17

Some universities in the UK require that all purchases from budget available to researchers happen through one or more authorized suppliers. They tend to be strict in this regard, even though some equipment might not be available or the price of it might be higher than elsewhere.

What is the rationale behind this policy?

I fail to see any. If university where concerned with financial control then allowing outside purchase should make no difference, as they would still have to be approved by the administrative personal. If they are concerned with providing adequate IT support this might be done as well, just under a different contract with the supplier.

Improve this question
4
  • 17
    This is certainly not exclusive to academia, but common in pretty much any business that has reached a certain size.
    – Stephan Kolassa
    Commented Oct 29, 2015 at 14:55
  • 1
    Same issue in some universities in the USA…
    – Franck Dernoncourt
    Commented Oct 30, 2015 at 3:34
  • At my US university, such a rule was put in place in the math department --- the quality of our chalk went down precipitously and immediately.
    – Anonymous
    Commented Oct 30, 2015 at 16:13
  • I think there's also an EU law that says if you're spending over X amount of publicly-funded money on something, you have to go through a supplier tendering process? At least, that's the reason my university cited when they started forcing us to book all travel through their tendered agent.
    – Moriarty
    Commented Oct 30, 2015 at 18:40

6 Answers 6

Reset to default
31
  1. Some universities can get a better deal from a supplier by promising them to buy exclusively, or to buy sufficiently much from them
  2. It is easier for the accounting department to deal with the same provider, since they can re-use the same documents.
  3. Dealing with a new provider has a certain degree of risk, including the quality of products, the timeliness of delivery, etc. If you deal with the same provider, you acquire enough information to feel yourself in control.
Improve this answer
4
  • 6
    +1. "Documents" in your point 2 not only refers to "we don't need to look up the address every time". It also refers to VAT handling, invoicing and a whole lot of stuff an academic researcher doesn't want to deal with.
    – Stephan Kolassa
    Commented Oct 29, 2015 at 14:54
  • 1
    To build on @StephanKolassa's point, the economies of scale in dealing with a small number of suppliers who each send single aggregated invoices, versus hundreds of small suppliers who each send their own, can be very significant. (I used to work in a finance office that handled both types. If we only had the former, we'd have needed half the staff...)
    – Andrew is gone
    Commented Oct 30, 2015 at 9:04
  • 3
    Building on @StephanKolassa, this is even more true when it comes to chemicals and other laboratory supplies that may have strong legal regulations around them.
    – jakebeal
    Commented Oct 30, 2015 at 12:36
  • @andrew, the number of suppliers issue only passes the sniff test if each and every department has it's own accounting system with independent systems. Universities already have thousands of suppliers.
    – Jim B
    Commented Oct 30, 2015 at 18:02
23

This is often done to prevent funneling money from the university to friends outside the university. If Prof A has a friend who sells IT gear, the prof cannot preferentially funnel orders to that friend's company unless they are on the approved list. Having an approved list means that each and every order for paper, staples, or whatever does not need to be scrutinized for these kinds of conflicts of interest. It would be very expensive to audit every purchase from a large university for these kinds of conflicts of interest.

Improve this answer
4
  • 21
    And so the right to funnel money from the university goes to someone who approves the list of suppliers. Just kidding )
    – Dmitry Savostyanov
    Commented Oct 29, 2015 at 19:06
  • 1
    I've never encountered such a policy, but presumably there's some sort of process designed to keep anyone from just picking their friends.
    – Bill Barth
    Commented Oct 29, 2015 at 21:04
  • 5
    I think if you mention this you should mention the flip side. The kickbacks (vacations posing as conventions) that higher ups receive for signing on with an approved vendor. And then the fact that the approved vendor may have good pricing for the essentials but outrageous pricing for everything else. Try buying a basic desk through a Staples corporate magazine. We were getting quote of around 2K for a basic classroom desk that sits two people while finding the same desk at around 400 elsewhere.
    – blankip
    Commented Oct 30, 2015 at 16:15
  • @blankip, sure. We have conflict of interest declarations annually that are intended to cover things like this. It's a firing offense not to declare properly.
    – Bill Barth
    Commented Oct 30, 2015 at 19:40
3

As in any big organization, it's not about doing the best thing (tm). It's about shunning responsibility (aka covering your own ass). Sad but true.

