if i could rewrite my institution’s purchasing policies here’s what they’d be

If I Could Rewrite My Institution’s Purchasing Policies

Here’s What They’d Be

Burr Millsap, CPA MBAAssociate Vice President

If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be

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• Background – OU’s Authority within Oklahoma• Organization – Current Policy• Organization – Proposed Policy• Why?

– Current Practices– Best Practices

• Significant Changes• Side-by-Side Comparison• Cross-Referenced Spreadsheet



Background – OU’s Authority within OklahomaOklahoma Constitution Section XIII-8

Board of Regents of University of Oklahoma

The government of the University of Oklahoma shall be vested in a Board of Regents consisting of seven members to be appointed by the Governor by and with the advice and consent of the Senate. The term of said members shall be for seven years, except and provided that the appointed members of the Board of Regents in office at the time of the adoption of this amendment as now provided by law shall continue in office during the term for which they were appointed, and thereafter as provided herein.

Appointments for filling vacancies occurring on said Board shall be made by the Governor with advice and consent of the Senate and said appoints to fill vacancies shall be for the residue of the term only.

Members of the Board of Regents of the University of Oklahoma shall be subject to removal from office only as provided by law for the removal of elective officers not liable to impeachment.

Added by State Question No. 311, Referendum Petition No. 88, adopted at election held on July 11, 1944.

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Organization – Current Policies4.11 Buying And Selling Goods And Services

4.11.1 Policy

4.11.2 Buying Goods and Services

4.11.3 Purchases That Must Be Processed Through The Purchasing Department

4.11.4 Purchases That Are Not Required To Be Processed Through The Purchasing Department

4.11.5 Purchases The Require The Assistance And Review Of The Purchasing Department

4.11.6 Purchases From Auxiliary Enterprises And Service Units

4.11.7 Submitting Purchases To The Board Of Regents For Approval And Reporting Other Purchases

4.11.8 Sole Source Purchases

4.11.9 Property Control And Capitalization Of Certain Purchases, Gifts or Other Acquisitions

4.11.10 Acquisition Of Surplus Property

4.11.11 Significant Emergencies

4.11.12 Selling Goods And Services

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Organization – Proposed Policy4.11 Buying And Selling Products And Services

4.11.1 Policy

4.11.2 Definitions

4.11.3 Excluded Transactions

4.11.4 Buying Products And Services

4.11.4.1 Purchasing Department Responsibilities

4.11.4.2 Supply Chain Management

4.11.4.3 Competition

4.11.4.4 Dollar Thresholds

4.11.4.5 Direct Purchases

4.11.4.6 Purchases Processed By Purchasing

4.11.4.7 Purchases Processed Through Purchasing

4.11.5 Purchases From Auxiliary Enterprises and Service Units



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Organization – Proposed Policy (continued)

4.11.6 Submitting And Reporting Purchases To The Board

4.11.6.1 Submitting For Prior Approval

4.11.6.2 Reporting

4.11.6.2.1 Report Quarterly

4.11.6.2.2 Report At Earliest Opportunity

4.11.6.2.3 Exempt From Approval Or Reporting

4.11.7 Submitting Purchases To The Board For Ratification

4.11.8 Property Control And Capitalization Of Certain Purchases, Gifts Or Other Acquisitions

4.11.9 Acquisition Of Surplus Property

4.11.10 Significant Emergencies

4.11.11 Selling Products And Services



Why?

Current Practices and Best PracticesHave Outpaced Current Policy

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Current Practices• Delegation of Signature Authority

– Expertise within Certain Departments• Purchases versus Payments



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Delegation Of Signature Authority• Norman Campus – 97• Health Sciences Center (OKC) – 20• Current Policy assumes everyone needs Purchasing’s intervention• Incomplete guidance confuses those who don’t need Purchasing’s

intervention with those who do• Expertise Within Certain Departments

– OU Physicians– Athletics– College of Continuing Education– Housing & Food– Research Administration– Student Union



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Purchases versus Payments• Current policy is silent; makes compliance difficult and

confusing.• Certain transactions are pure payments; do not need

Purchasing’s intervention. Student refunds Research subjects Debt service Acquisition or sale of real estate OU Foundation US Postal Service

Charities campus-wide (United Way)

Utilities campus-wide Royalties Insurance coverage campus-wide Travel reimbursements



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Best Practices• Supply Chain Management

– Stratification of the Supplier Base // Strategic Sourcing

• Purchasing’s Role: Much More Than A Turnstile



Supply Chain Management• Encompasses the planning and management of all activities involved

in sourcing, procurement, conversion, and logistics management. It also includes coordination and collaboration with channel partners, which may be suppliers, intermediaries, service providers, or customers. It integrates supply and demand management within and across companies.

• Total systems view of the links that work together efficiently. Costs are lowered by driving out unnecessary expenses, movements, and handling. Focus is on efficiency, added value, and removal of bottlenecks. Performance measurement is on total system efficiency and equitable monetary reward.

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Stratification of the Supplier Base // Strategic Sourcing

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Purchasing’s Role: Much More Than A Turnstile

• Train, monitor, and collaborate with those University employees who have Signature Authority and/or Processing Authority to ensure compliance

• Establish and manage strategic sourcing and other Contracts that offer Best Value• Maintain productive University-supplier relationships • Ensure that when Competition is indicated, it is appropriately carried out • Validate conditions in contraindication of Competition and administer alternative

methods • Train, coordinate, and ensure that required supplier documentation (e.g. insurance

endorsements and IRS forms) is properly obtained and filed • Work with University departments relative to supply/supplier support needs • Collect and analyze University data for expenditures for products and services • Define, measure, and track meaningful metrics of Purchasing operations • Collect and document information required for Board of Regents approval and

reporting

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SignificantChanges



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Significant Changes• Specifically assigns to University Administration overall

responsibility for establishing and enforcing related controls– University Administration may further assign responsibilities to enable

compliant, effective, and efficient processes and procedures• Expands “Competition” to include competitively awarded

contracts from like organizations and professional associations– Allows negotiation; recognizes Competition not always possible or

desired



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Significant Changes• Language Added Specifically Addressing Supply Chain

Management Principles– “As the University offers courses and degrees in Supply Chain

Management (SCM), Purchasing, as well, shall use SCM principles in its execution, management, and oversight of the University’s acquisition of products and services.”

