Purchasing and Tendering Procedures 1. General Overview The Office of the Comptroller ( CO ) is responsible for handling all purchases of goods and services of the University of which this set of purchasing and tendering procedures shall apply except for the purchase in relation to the following areas: (c) (d) (e) (f) Specific departures approved in advance by the appropriate Tender Board (e.g. Waive of Tender Procedures); Library Book Purchases; Tenancies; Academic/Research collaborations; Public utilities services; and Government services. 2. Approval authorities for purchase requisition are as follow: Purchase Requisition Value Level of Authority HK$600,000 and below Comptroller or his delegate (up to $100,000) Exceeding HK$ 600,000 President Approval from the above officers should be obtained before commencement of the purchasing process. All purchases of goods and services, with the exception of the items listed in paragraph 1 above and paragraph 7.1 below, must be obtained through the CO which will act as the purchasing agent for the University. Purchase orders (PO) will be placed with the supplier in compliance with Section 7 unless determined otherwise by the appropriate authority. 2.1 The approving authorities may, from time to time, sub-delegate his/her authorities for approving purchases of not exceeding $100,000 as deemed appropriate, however, the delegator shall always be held accountable ultimately. The written confirmation of delegation together with delegation conditions and specimen signature(s) shall be properly kept and filed with the Secretary to the Tender Board. 1
3. Purchase Requisitions 3.1 A Purchase Requisition Form (PR), shall be raised by the Requisitioning Department for all goods and services required. Upon receipt of the PR, the Office of the Comptroller ( CO ) will check to ensure that all PR (s) have been completed in good order; funding is available for the requisition(s). PRs with mandatory details missing shall be referred back to the Requisitioning Department for completion. In this case, the purchase may be delayed. 3.2 The duly completed and vetted PR will be submitted to the appropriate authority as specified in paragraph 2 for approval. 3.3 Early involvement of the Business & Commercial Activities Division ( BCAD ) in procurement of goods and services will facilitate planning, enhance synchronization and alignment of technical, operational and procurement strategies that would maximize savings and avoid potential duplication of efforts. To achieve the best possible results, adequate time must be allowed for thorough sourcing and tendering. 4. Officers appointed for the purchase of goods or services must ensure that the approved procedures are strictly adhered to. 5. The monetary limits set in paragraphs 7 refer to goods and services of the same type acquired by single purchase order from a single supplier. Care shall be taken in this connection to ensure that the limits are interpreted strictly and shall not be evaded by dividing up purchases into installment or by reducing the usual duration of contracts, so as to escape the limits test. 6. When filling in the estimated amounts of purchases in the PR, the Requisitioning Departments may ask the BCAD to supply an estimate of price or obtain an initial quotation from suppliers before completing the PR. 2
7. Purchase of Goods and Services Unless with the approval of the Comptroller, all purchases (except paragraph 7.1 below) must be placed through the BCAD of the CO via the most cost effective means. For purchases where the original request is estimated to be within a particular approving authority but the final price exceeds this limit, such purchases shall be submitted to appropriate approving authority in accordance with the final price for approval. 7.1 Direct Purchase up to $10,000 Single purchase of items up to HK$10,000 can be made by the department concerned under the delegated authority provided that the price is considered reasonable and approved by the budget controller. Users may still request the CO to acquire the goods/services on their behalf and the CO may directly approach a suitable supplier without seeking multiple quotations for comparison. 7.2 Single purchase costing more than $10,000 and up to $30,000 7.2.1 For this category, the minimum number of quotations that should be solicited is 2. 7.2.2 The quotations obtained by telephone shall be recorded on a Price Comparison Table for approval by the Comptroller or his delegates. 7.2.3 Where the minimum number of quotations cannot be obtained or where the offer selected is not the lowest quotation, justifications shall be made by the Department Head concerned and the Comptroller or his delegates shall certify that the prices are reasonable and justified for acceptance. 7.3 Single purchase exceeding HK$30,000 and up to HK$100,000 7.3.1 For such purchases, not less than 3 written quotations shall be obtained in accordance with the quotation procedures as set out below. All purchases shall be committed only after the PR has been approved by the Comptroller or his delegate. 3
