The purpose of this guide is to advise potential suppliers on how they can sell their products and services to HM Revenue & Customs (HMRC). It will tell you something about HMRC business, the type of goods and services it buys and how it buys them, HMRC attitude towards buying from Small and Medium sized Enterprises (SMEs) and its prompt payment policy.
The vast majority of contracts of significant value or complexity are let by the Commercial Directorate. The Commercial Directorate is responsible for the provision of policy and best practice advice, support for specific procurement projects, as well as much of the procurement and contract management of goods and services in the department. HMRC is the lead department responsible for the Government-wide procurement of Print and Office Solutions under the Centralised Category Procurement (CCP) Programme.
The Information Management Services team (IMS) in HMRC is responsible for IT procurement, and all Estates and Facilities Management procurement is carried out by Estates and Support Services (ESS). Much of this activity is covered by existing contractual arrangements established under the Private Finance Initiative.
Large value contracts for the department are let by competitive tender, normally via the Official Journal of the European Union (OJEU). Those companies who qualify after the initial selection process will be invited to tender. The department does not hold an approved supplier list, but with low value orders for goods and services, which are not available through existing contracts and framework agreements the following will be used to identify potential sources of supply:
The following thresholds will determine the procurement approach:
The EU threshold, above which a full OJEU exercise should be carried out, is currently higher than £90,000 but this internal threshold provides a safety net and encourages good practice.
The department normally advertises its purchasing requirements in trade journals, specialist publications etc and also in Government Opportunities and Contrax Weekly, published by BiP Solutions Ltd. Opportunities to bid for HMRC contracts can also be accessed via Contracts Finder on the Business Link website. There is a link to this in the SMEs section below.
For larger requirements, for goods and services or works contracts subject to the EU rules on procurement, an advertisement will be placed in the OJEU. Larger contracts sometimes cover a requirement for HMRC as a whole and may also encompass the needs of other departments or agencies. These larger contracts are normally handled by one of the procurement units on behalf of all the participating departments.
Advertisements and tender documents will always give a contact point from which to obtain further information. Where HMRC uses a two stage (restricted) procedure, it will issue a Prequalification Questionnaire (PQQ) to enable applicants to be shortlisted before being invited to tender. However, in line with the Government's aim to encourage SMEs to bid for public sector work, HMRC will consider greater use of the Open Procedure, where appropriate, in order to remove the need for a separate PQQ, thus reducing the burden on SMEs. When issuing an Invitation to Tender HMRC will be as explicit as possible in specifying its needs, for example, quality, technical capability/specification, delivery and timescales and where applicable HMRC also includes technical and commercial questionnaires. All invitations will also include the HMRC Terms and Conditions of contract.
All procurements are conducted in a fair and open manner. Records are made at all stages in order that the procedure is fully auditable.
HMRC uses an eSourcing tool for the vast majority of its procurement. HMRC advises prospective applicants and tenderers to familiarise themselves with the system before deciding to bid for HMRC contracts. More information can be found on the eSourcing webpage.
HMRC uses a formal evaluation process, which is embedded into the eSourcing tool, to identify the supplier(s) who will provide the best overall value for money for the particular purchase, which is not necessarily the lowest price. The financial assessment of both applicant and tenderer will normally include the state of their tax affairs, and checks will be carried out to ensure suppliers' compliance with their obligations in terms of the direct and indirect taxes collected by HMRC. Tender proposals will be subjected to a thorough evaluation. This may result in an award of contract or it may produce a short-list of the most promising technical and commercial offers requiring further assessment.
Short-listed tenderers may be further requested to clarify their bids or provide additional information in support of their proposals. Further assessment of short-listed tenders may include attendance at HMRC's premises for the purpose of clarifying aspects of a bid or may involve a visit by HMRC's representatives to any relevant facilities operated by the tenderer. In each case, tenderers will be responsible for their own costs.
Short-listed bidders may also be asked to provide samples and/or demonstrate their products or services. Presentations may be held on either the suppliers' or HMRC premises. In certain circumstances, 'reference site' visits may be made to the premises of other existing customers. The scoring may be amended at this point, if appropriate, and a record made of the reasons.
When HMRC has completed the evaluation of Invitations to Tender and reached a decision it will inform the successful and unsuccessful bidders in writing or by the e-sourcing messaging function without delay.
It is HMRC policy to always offer a debriefing with unsuccessful bidders and provide feedback on how they might improve their future competitive performance, as well as welcoming any comments on HMRC performance and procedures.
HMRC is committed to using electronic reverse auctions as part of the selection process, in order to achieve best value for taxpayers' money, and will do so in the majority of procurement exercises. The e-auction function is built into the e-sourcing tool and operates on the basis of both quality and cost in order to identify the best proposal.
As a result of a case in the European Court of Justice (ECJ), known as the 'Alcatel' case, the ECJ ruled that contract award decisions must be open to review before contract conclusion. For all procurements subject to the Regulations there is a mandatory ten day 'standstill' period between the award decision and notification and the actual conclusion of the contract. This is to allow unsuccessful tenderers a reasonable opportunity to make any legal challenges to the award decision.
