Appendix C - Contract Regulations

Getting started

All works that are offered to external contractors are covered by the following general rules:

• Work must be clearly specified
• Competitive quotes must be sought wherever possible
• Contractors must satisfy certain criteria before starting work
• Work must be inspected on completion before authorising payment.

Specification of works

An officer should ensure that:

• Any contract includes a proper specification.
• Ensure that wherever possible generic rather than branded products are specified.
• Ensure that any contract includes clear and appropriate conditions governing at least: price, time of payment, delivery, warranty and (for services) duration.

To make this process easier and to ensure compliance with the relevant regulations a standard contract form has been designed.

Rights of Way Contract Form (pdf) - this should accompany all requisitions and orders

Mandatory clauses for inclusion in all contracts (pdf)

It is often helpful to discuss requirements with a number of potential contractors in advance as this may help officers more accurately specify the work. This will also help determine the approximate value of the contract.

Competitive quotes

For small contracts, it is acceptable for quotations to be sought rather than follow the full competitive tender process. Quotations may be requested, received and opened by the contract officer.

A quotation which is not the lowest may be accepted in the interests of quality. Objective measures of quality or objective measures of factors likely to lead to good quality, must be used if they are available.

For purchases under £1000:

• the choice of processes should take account of the cost of the exercise.
• more than one quotation should be obtained whenever possible.

For purchases between £1000 and £10,000:

• the product must be clearly specified in writing.
• at least two written quotations should be obtained.

For all small value purchases (under £10,000):

• It is recommended that three quotations are obtained wherever quotations are sought. Where officers have recent (less than 1 month) experience of contractors carrying out similar jobs, their advice should be taken on current costs and competition.
• Where the product is not available through corporate contracts or internal providers. Negotiate the best possible price or rate, and conditions and make sure that these are adequately recorded.
• Ensure that provisions for adjustment in price or special conditions have been agreed and recorded in writing.
• A written order is placed specifying the product, agreed price and terms. A completed Contract Specification should be attached to the order for all contracts over £1000. (<£1000 at officers discretion).
• Details of quotations are recorded or kept available whilst they are current.

Where an Approved List exists, contractors should be selected from it. Rural Estates maintain a list of contractors for a range of arboricultural and silvicultural activities.

The contract officer must keep all supporting papers in one place.

For contracts with a value over £10,000

The contracting officer must arrange for a competitive tender to be undertaken. Tenders have a fixed date for receipt and neither the tenderer nor the value should be identified before these are opened in accordance with the rules. Decide and record:

• How to establish which tenderers are willing and able to tender, or where an approved list exists for the type of product or service required, the selection of tenderers from that list.
• How many tenderers should be invited to tender, based upon a minimum of three (3) for contracts between £10,000 and £100,000, or a minimum of four (4) for contracts £100,000 and under EU procurement thresholds.
• The criteria to be used to select tenderers and the method of making this public.
• The form in which tenderers shall be invited to tender.
• The criteria to be used to select the successful contractor from among those who tendered.
• The criteria to determine whether the chosen contractor performs satisfactorily.

The contracting officer sends out all invitations to tender and has the responsibility to ensure that these include a plain return envelope, with a pre-addressed reply label affixed to the envelope showing the matter to which the invitation to tender relates and the closing date for tenders.

Details of potential tenderers should be entered on a Tender Panel Record Sheet [TPRS1 on Connect] and a copy sent to Financial Services (Environment) who will administer the reception of any tenders. Keep a copy for your own records. Financial services will undertake the opening of the tenders after the deadline has passed, complete the Tender Panel Record Sheet [TPRS1/2 on Connex] and return it to the contracting officer detailed on the form.

Further advice on the Contract Regulations and Tendering process can be sought from the Network Manager (Contracts & Bridges) or the Financial Services (Environment).

Instances where there is no requirement for competition.

There is no requirement for competition for work placed with internal trading organisations. However where a trading organisation is known to offer similar services but the value of the work is above the low value threshold (£10,000), then contracting officers may seek competition. An officer will need to prove that competition is likely to lead to better value for money, taking account not only of price but of the total cost to the Council of both the competitive exercise and the loss of revenue within the trading unit. Internal Trading Organisations should be used wherever possible unless the goods, work or services required are sufficiently specialised for them not to be able to provide these at a competitive price. Examples include HBRC for ecological advice, CSD for legal advice and support.

All goods in common use that are in the County Supplies and Contract Services catalogue should be obtained from them unless small quantities are required so urgently that it is more efficient to purchase these locally.

Where goods, services or works are purchased by another public body on behalf of the Council or by the Council through a contract, properly let by another such organisation, then this satisfies the requirement for competition.

Criteria for contractors

Officers will need to ensure that contractors have shown evidence of meeting all of the following criteria. A checklisthas been drawn up for officers to use before employing a contractor. Officers should put the completed checklist and any relevant paperwork, in the 'Contractors file' in the unit library. It is only necessary to ask for this information once, so long as an officer is satisfied that the information held in the file is up-to-date and still valid.

