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Shape Shape
Preparing a retrofit project

6. Procurement Strategy


Procurement can feel complex and daunting, but it is also rich with opportunity. A well-run procurement exercise can leave your organisation:

  • Better informed about the state of the market for retrofit products and services

  • More effectively engaged with your residents

  • Setting out on your contract in an atmosphere of openness and trust

  • Achieving the results you want more efficiently, securing better value for money and meeting your wider objectives

  • Compliant with procurement legislation and regulations


    Why it matters

    A sound procurement strategy will form the basis of your retrofit project; time invested at this stage will help set the foundation for your whole scheme. Procurement helps you to clarify your organisation’s and residents’ needs and to communicate these with potential suppliers. Procurement also helps shape retrofit projects which deliver value for money and wider social outcomes.

    Key steps to take

    1. Engage early. You should start talking with your procurement team, consortium partners and residents to explore what you want to achieve and the approach to procurement that will deliver this.

    2. Think broadly. When designing your procurement exercise try to explore if you can run a procurement exercise to address immediate priorities and create flexibility for the longer term. This can be done by procuring for a contract value, duration or scope that exceeds initial requirements. Given the short-term turnaround times for funding proposals having more routes to deliver can reduce your workload and increase potential to be able to bid.

    3. Set objectives. Work collectively to identify what needs you are trying to fulfil through this procurement exercise. This will link to your overall retrofit project objectives, but will also identify what matters to you most (for example, you might want to emphasise innovation or local supply chain development).

    4. Understand the constraints you are working within. Procuring in line with specific funding requirements could set a timetable or other rules with which you need to comply.

    5. Agree your procurement approach. Your organisation may favour one type of procurement process, but you will need to consider whether this is suitable to a retrofit project, given your objectives and any constraints. You can read more about procurement approaches below.

    6. Ensure you have the right skills. Procurement is a team effort. You will need to bring together people with legal, financial and contracts expertise and engage them throughout the process. If your organisation is less experienced at procuring retrofit, you may need external support; get in touch with the RISE Support Team as they may be able to assist.

    Procurement for SHDF projects should comply with the National Procurement Policy Statement, which sets out the Government expectations for public sector procurement.

    In December 2020, the Government published its Green Paper: Transforming Public Procurement, which set out ideas for simplifying the public sector procurement process. The results of this consultation process will feed into a new Procurement Bill, which is due to be published in late 2021.

    Success factors

    Engage, engage, engage. 

    The more complex your project, the more you should engage with procurement colleagues. In particular, if the project involves any kind of joint venture or special purpose vehicle, this will take a significant amount of joint working to develop.

    Understand the timetable for procurement. 

    Procurement processes can be lengthy but timelines for funded projects are often very short. It is worth engaging procurement colleagues well in advance to understand the different procurement options. For example, using an existing procurement framework can speed up the process. There are many moving parts in a procurement exercise, so make sure you build plenty of time into your plan for drafting and redrafting documents, securing internal sign-off and responding to any questions of clarification.

    Stay focused. Some contracts are relatively short and simple. 

    Leave them that way! It can be tempting to add more and more requirements to a contract, but this will dilute your project away from your core objectives.

    Specify outcomes as far as possible. 

    You should use outcome-based specifications as much as possible. An output (or outcome) based specification focuses on the desired outputs of a service in business terms, rather than a detailed technical specification of how the service is to be provided. This allows providers scope to propose innovative solutions.

    Provide bidders with high-quality data. 

    The more specific and accurate your data, the more precise the costs that you receive from potential contractors. You can read more about monitoring and evaluating stock datahere.

    Be transparent about the risks. 

    Every contract carries risks, whether risks to the housing association, to residents or to the contractor themselves. As you work through your procurement process – and once the contract is in place – you need to have a clear view of the associated risks and who is accountable for managing them. A risk register developed at the earliest stage and built on as the project progresses can help you to maintain this clear view and can help potential bidders to understand what level of risk they are expected to assume if their bid is successful.