HMRC is committed to using electronic tools in support of its procurement activity and has developed an Enterprise Resource Planning (ERP) programme for the purpose of trading electronically with suppliers. HMRC operates a purchase order mandatory policy, whereby official purchase orders will be issued by the ERP system in respect of all purchases it makes. This ensures that every invoice received can be matched to a purchase order and to the corresponding goods or services. Suppliers will need to have the capacity to accept purchase orders from the ERP system, via email, on a PDF attachment. For further information see HMRC e-trading system (ERP).
The Confederation of British Industry (CBI) has issued a prompt payment code, which is widely recognised in the commercial world. HMRC has adopted the principles of that code, which are followed by purchasing and accounting staff.
HMRC is committed to pay suppliers in accordance with the terms of their contract, which is usually 30 days from receipt of a valid invoice. In order to meet contractual obligations, it is important that your invoice provides the details required for HMRC to match it to the original order/contract. In particular, it is essential that you provide all information requested on the purchase order or as specified in the contract. If any of this information is missing, it may delay payment.
Where the supplier lets a subcontract in connection with an HMRC contract then it must include similar prompt payment terms to the above in respect of payments to the subcontractor.
The percentage of commercial invoices paid within five working:
Month |
Percentage |
|---|---|
April 2010 |
87.11% |
May 2010 |
95.1% |
June 2010 |
95.3% |
July 2010 |
94.2% |
August 2010 |
94.0% |
September 2010 |
95.4% |
October 2010 |
94.7% |
November 2010 |
95.9% |
December 2010 |
95.2% |
January 2011 |
94.6% |
February 2011 |
96.75% |
March 2011 |
96.1% |
April 2011 |
95.1% |
May 2011 |
94.7% |
June 2011 |
96.2% |
July 2011 |
96.3% |
August 2011 |
97.6% |
September 2011 |
96.9% |
October 2011 |
97.0% |
November 2011 |
98.0% |
December 2011 |
97.0% |
HMRC does not maintain an approved supplier list.
On 11 February 2011, David Cameron, the Prime Minister and Francis Maude, the Minister for the Cabinet Office (MCO) announced a broad package of reforms designed to significantly open-up the public sector marketplace.
'Today, we are announcing big changes to the way government does business. By that, I mean what I say: literally, the way it does business. The contracts it signs, the goods and services it purchases - and the way it purchases them. We need to make the system much more open, more competitive and transparent.
It's about making our country less wasteful and more accountable. It's about opening up opportunities to new, small organisations as well as the old, big ones. It's about being more dynamic, in our economy, and in our public services.'
There are increasing opportunities for SMEs to do business with Government departments. HMRC tries to ensure that companies are invited to tender for work, which is compatible with their capacity and capabilities, in line with Government policy to encourage small firms.
Where appropriate, requirements are divided into smaller lots to encourage participation by SMEs. HMRC understands the difficulties that SMEs can experience in dealing with large government departments, and in order to encourage you to seek opportunities to supply goods and services to HMRC, they are publishing information designed to help you engage more easily with them.
In conjunction with the Cabinet Office, HMRC has developed an action plan to help meet the governments aspiration that 25 per cent of spend should go to SMEs.
HMRC's SME Action plan in PDF format (PDF 45K)
Contracts Finder (Opens new window)
This is a new free service that is the main source of information on government procurement opportunities with a value greater than £10,000. You can use this to access and search for closed tender and contract documentation that has been published by Government departments and agencies, as well as opportunities to bid for Government work.
The Business Link website will also provide you some helpful information on selling to government departments.
The department for Business and Skills.
Federation of Small Businesses (Opens new window)
This website gives small businesses information on dealing with Government, research findings and information on any new initiatives.
Learn Direct(Opens new window)
A free online training course for SMEs on how to win Government contracts.
Information on the Governments commitment to transparency from public departments.
If you have any questions, please contact our helpdesk
HMRC is fully committed to playing its part in the preservation of natural resources and in preventing environmental pollution. HMRC policy is to carry out business so that it takes full account of the needs of the environment, and includes action to reduce energy and water consumption, ensure paper is used economically and that recycled paper is used wherever it is practical and economic to do so. HMRC also aims to reduce the use of ozone depleting substances.
HMRC purchasing policy pays proper regard to environmental issues whilst still securing best value for money. Details of any environmental requirements that suppliers need to be aware of will always be included in the Invitation to Tender documents.
Sustainability is a key objective for HMRC's Commercial Directorate and will be an integral part of HMRC's procurement activity. To this end, HMRC has developed a Sustainable Procurement Strategy.
The Equality Act 2010 ('the Act'), which replaced the Race Relations Act 1976, as amended by the Race Relations (Amendment) Act 2000, gives HMRC a statutory duty to promote race equality. To this end, the Act requires HMRC to have due regard to the need to:
In order to fully comply with its duty under the Act, HMRC will take steps to ensure that its procurement activity and resulting contracts also promote race equality.
Although there are clear benefits from doing business with the Government, it is important to be aware of the differences there might be in this market. In general, you should expect bidding procedures to be more exacting since, unlike the private sector, the aim is to ensure value for money for the taxpayer.
The Stationery Office
Website: TSO (Opens new window)
Address: PO Box 29, Norwich, NR3 1GN
Tel: 0870 600 5522
Email:Subscriptions
Business Information Publications (BIP) Ltd
Website: BiP Solutions (Opens new window)
Address: Park House, 300 Glasgow Road, Shawfield, Glasgow, G73 1SQ
Tel: 0141 332 8247
Email:Bip contracts
