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Procurement manual: guide to procurement within BERR. Section E: managing the procurement process - part 4

URN No: URN 08/1509/A8

Department for Business, Enterprise and Regulatory Reform procurement manual section E: part 4 - managing the procurement process

E. MANAGING THE PROCUREMENT PROCESS

E.15 Ordering & Issuing the Contract
E.16 Payment
E.17 Contract Management
E.18 Disposals

E.15 ORDERING AND ISSUING THE CONTRACT

E.15.1 Contents

Introduction
Ordering Using the Government Procurement Card (GPC)
The Purchase Order and CTP
Summary of CTP Process

E.15.2 Introduction

This chapter needs to be read in conjunction with the Commit to Pay MENTOR guidelines.

Ordering is the part of the procurement process whereby the Department enters into a contractual relationship with a supplier for goods or services. Ordering usually follows the tendering process and, by acknowledging the order, the supplier agrees the contract. Strictly speaking there is no actual requirement for the supplier to provide acknowledgement as this is, in effect, our acceptance of his offer. Nevertheless supplier acknowledgement may be requested.

E.15.3 Ordering Using the Government Procurement Card (GPC)

Various members of the Department have been issued with a Government Procurement Card (GPC). This is a charge card badged by VISA and used to purchase low value (typically up to £500) goods and services directly from suppliers. When using the GPC there is no need to raise a purchase order (see Section E.15.4 - The Purchase Order & Commit to Pay (CTP)) or enter a commitment onto MENTOR.

Goods or services can be ordered from suppliers that accept VISA as a payment mechanism. This can be done via fax, telephone or in person and a log is kept of these purchases.

IWS Commercial Office receive a consolidated monthly statement for the entire Departmental Card spend.  This is examined to ensure that it is broadly in line with previous statements and that there are no obvious anomalies. It is then authorised and arrangements for payment of that bill are made using a suspense account.

Equally, Barclaycard provides a monthly statement to the cardholders Group Financial Controller (GFC) of the individual cardholder's purchases. Cardholders must reconcile the invoice against their logged record of purchases. Post payment reconciliation is vital to ensure that any discrepancy between the statement and log is investigated.

It is also the individual cardholder responsibility to ensure that they arrange for journal entries to be made following the monthly statement ensuring that the correct natural account code (NAC) codes are posted to general ledger and the suspense account is cleared.

Prospective new cardholders must complete a standard application form, which is then vetted by the Billingham Finance team before transmission to Barclaycard for the card to be issued.

Cardholders have a financial delegation (usually £500 for individual purchases with a monthly ceiling, typically of £1,000). These delegations can be customised locally to suit the Directorate’s business needs.

The Department benefits from the use of this card by saving on transaction costs (approximately £14 per transaction) and receives a rebate based on card usage. Suppliers benefit because VISA guarantees payment within 2-3 days.

E.15.4 The Purchase Order and Commit to Pay (CTP)

Ordering comprises two elements: placing the purchase order with the supplier and entering the commitment into the Commit to Pay (CTP) module. In its simplest form the order is effected by procurement staff issuing the purchase order and sending it to the supplier.

The CTP module produces a standard purchase order (PO) that can be sent to the supplier. However there may well be circumstances where the standard PO does not fit the bill. A contract award letter can be used when more suitable than a standard purchase order. Large or complex contracts may need the assistance of Legal Services Directorate to draft a bespoke contract but in such circumstances it is essential that the Purchase Order number is quoted in the contract. Even if this is necessary it is vital that the commitment also be entered onto MENTOR in order for the commitment to be recorded.

E.15.5 Summary of CTP Process

Full details on how to complete a purchase order and make the entry into the OPC module are to be found in the MENTOR guidelines on BERRNet.  Below, is a brief summary of the operation.

As per the steps set out in the procurement process, when placing an order with a supplier, the end-user should also complete a Requisition Form for transmission to the budget holder to confirm the continuing availability of funds and forward it to the Directorate’s purchasing staff.