– Current policy has no such language– Brings policy into 21st century– Recognizes and requires that Purchasing use judgment– Allows and requires Purchasing to operate in accordance with generally

accepted purchasing principles and practices– Provides the platform for Purchasing to strengthen personnel

requirements and focus on departmental outreach and collaboration



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Significant Changes• Definitions – Language added to define certain terms

Best Value Competition Contract(s) Direct Purchases Payments Processing Authority

Processed By Purchasing Processed Through Purchasing Purchases Purchasing Resale Signature Authority



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Significant Changes• Assigns labels to dollar thresholds

– Makes future threshold changes easier, more efficient– “Small Dollar” - $ 5,000– “Formal Competition” - $ 75,000– “Approval” - $ 250,000– “Reporting” - $ 75,000

• Two thresholds – (1) Formal Competition (2) Reporting - proposed to be increased to $75,000 from $50,000– Recognizes the effects of inflation since the last revision – Allows Purchasing a bit more judgment with mid-range Purchases– Reporting to Board - FY13 example – would still retain 77% of dollars

reported but reduce the number of transactions by 39% ($34.9MM of $45.6MM // 168 of 434, respectively)



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Significant Changes• Signature Authority

– Removes CCE as specific cite; generalizes requirements– Recognizes over 100 employees have signature authority– Assigns Purchasing oversight responsibility, requires judgment– Requires those with Signature Authority to coordinate with Purchasing

(versus requiring Processing By Purchasing)• Short Fuse Air Charter Services

– Assigns complete approval authority to President if above Approval Threshold and no time for Board action

– Removes $300,000 limit – arbitrary and potentially unworkable– Requires reporting to Board at earliest opportunity



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Significant Changes• Differentiates “Process By Purchasing” from “Process Through

Purchasing”– “BY” requires input of a requisition, workflow to Purchasing, Purchasing

must do something with it– “Through” limited to CrimsonCorner catalog purchases; also workflow to

Purchasing, but released directly to supplier, no additional Purchasing action needed (unless capital asset)

• Removes specific cite of Purchases up to $50,000 by Executive level officers– Not needed because of new language governing Signature Authority



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Significant Changes• Differentiates “Payments” from “Purchases”

– Assigns definition to Payments (already discussed above) and excludes them from policy

– Resolves confusion over certain transactions that are processed through Accounts Payable. . . If they are above Small Dollar Threshold should they have been Processed By Purchasing? No, for Payments as defined.

• Removes language alluding to “blanket orders” and “standing orders”– Technology advancements have overtaken the need for these– Relics of past practices in older systems– Outdated tools used internally by Purchasing– Not relevant policy-wise



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Significant Changes• Definition of Contract encompasses the entire proposed term;

rules out “annual” interpretation– Strengthens Board approval and reporting oversight– Current policy operates on annual spend; if less than Approval Threshold

annually, prior approval by Board not required– Proposed policy based on total spend over life of Contract

• Language added for clarity– Purchases above the Reporting Threshold against Purchases (Contracts)

that have received prior approval by the Board are exempt from reporting requirements and from requirement for further approval



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Significant Changes• Language added to strengthen certain exemptions from

approval and reporting– “This provision may not be relied upon to devise Purchase transactions

above the Reporting Threshold with the intent of circumventing the requirement to otherwise report or submit to The Board”

• “Sole Source” replaced by “without Competition”– Strengthens and enlarges the pool of Purchases that must be justified in

which Competition is not used– “Sole Source” is too restrictive– Recognizes technological advances and market forces that make

Competition-required-by-policy pro-forma and counter-productive



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Significant Changes• Language added to address Board ratification of noncompliant

purchases above the Approval Threshold– Current policy has no such language– Sets forth a sound process– Strengthens Board oversight

• Selling Products and Services– Replaces the current $125,000 threshold with the Approval Threshold– Replaces “ratification” with “reporting”– Revenue contracts are reviewed by Legal Counsel and go through

thorough reviews by departments and University Administration– Process to ensure Board oversight is streamlined



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Side-by-SideComparison



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Current Policy Proposed Policy Comment

The University’s legal capacity to acquire goods and services from others in exchange for payment, and to provide goods and services to others in exchange for revenue, originates with the Board of Regents. University funds are budgeted on an annual basis, and these budgets are approved by the Board of Regents. The Board of Regents recognizes that this is a large institution with sizeable annual cash flow, and realizes that substantial authority must be delegated.

The University’s authority to (1) acquire products and services; (2) make payments in support of University purposes; (3) negotiate, execute, monitor, renew, and terminate contracts with others pursuant to University purposes, and (4) sell and otherwise dispose of University property originates with the Board of Regents (The Board). The Board delegates substantial authority in order for the University to carry out its mission effectively, efficiently, and in compliance with governing laws and regulations.

No substantive change from Current to Proposed Policy. Proposed Policy adds language assigning overall responsibility to University Administration.

The University Departments of Administration & Finance (University Administration) have the overall responsibility for establishing and enforcing related controls. University Administration may further assign responsibilities to enable compliant, effective, and efficient processes and procedures.

