Finance & Planning Department

PROCUREMENT SERVICES
BEST PRACTICE GUIDE

A Guide to Purchasing
Professional & Consultancy
Services

1
 CONTENTS

1 Introduction 3

2 Procurement Rules 4

3 Achieving Best Value 6

4 General Ledger Codes 11

5 Taxation Rules 12

6 Further Information 13

2
1 INTRODUCTION

Professional services can be defined as services that are provided by a

formally certified member of a professional body while consultancy
services provide expert advice within a particular field which may not
be available internally.

The University spends a significant amount of money on professional

and consultancy services which are areas that can often be complex
and strategic with high transaction costs in comparison to other
categories of spend. The purpose of this guide is to help you
understand the procurement rules and provide guidance on the main
points which you should consider before engaging any external
provider.

Procurement Services can provide help and guidance on all

procurement matters including UK procurement legislation which the
University must comply with when purchasing goods, works and
services. This guide will be of particular relevance to anyone involved
with grant funding who needs to engage with external consultants.

You can obtain further procurement guidance and advice from

Procurement Services and contact details are provided in section 6.

3
2 PROCUREMENT RULES

Procurement is the process by which the University obtains all the

goods, works and services required to meet the business needs of the
Institution. Procurement must comply with statutes, regulations and
policies including:

 Financial Regulations of the University;

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

The first question you should ask yourself is whether you really need to
commission professional or consultancy services in the first place and
whether there are skills and capacity available internally or elsewhere
to carry out the work. You should consult with Procurement Services
before you proceed to check whether a contract or framework
arrangement already exists.

Thresholds

The following diagram summarises the financial limits and criteria for
inviting tenders or quotations. You must include VAT when calculating
the value of your procurement and take into account the total period of
contract you intend to award:

4
 D e m o n s tr a t e v a lu e
U p to £ 5 ,0 0 0
fo r m o n e y

B e tw e e n O b ta in a t le a s t 3
£ 5 ,0 0 0 & £ 5 0 ,0 0 0 w r it t e n q u o ta tio n s

O b ta in c o m p e t itiv e
te n d e r s v ia
O v e r £ 5 0 ,0 0 0
P ro c u re m e n t
S e r v ic e s

Exemptions
Please note that you may only apply for an exemption to these rules
under particular circumstances via a Tender/Quotation Exemption
Application Form which is available at:

http://www.northumbria.ac.uk/sd/central/finance/dept/accounting/procurement/
staffinfo/proc_team/proc_guide

Applications are carefully assessed by Procurement Services to ensure

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

5
3 ACHIEVING BEST VALUE

Written Quotations

If you are procuring services between £5,000 and £50,000, you must
obtain a minimum of 3 written quotations, or if this is not possible, from
all capable suppliers. A Request for Quotation (RFQ) template
incorporating the University’s terms and conditions of contract is
available for you to download from:

http://www.northumbria.ac.uk/sd/central/finance/dept/accounting/procurement/
staffinfo/proc_team/proc_guide/rfq_

You can modify the document to include your own particular

specification and any special conditions that you require companies to
meet. Decide on a deadline and then issue the RFQ to your selected
companies for them to complete and return directly to you. Although
not mandatory, use of this template is in accordance with best practice,
protects the University’s contractual position in the event of a dispute
with the supplier and encourages a more competitive approach from
suppliers.

The following diagram shows the main steps in the process:

6
Pricing and Expenses

You should ensure that consultants include details of all additional

costs or expenses which will apply in their quotation so that costs for
travel, subsistence and overnight arrangements can be clearly
identified and included when you are comparing quotations. It is good
practice to request that consultant’s rates are in line with the
University’s own subsistence rates, details of which are included in the
Expenditure Policy and Supplementary Guide, which can be accessed
at:

http://www.northumbria.ac.uk/sd/central/finance/fin_pol/?view=Standard

Revealing the Budget

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

Workshops

A consultant may invite you to attend a workshop to discuss how you

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

7
Scope

To reduce the risk of increasing costs over the life of an assignment it

is key to ensure that the project is thoroughly scoped to include the
following:

• Accuracy of the specification

• Clear deliverables
• Good contract/performance management
• Avoidance of scope creep via a change control mechanism

Proposed Team

In most cases you will have evaluated the experience and expertise of
the team which the consultancy has proposed in their quotation.
However once awarded the contract, the consultancy may exchange
them for less experienced colleagues. Provided you have been realistic
about start dates and workload, check that the final team matches the
team which was proposed and if they are different, find out why and
request the new team’s CVs to ensure their experience and expertise
are equivalent.