The Requisition Form provides clear instructions to the individual responsible for entering data onto CTP. Amongst other things it lists the supplier’s name, address, delivery point, the goods and services being ordered, the agreed price, and the delivery date. Details of the natural account code (NAC) will also need to be provided. The requisition will be approved on-line by the budget-holder (KC1), which will then allow the Purchase Order to be produced. The Purchase Order in turn will be approved by the finance officer with the correct delegated authority (KC3).

You are strongly advised to read the MENTOR guidance on BERRNet for further details and advice. 

E.16 PAYMENT

E.16.1 Contents

Prompt Payment
Invoice Payment and Control including Receipting Goods or Services.
Responsibilities
Payment Due
Payment in Advance
Miscellaneous
Additional Payments

E.16.2 Prompt Payment

BERR is 100% committed to the achievement, as promised in the BERR Standard Terms and Conditions of Contract for Supplies and for Services, to provide payment within 30 days of presentation of a correct invoice. See also Section B.2.3 - Prompt Payment Policy. Amey Services in Newport processes BERR’s payments within 2 days of receiving payment authorisation.

E.16.3 Invoice Payment and Control including Receipting Goods or Services.

All purchases of goods and services, except those for petty cash, must be the subject of a purchase order or an offer of contract (in relation to which a purchase order is raised). The supplier must quote the purchase order or contract reference on invoices.

Commit to Pay (CTP) has a step for the receipting of goods and services prior to payment action. Full details can be found in the MENTOR guidelines and what follows is an abridged version.

After satisfying themselves that the appropriate goods or services have been provided, the end users are responsible for the manual receipting of the goods received note. The budget holder should not carry out this task and it is important to enter receipting onto the CTP system. This can be done by the purchase order entry officer.

On receipt of an invoice the invoice entry officer needs to check that the purchase order it refers to has been quoted. They also need to check that the invoice can be matched to all or part of the purchase order and that the goods or services have been receipted. The invoice details are then entered into MENTOR.

Matching of the invoice to the purchase order takes place on-line in MENTOR which generates a payment authorisation, which is checked and signed by the invoice entry officer as first signatory and sent to the financial authoriser as second signatory. The signed payment authorisation is forwarded to Amey for approval and payment.

E.16.4 Responsibilities

Managers are responsible for ensuring robust procedures are in place providing an effective separation of duties and a complete management trail linking order, receipt and payment. The instructions contained in BERR's Main Finance Guidance and  Managing Public Money should be followed. (See also Section B.1 - Accountability and Standards of Conduct.

E.16.5 Payment Due

Where goods have been supplied at BERR’s request, payment for them is due unless they are rejected, e.g. because faulty. If goods have been wrongly supplied or supplied without BERR’s consent, no payment is due but the unused goods must be returned promptly. If BERR keeps the goods, payment becomes due.

Payment is due for a service when that service has been performed (in accordance with the contract). Given that it is not possible to return a service that has been performed without BERR’s consent, unwanted services, which have not been ordered by BERR, must be rejected immediately.

E.16.6 Payment in Advance

Payment for goods or services should be made only on completion of the contract, or in stages for part delivery or completion if provision for doing so was included in the contract. However, the amount of each stage payment must equate with the value of goods or services received at that stage.

Requests for advance payments should be dealt with in accordance with HM Treasury guidance entitled “Managing Public Money”.  Follow the attached link;

http://www.hm-treasury.gov.uk/documents/public_spending_reporting/governance_risk/psr_managingpublicmoney_index.cfm

E.16.7 Miscellaneous

For purchases of products made overseas, the contractor should be made responsible for the payment of import duty and VAT.

Some suppliers issue documents which appear to be invoices (giving details of an account number, date and invoiced amount) which are just invitations to purchase the goods described. The goods are then despatched after payment has been received. Matching every invoice with a purchase order prevents erroneous payments being made against such documents.

E.16.8 Additional Payments

Occasionally it may be appropriate to make a payment to a contractor for goods or services connected with a particular contract but not specifically provided for in that contract.

