18
Procurement Policy
18.1
Purpose
This procurement policy is designed to support the college’s procurement
strategy. It is supported by senior management and the governing body of
the college.
The policy is designed to enable staff to achieve the aims and objectives of
the procurement strategy and ensures that procurement procedures and
practices:
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18.2
are appropriate and fully responsive to the college’s diverse needs;
are timely and effective;
provide excellent value for money;
comply with all legislation effecting the college’s procurement activities;
minimise commercial and contractual risk;
are open and fair to the supplier community including, wherever possible,
small local suppliers;
give due consideration to environmental impact; and
promote high ethical standards and financial probity.
Philosophy
The college has a devolved procurement policy which aims to put control and
responsibility as near as possible to the point of need. This is underpinned by
centrally provided accounting and procurement functions which provide both
advice and support to departmental procurement activities.
The deployment of the college’s resources is the ultimate responsibility of the
governing body. Purchasing authority is delegated to designated budget
holders. In exercising this delegated authority, budget holders are required to
observe the college’s policies and procedures regarding the authorisation of
expenditure and procurement.
Budget holders are only authorised to commit the college to any expenditure
after ensuring that sufficient funds are available to meet the purchase cost of
goods and services. In addition, only bona fide expenditure, as outlined in the
financial procedures, may be authorised from college funds.
The college requires all budget holders, irrespective of the source of funds, to
obtain supplies, equipment and services on the basis of the achievement of
maximum value for money through good procurement practice. Factors to be
considered in determining value for money are noted in the procurement
procedures.
18.3
Failure to Comply
Failure to comply with procurement policies and procedures could result in the
college incurring unnecessary or excessive expenditure. This may result in
the individual concerned being held personally responsible for payment of the
costs incurred and/or disciplinary procedures against them.
19
Procurement Procedures
19.1
Purpose
19.2
These procedures, which form an important part of the financial procedures of
the college, are designed to implement the college’s procurement policy (see
Section 18), which in turn supports the procurement strategy.
19.3
The policy and procedures are binding on all staff who engage in purchasing
for the college. In these procedures references to ‘departments’ includes all
teaching, support and service departments. The procedures apply to all
sources of funding.
19.4
Procurement links to other key strategies
Purchasers should ensure that the following college strategies are considered
as part of the procurement process:
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Risk Management
Equality and Diversity
Sustainable Development
Health and Safety
19.5
Authority to Purchase
19.6
The deployment of the college’s resources is the responsibility of the
governing body exercised through the Finance & Resources Committee.
The following authorisation limits apply to all expenditure (including capital
and revenue):
Budget Holder
£1,000
Senior Manager
£1,000 to £10,000
Director of Finance and Resources
£10,000 to £50,000
Principal
£50,000 to £100,000
Corporation
£100,000+
19.7
The college operates a devolved procurement procedure whereby authority to
commit funds is delegated to designated budget holders supported by central
monitoring and specialist accounting and procurement advice. In exercising
this delegated authority, budget holders are required to observe the college’s
relevant policies and procedures. The names of all budget holders, specimen
signatures and expenditure limits must be lodged in advance with the Director
of Finance and Resources. Such persons are given authority to sign orders
for their department, committing departmental funds, or to sign invoices
authorising payment for goods received or services rendered, subject to
adequate segregation of duties within the relevant department.
19.8
No one is authorised to commit the college without first ensuring there are
sufficient funds to meet the purchase cost. This practice applies to all
purchases regardless of the source of funding.
19.9
In each department, the head of department is ultimately responsible for the
implementation of the college’s purchasing policy and procedures in respect
of all purchases, however funded, within his/her department.
19.10 The head of department must ensure that all staff having delegated authority
are fully aware of these procurement procedures.
19.11 Heads of department, budget holders and other authorised persons are not
authorised to enter into any form of contractual commitment for the
procurement of goods or services, whether written or oral and however
transmitted. In particular, contractual documents must not be signed. In this
context a contractual document is any document that has or may have the
effect of binding the college to procure and pay for goods and services. All
such documents must be forwarded to the Director of Finance and Resources
for vetting before signature by an authorised officer of the Institution.