4.11.1 4.11.1

General Policy Statement



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4.11.2

Competition, in the context of buying, means open and fair competition among suppliers; in the context of selling, it means making University products and services (that are authorized to be sold) publicly available by the most feasible means under the circumstances.

Sets forth the definition for Competition as the term is used in this Section of the Policy.

Contract(s) means contracts, agreements, memoranda of understanding, or similar instruments purposed to be signed by two or more parties, binding them to promises, actions, or transactions, whether or not consideration or value is given or received.

Sets forth the definition for Contracts as the term is used in this Section of the Policy.

Direct Purchase(s) means Purchases that are made directly by University departments without being Processed By or Through Purchasing. The distinguishing processing characteristics of a Direct Purchase are that (1) the supplier’s invoice/bill is forwarded by the requesting department directly to Accounts Payable, and (2) no related requisition (pre-encumbrance) or purchase order (encumbrance) has been processed. Also included are Purchases by University departments from University auxiliary enterprises, service units, independent operations or other University departments authorized to engage in Resale as defined herein.

Sets forth the definition for Direct Purchases as the term is used in this Section of the Policy.

Definitions



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4.11.2

Processing Authority means the authority to make decisions for the University relative to highly specialized products or services, compliance with governing laws and regulations, protecting the University from liability, or minimizing risks to the University.

Sets forth the definition for Processing Authority as the term is used in this Section of the Policy.

Processed By Purchasing means those steps taken directly by Purchasing to carry out an acquisition action. These include without limitation (1) conducting Competition, (2) negotiating, (3) reviewing and executing Contracts, (4) obtaining documentation required by law or regulation, or (5) issuing purchase orders. Such Purchases are initiated by requisition (pre-encumbrance).

Sets forth the definition for Processed By Purchasing as the term is used in this Section of the Policy.

Processed Through Purchasing means the processing steps taken by Purchasing only to issue purchase orders.

Sets forth the definition for Processed Through Purchasing as the term is used in this Section of the Policy.

Purchase(s) means (1) routine discrete orders for products and services, or (2) one-time, single-year, or multi-year Contracts. It is distinguished from and does not include disbursements in settlement of Purchases.

Sets forth the definition for Purchases as the term is used in this Section of the Policy.

Definitions



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4.11.2

Purchasing means the University’s Purchasing Department.

Sets forth the definition for Purchasing as the term is used in this Section of the Policy.

Resale means a University department’s formal authorization to routinely sell products or services to the public or to other University departments. Departments with this type of authorization are typically classified as service units, auxiliary enterprises, and independent operations (examples: Printing Services, Facilities Management / Site Support, OU Physicians, Athletics, Housing & Food).

Sets forth the definition for Resale as the term is used in this Section of the Policy.

Signature Authority means the “Authority to Sign Contractual Documents” as set forth in Section 4.10 of this policy.

Sets forth the definition for Signature Authority as the term is used in this Section of the Policy.

Definitions



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The University purchases a substantial volume of goods and services. Except in certain limited situations, University employees shall acquire these goods and services through an open and competitive process aimed at fairness to interested suppliers and best value for the University. Competition allows for the use of new technology in communications and of prior competitive history. Existing contracts established by cooperative associations and state and federal entities that meet the criteria for formal competitive process may be considered competitively bid. University departments are encouraged to request and receive assistance from the Purchasing Department for all purchases, regardless of the dollar amount.

Competition is the method of first consideration. It comprises processes such as (1) invitations to bid [ITB]; (2) requests for proposals [RFP]; (3) invitations to negotiate [ITN]; (4) requests for quotes [RFQ]; (5) requests for information [RFI], and (6) similar reasonable and well documented canvassing and comparative processes. Competition also includes using Contracts held by governments, cooperative and group purchasing organizations, and by other education and/or research institutions, provided that such Contracts result via competitive principles and processes that are generally accepted by the National Association of Educational Procurement (NAEP), the National Association of College and University Business Officers (NACUBO), the National Association of State Procurement Officials (NASPO), the National Institute of Governmental Purchasing (NIGP), the Association of Independent Research Institutes (AIRI), the Institute of Supply Management (ISM), or other similar organizations. When Competition is not possible or in the University’s best interest, other methods such as selection or negotiation may be used provided that the justification is validated by Purchasing.

Proposed Policy expands on the discussion and the provisions for Competition.It provides greater flexibility for effective and efficient purchasing while satisfying the requirements for control and oversight.This is consistent with Supply Chain Management principles.

4.11.2 4.11.4.3

Competition Explained / Defined



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4.11.4.4

For purposes of this policy, two categories of dollar thresholds apply. One category addresses whether Purchasing must be / is involved with a Purchase. The other category separately addresses whether Purchases must be submitted for prior approval by or reported to The Board. These dollar thresholds establish general requirements to which exceptions apply. In some cases the exceptions are less restrictive because the University must allow a substantial measure of decentralization for its business to be carried out efficiently. In other cases the exceptions are more restrictive because of additional controls needed to minimize risk to the University. Nothing in this policy prohibits any Purchase from being Processed By Purchasing.

Proposed Policy moves the discussion of Dollar Thresholds into its own subsection.It sets forth labels for each threshold so the labels can be referred to throughout this Section, and so that if the dollar amounts need to be changed in the future, making that change will be efficient.

The Formal Competition Threshold and the Reporting Threshold are increased to $75,000 from $50,000.

The following dollar thresholds address whether or how Purchasing must be / is involved with a Purchase. They apply per Purchase, including the overall value of a multi-year Purchase. Splitting Purchases to avoid or circumvent them is prohibited.

