V9

1
Commodity Profile Strategy for the Framework
Agreement for insertReference insertFor
info delete prior to issueThe strategy is
used in the planning stage of any procurement to
determine how key issues will be addressed e.g.
route to market, CSR issues, pricing strategy etc
which is then translated into the procurement
process and documentationIt identifies and
minimises risk and assists in ensuring all key
factors have been taken into account when
conducting the procurement leading to fit for
purpose and VFM.
2
Version Control
When drafting and amending the Profile
Commodity Strategy, the Procurement Officer
should complete the above table to ensure changes
can be tracked and queries can be directed to the
appropriate UIG member/others as appropriate
3
Contents
Except where stated as optional the slide
contained in this template are the recommended
mandatory minimum contents of the Profile
Commodity Strategy. Other slides can be added on
a commodity specific basis as appropriate.
Further slides are contained in the Scottish
Public Sector Toolkit
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Mandatory consultation with the Head of
Collaborative Procurement (HOPC)

• If consultation with HOPC is required detail
  outcomes here
• Procurement Officer must consult with the HOPC in
  the following circumstances
• where Single Tender Action (non competitive
  action) is proposed
• where a procurement has a strong potential to
  influence CSR issues
• where an extension to a contract or framework
  agreement is proposed
• where the negotiated procedure, competitive
  dialogue, or dynamic purchasing system is the
  proposed tendering option
• where it is proposed to shorten the EU minimum
  tendering timeframes or use the Accelerated
  Restricted procedure (NB use of the Accelerated
  Restricted MUST be highlighted in the Contract
  Notice. For further information about the
  Accelerated Restricted Procedure please refer to
  this Scottish Procurement Policy Note (SPPN 1
  2009) http//www.scotland.gov.uk/Resource/Doc/126
  5/0076383.pdf)
• where it is proposed that the duration of a
  framework agreement will exceed 4 years
• where TUPE may apply

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Executive Summary Procurement Officer to
complete this slide after completion of the
Strategy and prior to forwarding for sign off by
the UIG/HOPC

• Current status list
• Spend total versus addressed list
• Scope detail
• Strategic recommendations and reasoning detail
• Benefits how much, how, by when?
• Price parity opportunities
• a achievable by DATE
• Benchmarking opportunities
• b achievable by DATE
• Market competitiveness
• e.g. new player breaking into the market, driving
  pricing down but want commitment , c by DATE
• Product standardisation/ rationalisation
  potential
• d, assuming xyz by DATE
• Supply chain redesign, moving to ex-works,
• e by DATE
• Any major barriers to success

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UIG Role Input

• Procurement Officer to agree with the UIG their
  role, responsibilities, input and actions at each
  stage in the strategic sourcing process
• Agree with the UIG who will agree the final draft
  of the key stage documentation e.g. all or a
  nominated number of UIG members re the strategy,
  award recommendation etc
• Agree with the UIG the role UIG members will play
  in PQQ and tender evaluation and how Tender
  Evaluation Board scores for PQQ/ITT results will
  be collated e.g. overall weighted results or the
  average of score.

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Stakeholder ( UIG) Contacts for
Contract/Framework Agreement

• List names and contact details of all
  stakeholders relevant to this commodity

8
Business Need and Functional Requirements
Sector Requirements
Where we are
Where we want to be

• What does the commodity do, standard v
  customised, level of customisation, quality
  requirements, real v perceived function, service
  requirements, user perception, value to
  institution, specific specifications
• Consider the procurement innovation issues for
  highly complex procurements

• NB use of generic specifications if these dont
  exist the UIG needs to start working on them as
  soon as possible

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Scope of Name of Commodity

• Scope the commodity to be covered i.e. what is
  included in this commodity group, breakdown into
  sub-commodities, which products fall under which
  sub-commodity

10
Expenditure Analysis - Spend Distribution

• In scope spend distribution by universities and
  colleges, supplier, by sub-commodities detail
• What is the value of the requirement? How does
  this inform the procurement process?

