Introduction to

Procurement and
Value for Money
Foreword by the Director of Finance
I am pleased to recommend this booklet on Procurement and
Value for Money. I hope that you find it useful as both a general
introduction and a supplement to the existing good practice
within the organisation. Now, in these straitened times more than
ever, obtaining maximum value for money is essential in ensuring
that the University can undertake its day-to-day activities and so
that it can continue towards its goals outlined in: Advancing the
Manchester 2015 Agenda.
This document is necessarily brief and is a summary of information
available in other publications (including the Financial Regulations
and Procedures) which are available through the staff intranet. In
particular I draw your attention to the stringent legal regime (in
the form of The Public Contracts Regulations and developing case
law) that governs public procurement as discussed in Section 3.
This guide is intended for quick reference and I hope that the information contained within it will be supplemented,
as occasion requires, by reference to the detailed documentation. The staff within the Central Procurement Office
can also be contacted and will be happy to offer advice and discuss particular issues.
Every pound that the University spends is important in meeting our objectives for teaching, research and towards
the wider community. It is the responsibility of everyone who commits to spend money on behalf of the University
to ensure that they comply with our own internal regulations as well as with the highest standards expected of
those in public life. This means following best practice to reduce legal and commercial risks and to be able to
demonstrate that value for money has been achieved. The information provided within these pages will help you
to understand how best to do this and in so doing contribute to the overall financial health of the University.
Steve Mole
Director of Finance
 Introduction to Procurement and Value for Money 1

Introduction to Contents
Procurement and Section 1:
External Context and Internal
Value for Money Governance Framework 3
The aim of this document is to provide some basic The External Context 3
background on procurement and value for money The Governance Framework 3
particularly for those who manage budgets and spend Internal Regulation 3
money as part of their duties within the University.
Section 2:
The University spends some £300 million each year on Getting What You Want 4
non-pay items. The way this money is spent affects Value For Money 4
both individual budgets and the University as a whole.
Managing Procurement Risk 4
As a publicly funded body it is important for the
University to: Outlining What You Want: The Specification 5
Finding What You Want 5
• Follow best practice in obtaining goods and services Demonstrating Competition 9
• Demonstrate full accountability for every penny
Section 3:
spent
I Need to undertake a European Tender
• Ensure that all applicable legislation is adhered to for Supplies or Services 11
Background 11
• Obtain excellent value for money
Support For EU Tenders 11
We are all responsible through the way we operate for The Process 12
ensuring that the University is able to meet these Engaging With The Market 12
obligations.
Approaches To The Market And Timescales 12
Making A Decision And Tender Award 13
General Rules 14
Failure To Follow The Law 14

Section 4:
Dealing with Suppliers 15
General Principles 15
Dealing With Suppliers As Part Of A Tender 15

Section 5:
Managing Contracts 17
What Is Contract Management? 17
What Constitutes A Good Contract? 17
Why do Contracts Fail? 18
How Do I Ensure That A Contract Is Properly
Managed? 18

