Procurement and Contracts Structure - Example

The University Procurement & Contracts Department Procurement and Contracts Structure Mission Statement To ensure delivering value to our customers in supporting their educational and business goals through selecting, identifying and assisting in acquisition of the appropriate services and materials while fulfilling the requirements that are applicable to regulations and authorities. The process should be accomplished in a cost effective manner, in a timely manner, within acceptable quality standards and been professional. The members that make the Procurement and Contracts Department are assigned duties that are consummate to their expertise resulting in an effective and efficient department. Overview The Procurement and Contracts Department is the most important department at The University and is the central component in the contracts and purchasing department. The department is under the finance department and plays an important role with other departments within The University. The PCD manages, supervises and addresses to other legal agreements through acquisition of services and goods that supports and fulfils The University requirements. Procurement & Contracts Department Personnel These are the most important personnel that direct and assist operations within Procurement and Contracts Department at The University. Director Peter James xxxx@theuniversity.edu Assistant Director Kenneth Peter xxxx@theuniversity.edu Buyer III Peter James xxxx@theuniversity.edu Buyer II Michael Paul xxxx@theuniversity.edu Buyer I XXX CCCC xxxx@theuniversity.edu Senior Contract Analyst LLL KKK xxxx@theuniversity.edu Contract Analyst MMM XXX xxxx@theuniversity.edu Roles and Responsibilities Two distinct roles are fulfilled by the centralised purchasing strategy employed at The University I. Procurement and Contracts Department Role: the Director has all the rights and author to purchase services and goods for The University. However, the Director may delegate some of the responsibilities but the most important responsibilities include: Develop policy, systems, procedures and strategy Assists in providing benchmarking services across schools Provision of appropriate and necessary documentation and training Offer assistance with any type of purchase Formulating and implementing appropriate target turnaround on Purchase Orders if all documentations are appropriate II. Budget Coordinator’s Department Role: the role of this department is to inform the Procurement and Contracts Department of any unauthorised purchases of supplies, repairs, materials and services when these services and goods are: Considered as capital equipment Requiring a signed contract Restricted budget items Requiring labour on the premises of the university What I Should Know Some requirements that should be considered before using The University funds to purchase. Six important factors are utilised in ensuring you are a good steward to the University’s resources: Authority Signature Procurement of authorisation methods Expenses that are un-approved Selection of suppliers strategically Proper documentation Championing on code of ethics Signature Authority The authority of purchase is bestowed to Procurement and Contracts Department and the department is authorised to carry out its activities in accordance with directives, business soundness and directives of the governing stakeholders of The University. The department has the sole responsibility into entering lease or contract that is important in operations of The University. Therefore, specific staff members and faculty do not have authorisation towards signing contracts on behalf of the institution. In addition, it is paramount for the Procurement and Contracts Department to request information from vendors on products and services that are accompanied by agreements, conditions, forms and terms. This also means the Procurement and Contracts Department should follow the regional, federal or state legal requirements in fulfilling any contractual obligations. Authority for Contracts These are some of the limits based on contractual value: Up to $9,000 Head of Division Less than $50,000 Director of Procurement and Contracts & Controller Up to $150,000 Deputy Finance Director More than $150,000 Finance Director More than $500,000 Chancellor/President of the Institution More than $4,000,000 Board of Trustees Approved Departmental Expenses Some departmental expenses are Restricted Commodities and the Finance Department has categorically categorised these expenses with the aim of creating a platform wherein the Procurements and Contracts Department can base their analysis and recommendations. Authorised Methods of Procurement The following are the methods that authorised for paying and procuring ford services and goods at The University: Purchase Order System Electronic Procurement Travel Services Retail Purchase Forms Invoicing However, some of the services and goods are exempted from requirements of Purchase Orders but it is important to follow all approval workflows and policy requirements. Services and Goods Exempted from a PO Some of the services and goods that are exempted from a Purchase Orders include: Work for Hire Business Cards Independent Contract Agreements Strategic or Preferred Supplier Selection Procurement and Contracts Department is accountable in choosing the best source of purchasing services and products for The University and authorising preferred suppliers. The PCD maintains a Preferred Supplier list that establishes a relationship among the suppliers with The University resulting in an advantage position where it creates a win-win situation for the supplier and The University. These preferred suppliers should be utilised