UNIVERSITY OF ESSEX
REPORT TO UNIVERSITY STEERING GROUP
REGARDING PURCHASING FOR THE
PERIOD 1 AUGUST 2006 – 31 JULY 2007
COMPILED BY THE DEPUTY DIRECTOR OF ESTATE MANAGEMENT (PURCHASING)
ON BEHALF OF PURCHASING POLICY SUB- COMMITTEE
1
INTRODUCTION
This report has been compiled by the Deputy Director of Estate Management (Purchasing) on behalf of
Purchasing Policy Sub-Committee. It includes purchasing and contracting undertaken by the Central
Purchasing Unit and also by a number of Departments, Sections and Centres within the University.
2
CENTRAL PURCHASING UNIT
2.1
Savings
The Southern Universities Purchasing Consortium achieved savings of £301,553 for the year and this was
in respect of a broad range of commodities.
The Department of Biological Sciences have reported significant savings and these are as follows. Local
agreements for stores consignment stock has achieved savings of £12,100 and this is mainly from price
discounts and the absence of delivery charges. The Department secured one-off discounts, special offers
and competitive quotations and as a consequence savings of £127,408. Of this £82,527 (ex VAT) is from
SRIF purchases from the latter part of 2005/06 and the whole of 2006/07. In addition £7,132 was
achieved in respect of large-user price agreements for filtration products.
Owing to the amalgamation of equipment service contracts, an annual saving of approximately £3,000
was achieved by Catering Services.
Information Systems Services achieved savings of approximately £35,000. The savings were obtained as
result of tendering for the supply and installation of wireless networking. In addition to the financial
savings the tendering exercise also resulted in the acquisition of a higher quality system and improved
performance in comparison to the initial market evaluation.
The Central Purchasing Unit obtained savings of £260,051 and these were mainly in respect of the
purchase of furniture, locks, garden maintenance, AV equipment, bedding, vehicles and research
equipment. The cost of employing the Central Purchasing Unit staff – Deputy Director of Estate
Management (Purchasing), Purchasing and Contracting Administrator and secretarial support – during
2006/7 amounted to £75,400, and the non-staff cost was £11,960, giving a total of £87,360.
In summary the total savings for 2006/07 are as given below:
£
Catering Services
Information Systems Services
Biological Sciences
Central Purchasing Unit
Southern Universities Purchasing Consortium
TOTAL
3,000
35,000
146,640
260,051
301,553
746,244
The following graph shows procurement savings over the last three financial years.
Procurem ent Savings
800
700
600
Other
£K
500
SUPC
400
CPU
300
BiologIcal Sciences
200
100
0
2004 - 2005
2005 - 2006
2006 - 2007
2
2.2
Achievements
This has been an exceptionally busy year for the Central Purchasing Unit, having let 48 contracts. Some
of these addressed significantly complicated matters. Detailed below are examples of the achievements. A
full list of all contracts is shown on pages 4-6.
Following a review of the options regarding the provision of a facilities management service at Southend,
a decision was taken to outsource the service. A team of senior Estate Management staff worked closely
with consultants to tender for the service in accordance with an existing Office of Government Commerce
Framework Agreement. Prior to letting the contract operational processes were developed to ensure that
stakeholder expectations were met when the building became operational. This value adding approach
was developed by the Estate Management personnel. A contract was awarded to Operon and I’m pleased
to report that it was delivered on time and within the budget allocation. A major benefit of this approach
is the flexibility to meet the changing needs of the building. It was the first time that the University
contracted externally for a facilities management package. The Deputy Director of Estate Management
(Purchasing) worked closely with the team to minimise the risk and to develop the tender documentation.
The Central Purchasing Unit were requested to establish a contract for legal services. An advert was
placed within the Official Journal and 16 expressions of interest were received and following an analysis
of the completed pre-qualification documents, 5 contractors were short-listed for tendering. (Birkett Long,
Eversheds, Martineau Johnson, Mills & Reeve and Pinsent Masons. Tenders were received from all of
these contractors and following a careful evaluation of the offers against the contract award criteria, Mills
& Reeve provided the best value and were awarded a contract for a period of 5 years. The contractor
provides regular seminars and workshops for customers on educational issues and also has a client
extranet enabling customers to access financial and legal information eg. legal spend on cases, hours
worked per case and work in progress. The current University spend on legal services is approximately
£300k per annum.
A contract was awarded to Deloitte & Touche in respect of an External Audit Service for a period of 5
years. The contract provides a number of advantages to the University and these are as given below:

The contractor has substantial Sector presence.

The audit manager assigned to Essex is also head of the Deloitte’s internal HE training unit.

Opportunity for Essex staff to access Deloitte’s training event at no additional costs.

More risk based approach in line with current guidelines, in comparison to the previous
contractor.

