PROCUREMENT SERVICES BEST PRACTICE GUIDE

Finance & Planning Department PROCUREMENT SERVICES BEST PRACTICE GUIDE A Guide to Purchasing Professional & Consultancy Services 1 CONTENTS 1 I...
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Finance & Planning Department

PROCUREMENT SERVICES BEST PRACTICE GUIDE

A Guide to Purchasing Professional & Consultancy Services

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CONTENTS

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Introduction

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Procurement Rules

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Achieving Best Value

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General Ledger Codes

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Taxation Rules

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Further Information

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INTRODUCTION

Professional services can be defined as services that are provided by a formally certified member of a professional body while consultancy services provide expert advice within a particular field which may not be available internally. The University spends a significant amount of money on professional and consultancy services which are areas that can often be complex and strategic with high transaction costs in comparison to other categories of spend. The purpose of this guide is to help you understand the procurement rules and provide guidance on the main points which you should consider before engaging any external provider. Procurement Services can provide help and guidance on all procurement matters including UK procurement legislation which the University must comply with when purchasing goods, works and services. This guide will be of particular relevance to anyone involved with grant funding who needs to engage with external consultants. You can obtain further procurement guidance and advice from Procurement Services and contact details are provided in section 6.

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PROCUREMENT RULES

Procurement is the process by which the University obtains all the goods, works and services required to meet the business needs of the Institution. Procurement must comply with statutes, regulations and policies including:    

Financial Regulations of the University; Accountability and Audit: HEFCE Code of Practice; University Policies; National and European Union legislation.

The first question you should ask yourself is whether you really need to commission professional or consultancy services in the first place and whether there are skills and capacity available internally or elsewhere to carry out the work. You should consult with Procurement Services before you proceed to check whether a contract or framework arrangement already exists. Thresholds The following diagram summarises the financial limits and criteria for inviting tenders or quotations. You must include VAT when calculating the value of your procurement and take into account the total period of contract you intend to award:

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U p to £ 5 ,0 0 0

D e m o n s tr a t e v a lu e fo r m o n e y

B e tw e e n £ 5 ,0 0 0 & £ 5 0 ,0 0 0

O b ta in a t le a s t 3 w r it t e n q u o ta tio n s

O v e r £ 5 0 ,0 0 0

O b ta in c o m p e t itiv e te n d e r s v ia P ro c u re m e n t S e r v ic e s

Exemptions Please note that you may only apply for an exemption to these rules under particular circumstances via a Tender/Quotation Exemption Application Form which is available at: http://www.northumbria.ac.uk/sd/central/finance/dept/accounting/procurement/ staffinfo/proc_team/proc_guide

Applications are carefully assessed by Procurement Services to ensure that the University is not at risk of either breaching the law or likely to breach funding body requirements that could lead to penalties or withdrawal of funding at a later stage. For this reason, you must not make any commitment to a supplier before an Exemption Application is approved. It is strongly recommended that you plan sufficient time for a tender process to be completed in the event that the Application is not approved.

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ACHIEVING BEST VALUE

Written Quotations If you are procuring services between £5,000 and £50,000, you must obtain a minimum of 3 written quotations, or if this is not possible, from all capable suppliers. A Request for Quotation (RFQ) template incorporating the University’s terms and conditions of contract is available for you to download from: http://www.northumbria.ac.uk/sd/central/finance/dept/accounting/procurement/ staffinfo/proc_team/proc_guide/rfq_

You can modify the document to include your own particular specification and any special conditions that you require companies to meet. Decide on a deadline and then issue the RFQ to your selected companies for them to complete and return directly to you. Although not mandatory, use of this template is in accordance with best practice, protects the University’s contractual position in the event of a dispute with the supplier and encourages a more competitive approach from suppliers. The following diagram shows the main steps in the process:

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Pricing and Expenses You should ensure that consultants include details of all additional costs or expenses which will apply in their quotation so that costs for travel, subsistence and overnight arrangements can be clearly identified and included when you are comparing quotations. It is good practice to request that consultant’s rates are in line with the University’s own subsistence rates, details of which are included in the Expenditure Policy and Supplementary Guide, which can be accessed at: http://www.northumbria.ac.uk/sd/central/finance/fin_pol/?view=Standard

Revealing the Budget Under normal circumstances you should not divulge the size of your budget as there is a risk that this will reduce the range of bids and affect the competitive element of inviting quotations.

Workshops A consultant may invite you to attend a workshop to discuss how you could improve your School or Service. The workshop itself is sold as a service but the real aim is to develop new projects arising out of the workshop. You should approach such events with caution, as consultants generally use them to develop new business opportunities and any resulting work would still need to be subject to the procurement rules.

