1. This FM replaces FM 60 dated August 1995 which is hereby cancelled.

PURPOSE AND SCOPE

2. This FM deals with the formal delegation within PPARC of the powers of authorisation of financial commitment in respect of PPARC's activities. It is solely concerned with PPARC’s internal financial delegations. Guidance on other areas of authority delegated to PPARC by OST (eg staffing matters) and the consideration of referral to OST of individual cases is covered by FM 102 - Relationship with OST.
3. PPARC has separated the process of approval of support for an activity from the power of authorisation. The former is generally exercised through the peer review process, which determines the best science to be funded, and the latter by officials acting on behalf of the Chief Executive as PPARC Accounting Officer (see Government Accounting Chapter 8 Annex 8.2 for details of the responsibilities of a Non-Departmental Public Body Accounting Officer).
4. The financial delegation arrangements set out here relate to the approval and authorisation of financial commitments and are additional to the expenditure controls exercised through the normal process of Parliamentary estimates and Government Accounting procedures which, in PPARC, are administered through the system of the preparation and approval by Council of the Operating Plan and allocation of funds (see FM 114).

DEFINITION OF APPROVAL AND AUTHORISATION

5. Both approval and authorisation are necessary before financial commitments are entered into. For the purpose of this FM the terms "approval" and "authorisation" are defined as follows:

• Approval: The act of recommending that financial support be given to an activity or project by or on behalf of a properly constituted body to whom the power to give approval has been delegated. The act of approval does not actually commit PPARC to any specific expenditure or enable a commitment to be made. It is first necessary to obtain authorisation.
• Authorisation: The executive act of authorisation to commit expenditure can only be exercised following approval by or on behalf of the appropriate body (for the higher levels of expenditure this will be the Astronomy or Particle Physics Committees, as appropriate, or Council itself). The executive act of authorisation is made by a responsible officer with an appropriate level of delegation acting on behalf of the Accounting Officer. The purpose of authorisation is to record the authority of PPARC to incur specific expenditure and to enable expenditure to be incurred. In the case of activities covered by this FM an "authorisation to commit" is a prerequisite to "authorisation of commitment" (ie the making of a commitment and the creation of a financial obligation on behalf of PPARC eg through the award of a Research Grant or the placing of a contract) although the latter may be exercised at the same or different level once the former authority has been given. The term "authorised" as used in this FM relates to the former ie "authority to commit" except where otherwise stated. In the context of the purchase of goods and services, signing a requisition is an example of "authorisation to commit" and signing a purchase order is an example of "authorisation of commitment". In the context of the award of a Research Grant, authorisation to make the award is an example of "authorisation to commit" and issue of the announcement letter is an example of "authorisation of commitment".

1. Authority to commit expenditure on behalf of PPARC is vested in the Chief Executive who in turn delegates appropriate levels of authority to the Director Administration, the Director Programmes, the Establishment Directors and the Head of Corporate Affairs Division. These delegations are given in the form of annual "Letters of Delegation of Authority" which are normally issued in April each year. As well as listing personal delegations for various classes of activity these letters provide details of the specific responsibilities accompanying delegation of authority. The letters also cover the extent to which sub-delegation is permitted. In sub-delegating authority, care must be taken to distinguish between delegation of the authorisation to commit expenditure and the authorisation of commitment (see paragraph 5 for definitions of these terms). In sub-delegating authority, due attention must be given to the experience of the staff to whom authority is being given and issues surrounding corporate governance and the maintenance of control over public funds. Sub-delegation must always be made in writing and copies of all delegation letters retained on file by Establishment Finance Officers for audit purposes. Delegation of authority does not constitute an abdication of responsibility.
2. The levels of financial authority delegated to Directors and the Head of CAD are set out in Annex A to this FM. The areas of activity for which authority may be delegated include: Research Grants, contracts, capital investment projects, disposal of obsolete equipment, gifts and prizes, write-off of losses, and special payments. Levels of sub-delegation within PPARC Finance DivisionAdministration Directorate are set out in Annex B.
3. It should be noted that delegation of authority to purchase goods and services on behalf of PPARC is generally restricted in Swindon Office to the staff of Procurement Group, and at the Establishments to staff nominated by the Establishment Finance Officer. Letters sub-delegating financial authority should always make clear whether the power being granted includes authority to enter into contractual commitments for the purchase of goods and services. (See paragraph 34 below and also FM 401 Procurement for further details.)