Delegated Authority (Small Dollar) $5,000Competition Required (Formal Competition Threshold)$75,000

The following dollar thresholds address whether Purchases must be submitted for prior approval by or reported to The Board. They apply per Purchase, including the overall value of a multi-year Purchase. Splitting Purchases to avoid or circumvent them is prohibited.

Submitting for prior approval by The Board Required (Approval Threshold)$250,000Reporting to The Board Required (Reporting Threshold)$75,000

Dollar Thresholds Defined and Labeled



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Generally, the dollar amount of a purchase determines whether it must be processed through the Purchasing Department. The dollar limitations are on a per-transaction basis and are not cumulative. However, certain purchases, regardless of dollar amount, must be processed through the Purchasing Department:

Delegated Authority (Small Dollar Threshold)

$5,000 No substantive change.

Proposed Policy moves the discussion of Dollar Thresholds into its own subsection.It sets forth labels for each threshold so the the labels can be referred to throughout this Section, and so that if the dollar amounts need to be changed in the future, making that change will be efficient.The Formal Competition Threshold and the Reporting Threshold are increased to $75,000 from $50,000.

Generally, Purchases at or below the Small Dollar Threshold may be carried out as Direct Purchases. The requesting University department must ensure that such Purchases meet other requirements including, but not limited to legality, availability of funding, and whether the purchase is allowable (e.g., as in the case of a sponsored project).

4.11.3 4.11.4.4 // 4.11.4.5

Small Dollar Threshold // Direct Purchases



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4.11.3 4.11.4.1 // 4.11.4.6

If the purchase involves a contractual document of any kind, or if it is a type of product or service that would reasonably involve a contractual document, it must be signed and approved as provided by Board of Regents’ Policy. The College of Continuing Education is authorized to review contractual documents related to conferences and seminars it holds or coordinates pursuant to its mission. The reason for contract review is to avoid obligating the University to any terms or conditions that may conflict with the State Constitution, statutes, or case law; and to avoid binding the University to any duties or liabilities against its best interests. Examples of purchases that must be processed through the Purchasing Department include:

Purchases that involve services or Contracts. University employees with Signature Authority must coordinate with Purchasing relative to the most appropriate, efficient, and compliant process for such Purchases.

No substantive change from Current to Proposed Policy. Proposed Policy recognizes current practice that certain departments with Signature Authority have the knowledge and expertise to compliantly make Purchases above the Small Dollar Threshold (e.g., CCE, Athletics, Housing & Food).

Leases Language in Proposed Policy eliminates the need to single out Leases.

Use Licenses (such as for software, intellectual property)

Language in Proposed Policy eliminates the need to single out Use Licenses.

Services Proposed Policy mentions Services; no substantive change.

Purchases Processed By Purchasing



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Purchases involving radioactivity (to ensure appropriate regulatory authorities are involved).

Purchases involving radioactivity. No change.

Purchases involving a laboratory animal (to ensure appropriate regulatory authorities are involved).

Purchases involving laboratory animals. No change.

Purchases involving space maintenance or minor construction (to ensure that Facilities Management/Site Support can exercise appropriate oversight).

Purchases seeking space maintenance, renovation, alteration, or minor construction.

No change.

Purchases involving any other special product or service that requires prior approval from a University department with special responsibility and authority over such product or service.

Purchases involving any other special product or service that requires prior approval from a University department with Processing Authority over such product or service.

No change.

4.11.3 4.11.4.6

Purchases Processed By Purchasing – continued



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Because of their extreme importance to the University, purchases of air charter services (such as for athletic teams or other groups) must be processed through the Purchasing Department. The preeminent issues are the health, safety and welfare of University students and employees, the reliability of aircraft, and the reliability and quality of services. Secondary issues are overall value of services and an efficient competitive process. The Purchasing Director shall be responsible for conducting the process. Qualified air charter companies will be identified using stringent standards. Identified companies will be asked to provide offers for air services. The process and award will be conducted competitively and in a manner that fully addresses all vital issues. When the cost of a single air service contract exceeds the purchase authority granted to the President, the President, with the concurrence of the Norman Campus Committee of the Board of Regents, is authorized to make fast track decisions up to $300,000 if the decision is essential to fulfilling program requirements or if the decision will be to the University’s advantage economically.

Air charter services. The preeminent requirements are the health, safety and welfare of University students and employees. When timing or circumstances surrounding the University’s need to purchase air charter services (such as for athletic teams) above the Approval Threshold prevent submitting such Purchases to the Board for prior approval, authorization by the President is required.

Proposed Policy deletes language that is otherwise obvious and not needed. It authorizes the President to approve air charters above the Approval Threshold, but then requires reporting of them at the earliest opportunity.

4.11.3 4.11.4.6 // 4.11.6.2.2




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Unless otherwise exempt, purchases exceeding $50,000 must be processed through the Purchasing Department. Splitting orders to avoid this dollar limit is prohibited. A professional buyer from the Purchasing Department must place any resulting order.

Competition Required (Formal Competition Threshold)

$75,000 Proposed Policy increases the threshold to $75,000. Some obvious language is deleted.Recognizes that Purchasing must use judgment in determining whether and/or what form of Competition is to be used.Proposed Policy's discussion of Dollar Thresholds addresses the "splitting" prohibition.

Purchases above the Formal Competition Threshold, which do not fall under any of the exceptions provided in this Section, must be Processed By Purchasing. Formal Competition shall be the presumed method. Purchasing may use informal Competition or negotiation without Competition when attending facts and circumstances dictate or otherwise serve the University’s best interest.

