University of Northumbriaat Newcastle

1

University of Northumbriaat Newcastle

Commercial Procurement Policy

December 2014

Authors

Peter Batty, Commercial Director

David Jackson, Head of Business Assurance

Administration Document History

Revision History

Date of this revision:

Date of next revision:

Revision date / Previous revision date / Summary of Changes / Changes marked
29/10/2014 / 23/10/2014 / Chris Reilly’s amends / No
30/10/2014 / 29/10/2014 / Adam Dawkins and Jay Wilson amends / No
30/06/2015 / 29/10/2014 / Peter Batty / No
30/10/2015 / 30/06/2015 / Peter Batty

Table of Contents

Administration Document History

1OVERVIEW

2. HOW TO BUY

3WHERE TO BUY

4COMPETITION

5SUSTAINABLE PROCUREMENT

6PROCUREMENT ETHICS

7MONITORING AND AUDIT

APPENDIX

1OVERVIEW

1.1Purpose

The purpose of this document is to defineNorthumbria University’s (“the University”)policy on procurement to assist colleagues in carrying out procurement activity on behalf of the University.

It should be read in conjunction with the University Financial Regulations, of which this is a sub-policy,- the overriding principles which must be followed in order to ensure financial compliance throughout the University.

This Policy reflects and supports the University's objectives and Vision 2025, by working with staff and suppliers, to balance efficiency, against risk factors, in achieving Value for Money, whilst promoting sustainable procurement and maximising student and stakeholder satisfaction.

All procurement within the University shall be carried out in accordance with Financial Regulations, this Commercial Procurement Policy andLegal requirements.Where the projected, whole life value of the procurement is in excess of £50,000 (including VAT), the structured tender process should be led by Commercial Procurement Services. No tender exercises should be undertaken by Faculties and Services in isolation.

The University is a member of various procurement consortia, for example NEPO (North East Purchasing Organisation) and NEUPC (North East Universities Purchasing Consortium). The University supports collaborative procurement at sector and national level where this provides demonstrable benefit to the University.

1.2What is Procurement?

Procurement can be defined as `the whole process of acquisition of goods, works and services and assets spanning the whole life cycle from the identification of the business needs through to the end of the useful life of an asset, contract or of the need for an activity’. It is more than simply `purchasing’ and it covers provision from internal and external providers.

Whilst the approach to different types of procurement will differ in complexity, the essential principles outlined in this guide apply to the whole range of procurement of goods, works and services regardless of whether they are provided internally, by a third party or even a sub-contractor to a third party.

With routine procurement of goods (such as furniture), works (such as construction and engineering contracts) or services (such as a window cleaning contract) the procurement route is relatively straightforward.

With more complex procurement decisions e.g. a new campus or an existing service being provided by an external provider the process itself is more complex.

1.3Value for Money

Definition: ‘whether or not an organisation has obtained the maximum benefit from the goods and services it both acquires and provides, within the resources available to it. Some elements may be subjective, difficult to measure, intangible and misunderstood. Judgement is therefore required when considering whether VFM has been satisfactorily achieved or not. It not only measures the cost of goods and services, but also takes account of the mix of quality, cost, resource use, fitness for purpose, timeliness and convenience to judge whether or not, together, they constitute good value’ (HEFCE website)

To ensure that large value purchases obtain optimum Value for Money, the involvement of Commercial Procurement Services should be utilised for all University purchases (non-works) where the whole-life costs are in excess of £50,000 (including VAT).

Goods, services and works should be acquired by effective competition, including adequate publication of the contract opportunity, unless there are convincing and justifiable reasons to the contrary.

It is essential that a clear description of requirementswithin a PRF (Procurement Request Form)(Appendix A)is approved before the procurement process is commenced in order to allow the writing and scoring of tenders received.

It is the responsibility of Executive Deans and Directors of Faculties and Services to ensure that these requirements are complied with. Requests for departure from Commercial Procurement Policy require the prior approval of the Commercial Directorand requests for such departure from competitive processes must be submitted within an adequate time(three months in advance of the renewal date) so as to allow sufficient time for an internal review to be conducted prior to the event.

2. HOW TO BUY

2.1Financial Authority to commit expenditure

The University operates a system of devolved financial authority under which Executive Deans and Directors of Faculties and Services are responsible for the planning and decision making process and the management of their financial resources. This authority may be further delegated by Heads of a Faculty or Service to their staff – however this will require approval from the Chief Operating Officer.

Anyone placing a purchase order on behalf of Northumbria Universityshould ensure they have the correct levels of authorisation and budget to purchase, as authorised by the ExecutiveDean and Directors of Faculty or Service. Different members of staff will have authority to purchase and authority to approve invoices, and so maintaining a separation of these duties is essential.

