Procurement Manual - 5.0 Guidelines

05 September 2013

5.1 INTRODUCTORY NOTE

5.1.1 These guidelines supplement the information contained within other sections of the Manual. They advise on various purchasing-related matters and outline principal in-house services which are available to simplify the purchasing task and save time and expenditure.

5.1.2 Contents appear under separate Sub-section headings of:

 

5.2 VALUE FOR MONEY (VFM) AND PURCHASING SAVINGS

 

5.2.1 Improved sourcing by identifying alternative suppliers and increasing competition.

5.2.2 Negotiating price reductions with existing or potential suppliers.

5.2.3 Avoiding price escalations from suppliers by contesting routine or annual price increase notifications.

5.2.4 Post Tender Negotiations (PTN) prior to Contract Award to remove up front payments or to clarify abnormally high or low bid prices. These discussions must not alter the parameters set in the Invitation to Tender otherwise the process may be invalidated. PTN is a specialised matter which requires professional expertise. Please refer to Procurement for guidance.

5.2.5         Cost Avoidance Elements

5.2.5.1 Scrutinising and changing specifications to avoid restrictive or over specification of goods to open up competition to a wider supply market.

5.2.5.2 Standardising and reducing the variety of products thereby reducing the need for specials or expensive variants.

5.2.5.3 Using or re-using an item surplus to another user’s requirements by considering the validity of refurbishing, repairing or upgrading the item and comparing with the cost of purchasing new.

5.2.5.4 Eliminating or reducing the need to keep stocks of items by negotiating and adopting Just in Time supply arrangements and avoiding the high costs of storage.

5.2.6         Indirect Savings

5.2.6.1 There are factors other than direct cost reduction or cost avoidance, which produce purchasing savings and may be more important than price considerations. Savings can ’only be assessed in monetary terms therefore any successes relative to the following require’ evaluation at the conclusion of the exercise.

5.2.6.2 Analysing the lifetime Cost of Ownership where whole life cycle costs may be reduced by paying a higher price for better quality giving longer life or improved performance.

5.2.6.3 Achieving enhancements to other trading terms and conditions such as credit period; payment arrangements; prompt invoice settlement discounts.

5.2.6.4 Negotiating and obtaining within a previous expenditure level or budget allocation:

i. A larger quantity of products or services.

ii. The same quantity of goods or services but to a higher specification or quality.

ii. Improvements in delivery arrangements, warranties, after sales service, maintenance agreements.

iv. Introducing improved purchasing systems such as management information, which records and analyses product pricing and usage.

v. Streamlining purchasing operations and procedures to reduce staff time and hidden costs associated with sourcing and evaluating products and suppliers.

vi. Certain actions can produce savings in more than one category. Switching to a recommended Agreement courl result in a direct saving in price and a further indirect saving through elimination of the need to follow procedures for obtaining quotations or tenders. 

 

5.3 DEFINITIONS 

For most purposes, a satisfactory definition of Value For Money (VFM) is:

"Quality or fitness for purpose and delivery factors against price, judged on whole life cost and not simply on initial or short term costs." (HM Treasury Purchasing Guidelines)

Similarly, a VFM Improvement or a purchasing Saving can be described as:

"A benefit generated by the purchaser’s initiative and achieved by an action beyond that of, or arising from, routine order-placing"
(HM Treasury Purchasing guidelines)

Establishing best VFM is directly linked to attaining the "Seven Rights" of purchasing which are:

 

  • The right commodity (or service).
  • In the right quantity.
  • Of the right quality.
  • At the right price.
  • To the right location.
  • At the right time.
  • From the right source.
  • 5.4 COMMON FACTORS

     

    5.4.1 The factors which the purchaser must incorporate within the process of obtaining VFM will vary according to the nature of the goods or services. The more important considerations are as follows:

    5.4.2 Cost Reduction Elements

    5.4.2.1 Maximising potential purchasing power by aggregating demand. This is the primary objective in all National and Regional Consortia activities but can also be applied at local level by considering the question "Who else within our University or my Faculty or Support Service may need to buy this?"

