Guidance When Obtaining Quotations for Goods and Services

Introduction

The following guidance has been produced by the Purchasing and Insurance Office as an aid to departments when seeking and obtaining quotations for goods and services.

It is intended as a guide only and should departments have detailed or specific queries, please contact the Purchasing and Insurance Office directly.

What is an RFQ?

RFQ is the abbreviation for Request for Quotation. This is undertaken when engaging with suppliers to seek quotations for goods or services the University requires.

In issuing a Request for Quotation to a supplier, the University is inviting that supplier to make an offer for the supply or provision or undertaking of the subject matter. The University reserves the right to accept or reject the suppliers offer.

Care should be taken to distinguish between a suppliers Quotation, which should provide an accurate price for the goods and services offered, versus an Estimate which will be a rough approximation only and provides more scope for the supplier to amend pricing.

Why is it important to obtain a written quotation?

It is advised that written quotation(s) are always obtained as this provides the opportunity for the supplier to clearly outline the details of their offer, in order that the University can make a fair assessment. Any detail which is not clear can be clarified.

Obtaining multiple quotations or conducting price benchmarking exercises are also core means of achieving and demonstrating value for money. Suppliers subject to competition have greater incentive to ensure prices are keen providing the University with greater leverage to obtain best pricing and value.

Details contained within a suppliers quotation often form part of the Universitys contract with the supplier (Purchase Order). Obtaining a written quotation enables this record of detail to be kept should it be required either in a future dispute or should the purchase be subject to an audit. Note: verbal quotations which are accepted (verbally) may also be legally binding although much more difficult to define the detail and rely upon should things go wrong!

Written quotations should always be obtained prior to any Purchase Order being raised. The Universitys Purchase Order will form the basis of the contract with the supplier and should supersede any supplier terms and conditions of sale with the Universitys terms and conditions of purchase. unless otherwise agreed. (http://www2.warwick.ac.uk/services/finance/purchasing_and_insurance/docsandforms/tandcs )

What should be included in an RFQ?

The Request for Quotation document should include as a minimum, the following information where relevant:

UoW Reference Number, if applicable Details of the opportunity or requirement Deadline for submission and key dates UoW contact details How responses should be submitted How questions can be raised Wider overview of the Project / Department to give broader context, as required Technical specification (generic and not including any manufacturer proprietary information or brand names) Quantity information Additional requirements e.g. warranty, training, installation & commissioning, key milestones Delivery requirements and timescales Basis for price submission and available discounts

If seeking multiple quotations, best practice would be to issue the RFQ to all participants and provide the same timescale and information to all, with the same deadline for response and quotations to be closed until such time.

It is acknowledged that this may represent a significant change in departmental practices and as such departments may wish to take a risk based approach to this, dependant perhaps upon value and funding source, in particular applying the more robust closed bid process to RFQs for European funded requirements.

For all RFQ processes, it is advised that a robust audit trail be obtained in relation to receipt and assessment of quotations.

Note: For certain European funded projects where the procurement is managed via the Central Purchasing Office, the RFQ process is administered through the Universitys electronic tendering system and follows a similar procedure as a University tender, albeit with reduced timescales and documentary requirements. A copy of the Universitys Request for Quotation template will shortly be made available on the Purchasing and Insurance Office website) When should RFQs be obtained?

The requirement for obtaining quotations is detailed within Financial Regulation 15 Purchasing. (http://www2.warwick.ac.uk/services/finance/resources/regulations/fp15 )

This is currently (as of July 2012)Up to 10,000 net advise one written quotation10,000 to 34,999 net two written quotations 35,000 net and above University or EU tender.

Note: Funding providers may stipulate different conditions and thresholds for evidence of achievement of value for money. It is advised that Departments always check the conditions of the funding and in the event of conflict, apply the strictest conditions.

Due Diligence and Factors to Consider

Upon receipt of quotations and in assessing the preferred bidder, departments should ensure that all information requested has been provided and if multiple quotations are being considered, that these are on a like for like basis.

Buyer Beware - It is perfectly acceptable to seek clarification on any information which is not clear within a suppliers quotation or upon which it is silent. Within business to business contracts the law generally takes the position of Caveat Emptor or Buyer Beware and therefore appropriate and reasonable due diligence should be conducted to ensure that contracts with suppliers are entered into on an informed basis.

The most common types of due diligence which may be undertaken include:

Financial For example, credit check or analysis of recent accounts. This may be particularly relevant should the engagement with the supplier be for a prolonged period e.g. across multiple years, if the supply base is very niche or the item is bespoke and can be useful in safeguarding against any potential conflict of interest.. Such due diligence may also be appropriate at higher value levels should staged payments be required, however for sub 35K requirements, it is not expected that such arrangements would be applicable and advice should always be sought from the Purchasing Office should advanced payments be required. References obtaining references from current or recent past customers of the supplier can be an insightful exercise to provide added confidence around the suppliers capability, standards of performance and levels of customer satisfaction. Following up on references is particularly important for services requirements where there is generally little tangible evidence of the suppliers capabilities. Information Security and Data Protection checks This is an important area of due diligence for any requirement for goods or services which would involve or relate to personal or sensitive data. In particular, completion of the checks would be required in respect of the purchase of certain software programmes, 3rd party hosting of data or systems, development of websites. However the scope for impact on personal or sensitive data is much wider and reference should be made to the Universitys Information Security and Data Protection Policies and the workbook of standard questions available within the Governance pages http://www2.warwick.ac.uk/services/gov/informationsecurity/policies/ , http://www2.warwick.ac.uk/services/gov/informationsecurity/purchasingissues/Departments should also be aware that the Academic Technology Service support team within IT Services provides advice and support in relation to technology required for research or teaching and should be contacted should there be a requirement to purchase a website for such activities Insurance As part of the RFQ and due diligence process, it is advisable to ensure that the supplier has adequate and up to date insurance cover. The subject matter of the RFQ will determine the appropriate insurance policy required, for example Public and Products Liability, Professional Indemnity, Cyber. Minimum levels of insurance are stated within the Universitys standard terms and conditions for purchase. Any queries regarding insurance provided by suppliers should be directed to the Insurance Office. Conflicts of Interest Any conflict of interest between a supplier and the member of the University participating in the RFQ process should be raised with the Chair of the Department for appropriate action to be taken.

Best Value v Lowest Price?

At the sub tender value level where quotations are obtained, contracts are most commonly awarded on the basis of lowest price. However, lowest price does not always translate to best value and it is important for Departments when undertaking RFQ activity to be clear on their full requirements, to understand the critical factors of importance and to ensure quotations are assessed fairly and robustly.

Factors driving best value considerations may include such things as quality, delivery timescales, aftersales service, availability of spares or consumable items etc. Not all of these factors will be relevant to every purchase or indeed be considered of value for every purchase.

When considering price, it may also be appropriate to seek information not only on the one off purchase price but also any additional associated costs such as; delivery charges, running costs, costs of consumables, costs of servicing and maintenance, decommissioning and disposal. Such whole life costing approach may not be appropriate for each RFQ exercise undertaken but may be worth consideration in certain circumstances.

Note: Departments must ensure a robust, documented audit trail is maintained for RFQ exercises in which the lowest price participant is not selected. In particular evidence should be retained of the decision making and reasonings as to why, in the departments opinion, an alternative to the lowest price option provided superior value for money.