East Lancashire Hospitals NHS Trust
ProcurementGuide
How to Order Goods & Services
June 2011
East Lancashire Hospitals NHS Trust
Procurement Department
Customer Procedures Guide – An Introduction
From identifying the need to order goods or services – to those goods and services being available to you at point of use, can involve numerous people or stages of activity. At each stage there is a risk of error and delay. The simple task of ordering goods and services can become problematic, with a risk to the quality of your service and to patient care, if goods and services are not available to you when you need them.
There is often a perception that the process of ordering goods and services can be bogged down in bureaucracy, more often than not because of a lack of understanding of the procedures that must be followed and the reasons why these procedures exist. They exist to ensure that value for money is obtained in spending all public funds and that this expenditure is appropriately managed.
As all members of staff are directly or indirectly affected by the Procurement Department’s activity, this document offers guidance in the operation of procedures which should aid understanding of the stages involved in procurement of goods and services.
This guide forms part of and is consistent with the Trust’s Standing Orders and Standing Financial Instructions. All staff involved in the obtaining of goods, works and services of any description must ensure they have read and comply with this guide and the following documents:-
- Trust’s Standing Orders, Standing Financial Instructions and Scheme of Delegation.
- NHSE HSG(93)5 – Standards of Business Conduct for NHS staff.
The guide is intended to be customer friendly whilst still incorporating the basic rules to be complied with. I hope you find it a helpful guide – please keep it to hand. I welcome your comments on how we can improve for any future issues.
Linda Longton
Head of Procurement
Telephone: 01254 732519 (ext 82519)
e-mail:
website:
East Lancashire Hospitals NHS Trust
Procurement Department
Customer Procedures Guide
ContentsPage
- The Procurement Department5
Procurement Landscape5
Who Are We?6
Structures8
What Do We Do?9
2. The Trust’s Rules10
2.1Authorisation10
2.2Competition10
2.3Quotations and Tenders11
2.4Waiving of Competition12
2.5Single Tender Waiver Guidance Notes12
2.6 Official Orders13
2.7Delegated Ordering13
2.8Delegated Purchasing13
3. Procurement of Goods and Services from 13
Companies
3.1 General Background13Service Continuity Flowchart 16
3.2 Ordering Arrangements17
3.3 Contract Law19
3.4 Contract Law – “Do’s and Don’ts”19
3.5 Completing a Non Stock Purchase Requisition19
3.6 Expediting Orders20
3.7 Purchasing Goods from Charitable Funds20
3.8 Visits by Companies’ Sales Representatives20
3.9 Trials of Equipment and Consumables20
- Obtaining Goods from NHS Supply Chain 21
(Runcorn Warehouse)
4.1General21
4.2Delivery and Requisition Schedule21
4.3Emergency Orders22
4.4On-line Ordering22
- Goods Receiving Procedure22
5.1Receiving Stock Items from NHS Supply Chain22
5.2Receiving Direct Supply Items23
- Goods Return Procedure23
6.1Returning Goods to NHS Supply Chain (Runcorn)23
6.2Returning Goods to Suppliers24
- Responsibilities24
7.1Of Procurement Staff24
7.2Of Customers25
- Procedure for High Value Procurement26
8.1Introduction26
8.2Authorisation26
8.3Competition27
8.4Audit Trail27
8.5Procedure and Business Case submission28
8.6Report to the Director of Finance28
- Sponsorship29
10.Disposals29
Appendix 1NHS Supply Chain Out of Hours Service31
Appendix 2Bribery Act Compliance – A Guide33
Appendix 3Procedure for Disposal/Sale of36
Surplus Assets
Appendix 4Key Performance Indicators – ELHT43
- The ProcurementLandscape
Who We Are
The Procurement Department incorporates Purchasing/Contracts, Customer Services,Purchase Order Processing and e - Enablement.
The Procurement service is provided to East Lancashire Hospitals NHS Trust and to eight other Trusts by means of a service level agreement:
Lancashire Care Foundation NHS Trust (LCFT)
Calderstones Partnership Foundation NHS Trust(CPFT)
NHS East Lancashire (NHSEL)
NHS Blackburn with Darwen (NHS BWD)
NHS Blackpool (NHSBPOOL)
NHS North Lancashire (NHS NLANCS)
NHS Central Lancashire (NHSCLANCS)
NHS Northwest (NHSNW)
The department is based at RoyalBlackburnHospital.
