Welcome!

Procurement Basics

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

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

Procure – to - Pay

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

• Restricted items – PCard and General Restrictions

• Excellent controls – vendor and spend limit

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.Vendor2. Accounts Payable3. 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

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 and Kickbacks, …

Gratuities – Kickbacks: DefinitionsProcurement 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: DefinitionsContract Administrator – Newly Defined Group

•Makes a payment•Ensures contract compliance•Audits a contractor in relation to the contract•Enforces a contract

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

Gratuities & Kickbacks

Don’t accept anything from a supplier if involved with a current procurement process.

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 & Kickbacks

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

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.

Conflict of Interest

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=fbsnewsRead 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