before deciding to choose for a new supplier and reasons clearly identified for the change of the vendor. In fulfilling the procurement obligations, it is paramount for the Procurement and Contracts Department to champion value through obtaining the services and goods in a timely manner, encouraging appropriate competition, quality assurances is encouraged and in accordance with the legal requirements. The following components are considered in deciding procurement operation: reducing ordering time, price, and accurate customer service, centralisation of source and to develop process efficiencies. Documentation Required All the purchase decisions are based on The University Procurement Guidelines and Policies without factoring into consideration the source of funds. The bids and justification procedures should be followed to its conclusion following the university and other stakeholders’ requirements. The documentation constitutes the history of the entire process and its relevant establishment for the purpose of: Provision of complete history or background on the order Providing appropriate facts in event of a dispute Reasons for supporting one vendor rather than another Therefore, it is important to follow and factor these goals in ensuring appropriate documentation requirements are accomplished and all the contracts and purchase follow legal and ethical requirements. Competitive Bidding Bids should be solicited and received from numerous bidders with the aim of promoting competitive bidding. Quotations are required for services or goods totalling $6,000 in value. A minimum of four quotations are required if the value of the services and goods supersedes the $6,000. In addition, those services and goods that are single sourced should be justified and confirmed by the Procurement and Contracts Department. In addition, these quotations should be written and the pricing and other relevant information should confidential. Moreover, before the competitive bidding process, it is prudent for suppliers to check whether preferred vendor exists. The importance of this strategy is to utilise already created relationships to purchase products at competitive rates. After choosing the appropriate vendor, the vendor should reply through writing identifying the conditions and terms clearly documented. Justification Single or sole source justification is when there is only a single vendor who is in a position to provide the good or service and hence it is difficult to utilise competitive bidding strategy. This means there are numerous sources of supply but due to numerous factors, the item should be purchased from a specified vendor. If it is proved that a single bidding in applicable because of the available information, the Procurement and Contracts department are requested to compete the Sole Source Justification Form. No order should be placed if there is no appropriate documentation that includes awarded vendor quotation. In addition, the Procurement and Contracts has the right of reviewing and challenging any order. Waiving the Bidding Requirement – this option is applicable to those goods and services that are only available from a specific supplier who is non-contract and therefore preventing the process of bidding from following the university bidding policy. This is only applicable to specific circumstances and hence exceptional. Before acceptances of the waiver, the staff member must inform the Procurement and Contracts Department highlighting and giving reasons why the order should not follow the university policy on competitive biding and other regulations on non-preferred contractor. The Procurement and Contracts Department has the prerogative to analyse and negotiate the procurement process through requesting additional information that informs on the service or goods. Code of Ethics Procurement and Contracts Department is the intermediary between the university and the vendors to ensuring impartiality is encouraged and maintain effective duties separation. The vendor information especially the process should remain confidential, since revealing such information may result in potential legal actions. The Procurement and Contracts Department champion fairness and ethical considerations in promoting fair and open competition factoring into consideration the interests of the University and the relationships with the vendors. Sales Tax The Procurement and Contracts Department should understand different taxes that are exempt and applicable. In those instances the tax is exempted, it is a requirement for the Procurement and Contracts Department to attach exemption certificate on any purchase according to legal requirements. Please, any supplier should contact the Procurement and Contract Department to be advised on taxes and their applicability. Insurance Requirements/On Site Work Certain circumstances requires organisations to provide commercial liability insurance and the university should be added to the policy so that the organisation can operate on the university premises. These requirements requires written contract with the University. Moreover, the Procurement and Contract Department should liaise with the Office of Risk Management to ensure risk associated issues are addressed. Personal Purchases The Procurement and Contracts Department will not be responsible or approve any transaction that is personal in nature. Vouchers and requisitions that contain personal items would be analysed by the Procurement and Contracts Department, such items will be returned to the requisitioner, and appropriate disciplinary measures will be advanced to the human resource department. Conflicts of Interest All employees of The University including suggestive actions by the Procurement and Contracts