Purchasing Objectives, Regulations & Procedures

In addition to the regulations, guidelines and procedures detailed below, there are specific regulations governing the use of the University's purchasing card programme . There are also regulations governing the procurement of specific services, for example, consultancy, travel and advertising. Such regulations should therefore be viewed in conjunction with those below.

For the purposes of these guidelines, the word 'unit' refers to Schools, Directorates, Institutes, Service Units, etc.

General

Anyone committing University funds for the supply of goods and services must adhere to the University’s purchasing regulations. These regulations apply to all purchases, regardless of the source of the funds (eg general, research and other external grants, commercial/trading areas, etc) - in other words, any transaction which is processed via the University's financial system.

With regard to transactions for or by joint appointees or jointly funded units, if funding is channelled through the University's system, then, regardless of the source, the purchase must comply with the regulations.

The direct contact between the University and outside agencies selling goods or services, is an area which is particularly vulnerable to fraud, hence, it is critical that the University and all members of staff are protected by the use of strict and formal procedures for obtaining quotations, authorising expenditure, recording the receipt and acceptance of goods and services and clearing invoices for payment.

The University as a Contracting Authority

The University is a body governed by public law which means that it is bound by EU procurement rules - ie the Public Contracts (Amendment) Regulations 2009 and associated case law. 

Further, all its procurement activities must follow the rules and principles of the EC Treaty which require that all suppliers must be treated with the same degree of non-discrimination, equal treatment, transparency, proportionality and mutual recognition.

This means that the University must ensure that adequate control arrangements are in place in respect of all of its procurement practices and that such practices comply, at all times, with the purchasing regulations outlined below. 

It should be borne in mind that non-compliance with purchasing regulations can lead to:-

• public accountability issues - due to a perceived mis-use of 'taxpayers' money'
• possible legal challenges from suppliers
• reputational and financial risk to the University
  

Check List for Buying Goods and Services

This checklist for purchasers provides 'at-a-glance' guidance on what should be  considered when purchasing goods or services on behalf of the University.

Financial Thresholds

The University has a number of prescribed financial levels above which different procedures apply. These are summarised below and will be reviewed periodically and revised as appropriate.

Please note the change to the requirement for competitive quotations, effective from 1 November 2012.

(General guidelines on the issue and receipt of quotations can be found at 'Guide to Seeking Competitive Quotations'. See also guidelines on Equipment Purchasing.)

Calculating Cost Thresholds

In order to determine which of the above thresholds apply to a purchase, the aggregated total of the goods or services required over a specific period should be taken into account. For example, if a consultant is required to provide a service to the University for two days per month over a two-year period, then the cost of the service should be estimated as no. of days per year (24 in this case) x estimated daily rate (eg £500) x 2 years. The estimated total cost of the engagement would therefore be £24,000 which requires four competitive quotations.

Specifying a Requirement when Issuing Requests for Quotation

When specifying a requirement for goods or services to accompany a Request for Quotation, particularly in respect of equipment.  Requirements are normally specified in one of the following ways:-

Input/Prescriptive Specification - this will contain specific details of the requirement.  The specification should be unambiguous, whilst at the same time, ensuring that competition is not restricted by making it so explicit that it 'locks out' certain suppliers from quoting, which could result in a legal challenge against the University.  A specification for equipment should never be based on one provided by a particular supplier.

Output/Performance Specification - this will contain details of the required result/outcome.  This type of specification should be used where one is unsure of, or unable to specify, the requirement.  It is also more beneficial for identifying innovative mechanisms for achieving the desired outcome as it does restrict applicants to pricing only for goods/services with specific criteria.

Award Criteria and Evaluation of Quotations

If the Request for Quotation (RFQ) documentation states that the award of the business will be based on particular criteria (eg lowest price, aesthetic/functional characteristics, method of service provision, etc), then the evaluation, and ultimately, the award of the contract, must be on this basis.  Notes should be kept as appropriate.  Where the choice of supplier is not on the basis of lowest price, then a covering explanation as to the choice of supplier is required by the Purchasing Office in order to approve the order.

It should be borne in mind that inviting a supplier to quote implies a willingness to deal with that supplier if it offers the winning bid.  Further, unsuccessful suppliers are legally entitled to a de-brief within 15 days of requesting one.