4.11.3 4.11.4.4 // 4.11.4.6




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Unless otherwise exempt, purchases above $5,000 and not exceeding $50,000 must be processed through the Purchasing Department. Splitting orders to avoid this dollar limit is prohibited. Competition may be conducted by the ordering department and the results submitted to the Purchasing Department, which may rely on such results, or conduct further competition. A professional buyer from Purchasing Department must place any resulting order.

Generally, Purchases above the Small Dollar Threshold must be Processed By Purchasing. For such Purchases at or below the Formal Competition Threshold – in order to allow for University productivity and efficiency – Purchasing is responsible for determining whether or what form of Competition is to be used.

Proposed Policy increases the upper threshold to $75,000. Recognizes that Purchasing must use judgment in determining whether and/or what form of Competition is to be used.Proposed Policy's discussion of Dollar Thresholds addresses the "splitting" prohibition.

4.11.3 4.11.4.6




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Because of their unique or peculiar nature, the following types of purchases do not require formal competition or processing by the Purchasing Department. The dollar limits are on a per-transaction basis and are not cumulative.

To facilitate University productivity and efficiency, certain Purchases above the Small Dollar Threshold may be carried out as Direct Purchases. Purchasing has the responsibility to monitor such Purchases carried out by University employees with Signature Authority and to recommend administrative or corrective action as appropriate. Purchasing also has the responsibility to evaluate departmental requests to carry out such Purchases, to document approved requests, to monitor such Purchases, and to recommend administrative or corrective action as appropriate.

No change.

Purchases by University departments from University Auxiliary Enterprises, Service Units, or other University units engaged in the resale of products or services in accordance with their mission.

Purchases of any amount by University auxiliary enterprises, service units, and independent operations of products or services for Resale, or of minor operating supplies consumed in the Resale process, may be carried out as Direct Purchases. This provision may not be relied upon to devise Purchases with the intent of circumventing the requirement otherwise prescribing that the Purchases be Processed By Purchasing.

No change.

4.11.4 4.11.4.5

Direct Purchases - Other Types



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4.11.4

§ Purchases up to $50,000 of legal, medical, accounting, consulting, architectural, engineering, interior design, appraisal, landscape design, real estate agency, or similar professional services, only when such services are ordered by executive level officers of the University pursuant to University-wide matters of importance, and only when such services represent discrete short-term engagements with specific terminal objectives. Purchases of professional services shall be coordinated in advance with the applicable University department; e.g. legal service shall be coordinated with the Office of Legal Counsel.

Proposed Policy removes this provision in that current practice nonetheless requires that requisitions be input into the University's system, so this provision is not needed.Purchasing in most cases will likely forego formal competition because of the nature of the transactions, who originates them, and the professional services involved.

Professional Services – Provision No Longer Needed



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4.11.4.5

Purchases of any amount by University departments from University auxiliary enterprises, service units, independent operations or other University departments authorized to engage in Resale may be carried out as Direct Purchases. This provision may not be relied upon to devise Purchases with the intent of circumventing the requirement otherwise prescribing that the Purchases be Processed By Purchasing.

Proposed Policy adds this type of Purchase and includes additional protective / restrictive language that prohibits devising Purchases to avoid Processing By Purchasing if it otherwise would be required.

Department Purchases from Auxiliary Enterprises, etc.



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4.11.4 4.11.4.7

Purchases up to $50,000 of those products or services available through the contracts maintained in the University’s electronic marketplace.

Purchases made within the University’s electronic market place from the enabled suppliers’ online catalogs, which are at or below the Formal Competition Threshold, are Processed Through Purchasing.

Proposed Policy clarifies that these Purchases will still route through Purchasing because of systematic workflow definitions. Purchasing in almost all cases will forego competition because of the nature of the transactions.

Purchases Processed Through Purchasing



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Such other purchases as may be identified by the Vice Presidents for Administration & Finance and approved by the President.

Proposed Policy removes this language by recognizing that Purchasing has the responsibility to oversee any transactions that are non-compliant Direct Purchases, and to contact the department in question.

4.11.4

Catch-all Provision Not Needed



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Because they are covered by separate policies and procedures, the following types of purchases do not typically require processing by the Purchasing Department. The dollar limits are on a per-transaction basis and are not cumulative. However, the requirement for competition may still apply, and the requirement for processing by another University department may apply.

Payment(s) means any disbursement not in settlement of a Purchase. These include but are not necessarily limited to: (1) refunds to students, (2) payments to research subjects, (3) payments to service University debt, (4) payments related to University acquisition or sale of real property, (5) payments to the University of Oklahoma Foundation, (6) payments to the US Postal Service, (7) payments to qualified charitable organizations in connection with University-wide charity drives (e.g., United Way), (8) payments to regulated utility providers in connection with University-wide utilities usage, (9) royalty payments, (10) payments for merchant interchange fees, student loan collection fees, and similar costs related to tuition and fee collection and student financial aid, (11) payments for insurance premiums pursuant to the University’s risk management program, (12) payments to reimburse University employees for travel costs incurred on University business.

Proposed Policy handles this provision/exception via Definitions and the exclusion of Payments from this Section.

Individual travel costs (airfare, hotel, ground transportation, conference registrations, etc.) by employees attending conferences, seminars, and the like pursuant to official University business (governed by separate policies on travel reimbursement).

Payments as defined herein.Proposed Policy handles this provision/exception via Definitions and the exclusion of Payments from this Section.

Architectural, engineering, construction, design consultants, and construction management services related to major real property construction and renovation of University capital assets (such services shall be secured be accordance with applicable law).

Consulting and construction Contracts executed by the University Architectural & Engineering Services Department (A&E Services) relative to approved capital projects and on-call engagements.

No change.