Tel: 01254 733173 - External & 83173 - Internal
Fax: 01254 732829 – External & 82829 – Internal
82519Linda LongtonHead of Procurement
Customer Services via Helpdesk
Jade Biggs – Procurement Assistant
Munir Rasul - Procurement Assistant
Nafeesa Patel (Stock) - Procurement Assistant
Main Helpdesk - 01254 733173 - External & 83173 – Internal
Email:
Stock Helpdesk - 01254 733033 - External & 83033– Internal
Email:
Departmental Website:
The main responsibilities of Customer Services are to provide a responsive Customer Service Helpdesk facility as the frontline for advising, taking and resolving routineproblems. They are also responsible for all NHS Supply Chain requirements including Logistics Online (LOL) their dedicated online ordering service accessed via
Contracts Team
Mandy Hanson – Deputy Head of Procurement - Contracts
Paul Stacey – Senior Buyer
John Nelson – Senior Buyer
Sandra Cockell – Lead Buyer/Catalogue Manager
Michelle O’Brien – Lead Buyer /Catalogue Manager
Sue Maudsley – Lead /Buyer
Shaz Azam – Procurement Analyst
Sam Whitney – Procurement Assistant
The Contracts Team manage and organise all contract activity relating to non pay expenditureacross a wide variety of goods and services.
Tasks include the management of tenders and quotations, contract implementation and supplier management whilst ensuring compliance with Trusts’ Standing Financial Instructions and, relevant European Purchasing legislation.
e-Enablement Operational Team
Diane Mitton – Deputy Head of Procurement Service Development
Samantha Crompton – e Enablement Administrator
Janet Rawcliffe - e Enablement Administrator
Lois Fitzpatrick – Quality & Standardisation Officer
Annemarie Morris – Operational Team Leader
Christine Smith – Procurement Assistant
Judith Watson – Procurement Assistant
Judith Lord – Procurement Assistant
Leah Carter – Procurement Assistant
Lynn Mitchell – Procurement Assistant
The e-Enablement Team implement and manage the electronic purchase order module which enables trusts to select, requisition, approve, order, receipt, match and pay for goods and services electronically.
The Operational Team process paper requisitions, police adherence to Standing Financial Instructions and Trusts delegated limits.
Departmental Structures
What do we do?
Procurement has the responsibility for the purchasing of all goods and services on behalf of its customers. The only exceptionis pharmacy procurement which is managed through National and Regional Pharmacy networks. The contact for these services would be Neil Fletcher.
This purchasing function must be carried out in accordance with each Trust’s Standing Orders and Standing Financial Instructions. There must also be compliance with the European Union’s Directives for the purchasing of goods and services.
Separation of Responsibilities
The Trust must also ensure appropriate “separation of responsibilities” in its procurement of goods and services.
This is a public sector requirement to avoid the possibility of fraud by ensuring that the person who identifies the need to order goods and services is not the same person who undertakes the purchase, who in turn, is not the person who pays for them.
All of this is controlled by the Trust’s Standing Orders, Standing Financial Instructions, Budgetary Control Policy (Authorised Signatories) and EU Directives.
SO, WHAT WE REALLY DO….
Is to manage customers’ commercial activity to ensure there is compliance with the above, optimising value for money across all contracts and eliminating commercial and corporate risk. In so doing, we create an Audit Trail which provides an Auditor with evidence that all procedures have been followed and complied with.
“WE PROTECT THE PUBLIC PURSE AND THE PUBLIC PERSON (i.e. YOU) IN COMMERCIAL ACTIVITY”
- The Trust’s Rules
2.1 Authorisation
List of Authorised Signatories
Goods and services can only be requisitioned by a member of staff authorised to do so. They must be Budget Managers or specifically authorised by their Budget Manager to approve requisitions. A copy of their signature must be held in the Procurement Department on the finance approved ‘List of Authorised Signatories’. With regard to e-procurement the hierarchy and budget approval are signed off by the appropriate business accountant and business manager and the system hierarchy is built to reflect the divisions requirements.