Method of Providing Quotations

As quotations must be in writing, they can be submitted based on a formal template, provided by the originator (templates can be provided by the Purchasing Office, if required), or in a less formal manner, and can be in hard copy, by fax or by email.

Purchasing Secondhand, Reconditioned, Ex-Demonstration or Refurbished Equipment

Occasionally, items of used equipment will become available at a price which is a fraction of the cost of purchasing the equipment new. Purchasing secondhand, reconditioned, ex-demonstration or refurbished equipment is permitted as long as value for money is being obtained and it can be determined that the equipment will remain fully operational for the period of its use.

To this end, when deciding whether to purchase used equipment, the usage history must be taken into consideration in line with the purchase price and the age. The seller should be able to provide a history of the equipment to inform the decision whether to proceed with the purchase. Common sense should prevail in that if the equipment has been used in an environment and for a purpose which means that heavy wear and tear is likely, then it should not be purchased. The buyer should also be satisfied that the saving being made on the used equipment, compared to buying new, is significant, taking into consideration the various factors detailed above.

It is also advisable to seek as a minimum a 12-month warranty with any used equipment rather than the 3 or 6 months' cover which is usually offered.

With regard to competitive quotations, if other sellers are offering similar used equipment, then these may be used for comparison purposes. In most cases, however, such equipment becomes available as a 'one-off' and hence, when satisfied that a purchase of used equipment should proceed, the official order should be accompanied by a quotation for the used equipment together with a quotation for the item if it were to be purchased new. If possible, the 'new' quotation should be from an alternative source but if not, a quotation from the same supplier will suffice.

Purchasing Secondhand Vehicles

Any unit considering purchasing a secondhand vehicle should contact the Transport Manager for advice.

Purchasing Items from Auction

Occasionally, an opportunity arises whereby an item may be available to purchase at auction.  As different auction houses manage purchases in different ways, any unit wishing to discuss the purchase of an item in this mannner should contact the Head of Purchasing for advice.

Exceptions to the Requirement for Competitive Quotations

It is acknowledged that, occasionally, there are instances when it is not possible to obtain the required number of competitive quotations. Examples of these would be as follows.

• Single or limited source of supply - for example, equipment which has a patented design or which is available only from the manufacturer and a limited number of re-sellers
• Upgrades to existing equipment - where an upgrade is available only from the equipment manufacturer. However, where upgrades or add-ons are freely available on the market, the normal quotation requirements apply.
• Compatibility - for example, equipment which is being used to undertake research with a collaborative partner (eg another university) and to ensure accuracy of test results etc, it is essential that the same specification of equipment is used by researchers at Queen's
• Software - any type of software which is available only by licence from its creator or an appointed agent

Where the required number of quotations has not been obtained, copies of those which have been, together with a covering letter of explanation, should be submitted to the Purchasing Office for approval in the normal way. Where an item is widely available on the market and the required number of quotations have not been sought, the originator will be required to provide a sound, written justification for the purchase - for example, if equipment is being purchased, this justification must be on technical grounds relating specifically to the research application for which the equipment is to be used.

As the procurement of services (such as consultancy) is often more subjective, it is imperative that the justification for a sole or limited source of supply is based on something which can be verified and tested, for example, an individual may have a particular skills mix which is required for a specific project, making that supplier the only which could reasonably fulfil the requirement.  In such cases, the justification should be based on the specific requirements of the project and the reasons why the supplier is uniquely placed to provide the services.

The Purchasing Office will use a method of random sampling to determine that validations provided in such cases are legitimate.

Regarding sole or limited supply sources where the value exceeds Threshold D, the Purchasing Office will advise on the most appropriate means of competition.

Tendering for Goods and Services

Users must contact the Purchasing Office as early as possible in a purchasing exercise where the estimated expenditure is likely to exceed Threshold D . This early contact is most important as it can save many hours of wasted or duplicated work if competition procedures are required and have not been followed.

A detailed specification of the requirements must be provided as the basis for the tender documentation.  When specifying a requirement for goods or services - particularly in relation to equipment - it should be borne in mind that the specification should be unambiguous whilst, at the same time, ensuring that competition is not restricted by making the specification so explicit that it 'locks out' certain suppliers from tendering, which could result in a legal challenge against the University.