EXERCISING DELEGATED POWERS

4. All expenditure of public funds granted to the PPARC must be authorised at the appropriate level in accordance with the general principles set out in this FM and within the limits of personal delegations made to individual members of staff. PPARC Finance Division, Swindon Office, should always be consulted in cases of uncertainty.
5. In authorising an individual financial commitment under the terms of these delegated powers, the authorising officer has to be satisfied that it falls within an approved programme of expenditure ie the commitment is a proper call on a programme of expenditure that has been agreed by Council through the annual Operating Plan (PES submission) and Estimates, and that expenditure arising from the commitment can be met from the planned provision.
6. Details of the costs to be included when submitting projects or Research Grants for approval are set out in Annex C.
7. The authorisation of recurrent expenditure, including the subscriptions to international organisations and studentship and fellowship costs is inherent in the delegation of budgets to officers of PPARC, with peer review recommendations being effected through the annual planning exercise (the Operating Plan). Such expenditure must be authorised within the levels of delegation given to Directors in their "Letter of Delegation of Authority" and must be in accordance with the appropriate PPARC rules, for example, in respect of recruitment, the employment of consultants, travel and subsistence, the purchase of office equipment etc.

THE ROLE OF COUNCIL

8. Council is the key strategy-making, policy-forming and priority-setting body. It receives recommendations and advice from the PPARC Executive and its advisory bodies ie the Science Committee, the Education and Training Committee, the Public Understanding of Science and Technology Panel and the Audit Committee, together with the Executive advisory bodies: the Astronomy and Particle Physics Committees and the Industrial Programme Advisory Committee.
9. Notwithstanding the general principle that the process of approval is exercised through peer review, Council is required to give its formal recommendation/approval to:

• those capital investment projects and Research Grants of £15M and above requiring the explicit approval of the Chief Secretary to the Treasury. For this purpose the financial limit covers estimated total expenditure at current prices including staff costs and establishment overheads;
• those investment projects and Research Grants with a total cash cost of £3M and above to be authorised by the Chief Executive;
• matters liable to involve ministers including highly contentious and politically sensitive matters;
• expenditure matters involving significant financial risk;
• matters with a major or sensitive foreign policy aspect or involving significant expenditure abroad; and
• certain other marginally less significant matters listed in the Management Statement and Finance Memorandum (MS&FM) from OST issued June 1999, eg major points of interpretation of central guidance on issues such as investment appraisal (see FM102 for details of matters to be referred to the OST).

1. The PPARC Executive will inform Council retrospectively of the authorisation of projects or Research Grants in excess of £1M. The Director Administration and/or the Head of Finance will also decide whether, when and how to refer matters to the OST (after taking into account the requirements of the MS&FM - see FM102).

POWERS OF AUTHORISATION

2. The most senior PPARC official is the Chief Executive who, as Accounting Officer, has delegated power to authorise all investment projects and Research Grants up to the limit of £15M. Notwithstanding this, where a new Research Grant or project costs £3M and above, it is submitted to Council for approval prior to authorisation by the Accounting Officer - see paragraph 14 (b) above.
3. Officers of the PPARC act on behalf of the Accounting Officer to authorise the commitment of expenditure on single grants/projects up to £3M which the peer review system has approved as worthy of support. Annex D shows the delegated powers of authorisation of Research Grants by PPARC officials.
4. In PPARC the delegation of financial authority to commit expenditure is delegated from the Chief Executive to Directors and the Head of Corporate Affairs Division (CAD) and from them to nominated staff. Annex E shows the upper limits for sub-delegated authority for Investment Projects and other expenditure not the subject of specific delegations elsewhere in this FM.
5. Financial propriety demands that, in general, the same officer should not approve and authorise the same project, grant or purchase.
6. The tables at Annexes D and E should be read in conjunction with the explanations and further instructions set out in the rest of this FM. Other FMs provide further information on related topics and should be consulted as necessary. A list of the relevant FMs can be found at Appendix A.
7. PPARC Finance Division, Swindon Office, must be consulted about unusual or novel cases or in cases of doubt concerning the interpretation of this FM.