4.11.4 4.11.3

Transactions Excluded from this Section (4.11)



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Unless they are otherwise governed, restricted, or addressed by Board of Regents’ policy, purchases of $5,000 or less do not require competition or processing by the Purchasing Department, although competition is recommended. Splitting orders to take advantage of this dollar limit is prohibited. The ordering department shall ensure that such purchases meet all other requirements including, but not limited to legality, availability of funding, and whether the purchase is allowable, as in the case of a sponsored grant or contract.

Generally, Purchases at or below the Small Dollar Threshold may be carried out as Direct Purchases. The requesting University department must ensure that such Purchases meet other requirements including, but not limited to legality, availability of funding, and whether the purchase is allowable (e.g., as in the case of a sponsored project).

No substantive change.Proposed Policy's discussion of Dollar Thresholds addresses the "splitting" prohibition.

4.11.4 4.11.4.4 // 4.11.4.5

Direct Purchases



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To ensure effective and efficient mission accomplishment, the Purchasing Department, in meeting the requirement for a professional buyer to place an order, may establish for University departments orders that specify time frames, dollar limits, and product/service categories. Such orders may be established in response only to mission-critical needs that cannot otherwise be met timely or that cannot otherwise benefit from the direct involvement of the Purchasing Department. Such orders permit University departments to place orders with vendors, up to the specified dollar limits. Departmental requests for such orders shall be communicated in writing and approved by an administrative officer of the department/school/administrative office before being forwarded to the Purchasing Department. The Purchasing Department shall maintain a list of such orders and provide such list to the appropriate Vice President for Administration & Finance no less frequently than quarterly. The Purchasing Department shall continually review such orders for need and shall audit their usage for compliance with the principles of competition, fairness, and best value. The Purchasing Department may terminate any such order when the need for it no longer exists, if there is evidence of noncompliance, or for similar reasons.

Removes language alluding to “blanket orders” and “standing orders”Technology advancements have overtaken the need for theseRelics of past practices in older systemsOutdated tools used internally by PurchasingNot relevant policy-wise

4.11.5

Blanket Orders // Standing Orders



47


University Auxiliary Enterprises and Service Units offer various products and services for sale. Examples are food services, printing services, and maintenance and repair of working spaces. Any excess of revenues over expenses generated by these entities is used to ensure future operations, renew and replace plant and equipment, and contribute back to the University’s education and research missions through Presidential priorities. When a University department purchases such products or services, the University department must allow the related Auxiliary Enterprise or Service Unit first opportunity at the transaction. Such purchases may be awarded to outside vendors only upon sufficient justification or upon refusal by the Auxiliary Enterprise or Service Unit.

University auxiliary enterprises and service units offer various products and services for Resale. Any excess of revenues over expenses generated by these entities is used to ensure future operations, renew and replace plant and equipment, and contribute back to the University’s education and research missions through Presidential priorities. When a University department purchases such products or services, the University department must allow the related auxiliary enterprise or service unit first opportunity to service the transaction. Such Purchases may be awarded to outside vendors only upon sufficient justification or upon refusal by the auxiliary enterprise or service unit.

No change.

4.11.6 4.11.5

Priority Given to Auxiliary Enterprises, Service Units



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Separate and apart from the policies and procedures governing competition and processing by the Purchasing Department, the following conditions govern those purchases that must be submitted to the Board of Regents for prior approval, those purchases that must be reported to the Board of Regents at least quarterly, and those purchases that are exempt from either the approval or reporting requirements. The dollar limitations are on a per-transaction basis and are not cumulative.

Separate from the policies and procedures governing processing by Purchasing and Competition, the following requirements govern those Purchases that must be submitted to The Board for prior approval, those that must be reported to The Board, and those that are exempt from either the approval or reporting requirements.

No change.

4.11.7 4.11.6

Preamble – Prior Approval by / Reporting to The Board



49


Purchases over $250,000 must be submitted to the Board of Regents for prior approval; sole source purchases in this category must be identified as such; changes that would increase the financial obligation of the University by more than 15% must be submitted to the Board of Regents for approval.

Submitting for prior approval by The Board Required (Approval Threshold)

$250,000

No change other than Proposed Policy references the Approval Threshold rather than $250,000.

Purchases above the Approval Threshold must be submitted for prior approval. Such Purchases made by methods other than Competition must be identified as such. Changes that would increase the financial obligation of the University by more than 15% must also be submitted for prior approval.

4.11.7 4.11.4.4 // 4.11.6.1

Prior Approval By The Board



50


Purchases above $50,000 but not exceeding $250,000 must be reported to the Board of Regents at least quarterly; sole source purchases in this category must be reported separately and identified as such.

Reporting to The Board Required (Reporting Threshold)

$75,000 Proposed Policy increases the lower threshold to $75,000, and references the Approval Threshold and Reporting Threshold rather than the dollar amounts.Purchases above the Reporting Threshold but at or

below the Approval Threshold must be reported at least quarterly. Such purchases made by methods other than Competition must be identified as such.

Any agreement or obligation that would establish or make policy for the University, or would otherwise involve substantial or significant expenditures must be submitted to the Board of Regents for approval.

Any Purchase that would establish or make new policy for the University must be submitted for prior approval.

No substantive change. Proposed Policy removes the language regarding "significant expenditures" as such is sufficiently addressed by other provisions.

Purchases of air charter services must be reported to the Board of Regents at the meeting of next earliest opportunity.

Purchases of air charter services above the Approval Threshold that require authorization by the President must be reported at the earliest opportunity.

Proposed Policy authorizes the President to approve air charters above the Approval Threshold, but then requires reporting of them at the earliest opportunity.

4.11.7 4.11.4.4 // 4.11.6.1 // 4.11.6.2

Prior Approval By // Reporting To The Board



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Purchases by University departments from University Auxiliary Enterprises or Service Units are exempt from the approval and reporting requirements.

