Guidance When Obtaining Quotations for Goods and Services
Introduction
The following guidance has been produced by the Purchasing and Insurance Office as an aid to
departments when seeking and obtaining quotations for goods and services.
It is intended as a guide only and should departments have detailed or specific queries, please contact
the Purchasing and Insurance Office directly.
What is an RFQ?
“RFQ” is the abbreviation for Request for Quotation. This is undertaken when engaging with suppliers
to seek quotations for goods or services the University requires.
In issuing a Request for Quotation to a supplier, the University is inviting that supplier to make an
offer for the supply or provision or undertaking of the subject matter. The University reserves the
right to accept or reject the supplier’s offer.
Care should be taken to distinguish between a supplier’s Quotation, which should provide an accurate
price for the goods and services offered, versus an Estimate which will be a rough approximation only
and provides more scope for the supplier to amend pricing.
Why is it important to obtain a written quotation?
It is advised that written quotation(s) are always obtained as this provides the opportunity for the
supplier to clearly outline the details of their offer, in order that the University can make a fair
assessment. Any detail which is not clear can be clarified.
Obtaining multiple quotations or conducting price benchmarking exercises are also core means of
achieving and demonstrating value for money. Suppliers subject to competition have greater
incentive to ensure prices are keen providing the University with greater leverage to obtain best
pricing and value.
Details contained within a supplier’s quotation often form part of the University’s contract with the
supplier (Purchase Order). Obtaining a written quotation enables this record of detail to be kept
should it be required either in a future dispute or should the purchase be subject to an audit. Note:
verbal quotations which are accepted (verbally) may also be legally binding although much more
difficult to define the detail and rely upon should things go wrong!
Written quotations should always be obtained prior to any Purchase Order being raised. The
University’s Purchase Order will form the basis of the contract with the supplier and should supersede
any supplier terms and conditions of sale with the University’s terms and conditions of purchase.
unless
otherwise
agreed.
(http://www2.warwick.ac.uk/services/finance/purchasing_and_insurance/docsandforms/tandcs )
What should be included in an RFQ?
The Request for Quotation document should include as a minimum, the following information where
relevant:
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UoW Reference Number, if applicable
Details of the opportunity or requirement
Deadline for submission and key dates
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UoW contact details
How responses should be submitted
How questions can be raised
Wider overview of the Project / Department to give broader context, as required
Technical specification (generic and not including any manufacturer proprietary information
or brand names)
Quantity information
Additional requirements e.g. warranty, training, installation & commissioning, key milestones
Delivery requirements and timescales
Basis for price submission and available discounts
If seeking multiple quotations, best practice would be to issue the RFQ to all participants and provide
the same timescale and information to all, with the same deadline for response and quotations to be
closed until such time.
It is acknowledged that this may represent a significant change in departmental practices and as such
departments may wish to take a risk based approach to this, dependant perhaps upon value and
funding source, in particular applying the more robust closed bid process to RFQs for European
funded requirements.
For all RFQ processes, it is advised that a robust audit trail be obtained in relation to receipt and
assessment of quotations.
Note: For certain European funded projects where the procurement is managed via the Central
Purchasing Office, the RFQ process is administered through the University’s electronic tendering
system and follows a similar procedure as a University tender, albeit with reduced timescales and
documentary requirements. A copy of the University’s Request for Quotation template will shortly be
made available on the Purchasing and Insurance Office website)
When should RFQs be obtained?
The requirement for obtaining quotations is detailed within Financial Regulation 15 – Purchasing.
(http://www2.warwick.ac.uk/services/finance/resources/regulations/fp15 )
This is currently (as of July 2012)
Up to £10,000 net – advise one written quotation
£10,000 to £34,999 net – two written quotations
£35,000 net and above – University or EU tender.
Note: Funding providers may stipulate different conditions and thresholds for evidence of achievement
of value for money. It is advised that Departments always check the conditions of the funding and in
the event of conflict, apply the strictest conditions.
