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Departments: Contracts

Volume 464: debated on Tuesday 9 October 2007

To ask the Secretary of State for Foreign and Commonwealth Affairs under what circumstances his Department awards contracts to outside organisations without undertaking a tendering process. (154034)

Occasionally and exceptionally competitive tendering is not possible due to the nature of the goods and services being purchased. Such circumstances might arise as a result of the following:

when equipment being purchased needs to be compatible with existing equipment;

when only one company or supplier is known to have the special technical competence required to provide the service;

to repair an item and only the original manufacturer can do so;

when a repeat order needs to be placed and the original supplier holds the tooling, artwork, designs;

in cases of extreme urgency—but not if it arises because of inadequate planning; and

for contracts which must be accompanied by special security measures or when the protection of the essential interests of the security of the United Kingdom require it.

All proposals of this nature to contract with a single source (i.e. without undertaking a tendering exercise) with an estimated value in excess of 1,000 need careful consideration and specific approval. The supporting case should at a minimum cover the following factors:

why the supplier concerned is the only possible supplier of our requirements;

what is the basis for believing that the supplier concerned will provide value for money? What comparisons have been made in this area;

what market research has been carried out to identify other potential suppliers. And with what result;

what is the full estimated value of the contract. What breakdown of costs is available; and

is the award of this contract likely to lead to further similar business being awarded to the same supplier without competition.

Where single source tendering is proposed for purchases which exceed £1,000, a single source justification form must be completed and include an assurance that value for money will be achieved and background information covering as a minimum the points above to support that assertion. Decisions on single source purchasing where the value of the requirement is between £1,000 and £5,000 may be made by the internal sponsor department although advice should be sought from the Foreign and Commonwealth Office's procurement centre of excellence, Procurement Strategy Unit, as required.

Single source proposals in excess of £5,000 must be submitted for approval to the Procurement Strategy Unit. They must be considered by an official with specific delegated authority for single source action. Because of the risks, officers who are authorised to approve single source tenders are instructed to probe and challenge where necessary the justification for such action and record the reasons for their decision.