Any claim for extra payment should be examined to determine whether it should be considered as an extra-contractual or ex-gratia payment:

•        ex-gratia payments are those which are not legally due but made by way of compensation on the grounds of hardship or as an indication of goodwill.

•        extra-contractual payments are those which are not legally due under the contract or any amendment, but where it could nonetheless be argued that there is a legal obligation on BERR to pay and where it is likely that a contractor’s claim will be upheld by the courts.

Additional payments, in particular ex-gratia payments, may have legal or ethical implications so it is important to take advice on such claims from the IWS Commercial Office or your Directorate’s solicitor.

The following table is a guide to the action to be taken in a variety of potential additional payment situations.

Table E.16-1: Additional Payment Situations

E.17 CONTRACT MANAGEMENT

E.17.1 Contents

Introduction
General Arrangements
Contract Monitoring
Contract Control
Contract Variations and Extensions (Renewals)
- Contract Variations
- Contract Extensions (Renewals)
- Re-tendering
Completion Reports
Record Keeping

E.17.2 Introduction

This Section of the Manual should be read in conjunction with "Principles for Service Contracts - Contract Management Guidelines".

Contract management is the active monitoring and control of all aspects of a relationship between the provider of goods or services and the Department. The primary aim is to ensure the delivery of a cost effective and reliable service (or goods) at an agreed price and standard, consistent with legal requirements and financial propriety.

Contract management arrangements come into effect when a contract is let forming a distinct phase within the procurement cycle and often carried out by individuals not involved with tendering or awarding the contract. It is important to take into account the contract monitoring and control requirements related to any particular procurement right from the outset (business requirements stage). Wherever possible the staff responsible for contract monitoring and control should be identified at the beginning of the procurement process and involved at the specification stage. This ensures best practice prior to contract award and reduces the likelihood of problems arising later.  Staff can contribute to meeting the Departments sustainability agenda, particularly on the use and disposal of materials at both the identification of the requirement and when writing the specification.

Contract management is a challenging task and value for money will not be obtained if it is neglected. While management of low value, straightforward contracts may be simple and routine, at the other end of the scale service contracts involve issues such as change and uncertainty and the relationships of the parties in such contracts is more complex.

In addition, the problems faced in monitoring framework or call-off arrangements, whilst in many respects similar to ordinary contracts, may be greater due to a large number of remote customers. Under such circumstances closer cooperation with customers is required to ensure that monitoring is effective.

E.17.3 General Arrangements

Both parties within a contractual relationship need to establish contact points at the outset.

For the Department the contact will be the individual appointed to undertake the task of monitoring. He or she may be given a formal title such as contract monitoring officer or contract liaison officer. Whatever the title, ultimate responsibility for monitoring rests with that individual.

The actual management of the contract is the sole responsibility of the contractor, not that of the Department’s contact. The management role is to monitor the contract and control the contractor’s performance to ensure compliance with the provisions of the contract. If performance falls short it is the liaison officer’s job to take appropriate action.

The liaison officer should establish a cooperative, rather than adversarial, relationship. This is especially important for those contracts that involve the delivery of services over a long period.

Ideally, the Department and its contractor should be working in partnership.  Best results are obtained through mutual trust, open contact and pro-active monitoring.  The risks involved in not forming the correct relationship can be considerable, ranging from increased contract administration and costs through to the possibility of argument over contract terms and conditions, which could ultimately involve the courts. Conversely there are major advantages to be gained by focusing on a shared objective.

E.17.4 Contract Monitoring

Effective contract monitoring requires good management information and two-way communication between both parties.  This is only achievable through a collaborative relationship.  These factors can help:

•        satisfy BERR that goods or service have been received in a fully satisfactory manner as required under the contract;

•        ensure that the contractor has fully met the obligations under the contract;

•        identify any opportunities for improvement of the contractor’s performance (which is of course of direct benefit to the contractor);

•        forecast future trends or needs; and,

•        establish the point or points at which any stage payments can be made.