Free PAYE health check as part of the audit work.
To enable prospective providers of the service to gain a greater insight into the scale and nature of the
University’s requirements of its external auditors, an open meeting was held during the early stages of the
project. The meeting was hosted by the University’s Director of Finance and the Registrar and Secretary.
The formal selection process was made by an Evaluation Panel convened by the Audit and Risk
Management Committee. The panel comprised of 5 members, including members of Council, members of
the Audit and Risk Management Committee and members of University Staff. The Evaluation Panel also
invited all prospective tenderers to attend individually for a question and answer session based on
submissions provided under the invitation to tender. The Deputy Director of Estate Management
(Purchasing) provided guidance to the Evaluation Panel regarding the assessment of the offers and the
contract award procedure.
The Central Purchasing Unit worked very closely with the Research Enterprise Office to establish a
contract for the development of a software platform. The full technical specification of the platform was
3
delivered on time and the platform build proceeded according to plan and content from the HE partners.
The specification of the platform (website) was amended to allow additional features to be incorporated
within the existing budget, so as to enhance the value of the website to the end user.
The Deputy Director of Estate Management (Purchasing) provided significant input into the development
of the new Financial Management System project. A key part of the project was to develop the tender
documentation, the evaluation of the offers and undertaking a number of presentations to staff to highlight
the benefits that will arise from a purchasing perspective. These will include the introduction of a single
system that will enable staff to raise official orders up to a limited value and to forward direct to
contractors, rather than a combination of electronic and manual order processing systems within the
University and the utilisation of the Central Purchasing Unit by a number of Departments and Sections
which do not have an order processing system. The processing of official orders for products and services
is a very basic task and requires minimal training and support. The new process will reduce the lead time
for products and enable the Central Purchasing Unit to have input into key commodities which are
currently procured by various users and will undoubtedly enable improved value to be achieved.
2.3
Projects (competitive tendering)
In respect of the complex / higher value projects, competitive tenders were obtained and for many
projects a number of contractors were evaluated technically and financially during the early stages of the
process. In addition, those projects which were in excess of £140,000 in value, were advertised in
accordance with the EU Directive on Public Procurement. Given below are the projects which were
undertaken by the Central Purchasing Unit in conjunction with Departments during the period 1st August
2006 to 31st July 2007.
DEPARTMENT
COMMODITY
PRICE
Accommodation
Mortice Locks
£69,380
Accommodation
Beds and Mattresses
£12,150
Accommodation
White Goods
£32,620
Accommodation
White Goods
£50,369
Accommodation
Furniture
£140,906
Biological Sciences
Chromatography System
£149,504
Biological Sciences
Magnetic Circular Dichroism
£76,546
Computing & Electronic
Systems
40 Gb/s BERT System
£390,334
Computing & Electronic
Systems
Traffic Generator
£84,618
Computing & Electronic
Systems
Constellation Analyser
£63,686
Computing & Electronic
Systems
Vector Network Analyser
£75,508
Computing & Electronic
Systems
Motion Capture Equipment
£80,000
4
Computing & Electronic
Systems & Psychology
Infra Red spectrophotometry
Equipment
Computing & Electronic
Systems & Psychology
Transcranial Magnetic
Stimulation Equipment
£119,087
Day Nursery
Cleaning Service
£24,068 per annum
Estate Management
Facilities Management - Southend
£450,000 per annum
Estate Management
Tree Survey (Colchester Campus)
£7,640
Estate Management
Grounds Maintenance (Quays)
£8,200 per annum
Estate Management
Furniture (Southend)
£46,459
Finance Section
External Audit
£47,180 per annum
Information Systems
AV Equipment (Southend)
£67,637
Information Systems
Data Network Service
Loughton – Colchester
£39,108
Integrated Commercial Services
Management System
£22,000
Information Systems
OHPs
£24,440
ISER
Furniture
£52,816
Research & Enterprise
Design and Development
of a Software Platform
£2,510,000
TOTAL
£4,741,576
Information Systems
£97,320
5
2.4
Projects (competitive quotations)
Competitive quotations were obtained on behalf of Users for goods and services which were estimated to
cost less than £25,000 and single source quotations for commodities which were not subject to
competition eg. where new shelving is required to match an existing system.
DEPARTMENT
COMMODITY
PRICE
Academic
Furniture
£6,688
Accommodation
Furniture
£13,974
Accommodation
Curtains
£22,096
Accommodation
White goods
£8,181
Accommodation
Bedding
£8,660
Accommodation
Curtains
£17,750
Accommodation
Bedding
£7,628
Accommodation
Furniture
£11,500
Educational Development Services
Furniture
£15,245
Estate Management
Furniture
£14,612
Estate Management
Furniture
£3,305
Estate Management
Furniture
£3,778
Estate Management
Furniture
£2,942