Section 6:
Support and Help 19
Who to Contact 19
Web Links 19

Appendix 1:
Internal Regulations 20
2
 Introduction to Procurement and Value for Money
Section 1: The External
Context and Internal
Governance Framework
The External Context
The University is a chartered corporation mainly funded
by the public purse. This means that the following
general principles apply when you are spending money
in the course of your duties:
1. You must uphold the highest standards expected of
those in public service
2. You must ensure that expenditure represents best
available value for money and that any risks are
managed in the most appropriate manner
As a ‘public body’ for procurement purposes the
University is subject to a number of legal requirements,
over and above those generally applicable to business
transactions. These impose specific obligations and
duties which the University cannot avoid:
1. The University has to follow EU Procurement
Directives embodied within UK law in The Public
Contracts Regulations 2006 (SI 2006 No. 5). More
details are provided in Section 3 but these apply:
a. When public bodies seek to purchase goods,
works or services; and
b. Those purchases exceed the set monetary
thresholds
The purpose is to open up the public procurement
market and to ensure the free movement of goods and
services within the EU in an open, transparent and
non-discriminatory basis.
The University is required to advertise requirements in
the Official Journal of the EU and the detailed rules
applying to these purchases, known as tenders, will be
applied.
2. The Freedom of Information Act 2000 permits third
parties to access certain information and:
a. Covers activities carried out by public bodies in
respect of the information they hold.
b. Creates a legally enforceable right of access to
information upon written request. Information
can only be withheld in limited circumstances and
with a clear justification.
You are responsible for ensuring that expenditure complies with legal requirements and follows
internal University regulations.
3
3. In addition the University has to comply with other
legislative requirements/public policy (including
Equality and Diversity and Sustainability) which may
also have to be factored into buying decisions.
4. Funding provided by the Treasury via the HEFCE
imposes requirements on the University. In particular
HEFCE funding (under the Financial Memorandum)
lays down stringent conditions on management and
control of funds as well as requiring value for
money. Funding from other sources (e.g. research
grants) usually impose obligations in terms of value
for money and following good procurement
practice.
It is your responsibility to ensure these are applied
within the constraints established by the University’s
own Governance Framework.
The Internal Governance Framework
The principles outlined above are embodied in the
internal governance framework and regulatory
documents which together constitute the means by
which controls are embedded and conduct prescribed
for all University employees. The rules are designed to
protect the institution, you as an individual and to
provide evidence that due process has been followed.
Internal Regulation
There are a number of key documents. These are
detailed below:
1. The Charter - founding status granted by the
Queen
2. The Statutes - the University Laws
3. The Ordinances - prescribed University practices
and procedures
4. The General Regulations - the rules that staff and
students must follow including the Financial
Regulations and the Financial Procedures.
Full details containing extracts relating to the key parts
dealing with financial probity and value for money are
provided in Appendix 1.
 4
Section 2:
Getting What You Want
The University has a Purchasing Strategy and a
Purchasing Policy (available via the website:
www.campus.manchester.ac.uk/procurement/)
which are consistent with the University’s Strategy and
Governance Structure and both of which stress the
need to demonstrate value for money in a legally
compliant manner.
Value for Money (VFM)
VFM is often talked about but little understood; it is
not about buying the cheapest but is the balance
between the lifetime cost of the purchase and the
quality or performance of that product or service.
Competition is a key component in demonstrating that
a purchase represents value for money.
When buying expensive items, e.g. high value
equipment or specialist consultancy services, the need
to demonstrate value for money is more important
than for lower value purchases. It is for this reason that
the University has in place many pre-tendered deals,
and approved suppliers, across a wide range of
product areas. Value for money comes as standard
when you use these. This does not mean that they will
always provide the very cheapest price but it does
provide an assurance that you will get the best price
available across the whole institution and a consistent
quality from a reputable supplier with an interest in
working with the University.
Managing Procurement Risk
Every purchase is a form of contract between buyer
and seller and will contain some element of risk, in
most cases this will be small and steps can be taken to
ensure that the risk of any transaction is as low as
possible:
• Buying involves a legal risk:
Above threshold purchases will be subject to the
legal requirements of The Public Contracts
Regulations 2006 (an EU tender) and these need to
be managed carefully as outlined in Section 3. It
should be borne in mind that even purchases below
the threshold are subject to an over-riding duty to
ensure competition, non-discrimination and equality
of opportunity.
 Introduction to Procurement and Value for Money
Standard terms. The University has in place a set of
standard terms of business available through the
procurement web-pages:
www.campus.manchester.ac.uk/procurement/
It is important to ensure that all orders placed are
subject to the appropriate University terms and not
those of the supplier.
• Buying involves a commercial risk:
Aggregation – where possible combining spend is
advantageous as it allows greater leverage on behalf
of the University and acts as a powerful motivator
for suppliers to provide their best prices and their
best service.
Competition – free and open competition is the
best means of ensuring that any requirement
receives thorough consideration from the market. It
also generates commercial tension which
encourages firms to put forward good commercial
proposals at competitive prices.
Value for money – all purchases should deliver
value for money. Being clear on what constitutes
value for money and being able to benchmark it
clearly will reduce the chances of receiving a poor
commercial outcome.
Outlining What You Want:
The Specification
A specification is something that describes what you
want to buy and consequently what the supplier is
expected to provide. It has several functions including:
1. To communicate to a supplier what is wanted
2. To enable the University as purchaser to assess bids
submitted
The clarity and quality of the specification is crucial. It
should be a fair and accurate statement aimed at
achieving value for money by enabling open and
effective competition.
Drafting a specification will be required as part of any
formal tender and in particular if you are required to
undertake a tender under The Public Contracts
Regulations. A good specification should be:
• Clear – explaining exactly what is required
• Complete - covering all aspects of the product or
service (e.g. consumables, upgrades, training,
warranty etc)
Consider the true cost of what you are buying i.e.
the whole life cost for non-consumable purchases
5
Consider, where appropriate, the sustainability
aspects of any purchase. Sustainability consists of 3
aspects of well-being: (1) social (2) economic (3)
environmental. Each of these is consistent with the
University’s objectives and where applicable may
form part of the specification.
• Consistent - with other objectives (e.g. health and
safety, sustainability etc)
• Commensurate – matched to the need (i.e. neither
over-specified nor under-specified)
Care needs to be taken when writing a specification,
drafting it closely around a known product or service
or using known performance characteristics such that
other firms or solutions cannot bid against it is known
as a ‘lock out specification’.
• You may write a specification using your knowledge
of the market but write it in a generic manner rather
than around a specification from one supplier.
• You should not use brand names; where this cannot
be avoided the phrase ‘or equivalent’ must follow
each use of the brand name except where detail of
existing products is included only for information
purposes.
• You must take care when using certain performance
specifications (e.g. quoting clock speeds for a CPU
when buying a PC) or quoting some standards
(Fairtrade, ISO9001 etc.) without stating the
characteristics required or the option for equivalents
to be considered.
Writing a ‘lock-out’ specification or use of brand
names is bad practice, undermines genuine
competition, and is not lawful for EU regulated
procurements where it may be open to challenge from
aggrieved suppliers.
Finding What You Want
The University is a full service organisation and you
may be involved in buying almost anything and the
flowchart and following tables provide a brief overview
of how to go about this.
6

