Procurement Basics

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Welcome!

• Procurement Basics

Jane Scott, P-Card Manager Mary Louise Hughes,
Senior Buyer
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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

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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

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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.

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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.

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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

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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

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Keep it On Campus

• Campus Orders
• Print Mail
• General Stores
• Plant Operations
• Instructional Media Services
• Chartwells
• The Point
• Event venues Rice-Eccles, Red Butte

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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

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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

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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

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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.

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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.

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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.

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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 Universitys Sales Tax Exemption
  certificate.

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University Sales Tax Exemption
Certificate
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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.

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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

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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.

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General Restricted Items Requisitions ONLY

• Radioactives
• Drugs
• Ethyl alcohol
• Live Animals
• Imports
• Recruitment ads
• Gases
• Controlled substances

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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.

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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

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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

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What Happens if its 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

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What Happens if its 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

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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
  Departments website
• Fill out and fax to Purchasing Department

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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.
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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.

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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

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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
Dont accept anything from a supplier if involved
with a current procurement process.
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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

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Gratuities Kickbacks

• Do NOT accept Gratuities or Kickbacks
• Kickbacks include
• 1. Payment
• 2. Offer of employment
• 3. Anything of value

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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

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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.

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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
employees 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.
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Gratuities Kickback - COI Summary

• Dont 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.

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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.

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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

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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