Authorisation Levels / Scheme of Delegation
The Trust’s Authorised Signatory list defines expenditure levels at which authorisation must be given for the purchase of goods and services. Keep a copy of the current Authorised Signatory list for your Division. Each Division has the responsibility to ensure the list is kept up to date by informing their Finance leadof all changes required.
The Procurement Department will obtain Quotes/Tenders on your behalf.
Orders cannot be placed until appropriate authorisation is received. However, the obtaining of quotations and tenders can take place prior to authorisation, to help preparation of a business case – or to speed up a complex procurement.
If you are unsure about the level of authorisation you hold your DivisionalFinancial Accountant or Finance Lead can provide a copy of your Divisions Scheme of Delegation.
2.2 Competition
Standing Orders and Standing Financial Instructions set out the rules within which the Trust’s Directors and staff must operate.
1)The Director of Finance will advise the Board regarding the setting of thresholds above which quotations of formal tenders must be obtained.
These thresholds are set as follows:
TrustQuote LimitTender Limit
ELHT £5,000£25,000
LCFT£10,000£50,000
CPFT£5,000£20,000
NHSEL£10,000£50,000
NHS BWD£10,000£50,000
NHSBPOOL£5,000£50,000
NHS NLANCS£5,000£100,000
NHSCLANCS£10,000£50,000
NHSNW£15,000£25,000
2)Managers must ensure orders and requisitions shall not be split or otherwise in a manner devised so as to avoid the financial thresholds specified by the Board or those directed by the European Union.
EU Directives state that adverts must be placed in the Official Journal of the European Union (OJEU) if the value of the goods or services is above £101,323 excluding vat over the lifetime of the contract. Staff involved in the procurement of this value need to be aware of the significant timescales involved in following EU Directives. Advice from the Head of Procurement should be sought at an early stage, failure to comply with these rules can result in legal challenges form external sources and subsequent fines imposed by the EU Commission and the efficacy and reputational standing of the Trust is compromised.
All business should be advertised and competition invited to evidence and demonstrate value for money. A set of procedures underpin this principle. The Procurement Department operate an electronic contracts portal to advertise Trust business to the marketplace.
2.3Quotations and Tenders
Procedure
It is not just the obtaining of quotations and tenders which is a requirement of the Trust, but also the procedures that surround their receipt and opening. To guarantee separation of responsibility and public accountability, the Procurement Department must invite quotations and tenders on behalf of Budget Managers on approved Trust documentation. This helps guarantee under contract law, that any orders placed are subject to the NHS Standard Conditions of Contract, in preference to supplier terms and conditions. It also allows inclusion of any special contract requirements that the Trust may have.
The opening of tenders is against a time deadline and must be carried out by persons other than the person who has an interest in the particular procurement. Two people, as designated by the Chief Executive, are responsible for the formal opening and certifying of tenders received.
These officers must not be from the originating Division (see Standing Orders – Tendering Procedure).
Evaluation
In many cases, value for money will be the deciding factor for award of business. However, there are a number of goods and services, especially high value, where the evaluation criteria need to be extended to include other factors e.g. standardisation, technical advantage and patient quality issues. The evaluation criteria should be identified prior to quotations and tenders being issued.
Where the lowest price is not to be accepted, a written record must be provided of the reason for that decision. Any such decision must be approved by the Board or its nominated officer
2.4Waiving Competition
Value for money is the common responsibility of Trust staff. The need to prove value for money is satisfied by obtaining competition and carrying out a full cost option appraisal. It is the Trust’s aim to avoid the need to waive Standing Financial Instruction and Standing Order requirements for competition.
2.5Single Tender Waiver Guidance Notes for staff
REGARDING THE COMPLETION OF AN APPLICATION TO ACCEPT A NON COMPETITIVE QUOTATION
- It is a requirement of the trusts Standing Financial Instructions that the purchase / lease of all goods and services is subject to competitive Tender / Quotation. In circumstances where this requirement is to be set aside the attached application form must be completed by the requisitioning officer / budget holder with all supporting documentary evidence attached.
- Circumstances where Tender / Quotation procedures can be waived are;
- Where the Chief Executive decides that formal tendering procedures would not be practicable or the estimated expenditure or income would not warrant formal tendering procedures, and the circumstances are detailed in an appropriate Trust record.
