Procurement at HMRC
Information about doing business with HMRC and guidance for those who want to become an HMRC supplier.
1. How HM Revenue and Customs manages procurement
HMRC high value and complex contracts are let by our Commercial Directorate, who hold responsibility for procurement and contract management across the department. Their work relates to all commercial arrangements made as part of HMRC’s annual external spend, from everyday commodities to more complex procurement exercises to meet specific business requirements.
2. Our procurement policy
In common with other government departments, HMRC procurements are conducted in line with the UK Public Contracts Regulations and UK Cabinet Office Guidelines and Codes of Practice, including those relating to transparency, open competition, equal opportunity and ensuring value for money.
Please refer to the Sell goods or services to the public sector page on GOV.UK for general information about tendering for public sector contracts.
3. Supplying to HMRC
Unless they can be procured from an existing contract or framework agreement, HMRC contractual opportunities are generally advertised and opened to an appropriate degree of competition.
The precise procurement route and degree of advertising will depend on the regulatory requirements, the nature of the goods and/or services being procured and the estimated full life value of the contract.
Current financial thresholds and usual procurement routes:
- low value orders/contracts up to £10,000: 5 written quotes, with potential suppliers usually identified from various sources, including telephone and trade directories, national, local and trade press and suppliers’ catalogues
- higher value contracts from £10,001 to £100,000: Mini Tender Exercise, advertised in Contracts Finder, or award under an existing framework agreement where available
- high value contracts over £100,000: Full Competitive Tender Exercise advertised on the Find A Tender System (FTS) and on Contracts Finder, or award under an existing framework agreement where available
4. HMRC Tendering Instructions
HMRC’s standard Tendering Instructions (available below) contain general information about HMRC’s procurement policies and processes, including how HMRC takes account of a supplier’s tax compliance record when selecting and contract managing its suppliers.
Certain elements of the standard HMRC Tendering Instructions may be modified and made contract-specific when issued in the course of a procurement or tendering exercise.
5. HMRC conditions of contract
HMRC use a range of different contract types dependant on the route to market, value and complexity of the goods/services procured. Unless an agreement requires bespoke contract terms, the standard forms of contract typically used for HMRC agreements are as follows (HMRC refine the standard contract terms to ensure suitability with specific contract/HMRC requirements):
- High Value/High Complexity Contracts: Model Services Contract
- Medium Value/Medium Complexity Contracts: The Mid-Tier Contract
- Lower value/Lower Complexity Contracts: Short Form Contract
- Lowest value/Lowest Complexity Contracts:
Contracts awarded under Crown Commercial Service (CCS) Agreements
HMRC is required to adhere to the contractual terms stipulated by CCS for the respective agreement when procuring contracts through existing CCS Frameworks/Dynamic Purchasing Systems.
You can see current CCS agreements
6. HMRC e-sourcing portal
HMRC routinely uses a web-based e-sourcing portal to manage its procurement exercises. Further details on the system used are provided in the HMRC Tendering Instructions document, included above.
7. HMRC e-Trading System
HMRC has a ‘Purchase Order Mandatory Policy’ and processes all purchase orders using its eTrading system (‘myBUY’) which is provided by SAP Ariba.
The ‘myBUY’ eTrading system has been introduced as part of a wider programme to make our administration more efficient and effective and is used by (and impacts on suppliers to) not only HMRC, but also the Valuation Office Agency (VOA).
Further details are provided in the HMRC Tendering Instructions document.
8. Prompt payment
HMRC is committed to paying suppliers and organisations promptly.
HMRC has a mandatory purchase order policy – suppliers should always request a purchase order number to allow invoices to be paid promptly. Invoices without purchase orders will not be paid.
We:
- consistently exceed the government’s target to pay 80% of undisputed invoices within 5 days. We aim to pay all compliant goods and services invoices as soon as they have been authorised by the HMRC official(s) responsible for the purchase order/contract
- adopt the principles of The Confederation of British Industry (CBI) prompt payment code
- pay suppliers in accordance with the terms of their contract, usually 30 days from receipt and verification of a valid invoice
Where the supplier lets a subcontract in connection with a HMRC contract, they must include similar prompt payment terms to the above in respect of payments to the subcontractor.
