaluating the bids, the more difficult it can be to reach an agreement at moderation stage.

If appropriate, you may wish to call on a specialist, possibly from within your school, to assess individual questions where you require expert knowledge.

You must keep a record of your moderation decisions.

You must award the contract to the highest-scoring bidder.

Notify suppliers and award the contract

Once you’ve identified the winning bid, you should notify all of the suppliers of your decision at the same time. Example letters to successful and unsuccessful bidders are available.

Notifying the unsuccessful bidders

Send a notification letter to each unsuccessful bidder. It should include:

  • the name of the winning bidder
  • the evaluation criteria you used
  • the scores for the winning bid
  • why you think the winning bid is the most economically advantageous
  • the individual bidder’s scores and feedback on their bid
  • when the standstill period ends

For EU-compliant tenders, you must include this information in the notification letter to comply with regulations. If an unsuccessful bidder asks for the actual cost of the winning bid, you should provide it to them, but not a detailed breakdown of costs.

Notifying the successful bidder

Send a notification letter to the successful bidder identifying them as the winning bidder.

The letter is an invitation to finalise a contract. However, you should make it clear that:

  • you’ll only award them the contract if the standstill period passes without a challenge from another supplier
  • there are no commitments, and no work should begin, until both parties have signed the contract

If for any reason the winner refuses to go ahead with the contract, you may award the contract to the second-highest scoring bidder or you may wish to rerun the procurement process.

Apply a standstill period

It is best practice to apply a standstill period of at least 10 calendar days between notifying the bidders of your decision and formal award of the contract. This standstill period is sometimes known as the ‘Alcatel’ period. It allows for any unsuccessful supplier to challenge the decision if they believe it is unfair.

If the period ends on a non-working day, you should extend it to the end of the next working day.

The standstill period is mandatory for EU-compliant tenders.

Deal with challenges from suppliers

During the standstill period, if an unsuccessful supplier challenges the fairness of the contract award decision or process, you should contact the supplier making the challenge, explaining that you have conducted a fair evaluation process and that you have kept good records.

If the supplier then makes a legal challenge within the standstill period, you shouldn’t finalise the contract. Instead, you should seek legal advice and wait to see if the court reviewing the challenge grants ‘interim measures’. If so, you should then wait for the outcome of the legal proceedings.

Finalise the contract and advertise the award

The final contract that both parties sign should include:

  • a copy of the goods, works or services you’ve agreed to buy
  • a pricing schedule completed by the supplier
  • the terms and conditions that you’ve agreed with the supplier
  • the SLA, if you have agreed one with the supplier
  • any contract management agreements
  • an ‘implementation plan’, with your responsibilities and those of your supplier (eg if you’re buying ICT equipment, who’ll clear the necessary space, do any re-cabling and install the equipment)
  • your specification as an appendix

If the supplier agrees to use your terms and conditions, be sure to check that the signed copy they send back to you is exactly the same as the copy you sent them. The last copy of the terms and conditions sent by either side is the one that is legally binding, so try to make sure that you are the last to sign.

If you placed an advert for the contract in Contracts Finder, you should place a notice of your contract award there too.

For EU-compliant tenders, you must publish a notice of the contract award in the OJEU within 30 days of signing the contract.

You may want to set up an early meeting with the contractor to finalise commercial aspects such as the management and payment arrangements, clarify key performance indicators and agree how both parties will work together.

Debrief the unsuccessful suppliers

You should offer a verbal debriefing to all unsuccessful bidders.

If an unsuccessful bidder asks for feedback, you should:

  • only comment on that bidder’s tender (ie don’t share specific details of other bidders’ tenders)
  • give positive feedback where it is appropriate to do so

For EU-compliant tenders, you must provide feedback within 15 days of a request by an unsuccessful bidder. If you have a face-to-face meeting, we recommend that you keep notes during the meeting and have more than 1 member of staff present.

You mustn’t use the debriefing process to reopen negotiations.

If you need to abandon the tender process

On rare occasions, you may need to halt the tender process. For EU-compliant tenders, you must send a notice to the OJEU telling them what has happened.

If you abandon the process while suppliers are preparing their bids, or have submitted their bids, you should notify them with your reasons. If this occurs very late in the procurement process (ie from the evaluation period onwards), you may be at risk of a legal challenge.

You can’t abandon the tender process on the basis that the highest-scoring bidder in the evaluation process is not the supplier you want.

Read next chapter: ‘4. Managing your contract’.