Transcript Procurement Basics Welcome! Jane Scott, P-Card Manager Mary Louise Hughes, Senior Buyer

Procurement Basics
Welcome!
Jane Scott, P-Card Manager
Mary Louise Hughes, Senior Buyer
Procurement Code & Policy
Utah Procurement Code 63G-6a-408: Small Purchases
University Policy
• 3-100: University Procurement
• 3-191: Small Purchases and Expedited Procurement
• 3-192: Restricted Purchases and Special Procurement
• 3-010: Expenditure of University Funds & Personal
Reimbursements
Procure – to - Pay
What do I need? – Specifications
Where can I get it? – Contracted vendors
When do I need it? – Process time/Payment
How much will it cost? – Estimate
Definitions
•Small Dollar Purchase: Procurement of supplies or
services; total cost is less than $5,000.
Competitive bidding is not required but is encouraged.
•Procurement Price: Total acquisition price; i.e., cost of
goods/services plus shipping, installation, ancillary items,
training, tips, etc.
•Order Splitting: It is unlawful for an employee to
intentionally or knowingly divide a procurement into one
or more smaller procurements with the intent to qualify as a
small purchase or to avoid transaction limits.
Criminal Penalties for
Violation
A person who violates the small purchase law is
guilty of a:
•
Class B misdemeanor if the total value of the
divided procurements is less than $100,000.
•
Penalties increase to a second degree felony
depending on transaction total value.
Small Dollar Procurement
Tools - Under $5000
•
•
•
•
•
•
Purchasing Card: Preferred procurement method
Campus Orders
Blanket Order
Limited Purchase Order – LPO
Payment Request – Reimbursements
All restricted items must go on a Requisition
Purchasing Card
•
•
•
•
•
•
Preferred method for small dollar under $5,000
Most merchants accept MasterCard
Minimal paperwork / handling
Electronic reallocation
Excellent controls – vendor and spend limit
Restricted items – PCard and General Restrictions
Keep it On Campus
• Campus Orders
• Print & Mail
• General Stores
• Plant Operations
• Instructional Media Services
• Chartwells
• The Point
• Event venues – Rice-Eccles, Red Butte…
Campus Orders
• Administered by Accounts Payable
• Department to Department Purchase
• Print & Mail Services, Plant Ops, General Stores, Media
Services, Media Solutions, The Point, Red Butte Gardens,
Library, Travel, Museum of Fine Arts,
• Type then give to the “Selling” dept
• Transaction shows up on Management Reports
• Bookstore, Guest House and Chartwells prefer the
University MasterCard, not a Campus Order
Blanket Orders
•
•
•
•
For frequent small dollar purchases under $5,000
If bid, will cover LARGE $$ amounts
Can make them anytime during the year
Purchasing sends out proof requisitions each spring
on Blanket Orders that expire June 30th
• P-Card may handle these types of purchases
Limited Purchase Order - LPO
• Administered by Accounts Payable –
• Issued to an LPO Custodian, upon completion of an
agreement, who is primarily responsible for the control of
these forms.
• One-time purchases under $5000 –
DO NOT split transactions to avoid limit
DO NOT use for foreign purchases
• Type or print 3-part form then send copies out to:
1.Vendor
2. Accounts Payable
3. Keep one for department file
Limited Purchase Order - LPO
• Included within the scope of changes to Procurement code and
University Policy.
• Use when purchaser does not have a PCard or merchant does not
accept PCard
• For incremental services or deliverables with multiple payment
installments, use Requisition instead of Limited Purchase Order.
Payment Request
• Administered through Accounts Payable – form found online
• Included within the scope of changes to Procurement code and
University Policy.
• Used for payments to individuals for services, reimbursements,
Guest Lecturers, Performers, Honoraria.
• Payments to Independent Contractors and Consultants, or other
service providers still subject to Policy 3-111.
• For incremental services or deliverables with multiple payment
installments, use Requisition instead of Payment Request.
