Dounreay Procurement and Supply Chain Strategy

Dounreay Dounreay Procurement and Supply Chain Strategy March 2016 Issue 7 Dounreay Procurement and Supply Chain Strategy Index Section 1: Commer...
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Dounreay

Dounreay Procurement and Supply Chain Strategy March 2016

Issue 7

Dounreay Procurement and Supply Chain Strategy Index

Section 1: Commercial Services Unit - Objectives & Organisation Section 2: Procurement Strategy Section 3: Procurement Policy Statement Section 4: Contracting and Pricing Models Section 5: Supplier Engagement & Development

Dounreay Procurement and Supply Chain Strategy Section 1

Commercial Services Unit Objectives and Organisation

Dounreay - Commercial Services Unit - Objectives and Organisation This section sets out the Mission, Objectives, Organisational Structure and the key tasks for 2015 to 2017 for the Commercial Services Unit. The Organisational Structure of the Commercial Services Unit is illustrated in the chart contained in Appendix A. The Mission Statement and Key Objectives of the Commercial Services Unit are detailed as follows; 1.0

Commercial Services Unit Mission Statement To support Dounreay in the delivery of the P erformance P lan, the Commercial Services Unit will develop procurement and contracting strategies to secure the right goods and services at the right time at the best value for money.

1.1

Commercial Objectives

1.1.1 Deliver the Performance Plan (a) (b) (c) (d)

Manage Dounreay’s procurement and contracts interface with the NDA; Procure in a timely manner to meet project and programme delivery dates; Produce and manage the Procurement Plan and Monthly Procurement Metrics; Support NDA improvement initiatives (including the Shared Services Alliance).

1.1.2 Protect Dounreay (a) (b) (c) (d) (e) (f)

Ensure that all procurements are subject to a competitive process except in cases where sole source can be shown to represent value for money or is the only option; Allocate commercial risks to those best placed to manage them; Ensure contracts are commercially sound and legally enforceable; Ensure compliance with all relevant legislation; Manage disputes to satisfactory closure; Conduct business in accordance with a strong code of ethics.

1.1.3 Project Manager’s (PM) Expectations (a)

(b) (c) (d)

Support the PM in the development of project business cases and the sanctioning process. Take the lead in developing acquisition strategies, sub contract strategies, preparation of tenders, the tender evaluation process, Contract Award and post contract management; Procure the right goods / services to meet project objectives; Ensure consistency of contract documents; Communicate regularly with the project team including early engagement.

1.1.4 Value for Money / Supply Chain (a) (b) (c) (d) (e)

Ensure all procurements are conducted on a value for money basis including recognition of acquisition cost, whole life cost and quality; Understand and know the market; Share learning and best practice with the Supply Chain, Dounreay and across the NDA Estate; Supply Chain engagement and development; Consider socioeconomic impact and benefits in contracting strategies for major procurements. Page 4 of 34

1.1.5 Enablers – Skills & System Development (a) (b) (c) (d)

Identify, maintain and share best practice functionally between SLCs and the Supply Chain; Have skills and resources to support project delivery; Maintain procurement procedures and a Site procurement strategy reflecting best practice and market conditions; Raise commercial awareness within Dounreay.

1.2.0 Commercial Services – Organisation The C o m m e r c i a l Services Unit comprises o f 5 teams, each managed by a Commercial Manager. The teams within the Commercial Services Unit are: (a) (b) (c) (d) (e)

Central Support & NDA; Site Decommissioning (FCA, Waste, Shaft & Silo); Reactor Decommissioning; Fuels; Contract Management.

Each of these teams has responsibilities and Key Tasks for Financial Years 2015 to 2017 and details of these are contained in the sections below. 1.3.0 Central Support and Strategy 1.3.1 Responsibilities: (a)

Provide a general commercial support service;

(b)

Lead on business improvement programmes for the Unit;

(c)

Act as a procurement and contracts interface to NDA;

(d)

Support NDA’s Collaborative Procurement initiative;

(e)

Co-ordinate the procurement plan and produce key metrics in compliance with the SLC Agreement;

(f)

Maintain and appropriately develop procurement and contract management IT systems to support project delivery and reporting requirements;

(g)

Manage training and development requirements for the team, ensuring key skills and experience are retained or replaced;

(h)

Manage commercial arrangements for resource enhancement.

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1.3.2 Forthcoming Contracts 2016/17 Supply of Bulk & Cylinder Gasses Provision of Laboratory Consumables & Chemicals Provision of Stationery Framework Provision of IT Services Provision of PPE & work wear Provision of Health Physics Resource Supply of Electricity from EDF Energy

£ 2.4M £ 0.6M £ 0.2M £ 5.8M £ 1.1M £ 6.5M £ 3.2M

1.4.0 Site Decommissioning 1.4.1

Responsibilities: (a)

Lead strategy development and implementation for high value projects and provide commercial advice and guidance;

(b)

Implement acquisition and subcontracting strategies that identify opportunities for Dounreay to achieve best value for money with the Supply Chain to complete activities within the Life Time Plan;

(c)

Manage a properly resourced team that provides commercial and contractual support to the Directorates’ objectives;

(d)

Ensure that standards of professionalism are maintained by the Commercial Services Unit with key internal and external stakeholders;

(e)

Develop and manage project procurement plans, ensuring timely contract placement, monitor the same against planned procurements and compete/place contracts to the appropriate procedures commensurate to the value and risk;

(f)

On contract award, administer the contract and manage the variations procedure in conjunction with Project Management to ensure the process is followed and value for money is achieved.

1.4.2 Forthcoming Contracts 2016/17 Waste & Characterisation Directorate Collaborative Procurement for Grout Powders (PFA / OPC) Collaborative Procurement for 6M3 Boxes (CP £55M) Build of DCP ILW Store Extension Supply of a Mobile 8 Container High Stacking System

£ 8.0M £ 5.0M £20.0M £ 0.9M

Fuel Cycle Area Directorate D1217 Facility Concrete Cutting Campaign D1217 Facility Dismantling & Demolition Asbestos Removal No 1 (D1226, D1291, North Side DCP IEF) Asbestos Removal No 2 (D1217, D1251, D2001)

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£ £ £ £

1.5M 0.2M 0.2M 0.2M

Shaft & Silo Decommissioning Project Silo Retrieval Systems

£ 3.0M

1.5.0 Reactors Decommissioning 1.5.1 Responsibilities: (a)

Lead strategy development and implementation for high value projects and provide commercial advice and guidance;

(b)

Implement acquisition and subcontracting strategies that identify opportunities for Dounreay to achieve best value for money with the Supply Chain to complete activities within the Life Time Plan;

(c)

Manage a properly resourced team that provides commercial and contractual support to the Unit objectives;

(d)

Ensure that standards of professionalism are maintained by the Commercial Services Unit with key internal and external stakeholders;

(e)

Develop and manage the Procurement Plan, ensuring timely contract placement, monitor the same against planned procurements and compete/place contracts to the appropriate procedures commensurate to the value and risk;

(f)

On contract award, administer the contract and manage the variations procedure in conjunction with Project Management to ensure the process is followed and value for money is achieved.

1.5.2 Forthcoming Contracts 2016/17 Near Term: Residue Treatment Projects (heel pool pump, heaters, and treatment manifolds) £ 0.7M Skids for Residue Treatment £ 3.2M Longer Term: DFR Reactor Dismantling Multi-Purpose Shielded Container PFR Reactor Dismantling Bulk Sodium Treatment Facility

£11.0M £ 1.1M £14.0M £12.6M

1.6.0 Fuels 1.6.1 Responsibilities: (a)

Lead strategy development and implementation for high value projects and provide commercial advice and guidance;

(b)

Implement acquisition and subcontracting strategies that identify opportunities for Dounreay to achieve best value for money with the Page 7 of 34

Supply Chain to complete activities within the Life Time Plan; (c) (d)

Manage a properly resourced team that provides commercial and contractual support to the Directorates’ objectives; Ensure that standards of professionalism are maintained by the Commercial Services Unit with key internal and external stakeholders;

(e)

Develop and manage the Project Procurement plans, ensuring timely contract placement, monitor the same against planned procurements and compete/place contracts to the appropriate procedures commensurate to the value and risk; and

(f)

On contract award, administer the contract and manage the variations procedure in conjunction with Project Management to ensure the process is followed and value for money is achieved.

