Procurement Procedures

1 Introduction and Background

This procedure provides an easy to understand document for all areas of the
business to use when looking to purchase goods and services.

As a Non-Departmental Public Body (NDPB), SQA is accountable to the Scottish

Government. Details of this relationship and associated responsibilities are set
out in the Management Statement and Financial Memorandum (MSFM). As a
Government funded body SQA must comply with various laws and Government
regulations. These are set out in a number of documents (including the Scottish
Public Finance Manual, HM Treasury guidance, Public Contracts (Scotland)
Regulations 2012 and European Union procurement directives) to ensure that all
external spend has been transparent, fair and achieved value for money.

2 Purpose
The aim of this procedure is to ensure that all purchases made by SQA staff
conform to the regulations stated above, and embrace our management
principles. An integral part of this procedure is the provision of a process which
facilitates and supports those charged in carrying out any procurement task.

3 Scope
Procurement covers the process of acquisition of goods and services (including
consultancy) from third parties. It ranges from initial concept and definition of
business need through to the end of the useful life of a purchased asset or
service contract.

4 Policy
As a public sector organisation, it is vital that SQA observes the highest
standards of integrity when dealing with all matters concerning the procurement
of goods and services. In particular SQA must:

be fair, efficient, transparent, firm and courteous

publicise procurement contact points and make available as much
information as suppliers need to respond to the tendering process
notify the outcome of tenders promptly and, within the bounds of
commercial confidentiality, debrief winners and losers on request on the
outcome of the tendering process to facilitate better performance on
future occasions
achieve the highest professional standards in the award and
management of contracts

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 respond promptly, courteously and efficiently to suggestions and
enquiries
respect the confidentiality of information relating to a tender or contract
and never use the information for personal gain

Not only must SQA be seen to be open and accountable in all its transactions,
but we must also ensure that we operate fairly and efficiently and make best use
of taxpayers money. This should be achieved through competition unless there
are compelling reasons to allow for a direct award to a supplier; approval must
sought by the Director of Finance prior to the order being placed.

All procurement exercises should be based on the Most Economically

Advantageous Tender (MEAT) and provide Best Value for SQA.

Best Value, otherwise known as Value for Money, means taking into account the
optimum combination of whole life cost and quality necessary to meet SQAs
requirements and not simply on initial costs. See examples below:

total cost
warranty or maintenance costs
disposal cost of goods
travel costs
maximum product and service development cost
mutually beneficial commercial relationships
effective management of contractual relationships
environmental impact

The Most Economically Advantageous Tender is defined as the right balance

between the total Cost and Quality of the product or service being purchased.
The split of the criteria will depend on the subject matter and complexity of the
requirement.

The Remedies Directive (2007/66/EC) allows for unsuccessful suppliers to

challenge contract awards, so it is critical that these processes are documented
in full to provide an audit trail. Guidance will be provided by the Procurement
team on all contracts below 25,000. For contracts over 25,000, a member of
the Procurement team will be involved to manage the overall tender exercise and
assist the Contract Sponsor and/or Purchase Agent on the processes that must
be followed.

5 Roles and Responsibilities

Authorising Signatory

The Scheme of Delegation determines the authorised signatory of the contract.

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Contract Sponsor

The Contract Sponsor (normally a Head of Service) will be accountable to the

Authorising Signatory. The role of Contract Sponsor and the Authorising
Signatory may be the same individual, but regard should be given to the
separation of duties at all times. If there is a conflict of interest then the
Procurement team should be contacted.

The Contract Sponsor is the responsible and accountable officer for a given
contract, and owns responsibility for the terms secured and the quality of the
contract in terms of Most Economically Advantageous Tender (Best Value and
Fitness for Purpose).

The Contract Sponsor is responsible for managing the contract in terms of

performance, scheduling the appropriate reviews and implementing any
adjustments as required. The Contract Sponsor will chair contract reviews with
support from the Purchase Agent.