I want to buy goods and/or services

Go to Central Universities Procurement
Information Database (CuPID)
www.campus.manchester.ac.uk/procurement/

On CuPID Not on CuPID

Under
Over £2,000
£2,000 or Over Under Over
and under
only one £2,000 £2,000 £100,000
£100,000
supplier

Obtain three Obtain tender advice from

Undertake Obtain a quote
quotes Central Procurement Office
mini- (see Table 1-3)
competition (see Table 1-3)
(see Table 1
and guidance
on CuPID
website)
Under Over
£156,000 £156,000

Procurement Formal
plan agreed EU tender
with Central via Central
Procurement Procurement
Office Office

Raise requisition via IPROC

 Introduction to Procurement and Value for Money 7

Table 1
I want to buy…
A routine item for general use at work (e.g. paper, IT equipment, laboratory
consumables, furniture etc)
It will cost… Where do I find it? How do I buy it?

Less than £2,000 The University has in place around 400 Go to Iproc in Oracle and order either
suppliers in 100 different categories using one of the on-line
with formal agreements. These have catalogues/punch-out or use a non-
been selected to offer VFM and should supplier request
be used where possible. Details can be
found on the Central Universities
Procurement Information Database
(CuPID):
www.campus.manchester.ac.uk/pro
curement/cupid/

More than £2,000 Some formal agreements have more You will need to ensure that you
than one supplier able to supply similar comply with the requirement for
products. These multi-supplier quotes before placing any order
framework agreements are designed
to ensure competition and guidance
on using these is provided on the
Central Procurement Office website:
www.campus.manchester.ac.uk/me
dialibrary/procurement/
multi-supplier-framework-
agreements.doc

More than £25,000 As well as complying with the

requirement for quotes above. The
requisition will need to be approved by
the Central Procurement Office in
Oracle before any order is created

More than £100,000 The Central Procurement Office need

to review the proposed purchase to
ensure that where necessary the
requirement will be exposed to
competition, via formal tender, before
any order is created
8
Table 2
I want to buy…
A specialist item, or service, something unusual or a one-off
It will cost… Where do I find it?
Less than £2,000 You may know a supplier or be aware
of what the market place has to offer
in which case seek a quote.
If you do not know where to find
something ask colleagues or the
Central Procurement Office where to
obtain a quote.
More than £2,000 You may know a supplier or be aware
of what the market place has to offer
in which case seek a quote.
If you do not know where to find
something ask colleagues or the
Central Procurement Office where to
obtain a quote.
More than £25,000 Some form of advertisement of the
need may be an effective means of
identifying suppliers able to meet the
need if you do not know the suppliers
or market.
More than £100,000 You should ensure that the
requirement is subject to some form of
The current threshold market testing either through
for supplies and competitive quotations, invited closed
services subject to bid quotations or through an
formal EU tenders is advertised competitive tender.
£156,442 (excl. VAT)
How do I buy it?
Go to Iproc in Oracle and order using a
non-supplier request
You will need to ensure that you
comply with the requirement for
quotes before placing any order
The requisition will need to be
approved by the Central Procurement
Office in Oracle before any order is
created. Evidence of quotations will
need to be provided.
The Central Procurement Office needs
to review the proposed purchase to
ensure that where necessary the
requirement will be exposed to
competition before any order is
created. Evidence that some form of
effective competition has taken place
will be required either by informal or a
formal (EU) tender. Advice on formal
tendering and EU tenders (which have
proscriptive rules) should be obtained
from the Central Procurement Office.
 Introduction to Procurement and Value for Money 9

Table 3
I want to buy…
Something estates, catering, or library related

It will cost… Where do I find it? How do I buy it?

Estates have a set of thresholds
that determine the process to
be followed
The commercial Directorate
(STARS) have a number of
specific contracts and
agreements
The John Rylands University
Library (JRULM) have in place a
number of specific contracts for
journals, books, e-books etc.
You should contact you local
Estates representative who will
advise on the best means of
meeting the need.
You should contact STARS directly.
They will advise on what is
available and how your
requirement may be met.
You should contact JRULM directly. Details of how to buy what you
They will advise on what is
available and how your
requirement may be met.
Orders will be organised through
Estates who will liaise as necessary
with the Central Procurement
Office.
Details of how to buy what you
require will be determined upon
enquiry.
require will be determined upon
enquiry.