The contractor should be required to provide information and report on his own performance.

The exact monitoring requirements and methodology depend on the nature of the contract and the goods or service provided. There are nonetheless standard practices that can apply throughout. These include:

•        monitoring the contractor’s performance against the specific targets and levels laid out in the contract (e.g. deliveries of a set number of items by a given date, or particular milestones being reached);

•        inspection of the completed work (if it is impracticable to check every item individually – e.g. as with bulk stationery supplies or with a cleaning contract- it is nevertheless always good practice to inspect at least a random representative number);

•        recording complaints received from customers of the service (to ensure that complaints are readily dealt with), which may mean that in cases with a large number of users, such as call-offs from framework arrangements, bespoke systems have to be set up to collect and record complaints;

•        recording customer satisfaction with the service (different to recording complaints as it also tries to ascertain positive - as well as negative - feedback usually via a questionnaire at the end of a contract or periodically during a contract); and

•        ensuring, for consultancy contracts that there is a system in place which allows for the project to be formally signed off on satisfactory completion.

A good complaints and compliments procedure must be capable of:

•        tracking individual entries;

•        assigning responsibility for investigating the reasons for a complaint or compliment;

•        identifying the source of complaint or compliment;

•        resolving the problem or building on the success; and,

•        responding to the originator.

E.17.5 Contract Control

A key skill for liaison officers is the ability to identify problems that require corrective action. The type of problems that might be encountered include:

•        unsatisfactory performance,

•        misunderstanding the requirement,

•        inadequate channels of communications,

•        changes to the contract brought about by unexpected altered requirements, and,

•        contractor insolvency.

Contract control involves actively keeping the contractor’s performance to the required standard of the contract. Participation by both parties is needed for this to be successful and enable problems to be quickly identified and remedies sought. It is therefore important that a sound working relationship is established.

Regular contact and monitoring of performance assists control. Awareness by the contractor that monitoring is being done can itself discourage any potential fall-off in performance.

If monitoring indicates that a contractor’s performance has deteriorated, action needs to be taken. The nature of the action depends on the level of under-performance or complaints. If regular monitoring is effectively carried out problems will be spotted early and the degree of disruption from corrective action will be minimised.

In most cases a discussion is all that will be required to secure agreement on remedial action. If this does not work formal negotiations will have to take place.

Negotiations (whether informal or formal) during a contract are a valuable means of resolving problem. A good client-contractor relationship will help to ease any tension should the need for formal negotiations arise.

E.17.6 Contract Variations and Extensions (Renewals)

An important outcome of contract monitoring and control is the potential need to change the contract either by varying the terms and conditions, modifying the requirement, or extending it to allow the contractor to continue with the work.

1.        Contract Variations

Variations to a contract made during its life will not always be as a result of contract monitoring and control. The Department may decide during the course of the work that a slight change to the requirement is needed due to external factors. Contract monitoring and control arrangements might reveal problems that need a contract variation in order to regularise a situation, for example, poor delivery resulting from impracticable timescales. The Department can at any time request an alteration to the terms and conditions or make other changes to the nature of the contract. However, such changes must be agreed with the contractor.

Changes to the contract might affect:

•        the specification,

•        the quantity of goods,

•        delivery time or location, or

•        the nature of the service being provided.

It will normally be the role of the contract liaison officer to ensure that the need for any contract variations are properly recorded and the contract is suitably amended and subsequently agreed with the contractor. This may involve working with end users and in some cases the purchaser who let the contract (if different from the liaison officer). The liaison officer must also ensure that appropriate financial authority exists or is obtained if the contract variation involves a change in price.

The variation order must be clearly tied in with the main contract reference and should be sequentially numbered in order to avoid any confusion and to enable a clear audit trail to be established.

