Purchase to Pay Process

Transcription

1 National Financial Regulations Purchase to Pay Process Contents MAIN CHAPTERS Chapter Description Page No. 1. Purchase to Pay (General) Purchase To Pay Tendering Process Purchase to Pay Specific Topics Capital Projects and Property Transactions...44 APPENDICES Additional Information Re; Chapter 1, Purchase to Pay (PTP) on page 55 Chapter 2 Tendering on page 74 Chapter 3 Non Order Payments on page 82 Chapter 4 Capital Projects & Property on page 84 GLOSSARY OF TERMS on page 133 to Refer Chapter 5 Topic 3 for Purchase to Pay Capital Specific Provisions Ver /20/2013 Page 1 of 133

2 PTP - SUMMARY OF MAIN STEPS PURCHASING PROCESS - SUMMARY 1 IDENTIFICATION AND NOTIFICATION OF NEED Identify Need Validate Need Classify spend at some point from up to PO generation Comply with local Purchasing Arrangements Complete Standard Requisition Form Submit Requisition Form to Budget Holder / Nominee 2 CONFIRMATION OF AVAILABILITY OF FUNDS & APPROVAL TO SPEND Receive confirmation of availability of funds Resolve any regulatory issues ( e.g tax clearance, licensing, statutory permissions) Maintain readily available record of formal confirmation 3 SOURCING OF SUPPLIERS TO PROVIDE GOODS & SERVICES Check goods held in Storage Check existing valid contracts Invite 3rd Party Supplier to Supply Refer to Central Procurement if appropriate Select Appropriate Sourcing Option. Complete Quotation/ Tender process as appropriate Select supplier 4 EXPENDITURE APPROVAL AND ISSUE OF PURCHASE ORDER Complete purchase order/ requisition form Prepare relevant documentation Obtain approval for purchase order/ requisition Issue purchase order / requisition Send purchase order/requisition to relevant parties Maintain record of all relevant documentation RECEIVING & SIGN-OFF PROCESS - SUMMARY A PHYSICAL RECEIPT AND CUSTODY OF GOODS & SERVICES PHYSICAL RECEIPT accept goods 'subject to inspection POD ensure 'Stores Issue' or 'Proof of Delivery' documentation is received CUSTODY maintain safe custody of goods INSPECTION inspect & check goods received (as soon as possible after delivery) Verify & record actual delivery of goods* B DOCUMENTATION AND RECORDING OF RECEIPT AND CUSTODY OF GOODS & SERVICES GRN GRN Approval GRN - RECORDING make and record decision to sign off receipt manager confirms that goods can be paid for on receipt of a valid payment request recognise liability to pay for goods by inputting into accounting system. record expenditure against relevant Budget Holder Receiving process is now complete Legend; PoD Proof of delivery, GRN goods received note. Note ; The above is a representation which illustrates the PTP process, some are set out in more detail within further on in the document. The number, timing/sequence and details of these steps may not apply to all transactions. Ver /20/2013 Page 2 of 133

3 1 Purchase to Pay (General) The key requirements of the financial regulations are contained within the main chapters. However, this should be read in conjunction with additional information set out in the more detailed elements of the regulations, contained within the respective appendices (by chapter). 2a. Scope 2b. Objective of the Financial Regulations in respect of the Purchase to Pay Process. below 2c. Purchase to Pay regulations are Minimum Requirements on page 4 2d. Purchasing Process Main Requirements on page 6 2e Receiving Process Main Requirements on page 19 2f Payment Process Main Requirements on page 25 APPENDIX - More Information re. Chapter 2 Topics on page 55 to 74 2a. Scope The regulations within this section are intended to set out the Primary Financial Control requirements for all non-pay expenditure (i.e. expenditure not processed through the payroll system). Summary of Purchase to Pay (PTP) basic steps / stages 1. PURCHASING Obtaining expenditure approval, Sourcing of appropriate goods / services from 3rd parties or Stores to meet identified service needs. Formally requesting the selected 3rd party to provide specified goods or services by issue of PO or contract. 2. RECEIVING ( receipt of goods or services) Receipt and checking / inspection of goods and services. Confirmation that they are fit for purpose, and match what was ordered or contracted for. Approval that Goods/Service can be paid for upon receipt of an appropriate request for payment 3. PAYMENT For goods and services generally on foot of invoices or other payment requests. A Key control within this process is the checking and verification of the invoiced price of good or services to the purchase order price. 2b. Objective of the Financial Regulations in respect of the Purchase to Pay process The objectives of the Financial Regulations in respect of the Purchase to Pay Process are to ensure the HSE, its Budget Holders, Managers and Staff; Ver /20/2013 Page 3 of 133

4 Comply with Government and EU Procurement requirements and ensure that the procurement process is open and competitive. Properly assess the HSE procurement requirements on a periodic basis to enable proper procurement planning. Demonstrate full accountability and probity as well as the highest ethical standards in respect of the public funds expended in the purchasing process. Acquire goods and services that are most appropriate and represent best value for money for the health service in terms of full life-cycle costs. Make best use of the purchasing power of the HSE by entering into contracts including national contracts, wherever appropriate. Aggregate Gi demand to optimise purchasing power. Obtain formal approval from the appropriate Budget Holder or their nominee before requesting the provision of any goods, services or works. Do not engage in purchasing above the limits of the budget available. Operate the 'Purchase To Pay' process in an efficient and effective manner that facilitates the timely production of accurate and comprehensive Annual Financial Statements (AFS). Properly manage their contacts with suppliers and provide full clarity to suppliers as regards what is expected of them in relation to all aspects of the process. Consistently apply high standards with respect to evidencing and recording of Receiving of Goods/Services and custody of goods. 2c. Purchase to Pay regulations establish PTP Minimum Requirements 2.2. These regulations set out what are minimum requirements around many aspects of the purchase to pay process including: 1. Number of quotes / tenders required. (details on page 51) 2. Value thresholds for different sourcing options. (details on page 51) 3. Approval levels. (details on page 52) 4. Time periods for receipt of quotes / tenders The requirements set out in this chapter relate to Non Pay expenditure. In addition, there are other requirements that arise due to the specific nature of expenditure and which are governed by separate protocol. These include; Capital Projects Project Approval is governed by Capital Projects Approval Protocol Property Transactions - is governed by the Property Transaction Protocol - Protocol for the Acquisition and disposal of Property Funding of Voluntary Organisations (Not for Profit/Grants). Ver /20/2013 Page 4 of 133

5 2.4. It is a requirement that managers operating these regulations will apply higher than the minimum control level (e.g. next level up authorisation) if this is necessary to ensure the objectives set out above at 2.B. are consistently achieved. Example: A manager may decide that in the case of purchase of routine medical consumables for one of his/ her hospitals he/she needs to get a Grade Vl to approve any purchase between 5,000 and 10,000 (see Table 2 - normally a Grade V can approve expenditure up to 10,000 for routine expenditure) because of any one or a combination of the following: He needs a tighter level of financial control for the remainder of the financial year in order to clear an overspend earlier in the year He does not have a sufficiently experienced Grade V He decides that the complexity of the equipment or its purchasing process warrants it The actual steps, the number of steps and the sequencing of steps in the process that is being referred to as Purchase to Pay will vary depending on a number of factors including: Type and complexity of goods or service being acquired. For more complex services, works and equipping, third party sign-off shall be required at each stage of the Purchase to Pay process. Frequency of purchase of specific goods / services Value The source of the goods or services Specific service unit or area acquiring the goods / services etc The level of computerisation within the process but the fundamental process and the required financial controls are common. Ver /20/2013 Page 5 of 133

6 PURCHASE PROCESS 2d. PURCHASING/PROCUREMENT; MAIN REQUIREMENTS 2.6. Definition For the purpose of these regulations purchasing includes all activities up to the point where: A supplier(s) has been selected The supplier(s) has been formally requested to provide goods /services FOUR KEY ELEMENTS for each Purchasing Transaction It is clear that each and every purchasing transaction will have the following elements: 1 Identification and notification of need. Page 9 2 Confirmation of availability of funds and approval to spend. Page 10 3 Sourcing of supplier(s) to provide goods or services. Page 11 4 Expenditure Approval and Issue of Purchase Order or Contract to Supplier Page General Application of Purchasing Regulations These regulations cover the entire HSE which is a large and very diverse organisation. It is not practical to cover all potential situations or differences that may exist regarding: Exactly by whom or in what manner a need for goods or services is identified and communicated At what precise stage or by whom the approval to spend available funds is decided Exactly how the supplier of goods or services is to be sourced in each specific case. Use of HSE standard procedures should be availed of where appropriate The precise manner and by whom the formal request to the supplier to provide the goods or services is made Budget Holders must ensure that there are documented Purchasing Arrangements in place for Managers and Users for each respective location /main category of spend Application of Purchasing Regulations to Bodies funded by the HSE Where works and related service contracts are being awarded by external organisations and are funded more than 50% the requirements of these regulations as regards sourcing of suppliers are applicable Budget Holders must ensure that relevant voluntary, not for profit or other such organisations are aware of this requirement and it should be included as part of any service agreement or other contract with such organisations Refer to NFR-31 Grants to Outside Agencies for further details Ver /20/2013 Page 6 of 133

7 MANDATORY CONTROLS WITHIN PURCHASING. These regulations prescribe the following mandatory controls within the Purchasing process: I. Segregation of Duties within Purchasing Ref as below II. Procurement Planning Ref on page 8 III. Identification and notification of need Ref on page 9 IV. Confirmation of Availability of Funds and Approval to Spend Ref on page 10 V. Sourcing of Suppliers to Provide Goods and Services Ref on page 11 VI. End of Purchasing Stage; Approval & Issue of Purchase Order Ref on page 16 ( I ) Segregation of Duties within Purchasing Appropriate segregation of duties is a key element of any financial control framework. In the context of the purchasing process the following requirements are mandatory; At some point between initial identification of need and the issue of a purchase order or contract at least one other staff member in addition to the final decision maker must be involved in the process. This must be evidenced by signatures appearing on purchasing documents e.g. requisition, purchase orders No manager (or staff) should have the final decision regarding the issue of a purchase order or contract for any goods or service that is for their own day to day use There must be a clear separation of tasks between the person raising a Purchase Order and Recording the Receipt of the respective goods/service There is a mandatory requirement to obtain appropriate professional procurement input where the value of purchases exceeds 25, Decisions to authorise expenditure (i.e. to issue purchase order or contract) above 25,000 must be formally written and recorded. These decisions must be recommended by a manager at least at Grade V who must not be the same person that has 'signed off' the initial decision A minimum of two staff one whom must have expenditure authority equal to estimate value of contract or otherwise approved by Assistant National Director of Portfolio & Category Management must be involved in both the opening and evaluation of all tenders. (see Table 2: Purchase Order/Contract Approval-Financial Limits by Grade,) Ver /20/2013 Page 7 of 133

8 Managers responsible for evaluating tenders (i.e. above 25,000) must not have the final decision as regards selection of the successful tenderer and / or approval to issue the purchase order or contract Procurement must be notified of and co-ordinate all tenders above the EU threshold except those tenders relating to Capital Projects which are the responsibility of the Estates Office Procurement is responsible for the Commercial Evaluation of all EU Tenders (other than Works agreed specialist supplies). The person responsible for procurement shall co-ordinate procurement process and prepare tender analysis report for purchase approver/budget holder s evaluation The Budget holder/purchase approver makes the decision to proceed / sign-off a tender based on tender report prepared by Commercial Evaluator Budget holders must maintain a list of Commercial evaluators N2 for the Tender process Segregation of duties (SOD) within purchasing should be read in conjunction with Segregation of duties within receipt/receiving of Goods and Services. ( II ) Procurement Planning Budget Holders must, within twelve months of the coming into force of these regulations, ensure that they have reviewed and analysed their likely purchasing requirements over the following 3 years They must put in place a procurement plan, in conjunction with procurement/ Materials Management/ Estates/ICT as appropriate to address: Appropriate categorisation and rationalisation of suppliers Contracts to be renewed or terminated/allowed to lapse and their timeframes Additional contracts to be put in place Main service developments (new services, service expansions, service reductions) likely to impact on procurement over the following 12 months Any other relevant matters Procurement plans should be updated annually and replaced every three years. Given the need for obtaining value for money and making best use of scarce staffing resources there is a requirement to co-ordinate and aggregate procurement plans. N 2 Commercial Evaluators provide support through the procurement process by (a) Co-ordinating the procurement process (b) provide commercial tender analysis (c) ensure purchase systems and procedures are implemented, (d) procure supplies in line with current purchasing policies and procedures. Ver /20/2013 Page 8 of 133

9 Specific Assistant National Director(s) delegated by a National Leadership Team Member must take the lead in the procurement planning process with appropriate professional procurement input It is a mandatory requirement that procurement plans identify any likely purchases which will require the use of a tendering process or the EU Procurement Procedure, based on the value thresholds Account must be taken of the full likely HSE requirement for the goods or service in deciding which value threshold and related sourcing option is appropriate. ( III ) Identification and Notification of Need Managers and staff who identify and communicate needs for goods and services must satisfy themselves and be in a position to demonstrate that the need: Is genuine and is appropriate to their service Takes account of prevailing policies and constraints (including statutory compliance requirements) together with resource constraints under which their service is operating Person Approving expenditure must be aware of cost/value of items/service required and knowledge of budget Has been identified following a review of existing goods and services that may already be available to the service There is a requirement to obtain appropriate professional procurement input where the value of purchases exceeds 25,000 i.e. for purchases in excess of 25,000 the procurement function should be contacted and guidance sought In communicating the need for goods or services to the relevant Budget Holder, or their nominee, the manager or staff member must: Fully comply with the formal documented purchasing arrangements N3 put in place by or on behalf of the Budget Holder Fully comply with any requirement of their own manager Clearly communicate, in written form, unless otherwise permitted, the following: Date of Request Specification of goods / services required Name/source of request Purpose for which goods / services required Cost Centre / Internal Order Material Code / GL Preferred delivery address Timescales within which required Likely cost if known & quantity /duration etc N3 Budget Holders need to be pragmatic in drawing up the mandatory formal documented purchasing arrangements described at 1.above as regard (a) Value of goods and services and (b) Routine versus non-routine goods and services Ver /20/2013 Page 9 of 133

10 The normal requirement is for requests for the purchase of goods or services to be submitted on a standard pre-formatted sequentially numbered requisition form Such standardised requisition forms are particularly important where a purchasing location receives a high volume of requests from a number of remote locations Requisitions must be submitted using the financial information system where required by the relevant Budget Holder Adequately record the request so that it is readily available for future reference or inspection / audit. ( IV ) Confirmation of Availability of Funds and Approval to Spend Depending on the specific circumstances of any particular purchasing transaction confirmation of availability of funds may be required: Before a need is communicated to the manager or staff nominated to source suppliers and issue purchase orders or contracts to same, or At the same time and/or by the same manager with authority to issue requests to suppliers to provide goods or services (i.e. the person who approves purchase orders or contracts) Expenditure approval thresholds set out in Table 2; Purchase Order/Contract Approval Financial Limits by Grade(page 52) Mandatory Requirements It is not intended to prescribe the detail of this element of the purchase process, however the following are mandatory requirements: Budget Holders must document purchasing arrangements for their area to ensure there is clarity in respect of: 1. The point at which approval to spend is confirmed 2. By whom approval to spend is confirmed Formal confirmation of available funding and approval to spend must be obtained prior to issuing a purchase order or contract to provide goods or services to a Third party supplier Regulatory issues must be resolved prior to the issuing of a purchase order or contract. Such issues may include the following which is not intended to be an exhaustive list: 1. Any licensing issues 2. Other statutory permissions or requirements Ver /20/2013 Page 10 of 133

11 3. Tax Clearance Certificates /Tax status issues N A record must be readily available whether by reference to the Financial Information System (FIS) Gii record, signature on copy purchase order or other means Exceptions are only allowed where they can be clearly demonstrated as necessary to prevent material adverse impacts: To clients To members of the public To staff To the service generally To property or other assets of the Health Service Executive All exceptions must be clearly recorded for future audit and must be rectified by obtaining the necessary approval on the next available working day. ( V ) Sourcing of Suppliers to Provide Goods or Services Budget Holders responsibility in relation to Sourcing Budget holders and their nominees must; Monitor their purchasing activity on an ongoing basis. They must identify opportunities for appropriate extension of centralised contracting. These opportunities should be pursued with Procurement Document their sourcing procedures as part of their formal local purchasing arrangements and all such sourcing procedures must comply with the National Financial Regulations Have regard to the need to avoid ordering excess quantities of goods it is important to balance the requirement to ensure goods are available when needed against the issues associated with over ordering including: 1. Lack of appropriate storage 2. Excess goods may not last and have to be scrapped These requirements should be addressed in the context of meeting the need for procurement planning as set out above. 1st required preference; Source from Stock or Existing Contract It is a specific responsibility of each Budget Holder to ensure that: to the greatest extent practicable and where consistent with achieving value for money as many purchases of goods and services are from : N4 A Tax Clearance Certificate(TCC) is a written confirmation from Revenue authorities that a person's tax affairs are in order at the date of issue of the certificate. Under Section 1095 of the Taxes Consol. Act,199, it is mandatory that all vendors in receipt of 10,000 or more(inclusive of VAT), within any 12 months period, produce either a valid C2 certificate or a general Tax Clearance Certificate. Such contracts can involve the purchase, hiring, leasing of goods, services property. The requirement applies even where the provision of goods or services is not the subject of a formal written contract. Ref ( Ver /20/2013 Page 11 of 133

12 (i) Stock (Stores) - Goods held and issued from Stores/ storage location. (ii) Contracts - Acquired by ordering off a pre-existing and still valid contract, or Requirement to Utilise Contracts that are in place and still valid It is incumbent to establish whether an existing contract is already in place and, if so, to utilise this contract (Health Service Procurement Policy) The terms of any given contract must make clear the extent to which the HSE commits to purchasing from the suppliers who have been awarded the contract In the negotiation of any contract care must be taken to very clearly state the terms upon which the HSE agrees to any exclusive use of the supplier and their goods or services Particular consideration must be given to HSE locations or services that may have low volume or low value requirements or may be geographically remote The following should be the over riding factor in Putting in Place contracts; 1. the achievement of value for money including the use of scarce staff resources (within procurement and service delivery) 2. At all times, one must fully comply with Public procurement requirements The non-use of a relevant existing valid contract, other than as clearly provided for the contract, must be approved by the specifically delegated Assistant National Director (delegated by National Leadership Team Member) or by the Head of Procurement. The Head of Procurement must be notified in all cases Where contracts have already been negotiated this simplifies the purchasing process. It should enable the relevant staff member to focus on selecting the required goods from the contract list or catalogue. 2 nd required preference; Invitation to 3rd Party Supplier to supply General If goods or services cannot be sourced from stock or by calling off an existing contract then it will be necessary to source a supplier(s) directly It is a mandatory requirement of these regulations that a competitive process should be used unless there are justifiably exceptional circumstances Where HSE funds external organisations; which are awarding works or related services contracts and HSE is funding these contracts by 50% or more then these organisations must comply with the sourcing requirements in these regulations. Ver /20/2013 Page 12 of 133

13 2.30. This provision applies to both commercial and voluntary / not for profit organisations funded by HSE Every manager sourcing a supplier has an obligation to ensure that they are in a position to accurately and clearly specify their requirements to potential suppliers, regardless of value threshold Value Thresholds for Sourcing of Suppliers- General The value of the likely purchase is the major factor in choosing the required method for sourcing the supplier All values should be applied excluding VAT unless otherwise stated. 1. Goods The threshold should be applied in respect of the need for the same or similar goods for the remainder of the current financial year. 2. Services (including construction related services) - The threshold should be applied in respect of the need for the same or similar services for the remainder of the current financial year. 3. Works The threshold relates to the specific construction works. Authorisation of Capital Projects, and the related Expenditure Approval and Sourcing of Supplies and Services must be undertaken and managed by Estates Function In applying the value thresholds for sourcing managers must take account requirements for the same or similar goods or services in as wide an area of the overall HSE service as possible Prohibition on Splitting of Purchases to avoid value thresholds Splitting of Purchases occurs where a staff member separates what is in effect one requirement into two or more separate lots for the purpose of applying a lower than appropriate value threshold. This practice represents a very serious breach of the Financial Regulations and is prohibited Value Thresholds for Sourcing represent the minimum acceptable control levels. A Budget Holder must, if they believe it appropriate, require the use of the more open methods of sourcing suppliers even where the expected value does not make this mandatory. Such an approach would be required, for example, if they deem it necessary to: Ensure proper controls are in place Achieve best value for money Ver /20/2013 Page 13 of 133

14 2.35. SOURCING OPTIONS THAT COMPLY WITH THIS FINANCIAL REGULATION Table 1; A summary of main requirements with regard to Sourcing of Suppliers is set out in Table 1 on page 51. This includes the Methods of Sourcing, Number and form of quotes/tenders and minimum time for receipt of quotes/tenders allowed by these regulations for different bands of spend The following options may be utilised in cases where either acquiring from stock or from an existing contract are not possible: 1. Direct approach to one or more potential suppliers seeking quotes see variations below but operates within 1 to 25,000 range, excluding VAT. 2. Public Invitation of Tenders (Non EU) see variations below but operates between 25,000 to 200,000, excluding VAT for goods / services 5,000,000 for works). 3. EU Public Tender see variations below but operates for anything over the thresholds listed at 2 above If there is any uncertainty as to which value range the required goods / services fall into then the next highest range should be assumed and the sourcing options required for that value range are to be utilised Budget Holders and their nominees are required to use the sourcing options required by the higher value ranges where it is probable that this will yield better value for money. They must satisfy themselves that any additional expense and / or additional time involved can be justified Authorisation to seek quotes / tenders N Each Budget Holder or their nominee must set out the appropriate authorisation to be obtained prior to seeking quotes or tenders. This must be covered in the formal documented purchasing arrangements that is required to put in place As a minimum the following must be complied with: 1. Grade VI or higher must approve in advance any proposal to seek tenders (above 25k) up to the EU threshold levels 2. Grade VIII or higher must approve in advance any proposal to seek tenders requiring EU tendering procedures The General Requirements with regard to Tendering are set out on page 35 and include Tender Receipt, Custody and Opening, Tender Evaluation, Tender Award, Notification of Results and Documentation Please refer to section Professional Input to Tendering which details the requirements to obtain appropriate professional procurement input where the value of purchases exceeds 25, Issue of Tender Forms / Documentation A record must be kept of each request for tender documentation detailing when received, when responded to and documentation issue. N5 Quotations/Quotes (for the purpose of these regulations) refers to values up to 50,000, the term Tender or bid refers to a more formal submission by a supplier to supply goods or services greater than 50,000. Ver /20/2013 Page 14 of 133

15 2.41. Minimum time to be allowed for receipt of quote/tender. ( The times specified are the minimum allowed. Managers are required to allow additional time where doing so could be considered reasonably necessary Additional time should be allowed if it is considered necessary to secure the minimum number of quotes / tenders or to achieve best value for money Real time constraints that may exist around meeting service needs must be taken account of when considering allowing additional time Receipt of less than the required number of quotes Above the 25,000 threshold the receipt of less than the minimum required number of quotes means that there is a requirement for the next level up of authorisation to approve the resulting purchase order or contract. For example - ordinarily these regulations provide that a Grade V can approve purchase orders up to 10,000 for routine expenditure but in the event that only 2 quotes are obtained for goods costing 9,000 then the approval of a Grade VI is required The relevant manager is required to consider whether the objective of achieving best value for money would be better served by restarting the quotation process in an effort to achieve the required minimum number of quotes All potential suppliers must have equal access to information All potential suppliers must be informed in a consistent way as to any criteria that may be used to evaluate their quotes or tenders HSE staff must not give any real or perceived advantage to any potential supplier It is essential that any information or clarification provided to one supplier is provided in the same format and at the same time to all potential suppliers regardless of whether they have requested it or not Evaluation of Quotes and Tenders The general principles regarding evaluation of tenders must be applied to the quotation process. Evaluation of quotes must involve the use of objective and fair criteria that are consistently applied The Most Economically Advantageous Tender (MEAT) Giii or Lowest Price achieved must be accepted As the value threshold for quotes is lower than for tenders (quotes up to 25k, Tenders thereafter) it is expected that the quotation process will be less formal than the tender process and will require less documentation A clear record should be kept of the evaluation of all quotes and tenders - in particular where the lowest priced quote is not accepted the reasons for this must be recorded for future audit. Ver /20/2013 Page 15 of 133

16 ( VI ) End of Purchasing Stage Expenditure Approval and Issue of Purchase Order or Contract. Once an appropriate supplier has been sourced, the final stage in the tendering/selection process is to obtain approval for the expenditure and then to formally request the supplier(s) to provide the required goods, services or works. This is normally done through the issue of a purchase order or letter of offer to the supplier Expenditure Approval - Fundamental Requirement of these Regulations It is a fundamental requirement of these regulations that expenditure approval; is obtained prior to any request being issued to a supplier to provide goods or services (via Purchase order or contract etc) can only be issued once availability of funding has been confirmed Expenditure Approval - Financial Limits by Grade Expenditure approval is a key control within the Purchase to Pay process Table 2 Purchase Order/contract Approval Financial Limits by Grade, on page 52 sets out the approval levels for ranges of expenditure based on a hierarchy of grades Expenditure approval is based on hierarchy of grades utilising the main clerical/administrative grades to represent the standard approval levels Persons approving expenditure must be a formally appointed budget holder or must be nominated by a budget holder Non clerical/administrative grades can be nominated by budget holders as expenditure approvers Responsibility of Managers who approve expenditure It is essential that every manager who signs off on expenditure is fully aware of the meaning of that action as they will be held accountable for same This applies to any form of expenditure approval including approval for: The issue of a purchase order. The issue of a contract. Expenditure by any other means In effect the manager is confirming that he has taken all reasonable steps to assure him/herself that: 1. The expenditure is appropriate to meet the need. 2. Proper procurement has taken place. 3. The expenditure is within the available budget. 4. The Financial Regulations have been complied with. 5. It is in order to request supplier to provide goods/services. Ver /20/2013 Page 16 of 133

17 In assessing whether sufficient budget is available to cover any proposed purchase the manager must take account of all expenditure to date including commitments and known additional expenditure to the end of the financial year It is a mandatory requirement that requests to suppliers are in writing in the form of: System Purchase Orders Manual Purchase Orders Contracts Other written format approved by the relevant Assistant National Director of Finance Purchase orders must actually be sent to suppliers once issued. Where there is a necessity to place orders verbally the appropriate purchase or other written request as approved, must be issued to the supplier on the next available working day and must be clearly marked confirmation of verbal order dated xx/xx/xx Information regarding the acceptance of any tender can only be given to unsuccessful tenderers after the relevant Budget Holder has approved the expenditure and the award of the contract Value thresholds are applied to determine the level of managerial approval required in respect of any given purchase order / contract or expenditure Splitting of Expenditure Approvals Prohibited Expenditure approvals must not be artificially divided up or split so as to avoid the proper application of the expenditure approval limits set out in Table 2 on page Purchases extending over a number of months The approval of expenditure for goods or services to be provided over an extended period of time should be treated as one expenditure approval and requires the appropriate grade of manager to approve This applies for example to grants to outside agencies (s.65 s etc) the approval of the annual grant for the year and any subsequent adjustments to that grant are deemed to be expenditure approval decisions The processing of the monthly / quarterly grant payments are not expenditure approval decisions but do require appropriate validation and sign-off in terms of satisfactory receipt of services Departure from the Financial Limits by Grade Where it can be shown that there is a pressing need individual staff members can be authorised to hold the expenditure approval limit of the next grade above them Contingency arrangements Giv should be prepared to ensure that short term gaps that require temporary departure from financial limits. For example procedures to be put in place to address holiday and sickness cover The relevant Assistant National Director/ Hospital Network Manager must approve such arrangements. These do not take effect until they are notified to the relevant Assistant National Director of Finance Departures from limits applies only to Grade IV and above. Ver /20/2013 Page 17 of 133

18 Such departures must be treated as exceptional and must be reviewed at least annually and formally re-approved if they are required to continue Requirement for Written Decisions General There is a mandatory requirement to ensure that sufficient documentation is retained to facilitate any necessary future review of the rationale behind any expenditure approval For purchases below 25,000 appropriately filed and accessible copy letters, requests, quotes etc will provide sufficient documentation to meet this requirement. The approval of the appropriate manager must be clearly noted and dated above their signature on a purchase order or other relevant documentation For expenditure above 25,000 a formal written decision must be retained along with other written decisions of the relevant manager Expenditure Approval on Financial Information System /Accounting System Whenever practical the aim should be to facilitate the streamlining of the expenditure approval process without any reduction in financial control. This aim can be achieved by ensuring that managers approving the issue of purchase orders / contracts e.g. do so using accounting system directly. Transitional arrangements will operate for those locations with accounting systems with insufficient functionality to allow on-line approval. Ver /20/2013 Page 18 of 133