Estate Management
Consultancy
£6,000
Health & Human Sciences
Badges
£2,180
ISER (Single Source)
Shelving
£43,412
ISER
Furniture
£4916
ISER
Furniture
£2,089
Psychology
Stimulus Generator
£12,040
Registry
Furniture
£11,076
Southend
Furniture
£6,420
Southend (Single Source)
Furniture
£37,903
TOTAL
£262,395
6
2.5
Acceptance of Single Source Quotations
During the year 64 single source quotations were recommended for acceptance by the Deputy Director of
Estate Management (Purchasing) and approved by the Director of Finance. The total value of the
quotations amounted to £2,815,304. The chart below shows the expenditure and the number of requests
received for each Department.
DEPARTMENT
EXPENDITURE
AFM
£26,069
2
Biological Sciences
£153,061
18
Computing and Electronic Systems
£8,047
3
Educational Development Services
£4,237
1
Estate Management
£403,087
19
External Relations
£19,388
2
Health & Human Sciences
£26,511
2
Hotel & Conference
£23,074
2
ISER
£5,478
1
Personnel
£10,000
1
Registrar & Secretary
£23,000
1
Research & Enterprise
£22,629
2
Residential Services
£57,540
2
Southend
£2,019,383
7
Sports Centre
£13,800
1
£2,815,304
64
TOTAL
NUMBER OF REQUESTS
APPROVED
7
2.6
Performance Indicators
To monitor the performance of the Central Purchasing Unit and the Central Stores a number of
Performance Indicators are currently operational. Given below is the range of Performance Indicators,
together with the performance level of both the Central Purchasing Unit and the Central Stores during
2006/07.
PERFORMANCE INDICATORS
Increase the number of contracts for goods and services
by a minimum of 5%
ACHIEVED
Yes
Raise purchase orders within 8 working hours of receipt of
requisitions by the Central Purchasing Unit, except for items
which require competitive tenders or quotations.
Yes
Maximise the financial savings regarding contracting and
order processing. As a minimum, ensure that the Central
Purchasing Unit achieves savings in excess of £100,000
per annum.
Yes
Resist applications for price increases from contractors
where possible.
Yes
The Central Stores will action all stock requisitions within
8 working hours of receipt.
Yes
Official Orders will be raised within 8 working hours of
the identification of a requirement to replenish stock levels
within the Central Stores.
Yes
Maintain a stock-turn of 4 times per year concerning the
stock profile within the Central Stores.
Yes*
Ensure that all non-stock items which are received by Central
Stores are prepared for despatch to Users within 8 working
hours of receipt of the goods.
Yes
* except items which are held for emergency repairs as they
are often slow moving.
For the majority of performance indicators the level of performance was determined on a sample basis.
There may be occasions during the year when it was not possible to achieve the desired performance level
owing to sickness etc.
8
3
OFFICIAL ORDERS
Within the University there are a number of Departments which raise official orders for the supply of
goods and services. The chart below shows the number of official orders that were raised during the
period 1st August 2006-31st July 2007. It should be noted that it has not been possible to obtain this
information from all Departments.
DEPARTMENT
NUMBER
Accommodation
109
Biological Sciences
2,683
Catering Services
4,000
Central Purchasing Unit
2,431
Central Stores
789
Computing & Electronic Systems
813
Estate Management Section
1,832
Information Systems Services
865
ISER
32
Library
21,477
Printing Services Unit
706
Psychology
52
Safety Office
31
Sports Centre
138
TOTAL
35,958
9
4
INFLUENCED, NON-INFLUENCED AND UNKNOWN EXPENDITURE
The table below shows the expenditure which was influenced by professional purchasing staff. Also
expenditure which was incurred without input from professional purchasing personnel, i.e. goods and
services which were not available from contract arrangements and single source purchases. Financial
information regarding the ‘unknown expenditure’ is not currently available, but it is anticipated that the
committee will be able to report on all the expenditure following the installation of the new Financial
Management System.
DEPARTMENT
Accommodation
INFLUENCED
EXPENDITURE
£30,354
NON-INFLUENCED
EXPENDITURE
£139,645
Biological Sciences
£257,391
£565,959
Catering Service
£480,000
£275,000
Central Purchasing Unit
£1,083,769
£397,604
Central Stores
£62,054
£122,934
Computing & Electronic Systems
£972,224
£196,429
Estate Management
£3,121562
£883,531
Information Systems
£1,246,265
£566,705
ISER
£2,200,825
£100,971
Library
£1,113,893
£414,026
Printing Services
£220,566
£40,461
Psychology
£137,335
£27,023
Safety Office
£3,992
£5,471
Sports Centre
£48,859
£5,563
TOTAL
£10,979,089
£3,741,322
UNKNOWN EXPENDITURE
2
£17,000,000
EXPENDITURE ON CONSORTIUM AGREEMENTS 2006-07
The University utilises the contracts let by the Southern Universities Purchasing Consortium for goods
and services where they fully meet the needs of Users. For the period 1 st August 2006 to 31st July 2007
the total spend by Essex against the contracts was £2,298,266 and this was 1.58% of the total contract
spend by member Institutions. There are currently 89 member institutions and Essex ranked 25 th in
respect of the level of expenditure. The highest expenditure was £10,960,462 (7.53%) and this was
regarding the University of Cambridge and associated Colleges.
K Mason
Deputy Director of Estate Management (Purchasing)
01/11/07
10