Only those individuals with the appropriate delegated authority have the power to agree to and/or sign a contract variation. Thus close liaison is required where pre contract award functions such as purchasing are separated from monitoring and control.

b.        Contract Extensions (Renewals)

A contract extension, often termed a renewal, may arise because of operational difficulties on the client’s side, for example it may be inappropriate to re-tender and let a contract for a short period because of an imminent policy change. It may also arise if the original contract made provision for the term of the contract to be extended (for example, if the performance of the contractor was satisfactory or a pilot service successful). Ideally, a contract should only be renewed once because technology may improve, the market may develop or the contract price may become unrealistic. There is also a risk that "cosy" relationships may develop with suppliers to the exclusion of new potential contractors who may have entered the market. If consultancy contracts over-run or need to have their scope extended take particular care not to drift into an open-ended sequence of contract extensions.

For contracts subject to EU Directives, it is important to determine the total contract requirement at the outset and include any possible extensions in the original OJEU Notice. For unforeseen additional work the EU limits contract extensions to 50% of the original contract value. For further information on this see the BERR Procurement Guides on the EU Supplies Directive and GATT GPA  and Services Directive.

c.         Re-tendering

It is important to distinguish between a contract extension (or variation) and a re-tendering exercise. An example of the former is where a contract needs a short-term extension for a particular piece of work to be completed or a delivery to be effected as described above. A re-tendering exercise implies a complete end or stop to the existing contract to be followed by the commencement of a new arrangement. The contract may stop due to:

•        the end date being reached,

•        a decision to terminate the contract, or

•        supplier insolvency.

Where one of the criteria above occurs it would be normal for a new competitive tendering exercise to take place if further goods or services are still required.

Re-tendering should not normally be used as a threat to improve a supplier’s performance since it will undoubtedly disrupt the collaborative relationship. Where performance is slipping you should identify the problem and attempt to find a mutually acceptable solution, by negotiation if necessary. However, where a solution cannot be found by negotiation it is inevitable that the contract will have to be terminated.

If contract monitoring is carried out correctly the need for re-tendering, whatever the cause, should not come as a surprise. The specification will have been kept up to date and if procurement best practice has been followed, information on potential suppliers will have been accumulated whilst keeping abreast of market.

The re-tendering process should be started well before the end of the current contract. It is important to ensure that the existing supplier continues to meet contractual obligations during the re-tendering period, particularly if he/she is not to be invited to re-tender.

E.17.7 Completion Reports

It is good practice at the completion of any contract to review and place on record what went well and what did not, so that lessons can be learned for the future. This does not always need to be a major exercise with formal reporting. Depending on the nature of the procurement it might take the form of a simple note on the file by the liaison officer.

However, in the case of large procurements, projects which were more complex, high profile procurements and consultancy projects there should be a more formal post project completion assessment covering all key aspects of the procurement, including such thing as:

•        the conduct and outcome of the project,

•        the extent to which the expected benefits (deliverables) were achieved,

•        total cost (including full economic cost of in-house staff engaged on the project).

E.17.8 Record Keeping

Accurate and timely record keeping is essential to keep the liaison officer up to date with information on the contractor’s performance. This can be a manual system but for complex contracts a computerised database may be more appropriate.

Records should be maintained of complaints, performance failures and recurring problems:

•        to act as evidence to support necessary remedial action,

•        to monitor performance for payments purposes,

•        for possible future use for vendor rating (or reference) purposes, and,

•        to act as an audit trail.

Both parties to a contract should view maintaining records as mutually beneficial. Records are kept primarily to identify problems in advance and set down agreed remedial action by both parties, not to penalise the contractor. Notes of meetings and important telephone calls should be kept, using some judgement about whether every single call or short meeting needs be the subject of a detailed note. Anything that impacts directly on matters of contract price or contract delivery must be recorded.

E.18 DISPOSALS

E.18.1 Contents

Introduction
Requirements
Responsibility and Authority
Approvals Process
Disposal Board
Information Required
Disposal Routes
- Internal Use.
- Internal Sale
- External Sales
- Tendering
Charitable Sales/Donations
Hazardous Materials
Collection and Completion
Documentation
Receipts

E.18.2 Introduction

The disposal of fixed assets is covered in Managing Public Money.