Purchase Agent

The Purchase Agent is responsible for obtaining quotes for all spend below
25,000 for the relevant business area. The Purchase Agent assists the Contract
Sponsor, in the preparation of the specification, including the evaluation criteria.
The Purchase Agent will also support the Contract Sponsor following contract
award, in all contract review meetings with the supplier. The Purchase Agent will
be supported by the Procurement team as required.

Purchase Order Administrator (POA)

Each business area should have at least one POA to enable purchase orders to
be raised. They will be responsible for ensuring the information on the purchase
order accurately reflects the exact requirements, cost centre and cost. The
following is a summary of POA responsibilities:

process SAP purchase orders for their business area

be the point of contact for suppliers and Accounts Payable
monitor order and invoice status
run standard reports on orders for business area managers
advise purchasers on ordering process

Procurement Team

The Procurement team currently consists of the Procurement Manager, a

Purchasing Manager and a Purchasing Officer. They provide support and
guidance to all staff involved in purchasing goods and services.

The Procurement Manager, who leads the Procurement team, reports to the
Director of Corporate Services and oversees all contracts.

The Purchasing Manager and Officer are involved in contracts over 25,000
whilst also providing support and guidance on lower value spend. They will work
with the Contract Sponsor and Purchase Agents to ensure their requirements are
understood and incorporated into the tender documentation and be involved
throughout the tender process.

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Director of Corporate Services and Director of Finance

The Director of Corporate Services is responsible for ensuring compliance with

the procedural instructions, due legal process and the detailed processes
developed as part of the Procurement Procedure.

The Director of Finance is required to authorise all non-compliant spend that has
not followed the required competitive process.

SQA staff, at all levels, are required to comply with the procurement rules and
regulations.

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6 Authorisation limits
The table below is an extract from the Scheme of Delegation. This applies to all
contracts and purchase orders. The values given below include VAT which is
currently at 20%.

Value - Authorising Signatory

Inclusive of VAT

Up to 5,000 Grade 4 or above. Below grade 7 this is subject

to approval from Director of Finance and are post
specific

Up to 10,000 Grade 7 or above

Up to 20,000 Grade 8 or above

Up to 50,000 Head of Service or above

Up to 100,000 Director or above

100,000 - 500,000 Chief Executive **

Note: Expenditure on individual capital items

(excluding motor vehicles) or capital projects over
100,000 must have the prior approval of the
SQA Board of Management and the Scottish
Government before the tender exercise
commences. Sufficient time should be factored
into the procurement process to allow for these
approvals.

Over 500,000 Chief Executive **

Note: All contracts over this value must have the

approval of the SQA Board of Management and
the Scottish Government before the contract is
awarded. Sufficient time should be factored into
the procurement process to allow for these
approvals.

** Delegated authority to sign contracts and related documents will be given to a

specified Director during periods when the Chief Executive takes annual leave or
is off site for more than 5 days.

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7 Contracts
General principles of the contracting process

All purchases undertaken on behalf of SQA must be covered by a

contractual agreement between the supplier and SQA. Purchase orders
or the Procurement corporate credit cards must be used in all cases.
The contracting of goods and services will be the responsibility of the
Head of Service (or budget holder) requiring such goods and services
either for their own operation, or on behalf of the whole of SQA.
SQA operates an approved Scheme of Delegation. This sets out who
has the authority to commit expenditure and to what level. The Scheme
of Delegation also covers the level of authority to sign contracts on
behalf of SQA. This will often mean that the Head of Service, although
responsible for the arrangement, may not have the authority to sign the
contract.
SQA must comply with EU Directive 2004-18-EC in the contracting of
goods or services. The EU Directive sets out the legal requirements and
processes that a public body must comply with in making a commitment
for public sector expenditure. Although these regulations only apply in a
full legal sense for significant purchases over a given value, the Scottish
Government, in line with the UK Government, has made clear that it
expects the spirit of the regulations to be applied to all public
procurement regardless of value, and will monitor that requirement
through its audit procedures.
The EU Directive sets threshold values for services and supplies. From
1st January 2012 these are:

Services 173,934
Supplies 173,934

Types of Contract

Contract (General)

These contracts are usually for good or services with an anticipated total contract
value in excess of 10,000. Contracts might also be awarded to suppliers where
the value is less than 10,000 due to the complexity of requirements. A purchase
order is required for all contracts.