Policy 3-010 Key Points
•
•
•
•
•
•
•
Binding for all University colleges, departments, and units, including
University Hospitals & Clinics.
Accountability for the funds entrusted to the University, regardless of funding
source, extends to all those involved in the expenditure of those funds.
Funds “administered or held by the University” can include;
Departmental operating funds
Clinical income
Gifts
Any other funds for which the University is accountable, including monies from
federal contracts and grants.
Policy 3-010 Key Points
•
•
•
•
Reimbursements should be avoided, and instead direct
procurement methods should be utilized, which take advantage
of negotiated contracts, and the least costly expenditure outlay to
the University.
Reimbursements are subject to all the requirements of
expenditures made directly via University funds.
Payment of Sales Tax, via reimbursements, is waste of funds
entrusted to the University.
Prohibits use of personal funds to purchase on behalf of the
University in combination with use of the University’s Sales
Tax Exemption certificate.
University Sales Tax Exemption
Certificate
Policy 3-010 Key Points
•
•
•
•
Reimbursements under the minimum amount, currently $25,
should be paid by a departmental Petty Cash fund, if available.
Reimbursements greater than the maximum, currently $1,000,
require supervisory and Director or Department Chair approval,
and an explanation why preferred procurement methods were
not used.
If an individual makes a purchase which violates University
procurement policies, and then seeks reimbursement, it is
possible that reimbursement will not be processed.
This Policy does not apply to University Travel.
Rule 3-010 Key Points
• Establishes the following minimum documentation requirements;
•
•
•
•
•
•
•
Description of item or services purchased
Date of invoice or date of purchase
Amount
Adequate description of business purpose
Appropriate invoice or receipts
Appropriate accounting distribution
Necessary approvals
Rule 3-010 Key Points
•
•
•
Combining personal funds with the use of the University Sales
Tax exemption certificate is a violation of state law.
If documentation suggests misuse of this certificate, the
reimbursement will require a letter of justification, including
approval of the cognizant Vice President.
Reimbursement requests will not be eligible for expedited
processing (Next Day or Same Day) without department
Director or Chair approval.
General Restricted Items –
Requisitions ONLY
•
•
•
•
•
•
•
•
Radioactives
Drugs
Ethyl alcohol
Live Animals
Imports
Recruitment ads
Gases
Controlled substances
Federal Grants
• Federal Grant Money has additional rules of how it is
to be spent
• Grants & Contracts Accounting is the main contact
• Purchasing gets their approval for equipment
purchases
• If spending towards the end of a grant, leave 8 weeks
for procurement procedures to take place. Federal
Grant $$ can be turned down if spent too close to the
end of a grant.
Large Dollar Procurement Over $5000
• Submit requisitions for all purchases close to or over
$5,000. Not all requisitions are bid. A bid waiver
request must be submitted with requisition.
Purchasing buyer determines if bidding. (Purchases
from state or university contracts do not require
bidding.)
• All restricted items MUST go on a Requisition
• Form found on Purchasing website or CIS
www.purchasing.utah.edu
• Fill it out on-line, print, sign and fax to Purchasing
• Be descriptive and informative
Large Dollar Procurement –
Solicitation Tools:
• Quotes (Request for Quotes)
• Bids (Invitation for Bids)
• Request for Proposals
• Use when price is not the most important factor
• Purchasing must pre-approve using this process
• Use RFP instructions, template and buyer at Purchasing
What Happens if it’s Bid?
Step 1: Requisition gets routed to the buyer and buyer
determines if bidding is required (State contracts and
other justifications)
Step 2: Buyer gathers bids - 3 or more sources
Under $50,000; the buyer gets fax or phone bids
will take about 3-7 days
Over $50,000; will be posted to the online bid system
will take about 10-25 days
Step 3: Bid results are forwarded to department
What Happens if it’s
Bid? – cont.