Fixed assets can be defined as land and buildings, plant and machinery, office equipment etc. An item that is or was intended to provide a service over a given period of time can also be regarded as an asset.

This Section of the Manual covers the disposal of goods and materials. The Building Facilities Management Unit of IWS Directorate should be consulted on procedures for the disposal of land and buildings.

E.18.3 Requirements

Any fixed assets (including goods and materials) that are surplus to requirements should be disposed of as soon as possible.

Goods that have a resale value should be disposed of to the highest bidder unless use is found for them elsewhere in the department or government service. The disposal method chosen should safeguard the taxpayer’s interest by securing best value for money. The objective is to maximise the benefit to the Department, either in cash terms or by putting the assets to good use in a way that benefits either the Department's general aims or the Government's wider interests. In assessing the economy of repairs or refurbishment, the value of staff time involved must be added to the repair cost.

Surplus or obsolete items not considered saleable should be disposed of in the most economical manner possible.

When a decision to dispose of an item has been made the Group Financial Controller (GFC) should be consulted to determine  whether this action will have implications for the BERR asset register. The item being disposed of or scrapped may exceptionally give rise to a significant loss within the terms of Government Accounting and will require formal write-off.

E.18.4 Responsibility and Authority

Heads of Agencies and Government Offices who have delegated authority for purchasing equipment and stores on capital or current expenditure budgets may also dispose of surplus or scrap. Other HMUs must refer all surplus office equipment to the Telephony and IT Service Management Unit in IWS Directorate and all surplus furniture to Building Facilities Management Unit, also in IWS. For advice on dealing with disposal of other items, contact the Procurement Policy Services unit within IWS Commercial Office in the first instance.

E.18.5 Approvals Process

Any officer with delegated authority to incur expenditure may - subject to the requirement in E.18.3 - Requirements to refer disposals of office equipment (including computers) and office furniture - authorize disposal of goods whose documented book value does not exceed 10% of that officer’s level of delegated authority.

The authorising officer should be satisfied that disposal of the items is more cost effective than redeploying them and that cost effective arrangements have been made for managing the disposal.

Generally speaking an individual should be designated to manage the disposal (disposal officer). For values over £500 the disposal officer should be required to work with at least one other officer to form a Disposal Board.

The Disposal Board (or disposal officer working alone for values less than £500) should:

•        recommend disposal arrangements to the authorising officer

•        manage the disposal arrangements once authorised

•        seek approval from the authorising officer of its final recommendations on disposal before confirming the sale.

E.18.6 Disposal Board

For the disposal of commodities, equipment or vehicles where the sales price is likely to exceed £500, a Disposal Board (DB) should be convened under the following terms of reference:

•        a minimum of two persons, the disposal officer and one other,

•        to review the documentary submission and, where possible and economic, view the actual items to be disposed of,

•        to set an estimated sales price and decide on the most appropriate method of disposal, and

•        to prepare the tender document and/or the advertisement.

•        to maintain clear and concise records.

The DB recommendation should be submitted to the GFC for approval and authorisation of disposal.

The disposal officer should issue the invitation to tender or arrange an advertisement and award the contract or, where appropriate, arrange destruction or disposal as scrap.

E.18.7 Information Required

The proposal for disposal must indicate whether the materials are owned by BERR. It is possible that material/assets may be subject to leasing arrangements, therefore without terminating the lease and obtaining written agreement to dispose of the items, breach of contract or illegal practice may result.

The officer responsible for disposal will in addition require the following information:

•        full description (manufacturer/serial nos./supplier codes/ technical data sheets)

•        quantity/weight

•        condition

•        value of items - estimated market value and net book value

•        date available

•        approximate age/date of purchase

•        current location/collection point

•        contact for collection

•        former use

•        reason for becoming surplus

•        any other reasons to support disposal

•        proposing officer authorization (signature)

•        management approval (where applicable - see E.18.5 - Approvals Process)

If the disposal relates to computer equipment, the original Purchaser should be consulted (for HQ Directorates this will usually be IWS). The proposing officer must ensure that sufficient effort has been made to ensure that no software or data is on the equipment, in compliance with Departmental instructions. The disposal officer must also require the individuals or organisations making an offer for equipment (whatever the disposal route) to indicate in writing their understanding of software copyright law.