19.12 The Director of Finance and Resources is responsible for making payment to
suppliers for goods and services supplied to the college, provided appropriate
authorisation of the expenditure is in place, and for all accounting and
financial management matters.
19.13 Reporting to the Director of Finance and Resources, the Finance &
Procurement Manager is responsible for:
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ensuring that the college’s procurement policy and procedures are known
and observed by all who are involved in purchasing for the college;
advising on matters of college purchasing policy and practice;
advising and assisting departments where required on specific
departmental purchases;
establishing appropriate supply arrangements on behalf of college
departments to assist them in meeting their value for money obligations;
ensuring that the college’s procurement activities comply with legislative
and regulatory requirements.
19.14 General Principles
19.15 The identification of a purchase requirement is performed in the buying
department. It is an important element of the college procurement strategy
that the removal of waste should form part of the normal specification
process. Purchasers should therefore challenge requirements and consider
whether goods are Needed as opposed to Wanted. Where possible other
college departments should be contacted to check whether there is a surplus
of the required goods already available.
19.16 The college requires all authorised persons, irrespective of the source of
funds, to obtain supplies, equipment and services at the lowest possible cost
consistent with quality and delivery requirements and in accordance with
sound business practice, taking due account of relevant ethical and
environmental standards. The determination of lowest cost should take into
account the “whole life” of the products or services being supplied including,
where appropriate, the following factors:
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purchase cost (including VAT if applicable);
terms of payment;
commercial and legal risks;
length of warranty or period of free maintenance;
running costs (e.g. spares, consumable items, fuel, water, electricity);
the cost of any required building or services alterations - after consultation
with the Estates Department;
the likely sale or scrap value;
the cost of safe decommissioning and end-of-life disposal;
any relevant environmental, sustainability and social responsibility
considerations;
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the cost of the procurement process itself, which should not be
disproportionately high in relation to the value or importance of the subject
matter.
19.17 With regard to terms of payment, the college will not normally pay for goods in
advance. The main exceptions to this are:
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maintenance contracts which are normally paid annually in advance;
small value purchases such as journal subscriptions and goods or services
that may be paid for in advance by Government Procurement Card;
large value contracts with stage payments tied to milestones of
achievement and/or protected by a bank guarantee.
19.18 Special cases, not falling within one of these exceptions, should first be
discussed with the Finance & Procurement Manager.
19.19 Supplier Selection
19.20 Suppliers should be selected with reference to:
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College central contracts
National/Regional contracts
Collaborative solutions
The College list of approved suppliers
Sustainability
Note that for construction contracts suppliers will be selected with reference to
‘Constructionline’ and ‘The Contractors Health and Safety Assessment
Scheme’.
19.21 College central contracts
There are a number of purchasing contracts organised on a central basis
which must be utilised by all authorised purchasers. These contracts cover
the following goods:
Description
Contracting Department
Office stationery/supplies
IT hardware/software/consumables
Printers
Building
Painting
Furniture
Window Cleaning
Carpets
Blinds/Curtains
Waste Disposal
Signage
Cleaning
Finance
Computer Services
Computer Services
Estates
Estates
Estates
Estates
Estates
Estates
Estates
Estates
Estates
Car Hire
General Advertising
Recruitment Advertising
General Rail Travel
Professional Development Rail Travel
General Hotel Accommodation
Professional Development Hotel
Accommodation
Catering
Legal Services
Estates
Marketing
Personnel
Finance
Professional Development
Finance
Professional Development
Catering
Principal
19.22 Collaborative solutions
The college recognises that one of the key principles of achieving value for
money (VFM) is the development of a collaborative approach to procurement.
Collaboration can take place both within the college and with external
partners. It adds leverage and efficiency to the procurement process.