Purchases by University departments from University auxiliary enterprises, service units, independent operations or other University departments authorized to engage in Resale are exempt from the approval and reporting requirements. This provision may not be relied upon to devise Purchase transactions above the Reporting Threshold with the intent of circumventing the requirement to otherwise report or submit to The Board.

No substantive change. Proposed Policy adds additional protective / restrictive language that prohibits devising Purchases to avoid Submitting or Reporting if it otherwise would be required.

Purchases of products, services, and utilities for resale, including minor operating supplies consumed in the resale process, by University Auxiliary Enterprises or Service Units or other University units engaged in the resale of products or services in accordance with their mission, are exempt from the approval and reporting requirements.

Purchases of merchandise, services for Resale, or minor operating supplies consumed in the Resale process, by University auxiliary enterprises, service units, and independent operations are exempt from the approval and reporting requirements. This provision may not be relied upon to devise Purchase transactions above the Reporting Threshold with the intent of circumventing the requirement to otherwise report or submit to The Board.

No substantive change. Proposed Policy adds additional protective / restrictive language that prohibits devising Purchases to avoid Submitting or Reporting if it otherwise would be required.

4.11.7 4.11.6.2 .3

Exemption from Approval By // Reporting To The Board



52


Acquisition contracts that merely establish unit prices, availability and other terms and conditions but which are indefinite as to quantity and delivery must be reported to the Board of Regents if the cumulative orders against them are expected to exceed $250,000 annually.

Purchases which merely establish unit prices, availability and other terms and conditions but which are indefinite as to quantity and delivery must be reported at the earliest opportunity if the cumulative orders are expected to exceed the Approval Threshold.

No substantive change.

Subcontract and subrecipient agreements and the related orders issued pursuant to sponsored grants or contracts that have been ratified by the Board of Regents are exempt from the approval and reporting requirements.

Subcontract and subrecipient agreements – and their related orders – pursuant to sponsored projects are exempt from the approval and reporting requirements.

No change.

4.11.7 4.11.6.2.2 // 4.11.6.2 .3

Reporting // Exemption



53


Purchases of property designated as surplus by federal agencies, state agencies, county governments, municipalities, school districts, other institutions of higher education, and similar bodies are exempt from the approval and reporting requirements.

Purchases from federal agencies, state agencies, county governments, municipalities, school districts, other institution of higher education, and similar entities are exempt from the approval and reporting requirements. This provision may not be relied upon to devise Purchase transactions above the Reporting Threshold with the intent of circumventing the requirement to otherwise report or submit to The Board.

No substantive change other than that Proposed policy combines these two classifications and adds additional protective / restrictive language that prohibits devising Purchases to avoid Submitting or Reporting if it otherwise would be required.

Payments to federal agencies, state agencies, county governments, municipalities, school districts, other institutions of higher education, and similar bodies for products and services in situations that cannot reasonably be subjected to the competitive process are exempt from the approval and reporting requirements.

4.11.7 4.11.6.2 .3

Exemption from Approval By / Reporting To The Board



54


4.11.7

If a Purchase that otherwise requires prior approval by The Board is made without such approval, it may be deemed to be in violation of this policy. Such instances should be extremely rare. When discovered, such Purchases shall be reported as quickly as possible to University Administration for further reporting to the President and to the Office of The Board. If approved by the Chair of The Board the Purchase must then, at the earliest opportunity, be submitted for ratification. The submittal must contain a complete explanation of the facts and circumstances and must document the measures taken to prevent recurrence.

Proposed Policy adds this requirement. Current Policy is silent on it, but the University needs guidance if such a situation should ever occur.

Needed Policy for Ratification by The Board



55


The following policy regarding sole source purchases explains why a particular action may not be subject to competition. However, it does not affect the criteria governing when a purchase must be processed through the Purchasing Department. Other than the requirement for competition, sole source purchases are subject to the same policies and procedures set forth above.

Proposed Policy deletes discussion about Sole Source Purchases, but instead adds controls and requirements throughout regarding Purchases that are made without Competition.Sole Source is a term that is too restrictive and misses other types of Purchases that are not true sole sources but are still carried out without going through a Competitive process.

A sole source purchase is any purchase which, by the specifications needed by the requestor or by the specific restrictions imposed by a funds provider, restricts the action to one supplier or to one brand name. The sole source determination and justification shall not be based upon personal or professional preference of the requestor. Justification shall be objective rather than subjective.

A major component of a sole source purchase is the determination of fairness of price. Even though a material, service or supplier may truly fit the conditions of sole source, the requestor shall demonstrate that the related price is fair and reasonable.

Any requestor or buyer who knowingly executes a sole source purchase when, in fact, it is not one, may be subject to administrative action.

The Purchasing Director is responsible for developing and maintaining the specific guidelines and forms necessary for requestors to document and justify proposed sole source purchases, and has the authority to challenge and deny requested actions that lack sufficient justification. The completed and executed forms shall be an integral part of the procurement file, available for inspection and audit by appropriate authorities.

4.11.8

“Sole Source” Replaced By “Without Competition”



56


In addition to the policies and procedures governing the acquisition of products and services, the following requirements apply to certain purchases, gifts or other acquisitions.

In addition to the policies and procedures governing the acquisition of products and services, the following requirements apply to certain purchases, gifts or other acquisitions.

No change.

Capital assets coming under the control of a University department, whether through purchase, gift or otherwise, shall be recorded in the University’s inventory system. Additionally, capital assets that are movable shall be tagged. If a movable capital asset is transferred from one location to another, the transferring department shall report such movement to the appropriate inventory control office, and the new location shall be recorded in the system.