1.6.2 Forthcoming Contracts 2016/17 Un-Irradiated Exotics Priority is to remove the un-irradiated exotic materials off the Dounreay Site by 2017. This will be delivered mainly through contracts already in place No major procurements (greater than £3M) Engineering Support Contract 42 Used Fuel Cans Used Fuel Can Welding System Glove-boxes (4 in different work streams) 1.7

£1.0M £0.5M £0.3M £0.4M each

Site Wide Frameworks Frameworks due for renewal during the next financial year: Site Investigation Services Scaffolding Services to Support Minor Projects Mechanical, Electrical, C&I Services (Major) Mechanical Services (Minor) Electrical, C&I Services (Minor) Building & Civils Services (Major) Building & Civils Services (Minor) Professional Services

Page 8 of 34

£ 2.0M £ 3.0M £20.0M £10.0M £ 5.0M £10.0M £10.0M £20.0M

Appendix A – Commercial Services – Organisation

SUPPORT DIRECTORATE Commercial Services Head of Commercial Services

Commercial Manager (Contract Management)

Commercial Manager Fuels

Commercial Manager Reactors

Commercial Manager Site Decommissioning Area

Contracts Manager (Shaft and Silo)

Contracts Managers

Contracts Manager

Contracts Manager

Contracts Manager (Fuels)

Assistant Contracts Manager

Assistant Contracts Manager

Contracts Manager (Fuels)

Contracts Officers Graduate

Contracts Manager (Waste)

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Commercial Manager Central Support and NDA

Assistant Contracts Manager Contracts Officer Graduate Administrator

Dounreay

Dounreay Procurement and Supply Chain Strategy Section 2

Procurement Strategy

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Dounreay Procurement Strategy 2.1

Introduction

DSRL operates under Contract to the Nuclear Decommissioning Authority (NDA) and is a wholly-owned subsidiary of the Cavendish Dounreay Partnership Ltd (CDP), a consortium of Cavendish Nuclear, CH2MHILL and Aecom. It is funded by the NDA to deliver the Site closure programme agreed with the Cavendish Dounreay Partnership. As such, the procurement strategy is influenced (amongst other things) by CDP, the NDA, and the statutory and ethical requirements of being publicly funded. This section describes the Dounreay Site wide Procurement Strategy and should be read in conjunction with the Performance Plan to obtain an understanding of DSRL’s procurement requirements over the financial years 2015 to 2017. 2.2

Purpose of the Dounreay Procurement Strategy

DSRL expects to spend circa £100M - £110M per annum with its supply chain on a wide array of requirements ranging from minor office supplies to major construction projects. This Procurement Strategy summarises the methods and initiatives DSRL are implementing in order to have a robust and competitive supply chain; with the necessary skills, capability and capacity to support the decommissioning of the Dounreay Nuclear Licensed Site to an agreed Interim End State. The Strategy document will be updated as the decommissioning at Dounreay continues to progress and the challenges change. DSRL will develop mature and open relationships with the Supply Chain that will deliver business solutions which meet or exceed DSRL’s Safety, Environmental, Quality, Schedule and value for money requirements. 2.3

Procurement Scope

DSRL has determined that in order to comply with Statutory and Legal obligations and to mitigate significant business risks, certain core/critical business activities should be selfperformed. DSRL has similarly determined that all other business activities necessary to discharge its obligations as set out in the LTP shall be subject to a Make/Buy Process. The Contract Project Manager and the Commercial Manager are responsible for the preparation and submission of Project Acquisition Strategies which are approved by the Project Director and/or the internal sanctioning panel depending on risk and value. The Make/Buy decision is an integral part of that Strategy. 2.3.1

DSRL Self Performed Activities

DSRL’s core/critical business activities are set out below and represent the activities that need to be performed directly by DSRL (or seconded from CDP) in order to manage significant business risks and ensure compliance with the Nuclear Site License and other Statutory requirements. Core activities cover leadership, strategy, governance, stakeholder management, assurance programme management, business change management, intelligent customer capability and functions covered by the safety base line to ensure compliance with the requirements of the Nuclear Site Licence. Page 11 of 57

Critical activities typically cover significant business risks and compliance with Legislation (e.g. Dosimetry, Radiation Protection Advisors, Radioactive Material Transport, and Maintenance of Critical Assets). 2.3.2

Make/Buy

DSRL recognises that the Make/Buy decision process is a clear area where significant economic and associated socio-economic opportunities exist in line with NDA objectives. It is necessary that a robust approach is taken to challenge existing custom and practice when deciding whether to Make or Buy and to re-challenge this as Site decommissioning progresses. All Make/Buy decisions must demonstrate the economic benefits, risks and opportunities associated with the recommendation. The Make/Buy process provides a decision making tool to assist with maximising business performance and delivery of value for money solutions. This is achieved by:     

Reserving DSRL’s core and critical mission work for in-house performance; Retaining work that presents high performance risk. Where not practicable, strengthening the DSRL intelligent client capability for procuring such work; Balancing the benefits of open competition with local socio-economic objectives within EU procurement rules; Using shared services when it offer best value and optimise use of resources across NDA sites; Meeting demand through the supply chain when staff leaves to find alternative work as the Intermediate End State approaches.

Figure 1.1 below shows DSRL’s Make / Buy Decision Process. The outputs from the process will be one of the following:   

Must Make; Must Buy; or Make or Buy decision for those that could be either.

Figure 1.1 – Make / Buy Decision Process

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2.3.3

The Buy Decision

Generally, the principle business drivers for deciding to Buy or Out-source an item or activity are due to the following reasons:          

Capability (DSRL does not have the capability and has no business driver to create the capability); Capacity (DSRL has the capability but does not have the capacity to undertake the activity); Unique or non-continuous activities (where DSRL pays only for the requirement); Intellectual Property (where the Supply Chain possess knowledge i.e. patents, design rights, specialist skills including Safety related); Risk Transfer (where it is appropriate and beneficial to transfer risk to the Supply Chain as they are best placed to manage the risk); Competitive Tension (where there are strong competitive forces within the Supply Chain); Efficiency (where there are demonstrable efficiencies available in the Supply Chain); Flexibility (where there are more flexible working practices available in the Supply Chain); and Whole life costs, including investment, replacement and development costs; staff costs and liabilities, etc. Strong socio economic reasons outweigh potential benefits of a Make decision

The outcome of the decision to Buy or Out-source must clearly demonstrate not only Value for Money, but efficiencies and (importantly) tangible benefits or savings/cost reduction. 2.3.4

Buying Strategies

DSRL applies Aggregation, Standardisation and Transformation strategies as appropriate to obtain the best value for money in procurement. These strategies are summarised as follows: 

Aggregation in its simplest form involves the aggregation of demand to leverage lower unit costs through economies of scale and is usually most effective when applied to the procurement of commodities, goods, manufactured items and repetitive standard services. Aggregation can be within or across the NDA Estate through the Shared Services Alliance and Collaborative Procurements (see below). The Crown Commercial Service (CCS) is also utilised where appropriate. Aggregation could also be done across the Dounreay Site using framework contractors or term service contracts. Leverage will be most effective with the highest level of participation in the initiative. A further benefit of aggregation is the opportunity to share and reduce the cost of the administrative burden.

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The under noted is a list of collaborative procurements that DSRL is actively participating in:                      

Access & Insulation; Agency Supplied Workers (ASWs); Alcohol and Substance Abuse Testing; Beach Monitoring; Bulk and Cylinder Gases; Caustic Soda; Electrical / Mechanical (MRO); Electricity; Estate Management; Health Physics; High Integrity Stainless Steel Containers; ILW Container (Robust Concrete Boxes) Laboratory Supplies & Chemicals; Metallic Waste Treatment Services; Online Standards; Payroll Services; PPE, PVC Containment and Workwear; Professional Services (Government Procurement Service); Stationery; Statutory Inspections; and Travel Booking Service

Standardisation involves identifying opportunities through best practice to harmonise business processes, practices, products and systems across DSRL and potentially the NDA Estate, in order to achieve common approaches. The benefits of standardisation include:    

Reduction in management and administration costs; Consistency of approach; Lower risk of failure or problems; and Potential lower direct costs.