    Deep dive

    Setting objectives

    You should start by defining the need or challenge that your project is trying to address. This should be a broad statement such as:

    We need to provide high quality homes to our residents by ensuring existing properties are comfortable, affordable and decent, whilst managing the costs of repairs in a predictable way.

    This type of statement will help you to focus your procurement exercise on the core requirements of your association, your consortium partners and your residents.

    You should think about two types of objectives:

    • Strategic objectives – these identify what your organisation wants to achieve in the long-run and are usually expressed through the organisation’s vision, mission and business plan. They provide the context for the work that you are specifying.

    • Specific objectives – these set the outcomes that you would like to achieve from the specific procurement exercise and subsequent contract.

    The specific objectives of your contract should dovetail with your organisation’s strategic objectives; if they do not, you risk agreeing a contract which takes the organisation away from its goals. This is particularly important when working in a consortium where different partners may be trying to achieve different goals.

    TheNational Procurement Policy Statement sets out three national priority outcomes, which should sit alongside your local objectives:

    • Creating new businesses, new jobs and new skills

    • Tackling climate change and reducing waste

    • Improving supplier diversity, innovation and resilience

    Setting out your requirements

    Objectives set the big picture of what you are trying to achieve, but they are not enough in themselves. You will need to translate your objectives into measurable requirements within your tender documents.

    You can think about objectives in a hierarchy. For example, here is a hierarchy of objectives for a project to replace heating systems:

    • Strategic objective: improving the sustainability of your housing stock

    • Specific objective: procuring heating systems that are highly energy efficient or use renewable sources of energy

    • Requirements: examples could include:

      • specifying a performance level in terms of carbon emissions or predicted energy costs that any system should achieve (this is a good example of an outcome)

      • specifying that gas boilers must achieve an “A” energy rating

      • specifying renewable energy technologies to be deployed within your stock

    Resident engagement

    Procurement is often carried out by a central team that may not have everyday contact with residents. You should take positive steps to ensure that residents are involved from the start of the procurement process.

    Procurement exercises are complex and residents will best be able to participate if you can provide a period of training and development. Too often, residents are involved at the last minute – for example, they are invited to join evaluation panels late in the process – and an opportunity for effective and constructive resident input is missed.

    Your residents are a vital source of information and feedback about their needs, your homes and the effectiveness of previous contracts. Greater customer involvement in specifying and selecting materials and services leads to greater satisfaction amongst residents. The resident’s ability to look at what is being proposed from the perspective of the end user is a valuable input in the selection of new contractors and service providers. Residents may also feel more loyal and supportive of services where they have helped to make the choice.

    It is equally important to involve leaseholders and their associations in the procurement of major contracts, especially those where the leaseholders will have to pay a contribution to the works and may see an increase in future service charges. This includes any leaseholder whose tenancy agreement includes a variable service charge clause (eg, shared ownership leaseholders). At minimum, your organisation will need to comply with formal leaseholder consultation requirements. Best practice advice is that leaseholders should be represented throughout the procurement process on panels in a proportionate manner based on the percentage tenure in the area that the contract covers.

    Choosing your procurement strategy

    There are a number of ways in which you can procure – make sure that you work with your procurement team and your consortium partners to find the approach that will meet your objectives and any requirements of funders. The options are:

    • ‘Bolting onto’ an existing contract (for example, a responsive repairs or cyclical maintenance contract)

    • Using an existing framework agreement

    • Using a buying club (a specific type of framework agreement)

    • Running your own procurement (which could include setting up your own single or multi-supplier framework)

    • Running a joint procurement with one or more other associations, local authorities or ALMOs

    • Forming a partnership, joint venture or special purpose vehicle with public or private sector partners

    Using an existing contract

    This is officially known as a negotiated procedure without prior advertising and gives you the option to add goods, works or services to an existing contract. However, you will need to be sure that you can justify using the existing contract or potentially face legal challenge.

    Using an existing framework agreement

    A framework agreement sets the terms for future contracts but does not commit an organisation using it to making any purchases. Frameworks are set up to comply with procurement rules and can help speed up the procurement process as some stages have already been carried out. Local authorities and housing associations often set up frameworks for types of project that are likely to recur.