E.18.8 Disposal Routes

There are several methods for the disposal of surplus assets and materials. It is important that the Disposal Officer judge each disposal activity on its own merit and determine the most cost effective approach to disposal, using a strategy appropriate to current market trends.

Example disposal routes are discussed in the following paragraphs.

a.        Internal Use

If a use in other departments/agencies or elsewhere in BERR can be found, disposal costs may be reduced. This process should not require significant resources and will be of greatest benefit for specialist items where restricted markets reduce market value at the time of disposal.

b.        Internal Sale

Internal sale of surplus low value items may be cost-effective but staff resource intensive. Safety and legal requirements necessitate firm control and clear sensible procedures need to be followed to avoid criticism of unfairness or impropriety.

Once materials have been identified as suitable for sale by this method, the following steps are recommended:

•        individual items of a similar nature should be identified separately by the allocation of a Lot number;

•        the materials should be openly advertised, and

•        applications to purchase should be made on form PF90.

The sale should be conducted on the same principles applied to a standard procurement tender, focusing on getting good return for the surplus material.

A sales notice should be issued and drawn to the attention of all staff via, for example, internal staff notice boards. This notice should include the following:

•        full description (specification)

•        manufacturer

•        estimated weight

•        condition

•        holding location

•        on-site contact for viewing

•        date available for collection

•        special site requirements

•        conditions of sales (standard PF90 form for Conditions of Sale should be utilised)

In considering bids from staff pay particular attention to the following:

•        whether the officer had been officially associated with the disposal arrangements,

•        whether the officer has been able to obtain special knowledge about the condition of the item to be sold (which was or would not be available to other interested prospective purchasers), and

•        whether the transaction would be likely to cause criticism on low pricing.

c.         External Sales

Wherever possible, use approved external agents (auctioneers and organisations providing unrestricted sales to the public and trade).

One of three routes is specially recommended:

1.        Select a commercial auctioneer/company based on:

o                        the best offer from at least three commercial companies

o                        acceptance of BERR Conditions of Sale as printed on the reverse of PF90 or GC/SALES 1978 (GC/SALES 1978 should be used unless the buyers conditions apply, in which case you must record the reasons)

o                        provision of information along the lines of that required on PF90,

2.        Through Ministry of Defence (MOD) which operates, a disposal service for government departments and local authorities by undertaking the administration or acceptance of goods or vehicles physically at a number of depots throughout the country. The service includes dismantling on site as well as at the depots where precious metals can be recovered and sold at high prices. The MOD charges a management fee based on the amount of work involved.

3.        Auctioneers and valuers Martin Spencer-Thomas (MST) previously arranged disposal of surplus saleable government equipment from TCS and are now under contract to TBA. Goods for disposal can be sold on site with the company conducting the auction sale, collected by MST or delivered to MST's depot in Exmouth. The area of operation is South of Manchester, elsewhere only by negotiation with MST. The company will collect and auction for an all-inclusive commission of between 60% and 80%. The commission on sales of goods delivered to MST's Exmouth depot and for sales conducted on BERR premises is between 20% and 50% of the proceeds. The company will dispose of items that it cannot sell. There will be no charge for such disposals. The company will accept for auction almost any saleable commodity. TBA Contract No. A511825 must be quoted on all orders.

d.        Tendering

For high value and attractive items of a specialist nature it may be appropriate to offer the goods for tender. However, this option should be used selectively as the process tends to be labour intensive and often fails to produce returns significantly in excess of those achieved by specialist auction groups. Only use this option where net receipts are expected to be in excess of advertising, tendering and collection costs, etc.