Concession Contract

This is solely for contracts where SQA receives income for goods or services
provided (e.g. publishing of past examination papers).

Others

Other types of contract are Memorandums of Understanding (MoU), Partnership

Agreements and Service Level Agreements (SLAs). These must not be entered
into without having sought advice from the Procurement team.

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Terms and Conditions

SQA has in place standard terms and conditions which must be used for all
contracts. SQAs terms and conditions form a specific schedule in the Invitation to
Tender (ITT) document and should not be amended without prior approval from
Procurement. Any agreed amendments will be documented in the contract.

Duration of Contracts or Frameworks

The optimum contract period will depend upon the nature of the goods or
services being provided, and the market for them.

Short-term contracts have the following advantages:

maximise the opportunity for the purchaser to take advantage of

favourable market development such as the entry of efficient new
suppliers and technological improvements
provide an incentive to the supplier not to let costs get out of line with
those of its competitors
inhibit the development of an exclusive and perhaps too close
relationship between SQA and suppliers

On the other hand, long-term contracts:

give SQA and suppliers greater time and incentive to understand the
requirements of the contract and to co-operate, providing service
improvements and/or cost reductions
give SQA longer to recover the cost of any investment (e.g. in training
or new technology) required for the contract, and hence the ability to
reduce annual charges and total cost of ownership
reduce the cost to both SQA and suppliers of frequent re-tendering
exercises
enhance partnership arrangements

Contracts duration

The recommended duration of a contract is four years and this should not be
exceeded without prior approval from Procurement. Duration of contracts can be
split into an initial period plus the option of an extension to make up the full term
of four years.

Contract extensions are seen as an incentive to suppliers as well as allowing

time to work on the new contract whilst utilising a compliant contract. With this in
mind, SQA recommend taking the option to extend wherever possible.

Frameworks duration

A framework agreement is an agreement which can be with a single supplier or

multiple suppliers. The purpose of which is to set out the terms and conditions
under which specific purchases (call-offs) can be made throughout the term of
the agreement. The maximum permitted duration of a framework is four years.
Please note that a framework is not a contract in its own right.

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Contract Management and Review

Contract Sponsors, assisted by their Purchase Agent and possibly the

Purchasing Manager or Officer, are responsible for contract management,
amendment, review and renewal.

Progress of contracts should be monitored to ensure that the requirements of the

contract are being met. To assist in this process, Key Performance Indicators
(KPIs) should be incorporated into the specification section of the ITT. The
Procurement team can provide guidance on these. Key issues to consider are:

delivery timescales
quality of goods or service provided
correct details on all invoices
management information provided
environmental changes/impacts

The information collected can be recorded using the Contract Management

Review template (PR 40) and used during regular reviews with suppliers to
improve performance.

In addition, it would be useful to consider what is going well and to record the
reasons. There may be important lessons to put into practice, which may prevent
problems in other parts of the contract. This will also help to develop a positive
relationship with a supplier and assist in the contract review process.

Contracts should state formal review dates. The Contract Sponsor should have
them agreed with the supplier at intervals that give them confidence in their
monitoring processes. New suppliers, depending on the nature of the contract,
might be reviewed as often as monthly, although SQA would recommend as a
guide every three to six months. These reviews should be led by the Contract
Sponsor supported by the Purchase Agent and Purchasing Manager or Officer if
required.

A report should be prepared by the Purchase Agent following the review meeting
and agreed with the Contract Sponsor and supplier. If the review meeting
necessitates a change to the existing contract, the Purchase Agent should
contact Procurement to assist with a contract addendum.

Unsatisfactory Supplier Performance

Where a supplier fails to meet its contractual obligations, or have not addressed
any action highlighted at the contract management review meetings, SQA may
decide to terminate the contract.

The Contract Sponsor must inform Procurement of any supplier whose

performance has to be reviewed for any reason. It is important that under-
performance is documented fully by the Contract Sponsor and this information
passed to Procurement. The Procurement Manager in discussion with the
Contract Sponsor will be responsible for the termination of a contract. Should this
happen, the Contract Sponsor should first ensure that alternative procurement
arrangements are in place. The Procurement Manager will raise such action with
the appropriate Director, and where the termination of a contract is deemed
significant, the Chief Executive.

