PROCUREMENT GUIDE

Asst. Prof. Muhammad Abu Sadah

Dean faculty of law, UP

Procurement strategy

The overall aim of the College’s procurement strategy is

twofold:

to obtain the best value for money, at the lowest cost, and

to be able to demonstrate its effectiveness in procurement to interested external bodies.

Aims of procurement guide

The aims are to be achieved co-ordination of a devolved procurement structure.

offers the best opportunity to improve the negotiating position with suppliers,

developing and exploiting the commercial expertise of procurement staff throughout the institute.

Code of Ethics

Staff should always seek to uphold and enhance the standing of the institute, and should never use their authority or office for personal gain.

Any personal interest, which may be seen to impinge on an employee's impartiality, should be declared in writing.

The confidentiality of information received in the course of duty should be respected. Equally, information given in the course of duty should be true and not designed to mislead.

Although a close and co-operative relationship with suppliers is often mutually beneficial, impartiality must be maintained, and fair competition should not be compromised.

Code of ethics- cont.

Business gifts should not be accepted, other than items of very small intrinsic value such as business diaries or calendars. Modest hospitality may be acceptable, provided that this cannot be deemed by others to have influenced a business decision.

As a rule, the frequency and scale of hospitality accepted should not be significantly greater than the institute would provide in return.

If in doubt as to whether a gift or hospitality is acceptable, the offer should be declined or advice sought from the Head of Department or the Head of Purchasing.

Any Gifts or hospitality received should be recorded in a departmental Hospitality/Gift book.

The Procurement Cycle

Goods and services should be purchased externally only if necessary for the achievement of financial or organisational plans.

It should first be established that suitable goods or services are not already available elsewhere in the institute, and that sufficient authorised funding exists.

Obtaining Competitive Bids

Competitive bids should be sought by one of the following means;

Invitation to Tender: Higher-value and more complex contracts should be put out to competitive tender.

Tendering and Quotation, set out the following thresholds, these limits apply to the supply of goods or service, for which the value must be for the total life of the contract which may be over a period of a year or more.

Quotations and tenders shall be retained for at least six months after the end of the financial year for which they were sought.

A permanent record shall be kept of any tender process. Any deviation from the financial regulations must be

justified in writing and authorised by the Director of Finance, and submitted to the Finance committee

Emergency action shall be documented and reported to the director of Finance and to the finance committee

The procedure shall also be subject to any rules or requirements.

Tender procedures need NOT be applied in the following circumstances:

if the commodity or service can to be supplied through a consortia framework agreement, or other regional or national consortia contract.

the supply is of such specialised nature that, in the view of the budget holder endorsed by the Director of Finance, normal competitive tendering is inappropriate. Subsequent report of the purchase must be made.

The supply of architects or consultancy services where in the view of the Director of Finance, normal competitive tendering is inappropriate, but subsequent report of the appointment shall be made to the finance or any other relevant Committee,

The supply is to be financed from an external source which agrees alternative methods,

there is an exception specifically approved by the Finance Committee

Purchase Agreements

Staff may use any of the framework purchase agreements set up by consortia such as the LUPC, and the OGC.

For many purchases such agreements will offer the best value for money overall, since they have already been competitively tendered, through EC procedures where appropriate.

Whole Life Costing

Bids should be evaluated by reference to Whole Life Costing. Taking into account all of the costs of ownership over the life of an asset:

pre-purchase costs, including research and evaluation purchase costs, including installation and initial training order processing costs stockholding costs running costs, including maintenance, power and

continuing training health and safety requirements disposal costs and / or residual value

Stockholding

Stockholding costs cover finance, damage, deterioration, theft and obsolescence, and may add to the purchase cost as much as 25 - 40%.

Smaller and more frequent deliveries are often more cost-effective than bulk ordering, even allowing for price discounts, but it is worth noting that many consortia agreements are at fixed prices, irrespective of delivery quantity.

Order processing

Order processing costs are significant, having been estimated at between X$- Y$ for a simple purchase order, and up to Z$ for a more complex purchase.

It makes sense to consolidate requirements and place a single order for a range of products from the same supplier rather than have multiple deliveries.

Processing a Purchase Order

When you identify a need to obtain a product you should consult the person who is responsible for purchasing (the buyer) within your department. The purpose of such a consultation is so that;

1. The buyer can add value by contributing to the definition of the specification or suggesting alternatives to achieve better value for money.

2. The buyer can advise if the institute has agreements in place with a potential supplier, or if a consortium arrangement is in place with a preferred supplier.

3. If there is no existing supplier and a new supplier is required, the buyer can ensure that negotiations with the supplier follow good commercial practice.

Once a requirement has been defined it should be officially communicated to the buyer by means of a requisition.

Ideally the purchasing officer / buyer acts when a purchase requisition is received. This requisition serves three purposes;

1. It requests that a purchase be made2. It gives the requisitioner’s authority to the

purchaser3. It serves as a record for management, audit

and other purposes

purchase requisition

The purchase requisition must contain the following information;

1. Product(s) required2. Specification3. Quantity4. Price5. Any additional costs, i.e. delivery charges, packaging.6. Suggested or previous supplier(s) if known7. Date required 8. Delivery point9. Four digit centre code 10. Four digit fund code11. Five digit expense code

The purchase order

The purchase order must contain the following information;

1. Date of order2. Name, Department and contact number of the

person placing the order3. Name and address of the supplier4. Quantity and description of goods5. Price of goods with any delivery or packaging

charges clearly shown6. Delivery date required (do not put a.s.a.p. as a

delivery date)

7. The delivery point

8. Signature of both the buyer and authoriser

9. If the goods are VAT zero rated, you will need to provide the supplier with a VAT exempt certificate, in this case a copy of the certificate must be sent with a hard copy of the official purchase order.

Whether written or not, purchase orders are legally binding and care should be taken to ensure that they are placed on equitable terms of contract.

Payment should be made only on satisfactory receipt of the goods or service.

Avoid advance payment, as payment sent with an order may be lost if the supplier ceases trading or fails to honour the contract.

The member of staff certifying an invoice for payment must be different from the member of staff authorising the order.

Some businesses are entitled to claim interest on late payment of invoices. Such claims could prove very expensive, so the following precautions are suggested:

Unless extended credit terms are negotiated, the standard payment terms should be agreed in advance wherever possible.

Purchasers should keep documents such as purchase orders goods received notes and relevant quotations, for a minimum of two years beyond the completion of an order or contract.

Invoices and supporting documents will be kept for six years by the finance department.

Invoices should be marked with the date of receipt, together with details of any query on the goods or services supplied. If you are holding an invoice for query the supplier should be notified immediately in writing.

Invoice addresses should be stated clearly on purchase orders, if an invoice is received late as a result of being wrongly addressed, the supplier should again be notified immediately in writing.