PCR 2015 explained: How your school can stay compliant
PCR15, also known as the Public Contract Regulations 2015 are a set of laws that cover how to conduct procurement in an efficient and compliant manner. There are many regulations to constantly keep track of and to say it can be overwhelming is an understatement! However, we are here to decipher them and what you can do to maintain compliancy.
Before we even consider PCR15 regulations, you must already be following your own school’s purchasing policies and financial regulations.
Best practice and compliant buying processes can have a tremendous impact on your school’s ability to achieve best value for money. While we have covered a large variety of compliance dos and don’ts previously, here are some more that may help you start:
- Breach procurement regulations
- Roll-over contracts
- Repeatedly re-source the same suppliers
- Get tied into unsuitable contracts
- Let suppliers make assumptions
As a school, you are responsible for spending public money in a responsible way. You are encouraged to ensure best value at every opportunity, not only for yourself as an institution, but for the pupils and staff that spend the majority of their time there.
What are the thresholds?
So, what are public contract thresholds? They are levels of expenditure above which the Public Contracts Regulations apply. These are the current thresholds:
For the specific procurement of a list of services:
As of the 1st of January 2022, the PCR thresholds include VAT (even if you can recover the VAT under the VAT rules). This means that you must calculate and include VAT within the procurement value.
These thresholds will be set to get another update in January 2024, however, there’s not been much news on what that could entail yet.
The thresholds depend on the type of contract or what you are buying, leasing or hiring, and apply to the whole value of the contract throughout its duration (not the annual value). This includes any possible extensions or renewal options.
Meaning, if it’s an ongoing requirement for big ticket items such as cleaning, catering and energy then these will most likely go above the spend threshold. Other categories can creep in here too – like stationery, payroll and many IT services.
If your contract value exceeds the threshold you have to follow a PCR-compliant process. This can be done either by running a full tender or using a compliant procurement solution, including the use of Frameworks or DPSs.
If it does not, then you focus on complying with your schools purchasing policy and financial regulations.
How do you calculate your whole contract value?
It’s important to know how much your whole contract spend is so that you can ensure you are compliant with PCR regulations if necessary. The equation to figure out the whole contract value is as follows:
Monthly Recurring Spend X Contract term Length = Whole Contract Value
Some contracts that you may not think apply, actually do, such as:
- Purchasing multiple successive contracts of the same type with the same supplier (window cleaning/boiler repair for example) – the threshold applies to the aggregated spend of these contracts over a 12-month term.
- If you have a rolling contract with no end date – The threshold applies to the aggregated spend on the contract over a 4-year term.
So how do you know if your contract could be breaching regulations?
Lets use an example:
Your school has a £150k IT contract that was bought following a 3-quote process with your list of preferred current suppliers. Say you then decided you wanted to extend the contract for a second year, you have now breached regulations as extending a contract every year could be seen as breaking the contract down in order to avoid the tendering process. This is often called disaggregation.
This does not mean that when you buy into a contract, you are effectively trapped, as you can include review/extension points where the contract can be cancelled or extended at your school’s discretion. The breach focuses entirely on the value of the contract, as that’s what the procurement process should focus on – the maximum value possible.
What are your procurement obligations?
To make sure you are legally compliant during the procurement process, there are obligations that must be followed, these are:
- PCR2015 compliance is a legal requirement – consequences of not following the regulations include: being highlighted in annual accounts by auditors, increased governance reporting and scrutiny, increased DfE scrutiny, possible fines, reputational damage, court proceedings.
- Advertisements for a full tender processes must be published on the government website ‘Find a Tender’ service
- Paper tenders are no longer valid – must be electronic (via a dedicated portal or on email)
- There are prescribed timescales and procedures that must be followed (a typical full tender process can take 6-9 months end to end)
- You must state the evaluation criteria for your tender process and stick to it (this is the most common grounds for questions from unhappy suppliers at the end of a tendering process)
- You cannot discriminate on the basis of an incumbent supplier or on geographic grounds
Do you need to complete a full tender process for every procurement over the new thresholds?
