Procurement Guide for Managers

Appendix 2

Procurement Cycle Checklist

The following checklist covers the basic procurement cycle from identifying and specifying a need to making payment and managing a contract. Use it as a reminder list to evaluate the effectiveness of your purchasing procedures.

Originating a purchase

The User identifies a need, specifies the requirement and raises the requisition.

CHECKS	RISKS
Is the user authorised to do so?	Unauthorised purchases.
Has approval (through business case if necessary) been sought?	Buying goods when they are not needed/justified.
Are there funds available to meet the purchase?	Overspending on budget.
Is the value (individually, or collectively with other like purchases) over the EU Procurement thresholds?	Breaking EU law; the department having to pay damages through the EU Remedies Directive; suspension and cancellation of contract.
Is it low value/low risk/high value/high risk?	Wrong resources spent on types of purchase; too little/too much control.

Selecting a supplier

Before a Purchase Order is issued, the right supplier for this type of purchase needs to be identified.

CHECKS	RISKS
Is a Framework Agreement available? If not used have the reasons been satisfactorily documented?	Not achieving VFM; waste of resources; duplication of resources.
Have competitive tendering procedures been followed? (This should always be the case except for individual low value and low risk purchases).	Not achieving VFM; not getting the right supplier for the purchase; possible breach of Government Procurement Policy and EU Procurement Directives.
If a single source supply is used, have the reasons been satisfactorily documented?	No assurance on obtaining VFM.
Have suppliers been selected for invitation to tender on a fair basis and the reasons for selection fully recorded?	Lack of competition leading to poor VFM.
Have the financial background/stability of the suppliers been assessed?	The supplier going bankrupt/failing to deliver.
Have the tender bids been opened and evaluated in a controlled way, providing reasons for selection and non-selection?	Possible collusion between suppliers may not be discovered.

Ordering

Once accepted by the supplier the Purchase Order is the basis of a binding contractual agreement so it is important to get it right.

CHECKS	RISKS
Are the details correct, especially those relating to the supplier and delivery details?	Waste of resources in tracking goods and services going astray. Unnecessary cost of rectification.
Has a copy been retained and no unauthorised changes made after issue to supplier?	Changes to delivery address, volume, and value of goods can lead to unauthorised expenditure.
Has it been authorised at an appropriate level given its value/type of purchase?	Orders may be issued with inadequate contractual terms, inaccurate/incomplete details leading to loss of VFM.
Has it been broken into a number of smaller value orders to avoid proper level of authorisation?	Not achieving VFM; possible disaggregation under EU Procurement Directives.
Are the contractual terms clear and understood?	Getting tied into disadvantageous contractual terms.

Receiving and accepting goods and services

This is a key function. No payment should subsequently be made unless the goods received match the Purchase Order details.

CHECKS	RISKS
Does the Goods Received Note/Delivery Note correspond with the consignment delivered?	Consignment (e.g. number of parcels) registered as received is not what was actually received.
Do the goods delivered correspond with details ordered on the P.O.?	Goods wrongly certified as received; not getting the volume/type of goods ordered; paying for goods not received; misappropriation of goods.
Are there controls in place for checking the performance of services against the order/contract and that departmental confirmation is recorded of satisfactory completion?	Payment against services not performed or performed inadequately (particularly vulnerable where sub-contractors are used).
Have goods been returned to the supplier and are there controls in place to ensure replacement/credit notes/refunds are provided and recorded?	Returned goods and subsequent credit notes, refunds and replacement goods not received leading to wasted resources.

Receiving the invoice and making payment

This should always be separate from the ordering and receiving functions. It is also crucial that the invoice is paid within the specified limit agreed when the order was placed. In the absence of any specific agreement, payment must be made within 30 days of the receipt of the invoice or of the goods, whichever is the later.

CHECKS	RISKS
Are there controls in place to inhibit payment unless the P.O., goods received records and invoice match? Is the P.O. reference correctly quoted on the invoice?	Payment made before goods received, payment made in excess of delivery value; inaccurate payment made.
Were settlement discounts payable and obtained?	Failure to achieve VFM; overspending on budgets.
Is invoice from the contract supplier? Have any supplier details changed? Are they correct?	Payment to an incorrect supplier, supplier account or branch.
Was the payment for part delivery? Are there controls in place to cover part payments?	Paying for more than has been received.
If the order was fulfilled, are there procedures for closing off the purchase so that no further invoices can be received?	Possibility of duplicate and overpayments that were not agreed as part of the original P.O.
Is the invoice an original? Are there controls in place to avoid duplicate payments?	Possibility of duplicate payments.

Post Contract Control

Large contracts in particular need to be managed against the terms agreed with the supplier/contractor especially where staged or regular payments are due.

CHECKS	RISKS
Is it clearly recorded what needs to be done, by whom, when and how much it will cost?	Not getting the work done because the contract terms were not clear and properly controlled; paying excessive amounts.
Do you have a programme of checking work/goods against the specification?	Not getting done what is needed; paying for work not done.
Do you have procedures for identifying inadequacies/poor work and for remedial action?	Not getting the work done to the standard needed; making payment for inadequate work.
Do you maintain record of supplier performance?	Re-letting of contracts to unsatisfactory suppliers.