Procurement - civil engineering dynamic purchasing system – projects up to £5M: buyer's guide

Preparing the tender documents

Buying organisations should develop their tender documents as they would for any tender, including how and when to respond, along with details of the evaluation criteria that will be used. Responses received by the deadline must then be evaluated and the tenderer that offers the most economically advantageous tender should be awarded the call-off contract. Suppliers must be given a minimum of 10 days to respond to any tenders issued via the DPS.

However, buying organisations should take into account the complexity of their requirement when deciding the deadline for tender submission.

The award criteria must include both cost and quality of service. The weightings should be determined prior to issue of the tender documents. Please note that the overall weightings must be within the following ranges as advertised within the Contract Notice:

• price 10%-50%
• quality 50%-90%

All call for competition transactions must be carried out electronically. CCT strongly encourages buying organisations to use Public Contracts Scotland – Tender (PCS-T) to run their call for competitions/ITTs under the DPS. CCT have created a dedicated PCS-T area for this purpose.

The use of PCS-T makes the tendering process more structured and facilitates CCT support. Furthermore, a step by-step guide is available on Knowledge Hub (PCS-T DPS User Guide) that describes in detail how to create an ITT, publish it and evaluate responses.

Buying organisations that do not wish to use the dedicated PCS-T area can run the DPS call for competition process by any electronic means, i.e. PCS or any other valid electronic portal.

To do so they can obtain a list of the suppliers that must be invited to tender by using the Supplier Selection Tool available on Knowledge Hub or by emailing CCT_SPPD@gov.scot.

PLEASE NOTE: as the DPS is an ‘open and running’ system it is important you ensure that your ITT is issued to any new suppliers added to the DPS between the dates of initial engagement and issuing your ITT documentation. You are strongly encouraged to check with CCT to ensure your supplier list is up-to-date before issuing your ITT.

You can also establish if new suppliers have been added to the DPS by checking the most up-to-date version of the Supplier Selection Tool on Knowledge Hub.

Using the dedicated DPS area on PCS-T for calls for competition To help buying organisations use the DPS, a dedicated area within Public Contracts Scotland – Tender (PCS-T) has been created by CCT specifically for buyers to carry out their call for competition/ITT process.

There is no need to undertake the two-day PCS-T training course to get access to this dedicated area. Once you gain access, there is a user guide on Knowledge Hub.

(PCS-T DPS User Guide) which contains information that will help you run your call for competition. In order to be added to the DPS dedicated area on PCS-T you need to contact the CCT_SPPD@gov.scot  and ask to be added to the DPS Lot(s) that you are using for your requirement.

If you do not already have a PCS-T account, then a DPS Buyer account can be created. In order to do so, send an email to PCS-Tender@gov.scot including your name and email address, and the name and email addresses of any other staff that require access to the DPS dedicated area on PCS-T.

Creating an ITT using the existing ITT templates

If you decide to run a call for competition via PCS-T, you need to create the ITT from the relevant DPS ITT template. This process is described in detail within the PCS-T DPS User Guide, available on Knowledge Hub.

You can ‘create from existing ITT’ using the following codes:

• ITT Code 56574 – Lot 1: General Civil Engineering Works
• ITT Code 56576 - Lot 2: Roads
• ITT Code 56577 - Lot 3: Structures
• ITT Code 56578 – Lot 4: Geotechnical Services and Related Works
• ITT Code 56579 – Lot 5: Utilities
• ITT Code 56580 – Lot 6: Harbour, Coastal, Rivers, Flood and Marine

These ITT templates will be kept up to date by CCT as new suppliers join the DPS.

PLEASE NOTE: Each ITT template includes the full list of suppliers on the indicated Lot, for all Regions and Value Bands. Once an ITT is created from the ITT template, the buyer will have to manually deselect the suppliers that do not belong to the Region and Value Band relevant to their requirement. Buyers must do so following the instructions included within the PCS-T DPS User Guide.

Buyers should set up their project in the PCS-T DPS dedicated area only when they are ready to issue their tender. When you set up a project on PCS-T, only the suppliers on the DPS Lot list at that time are included in that project. As the DPS is an ‘open and running’ system it is important you ensure that your ITT is issued to any new suppliers added to the DPS between the dates of initial engagement and issuing your ITT documentation.