19 RECEIVING PROCESS 2e. RECEIVING; MAIN REQUIREMENTS Definition The receipt / receiving process for goods or services cover the following activities: 1. Checking and recording that the goods or services received match the specification of what was ordered or contracted by the HSE. 2. Checking and recording that the goods or services that have been received are in good order and are deemed to be fit for the purpose for which they were supplied. The receipt / receiving process are complete when 1. to 2. are complete The Key control within the Receiving process is to ensure that the quantity and quality of goods specified have been satisfactorily delivered to meet the customer requirements At this stage it is appropriate to record the accounting entries in the Financial Information System (FIS) to: i) recognise the liability to pay for the goods, services or works ii) record the expenditure against the relevant Budget Holder This is achieved by inputting a Goods Received Note (GRN) onto the FIS. It is important that the receiving process is completed efficiently and without undue delay to ensure that the HSE recognises its liabilities and records expenditure at the earliest appropriate time Receipt / Receipting Key Control Stage Receipt / receipting is the second and final key control stage in the purchase to pay process. Once this stage has been appropriately reached what remains are important but lesser control points around invoice checking When a manager makes a decision that the receiving process is complete they are in effect making a decision to pay for the goods and services provided an appropriate payment request (invoice) is subsequently received.. They may never see the invoice unless their personal involvement is required to address any mismatch between the invoice and the goods received These regulations support the need to move away from the inefficient process of having invoices circulating around the HSE to be certified This is becoming increasingly unnecessary with modern financial systems that can automate the matching of invoices against purchase orders and delivery documents (Goods Received Notes). Ver /20/2013 Page 19 of 133

20 2.45. General Application of Receipt / Receiving regulation These regulations cover the entire HSE and, given the diversity inherent in the HSE, variations may occur in the detail around: Exactly by whom or in what manner goods or services are received At what precise stage or by whom the checking of what has been received against the price, quantity and specification of what was ordered or contracted for will be carried out The precise manner and by whom it will be decided that it is in order to pay for the goods or services upon request Who exactly performs the related accounting entries involving inputting what FIS refers to as a Goods Received Note that has the effect of : Recording a liability in the accounts of the HSE Recording the expenditure against the budget of the relevant Budget Holder. It is not intended to prescribe the detail of exactly how the receipt / receiving process will operate in specific locations, however, the following are mandatory requirements: Mandatory Controls within Receiving. A. Segregation of Duties within Receipt / receiving of goods and services Page 21 B. Procedures for receiving to be put in place by Budget Holders Page 21 C. Delivery of Goods/Services to Nominated Receipting Location Page 22 D. Inspection, Checking and Matching of Receipt Page 22 E. Authorisation and Sign-off for Receipt of Goods and Services. Page 23 Ver /20/2013 Page 20 of 133

21 A. Segregation of Duties within Receipt / receiving of goods and services No manager can both make the decision to issue a purchase order or contract and also sign-off on the receipt of the goods or service There must a clear separation of duties between the Purchase Ordering and Receiving Required Sign-off on receipt of goods or services : 1. Up to 5,000, receipt must be approved by grade III 2. Up to 25,000, receipt must be approved by grade lv 3. Above 25,000, receiving must involve at least 2 managers one of whom must be at Grade V or above Example of Receipt of Goods greater than 25,000. Example A: Staff member A initially receives the goods and physically inspects and signs off that the goods are in order etc and can be paid for when invoiced. A separate staff member must carry out the accounting entries i.e. by recording the receipt on the system. Example B: Staff member A initially receives the goods and carries out all the inspection checks etc. Staff member B signs off that receipt is complete and it is in order to pay for goods once invoice received. Two people have now been involved in the process so either staff member can complete the accounting entries or a third staff member can do so No manager can have the sole sign-off on receipt of goods or services that are intended primarily for his or her own day to day use. B. Procedures for Receiving to be put in place by Budget Holders Receiving Procedures and Locations Receiving of good or services may occur at designated receiving points e.g. hospital stores or a health centre within community care. The purchase order should state the designated point of delivery Responsibility rests with the relevant Budget Holder to ensure appropriate receiving procedures are in place to enable compliance with these regulations Budget Holders must put in place clearly documented procedures for the efficient operation of the main elements of the receiving process outlined above A key control is ensuring that issues with goods or services received are identified as soon as possible after receipt and notified to the supplier The receipt / receiving arrangements put in place must be formally reviewed and updated at least annually and the output of these reviews must be held available for future audit. Ver /20/2013 Page 21 of 133

22 C. Delivery of Goods/Services to Nominated Receipting Location Gv Initial Receipt of Goods / Services The person who initially physically receives the goods or services may not be the person who carries out any or all of the checking referred to above. The mandatory requirement is that all staff who initially receives goods or services on behalf of the HSE is aware that their minimum obligation is to: i) Accept the goods/services provided that they have not been formally precluded from doing so ii) Accept the goods or services on a subject to inspection / confirmation basis only if they are not in a position to carry out the necessary checking while the deliverer waits. iii) They must clearly mark this on any documentation they are signing for the deliverer. iv) Obtain and retain a copy of any delivery documentation including anything signed by them for the deliverer and pass it to the appropriate staff member. v) Maintain safe custody of the goods until they are brought within whatever local inventory / asset management arrangements are in force for that location. vi) Immediately, or as soon after as is practical, notify the appropriate staff who is responsible for carrying out the remaining or next step in the process Derogation ; Budget Holders may, with the approval of the Assistant National Director/Hospital Network Manager or equivalent salary grade (or nominee) co-signed by the relevant Assistant National Director of Finance put in place alternative arrangements. Such arrangements may involve random sample verification or other measures not involving full confirmation of delivery for each specific direct delivery prior to payment. There is a balance to be struck between the value of the goods or services and the cost of verifying their receipt. D. Inspection, Checking and Matching of Receipt Procedure following Initial Physical Receipt Goods or services must be inspected and checked on a timely basis. This should take place at the time of delivery or if not, then as soon as possible after actual delivery of goods or services. Delivery of goods or services must be inspected and checked in respect of: i. Match to specification i.e. was it what was ordered in terms of quantity, type etc ii. Fitness for purpose i.e. are they fit for the purpose for which they were purchased or are there any obvious defects etc. iii. Match to price indicated on the purchase order or contract Timing of Inspection / Checking of goods or services received There is a mandatory requirement to inspect goods and services as soon as is practical following delivery. Ver /20/2013 Page 22 of 133

23 It is important that Budget Holders ensure that this aspect of the receipting process is carefully managed to ensure the HSE does not suffer any loss due to late checking of goods or services received Suppliers generally have set time periods within which they must be notified of any problems with goods or services delivered by them In respect of services this requirement is particularly important given that services can generally not be returned a. Matching to purchase order specification Discrepancies against the original purchase order or contract must be identified and a decision made as to what action, if any, is required to resolve the issue All material discrepancies and action taken to resolve must be recorded Where some of the goods do match what was ordered then a decision must be taken and recorded as to whether these goods will be accepted or whether the entire delivery should be rejected Return of Goods to the Supplier Faulty or excess goods or goods that do not match what was ordered should be returned immediately or as soon as possible to the supplier The HSE should not suffer the cost of returning goods to any supplier where they are defective or do not match what was ordered. E. Authorisation and Sign-off for Receipt of Goods and Services Sign-off on Receiving Process It is a mandatory requirement that at the conclusion of the receiving process a decision is made and appropriately recorded Managers must be pragmatic around how this is achieved and in most cases a note on the purchase order or delivery document signed by a manager at the appropriate level will suffice The signing off on the satisfactory receipt of a good or service is an important control. It represents the point of no return in respect of most purchases. However, it is a lesser control than that required to authorise expenditure in the first place Professional Input to Receipting Goods/Services over 25, Depending on the nature of the goods or services (remembering that services includes building services) it may be necessary to obtain professional and / or technical advice internally or externally as to the receipt of goods or services. Ver /20/2013 Page 23 of 133

24 The provisions above within Purchasing as regards obtaining professional / technical input to expenditure approval above 25,000 also apply to signing off on satisfactory receipt of goods or services above the threshold Written Decisions for Receipts of Goods, Services and Works A written decision signing off on the satisfactory receipt of goods or services is required where the value received is in excess of 100,000 for Non Routine expenditure This decision must summarise the steps taken to validate that the goods or services received matched what was ordered/contracted for and were free from obvious defect Responsibility of Managers who sign-off on receipt of Goods/Services It is essential that every manager who signs off on receipt of goods or services is fully aware of the meaning of that action as they will be held accountable for same In effect, once a Goods Receipt Note has been created on the system which matches to a purchase order, the person who has approved the GRN has triggered a decision to pay, subject to receipt of a valid invoice Managers who sign-off on the receipt of the goods or services are confirming the following: That all steps in the receiving process up that point whether carried out by them or on their behalf or otherwise. Are to the best of their knowledge, having taken all reasonable steps to assure themselves of same, fully compliant with these Financial Regulations. And are fully compliant with any other relevant requirements that are in force at that time. Ver /20/2013 Page 24 of 133

25 PAYMENT PROCESS. 2f PAYMENT PROCESS; MAIN REQUIREMENTS Definition The release of payment, following receipt and matching of a payment request (usually an invoice) to what was ordered and satisfactorily received Payment is the final stage of the Purchase to Pay process Payment should only occur after proper sign-off of the satisfactory receipt of goods, services or works Authorised Payment requests for specified payments in advance Payment clears the HSE liability to the supplier Payment - General The controls around the payment element of the purchase to pay process are essential but not as fundamental as those covering Purchasing and Receipt. The focus of controls currently around invoice certification/approval those within Purchasing and Receiving By the time the purchasing and receipt stages have been properly completed the HSE has: i. A) Approved expenditure via the issue of a purchase order or contract. i. B) Signed off that satisfactory receipt has been achieved and payment is in order once a proper payment request is received The control issues at payment stage are around confirming that the above have taken place and that the payment request (usually an invoice) agrees with same, particularly in terms of price These regulations require that the HSE move as quickly as possible to a situation where the bulk of payment requests (invoices) are; received centrally within the shared services centre or equivalent automatically matched to the purchase order and GRN automatically approved for payment once a three way match is achieved (3 way match = 1. Purchase Order + 2. Goods Receipt Note + 3. Invoice ) routed electronically to the relevant staff member for resolution if auto matching fails Information to Appear on Invoices Minimum requirement It is the responsibility of each Budget Holder to manage relationships with suppliers, either directly or through the staff operating the procedures to ensure that invoices are received promptly and contain all the necessary prescribed information. Ver /20/2013 Page 25 of 133

26 2.87. An invoice must contain the following information; Supplier Name and Address Invoice Number and Invoice Date/ Tax point (date which VAT applies) Purchase order number or equivalent agreed number. Delivery details, reference number, delivery date and delivery address Description of Goods or services being purchased Supplier VAT and Registration number Vat Exclusive Amount, Vat amount by Vat Code and total invoice amount Certification information required e.g. engineering certification of work. Unit Price Tolerance Levels - (When Matching Invoices to PO/GRN) These regulations permit a general price tolerance level of 25 or 2% (whichever is the lower) when matching the total value of an invoice to the relevant amount on the purchase order / GRN Quantity differences (Invoice quantity is greater than Ordered) Quantities delivered in excess of the Purchase order quantity should not be accepted and should be taken back by the supplier at no extra cost to the HSE Price differences All matching differences above 25 or 2% require the invoice to be referred to the appropriate local staff member for resolution Budget Holders must review these reports and report on a quarterly basis to the relevant Assistant National Director of Finance as regards any trends in the occurrence of matching differences Importance of timely receipting (entry of GRN) on the Fin. Info. System(FIS) It is essential that goods/services are properly Good Receipted on the financial information system (FIS) when actually provided/delivered by the supplier This will ensure that any mis-match between the purchase order and goods received is quickly identified and resolved. This will simplify the process of matching the invoice to the already matched purchase order/goods Receipt Note Prompt entry of the goods receipt notes (GRNs) on the FIS is also essential to ensure expenditure is recorded at the proper time, i.e. when it is incurred Authorisation Levels for Payment Provided the purchasing and receipt stages of the process have been carried out in full compliance with these Financial Regulations it is not a requirement to assign any particular authorisation grade level to the payment stage of the process. This is largely due to the fact that this stage is seen as appropriate for automation It is crucial therefore that the importance of the purchasing and receipt stages is fully understood by all relevant managers and staff. Ver /20/2013 Page 26 of 133

27 2.91. Prompt Payment of Interest Budget Holders must ensure that in designing, implementing and monitoring their purchasing arrangements they are fully aware of and compliant with the requirements of the prompt payment legislation The key prompt payment issue (relating to the purchasing process) is to ensure that there is clarity as to what payment terms apply in respect of any purchase order or contract issued to any supplier The HSE standard payment terms in respect of normal suppliers or what are often referred to as Traders are within a range of 30 to 45 days from receipt of invoice or delivery of goods / services whichever is the later The payment terms should be quoted on all documentation issued to suppliers including tender documentation, purchase orders etc There will be cases where payment terms requiring less than 30 days are appropriate however, these require the specific or general approval of the relevant Assistant National Director of Finance unless encompassed within the following: Public Utilities (e.g. Eircom, Bord Gais etc.) Grants to outside agencies no invoice, paid in accordance with contract or agreement. Ver /20/2013 Page 27 of 133

28 3. Purchase To Pay Tendering The essential requirements of the financial regulations are contained within the main chapters. However, these should be read in conjunction with additional information contained within the respective appendices (by chapter) TENDERING... (A Tendering process is required for all purchases of Supplies or Services above 25,000 unless available from stock or on contract) 3.2. General The general purchase to pay regulations must be fully complied with in relation to tenders unless specifically provided for in this section This regulation is intended to expand on and clarify the general purchase to pay regulations in relation to tendering and must always be read in conjunction with those regulations Professional Input to Tendering Every manager sourcing a supplier has an obligation to ensure that they are in a position to accurately and clearly specify their requirements to potential suppliers, regardless of the value threshold Appropriate and necessary procurement input and / or technical / clinical input must be obtained by the manager sourcing suppliers for values above 25, This input applies to the various stages of the process which can be summarised as: i) Identification of need and specification of requirements to meet that need ii) Assessing and evaluating potential suppliers iii) Conduct of tendering process iv) Evaluation and award of tender plus notification to unsuccessful tenderers v) Supervision of supply of goods, services or works (in some cases project management) vi) Sign-off on satisfactory receipt / completion of goods, services or works 3.4. Works - Tenders for Construction Works and Related Services It is a mandatory requirement that the provisions of the purchase to pay process regulations be fully complied with as regard works and related services unless specifically indicated otherwise in this section It is also a mandatory requirement that the provisions of Capital Projects regulations are fully complied with regard to Works and related services, unless specifically indicated otherwise in this section. October 2006 Ver /20/2013 Page 28 of 133

29 Public Advertisement Compliance with the requirement for public advertisement involves publication on the government tendering web site Other advertising media such as national newspaper should be utilised in addition to the web site if considered necessary to attract a sufficient number of tenderers Only the relevant specially delegated Assistant National Director(s) can approve a departure from the requirement for public advertisement (above 25,000 for goods/services or above 500,000 for works), but only in exceptional circumstances as detailed on page This approval must be co-signed by the Head of Procurement. Aggregation of Tenders/ Tender Coverage (Source ; Regional Material Management s Procedure for Tender/Contract Approval ) It is the policy of the HSE to move to a situation where the level of aggregation of purchasing is increased consistent with full compliance with EU Procurement requirements and achievement of Value for Money These regulations require that pending the completion of the change process outlined above, the following Procedure for Tender/Contract Approval (issued in March 2005 by Regional Materials Management Group ) will apply This pre-tender procurement Aggregation process (Tender/Contract Approval procedure) applies to proposed tender process with an estimated contract value in excess of the high values (currently 25k) defined in the procurement policy Dealing with uncertainty around likely tender values The thresholds for EU Procurement have been set out on page 51. These values are based upon the VAT exclusive value of expected spend Reasonable estimates must be used when estimating the likely value of a tender to determine whether the EU thresholds will be reached The estimates must be: i) Properly arrived at ii) Based on appropriate professional / technical input iii) Properly documented and recorded In the event that an estimate was used to decide that EU Procurement Procedures were not necessary and this subsequently turns out to be incorrect, the procurement process remains valid provided the original estimate was reasonable in all respects and stands up to scrutiny If there is a reasonable expectation that the EU threshold will be reached there is a requirement to utilise EU procurement procedures. Ver /20/2013 Page 29 of 133

30 Non-EU Tenders Forms of Tender Process Used where values are below the EU Thresholds ( 200,000 Supplies and Services, and Works 5,000m) The 4 options for Non EU Tendering Processes are: Open Tendering (Non EU) (Page 31) Restricted Tendering (Non EU) (Page 31) Abridged (Selective) Tendering (Non EU) (Page 32) Negotiated Tendering (Non EU) (Page 33) General The general requirement is to ensure that any tendering process utilised by the HSE is conducted fairly, honestly and in a transparent manner The objective is to ensure, to the greatest extent practical, that a sufficiently wide field of competition is attracted to the process to provide assurance that best value for money can be achieved It is important to stress that any dialogue with tenderers, that could be construed as post tender negotiation on price or which may result in significant changes in the published tender specifications must be avoided Such dialogue is only permitted in the limited circumstances in which the Non EU negotiated procedure is appropriate see below The public advertisement of the tender notice is for one of the following purposes: Inviting potential tenderers to submit tenders, or Inviting potential tenderers to submit details so they can be qualified for inclusion on a specific (restricted tendering) pre-approved tenderer list, or Inviting potential tenderers to submit details so they can be qualified for inclusion on a general (abridged / selective tendering) pre-approved tendering list, Departure from the public advertisement requirement is only permitted in the case of genuine exceptional circumstances as detailed on page The nature of, and steps within, the chosen tendering process must be made clear to all potential tenderers. This includes clarity on any pre-qualification process. Ver /20/2013 Page 30 of 133

31 3.8. Open Tendering (Non EU) Used for all value thresholds up to EU levels All potential interested parties may submit a tender. This method of tendering will be the quickest to produce completed tender submissions Potential suppliers (tenderers) will have become aware of the tender from the public advertisement of the tender notice Consideration should be given to whether it may be necessary to short list the tenderers depending on the volume of tenders received. In such cases only the tenders submitted by those who have been short listed will be fully evaluated Short listing can only be used if the publicly advertised tender notice has made it clear that the HSE reserves the right to do so The criteria for short listing must be included in the tender notice and must be limited to any or all of the following: 1. Personal Situation 2. Financial Capacity 3. Technical Capacity 4. Relevant Experience, 5. Expertise and Competency Open tendering should be the norm where the goods, services or works being tendered for are of lower value and / or are less complex in nature In such cases, the combination of the likely number of tenders that will be received and the required effort to properly evaluate them is not expected to place an undue staff or time burden on the HSE The general requirement to notify tenderers of the results of the tendering process applies to advising any tenderers who have been short-listed from the full evaluation process Restricted Tendering (Non EU) Can be used for all value thresholds up to EU Level. N With restrictive tendering you prepare a pre-approved list of potential tenderers for each specific tender process The tender notice must make clear that HSE is using a restricted tendering process and must set out the meaning of this The list of potential tenderers must be created following public advertisement of the tender notice and the qualification criteria for inclusion on the list the same as that N6 Additional Approval is required to proceed with restrictive tenders for contracts greater than 50,000-see para Ver /20/2013 Page 31 of 133

32 for Open competition i.e. (i) Personal situation, (ii) Financial Capacity (iii) Technical Capacity (iv) Relevant Experience, Expertise and Competency The initial tender notice in the restricted process is often referred to as a: o o Request for proposals or Request for expressions of interest The list of potential tenderers is prepared by applying the qualification criteria to all valid proposals/ expressions of interest received. Those on this Approved list are then invited to submit their full tenders Those not selected for the approved list must be advised of this fact Restricted tendering is used where the HSE has decided in advance that there is a need to have an initial pre-qualification/short listing process in order to limit the number of tenders to be fully evaluated, to a manageable level Restricted tendering is suitable where the goods, services or works being tendered for are of larger value and / or are more complex in nature Invitation to Tender (Under EU Threshold Values only) Direct invitations may be used for values under EU thresholds. It is possible to Invite suitable suppliers or service providers to compete for contacts below the EU thresholds Invitations to suitably qualified suppliers for a specific project Can be used where there is limited number of qualified suppliers Invitation from list established on an open and objective basis A sufficient number of potential suppliers to ensure adequate competition (minimum five is strongly recommended) should be invited to tender. Suppliers must be selected on an objective and non-discriminatory basis & should be invited to tender Approval to proceed with restricted tender process for tenders greater than 25,000 should be obtained in advance from LHO Manager, NHO Hospital Manager (Band 4 &5) or Assistant National Director and co-signed by the relevant Assistant National Director of Finance co-signed or his/her nominee Only after notices are published one may approach particular suppliers directly Abridged / Selective Tendering (Non EU) Can be used up to 25,000 for goods / services and up to 500,000 for works Abridged tendering involves the creation and maintenance of a pre-approved list of potential tenderers for related goods, services or works which can be used for a number of tenders over the lifetime of the list Lists of pre-approved potential tenderers must be prepared following public advertisement and must be replaced at least every two years An extension of one additional year may be obtained upon approval by the relevant Assistant National Director of Finance. Ver /20/2013 Page 32 of 133

33 When selecting potential tenderers for inclusion on a pre-approved list only the qualification criteria should be the same as that as open competition i.e. (i) Personal situation, (ii) Financial Capacity (iii) Technical Capacity (iv) Relevant Experience, Expertise and Competency Where there is a requirement to tender for goods or services then suppliers on the pre-approved list are: 1. All invited to submit tenders, or 2. Selected at random and invited to submit tenders or 3. Selected by rotation to submit tenders Care must be taken not to unfairly or inappropriately discriminate against potential tenderers in preparing and maintaining pre-approved lists This form of tender process is acceptable where: There is a high volume of procurement activity expected in a given area, and / or It is necessary as a means to ensure that scarce procurement expertise is appropriately managed, and / or There is a need to be ready at short notice to complete a tendering process without disruption to services Under no circumstances can the HSE or any of its officers depart from the need for public advertisement in preparing a list of pre-approved tenderers for use in abridged tendering Abridged or selective tendering represents a departure from the normal competitive tendering process which is why it is limited in terms of value threshold It may only be used with the specific written approval of the relevant ISA/LHO Manager, NHO Hospital Manager (bands 4 & 5) or Assistant National Director and must be co-signed by the Head of Procurement or his/her nominee. Notification should be sent to the relevant Assistant National Director of Finance Non EU Negotiated Procedure Can be used up to EU Threshold Values This process may only be used in exceptional circumstances and with the approval of the relevant Assistant National Director co-signed by the Head of Procurement, and notified to the relevant Assistant National Director of Finance The standard requirement is that dialogue with tenderers that could be construed as post tender negotiation on price, or which may result in significant changes in the published tender specifications must be avoided The negotiated procedure should only be used where: The Open or Restricted procedure has failed to identify any suitable tenderers or, Ver /20/2013 Page 33 of 133

34 Where the nature of the requirement is so complex as to not facilitate overall pricing without negotiation, or, Where it is not possible to specify requirements with sufficient precision to enable potential tenderers to respond with priced tenders, or, Where one or more of the very exceptional circumstances listed on page 55 apply Negotiated tendering must only be used following a public advertisement of a tender notice most likely involving a pre-qualification process as for restricted tendering Negotiated Tendering must only be used with the specific written approval of the relevant Assistant National Director or Hospital Network Manager. The approval must be must be co-signed by the Head of Procurement or his/her nominee. Notification should be sent to the relevant Assistant National Director of Finance. Tenders which require use of EU Procurement Procedures The EU Procurement Directives have the force of law in Ireland and must be fully complied with in all respects The EU Threshold Values that currently apply (from 1-Jan-12 to 31-Dec-13) are; o Supplies or Service greater than 200,000 o Works greater than m The Budget Holder or nominee must notify the procurement function of all purchases that fall within the EU Thresholds Procurement will appoint a Commercial Evaluator who ensures that procurement is in line with current policies and procedures and will co ordinate and lead the tendering process The importance of the Procurement Planning Process is very clear when it comes to situations where the EU Procurement Procedures must be used In a number of cases, the relatively long notice periods required under the EU procedures can be shortened where a sufficiently detailed and specific Prior Indicative Notice (PIN) has been published in advance Procurement planning will facilitate the placing of EU PIN s as appropriate It is neither intended nor practical to seek to set out in these regulations the level of detail that is required to comply with the EU Procurement Directives In the first instance, HSE staff seeking to ensure compliance should refer to the document: Public Procurement Guidelines Competitive Process published in 2004 by the National Public Procurement Policy Unit (NPPPU) of the Department of Finance following consultation with the Government Contracts Committee (GCC). Ver /20/2013 Page 34 of 133

35 3.17. Professional procurement must lead the tendering process when engaging in an EU tendering Process. TENDER PROCESS GENERAL REQUIREMENTS Details of the requirements of these regulations regarding tender process summarised below are set out in Appendix on page All potential suppliers must have equal access to information Tenders Receipt and Handling Tenders should be sent in sealed envelopes addressed to the nominated manager in accordance with the detail of these regulations in paragraph Tender Deposit Any tender deposit charged must be limited to the estimated marginal cost associated with reproducing the tender documents and getting them to each extra potential tenderer (i.e. printing/photocopying plus postage/courier etc) Receipt of less than the required number of tenders Above the 25,000 threshold the receipt of less than the required number of tenders means that the approval of the relevant NHO or LHO manager is required Minimum time to be allowed for receipt of quotes / tenders The provisions set out in Table 1 on page 51 must be complied with as a minimum Tenders received late Late tenders should not be opened and should therefore not be evaluated Custody and Opening of Tenders Above the 25,000 threshold sealed tenders are required and must be processed in accordance with procedure set out in paragraph Tender Evaluation The criteria to be used to evaluate any tender must be objective and the evaluation process must be transparent and fair and disclosed to potential tenderers prior to them completing their tender documents. The relevant Budget Holder must nominate the person(s) to evaluate any tenders that are received. See also; Requirement for Tender Evaluation Report on paragraph 3.27 below Acceptable Basis of Award of Contracts More information [A3.8] The following are the accepted bases for evaluation for award of tender contracts within the HSE; Ver /20/2013 Page 35 of 133

36 Most Economically Advantageous Tender (MEAT) N7 or Lowest Priced Tender Requirement for Tender Evaluation Report (above 25,000) Tender reports are required in respect of each tender following receipt and evaluation of tenders. They must be retained as part of the documentation supporting the final purchase order / contract. The value and complexity of the specific tender will determine the precise format and amount of detail necessary to accurately report on the tender A minimum of 2 staff, one of whom must be at least at Grade VIII must be involved in the evaluation of all tenders i.e. above 25, The award of the contract is subject to the evaluation and recommendation by the relevant managers Restrictions on Award of Tenders / Contracts Before the award of any HSE tender/contract the following must be addressed: Risk Management Statutory Provisions Conflicts of Interest Collusive Tendering Criminal Convictions The successful tenderer will be obliged to notify the HSE in writing of any change to the status of this compliance statement that may occur during the period of the contract Tender Award The award of a contract or issue of a purchase order following a tender process is an approval of expenditure and requires a formal written decision HSE Standard Terms of Contract. The use of the HSE Standard Terms and Conditions of Contracts is mandatory a copy of the standard terms and condition of contract is available on the HSE website ( /supplyopportunities/termsandconditions ) or the local supplies officer. N 7 MEAT; most economically advantageous tender (specifying, in addition to price, various other criteria including running costs, servicing costs, level of after sales service, technical assistance, technical merit, environmental characteristics). It is the recommended as the primary basis of tender evaluation. Ver /20/2013 Page 36 of 133

37 The standard Terms and Conditions of Contract should only be varied, in exceptional circumstances,with the agreement of the HSE Head of Procurement function or of the relevant Assistant National Director of Finance or his/her nominee Notification of Results of Tendering Process All tenderers, including those who are not successful, should be informed of the result of the tender process without undue delay. Ver /20/2013 Page 37 of 133

38 4. Purchase to Pay Specific Topics 4.a Non Order Payments below 4.b Prompt Payment of Accounts on page 40 4a Non-Order Payments - General Detailed Policy and Procedures relating to the following areas are documented in the Appendix; Taxis on page 82 Utility Bills on page The standard means of requesting a supplier to provide goods or services is by issuing a purchase order to the supplier Purchase Orders are the required default means of requesting any supplier to provide goods or services and should be utilised in all situations unless specifically or generally approved by the relevant Assistant National Director of Finance The purpose and expected items for inclusion within a purchase order are set out on page 63 below Such approval will be granted in cases where it is clear that the use of a purchase order will add little if any value in terms of the financial controls or the efficient operation of the process Control over Non Order Payments will be exercised by a flag on the (Financial Information/Accounting System) supplier record allowing processing of an invoice without an order. This will be enforced via a validation which only allow non order invoices be recorded on a non order vendor The relevant Assistant National Director of Finance must, at least annually, review the list of approved non order payments and renew them where he/she deems it appropriate. Ver /20/2013 Page 38 of 133