Commercial Services are actively involved in standardisation initiatives including a combined complete tender management system (CTM), additional templates for contract and tender documentation, a generic NDA Estate Prequalification Questionnaire, standardised NDA flowdown provisions and rationalisation of catalogue items (e.g. stationary, PPE, workwear). The area currently identified as the biggest opportunity for standardisation is waste containers and DSRL is working with the rest of the NDA Estate to reduce the substantial costs of waste containers required at Dounreay and other sites.

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2.3.5

Transformation mainly involves engagement with the Supply Chain to identify innovative, cost effective long term business solutions that meet the requirements of DSRL and the NDA Estate. It is generally the case that transformation has high implementation costs and durations and there is limited opportunity to apply it to procurement activities at Dounreay due to the short programme life. However, an example of where DSRL can apply transformation is the Strategic Interest Group (SIG) for Health Physics which DSRL is leading on across the NDA Estate. The SIG will consider, amongst other things, Estate wide resourcing and potential addition of other bodies that make use of Health Physics services (e.g. AWE, UK Border Agency).

Supply Chain Risk and Responsibility

DSRL allocates supply chain risk (both threat and opportunity) appropriately to the scope of work to be procured by choosing the most suitable contracting mechanism. Risk is allocated to the organisation best placed to manage it. DSRL shall negotiate fair risk allocation based on the risk reward benefit and ensure that technical specifications are as well defined as possible to minimise the risk to all parties. Supply chain risk includes both the commercial risks associated with the nature of the procurement/contract and risks associated with the supply chain. For procurement and contract risk assessments, products and services are categorised to reflect their relative supply importance in respect of risk and value (see Figure 1.2 below).

Figure 1.2 – Risk Matrix Page 15 of 57

There are four categories: strategic relationships, security of supply, leverage items and routine items. The key considerations in a risk assessment are:           

Value of the contract; Availability of source of supply; Criticality to project or programme; Level of technical complexity; Uncertainty in the project scope; Interfaces and dependencies with other work packages/procurements; Security of supply; Benefits of aggregation and collaboration across the site and the NDA Estate; Operating environment; Impact on the supply chain; Impact on other organisations within the NDA Estate.

DSRL assesses the commercial risk and value / uncertainty of the identified procurement requirement, positioning the procurement in one of four boxes on the Risk Matrix to establish the most suitable contracting strategy. Figure 1.2 summarises the key contract features associated with these commercial risks. For simple low-risk activities, fixed-price contracting arrangements are the most appropriate means of risk transfer. Where complex, high-risk contracts are being procured, more innovative contractual strategies are developed using target cost incentivised arrangements to ensure an equitable balance of risk between the parties. DSRL maintains a risk register of all risks, including supply chain risks, throughout the contract term. Supply chain risk assessments are supported by financial health checks on key suppliers and market intelligence gathering on performance issues and impending acquisitions. 2.3.6

Procured Items

Once the Make/Buy process has established that work should be procured via the Supply Chain, then project teams should engage with their nominated commercial representative to ensure that the procurement is undertaken in accordance with the DSRL Procurement Manual MAN 0003 and the under noted rules are complied with:   



No expenditure should be incurred unless it is in the site Performance Plan, and only limited costs can be committed prior to the approval of Business Case, Acquisition Strategy and/or Subcontract Strategy; Sanction must be signed off by an individual or committee with the correct level of delegated authority; For resource augmentation contracts, DSRL’s primary source of resources will be from Agency Supplied contracts (currently Capita and Morson). The next preferred option is the Site frameworks and only once these routes have been exhausted shall reachback be used for hired staff; Wherever possible DSRL shall procure standard off the shelf equipment that is fit for purpose taking cognisance of the limited operating life of the Dounreay site; Page 16 of 57



 

    

 

      

2.3.7

For discrete packages of work DSRL’s preferred hierarchy of reimbursement is fixed price, target price, measured work and cost reimbursable (giving due consideration to adequacy of scope definition and parties best placed to manage risk). See Section 4 for more detail; Maximise use of competition (minimise the use of sole source and provide justification for any single source tenders within the sub-contract strategy); Comply with Public Procurement requirements and give due consideration to the chosen procurement route - open, restricted, sole source or competitive dialogue based on where the package would be placed on the supply chain risk / cost matrix; Define the project or package critical success factors and link to the tender evaluation criteria; All procurements must be conducted in an ethical and sustainable manner; Compliance with Health, Safety, Security, Environmental and Quality Legislation and Site requirements; Use the appropriate contract from the NEC Suite (and consider other appropriate terms where the NEC is not applicable for example property leases); On selection of the appropriate form of contract from the NEC suite, consideration needs to be given to the selection of the main and secondary options and any bespoke amendments to ensure adequate risk mitigation. Any bespoke amendments to standard forms of contract must be approved by the Head of Commercial Services; Ensure appropriate NDA flow downs are incorporated into all contracts; For ongoing service contracts a TUPE indemnity provision is inserted in the contract to ensure DSRL are protected against the risk of future redundancy liability. Should this not be achievable, approval must be provided by the Head of Commercial Services; Any incentives or remedies for breach should be linked to project critical success factors; Termination for Convenience should be limited to one month’s notice, with an express exclusion removing the Contractors rights to loss of profit. Any deviation from this shall require the approval of the Head of Commercial Services; For target cost contracts under NEC ensure that pain share is calculated on an annual basis and deducted from the Contractors payment. Value for money should consider whole life cost of solutions (Capex, Opex, reliability, decommissioning and site remediation) and be linked to the project critical success factors; Ensure that due consideration of SMEs and socio economic are taken into account when developing acquisition and subcontract strategies; The use of aggregation, standardisation and frameworks could present DSRL with the opportunity to rationalise its Supply; Ensure that due consideration is given to the use and creation of Intellectual Property Rights and informing the NDA where appropriate. E Tendering

In 2012 Commercial Services introduced the CTM (Complete Tender Management) System which is an internet based tendering system, supported by EU-Supply. At present all requirements are published via OJEU use the CTM System. Page 17 of 57

DSRL has no current plans to carry out any electronic auctions during 2015 to 2017 but consideration will be given to its future use as a strategic tool. 2.4

Sole Source Procurement and Continuity of Supply

As a guiding principle sole source procurements should be avoided wherever possible. However, the necessity of sole source procurement is recognised in specific circumstances. Where a sole source procurement is required, Commercial Services and the project teams must work together to mitigate the potential adverse consequences of sole source procurement, including:    

Lack of demonstrable value for money; Reduced certainty regarding the security of supply; Weaker SLC position to negotiate contract terms and conditions; and Limited options in the event of poor supplier performance.

The Procurement Plan is used to create a clear understanding of all current and future sole source contracts required to execute the LTP. In order to mitigate the adverse consequences of such procurements there are processes and governance in place. The key elements of these processes are as follows:          

Survey of industry capability to ensure there are no other service or product providers; this could be through a call for expressions of interest; Sign-off by an appropriately delegated authority is mandatory; All sole-source procurement must comply with EU Procurement rules; Prices must be benchmarked wherever possible to ensure that best value for money is achieved; Adequate break clause conditions must be provided in the contract; The impact of sole-source procurement on other suppliers must be considered; Ongoing supplier financial health checks to monitor changes in the wider supply chain capability; Challenge the scope of sole source procurements to cover only those services that cannot be procured through open competition; Good understanding of price breakdown; and Agreed schedule of rates.