Officer checklist for ensuring contractor compliance (pdf)

Health & Safety

• A contractor is expected to show examples of risk assessments or the risk assessment for the job in hand, so that they can be compared with those of the rights of way unit. A contractor without, can be provided with our risk assessments which they will be expected to apply.
• Evidence of relevant qualifications to carry out contract safely eg. Chainsaw qualification.
• If a contractor employs more than 5 people, a copy of the companies Health & Safety Statement.
• Contractor's policy on lone working.
• The contractor recognises the need for relevant personal protective equipment and where identified it is supplied and used.
• Details of the accident record for the past three years.
• Contractors provisions for First Aid, include training, equipment etc

Environmental Management Systems (ISO14001)

• The contractor should be aware of the requirements of the Service's Environmental Management System and that the same standards apply to the contract.
• The contractor may be required to notify the Countryside Access Officer (CAO) in writing of his arrangements for the disposal or removal from the site of all construction waste and materials surplus to the requirements of the Works including details of the point of disposal.
• On request the contractor shall afford the CAO ever opportunity to monitor the contractors arrangements and shall provide such further information as may be requested by the CAO.
• The contractor should be given a copy of the current regulations governing the spillage of oil and fuel on site or show evidence that alternative satisfactory systems are in place.

Insurance

The contractor should show original and current insurance certificates (and provide a copy) for the following:

• Public / products liability - £5,000,000
• Employers liability - £5,000,000
• Professional indemnity - £5,000,000

Tax status (CITDS)

The Construction Industry Tax Deduction Scheme (CITDS) applies to payments to contractors whose expertise extends to construction operations.

Contractors must present their certificate or registration card in person so that officers can ensure the photograph shows a true likeness of the card holder, and in order for photocopies to be made. Payment cannot be made if neither are held or until either are presented.

If satisfied, a photocopy should be taken of the certificate or registration card ensuring that the information as detailed in table x below is included. This should be signed to certify that it is a true likeness of the cardholder.

• One copy should be sent to ITnet Accounts Payable who will enter the information in the register and ensure that the appropriate payments are made at the end of the contract.
• One copy should be retained and go into the contractors file.
• One copy should be forwarded to Financial Services (Environment) for entry into the departmental register.

All contractors must have either a certificate or a registration card. There will be two types of registration card, one permanent (CIS4(P)), the other temporary (CIS4(T)) and two types of certificate (CIS5, CIS6). The certificates will only be issued to companies or individuals that fulfil Inland Revenue conditions. Registration cards will be issued by the Inland Revenue to those that do not fulfil the conditions.

The order with attached contract specification can now be processed as normal. No further action need be taken regarding the scheme.

Authorising payment

Works should be inspected following completion, a checklist can be found here. If the officer is satisfied that the work has been completed and all the regulation have been met, invoices can be passed for payment. Officers are advised to withhold payment where contractors have not met any of the requirements set out above.

Officer checklist following completion of works

More information

The above guidelines are a summary of a number of far more detailed documents produced by HCC and others. If in any doubt about any of the procedures contact Environment Finance for clarification. The relevant documents are listed below (full references in Appendix H):

• Guide to Good Commercial Practice, Parts 1 and 2. (HCC)
• Contract Regulations (HCC - February 1999)
• Environment Interim Rules and guidelines (HCC)
• Best Practice in Procurement (2000) HCC

Documentation, application, records and obligations of the CITDS scheme.

Permanent Registration Card [CIS4(P)]
Individuals and companies that do not fulfil IR conditions for a certificate. A 20% deduction is applied to all payments for labour (inc. expenses).

• Name
• No. of Card
• Expiry Date
• NI number or equivalent
• Gross payment ex VAT
• Cost of any materials ex VAT
• Amount of the deduction
• Contractor to check validity of card before payment.
• Contractor to complete 3 part CIS25 voucher monthly. Parts to IR, card holder and own records.

Temporary Registration Card [CIS4(T)]
Individuals and companies that do not fulfil IR conditions for a certificate A 20% deduction is applied to all payments for labour (inc. expenses).

• As above.

Construction Tax Certificate [CIS5]
Companies that fulfil IR conditions. Gross payment.

• Name and Address
• No. of Certificate
• Expiry Date
• Gross payment ex VAT
• Contractor to check validity of card before payment.
• Contractor to complete 2 part CIS23 voucher monthly. Parts to IR and own records.

Sub-Contractors Tax Certificate [CIS6]
Individuals who fulfil IR conditions. Gross payment. Note : sub-contractor part completes 3 part CIS24 voucher monthly and is required to send it to the contractor making payment.

• Name and Address
• No. of Certificate
• Expiry Date
• Gross payment ex VAT
• Contractor to check validity of card before payment.
• Contractor to add contractor number and sign voucher CIS24. Parts to IR, certificate holder and own records.
• Contractor to take all reasonable steps to obtain vouchers from sub-contractor.

*Ref. No. Inland Revenue Construction Industry Scheme booklet - IR14/15 (CIS)

N.B. Failure to operate the rules correctly may cause a contractor (i.e. HCC) to be liable for the deductions that should have been made.