Procurement Policies & Procedures

Transcription

1 Procurement Policies & Procedures 1. Procurement Policy 1.1 Purpose This procurement policy is designed to support the college s procurement strategy. It is supported by senior management and the Board of Directors 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: are appropriate and fully responsive to the college s diverse needs; are timely and effective; provide excellent value for money; comply with all legislation affecting 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. 1.2 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 Board of Directors. 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.

2 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. 1.3 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. 2. Procurement Procedures 2.1 Purpose 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 1), which in turn supports the procurement strategy. 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. 2.2 Procurement links to other key strategies Purchasers should ensure that the following college strategies are considered as part of the procurement process: Risk Management Equality and Diversity Sustainable Development Health and Safety 2.3 Authority to Purchase The deployment of the college s resources is the responsibility of the Board of Directors exercised through the Finance Manager. The following authorisation limits apply to all expenditure (including capital and revenue): Procurement Manager Up to 3,000 Finance and Resources Manager 3,000 to 50,000 Director 50,000 +

3 2.3.2 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 Finance Manager. 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 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 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 The head of department must ensure that all staff having delegated authority are fully aware of these procurement procedures 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 Finance Manager for vetting before signature by an authorised officer of the Institution The Finance Manager 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 Reporting to the Finance Manager, the Procurement Manager is responsible for: 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.

4 2.4 General Principles The identification of a purchase requirement is performed in the procurement 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 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: 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 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; the cost of the procurement process itself, which should not be disproportionately high in relation to the value or importance of the subject matter With regard to terms of payment, the college will not normally pay for goods in advance. The main exceptions to this are: 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 designated bank card; large value contracts with stage payments tied to milestones of achievement and/or protected by a bank guarantee Special cases, not falling within one of these exceptions, should first be discussed with the Finance or Procurement Manager.

5 2.5 Supplier Selection Suppliers should be selected with reference to: 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 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 Office stationery/supplies IT hardware/software/consumables Printers Building Painting Furniture Window Cleaning Carpets Blinds/Curtains Waste Disposal Signage Cleaning General Advertising Recruitment Advertising General Rail Travel General Hotel Accommodation Catering Legal Services Contracting Department Finance IT IT Marketing HR Finance Finance Finance 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.

6 2.5.4 Consortia The college is a member of the Crescent Purchasing Consortium (CPC), a consortium with an education sector 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 or 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 or 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 or Procurement Manager prior to purchase 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: 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. 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 Departments must, wherever possible, procure/request goods and services from the college list of approved suppliers.

7 2.6 Making a Purchase The purchase process varies depending on the type and value of the goods or services being ordered All departments and staff must comply with the regulations relating to contracts, agreements and purchases as per these procedures before creating an order Any purchase exceeding quotation/tender limits must be managed through the Finance or Procurement Manager 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 There are three mechanisms for purchasing goods and services: Purchase orders. For detailed procedures concerning purchase orders see below. Purchases paid by Bank Card within the relevant card limit. Card holders have delegated authority to purchase goods or services for and on behalf of their department. Petty cash purchases. For the regulations concerning petty cash see below. 2.7 Purchase Ordering All purchase orders must be placed on the college s Procure-To-Pay system and shall be in accordance with procedures prescribed by the Finance Manager Advice may be sought from the Procurement Manager on any aspect of the purchase ordering process Deviations from the college's standard terms and conditions should not be accepted without the prior approval of the Finance Manager. Any change in contract terms required by the college or a supplier is to be referred immediately to the Procurement Manager Standard Purchase Ordering Process (Appendix B: Purchase Ordering System Flowchart) 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.

8 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 3,000 must be authorised by an SMT member having been checked by the Procurement Manager. All requisitions for orders under 3,000 may be authorised by the Procurement Manager, 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 Examination fees 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: have been supplied and the quantity is correct. have not previously been paid for. 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 before returning it to the Finance Department for payment. 2.8 Credit and Charge Cards The use of credit and/or charge cards in the name of the College is only allowed to the authorised personnel s. In no circumstances are direct applications to be made for such cards on behalf of the College by any member of staff Financial usage limits and merchant categories for bank cards must be agreed with the Finance Manager. These are subject to regular review Bank cards will only be issued to specific individuals and should not be used by any other member of staff Under no circumstances should the cardholder inform suppliers of the card s transaction limits 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 The monthly bank 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.

9 2.8.6 If any items are disputed the card issuing company should be contacted immediately and the item placed in dispute by the cardholder 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 Transactions and supporting documents will be retained by the Finance Department so that they can be produced if an audit is carried out 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 PIN numbers must be kept secure and not disclosed to anyone else 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 The cardholder will surrender the card to the Finance Manager when he/she leaves the employment of the College or if changing circumstances mean that the card is no longer required. 2.9 Petty Cash Payment out of petty cash shall be confined to small amounts where direct payment by cheque would be inappropriate. Transactions greater than 100 should not be made through petty cash unless specifically approved by the Finance Manager 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 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 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 Paying accounts The Procurement Manager shall arrange for the invoice to be matched against the delivery note and order, if applicable, to ensure that: the goods have been supplied or the services rendered and that they are of satisfactory quality and correct quantity the goods or services have not previously been paid for they are in accordance with contract price or estimate.

10 If the Procurement Manager 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 Any queries about the invoice should be raised by the Procurement Manager with the supplier concerned. If agreement cannot be reached, the invoice, together with copies of any correspondence, should be sent to the Finance Manager Invoices where discount is allowed for prompt payment should be dealt with immediately. It is vital that these invoices should reach the Finance Department in sufficient time for payment to be made to the supplier within the discount date 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: ordering of goods, works and services, and/or receiving of goods, works and services authorising the invoice for payment A list of those staff who are able to authorise invoices for payment shall be maintained by the Finance Manager, 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 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 Finance Manager 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 Procurement Manager must liaise with the Finance Manager before any agreement is made with the supplier Invoices requiring payment in foreign currency should be passed to the Finance Department 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.

11 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 Department 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 Statements All suppliers' statements shall be retained centrally (Finance Department) for checking and reconciliation to the supplier accounts Credit transfers/bacs payments All credit transfers/bacs payments schedules shall be verified independently before any transfers take place New accounts All new suppliers' accounts shall be properly approved by the Finance Manager Control accounts The 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.

12 Appendix B Complete Purchase Requisition Request approved Return Requisition NO YES Check Stock Records In Stock Non Stock Item Dispatch to requsitioner Source Supplier RFQ (Request for Quotation) Create Purchase Order (PO) Goods Receipt Invoice Posting Accounts Payable