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 Storage of Contracts

Procurement will store original signed contracts with the successful tendering or
quotation documents. Contract Sponsors may retain a photocopy of final contract
documents, for contract review purposes, for the life of the contract only.

8 Timescales
Timescales should be taken into account when planning any procurement
exercise. From obtaining approval through to contract award, the timescales
vary on the value of the contract.

The Contract Sponsor should ensure that sufficient time is factored into the
procurement process to also allow for SQA Board of Management and Scottish
Government approval. The Contract Sponsor and nominated Procurement
contact should discuss and set out the timescales for the stages in the tendering
process to avoid slippage and ensure that crucial deadlines are met.

9 Market research
Contract Sponsors are encouraged to undertake some market research within
the supply market in order to determine an approximate cost and to obtain
general advice and/or information about their requirement. However, the
following advice should be noted:

All suppliers contacted must be informed that the information being

sought may be used in a tendering exercise and there are no
Intellectual Property Rights associated with the information.
All suppliers contacted must be given an opportunity to tender or quote
for the contract.
The tender that is drafted should not provide any tenderer that has been
involved in supplying information as part of the market research
exercise with any unfair advantage.

10 Risk assessment
A formal risk assessment should be carried out for all high value (over EU
thresholds) or strategic contracts prior to the preparation of the tender, to ensure
risks can be adequately addressed. However, risks (and contingency) should
always be considered when drafting any tender specification.

The responsibility for assessing and documenting risks is primarily the

responsibility of the Contract Sponsor supported by the Purchase Agent
and Procurement.
The on-going monitoring of identified risks and the controls in place to
manage the risks are the responsibility of the Contract Sponsor.
The Procurement contact involved in the contract is responsible for
checking that risks have been considered throughout the process.

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11 Purchase Order process
A purchase order must be issued for all transactions and must be quoted on the
invoice. When purchasing under an existing contract or framework, the purchaser
must quote the contract or framework number (and lot number if applicable) and
supplier code on the purchase order.

Purchase orders must not be issued retrospectively. If there is no purchase order

number on the invoice, Accounts Payable may not pay the suppliers invoice.

12 Procurement Processes
Direct award to a supplier for one off purchases up to 300

Quotes (verbal or e-mail) goods and services not exceeding 5,000

Where total expenditure is below 5000 (incl. VAT) at least three verbal
or email quotes should be obtained.
The competing quotes should be recorded and retained by the
Purchase Agent before any expenditure is incurred.
This information is then given to the POA to raise a purchase order.

Quotes (e-mail) goods and services between 5,000 and 10,000

Where total expenditure is between 5,000 and 10,000 (incl. VAT) at

least three written quotes should be obtained.
The competing quotes should be recorded and retained by the
Purchase Agent before any expenditure is incurred.
This information is then given to the POA to raise a purchase order.

Invitation to Quote (ITQ) goods and services between 10,000 and 25,000

Planning

If total expenditure is between 10,000 and 25,000 (incl. VAT) the

Purchase Agent must complete a Contract Request Form (CRF) (PR15)
which is available on find a form and send to Procurement.
A contract number will then be allocated, and advised to the Purchase
Agent to quote on all further documentation.
To ensure sufficient competition, three to six suppliers should be invited
to quote. Verbal quotes are not acceptable at this level of expenditure.
The ITQ template (PR2) should be used for straightforward
requirements only.
After completion the ITQ can be issued by either the Purchase Agent or
Procurement to the selected suppliers.
Where the procurement process is not followed, the Purchase Agent
must complete a Non Competitive Action (NCA) form (PR 13) and
return it to Procurement with an explanation.

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Evaluation

The closing date and time for the ITQ return must be advised within the
ITQ as late quotes will not be considered.
The quotes received after the deadline should be evaluated using the
evaluation template (PR11).
Justification comments should be recorded to enable feedback to be
provided to the unsuccessful suppliers.