Due Diligence and Factors to Consider
Upon receipt of quotations and in assessing the preferred bidder, departments should ensure that all
information requested has been provided and if multiple quotations are being considered, that these
are on a like for like basis.
Buyer Beware - It is perfectly acceptable to seek clarification on any information which is not clear
within a supplier’s quotation or upon which it is silent. Within business to business contracts the law
generally takes the position of “Caveat Emptor” or “Buyer Beware” and therefore appropriate and
reasonable due diligence should be conducted to ensure that contracts with suppliers are entered
into on an informed basis.
The most common types of due diligence which may be undertaken include:
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Financial– For example, credit check or analysis of recent accounts. This may be particularly
relevant should the engagement with the supplier be for a prolonged period e.g. across
multiple years, if the supply base is very niche or the item is bespoke and can be useful in
safeguarding against any potential conflict of interest.. Such due diligence may also be
appropriate at higher value levels should staged payments be required, however for sub
£35K requirements, it is not expected that such arrangements would be applicable and
advice should always be sought from the Purchasing Office should advanced payments be
required.
References – obtaining references from current or recent past customers of the supplier can
be an insightful exercise to provide added confidence around the supplier’s capability,
standards of performance and levels of customer satisfaction. Following up on references is
particularly important for services requirements where there is generally little tangible
evidence of the supplier’s capabilities.
Information Security and Data Protection checks – This is an important area of due diligence
for any requirement for goods or services which would involve or relate to personal or
sensitive data. In particular, completion of the checks would be required in respect of the
purchase of certain software programmes, 3rd party hosting of data or systems, development
of websites. However the scope for impact on personal or sensitive data is much wider and
reference should be made to the University’s Information Security and Data Protection
Policies and the workbook of standard questions available within the Governance pages
http://www2.warwick.ac.uk/services/gov/informationsecurity/policies/
,
http://www2.warwick.ac.uk/services/gov/informationsecurity/purchasingissues/
Departments should also be aware that the Academic Technology Service support team
within IT Services provides advice and support in relation to technology required for research
or teaching and should be contacted should there be a requirement to purchase a website for
such activities
Insurance – As part of the RFQ and due diligence process, it is advisable to ensure that the
supplier has adequate and up to date insurance cover. The subject matter of the RFQ will
determine the appropriate insurance policy required, for example Public and Products
Liability, Professional Indemnity, Cyber. Minimum levels of insurance are stated within the
University’s standard terms and conditions for purchase. Any queries regarding insurance
provided by suppliers should be directed to the Insurance Office.
Conflicts of Interest – Any conflict of interest between a supplier and the member of the
University participating in the RFQ process should be raised with the Chair of the
Department for appropriate action to be taken.
Best Value v Lowest Price?
At the sub tender value level where quotations are obtained, contracts are most commonly awarded
on the basis of lowest price. However, lowest price does not always translate to best value and it is
important for Departments when undertaking RFQ activity to be clear on their full requirements, to
understand the critical factors of importance and to ensure quotations are assessed fairly and
robustly.
Factors driving best value considerations may include such things as quality, delivery timescales,
aftersales service, availability of spares or consumable items etc. Not all of these factors will be
relevant to every purchase or indeed be considered “of value” for every purchase.
When considering price, it may also be appropriate to seek information not only on the one off
purchase price but also any additional associated costs such as; delivery charges, running costs, costs
of consumables, costs of servicing and maintenance, decommissioning and disposal. Such whole life
costing approach may not be appropriate for each RFQ exercise undertaken but may be worth
consideration in certain circumstances.
Note: Departments must ensure a robust, documented audit trail is maintained for RFQ exercises in
which the lowest price participant is not selected. In particular evidence should be retained of the
decision making and reasonings as to why, in the department’s opinion, an alternative to the lowest
price option provided superior value for money.