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Procurement Procedure

Category Finance
Type Procedure
Approved by Chief Financial Officer
Date Procedure Took Effect 16 April 2002
Last Approved Revision 23 July 2015
Sponsor Chief Financial Officer
Responsible Officer Procurement Manager
Review Date 23 July 2020


To specify the University position, and provide direction, on procurement procedures.

Organisational Scope

These guidelines apply to all University employees, contractors or consultants acting on behalf of the University in procuring goods or services (including consultant services) by any contractual means.

The guidelines do not apply to employment contracts or funding agreements (e.g. sponsorship, memoranda of understanding, deeds).


  • All of Government Contracts - Contracts establishing a supply agreement between the Crown and approved suppliers.
  • Approved supplier - A supplier who has been selected by the University following a competitive procurement process.
  • Finance One  -The University’s Corporate Financial Management Information System. The purchasing module can be used to select goods from suppliers’ catalogues (Marketsite) or to create standard purchase orders.
  • Head of Department - Refers to the Head of Department (in the case of Academic Divisions) or Divisional Head (in the case of Non-Academic Divisions, academic Heads of Department and Deans).
  • Marketsite - The University’s e-procurement system that allows buyers to select goods from supplier’s catalogues, and transact the purchase electronically with the supplier. This application has been incorporated within Finance One.
  • Open tender - A publically-advertised tender process whereby suppliers are openly invited to respond.
  • P-Card - A University issued purchase card (i.e. credit card).
  • Procurement - All the business processes associated with purchasing goods and services.
  • Purchase Authority - Person duly authorized to approve a specific Purchase Order in accordance with the University Delegations Policy.
  • Purchase order - A University-initiated request for a good or service, including authorisation to charge the University for that particular good or service.
  • Selective tender - Tender without open advertising from selected pre-qualified suppliers.
  • Sole source tender - Tender without open advertising from a single pre-qualified supplier.
  • Standing Offer -  Contract created between a supplier and the University with agreed pricings, terms and conditions for the purchase of goods and services. The contract will be valid for an agreed period of time and allows for purchasing on an ‘as and when’ basis.
  • Syndicated Procurement - Syndicated procurement typically involves a ‘cluster’ of agencies aggregating their respective requirements (needs) and collectively going to market for common services and pricing.
  • Contract Privity -  Common Use Provision (CUP) clause within the resulting contract, to allow other agencies to join the contract later on the same terms and conditions.
  • Total cost of ownership - The full cost of a good or service across its life span including purchase price, through life service and maintenance expenses and ultimate cost of disposal.

Policy Content

1. Purchasing Authority

(a) Requests for goods and services to be purchased in support of University requirements can be made by any university staff member or student.

(b) All University purchases must be authorised by a staff member with the appropriate financial delegation.

(c) Purchases are to be initiated by an authorised member of staff using an appropriate purchasing method as detailed in clause 2 below.

(d) Heads of Department are responsible for the establishment of systems to ensure the purchase of consumables or other goods and services in their department complies with policies, procedures and guidelines issued by the Financial Services Division.

2. Purchasing Methods

(a) Every purchase by the University is to be undertaken through the use of an approved University purchasing channel:

  • Finance One
  • Marketsite (incorporated in Finance One)
  • Approved supplier invoicing
  • P-Card
  • Petty cash

(b) Petty cash should only be used for low value purchases. Petty cash limits are set by the value of the cash float for the department whose cash is being used. Refer to the petty cash procedures for further information.

(c) For purchases made via purchase order, the University may not recognise an invoice for payment submitted by a vendor unless the official relevant University purchase order number is quoted on the invoice supplied.

3. Purchasing Options

(a) There are a number of purchasing options to meet a varied range of circumstances. In order of preference these are purchasing:

  • from existing University approved suppliers. These contracts may be established
    • directly between the University and supplier;
    • through selected contracts with syndicated procurement provisions established by other Crown entities or government departments;
    • through arrangements adopted by the University (e.g. All of Government contracts);
    • from pre-qualified suppliers (e.g. N3 purchasing agreements);
  • through competitive market analysis and associated processes (e.g. tendering);
  • through selective (including sole source) purchase;
  • via emergency purchase procedures as outlined in clause 8 below.