19.23 Consortia
The college is a member of the Crescent Purchasing Consortium (CPC), a
consortium with a further education focus.
The college requires that all budget holders give due consideration to any
contracts organised by the CPC. Details of these contracts can be obtained
from the Finance & Procurement Manager.
Budget holders should, where value for money is demonstrated, place orders
through the approved suppliers of the CPC. Failure of such suppliers to
provide value for money, or the existence of a non CPC supplier providing
better value for money, must be referred to the Finance & Procurement
Manager for referral to the CPC.
Other providers of Framework Agreements may also be an appropriate
solution. Where consideration is given to using such alternatives this should
always be discussed with the Finance & Procurement Manager prior to
purchase.
19.24 Sustainable Procurement Policy
The college recognises its responsibility to carry out its purchasing activities in
an environmentally responsible and sustainable manner. The college will
therefore strive to:
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Comply with all relevant environmental legislation.
Investigate the impact of the college’s spending in order to identify
environmental impacts.
Engage with suppliers of high sustainability impact products/services,
share the college’s sustainability objectives, and strive to spread
sustainability improvements throughout the supply chain.
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Ensure that for high sustainability impact spend areas suppliers’
environmental credentials are, as far as legally practicable, considered
in the supplier appraisal process.
Ensure that, where appropriate, environmental criteria are used in the
award of contracts.
Encourage college purchasers to review their consumption of goods
and materials, in order to reduce usage and adopt more
environmentally friendly products, including the use of recycled
products as appropriate.
Specify, wherever possible and reasonably practicable, the use of
environmentally friendly materials and products.
Ensure that appropriate consideration is given to the costs and benefits
of environmentally friendly alternatives.
Explore opportunities for recycling of materials as appropriate.
Address barriers to entry so that SMEs and local suppliers are
encouraged to bid for appropriate work.
19.25 Departments must, wherever possible, procure goods and services from the
college list of approved suppliers.
19.26 Making a Purchase
19.27 The purchase process varies depending on the type and value of the goods or
services being ordered (see Appendix G: Procurement Thresholds).
19.28 All departments and staff must comply with the regulations relating to
contracts, agreements and purchases given in Appendix A to these
procedures before creating an order.
19.29 Any purchase exceeding quotation/tender limits must be managed through
the Finance & Procurement Manager.
19.30 The college does not undertake to accept liability for the payment of any
invoice unless the goods have been supplied in response to an official college
purchase order authorised and processed in accordance with these
procurement procedures. In situations where correct procedures have not
been followed liability may fall to the individuals concerned.
19.31 There are three mechanisms for purchasing goods and services:
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Purchase orders. For detailed procedures concerning purchase orders
see below.
Purchases paid by Government Procurement Card (GPC) within the
relevant card limit. GPC holders have delegated authority to purchase
goods or services for and on behalf of their department using the GPC
payment mechanism. For the regulations concerning the use of GPCs see
below.
Petty cash purchases. For the regulations concerning petty cash see
below.
19.32 Purchase Ordering
19.33 All purchase orders must be placed on the college’s financial system and shall
be in accordance with procedures prescribed by the Director of Finance and
Resources.
19.34 Advice may be sought from the Finance & Procurement Manager on any
aspect of the purchase ordering process.
19.35 Deviations from the college's standard terms and conditions should not be
accepted without the prior approval of the Director of Finance and Resources.
Any change in contract terms required by the college or a supplier is to be
referred immediately to the Finance & Procurement Manager.
19.36 Standard Purchase Ordering Process
(Appendix F2: Purchase Ordering System Flowchart – Faculties and Central
Services)
Orders should be raised in advance of the supply of goods. In the rare cases
where it is necessary to make a telephone order this must be followed up
immediately with an official order which should be marked as ‘confirmation
order’.
A record of approved signatories will be held in the Finance Department and
verification checks will be carried out regularly. All requisitions for orders
greater than £1,000 must be authorised by an SMT member having been
checked by the budget holder. All requisitions for orders under £1,000 may
be authorised by the budget holder, provided that sufficient funds remain
within the budget.
