A Guide for Everyone Who Works with the School District Procurement Process Works with the School District Procurement Process AASBO OCTOBER 19, 2012 MESA,

A Guide for Everyone Who A Guide for Everyone Who Works with the School District Works with the School District

Procurement ProcessProcurement Process

AASBO OCTOBER 19, 2012MESA , ARIZONA

ByBill Munch

Exec. Director of ProcurementCompliance, Outreach & Training

Valley Schools(602) 677-1988

[email protected]

Purchasing Purchasing Workshop for Workshop for

EveryoneEveryone

Purchasing Workshop Purchasing Workshop for Everyonefor Everyone

Small Purchases

Large Purchases

Warehousing

Distribution

Contracts Administration

Inventory Management

Fixed Assets Management

Property Disposal

School District Procurement IncludesSchool District Procurement Includes


The “rules” exist

The rules are not optional

The rules apply to every one

The rules are specific, but do not provide clear answers for all questions

Certain personnel within your school district are charged with enforcing the rules

When enforcing the rules, those individuals are doing their jobs, not throwing up roadblocks to prevent you from doing yours

There are penalties for not following the rules

The most severe of those penalties are assessed against individuals, not school districts

You can follow the rules and get your job done

Key things you should knowKey things you should know


Governing Board PolicyGoverning Board Policy

Sets local requirements for the school district

May be more restrictive than the USFR or procurement rules

May not be less restrictive

School District Procurement is Governed BySchool District Procurement is Governed By

Arizona Revised StatutesArizona Revised Statutes

A.R.S. § 15-213-A is key to procurement

Other subsections also apply

Uniform System of Financial Records (USFR)Uniform System of Financial Records (USFR)

Applies to purchases of $50,000 or less

Applies to inventory management

Applies to fixed assets management

Section VI-G is the applicable section

Arizona Department of Education School District Arizona Department of Education School District Procurement RulesProcurement Rules

Applies to all procurement with values over $50,000.00

The bid threshold is no longer adjusted annually

Applies to procurement protest and claim resolution

Applies to disposition of assets


Purchases over $50,000Purchases over $50,000Require formal competitive sealed bids or proposals & quotes do not meet the requirement

Competitive QuotationsCompetitive Quotations

Apply to purchases under the formal bid thresholdApply to purchases under the formal bid thresholdMay be verbal or written

An acceptable quotation includesAn acceptable quotation includesDate of quote

Name of firm

Name of person providing quote

Item or service offered (description, brand & model)

Unit price

Extended cost

Freight, sales tax & other charges

Total cost

Warranty, delivery & other important information

Name of person obtaining quote

Must be provided with the purchase Must be provided with the purchase requisitionrequisitionVerbal quotes can be noted on the requisition

Written quotes must be on vendor quote form or letterhead and generally have an authorized signature unless a website or email quote


Bids and proposals are used to make purchases with Bids and proposals are used to make purchases with costs above the competitive sealed bid thresholdcosts above the competitive sealed bid threshold

Utilized most often for commodity or services purchases where the requirements can be clearly defined and award is based primarily, but not solelybut not solely, on price

Utilized most often for commodity or services purchases where the requirements are not clearly defined and award is based primarily on factors other on factors other than pricethan price

Bids are…Bids are…

Formal requests for offers from the school district

Proposals are…Proposals are…

Formal requests for offers from the school district

Formal offers from vendors Formal offers from vendors

Firm as received. No negotiation is allowed

Subject to revision by means of best & final offers

Awarded to the lowest responsible & responsive bidder

Awarded to the vendor whose proposal is determined to be most advantageous to the District


Cooperative PurchasingCooperative Purchasing This is not an exception, but another means of meeting the competitive procurement requirements

Multiple public procurement units share contracts, when the contracts meet the requirements of the Procurement Rules

Exceptions to the Competitive Procurement Requirements

Emergency ProcurementsEmergency Procurements

Have an immediate impact on the health, safety or welfare of the public, employees or students, or the operational capabilities of the district

Sole Source ProcurementsSole Source Procurements Only one source is available to supply a required material or service

Avoid sole source procurement unless it can be documented that there is not a reasonable alternative based upon a functional, operational or programmatic requirement


Commonly completed by the ordering sites

Create requestsrequests to purchase

Used by the Purchasing Department to issue purchase orders

Are not the same as purchase orders

Must not be used to place orders with vendors

Must be accurate, complete & legible

Commonly have several stops before they reach the Purchasing Department

1 1 3

Purchase RequisitionsPurchase Requisitions


Must be issued before materials, services or construction items are ordered or received

Create procurement contracts on behalf of the school district

Place certain obligations on the vendor & the school district

Possess certain permissions and restrictions

Should not be revised or exceeded without approval from the Purchasing Department

Help control the vendor payment process

Purchase OrdersPurchase Orders

Committing the school district to a purchase before a purchase order is issued creates an after the fact purchase. After the fact purchases are violations of the rules that apply to school district procurement. Serious consequences may result from after the fact purchases.


Why are there so many rules?Why are there so many rules?School districts spend taxpayer money. As custodians of that money, we have a duty to spend it wisely. The rules, regulations & processes help ensure we do so.

Can the rules be waived?Can the rules be waived?No. The rules are in place for a reason and cannot be waived. In fact, most of the rules have been created by, or in response to, legislative action. The rules have been written to provide a reasonable solution for most requirements.