The Financial Regulations covering Authority limits are available on the Finance and Planning website:

Finance and Planning (Payments Team) maintains a secure electronic record of all staff that who have delegated authority to approve expenditure. The record will also hold details of the budgets against which the employee is authorised to approve purchases as well as their transaction levels. This record is checked when invoices are paid to ensure staff with correct levels of financial authority have been included during the process.

It should be noted that:

• No employee can approve purchases if they have not been given delegated authority to do so;
• No employee is authorised to commit the University without first ensuring that budgets are available to meet the commitment;
• Aggregation of Purchase Orders is not permissiblei.e. to raise two or more lower value purchase orders or to phase the issue of purchase orders in order to circumvent authorisation levels.

Failure to comply with these requirements may result in withdrawal of authority and disciplinary action. If you are unsure of your personal authorisation levels, please check with the Finance and Planning (Payments Team.)

2.2Purchasing regulations & thresholds

The current thresholds that apply to all University procurement activity are set out below. It must be notedthat the costs listed are not just for initial outlay, but for the whole life costs of the contract.

.

There are a number of definable steps involved in the purchase of goods and services for the University that commits it to pay a third party, and these are listed as below. For these purposes, a “Commitment” means: “a contractual obligation for the University to pay a supplier that is created by an approved purchase order including those made electronically or online and those using a procurement card or created by any other purchasing commitment (including a verbal agreement).”

The financial limits up to which individual employees can make a Commitment are those set by the Board of Governors, which apply to all financial transactions carried out on behalf of the University. The current financial limits(inclusive of VAT)are as follows:

•Employment and Finance Committee: over £2,000,000;

•Chief Operating Officer and Vice-Chancellor (together): up to £2,000,000;

•Vice-Chancellor: up to £500,000

•Chief Operating Officer: up to £500,000;

•Members of University Executive: up to £50,000;

•Other staff with Delegated Authority from the Chief Operating Officer: up to£50,000.

Plans to acquire equipment, goods or services must be aggregated across the University and over the life of the contract.

The buyer(i.e. the instigator of the purchase), should consider the most appropriate route to procure, in line with the guidance set out below:

2.3E-purchase

All procurement within the University should be carried out, where available, using the electronic ordering system, e-purchase(SRM).

The only exceptions will be where it has been agreed that for practical reasons other systems need to be utilised, such as University Travel and Expenditure Policy (Key Travel), agency and temporary personnel up to and including Grade 5(C-NET – Comensura) etc.or where the e-purchase system has not yet been set up, or for low value orders when Purchasing Cards can be used.

E-purchase has a workflow functionality that ensures that the correct approval process is carried out prior to purchaseby budget holders.

2.4Purchase Orders

All purchase orders should, where possible, be placed via e-purchase, under no circumstances should verbal orders be given. Faculties and Services should be aware that it is when a purchase order is placed with a supplier that a commitment is made on behalf of the University, not when an invoice is received, so approvals should be ensured at this stage. All purchase orders have attached theUniversity’sStandard Terms andConditions of Purchase; the latest version of these is available on the Finance and Planning web pages.

2.5Purchasing Cards

It is recognised that there is aneed in certain circumstances to use Purchasing Cards as an alternative means of paying for goods and services. There are some advantages includingthe potential to reduce paperwork, time in administration and subsequently reduce costs, however the reduced level of security, consistency and potential for misuse need to be considered. Purchasing Cards are suitable for low value, one-off purchases and for purchases from abroad – they should only be used for transactions up to £1,000 (including VAT) and NOT for any IT or printer-related purchase (parts, ancillaries, consumables) or capitalised equipment or hardware.

Consideration should be given to the aggregation of requirements as it can also be time consuming registering card details on a regular basis.

These cards can be approved and issued through Procurement by the Executive Dean or Director of Faculty or Service.

For further information, you should refer to the Purchasing Card Procedures, which can be found at Failure to comply with these, or misuse, may result in withdrawal of authority and disciplinary action.

2.6Suppliers

Suppliersthat Faculties or Servicesneed to use must be set up on the University's finance system, to enable payment to be made. You must complete a new vendor form and send to Commercial Procurement Services who will then carry out the necessary checks before agreeing to a new supplier being set up. Forms are available on the Finance and Planning website. All potential suppliers should have financial assurance checks carried out. This is particularly relevant if the payment terms dictate that some payment in advance of receipt of goods or service is required – such a payment must be approved in advance by the Commercial Director.

Commercial Procurement Services has access to a credit reference agency, and requests to use this facility should be made through them, all new suppliers should be credit checked before being engaged

3WHERE TO BUY

3.1Internal sources of supply

For Catering or Print requirements you should consultCampus Services Catering or the University Print Service before considering to purchase externally. Both these internal suppliers have considerable facilities and wide staff expertise to ensure you get the right solution to your requirements.

For furniture or stationery, it may be that there is excess or unwanted stock in another Faculty or Service, which would meet your requirements. Unwanted university-owned items suitable for reuse should be added to Northumbria University’s WARPit site by a staff member. Before procuring a new item, staff members should check WARPit to determine whether the item they require is available in-house. (

University Faculties or Services mayalso have a contractual arrangement you could utilise, or which might be interested in running a joint procurement to increase the overall buying power.