Official orders shall not be placed for any personal or private purchases, nor
shall personal or private use be made of college contracts.
19.37 Examination fees
(Appendix F3: Purchase Ordering System Flowchart – Exams)
All examination invoices must be entered onto the financial software invoice
register by the Finance Department immediately upon receipt of the invoice.
The examinations co-ordinator shall arrange for the invoice to be matched
against the individual student entry to ensure that the goods:
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have been supplied and the quantity is correct.
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have not previously been paid for.
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are in accordance with contract prices and estimates.
When satisfied that the invoice is correct, the examinations co-ordinator will
initial the certification stamp on the invoice. The head of CIS will then sign the
invoice before returning it to the Finance Department for payment.
19.38 Credit and Charge Cards
The use of credit and/or charge cards in the name of the College shall not be
allowed unless specifically authorised by the Principal. In no circumstances
are direct applications to be made for such cards on behalf of the College by
any member of staff.
19.39 Government Procurement Card
19.40 The college has evaluated the benefits of the Government Procurement Card
in relation to low value procurement and will, in circumstances where it
perceives that benefits will accrue, deploy procurement cards having first
established the necessary control mechanisms. Specific arrangements will be
permitted for the purchase of supplies and services using the Government
Procurement Card, subject to procedures and thresholds approved and
periodically reviewed by the Director of Finance and Resources.
19.41 A government procurement card is only issued to a budget holder to facilitate
the carrying out of college business.
19.42 Financial usage limits and merchant categories for government procurement
cards must be agreed with the Director of Finance and Resources. These are
subject to regular review.
19.43 Government procurement cards will only be issued to specific individuals and
should not be used by any other member of staff.
19.44 Under no circumstances should the cardholder inform suppliers of the card’s
transaction limits.
19.45 Receipts or invoices must be obtained to support every item of expenditure
and if the purchase contains any charges for VAT a proper VAT receipt or
invoice should be obtained.
19.46 Each cardholder will maintain a transaction log of each purchase as it is
made. This log is used in the verification of the statement when it is received.
If there is an item on the transaction log that does not appear on the monthly
statement, it should be crossed off the log and transferred into the transaction
log for the following month, for checking against the next statement.
19.47 The monthly statement must be checked by the cardholder immediately upon
receipt and passed to the finance department for processing. Receipts and
invoices must be cross checked to individual transactions on the statement
and securely attached to the card statement together with the transaction log.
19.48 If any items are disputed the card company should be contacted immediately
and the item placed in dispute by the cardholder.
19.49 If receipts/invoices are lost a note should be made in the transaction log to
this effect.
19.50 A brief note should be added to the statement or transaction log to explain
purchases where the reason for purchase is not apparent.
19.51 All card statements will be checked monthly by the cardholder’s line
manager/budget holder who will certify the statement to confirm that it has
been checked. The line manager should also arrange checks if the cardholder
is on extended absence.
19.52 Transactions and supporting documents will be retained by the Finance
Department so that they can be produced if an audit is carried out.
19.53 Every effort must be made to keep the card secure at all times and either held
personally or stored in a locked drawer or filing cabinet.
19.54 PIN numbers must be kept secure and not disclosed to anyone else.
19.55 The card provider must be notified immediately if the card is lost or stolen, or
fraudulent use is suspected. The Finance department must also be notified of
the loss.
19.56 The cardholder will surrender the card to the Director of Finance and
Resources when he/she leaves the employment of the College or if changing
circumstances mean that the card is no longer required.
19.57 Petty Cash
19.58 Payment out of petty cash shall be confined to small amounts where direct
payment by cheque would be inappropriate. Transactions greater than £50
should not be made through petty cash unless specifically approved by the
Director of Finance and Resources.
19.59 All expenditure from petty cash must be recorded at the time it is incurred.
The date, details and amounts of each payment shall be noted, and the total
payments for each period agreed with the reimbursement for that period.
