<<Return to Funding Code of Practice
Glossary of Terms
Contract Negotiation Route
Typical Core Costs
The Gershon Report
Useful Contacts
Contracting
Contracting involves situations where the council invites bids from external organisations to supply goods or services that the council either has to provide by law, or which it has made a decision to provide, within its legal powers. The council writes a specification for each contract and invites bids or tenders, within the procedures laid down in the council’s financial regulations. The specification says what is required and how it should be provided. Organisations bidding for the contract say how they will provide what has been specified. The financial regulations set out rules about how this process of tendering is to be carried out. This includes making sure there are fair opportunities for organisations to bid for the contract.
Grant funding
Grant funding is where the council makes funding available to VCS organisations to provide services it does not undertake itself. These are defined under broad headings that fit within the council’s overall aims and priorities.
Organisations applying for funding describe the service they are going to provide and the needs they will meet. The council assesses this against the criteria for the funding programme.
Organisations receiving grant funding then agree specific terms and condit ions that set out how they will manage and use the funding. The council does this mainly through annual grant funding rounds, and sometimes through a rolling programme such as ward committee grants.
Monitoring and evaluation
Monitoring is the process of gathering and recording information on a regular basis. It keeps account of progress and work undertaken against a set of agreed objectives, targets and indicators.
Evaluation is the process of looking at relevant information and making judgements about the quality of the work and its success against expectations and stated aims. It focus es on outputs or results i.e. what has been done.
S ervi ce Level Agreements (SLA)
An SLA is a formally negotiated agreement that records a common understanding between two parties (in this case the council and a VCS organisation) about services, priorities, responsibilities, guarantees etc - in other words, the level of service. SLAs can be offerred with grant funding or with contracts. For provisions see section 1, 9.1-9.3.
This appendix sets out the procedure referred to in section 3, paragraph 3.16.
3E Negotiation Procurement Route
3.21 A procurement may be carried out by way of negotiating a Contract with a particular firm only in the exceptional circumstances set out below.
3.22 A Contract may be negotiated without seeking either Minor Quotations, Written Quotations or Tenders only where:-
3.22.1 the requisit ioning Delegated Officer authorises in writing that such negotiation is in the best interest of the Council. For this purpose, the standard Authorisation to Negotiate Form must be used and is attached at Appendix 4. In cases of urgency, and only where it is impractical to give prior authorisation, the Delegated Officer may authorise the negotiation retrospectively giving full details of the circumstances involved; and
3.22.2 such negotiation is permitted under the EU Public Procurement Rules (which will apply if the estimated Contract value is above the EU Threshold).
3.23 For all Contracts with a total estimated value of £100,000 or more, the written approval of the Chief Finance Officer must be obtained before negotiations may commence.
3.24 If a Contract has been negotiated using this route, the Delegated Officer shall only award the Contract if satisfied that the negotiated price and such other terms and conditions which may have been negotiated represent best value for money and will be in the best interests of the Council. A full written record must be kept of the negotiation process including details of any meetings or other discussions with the firm and their outcome.
3.25 The Chief Finance Officer and the Legal Services Procurement Team must:
(a) be sent a copy of the Authorisation to Negotiate Form by the Delegated Officer immediately after it has been signed; and
(b) be advised in writing by the Delegated Officer of the details of any resultant Contract once it is awarded
Given these requirements, there is no need to record the authorisation to negotiate on the Delegated Decision system although any subsequent decision to award a Contract as a result of the negotiation will still need to
be so recorded in the usual way.
3.26 The Chief Finance Officer will report to Procurement Committee every six months detailing each Contract with a total estimated value of £5,000 or more that has been let without formal competition. Every such report shall
highlight any case where a retrospective authorisation has been given under PPR 3.22.1.
3.27 The requirement to carry out a risk assessment in PPR 2.6 to 2.13 (Chapter 2B – Risk Assessment) still applies under this procurement route.