Where appropriate, sole-source contracts are reviewed on a regular basis to examine whether there is any other way of providing these goods and services. Where a new solesource procurement activity arises, a detailed formal single tender action request is made by the project. This details the rationale behind the single tender action. 2.4.1

Business Continuity Management (BCM) and Supplier Monitoring

A prolonged disruption to performance on critical contracts could result in adverse impact to the Site; e.g. disruption to key processes, critical activities, resources and dependencies utilised in the delivery of business obligations. DSRL has produced a Business Continuity Management Plan which sets out the strategy and arrangements that have been established to ensure that, in the event of a disruption to critical contracts, the Site remains compliant with all statutory requirements and that disruption to operations and delivery is minimised. Page 18 of 57

In conjunction with the BCM plan, DSRL holds a Critical Supplier List which is reviewed and updated periodically by Commercial Services. The list is made up from suppliers of key service provisions (such as IT, Facilities Management, Health Physics) and suppliers of key consumables/components (in particular those in a market of very limited competition, if any). DSRL also monitors all its key, critical and top 100 suppliers (by spend) for financial stability in collaboration with other SLCs in order to take a holistic view across the NDA estate.

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Dounreay

Dounreay Procurement and Supply Chain Strategy Section 3

Procurement Policy Statement

3.1

Dounreay Procurement Policy

It is Dounreay policy to:

3.2



consider SME and socio-economic impact and benefits in acquisition and contracting strategies for major procurements;



to work collaboratively with the Supply Chain to improve safety, environmental and security performance;



obtain best value for money, based on lifetime costs, in the purchase of goods and services;



compete requirements unless there are compelling reasons to sole source;



demonstrate the highest ethical standards in all dealings with suppliers and contractors;



maintain security of supply using sustainable sources;



communicate Dounreay requirements to the Supply Chain, by updating and publishing the Procurement Plan every month;



comply with all relevant aspects of the EU Public Procurement Directives;



undertake all procurements in accordance with good industry practice;



apply an approved quality management system to all procurements;



monitor critical, key and high spend suppliers for financial strength;



apply a ‘make or buy’ decision-making process to all non-core activities; and



assess supplier performance and provide feedback to the Supply Chain.

Expectations of Supply Chain

Dounreay expects its suppliers to: 

demonstrate responsible health and safety performance as per legislation and Site requirements;



demonstrate responsible environmental performance and apply rigorous standards of environmental protection and to comply with all site security requirements;



provide best possible value for money;



bring innovation and continually deliver improvements as reflected in Dounreay review feedback;



not discriminate on any basis or undertake any unethical practices;



treat sub-contractors fairly and ensure flow down of prompt payment through the Supply Chain;



respect commercial confidentiality;



share feedback with DSRL, regarding Dounreay performance such that 360 degree feedback can be obtained.

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Dounreay Procurement and Supply Chain Strategy Section 4

Contracting and Pricing Models

This section is a summary of the guidance available on contract and pricing types. Further information is available from Dounreay Commercial Services. 4.1

Contract Types

Dounreay decided to transition from GC Works to NEC contracts in the late 1990’s due to a drive for less adversarial contractual relationships. The suite of documents is now on edition 3 and is referred to as NEC3. NEC3 continues to be recommended by government for public authorities to use. Different NEC contract types are used for different phases of projects and for different project complexity (figure 2.1 below). NEC3 is suitable for procuring a diverse range of works, services and supply spanning minor works and purchasing of supplies and goods through to major construction and engineering works.

Figure 2.1 The NEC3 Family of Contracts

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Works encompasses contracts such as the construction of buildings, major process plant and equipment. NEC contract types under works include:    

NEC3 engineering and construction contract (ECC) NEC3 engineering and construction short contract (ECSC) NEC3 engineering and construction subcontract (ECS) NEC3 engineering and construction short subcontract (ECSS)

Services encompass contracts such as the purchase of both professional services, for example engineering and consultancy, and maintenance or management services. The NEC contract types under services include:   

NEC3 term service contract (TSC) NEC3 term service short contract (TSSC) NEC3 professional services contract (PSC)

Supply includes supply of high value goods. The NEC contract types under supply are:  

NEC3 supply contract (SC) NEC3 supply short contract (SSC)

The framework contract (FC) is also available and is used for appointing one or more framework contractors. Under a framework contract, the suppliers prepare mini-competitions against defined scopes of work, to different pricing strategies. Use of these contracts is demonstrated in the table below: Type of Work Supply, delivery, installation of medium- and high-value/risk mechanical and electrical plant, including work on or off site Low-value, low-risk supply and repair of goods, including work on or off site Decommissioning/engineering works

Type of Contract NEC3 ECC

NEC3 ECSC NEC SSC NEC3 ECC

Consultancy/R&D/professional services

NEC3 PSC NEC3 FC

Term contract/facilities maintenance Civil/building works and demolition

NEC3 TSC

Supply of goods and services

NEC3 ECSC

NEC3 SC NEC3 SSC

Where They May be Used  Supply and installation of equipment for the PFR decommissioning  Supply and installation of equipment for the DFR decommissioning  Supply of bottled gases  Lifting inspections  Pressure system testing  Detailed design of specified systems for shaft and silo retrieval plant  Design and build of Reactors Waste Processing Facility  Build of the ADU Floc Plant  Design and build of DCP ILW Store Extension  Encapsulation development work  Letter of compliance support  Safety case writing support  Scheme and detail design of the Shaft & Silo facilities  Health Physics  Decommissioning Support Services  Demolition of inactive buildings  Minor repairs to buildings in Site General Areas  Supply of containers–TRU-Shield, , Thorp cans, HHISOs  Supply of transport services–movement of wastes on and off site

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4.2

Pricing Mechanisms

Using different pricing mechanisms allows Dounreay to deliver best value for money and lowest commercial, technical and programme risk for the projects. The appropriate pricing mechanism is chosen depending on the nature of the work and how well the scope of work can be defined. Dounreay’s preferred pricing mechanism is fixed-price based on detailed scopes of work. However, the approach is flexible to meet the needs of the project. The table below summarises the different pricing mechanisms, their benefits and where they may be used. Pricing Mechanism

Option

Benefit  

Fixed-price contract

A B



Inflation linked price adjustment formula Transfer of risk to supply chain Low administration costs in managing this type of contract

Where They May be Used      

  Target cost with incentivised fee

C D

   

 Costreimbursable contract

E

Used for fully scoped, low commercial risk projects , for example: Supply and installation of equipment Supply of waste containers Non-destructive assay systems Robotic systems Asbestos removal

Approach allows visibility of the true cost of the activity for future benchmarking Allows the opportunity to incentivise the contractor to achieve specific milestones Promotes a strong cost control mentality on both parties Supports improved Dounreay/supplier relations Promotes cost saving initiatives





Build of LLW Vaults

Contractors should receive lower margins because most of the risk remains with Dounreay Relatively low administration costs in managing this type of contract



Used for projects where scope and usage levels are very uncertain Used for low value requirements and is closely managed to ensure control of time, cost and quality Optioneering assessment Agency-supplied workers Health Physics Monitoring resources Decommissioning Operatives

Demolition of reactor buildings



   

Page 25 of 57

Used for complex contracts where scope is uncertain and there are diverse interfaces, for example:

Dounreay Procurement and Supply Chain Strategy Section 5

Delegated Authorities

Page 26 of 57

5.0

DELEGATED AUTHORITIES

5.1

Commercial Delegation

Authority to sign commercial documents including sub contract strategies, contracts and contract amendments is delegated within the commercial team. Dounreay use a dual signature approach to commit the business to a contract with the supply chain. This is usually the document author and a senior person within the Commercial Team depending on value. For very high value contracts a member of the Executive Committee may be a signatory to the contract. 5.2

SAP EBP

Dounreay use SAP Enterprise Buyer Professional (EBP) to generate contract numbers and hold purchase order data for finance and payment purposes. SAP EBP provides internal sanction to commit the business and delegated authorities are managed by finance and formally notified to the individual. SAP EBP is set up to ensure that the correct person receives the ‘purchase order’ electronically to authorise and is based on value and category.