7.3.2 The BCAD shall invite not less than 3 quotations from suppliers selected from the approved suppliers' list approved by the Comptroller, one of which shall be a previous successful supplier and the other two shall be chosen by rotation in general. 7.3.3 In the event that it is impossible to obtain three quotations, the Comptroller or his delegates and the Department Head concerned may consider accepting the single quotation. 7.3.4 The BCAD, in consultation with the Requisitioning Department, shall make recommendations on the quotations received as well as the terms of payment, delivery, warranty, etc. The price quotations received with the recommendations shall be summarized in a "Price Summary" to be approved by the Comptroller or his delegates. A summary report shall be compiled for periodic review. The Comptroller or his delegates shall review all purchase decisions on a regular basis. Where the lowest offer is not selected, full justifications shall be made to the Comptroller or his delegates for approval. All quotations, whether successful or not, shall be kept for 3 months after acceptance of the successful quotation. 7.4 Purchases exceeding HK$100,000 7.4.1 Single purchases over HK$ 100,000 in value must be obtained by tender. The minimum number of tenderers and the approving authority for the tenderers list and tender results are specified in the below table: Purchase Value Minimum Number Approving Authority Selective Tenderers Tender Results Tenderers List >HK$100,000 to 5 Comptroller HK$300,000 Comptroller >HK$300,000 to 5 GTB HK$3million Exceeding HK$3 million 5 MTB MTB Capital Projects 5 Council MTB &CDMC* *CDMC denotes Campus Development and Management Committee 4
7.4.2 Prior to calling tenders, the list of tenderers chosen from the approved list of suppliers shall be sent to the Requisitioning Department for comment and to the approving authority specified in the table above. 7.4.3 The minimum number of tenderers selected from the registered supplier list (defined in paragraph 8) shall be in accordance with the above table. Under normal circumstances, not less than 5 tenderers for purchase value over HK$100,000 shall be selected from the registered list of suppliers. Among these, one tenderer must be the successful supplier in recent tenders for the supply of similar goods/services and the others (at least 2 if the minimum is 5) are those who have not been invited to tender recently. 7.4.4 The Purchasing Officer and the Secretary to the Tender Boards shall ensure the following are complied with: When a deposit is required as a guarantee, the tender document shall specify that the tenderer is to issue a notification stating the amount of the deposit, the specification of how it is to be paid and the requirement of attaching the deposit receipt to the tender. All "Invitations to Tender" shall clearly indicate the mode of dispatch to the specified Tender Box before the closing date and time. Tenderers shall be advised that if they submit their tenders by post, they are doing it at their own risk. (c) A Control Record of the invitation sent and the subsequent follow-up actions for non-response must be kept. "Invitation to Tender" may be sent by registered post or be collected by the supplier upon request. (d) A tender box kept under double lock shall be located at the counter of the Office of the Comptroller for the receipt of tenders. The keys shall be kept separately by the key holders (i.e. the President s delegated staff and the Comptroller s delegated staff). 5
(e) The closing time and date for the receipt of a tender shall be clearly stated in the "Invitation to Tender". 7.4.5 From the time tenders are received until the award of the respective contract has been made, all relevant information and communications between Departments concerned must be kept confidential. 7.4.6 In the event of a tender received by post before the closing time, the Secretary to the Tender Board or the Purchasing Officer shall put it into the Tender box. If the date and time of opening tenders is deferred, the same privileges shall be extended to all tenderers and the opening of the Tender Box shall be deferred until the extended closing time. 7.4.7 Late tender, unless the Tender Board approves otherwise, shall not be considered except when only one tender has been invited. In such case, approval of the Tender Board shall be sought to accept such late tender as a valid offer. 7.4.8 The tender box must be opened promptly by the key holders at the closing time or such deferred closing time as approved by the Tender Board. 7.4.9 The Tender shall be opened in the presence of one Officer as nominated by the President, one Officer to be nominated by the Comptroller and one additional Officer. The following actions are to be taken: All tenders, immediately after being opened, shall be sorted into original and duplicate copies and shall be stamped, authenticated and initialed by the witnesses to ascertain that they were duly received on time. The total number of tenders received shall be noted in a tender summary sheet. All officers witnessing the tender opening shall endorse the list. Those non-response invitations shall be followed up by the Business and Commercial Activities Division and wherever possible a written declination to tender be returned. 6
