JOINT ASTRONOMY CENTRE

PURCHASING PROCEDURES

INTRODUCTION

The purpose of this note is to explain the procedures that are followed at the Joint Astronomy Centre (JAC) in making purchases of goods and services from external suppliers. These procedures are mandatory.

The powers that the JAC has to make purchases are vested in the Director, JAC. In addition there is a further sub delegation of powers, which is described below. Purchases may involve formal contracts and involve tendering action.

FINANCIAL AUTHORITY

Delegated financial authority for all JAC lies with the Director. Authority is then passed, at the Director's discretion, to nominated staff within JAC. This delegated authority covers permission to purchase particular types of goods or services to an agreed limit, these are held as budgets. A list of these budgets and the nominated officer responsible, the Main Budget Holder (MBH) is held at Financial Responsibility

The MBH may if they wish nominate other individuals who may purchase items up to a $1000 from that budget without further authorisation (see purchasing limits below). However, this in no way detracts from the responsibilities that MBHs have to ensure that their budgets are used properly.

DEFINITIONS

Procurement, in the sense in which it is applied in this note, covers the process of acquisition of goods, services and works projects from third parties, from initial concept and definition of business needs through to the end of the useful life of a procured asset or services contract.

A contract is a legally binding agreement between two or more parties. With certain exceptions (e.g. contracts for the purchase of land) a contract does not have to be in writing. Contracts made orally are just as valid but the terms will be uncertain and evidence of those terms difficult to establish in the event of a dispute. As a matter of policy, therefore, all of JAC’s contracts are made, or at least confirmed, in writing with the exception of low value purchases made using petty cash. The key elements of a contract are offer, acceptance and consideration. Without any one of these a contract is unenforceable.

GENERAL PURCHASING PRINCIPLES

JAC is directly accountable to the Science & Technology Facilities Council (STFC), a UK Non-Departmental Public Body (NDPB), as well as receiving finance from Canada and the Netherlands. As such JAC is bound by UK government accounting framework and must abide by the standards expected in public life. JAC's activities are also subject to external audit.

The standards governing purchasing are:

ensuring value for money - in determining best value for money it is necessary to take into account the optimum combination of whole life cost and quality necessary to meet the requirement; staff should seek to achieve these aims by ensuring suppliers compete for JAC’s business thus resulting in lower prices and improved standards of service;

ensuring goods and services are appropriate and necessary for the work being carried out so to achieve the aims of the organisation.

JAC's PURCHASE ORDERING AND AUTHORISATION LEVELS

Whilst always wishing to ensure value for money it is recognised that it is not always practical or economic to ask suppliers to tender for all goods required. Therefore, the procurement procedure to be followed depends on the total amount of the goods or services being ordered.

Single Signature Requisitions (up to $1,000)

For items up to $1000 a MBH or one of their nominees may place orders directly that will not require competitive procedures to be carried out or further authorisation. In these cases the individual should ensure that the price to be paid is fair, reasonable and represents value for money and that any risk is adequately catered for.

Small Value Orders (from $1,001 to $5,000)

Orders up to $5000 may also be placed directly without formal competitive procedures. However if the order is placed by an individual who is not the MBH (or deputy) then the purchase order must be counter-signed by the MBH. The MBH's role in here is to ensure that the goods or services

are appropriate and necessary for the work being carried out;

represent value for money;

the purchase is within the budget limit (or permission has been sort to spend over this limit).

Simplified Ordering Method (from $5,001 to $30,000)

Simplified Ordering Methods is a further stage in streamlining strategy for orders up to $30,000. It applies to purchases above the Small Value Order limit where the supply is of a proprietary or well-defined nature. Provided competitive quotations have been received, then it may be possible to offer a contract without the issue of a formal invitation to tender. Quotations may be obtained from the Internet, catalogues etc or by contacting a company directly. When contacting a company the orderer should be careful to ensure that it is clear only a quotation is required and that an order is not being placed.

The orderer may obtain the necessary quotes themselves, however the Finance Officer will provide help and advice where needed.

At least three quotations should be obtained by the methods discussed above. The orderer is responsible for ensuring that the most appropriate companies have been approached. Copies of these quotations must be attached to the Quotations Form available in \\ola\public\Finance Information\Budgets & Codes\Quotations Form.doc. This form must be logged with the Finance Officer before an order is placed.

Orderer's will normally be expected to take the cheapest quotation, however there well maybe instances where one or two quotes only can be obtained (only supplier, using the same company minimises the stock of spares etc) or the cheapest quote is not the most appropriate (delivery times, holding of stock, better quality etc). You will be asked to justify these reasons on the Quotations Form.

If the person is not the MBH then they (or their deputy) will be asked to countersign the Quotations Form. The MBH's role as well as the ensuring the goods or services fulfill the criteria listed above should make sure the most appropriate companies have been approached and that the order does not need to be formally tendered, see below.

Please note that though a formal tender process for orders up to $30,000 is not required, such a process may be appropriate in some instances if best value for money is to be achieved. Going to tender is probably appropriate where:

such goods have not been ordered before and the likely cost is unknown;

goods may need to be manufactured especially;

services are being provided.

In these cases please contact the Finance Officer.

Formal Tendering (over $30,000)

Orders that will total over $30,000 must be subject to a formal tender process. You must contact the Finance Officer in these cases before any other action is taken.

ORDERING

Budget holders (or their nominee) placing orders directly under the provisions of paragraph 10 and 11 above should always raise a purchase order (PO) by entering the appropriate details on the finance system, thereby creating a purchase order number. The full cost including any tax and/or shipping and handling charges should always be shown on the purchase order. The procedure will then be as follows.

Purchase orders under $1000 will be printed by Accounts and sent directly to the supplier without further authorisation (unless Accounts are notified otherwise); the blue copy will be sent to the orderer for their records.

Purchase orders between $1000 and $5000 will printed and then sent to the MBH for authorisation, the MBH should return the white, pink and yellow copies to Accounts who will send out the PO to the supplier unless notified otherwise, the blue copy should be retained as a record.

Purchase Orders over $5000 - after the Quotations Form has been completed, countersigned by the MBH, and logged with the Finance Officer, orders exceeding $5,000 can be entered on the system by the with ‘nil’ amounts. The Accounts Payable Clerk (Felisa Teramoto) should be asked to release the order. As the order will have already been authorised by the MBH using the Quotations Form the PO will be sent directly to the supplier without further authorisation (unless Accounts are notified otherwise), the blue copy will be sent to the orderer for their records.

Any order placed other than in strict accordance with these procedures may become the personal liability of the officer signing the order or making the commitment.

RECEIPT OF GOODS

When goods are received they should be checked for correctness and completeness by the Budget holder, who will be asked to confirm acceptance by endorsing the invoice.

Invoices should be addressed by the supplier to the JAC for the attention of the Accounts Office. However, it sometimes happens that an invoice is enclosed with the goods or addressed to the Budget holder. Any invoice or statement of account received in this way must be passed to the Accounts.