Procurement Officer to add an acknowledgement,
for future reference, of the source(s) of data
used
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Future Expenditure Trends

• Demand Profile insert

12
Spend Analysis Conclusions

• Demand Profile insert

13
Commodity - Typical Cost Breakdown
Recommendations
Profit 10
Complete the breakdown for the commodity

• What are the recommendations

xxxx
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Total Cost Model Name of Commodity (OPTIONAL)

• List the activities carried out under each step
  of the product life cycle, Determine the impact
  of each step on the total cost of ownership in
  terms of High, Medium or Low, Brainstorm the cost
  drivers associated with the activities under each
  step, Determine the opportunities in each area.
  Which costs can be reduced (savings)/avoided
  (cost avoidance)?, Identify Low, Medium and High
  Savings Opportunities, Identify the barriers and
  enablers related to realising the opportunities

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Total Acquisition Cost (OPTIONAL)
Example acquisition costs
Sample Cost Drivers
Supplier Costs
Total Acquisition Costs
Organisations Costs

• Uniform specification and range
• Delivery frequency and location
• Order frequency
• Order value
• Requisition to P/O
• Returns
• Queries
• Reporting
• Goods receipt
• Sewing Rooms
• Delivery

Product Driven Costs
Customer Driven Costs
Order Fulfilment Costs
Administration Costs
Order Fulfilment Costs
Order Fulfilment Costs
Order Fulfilment Costs

• Quality specifications
• Defects/rejects/returns
• IT Costs
• Customer support
• Sales

• Material
• Labour
• Overheads
• Warehousing
• Special tooling

• Inventory handling
• Transportation
• Picking Packaging

• Requisition to P/O
• Order Transmission
• Expediting
• Invoice Reconciliation
• Timely Payment
• Queries
• Reporting

• Defects
• Inspection
• Rejects
• Repackaging
• Reshipping

• Storage costs
• Labour
• Overheads

• Goods receipt
• Delivery
• Requisitions

• Cost Drivers e.g
• Product specification and range
• Delivery frequency and location
• Order frequency
• Order value
• Lead time

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Supply Market Overview

• Market Trends detail what is happening in the
  market for the commodity, current and future
  technologies, changing customer demands, new
  players, mergers and acquisition
• Supply Market Share detail the key players
  within the industry, identify size in terms of
  turnover, sales, number of customers and capacity

NOTE trends can reveal who is winning/ losing
business, whos trying to win market share in the
UK, whose business objectives match the sector,
what do profit margins typically look like for
the industry.
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Current Contract Position Contract/Framework
Agreement
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Current APUC/Sector Suppliers of Name of
Commodity
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Main Suppliers in the Market in Context of their
Total APUC/Sector Business
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Benchmarking Opportunities (Optional)

• Look to understand opportunities from internal
  APUC price parity I.e. if different Institutions
  pay different prices and all move to the lowest
  price point and, from benchmarking with other
  organisations e.g. PASA, Value Wales, N Ireland
  Procurement Service, OGC, Scotland Excel,
  councils, fire and police service, private sector
  etc

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Risk Analysis for Name of Commodity Inc
Barriers To Change
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Corporate Social Responsibility (CSR)

• Procurement Officer UIG to consider CSR issues
  relevant to this procurement
• General issues
• Result of the Risk Coding Analysis for
  goods/services regarding relevance and risk
• Completion of the Sustainable Procurement Risk
  Assessment Tool (SPRAT) for goods/services
  Are there any resulting actions are required to
  be managed. NB areas may already be adequately
  covered by the existing CSR questions.
• Which areas in PQQ CSR Questionnaire or ITT CSR
  Questionnaire are required.
• Is EAUC assistance required? If Yes approach
  EAUC via the standard letter of engagement.
• Specific CSR Requirements for ITT

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CSR -SMEs, Supported Businesses Social
Enterprises and Community Benefits

• Detail barriers to participation for SMEs and
  proposals for removing
• Can this be let as a Reserved Contract under
  Regulation 7 of the EU Procurement Regulations
• Identification of any social clauses or community
  benefits relevant to this procurement

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CSR

• Race Equality Impact Assessment
• To determine whether race equality is a core
  requirement in a contract or framework agreement
  for goods, services or works, the following
  questions should be considered
• What is to be provided under the contract or
  framework agreement? list
• Is the provision of the goods, services, or works
  one of the functions or policies relevant to
  meeting the duty to promote race equality?
  Yes/No. Refer to Appendix 3 of the Procurement
  Manual
• Is the provision of the goods, services or works
  likely to affect (directly or indirectly) the
  ability to meet the duty to promote race
  equality? Yes/No
• Is it necessary to include requirements for
  promoting race equality in the contract to make
  sure the duty is met? Yes/No
• What race equality requirements are appropriate
  for the contract or framework agreement? list
• If the answer to questions 2, 3, or 4 is Yes,
  race equality is a core requirement. Refer to
  paragraph 3.7 of APUCs Procurement Manual which
  details how and where race equality should be
  implemented into the strategic sourcing process.

