Update on the control of Single Tender Actions

Report: 9
Date: 5 November 2009
By: the Directorate of Resources on behalf of the Commissioner

Summary

At the July 2008 Full Authority meeting the MPA approved revised levels of authority for Single Tender Actions (STAs). This approval was provided on the basis that the MPS could demonstrate appropriate levels of control and record the justification for granting STAs. Following the approval a new procurement process and associated form (1049) was approved by Finance and Resources Committee 19th March 2009.

The purpose of this report is to inform Members of the number of requests for STA against each of the legal exemption types and provides detail of the number and value of those approved and declined.

A. Recommendations

That

1. Members note the report for the period 1 April to 30 September 2009 and the control of single tender actions by Procurement Services and MPA officers.

B. Supporting information

Previous Regulations

1. At the July 2008 Full Authority meeting the MPA approved a number of amendments to Standing Orders based on recommendations from a joint MPA/MPS working group including members of Finance, DoI, Property and Procurement Services. These amendments:

• Provided greater flexibility and increased authority levels;
• Increased delegation levels to £50,000 before consultation with Procurement is required, subject to appropriate competition;
• Increased approval granted to MPS for exemptions to Contract Regulations (use of a Single Tender Action) subject to approval by Procurement Services;
• Increased the financial value of contracts above which the MPA are required to sign and seal contracts i.e. aligned to MPS Scheme of Delegation;
• Supported the current MPS sponsored work on improving controls and governance.

Single tenders

2. The only change that was not effective immediately was the increased approval level granted to the MPS for exemptions to Contract Regulations. This relates to the award of contracts to suppliers without a competitive tender (what is known as Single Tender Action [STA]). The increased authority was conditional on the MPS putting additional controls in place and it was requested that Procurement Services played a greater role in the approval of STA’s below £100,000.

Revised Regulations

3. Following agreement from the Authority at the March 2009 Finance and Resources Sub-committee (published by the MPA in the document “Changes to MPS procurement processes in support of the new MPA standing orders”, dated 19 March 2009), the new threshold for requiring prior approval of the MPA Chief Executive for an STA was increased from £40,000 to £100,000. This was subject to the Service being able to demonstrate an increased level of control with Procurement Services playing a greater role in the approval of exemptions below £100,000. The de minimis level, where one written quotation (Single Tender) is acceptable, remains unchanged at £5,000.

4. The process for the consideration of STAs over £5,000 is as follows:

• All STAs with a total value between £5,001 - £100,000 must be forwarded to Procurement Services for prior approval in accordance with the Scheme of Delegation (SoD), on the basis there is justification for the exemption in EU legislation.
• STAs over £100,000 must be forwarded to Procurement Services, who in line with current practice, will review the justification for the exemption request and if deemed valid will seek prior approval of the MPA Chief Executive.

5. As with the previous Regulations exemptions to a Tender or Quotation process are only permitted where certain conditions apply. In order to provide a greater level of transparency and granularity the EU Procurement Law has been interpreted in the revised Regulations under ten legal exemption types, namely:

1. Absence of appropriate tenders following a previously advertised procurement.
2. For technical or artistic reasons, or for reasons connected with protection of exclusive rights, the services, supplier or works may be provided only by a particular provider.
3. A contract following a previously advertised design contest.
4. For security reasons advertising would not be in the best interest of the Authority.
5. Additional works or services which were not foreseen at the time of contract award but have now become necessary for the performance of a previously tendered contract.
6. Work or services similar in nature to that covered by a previous tendered contract and have now become necessary for the performance of that contract.
7. A genuine unforeseeable operational need arose and competition was impracticable where the urgency of need is such that it did not permit the full procurement process to be carried out.
8. When goods to be purchased or hired under the contract are to be manufactured solely for the purpose of research, experiment, study or development.
9. To take advantage of particularly advantageous terms for the purchase of goods in a closing down sale.
10. Replacement goods which can only be sourced from the same contract.

Management Information

6. At the March Finance and Resources Sub-committee the Authority, requested that Procurement Services provide a quarterly report detailing the number of single tender actions and the legal exemption under which they have been approved. The Authority stated that it should be implicit in the reporting process that Procurement Services highlight exemptions required to fulfil an operational need resulting from poor planning or failure to take appropriate actions necessitating the need to utilise a non-competitive approach.

7. Due to ongoing discussions with MPA Officers on the format of the reporting this report covers the period 1 April to 30 September 2009. Appendix 1 details the total number of requests for contract action (Form 1049) received for the period. This is shown on a monthly basis and also details the split between variations or extensions V’s single tender actions. It should be noted that:

• The number of requests for contract action varies.
• The STA percentage has, as a trend, decreased over the period, having commenced in April at 33.3%. The belief is this is a result of the communication of the new process to business groups and the subsequent robust adherence to it by Procurement Services.

8. Appendix 2 details the eighty six (86) requests for single tender action considered by Procurement Services during the period. This is broken down by both number and value against each of the exemption types and shows whether they were approved or declined. Members will note that the majority of requests for single tender action are based on the exemption that only one supplier is able to provide the service. The reason this exemption type is most common is in the case of software support, where a particular company owns the intellectual property rights (IPR), and that support cannot therefore be provided from elsewhere.

9. With the exception of contracts that have been identified in the proactive exercise that will be reported in the ‘Increased Contract Compliance’ report, Appendix 3 (exempt appendix) itemises the requests that resulted from poor planning and the action taken.

C. Race and equality impact

1. There are no specific race, equality or diversity implications arising from this report, but it is notable that equality of opportunity is promoted by competitive tendering processes; this pertains especially to the support of small and medium sized enterprises (SMEs) where lack of open competition as a result of STA’s risks SMEs and businesses from different communities being denied the opportunity for competing for the work.

D. Financial implications

1. The data demonstrates that in keeping with MPA policy the vast majority of contracts have been tendered competitively and therefore every effort to achieve value for money in the procurement process has been taken. There are no other financial implications arising from this report.

E. Legal implications

1. All requests for contract action received during the period have been actioned in accordance with MPA Regulations and EU Procurement Law. There are no other legal implications arising from this report

F. Background papers

• None

G. Contact details

Report author: Anthony Doyle, Director of Procurement, MPS

For more information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

Appendix 1

Table 1 - Breakdown of Requests for Contract Action (Form 1049) received for the period 1 April to 30 September 2009.

Appendix 2

Table 2 - Breakdown of Single Tender Action requests received by type for the period 1 April to 30 September 2009.

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