(c) If it is discovered, on the opening of tenders, that alterations have been made without supplier's signature, the witnesses shall encircle the alterations in red to certify that the alterations detected are made before the receipt of tender. (d) Original tenders and a copy of the Tender Summary Sheet shall be retained by the Secretary to the Tender Board under lock and key. All photo or carbon copies of the provisional bills of quantities shall be handled under confidential cover as stated in paragraph 7.4.10. (e) For any tender submitted without the required photo or carbon copy of the provisional bills of quantities, photocopies of the tender shall be taken and certified by the Secretary to the Tender Board. (f) Tenders which have omitted the tender number from the envelope shall be opened by the Secretary to the Tender Board in the presence of the witnesses to see if they are related to the current tender or whether they are early tenders for the next tender exercise. In the latter case they shall be put back into the Tender Box for the next opening after the Secretary to Tender Board and the witnesses have certified on it. 7.4.10 The duplicated tenders shall then be listed and forwarded by the Secretary to the appropriate Tender Board under confidential cover by hand to the Requisitioning Department for assessment. 7.4.11 The Requisitioning Department shall prepare an assessment report for consideration by the Comptroller or the appropriate Tender Board. The tender report shall contain at least a price summary in the form of a comparative statement, a recommendation and the budgeted amount with full justification. 7.4.12 The Chairman of the Tender Board may decide whether tender reports be considered by circulation or for discussion in a meeting at which representatives from the Requisitioning Department may be required to answer queries from members. 7
7.4.13 The Secretary to the Tender Board shall proceed to obtain further approval from UGC, if required in accordance with the Tender Board resolution. Upon receipt of the necessary authority to accept the tender, the Secretary to the Tender Board shall inform the Requisitioning Department of the outcome and the BCAD shall proceed to finalize the contract. 7.4.14 Tenderers shall treat their returned tenders as being unsuccessful if orders are not confirmed within the tender validity period. Such unsuccessful tenders shall be retained for three months before disposal. 7.4.15 No post tender negotiation is allowed unless approved by the Chairman of the Tender Board. Any approved negotiation must be carried out by AT LEAST two officers, one from the CO and one from the Requisitioning Department. All agreements reached must be clearly documented and signed by both parties. 7.4.16 Tender files shall be periodically examined by staff assigned by the Comptroller in order to ensure that all "Invitations to Tenders" have been sent out accordingly and approved suppliers have a fair chance to compete. 7.4.17 For administrative convenience, it is permissible to re-apply previous approved quotations or tenders to new requisitions for goods or services which have been ordered or contracted before, provided that the quotation/tender is not more than 12 months' old and all relative terms, rates and conditions remain the same. This also applies to paragraphs 7.2 and 7.3 above. 7.4.18 Contracts awarded by tender may be extended for a further period subject to the tender specification with the approval of the appropriate Tender Board. 7.4.19 The BCAD shall provide a continuous diary of quotation and tender opening dates and time for the Comptroller's inspection and scrutiny. 8
7.5 Single Tendering 7.5.1 Single tender shall be avoided, as far as possible. Single tender may only be adopted when circumstances do not permit normal competitive tendering. Examples of such circumstances are given below: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) where there is unforeseen urgency; where there are security conditions; where the equipment to be acquired must be compatible with existing equipment; where there is evidently only one source of supply; where "Patent" or "Proprietary" items are involved; where services are to be provided by utility companies; where there is exclusive maintenance on patented or specialized equipment; or where lease terms requiring specific work that must be carried out by specified party/organization. 7.5.2 Procedure for Single Tendering Unless approved by the approving authorities for tenderers list, single tender must not be adopted. For the case of single tendering, the reason(s) for approving the single tendering shall be documented and filed together with the approval. When seeking authority to approve the adoption of single tendering procedures, the Requisitioning Departments shall: (i) (ii) (iii) (iv) describe the background of the work to be carried out or the requirement of goods/service to be procured; state the estimated cost; explain why single tendering is required; if the reason for the single tendering actions is urgency, explain why the need for the service/goods could not be envisaged earlier. 9