39 4.2. Principles for the use of Non Order Payments The relevant Assistant National Director of Finance will give consideration to approving the use of Non Order Payments where it can be demonstrated that: And / or 1) A specific contract is in place for the ongoing receipt of a service for example: Utility Bills (ESB, Eircom, Water Charges, Mobile phone costs etc) Nursing Home Subvention / Capitation fees Grants to outside organisations Foster Carer payments 2) They relate to internal payments for example: And / or Pay over of payroll deductions Payments to staff (including expenses) Petty Cash / Imprest Recoupments Payment for staff seconded to HSE 3) Payments that do not involve receipt of any goods or services by HSE but relate to operation of a scheme for the benefit of clients including: Allowances (disability / welfare) PCRS Medical Schemes (formally known as GMS) Dental Treatment Services Scheme Hepatitis C Methadone Treatment Scheme And / or 4) Where the sole purpose of issuing a purchase order would be to enable a payment to be made And / or 5) Where it is not practical, material or useful to issue a purchase order in advance of the service being provided or invoiced for, including: Taxi Services Courier Services Emergency call outs In a number of the cases listed above, HSE does not actually receive invoices requesting payment. The sections that follow detail specific instances where the use of a purchase order is not required, subject to the approval of the relevant Assistant National Director of Finance. It is stressed that Budget Holders are always free to continue to use purchase orders where they feel it is necessary. Ver /20/2013 Page 39 of 133

40 4.b Prompt Payment of Accounts 4.3. General In putting in place formal documented arrangements for the operation of the purchase to pay process in their areas Budget Holders must have specific regard to the need to ensure that these arrangements: Comply with statutory prompt payment requirements (SI 388 & 1997 act) Facilitate payment of prompt payment interest where it is due to be paid Minimise the occurrence of late payments and therefore of late payment interest The statutory requirements are set out in the Prompt Payment of Accounts Act 1997 as amended by the S.I. No 388 of 2002 which gives effect to Directive No. 2000/35/EC It is important to note that S.I. 388 of 2002 repealed sections 4 to 11 of the Prompt Payment of Accounts Act 1997 these sections were the primary detailed sections which previously governed the practical operation of prompt payments Responsibility and Legal Requirement Budget Holders and relevant managers and staff are obliged to familiarise themselves with the statutory prompt payment requirements Compliance with the Purchase to Pay Financial Regulations will largely ensure that payments are processed promptly and that late payment interest is minimised Compliance with the Act / SI 388 requires that the HSE pay the appropriate interest in relation to late payments as it falls due While incurring prompt payment interest is therefore not a breach of the statutory requirement it is a mandatory requirement of these Financial Regulations that Budget Holders ensure that the purchase to pay process is operated efficiently so as to eliminate late payments and interest to the greatest extent possible Interest must be paid at the appropriate rate as set out in the statutory instrument and will be paid without any request from the supplier Interest amounts less than 5 do not need to be paid. (Ref SI 388) Compensation payments, which are in addition to late payment interest, are to be paid upon receipt of a written request from the supplier for same. Ver /20/2013 Page 40 of 133

41 4.5. The following are the key elements in reducing / eliminating late payment interest: Clarity around payment terms Budget Holders and relevant managers and staff must ensure that they are aware of the payment terms that apply to the various suppliers they utilise. The HSE Standard Payment Terms are the later of: (a) 30 days* from date of receipt of request for payment (usually invoice) or (b) 30 days from confirmation of satisfactory receipt of goods or services *Important note; A number of former Health Boards have in place existing Standard Payment Terms of 45 days from date of receipt of Invoice. Therefore the current standard terms in operation will range between 30 and 45 days. These supplier accounts will continue to operate with their respective terms until such time as there is a specific comprehensive programme to review, revise and consolidate vender terms and details The standard terms may only be varied (upwards or downwards) with the specific or general approval of the relevant Assistant National Director Procurement may, as part of a commercial decision, put in place a central contract with a supplier with payment terms other than the standard terms of 30 days. These must be approved by the relevant Assistant National Director and Head of Procurement and notified to relevant Assistant National Director of Finance Other approved Non-Standard Payment terms will be in operation. For example; Public Utilities (e.g. Telecom/Eircom, Bord Gais etc.) Grants to outside agencies no invoice, paid in accordance with contract or agreement Payment terms must be quoted on all of the following; Invitations to quote Tender notices Tender documentation Contracts and or Purchase orders Other relevant documentation 4.6. Managing Supplier Relationships Responsibility rests with Budget Holders to ensure that suppliers are managed so that any suppliers not complying are dealt with appropriately. Where appropriate HSE Procurement/Budget Holders should lead all discussions with suppliers which could have material impact on the contract. Ver /20/2013 Page 41 of 133

42 It is essential that Budget Holders ensure that suppliers are clearly advised as to: Locations where goods or services are to be delivered. HSE requirements around proof of delivery documentation. HSE requirements around information needed on invoices (in particular the need to quote purchase order number for all amounts invoiced) and where invoices are to be sent to Ultimately suppliers that persistently fail to meet the HSE requirements above should not be utilised Put the effort in before the Invoice arrives The key to prompt payment is to have an efficient purchasing and receipting process so that: Suppliers know what is required of them and supply it first time and on time Goods and Services are receipted on FIS as soon as possible after delivery Issues with delivery are identified early and resolved early with suppliers Suppliers invoices match what was ordered and receipted and can be matched for payment with minimal manual intervention 4.8. Proper record keeping and document handling The HSE is only liable to pay late payment interest where we are responsible for the delay in making the payment The HSE is required to calculate and pay late payment interest for every commercial transactions not paid before the Relevant Payment Date Gvi It is essential that proper records are kept so that it is possible to differentiate delays in payment caused by HSE from those caused by suppliers or other parties In most cases the payment term of 30 days (or other approved period) will begin to run when the invoice is received. Where the date of receipt of invoice is uncertain or before receipt of goods/services then date of receipt will apply Invoices must be date stamped immediately upon receipt. If it transpires that the invoice was received prior to receipt of the goods then the date received should be amended to the later date Queries or issues with invoices need to be: Identified quickly Notified without delay to the supplier Recorded and followed up effectively to ensure late payment calculations are correct Disputed invoices with suppliers A register must be kept of all disputed invoices with sufficient information to facilitate tracking, follow up and closure once the issue that gave rise to the dispute is addressed. Ver /20/2013 Page 42 of 133

43 A formal standard notification that the invoice or specified elements of it are in dispute must be sent immediately to the supplier with a copy of the invoice Where a disputed invoice is returned to supplier within 10 working days of receipt, then the interest penalty will begin to accrue 10 working days after receipt of corrected or replacement invoice from supplier or, if later, the original prescribed payment date For practical purposes the 30 days (or other approved period) in which payment must be made stops running when HSE notifies a supplier of a dispute in respect of an invoice The payment period starts to run again from the date the supplier provides the information requested or amends the invoice etc Entries to the FIS must ensure that any periods, during which the payment terms period was suspended, while HSE awaited information or clarification from a supplier, are appropriately reflected to avoid an incorrect payment of late interest Pay Promptly anything not in dispute Any goods or services that have been signed off as having been appropriately received should be paid for within the applicable payment terms Where part of an invoice is in order but an element of it is in dispute then only the element in dispute should be withheld from payment and the balance should be paid within the payment term Track and Report on Prompt Payment Interest Incurred Each Budget Holder must monitor and review instances of prompt payment interest for his/her area of responsibility and must: i. Investigate any interest amount greater than 5. ii. Investigate any payment that was more than 10 days late iii. Review and amend arrangements to address any matters uncovered by these investigations iv. Report monthly to the relevant Assistant National Director / Hospital Network Manager/ LHO or NHO Manager (band 4-5) as appropriate. on (1). to (3) above, copying in the relevant Assistant National Director of Finance. v. Report on the overall monthly trend by late interest amount and days late for their areas of responsibility in such format as may be specified by the relevant Assistant National Director of Finance. Ver /20/2013 Page 43 of 133

44 5. CAPITAL PROJECTS and PROPERTY TRANSACTIONS 5.a Capital Projects below Appendix on page 84 5.b Property Transactions on page 47 Appendix on page 88 5a CAPITAL PROJECTS Capital Projects encompasses all construction, works, refurbishments, building fit-out, equipping etc funded from capital funds. Projects of a capital nature which are funded using non-capital monies (i.e. paid for out of revenue budgets) where the value of the project value is greater than 500,000 must be treated as capital projects and dealt with in accordance with this financial regulation and the Capital Projects Approval Protocol (CPAP). The requirements of the regulations are mandatory and must be adhered to in addition to the Protocol for the Acquisition and Disposal of Property, mandatory. Capital Projects Approval Protocol Each Capital Project must be approved in accordance with the Capital Projects Approval Protocol (CPAP), with the support of the Estates /TSO function who also provide project administration, technical expertise and project management Capital Projects Approval Bands The Capital Projects Approval Protocol sets out the specific criteria and requirements with regard to approval and management of capital projects within the specified value bands. Projects are divided into four different Bands which have incremental requirements. The four bands are; (A) Projects less than 500,000 (B) Projects between 500,000 and 5,000,000 (C) Projects between 5,000,000 and 20,000,000 (D) Projects greater 20,000,000 Details of these requirements can be obtained from the Capital Projects Approval Protocol The current version of this protocol was included in the Capital Programme/Plan as approved by the HSE Directorate.. The Capital Programme/Plan is currently being reviewed by the HSE following feedback from the DOHC and the Capital Approval Protocol may be amended in that context. Ver /20/2013 Page 44 of 133 October 2006

45 5.2. Capital Projects; Financial Regulations The general principles of the National Financial Regulations (such as balanced budgets, Sourcing options and Expenditure Approval, Receiving, Segregation of Duties) apply to all areas of Non pay spend including Capital Projects. Budget holders are responsible for proposing and selection of Capital Projects. Each Capital Project must be approved in accordance with the Capital Projects Approval Protocol (CPAP), with the support of the Estates /TSO function who also provide project administration, technical expertise and project management. The Capital Projects Approval Protocol N8 sets out the specific procedures to be followed in order to obtain approval for a Capital Projects, (refer to page84.), and establishment of related contracts/pos Capital Projects Approval and Contract Approval. Capital Projects/works expenditure approval and Contract/PO is governed by CPAP approval procedures rather than those for general procurement. However, if there is any uncertainty or where expenditure is made before a project has been approved then the general rules should apply (see Table 2, on page 52). The Estates function is responsible for managing the approval of Capital Projects in accordance with four value thresholds (Bands) set out in the CPAP. They are also responsible for coordinating procurement of goods or services and putting in place a contract(s)/pos relating to that project i.e. sourcing, tender process and contract award. Procurement/Tendering and award of Contract or Purchase Order may, depending on the project value occur either as part of the Project authorisation process or after the Project has been autorised, e.g. Band A - minor capital projects are normally approved before expenditure approval/contract is made whereas Band C projects require Tender reports is incorporated into the project approval process. Example 1. a Capital Project value 6m is approved in accordance with CPAP. The approval of the project by HSE corporate requires that the tender is approved by HSE corporate before the project is authorised. A letter of authorisation is then provided. Example 2. A Capital Project value 450,000 that had been included in the list of minor projects in the capital plan is submitted by service pillar and is vetted and approved by the local Estates office. A letter of authorisation is issued. The tendering process for this expenditure can then commence and the contract is awarded by the Estates function. Unless formal notification has been provided then the project should not be considered approved. Project funding is not available until the project has been approved in accordance with the protocol and that approval is then notified to the relevant project manager and project sponsor. Notification must be provided by the Finance directorate (Chief Financial Officer or relevant Assistant National Director of Finance) Capital Projects; Main Requirements Project Proposals 1. Each Capital project has to be fully appraised, evaluated, approved and notified. 2. The inclusion of a Capital Project in an approved Capital Programme/plan does not in itself signify that the project has been authorised. N 8 This Capital Projects Approval Protocol was prepared by the Estates/TSO Directorate included in the 2006 Capital Plan submission for approval by the HSE board. Ver /20/2013 Page 45 of 133

46 Project approvals i.e. approvals to progress projects and eventually incur expenditure on same are needed for each individual project or group of projects and this requirement is separate to the capital plan. 3. Only fully costed Capital Project proposals are individually included in the approved budgeted Capital Programme/plan (Minor capital are grouped and totalled). 4. Any preliminary work carried out with regard to project evaluation or appraisal must be agreed in advance by the budget holder. Project Approval and Authorisation to Commence 5. A Capital Project cannot be considered approved and must not commence until formal notification of the project s approval has been provided by the Finance Directorate. 6. All Capital funded projects and revenue funded capital projects with value greater than 0.5m are appraised, evaluated, and approved in accordance with the Capital Projects Approval Protocol. This process is managed under the Estates directorate. 7. The future recurring revenue cost and WTE impact of each Project must be validated and signed off by the relevant Assistant National Director of Finance or their nominee. Projects must be approved in advance of a contract/order being awarded. 8. Tendering procedures (including EU procedures) must be complied with. 9. Capital Projects with a contract value greater than 10m must be approved by the HSE Directorate. Project Management and Report 10. Project Cost Variations must be approved in accordance with the Capital Projects Approval Protocol Controls within Capital Projects; i) Segregation of Duties ii) Independent Project evaluation and Appraisal Certification of Work completed for construction contracts Budget holder within service, Project management in Estates directorate. Capital approval procedure Specific Capital Projects approval procedures within predefined bands Full costing prepared, including future Revenue and Staffing commitments Cost Variation approval and reporting iii) Sourcing of Goods/Services for Capital projects Tendering Process Certification of Work completed for construction contracts iv) Project Management Project Expenditure monitoring and review Capital Programme/plan approval by senior management Ver /20/2013 Page 46 of 133

47 PROPERTY TRANSACTIONS; Protocol for Acquisition and Disposal of Property Property Transactions relate to the acquisition or disposal of Land and/or Buildings by the Health Service Executive. The Protocol for Acquisition and Disposal of Property N9 (approved by HSE Directorate March 06) sets out the specific procedures to be followed in order to obtain approval for a transaction where the HSE acquires or disposes of any property (whether freehold or leasehold) or interest in property. The requirements of these regulations are mandatory and must be adhered to in addition to the Protocol for the Acquisition and Disposal of Property, mandatory. Property Protocol Approval Thresholds The Protocol for Acquisition and Disposal of Property sets out the requirements with regard to obtaining approval within the specified value categories. Property transactions are divided into three different categories (based on their value) which have incremental requirements. The categories are; (1) Property Transactions less than 1,000,000 (2) Property Transactions between 1,000,000 and 2,000,000 (3) Property Transactions greater than 2,000,000 The value of a transaction requiring approval is the total cost (for leases, value of lease is the annual rental costs by the number of years of lease) exclusive of Value Added Tax (VAT) and service charges. Authority to approve the acquisition or disposal of property has been delegated by the HSE Directorate for transactions below 2m. Property related transactions must be approved by the respective National Director of Service and Chief Executive (CEO approval if greater than 1m) or his/her delegated nominee. Formal notification of Approval for the acquisition or disposal of a property must be received before conclusion of negotiations can commence Property Transactions; Main Requirements Property Transactions Proposals 1. The inclusion of a property related transaction in the approved Capital Programme/plan or Revenue Budget does not in itself signify that the project has been authorised. Specific approval to progress property transactions and eventually incur expenditure are N 9 This protocol was prepared by a Property Operational Sub-Group which included Finance Directorate and Strategic Planning and Development under the lead role provided by the Estates/TSO function. Ver /20/2013 Page 47 of 133

48 needed for each individual property transaction and this requirement is separate to the Capital plan/ Service plan. 2. Review by Property Committee - each Property related project has to be fully appraised and submitted to The Property Committee N 10 for recommendation. Detailed requirement regarding completion of Business Proposal and Business Case, which may include technical and legal advice, are set out in the Protocol for Acquisition and Disposal of Property. 3. The future recurring revenue cost, confirmation of availability of funds and WTE impact of each property transaction proposed must be validated and signed off by the relevant Assistant National Director of Finance or their nominee. Property Transaction Approval and Authorisation to Commence 4. A Property transaction cannot be considered approved and any commitments must be clearly flagged as subject to formal HSE approval until formal notification of the property transaction approval has been received. 5. Project approval is subject to ; - Business case approved by Assistant National Director of related service - Review and recommendation of The Property Committee - Approval by National Service Directors,(endorse recommendation if greater than 1m) - Approval by CEO for values between 1m & 2m ( endorsement if greater than 2m) - Approval by HSE Directorate for property transaction greater than 2m 6. All Property projects with value greater than 2m are approved by the HSE Directorate. 7. Auction and Tendering procedures; refer to schedule IV of protocol. 8. Commitment should not be entered into until notification of approval of a Property transaction must be received Controls for Property Transactions; Segregation of Duties Evaluation and recommendation by Property Committee whose members are made up of functional and technical expertise Expert Legal and technical support if required Budget holder in function/service, project management in Estates directorate. Capital approval procedure Specific Property Transaction procedures within predefined categories based on value Property Transactions funded from Capital Funds may require to be approved under the Capital Project Approval Protocol. Management controls N 10 The property Committee is an executive group set up by the HSE. Their primary function is to appraise proposals with reference to the corporate, service and capital plans and to make recommendations regarding proposals. Ver /20/2013 Page 48 of 133

49 Project Expenditure monitoring and review Level at which HSE Directorate must approve is relatively low reflecting nature of projects Property Transaction Protocol - Contents 1. Procedures for acquisition or disposal of Property or Interests in Property 2. Appendices; Schedule 1 Delegations Schedule 2 Statutory provisions Schedule 3. The Property Committee Schedule 4 Summary of the Provisions of Part 5 of Code of Practice for the Governance of State Bodies. Schedule 5 Assessment of the potential or ongoing liabilities Schedule 6 VAT on property transactions Schedule 7 Stamp duty on property transactions Ver /20/2013 Page 49 of 133

50 APPENDICES APPROVAL & SOURCING THRESHOLDS Tables Table 1 Sourcing of Suppliers Summary of Value Thresholds on page 51 Table 2 Expenditure Authorisation Thresholds on page 52 ADDITIONAL INFORMATION Re Chapter 1 General Provisions re. PTP Error! Bookmark not defined. Re Chapter 2 Purchase to Pay (PTP) on page 55 Re Chapter 3 Tendering on page 74 Re Chapter 4 Non Order Payments more information; Taxi s on page 82 Utility Bills (Telecom/Eircom, ESB, etc) on page 83 Re Chapter 5 Capital Projects & Property Transactions on page 84 Links and References on page 132 Glossary specific to terms in this document on page 133 Ver /20/2013 Page 50 of 133

51 Spend Bands TABLE 1 - SOURCING OF SUPPLIERS SUMMARY OF VALUE THRESHOLDS Value of Purchase (estimated) Below EU Threshold (details on page 30) Low Up to 250. Sourcing of Suppliers Method of Sourcing Suppliers Direct Approach (verbal or written) No of Quotes (required) Minimum of One Quotation Form of Quote Verbal/ written (All Values exclude VAT) Minimum Time for receipt of Quotes/Tenders None Low 250 to 5,000. Direct Approach (written recommended) Minimum 3 quotes required 11 Written. None Medium 5,000 to 25,000. Direct Approach (written) Minimum 3 quotes required Written. None up to 10,000 and 2 working days thereafter High (details on page 30) 25,000 to 200,000 (supplies & Services) Open or Restricted/ Abridged, with Public Advertisement. Negotiated in exceptional circumstances. Minimum 5 sealed Tenders to be sought Formal Full Tendering Procedure Minimum 10 working days High 25,000 up to 5,000,000 (Works only) Open or Restricted/ Abridged, with Public Advertisement see note below Minimum 5 sealed Tenders to be sought Formal Full Tendering Procedure Minimum 10 working days Above EU Threshold Detail of`eu Tender procedures on page 34. High 200,000 + (Service/ Supplies) IN ALL CASES OF PROCUREMENT (OTHER THAN CAPITAL PROJECTS, PROPERTY TRANSACTIONS OR GRANTS WHERE SPECIFIC PROTOCLS EXIST) WHERE VALUE IS GREATER THAN EU THRESHOLD, IT IS A MANDATORY REQUIREMENT THAT THE PROCUREMENT FUNCTION IS NOTIFIED IN ORDER TO TAKE RESPONSIBILITY FOR MANAGING THE TENDERING PROCESS. Public Advertisement In EU Journal Minimum 5 sealed Tenders to be sought EU Formal Full Tendering Procedure As dictated By EU Directives High 5,000,000 + (Works Contracts) Construction / Works/ Equipping Property Transactions Public Avertissement In EU Journal Minimum 5 sealed Tenders to be sought EU Formal Full Procedure As dictated by EU Directives Sourcing and Expenditure Approval for all Capital Projects (i.e. Capital funded projected per Capital programme/plan and Revenue funded non routine spend greater than 500k) are conducted by Estates/TSO Directorate in accordance with Capital Projects Approval Protocol.Refer to Chapter 5,p54 and related appendices P Sourcing and Expenditure Approval for all Property Transactions are conducted by the Estates/TSO Directorate in accordance with the Protocol for the Acquisition and Disposal of Property. Refer to Chapter 5 in this regulation (1) The above values are not expenditure approval thresholds ; please refer to Table 2 on page 52 which sets out expenditure approval thresholds by grade. (2) Please refer to section The 4 options for Non EU Tendering Processes are: on page 30 which details the various tendering options available (i.e. Open, Restricted, Abridged and Negotiated) where the value involved is below the EU threshold. (3) Revenue Funded Capital Works with a value in excess of 500k come under the stewardship of Estates/TSO function and are dealt with in accordance with the Capital Projects Approval Protocol. Contact your local Estates/TSO office. (4) / fax are acceptable forms of quote providing it is made clear to potential suppliers that if they provide quotes by or fax they are accepting that their ed / faxed quote has the same legal standing as if they were submitted in writing. 11 A single quotation may be used if it is established that value for money has been achieved. Ver /20/2013 Page 51 of 133

52 TABLE 2 ; Purchase Order / Contract Approval Financial Limits by Grade. The Table below sets out the standard approval levels for a range of values with regard to;(i) Revenue Expenditure, (ii) Procurement contracts and (iii) Funding of Voluntary Organisations, based on a hierarchy of grades 12 these are explained in more detail on the note to the table below. Approval of Capital Projects and Acquisition or disposal of Property is dealt with within their respective protocols. Please refer to notes regarding Table 2 on pages 53 and 73, which provide additional information regarding expenditure approval. (All Values Include VAT). Band Grade/Equivalent Salary Grade or Position NON ROUTINE Gvii Expenditure. ROUTINE Expenditure Expenditure N13 Approver must be linked to budget holder see notes on page 53 1 Grade lll Nil Nil 2 Grade lv Nil Up to 5,000 3 Grade V Nil Up to 10,000 4 Grade Vl Up to 10,000 Up to 25,000 5 Grade Vll Up to 20,000 Up to 50,000 6 Grade Vlll Up to 40,000 Up to 100,000 7 General Managers Up to 70,000 Up to 250,000 8 LHO Manager/ ISA Manager Up to 100,000 Up to 500,000 9 Hospital Network Managers Up to 500,000 Up to 2,500, Assistant National Directors/Regional Director of Operations/ Regional Directors for Performance and Integration/ Head of Function Up to 500,000 Up to 2,500, National Directors Up to 2,000,000 Up t0 10,000, Director General Greater than 2,000,000 Greater than 10,000, HSE Directorate/ nominated member n/a n/a Procurement Contract Approval see notes on page 53 1 to 7 Grade IV to General Manager approval level is same as that for Routine Revenue Expenditure for respective grades 8 LHO Manager/ ISA Manager Up to 1,000,000 9 Hospital Network Managers Up to 5,000, Assistant National Directors Up to 5,000, National Directors/ Regional Directors of Operations/Regional Directors for Performance and Integration/ Heads of Function Up to 10,000, Director General Up to 10,000, HSE Directorate/ nominated member Above 10,000,000 Voluntary/Not for Profit Expenditure (see notes on page 53 and further detailed information Error! Bookmark not defined.) 6 Grade Vlll Up to 100,000 Up to 250,000 7 General Managers Up to 250,000 Up to 1,000,000 8 LHO Manager/ISA Manager Up to 250,000 Up to 2,000,000 9 Hospital Network Managers Up to 2,500,000 Up to 5,000, Assistant National Directors Up to 2,500,000 Up to 5,000,000 Property Transactions Capital Projects refer to Property Transactions Protocol (Estates/TSO) refer to Capital Projects Approval Protocol (Estates/TSO) 12 Where a Specific Grade is not listed it can be aligned to the nearest Equivalent or Lower Grade in this Table. N13 Revenue funded Equipping, Building, Maintenance greater than 500k should be dealt with in accordance with Capital Protocol Ver /20/2013 Page 52 of 133

53 Table 2 Notes: Regarding Expenditure Approval & Contract Approval The information on the table and related notes below should be read in conjunction with the main body of these regulation (e.g. Mandatory controls within Purchasing and Confirmation of availability funds and approval to Spend and the related appendices. The expenditure approval levels are the minimum controls. They act as maximum limits and not entitlements - therefore it is open to any budget holder nominating an expenditure approver to assign them a lower than standard approval limit if in their judgement this is necessary Example ; A LHO manager may have seven Grade Vll within their area of responsibility. He/she may decide that it is appropriate to have four of the seven given approval authority as follows; Routine expenditure up to 40,000 and Non Routine expenditure up to 5,000 (versus 50,000 and 10,000 respectively in accordance with Table 2 of per these regulations). 2) Procurement Contracts The approval of a procurement contract is separate to any expenditure approval associated with same and different authority thresholds apply to approval of procurement contracts and to expenditure approval. A person authorised to approve procurement contracts does not need to be linked to the respective budget holder. Example 1. HSE signs a 4m 3 year contract for the purchase of PC s this is not an expenditure approval as expenditure approval takes place when each manager in the system buys X number of pc s from the contract the approval of this procurement contract at 4m requires sign-off by someone at Hospital Network Manager / Assistant National Director or above. Example 2. HSE signs a 600,000 contract for the purchase of an X-ray machine for Connolly Hospital the approval of the procurement contract is in effect also an expenditure approval as most likely the two happen at the same time technically the procurement contract can be approved by the Hospital Network Manager as it less than 5m but the expenditure approval required before the X-Ray order is actually placed requires sign-off by a National Director via the capital project protocol as it is a non-routine revenue expenditure item in excess of 500,000. Procurement contracts exclude contracts relating to property or capital projects as these are dealt with in specific separate protocols. 3) `Routine and Non Routine Expenditure. Routine expenditure relates to decisions to approve expenditure in respect of goods or services consumed on a day to day basis to support the provision of existing services. The approval of existing level of service budgets with voluntary / not for profit organisations including any pay award or other technical adjustments falls within the definition of routine revenue expenditure approval. Formal sign-off of the budget by the Directorate will provide effective expenditure / contract approval for voluntary / not for profit organisations over the 10m limit including the large voluntary hospitals and this will need to be made clear to the Directorate and any legal considerations dealt with. Non Routine expenditure relates to; New or expanded level of service HSE or with Voluntary Organisations Purchase of new equipment paid from revenue funds Capital Projects ( refer to Capital Projects Approval Protocol ) Property Transactions ( refer to Protocol for Acquisition and Disposal of Property ) Example A LHO is formally allocated 1.4m from the 30m 2006 Elderly Development funds for Home Help by A Browne/National Care Group Steering Cttee on Elderly. Then the LHO manager has effective expenditure approval for that amount of new / expanded service, subject to the overriding need to have an effective breakeven plan in place before any service developments can take place. Ver /20/2013 Page 53 of 133