Page 27 of 57

Dounreay

Dounreay Procurement and Supply Chain Strategy Section 6

Supplier Engagement and Development

6. SUPPLY CHAIN ENGAGEMENT AND DEVELOPMENT 6.1 Introduction The development of the Supply Chain is considered by Dounreay to be essential for delivering value for money. This section describes the Dounreay strategy for development and engagement with the Supply Chain. It includes initiatives to reduce the non-value added work that suppliers need to carry out in order to tender for opportunities and administer contracts with Dounreay. Further, this section summarises our socioeconomic and SME (Small and Medium Enterprise) commitments. The NDA supply chain development principles are taken into consideration in Dounreay’s supply chain development strategy. Dounreay is committed to the implementation of the key NDA principles. Dounreay is a signatory to the NDA’s Supply Chain Charter for nuclear decommissioning sites and encourage members of their supply chain to become one as well. The Supply Chain Charter aims to foster good working relations across the NDA estate's supply chain, with parties signing up to a set of principles encouraging mutually beneficial and rewarding relationships. As NDA and Dounreay value the whole supply chain, the concept of a Supply Chain Charter was identified to help deliver the following:   

For all levels of the supply chain to 'be a good client'; To foster good working relations; and Improve planning and performance through all tiers of the supply chain supporting the NDA estate.

The charter is available on the NDA’s web site at www.nda.gov.uk/contracts 6.1 Supply Chain Development The purpose of Supply Chain Development is to ensure that:     

there is a healthy competitive environment where the Supply Chain is seeking to participate in the tendering process for contracting opportunities at the Dounreay Site; the Supply Chain is aware of contracting opportunities at the Dounreay Site; the Supply Chain is actively encouraged to propose innovative solutions that deliver value for money solutions; there is a continuous improvement process for the delivery of value for money through the involvement and delivery by the Supply Chain; and Dounreay’s current and future contracting requirements are identified and met.

The Dounreay Supply Chain consists of a diverse range of contracting organisations, such as: Page 29 of 34

    

6.1.1

Large Multi Nationals; UK Based Small and Medium Enterprises; Local and Regional Based Companies of varying sizes; Subcontractors supporting the above Contracting Organisations; and Specialist Suppliers.

Communications with the Supply Chain

Policy - Dounreay’s communications with the Supply Chain:   

will always be open, honest and transparent; will be responded to in a prompt professional manner; and will provide an accurate representation about current and future contracting opportunities and will not knowingly raise the expectations of the Supply Chain.

Communication Routes - Dounreay will communicate with the Supply Chain through the following routes:     

Advertising of contracting opportunities; As part of the tendering process; e.g. Site visits, responses to tender queries, debriefing of unsuccessful Tenderers; Meeting with representatives of contracting organisations; Regular Supply Chain briefings; the Caithness Chamber of Commerce.

Advertising - Contracting opportunities will be published and advertised in:    

the Dounreay Procurement Plan (all opportunities > £50K); the Dounreay website (selected opportunities > £50K); the Official Journal of the European Union through the issue of PIN and OJEU Notifications (opportunities over the current EU Procurement Directive thresholds); Contracts Finder for bullets 2 and 3 above (See 6.2 below for additional details).

6.2 Opportunities for Supply Chain Development Dounreay has identified a number of opportunities for Supply Chain engagement and development, and is participating in estate wide initiates led by the NDA. This section summarises those initiatives. 6.2.1 Supplier Events and Conferences It is recognised that participation in supplier events and conferences can facilitate new suppliers and technologies to decommissioning at the site. Dounreay plans to participate in the following in 2015 to 2017:     

Nuclear Decommissioning Conferences; NDA National Supply Chain Event (usually in November each year); Scottish SME Stakeholders Group Scottish Enterprise and Highland and Island Enterprise initiatives; and Local supplier briefings. Page 30 of 34

6.2.2

Performance Review and Feedback

Revised supplier performance reviews were implemented in 2012. has fewer but more relevant questions. Review categories are:  Commercial  Management & Technical  Commissioning (if applicable)  Safety, Quality & Environmental

The supplier review now

Supplier performance reviews will be carried out for:  All procurements over £50k, at the end of the contract  Companies with an annual spend of £250k+, in order to cover suppliers with high spend but relatively low contract values. Information gained from the reviews will be used by DSRL to:  Provide benchmarking performance to NDA  Drive continuous improvement through working with the Supply Chain  Providing regular two way feedback sessions (360 degree review)  Feed into post investment appraisal for large projects/procurements  Provide reputational information (e.g. for references) 6.2.3 Contract Opportunities Portal Every SLC currently advertises procurements on their own web-site which makes it very difficult for suppliers to keep up to date with estate opportunities. Dounreay is supporting an initiative by NDA to advertise in a central web-portal, where all opportunities in the estate are easily accessed. To this end, Dounreay and the other SLCs have registered with “Contracts Finder”, the government portal for advertisement of opportunities. This can be found at: http://www.contractsfinder.businesslink.gov.uk/ Suppliers can search on “NDA Estate” to find all opportunities across all SLCs. 6.2.4

Generic PQQ

The NDA estate has developed a generic Pre-Qualification Questionnaire to replace SLC standard templates. This means that every SLC will ask the same questions on basic information (e.g. with regards to accreditations, HS&E statistics, etc.) when it comes to suppliers expressing interest in work, which should reduce the effort required. Dounreay uses the CTM (Complete Tender Management) system. Previous answers to the generic questions will be saved, further reducing the effort required in expressing interest in opportunities. Dounreay is also supporting further developments in this initiative including consistency on marking and standard templates for technical questions.

Page 31 of 34

6.2.5 Small and Medium Enterprises (SMEs) "SME" stands for small and medium-sized enterprises – as defined in EU recommendation 2003/361. The main factors determining whether a company is an SME are: 1. number of employees; and 2. either turnover or balance sheet total. Company category Medium-sized Small Micro

Employees < 250 < 50 < 10

Turnover ≤ € 50 m ≤ € 10 m ≤€ 2 m

or Balance sheet total ≤ € 43 m ≤ € 10 m ≤€2m

There is an aspirational government target that 25% of all public spend opportunities are awarded to SMEs. Dounreay’s SME spend in 2014/15 equated to 19.1%, it is still amongst the highest in the NDA Estate and DSRL wishes to continue this in the future. The initiatives described in this section go some way to enable this, making it easier for SMEs to access and win opportunities within the nuclear decommissioning market. Dounreay will monitor its SME spend on a quarterly basis and expects its top tier 2 suppliers to support this initiative and monitor their own spend in the same way. In addition to the other initiatives summarised in this section that will be of benefit to SMEs, Dounreay are implementing the following in collaboration with the rest of the NDA estate:  Procurement plans which break out disciplines in order that companies can take a view on potential subcontract opportunities;  Writing to our top 20 Tier 2 suppliers by spend to encourage them to register with Contracts Finder for advertising sub-contract opportunities; and  Record interest by SMEs in opportunities to see if initiatives are having a positive effect. 6.2.6 NDA Flowdown The NDA is leading an initiative to reduce the amount of conditions (in its contract with the SLC) that are required to be “flowed down” to SLC supply chains. The aim is to limit the flowdown conditions to contract terms which the NDA requires to be incorporated into subcontracts for one of two reasons:  Flowdowns required to allow the NDA to manage the estate (i.e. change of control, novation and assignment provisions); and  Flowdowns which are required in order to enable the NDA to comply with its own statutory obligations (Anti Bribery, FOI, etc.). Further, application of NDA flow-down conditions is now >£150k for contracts and subcontracts raised from £50k (in 2013/14).

Page 32 of 34

6.2.7 NEC3 Contract Management Software Dounreay implemented a NEC3 Contract Event Management and Reporting Tool in 2012 called CEMAR. This allows communication between parties over a single web-application. The system minimises the administration burden on the parties, automating correspondence and guiding teams through contract procedure ensuring compliance. Intuitive alerts keep teams aware of their responsibilities. The system is used for new significant NEC contracts in the main, however as parties get to know the system lower value contracts will be administered through CEMAR. More information on the system is available from www.cmtoolkit.co.uk 6.3 Supplier Complaints Dounreay takes complaints against the company or its staff very seriously and has formal processes and procedures if this were to occur. The Dounreay web site contains details on how suppliers can make a formal complaint. The complaint will be acknowledged within 2 working days, investigated and responded to within 20 working days. If this is not achievable, Dounreay will respond stating the date of expected reply, giving reasons for the delay. The internal Supplier Complaints Procedure is applicable to both informal and formal complaints made by existing or prospective suppliers. It provides guidance on the actions to be taken by Commercial Services staff, including advice to be given to technical staff managing projects and contracts. On existing contracts, the administration of the contract and the dispute resolution process provided under the contract is used to resolve most issues, and not the Supplier Complaints Procedure. 6.5

Community Benefits Policy

European Procurement Directives and UK legislation enable Contracting Authorities to maximise community benefit within public sector contracts. DSRL is committed to contributing to the social economic and environmental well-being of the wider community. Whilst complying with EU and UK legislation, this will be achieved through:  

including community benefit requirements within major contracts. maximising Community Benefits from procurement activities.