(c) The tenderer invited to quote under the single tendering procedures shall be advised to submit his tender in accordance with normal tendering procedures. Under no circumstances shall the tenderer be informed that the tender is being processed on a single tender basis. 7.6 Tender Waiver In case of tender waiver, the reason for waiving the tendering procedures shall be documented and filed together with the approval. The approving authorities for tender waivers shall be the same as the authority for approving tender results as shown under paragraph 7.4.1. A list of all approved tender waivers approved by the Comptroller and GTB shall be submitted annually to the GTB and MTB respectively for information. 7.7 To ensure impartiality of the procurement process, related persons including but not limited to the University s staff, members of the Finance Committees, Council Members, or indeed all persons involved in the process should be required to undertake not to divulge, without permission, any information relating to the tender/quotation submissions and that they should avoid and declare any conflict between their personal interests and their duties in connection with the procurement process, if any, related to the purchase concerned, by completing the Undertakings by Members of Tender Opening Teams/Tender Boards/ Consultants Selection Boards. Individuals with any conflict and interests declared should exempt themselves from discussing, reaching decision and accessing to the related information. As a general rule, a declaration should be made in all cases of doubt. 8. Supplier Registration 8.1 The CO shall maintain a list of suppliers which are approved by the Comptroller for invitation to quote or tender. The list is classified into groups and categories. 8.2 For those universities, education institutions, government departments and related organizations, schools and overseas vendors, exemption for inclusion 10
into the University s registered Supplier List may be granted by the Comptroller. 8.3 Users/Consultant may recommend supplier(s) other than registered suppliers; however, these new suppliers have to complete the supplier registration procedures before the issuance of order. Users/Consultant should give justification(s) for their recommendations. 8.4 The approved lists of suppliers shall be reviewed at least once every three years by the Comptroller or his delegates. New suppliers shall be added to the lists at any time provided that they have satisfied the pre-determined criteria. 8.5 New Suppliers Inclusion Procedure Potential suppliers who want to be included in the list of suppliers shall complete and return the "Application Form for Registration as Supplier, which are obtainable from the CO, together with copy of business registration certificate and a job reference list. The Application Form for Registration as Supplier should include the following information of the supplier: (i) (ii) (iii) (iv) (v) Company name Address, telephone and fax number Major business Name of directors / partners / sole proprietor Banker information 8.6 Registered Suppliers Inclusion Criteria The inclusion criteria are as follows:- the ability and willingness of the supplier to make timely delivery 11
of goods and services of the required quality and quantity of goods/services; (c) the price competitiveness of the supplier, viz. unit price, bulk purchase discount, transportation cost and credit terms; and provision of necessary information as requested by the University. 8.7 Potential suppliers will only be notified if they have been included in the registered lists. 8.8 Registered suppliers may be considered unsatisfactory if they exhibit the following behavior: (c) (d) Frequent late delivery of goods/services without proper notification and justifications; Sub-standard goods/services; Poor after-sales service (e.g. slow response to maintenance calls); or Frequent non-response to invitation to quote or tender without proper notification. (e) Any other criteria as the Comptroller considered deem necessary and appropriate in the interest of the University and in compliance with the stipulated procurement procedures. 8.9 Procedures for the Deletion of Unsatisfactory Suppliers from the Registered List Unsatisfactory suppliers shall be deleted from the Registered List by the Comptroller if: verbal warnings have been given to the unsatisfactory suppliers (record of such warnings should be kept); and written warnings have been issued to the unsatisfactory suppliers who have shown no improvement after being verbally warned by the University; 12