(b) Information on these purchasing options is available from the Procurement Office

4. Purchasing Framework

(a) The following framework provides advice on purchasing methods and options for given values of goods and services based on the total cost of ownership (including likely additional requirements after initial purchase):

Purchase Value Purchasing Method Purchasing Option
  • Petty Cash
  • P-Card
  • Approved supplier invoice
  • Purchase Order (Finance One or Marketsite)
  • University Contracted Supplier
  • Appropriate Market analysis
$5,000 to $100,000
  • Purchase Order (Finance One or Marketsite)
  • Approved supplier invoice
  • P-Card (up to limit defined under P-Card policy)
  • University Contracted Supplier
  • Minimum of three written quotes
  • Formal Tender (if appropriate)
  • Purchase Order (Finance One)
  • University Contracted Supplier
  • Market Evaluation via Tender Process

(b) Goods or services which are available via an existing valid Standing Offer or Contract are able to be purchased in accordance with those agreements without the need for further tendering, regardless of value.

(c) Any purchase with a value of $75,000 or more for which only one quote is available, or where a formal tender process is considered inappropriate, must be supported by a relevant Procurement Plan which provides a justification as to the purchase method requested. This alternative purchase process must be endorsed by the Financial Services Division (Procurement Manager) and authorised by the relevant purchasing authority (as per the Financial Delegations Policy) prior to purchase.

(d) High-value purchases (in excess of NZ$1M) should be notified to the Financial Services Division Treasury Accountant for the purposes of cash flow planning. This advice should include the contracted payments schedule including anticipated invoice payment dates.

5. Tendering Principles

(a) The University requires that all procurement of works, goods or services with a value over $100,000 (+GST) are subject to a competitive procurement process.

(b) Tendering processes are to be used to:

  • establish the competitive prices and terms available;
  • explore or test the market for alternative opportunities;
  • fulfil a public duty of fairness and equity between suppliers;
  • reduce the risk to reputation arising from allegations of purchaser bias or conflicts of interest;
  • confirm current market intelligence; and
  • identify the best source of goods and services.

(c) The content of all tenders received by the University are confidential, and are not to be discussed under any circumstances with competing suppliers.

(d) Anyone involved in a University tender process must meet their obligations under the University’s Conflicts of Interest policy.

(e) No commitment, express or implied, should be given to any supplier at any time up until the tender evaluation summary recommendation has been accepted by the relevant purchase authority.

(f) The University will use tender processes that allow for transparency of decision-making and subsequent review of the process of decision-making.

(g) All University tenders should be coordinated through the University Procurement Office to, at a minimum, obtain a tender number and for publication on the Government Electronic Tender Service (GETS) where necessary. All depts. are encouraged to contact the procurement office as soon as practical after identifying that a procurement process is required.

(h) Further information on the University Tender Process can be found here.

6. Tendering Methods

(a) Open tenders should be advertised in a manner so as to attract a wide response. At a minimum, such tenders should be listed via the Government Electronic Tendering Service website

(b) Selective (including sole source) purchase or tender of any goods and services may be appropriate where:

  • goods or services require specialised skills or are very complex, and there are limited qualified suppliers;
  • required goods and services are only available from one source, or limited sources, in the relevant timeframe;
  • standardisation or compatibility requirements require the use of a specific supplier; iv. goods or services are identical to those purchased within the last six months under an open tender process;  
  • goods or services are subject to prototype or development work;
  • the cost of a procurement process is likely to be disproportionate to the value or benefits likely to be gained; or
  • goods or services can be obtained via a syndicated procurement or contract privity opportunity clause that provides a commercial benefit to the University and avoids any further cost of procurement.

(c) In cases where selective purchase or tendering is considered to purchase identical goods or services (see 7(c)iv above):

  • careful consideration should be given to changes in market conditions and the entitlement of other tenderers to compete on more favorable terms; and
  • purchasing officers should ensure that the element of competition is maintained by requesting that the selected tenderer submit a firm tender on each occasion the dispensation is used with no indication given that the selected tenderer is the only bidder.