DETERMINING THE LEVELS FOR AUTHORISATION

8. The levels laid down in Annexes D and E represent the maximum upper limit of expenditure. For all types of expenditure the delegation arrangements require that the decision maker is sufficiently experienced and knowledgeable to ensure that any financial commitments or payments made are properly accounted for and recorded and can be met from within budget allocations. Therefore careful consideration should be given to the level of financial delegation authorised for newly appointed or inexperienced staff and due consideration should be given to the judgmental ability of staff when setting the limit of their authority.
9. In all cases of sub-delegation the Establishment Finance Officer must be notified in writing of the level of authority given to an individual together with a specimen of their signature. A sub-delegation template is provided at Appendix B. A complete list of the sub-delegations made must be provided to Establishment Finance Officers within one month of the issue of the annual "Letters of Delegated Authority".
10. It is also essential that the best possible estimate of actual cost be obtained at the recommendation and approval stage as any subsequent authorisation will be related to that value. In the case of shared projects or Research Grants which are not funded solely by the PPARC, it is necessary to assess what costs should be used in determining the approval and authorisation levels. Where the PPARC is taking part in a project managed by another body then the actual cost to the PPARC is used to determine the approval and authorisation levels. If all costs are channelled through the PPARC (even if some are subsequently repaid from another source of funding) then the total value is used to determine the approval and authorisation levels.

THE COSTING AND SUBMISSION OF A PROJECT OR GRANT FOR APPROVAL AND AUTHORISATION PURPOSES

11. Detailed definitions and explanations concerning approval and authorisation levels are set out in Annex C, which also contains the definition of costs to be used in calculating the value of a proposal.
12. A submission for approval must:-

• state the objective of the proposal;
• show the timetable and/or completion date;
• show that the most cost effective means of achieving the objective has been chosen by undertaking an investment appraisal where possible;
• show all the external and internal costs and implications in sufficient detail to enable an informed decision to be made; and
• state deliverables.

1. The submission must set out all the cash costs to completion, using indices notified by PPARC Finance Division, Swindon Office. This cash cost will be explicitly cash limited at the time of authorisation (see paragraphs 29 and 30 regarding cost increases).
2. It is recognised, however, that the cash cost to completion may be affected significantly in instances where, for example a project or Research Grant:

• incurs substantial overseas expenditure and is subject to exchange and inflation rate fluctuation;
• has substantial research and development content so that definite costings cannot be made in the early stages; and
• incurs allowable additional costs under grant terms and conditions.

1. It is necessary to carry out frequent reviews of actual commitment, particularly where there may be little scope for re-distribution of the resources or of reducing the commitment to offset increasing costs, so that any necessary additional authorisation is sought as soon as the need for an increase becomes apparent.
2. Where the cost of a cash limited investment project changes, the following policy is actioned: changes in the cost of a project which are within 10% of the original authorisation or £500k, whichever is the less, will be deemed to have been formally re-authorised following Council’s acceptance of the Operating Plan in which the revised annual project estimates are displayed. This assumes that all changes are acceptable to the PPARC budget holder and that any additional resource can be funded from within the planned provision. Where the change in cost exceeds the above limits, re-authorisation by Council is necessary except where the change arises from the impact of inflation or where paragraph 28 (b) applies, when the Chief Executive's decision is sufficient. Detailed arrangements for the revision of authorised commitments are set out at Annex F to this FM.

DELEGATED AUTHORITY WITHIN PPARC

3. Annex A establishes PPARC's overall delegated authority and that of the Establishment Directors with regard to repayment work, the disposal of assets and other detailed financial matters, such as losses, special payments, gifts and contracts. Annex B states the delegated authority within PPARC Finance DivisionAdministration Directorate, Swindon Office, for the authorisation of payments against these headings.

DELEGATED AUTHORITY OF THE ESTABLISHMENT DIRECTORS

4. The Establishment Directors have the authority to commit funds against the programme of work agreed by the Swindon Office budget holder, as defined in the "Letter of Delegation of Authority" and when making the allocation of funds. The Directors also have the authority to vire funds between the main programme headings by up to 10% of their direct allocation in any one financial year. Virement in excess of this limit will require the prior written approval of the Director Programmes. All instances of virement in excess of 10% of a Director’s annual allocation or £100k, whichever is less, must be reported promptly to the Director Programmes and the Head of Finance, PPARC.
5. For certain discrete projects, to be identified by the Chief Executive, allocations will be made by the Swindon Office budget holder directly to the appropriate programme manager at an Establishment. The programme manager will be responsible for this budget, and will have the same authority and responsibility, in principle, for transferring funds between areas of this budget as an Establishment Director. This delegation of financial responsibility will cover all aspects of resource allocation and budgetary control, but does not extend to those areas of accountability listed at Annex A or of, for example, personnel management which will remain the responsibility of the Establishment Director as stated in the annual "Letter of Delegation of Authority", who will be accountable to the Chief Executive through the Director, Administration.