For equipment tenders, the lead user will be required to complete a Statement of Need as well as providing a technical specification for the item(s) and determining the standards and performance criteria on which the item(s) will be scored. 

The Purchasing Office uses a Tender Assessment Model for all tender evaluations.

Value Added Tax

General Rules

Most goods/services being purchased by the University are likely to incur VAT at 20% of their cost. The only exceptions to this will be:

• where the goods/services are exempt from VAT
• where the supplier is not VAT registered
• where the goods are eligible for zero rating of VAT
• when purchasing corporate hospitality and VAT cannot be re-claimed

The way in which VAT is handled will depend upon either the location of the source of supply of the goods or the location in which the service is being performed (ie, UK, European Union or Rest of World). For more information on the coding of VAT on official orders, click here .

Zero-rating of VAT

For notes on the payment of VAT and eligibility to claim zero rating of VAT on certain purchases, click here .

Importing Goods

For notes on importing goods, the associated costs and Incoterms, click here.

Approval of Purchase Orders

The University’s purchase orders require two levels of approval. The first level is by the signature of a person authorised to commit funds from the project which will pay for the goods/services. This person will sign the requisition and it is their responsibility to ensure that adequate funds are available to pay for the goods/services required and also, to verify the need for those goods or services. It should be noted that the person who signs the requisition cannot then authorise payment for the goods/services when they have been received.

The second level is by the electronic approval of the University’s Head of Purchasing, other members of the central Purchasing team or Nominated Buyers (see below). This approval is given only when the University’s purchasing procedures have been applied correctly, a University contract used (if one is available) and value for money obtained.

It should be noted that purchase orders raised where procedures have not been followed will not be approved by the Head of Purchasing or his/her nominated representative. Originators of orders should bear in mind at all times the need to obtain competitive prices for goods/services, according to the prescribed Financial Thresholds above, and where there is no central contract from which the goods/services can be purchased.

In respect of non-compliant orders over £50,000 ex VAT and all orders over £100,000 ex VAT, a further level of approval is required by the Director of Finance, on behalf of the University Operating Board.  This requires a 'Report on Order' to be produced by the Purchasing Office.  ('Non-compliant' refers to purchases regarding which a competitive process has either been undertaken incorrectly or not at all.)  The approval process, and the length of time this takes, will depend upon whether or not the Director of Finance is satisfied with the explanation for the purchase.

Approval of Increases to Purchase Order Values

If there is a need to increase the value of a purchase order, the increase must be noted on the original requisition form, dated and approved by an authorised signatory for the cost centre bearing the cost of the purchase. The increase can be approved by any authorised signatory for the purchase, ie, not necessarily the person who authorised the original purchase.

The Qfis Clerk or Nominated Buyer (see below) should record, on the notes field of the order, the reason for the increase in the value and the name of the person who authorised it.  This note, and the related paper record, will be subject to audit.

Nominated Buyers

The University has a network of Nominated Buyers who are members of staff nominated by their Head or Director and approved by the Head of Purchasing. A Nominated Buyer is delegated authority by the Head of Purchasing to approve purchase orders with values up to threshold A.

Nominated Buyers act as an extension of the central purchasing team and approve purchase orders, having ensured that procedures have been followed, central contracts used where appropriate and value for money obtained.

In certain instances, the Nominated Buyer may also be an authorised signatory for the project to which the goods/services will be charged. Hence, they can sign the requisition as authorised signatory, but cannot then authorise payment of the invoice.

The table below summarises the permissible combination of signatures:-

Pre-payment of Purchase Orders

On some occasions, it may be necessary to pay for goods or services prior to receiving them. It should be noted that wherever possible, pre-payment should be avoided as it places University funds at risk and it may be very difficult to obtain a refund if the supplier does not honour the purchase order. This is of particular importance where large sums of money are involved.

Particularly in the case of large items of scientific equipment which are being purchased as the result of a tender, a supplier may seek payment in a number of stages. Members of staff must not become involved in negotiating payment terms. It is University policy that stage payments will only be permitted where there is clear evidence that work of that value has been completed and/or the supplier provides a banker's guarantee that all monies paid will be refunded in full, should the supplier fail to fulfil the contract. In cases such as this, advice should be sought from the Purchasing Office.