Any supplier added to the DPS list after your PCS-T project has been set up will need to added manually and, accordingly, you are strongly encouraged to check with CCT to ensure your supplier list is up-to-date before issuing your ITT. You can also establish if new suppliers have been added to the DPS by checking the most up-to-date version of the Supplier Selection Tool on Knowledge Hub.

NEC4 contract type and options

Buying organisations using the DPS must choose the NEC4 contract type that suits their requirement and use the relevant template available on Knowledge Hub.

The terms and conditions templates to be used for call-off contracts are as follows:

• NEC4 Engineering and Construction Contract (ECC)
• NEC4 Term Service Contract (TSC)
• NEC4 Engineering and Construction Short Contract (ECSC)
• NEC4 Term Service Short Contract (TSSC) Buying organisations must consider the following based on their requirement:
• long form (ECC/ECSC) or short form (ECSC/TSSC) contract (see the FAQs and Additional Guidance for Buyers document available on Knowledge Hub for further information)
• main and secondary options (in the case of long form)
• completion of the entries in contract data Part 1 – some of which adjust levels of risk and reward for the options and
• option Z (additional conditions of contract). The additional conditions included in the NEC4 templates provided cannot be changed
• completion of content for other documents (e.g. design requirements, scope, site information)

There are no set parameters for which form of contract to use (ECC, ECSC, TSC, TSSC) for a Work Order. Please see the FAQs and Additional Guidance for Buyers for considerations on whether a particular Work Order should be in the form of the ECC, ECSC, TSC or TSSC.

Whichever main Option in the NEC4 ECC contract is chosen will determine how the works are priced. A contract can either be priced or can use a target price, in each case using a Bill of Quantities or an Activity Schedule. There is also a cost reimbursable (cost plus) option and a management contract option (although this latter option is rarely used) – neither of these two options have a pricing document.

Under Main Option A, the Contractor is to receive payment for each piece of work identified in the Activity Schedule. If there is a group of activities in the Activity Schedule, the Contractor can only be paid once everything comprising the group of activities has been completed (it cannot receive payment for any of the individual activities in the group).

NEC4: A User’s Guide is recommended for information on utilising the NEC4 suite of contracts.

Please note that Scottish Government does not provide specialised NEC4 advice. This Buyer’s Guide is not a definitive, technical or legal document and Contracting Authorities should always seek their own professional technical and legal guidance and advice.

However, we advise strongly that DPS buying organisations speak to the Collaborative Construction Team (CCT) about this DPS before preparing tender or contract documentation and before engaging any separate advice.

Project bank accounts (PBAs)

For construction projects, Project Bank Accounts (PBAs) are ring-fenced accounts which see payments made directly and simultaneously by a public sector client to members of the construction supply chain. PBAs improve subcontractors' cashflow and ring-fence it from upstream insolvency.

Following the introduction of CPN 1/2019 relevant public bodies must include a PBA in tender documents for public works contracts commencing procurement procedures from 19 March 2019 with an estimated value more than or equal to £5,000,000 for civil engineering projects.

This DPS is for Civil Engineering Works Projects up to £5,000,000, therefore the inclusion of PBAs is not mandated. If buying organisations want to use PBAs, it is the responsibility of each buying organisation to include this in their call-off contracts.

If a PBA is to be operated, the ECC or TSC form of contract should be used. Select Option Y(UK)1 (Project Bank Account). This option details how the PBA is to function and directs the parties to the Trust Deed and Joining Deed in the Scope document of the contract. For more information on PBAs, please visit Construction projects: Project Bank Accounts (PBAs).

The ECSC and TSSC forms of contract do not have PBA provisions, and these should be included in the Scope. Drafting is included in the FAQs and Additional Guidance for Buyers document available on Knowledge Hub. This drafting details how the PBA is to function and directs the parties to the Trust Deed and Joining Deed.

NEC4 project manager / service manager

A NEC4 Project Manager is required for the ECC, and a Service Manager is required for the TSC. There is no equivalent role for either the ECSC or the TSSC, which are far simpler to operate and are designed to be managed by the buying organisation (Client) itself.

Buying organisations may wish to appoint a consultant to administer the contract anyway and this would not be unusual. The long form contracts are complex and rely heavily on the knowledge and ability of a Project Manager / Service Manager as appropriate.

Where the appointed Project Manager / Service Manager has the time and experience to operate the Work Order Contract, this will take a substantial amount of administration away from the buying organisation. Conversely, if the Work Order Contract is not correctly and efficiently administered, potential disputes with and claims from the Contractor could arise.