Department should not participate in actions that may appear to cause conflict of interest or result in conflict of interest. The University employees should not place themselves in position in which they can influence outside organisations or individuals with the aim of acquiring professional or personal benefit, direct financial or members of their families. Gifts and Gratuities To avoid appearance of conflict of interest or to avoid conflict of interest, it is important for the employees not to accept or solicit gifts or gratuities from any potential contractor or vendor. However, an ordinary business courtesy such as modest lunch by a prospective contract is acceptable. Nevertheless, any “gift” received in conjunction with a purchase are assumed to be the property of the university. These “gifts” should be utilised within the institution or within the department. Specific Services on Campus Those specific services or tasks that should be accomplished within the university should be permitted with specific authorisation to the contractor. In addition, the on-site services should be insured in accordance with insurance requirements established by The University. Service Agreements and Equipment Maintenance Some specialised equipments and facilities such as scientific, computers, software, hardware, testing and diagnostic equipment require ongoing maintenance after expiration of warranties. It is important to negotiate a maintenance agreement with vendor to provision of factory-trained personnel including original spare parts to repair and maintain the equipment. New Equipment – during the negotiation process, it is important to discuss the maintenance and service requirements on ‘one time’ buy. This consideration should be addressed during price determination and can be achieved through evaluating Request for Proposal and Request for Quote documentation. Through the process, the entire cost of actual purchase and supportive services such as warranties are quantified to determine the most appropriate bid. In addition, the LIFE CYCLE COST of the equipment should be considered including the maintenance costs. Maintenance Agreements and Developing Service – it is important for the parties involved to fully define the scope of their work to prevent unsatisfactory and misunderstanding of service. Some of the terms and conditions that should be agreed between the vendor and the buyer include: Labour Working hours Warranty, guarantee Included and excluded services Included and excluded parts Loaner equipment Service Level Agreement and response time Appropriate insurance coverage In addressing these concerns, it is paramount for the Procurement and Contracts Department ask some questions before deciding to procure services. Some of these questions are: Issues associated with maintenance Is there training that is required for the end users Whether the products requires acceptance e.g. conform to performance expectations Terms of payments Purchase Orders and Purchase Requisitions Online purchase requisitions that are accomplished through online should have the following information: The date of requisition The initiator of the order The vendor ID and other importance details regarding the vendor Approval requirements for each department Whether the requisition is done Purchase Order Conditions and Terms The University Terms and Conditions and the “Agreement” or purchase order shall constitute the exclusive and complete statement of the understanding between the vendor and The University with respect to services and goods. The terms and conditions of The University stands and shall take control. Purchase Order Types Standard – A Purchase Order indentifies a supplier with the particular services and goods that are supposed to be purchased. Some of the information contained includes the date of the PO, supplier’s name, manufacturer, quantity and line items and date of delivery. The document should be signed within the premises of The University. In addition, the entire process should be tied to the Terms and Conditions specified by the Procurement and Contracts Department. Blanket Purchase Order – this strategy is utilised for repetitive purchases for a specific supplier of specific goods or services, which are required in additional resulting in discounts, multiple shipments, leasing office equipments, multiple payments and maintenance agreement. The Blanket Purchase Order should include: Clarity on the blanket purpose Performance time of the blanket Amount or quantities specified Individuals authorised to release the blanket Scope of services and goods Arrangements on delivery Approval of any documentations University Services The Procurements and Contracts Department budget should be used in purchasing services from the on-campus approved vendors. The department should be informed on services and goods that can be offered on campus and capitalise on them to ensure for value of money and to receive optimum support from these vendors because they are within the institution premises. Receiving Purchases According to the agreements between the University and the vendor, the vendor is supposed to deliver the goods and services according to the specifications on the Purchase Order. Moreover, the packaging should be examined to determine whether there is evidence to show damage especially on those purchases that are costly or fragile. The receiving process of purchases should take note of the vendor’s name, the date the order was received, serial number, the order number, the quantity received, colour and manufacturers’ model number. The receive process should be counterchecked against the invoice. Shortages and Damaged Shipments – any damaged shipments should not be accepted if they are destroyed