RESPONSIBILITIES OF BUDGET HOLDERS IN RELATION TO THE PURCHASE OF GOODS AND SERVICES

6. Separate delegation arrangements exist in respect of the purchase of goods and services. These are described in FM 401 Procurement. Authority to make purchases is normally restricted to staff within Finance offices although Establishment Directors may grant delegated powers to staff in other areas in respect of low value purchases. However, before any purchase is made, it is necessary to ensure that financial authorisation to incur expenditure has been obtained and recorded. This normally takes the form of a requisition signed by the approving officers and authorising officers who, except for low value purchases (see FM 401), must be different members of staff. Budget holders, or their nominees, must satisfy themselves that the necessary level of delegated financial authority has been obtained before a requisition is raised and evidence must be retained for audit purposes.
7. PPARC Finance Division staff and auditors from both Internal Audit ie the Research Councils’ Internal Audit Service (RCIAS) and External Audit, ie the National Audit Office (NAO) or its sub-contractors, will carry out dipstick tests to ensure that prescribed controls are operating effectively and securely.
8. Directors are responsible for ensuring that the Delegated Authority and signature lists are kept up to date and any changes notified to Establishment Finance Officers promptly.

PRELIMINARY EXPENDITURE

9. Preliminary expenditure on a proposed project or other new activity shall be limited to the minimum necessary to make a first technical and financial appraisal of the proposal, and for capital projects or facilities should identify any areas of technical uncertainty where significant advances on existing state of knowledge are likely to prove necessary for successful completion of the scheme. All such expenditure will be subject to the normal powers of authorisation, provided the authorising officers are satisfied that the proposed project or activity does not raise questions of propriety or other matters requiring possible referral to the OST (see FM102).

DELAYS IN AUTHORISATION

10. Where, for whatever reason, a delay in authorisation will unduly prejudice a proposal or result in significant additional or wasted expenditure, or lead to failure to meet existing obligations, authorisation should be obtained from the next available senior officer. Where the approval of Council is required, the Chairman or Chief Executive is granted appropriate emergency powers. In the event that such powers are exercised, the Director of Administration is required to make a report to the next Council meeting.

PROPOSED NEW SCHEMES OR CHANGES TO EXISTING SCHEMES

11. PPARC Finance Division should be approached with proposals for any new schemes, eg PUST Awards, PIPPS grants etc or proposed changes to any existing schemes, eg issues of propriety and regularity, at the earliest opportunity. All schemes must be clearly defined with all terms and conditions formally agreed by PPARC Finance Division, Swindon Office.

AMENITY SCHEMES

12. An amenity scheme is defined as the provision of a facility not related to, or required for, any of the functions for which the Establishment is responsible but which provides for the extra well-being or good of staff. Authority for such schemes rests with the Director of Administration, Mr John Love, e-mail: john.love@pparc.ac.uk , to whom any such proposals must be addressed.

QUERIES

13. Any queries concerning the content or interpretation of this FM should be referred to Jill Drinkwater, Propriety and Regularity Section, PPARC Finance Division, Swindon Office, tel: 01793 442124 e-mail: jill.drinkwater@pparc.ac.uk .

J F Down

Head of Finance, PPARC

FM 102 Relationship with OST

FM 115 Losses and Special Payments

FM 201 Regularity and Propriety

FM 202 Prevention of Fraud

FM 205 Open Days: Opening Ceremonies, etc at PPARC Establishments

FM 302 Project Management

FM 303 Costing and Charging: Repayment Work and Market Testing

FM 401 Procurement Policy and Procedure

FM 402 EC Procurement Directives,

FM 403 Agreements

FM 404 Service Level Agreements

NOTE: PPARC Finance Division, Swindon Office, should be consulted in any case of doubt or in matters of interpretation of any FM.