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Strategic Tendering Options

• On the basis on the internal and external
  analysis, plus opportunity assessment, detail the
  available options and the pros/cons of each.
• Several examples are detailed below
• Option 1 Negotiate and extend current contract
• Pros analysis shows limited opportunity in this
  area compared with rest of portfolio, would
  achieve savings whilst minimising resource
  effort would also allow APUC to approach the
  market jointly with PASA next year
• Cons will not optimise savings as suppliers
  looking for volumes commitments which is
  dependant on extended work with stakeholders
• Option 2 Use OGC framework for next 12mths to
  allow quick win and gathering of better
  management information
• Pros initial assessment shows saving of 3 on
  OGC contract, this could be quickly implemented
  and allow management information to be collated
  as currently data is poor
• Cons comparisons with industry suggest savings
  of 20 if had APUC commitment contract
• Option 3 APUC tender and contract for x years,
  with the aim of being in y position in z period
  of time e.g. product rationalisation as part of
  contract requirements. Intention would be dual
  supply award to maintain competitive tension etc
• Pros Maximise savings
• Cons Resource effort involved given other
  portfolio opportunities have higher potential

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Strategic Tendering Options

• Lead-In Period - detail period required NB
  consider the period for implementing the
  commodity onto PECOS agreed with Supplier
  eEnablement during the project start up stage
• Extension Period detail proposed period (s)
• Tendering route to demonstrate competition
  Detail and insert justification
• A framework agreement will be established as
  follows
• framework route single supplier/multi-supplier
  
• Multi-supplier framework lots insert number
  proposed
• Call off contract mechanism direct/ranked/ mini
  competition

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ITT Considerations (particularly relevant to
consider at this stage in more detail when the
Open Procedure is proposed so as to reduce the
time taken to compile the ITT at the ITT
composition stage)

• Statement of Requirements (SoR) Detail the main
  areas and issues needing to be inserted into the
  SoR
• IPR Does IPR apply and what is the impact.
• Access by institutions detail the number of
  institutions, affiliated bodies, and if APUC
  requires to access the contract or framework
  agreement. Estimate number anticipated to access
  the contract/framework agreement from
  commencement date
• TUPE establish if TUPE is likely to apply. If
  yes, obtain the detail of name(s), sex,
  employment location of individuals who may be
  subject to TUPE and consult with the HoP or Human
  Resources or seek legal advice
• Pricing Strategy
• detail the how the commodity will be priced
  (taking into account whole life costing and cost
  avoidance).
• Can an e-Auction be utilised for this commodity?
• State the period of price stability (e.g. 1 year
  etc) and the reasoning for this.

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ITT Considerations

• Mechanism for addressing variation in the charges
  e.g. via RPI/CPI etc
• More info can be found at www.statistics.gov.uk/s
  tatbase/product.asp?vlnk868
• Payment period The default position under the
  Late Payments of Commercial Debts Act 1998 is 30
  days
• Parent Company Guarantee/bond state if either is
  to be included in the ITT for the framework
  agreement and/or call off contracts or a contract
  and why use would be beneficial.
• TsCs list any clauses required over and above
  the standard tscs.
• For Part B services If the procurement is
  considered to be high risk/high value, a
  standstill period should be considered (with
  reference to Federal Security Services Ltd vs
  Police Service of Northern Ireland).

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Information re Evaluation of References, Site
Visits, and Presentations