In addition to ensuring HMRC pays its suppliers quickly, we also check the payment performance of organisations bidding for HMRC contracts, in line with wider government guidance. As part of in scope procurement exercises, bidders must demonstrate they pay their suppliers promptly, in line with Cabinet Office Prompt Payment Policy. Bidders failing to meet the minimum standards outlined under this policy, will have their tender submission rejected.
9. Small and medium enterprises (SMEs)
The overwhelming majority of UK businesses are SME’s, with latest government figures identifying 99.9% of businesses fall under this definition. These organisations are incredibly important to the UK economy, employing over 60% of the workforce and accounting for more than 50% of total turnover in the UK private sector. Where feasible, HMRC wants to trade with SMEs to support economic growth and sustainability within this important business sector.
The next HMRC SME Action Plan, due to be published later this year, will outline ways in which we look to work with SMEs and increase the proportion of procurement spend awarded to smaller suppliers.
Procurement opportunities advertised by HMRC that may be suitable for SME participation can be found on Contracts Finder. The Contracts Finder portal is used by central government organisations, to advertise procurement opportunities with a value greater than £10,000.
In conjunction with the Cabinet Office, HMRC plans to help meet the government’s aspiration that 25% of spend should go to SMEs.
Further information for SMEs wishing to trade with central government can also be found through the following sources:
- The Federation of Small Businesses website gives small businesses information on dealing with government, research findings and information on new initiatives
- Learn Direct offers online training courses for SMEs on how to win government contracts
10. Sustainable procurement
Sustainable procurement is a process whereby organisations meet their needs for goods, services, works and utilities in a way that achieves value for money and generates benefits not only to HMRC, but also to society and the economy too, while minimising damage to the environment. Our goal is to become a national leader within government on sustainable procurement.
To help HMRC meet its sustainability strategy, sustainability and social value is considered by HMRC throughout the various stages of the procurement process. HMRC is implementing the requirements outlined in the Social Value Model (SVM), introduced under Procurement Policy Note (PPN) 06/20 as part of in scope procurement exercises, this includes:
- provision of at least one social value award question, with a minimum 10% of the total tender weighting
- responses provided by bidders will be evaluated in line with the corresponding award criteria included in the SVM
- social value deliverables identified in the winning tenderer’s proposal will be incorporated into the contract in readiness for managing them through the contract lifespan
- social value key performance indicators will be agreed with the successful supplier based on reporting metrics included in the SVM and the commitments made in the supplier’s response
In addition, HMRC has incorporated sustainability and social value elements as part of the procurement process prior to the introduction of the SVM. These areas continue to be included where deemed relevant and proportionate to the contract procured. Relevant areas covered by our standard procurement question set include, but are not limited to, assessment of the following:
- compliance with environmental legislation
- commitment to supporting the HMRC Sustainable Procurement Strategy
- the supplier’s policy towards economic regeneration and improving workforce skills
- the supplier’s environmental policy
11. Transparency
Suppliers intending to bid for public sector contracts should be aware of the various transparency requirements, including, subject to certain limited exemptions, the obligation to publish details of contracts awarded.
The requirement to publish is outlined in the HMRC Tendering Instructions and is further explained in PPN 02/17: in line with the government’s commitment to greater transparency, HMRC also publishes the following information relating to procurement and contracts:
- HMRC spend over £25,000
- HMRC Government Procurement Card (GPC) Departmental spend over £500
- HMRC exceptions to the government
HMRC also has statutory obligations under the Freedom of Information Act 2000 (FOI) which may impact on HMRC suppliers.
12. Transparency data
HMRC Commercial pipeline provides a forward look of our anticipated outsourcing activity over the following 24 months. The pipeline includes all our major projects and anticipated procurements valued at £10 million or more. HMRC’s Commercial Pipeline
13. Complaints or feedback
HMRC values feedback for the purpose of improving procurement processes and customer-supplier relationships. If you are a current or prospective supplier and would like to provide feedback on the content of this page, please contact us at:
Business Services (GRAC),
HMRC Commercial Directorate,
5W Ralli Quays,
3 Stanley Street,
Salford M60 9LA
Email: Governance, Compliance and Information Security Risk (Commercial)