3.2External sources of supply

The University has contractual relationships with a large number of organisationseither put in place by the University or run on our behalf by purchasing consortia. These contracts cover a wide range of Goods and Services, both specialist and routine requirements. It is important these are used when available to prevent the University being in breach of an existing contract and to achieve Value for Money. Commercial Procurement Services will maintain a list of these key suppliers and contracts and should be the first point of contact, as these existing contracts should always be the first option when considering a purchase.

The University benefits from the use of collaborative procurement agreements and, in addition to being a member of the North East Universities Purchasing Consortium (NEUPC), works with other public sector bodies on collaborative projects to deliver Value for Money to the University where it can.

Executive Deans and Directors of Faculties and Services have a responsibility to ensure that where an appropriate contract is available, purchase orders are placed with that supplier. If there is any doubt regarding the correct source of supply, advice should be sought fromCommercial ProcurementServices in advance of the requirement.

If a non-contracted supplier is offering lower pricing than our contracted suppliers, this should be brought to the attention of Procurement.

3.3Specialist knowledge and assistance

Specialist knowledge and assistance may be required, including the engagement of external consultants for highly complex and high value procurements, but internal assistance, e.g. Campus Services or IT Services should be preferred where available. IT Services should always be consulted when hardware or software purchases are required, to ensure the equipment is compatible with our existing IT infrastructure and that all software licensing rules are complied with.

3.5Travel buying

The University has a contracted supplier (Key Travel - that should be utilised for all business travel. The details of how we should travel are contained within the University Travel and Expenditure Hubwhich can be found here:

The current University travel supplier can be found on the travel portal of the University intranet site.

The University travel supplier should be used online for the following modes of travel unless travel is of a routine nature and there is insufficient time to pre book tickets (e.g. tickets to Durham or York):

• Rail;
• Air (domestic and international, short and long haul including low cost carriers);
• Hotel bookings; and
• Combinations of journeys.

While the above relates to staff travel, it should be noted that a University Student travel/ Field Trip Framework is currently being developed and will be in place early 2015.

4COMPETITION

The form of competition should be appropriate to the value and complexity of the goods, services or works to be acquired. We should also seek to keep bidding costs to the minimum necessary for effective competition and should remove barriers to participation by, for example small firms, the self-employed and the third sector without discriminating against others. Any minimum standards required should be proportionate to the contract in question, other than where legally required.

4.1Pre- market engagement:

The University should look to engage early with the market to understand supplier issues, the state of innovation and commercialisation in the market and other market constraints. In setting up this pre-market engagement, it would be advisable to look at issuing a Request for Information(RFI) to notify potential suppliers of the opportunity and set up an early industry day to discuss the opportunity.

4.2Quotations and tenders

The quotation and tender processes are both used to obtain written offers from suppliers for the supply of goods, works and services. The quotation process is normally used for relatively low value and low risk purchases. For higher value purchases, which require greater accountability, the more formal tendering process should be adopted.

Both processes are described in more detail below.

4.2.1Quotation Process

In accordance with the University's Financial Regulations, a minimum ofthree written quotations are required for any purchases between £5,000 and £50,000 (inclusive of VAT). Requests for quotations can be made verbally(confirmed in writing)or in writing. Written confirmation of the quotation is required.

In seeking written quotations the supplier should be asked to submit details of price, time required for delivery, trade or early payment discounts, any other costs associated with delivery and carriage and, where appropriate, the whole life running costs of the contract. Suppliers should be given a reasonable period to respond to enquiries(no less than 7 days and no more than 30 days) and should return their offersby the requested methodology and marked with the appropriate quotation reference.

In requesting quotations, care should be taken to ensure that any purchase is subject to the University's own terms and conditions. Any exceptions must be sent to Legal Services for review in advance of acceptance.

The Request for Quotation Template is available on the Procurement Web Pages(Appendix B)

Receipt and Custody of Quotations

An independent person or department should be nominated for the receipt, safe custody and opening of all quotations and should not be involved in the subsequent quotation process. All quotations received should be recorded in the Faculty/Service Quotation Register.

All quotations must be treated with care and in the same way. They must be kept unopened, in a secure location until the designated tender opening time, which should be as soon as possible after the closing date.

Log the quotations as you receive them. The person appointed to witness the opening of quotations does this and should have no further role in the quotation process.

On no account should you disclose to bidders who else you have invited to bid or reveal details of any bid to anyone outside the evaluation team. This applies even after the contract has been awarded

A nil response should be recorded in the Quotation Register if a bidder does not submit a response.

If, by the deadline for receipt of quotations, you have received less than the expected number of responses, check that none are being delayed internally, such as in the post room, reception or with messengers. Failure to consider such tenders could result in a later challenge and legal action.