Given this policy, when ordering large items of equipment, consideration should also be given to any building work and/or services which may be required prior to installing the new equipment. Inability by the University to take delivery of such equipment can result in storage payments being requested by the supplier or, at worst, an action in breach of contract by the University.

Where pre-payment is approved, then a pro-forma invoice should be sought from the supplier. The supplier should be advised that the invoice header should be clearly marked 'pro-forma'.

The official order must have the required approval after which the pro-forma invoice should be registered on Qfis in the same way as a regular invoice and the transaction number recorded on the invoice authorisation stamp for processing by the Payments Office. It is acceptable to proceed with sending the order to the supplier with a note that payment of their pro-forma invoice will follow.

Confirmation Orders

Confirmation orders are defined as official orders which are raised after a request for goods or services has been communicated to a supplier eg verbally, electronically or by fax after the invoice for the goods/services has been received. This means that the budget holder has not authorised expenditure of the funds paying for the goods/services and that the commitment has not been recorded. It also means that the Purchasing Office (or the unit’s Nominated Buyer) has not approved the order ensuring that purchasing regulations have been followed and contracts used where appropriate. The use of confirmation orders places the University at considerable risk in terms of the unapproved commitment of funds and it is therefore imperative that this practice be avoided where possible.

The Purchasing Office has produced guidelines which outline the most common justifications given for the use of confirmation orders and also identify proposed solutions in each instance so as to prevent further use.

In certain circumstances, it may be necessary for a unit to order goods before a purchase order can be written, approved and issued to the supplier. Whilst confirmation orders are sometimes unavoidable, their use must be strictly controlled.

Where a confirmation order is deemed absolutely necessary, it must be endorsed "confirmation order" and must state the arrangements made, together with the name of the contact person in the firm. A further note explaining the reasons for needing to use a confirmation order should be recorded on the 'notes' screen of the order.

It should be noted that, in most cases, orders are approved by the Purchasing Office on the day they are received - the exception being where the required supporting paperwork (eg in the case of orders for which competitive quotations are required) has not been received by the Purchasing Office. The same will apply to approval by a unit's Nominated Buyer if the order value is within threshold A , thus reducing the need for confirmation orders.

Standing/Blanket Orders or Use of Purchasing Card

Within many units, there will be categories of low value, high volume requirements with a small number of suppliers, for example, weekly dry cleaning of laboratory coats. The use of a standing or blanket order can reduce the administrative work created by the need to write numerous individual orders, each of a low monetary value.

Standing Orders

A standing order is one which is placed for a quantity of a product, eg bottled water for a water cooler which is to be delivered at staged intervals, say, weekly over a pre-determined period. As each delivery is received and paid for, the outstanding balance is reduced until it is complete. It should be noted that care must be taken to ensure that the appropriate purchasing procedures are adhered to, based upon the total value of the order or consecutive orders for the same product. The Purchasing Office should be approached to seek guidance on the introduction and use of standing orders.

Standing orders should not be carried over from one financial year to the next.  The order should therefore be terminated at the end of a financial year, once all related invoices have been cleared, and a replacement order raised for the new financial year, if the requirement for the goods/services still exists.

Blanket Orders

A blanket order is one which may be appropriate where the goods required from the supplier are of an ad hoc nature, either due to irregular demand patterns or varying types of goods. A blanket order should quote either a maximum monetary value (estimated to cover, for example, six months of deliveries) or a fixed time period. In both cases, the blanket order should not, if at all possible, cross from one financial year into another (this will ease accounting processes). As goods are received from the supplier, their receipt must be recorded.

It should be noted that the estimated value of a blanket order should not exceed the monetary threshold above which the University’s competitive quotation/tendering procedures apply, unless the items are being purchased from a central contract.

Blanket orders should not be carried over from one financial year to the next.  The order should therefore be terminated at the end of a financial year, once all related invoices have been cleared, and a replacement order raised for the new financial year, if the requirement for the goods/services still exists.

Use of Purchasing Card

As an alternative to the use of standing/blanket orders, units with nominated cardholders may use a purchasing card for the purchase of low value goods/services. For further information and guidance on the use of purchasing cards, see below.