(c) if there is no improvement observed within a reasonable period of time after both verbal and written warnings have been issued, a proposal will be made to the Comptroller to delete such suppliers from the registered lists. 8.10 The BCAD shall be responsible for maintaining a list of registered suppliers for each type of goods/services, from which reference shall be made in obtaining quotations. All suppliers approved shall be reviewed periodically by the Comptroller to ensure that each of them has been given a fair chance to quote and that they have been providing satisfactory services. 9 Tender Boards 9.1 The General Tender Board ( GTB ) 9.1.1 The membership compositions of the GTB are: Chairman: Member: Secretary: Quorum: Vice-President Comptroller (Deputy Chairman) One Dean by rotation to be nominated by the Chairman of the General Tender Board The term of office of the Dean is two years A representative from the Office of the Comptroller Three Members 9.1.2 Terms of Reference (i) To consider and approve all matters relating to tenders in excess of $300,000 and up to HK$3 million, including but not limited to tenderers list, waiver of tendering procedures and award of contract; and (ii) To consider and approve all matters relating to tenders and quotations not exceeding $300,000 in value which are referred to the GTB by any Head of the Requisitioning Department or the Comptroller. 13
9.2 The Main Tender Board ( MTB ) 9.2.1 The membership compositions of the MTB are: Chairman: Members: Secretary: Quorum: An external Council member At least two external Council members President, ex-officio Vice-President, ex-officio A minimum of four to a maximum of six other members to be appointed by the Finance Committee, of which at least half of them should be external Council members. Comptroller Three members with one external Council member in the Chair 9.2.2 Terms of Reference (i) To consider and approve all matters relating to tenders in excess of $3 million, including but not limited to tenderers list, waiver of tendering procedures and award of contracts ; (ii) To consider and approve all matters relating to tenders not exceeding $3 million in value which are referred to the Main Tender Board by the General Tender Board. (iii) To consider and make recommendations for the establishment of other subsidiary Tender Boards where appropriate and to draw up such rules as may be appropriate to regulate their procedures; and (iv) To recommend for Finance Committee s approval the Purchasing and Tendering Procedures of the University and any revision to it. 9.3 It is imperative that all members of the Board must make a clear declaration of his interests, if any, in connection with the tender/quotation under consideration. If any Member has a pecuniary interest, direct or indirect, in any contract or proposed contract or other matter, and is present at a Meeting at which the contract or other matter is a subject for consideration, he shall disclose this fact and the nature of his interest. The Chairman shall thereupon ask the Meeting to 14
decide whether the Member should withdraw during the discussion of the matter or be present but abstain from participating and voting. 10. Tender Evaluation 10.1 For tenders based on both price and technical/quality considerations, a twoenvelope system should be adopted and the BCAD shall forward the duplicate copy of the tenders excluding price information under restricted cover to the requisitioning department for evaluation and recommendation. Tenderers should be informed in the tender document to submit the price proposal and technical/quality proposal in separate, sealed envelopes. In the evaluation, the price envelopes should be kept in the Tender Box and should only be released to the requisitioning department after the technical/quality proposals have been properly assessed. 10.2 A scorecard of evaluation factors with relative weightings shall be predetermined and agreed as appropriate between the requisitioning department and the BCAD before the issuance of tender. The technical/quality and price scores should be combined using pre-determined weightings. 11. The status of processing the purchase requisition shall be updated by the Purchasing Module of the Banner System automatically when a Purchase Order has been issued. 11.1 The Purchasing Officer preparing the PO shall ensure that the PR is duly approved by the appropriate level of authority, and additional PR should be approved if the recommended order amount exceed the initial PR by HK$10,000. 12. Any variation in the tender/quotation procedures or disagreement arises between the Requisitioning Department and the BCAD that may affect the acceptance of quotation/tender must be referred to the appropriate approving authority for decision. 15