It's very simple. Imagine you are the person who approves or rejects every purchase. Your biggest problem is to determine if any given purchase was legitimate (that is purchased at proper quality and appropriate price) or fraudulent (purchased at substandard quality and/or inflated price and the difference pocketed). Now imagine you have to review dozens of such purchases every day, most of them outside your field of specialization. Will you take the responsibility of approving it and open yourself to possibility of being accused of failing your job by not detecting a scam? Or reject perfectly legit purchase and break someone's career mislabeling him/her as a scammer (and then get sued for it)? How can you judge if the price and quality are right?

No. It's simply easier to demand a list of pre-approved vendors. Then your job is narrowed down to asking one question only: "Is it on The List?". Voila. Clear criteria. No responsibility. It's not your money, you don't care if the item could be purchased a bit cheaper.

"No one ever got fired for buying IBM".

University, corporation, government agency - it works like that everywhere the organization is big enough that cogs in the machine couldn't care less about subjects of their job.

Improve this answer
1

In addition to exclusivity clauses (which tend to give benefit to central university finances at the expense of individual departments*), purchasing like to be in control of the process and the supplier list for a few reasons, most of which apply at least to some extent to big businesses as well.

Universities often have labyrinthine purchasing systems and try to impose significant conditions on all contracts. Both of these can cause hassle for suppliers as well as staff. So purchasing want to make sure the suppliers can deal with this (as well as not going out of business taking the money with them.

For some purchases, particularly as public bodies, universities have to follow certain legal procedures (multiple quotes, public tenders etc.). While this doesn't inherently require that the suppliers are restricted to a list, in practice there's a whole supply-chain management system that does.

The good news is that it's often quite easy to get a supplier (of low-value items at least) added to the list; it can be much harder in industry. And the right people can work wonders when it comes to getting round some of the other difficulties.

*"If you buy all your PCs from us we'll give you a massive discount next time you upgrade your library computer room (but we'll charge a small fortune if someone wants a CAD workstation or a machine with extra slots to talk to hardware)."

Improve this answer
1
  • 1
    Personally I think ( at least for large Unis/Corps ) you hit the nail with "multiple quotes, public tenders etc.". The University goes through a major acquisition quote generation and then (following all of the legal niceties) awards the contract to some single major company. (or even smaller). From that point, everyone has to use that contract, regardless, because changing source of supply requires new contracting processes.
    – CGCampbell
    Commented Oct 30, 2015 at 17:13
1

It's the same at many corporations. The simple reason is that the invoicing and payment to the vendor has already been set up in both systems. The cost may be higher than the norm (or current for the product) but the overall reduction in paperwork and approvals etc. hopefully offsets the increased purchase price. The downside is that almost no university/corporation revisits these relationships after they are set up. Note that many of the answers include some sort of discount. If this was true you wouldn't want to go someplace else. Very rarely is there a product discount involved in these situations. Ideally the policy would be to purchase from an approved vendor unless there was a sizeable reduction in cost (30%).

Improve this answer
1

This certainly isn't norm for all universities or big companies. I have been a BIG COMPANY and we have flipped on this back and forth 3 times at least.

Let's be honest. There is someone or a small group of upper level people that decide this.

Why would they choose going with a vendor (or not)?

  • because it saves them money based on one set of payments, based on discounted prices, based more features (ability to buy certain things or more help)
  • because they don't trust their staff or think that their staff is too stupid buy things correctly
  • because they want to do something different. This is usually the norm. Something isn't perfect, so the next VP coming in wants to put their stamp on something.
  • because the vendors have sweet talked them into something. This might be the vendor showing them the extreme savings (maybe incorrectly), offering them perks, or pseudo-vacations. I have even seen vendors basically offer to do part of an upper-managers job by allocating staff to them.
Improve this answer

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .