Purchase Orders Procedure (Australia)
Parent Policy
Procurement Policy
The creation of a Purchase Order is required when engaging with a Supplier for the supply of Goods and/or services.
A Purchase Order is an official document of the University and acts as the authority to commit to the purchase of goods and/or services and the funds to cover the associated costs of the purchase.
The authorisation of a Purchase Order represents the approval to expand University funds and enter into a formal agreement with a Supplier. It is the Purchase Order approval, as distinct from the approval of a Supplier invoice, which carries the ultimate authority to spend University funds.
Definition of terms
Authorising Officer: A University Officer who has access rights to the University’s ERP system (SAP) with a set level of financial delegation and the authority to approve Purchase Orders. The authority to approve a Purchase Order may be for a specific Cost Centre or range of Cost Centres, as appropriate.
Buyer: The person or organisation that seeks to acquire goods and/or services from a Supplier. In the context of this document the Buyer is Monash University (the University) or an affiliated organisation bound by the University’s regulations.
Contractor Threshold Value: The level (e.g. monetary value) prescribed by the University whereby a University Buyer seeking to engage the services of a contractor or consultant must issue an RFT or RFP seeking at least three competitive Bids from Suppliers for the proposed supply of services.
Extended Price: The Extended Price is the extended cost of a lime item on a Purchase Order and is usually the Unit Price x the Number of Items (See Unit Price).
Issuing Officer: A University Officer, usually based in a Cost Centre level, who requires a Purchase Order to be raised. The Officer is typically the person who requires the good or service or may also be the person who has the administrator access to the ERP system or the person with financial delegation to approve the Purchase Order.
Material Code: A code, to be entered into a SAP document (Purchase Requisition and Purchase Order) and assigned to each item that is used to classify the type of good / service required. Material Codes are subsets of Material Group Codes.
Material Group Code: A code used to classify like groups of materials as defined by the Material Code. A Release Strategy is usually applied at the Material Group level.
Monash Procurement / Procurement: Monash University’s Procurement unit that co-ordinates the University’s strategic procurement activities, organises major supply agreements for common use goods and acts as an advisory body for procurement related matters.
On-going Supply Contract: A contract or agreement between the Buyer and Supplier that covers the on-going supply of goods/services over a nominated period. Individual purchases can be made against an On-going Supply Contract by either setting up standing Purchase Orders that “call-off” the Contract or by raising individual Purchase Orders that reference prices contained in the Contract. An On-going Supply Contract is usually arranged between “Endorsed Suppliers” for the supply of common use goods by all Cost Centres.
Procurement Board: The Board of management established by Monash University to promote and oversee best practice in the processes used by the University to procure goods and services in order to achieve value for the University’s expenditure. The Procurement Board will normally receive, for approval, the recommendations from a Tender Panel on the awarding of a Tender where the value of the Tender exceeds a prescribed threshold value.
Procurement Director: The head of Monash Procurement or person nominated by the Vice-President (Finance) to oversee the activities of the Procurement unit.
Purchase Order: A formal document initiated by a Buyer and forwarded to a Supplier normally used to form the basis of a one-off contract between the parties for the supply of Goods and/or services to the Buyer.
Purchase Requisition: An internal document used by a University Officer (staff member or student) to signify goods / services that they require to be ordered from a Supplier. A Purchase Requisition can be a SAP-based document or a paper-based document. Where a Release Strategy applies to the class of good / service then a Purchase Requisition must be raised and authorised in SAP.
Quotation / Quote: A submission from a Supplier that specifies the cost of supplying a good or service.
Quotation Threshold Value: The level (e.g. monetary value) prescribed by the University whereby a University Buyer must seek at least three competitive Quotes from Suppliers for the proposed supply of goods or services.
Quotation/Tender Summary Form: A pro-forma, downloadable from the Monash Procurement website, which records all Bids submitted by Suppliers in response to an RFQ, RFT or RFP. The form should be signed off by the appropriate officer(s). The form and the related submissions from Suppliers are to be retained as a formal record and may be required for audit purposes.
Request for Proposal (RFP): A formal request to seek detailed proposals on goods/services that offer a viable solution to the requirement and where competing bids vary significantly in form and price. It is usual that evaluation of bids will require clarification before the most appropriate offer is accepted. The final, negotiated price may differ from the submitted price. An RFP is more prescriptive than an RFQ and differs from an RFT in that the requirement is usually less prescriptive and not as tightly specified.
Request for Quotation (RFQ): A request to a Supplier to provide a quotation covering the cost of providing goods or services prescribed in the RFQ. An RFQ is generally issued for lower value goods and services than for an RFT or RFP and a quotation is generally provided in a shorter timeframe by a Supplier. It is usual ,provided that the good/service offered by a Supplier meets the requirement specified in the RFQ, then the lowest price bid is accepted and goods/services is purchased at the quoted price.
Request for Tender (RFT): A formal request to provide a detailed submission covering the cost of providing goods or services prescribed in the RFT and there is no variations allowed. This means that all bids must either comply with or exceed the specification. Provided that the goods/services offered meet or exceed the specification prescribed in the RFT, the lowest price bid is accepted. An RFT is more prescriptive than in an RFQ and seeks a more detailed response on the goods/services as well as overall cost factors.