- Where the timescale genuinely precludes competitive tendering but failure to plan the work properly would not be regarded as a justification for a single tender.
- Where specialist expertise is required and is available from only one source
- When the task is essential to complete the project and arises as a consequence of a recently completed assignment and engaging different consultants for the new task would be inappropriate
- There is a clear benefit to be gained from maintaining continuity with an earlier project. However in such cases the benefits of such continuity must outweigh any potential financial advantage to be gained by competitive tendering.
- Waiver Procedure
- The Requisitioning Officer must complete all parts of Section 1 of the Application Form.
- The Budget Holder must sign the form where indicated. Failure to do so will result in the Application Form being returned unauthorised.
- The Application Form along with the Requisition must be forwarded to the Procurement Department who will quality assess the application. Any application which is not fully completed or which does not provide appropriate supporting documentation will be returned unauthorised.
- The Procurement Department will forward the Application Form and Requisition to the Chief Executives office for authorisation by the Chief Executive or Director of Finance.
- The Application Form and Requisition will be returned to the Procurement Department for processing.
2.6Official Orders
Goods and services can only be ordered via the E Financials/E Procurement Purchase Order system and Pharmacy Ascribe system. Responsibilityfor purchasing rests solely with the following officers who are responsible for ensuring compliance with Standing Orders and Standing Financial Instructions:
- Head of Procurement
- Director of Estates
- Director of Pharmacy
The placing of official orders is also a method of ensuring that NHS Conditions of Contract are in place.
2.7Delegated Ordering
The Head of Procurement can delegate the ordering of goods and services available on contracts agreed / formalised by the Procurement Department to customers in accordance with Procurements policy on Delegated Ordering. Certain criteria have to be met for this to be introduced.
2.8Delegated Purchasing
OnlyProcurementstaff has the responsibility within the rules to undertake purchasing activity which requires the negotiation of prices with a supplier.
3.Procurement of Goods and Services from Companies
3.1General Background
Procurement i.e. the process of obtaining goods and services includes several stages:
- Identifying the need
- Completing and authorising a requisition (electronic)
- Sending the requisition to Procurement ( electronic)
- Procurement activity
- Delivering the goods
- Recording the Goods Received Note (GRN)
- Payment to the Supplier
Much of the ‘pain’ that can be experienced in obtaining goods can be avoided by requisitioning in a time frame which allows for all the above processes to take place and allow delivery before need.
For higher value goods which require quotations and tenders, the earliest involvement of the Procurement Department will help reduce the time frame. Competitive quotations can add a minimum of two weeks to the processing time of an order. Competitive tenders can add a minimum of six to eight weeks to the processing time of an order. Tenders in line with EU Directives will add a minimum of 16 weeks to the process of placing an order. Therefore, early contact with your Procurement Department is essential if the value of your contract period exceeds £101,323.
Any medical or scientific products which are to be used in patient and laboratory areas will be subject to a pre-purchase questionnaire (PPQ) which has to be completed by the supplier and approved by the appropriate Technical Officer (E.B.M.E. Department), together with statements regarding decontamination. This can add further time to the processing of an order. Following receipt, these products are subject to Acceptance Testing prior to being released for use.
The adherence to National / Regional / Local contracts will normally be recommended where there are demonstrable benefits e.g. value for money, product standardisation, expediency.
Low Value Orders
Where e-requisitioning is not available it is essential to consider that the cost of generating an order is estimated to be approximately £75. Customers should avoid raising purchase requisitions for goods of low value wherever possible – especially for regularly used items. If you would like to discuss this or have a problem in this area, please contact the Procurement Department.
High value Orders see flowchart
Business Continuity Process
The flowchart below describes how to order goods and service via the procurement dept in the case of system or telephone failure or other unforeseen event whereby service disruption has occurred.
Emergency service continuity flowchart:
3.2Ordering Arrangements
1.Routine Purchase Requisition
The majority of orders fall into this category. ELHT and NHS Blackpool now use electronic ordering via E procurement to raise its purchase orders/requisitions, where possible all goods and services should be ordered via E Procurement via your log on.