Award

The Purchase Agent or Purchasing Officer should then notify all

suppliers of their successful or unsuccessful outcome in writing.
The successful ITQ can then be turned into contract (see guidance note
4.5) to be signed by an authorised signatory.
If a new supplier is selected complete a supplier addition form (PR27) to
add the supplier to the SAP system.
No purchase order should be raised until signed copies of the contract
are returned from the supplier.

Invitation to Tender (ITT) goods and services over 25,000

Planning

Where total expenditure is over 25,000 (incl. VAT) the Purchase Agent
must complete a CRF form (PR 15) and send it to Procurement to
obtain a contract number for use on all future documentation.
This process is led by a member of the Procurement team with input
from the Purchase Agent who will draft the specification with all their
business requirements.
The Procurement team member will assess which procedure to follow
depending upon the requirements. Depending on the process, a Pre-
Qualification Questionnaire (PQQ) can be used.
The issue of a PQQ can be an effective way of ensuring that suppliers
taken forward to the ITT stage have the capacity and ability to meet
SQA requirements.
At this stage the Purchase Agent must consider the evaluation criteria,
including the price and quality split which should be used to evaluate
the ITT. The criteria must be relevant to the particular contract.
The advert will be placed on www.publiccontractsscotland.gov.uk by
Procurement and OJEU if over the EU threshold. The advert will include
the evaluation criteria, type of procedure and total value of the contract.

Evaluation

Upon receipt of the PQQ submissions, the Procurement team will

record and issue copies to the Purchase Agent for evaluation.
All PQQs received must be evaluated and results recorded for every
submission on a PQQ evaluation form.
When evaluating PQQs the evaluation team should determine if
candidates have met the minimum standards required. Adequate
justification must be recorded for debrief purposes.

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 A consensus meeting is then arranged with all relevant parties to agree
the final scoring. This will provide a short list of suppliers to be invited to
tender (normally between three and six).
If an unsuccessful supplier requests feedback on the PQQ stage,
Procurement will respond.
Procurement will carry out financial credit checks on all suppliers who
are short listed to receive an ITT.
Procurement will issue the unsuccessful letters to the suppliers and
send the ITT documentation to the successful suppliers.
Once the closing date has been reached, Procurement will open and
record all ITT submissions in the appropriate format.
ITT submissions will be issued to the Purchase Agent for evaluation
with a scoring template. The scoring must be fair and consistent using
the pre-agreed criteria and justification provided on the score.
A further consensus meeting is then arranged with all relevant parties
and the nominated Procurement contact will record the evaluation and
consolidate the evaluation scores and the pricing information, to obtain
the successful supplier(s).

Award

Following approval for contract award, Procurement will notify all

unsuccessful suppliers and provide the information required under
Public Contracts (Scotland) Regulations 2012.
For all contracts over 500,000, a Tender Evaluation Report will be
produced by Procurement, and issued to the SQA Board for approval.
Unsuccessful suppliers will be debriefed by Procurement where
requested.
Procurement will convert the ITT submission into a contract and
arrange for the supplier and SQA authorising signatory to sign copies of
the contract.
No purchase order should be issued until the contract is signed by both
parties.
Where the procurement process is not followed, the Purchase Agent
must complete a Non Competitive Action (NCA) form (PR 13) and
return it to the Procurement Team for authorisation, prior to any
purchase order being raised.

13 Scottish Government
Non Competitive Action report

All requirements in which a competitive process cannot be undertaken, or the

tendering process was waived, will be subject to approval by the Director of
Finance prior to contract award.

An exception report will be created using the information provided in the Non
Competitive Action (NCA) forms completed by the business areas. This report will
list all instances where the procurement process has not been followed, and will
be issued to the Scottish Government each financial year.

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Approval

Approval from the SQA Board and the Scottish Government is mandatory for new
contracts in the following circumstances:

all contracts with a lifetime value over 500,000

expenditure on individual capital items (excluding motor vehicles) or
capital projects is over 100,000

For any queries regarding this procedure, or if you require assistance,

please contact a member of the Procurement team who will be happy to
assist you with your enquiry.

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