Demonstrating Competition: Obtaining Quotes

Obtaining quotes is the best way of demonstrating
competition and there are a number of ways of
doing this:
1. Simple quotes – you may contact firms directly (by
phone, fax, Email etc) and ask them to provide a
quote for items that you know that they can supply.
This is a simple process with no formal deadlines or
set requirements in terms of format and firms who
respond will do so under their terms of business.
2. Request for quotation/sealed bid quotation – a
more formal version of the above where a written
request is sent to firms using our terms of business.
There are no set timescales but firms will be
expected to respond by a certain date with ‘blind’
(i.e. secret) bids only opened after the closing date.
3. Formal quotation via tender – the most formal
version of requesting quotations using a fully
developed written specification and detailed tender
document including our terms of business. A
response in a particular format and by a particular
deadline, with sealed bids opened only following the
closure date and time. For purchases over the
relevant thresholds the rigours of The Public Contract
Regulations, as detailed in Section 3, will apply.
Finding or selecting firms to provide quotes or
participate in a tender can be a problem unless you
have market knowledge, can rely on previous exercises
or have an existing list of providers to select from. If
you do not know of any firms who can provide what
you want the best starting point is to do an internet
search, but you can also ask colleagues or the Central
Procurement Office for advice. Formal tenders are
advertised and firms request to participate but when
obtaining quotes you should bear in mind the need to
be fair, transparent and choose an appropriate number
of firms to demonstrate competition.
Obtaining quotations can be done flexibly and the
detailed approach can be tailored to fit the value and
complexity of the purchase being made. The
University Financial Regulations require, a minimum of,
3 quotes, where possible, for any purchase over
£2,000 in value but the means of achieving this is not
specified. Items likely to exceed the EU tender
thresholds will need to comply with the strict rules for
formal regulated tenders but below this the most
appropriate means of getting quotes should be
discussed with the Central Procurement Office.

All purchases must represent value for money. Competition is the best means of demonstrating value
for money and should be undertaken in line with the thresholds that are set in the Financial
Regulations. A range of pre-tendered contracts are available and should be used where possible.
10
 Introduction to Procurement and Value for Money 11

• Proportionality – the requirements of the process

Section 3: I Need to and specification should match the actual need
Undertake a European • Objectivity – the approach and specification must
Tender for Supplies or be clearly justifiable and unrealistic obstacles should
not be created either in the specification or choice
Services of market approach
There are quite prescriptive rules laid down for EU • Fairness – the process must be fair and every bidder
tenders and there are mandatory minimum timescales must receive the same consideration as others
but the relevant law does not contain any
The Regulations are supplemented by a growing body
requirements that the University would not consider
of case law where the courts have stepped in to
good procurement practice. Nor does the process
interpret how the rules are to be applied. In most
force you to buy the cheapest or in any way prevent
instances these cases have reinforced the need for
you from getting what you need, rather it is designed
contracting authorities (like the University) to ensure
to ensure that you obtain goods, works or services in a
full transparency and fairness as part of the
fair and transparent manner.
procurement process.
However, that said, the advice here is necessarily brief
Increasingly the courts are also taking an interest in
and there are many pitfalls for the unwary; you should
new areas such as below threshold transactions and
not undertake an EU tender without professional help
deals relating to property. If you are in any doubt about
and if you do need to do so you should contact the
the applicability of the Regulations consult the Central
Central Procurement Office who will provide help and
Procurement Office.
advice to guide you through the process.