(d) For goods or services subject to prototype or development work (see 7(c)v above), the following should be considered when selecting the vendor and negotiating any subsequent contract:

  • the technical and commercial experience of the prospective vendor;
  • the ownership of the finished product, protection of intellectual property, possible patent rights and ownership of any moulds and dies;
  • the basis of payment including method of calculating charges, progress payments and final payments;
  • ownership of pre-production samples; and,
  • rights to commercial development of the product.

(e) Each decision to purchase via selective tender for goods/services in excess of $100,000 must be supported by a properly developed business case and/or a fully worked procurement plan. The decision to proceed with selective tendering rests with the Delegated Purchase Authority. This documentation should be attached to the Finance One purchase order for future reference and audit purposes.

7. Establishment of Contracts

(a) The establishment of standing offers and contracts (either established by the University or as part of a syndicated procurement opportunity) should be the result of a formal tender process (either an open tender or a selective/sole source tender).

(b) Contracts are to be executed in the name of the University of Otago and where possible, the University Contracts Templates should be used. All standing offer contracts or agreements are undertaken on behalf of the University and will be available for use by any University of Otago department.

(c) The financial delegation policy and the delegations schedule do not delegate authority to approve contracts. The University Council has resolved that every instrument requiring the affixing of the common seal be countersigned by two members of the Council. The executed of documents not requiring the common seal are to be actioned in line with the Financial Delegations Procedure.

(d) All contracts should be advised to the University Procurement Office so that they can be recorded in the Contract Register Tool.

8. Emergency Purchases

(a) In case of an emergency, normal purchasing rules may be set aside for specific goods and services where: 

  • the goods and/or services are required to complete or continue significant tasks 
  • it is impossible to purchase goods and services under normal purchasing procedures.

(b) Emergency purchasing is to be used solely to meet immediate emergency requirements, and must never be used solely for expediency. Authorising officers are to ensure that emergency purchases are strictly controlled.

(c) Where the value of an emergency purchase is in excess of $100,000, the Head of Department or the Chief Operating Officer must approve the purchase prior to committing expenditure.

9. Overseas Purchases

(a) Purchases are normally only to be made from overseas when price (including delivery and associated costs) and quality are competitive and goods are unavailable in New Zealand. In all cases, advice should be sought from the relevant FSD Financial Analyst before any purchase commitment is made. 

(b) The FSD Treasury Accountant must be notified where purchases require foreign currency and are in excess of NZD$50,000 in value so that appropriate forward cover can be arranged as necessary.

10. Probity/Conflicts of Interest

(a) University staff and contractors must comply with the following principles of probity (ethical conduct) throughout all stages of the procurement and contracting process:

  • use of a competitive process where possible;
  • transparency;
  • identification and resolution of conflicts of interest;
  • fairness and impartiality;
  • security and confidentiality.

(b) A conflict of interest arises whenever an individual acting for the University also has an interest in a University Supplier. All conflicts of interest shall be advised immediately they are determined via the HoD or Divisional head to the Procurement Manager, FSD for recording. Material conflicts of interest will be referred to the Chief Operating Officer.

11. Use of Third Party (Agents or Brokers)

(a) There is no restriction on the use of agents or brokers. When considering their use, issues associated with total costs of ownership, effectiveness and efficiency, and leverage should be analysed so that the value added by agents or brokers is clearly articulated and understood.

12. Trade Ins, Free Goods and Trial Items

(a) As part of the negotiations for a purchase of replacement goods or equipment an existing item of equipment may be offered as a trade-in.

(b) A trade-in is considered to be an asset disposal for the purposes of S192 and S193 of the Education Act 1989. All disposals with a book value greater than an “amount determined by the Minister of Education” (and advised annually by FSD to Cost Centre Heads) requires the written consent of the Secretary of Education before disposal. Any further queries on this subject area should be directed to the Financial Accountant, FSD.

(c) Trade-ins should be explicitly dealt with in the contract's terms and conditions, including the value of the trade-in credited by the seller against the value of the new equipment. Full details of the sale of the old asset and the true cost of the new asset must be obtained for updating the Asset Register. (d) Trials, free goods and trade-ins all provide opportunities for goods and services to pass between entities or individuals without fully recording the transaction. Wherever possible a price discount should be sought in preference to a 'free' item.

Related Policies, Procedures and Forms

Contact for Further Information

For further information, contact the Procurement Manager, extn 8195 or email