54 It is expected that the commissioning of new services will primarily be done in a controlled way via the service planning process and therefore funding allocations will in effect come with expenditure approval. 4) Capital Projects and Property Transactions. The thresholds for expenditure approval within the table apply to all non payroll related expenditure except for; Capital Projects and Property Transactions both of which are governed by respective protocols 5) General Requirements There is no limit on the approval level of Director General in respect of Routine Expenditure. National Directors other than those specifically set out in Table 2 must have their approval levels assigned to them by the Director General. Assistant National Directors (AND) /Hospital Network Managers(HNM)/ Local Health Managers (LHO)/ NHO Hospital Managers must have their approval levels formally assigned to them by their National Director. Below this level (i.e. AND/HNM/LHO & NHO Hospital Manager) each manager to decide who can approve expenditure and to what value. In exceptional circumstances, with the consent of an Assistant National Director of Finance or his nominee, individuals can be assigned the approval limit of the next grade up. In such circumstances the budget holder is responsible for ensuring that the necessary adjustments are notified to the relevant personnel to operate. An expenditure approver can only approve spend within their budget holder s (or nominees) responsibility. Approval of Procurement Contracts is not restricted in this way e.g. a 2 year 6m procurement contract for Aids & Appliances (that can be used by PCCC and NHO) is approved by a National Director -and from which individual POs will be raised and approved for each respective budget holder in accordance with their respective approval levels. Table 2 lists only clerical / administrative and management grades in respect of financial approval limits by grade. Refer to paragraph A2.15 Expenditure Approval by Non-clerical Admin. & Management grades below for details for applicably to other grades In circumstances where an exact price cannot be obtained prior to issue of order, a one up approval is required (refer paragraph 2.4 above for further explanation). Expenditure Approval can occur at any point up to authorisation of issue of a Purchase order, e.g. an item on contract can be authorised by designated approver at requisition stage or an item could be approved by designated approver at point where order has been completed but not yet awarded to supplier. Ver /20/2013 Page 54 of 133

55 APPENDIX Related Chapter; 1 PURCHASE TO PAY (General) The following is additional information set out by Topic heading which relates to Chapter 2. PURCHASING Page TOPIC 1 ; Sourcing of Goods/Services - More information (2d iv) 55 TOPIC 2 - STORES ; Requisitioning of Stock and Receipt from Stores 57 ` TOPIC 3: Expenditure Approval - More information (2d VI) ` 61 TOPIC 4: Requirement of Purchase Order - More information (2d VI) 63 TOPIC 5: Outstanding and Incomplete Orders 64 TOPIC 6: Manual Purchase Orders 65 TOPIC 7: Documented Purchasing Arrangements 65 TOPIC 8; Supplier Approval, Categorisation, Performance Management 67 RECEIVING PROCESS TOPIC 9: Receiving Goods or Services - More information 68 PAYMENT PROCESS TOPIC 10: Supplier Payment Remittance & Supplier Reconciliation 71 TOPIC 11: Invoice Matching Tolerances More information 72 TOPIC 1; Sourcing of Goods/Services - More information (2d iv) A2.1. Sourcing Options in Exceptional Circumstances In exceptional circumstances the sourcing options relevant to the value thresholds above may not apply or may not apply fully. These circumstances include: Ver /20/2013 Page 55 of 133

56 Extreme Urgency where necessary to avoid, (2.1.1)..1. Significant risk to persons (2.1.1)..2. Significant risk to property (2.1.1)..3. Significant financial loss to the HSE. It is very important to be aware that the circumstances giving rise to the Urgency must have been unforeseeable and should not have arisen due to lack of planning or action on the part of the HSE Proprietary Materials the goods or services are available from only one source (to be periodically market tested, at least annually) Additional Deliveries items previously sourced in compliance with the normal requirements if a change of supplier would result in incompatibility or disproportionate technical difficulties Bargain Purchases or purchases under particularly advantageous conditions e.g. liquidation sale etc Confidential Contracts which required to be placed as such due to particular sensitivity or special strategic importance to the HSE Statutory Type Purchases items of expenditure such as commercial rates, water charges, Planning permissions etc Capital Project approved under the Capital Programme/Plan where an urgent requirement has been identified and justified. In all cases the Assistant National Director / Hospital Network Manager must approve in writing the application, co-signed by the relevant Assistant National Director of Finance e.g. exceptional circumstances criteria. The Head of Procurement must be notified of such instances. Ver /20/2013 Page 56 of 133

57 TOPIC 2 - STORES ; Requisitioning of Stock and Receipt from Stores (Includes Pharmacy Stock and Sterile Supplies) A2.2. General The general principles of the Purchase to Pay process apply to requisitioning and receipt from stock unless indicated otherwise in this section. This section is intended to address any issues or challenges that may arise in the application of the standard Purchase to Pay regulations to this area. These regulations use the generic term Stores to refer to locations where stock is held for issue to services and this term is taken to cover: o General Stores / warehouses o Maintenance / Engineering Stores o Pharmacy o Sterile Stores (CSSD) o Any other storage location which holds stock A2.3. Purchasing from Stock - Requisitioning of Stock from a Store (Warehouse or other storage location) As indicated in Section 2d the generic elements of the purchasing process are as follows: (i.) Identification and notification of need - will still take place albeit in a more routine process and may be automated by using standard re-order levels etc. (ii.) Confirmation of availability of funds and approval to spend. Approval to spend for Store items is exercised by the person who approves the requisition (the requisition document in effect replaces the purchase order). (iii.) Sourcing of supplier(s) to provide goods or services. The sourcing of suppliers and ordering from them becomes a matter for the stores staff. (iv.) Formal request issued to supplier to provide goods A2.4. Segregation of Duties The segregation requirements listed on page 7 above in respect of purchasing apply to the ordering of goods by stores staff and receiving the goods into stock in the store Once the goods are in stock and ready to issue, the controls inherent in this segregation have already been largely complied with Accordingly, the segregation of duties required in respect of requisitioning of goods from a stores, is that a person must not approve a requisition that contains goods for his/her own day to day use The segregation of duties required in respect of receipt of goods from stores is that the person who signs off on the requisition should not be responsible for checking and confirming that the goods received match the requisition and are in good order. A2.5. Requirement for Documented Arrangement for Stores Ver /20/2013 Page 57 of 133

58 A2.6. Main differences between Requisitioning from stock and normal purchasing Stock items refer to goods only and not services or works In general terms, items held in stock in a store, warehouse or other storage location may be of a more routine nature than may be the case with purchasing direct from a supplier Goods held in stock will generally be in the low to medium value range The stores staff are responsible for dealing with third party suppliers and will generally place orders to meet the overall needs of the services/locations which are supplied. A2.7. Mandatory requirements for ordering / requisitioning from stores It is a mandatory requirement that the manager signing off expenditure must be in accordance with the financial limits set out in Table 2 on page With regard to approval by other grades of staff outside the clerical administrative / management stream refer to provisions set out on page It is a matter for Budget Holders to specify which staff /grades may make a requisition from the stores that supply their area and to set any restrictions that may apply Such restrictions may apply to certain goods or categories of goods where, for example, the store stocks high value items such as surgical implants A higher grade of staff may be required to approve such non-routine or higher value goods A practical approach will be necessary for Budget Holders when identifying and documenting what staff or grades of staff may approve requisitions from stores The staff member approving the requisition must satisfy themselves that the need is appropriate and that the budget is available to cover the cost of what is being requisitioned Requisition forms should be filed for future reference and audit. Hardcopy requisition forms (where in use) should be o o o in triplicate numbering uniquely and part of a numbering sequence circulated as follows: Original for stores. 1 copy for staff member due to receive the goods. 1 copy to be retained Requisitioning from Stores - staff requisitioning from stores should do so using a standard template that clearly records: o Location / Service requisitioning the goods o o o o o o o o Date of requisition Description of goods Quantity of goods Whether for collection or delivery Delivery address, date, preferred time(s) and contact Name of person requisition prepared by, date prepared & contact details Name of person requisition has been approved by and date Key contact for requisition if not one of the above Ver /20/2013 Page 58 of 133

59 A2.8. Use of Central Contracts is mandatory where they are in place The mandatory requirement to utilise centrally negotiated contracts wherever they are in place applies to stores managers and their staff in terms of the replenishment of their stock by purchasing from suppliers In general terms, items are held in stock in a store because there is a readily apparent and continuous need for them On that basis there is an expectation that the majority of items held in every stores area will generally be acquired via centrally negotiated contracts. A2.9. Splitting of Requisitions is prohibited Requisitions must not be split for the purposes of avoiding the correct application of approval thresholds in these regulations. A2.10. Approval of New Items to be held by Stores Where new products are being added to the list of items held in a store, regard must be had to any financial implications that may arise It is the responsibility of the stores manager to notify the relevant Budget Holder(s) or their nominees, in advance of, or as soon as possible after, the introduction of any products that will have a material impact on costs Each Budget Holder should receive a report from the stores in their area (at least every two months) detailing: a) New products added that month to the list of normal stores items b) Unit costs of new products c) Costs of products they have replaced if relevant d) Expected monthly order quantity and cost of new products RECEIVING GOODS FROM STORES General Applicability of Purchase to Pay Receiving regulations The requirements of the normal receiving process as set out on page 21 and on page 68 also apply to receiving from stores, unless otherwise provided. A2.11. Main requirements for receiving goods from stores The mandatory requirements centre around; Initial receipt and safe custody of deliveries/collections from stores this is a key priority and must be appropriately planned for and implemented Receipt of appropriate stores issue documentation (equivalent of Proof of Delivery in standard Purchase to Pay process) Checking of goods received for match to stores issue documentation and original requisition Early notification and resolution of any discrepancies between what was requisitioned and what was received Proper record keeping and follow up on any of the discrepancies referred to at above Ver /20/2013 Page 59 of 133

60 A2.12. Importance of Stores Issue Documentation that clearly references the original requisition Stores Issues - Mandatory requirements; It is the responsibility of the stores manager to ensure that every collection or delivery is accompanied by the appropriate stores issue documentation that clearly shows: (i.) (ii.) (iii.) What goods are being issued from stores and The quantity and value of those goods Clearly references each item to the relevant requisition document The stores manager must ensure that at time of issue or as soon as possible thereafter that the requisitioner is ; o o Notified of any goods on the requisition not included in the current stores issue, Advised as to possible alternatives or date when goods will be available etc. A2.13. Checking of expenditure relating to Stores issues on Financial Information System / Accounting System Budget Holders and their staff must be in a position to monitor expenditure including expenditure incurred via stores It is a mandatory requirement that the level of expenditure recorded as stock issues can be reconciled by the Budget Holder to his/her records of stock requisitioned and received Stores issues recorded on the Financial Information System/ Accounting system against cost centres or Internal Orders (Capital cost centres) must incorporate the requisition number or equivalent Appropriate monthly summary and detail reports must be available to and reviewed by Budget Holders showing stock items issued to them by: Cost centre / internal order Stock type or category Value Store / storage location This is to facilitate efficient tracking by Budget Holders of expenditure back to the original requisition Stores managers must ensure procedures are in place to facilitate this requirement. A2.14. Recording and resolving non fulfilled requisitions The stores manager and the person(s) approving requisitions must ensure that records are kept of outstanding or part outstanding requisitions i.e. where some or all of the goods on a requisition have not yet been issued On a monthly basis requisitions outstanding for more than 2 months must be reviewed and closed by both the person approving the requisition and the stores manager. Co-operation between stores and requisitioning staff is required to enable this process to operate efficiently. Ver /20/2013 Page 60 of 133

61 TOPIC 3: Expenditure Approval - More information (2d VI) A2.15. Expenditure Approval by Non-Clerical Administrative and Management Grades Government and Health Service policy promotes the engaging of clinicians more fully in all aspects of the formal management of the health services they deliver. These regulations require: The formal identification and approval of managers who are being delegated authority as Budget Holders and also, The formal documentation by Budget Holders of the key elements of the purchasing arrangements in force within their areas of responsibility In the context of and above there is scope to formally approve non clerical / administrative or management grades as both Budget Holders and expenditure approvers Given the diversity of such grades within the health service it is not proposed to prescribe equivalents to each of the grades listed in the Financial Limits by Grade table above Approval of Budget Holders and Expenditure Approval [ Approval of all Budget Holders by Deemed Budget Holders and takes effect when notified to the relevant Assistant National Director of Finance There is a need to strike an appropriate balance between: i. The need to deepen the general management and financial management involvement of staff in grades outside the clerical / administrative and management stream, ii. and the requirement to have appropriately trained and experienced staff with sufficient knowledge and understanding to maintain a high level of internal control. It remains the responsibility of the Budget Holder member making the delegation to take all steps necessary to oversee that any person they delegate responsibility to as a budget holder complies with requirement of such delegation. This is particularly important with regards to managing within available budget and full compliance with these regulations. A2.16. Requirement for Written Decisions for Expenditure Approval Use of FIS (Expenditure Approval on Financial Information System/Accounting system by Nominees) Whenever practical the aim should be to facilitate the streamlining of the expenditure approval process without any reduction in financial control. This aim can be achieved by ensuring that managers approving the issue of purchase orders / contracts e.g. do so using the system directly The above assumes that managers, including the most senior managers whose approval is required in respect of higher value amounts, are in a position to utilise the FIS to approve purchase orders In the event that certain managers do not utilise the System directly, then they must nominate a manager(s), at Grade VI or above, to implement on the System their decisions to approve expenditure. Ver /20/2013 Page 61 of 133

62 The nominated manager will be responsible for approving the necessary purchase orders within the Financial Information System (FIS)/Accounting System to give effect to the senior manager s decision It is good practice to nominate a substitute to address any absences by the nominated person A decision to nominate a manager (applies to NHO/LHO managers or above) and any substitutes in this context must be given in writing and recorded along with the other written decisions of that senior manager The relevant Assistant National Director of Finance must be notified of all managers nominated in this way and the Budget Holder for the area must ensure that all such nominations are reviewed at least annually. A2.17. Formal Written decisions approving expenditure greater than 50,000 minimum requirements. Each written decision that approves expenditure must: Be sequentially numbered with a sequence that identifies both the senior manager signing off on the decision and the year Be dated Set out a synopsis of, or refer to documents outlining, details of the need that is being addressed Set out a synopsis of, or refer to documents (preferably attached) outlining details of the procurement options followed to source the goods / services and the recommended supplier(s) Identify or refer to documents identifying quantity, specification, price, time period and any other relevant details Specify total expenditure being approved (showing VAT exclusive, VAT and VAT inclusive amounts) and periods over which expenditure will be incurred Be specific as to funding source in place to cover the expenditure Detail cost centre(s) and cost element(s) that charges are to be made against (or refer to appropriate documents for same) Be recommended by a manager of at least grade V level who is not the manager approving the decision Be signed by a manager with the authority to expend the amount in question Be summarised in an electronic format list as specified by the HSE Chief Financial Officer. Updated copies of this list to be forwarded each month before the third working day of the following month to the relevant National Leadership Team Member and the relevant Assistant National Director of Finance. Ver /20/2013 Page 62 of 133

63 TOPIC 4: Requirements of Purchase Order - More information (2d VI) A2.18. Purpose of a Purchase Order The purchase order serves a number of purposes including: Providing a clear request to the supplier with all the necessary details to assist them in meeting HSE requirements and for future reference Forming part of documentation of the legal contract between the HSE as purchaser and the supplier Establishing a control whereby purchase orders should not be issued until expenditure is approved following confirmation of budget availability Establishing a reference point for the purpose of accurate accounting where commitments can be recorded and later the expenditure and liability (accrual) when goods are received Providing a permanent record for the HSE of what was ordered to facilitate;. Notification of receipting location for delivery Checking or what was delivered against what was ordered Checking of invoice against what was ordered Checking in case of later dispute Checking price agreed at time of order with subsequent invoice A2.19. Who needs to get copies of Purchase Orders. Once approved, purchase orders must be issued immediately to: i) The supplier. ii) iii) The person(s) expected to receive the goods/services. The person responsible for approving the expenditure i.e. approving the issue of the order or his/her nominee. It is a mandatory requirement that purchase orders are physically issued to (i). to (iii) above unless approval of the relevant Assistant National Director of Finance (or his/her nominee) has been obtained. A2.20. Key items for inclusion on purchase orders / contracts These regulations require that the purchase order or contract must contain, or refer to accompanying documents that contain, sufficient detail to enable the supplier to fully understand and comply with the needs of the HSE. Each purchase order / contract must include the following: i) Unique sequential printed order number or equivalent ii) iii) iv) Name, address and Supplier account Number (Vendor number) or selected supplier Description, quantity of goods or services Price (showing VAT Exclusive, VAT and VAT Inclusive) v) Address for delivery of goods or services. vi) Address for submission of invoice or equivalent. Ver /20/2013 Page 63 of 133

64 vii) Address for submission of supplier statements. viii) Any necessary time constraints around delivery. ix) Summary of standard HSE payment terms. x) Date xi) Material Code / account code TOPIC 5: Management of Outstanding and Incomplete Orders A2.21. Monitoring of Purchase Orders not fulfilled It is a mandatory requirement that officers responsible for approving purchase orders ensure that they monitor purchase orders that have yet to be fulfilled by the supplier i.e. where some or all of the goods or services have yet to be received Each month a list of any purchase orders that remains open for more than 3 months must be prepared The purchase orders listed must be investigated and closed by receipting goods against it or cancelled if it will not be fulfilled If there is a valid reason to keep open any such purchase order then this reason must be recorded against it. A summary of the outcome of this monthly review exercise must be sent by each location to the relevant Assistant National Director of Finance or his/her nominee(s). A2.22. Monitoring of Purchase Orders fulfilled but not invoiced (GRINR) Goods Received Invoice Not Received (GRINR) Once a goods receipt note is inputted into the Financial Information System (FIS) against a purchase order, the expenditure for those goods or services is recorded against the relevant Budget Holders cost centre or internal order The Goods received transaction will automatically be accrued to the GRINR account in the FIS, until such time as the invoice is received and matched against the Purchase order It is important to realise that this incurring of expenditure occurs and therefore must be recorded, in most cases, before the invoice is received It is a mandatory requirement that purchase orders for which goods have been receipted but for which no invoice has yet been received are monitored closely A high level of purchase orders that have been goods receipted for a long period i.e. longer than 3 months without receipt of an invoice may indicate that there are duplicate purchase orders and GRN s in the system and therefore duplicate expenditure Alternatively, it may indicate that there are issues with the invoice receipt and matching process that could cause prompt payment or cash flow issues when the invoices are eventually matched for payment Each month a list of any purchase orders that have been goods receipted but not matched to an invoice for more than 3 months must be prepared and compared to the GRINR control account on the Financial Information System This list must be investigated and the items on it cleared. Ver /20/2013 Page 64 of 133

65 If there is a valid reason to keep open any such item then this reason must be recorded against it A summary of the outcome of this monthly review exercise must be sent by each location to the relevant Assistant National Director of Finance or his/her nominee (s). TOPIC 6: Manual Purchase Orders The issue of a manual purchase order is covered by the same Financial Regulations as set out in sections 2a to 2d on Purchasing. A2.23. The written approval of the relevant Assistant National Director of Finance or nominee is required for inclusion on the list of service areas/locations eligible for a manual purchase order book The list of service areas / locations eligible for inclusion on the list for manual purchase order books must be reviewed at least annually and re-approved if appropriate by the relevant Assistant National Director of Finance Within 3 months of the coming into force of these regulations each Budget Holder must prepare a report detailing each of the locations within his/her area of responsibility that utilise manual purchase orders and must detail: Number of service areas / locations using manual purchase order books in his/her areas of responsibility Approximate number and value of manual purchase orders issued per service area / location Reasons for the use of manual purchase orders in each service area / location. A2.24. Manual Purchase Order books should only be supplied in respect of service areas / locations that; do not have access to FIS generated purchase orders cannot issue FIS purchase orders for certain Goods/services that require a purchase order The issue of manual purchase order books must be centrally controlled by or on behalf of each of the Assistant National Directors of Finance with a permanent record retained of ; (1) Which Budget Holder, service and location are issued Order books (2) Date of issue of manual order book (3) Names and signatures of person issuing and collecting order books. (4) First and last order number in each book issued. (5) Any restrictions on the use of the manual purchase orders The minimum information to appear on any manual purchase order, including the requirement for unique sequential numbering, is the same as for a FIS generated purchase order as set out in detail in section 2d on page Within 12 months of the coming into force of these regulations each Budget Holder must review and report to the relevant Assistant National Director of Finance as to plans identified to eliminate the use of manual purchase orders It is a requirement that the use of manual purchase orders is phased out as soon as practical. TOPIC 7: Documented Purchasing Arrangements - More information A2.25. Formal Documented Purchasing Arrangements for Managers and Users Ver /20/2013 Page 65 of 133

66 Budget Holders should set out, for each location/main element of spend, who and how/when points 1 to 4 on page 6 are dealt with Identify Need, Who can validly confirm need Who makes decision on that need Form of communication, by who and to whom Confirm Available funds and approval to Spend. Who does what How is confirmation and approval done What is process if there is no approval Who approves spend Source Supplier Communication of information regarding centralised contracts What are local arrangements for non contract items and encourage HSE standard procedures, where appropriate How and who makes contact with suppliers Issuing of Purchase Orders/ Contracts How are purchase orders generated, approved & sent to vendor How are contracts drawn down, received Who handles and/or approves invoices Where Public Capital Funding to Not for Profit agencies is provided there is a requirement for the HSE to ensure a lien is made on the asset created (Securing the State s Interests). Procedures documented under Capital Section are likely to apply to works, specialist services and equipping Stores ; Specific Arrangements for Stores Within the required formal documented arrangements relating to the operation of the purchase to pay process, each Budget Holder must specifically address the following in relation to requisitioning from stores: (i.) Which managers (a) may approve stores requisitions, and (b) to what value, setting out any conditions to apply regarding high value goods or nonroutine goods etc (ii.) Process for approval of new products to be held in stores. (iii.) Monitoring and review arrangements in respect of requisitions from stores. A2.26. Details of Purchasing arrangements must be reviewed at least quarterly to reflect any changes, and communicated to all staff involved in the purchase to pay process. Ver /20/2013 Page 66 of 133

67 TOPIC 8; Supplier Approval, Categorisation, Performance Management (2d iv) A2.27. Supplier Approval It is a mandatory requirement of these regulations that suppliers are appropriately selected and managed. This is to ensure that HSE utilises, on a continuing basis, only suppliers that provide a consistently high performance in meeting HSE requirements around provision of goods and services Performance by suppliers in this area includes facilitating compliance with these regulations by provision of appropriate documentation, responding to queries and related activities Any suppliers selected must comply with whatever supplier selection and approval criteria are in force from time to time within HSE Only suppliers (also known as Vendors ) that meet any such criteria should be listed for set up on the FIS. A2.28. Supplier Categorisation & Development The scale of the HSE is such that there is a requirement to ensure that a broad base of competitive potential suppliers is available at all times in respect of key purchasing areas Budget Holders, and particularly those acting on their behalf in terms of providing procurement support and advice must ensure that all reasonable steps are taken to meet to this requirement While complying with the above requirement it is important to ensure that HSE contracts have an appropriate minimum number of suppliers It is important that strong mutually beneficial relationships and partnerships are built up with key suppliers where this assists meeting the best value for money objective. It is important that the purchasing activities of the HSE do not operate to limit choice and competition amongst recently established firms or those seeking to contract with the public sector for the first time. A2.29. It is a mandatory requirement that any arrangement that might in the long term prevent the effective operation of competition must be avoided. A2.30. Supplier Performance Management Budget Holders must ensure that arrangements are in place to monitor the performance of significant suppliers and that corrective action is taken and followed up where performance is not satisfactory. The Budget holder must link with the designated procurement agent (Material Management, Capital Estates etc) with regard to monitoring and taking action on supplier performance. Ver /20/2013 Page 67 of 133

68 TOPIC 9: Receiving Goods or Services - More information A2.31. Formal Documented Purchasing Arrangements for Managers and Users Accounting entries associated with receipt of goods or services In many cases the staff member responsible for creating and inputting what is referred to as The Goods Receipt Note (GRN) Gviii on the FIS will not be the same person as has checked the goods or services and / or signed off on their satisfactory receipt For this reason the creation and inputting (posting) of the GRN within FIS does not require any specific authorisation level The person carrying out this transaction on the system must, however, be able to produce for future audit the appropriate documentation to demonstrate that the receiving process was appropriately signed off before they inputted the GRN into the computer system There is a requirement on all Budget Holders to make the purchase to pay process as efficient as possible In this context it is clearly necessary to maximise any opportunities that may exist to have signoff of the receiving process and finalisation of the GRN on the computer system carried out by the same person Responsibility for the process of finalising GRN s on FIS rests with the relevant Budget Holder and their managers and is important. The act of creating and inputting the GRN in computer system: Records the liability to the supplier as an accrual Records the expenditure against the budget of the relevant Budget Holder A2.32. Services provided over a period of months or years Approval of expenditure for services occurs when the contract: (i.) Is initially awarded. (ii.) Is amended e.g. increase in cost (iii.) Is renewed For example: a contract extends over 12 months and payments are made in monthly instalments. In this example each monthly instalment represents a sign-off on satisfactory receipt of the services for that month The approval level (i.e. grade) that applies to monthly payments is based on the value thresholds for the sign-off on satisfactory receipt Each monthly instalment is not a new expenditure approval This regulation is particularly relevant to grants to voluntary organisations / not for profit organisations. A2.33. Procedures and Local Receiving Arrangements It is important that Budget Holders ensure that robust arrangements are in place to identify and record liabilities on a monthly basis even if supplier does not expect payments each month The recording of liabilities is relatively straightforward where goods are physically received as this prompts the inputting of a Goods Received Note (GRN) in FIS Recording of liabilities is an important element of the Accruals Gix process. Ver /20/2013 Page 68 of 133

69 In the case of services, including works, procedures must be in place to ensure that each month any material liabilities are estimated and recorded by means of submitting accruals for input into the FIS. DELIVERY OF GOODS/SERVICES Additional Information A2.34. Proof of Delivery is Mandatory in all situations - including direct delivery to clients or other third parties In certain cases, HSE purchased goods or services are not physically received by HSE staff but may, for example, be delivered directly to or collected by or on behalf of HSE clients. This may pose practical issues for Budget Holders in formalising arrangements around the receiving process for their area. It is stressed that such practical issues do not eliminate the mandatory requirement that each area must obtain reasonable proof of delivery of goods or services before paying for them. There are many options that can be explored in this regard and this is a matter for Budget Holders However the requirement is that in respect of each direct delivery; There is a mechanism for the recipient (i.e. the client) Or someone acting on their behalf Other than the supplier, To confirm receipt of the goods or services For a HSE staff member or some one acting on its behalf To verify receipt of the good or service. A2.35. Minimum Delivery Documentation to facilitate Proof of Delivery The HSE requires minimum delivery documentation in respect of all goods or services received. Such documentation summarises, from the supplier s perspective, what he believes he has delivered and must as a minimum enable the HSE to interpret: When and by whom it was ordered a Purchase Order Number or agreed alternative must be quoted on all delivery documentation. What was delivered quantity, type, description etc in sufficient detail to enable efficient matching later to the original purchase order/ contract. When and to where it was delivered It is a matter for Budget Holders to manage their relationships effectively with suppliers to ensure that they receive the necessary documentation in an appropriate format that assists in implementing the required controls in an efficient manner In most cases there will be a need for onward communication of delivery documentation in the form of a Proof of Delivery Document (PoD). Gx Actual delivery of any good or service must be verified and recorded. Wherever practical the delivery documentation provided by the deliverer should be utilised This will generally be carried out by a HSE staff member in the form of a legible signature written across the delivery document with whatever notes or qualifications are necessary such as subject to inspection. Ver /20/2013 Page 69 of 133

70 o o In the absence of appropriate delivery documentation being provided by the deliverer then the appropriate HSE staff involved in the receiving process must themselves prepare a Proof of Delivery Document. Proof of Delivery documents must be fully legible and contain the basic information listed at A2.36 below. A2.36. Information to Appear on Suppliers Proof of Delivery It is the responsibility of each Budget Holder to manage relationships with suppliers to ensure that Delivery Dockets are received promptly and contain necessary prescribed information. Supplier Name and Address Delivery Address and contact person Purchase order number or equivalent agreed number. Description of Goods/Service to required level of technical detail. Delivery date Details of items not delivered or returned. INSPECTION, CHECKING AND MATCHING OF RECEIPT Additional Information A b Shortage on Delivery - Follow-up regarding goods ordered and not delivered Checking of what has been delivered against the purchase order may reveal that less than the quantity ordered has been delivered The supplier should be notified of this immediately and requested to deliver the additional quantity as soon as possible Where, for whatever reason, a supplier does not deliver the balance of the goods within a reasonable time he must be formally notified that the goods are no longer required and the purchase order should be amended accordingly It is important to ensure that the appropriate notification of the shortage and respective delivery details is received by the staff member responsible for inputting Goods Receipts Notes into the financial system so that the necessary accounting entries can be dealt with. A a Checking if fit for purpose / free from obvious defects While checking that goods or services are fit for purpose and free from obvious defect managers and staff should be aware of the warranty position for the goods / services The warranty should incorporate the right to rectify any defects that come to light after initial signing off of receipt for goods or services Accordingly the requirement at the goods receipts stage, subject to the above, is a reasonable but not an exhaustive level of checking to identify any potential defects. A b Quality Assurance / Certification Where certificates of fitness for purpose or any other quality assurance documentation is required in respect of any goods or services (for example R.E.C.I. Certification in relation to electrical wiring) then sign-off on satisfactory receipt cannot take place until the appropriate certificates have been received and are deemed to be in order. Ver /20/2013 Page 70 of 133

71 A2.40. Proof of Delivery / Receipt not notified until Invoice receipt Payment of invoices cannot be made until there is a record of satisfactory receipt of goods or services Delays in recording satisfactory receipt of goods, either due to lack of proper delivery documentation at time of receipt or delays in processing may lead to unnecessary late payments and prompt payment charges being incurred It is the responsibility of each individual involved in the delivery/goods Receipt process to ensure Goods Receipt Note (GRN) for satisfactorily received goods/services are inputted promptly on the FIS Persistent difficulties with obtaining Proof of delivery from suppliers must be effectively followed up and addressed. A2.41. All returns of Goods must be documented fully, to include: i) Purchase order number or Contract reference number ii) Delivery date and location iii) Description of goods returned iv) Quantity of goods returned v) Date and method of return vi) Reason for return vii) Confirmation of acceptance of return by supplier and / or Credit Note reference viii) Supplier name Where feasible the requirement is to only reject and return those goods that are defective or do not match what was ordered. TOPIC 10: Supplier Payment Remittance & Supplier Reconciliation Related Section in chapter 2; A2.42. Supplier Statement Reconciliation Budget Holders must ensure that all supplier statements are reconciled and arrangements made to clear outstanding balances on an ongoing basis. Where a supplier is used by a number of budget holders, each budget holders must ensure that procedures are in place to ensure that each of their transactions relating to that supplier can be fully reconciled and accounted for irrespective as to who actually completes the reconciliation. The practical operation of this regulation is a matter for each Budget Holder and may require discussion and agreement with shared services or equivalent. Such practical issues do not affect the requirement to implement this regulation. A2.43. Supplier Remittances (Payment Remittance Advices) The Supplier Remittance Advice is the document that the supplier receives along with payment to allow the supplier to understand what transactions are being paid Budget Holders must ensure that sufficient and accurate details are recorded on the Financial Information System (FIS) as part of the purchase and receipting stage to enable shared services or the equivalent to efficiently produce remittance advices for suppliers. Ver /20/2013 Page 71 of 133

72 A2.44. The minimum requirement for remittance advice is that the following must be provided in respect of each amount appearing on the remittance advice: i) Invoice number and invoice date ii) The purchase order number or equivalent Sufficient detail to enable the supplier to identify which element of the invoice is being paid if less than the full amount of an invoice is paid Contact details for any queries which where practical should be specific to each remittance amount Poor quality information on remittance advices may lead to difficulties in reconciling suppliers statements therefore this area requires close attention by Budget Holders and those acting on their behalf. A2.45. Suppliers Statements and the need to reconcile and address outstanding amounts There is a mandatory requirement for Budget Holders to ensure that the purchase to pay process is efficiently organised in their area One key performance indicator (KPI) in relation to this is that suppliers are paid on time and that there are no significant unresolved issues regarding outstanding amounts due to suppliers It is essential that any monies recorded by a supplier as due to him/her can be reconciled with the HSE records of what is deemed to be owed to the supplier This is a key control point - recurring and ongoing issues on supplier statement reconciliations often indicate a poorly controlled purchase to pay process. TOPIC 11: Invoice Matching Tolerances More information A2.46. Tolerance Levels - (When Matching Invoices to PO/GRN) These regulations permit a general price tolerance level of 25 or 2% (whichever is the lower ) when matching the total value of an invoice to the relevant amount on the purchase order / GRN Price differences; All matching differences above 25 or 2% require the invoice to be referred to the appropriate local staff member for resolution. The FIS system will identify where there are price differences (greater than the tolerance level) and change the status of the transaction until the transaction is subsequently released. Resolution may involve engaging with the supplier to have the invoice amended or approval of the additional amount and amendment of the purchase order / goods receipt note as necessary The tolerance level applies to the total value of the invoice compared to the purchase order price/goods Received Note and not to individual lines on the invoice Where an additional amount is being approved the total amount of the relevant invoice must be looked at in identifying the level of manager required to sign-off on the revised amount Delivery charges should not be accepted unless they have been specifically identified and agreed at purchase order stage Ver /20/2013 Page 72 of 133

73 All matching differences above 25 or 2% must be listed, summarised appropriately and reported to the relevant Budget Holder on a monthly basis in the format specified by the Area Director of Finance Budget Holders must review these reports and report on a quarterly basis to the Area Director of Finance as regards any trends in the occurrence of matching differences Budget Holders must outline in their quarterly reports the measures being taken to address any inappropriate level of recurring matching differences Quantity differences (Invoice quantity is greater than Ordered) i) Quantities delivered in excess of the Purchase order quantity should not be accepted and should be taken back by the supplier at no extra cost to the HSE. ii) Where a decision is taken, in exceptional circumstances, to accept additional quantities, this requires the approval of a new purchase order and/or an approved amendment to the original purchase order. Ver /20/2013 Page 73 of 133

74 Related Chapter; 2. Tendering TOPIC 1; Public Advertising Requirements - More information A3.1. Public Advertisement Compliance with the requirement for public advertisement involves publication on the government tendering web site Other advertising media such as national newspaper should be utilised in addition to the web site if considered necessary to attract a sufficient number of tenderers National and EU advertising information must be consistent all information regarding a contract published nationally must be included in EU publications (and visa versa). EU contract threshold (Supplies / Services over 200,000 and Works over 5m) Each contract above the EU contract threshold must be published on the Official Journal of the European Union (OJEU) publication accessed via the e-tenders web site or EU website Departure from the requirement for advertisement for contracts above the EU threshold value is not permitted by these regulations and would be a breach of legal obligation. EU contract threshold (Supplies / Services over 200,000 and Works over 5m) Only the relevant National Leadership Team Member can approve a departure from the requirement for public advertisement (above 25,000 for goods/services or above 500,000 for works), but only in exceptional circumstances set out on page This approval must be co-signed by the Area Director of Finance. A3.2. Prior Indicative Notice (PIN) It is recommended that Prior indicative Notices Gxi (PINs) be for known aggregated procurement supplies or services requirements in excess of 750, The PIN is normally submitted at the start of the budgetary year and sets out the categories of products and services likely to be procured during the year From 1 st January 07, there will be a mandatory requirement to publish a PIN of all national aggregated spend in excess of 750,000 by product area of supply or category of service. It is the responsibility of the Head of Procurement to ensure that PINs are published, setting out categories of products/services for the HSE as a whole PINs are intended as an aid to transparency and are for the benefit of suppliers. Insertion of a PIN does not commit contracting authorities to purchasing or proceeding with a project if circumstances change. Ver /20/2013 Page 74 of 133

75 TOPIC 2; Aggregation Procedure - More information A3.3. Aggregation of Tenders/ Tender Coverage It is the policy of the HSE to move to a situation where the level of aggregation of purchasing is increased consistent with full compliance with EU Procurement requirements and achievement of Value for Money These regulations require that pending the completion of the change process outlined above the following Procedure for Tender/Contract Approval (issued in March 2005) will apply: This pre tender procurement Aggregation process (Tender/Contract Approval procedure) applies to proposed tender process with an estimated contract value in excess of the high values ( currently 25k) defined in the procurement policy o o Need to Commence tender process Identified Refer details of proposed contract to HSE Procurement using template. Information required; a) Name of proposed contract b) Scope of Proposed contract c) Estimated start date (date of award) d) Value of proposed contract e) Contract details o o o o Following assessment a decision on the appropriate action to be taken will be issued. HSE reference number will be assigned to all future tender processes. Following completion of the tender process a copy of the Contract Approval Request (CAR) should be forwarded to HSE procurement (see template in appendices). The CAR will be used for formal contract approval and to update the HSE register of contracts. This procedure will provide the basis for an efficient streamlining of contracts at sector level. It will also accelerate compliance with EU procurement Rules on aggregation of expenditure. Ver /20/2013 Page 75 of 133

76 TOPIC 3 ; Tendering Process, General Requirements - More information. A3.4. Tender Addressee - Receipt and Handling of Tenders A Below EU Threshold Tender should be addressed to the relevant HSE Line Manager (or his/her nominee) one who must have expenditure authority equal to the estimated value of the contract or otherwise approved by Assistant National Director of Portfolio & Category Management. (see Table 2: Purchase Order/Contract Approval-Financial Limits by Grade,) B Above EU Threshold Tender must be addressed to the Assistant National Director of Portfolio & Category Management/Nominee Minimum time to be allowed for receipt of quotes / tenders The provisions set out in Table 1 on page 51 must be complied with as a minimum Tenders received late The process of receiving, opening and recording tenders must be conducted in a manner that ensures the integrity of the tendering process. Late tenders have the potential to: (i.) (ii.) Bring into question the integrity of the tendering process especially where the late tender is received after bids have been opened. Disadvantage other tenderers by affording the late tenderer additional time to prepare a bid. and accordingly cannot be considered. (iii.) (iv.) The tender delivery instructions must be clear to all prospective tenderers at the invitation to tender stage and the tender receipt arrangements are to be made as failsafe as possible. Tenders are to be opened as soon as possible after the closing date by at least two authorised officers of the HSE. Tenderers price sheets are to be date-stamped and signed by each authorised officer Tender Deposit (v.) (vi.) Any tender deposit charged must be limited to the estimated marginal cost associated with reproducing the tender documents and getting them to each extra potential tenderer (i.e. printing/photocopying plus postage/courier etc). Tender deposits should be repaid upon receipt of a valid tender by due date. A3.5. Custody and Opening of Tenders Above the 25,000 threshold sealed tenders are required and these must: (i.) (ii.) Be numbered sequentially and stamped for date and time upon receipt. Be held securely in a locked container or room and unopened until due for opening after the tender deadline has expired. Ver /20/2013 Page 76 of 133

77 (iii.) (iv.) Be opened by a minimum of two staff one who must have expenditure authority equal to estimate value of contract or otherwise approved by Assistant National Director of Portfolio & Category Management. (see Table 2: Purchase Order/Contract Approval- Financial Limits by Grade,) Every tender must be initialled and dated by the staff opening it. Each page of price sheets should be signed and dated stamped. (v.) (vi.) Be recorded in a register kept for that purpose detailing: Date and time received Date, time and by whom (to include Grade/Title) opened Confirmation that tender was not previously opened Name of tenderer Overall price quoted where applicable Specific lots tendered for where relevant Date and person handed over to for tender evaluation. Be held safely until handed over for evaluation Where a tender has been submitted with a covering letter attached the details of the tender must be checked against the letter. Any discrepancies must be notified to the tenderer Any additional requirements of EU procedures must be fully complied with. A3.6. All potential suppliers must have equal access to information All potential suppliers must be informed in a consistent way as to any criteria that may be used to evaluate their quotes or tenders It is essential that any information, or clarification, provided to one supplier, is provided in the same format and at the same time to all potential suppliers regardless of whether they have requested it or not HSE staff must not give any real or perceived advantage to any potential supplier Documents to be made available to potential tenderers on request; (i.) Specification of goods, services or works (ii.) Pre-qualification criteria and forms for completion where appropriate (iii.) Tender document (to be filled in by tenderers) (iv.) HSE Conditions of Contract (to be signed by tenderers to indicate acceptance). (v.) Any other relevant information. A3.7. Tender Evaluation The criteria to be used to evaluate any tender must be objective and the evaluation process must be transparent and fair All evaluation criteria must have been disclosed to potential tenderers prior to them completing their tender documents The HSE Procurement Policy establishes different aspects of assessment and evaluation that should be considered for each tender being processed. These include ; a) Clinical Evaluations b) Technical Evaluation c) Commercial Evaluation Any criteria not disclosed cannot be used in the evaluation process The relevant Budget Holder must nominate the person or persons to evaluate any tenders that are received. Ver /20/2013 Page 77 of 133

78 Cost is a very significant factor in evaluating any quote or tender. 1. When considering costs, managers must consider full cost over likely lifespan of the good or service in so far as is practical. 2. Costs should include any recurring costs during the lifespan of the good or service and any material disposal or decommissioning costs. A3.8. Acceptable Basis of Award of Contracts The following are the accepted bases for evaluation for award of tender contracts within the HSE; Most Economically Advantageous Tender (MEAT) Or Lowest Priced Tender MEAT Basis Most Economically Advantageous Tender is recommended as the primary basis of tender evaluation. Other criteria (in addition to price) are considered as part of the evaluation process, e.g. technical assistance and merit, after sales service, environmental concerns Examination of Tenders should be carried out by individuals (with the relevant competence and skills. These may include Clinical input or evaluation of tenders in addition to commercial evaluation (as appropriate to specific contract) All contracts greater than 25,000 will require input from a Purchasing Professional who should coordinate the procurement process including qualification/assessment, procurement of supplies/service and commercial analysis as well as negotiations. Application of the M.E.A.T. principle requires criteria to be weighted to indicate the level of importance attached to each of the criteria. A scoring sheet rating each tender/quote against the different elements of the evaluation criteria must be completed for each tender process The M.E.A.T. principle enables due regard in the evaluation and award process to be had to factors such as: Full cost price over complete life cycle of goods, services or works Match to specification issued with tender documents Capacity (technical and financial) of suppliers to satisfy the full requirement Demonstrated relevant experience and competence Level of after sales service Technical assistance available Technical merit and general suitability of good, service or works Acceptance of HSE Standard Contract Terms Acceptance of Lowest Price Tender It is appropriate for a high evaluation weighting to be assigned to cost where goods, services or works are; relatively standardised and closely comparable in terms of specification and any after sales support etc A3.9. Tender Evaluation Report Ver /20/2013 Page 78 of 133

79 As a minimum, tender reports must record or refer to readily accessible and preferably attached documents that record: (i.) Description of goods or services tendered for (ii.) List of tenderers (iii.) All relevant dates in process including for example Date of advertisement / invitations to tender List of tenders received and dates Deadline for receipt of tenders Date tenders opened Date(s) tenders evaluated and by whom (iv.) Details of any late tenders (v.) Details of any invalid tenders (vi.) Comparable prices per valid tender following any adjustments necessary to compare like for like (vii.) Evaluation based on criteria utilised, marked on a score sheet. (viii.) The evaluation score sheet must provide sufficient detail to enable full understanding of why the lowest tender may not have been accepted. (ix.) Results of the evaluation and a recommendation by the evaluators as to which tender should be accepted and on what basis. (x.) Signature of persons who carried out the tender evaluation and prepared tender report. A3.10. Tender Award The award of a contract or issue of a purchase order following a tender process is an approval of expenditure and requires a formal written decision (see Written Decision approving expenditure greater than 50,000 on paragraph 2.61 on page 18 and also page 61 ) The tender evaluation report should be referenced (and preferably attached to) in the written expenditure approval decision and should include all of the necessary information. In that context the written decision will, if appropriate: Cover the acceptance of the tender evaluation report Approve the award of the contract or order and Detail any other matters not dealt with in the tender evaluation report which are required to be included on a written expenditure decision For administrative efficiency and ease of future reference the tender evaluation report and the expenditure approval decision should be encompassed in the composite document where practical. A3.11. Restrictions on Award of Tenders / Contracts Before the award of any HSE tender/contract the following must be addressed: Risk Management It is essential that potential risks associated with the supply of any goods or services are where possible identified and dealt with prior to award of tender / contract. This includes: Quality/Reliability. (a) The HSE must have appropriate arrangements/ procedures in place to be able to identify, record and resolve with suppliers, problems identified with goods/services delivered. (b) Budget Holder/ expenditure approver signing must be able to satisfy themselves that the goods delivered/services provided are of sufficient quality to meet the needs of the service. Ver /20/2013 Page 79 of 133

80 Insurance. All suppliers must have adequate Employers and Public Liability or product Insurance as appropriate. Evidence of appropriate insurance must be supplied Statutory Provisions tenders / contracts can only be awarded to organisations that confirm they are complying with all applicable statutory provisions including those relating to: Payment of minimum wage Restrictions on Award of Tenders / Contracts Statutory provisions.continued Employment Law generally Taxation Health and Safety Issues All other relevant provisions Conflicts of Interest anyone involved in Tender / contract requirements specification or Tender evaluation or Expenditure approval / award of tender / contract must confirm in writing, that the tender has no potential conflicts of interest that might affect in any way their ability to act with impartiality and objectivity in relation to any aspect of the tender process They must also undertake to make known to the Budget Holder any potential conflicts that may subsequently arise The Budget Holder must decide whether the potential conflict of interest requires the exclusion of the person from the process He must inform the relevant Assistant National Director of Finance of his/her decision in writing Potential conflicts of interest involving National Leadership Team Members must be notified in writing to the HSE Director General Potential conflicts of interest involving the HSE Director General must be notified to the Chair of the Directorate of the HSE Collusive Tendering Staff involved in any tendering process must be vigilant in order to prevent collusion between potential tenderers or any other anti-competitive practices Criminal Convictions public contracts cannot be awarded to persons convicted of: o Organised crime o Fraud o Corruption o Money Laundering Potential tenders must be made aware of this requirement and of the need to provide written confirmation that demonstrates compliance for proprietors, owners, directors and contract contacts. The successful tenderer will be obliged to notify the HSE in writing of any change to the status of this compliance statement that may occur during the period of the contract. A3.12. Notification of Results of Tendering Process All tenderers, including those who are not successful, should be informed of the result of the tender process without undue delay. Ver /20/2013 Page 80 of 133

81 No information regarding the final award of any contract or issue of a purchase order following the tender process can be given to the successful tenderer(s) until the relevant Budget Holder or his/her nominee have approved the expenditure It may be necessary to reserve the right to revert to one or more unsuccessful tenderers in the event that a preferred tenderer does not actually wish to proceed with the provision of the goods, services or works Notification of Unsuccessful tenderers; Unsuccessful tenderers for contracts covered by the EU Directives should be notified promptly of the outcome of a tendering procedure. A contract is not formally awarded before an interval has elapsed, during which an unsuccessful tenderer can seek a review of the decision if s/he feels that the process has been unfair or unlawful. Any notification to the successful tenderer during this interval must be provisional and must not constitute a contractual arrangement. Tender documentation should include a statement indicating the need for an appropriate interval after the award decision is notified and before a formal contract is put in place. A3.13. Documents to be held on every tender file Documentation relating to a tender file should be retained for the later of ; (i) The end of the contract and (i) The end of the audit period for which the final invoice relating to a contract has been posted The following must be retained in respect of each tender process: i ii iii iv v vi vii viii ix x xi xii xiii xiv xv xvi Original requisition or memo etc. setting out need Specifications / description of work Copies of all notices and documents published or issued to potential tenderers. Any correspondence from or to potential tenderers Conditions of Tendering Details of marking scheme used as part of MEAT evaluation Terms of Contract Qualifications / short listing report Copies of all tenders received and accompanying documents Commercial / Technical / Clinical evaluation reports appropriately signed Minutes of any meetings whether internal or with potential suppliers Details of those involved in the process e.g. tender opening, evaluation, and approval Copies of any letters to unsuccessful tenderers or debriefing notes Tender Evaluation Report Expenditure approval decision Copy of final awarded order or contract and any award notice Ver /20/2013 Page 81 of 133

82 Related Chapter; 3 NON ORDER PAYMENTS (General) TAXI s As with any area of expenditure it is the responsibility of Budget Holders to ensure that taxi costs incurred are necessary for the service, represent value for money, and are appropriately monitored and controlled. Use of Taxi s presents some practical difficulties in terms of the normal purchase to pay process. A5.1. Purchasing Taxi Services A contract or contracts for taxi services should be in place for the HSE and must be renewed at least every 2 years (can be extended to 3 years with approval of the relevant Assistant National Director of Finance The taxi contract must provide appreciable benefits to the HSE in terms of cost reductions and / or a more efficient billing and activity tracking process Wherever practical the contract must be used for all taxi journeys It is accepted that in some instances taxi s will be booked to collect at a certain time and location whereas in other cases taxi s may be engaged directly on the street It is not required that a purchase order is issued for each individual taxi journey A5.2. Receiving Taxi Services Each person utilising a taxi which the HSE has to pay for must ensure that: (a) The taxi meter is correct (should be at zero or appropriate booking/waiting charge) when their journey commences. (b) They sign for the charge at the end of the journey and get a receipt / docket showing the amount which must match the final charge showing on the meter. (c) Where they pay the charge themselves they must also obtain a receipt showing the amount which must match the final meter reading. (d) They forward, without delay, the receipt / docket to the appropriate person responsible for checking taxi invoices and processing them for payment. (e) This includes where they have paid the taxi themselves and are submitting an expenses claim for re-imbursement The receipt / docket referred to. above must also (i) Be dated, (ii) Indicate journey start point and destination (iii) Show Taxi/hackney registration number Budget Holders must have arrangements in place to ensure that taxi invoices / expenses claims are matched against the taxi receipts / dockets and any material discrepancies investigated and dealt with. A5.3. Monitoring of Taxi Costs Budget Holders must monitor taxi costs and usage on an ongoing basis to ensure that: Taxi journeys are necessary and appropriate Taxi s are not being used for personal use Efficient and proper usage is made of taxi s for example a protocol around requesting taxi s to wait at a destination for a return or onward journey must be in place and enforced. Ver /20/2013 Page 82 of 133

83 Utility Bills (Eircom, ESB, etc) A5.4. The general requirements of the purchase to pay regulations as set out on page 6 Error! Reference source not found. must be complied with in respect of Utilities unless otherwise provided in this section. A5.5. This Financial Regulation covers: Telecommunications land line (Eircom and others), Electricity Supply (ESB and others), Gas Supply Bord Gais and others, Water Charges, Rates Charges, Waste collection services A5.6. Purchasing Expenditure Approval A formal written decision, in effect of an Expenditure Approval, is required: a) To open a new utility account b) To approve a new connection or significantly amended connection c) To approve a move to a new charging or tariff arrangement etc d) To record the discontinuation of a utility contract / connection An estimate of the likely usage and cost, or additional cost, per annum must be made and an expenditure approval from the appropriate grade of manager obtained (per Table 2 on page 52 above It is not necessary to issue a purchase order in respect of utility costs either in respect of the initial set up or ongoing periodic bill payments. Deregulation is bringing major change in terms of choice of providers for what was previously a series of monopoly / proprietary sectors. A5.7. The Procurement and Materials Management Service has responsibility for advising Budget Holders around requirements that may come into force requiring competitive sourcing to select utility providers. A5.8. Receiving The receiving element of the purchase to pay process is typically carried out following receipt of the invoice Budget Holders must put in place arrangements to ensure that utility costs are recorded as expenditure each month by submission of appropriate accruals. Ver /20/2013 Page 83 of 133

84 Related Chapter; (4) CAPITAL PROJECTS and PROPERTY TRANSACTIONS Topic 1; CAPITAL PROJECT APPROVAL PROTOCOL Issued by Estates Directorate 2006 The following protocol should be read in conjunction with the related chapter in the main body of this document (on page 44). I It is important to reiterate that a project should not considered approved until such time as formal notification has been provided by the Finance Directorate. INTRODUCTION Following the transfer of responsibility and authority for the Health Services Capital Expenditure Programme to the HSE from the Department of Health and Children, it is necessary to put in place protocols to ensure that there is proper governance of capital projects. It is also important to ensure that the protocols will enable the efficient management of capital projects. The HSE is required as part of the service plan to indicate any capital plans proposed by the HSE for the approval of the Minister for Health. The HSE also requires the written permission of the Minister to enter into any agreement or arrangements in respect of capital spending or an undertaking if the total amount spent on the undertaking would exceed an amount that may be specified from time to time by the Minister with the consent of the Minister for Finance. The Directorate of the HSE has delegated to the CEO approval of contracts other than those in excess of 10m. The Estates Directorate will manage the capital programme on behalf of HSE Corporate and regionally. The HSE Capital Planning Group has been established to formulate and coordinate the Capital Plan. The group consists of representatives of the NHO and PCCC service pillars, Estates and Finance Functions. Approval Procedures The following sets out the approval procedures with which HSE Areas must comply with prior to committing Capital Funding to a project. The guidelines for the Appraisal and Management of Capital Expenditure Proposals in the Public Sector issued by the Department of Finance in January 2005 shall also apply. The projects are divided into different categories depending on the capital cost of the project: Band Project Cost A less than 500,000 B 500,000-5,000,000 C 5,000,000-20,000,000 D greater than 20,000,000 The capital cost of a project is the total project cost including VAT. The total project cost includes construction costs, design fees, equipment costs and miscellaneous costs associated with the project. Band A (minor capital and projects less than 0.5m) Band A projects will include all Minor Capital projects and projects with a total project value of less than 500,000. A list of these projects will be submitted to HSE Corporate for approval within the Capital Plan and once the list of projects is approved no further approval is required. Ver /20/2013 Page 84 of 133

85 Topic 1; Capital Projects Approval Protocol Continued This approval is subject to the following conditions 1 Expenditure on the list of projects cannot exceed the allocation for that year. 2 The maximum carryover of contractual commitments cannot exceed 50% of the current year s allocation 3 Any substitutions on the list must be agreed with the Network Manager (NHO) or LHO Manager (PCCC) and Area Assistant Director of Estates. 4 Any variation on projects must be approved by the Area Assistant Director of Estates. 5 All public procurement directives/guidelines must be complied with. 6 All stages of the projects must be agreed locally and approved by the Area Assistant Director of Estates. The Assistant Director of Estates shall, at the end of each calendar quarter, submit to the National Director of Estates a report on the list of projects indicating progress and cost performance. Updated cash flow forecast will be part of this report. Band B ( 0.5m to 5m) Projects with an estimated total project value exceeding 500,000 but not exceeding 5,000,000 The HSE Area must apply to HSE Corporate for approval for all projects in this category. An individual submission is required for each project. The submission must include the following: Project Brief Option Appraisal study that justified the proposed investment as part of the preferred option for the required service. Estimated final project cost for the project (Q Cost). Year by year cashflow forecast of expenditure. Project Programme Revenue costs and WTE associated with the project. HSE Corporate will issue an approval for the project subject to consideration of service priorities and available funding N 14. No further approvals will be required subject to the following conditions. 1 Total expenditure on the project cannot exceed the approved allocation. 2 Yearly expenditure should be within 10% of projected cash flow. 3 Any variation on projects must be approved by the Area Assistant Director of Estates and within the approved allocation for the project. 4 All public procurement directives/guidelines must be complied with. This includes complying with EU procurement directives where appropriate. 5 All stages of the project must be agreed with the local service (i.e. Hospital Network or LHO) and Area Assistant Director of Estates. The Area Assistant Director of Estates shall, at the end of each calendar quarter, submit to the National Director of Estates a report on the project indicating progress and cost performance. Updated cash flow forecast will be part of this report. Band C ( 5m - 20m) Projects with an estimated total project value exceeding 5m but not exceeding 20m. The HSE Area must apply to HSE Corporate for approval for all projects in this category. An individual submission is required for each project. The submission must include the following: Project Brief Option Appraisal study that justified the proposed investment as part of the preferred option for the required service. N14 Notification of project approval (letter of approval) must be provided by the Finance Directorate (National Director of Finance or relevant Assistant National Director of Finance) Ver /20/2013 Page 85 of 133

86 Topic 1; Capital Projects Approval Protocol Continued Estimated final project cost for the project (Q Cost). Year by year cash flow forecast of expenditure. Project Programme Revenue costs and WTE associated with the project. HSE Corporate will issue written approval to the commencement of the project of the basis of the foregoing data subject to consideration of service priorities and available funding. The commencement covers Selection of a Design Team and proceeding with design to Stage 2 (Sketch Schemes). The HSE Area must obtain HSE Corporate approval for Stage 2 of the project before proceeding with developing the project further. The Stage 2 submission will include equipment schedules which will also be approved at this stage. After receiving approval for Stage 2 the HSE Area may advance the project up to and including the preparation of the tender documents. All stages of the project must be agreed with the local service (i.e. Hospital Network or LHO) and Area Assistant Director of Estates. The HSE Area must obtain HSE Corporate approval to seek tenders for the project. The submission seeking approval must include the following: Reports on the tender process proposed. If the restricted process is proposed a report on the selection process used to finalise the list of tenderers. A cost check based on completed documentation reconciled with the original estimate upon which the commencement approval was based. A statement that the tender documents have been examined by the Area Assistant Director of Estates and that the documentation is considered satisfactory. After receipt of the tenders for the project, the Area Assistant Director of Estates must submit the tender report to HSE Corporate for approval to accept the tender. Please note that the approval of the Directorate of the HSE is required to accept tenders in excess of 10m. Approval to accept the tender is subject to the following conditions. 1 Total expenditure on the project cannot exceed the approved allocation. 2 Yearly expenditure should be within 10% of projected cash flow. 3 Any variation on projects must be approved by the Area Assistant Director of Estates and must be within the approved allocation for the project. 4 All public procurement directives/guidelines must be compiled with. This includes compliance with EU procurement directives where appropriate. The Area Assistant Director of Estates shall, at the end of each calendar quarter, submit to the National Director of Estates a report on the project indicating progress and cost performance. Updated cash flow forecast will be part of this report. Band D (greater than 20m) Projects with an estimated total project value exceeding 20m. The HSE Areas must apply to HSE Corporate for approval for all projects in this category. An individual submission is required for each project. The submission must include the following: Project Brief Option Appraisal study that justified the proposed investment as part of the preferred option for the required service. Estimated final project cost for the project (Q Cost). Year by year cash flow forecast of expenditure. Project Programme Revenue costs and WTE associated with the project. Ver /20/2013 Page 86 of 133

87 Topic 1; Capital Projects Approval Protocol Continued The HSE is obliged to make a submission to the Directorate of the HSE and to the Minister for Health to obtain approval to proceed with the project. The submission will include The reasons why the particular project is considered a priority. Complies with overall strategy for the provision of a service. Estimated revenue or operating cost consequences of the proposal. A statement that the project is affordable within the Capital Plan. The HSE is also obliged to seek the advice of the National Development Finance Agency on the optimum means of financing the cost of the project. On receipt of written approval from the Department of Finance the HSE Chief Financial Officer (or nominee) will issue written approval to the commencement of the project of the basis of the foregoing data subject to consideration of service priorities and available funding. The commencement covers Selection of a Design Team and proceeding with design to completion of Stage 2. The HSE Area must make a submission for written approval for each of the following design stages. Detailed Sketch design including equipping list (Stage 3) After receiving approval for the Stage 3 the HSE Area may advance the project up to and including the preparation of the tender documents. All stages of the project must be agreed with the local service (i.e. Hospital Network or LHO) and the Area Assistant Director of Estates. The HSE Area must obtain HSE Corporate approval to seek tenders for the project. The submission seeking approval must include the following: Reports on the tender process proposed. If the restricted process is proposed a report on the selection process used to finalise the list of tenderers. A cost check based on completed documentation reconciled with the original estimate upon which the commencement approval was based. A statement that the tender documents have been examined by the Area Assistant Director of Estates and that the documentation is considered satisfactory. The HSE is obliged to make a submission to the Department of Finance to obtain approval to proceed to tender. On receipt of approval from DoHC, the Chief Financial Officer (or nominee) will issue a letter to obtain approval to proceed to tender. After receipt of the tenders for the project, the Area Assistant Director of Estates must submit the tender report to HSE Corporate for approval to accept the tender. Please note that the approval of the Directorate of the HSE is required to accept tenders in excess of 10m. Approval to accept the tender is subject to the following conditions. 1 Total expenditure on projects cannot exceed the approval allocation. 2 Yearly expenditure should be within 10% of projected cash flow. 3 Any variation on projects must be approved by the Area Assistant Director of Estates and must be within the approved allocation for the project. 4 All public procurement directives/guidelines must be compiled with. This includes compliance with EU procurement directives where appropriate. The Area Assistant Director of Estates shall, at the end of each calendar quarter, submit to the National Director of Estates (and copy to the Assistant National Director of Finance, Capital) a report on the projects indicating progress and cost performance. Updated cash flow forecast will be part of this report. Ver /20/2013 Page 87 of 133

88 Topic 2; Protocol for Acquisition and Disposal of Property Issued by Property Sub Committee, Approved by HSE Directorate - March 2006 Introduction HSE, Protocol for the Acquisition and Disposal of Property 26 th January 2006 Delegations As of 1 st January 2005, all property previously held by any of the health Directorates became vested in the Health Service Executive ( HSE ). This protocol sets out the procedure to be followed when the HSE acquires or disposes of any property (whether freehold or leasehold) or interest in property. Terms used in this protocol are defined in Schedule 8, on Page 157 This protocol does not extend to the acquisition of land by compulsory purchase order. The Authority is permitted to compulsorily acquire land pursuant to section 78(1) of the Health Act, 1947 (as amended by Section 75 of the 2004 Act). This protocol does not extend to the provision of affordable housing. The CEO is directly responsible to the Directorate but, subject to any directions the CEO may receive from the Directorate, he may in writing delegate any of his functions 15 to employees of the HSE specified by name, position or otherwise, and authorise the subdelegation of any or all delegated functions to or by other such employees. Delegations and subdelegations of functions are to be taken to include the delegation or subdelegation of any duty or power incidental to or connected with that function 16. The [draft] delegations from the Directorate to the CEO and from the CEO to the National Directors in relation to the acquisition and disposal of property are set out in Schedule 1. Relevant Statutory Provisions The key statutory provisions of the consolidated Health Acts that are or may be relevant to this protocol are set out in Schedule 2. Other Relevant Matters In addition to the matters discussed in this protocol, in considering the acquisition or disposal of any property or interest in property, the relevant employee of the HSE must consider: Whether the contemplated transaction falls within the ambit of any function reserved to the Directorate of the HSE, the Director General or a National Director. How the interests of the HSE in retaining assets funded by the HSE within the healthcare system, and securing a proportionate interest for the HSE in the increased value of any asset upon subsequent realisation are to be protected. This should be considered both in determining the structure of the transaction (e.g. sale and leaseback, purchase and declaration of trust, etc) and the contents of the related documentation (e.g. whether any restrictive covenants, negative pledges, charges, etc are required to protect the HSE s interests). N15 The DG s functions are set out in Section 18(1) of the 2004 Act: (a) to carry on, manage and control the administration and business of the HSE, (b) any other functions assigned by the Act or delegated by the Board and (c) to supply the Board with information. N16 Section 76 of the 2004 Act. Ver /20/2013 Page 88 of 133

89 Chapter 5, Topic 2 Protocol for Acquisition and Disposal of Property Continued For example, tenants of residential premises may avail of a procedure under either the Landlord and Tenant (Ground Rents) Act, 1967 (the 1967 Act ) or the Landlord and Tenant (Ground Rents) No. 2 Act, 1978, and tenants of business premises may avail of a procedure under the 1967 Act to purchase the freehold interest in the relevant property. The HSE is not currently among the bodies excluded from the ambit of this legislation and, accordingly, tenants of the HSE may seek to acquire the freehold interest in property leased by them from the HSE. This would be detrimental to the interests of both the HSE and the State as it can operate to remove important assets from the healthcare system at a significant discount to their market value. Consequently, care should be taken to ensure that any new leases granted by the HSE cannot become qualifying leases for the purposes of this legislation through careful drafting of the relevant lease agreements in each case. 4.3 Any general or specific written directions issued by the Minister which may be relevant to the proposed transaction (Section 10 of the 2004 Act). Whether the proposed transaction is consistent with the terms of the HSE s corporate plan and the service plan (including the capital plan) for the relevant financial year. Whether the proposed transaction would involve capital expenditure in excess of the level specified from time to time by the Minister with the consent of the Minister of Finance (Section 34 of the 2004 Act). If so, ministerial consent is required. Any regulations made by the Minister for any purposes set out in the 2004 Act. At the time of writing no regulations relevant to property disposals or acquisitions have been made. If the transaction would require the HSE Seal to be applied to any document, the Protocol for the use of the HSE Seal. The Code of Practice for the Governance of State Bodies (2001), in particular Section 5 of that Code. Schedule 4 to this protocol includes a detailed summary of the provisions of Section 5. In summary, specific Directorate approval is required where an asset is disposed of or a grant of access to property for commercial arrangements with third parties is made and the anticipated value of the transaction is at or above EUR70,000, unless the disposal or grant is undertaken by way of auction or competitive tendering process. Disposals of assets to members of the HSE s Directorate, or employees of the HSE, or their connected persons may also require Directorate approval. The Guidelines for the Appraisal and Management of Capital Expenditure Proposals in the Public Sector (Department of Finance, 2005). Any other codes of conduct or governance adopted by the HSE from time to time. The implications of the anticipated transaction in terms of rates (see Schedule 5 for more detail), VAT and stamp duty (see Schedule 6 for more detail) and the implications of the anticipated transaction for the HSE in terms of VAT and stamp duty (see Schedules 6 and 7 for more detail). Procedure for the Acquisition or Disposal of Property or Interests in Property With respect to any proposed transaction in relation to property or an interest in property, the Manager must first consider whether the transaction would be a: Category 1 Transaction (equal to or less than EUR1 million exclusive of VAT and Service charges); Category 2 Transaction (in excess of EUR1 million but equal to or less than EUR2 million exclusive of VAT and Service charges ); or Category 3 Transaction (in excess of EUR2 million exclusive of VAT and Service charges). Chapter 5, Topic 2 Protocol for Acquisition and Disposal of Property Continued Ver /20/2013 Page 89 of 133

90 For these purposes, the value of the lease is deemed to be the annual rental costs payable pursuant to the lease multiplied by the duration in years of the lease. Category 1 Transactions The Manager e.g. LHO or other equivalent will submit a Business Proposal to the relevant Assistant National Director e.g. Asst./ PCCC, requesting clearance to develop a Business Case. Each Directorate is responsible for initial assessment of Business Proposals before advancing to Business Case stage. Business Proposal means a written document including the following information: Care group purpose Brief outline identifying the needs requirement (including associated risk analysis) linked to corporate and/or strategic plans for service The revenue funding implications (e.g. existing / new / increase), as appropriate. WTEs required (e.g. existing / new / increase), as appropriate. Preliminary Option Appraisal (e.g. replacement / expansion / new) Linkage requirement to other services / community / special conditions Funding approval to date / applications made as appropriate Capital funding implications (e.g. existing / new / increase) as appropriate. The Assistant National Director will or will not grant clearance to the Manager to develop a Business Case. The decision shall be notified in writing. On grant of clearance from Assistant National Director to the Manager for development of a Business Case, the Manager will do so in accordance with HSE guidance. Business Case means a written document including the following information: Option Appraisal is essential. Consider options that address service needs and objectives (e.g. demographics/ location/ etc.) and development costs. If the proposed transaction is an acquisition, provide evidence of the requirement for increased/ replacement accommodation. If the proposed transaction is a disposal, evidence of the reduced/ replacement requirement for accommodation, identifying impact on service delivery. Evidence of alignment of the proposed transaction with the objectives of the HSE s service plan and capital plan. Identify property type, location and approximate size (include map). Technical report, providing support as to the appropriateness of property proposal to be acquired for its intended use, identifying and cost all necessary improvement measures e.g. alterations, fire safety precautions etc. If it is proposed to acquire or dispose of a freehold or leasehold property, an explanation of why freehold or leasehold acquisition or disposal is appropriate (e.g. if granting a lease to a third party over HSE property, explain proposal option rather than disposing of the property entirely), together with a detailed cost/ revenue projections in relation to such acquisition or disposal. Chapter 5, Topic 2 Protocol for Acquisition and Disposal of Property Continued Ver /20/2013 Page 90 of 133

91 If the proposed transaction is the grant of a lease or the acquisition of leasehold property, details of the proposed term and covenants of the lease. Valuation report from Valuation Office or, where the Valuation Office has confirmed to the Manager in writing that it will not be able to provide a valuation report within the required timeframe, a valuation from an alternative valuer. If necessary, a legal opinion should be obtained to guide negotiation process and protect interests of HSE for larger/ more complex transactions. Legal advice shall be necessary at conveyance stage. Source of capital and ongoing revenue funds and impact on revenue budget. Detail on WTE implication. Alternative options considered with costs and other advantages/disadvantages associated with such options. Provide VFM report and risk analysis. A proposed programme for actions and expenditure, stating all assumptions. In preparing the Business Case, expert advice may be required: Technical: HSE areas, Technical Services/ Capital Project personnel will provide, the in-house engineering technical advice and carry-out a conditional survey, option appraisals in conjunction with service personnel for the properties. The conditional survey will report on: (i) Appropriateness for proposed occupants/ use. (ii) fire safety compliance, (iii) health and safety issues, (iv) essential remedial measures required (with associated costing), (v) compliance with local authority planning and building control, and (vi) any relevant local authority or site specific development plans. Where external technical expertise (e.g. an architect, engineer or quantity surveyor) is required, the relevant expert shall be selected from the appropriate panel maintained by HSE. Auctioneering: Valuations shall be sought from external valuers only where the Valuation Office has confirmed to the Manager in writing that it will not be able to provide a valuation report within the required timeframe. HSE shall maintain panel of valuers. The expertise of the valuers on the panel may be drawn on to explore options with respect to the acquisition or disposal of the property in question, in accordance with the service specification, available funding, valuation guidance and procurement regulations. Cognisance of local knowledge with ability to verify advice against national norms and provide a competitive pricing proposal for various services shall be among the selection criteria for specific assignments. Legal: Legal opinion should be obtained to guide negotiation process and in the protection of the HSE interest for larger/ more complex transactions. Legal advice shall be necessary at conveyance stage in property transactions. The HSE has limited internal legal advice available and shall develop and maintain a panel for legal advice services. The completed Business Case for a property transaction shall be submitted by the Property Contact person for the area, on behalf of the relevant manager to the HSE corporate property section, for recommendation by the Property Committee. Chapter 5, Topic 2 Protocol for Acquisition and Disposal of Property Continued Ver /20/2013 Page 91 of 133

92 The Property Committee shall review the Business Case for property transactions. In each situation the Property Committee shall either, Seek further information in writing, for review at subsequent meeting; Or Recommend the transaction described in the Business Case for approval to the relevant National Director in writing (draft decision paper attached); Or Recommend rejection of the Business Case to National Director in writing. The relevant National Director will approve or reject the property transaction recommended by the Property Committee The National Director will notify the HSE corporate property section of the decision in writing and attach a copy of signed decision paper if the transaction is approved. The HSE corporate property section will advise the responsible manager in writing the decision of the National Director including conditions. In addition the detail of the decision, for the property transaction shall be entered into the national property transaction database. Approved transactions shall be notified to the Secretary of the HSE Directorate, as approved Category 1 Transactions, for notification to the Directorate 17. On receipt of formal approval for the property transaction, from HSE corporate, the Manager in conjunction with the legal advisors shall conclude negotiations based on submission reviewed by the Property Committee and prepare contract documents for the approved Category 1 Transaction. Once these documents are in final form, they will be executed in accordance with the HSE s Sealing Protocol. Category 2 Transactions Paragraphs 0 to 6.8 Error! Reference source not found. of the procedure for Category 1 Transactions apply. The relevant National Director shall endorse or reject the Property Committee recommendation. The National Director notifies the HSE corporate property section of his/ her endorsement of the recommendation to approve the transaction by the return of the signed draft decision paper or on the decision otherwise in writing. For a transaction proposal endorsed by the National Director, the draft decision paper signed by National Director shall be forward to the CEO, by the HSE corporate property section for his approval or rejection. The draft decision paper shall be accompanied by an executive summary of the business case, for briefing purposes. Recommendations of the Property Committee that do not have the continued support of the National Director shall be notified to the HSE Corporate Property section in writing. The corporate section shall advise the Manager of the National Director decision. A copy of the notification shall issue to the CEO for information. The CEO will approve or reject the Category 2 Transaction, recommended by the Property Committee and endorsed by the National Director. The CEO s office shall notify the HSE corporate property section of the decision in writing and attach a copy of signed decision paper if the transaction is approved. The HSE corporate property section will advise the Manager in writing, copied to the National Director, of the CEO s decision, including any conditions or restrictions. In addition the detail of the decision of the CEO and the National Director, for the property transaction shall be entered into national property transaction database. Approved transactions shall be notified to the secretary of the HSE Directorate, Chapter 5, Topic 2 Protocol for Acquisition and Disposal of Property Continued N17 Re. The Code of practice for Governance of State Bodies (2001), in particular Section 5 of that Code. Ver /20/2013 Page 92 of 133

93 as approved Category 2 Transactions, for notification to the Directorate N18. On receipt of formal approval for the property transaction, from HSE corporate, the Manager in conjunction with the legal advisors shall conclude negotiations based on submission reviewed by Property Committee and prepare contract documents for the approved Category 2 Transaction. Once these documents are in final form, they will be executed in accordance with the HSE s Sealing Protocol. Category 3 Transactions Paragraphs 0 to 7.4 of the procedure for Category 2 Transactions apply. The CEO shall endorse or reject the Property Committee recommendation which is initially endorsed by the relevant National Director, prior to submission for approval by the HSE Directorate. The CEO s office notifies the HSE corporate property section with the return of the signed draft decision paper or on the decision otherwise, in writing. The Manager seeking approval will prepare a briefing note for the Directorate on the transaction, to be circulated with the Directorate papers in advance of the next meeting of the Directorate. The briefing note will include as appropriate the following standard information: Purpose of Category 3 Transaction Identify service plan and/ or strategic basis for scheme, include service benefits and risk analysis Identify capital funding source, as appropriate. Identify revenue cost impact and source, as appropriate. Identify staffing implications and approval, as appropriate Verify option appraisal completed Verify that assessments were completed, as appropriate e.g. legal, technical, financial, VFM Confirm adherence to public procurement procedures and Guidelines for the Appraisal and Management of Capital Expenditure Proposals in the Public Sector (Department of Finance, 2005) At the request of a Directorate member (notified to the secretariat in advance of the meeting), the CEO, the relevant National Director or a nominee, will attend the Directorate meeting or meet with some or all members of the Directorate by arrangement, to address issues raised by the Directorate or individual members. The Directorate will approve or reject the Category 3 Transaction, recommended by the CEO. The Secretary to the Directorate shall arrange for notification to the HSE corporate property section, of the decision in writing and attach copy of decision paper signed by 2 no. Directorate members. Chapter 5, Topic 2 Protocol for Acquisition and Disposal of Property Continued N18 Re. The Code of practice for Governance of State Bodies (2001), in particular Section 5 of that Code. Ver /20/2013 Page 93 of 133

94 The HSE corporate property section will advise the responsible manager in writing, copied to the National Director, of the Directorate s decision including any conditions or restrictions. In addition the detail of the Directorate, CEO and National Director s decisions, for the property transaction shall be entered into the national property transaction database. On receipt of formal approval for the property transaction, from HSE Corporate, the Manager in conjunction with the legal advisors shall conclude negotiations based on submission reviewed by Property Committee and prepare contract documents for the approved Category 3 Transaction. Once these documents are in final form, they will be executed in accordance with the HSE s Sealing Protocol. Ver /20/2013 Page 94 of 133

95 Chapter 5, Topic 2 Protocol for Acquisition and Disposal of Property Continued Schedule 1 Delegations DRAFT FOR SIGNATURE Delegation by the Directorate to the Director General Delegation Order The Directorate resolved at its meeting on 1 st January 2005 to make the delegation of all functions assigned to the Executive under the Health Act, 2004 and previous Acts as listed in Schedule 1 and 3 of the Health Act, 2004 to the Director General with the exception of functions reserved at the time by the Directorate including, inter alia, the approval of acquisitions and disposals of land (Section 6(2)). Pursuant to Section 12 of the Health Act, 2004 the Directorate resolved at its meeting of 2 nd February 2006 to delegate the function listed below to the Director General. Exclusions: Subject to: Approval of acquisitions and disposals of land (Section 6(2)). Approval of acquisitions and disposals of lands wherein the transaction value exceeds 2 Million exclusive of V.A.T. and Service Charges.( i.e. Category 3 Transactions) Note: For this purpose, the value of the lease is deemed to be the annual rental costs payable pursuant to the lease multiplied by the duration in years of the lease. All reserved functions of the Directorate. The provisions of the HSE, Property Acquisitions and Disposal Protocol. The general provisions of the approved annual National Service, Capital and Corporate Plans and the specific resources and targets relevant to the HSE. The policies, procedures and codes of practice adopted by the HSE. The Code of Practice for the Governance of State Bodies (2001), in particular Section 5 of that Code. The Guidelines for the Appraisal and Management of Capital Expenditure Proposals in the Public Sector (Department of Finance, 2005). The Directorate hereby authorises the sub-delegation of any function delegated to the Director General pursuant to this Delegation Order to or by other employees or the Executive. A person acting in the role of Director General has the same delegated authority and accountability as the substantive post holder for the duration of the acting period. Any dispute as to whether or not a function has been delegated to the Director General will be decided by the Directorate of the Health Service Executive. Signed: Chairperson Directorate of the Health Service Executive Date: Ver /20/2013 Page 95 of 133

96 Chapter 5, Topic 2 Protocol for Acquisition and Disposal of Property Continued DRAFT FOR CONSIDERATION Delegation by the Director General to the National Directors Under the Health Act 2004 the Directorate is the governing body of the Health Services Executive (the Executive ) with the authority to perform the functions of the Executive. Pursuant to Section 12 of the Health Act 2004 the Directorate has delegated all functions assigned to the Executive under the Health Act 2004 (with the exception of certain reserved functions) to the Director General. Section 18(1) of the Health Act 2004 provides that the Director General, shall carry on and manage and control generally the administration and business of the Executive and perform other functions assigned under the Health Act 2004 or any other enactment or as may be delegated to him by the Directorate. The Director General may, subject to any directions issued by the Directorate, delegate any of his functions to employees of the Executive and authorise the sub-delegation of delegated functions to or by employees of the Executive. Any function delegated or sub-delegated to an employee is to be performed by the employee under the general direction and control of the Director General, or the employee who sub-delegated the function, and does not preclude the Director General, or the employee who sub-delegated the function, from performing that function. Delegation Order Pursuant to Section 19 of the Health Act, 2004, I, [ ], as Director General of the Health Service Executive, hereby delegate the following function to you, as National Director of [ ] (the Directorate ). The approval of acquisitions and disposals of land within your area of responsibility (Section 6(2) of the Health Act, 2004). Exclusions: Approval of acquisitions and disposals of lands wherein the transaction value exceeds 1 Million exclusive of V.A.T. and Service Charges.(i.e. Category 2 or 3 Transactions) Note: For this purpose, the value of the lease is deemed to be the annual rental costs payable pursuant to the lease multiplied by the duration in years of the lease. All reserved functions of the Directorate. Subject to: The provisions of the HSE, Property Acquisitions and Disposal Protocol. The general provisions of the approved annual National Service, Capital and Corporate Plans and the specific resources and targets relevant to the HSE. The policies, procedures and codes of practice adopted by the HSE. The Code of Practice for the Governance of State Bodies (2001), in particular Section 5 of that Code. The Guidelines for the Appraisal and Management of Capital Expenditure Proposals in the Public Sector (Department of Finance, 2005). The general directions of the Director General. A person acting in the role of National Director [ ] has the same delegated authority and accountability as the substantive post holder for the duration of the acting period. This Delegation Order should be read in conjunction with all previous delegation orders by the Directorate of the Executive to the Director General. Any dispute as to whether or not a function has been delegated to a National Director will be decided by the Director General. I hereby revoke all existing Delegation Orders relating to the matters set out above. Signed: Director General Health Service Executive Date: Ver /20/2013 Page 96 of 133

97 Chapter 5, Topic 2, Protocol for Acquisition and Disposal of Property Continued 1. Health Act 2004 Schedule 2 Statutory Provisions Section 6(2)(b) The HSE may, subject to the Health Acts 1947 to 2001, acquire, hold and dispose of land or an interest in land. Section 7(5)(d) and (e) Section 10 Section 25 Section 26 In performing its functions, the HSE shall have regard to the resources that are available for the purpose of such performance, and the need to secure the most beneficial, effective and efficient use of those resources. The HSE shall comply with any general or specific written directions issued by the Minister. In performing the functions of the HSE, employees must maintain proper standards of integrity, conduct and concern for the public interest and shall comply with any relevant code of conduct. Employees of the HSE must not disclose confidential information (including proposals of a commercial nature or tenders submitted to the HSE) unless authorised by the HSE, or disclosed to the Directorate of the HSE or the Minister or otherwise in compliance with law. Sections Section 29(2). The HSE must prepare a three (3) year corporate plan, submit it for the Minister s approval and, following a copy of the approved plan being laid before both Houses of the Oireachtas, publish the approved plan on the internet. Assistance may be provided by the HSE to any person or body that provides or proposes to provide a service similar or ancillary to a service that the HSE may provide by permitting the use by the person or body of premises maintained by the HSE (and, where requisite, executing alterations and repairs to and supplying furniture and fittings for such premises) or by providing premises (with all requisite furniture and fittings) for use by the person or body. Sections Section 34 The HSE must prepare a service plan for each financial year, submit it for the Minister s approval and, following a copy of the approved plan being laid before both Houses of the Oireachtas, publish the approved plan on the internet. Section 33 provides that the HSE must manage health and personal social services indicated in the approved service plan so as to ensure that the services are delivered in accordance with the plan. The Executive must not, without the consent of the Minister, enter into any agreement or arrangement or otherwise commit itself to capital spending on a transaction if the total cost Ver /20/2013 Page 97 of 133

98 Chapter 5, Topic 2, Protocol for Acquisition and Disposal of Property Continued Section 40 Section 62 Section 70 Health Act, 1970 Section 38 of this would exceed the level specified from time to time by the Minister with the consent of the Minister of Finance N19. The HSE may accept gifts of land on such trusts or conditions (if any) as may be specified by the donor, unless such trust or condition would be inconsistent with the HSE s object or functions or with any obligations imposed on the HSE under any enactment. On 1 st January 2005, all land that, immediately before that day, was vested in the predecessors to the HSE (i.e. the health Directorates or authorities) and all rights, powers and privileges relating to or connected with that land were, without any conveyance or assignment transferred to and vested in the HSE. The Minister may order the transfer to the HSE of any property, rights and liabilities of any body that is dissolved by the Minister under this Section (being bodies established under the Health (Corporate Bodies) Act, 1961). The HSE may, with the consent of the Minister, provide and maintain any hospital, sanatorium, home, laboratory, clinic, health centre or similar premises required for the provision of services under the Health Acts. The Minister may give to the HSE such direction as he thinks fit in relation to the provision or maintenance of any premises provided and maintained by the HSE and in relation to the arrangements for providing services therein. The HSE must comply with any such instructions. The HSE may and, if directed by the Minister shall, discontinue the provision and maintenance of any premises provided and maintained by it, but shall not exercise this power in relation to a hospital, sanatorium or home without the consent of the Minister. Section 40 (as amended by Section 17 of the Health (Amendment) (No. 3) Act 1996) Section 40 of the Health Act 1970 provides as follows: a health Directorate may provide land to a body providing institutional services on the request of the body; subject to any general directions given by the Minister; and where the Directorate is satisfied the land is required for the efficient performance of the body s functions. where the Directorate decides to provide land to such a body, it may acquire the land by agreement, subject to any general directions given by the Minister; or by compulsory acquisition; and may lease the land to or for the benefit of the body. N 19 At the time of writing no level had been specified. Ver /20/2013 Page 98 of 133

99 Chapter 5, Topic 2, Protocol for Acquisition and Disposal of Property Continued Section 68 Health Act, 1953 Section 54 The HSE shall make available a service for the training of disabled persons for employment suitable to their condition of health, and for the making of arrangements with employers for placing disabled persons in suitable employment. For these purposes, the HSE may provide and maintain premises, farms, gardens and similar facilities. A health authority is under a duty to give to every person in its functional area who is eligible for institutional assistance (meaning shelter and maintenance in a county home or similar institution) such institutional assistance as appears to them to be necessary or proper in each particular case. Sections 63 and 64 A health authority may, with the consent of the Minister, (and shall if the Minister so directs) provide and maintain a nursing school in connection with a health institution maintained by it. Part IV (Infections Diseases and Infestation) Health Act, 1947 For the purpose of the execution of their powers and duties under this Part of the Act, a health authority may provide and maintain premises, apparatus, material or any other facilities or may make arrangements with any person for the provision of such facilities, for example they may provide temporary accommodation to persons who need it as a result of an infectious disease. Part VIII (Acquisition and Disposal of Land by Health Authorities) Health Act, 1947 Section 78 (as substituted by Section 75 of the Health Act 2004) Section 80 Section 81 Section 82 The HSE has the power to acquire land either (a) by agreement, subject to any general directions given by the Minister with the consent of the Minister for Finance or (b) compulsorily under this Part (Part VIII) of this Act or the Acts incorporated within this Act. An officer or agent of a health authority who is duly authorised by the health authority may enter on any land at reasonable times for the purpose of ascertaining whether the land is or is not suitable for acquisition by the authority. Before the officer enters the land, he must either obtain the consent of the owner or occupier of the land or give the owner or occupier fourteen days notice in writing of the intention to make the entry. A health authority can make an order for compulsory acquisition under this section. Before a health authority makes an order for compulsory acquisition, it must give notice to the owner or occupier of the land and publish an advertisement in the prescribed form in one or more newspapers circulating in the area. Ver /20/2013 Page 99 of 133

100 Chapter 5, Topic 2 ; Protocol for Acquisition and Disposal of Property Continued Sections 83, 84 and 85 Section 83 sets out the circumstances in which the Minister can confirm any compulsory acquisition order made by a health authority and Section 84 states that the health authority must also give notice of and advertise the confirmation of the compulsory acquisition order. Section 85 provides for annulment of compulsory acquisitions by the High Court. Section 88 (as inserted by Section 18(b) of the Health (Amendment) Act (No.3) 1996) The consent of the Minister for the purchase, leasing and sale of land by the HSE is no longer required, but any acquisition, disposal, leasing of land must still be carried out in accordance with any general directions of the Minister. The HSE may, subject to the general directions of the Minister, appropriate and use for the purpose of its powers and duties, any land vested for any purpose in it and not required for the purpose for which it was acquired. Section 89 (as inserted by Section 18(d) of the Health (Amendment) (No.3) Act 1996) The HSE may, subject to any general directions given by the Minister with the consent of the Minister of Finance, sell, exchange, let or otherwise dispose of any land vested in it. Any capital proceeds of sale of any land are to be used, subject to the general directions of the Minister, for a purpose to which capital money may properly be applied by the Directorate. Where land is exchanged, the land received shall be used for the same purposes as the transferred land. Section 105 of the Health Act, 1947 A health authority, may with the approval of the Minister and shall if the Minister so directs, provide and maintain residences for the use of officers appointed or servants employed by them. Ver /20/2013 Page 100 of 133

101 Chapter 5, Topic 2 ; Protocol for Acquisition and Disposal of Property Continued Schedule 3 The Property Committee The Terms of Reference for the Property Committee The Property Committee will function as an executive group reporting to the Management Team that will apply their collective experience and knowledge of service requirements and property management, to vet and recommend or reject property transaction proposals. The committee shall operate in a manner that ensures an integrated, consistent and transparent approach in it s assessment of HSE property transaction proposals and will recommend as appropriate, property proposals to the National Directors, DG or the HSE Directorate, in accordance with the current legislation and best practice for property transactions in the public sector. The Property Committee will: Appraise property transaction proposals with reference to Corporate Plan, Service Plan, Capital Plan and agreed property protocols that also takes account of legislative requirements and relevant guidance. Make recommendations accordingly, to the persons designated in agreed HSE, property protocols. Oversee the work of the corporate property section. The corporate property section shall carryout routine preparation in advance of Property Committee meetings and follow-up as necessary to conclude the transaction process at corporate level. The corporate section shall maintain records of submissions to the committee and of the committee s recommendation, decisions of Directorate, DG and National Directors. The Committee shall be responsible for co-ordinating an integrated and standardised best practice approach to corporate property issues and advise the Management Team accordingly. Contribute to the development of the HSE s Strategy for Estate Management. The Property Committee Composition The Property Committee is an executive group set up by the HSE, Leadership Team that comprises of nominees from: (a) The National Hospitals Office; The Primary, Community and Continuing Care Office (2no. representatives); The Directorate of Finance; The Estates function (3no. representatives). Note: At the time of development of this document Estates function operating under the direction of the Chief Financial Officer. Other Directorates nomination available when items of relevance are before the committee And Chapter 5, Topic 2 ; Protocol for Acquisition and Disposal of Property Continued Ver /20/2013 Page 101 of 133

102 Chair Secretary to the committee The frequency of the Property Committee Meetings will be determined by the Property Committee with reference to the volume of proposals submitted and ongoing workload of the committee. Committee meetings will not take place when a quorum is not available. A quorum requires that five members of the committee are in attendance. The committee will determine the minimum grade, qualifications and experience required for nominees and substitutes that may be required to attend from time to time. The chairperson of the Committee shall be nominated by the Director General. The Estates function shall supply the Secretary to the group. The Secretary s role shall be to co-ordinate the activities of the Property Committee, to keep records of the Business Cases submitted to the Property Committee and the recommendations made in respect of each, to keep and circulate minutes of meetings of the Property Committee, to draft any correspondence and keep records relating to property transactions, reviewed by the Property Committee, and other ancillary matters. Ver /20/2013 Page 102 of 133

103 Chapter 5, Topic 2 ; Protocol for Acquisition and Disposal of Property Continued Schedule 4 Summary of the Provisions of Part 5 of the Code of Practice for the Governance of State Bodies (the Code ) The Code provides that it should be standard practice that the disposal of assets of State bodies like the HSE, or the granting of access to property for commercial arrangements (e.g. joint ventures with third parties), with an anticipated value at or above a threshold level of EUR70,000 should be by auction or competitive tendering process, other than in exceptional circumstances (such as a sale to a charitable body). The auction or competitive tendering process used should be both transparent and likely to achieve a fair market-related price. Determining the anticipated value The anticipated value may be determined by: (a) (b) the reserve price recorded in advance in the HSE s records; or formal certification by the Director of the HSE with responsibility for financial matters or a Director who is a member of the Audit Committee of the Directorate of the HSE that, in his or her view, the anticipated value is likely to be less or greater than EUR70,000. In determining market value, regard should be had to accounting standards best practice in Ireland. If an auction or competitive tendering process takes place and the highest bid is not accepted: Specific Directorate approval is required before the disposal of the asset or granting of access to property for commercial arrangements with third parties can be completed. This approval and the reason why a lower bid was accepted should be noted in the minutes of the Directorate. If an auction or competitive tendering process does not take place and the agreed price is EUR70,000 or more: Specific Directorate approval is required before negotiations start and also before the disposal of the asset or granting of access to property or infrastructure for commercial joint venture arrangements with third parties can be completed. No disposal of an asset or grant of access to property or infrastructure for commercial arrangements with third parties should be completed until: The officer authorising the disposal or grant of access has certified formally that: (a) (b) Directorate approval is not necessary, and the reasons why this is the case; or Directorate approval has been obtained. Disposal of assets to Directors, employees or their families or connected persons Families or connected persons in this context means: (a) (b) (c) a spouse, parent, brother, sister, child or step-child; a company with which the person is associated; a person acting as the trustee of any trust, the beneficiaries of which include the Director/employee or the persons described in (a) above or the company described in (b) above; Ver /20/2013 Page 103 of 133

104 (d) a person acting as a partner of the Director/employee or any person or body who, by virtue of (a)-(c) above, is connected with the Director/employee. These disposals should be at a fair market-related price. A record of all such disposals to such persons (including details of the asset disposed of, price paid and name of the buyer) should be noted in a register kept for this purpose (minor disposals below a threshold approved by the Directorate may be omitted from the register). This register should be available for inspection, if requested, by the Directorate or by any member of the Directorate. The Directorate may retain a requirement that any disposal above an approved threshold may not be made without having been formally endorsed by the Directorate. Such endorsement may be subject to any conditions or specific restrictions imposed by the Directorate. Annual Reports to the Directorate and by the Directorate to the Minister Details of all disposals of assets or grants of access to property for commercial arrangements with third parties (save for Disposals of assets to Directors, employees or their families or connected persons as discussed above) below the threshold value of EUR70,000 without auction or competitive tendering process should be formally reported, with the paid price and the name of the buyer, to the Directorate on an annual basis. Details of and explanations for the disposals of assets or grants of access to property or infrastructure for commercial arrangements with third parties above the threshold of EUR70,000 which have not been subject to auction or competitive tendering process should be included in the Chairperson s annual report to the relevant Minister. The Chairperson, in the annual report to the relevant Minister should affirm that the disposal procedures, as outlined in Part 5 of the Code, have been complied with. Ver /20/2013 Page 104 of 133

105 Chapter 5, Topic 2 ; Protocol for Acquisition and Disposal of Property Continued Schedule 5 Assessment of the Potential Future or Ongoing Liabilities of the HSE to pay Outgoings in respect of a Property, in particular Commercial Rates 1. General On the sale or disposal of any property or property interest by the HSE, the legal procedures and documentation should ensure that all liability on the part of the HSE in respect of the property ceases as at the date of the disposal. The assessment of any potential future ongoing liability for the HSE to pay outgoings in respect of any particular property therefore really only arises on the acquisition of property, both freehold and leasehold. The Manager whose responsibility it is to run the proposed acquisition of the relevant property on behalf of the HSE should always as part of his/her preliminary enquiries in relation to the property ascertain the outgoings (in particular, any unusual outgoings) affecting the property e.g. most commonly the rent payable in respect of a leasehold property. These should be verified and all other outgoings affecting the property established in the course of the due diligence conducted in respect of the acquisition of property e.g., in the case of the property being acquired by means of the grant of a lease, by way of prelease enquiries and in the case of the acquisition of a freehold interest and/or the assignment of a leasehold interest, by means of raising appropriate pre-contract enquiries followed by standard Objections and Requisitions on Title. Property acquired by HSE by means of Grant of Lease While not intended to be an exhaustive list and the appropriateness of the enquiries will depend on the particular property in question, in order to ascertain the outgoings affecting the property going forward generally the pre-lease enquiries raised by the solicitor conducting the legal aspects of the transaction on behalf of the HSE should include the following: Rates and Charges Insurance What is the rateable valuation of the demised premises. Please furnish evidence of payment of rates for the current year. Please furnish on completion a letter to the Rating Authority notifying change of occupier. If the demised premises is subject to any other periodic or annual charge, give details. If the Landlord is insuring, furnish a certified copy of the Landlord s insurance policy in receipt for latest premiums. What will the tenants insurance payment for the first year of the Lease be? Service Charges Please furnish a summary or budget of the service charge for the first year of the term and the anticipated amount of the tenant s contribution. Please confirm the floor areas upon which the tenant s contribution towards the service charge has been calculated. Chapter 5, Topic 2 ; Protocol for Acquisition and Disposal of Property Continued Ver /20/2013 Page 105 of 133

106 Please confirm whether there is a sinking or reserve fund in effect? If so please furnish details. Is the Landlord or the service provider aware of any possible claim that will effect the service charge presently payable? Has any work been carried out or expenditure incurred or is there any proposal to carry out any work or incurring expenditure which would substantially affect the charge presently payable. Freehold Property and Leasehold Property Acquired by Assignment of Leasehold Interest The standard Objections and Requisitions on Title numbers 14, 33 and 37 should be raised prior to entering into any contract in relation to the property to ascertain all encumbrances and outgoings affecting the property. In addition for leasehold property, where it is clear that a rent review is due under the terms of the Lease, appropriate enquiries should be made as to whether the rent review has taken place. If so, a copy of the related rent review memorandum should be requested and furnished and if not, confirmation should be requested of the vendor that no steps have been taken to initiate the review. In circumstances where a rent review is due and pending and no steps have been taken to initiate a review, the HSE would need to take the advice of a competent valuer as to the estimated or projected rent due on review. Commercial rates HSE situation under review Ver /20/2013 Page 106 of 133

107 Chapter 5, Topic 2 ; Protocol for Acquisition and Disposal of Property Continued Schedule 6 VAT on Property Transactions WARNING: THIS NOTE IS INTENDED TO ACT AS A USEFUL SUMMARY GUIDE IN ALERTING USERS TO SITUATIONS WHERE THE VAT STATUS OF A PROPERTY MERITS FURTHER INVESTIGATION. THIS GUIDE SHOULD NOT BE TAKEN AS A DEFINITIVE STATEMENT COVERING ALL CIRCUMSTANCES AND A PROFESSIONAL ADVISER SHOULD AT ALL TIMES BE CONSULTED TO DEAL WITH THE VAT ASPECTS OF ANY DEALINGS WITH PROPERTY. All references which follow, unless otherwise indicated, are to the Value Added Tax Act, 1972 ( VATA ) (as amended by all subsequent legislation). 2. STEP-BY-STEP APPROACH In considering the question of Value Added Tax ( VAT ) on a property transaction it is recommended that one should follow a structured approach and the following is suggested: Identify the nature of the interest being disposed of is it a sale of a freehold, creation of a lease, assignment or surrender of an existing lease, creation of a new lease following the surrender of a lease. Different rules apply depending on the nature of the interest being disposed of. Consider whether the six conditions mentioned at Paragraph 2 below are met. If any of the six conditions are not satisfied, then the property is not liable to VAT (It should be noted that only the first five conditions are applicable on the sale of a freehold interest); If all of the conditions are met then consider how the VAT liability is computed and who is accountable. IS THE PROPERTY SUBJECT TO VAT? In order for VAT to be chargeable on a disposal, the following conditions must be fulfilled: The property must have been developed or redeveloped on or after 1 st November (VAT was introduced in Ireland on that date.) Development is defined in Section 1 VATA, as: the construction, demolition, extension, alteration or reconstruction of any building on the land or the carrying out of any engineering or other operation in, on, over, or under the land to adapt it for a materially altered use In most cases it will be possible to determine without difficulty whether or not a property has been developed or redeveloped. Where difficulties arise however is in relation to alterations and additions to a building. In this regard, Revenue will ignore relatively small outlay on additions or alterations, notwithstanding that a tax credit may have been claimed in respect of same. In a recent Revenue publication the Revenue has indicated that alterations or additions will only be ignored where (i) the works carried out did not adapt the land for a materially altered use and (ii) it is reasonably clear that the costs incurred did not exceed 10% of the total amount which tax would be chargeable on if the property was treated as developed or 300,000, whichever is the lesser. Ver /20/2013 Page 107 of 133

108 Chapter 5, Topic 2 ; Protocol for Acquisition and Disposal of Property Continued The person making the disposal must have an interest in the property. An interest means a leasehold interest of 10 years or more or a freehold interest. It should be noted that a lease containing an option enabling the tenant to extend the lease to 10 years or beyond is deemed to be a lease of at least 10 years duration. Break clauses in leases are ignored for the purposes of determining whether someone has an interest in a property. The person making the disposal must dispose of an interest in the property. This could be a disposal of the full interest (e.g. freehold) or of a lesser interest derived from that interest (e.g. the person holding the freehold creates a lease / assigns a lease / surrenders a lease / grants a new lease following a surrender of a lease etc.). The person making the disposal must have been entitled to claim a VAT input credit in respect of the acquisition of that interest or on the development of the property. Note that the entitlement is sufficient it would not matter if the VAT was never actually claimed. If a body is VAT exempt (e.g. certain financial institutions, insurance companies etc.) then it would not be entitled to claim VAT input credit. If the HSE is not entitled to reclaim VAT on costs incurred by it, it is probable that it should not be charging VAT on the disposal of an interest in the property, as it is unlikely that the HSE would have been entitled to reclaim VAT on the acquisition/development of its interest in the property. The disposal must occur in the course or furtherance of business. There is a presumption that the disposal is a business transaction except in the case of the sale of a person s private residence. WHERE ANY OF CONDITIONS 7.1 TO 7.5 ARE NOT FULFILLED, THE DISPOSAL IS NOT LIABLE TO VAT. The introduction of Section 4(3A) VATA (the Economic Value Test, or EVT ) has meant that a further test must be applied where a new long-lease (i.e. a lease with a term exceeding 10 years) is being created, an existing long-lease is being surrendered/assigned or a new long lease is created following the surrender of an existing long lease. It should be noted that EVT does not apply in the case of a sale of freehold property (or by Revenue concession in the case of leases of 99 years or more duration with a peppercorn rent) such that the five conditions referred to above are the only conditions which need to be satisfied. The effect of the EVT is that where the capitalised value of a long lease (see paragraph 3.2 below) does not exceed its economic value then the disposal of the lease is regarded as being exempt from VAT. In addition if the EVT is failed the VAT reclaimed by the landlord on the purchase/development of the property is disallowed. Therefore it is important that in any property transaction involving a lease (whether acting for the landlord or the tenant) great care is taken to ensure that one does not fail the EVT. In this regard it should be noted that the standard Law Society Contract for Sale provides that in a situation of a surrender/assignment of a lease the Purchaser will be required to indemnify the Vendor against any loss of VAT previously recovered or reclaimed by the Vendor on the property which arises from the Purchaser seeking to attribute an amount less than the EVT to the capitalised value of the interest being disposed. The economic value of a property is the amount on which VAT was chargeable on the earlier purchase and development of the property by the person disposing of their interest. The economic value also includes all related VATable professional costs incurred e.g. architects fees, solicitors fees on the acquisition or development of the property. However, the economic value of a property can be reduced by up to 25% in the following circumstances: Ver /20/2013 Page 108 of 133

109 Chapter 5, Topic 2 ; Protocol for Acquisition and Disposal of Property Continued the property has not been developed since the Vendors interest in the property was acquired; the disposal is of an interest derived (the lesser interest ) from a greater interest acquired by the lessor (e.g. grant of a lease out of a freehold would be regarded as a lessor interest) and the lesser interest is not more than 35 years in duration. If all of the above conditions apply, the economic value of the lesser interest should be calculated based on the following formula: Economic Value x N1 (Number of full years in the lesser interest) N2 (Number of full years in the greater interest, although if this exceeds 35 years or if the greater interest is a freehold, then N2 shall equal to 35). Finally, the above relief is limited and the economic value of the lesser interest cannot go below 75% of the economic value of the greater interest, except where the lesser interest is disposed of by way of surrender/assignment in which case there is no limit on the formula relief (see next paragraph). In the context of the surrender or assignment of an interest, the economic value is calculated based on the remaining term of years in the lease. AMOUNT ON WHICH VAT IS CHARGEABLE Having established that the disposal is subject to VAT, it is then necessary to decide on what valuation should be levied. Sale of Freehold Interest A supply of a freehold interest in a property is subject to VAT at 13½% on the sale price. Irish VAT legislation states that market value may be imposed where the sale price is less than the market value. If a freehold interest is sold with the benefit of a taxable long lease (i.e. a lease in excess of 10 years) in place the sale will not be subject to VAT where the property has not been developed or redeveloped since the lease was granted. The reason for this is that the taxable interest in the property is treated as having been disposed of by the Vendor when the long lease was granted. Creation of a new Lease of 10 years or greater ( long lease ) On the creation of a long lease VAT at 13½% is chargeable on the capitalised value of the lease provided that the EVT (see paragraph 2(6) above) is passed. The capitalised value is the figure computed under one of the following three valuation methods: Formula Method: 3 / 4 of the annual rent X the number of full years in the lease; Multiplier Method: The annual rent X Revenue multiplier (currently N20 ); Valuation Method: The valuation arrived at by a competent and qualified valuer. N20 The value of the multiplier is derived from the return from Government Stocks and is adjusted periodically according to changes in the yield applying to those stocks. Ver /20/2013 Page 109 of 133

110 Chapter 5, Topic 2 ; Protocol for Acquisition and Disposal of Property Continued In practice, the person granting the lease can choose whichever valuation method they wish and therefore if the HSE is a VAT exempt person and thereby not entitled to reclaim VAT care needs to be taken of what method is used i.e. if the highest valuation method is used then the amount of irrecoverable VAT will be higher. Reversionary Interest Leases between Years When a landlord creates a lease, the tenant enjoys the right to occupy the property for the duration of the lease. At the end of the lease period, the property reverts to the landlord and this is known as the landlords reversionary interest. If a lease is for a period of 20 years or longer, the value of the reversionary interest is disregarded for VAT purposes. However, if a lease is for a period of between 10 and 20 years, the reversionary interest must be calculated, and the landlord must account at the time of creating the lease for the VAT arising on the reversionary interest. The value of the reversionary interest is the difference between the value of the landlords freehold interest in the property and the capitalised value of the lease (as calculated using the formulas at paragraph 3.2 above). A landlord will typically want to choose the valuation method which gives the highest capitalised value for the lease so as to minimise the value of the reversionary interest. This is because the landlord will not be able to pass on the VAT cost which arises on the creation of a reversionary interest. If the tenant is not entitled to reclaim (i.e. it is a partially or wholly exempt person) VAT, the tenant will be anxious that the lowest capitalised value (as calculated using the formulas at Paragraph 3.2 above) is chosen so as to reduce the amount of irrecoverable VAT which the tenant will suffer on the creation of the lease. Therefore care needs to be taken of these considerations if acting for either a landlord or tenant on the creation of a lease of between 10 and 20 years. In order to avoid the above irrecoverable VAT liability which arise on the granting of 10 to 20 year leases, one possible solution is to agree with the tenant that the lease would be for a minimum of 20 years. This may well be in excess of the tenants requirements, and more than the tenant wishes to commit to. However, the landlord could agree that the lease will contain a break clause at say year 15. As mentioned earlier, the existence of a break clause will be ignored at the date of creation of the lease, and therefore such a lease would be regarded as a lease of 20 years or more with the result that the value of reversionary interest would be disregarded for VAT purposes. Assignment And Surrender of Long Lease A surrender of a lease is the return of the leasehold interest held by the tenant to the landlord. Surrenders include normal surrenders, abandonment or failure by a tenant to exercise an option to extend a lease, eject and forfeiture. The VAT liability on a surrender is calculated by reference to the capitalised value of the unexpired term of the leasehold interest being surrendered. The capitalised value is calculated by using the methods outlined in Paragraph 3.2 above. It is important to emphasise that the tenant making the surrender must pass the EVT (see paragraph 2.2 above) given that if the surrender fails the EVT, there is a clawback of the VAT input credit which would have been previously granted to the tenant when they acquired their interest in the property. An assignment of an interest in a property is a transfer of the interest held by a tenant to a person other than the landlord. An assignment is valued as if it were the creation of an interest in the property for a period equal to the unexpired portion of the lease. Again it is important to emphasise that all assignments must pass the EVT (see paragraph 2.2 above. Ver /20/2013 Page 110 of 133

111 Chapter 5, Topic 2 ; Protocol for Acquisition and Disposal of Property Continued Supply of Property following the Surrender of a Lease A complex series of rules apply for determining the VAT treatment which applies to a dealing in property where the property has been the subject of a long lease which has been surrendered. It should be noted that these rules only apply if there was no development of the property since the grant of the long lease which was surrendered (the Original Lease ) in question. If there has been development of the property since the grant of the Original Lease, the entire property is back within the VAT net again and therefore the rules which follow are not applicable. The general principle is that one determines the unexpired portion of the Original Lease at the date on which the new dealing (the New Lease ) is granted. This period is referred to as the Interval. The length of the Interval will then determine the VAT treatment which will apply on the grant of the New Lease. New Leases will fall into four categories. Category 1 New Lease is for a period of less than 10 years Where the New Lease is for a period of less than ten years the New Lease is exempt from VAT. The landlord will therefore not be entitled to reclaim the VAT arising on the surrender of the Original Lease to them. However, the landlord may waive this exemption and treat the New Lease as taxable and thereby recover the VAT incurred on the surrender of the Original Lease. Unlike the waivers discussed at (Clause 4 Leases for less than 10 years below), the waiver in this case will only relate to that specific letting (i.e. all other short term rental income remains exempt from VAT). VAT at 21% will therefore be chargeable on the rent from the New Lease as it arises. Category 2 New Lease is for a period of ten years or greater but the Interval is less than 10 years. Where the New Lease is for a period of ten years or greater but the Interval is less than 10 years the New Lease is exempt from VAT and therefore the landlord will not be entitled to reclaim VAT on the surrender of the Original Lease. However, the landlord can opt to charge VAT on the New Lease. It should be noted that this option is different to the waiver of exemption mentioned at Category 1 above. If the option is exercised (i.e. the landlord claims an input credit on the VAT arising on the surrender of the Old Lease) VAT will apply a 13½% on the capitalised of the Interval. Category 3 New Lease is for a period of ten years or greater, the Interval is greater than ten years, and the New Lease is longer than the interval. Where the New Lease is for a period of ten years or greater, the Interval is greater than ten years, and the New Lease is longer than the Interval, the New Lease is liable to VAT. VAT is charged on the capitalised value (usual valuation methods apply see paragraph 3(b) above) of the Interval. Category 4 New Lease is for a period of ten years or greater, the Interval is greater than ten years, and the New Lease is shorter than the Interval. Where the New Lease is for a period of ten years or greater, the Interval is greater than ten years and the New Lease is shorter than the Interval, the New Lease is liable to VAT as per Category 3 above. However, in addition the landlord is liable on the reversionary interest which is created. The reversionary interest in this scenario is the period of time between the end of the New Lease and the end of the Interval. The reversionary interest will be calculated by reference to the capitalised value of the Interval less the capitalised value of the New Lease. If the New Lease is for more than 20 years the reversion is ignored. Ver /20/2013 Page 111 of 133

112 Chapter 5, Topic 2 ; Protocol for Acquisition and Disposal of Property Continued LEASES FOR LESS THAN 10 YEARS A separate VAT treatment applies to the grant of leases with a term which is less than 10 years ( Short Leases ). A Short Lease is considered as a supply of services for VAT purposes and is exempt from VAT. However if a landlord has recovered VAT on the acquisition or development of a property and subsequently grants a Short Lease the landlord will be regarded as making a self supply for VAT purposes and will therefore suffer a clawback of any VAT which the landlord may have recovered on the acquisition/development of the property. In order to avoid such a VAT cost a landlord can elect to waive the exemption from VAT on Short Leases and thereby charge VAT at 21% on the periodic rents received or invoiced. It should be noted that the waiver extends to all properties let on Short Leases by the landlord. The waiver can be cancelled at any time but doing so may cause a clawback of VAT previously claimed on the property. ACCOUNTABLE PERSON Sale of Freehold Interest In the case of the sale of a freehold interest it is always the Vendor who accounts for VAT on the disposal. Grant of Long Lease On the creation of a Long Lease the lessor is generally the person responsible for accounting and charging for VAT. However in the case of the grant of a Long Lease to a tenant which is Irish VAT registered and entitled to full VAT recoverability in respect of the VAT borne on the lease the landlord can avoid having to charge the VAT if the tenant agrees to self account for the VAT in his VAT return. This procedure is known as the VAT 4A procedure and can only occur after Revenue approval is granted following an application on form VAT 4A. It should be emphasised that the timing of the application for Revenue approval to operate this shift mechanism is important. Application must be made to the Revenue well in advance of the supply of the property in question, and before the earlier of: The occupation of the property by the tenants; or The execution of the Long Lease. Once approval has been obtained from the Revenue the landlord ceases to have any responsibility for VAT on the creation of the Long Lease. The tenant is obliged to account for the VAT in its return, but as it has full deductibility it is also allowed to take a corresponding credit for that VAT with the net result that it does not actually have to pay any VAT over to the Revenue. Obviously the benefit of this procedure from the tenants perspective is that the tenant can avoid the cashflow problems which may be encountered by a tenant in making an upfront payment of VAT. Assignment or Surrender of a Long Lease In the case of an assignment or a surrender of a Long Lease the person to whom the property is assigned/surrendered is generally accountable to the Revenue for VAT on the reverse charge basis. Such persons liable to account for VAT on a reverse charge basis include: Taxable persons (i.e. person who is registered for VAT and who make supplies which are subject to VAT); A Department of State and local authorities; Chapter 5, Topic 2; Protocol for Acquisition and Disposal of Property Continued Ver /20/2013 Page 112 of 133

113 Some VAT exempt persons including: Persons supplying exempt property; Financial service providers; Insurance service providers; Passenger transport providers; Providers of agency services in relation to passenger transport, accommodation, insurance and financial services; An Post; RTE. The reverse charge basis does not apply to leases assigned/surrendered to:- Private individuals; Other exempt entities including medical practitioners, educational establishments, the National Lottery and Undertakers. In these cases it is the person who is assigning his interest/surrendering his interest who is accountable to the Revenue for the VAT liability arising on the surrender/assignment of the lease. Ver /20/2013 Page 113 of 133

114 Chapter 5, Topic 2 ; Protocol for Acquisition and Disposal of Property Continued Schedule 7 Stamp Duty on Property Transactions WARNING: THIS NOTE IS INTENDED TO ACT AS A USEFUL SUMMARY GUIDE IN ALERTING USERS TO THE RATES OF STAMP DUTY WHICH APPLY ON TRANSFERS OF COMMERCIAL PROPERTY. THIS NOTE SHOULD NOT BE TAKEN AS A DEFINITIVE STATEMENT COVERING ALL CIRCUMSTANCES WHICH MAY ARISE AND A PROFESSIONAL ADVISER SHOULD AT ALL TIMES BE CONSULTED TO DEAL WITH THE STAMP DUTY ASPECTS OF ANY DEALINGS IN PROPERTY. All references which follow, unless otherwise indicated, are to the Stamp Duties Consolidation Act, 1999 ( SDCA ). 3. GENERAL PRINCIPLES Stamp duty is a highly technical tax, with great importance attaching to precise interpretation of the various legislative provisions and to the form of documents. With careful planning and structuring it is often possible to structure property transactions so as to reduce/eliminate the charge to stamp duty which would otherwise arise. Some of the more important general principles of stamp duty law are set out below: Stamp duty is a tax on instruments or documents. It is not a tax on transactions or persons but there are accountable persons (see Paragraph 6 below). The primary charging section is contained in Section 2, SDCA which states:- Any instrument which: is specified in Schedule 1 (i.e. the heads of charge ); and is executed in the State or, wherever executed relates to any property situated in the State or any matter or thing done or to be done in the State, shall be chargeable with Stamp Duty. The most common heads of charge are Conveyance/transfer on sale of property other than stocks or marketable securities; Conveyance/transfer on sale of stocks or marketable securities; Lease of immovable property; Mortgage, Bond, Debenture, Covenant (if a charge on property (e.g. immovable property) situated in Ireland). The law in force and the facts in existence at the date of execution of the instrument is the applicable law and the relevant facts for the purposes of assessing stamp duty. This is important not least because numerous changes to the legislation have been made over the years, in particular to the first schedule of the SDCA. Stamp duty is payable 30 days after execution of the relevant document. If stamp duty is not paid by the relevant due date interest, penalties and surcharges can accrue and the accountable person becoming liable. Stamp duty has since lst November, 1991 been a compulsory tax. It is a debt due to the Minister for Finance by the "accountable person". The accountable person is: Chapter 5, Topic 2 ; Protocol for Acquisition and Disposal of Property Continued Ver /20/2013 Page 114 of 133