Background Support for EU Tenders

The Central Procurement Office is experienced in
The rules relating to public procurement are embodied
managing EU compliant tenders and is available to
in The Public Contracts Regulations 2006 (SI 2006 No.
provide advice and support should you need to
5) (“the Regulations”). The Regulations apply to the
undertake such a tender. The Central Procurement
University because it is a body governed by public law
Office will provide detailed advice and has standard
as it receives more than 50% of its funding through
documentation to make the process as easy as possible
state funds. The Regulations set down in detail what is
whilst also ensuring compliance with the detailed rules
required from public bodies when they spend money
of the Regulations. All tenders are run using an
and are consistent with the general principles outlined
electronic tendering system which allows for paperless
in the Treaty of Rome, which govern the EU regime.
communication of tender documentation, supplier bids
The Treaty of Rome, and its successors, embody 7 and all necessary correspondence. Ownership and
principles that must be applied to all purchasing responsibility for the goods or services for which you
activity undertaken by public bodies: are tendering remain yours and working alongside the
Central Procurement Office who will take the lead on
• Level playing field – all bidders must have access the administrative, commercial and legal aspects of the
to the same information, in the same format, and tender means that you will be able to concentrate on
have the same opportunity to respond the detail of what you need to purchase.
• Transparency – information must be clear, easy to
understand and communicated openly
• Equal treatment – no bidder must receive any
advantage over any other
• Non-discrimination on grounds of nationality –
there must be no intentional or unintentional bias
for-or-against domestic bidders
 12
The Process
Broadly an EU tender can be broken down into three
key stages:
• Stage 1: Pre-Tender where there is an opportunity
to understand what the market has to offer and to
develop a clear specification that will not inhibit or
distort competition.
• Stage 2: Tender where the market has the chance
to consider and bid against the specification. There
are set minimum timescales and prescribed market
approaches as to how this happens.
• Stage 3: Post Tender where suppliers have
submitted their bids and these are evaluated and a
decision reached. There are rules providing for
debrief of unsuccessful suppliers and the
opportunity for them to challenge a decision if they
are unhappy. If no challenge is received the contract
can be finalised.
Engaging with the Market
This can be done to understand what is available or
how a need may be met; so called ‘technical dialogue’.
Further detail is provided in Section 4 but this must not
compromise a possible tender and must not be done in
such a way that it gives an unfair advantage or distorts
or limits competition.
In undertaking a technical dialogue the aim should be
to understand what the market can offer, at what price
and within what timescale. This information should be
used to inform the tender process. It also provides an
opportunity to condition the market and advise them
of what the University requires and what suppliers
must do to meet that need.
It is important to remember that responding to queries
and requests for information (and particularly
responding to a formal tender) has a cost for the firms
involved. In some instances the market may not be
able to engage as fully as you would like because
suppliers are unable or unwilling to do so. Where this
is the case it can complicate any subsequent tender
but it is a fact, established through the courts, that
neither inadequate time nor the apparent existence of
a single supplier are sufficient justification to avoid the
need to tender where required under the Regulations.
Approaches to the Market and Timescales
There is a requirement to undertake a formal approach
to the market for any purchase above certain set
thresholds. The current thresholds (as at 01/01/2010*)
relating to the University are:
• Supplies and Services: £156,442 (excl. VAT)
• Works (i.e. relating to construction): £3,927,260
(excl. VAT)
The thresholds are calculated in respect of the costs of
the goods/services/works over the lifetime of the
contact and include consumables, maintenance,
ancillary items or any contract fees which are linked to
the goods/services/works provided and which are
supplied by the same supplier. There are clear
prohibitions preventing sub-division of contracts into
smaller lost to avoid the Regulations.
* These are set by The Treasury and change every 2
years. You should check with the Central Procurement
Office to ensure that these are up to date.
Open competition is a key element of the Regulations
and every tender, above the threshold, must be
advertised in the Official Journal of the European
Union (OJEU) an electronic notice board that alerts
potential bidders to the business opportunity. The
OJEU advert provides free publicity and is an easy way
of advertising any requirement to the market.
Formal tenders are required and are carried out as
closed exercises so that they generate the maximum
commercial tension and also maintain the integrity of
the tender process.
There are a number of approaches to the market but
the two most common are:
• The ‘Open Procedure’ a 1 stage process suited to
purchases where the number of bidders is likely to
be limited
• The ‘Restricted Procedure’ a 2 stage process that
allows pre-selection of firms before tender
documentation is issued and suited more to
purchases where there are likely to be a lot of
bidders
Tendering is subject to mandatory minimum
timescales:
• For a one stage tender firms must submit their final
bid within, not less than, 52 days.
• For a two stage tender firms have, not less than, 37
days to submit their pre-qualification information
and those firms selected to progress have a further,
not less than, 40 days, following notification of their
success at stage one, to submit their final bid.
• In both cases the ‘clock starts ticking’ the day after
the publication of the OJEU notice.
 Introduction to Procurement and Value for Money
• There is a further mandatory 10 day standstill period
(sometimes known as the Alactel Period) once all
firms have received notification of the intention to
award the contract. This is to permit any challenges
from disappointed parties.
In addition to these ‘process times’ allowance must be
made for the actual time taken for you to understand
and evaluate the bids, or the pre-qualification
information, when they come in. As a rule of thumb a
one stage EU tender will take slightly over 2 months
and a two stage tender just over 3 months.
There are allowances for reductions in these timescales
depending upon certain factors (e.g. electronic
publication or issuing of advanced information (Prior
Indicative Notice or PIN) but unless there is good
reason these minimum timescales must be observed.
There are several other market approaches allowed
under the legislation but access to these is allowable
only under certain circumstances and these should be
discussed with the Central Procurement Office.
Making a Decision
and Tender Award
Once the deadline for submission of bids has passed