19.60 Authorised vouchers must be obtained and should be attached to the claim for
reimbursement. Vouchers should be marked 'paid' and filed away to avoid
duplicate payment.
19.61 The total amount of expenditure being reclaimed to replenish petty cash plus
cash and postage stamps in hand must agree with the total of the petty cash
holding.
19.62 Paying accounts
19.63 The budget holder shall arrange for the invoice to be matched against the
delivery note and order, if applicable, to ensure that:
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the goods have been supplied or the services rendered and that they are
of satisfactory quality and correct quantity
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the goods or services have not previously been paid for
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they are in accordance with contract price or estimate.
19.64 If the budget holder is satisfied that the order/invoice is correct, the invoice
must be returned to Finance within 2 days to ensure that there is sufficient
time for payment to be issued within the payment terms.
19.65 Any queries about the invoice should be raised by the budget holder with the
supplier concerned. If agreement cannot be reached, the invoice, together
with copies of any correspondence, should be sent to the Director of Finance
and Resources.
19.66 Invoices where discount is allowed for prompt payment should be dealt with
immediately. It is vital that these invoices should reach the Finance Office in
sufficient time for payment to be made to the supplier within the discount date.
19.67 The following three duties must not be performed by the same member of
staff without the involvement of a second member of staff, unless the specific
approval of the principal has been given :
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ordering of goods, works and services, and/or
receiving of goods, works and services
authorising the invoice for payment.
19.68 A list of those staff who are able to authorise invoices for payment shall be
maintained by the Director of Finance and Resources, together with specimen
signatures.
Note: Copy or photocopied invoices must not be submitted for payment without a
note of explanation written on the face of the invoice and signed by the
processing officer.
19.69 It will be standard college practice to despatch payment of invoices to a
supplier's normal business address. Any variation of this procedure will
require the formal approval of the Director of Finance and Resources.
19.70 Invoices will normally be paid on 30-days-net month-end terms, with
payments being scheduled throughout the month after they become due. If
non-standard terms are required the budget holder must liaise with the
Finance & Procurement Manager before any agreement is made with the
supplier.
19.71 Invoices requiring payment in foreign currency should be passed to the
Finance Office in the same way as for sterling transactions. The sterling
equivalent, plus any bank charges, will be debited to the expenditure
account(s) in due course.
19.72 It is important to appreciate the taxation distinction between a contract for
services and a contract of service. Most suppliers' invoices for goods
supplied, or work performed, clearly fall into the former category. An
employee of the college clearly falls into the latter category. Unfortunately,
there exists between the two, a wide ‘grey area’ which must be narrowed if
the work in the Finance Office is to proceed reasonably smoothly.
The college is required by law to inform the HM Revenue & Customs of any
payment made to an individual for a service performed where there is either
an actual or implied contract of service. Similarly, the college is required to
account to the Benefits Agency for any national insurance contribution where
a recurring payment of this nature is in excess of a minimum weekly sum.
The college is liable for this contribution even if it fails to collect the
employee's share, or if the employee is not liable by reason of other
employment.
Any payment in the nature of ‘earnings’ shall be the subject of a contract of
employment issued by the Personnel section. Such persons will receive a
salary or wage via a payroll handled by the Personnel section. These
payments are subject to tax and national insurance.
19.73 Statements
All suppliers' statements shall be retained centrally (Finance Office) for
checking and reconciliation to the supplier accounts.
19.74 Credit transfers/BACS payments
All credit transfers/BACS payments schedules shall be verified independently
before any transfers take place.
19.75 New accounts
All new suppliers' accounts shall be properly approved by the Director of
Finance and Resources.
19.76 Control accounts
The Finance & Procurement Manager shall reconcile the balance on the
purchase ledger's control account to the list of suppliers' balances on a
monthly basis, and the balance on the sales ledger control account to the list
of customer balances.
The VAT control account will be reconciled with VAT returns submitted
quarterly.