• References
• In a Restricted procedure, ascertaining an
  applicants past experience in terms of
  technical or professional ability (as
  determined by Regulation 16(7)(b)(ii) of the
  Public Contracts (Scotland) Regulations 2006) can
  be included in a Pre Qualification Questionnaire
  as a section criteria.  Written evidence of past
  performance, which can be objectively
  evaluated, can be used but it is not recommended
  written evidence is used as a Minimum Standard.
  Standard forms can be used to request references
  , but returned references should then be used for
  information purposes only.
•  The above also applies to an Open procedure.
•  Site visits
• If a site visit is required before tender return
  i.e. to be used to inform tenderers more clearly
  regarding the outputs of the requirement e.g.
  visit to an Institution's property or visit to a
  new build, then this is not evaluated.
• If a site visit is deemed to be required post
  tender return and as part of evaluation process
  (because the information to be ascertained from
  the site visit directly relates to the subject
  matter of the Contract or Framework Agreement),
  this must be detailed as an award criteria in the
  Contract Notice or ITT, be capable of evaluation,
  and make clear what is being assessed in the site
  visit.
•  Presentations
• If a presentation is deemed to be necessary as
  part of tender evaluation and/or bid
  clarification,  it can only be used for
  information purposes and cannot be detailed as an
  award criteria in the Contract Notice or ITT and
  used to evaluate tenders because it is
  subjective, and not capable of objective
  evaluation i.e. performance at interview is not
  an evaluation criteria. 
• Evaluation of a presentations written output is
  permissible where as part of bid clarification
  tenderers are requested to present on common
  areas in the submitted tenders (which following
  tender evaluation have been revealed to be areas
  where clarification would be needed).  These
  areas cannot be in addition to the award criteria
  detailed in the Contract Notice or ITT. 
• Ensure any area of concern remaining after the
  presentation is followed up in writing as part of
  bid clarification.

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PQQ Selection CriteriaFurther information OGC
Selection/Award criteria PPN

• Part A - Section not scored for info only
• Part B - Insert minimum standards in the Contract
  Notice or list as objective criteria in section
  III.2 in the Contract Notice .See APUCs of
  Financial Analysis of Accounts for recommended
  levels.
• NB if minimum standards are set and arent
  met, the applicant should be excluded from the
  process
• Part C - If the applicant answers Yes to any
  question they MUST be excluded from the process
• Part D - If the applicant answers Yes to any
  question they MAY be excluded from the process
• Part E - If minimum standards are set and arent
  met, the applicant should be excluded from the
  process otherwise use objective scoring criteria
  to shortlist those applicants meeting minimum
  standards

• Part A Background Information
• Part B Economic Financial Standing
• Part C Conviction of Criminal Offences
• Part D Business Probity
• Part E Technical Professional Ability

EXAMPLE
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ITT Award Weighting Criteria
EXAMPLE
EXAMPLE
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ITT Call Off Contract Award Criteria

• insert weighting

• insert criteria

EXAMPLE
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Contract Implementation Lead-In Period

• Detail what will need to happen, when, and who
  has responsibility
• For example
• Communicate with universities and colleges to
  prepare them for any changes
• Conduct product trials (if applicable)
• Start running down stocks of current product
  ranges (if applicable)
• Prepare/ complete any required training
• Clarify supplier change management/
  implementation expectations
• Ensure smooth transition
• Follow-up on progress
• Note requirements for completion later in the
  strategic sourcing process
• For example
• Systems updates, CUPID, SharePoint
• Savings notification to individual institution
• Notification and award letters
• Buyers Guide/ Commodity Action Report (CAR)/ ePS
  Bulletin etc

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ePS Trading Strategy

• Detail how End Users will see and access the
  Framework Agreement content in PECOS
• Use APUCs Supplier Report showing ePS active
  suppliers through Institutions ePS Supplier
  Report to determine PECOS
• Content Availability
• Connection Type
• 2. Develop a list of specific and general ePS
  issues / requirements relevant to the commodity
• list
• Plan how these will be accommodated on
  PECOS detail
• 3. Decide PECOS trading strategy
• on catalogue
• Catalogue
• Punchout

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Strategic Contract and Supplier Management

• All contracts or framework agreements will be
  contract managed by the Procurement Officer.
  Refer to ITT for Procurement Officer and User
  Group roles and responsibilities.
• Detail considerations for Contract and Supplier
  Management

GuidanceScotland strategic contract and supplier
management guidance, processes, and templates are
available at http//www.scotland.gov.uk/Publicatio
ns/2006/11/16102303/0a10. These are currently
being develop and once finalised will be
incorporated fully into strategic sourcing
documentation.
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Timelines

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Prior Information Notice (PIN)

• Use of PINs is not mandatory. PINs can be
  published through OJEU in order to alert the
  market to forthcoming contract opportunities.
• Once a PIN has been published, reductions in
  timescales for competitions identified in the PIN
  are possible.
• PIN should be published at least 52 days before
  and not more than 12 months before the contract
  notice.
• The PIN should contain details of supply and
  services contract for which the public body
  expects to seek tenders in the next 12 months.
• PINs must be published on OJEU website (this can
  also be done through the Public Contracts
  Scotland website).

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Commodity Strategy Sign-Off UIG HOPCUIG
HOPC Profile Commodity Strategy approved by
HOPC, APUC .. Date
..