evaluation of the offers must be undertaken. There is
no set timescale for this to be done but it is assumed
that this will be done within a ‘reasonable’ time and
certainly before the offers from firms expire.
13
Evaluation should not be undertaken alone but should
be carried out by a team of people. At least one
member of the evaluation panel should possess
expertise or knowledge of the product or service that is
being purchased. Bids must be judged and scored
strictly in line with the criteria published in the tender
documentation. The Central Procurement Office will
provide standard pro-forma documents to assist in the
evaluation and these are essential to comply with the
feedback requirements and also to maintain the tender
audit trail.
Once these have been completed formal notification of
the decision has to be sent to all bidders. This
communication must contain specific information
including feedback to firms on their submission to
allow them to understand how they scored as well as
the relative characteristics and advantages of the
successful submission. No other feedback should be
provided and under no circumstances should you
provide verbal feedback to bidders even if they contact
you and ask directly. This formal notice initiates the
mandatory 10 day standstill period that must be
observed before any contract can be formed or order
issued. During this time firms may issue a formal
challenge to the process, or request additional
information in the form of a Freedom of Information
request. In the case of the latter any request has to be
considered and if appropriate the information released.
If a formal challenge is issued the contract cannot be
concluded until the outcome of this is decided.
 14
Assuming there is no challenge, the formal contract
can be concluded between the parties but the formal
tender process is concluded only when an official
Award Notice, providing details of the contract and the
successful bidder, is posted in the OJEU. This has to be
done within 48 days of contract completion.
General Rules
When involved in a tender there are some general rules
that must be followed:
• Any firm/organisation that expresses an interest must
be allowed to participate e.g. if an organisation of
which you have never heard requests documentation
and submits a bid, or a known firm who you did not
think could meet the need applies, they must be
allowed to participate, and their bids must be fully
considered.
• All firms must receive the same treatment; for
example general information should be shared with
all firms or where one firm requests a meeting the
same invitation should be made available to all firms
interested in participating in the tender
• All firms who express an interest must be treated
fairly and equally.
• There is a requirement to let bidders know on what
basis any award will be made and to publish the
evaluation criteria that will be used to assess bids. This
must also include the relative weightings of the criteria
and once published these cannot be varied nor can
additional criteria (or sub-criteria) be introduced.
• When undertaking a 2 stage process the
information required in each stage is distinct and
cannot be confused. The first stage is about the
firms, their capacity and experience and is essentially
backward looking. The second stage is forward
looking and must concentrate on the solution to the
requirement being tendered. Each stage must be
taken on its own merit and it is not acceptable to
ask for information in either stage that should be
considered at the other stage.
• Room for negotiation is strictly limited especially
once tenders have been submitted. This is to
maintain the integrity of the tender process and it is
important that all firms understand that they must
submit their best and final offer as part of the
tender. Second bids, revisions of bids or the chance
to re-negotiate submissions are not usually allowed.
Purchases for goods, services and works above certain values are subject to a legal requirement to
tender. You must follow the Regulations and if in doubt contact the Central Procurement Office.
Breaches of the Regulations could expose the University to serious financial and reputational risk.
Further guidance on these rules will be provided by the
Central Procurement Office when you are undertaking
an EU tender.
Failure to Follow the Law
There are very real risks to the University for failing to
abide by the law and these can be:
• Financial (in the form of damages and/or fines)
• Reputational damage arising from adverse publicity
and possible loss of confidence from funding bodies
Penalties available for not following the rules have
been strengthened following the acceptance into law
of The Public Contracts (Amendments) Regulations
2009 (SI 2009 No. 2992) also know as the ‘Remedies
Directive’.
Bodies interested in a contract have a right of appeal
and where they feel aggrieved that the procurement
process was flawed, or ignored, causing them loss can
apply to the courts for restitution.
If a contract has yet to be signed remedies can include:
• Seting aside the decision i.e. for the tender process
to start again
• Document amendment i.e. alter the basis on which
the market is approached
• Contract shortening
• Other ‘appropriate’ action
If a contract has been awarded remedies can include;
• Damages awarded to unsuccessful firm(s) and
possibly the firm awarded the contract if it is
rendered ‘ineffective’ through no fault of their own
• ‘Ineffectiveness’ where a contract can be set aside
for direct awards (i.e. not advertised) or if no
effective standstill period has been observed
It will be obvious from the above that a successful case
brought against the University could result in severe
financial consequences. Depending upon the
seriousness of the breach and the value of the contract
this may run into millions of pounds. These penalties
would apply against the University which is the
contracting authority; in rare cases individuals may be
held liable for breach of duties owed in holding a
public office.
 Introduction to Procurement and Value for Money
Section 4:
Dealing with Suppliers
Suppliers are an important part of the system that
enables the University to carry out its everyday
functions. They are a vital source of goods, services
and expertise and should be dealt with in a manner
that ensures the most effective use of their knowledge
and upholds the highest standards expected within
public life.
All dealings with suppliers should be governed by the
following principles:
• Transparency – provide true and fair information to
suppliers and be clear on what is wanted and why.
• Integrity – all suppliers must be treated fairly and
equally, and interactions should always be for the
benefit of the University. Under no circumstances are
personal inducements or gain acceptable and
supplier relationships must not be so close that open
and fair competition is compromised.
15
• Respect – suppliers and their representatives are
doing their job and should be treated with
consideration and professional courtesy. Where
suppliers fail to demonstrate these qualities in return
refer them to the Central Procurement Office.
• Discretion – information provided by suppliers is
confidential and under no circumstances must legal
documents, technical solutions, detailed
specifications or pricing information be released to
other suppliers or third parties, without express prior