and if there are chances that the broken contents can cause contamination. This means the shipper or vendor should dispose the refused shipment without initiating any claim to the institution. In addition, the package should be inspected and both the receiver and the vendor/shipper should note any evidence of damage. The Central Receiving section should be notified of any concealed damages at the time of unpacking, and further inspection should be done on the shipments. The vendor should be notified through initiation of a claim. The formal claim should contain: Description of the damage The date in which the shipment was received Provision of vender’s name Provision of original invoice Copy of the delivery receipt Provide estimation of cosy of repair Copies of correspondence regarding the claim After reception of the claim, the shipper or vendor should acknowledge the claim within 30 days while the offer of settlement should be submitted within 120 days. Returning goods – it is appropriate to follow exclusively a clear process of returning the goods. This means the vendor should be notified in advance. This is attributed to the requirements of some vendors providing authorisation number and processes as the strategies of returning the shipment. Unauthorised Purchases The Procurement and Contracts Department has the prerogative authority to delegate the procurement process. Any person who has not been permitted by the procurement authority and decides to purchase goods or services may be held responsible for the entire process and the individual is liable for any expenses incurred. According to the directives from the Procurement and Contracts Department Director: The individual who had no authority to purchase will either be required to fully pay the amount, pay additional amount beyond the budgeted amount and any charges incurred after cancellation of the purchase. The unauthorised person will be required to pay the difference charges that are incurred and that The University shall be reasonable expected to have incurred if the purchase had been authorised. Invoice Processing The invoices should be addressed to: The University Attn: Accounts Payable 87686987 Sydney Avenue Sydney Any invoices should be matched with packing slip and the Purchase Order if such information was available. If there is no Purchase Order, the invoice should be sent back to the vendor and informed the Purchase Order process before signing any contract. If this process is followed to its completion, the invoices will be paid promptly. Delays on payments might result in The University been placed on credit hold. Such approach will affect immensely the operations of the vendors and affects the credit status of The University and the additional costs to offset the vendor’s collection services. The work of the Procurement and Contracts ends after receiving the consignment while payment task are accomplished by Accounts Payable. The existence of the invoice should be approved and any discrepancies should be pointed to so that both parties are satisfied with the process. Delegation of Purchasing Authority Moreover, the Board of Trustees have delegated some duties regarding purchasing to the following functional areas: Human resources should address employee benefits Dinning services should address food services Risk management should address the insurance services General counsel should address legal services The university library should address library books Material Management Capital Equipment – Equipments that exceed $6,000 and the economic value of these equipments should have a span of more than two years. Procurement and Contract Department provides tags to be affixed on the equipments with the aim of taking annual inventories. Additional directives are provided regarding equipments titled Capital Equipment Definitions. Surplus – Those items that are not utilised by the departments should be returned to the Surplus Program so that the university may update the records and redistribute these equipments to other departments, donated, sold or even scrapped. The Procurement and Contract Department operates this program to ensure the University funding, acquisition and disposal regulations are fulfilled. Vendor Information Business Opportunities – the opportunity to supply to The University is open to any business. The Procurement and Contracts Department has numerous individuals and contracting groups that allows ordering opportunities across a variety of services and products. Vendor Fair – Each year, The University hosts Vendor Fairs wherein more than a hundred vendors are allowed to exhibit their services and products. The aim of the fair is to provide a platform for contracted vendors with the chance of show casing their products and services, make new contracts and get the opportunity to work with The University. Small Business Development – Procurement and Contracts Department understands the aspirations and requirements of small business and therefore aims to support such businesses. In the bidding process, the Procurement and Contracts Department ensures most of the small business successful wins appropriate buds. Additionally, the department provides support in creating the bidding documents to increase the chances in which these small and developing businesses can win the bids. Environmental Purchasing – The University understand the importance of the environment and encourages the employees to champion environmental awareness and purchase products that are friendly to the environment. The aim of this strategy is to encourage environmental sustainability and minimise the adverse health and environmental effects that are associated with product life cycles. Relationship among Other Departments Read More