Transcript Document

Legal Aspects of Purchasing
How to Navigate the Jungle
Presented by:
Bramby Ann Tollen, C.P.M.,CPPO, CPSM, CPSD
Director, Purchasing & Warehousing
Clark County School District
Las Vegas, Nevada
91st Annual Meeting & Exposition
April 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Overview
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Purchasing Law-Navigating the Jungle
Staying on Solid Ground with Terms & Conditions
Avoiding Quicksand
Surviving the Swamp
Going Forward with Sturdy Footing
Using Life Lines
Time for Questions
91st Annual Meeting & Exposition
April 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
The Jungle-Purchasing Law-Can you Navigate it?
1. Purchasing competes requirements because:
a)
b)
c)
d)
We are naturally competitive people.
We enjoy the extra paperwork. (Not!)
We like to torture our customers with anticipation.
It is a good business practice and those pesky State
statutes and Board policies require that we do so.
91st Annual Meeting & Exposition
April 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
The Jungle-Purchasing Law-Can you Navigate it?
2. State statutes and Board regulations are usually
created in response to :
a)
b)
c)
d)
Legislative whimsy.
Divine inspiration.
The need for more red tape.
Actual incidents of fraud, waste, and abuse.
91st Annual Meeting & Exposition
April 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
The Jungle-Purchasing Law-Can you Navigate it?
3. It is okay to accept gratuities from suppliers when:
a) The supplier is your uncle Bob.
b) You have never played golf at Pebble Beach and
this is a great opportunity.
c) You are really hungry and you do not have any
cash for lunch.
d) Never
91st Annual Meeting & Exposition
April 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
The Jungle-Purchasing Law-Can you Navigate it?
4. Conflict of Interest arises when:
a)
b)
c)
d)
You want to go to an action movie and your spouse wants
to see a romantic comedy.
You have to choose between wearing the paisley green &
orange sweater your mom gave you or the plaid purple &
yellow sweater your grandma gave you.
You have the opportunity to spend the mortgage money on
a great deal on a really cool motorcycle.
You need to purchase volleyballs for the athletic
department and your uncle sells them and offers you a
personal rebate.
91st Annual Meeting & Exposition
April 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
The Jungle-Purchasing Law-Can you Navigate it?
5. The reason indemnification is important is:
a)
b)
c)
d)
The airports require a picture id to get on the airplane.
The lawyer is paid by the word and he has not billed you
the full contract amount yet.
Letters look better when paragraphs are indemnted.
Funds are better spent on textbooks than injury, loss, or
damage caused by suppliers.
91st Annual Meeting & Exposition
April 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Staying on Solid Ground with Terms & Conditions
Lions, Tigers and Small Print…..
1.Assignment of Contract only with Agency Consent
Should not be unreasonably withheld
2.Attorney Fees Paid by Each Party
American Rule vs. Equitable Remedies
3.Conflict of Interest
Duty of Loyalty
91st Annual Meeting & Exposition
April 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Staying on Solid Ground with Terms & Conditions
Lions, Tigers and Small Print…..
4. Cooling Off Period
Separated Employee-similar work?
Earning maximum?
5.Dispute Resolution Process
Written issues of non-compliance
Informal Mediation
Arbitration and/or Litigation
6. Fiscal Fund Out
91st Annual Meeting & Exposition
April 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Staying on Solid Ground with Terms & Conditions
Lions, Tigers and Small Print…..
7. Four Corners Rule
Overall intent rather than individual words
8. Full Disclosure
Employee
Buyer
Authorizing Official
Governing Body
Supplier
91st Annual Meeting & Exposition
April 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Staying on Solid Ground with Terms & Conditions
Lions, Tigers and Small Print…..
9. Indemnity
Mandatory requirement?
10.Insurance
Work with Risk Management Department
Provide certificate of insurance with agency named.
Working with students? Insurance should include coverage for
abuse, molestation, and corporal punishment…normally a part
of, or an endorsement to, a commercial liability policy.
91st Annual Meeting & Exposition
April 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Staying on Solid Ground with Terms & Conditions
Lions, Tigers and Small Print…..
11.Payment Tied to Performance
Pay for items delivered or performed
Lock in firm pricing for maintenance
and increased based on index
Allow increases & decreases based on market
12. Prevailing Law & Jurisdiction
Your paper, your rules!
91st Annual Meeting & Exposition
April 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Staying on Solid Ground with Terms & Conditions
Lions, Tigers and Small Print…..
13. Sub-contracting
Not unless defined and approval in advance.
14.Supplier Defines “Team” & Project Manager
Do not allow “Bate and Switch”
Define account/project managers
Define who is responsible for each task/deliverable
15.Termination for Convenience
91st Annual Meeting & Exposition
April 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Avoiding Quicksand-Terms to Avoid
• Anti-Trust
• Collusion
• Conflict of Interest
o Current Employees
o Relatives & Friends
o Work Day & Responsibilities
• Credits
• Favors
91st Annual Meeting & Exposition
April 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Avoiding Quicksand-Terms to Avoid
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Gratuities
Limited Time Offer or Special Deal “Just for You”
Nepotism
Oral Agreements
Perceived Advantage
o Advance Knowledge
o Incumbent Supplier
• Prepayments
91st Annual Meeting & Exposition
April 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Avoiding Quicksand-Terms to Avoid
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Rebates
Split Purchases
Suppliers-Arms Length Principle
Vendor’s Contract/Agreement/Paper
Verbal Representations
91st Annual Meeting & Exposition
April 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Surviving the Swamp
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Prepackaged software licenses
Software & equipment maintenance
Subscription services
Speaking engagements
Musicians & other performers
Other low risk ventures that do not include on-site
services nor interacting with students
91st Annual Meeting & Exposition
April 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Going Forward with Sturdy Footing
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Full Disclosure
Use your own “paper”
Indemnity
Point of Contact/Responsible Party
o Supplier & Buyer
• Deliverables defined with time frame and payment
• Acceptance and rejection process
• Project management or communication process
91st Annual Meeting & Exposition
April 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Going Forward with Sturdy Footing
• Competition
o Consumption or Purchase Estimates
• Right to negotiate if quantities increase
decrease by 25%
o Warranty & Specifications
• Take advantage of UCC
o Balance of Line Discount
• Discount for future unidentified requirements
• Must equal discount for identified bid items
o Question & Answer Phase
• No pre-bid conferences
• All information sent out via addenda
91st Annual Meeting & Exposition
April 1 – 4, 2012
Anaheim, California
or
Legal Aspects of Purchasing
Going Forward with Sturdy Footing
Top Five Reasons to Compete
1. Despite the offers of free lunches and trinkets, suppliers’ best
interests rarely coincide with the buyers.
2. Our Legal and Risk Management Departments are not sitting around
idly in eager anticipation of liability claims due the actions of
uninsured suppliers.
3. Our Superintendent stubbornly clings to the notion that the budget
is limited and insists that we get the best value for our money.
4. Contracting with relatives may get you a better holiday present, but
ask for a sweater. It gets cold in the unemployment line.
5. State statutes are not suggestive in nature.
91st Annual Meeting & Exposition
April 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Using Life Lines
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NAEP
Legal Department
Suppliers
GSA & Cooperatives
Other Purchasing Agencies
Internet Search
Friends & Contacts
91st Annual Meeting & Exposition
April 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Summary
• Questions?
• Thank you!
• Contact Information:
Bramby Tollen
[email protected]
702-855-5461
91st Annual Meeting & Exposition
April 1 – 4, 2012
Anaheim, California