    There are two types of framework agreement: single contractor and multiple contractor.

    Under a single contractor framework, your organisation can buy works, services or supplies from that contractor on the terms of the framework agreement without further competition.

    Where there are multiple contractors, you can either purchase using a direct award or through a mini-competition. (These options are mutually exclusive: you will have to follow the approach set out in the framework.) Direct award may be available for particular work types or in particular geographical areas. Mini-competitions are more common. Using this approach, you invite all the pre-qualified contractors on the framework to submit a tender.

    Buying clubs

    Using a buying club is generally the best option for goods, where combined purchasing power can lead to lower prices.

    Buying clubs (technically called ‘central purchasing bodies’) set up framework agreements for others to use to procure goods, services or works. In order to rely on a buying club framework, your housing association needs to have been named as a potential purchaser; in practice, this is usually done as part of a list of organisations or types of organisation.

    When using a buying club, your procurement team should check that:

    • it has been validly set up;

    • the association is entitled to use the framework;

    • there are appropriate arrangements with the buying club to protect the housing association from legal costs and claims for damages if the buying club failed to follow procurement rules properly when setting up the framework.

    Running your own procurement or procuring with others

    Your options for procurement are:

    • Open procedure: The open procedure is appropriate for simple procurements. It is a single stage process (ie, there is no prequalification stage) and all tenders submitted must be evaluated. Given the open nature of this approach, it is most appropriate when the pool of potential bidders is small or when you are procuring simple services or supplies. The open procedure is the conventional approach to procurement and is the first choice unless there are reasons to use a different process.

    • Restricted procedure: Tenderers are invited to respond to a pre-qualification questionnaire (PQQ), from which a shortlist are then invited to tender for the project or programme. This reduces the number of full tenders that you will have to evaluate and makes it worthwhile for contractors to invest time in preparing tenders since they know they have a reasonable prospect of winning the contract.

    • Competitive dialogue: After shortlisting candidates, the contracting body discusses possible solutions with them. The contracting body can continue the dialogue until it has found one or more solutions that meet its requirements. At that point, the dialogue is closed, and final tenders invited. This process is helpful for complex procurements as you can explore solution options where it is difficult to provide a precise specification. These could be technical solutions (eg, packages of energy efficiency measures) or aspects of the delivery process (eg, proposals for resident involvement).

    • Competitive negotiation: The contracting body carries out a pre-qualification process and then enters into detailed negotiations with preferred bidders. The negotiated procedure allows the client to negotiate the terms of the contract with the shortlisted bidders. The negotiated procedure is rarely used in the UK.

    • Innovation Partnership: An innovation partnership enables the buyer to work with suppliers to develop and then purchase innovative products, works or services where no suitable solution exists in the market. This shares the risk of development between the public sector buyer and the supply chain and could create an opportunity for your organisation to share in the profits from wider sale of products (eg, through licensing agreements). An innovation partnership is a form of competitive negotiation.

    Procurement thresholds

    UK public procurement has thresholds at which different types of procurement process are required. New thresholds were established on 1 January 2022. These can be found at the following link:

    Visit Website (

    You should work with your procurement colleagues to ensure that you are advertising your procurement appropriately and following the correct type of process.

    Subsidy control

    The other key element for consideration is subsidy control.

    Subsidy control is the UK successor to the EU State Aid rules which set limits on the amount of money that can be awarded by public sector bodies to other types of organisation.

    The Subsidy Control Bill 2021 received Royal Assent in April 2022, passing into law as the Subsidy Control Act 2022. A subsidy might be a cash payment, a loan with interest below the market rate or a loan guarantee and these are seen as valuable in stimulating activity such as research and development. However, there are risks that subsidies could cause economic harm or distort competition, so the Government has put in place its rules for subsidy control.

    In very simple terms, and as with State Aid, the Act provides a threshold for the amount of public funding that an organisation can receive; this is £315,000 over three years.