 * For any SLAs with other Research Councils the delegated authority for contracts and/or repayment work will apply.

1. The delegated authority limits for Administration Directorate, Swindon Office, for each of the areas identified in Annex A are as follows:

Competitive Single Tender

Head of Procurement £ 1,000,000 £ 500,000

Band 2 Finance Division £ 5,000,000 £3,000,000

Head of Finance Full Full

Director Administration Full Full

Chief Executive Full Full

2. Authorisation of agreements

The Director Administration has delegated full authority to the Head of Finance, PPARC, to sign "Agreements" (see FM 403) and to sub-delegate the said authority on an ad-hoc basis to Establishment Directors as and when appropriate.

3. Compensation payments shown in Annex A

1. to staff for injury or damage to property;
2. to ex-staff for unfair dismissal; and
3. in respect of road traffic accidents

2. Other categories shown in Annex A not mentioned above - where PPARC has full delegated authority

Band 2 - two thirds of PPARC authority

Head of Finance - up to the limit of PPARC authority.

1. For the authorisation of contracts, the following delegated authority limits have been agreed:

Competitive Single Tender

Head of Procurement £ 1,000,000 £ 500,000

Band 2 £ 5,000,000 £3,000,000

Head of Finance Full Full

Director Administration Full Full

Chief Executive Full Full

2. The delegated authority for compensation payments shown in Annex A:

1. to staff for injury or damage to property;
2. to ex-staff for unfair dismissal; and
3. in respect of road traffic accidents

Band 2 - two thirds of PPARC authority

(see paragraphs 25 to 28)

1.1 An investment project is a discrete activity, usually involving capital expenditure, to achieve the purchase, construction, refurbishment or operation of a major instrument or facility. The total cost of the project will determine the necessary level of approval or authorisation.

1.2 The submission for approval must state the full cost and must also set out the other resources involved, including:

(a) the estimated cost of any associated internal expenditure, including any associated internal R&D;

(b) the estimated cost of Research Grants or other forms of funding for any closely associated work to be undertaken outside the PPARC during construction;

(c) the expected level of maintenance and operating costs and the extent to which these will be met by the closing of existing facilities; and

(d) the workforce implications, ie the cost of in-house staff effort on construction, maintenance and operation, including their associated overhead costs, and the extent of redeployment from other work.

1.3 The full cost should be calculated up to the completion of the commissioning of the facility or instrument and should include the cost of its associated initial supply of essential spares and outfitting. In the case of building projects it should include the cost of external works, such as drainage and access roads, unless these have already been authorised as part of a composite scheme.

1.4 The initial estimate must, where appropriate, include reasonable provision for contingencies to cover such factors as:

(a) the known dependence of major design features on further R&D;

(b) lack of detailed knowledge of local conditions;

(c) design changes arising from problems which are not foreseen at the outset but which experience suggests are likely to occur;

(d) changes arising from new R&D information whilst the work is proceeding; and

(e) minor variations in the details of design.

1.5 The composition of and justification for any such contingencies should always be fully set out in the submission for recommendation. The sum identified should be at a level which reflects the degree of novelty involved and should not normally exceed 10%. It should be noted however that projects will be authorised with no allowance for contingency. Any bids for additional funds will be placed in competition with the rest of PPARC’s programme.

1.6 Both the financial and staff resources required should be within the agreed or projected levels of the current Operating Plan (PES submission), and this should be stated. Council's recommendation may set a limit not only to the total cost but also to the internal cost, normally in the form of a limit on the direct costs including the staff engaged on the work.

1.7 The following cases do not fit neatly into the concept of a capital project or facility. Nevertheless such expenditure should be recommended and authorised in the same way as other investment projects:

(a) equipment for space: although expenditure on the provision of space vehicles, satellite launch rockets and similar short-lived hardware are considered to be recurrent expenditure for vote accounting purposes, recommendation and authorisation must be sought, on a similar basis to that for capital facilities, on the grounds that such programmes can be expected to have wider repercussions than is normal for activities classed as recurrent.

(b) arrangements to purchase supplies of capital items in advance of individual recommendations and authorisations, whether for stock or for supply to academic institutions: it is not usual for a running contract to relate to capital items but where it does (such as arrangements for the bulk purchase of computing equipment) recommendations and authorisations must be sought for the maximum total expected capital expenditure during a given period.