Community Benefits The important Community Benefits for DSRL will be those which contribute to the delivery of the Dounreay Socio Economic Plan through  

education initiatives Skills development through training and recruitment

and those which offer sub-contracting opportunities for SMEs in the Caithness & North Sutherland area or contribute to the economic, social or environmental well-being of society. Page 33 of 34

The process for identifying, implementing, monitoring and reporting Community Benefits in DSRL contracts is given Appendix A. Community Benefits will be considered as a part of the acquisition and contract strategies by Commercial Managers. When compiling acquisition and contract strategies Commercial Managers can also   

specify smaller contracts or split larger contracts into smaller lots allowing local, smaller suppliers an opportunity to compete; setting specifications and contract conditions which set performance terms to ensure that due weight is placed on important economic advantages of local suppliers. (e.g. the need for responsive emergency call-out arrangements); engage with the local market in pre-procurement activities such as Supplier Briefing Events to communicate future opportunities.

.

Page 34 of 34

Appendix A to the Procurement Strategy

Community Benefit

29 February 2016

Protocol for Community Benefits in Procurement

29 February 2016

Contents 1.0

Introduction...........................................................................................................................................38

2.0

Community Benefits Commitment........................................................................................................39

3.0

Identifying Potential Community Benefits...........................................................................................39

4.0

Transparency, Non-Discrimination and Proportionality......................................................................40

5.0

Inclusion of Community Benefits .........................................................................................................40

6.0

Specifying Community Benefits within Procurement Documents .......................................................41

Contract Notice............................................................................................................................................41 Pre-Qualification Questionnaire ..................................................................................................................41 Evaluation ....................................................................................................................................................41 Invitation to Tender .....................................................................................................................................42 Evaluation ....................................................................................................................................................43 7.0

Implementation of Community Benefits .............................................................................................44

8.0

Monitoring the Delivery of Community Benefits ..................................................................................44

9.0

Key Tier 2 Suppliers ................................................................................................................................44

APPENDIX 1: Examples of Community Benefits...............................................................................................46 APPENDIX 2: Example Contract Notices .........................................................................................................48 APPENDIX 3: Example Prequalification Questions...........................................................................................49 APPENDIX 4: Example Invitation to Tender Questions....................................................................................50 APPENDIX 5: Suggested Scoring Criteria for Evaluating Community Benefits with Tender Submissions .......56

29 February 2016

1.0

Introduction

1.1

European Procurement Directives and UK legislation enable Contracting Authorities to include Community Benefits in the procurement process, in certain circumstances. This document provides guidance on the incorporation of Community Benefits within the procurement process.

1.2

The legislation applicable to DSRL are the Public Contracts (Scotland) Regulations 2012 (”the Regulations”) and the Procurement Reform (Scotland) Act 2014 (”the Act”).1 The Act regulates the procurement of contracts that are valued below the EU thresholds. The Regulations apply to the procurement of contracts valued above EU thresholds. The current EU Threshold values are detailed in Table 1. Table 1: EU Threshold Values

Supplies Other public sector contracting authorities

£172,514 €207,000

Services £172,514 €207,000

Works £4,322,012 €5,186,000

1.3

Legal advice has stated that DSRL is a contracting authority for the purposes of both the Regulations and the Act.

1.4

From 18 April 2016, the Public Contracts (Scotland) Regulations 2015 will come into force and implement the 2014 EU Procurement Directive (Directive 2014/24/EU) into Scottish Law. These will replace the Regulations.

1.5

Where applicable, DSRL will commit to maximising socio economic benefits from its procurement activities. This will be achieved through either the use of method statements or the inclusion of specific contract clauses, see section 5.1 below. The use of specific contract clauses are known as “Community Benefit Clauses”.

1.6

Community Benefit Clauses are contractual requirements which deliver wider benefits in addition to the core purpose of the contract. The term “Community Benefits” derives from the Act and defined as: “a contractual requirement imposed by a contracting authority -

1

The Act is not clear on the status of DSRL relating to reserved matters. This means that any approach that assumes that the Act does not apply will expose DSRL to risk. Therefore for the purposes of this document, the Act will apply to DSRL activities.

29 February 2016 (a) relating to (i) training and recruitment or (ii) the availability of sub-contracting opportunities or (b) which otherwise intend to improve the economic, social or environmental wellbeing of the authority’s area in a way additional to the main purpose of the contract in which the requirement is included.”

2.0

Community Benefits Commitment

2.1

DSRL is committed to maximising Community Benefits from its procurement activities.

2.2

For any supplies, services or works contract with an estimated purchase value above the threshold values detailed in table 2 the inclusion of Community Benefits, on a case by case basis, must be considered from the outset of each tendering process. As part of this consideration, the relevant Commercial Manager will interact with the Community Relations Manager. Table 2: Threshold Values for DSRL Contracts

Threshold Value

Supplies

Services

Works

£500,000

£500,000

£1,000,000

For contracts below the threshold values, Commercial Managers are encouraged to consider if there are Community Benefit opportunities. 2.3

Commercial Managers should always consider if there are community benefits that maybe achieved that are linked to the subject matter of a contract. If there are, the Community Benefit requirements should be developed and evaluated as part of the bidder’s tender response.

2.4

Commercial Managers will encourage tenderers to engage with a. the Caithness Chamber of Commerce to identify products and services locally. b. Job Centre Plus on the availability of local labour.

3.0 Identifying Potential Community Benefits 3.1

Various examples of Community Benefits are provided within Appendix 1.

3.3

Potential Community Benefits should always be discussed in the first instance with the DSRL Community Relations Manager. A Community Benefits section must be included in the Subcontract Strategies for contracts above the Threshold values listed in table 2.

29 February 2016

3.4

Commercial Managers should ensure that all Community Benefits being considered are in line with Dounreay’s socio economic plan and represent Best Value for DSRL.

4.0 Transparency, Non-Discrimination and Proportionality 4.1

The principles of transparency, non-discrimination and proportionality are critical to ensuring that Community Benefits are legally incorporated within the tendering process. a. Bidders should not be discriminated on the grounds of nationality. b. Community Benefits should be relevant and in keeping with the scale and nature of the contract.

4.2

The aim of achieving Community Benefits as part of the DSRL’s tendering processes must be made clear from the outset. Where Community Benefits are part of the tendering process, then a statement must be included in either the Prior Information Notice and/or Contract Notice stating that DSRL intends to include community benefit requirements.

4.3

For contracts over £4M, the Act requires a statement to be included in the Contract Notice stating either (a) a summary of the community benefit requirements DSRL intends to include in the contract; or (b) where DSRL does not intend to include any such requirements, a statement of its reasons for not including any requirements.

4.4

Commercial Managers should also ensure that the inclusion of Community Benefits does not directly or indirectly disadvantage or discriminate against tendering suppliers out with the Caithness & North Sutherland area and vice versa. This may mean recognising that Community Benefits maybe delivered in in other areas.

5.0 Inclusion of Community Benefits 5.1

Once suitable Community Benefits have been identified, Commercial Managers must then decide how best to include them within the tendering process by choosing from one of the following two options: a. Method Statements: Bidders are required to provide a method statement based on a set of high level community benefit requirements DSRL is seeking under the contract. The method statements will be evaluated. b. Contract Clauses: Community Benefit requirements are specified as contractual clauses. Bidders will need to confirm their acceptance of these clauses. Bidders who do not accept these will be non-compliant.

29 February 2016

5.2

When appropriate, preference should be given to evaluating Community Benefit proposals.

