Financial purchasing guidance for financial year 2017.
The new financial year seems a long way off but preparation for Service Level Agreements (SLAs) and other contract renewals will need to begin as soon as we all return from the Christmas break.
School Financial Regulations
The financial regulations state that purchases over £2,000 require three quotes, and for most schools this is currently an annual task when renewing SLAs and contracts. This requirement is in place to ensure that schools are achieving ‘best value’ and are spending public funds in the most efficient and effective way possible.
Best value is not a statutory requirement for schools but governing bodies are expected to spend public money wisely. Therefore applying best value principles is good practice within schools.
Points to consider when reviewing contracts to establish best value:
- Lowest price does not always bring best value, consider whole life cost and the cost of time to manage and potentially replace a poor service
- Is the current service delivery fit for purpose and does it meet the school’s requirements?
- What is the current user experience of the service in terms of ease of access and outcomes?
- Are the providers of the service suitably qualified with relevant experience and how is the service quality assured?
- Can the company provide continuity? Do they have contingency arrangements available if an individual is not able to meet the school’s requirements
- Is the company financially robust, viable and sustainable?
- Look for economic, environmental and social value. Is the service local? Will purchasing from this supplier help contribute to the local community?
- How well does your current service perform/operate to achieve your objectives?
- Does the supplier operate ethically and with a social/moral conscience? What is their ethos? What is the company’s purpose and what do they seek to achieve?
- Benchmark; compare between companies on the content of the contract, what will be delivered and on price.
Alongside the quality and delivery impact of services, competitive prices do need to be considered. There are some exceptions to this requirement which can be identified by checking your school’s financial regulations but you must ensure that any exceptions are approved and noted at governing board level.
SLA/Contract Renewal Advice and Guidance
Gaining quotes on an annual basis is time intensive and may not be the best use of time during the spring term when school business managers are already juggling day-to-day demands, the school census, and preparing for the financial year end. Schools may want to look at ways of reducing their workload by considering the following:
- Procure/agree longer term contracts (two or three years duration)
- Negotiate a fixed cost or reduced cost for the duration of the extended contract
- Purchase services as a trust or cluster to try to achieve a ‘bulk buy’ discount
- Consider the possibility of purchasing multiple consolidated SLAs/contracts with one supplier to gain better value for money.
- Negotiate loyalty discounts with the supplier.
Christmas Holidays are fast approaching!
Maintained schools will have completed their period six budget monitoring return to the local authority in October. Both schools and academies will be preparing their workforce census for the December deadline, but academies will also be preparing audited financial statements, auditors’ management letters and value for money statements for 2015/16 ready for the December deadlines too.