written agreement or other lawful authority.
Dealing with Suppliers as part of a Tender:
Competitive tendering is an established means of
attracting interest from the market and of
demonstrating value for money. For tendering to be
effective competition must be real and follow a process
that ensures bona fide bids are submitted. For formal
tenders conducted under The Public Contract
Regulations mandatory and prescriptive rules apply and
the highest standards must be observed – if you are
involved in such a tender you MUST involve staff from
the Central Procurement Office.
 16
Pre-tender
• You may engage in a technical dialogue or ‘soft
market testing’ to understand what the market has
to offer and to gather an indication of the best
means and likely cost of meeting your requirement.
• You must not:
Give a single supplier an unfair advantage or create
a ‘preferred supplier’ where known competition
exists.
Give an indication or expectation that a purchase
will result or that a supplier will be entitled to any
business.
During Tender
• You may:
Hold discussions (meetings, open days etc) with
suppliers to allow them to understand the
requirement in more detail. Ideally all suppliers
should be present at these meetings and/or open
days to ensure fairness and transparency is achieved.
One to one meetings should be avoided.
Share general information relevant to all suppliers
with all suppliers.
Suppliers are a key component in allowing the University to carry out its every day functions. All
dealings with suppliers should be professional rather than personal and should not compromise
either the University’s or your own position.
• You must:
Treat all suppliers equally and fairly in terms of
access to information and personnel.
Ensure supplier discussions are undertaken only with
contacts identified within the tender
documentation.
• You must not:
Give one supplier preferential treatment even where
they are an incumbent.
Allow open access by one supplier to any staff
involved in the tender evaluation.
Share detailed information on solutions/approaches
from one supplier with others.
Post Tender
• You must not reveal the details of supplier’s bids to
other suppliers.
• You should provide feedback to suppliers but
contact the Central Procurement Office for advice
on how to do this.
 Introduction to Procurement and Value for Money
Section 5:
Contract Management
Making a purchase or buying something is often the
easy part, the real work starts when there is a contract
to be managed or an ongoing relationship, tied to a
product or service, which needs to be maintained. You
may be required to manage a contract or supplier
relationship as part of your role within the University.
What is contract management?
Contract management can be defined as: “the process
that enables both parties to a contract to meet their
obligations to deliver the objectives required from the
contract.”
You will see from this that there are 2 key things that
have to be understood and met if any contract is to be
effectively managed:
1. You need to understand the OBJECTIVES of the
contract.
2. You need to know the OBLIGATIONS that the
contract creates both for the University and the
supplier.
The best contracts are fair and flexible, so that both
parties can gain from the arrangement. They should
17
manage the risk and deliver value for money. Setting
up the right contract makes managing it so much
easier.
What constitutes a good contract?
If you are required to set up a new contract, or inherit
an old one, the following checklist indicates some
features of a good contract:
• A clear and unambiguous specification.
• Appropriate contract documentation with relevant
Terms & Conditions.
• Adequate resources to manage the contract.
• The right people to manage the contract.
• An agreed service level.
• Mutual understanding between buyer and seller.
• Clear lines of responsibility.
• Good management information.
• A clear dispute resolution mechanism.
By implication a poor contract is one where all or most
of these features are missing. Managing such a
contract is difficult and likely to increase the chances
that it will fail.
 18
Why do contracts fail?
Contract failure is unfortunately quite common and
can arise where:
• You, the customer, fail to take responsibility, and the
supplier takes the initiative.
• There is no clear line of responsibility, resulting in an
inability to make decisions.
• There is a lack of flexibility and/or a slowness to
respond to changed circumstances.
• There is a lack of understanding between the parties
to the contract.
If you are responsible for a contract that suffers from
any of the above the chances are that you will fail to
achieve the aims of the contract or deliver maximum
value for money, and the contract will become
unworkable. Where you are in such a position you
should contact the Central Procurement Office; we can
then explore the options on how best to resolve the
position.
How do I ensure that a contract is properly
managed?
By pro-actively managing a contract you can minimize
the likelihood that problems will arise, or at least
where they do have in place a system to ensure that
they are dealt with appropriately and promptly.
There are several main activities connected with
contract management:
1. Delivery Management - ensuring you get what
was agreed, on time, at the right quality, and at the
right price.
Managing delivery is easier where the contract defines
what is to be delivered, which in turn helps to ensure
that the contract is managed within budget.
In controlling contractual risk you will need to assess
and manage supplier performance, and the key to this
is monitoring via effective management information.
Make sure that a good contract is in place and managed. You must understand the objectives and
obligations created by the contract. Where this is not the case aims will not be achieved and value
for money will not be secured.
2. Relationship Management - ensuring both parties
understand each other and can work together.
Ultimately all contracts depend on good relationships
as both supplier and customer need each other.
Structures must facilitate a sound working relationship
and encourage commitment from all staff involved in
the contract.
Key factors in ensuring a productive relationship
management are: Trust; Communication; Mutual Aims.
3. Contract Administration – ensuring formal
governance arrangements are recorded and
updated.
Proper records of the contract, meetings, change
control etc. are fundamental to ensuring that the
contract is well managed and underpins the whole
process.
There should be clear administrative procedures that
ensure all parties understand what is required of them.
4. Addressing issues – ensuring that when there are
misunderstandings between the parties, or failure to
perform, there is a pro-active approach to solving
problems and getting back on track.
All of these activities form part of the contract review
cycle. This is an on-going process and should happen
during the life of the contract and at the end of the
contract term to:
• Analyse ongoing needs.
• Seek improvements.
• Solve problems.
Lessons will be learned from the review and this will
aid in continuous improvement and ensure that any
refresh of the contract builds on firm foundations to
deliver improved value for money.
 Introduction to Procurement and Value for Money 19