5.3

Commercial Managers must also discuss any decision to evaluate Community Benefits proposals with the Community Relations Manager.

5.4

When evaluating Community Benefits as part of the tendering process, Commercial Managers must consult with the Community Relations Manager to set a specific weighting for Community Benefits proposals within the defined award criteria (e.g. 10% Community Benefits).

5.5

In order for Community Benefits to be evaluated against objective criteria, Commercial Managers should stipulate specific and quantifiable Community Benefits proposals within the tendering documentation. This will also ensure that performance against these proposals is measurable during contract monitoring post award.

5.6

It is essential that Community Benefits are directly related to the ‘core purpose’ of the contract. For example, it is not appropriate to include Community Benefits requiring suppliers to provide training across all of their operations when only one of their operations is relevant to the delivery of the contract.

6.0

Specifying Community Benefits within Procurement Documents

Contract Notice 6.1

The inclusion of Community Benefits in contract conditions must be mentioned in any OJEU Notice. This should be a summary of the Community Benefit requirements it intends to include in the contract.

6.2

Use of appropriate wording in OJEU Notices, reserves the right to take account of social and environmental issues in the award of the contract. Appendix 2 provides sample wording which can be considered when preparing the OJEU Notice. This would be included under the heading ‘other information.’

Pre-Qualification Questionnaire 6.3

Where Community Benefits are included as a requirement of the contract, questions can be asked in the pre-qualification questionnaire to assess the Supplier’s technical capability. Example questions are given in Appendix 3.

Evaluation 6.4

DSRL must comply with its procurement obligations and provides a clear and transparent approach to how the Expressions of Interest will be evaluated.

29 February 2016

6.5

DSRL can assess the Supplier’s capability of delivering Community Benefits at Expressions of Interest stage. The selection process should be a “backward-looking, not forward-looking” process. That is, the selection criteria must concentrate on the general suitability and capability of the Supplier for the contract, as opposed to the specific means by which the Supplier would perform the contract.

6.6

The example below highlights how a Contracting Authority could evaluate the technical capability of the Suppliers at Expression of Interest stage.

Invitation to Tender 6.7

When incorporating Community Benefits within the invitation to tender, the Commercial Manager will need inform the Suppliers of the current Dounreay’s Socio Economic Plan by either including a link to the Plan; incorporating a copy or extracts of the Plan in the tender documents; or a standalone statement on Community Benefit Objectives.

6.8

DSRL should request that Suppliers includes their proposed contract specific Community Benefit method statement in their Tender Submissions. This method statement will offer an opportunity for the Supplier to set out their approach and methodology in delivering benefits. The Supplier can also include a method statement about how they will deliver any additional supplementary benefits they wish to offer as part of their Tender Submission.

6.9

For major construction contracts, DSRL should consider the inclusions of a targeted recruitment method statement. Targeted recruitment clauses are a particular form of Community Benefit which allows organisations to specify, in the contract, that a proportion of the labour used must be sourced from particular groups. Commercial Managers must ensure that any targeted recruitment clauses comply with the Equality Act 2010.

29 February 2016 6.10

Example questions are provided in Appendix 4.

Evaluation 6.11

DSRL must comply with its procurement obligations and provides a clear and transparent approach as to how the Tender Submission will be evaluated.

6.12

The example below highlights how DSRL could evaluate Community Benefits within the Tender Submission. The apportionment of scoring attributed to Community Benefits should be assessed on a contract by contract basis.

6.13

Appendix 5 offers suggested scoring criteria to evaluating Community Benefits within Tender Submissions.

29 February 2016

7.0 Implementation of Community Benefits 7.1

Commercial Managers in Conjunction with Project Managers must ensure that there are robust arrangements in place in order to monitor and report the Community Benefits element of the contract. The following monitoring information should be requested and included in the contract documentation: o a single point of contact within the Supplier’s organisation who will be responsible for ensuring the delivery of the Community Benefit proposal; o a clear statement of the actual outputs to be monitored; o the frequency of monitoring information arrangements; o the format of monitoring information arrangements; o a means of verifying the monitoring information.

7.2

The approach to monitoring the Community Benefits requirements should be no less rigorous than that applied to other core elements of the contract. Without robust monitoring arrangements in place, DSRL will be unable to track progress or check whether the Supplier has fulfilled their obligations.

7.3

As part of the delivery of Community Benefits, Commercial Managers in conjunction with Project Managers should consider agreeing KPIs which may be incentivised. Any incentivised KPIs are required to be included in the Subcontract Strategy document.

8.0

Monitoring the Delivery of Community Benefits

8.1

Progress on Community Benefits achieved against targets will be reported as part of the monthly Procurement Monitoring Report to the NDA and the Quarterly Report to the Dounreay Stakeholder Group (Socio Economic Sub Group). This will also include information on the direct impact of achieved Community Benefits to the Caithness & North Sutherland area. All such information shall normally be provided by the Project Teams.

9.0

Key Tier 2 Suppliers

9.1

DSRL has a number of Tier 2 suppliers who annually secure repetitive contracts which maybe of low value however the cumulative value may be significant.

29 February 2016 9.2

Annually, the Commercial Team will identify Suppliers with expenditure in excess of £500K. The list will be reviewed in conjunction with the Community Relations Team to identify Suppliers who may not have already submitted a Community Benefit method statement as part of a tender process.

9.3

DSRL will select Suppliers and request that a Community Benefit method statement covering the next 12 month period is submitted. This method statement will offer an opportunity for the Supplier to set out their approach and methodology in delivering Community Benefits in particular in the Caithness and North Sutherland area. The method statement will be reviewed by both the Commercial and Community Relations Teams and agreed with the Supplier.

9.4

These Suppliers will be contractually required to submit a six monthly progress report on the implementation of their submitted Community Benefit Method Statement

29 February 2016

APPENDIX 1: Examples of Community Benefits Procurement Professionals should consider the following example areas of Community Benefits:

Benefit Economic

Training & Employment

 Permanent Employment (New Entrants; Indirect new Entrants)  Apprenticeships  Training  Work Experience  Mentoring  Graduates  Targeted Recruitment

Education

 Work Placements  Curriculum Support  Visits – schools  Visits – Further education  Educational Engagement

SME & 3rd Sector

 Work awarded;  Supplier development  Meet the buyer days  Prompt Payment of subcontractors  Opportunities for 3rd sector

Social

Community Initiatives

 Landscaping and building to regenerate communal areas  support for local youth groups or other community groups

29 February 2016  Local Sponsorship (eg Communities Fund)

Environmental

Environmental

 recycled waste;  reduced waste to landfill  Reduced site pollution  Habitat Enhancement  Carbon reduction

29 February 2016

APPENDIX 2: Example Contract Notices Example 1 DSRL is committed to contributing to the social economic and environmental well-being of the wider community. Accordingly, DSRL has incorporated Community Benefits into this procurement in accordance with the Public Contracts (Scotland) Regulations 2012. A weighted Community Benefit question has been included within the Invitation to Tender and responses will be evaluated. Example 2 DSRL is committed to maximising Community Benefits from its procurement activities. Under this procurement, the contractor, and its supply chain, will be required to support the DSRL’s economic and social regeneration objectives. Accordingly, contract performance conditions may relate in particular to social, economic and environmental considerations.

29 February 2016

APPENDIX 3: Example Prequalification Questions The following are examples only. Questions should appropriate for the contract. Example 1 Please give three examples of how your organisation has delivered community benefits on previous projects and how they addressed the following issues:a. generating employment and training opportunities for long-term unemployed people; b. providing training opportunities; development of trade skills in your existing workforce; c. equal opportunities recruitment procedures; d. delivering environmental benefits (eg waste recycling and reduction, carbon reduction).

Example 2 a. Provide evidence of a policy and process for workforce training and development for direct and subcontracted staff. b. Can the supplier confirm that a proportion of its total workforce (excluding admin staff) being in any form of apprenticeship or training agreement over each of the last [3 years] c. Within the suppliers workforce, over the last 3 years: 

How many staff have achieved professional registration?



How many are currently working towards professional registration and when are these due to be achieved?



How many accredited training weeks in total of any level have been completed over each of the last [3 years]?

d. How many apprenticeship weeks in total have been completed over each of the last [3 years]? e.