The principles for preparing tender documents and inviting offers for disposal are the same as those for purchasing. A sound specification must be prepared to make clear all of the requirements to be tendered.

It's important to make adequate arrangements for tenderers to view the items for sale. They will be sold ‘as is’ with such faults and errors of description accepted and it is therefore up to the tenderers to satisfy themselves as to the condition. If purchased on this 'as is' basis there can be no comeback on the department because of faults, errors or misstatements.

The tenders should be received, controlled and assessed in accordance with procurement procedures. However, the following should be observed:

•        aim to obtain the highest price,

•        if the price offered is below the scrap price the highest tenderer may be asked to increase his price or the materials will be disposed of for scrap based on assessed weight,

•        tenderers conditions must be fully scrutinised - for example, firms may quote a price ‘free on vehicle' requiring the Department to absorb significant costs in providing lifting facilities or labour - wherever possible BERR conditions of sale as given on the reverse of PF90 should be applied.

E.18.9 Charitable Sales/Donations

The officer with appropriate delegated powers (see E.18.5 - Approvals Process) should be approached to approve this route.

E.18.10 Hazardous Materials

The rules on the identification, storage and movement of hazardous materials also apply to sale and disposal.

Staff responsible for hazardous materials must ensure the safe custody of such materials up to the point of loading or destruction. This must be done in compliance with the provisions of the Health and Safety at Work Act 1974 and any relevant Regulations and Approved Codes of Practice made under the Act. The Control of Substances Hazardous to Health (COSHH) Regulations 1999, and the Control of Asbestos at Work (CAW) Regulations 1987 and CAW Amendment Regulations deal strictly with the control of materials that pose a risk to health.

No hazardous materials are to be disposed of until the responsible site or safety officer is satisfied that all health, safety and environmental requirements have been observed and, where necessary, advice or instructions passed on to the purchaser.

The disposal of hazardous materials will also need to comply with the Duty of Care on Waste Management under the Environmental Protection Act 1990.

E.18.11 Collection and Completion

Collection should be arranged to the satisfaction of the nominated Disposals Officer and take place as soon as payment is cleared.

If materials have been sold against an estimated weight, the purchaser’s vehicle should be weighed on entering and leaving the site and weight tickets obtained using a public weighbridge witnessed by a member of staff.

If several items are sold as a lot the most attractive item should be released only after the other items have been loaded.

E.18.12 Documentation

Except for disposals through the MOD depots, all goods are  sold "where lying", the buyer (including staff) are responsible for loading and/or removal from site.

For all sales, including those to staff, an application to purchase BERR sale goods (form PF90) must be completed. All buyers including staff who purchase equipment from the Department must be issued with an invoice (form BERR 1089M) which records details of the equipment, the serial number if appropriate, the date, the price paid and the signature of the authorising officer. The invoice must be cross-referenced to the relevant form PF90.

Whatever method of disposal is used, clear records must be kept providing an audit trail of the decisions and actions taken and the authorisations given for the disposal.

E.18.13 Receipts

Payment must be received before goods are released.

All receipts arising from disposals must be credited to Extra Exchequer Receipts under appropriate ledger headings allocated by FRM. However, where an item is "traded in" against new equipment the credit for the part exchange should be discounted from the purchase price.

Gifts to non-Exchequer bodies must be noted in the Appropriation Account.

Sales of damaged or obsolete stock that is written off should be recorded as value for money savings and declared as a part of the returns for the Treasury's annual reporting exercise.

Address;

Disposal Services Agency (an Agency of the MOD)

2^nd Floor, St George’s court

2 -12 Bloomsbury Way

London WC1A 2 SH

Corporate Services – tel 0207 305 3283/ 3164 or Fax: 0207 305 3242.

If however, you have a general enquiry on the many services the DSA can offer, please send an e-mail to query@edisposals.com Please ensure that you include your full name and postal address in case we need to reply via postal mail if necessary.

For more information please visit http://www2.edisposals.com/index.htm