3 1.3 Flashcards
What is the process to arrive at contractual arrangements?
through direct negotiation or through a process of competitive tender.
Although contracts for one-off purchases maybe simple, low value purchase they may still include?
Warranties and guarantees
Insurance requirements
Specification requirements
Minimum quality standards
Built-in change process
Ability to extend the scope of the contract
Ability to extend the duration of the contract
Data security protocols
What is the key element of a one-off contract?
It relates to a single purchase. A single purchase is not the same as a single item
What is a one-off purchase contract?
A contract for a single engagement - can be simple or complex, it may or may not have been tendered
For simple items, the reasons for using a one-off contract are - low value spends, urgent need and a lack of planning
For complex purchases the reasons for using a one-off approach are - lack of a full developed strategy for the spend area and/or the inability to predict future funding.
What is an informal framework arrangement?
A loose set-up, without any legal standing.
No commonly agreed terms.
Also referred to as an approved supplier list.
What are the benefits of one-off contracts for the purchaser?
The potential for speedy delivery for simple low-value purchase
The ability to tap into falling market prices and/or special offers
Ability to narrow down the terms
What is the definition of Goods, Services and Works?
Goods - products; tangible items or materials that can be touched, stored and moved e.g. raw materials, components or finished goods
Services - something done or provided by a person or a group of peope, intangible, cannot be touched or stored
Works - a special type of service e.g. construction works, buildings, civil engineering.
What are benefits of one-off contracts for the supplier?
there may not be any competition, enabling the supplier to set their own price, if one-off contract is on a spot-purchase basis,
the total spend may be significant even if the individual order values are low, if purchasers regularly use one-off contracts,
What are risks of one-off contracts for the supplier?
Low value ad-hoc purchases make production planning difficult
A failure to perform on this one contract could lose a potential client forever
What are the disadvantages of an informal framework arrangement for the purchaser?
Limits the number of potential providers so the best or most appropriate provider could be missed
Resource intensive as all documentation needs to be checked
Resource requirement for vetting new suppliers
Risk of the lists becoming large and unmanageable
What are the risks of one-off contracts for the purchaser?
Tied to on-the-day price, no market investigation and limited competition
The contract will not allow for extensions should ‘more-of-the-same’ be required
Limited ability to develop a relationship with the supplier
When regulated can be viewed as avoiding the regulations by keeping values below financial thresholds
What are the advantages of an informal framework arrangement for the purchaser?
Reduces tender process costs and speed to supply
Ability to build trust through regular work
Ability to include newly discovered potential providers
What are the advantages of an informal framework arrangement for the Supplier?
Better chance of winning tenders when low number able to bid
Potential for high turnover of low-value orders for known client
Ability to build trust through regular work
Ability to target potential customers without constraints of tender timescales
What is a call off or term contract?
A contract which exists for a fixed period of time, rather than for a specific purchase. They are used where the purchaser has a regular requirement for goods or services of similar nature which they want to be provided by a single supplier
What is an Ad-hoc purchase?
An item bought for a single and non-recurring use or purpose