Purchasing Cards

Purchasing Cards make the purchase of low value goods and services fast, cheap and simple as the administrative costs normally associated with purchasing such items are disproportionate to the cost of the goods or services themselves. Each card is assigned to a named Cardholder, with the approval of his/her Line Manager, and it is the named individual who has sole responsibility for the proper and appropriate use of the Card. This individual is normally a unit's Nominated Buyer, ie, the person who has most experience of his/her unit's requirements for goods and services.

The strict security and control features applied to the Card are sufficiently robust to give a high degree of confidence that any fraudulent use or abuse will be exposed at a very early stage. In addition to these features - which include transactional and monthly expenditure limits set against each card - there are stringent guidelines and procedures for the use of the Card. These are detailed in the Cardholder Manual .

Goods and Services for Personal Use

Official purchase orders, University notepaper or any other form purporting to come from the University shall not be used to obtain goods or services for an individual's personal use, nor will University funds be made available to any individual for goods or services for personal use.

Some of the University's contracted suppliers will operate private purchasing arrangements for staff and students whereby they may take advantage of the University's contract prices. In such cases, details of these arrangements will be contained in the webpage for the relevant goods/services under the ' Contracts and Buying ' section of this website.

Paying Personally for Goods or Services

Unless in exceptional circumstances (for example, to meet an urgent requirement when travelling abroad), staff and students are not permitted to pay personally for goods or services with a view to being reimbursed by the University for their expenditure. All goods and services must be purchased using either an official order or a purchasing card. The Purchasing Office is required to approve all such claims for reimbursement by staff and students. If an adequate justification cannot be provided for the purchase, then the Purchasing Office reserves the right not to approve the reimbursement.

Guidelines on the use of E-Bay

Purchases via e-Bay are permissible only in exceptional circumstances where no other purchase option exists. In the event that such a transaction is necessary, then it must be strictly controlled and must remain within the current restrictions for purchase card use. Purchase card transactions via e-Bay will be monitored on a monthly basis by Purchasing staff and cardholders may, at any time, be requested to provide full details of the transaction and their justification for using e-Bay. The following should be noted:-

• There are significant potential risks associated with bidding on an electronic auction website, such as e-Bay, as opposed to placing an order based on the University’s conditions of contract. These risks are the unit's responsibility.
• The unit should make all reasonable efforts to ensure that it is satisfied with the information concerning the supplier’s identity, the specification and condition of the goods concerned, delivery arrangements, payment, technical support, software upgrades etc.
• Any associated costs, eg VAT if applicable and import duty, are also the unit's responsibility. It is also the budget holder's responsibility to ensure that sufficient funds are available to meet the total cost of procurement.
• The University is not normally able to obtain supplier accounts and appraise them for financial stability prior to an e-Bay bid. As such, as payment would be made in advance of receipt of goods, which is contrary to normal procedures, the School would bear the risk if the goods are not as advertised, or not delivered for any reason, following payment.
• Transactions via e-Bay should not be paid for personally as this is in direct contravention of the University’s Purchasing Regulations. Purchasing cards must be used at all times.
• Any queries in respect of purchasing via e-Bay should be referred to the Purchasing Office in the first instance.

Delivery of Goods and Services

When the goods detailed on the purchase order have been received, their correctness should be checked and the quantities received should agree with the delivery note which accompanies them. Goods should not be signed for until they have been checked. If insufficient time is available to do this, the delivery note should be clearly marked "goods received but not inspected by ....".

It should be noted that goods retained for what the law terms "a reasonable time" will be deemed to have been accepted. It is therefore essential that all goods are checked as soon as possible and any deficiencies, faults etc notified to the supplier as soon as possible, and confirmed in writing.

The delivery note is a key component of the contract documentation. Hence, the delivery note should be retained with any other paperwork relating to the order.

Receipt and Authorisation of Invoices for Payment

Whenever goods/services have been received, the invoice is matched with the delivery note and the official order to ensure that the correct quantities have been received and the correct prices charged. Any discrepancies should be investigated and, where necessary, credit notes obtained. Only when satisfied that the details are correct should the invoice be authorised for payment.

The invoice must be stamped and the boxes completed before being signed by a person authorised to sign invoices on behalf of the project paying for the goods.  The person who authorises the invoice for payment should not be the same person who signed the requisition.