You can contact the Central Procurement Office as

Section 6: follows:
Support and Help tel 0161 275 2160
This guidance is designed to provide a brief overview fax 0161 275 2961
of procurement and value for money it is not intended email procurement@manchester.ac.uk
to provide comprehensive guidance for every Full details can be found on the web-pages:
circumstance. www.campus.manchester.ac.uk/procurement/
Assistance and support is available from professional
support staff who are able to help with problems and
issues that you have. In particular the Central
Procurement Office can advise on procurement
matters, and should be your first port of call for issues
relating to value for money, supplier management, the
application of The Public Contract Regulations (EU
tenders) and to oversee formal tenders.
 20
Appendix 1:
Internal Governance Framework
The key documents are detailed below with extracts
relating to the parts dealing with financial probity and
value for money.
1. The Charter (founding status granted by the Queen)
in particular:
a. Article II 4. ‘In the conduct of its business and its
affairs generally…the University shall treat all
persons with fairness and equality of
opportunity…’
b. Article IV (n) ‘Generally to do all other lawful acts
whatsoever that may be necessary for and
conducive or incidental to the attainment of the
objectives of the University.’
2. The Statutes (the University Laws) in particular:
a. Statute XI (Corporate, financial and estate
management) sets out how authority is assigned
to ensure:
i. (n) the development and maintenance of effective
management and control systems
3. The Ordinances (prescribed University practices and
procedures) in particular:
a. Ordinance VIII (Arrangements for Effective
Governance, Internal management and Financial
Control) details how control is exercised (and is
subject to the HEFCE Financial memorandum
currently in force):
b. VIII 2. ‘…the Board shall formulate and keep
under review Regulations and Procedures, to be
termed ‘Financial Regulations and Procedures’,
which provide for, and demonstrate compliance
with, effective arrangements for internal financial
and management control over the business
processes of the University’.
c. VIII 3. ‘All Members of the University shall be
required to comply with the Financial Regulations
and Procedures for the time being in force.’
4. The General Regulations (the rules that staff and
students must follow) in particular:
a. The Financial Regulations (translate in guidance
Board policies relating to financial control)
Section 6 deals with expenditure:
• 6.2 Heads of School or delegated budget
holders are responsible for orders/authorising
payments
• 6.3 Budgets must be sufficient to meet
purchases
• 6.3 All expenditure must be bona fide
• 6.6 All orders must be placed in line with the
University’s conditions of contract
• 6.13 Tenders must be carried out where the
total estimated cost of purchases exceeds
£100K or as required by funding bodies
• 6.19 Heads of School must ensure that staff
comply with EU Public Procurement Directives.
The Central Procurement Office should be
notified where any purchase is likely to exceed
the threshold
b. The Financial Procedures (supplement the Financial
Regulations and provide details on how control is
exercised)
Section 6 deals with expenditure:
• Thresholds:
o 6.17 Items expected to exceed £100K (exclusive
of VAT) should be reviewed by the Central
Procurement Office before any purchase is
made
o 6.17 Items expected to exceed £2K (exclusive
of VAT) must have 3 quotes or a justification of
why 3 quotes have not been obtained
o 6.18 all requisitions that exceed £25K must be
reviewed and approved by the Central
Procurement Office before an order is placed
• A separate Annexe to Section 6 deals with Estates
Purchasing Procedures and thresholds (all inclusive
of VAT):
o <£5K one written quote
o >£5K but <£10K three written quotes
o >£10K but <£25K three written quotes
o >£25K but <£150K three competitive tenders
o >£150K four competitive tenders
Full details are available on the intranet:
• Governance documents
(Charter, Statute, Ordinances etc.):
www.manchester.ac.uk/aboutus/structure/
governance/
• The Financial Regulations and Procedures:
www.campus.manchester.ac.uk/finance/
 Introduction to Procurement and Value for Money 21

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Central Procurement Office
The University of Manchester
Oxford Road
Manchester M13 9PL
tel 0161 275 2160
fax 0161 275 2961
email procurement@manchester.ac.uk
www.campus.manchester.ac.uk/procurement/

The University of Manchester, Oxford Road, Manchester M13 9PL

J3043 01.11 Royal Charter Number: RC000797