    5.4.2.2 Collating numerous small orders into larger purchases to achieve volume discounts or to reduce the administrative costs of ordering.

     

    5.5 THE PROCUREMENT CYCLE

    5.5.1 Procurement encompasses all the activities required to buy goods or services and these can be represented diagrammatically - Procurement Cycle

    5.5.2 Irrespective of whether purchasing is centralised or decentralised, the basic processes remain the same and are summarised as follows:

     

  • determine the requirement;
  • produce a specification to define the need;
  • find and select potential sources;
  • Issue tender;
  • evaluate the responses to the enquiry;
  • Award Contract – inform successful and unsuccessful tenderers of outcome;
  • prepare a purchase order and send to the selected supplier;
  • manage the progress of the order;
  • obtain acknowledgement of order; 
  • monitor incoming goods and services, accept if satisfactory, reject if inadequate;
  • deal with discrepancies;
  • make payment for satisfactory goods or services;
  • ensure that proper stock management controls are in place if the goods are to be held in stores. Dispose of surplus assets.
  • Continue to monitor performance
  • Our University’s approved procedures for the above are contained in Section 5.6 below.

     

    5.6 CENTRALLY ADMINISTERED CONTRACTS

    5.6.1 A wide variety of centrally controlled contracts for goods and services are available to all users either from other Faculties or Support Services within our University or via Recommended Suppliers. The under noted information relates to contracts which Procurement control or operate in partnership with another University Faculty or Support Services

     

    5.6.2 COMPUTERS, WORKSTATIONS AND HARDWARE

    Frame work Agreements with Recommended Suppliers offering VFM allied to exacting standards of performance are in place covering:

     

  • Microcomputers and laptops - PC and Apple.
  • UNIX Workstations.
  • Printers - all types.
  • Other peripheral hardware.
  • The contracts were formulated in conjunction with (Information Systems and Media Services) ISMS and as a result of formal tendering exercises carried out under the EU Public Procurement Regulations.

     

    5.6.3 COMPUTER CONSUMABLES

    National Agreements are in place with a Preferred Supplier for the supply of - toner and inkjet cartridges. Other media are available under SUPC Agreements. Please contact ISMS Helpdesk for further information.

     

    5.6.4 LABORATORY EQUIPMENT, CHEMICALS AND GASES

    Faculty of Science and Technology maintain a stock of chemicals and laboratory supplies for sale to all Faculties and also act as a focal point for advice and assistance on these products together with laboratory and Industrial Gases.

     

    5.6.4 MAINTENANCE CONTRACTS

    Procurement under take bulk tendering for equipment maintenance contracts including computers and office equipment details of which are available to all Faculties and Support Services. The agreements offer high standards of service at competitive costs with Preferred Suppliers.

     

    5.6.5 PAPER

    Digital Copy Services (DCS) run a central service at both Cambridge and Chelmsford. Paper is purchased by DCS from the preferred supplier. Faculties and Support Services can then order paper from DCS which will be desktop delivered. Each delivery is then invoiced by DCS.

     

    5.6.6 PHOTOCOPYING EQUIPMENT

    Our University is fully committed to the Agreement for the provision of photocopiers. The principal supplier is Konica Minolta. All machines are installed on a simple and all-inclusive ’cost per copy’ charging basis with no minimum or hidden charges. DCS maintain a database of all known copiers throughout our University and administer entries to and departures from the contract. The Contract offers the lowest costs allied to quality and completely protects our University against the dangers associated with photocopier contracts. This renders it unnecessary and inappropriate for anyone within an HE institution to become involved in a Rental or lease agreement of any kind for the provision of a photocopier.

     

    5.6.7 POSTAGE, PARCEL AND MAILING SERVICES

    UK and International mail and parcels are handled by the Central Post Room under the direction of the Estates and Facilities. All Faculties and Support Services are issued with a mail bag for internal recharging purposes, these being administered by Estates and Facilities. Faculties and Support Services requiring to make use of express parcel and document services, particularly in relation to overseas locations are issued with a choice of Recommended Suppliers each of which will transact on a direct uplift and invoice basis. Estates and Facilities will provide additional information as required.