Centrally Managed Purchasing Arrangements

The Purchasing Office manages a number of arrangements on behalf of the University. These are summarised below.

The above arrangements should be used where possible.  For further information, please refer to the Contracts & Buying section of this site.

Business Travel

The University has an appointed travel management company (TMC) which is contracted to provide a complete travel service. All bookings relating to travel must be made in accordance with the University's Travel and Expenses Policy .

In respect of the regulations governing the reimbursement of subsistence costs, please refer to the Payments Office website .

Consultancy Services

The provision of all consultancy services must be in accordance with the University's Policy for the Engagement of Consultants as outlined in its Regulations and Procedures for the Engagement of Consultants.

Ethical Standards

Misuse or misappropriation of the assets and funds of the University is a serious disciplinary matter which could ultimately lead to criminal proceedings.

The University is committed to observing the highest standards of probity, integrity and accountability in its conduct and to compliance with all applicable laws and regulations. It therefore seeks to conduct its affairs in a responsible manner, having regard to the seven principles established by the Nolan Committee which members of staff at all levels are expected to observe. These principles are as outlined below:

Disclosure of Interest

Members of staff who are involved in the commitment and payment of funds used to purchase goods and services on behalf of the University therefore have a responsibility to ensure that their actions are conducted with integrity and that they are fully accountable for those actions. Where a member of staff has a related interest, or a potential related interest, in a planned purchase, then he/she must declare the related interest which they may have in any proposed transaction.

For example, where a member of staff, involved in the purchase of goods/services, finds him/herself in a conflicting situation where, say, a preferred supplier for the required goods or service is a relation, friend or colleague, then this fact should be made known to both the member of staff's line manager and reference should be made, by both the individual and his/her line manager, to the University's Register of Interests Policy.

The purchase requisition (used to generate either a purchase order or a purchase card transaction) contains a declaration placed under the authorised signatory's signature "I have no related interest in this requisition as outlined in the University's Regulations, Guidelines and Procedures for the Procurement of Goods and Services". As such, if a person, who is an authorised signatory, has a related interest in the firm supplying the goods/services, then that person should not sign the requisition.

For further details of the roles and responsibilities of staff procuring goods and services on behalf of the University, see Guide to Ethics in Purchasing.

Bribery Act 2010

The Bribery Act 2010 was introduced into UK law on 1 July 2011.  There are four offences under the Act, all of which impose the risk of imprisonment of senior officers and employees of an organisation and unlimited fines for any organisation found to be involved in bribery or corruption.  The first three offences are applicable to educational institutions of all types and their employees.  These are:-

• the offering, promising or giving of a bribe
• requesting, agreeing to receive, or acceptance of a bribe
• the discrete offence of the bribing of a foreign public official

The fourth offence is much wider in remit than the others:-

• failure, by a 'commercial organisation' to prevent a bribe being made, on its behalf, by an 'associated person'.

An 'associated person' is defined in the Act as one who performs services on behalf of a commercial organisation.  The Act gives examples of employees, agents and subsidiaries.  From the University's perspective, this would include the University's related companies, joint ventures, partners, agents working abroad and University staff.

With regard to a 'commercial organisation', the guidance on the Act states that ' so long as the organisation in question is incorporated (by whatever means), it does not matter whether it pursues primarily charitable or educational aims or purely public functions'.  An organisation will therefore fall under the Act if it engages in commercial activities - irrespective of the purpose for which the profits were made.

A Bribery Act Working Group has been established to ensure that appropriate risk assessments are undertaken and that policies and procedures are adequate in order to address the risks identified.  This site will therefore be updated in due course.

Equipment Register Requirements

The University’s Equipment Register records all equipment owned by, or located within, the University. There are detailed guidelines for dealing with the input of information to the Register and the subsequent maintenance of equipment records. Further information on input, maintenance and control can be found under Equipment Register.

Disposal of Obsolete or Redundant Equipment

The Policy/Guidelines on the Disposal of Obsolete/Surplus Equipment provide information on the disposal of equipment which is no longer required.

There are legal requirements for the disposal of specific items such as waste electrical equipment, fridges and freezers. For further information on the disposal of all waste items, contact the Environmental Services section of the Estates Department.

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