2.1 Where the Research Grant project requires access to central facilities, eg SRS, telescopes, the estimated cost of the proposed use of such facilities together with any other associated costs, eg equipment on loan, in-house effort, should be identified but not included in calculating the value of the grant for recommendation or authorisation purposes. Grants involving only associated costs still require peer review recommendation. It is the intended value to be announced (excluding associated costs) which determines the recommendation level within the PPARC. The special considerations applying to foreign purchases apply equally to such purchases on Research Grants. Where the main expenditure on a grant is for the purchase, development or construction of major equipment, paragraph 24 of the FM also applies.

Annex D to FM 101

(see paragraphs 16 to 21)

The following table reflects the levels of authority formally delegated to senior staff in their Letters of Delegation of Authority (as per Annex A) and also indicates the upper limits for sub-delegation to their staff. £k

Chief Executive (following Council approval) 15,000

Director Administration/Director Programmes 3,000

Band 2 Programme Managers (Programmes Directorate) and Head of CAD

1,500

Other Band 2 750

Band 3 (plus Band 4 with not less than 2 years experience) 500

Band 4 (plus Band 5 with not less than 2 years experience) 250

Band 5 100

Band 6 50

Note: The above limits are upper limits. Actual limits for individual members of staff will be determined by budget holders having regard to both the above levels and the experience of individuals and must be confirmed in writing from the budget holder to the member of staff concerned.

 This Annex refers to investment project expenditure and expenditure related to the operation of the organisation. The lower limits reflect the nature and type of expenditure expected to be incurred.

 The following table reflects the levels of authority formally delegated to senior staff in their Letters of Delegation of Authority (as per Annex A) and also indicates the upper limits for sub-delegation to their staff.

£k

Chief Executive (following Council approval) 15,000

Director Administration/Director Programmes 3,000

Band 2 Programme Managers (Programmes Directorate)

and Establishment Directors 600

Other Band 2 100

Band 3 (plus Band 4 with 2 years experience) 50

Band 4 and 5 10

Note: The above limits are upper limits. Actual limits for individual members of staff will be determined by budget holders having regard to both the above levels and the experience of individuals and must be confirmed in writing from the budget holder to the member of staff concerned. Exceptionally, authority which exceeds these limits may be delegated to specific personnel for authorisation of expenditure against discrete, specified account codes.

Annex F to FM 101

(see paragraph 30)

The powers in the table at Annex D relate to new commitments. Specific revision delegations apply as follows:

1. For projects

2. For Research Grants and other forms of direct funding of research

0. Revisable Research Grants may be reviewed and revised at any time in accordance with the Research Grant Conditions. When a Revisable Research Grant is revised, the new (revised) total value ie the original announced total value together with the additional extra support requires both approval and authorisation.

3. General Points

3.1 All officers seeking to recommend for approval and/or authorise a Research Grant that has been revised should ensure that they are sufficiently acquainted with both the past progress and current proposals so as to enable them to determine and justify the continuation of the project in the light of the present circumstances.

3.2 Where possible those officers responsible for recommendation and authorisation should be able to identify and consider separately the reasons for the revision eg fluctuations in price levels; as a result of technical changes; due to unforeseeable delays.

3. Officers should be able to identify:

1. previous awarded total;
2. expenditure to date; and
3. revised awarded total.

3.4 The Research Grant file should clearly record all the evidence supporting the need for the revision and, where appropriate, why the additional costs cannot be found from savings achieved within other heads of expenditure. The Budget Holder should confirm that the additional costs can be accommodated within the Operating Plan.

3.5 If any modifications are proposed, the technical case for them should be set out, stating why they are now considered necessary and why they were not anticipated at the time of the previous authorisation. The cost of the modified project should be itemised and, as far as the changes in plan will allow, compared directly with the corresponding updated costs of the items of expenditure previously authorised.

3.6 In summary, the approval and authorisation should only proceed where:

(b) the proposed revision(s) is justified and can be met financially;

(c) the revision is relevant to the original project.

3.7 Authorisation should only proceed on the basis of a precisely identifiable objective. Revised developments which suggest that different objectives / outcomes are now likely to be achieved should be noted whether or not further additional support might be required as a result.