There are six recognised grades and, therefore, price bands, which
generally correspond to industry-understood job titles and are in
common use in the public sector. These are:

• Partner/Director
• Managing consultant
• Principal consultant
• Senior consultant
• Consultant
• Junior consultant

8
Common descriptions for each grade are provided in the following
table. Consultants must possess the following skills and knowledge
according to their grade:

Grade Requirement

Junior Demonstrable experience in a wide range of

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

9
Director / Extensive experience in their specialist field, in
Partner which they are nationally or internationally renowned
as an expert. Extensive experience of leading or
directing major, complex and business-critical
projects; bringing genuine strategic insight. In depth
knowledge of the HE sector and of current policy
and political issues affecting it.

In addition to the above experience, consultants and trainers will be

expected to possess relevant accreditation, qualifications and
certification applicable to their disciplines.

University Leverage

A large volume of suppliers are currently used for relatively low value
professional and consultancy services work. By reducing the high
number of suppliers used across categories such as marketing, training
and publicity to name just a few, there is an opportunity for the
University to introduce new contracts in order to combine spend and
achieve more competitive pricing and improved trading terms.

Procurement Services evaluates University expenditure in order to

develop new contracts in consultation with Schools and Services to
ensure that the University’s procurement arrangements are as efficient
and effective as possible. If you would like further information about
future contracts, please contact Procurement Services.

10
4 GENERAL LEDGER CODES

General ledger codes are codes used by the Finance department to

record income and expenditure against predefined categories such as
travel, stationery, IT equipment etc.

It is very important that professional and consultancy services

transactions are entered against the correct general ledger code in
SAP to ensure that the University’s accounts are accurate.

A full list of general ledger codes is available to view on SAP within the
Purchasing module. For further SAP training please contact the IT
Helpline on x4242 or email it.helpline@northumbria.ac.uk

11
5 TAXATION RULES

HM Revenue and Customs set out specific rules regarding the

employment of individuals as consultants. The level of control that the
University has over an individual’s work is a major factor in deciding
their employment status for the purposes of taxation. The higher the
level of control, the greater the chances are of HMRC classing the
person as an employee of the University which means they will be
treated differently for tax purposes. It is therefore essential that you
understand the distinction so that legal rights and obligations are clear.

If you are obtaining quotations for professional or consultancy services

you should be aware that the individual you engage may be subject to
the payment of additional tax and national insurance contributions if it
is deemed necessary to pay them as an employee through the Finance
payroll system. This could impact on the amount of revenue that the
individual expects to receive from the University and may lead you into
dispute over the contracted rates, or delay payment of invoices for
services provided.

You should consult with Procurement Services on telephone number

0191 2274093 or visit the Procurement Services webpage for further
advice regarding the engagement of individuals, prior to commencing
any procurement process at:

http://www.northumbria.ac.uk/sd/central/finance/dept/accounting/procurement/
staffinfo/payments_team/pti_main/?view=Standard

12
6 FURTHER INFORMATION

Procurement Services is responsible for overseeing all procurement

activities within the University and the correct and timely payment of all
University payments, other than payroll items.

For more information please visit the website at:

http://www.northumbria.ac.uk/sd/central/finance/dept/accounting/procurement/

Finance & Planning,

Procurement Services
Room 0001
Sutherland Building
Northumberland Road
Newcastle upon Tyne
NE1 8ST

Telephone: Procurement Team 0191 227 4334

Payments Team 0191 227 4093

E-mail: Procurement Team fi.purchasing@airport.unn.ac.uk

Payments Team fi.payments@airport.unn.ac.uk

13