The Project Manager / Service Manager should be a specialist, independent consultant with considerable experience of operating NEC4 contracts.

Ideally, they would have a degree in engineering, construction or another built environment subject, chartered or Incorporated status with a relevant professional institution, accreditation as a NEC Project Manager or Supervisor (NECReg), and experience of managing contractors, consultants and other advisors throughout large and complex construction projects, in a regulated environment.

More generally, they should have a good understanding of the NEC4 contract being used, its Main and Secondary Options, including the ability to comprehend additional conditions of contract and recognise critical contract processes. Knowledge of the relevant industry legislation and contract principles will be useful, as will experience with taking ownership of own responsibilities, acting as stated in the contract and confidently managing key stakeholders.

It is sometimes the case that the Project Manager is an internal appointment of the buying organisation (Client). The Project Manager / Service Manager is required by the relevant contract to exercise discretion fairly and reasonably as between the parties.

It should be noted that if an independent Project Manager / Service Manager is appointed at the outset the buying organisation cannot later replace that independent party with an internal appointment as this would be inconsistent with the requirement for the Project Manager / Service Manager to act fairly between the parties.

It is also important to distinguish between a “project manager” (lower case) appointed by a Client to be responsible for the project within the organisation, and the “Project Manager” / “Service Manager” (as defined in the ECC / TSC) who would administer the contract on a day-to-day basis.

It is not advisable to allocate the role of Project Manager to an individual for purely internal organisational reasons, unless:

• that individual (1) has sufficient time to dedicate to fulfilling the role of Project Manager / Service Manager under an NEC4 contract (bearing in mind that the role could equate to one or more FTE jobs depending on the size and nature of the project); and (2) has sufficient knowledge and experience of NEC4 contracts to perform that role, combined with the personal attitude that is generally considered to be of particular importance to the successful running of an NEC4 contract; or
• the day-to-day running of the ECC / TSC will be formally delegated by the Project Manager / Service Manager to individuals who do have the time, knowledge, experience and attitude required to successfully administer the contract.

 Useful NEC4 background

The bespoke amendments to the NEC4 standard forms of contract arise from three basic considerations:

• amendments to reflect the particular requirements and desired risk allocation of the Scottish Ministers and/or Contracting Authorities;
• amendments to reflect Scots law and practice; and
• presentational changes to make the DPS more user friendly and to ensure continuity across the suite of contracts used Please see the FAQs and Additional Guidance for Buyers document available on Knowledge Hub for further information on specific amendments

Define your requirements

Your specification (‘scope’) is essential in defining your requirements. Contract Management and Performance Monitoring should also be incorporated. See the client guide to construction projects. The overall weightings must be within the following ranges as advertised within the Contract Notice:

• price 10%-50%
• quality 50%-90%

Quality criteria

To evaluate quality you can, for example, consider service delivery, service levels, and project management (weightings and detail are a decision for the buying organisation):

• general understanding of the requirement along with details of how any risks e.g. political, reputational, operational and financial can impact on the Provision of the Works or on the Provision of the Service and what action the supplier proposes to mitigate these risks.
•  general understanding of policy objectives including but not limited to sustainability, environment, fair work practices, ethical sourcing, community benefits and how these policy objectives will be met through delivery
• details of the operational proposals with particular emphasis on quality and performance measurements, and customer satisfaction to Provide the Works or Provide the Service (scenarios may be used)
•  details of the qualifications, experience and skillsets of the personnel proposed to Provide the Works or Provide the Service

Within the tender documents, buying organisations must clearly set-out the scoring criteria for the assessment of quality.

Buying organisations should use the most appropriate quality scoring for their specific contract. This may include, but is not limited to, the scale noted in the Procurement Journey: Selection Criteria | Procurement Journey.

Price criteria

To evaluate price, you should consider all costs over the duration of the Work Order Contract period. This can include a whole life costing approach taking account of all aspects of cost from the cradle to the grave, including acquisition costs, operational costs such as energy consumption, maintenance and end of life costs such as decommissioning and demolition.

Graduated pricing mechanism (GPM)

The Graduated Pricing Mechanism (GPM) is a method to calculate the price score of tender submissions which respects the principle of equal treatment but reduces the incentive to submit low bids. The use of a GPM is mandated for determining price scores in DPS calls for competition. Please see the FAQs and Additional Guidance for Buyers document available on Knowledge Hub for more information on how it should be applied.