115 in the case of a conveyance/transfer on sale, the transferee; in the case of a lease, the lessee; in the case of a mortgage, the mortgagee; in the case of a settlement, the settlor; in the case of a voluntary disposition, the parties to the instrument; in the case of any other instrument, the parties to the instrument. COMMON HEADS OF CHARGE Most transactions involving commercial property fall to be taxed under either the Conveyance on Sale or Lease heads of charge. It is important to be aware of the distinction between instruments chargeable to stamp duty under the Conveyance on Sale head of charge and instruments chargeable to stamp duty under the Lease head of charge as there are differing provisions applicable to each head. All conveyances or transfers of freehold interests in land and all assignments of leasehold interests are chargeable to stamp duty under the Conveyance on Sale head of charge. The creation or grant of a new lease (e.g. carving a new leasehold interest out of the freehold interest or creating a sub-lease out of an existing leasehold interest) is stampable under the Lease head of charge but can also be stampable under the Conveyance head of charge. CONVEYANCE ON SALE HEAD OF CHARGE As has been stated above, all conveyances and transfers of freehold interests in land and all assignments of leasehold interests in land and the grant of a lease at a premium (see section 4 below) are chargeable under the Conveyance on Sale head of charge. In addition, it should be noted that certain other documents which are executed in connection with commercial property may fall to be taxable under this head of charge. However, for the purposes of this summary we do propose to provide a list of such documents given that it is an extremely complex area of law. However, we would again stress that a professional adviser should be consulted prior to the execution of any document/agreement concerning a transfer of commercial property as the execution of any such documents may give rise to a charge to stamp duty. Stamp duty is levied under the Conveyance on Sale head of charge on the consideration paid for the property being transferred or the market value of the property if the consideration is deemed to be insufficient. We have set out in the table below the rates of stamp duty which will apply under the Conveyance on Sale head of charge on transfers of commercial property. The relevant rate which is applicable to a transfer will be determined by reference to the consideration which is being paid for the transfer. Rates of stamp duty for Conveyance on Sale or Lease Premiums Rate of Duty of Commercial PropertyAggregate Consideration Not exceeding 10,000 Exempt 10,001-20,000 1% 20,001-30,000 2% 30,001-40,000 3% 40,001-70,000 4% 70,001-80,000 5% 80, ,000 6% 100, ,000 7% 120, ,000 8% Over 150,000 9% Chapter 5, Topic 2 ; Protocol for Acquisition and Disposal of Property Continued Ver /20/2013 Page 115 of 133

116 LEASE HEAD OF CHARGE As has been stated above, any document evidencing the creation/grant of a new lease is generally stampable under the lease head of charge and certain agreements for Lease. In addition, it should be noted that certain other documents which are executed in connection with commercial property may fall to be taxable under the Lease head of charges. However, for the purposes of this summary we do not propose to provide a detailed list of such documents given that it is an extremely complex area of law. However, we would again stress that a professional advisor should be consulted prior to the execution of any documents concerning the grant of a lease of commercial property. Stamp duty on the granting of a lease of non-residential property is determined by reference to whether rent is payable under the lease. Where rent is payable under the lease, the stamp duty is calculated as follows (in addition to any stamp duty on the premium): If the term of the lease is less than 35 years, stamp duty is calculated at the rate of 1% of the average annual rent; If the term of the lease exceeds 35 years but is less than 100 years, stamp duty is calculated at the rate of 6% of the average annual rent; If the term of the lease exceeds 100 years, stamp duty is calculated at the rate of 12% of the average annual rent. If a premium is payable under the lease, either of itself or in addition to a rental payment, the normal rates for conveyances of non-residential property apply in calculating the stamp duty payable on the premium. (see paragraph C above for the relevant rates of stamp duty which apply to premiums). It should be noted that in general stamp duty on a lease is calculated by reference to the rents/premiums which are provided for in the terms of the lease. However, it should be noted that under Section 54 SDCA, a lease will be deemed to operate as a voluntary disposition inter vivos where it is not executed in good faith or for valuable consideration. Essentially this applies where the consideration is inadequate (or for other circumstances) the lease confers a substantial benefit on the lessee. Where a lease is deemed to operate as a voluntary disposition inter vivos, a capital sum equal to the amount of the benefit conferred on the lessee is imputed to the lease and this capital sum will be stamped in the same way as if it were a premium. This deemed premium may be calculated on the basis of the open market rent that the property could achieve, with the premium equating to the amount of rent which the landlord would need to receive in order to compensate him for the reduced rent which has been reserved under the lease. If the lease contains a break clause which allows the lessee to break the lease before the term reserved thereunder has expired, the lease is stampable upon the maximum duration of the lease without reference to the ability of the lessee to break the lease at an earlier stage. For example, a lease for a term of 40 years which gives the lessee the right to break the lease after a 5 year period will be stampable as a 40 year lease, even if it is likely that the lessee will exercise the break clause. If the lessee is given the option to renew the lease for a further term, the lease is stampable only in respect of the fixed term and not by reference to the maximum possible term. If the option to renew is exercised, the documentation entered into to effect the exercise of the option will become stampable as a new lease granted on the date of the renewal of the new term. Licenses over land are essentially authority to do something on that land which would otherwise not be permitted e.g. a concession to sell popcorn at a cinema. Licences relating to land do not represent an interest in land and therefore the creation of a licence relating to land should not in general be stampable under the Lease head (only leases or documents deemed to be Ver /20/2013 Page 116 of 133

117 Chapter 5, Topic 2; Protocol for Acquisition and Disposal of Property Continued leases are stampable on the lease head). However it is important that a licence is correctly documented for this treatment to apply. PURCHASE OF PROPERTY THROUGH PURCHASE OF SHARES Since the stamp duty rate on the transfer of land is 9% (for land valued in excess of 150,000) it has become increasingly the case that, where properties are held in a company and the shares in the company are sold, resulting in a 1% charge to stamp duty on the transfer of the shares (assuming that the company is an Irish incorporated company). This can result in a significant savings. However, before proceeding with a share acquisition it would be necessary to quantify the latent capital gains which may exist in the company and to obtain cover for historic tax liabilities which may exist in the company. In addition, it should be noted that there will be additional legal costs involved in the acquisition of a company as it would be prudent for a potential purchaser to have a financial and legal due diligence carried out on the company. EXEMPTION FROM STAMP DUTY IF PAYABLE FROM OIREACHTAS FUNDS There are numerous exemptions/relief available under stamp duty legislation which can utilised to reduce/eliminate the stamp duty charge on a document. Of particular relevance to the Health Services Executive ( HSE ) is Section 111 SDCA which provides that stamp duty shall not be charged upon any instrument if the amount of the stamp duty will be payable solely out of monies provided by the Oireachtas. Therefore if HSE is obliged to pay stamp duty on any document it may be entitled to an exemption from that stamp duty if the duty would have to be paid from funds provided by the Oireachtas Act means the Health Act, Directorate means the Directorate of the HSE. Schedule 8 Definitions and Interpretation Category 1 Transactions means acquisitions and disposals of property or interests in property valued at an amount equal to or less than one million euro excluding VAT. Category 2 Transactions means acquisitions and disposals of property or interests in property valued at an amount in excess of one million euro but equal to or less than two million euro excluding VAT. Category 3 Transactions means acquisitions and disposals of property or interests in property valued at an amount in excess of two million euro excluding VAT. DG means the Director General of the HSE. HSE means the Health Service Executive. Manager means any LHO Manager or a HN Manager or equivalent salary grade, as the case may be. Minister means the Minister for Health and Children. Property Committee means the Property Committee described in Schedule 3. WTEs means whole time equivalent staff. Ver /20/2013 Page 117 of 133

118 Topic 3; Purchase to Pay Capital Specific provisions Capital Purchase to Pay Process from January 2012 Map of Purchase to Pay Capital Construction projects recorded in Capital Plan. ICT projects must be sanctioned by CMOD. Internal Order created on SAP & project created on CMS Annual capital project budget identified in letter of capital approval is recorded on CMS Project Requisition created on SAP Purchase Order created on SAP against Purchase Requisition and sent to Vendor When good delivered or service received and verified, the Goods Receipt is recorded on SAP Ver /20/2013 Page 118 of 133

119 Additional steps and inputs from the standard Purchase to Pay Process Purchase Requisition A Purchase Requisition must be created on SAP in respect of goods or services required for a capital project, that is, construction or ICT project. The Purchase Requisition will record the material code and related general code for the goods/services requisitioned. It will also record the quantity of the goods/services requisitioned. The Purchase Requisition must also record the following details; o The final location for the goods being purchased; this is recorded in the goods recipient field and will be the ultimate location of the asset. o A concise description of the goods/services requisitioned must also be recorded on the Purchase Requisition using text overview. In the case of a contract the start and end date of the contract must be recorded in the text overview. o The Purchase Requisition must also identify the delivery address for the goods/services, if it is different from the purchasing group address. This must be recorded in the house address field. o The Purchase Requisition does not require a release authorisation. Purchase Order The purchase order will identify the vendor to whom the purchase order will be issued. The data input in the Purchase Requisition will be copied into the Purchase Order. The Purchase Order will also identify the net unit price of the goods/services to be ordered and the relevant VAT code must also be selected by the person creating the Purchase Order. The following customisations are unique to capital funded Purchase Orders; o Purchase Orders can only be created and saved if the project has sufficient budget available to support the value of the order. o When the Purchase Order is created the available budget for the project is automatically reduced by the value of the order. o Purchase orders can only be released by personnel with the authorisation to do so having regard to the capital expenditure release thresholds identified below in Table 1. The expenditure release thresholds were developed having regard to the Capital Projects Approval Protocol. o Purchase Orders will automatically print to the designated printer of the purchasing group. Ver /20/2013 Page 119 of 133

120 Good Receipt Notes The signing off on the satisfactory receipt of a good or service is an important control. It represents the point of no return in respect of most purchases. A Goods Receipt Note must be recorded for all capital purchases to confirm receipt of the goods or service. For an infrastructure project this may take the form of an Architect Certificate for Value of Work Completed. A hand written goods received note is required as evidence of sign off on the satisfactory receipt of goods or services where there is no delivery docket for equipment delivered or an architect s certificate in the case of construction work. Refer to Appendix 1 for copy of Goods Received Note to be completed in these scenarios. These documents are used to confirm that the goods or services received match what was ordered/contracted for and were free from obvious defect. Responsibility of managers who sign-off on receipt of goods/services It is essential that every manager who signs off on receipt of goods or services is fully aware of the meaning of that action as they will be held accountable for same. In effect, once a Goods Receipt Note has been created on the system which matches to a purchase order, the person who has approved the Goods Receipt Note has triggered a decision to pay, subject to receipt of a valid invoice. The recording of the GRN will generate the charge to the General Ledger as an accrual for the purchase, prior to the payment being processed. Return of Goods to the Supplier Faulty or excess goods or goods that do not match what was ordered should be returned immediately or as soon as possible to the supplier. The manual Goods Receipt Note should record the return of such goods and it must subsequently be recorded on SAP. The HSE should not suffer the cost of returning goods to any supplier where they are defective or do not match what was ordered. PAYMENT PROCESS; MAIN REQUIREMENTS Definition The release of payment, following receipt and matching of a payment request (usually an invoice) to what was ordered and satisfactorily received. Payment should only occur after proper sign-off of the satisfactory receipt of goods, services or works. Payment clears the HSE liability to the supplier. Payment - General By the time the purchasing and receipt stages have been properly completed the HSE has: Approved expenditure via the issue of a purchase order Signed off that satisfactory receipt has been achieved and payment is in order once a proper payment request is received. Ver /20/2013 Page 120 of 133

121 The control issues at payment stage are around confirming that the above have taken place and that the payment request (usually an invoice) agrees with same, particularly in terms of price. These regulations require all capital invoices are submitted to the Shared Services scanning centre and the following steps are performed thereafter; automatically matched to the purchase order and GRN automatically approved for payment once a three way match is achieved (3 way match, 1. Purchase Order & 2. Goods Receipt Note & 3. Invoice ) routed electronically to the relevant staff member for resolution if auto matching fails Information to be recorded on the Invoice Minimum requirement It is the responsibility of the Project Manager to manage relationships with suppliers, either directly or through the staff operating the procedures to ensure that invoices are received promptly and contain all the necessary prescribed information. An invoice must contain the following information; Supplier Name and Address Invoice Number and Invoice Date/ Tax point (date which VAT applies) Purchase order number Delivery details, reference number, delivery date and delivery address Description of Goods or services being purchased Supplier VAT and Registration number Vat Exclusive Amount, Vat amount by Vat Code and total invoice amount If VAT is to be accounted for the Principal Contractor, this must be identified on the invoice Certification information required e.g. engineering certification of work. Importance of timely receipting (entry of GRN) on the Financial Information System (FIS) 1. It is essential that goods/services are properly Good Receipted on the Financial Information System when actually provided/delivered by the supplier. 2. This will ensure that any mis-match between the purchase order and goods received is quickly identified and resolved. This will simplify the process of matching the invoice to the already matched purchase order/goods Receipt Note. 3. Prompt entry of the goods receipt notes (GRNs) on the FIS is also essential to ensure expenditure is recorded at the proper time, i.e. when it is incurred. Ver /20/2013 Page 121 of 133

122 Table 1 Capital Purchase Order Approval Limits Administrative Grade Estates Technical Grade Description Value Threshold for "Non Routine" (Capital) PO Authorisation Grade IV Grade IV 5,000 Grade V Grade V 10,000 Grade VI Grade VII Grade VIII General Manager Grade VI/ATSO(Acting Technical Services Off)/Technician 50,000 Grade VII/SATSO (Senior Assistant Technical Officer) 250,000 Grade VIII/CATSO (Chief Assistant Technical Officer) 500,000 Local Health Office Manager LHO/Hospital Network Manager/Estates Manager 2,500,000 LHO/Hospital Network Manager/Estates Hospital Network Manager Manager Assistant National Director Assistant National Director 5,000,000 National Director National Director 10,000,000 CEO Ver /20/2013 Page 122 of 133

123 GOODS RECEIVED NOTE Appendix 1 PLEASE READ ATTACHED NOTES BEFORE COMPLETING THIS FORM GOODS RECEIPT No.: (Refer to Note 2) Location of Receipt: (Hospital/Community Care Centre/Stores Location) Date of Receipt: Supplier Name: Supplier Address: PO Number: Internal Order No. Name of Capital Project: Physically Received By: Inspected & Passed By: Ver /20/2013 Page 123 of 133

124 Item No DESCRIPTION OF GOODS/SERVICES (Insert vehicle registration number of vehicles) (Insert serial number of equipment, if not recorded on delivery docket) Accepted or Rejected (A) or (R ) Quantity Final Location for Goods Delivered (Name Hospital & Dept/Commu nity Care Centre) Estimated Value of Works Completed (This column is not applicable to equipment) In the case of works contracts please specify project phase: (Refer to Note 1) If goods were returned to supplier, specify date of return Date of Return: Any additional comments/details: Certified By: Date: Ver /20/2013 Page 124 of 133

125 Notes on Completion of Goods Received Note (GRN) 1. This GRN must be pre-agreed with the relevant supplier/contractor in order to ensure that the invoice value will match the value of the work completed/service provided or equipment delivered, that is, the Goods Received amount recorded on SAP. It must be completed for the following scenarios; Works contracts in respect of which an architect is not employed. It must be completed by the Project Manager in respect of the work completed, following consultation and agreement with the supplier/contractor. It must record the value of the invoice which will be issued to the HSE in respect of works satisfactorily completed. In the case of works contracts please specify the phase of the project, i.e. design, construction, equipping or other. Design team fees Engagement of consultants Grants to Voluntary Service Providers Software development works, if a delivery note is not provided by the relevant supplier. Equipment delivery, if a delivery docket is not provided by the supplier. 2. This GRN should be numbered in sequence (commencing with number 1 and prefixed with the initials of the former health Directorate area, for example MW1 for HSE Mid West, South East 1 for HSE South East) and should be completed in respect of each stage of the project billed by the supplier/contractor. In the case of equipment, please insert number (commencing with 1 and pre fix it with the initials of the former health Directorate). Please use next GRN number in the event of more than one equipment delivery fulfilling a Purchase Order. Ver /20/2013 Page 125 of 133

126 Sample Documents & Forms SUBJECT - Aggregation of Purchases Values Owner of Procedure; Regional Material Management Group TEMPLATE AGGREGATION OF PURCHASES PRE CONTRACT APPROVAL REQUEST (CAR) for Pre Tender/Contract Approval by HSE Procurement Name of Proposed Contract Scope of Proposed contract Estimated commencement date End Date Value of Proposed contract Contact details for lead responsibility for tender process The above form must, in accordance with Procurement functions Aggregation procedure, be completed and sent to HSE Procurement prior to the commencement of a tender process or award of any future contracts. The aggregation procedure applies to proposed tender processes with an estimated value in excess of 50,000. Ver /20/2013 Page 126 of 133

127 SAMPLE PURCHASE ORDER These regulations require that the purchase order or contract must contain, or refer to accompanying documents that contain, sufficient detail to enable the supplier to fully understand and comply with the needs of the HSE. The sample below illustrates a template that should be acceptable for most requirements it does not create a mandatory format nor does it seek to set out the requirements for all services. HSE PURCHASE ORDER HSE Address and other details HSE Logo Supplier Name Supplier Address Delivery Address Invoice Address Date xx/ xx/ 200X Supplier PO Number / (unique no) No/ref reference XXXXXXXX Currency of PO & value Euro value Requisition ref XXXXXXXX Item No Originator DESCRIPTION OF GOODS OR SERVICES (including supplier references if required) Material Code & Contract Ref PO queries should be sent to Quantity & Unit of Measure Total Cost of Goods and/or service VAT ( where applicable) Total Value of Goods and/or Services (incl VAT) Cost (excluding VAT) xx,xxx.xx Payment Terms e.g. 30 days from invoice receipt Additional Information / Comment /Details Supplier VAT No xxxxxxxxxxx Signed by ; Place Signature here This PO is issued subject to the condition that a valid & current tax clearance cert or C2 [N21] is submitted where the value of goods, works or services supplied in any 12-month period is 10,000 or more (incl. VAT). Payments are at all times conditional on this. N21 Tax Clearance or C2 - Tax Clearance Certificate (TCC) is a written confirmation from Revenue that a person's tax affairs are in order at the date of issue of the certificate. A condition of obtaining a Public Sector Contract of a value of 10,000 or more, (inclusive of VAT), within any 12 months period, is that the contractor is required to produce either a valid C2 certificate or a general TCC. Ver /20/2013 Page 127 of 133

128 SAMPLE GOODS RECEIVED NOTE The sample Goods Receipt Note below illustrates a template that should be acceptable for most requirements it does not create a mandatory format nor does it seek to set out the requirements for all services. HSE GOODS RECEIVED NOTE Location of Receipt e.g. Hospital Stores Location HSE Logo Supplier Name Supplier Address Supplier No/ref i.e. the suppliers Proof of Delivery (POD) note ref. Physically received by; Inspected & Passed by; Point of Receipt Date PO Number / reference Entered in FIS by; xx/ xx/ 200X (unique no) XXXXXXXX Item No. DESCRIPTION OF GOODS OR SERVICES (including supplier references if required) Accepted Or Rejected Quantity & Unit of Measure Storage Location Goods returned Log/reference Additional Comment /Details Signed by ; Place Signature here Ver /20/2013 Page 128 of 133

129 SAMPLE - GOODS RETURNED NOTE The sample Goods Returned Advice Note below illustrates a template that should be acceptable for most requirements it does not create a mandatory format nor does it seek to set out the requirements for all services. HSE GOODS RETURNED ADVICE NOTE Location of Receipt e.g. Hospital Stores Location Supplier Name Supplier Address Supplier No/ref i.e. the suppliers Proof of Delivery (POD) note ref. Physically received by; Item Rejected by; HSE Logo Point of Receipt Date of delivery Tracking/Log No for Goods Returned PO Number / contract reference Goods Receipt No if applicable xx/ xx/ 200X XXXXXXXX (unique no) XXXXXXXX ( XXXXXXXX Description of Fault with Goods/Item and Reason for Return Item No. DESCRIPTION OF GOODS BEING RETURNED (including supplier references if required) Accepted Or Rejected 1 2 Quantity returned Reason Code Goods returned Log/reference Arrangement for collection, or Delivery ( at cost to supplier) Signed by ; Place Signature here Ver /20/2013 Page 129 of 133

130 Health Service Executive National Financial Regulations SAMPLE - Sample Score Sheet for evaluation of tenders Award Criteria Quality of proposal for providing service detailed at xxxx of RFT. Management & service structure proposed Expertise and skills of personnel assigned to this project Timeframe for delivery Proposed Cost of providing service Total marks awarded Total Marks Available Sample Company A Company B Company C Company D Company E Source : NPPPU Ver /20/2013 Page 130 of 133

131 Health Service Executive National Financial Regulations Sample Return; Summary of Monthly Review Purchase Orders not Fulfilled No of PO s No of Items Total value of PO Value Outstanding (A) Outstanding PO s PO s between 3-6 months old PO s between 6-9 months PO greater than 9 months old Total (B) PO s values cancelled or adjusted Sample Return; Summary of Monthly Review Outstanding GRNs (GRIR) Outstanding GRNs Purchase order items that have been Receipted (GRN) which have not been Matched to an invoice. GRN value < 3 months GRN Value > 3 months Total Value of o/s GRNs Number of GRNs (A) System GRN Listing XX xxx XXXXX (B) Balance Sheet Value of GRIR account (XXXX) Difference Explained (A-B) X (C) Value of Manual GRNs X X XX Total Value of GRN (A + C) XXX XXXX XXXXXXX Value of GRN s corrected YY Y YYY Ver /20/2013 Page 131 of 133

132 Health Service Executive National Financial Regulations Links and References Useful References NPPPU (National Public Procurement Policy Unit). Public Procurement Guideline - Competitive Process The National Public Procurement Policy Unit (NPPPU) was established in June 2002 to formulate policy, disseminate best practice guidance in public procurement, to help develop procurement capacity across the public service and to deliver the Government's eprocurement strategy Guidelines on conducting an appropriate competitive process under national rules and revised EU public procurement Directives. These largely replace the provisions of the 1994 Guidelines [Green Book]. A hardcopy version is available on request from [email protected]. Or through internet. Prompt Payment Legislation Revenue Commissioners Guideline for Appraisal & Management fo Capital Expenditure Proposals Code of Practice for the Governance of State Bodies Frequently Asked Questions Revenue requirements for Tax Tax Clearance /C2 forms Health Act Act; Statutory Instrument HSE Terms & conditions of Contract; conditions It s core business is the assessment and collection of taxes and duties. Revenue's mandate derives from obligations imposed by statute and by Government capappguide05.pfd codeof_practicegsb.pdf E-Tendering Public Procurement Guideline Section 10, pubproguidejuly04.pdf Tax Clearance Form : C2 Subcontractor (RCT) : Useful Links/ Contacts [email protected] ortunities/ Office of the Revenue Commissioners. HSE Homepage HSE Procurement Enquiries Address HSE website; Link to Supply opportunities. The HSE is the largest purchaser in the state spending in excess of 3billion annually on a diverse range of goods, services and works projects. Refer to HSE Regional Material Management Group (RMM). Public Procurement /Tender Management website This Internet Web site is designed to help you find information on government and public sector procurement by providing links, Information. Guides, and a search engine that can be used to search for notices issued by public bodies across Ireland Irish Public Procurement Portal Quick link to all public service websites Department of Finance Website Professional Services Witholding Tax (PSWT); Value Added Tax (VAT); Department of Health and Children web homepage Ver /20/2013 Page 132 of 133

133 Health Service Executive National Financial Regulations Glossary of Terms G i Aggregate Demand (Aggregation) term used to describe the maximum potential quantity/ value that could be considered when sourcing particular goods or services. G ii Financial Information System (FIS) ; the computerised accounting system used for recording financial transactions and balances. A number of different systems are used by the HSE include Aran and SAP. G iii Most Economically Advantageous Tender (MEAT) Please refer to Tender Evaluation section above that explains the applications of the Most Economically Advantageous Tender principle (on page 35). G iv Contingency Arrangements; procedures to be put in place to address what actions should be taken for unforeseen events e.g. if someone was out on unplanned leave and departure from regulations were required. G v Nominated Receipting Location; This refers to the physical location where it has been agreed that goods are delivered. This could be a Stores location, direct delivery to a client, or delivery to the requester. G vi Prompt Payment Interest. The HSE is required to calculate and pay late payment interest for every commercial transactions not paid within the Relevant Payment Date. Amounts of late payment interest less than 5 are not payable. Ref 1997 Prompt Payment Act and 2002 Statutory Instrument No.388. See Links on page 132. G vii Routine versus Non Routine Expenditure Routine expenditure relates to good/services consumed by the HSE on a daily basis to support the provision of services. In general terms it can be considered all non pay expenditure except that excluded. Note that expenditure approval is not the same as Contract approval where a procurement contract may be put in place for a number of years. Routine expenditure excludes; (i) Capital Projects Capital funded expenditure plus non routine Revenue funded expenditure above 500k should be dealt with in accordance with the Capital Approvals Protocol. (ii) Property Transactions dealt with under Property Transactions Protocol. (iii) Non Routine Expenditure Non Routine expenditure - primarily relates to ; (i) Commissioning new or expanded Service within HSE and from other Public/private or voluntary providers (ii) Purchase of new equipment that is paid out of Revenue funds (iii) Construction type work (building/extension/repairs/ refurbishment) paid for out of revenue funds which goes beyond ordinary day to day maintenance /repairs. Above 500k revenue funded works should be dealt with in accordance with the Capital Approvals Protocol Examples of Routine Expenditure; (a) Existing level of service (b) Renewal of Voluntary Provider / s.65 etc budget / SLA for existing level of services (c) Amendments to Voluntary Provider / s.65 budget for pay awards, non pay inflation etc (d) Approval of price increases for existing home help hours, home care packages, foster care places, private nursing home beds etc. (e) Repairs / servicing of equipment (f) Normal maintenance (g) Stock (normal) (h) Demand Led Schemes (Community Drugs Schemes, Aids / Appliances, Chiropody, Optical, Maternity, DTSS, Immunisation, Allowances) Examples of NON Routine Expenditure; (1) Provision of a new service (direct or via voluntary / s.65 etc), (2) Expansion of a service (direct or via voluntary / s.65 etc) (3) Additional Home help hours, home care packages, foster care places, private nursing home beds etc. (4) Purchase of Equipment (5) Construction / Refurbishment / Backlog Maintenance beyond the limits of routine expenditure (6) Expenditure which acquires or creates an asset or significantly enhances the value and / or useful economic life of an existing asset G viii Good Received Note (GRN) ; A goods received note is a record that documents the receipt of Goods or Services received from external sources. A goods receipt note may be a manual (hardcopy) record or entry within the Financial Information System. A GRN record should be supported by a supplier s Proof of Delivery, Professional Valuation/Certification. G ix Accrual (s) A financial record of the value of expenditure for goods or services incurred, (but not necessarily invoiced by the supplier) within the period to which it relates. For example if someone received and used goods in January, this consumption /expense should be recorded in the Financial Information System irrespective as to whether the invoice has been received from the supplier and processed in the system. G x Proof of Delivery (POD) is a notification (normally paper based) of advice or other document generated by the vendor that records the delivery of goods. In recent times, some suppliers rely on Couriers to deliver and record evidence of receipt of Goods the advice/pod may be in the form of an electronic tracking number. The POD is a key document which, when properly signed provides evidences receipt of Goods or Services. G xi Prior Indicative Notice is an EU Tender procedure relating to publication of information in advance of Actual Tender publication. PIN can be published (normally at the beginning of financial period) either on the OJEU or E-Tenders website, setting out categories of products/services. Publication of a PIN reduces the minimum time required for tendering. Ver /20/2013 Page 133 of 133