    You should consult with colleagues in procurement, finance or legal teams to ensure that you are complying with subsidy control requirements once they are introduced.

    You can read the Subsidy Control Act at:

    Visit Website (

    You can read more about the principles of subsidy control at:

    Visit Website (

    Value for money and social value

    One of your objectives is likely to relate to value for money. The Value for Money Code of Practice (2018) defines value for money in the following way:

    Achieving value for money should include achieving economy, efficiency and effectiveness in all areas of activity, taking into account the outputs achieved as well as input costs. Economy, efficiency and effectiveness are defined as follows:

    • Economy: minimising the cost of resources used while having regard to quality

    • Efficiency: the relationship between the output from goods or services and the resources to produce them

    • Effectiveness: the extent to which objectives are achieved and the relationship between intended and actual impacts.

    The Public Services (Social Value) Act 2012 requires housing associations to take account of social and environmental wellbeing when procuring contracts.

    Broadly, social value involves looking beyond the price of an individual contract and considering the collective benefits to a community from your decision to appoint a contractor. A useful way to consider the issue is to ask: if £1 is spent on the delivery of services, could that same £1 be used at the same time to produce a wider benefit for the community?

    An approach based around social value could deliver a wide range of benefits:

    • Support for the economy: both in terms of supporting organisations who may wish to bid for work and improving employment opportunities that could be secured by local people.

    • Efficiencies across the housing association and the wider public sector: tying social and environmental goals into your procurement process can help you to achieve multiple organisational objectives and wider social outcomes.

    • Improving equality and diversity outcomes: procurement can be used to support wider social outcomes, for example, providing apprenticeship or workplace opportunities to under-represented groups or ensuring equity in how your service is delivered to different groups within your community.

    • Support for the social economy: providing opportunities to engage in large contracts for charitable and social enterprises which put community benefit at the heart of what they do.

    • Aligning social value with community needs: thinking about community priorities and issues can help your association to deliver a contract that addresses what really matters to local people.

    Learn and plan for the future

    National fuel poverty strategies set out a long-term trajectory for the existing social housing stock. National and local carbon reduction goals set out pathways for decarbonisation of homes and communities. Alongside these policy objectives, we are starting to see longer-term funding programmes such as the SHDF. Retrofit is truly going to be part of business-as-usual for housing providers. Each retrofit project provides the opportunity to learn and this includes learning from the procurement exercise.

    • Did the procurement deliver the outcomes you expected? If so, how? If not, why not?

    • What unintended outcomes did it deliver (positive or negative)? For example, your procurement exercise may have helped catalyse supply chain growth in your local area.

    • What elements could be repeated to save time in future projects?

    • What elements will remain bespoke / unique to each individual project?

    • You can read more about opportunities to learn in the guidance onmonitoring and evaluation here on the Knowledge Hub.

    Further resources

    Where can I learn the basics of procurement?

    The National Procurement Policy Statement sets out the basics of public sector procurement in the UK.

    Visit Website (National Procurement Policy Statement)

    How do I know if I can use an existing contract?

    The Local Government Association offers some guidance on the rules for making changes to existing contracts. You should also speak to a procurement professional to be sure that you can follow this approach in a compliant way.

    Visit Website (Changes to contracts)

    How can I bring in social outcomes to my procurement project?

    This guidance will help you think about social outcomes and other forms of innovation in public procurement. It includes some case study examples, mostly from the health and local government sectors, showing how to consider social outcomes in procurement exercises.

    Visit Website (

    How can I make sure procurement processes are open to SMEs?

    Guidance from Public gives an overview of the procurement process and insights particularly from the technology sector which has a high rate of innovation and start-ups, characteristics we can expect to see in the retrofit sector as it grows.

    Visit Website (

    Get in touch

    If you would like to discuss approaches to procurement for your retrofit project, please contact the RISE Support Team

    We would love to hear about your experiences. What has worked for your housing association? What lessons have you learned? What documents, reports or tools have you found most helpful? Please contact if you would like to share your experiences.

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