The two new good practice guides

Spending public money wisely and well: how to put basic principles into practice.

For public entities, procurement and the different types of funding arrangements can be a very confusing area. There is a complex mix of different organisations involved, types of funding arrangements, and procedural rules and requirements. It is not always clear what rules or expectations apply when. We often get asked questions such as:

  • Does it matter whether something is a grant or a contract? If so, what difference does it make?
  • When does a procurement policy apply? Are there any equivalent rules if it does not apply?
  • Should we manage everything as a contract?
  • Should we do anything different if we are contracting with a non-government organisation?

We have therefore recently updated and reissued our good practice guide on procurement (Procurement guidance for public entities), and have also produced a new guide entitled Public sector purchases, grants, and gifts: Managing funding arrangements with external parties.

We use the phrase “funding arrangements to external parties” to cover the span of procurement and purchasing (large and small), grant funding, and gifts – anything where an entity is handing public money over to someone else in some form to achieve its goals. The “someone else” in this transaction might be a private company, a non-government organisation or charitable trust, an individual, or another public sector organisation.

This more general guide explains the range of funding arrangements that public entities commonly enter into and how to think about which type of arrangement suits a particular circumstance. It aims to clarify:

  • how the different processes and expectations fit together;
  • what the basic principles are; and
  • what choices public entities need to make when they plan for, and enter into, any kind of funding arrangements with external parties.

The procurement guidance sits underneath that overall framework and gives more specific advice and guidance on how to go about purchasing goods and services and running procurement processes. The key difference from our previous work is that the focus now is on encouraging entities to think strategically – the emphasis is on “doing it smarter” rather than on compliance with standard processes or checklists. The guidance now also explicitly acknowledges a much wider range of circumstances than straightforward commercial procurement in a market situation and recognises that general tender processes will not always be the best way to manage a purchase. Tendering often will be a safe and proven way to ensure a fair process and value for money. But sometimes it can be counter-productive or involve excessive compliance costs. The new guidance encourages entities to think about their circumstance and to be willing to defend the reasons why they might do something different in some circumstances. The focus is on core principle rather than detailed procedural expectations.

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