Procurement strategy

Purpose:

To define the type, size and phasing of the procurement to comply with EC procurement rules, after having made a decision on the most appropriate sourcing option. The aim is to balance efficiency against risk factors in achieving value for money. The procurement team must consider:

• government initiatives such as Achieving Excellence
• the risks relating to achievement of business objectives
• evolving requirements.
• Factors influencing risk include:
• uncertainty and/or innovation in the requirement
• the complexity of the project (particularly outsourcing)
• the scale of the project
• the length and flexibility of the timescales for implementation
• the priorities of the business benefits to be achieved
• the possibilities of change in the customer organisation's operations
• availability of project management and technical expertise
• the ability of the market to respond. 

Fitness for purpose checklist:

• Can the sourcing decision be justified?
• Can the procurement route be justified within EC procurement rules?
• Does the procurement strategy take account of the extent to which procurement steps could run in parallel?
• Does the procurement strategy take account of the likely number of providers to be selected and proposals to be evaluated?
• Where relevant, does the procurement strategy allow for reference site visits and negotiations with providers?
• Are the timescales realistic?
• Have key risks been identified, with plans for managing them?
• For construction projects, does the procurement strategy comply with the guidance in  Achieving Excellence Guide 6: Procurement and contract strategies?
• Are model forms of contracts to be used? If not, can this decision be justified? 

Notes:

For construction projects, Public Private Partnerships should be investigated at the earliest opportunity because they may offer a solution that meets user needs and provides greater value for money than a conventional construction project.

Once a construction project has emerged as the optimum solution, the presumption is that Design & Build (and where appropriate maintain and operate) and Prime Contracting procurement options will be used because they allow better integration of the supply chain and normally offer better value for money. There would have to be very good reasons for selecting conventional procurement options. 

Suggested content:

• Key objectives of the procurement that will be met by the selected procurement strategy
• Sourcing decision, with justification (e.g. PFI, prime contractor)
• Procurement route (Open, Negotiated, Restricted) with justification for selected route
• Details of opportunities for streamlining the process, where appropriate, e.g. running procurement steps in parallel
• Key milestones with target dates:
• High level requirements specification (including business prospectus if required)
• Requirement specification (normally an output-based specification)
• Evaluation strategy (including key criteria and weightings)
• OJEU advertisement
• Selection of providers (including details of likely number of bidders)
• Evaluation of proposals/tenders
• Negotiations, where applicable
• Investment decision
• Contract award
• Debrief 

Source information:

• Business Case 

Further information:

Gateway workbook 2 : Procurement Strategy

Introduction to the EC Procurement Rules

Achieving Excellence Guides.