Step 4: Department accepts low bid or justifies otherwise
Step 5: Purchasing Department generates a PO
Step 6: Purchasing Department sends PO to vendor
Note: Contracts should be reviewed by the legal department
before they are signed by departments
Modifications
• Purchase Order modifications are made on a
Continuation Form
•
•
•
•
Increase/decrease
Remove encumbered funds
Cancel PO
Make changes to PO in any way
• Continuation Form found on Purchasing
Department’s website
• Fill out and fax to Purchasing Department
Gratuities and
Kickbacks, …
It is UNLAWFUL for purchasing
participants or contract administrators to ask
for or receive a gratuity.
It is UNLAWFUL for suppliers to offer or
give a gratuity.
Gratuities – Kickbacks:
Definitions
Procurement participants are those who:
• Make a decision to obtain a procurement item from a
particular person.
• Prepares for, administers, or conducts a procurement
process.
• Evaluate a quote, bid, or response.
• Make an award recommendation.
Gratuities – Kickbacks:
Definitions
Contract Administrator –
Newly Defined Group
•
•
•
•
Makes a payment
Ensures contract compliance
Audits a contractor in relation to the contract
Enforces a contract
Gratuities & Kickbacks
Gratuity means anything of value except
promotional or hospitality items of less than
$10 in value, such as:
1. Trinkets or promotional items such as
a pen or pencil
2. Non-alcoholic beverages or snacks
Don’t accept anything from a supplier if
involved with a current procurement process.
Gratuities & Kickbacks
Do NOT accept Gratuities or Kickbacks
• Restricted Gratuities include:
1. Meals: breakfast, lunch, dinner,
other meals.
2. Tickets or admittance: movies,
plays, concerts, sporting events, etc.
3. Lodging
Gratuities & Kickbacks
Do NOT accept Gratuities or Kickbacks
• Kickbacks include:
1. Payment
2. Offer of employment
3. Anything of value
Gratuities – Kickback:
Violation
Total value
•
•
•
•
Less than $100: Class B misdemeanor
$100 - $250: Class A misdemeanor
$250 - $1,000: 3rd degree felony
$1000+: 2nd degree felony
Conflict of Interest
Is defined as using your position to influence:
•
•
•
•
•
Decisions and approvals
Awards and recommendations
Procurement requirements
Proceedings, ruling determinations
Claims, controversies, or investigations
to the benefit of you or your family members.
Conflict of Interest
University policy 1-006 requires procurement
participants to disclose significant financial
interests in a business entity proposing to enter
into a transaction with the University if the
employee’s position may influence the outcome of
a transaction decision. There should be no
relationship with or bias towards any bidder that
would prevent fair treatment of all bidders.
Gratuities – Kickback - COI:
Summary
•
•
•
•
Don’t accept anything of value from a supplier, unless
it meets the definition and threshold of a hospitality
item.
No meals, tickets or entertainment from a supplier .
Inform members of your department who participate
in purchasing.
Inform suppliers who may offer gratuities, meals,
tickets, etc.
Gratuities – Kickback - COI:
Summary
•
•
•
•
Departments can establish department policies
more conservative than the state law.
Samples from suppliers become University
property.
Separate duties of development officers and
procurement participants.
Contact Purchasing or Office of General
Counsel with questions.
Resources
• Where do I find more information on…?
Demonstration of CIS – Financial & Business Services Menu –
Reports, Transaction Detail Search, Chartfields, Assets, Ship to Codes
• Who do I ask about…?
Tour of Financial & Business Services Websites –
Purchasing, Accounts Payable, Tax Services, General Accounting,
Grants and Contracts, Property Accounting
Receive Updates FBS News & Momentum Newsletters
Subscribe to FBS News listserve:
• http://fbs.admin.utah.edu/communication/list
-sign-up/?list=fbsnews
Read Momentum Newsletters:
• http://fbs.admin.utah.edu/home/momentum/
Remember
• The $5000 limit – must go through Purchasing if the
total amount of the procurement exceeds $5000
• Restricted items must go on a requisition
• Sales Tax Exemption
• No split transactions per Utah Procurement Code and
University Policy