Typical Core Costs| Type of cost | Particular importance
in one type of
organisation? | Particular importance
in stage of
development? |
|---|
Secretarial support | All | Needed at all stages |
Chief officer/Co-ordinator | Needed in all organisations employing staff | Needed at all stages
|
Finance management | Needed in all | Needed at all stages |
Telephone, fax, postage | Needed in all | Needed at all stages |
Premises – rent, mortgage | Need in nearly all | Sometimes minimised in early stages of an organisation’s life – but not likely to be a
long-term response |
Associated premises cost – heat, light | All | Sometimes minimised in early stages of an organisation’s life – but not likely to be a long-term response |
Insurance | Needed in all | - |
Associated staff costs, including insurance, pension, contractual rights cover | All organisations employing staff | As soon as staff are employed |
Equipment – IT, printing etc | Needed in all but likely to increase as new activities are taken on | Particular investment in period of growth |
Premises management | Present in all organisations | Throughout |
Research and Development | Present in all | Particularly significant at early stages of an organisation’s life or at a period of planned or expected growth |
Fund-raising | Present in all | Maybe a greater percentage of the work done in the development stages of a charity’s life |
Membership – support of the membership structure | Particular relevance for membership organisations | Needed at all stages |
Governance – support of the trustee structure | All organisations | Needed at all stages |
Project Management | All | Needed at all stages |
Monitoring and evaluation | All | Needed at all stages |
Quality assurance | All | Needed at all stages |
Travel and subsistence | All | Needed at all stages |
Staff training and supervision
(including&nbs p;volunteers) | All employing staff | Needed at all stages |
Personnel functions | All employing staff | Needed at all stages |
Accountancy and audit | All | Needed at all stages |
Secretarial support | All | Needed at all stages |
Corporate planning | All | Needed at all stages |
The Gershon report (*) made several points that impact on this area. These are considered below.
(*) Gershon, P. (2004) 'Releasing resources to the front line, H.M. Treasury.
Full cost recovery
Both the council and the VCS understand that the price of the contract will normally pay for the full cost of a service. Exceptions will be set out and agreed in writing before the contract is signed.
Longer term contracts
When it is in the best interests of the council, the council will endeavour to develop contracts of more than one or two years. Government is seeking to make three-year contracts the norm, though this should not be regarded as a maximum. Extensions of two-years are possible and should not be regarded as unusual.
Where VCS organisations are contracting to deliver public services, the VCS will seek to agree contracts of suitable length to maximise efficiency.
Appropriate assignment of risk
In each case and as advised by the North East procurement Centre of Excellence (NECE) risks should be appropriately assigned.
Both the council and NCVS recognise that the contractor bears the risk. For an organisation delivering the whole service itself, this is straightforward. Where sub-contractors are involved, or where there is a partnership of providers with an accountable body, support and accountability may be spread. Nevertheless, in every case the terms under which the contractor operates will be specified in the contract.
Both the council and NCVS recognise that the PPR take precedence in all cases.
Elimination of unnecessary bureaucracy
The council is committed to simplicity and proportionality – processes should be as simple as possible and in proportion to the amount of work involved.
VCS organisations will seek to align internal processes to contractual arrangements with the council e.g. how monitoring information is collected.
For grant funding issues
Michael Robinson, Manager, Community and Voluntary Sector Support Unit
Phone: 0191 211 5834
E-mail: mike.robinson@newcastle.gov.uk
For contracting issues
Gerry Paxton, Assistant General Manager, Procurement
Phone: 0191 211 6937
E-mail: gerry.paxton@newcastle.gov.uk
Christine Herriot, Head of Efficiency
Phone: 0191 211 7665
E-mail: christine.herriot@newcastle.gov.uk
For voluntary and community sector issues
George Kelly, VCS lead officer, Newcastle City Council
Phone: 0191 211 5890
E-mail: george.kelly@newcastle.gov.uk
Carole Howells, Director, Newcastle Council for Voluntary Services
Phone: 0191 232 7445
E-mail: carole.howells@cvsnewcastle.org.uk
<<Return to Funding Code of Practice