     

    5.6.8 PROTECTIVE CLOTHING AND WORK WEAR

    Procurement Tender for the provision of overalls, technicians’ coats and other protective garments and details are circulated to all users. Recommended Agreements are also in place for related products including footwear and safety spectacles.

     

    5.6.9 PRINTING

    The Digital Copy Services is under the control of the Director of Learning Development Services. It offers a wide variety of cost effective services associated with the design and production of printed material for all departments within this University.

     

    5.6.10 STATIONERY MATERIALS

    Southern Universities are committed to obtaining their stationary materials from a single source under an SUPC agreement. The universities preferred supplier is Lyreco. Lyreco provide an online ordering service that is accompanied by next day desktop delivery. Lyreco accept purchasing cards.

     

    5.6.11 TAXIS

    Preferential terms, simplified security billing and a priority callout service are contained within an Agreement negotiated by Procurement with Taxi Owners in Cambridge and Chelmsford.

     

    5.6.12 TRAVEL

    Preferred Travel Management firm is Co-op Travel.

     

    5.6.13 VEHICLES

    The purchase, lease purchase and disposal of vehicles is handled by Procurement. Procurement also hold Registration documents, MOT and plating certificates for all vehicles owned by our University.

    The insurance of University vehicles and the processing of any claims is handled by the Secretary and Clerks Office but Ann Debney is to be contacted in the first instance.

    Short term vehicle hire is available to staff from our preferred supplier, Enterprise Rent a Car in Chelmsford and Thrifty Rental in Cambridge.

     

    5.7 VALUE ADDED TAX (VAT)

     

    5.7.1 VAT IN THE UNITED KINGDOM

    The majority of goods and services purchased by our University are subject to VAT at the prevailing rate. It is important that purchase prices include VAT and that order values reflect the total cost.

    In certain circumstances, such as medical research, goods may be VAT Exempt. Where this applies, action must be initiated at the ordering stage by completing and submitting the appropriate VAT Exemption Form to the supplier who will then decide if the charges can be exempt from VAT.

     

    5.7.2 VAT ON IMPORTATIONS FROM EU LOCATIONS

    Goods obtained from companies in EU Member States are also subject to VAT and the rules which apply to most purchases are:

     

  • If a supplier is VAT Registered in their country, they must not add VAT to their invoice.
  • VAT is not payable to Customs on arrival in the U K.
  • VAT is payable to Customs & Excise by our University. This is paid by Finance Office at the same time as payment is made to the supplier.
  •  

    5.7.3 VAT EXEMPTION ON IMPORTATIONS FROM EU LOCATIONS

    When goods which qualify for VAT Exemption are ordered from EU Suppliers, the appropriate Certificate should be forwarded to the Finance Office with the Blue copy Order.

     

    5.7.4 VAT AND DUTY ON IMPORTATIONS FROM NON-EU COUNTRIES

    Goods arriving at UK Ports addressed to our University must be cleared through HM Customs immediately to avoid expensive demurrage (storage) charges. This is normally undertaken by a Shipping Agent who pay all VAT and Import Duty charges on our University’s behalf and deliver the goods to the stipulated location. The bill from the Shipping Agent must be paid immediately and failure by our University to do so can lead to Agents refusing to outlay the VAT and Duty payments and the Department would be responsible for arranging urgent payment to Customs & Excise.

     

    5.7.5 VAT EXEMPTION AND DUTY RELIEF ON IMPORTATIONS FROM NON-EU COUNTRIES

    Where this applies, the appropriate form must be completed and submitted to HM Customs before the goods arrive in this country. Successful retrospective claims for Duty Relief are virtually non-existent.

     

    5.7.6 ENQUIRIES

    Questions or areas of doubt relative to VAT should be referred in the first instance to our University’s Finance Office -  (Carol Saward is the contact, ext 3775).

    Enquiries over importation rules, regulations and procedures should be made with HM Customs & Excise Tel. 0141 308 3330.