What happens if the rules are not followed?What happens if the rules are not followed?School districts generally have internal procedures to address rules violations. These tend to be geared toward addressing the issue, resolving it to the benefit of all parties, and preventing future occurrences.

Violations can result in severe personalpersonal penalties. These include:

Responsibility for the debt Repaying the statePayment of a 20% penalty Payment of legal fees & court costsPayment of interest A Class IV felony convictionLoss of employment Seizure of personal assets

Why does everything have to go through the central office?Why does everything have to go through the central office?This is generally done as a control feature to ensure compliance with all requirements. Most times, it provides good protection for the district and its employees. It also allows others to focus on business issues and lets school personnel concentrate on teaching students.

There is a trend to reduce bureaucracy for small purchases. Efforts in this area include the use of purchase certificates, limited value purchase orders, procurement cards, term commodity & service contracts, etc.

Frequently asked questionsFrequently asked questions


Why does it take so long to get a purchase order after we send in a requisition?Why does it take so long to get a purchase order after we send in a requisition?There are a number of factors that contribute to purchase order turn-around time. These include:

The signature trail Incorrect account codesLack of funds Non-compliance with the rulesIncomplete requisition Poorly prepared requisitionMissing signatures Unplanned requirementsWorkload

The rules cost my school money. What can we do?The rules cost my school money. What can we do?This is a frequent complaint. However, we have found that the lower prices generally result from one or more of the following:

Different quality Vendor operates on cash basis Loss leaders Ancillary costs make up the differenceShort term sale No after the sale supportRisk of the purchase falls on the buyer

Why do we have to buy from out of state vendors?Why do we have to buy from out of state vendors?In general, we are prevented by law from giving any type of local preference. However, there are a number of purchases where we can support local vendors.

Why do we have to buy from the low bidder?Why do we have to buy from the low bidder?If we’ve done our jobs right, the low price is normally the best buy. However, cost is never the only factor considered. We also consider other factors such as quality, delivery time, warranty, purchase terms, etc. A low bid can be rejected if it is documented that it does not comply with all requirements.



What can be done to get quotes faster?What can be done to get quotes faster?The buyer can give deadlines for vendors to respond. If a vendor doesn’t respond within the specified time, a “no quote” can be documented. This helps keep the purchase on track.

What if I can’t get three quotes?What if I can’t get three quotes?Document your effort. If you contacted vendors that had reasonable opportunity to quote, we will accept the “no quotes” or contacts as meeting the requirements. However, don’t contact O’Rielly Chevrolet if your looking to buy a copy machine.

Why do I have to get quotes, I already know where to get the best buy?Why do I have to get quotes, I already know where to get the best buy?The quotation process is designed to ensure and verify that we are spending money wisely. It provides opportunity for vendors and instills confidence in the public.

Why do I have to get quotes, when I know no one else can meet my need!Why do I have to get quotes, when I know no one else can meet my need!We hear this often, and there is a sole source procedure that eliminates the need for competitive quotes or bids. However, this provision should be used very rarely. A sole source determination must be based upon performance, programmatic or operational requirements, not a preference for a particular product or provider. Because of the documentation requirements, completing a sole source purchase can be more difficult and take longer than trying to get quotes.

What are the most common mistakes you find department personnel make?What are the most common mistakes you find department personnel make?There are several:

Not allowing enough time for the processNot asking questions “up front”Incomplete documentationOrdering & receiving materials or services before a purchase order is issuedFailing to inspect & confirm an order upon receiptFailing to send receiving documents to the Accounts Payable DepartmentFailing to tag capital equipmentSigning contractual documents without authority



How do I handle multiple purchases of the same item?How do I handle multiple purchases of the same item? Start with what you know at the time Use the total anticipated cost of the materials over the fiscal year Review purchases from prior years to estimate total current year purchases Bid and warehouse the materials Bid the materials on a “will “call basis

How do I handle multiple purchases with the same vendor?How do I handle multiple purchases with the same vendor? Start with what you know at the time Determine if the purchases are reasonably subject to competition If certain items are purchased routinely from that vendor, the total cost over the fiscal year may require competitive purchase Multiple purchases for “unanticipated requirements” may not be reasonable for competitive purchase Bid for a percent of discount to be applied to the vendor’s entire product line Document the basis for using that vendor

How can I bid maintenance supplies? I don’t know what I need until I need it.How can I bid maintenance supplies? I don’t know what I need until I need it.Review the prior year’s purchase historyGroup related items that are routinely purchased Use a percent of discount bid for all items in that group List a sampling of the routinely purchased items in each group and require the bidders list their prices for those items to assist bid evaluation

What can I do to make my procurement successful?What can I do to make my procurement successful?Allow enough time for the processAsk questions “up front”Provide complete documentationBe fair and be reasonableAvoid after the fact purchases Inspect & confirm orders upon receiptPromptly send receiving documents to the Accounts Payable Department Do not sign contractual documents without authority



FINAL THOUGHTFINAL THOUGHT

Constant optimism is a force multiplierConstant optimism is a force multiplier

General Colin Powell

Documents

A Guide for Everyone Who Works with the School District Procurement Process Works with the School District Procurement Process AASBO OCTOBER 19, 2012 MESA,