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Scope To reduce the risk of increasing costs over the life of an assignment it is key to ensure that the project is thoroughly scoped to include the following: • Accuracy of the specification • Clear deliverables • Good contract/performance management • Avoidance of scope creep via a change control mechanism

Proposed Team In most cases you will have evaluated the experience and expertise of the team which the consultancy has proposed in their quotation. However once awarded the contract, the consultancy may exchange them for less experienced colleagues. Provided you have been realistic about start dates and workload, check that the final team matches the team which was proposed and if they are different, find out why and request the new team’s CVs to ensure their experience and expertise are equivalent. There are six recognised grades and, therefore, price bands, which generally correspond to industry-understood job titles and are in common use in the public sector. These are: • Partner/Director • Managing consultant • Principal consultant • Senior consultant • Consultant • Junior consultant

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Common descriptions for each grade are provided in the following table. Consultants must possess the following skills and knowledge according to their grade: Grade

Requirement

Junior consultant

Demonstrable experience in a wide range of projects in their specialist field. Evidence of client facing experience and support services to wider consultancy projects. Notable experience and in-depth knowledge of their specialist field. Evidence of a wide range of consultancy projects and client facing experience. Support work in process and organisational design and leading workshops and events. Substantial experience in their specialist field and in a consultancy/training role. Previous experience in project management and working in a wide range of high quality and relevant projects. Familiarity of the issues/problems facing the HE sector. Substantial experience in their specialist field and in a consultancy/training role. Sound knowledge of the HE sector and current policy and political issues affecting it. Previous experience in project management on at least three major projects, preferably in the HE sector and using PRINCE2 or equivalent project management methodology. Substantial experience in their specialist field and in a consultancy role. In depth knowledge of the HE sector and of current policy and political issues affecting it. Previous experience in project management on at least five major projects, preferably in the HE sector and using the PRINCE2 or equivalent method.

Consultant

Senior consultant

Principal consultant

Managing consultant

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Director / Partner

Extensive experience in their specialist field, in which they are nationally or internationally renowned as an expert. Extensive experience of leading or directing major, complex and business-critical projects; bringing genuine strategic insight. In depth knowledge of the HE sector and of current policy and political issues affecting it.

In addition to the above experience, consultants and trainers will be expected to possess relevant accreditation, qualifications and certification applicable to their disciplines. University Leverage A large volume of suppliers are currently used for relatively low value professional and consultancy services work. By reducing the high number of suppliers used across categories such as marketing, training and publicity to name just a few, there is an opportunity for the University to introduce new contracts in order to combine spend and achieve more competitive pricing and improved trading terms. Procurement Services evaluates University expenditure in order to develop new contracts in consultation with Schools and Services to ensure that the University’s procurement arrangements are as efficient and effective as possible. If you would like further information about future contracts, please contact Procurement Services.

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GENERAL LEDGER CODES

General ledger codes are codes used by the Finance department to record income and expenditure against predefined categories such as travel, stationery, IT equipment etc. It is very important that professional and consultancy services transactions are entered against the correct general ledger code in SAP to ensure that the University’s accounts are accurate. A full list of general ledger codes is available to view on SAP within the Purchasing module. For further SAP training please contact the IT Helpline on x4242 or email [email protected]

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TAXATION RULES

HM Revenue and Customs set out specific rules regarding the employment of individuals as consultants. The level of control that the University has over an individual’s work is a major factor in deciding their employment status for the purposes of taxation. The higher the level of control, the greater the chances are of HMRC classing the person as an employee of the University which means they will be treated differently for tax purposes. It is therefore essential that you understand the distinction so that legal rights and obligations are clear. If you are obtaining quotations for professional or consultancy services you should be aware that the individual you engage may be subject to the payment of additional tax and national insurance contributions if it is deemed necessary to pay them as an employee through the Finance payroll system. This could impact on the amount of revenue that the individual expects to receive from the University and may lead you into dispute over the contracted rates, or delay payment of invoices for services provided. You should consult with Procurement Services on telephone number 0191 2274093 or visit the Procurement Services webpage for further advice regarding the engagement of individuals, prior to commencing any procurement process at: http://www.northumbria.ac.uk/sd/central/finance/dept/accounting/procurement/ staffinfo/payments_team/pti_main/?view=Standard

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FURTHER INFORMATION

Procurement Services is responsible for overseeing all procurement activities within the University and the correct and timely payment of all University payments, other than payroll items. For more information please visit the website at: http://www.northumbria.ac.uk/sd/central/finance/dept/accounting/procurement/

Finance & Planning, Procurement Services Room 0001 Sutherland Building Northumberland Road Newcastle upon Tyne NE1 8ST

Telephone:

Procurement Team Payments Team

0191 227 4334 0191 227 4093

E-mail:

Procurement Team [email protected] Payments Team [email protected]

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