Requisition: A Purchase Requisition.
Supplier: A person or organisation that can provide goods or services to a Buyer.
Tender: A competitive process, initiated by an RFQ, RFT or RFP, used to seek Bids from a Supplier with the aim of eventually acquiring goods/services for a Buyer.
Tender Threshold Value: The level (e.g. monetary value) prescribed by the University whereby a University Buyer must issue an RFT or RFP seeking at least three competitive Bids from Suppliers for the proposed supply of goods or services.
Tender Panel: A group, comprising three or more persons assigned by the Buyer, to evaluate responses to a Tender. The Tender Panel should be established prior to issuing a Tender and should approve the content and form of the Tender documentation prior to release. The Tender Panel is charged with making the final recommendation / decision as to which Supplier(s) has been successful in their bid and will be required to sign-off their recommendation on a Quotation/Tender Summary Form.
Unit Price: The base price of a item as listed in the Supplier’s catalogue or provided by Quotation or Tender. The Extended Price is usually the Unit Price x the Number of Items (See Extended Price).
Raising a Purchase Order
All University Purchase Orders must be generated within, and be printed in the standard format from, the University's ERP system (SAP). Other instruments that purport to commit the University to a Supply Agreement are not be deemed as an official document of the University and must not be used.
Responsibility
Issuing Officer
Information required in a Purchase Order
The information recorded in the ERP system against a Purchase Order must:
- Uniquely identify the Supplier (Vendor);
- Clearly identify the goods / services required to be supplied to the University with due reference to Supplier's catalogue / product numbers, where available;
- List the Unit Price and Extended Price of each good / service required;
- Provide details on where the intended goods should be delivered or where the services are required to be provided;
- Link to the Asset number when the purchase is for an item that is required to be recorded in the University's Asset Register;
- Provide explicit details on the goods / services required to be provided by the Supplier;
identify the General Ledger code (Account Code) in order to classify the expenditure type for formal recording in the University's accounts;
- Identify the source of funds (Cost Centre and Fund codes) to which expenditure will be recorded;
- record the Material Code to assist in the detailed classification of the goods / services being purchased by the University;
- Identify the Purchasing Group and Person responsible for raising the Purchase Order
- cross reference any Purchase Requisition or Contractor Agreement associated with the Purchase Order;
- Record any changes to the Purchase Order;
- Register the University Officer(s) that approved the Purchase Order. Responsibility
Issuing Officer
Authorising a Purchase Order
A Purchase Order is not a binding document unless it has been properly authorised by an Authorising Officer in SAP. SAP automatically routes the Purchase Order, via a workflow routine, to the Authorising Officer(s) that have the delegated financial authority to release the Purchase Order.
The Authorising Office must be satisfied, where required for goods and/or services exceeding the Quotation Threshold Value, that the Procedure for Tenders and Quotations has been properly followed to ensure a competitive process was undertaken.
The Authorising Officer must log into SAP, using their unique log in code and password, in order to approve (release) a Purchase Order. Once authorised, the Purchase Order is annotated with the name of the Authorising Officer.
Responsibility
Authorising Officer
Transmission of a Purchase Order to a Supplier
On approval of a Purchase Order the Purchase Order must be provided to the Supplier by one of the following mehods:
- Delivery by mail;
- Transmission by fax (using a dedicated fax or a fax gateway linked to SAP, if available);
- Transmission by email as an attachment (scanned as an electronic document).
SAP generated Purchase Orders carry reference to the University's general terms and conditions.
Responsibility
Issuing or Authorising Officer
Cross referencing Supplier Invoices
On supply of goods and/or services, invoices submitted by Suppliers are required to be cross-referenced with the Purchase Order within SAP.
Where Direct Invoices (invoices that do not have a referenced Purchase Order) are received by the University, such invoices will need to follow the appropriate processes with the relevant faculties and departments.
Any discrepancies between Supplier Invoices and Purchase Orders should be addressed by the Issuing Officer and copies of the related invoices retained by the relevant cost centre/department for audit purposes.
Responsibility
Issuing Officer
Supporting document to accompany a Purchase Order
Where a Purchase Order of goods and/or services exceeds certain threshold monetary values, then the authorisation of a Purchase Order must be supported by associated market engagement documentation (RFQ or RFP) that was used to ensure that the selection of the Supplier was carried out in a competitive manner and with an appropriate level of probity in order to protect the reputation of the University.
Evidence that there has been a competitive process applied, is to be summarised on a Quotation / Tender Summary Form that must be cross-referenced to the Purchase Order and provided to the Authorising Officer. The Quotation / Tender Summary Form must be also provided to the Director Strategic Procurement or Procurement Board as required for the approval and release of high value Purchase Orders.
The University requires that a competitive process be applied, as appropriate, when seeking goods / services in excess of the Quotation Threshold Value or the higher Tender Threshold Value, as appropriate. For services requiring the engagement of a contractor or consultant the Contractor Threshold Value is applicable. Responsibility
Issuing and/or Authorising Officer
Contact Person: Finance Policy
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