13. Emergency Procedure 13.1 In situations where goods or services are urgently required by the requisitioning department, the BCAD shall have the discretion to obtain quotations/tenders urgently in compliance with paragraph 7 prior to the PR being duly approved by the appropriate level of authority. In all cases the details of all emergency purchases shall be submitted to the respective authority under normal procedures for subsequent review and ratification. 14. Order and Commitment Records 14.1 With proper approval for the purchase, a PO or a Letter of Acceptance will be issued to capture the financial commitment of the expenditure and to serve as an official acceptance of the offer made by the suppliers. All POs must be placed through the CO. 14.2 All data on PR raised, PO issued and payment made against such PO shall be recorded in the PO module of the Banner System automatically upon quoting the correct PO numbers in the invoices. 15. Follow-up on PO Issued 15.1 Expediting The BCAD shall monitor the receipt of goods. In this connection, the Division shall be responsible for the follow-up actions: follow-up with the Requisitioning Departments in preparing documents evidencing goods received (e.g. GRN); in the absence of GRN or any proper documents evidencing goods received, check the Requisitioning Department if goods or services are properly received; (c) inquire into the outstanding undelivered PO with the suppliers. 16
15.2 Goods/Services Receiving Procedures Goods/Services ordered shall be delivered directly to the Requisitioning Department as far as practicable. In cases where delivery of goods of a single order involves more than one requisitioning department, the BCAD shall act as an agent. The following general procedures apply to all cases of goods or services receipts, including those for the University's Store. However, additional steps need to be taken for University Store goods receipt. Please refer to the Stores Procedures for details. 15.2.1 Delivery of goods or services shall be accompanied by a delivery note, receipt, invoice or any other supporting document as evidence of receipt. Before accepting the goods or services and acknowledging such, the receiving staff should ascertain the following: that the goods or services delivered are requested under a legitimate PO issued by the University; that the quantity of goods and services delivered (including the figure shown in the delivery note and invoice) and the requested quantity as stated in the PO are exactly the same; (c) that the condition of goods or the quality of services delivered is at acceptable level/standard as stated in the PO. 15.2.2 Any defective or damaged items found during inspection of goods shall be rejected and remarks shall be made on the document. 15.2.3 Where no inspection is possible in view of the time constraint, a note should also be made on the document evidencing the receipt to such effect. 15.2.4 A copy of the document evidencing the receipt of goods should be made as soon as possible and retained by the Receiving Department for onward submission to the BCAD of the CO. The Receiving Department should mark on the document any defective or damaged items discovered during 17
the receipt of goods and what actions have already been/will be taken. 15.2.5 For service contracts irrespective of the order value and for suppliers who have been awarded orders in excess of HK$100,000, performance assessment form shall be completed by the Requisitioning Department upon job completion and be forwarded to the CO for record purpose together with the document evidencing the receipt of goods. 15.2.6 The copy of the document evidencing the receipt of goods or services shall form the basis for payment. The Receiving Department shall ensure that the document bears its proper authorization signature before forwarding it to the CO for further processing. 15.2.7 Where the copy of the document evidencing the receipt of goods or services is lost, the department receiving the goods or services shall certify on the invoices that goods/service have been received in good conditions for payment purpose. 15.3 Goods Receipt Recording 15.3.1 For goods received and procured with the issue of a PO, the BCAD shall update the Goods Receipt Notes in the Purchase Order Data File of the Banner Integrated System. 15.3.2 The quantity of goods or services received, no matter in acceptable conditions or damaged conditions shall be recorded. The Goods Received Note number/po numbers, after final delivery is made, are to be recorded for future reference. 15.3.3 The users shall follow up with the supplier in case they do not receive the goods/service on or before the expected delivery date specified on the PO. The BCAD will offer assistance upon receiving request from the users. 18
15.4 Payment The document evidencing the receipt of goods or services when after processing by the Receiving Department concerned, shall be recorded by the BCAD into the Banner System via the Goods Receiving Function. The invoice together with the PR and PO copies shall be passed to the Payment Section for effecting payments. 15.5 Order Amendment 15.5.1 If changes have to be made to a PO regarding delivery address, specification, quantity, etc., the BCAD shall prepare an "Amendment to Order" and distribute it in the same manner as a PO. 15.5.2 Should the amendment affect the total value of the requisition, the BCAD shall seek prior approval from the appropriate authorities as prescribed in paragraph 7 above. 19