The full tender process is lengthy and can be stressful if you are unsure of the regulations or your contract spend. Fortunately, you do not have to complete the full tender process for every procurement – you can piggyback off an existing compliant solution, such as a framework or DPS.
What procurement solutions are there?
One of the best ways to circumvent the worries of PCR 2015 compliance is to look into procurement solutions. A procurement solution or agreement is essentially a contract that other organisations such as: local authorities, central governmental departments or public buying organisations negotiate with suppliers in order to get the most effective and compliant deals. These deals then become available to schools and other public bodies through those organisations.
The most effective form of procurement solution is either a Framework or DPS, here are the differences between a Framework and DPS:
- Closed list
- Includes direct award/Further Competition
- Includes fixed pricing
- Single/multi-supplier agreements
- Cuts down procurement timescales
- Template documents & guides
- Pre-defined T&Cs
- Can add new suppliers to list
- Always Further Competition
- Multi-supplier agreements
- Call-off timescales minimum 30 days
- Template documents & guides
- Pre-defined T&Cs
There are a lot of benefits to a Framework and DPS, such as the fact that you can avoid using the Find a Tender service, instead you would ‘call off’ from the specific requirements from your agreement.
What is a call-off contract?
A call-off contract is a contract between a suppler and buyer for the provision of services, goods or works. Each framework and DPS will also have its own set of mini rules to adhere to.
Most importantly, each solution will provide you with a different outcome for your school, you need to be sure you understand fully the expectations from the supplier and contract in place before agreeing.
All suppliers will have followed a price and quality tender exercise. This means the school will not have to undertake a typical three quote or tender process as this has already been completed by the Framework provider. However, if you go down the direct award route, do your due diligence, check the quote and scope to make sure everything you need is covered!
Think about how easy the process is to follow, how robust the documentation is and which suppliers are on the agreement before you start your procurement activity.
For example, Education Buying’s range of procurement solutions have tailored procurement templates for the education sector, ensuring their relevance and ease of use.
If you do choose to use a DPS, you should know that under all DPS tenders. You are required to carry out a further competition or a mini competition (this may also be the case for some frameworks). While running a further competition may sound like a lot of work, it is nowhere near the level of a full tender exercise due to the suppliers listed on the agreements having been pre-qualified. This means they can then bid for work around a specific group of goods, services or works because they have all signed the agreement terms.
What are the best ways to use a procurement solution properly?
When using a procurement solution, our procurement experts have come up with a checklist to see whether you are making best use of your solution. They are:
- Make sure whatever you are buying from the Framework or DPS falls within its scope (for example, you wouldn’t use a stationery framework to purchase furniture.)
- Following on from this, always check whether your school is able to use the agreement as some are only available for central government etc.
- Follow the rules of the solution, each has their own guidance document, so be sure to work through those to stay on track for compliance.
- The award criteria you use to make your decision must be based on the award criteria set out in the framework agreement, but focusing on your requirement. This means that the criteria you use doesn’t need to be the same as the original framework agreement, but can instead be tuned to your particular requirements.
- You must ensure fair and equal treatment of suppliers:
- The specification is sent to all the framework suppliers at the same time.
- They are asked to respond by a stated time and date that gives the supplier a reasonable amount of time to respond to your requirement.
- The submissions should be opened only after the deadline and evaluated against the stated award criteria.
- The decision is made, and outcome notified to all bidders.
- Remember the key principles are to be open, fair and transparent!
The procurement experts at Education Buying recommend using an existing procurement solution rather than running a full PCR tender. If not only for the fact that it will generally save you time, money, and provide a compliant route to market.
The sourcing and pre-qualification work has already been done, and you are accessing shared procurement expertise, resource, and contract management so if anything does go wrong during the life of the contract, you’ll have the support and assistance from the organisation that negotiated it.
So, be sure to remain compliant by following the tips in this blog post and find your school more savings. If you would like to see the many Frameworks and DPS’s that Education Buying offer, click the link here to find out more.