What are your plans for ensuring the skills and training requirements flow down to your supply chain? How will these plans be designed to include SMEs without imposing disproportionate administrative and cost burdens on smaller suppliers?

29 February 2016

APPENDIX 4: Example Invitation to Tender Questions Example 1

Community Benefit Method Statement The decommissioning of the Dounreay site will have a significant impact on the economy of Caithness & North Sutherland (CNSRP). Through CNSRP, local agencies are working to mitigate this impact by looking to attract new industries into the area and to help local businesses diversify into new sectors. Both the NDA and DSRL work closely with CNRSP. The Scottish Government report “Education Working for All!” by the Commission for Developing Scotland's Young Workforce highlights the importance on significantly enhancing Scotland's vocational education to achieve the same acclaimed status as that enjoyed by Scotland's higher education sector. Increasing skill and education levels is an important driver of productivity and improving our skills base is vital in enabling companies to grow and attract investment. It is important for industry to work with schools and colleges to ensure young people are more prepared for employment and better informed in career choice and for employers to recruit and train more young people. This is particularly relevant to the Caithness & North Sutherland area in order to diversify the local economy during the decommissioning of Dounreay. The tender is required to submit a Community Benefit Method Statement which is relevant for this project and the area. This should align to Dounreay socio economic plan and the ambitions of the Caithness North Sutherland Regeneration Partnership. In particular, the method statement should propose: How through this contract and linking into the North Highland invest in Young People Group,

they will support development of the people, in particular the young, in the Dounreay travel to work area. How the contractor will engage with the local supply chain to ensure that they have the opportunity to tender for packages of work. How the contractor will look to reduce the environmental impact of the work. Performance indicators to measure the delivery of the proposed Plan.

29 February 2016 Example 2 x.1

DSRL is committed to maximising Community Benefits from its procurement activities in order to build economic, social or environmental conditions into the delivery of council contracts.

x.2

In the Tender Submission, the Supplier will be required to submit a Community Benefit Method Statement detailing any social, economic and environmental benefits associated with contract performance during the contract term in the event of their appointment, in particular, within any of the following areas:

Benefit Economic

Training & Employment

 Permanent Employment (New Entrants; Indirect new Entrants)  Apprenticeships  Training  Work Experience  Mentoring  Graduates  Targeted Recruitment

Education

 Work Placements  Curriculum Support  Visits – schools  Visits – Further education  Educational Engagement

SME & 3rd Sector

 Work awarded  Supplier development  Meet the buyer days  Prompt Payment of subcontractors  Opportunities for 3rd sector

Social

Community Initiatives

 Landscaping and building to regenerate communal areas  support for local youth groups or other

29 February 2016 community groups

 Local Sponsorship (eg Communities Fund) Environmental

Environmental

 recycled waste  reduced waste to landfill  Reduced site pollution  Habitat Enhancement  Carbon reduction

x.3

Such social, economic and environmental benefits are hereinafter referred to as “Community Benefits.”

x.4

If there will be no Community Benefits, the Supplier should state this in the submission. If there will be Community Benefits, the Tender Submission should include a methodology/plan/statement as to how this will be delivered.

x.5

The information included in the Tender Submission in terms of this clause is hereinafter referred to as the “Community Benefits Information”.

29 February 2016 Example 3 

How many accredited training opportunities of any level will be delivered as part of this contract/framework?



Will these training opportunities be recognised, valued, and transferable qualifications?



How many apprenticeships/trainees will be started and completed as part of this contract/framework?



What steps will be taken to ensure these opportunities are both valued and sustainable and will be maintained beyond the term of the host employer’s engagement with the project?

29 February 2016 Example 4 x.1

Contractors are required to submit a Target recruitment and Training Method Statement with each valid tender, setting out how the following outcomes will be achieved without cost to DSRL

x.2

A minimum of 52 weeks employment for new entrant trainees recruited from a source agreed by DSRL per £1m in contract value where  A person-week is the equivalent to one person being employed for 5 days either on the site or on other sites with the agreement of DSRL, such agreement not to be unreasonably withheld; 

New entrant trainee an individual leaving an education establishment or training provider or is currently unemployed (and is seeking employment) and who is undertaking training towards a nationally recognised qualification

x.3

Recruitment Every vacancy associated with the project, including those of sub-contractors, is to be notified to Job Centre Plus in Caithness and candidates identified by them are to have an equal opportunity in the selection process.

x.4

Unwaged Work Experience The equivalent of a minimum of 10 person-weeks per £1m in contract value is to be made available as unwaged work experience opportunities. Some of these may not be utilised.

x.5

Opportunities for Additional Suppliers When requested by DSRL to participate in initiatives to identify and nurture additional supplychain organisations.

x.6

Monitoring & Verification Information Within 4 weeks of completion of each 13 week period following Implementation to provide DSRL with a Targeted Recruitment and Training Performance Statement setting out in relation to the period and the contract to date x.6.1 the numbers of weeks employment provided to new entrant trainees, including those on sites out with the development sites where this is necessary to provide continuity of employment and training and where this has been agreed with DSRL; x.6.2

a schedule showing for each contractor and sub-contractor:



the number or personnel starting on site in the period and cumulatively;



the number of vacancies notified to agencies named by DSRL;

29 February 2016 

the postcodes of all people engaged on site in any capacity, including the numbers that have their main residence in the Dounreay Travel to Work Area postcode areas.

x.6.3 a schedule listing the firms invited to tender or price for subcontracts and supply contracts under x.5 above and indicating which of these were successful; x.6.4 the name and address (including postcode) of all subcontractors and suppliers, identifying the value of each contract or the total value of sub-contract and supplies contracts that have been awarded to firms with a Dounreay Travel to Work Area postcode. x.7

For verification purposes the following documentation to an agreed format will be required by DSRL: 

a Trainee recruitment notification signed by the trainee (to permit the provision of personal data for contract monitoring purposes);



a Trainee completion or termination notification.

29 February 2016

APPENDIX 5: Suggested Scoring Criteria for Evaluating Community Benefits with Tender Submissions Example 1 Score Mark 0

Description % 0%

Unacceptable

1

25%

Poor

2

50%

Adequate

3

75%

Good

4

100%

Excellent

Example 2 Score Description

Nil or inadequate response. Fails to demonstrate an ability to meet the requirement. Response is partially relevant and poor. The response addresses some elements of the requirement but contains insufficient/limited detail or explanation to demonstrate how the requirement will be fulfilled. No understanding of the local economic issues or where they could offer benefit to the area. The benefits are related to Corporate Social Responsibility rather than supporting Community Benefit. Response is relevant. The response addresses a broad understanding of the requirement but may lack details on how the requirement will be fulfilled in certain areas. The proposal has the potential to satisfy the Community Benefit requirements however the submission is minimal in detail. The submission has generic “corporate” statements with no/limited information on how these could be applied locally via the proposed contract. Response is relevant and good. The response is sufficiently detailed to demonstrate a good understanding and provides details on how the requirements will be fulfilled. The proposal supplied demonstrates how the organisation would include community benefit to the area. The submission has identified activities which are linked to the aims of DSRL and CNSRP. Response is completely relevant and excellent overall. The response is comprehensive, unambiguous and demonstrates a thorough understanding of the requirement and provides details of how the requirement will be met in full. The proposal supplied includes a programme of activities that demonstrates how the organisation would deliver community benefit through the proposed contract and is linked to the aims of DSRL and CNSRP.

29 February 2016 0

Poor: The community benefit requirement has not been addressed and does not give DSRL confidence in the ability of the bidder to deliver the required Community Benefits.

3

Weak: Meets some but not all of the community benefit requirements and/or lacks detail/evidence giving rise to concern about the ability of the bidder to deliver the required Community Benefits.

6

Satisfactory: Meets all of the community benefit requirements and provides sufficient detail/evidence but contains some minor weaknesses giving DSRL confidence in the ability of the bidder to deliver the required Community Benefits.

10

Good: Meets the community benefit requirements and provides comprehensive evidence giving DSRL complete confidence in the ability of the bidder to deliver the required Community Benefits.

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