Capital assets coming under the control of a University department, whether through purchase, gift or otherwise, shall be recorded in the University’s inventory system. Additionally, capital assets that are movable shall be tagged. If a movable capital asset is transferred from one location to another, the transferring department shall report such movement to the appropriate inventory control office, and the new location shall be recorded in the system.

No change.

For purposes of this policy, a capital asset is one that meets the federal useful life and cost criteria specified in the Office of Management and Budget Circular A-21, as may be amended or superseded.

For purposes of this policy, a capital asset is one that meets the federal useful life and cost criteria specified in the Office of Management and Budget (OMB) Circular A-21, as may be amended or superseded.

No change.

The President or President’s designee may impose inventory controls above and beyond those required in OMB circular A-21, as may be amended or superseded.

University Administration may impose inventory controls above and beyond those required in OMB circular A-21, as may be amended or superseded.

No substantive change.

4.11.9 4.11.8

Capital Assets



57


The following University officers are authorized to sign contractual documents and enter into negotiations as necessary in the acquisition of surplus property from federal agencies, state agencies, county governments, municipalities, school districts, other institutions of higher education, and similar bodies:

The following University officers are authorized to Purchase surplus property from federal agencies, state agencies, county governments, municipalities, school districts, other institutions of higher education, and similar bodies:

No change.

President President No change.

Vice Presidents for Administration & Finance Vice Presidents for Administration & Finance No change.

Associate Vice Presidents for Administration & Finance

Proposed Policy adds this title

Controllers Controllers No change.

Assistant Controllers Assistant Controllers No change.

Purchasing Director Purchasing Director No change.

Purchasing Director’s Designee Purchasing Director’s Designee No change.

4.11.10 4.11.9

Acquisitions of Surplus Property



58


The President shall have authority to direct University Administration to enter into such transactions as may be necessary for the University to timely respond to significant emergencies. For purposes of this policy, a significant emergency is an event of substantially harmful or catastrophic impact, whether resulting from natural or human causes. Examples of such events are addressed in the national Incident Management System (NIMS) literature and guidance. However, the President shall have the authority contemporaneously to declare any event as “significant” based upon his/her judgment and assessment of the developing situation. In such instances, the President shall keep the Chair of the Board of Regents timely informed of the attendant facts and circumstances. All material transactions shall be reported back to the Board at the earliest opportunity.

The President shall have authority to direct University Administration to enter into such transactions as may be necessary for the University to timely respond to significant emergencies. For purposes of this policy, a significant emergency is an event of substantially harmful or catastrophic impact, whether resulting from natural or human causes. Examples of such events are addressed in the national Incident Management System (NIMS) literature and guidance. However, the President shall have the authority contemporaneously to declare any event as “significant” based upon his/her judgment and assessment of the developing situation. In such instances, the President shall keep the Chair of The Board timely informed of the attendant facts and circumstances. All material transactions shall be reported back to The Board at the earliest opportunity.

No change.

4.11.11 4.11.10

Significant Emergencies



59


The University provides a substantial volume of goods and services for compensation. To protect and preserve the University’s interests and ensure that it remains in compliance with all applicable laws and regulations, contractual documents must be processed through the University’s Legal Counsel Office and any other appropriate office (for example, Grants and Contracts Administration, the Controller, Public Affairs). Such contractual documents should be signed only after all appropriate and required reviews and approvals have been completed. Only an individual to whom the President has delegated the appropriate authority to sign contractual documents in the nature of the document in question may sign the document. Each document involving annual revenues of $125,000 or more shall be submitted to the Board of Regents for ratification. Additionally, if the agreement would establish or make policy for the University, or would otherwise involve a substantial service to be performed by the University, it must be submitted to the Board of Regents for approval.

The University provides a substantial volume of products and services for compensation. Competition is the method of first consideration. To protect the University’s interests and ensure compliance with all applicable laws and regulations, Contracts must be processed through University Legal Counsel and/or other appropriate Processing Authority. Each Contract involving annual revenues above the Approval Threshold shall be reported to The Board at the earliest opportunity. If the Contract would establish or make policy for the University, it must be submitted to The Board for prior approval.

Proposed Policy changes the requirement to reporting rather than ratification, and increases the threshold to the amount associated with the Approval Threshold, as defined, from the $125,000 amount cited in Current Policy.Proposed Policy also deletes "or would otherwise involve a substantail service to be performed by the University" because "substantial" is a subjective term and has never come into question in practice.

4.11.12 4.11.11

Selling Products and Services



60


Separately, the selling or disposing of excess or obsolete University property shall be carried out in all respects in compliance with governing laws and regulations. Examples of such property are, without limitation, desks, chairs, equipment, furniture, and vehicles. Only appropriate departmental authority (such as vice president, dean, or department head) may declare property as excess or obsolete. The Vice Presidents of Administration & Finance of each campus shall establish the detailed procedures necessary to ensure that University property is sold or disposed of properly. The detailed procedures shall specifically address and require the complete and irreversible destruction of data on any device (e.g., computers, copiers, printers, PDAs, pads, etc.) that may contain such data.

Separately, the selling or disposing of excess or obsolete University property shall be carried out in all respects in compliance with governing laws and regulations. Examples of such property are, without limitation, desks, chairs, equipment, furniture, and vehicles. Only appropriate departmental authority (such as vice president, dean, or department head) may declare property as excess or obsolete. University Administration shall establish the detailed procedures necessary to ensure that University property is sold or disposed of properly. The detailed procedures shall specifically address and require the complete and irreversible destruction of data on any device (e.g., computers, copiers, printers, PDAs, pads, etc.) that may contain such data.

No change.

4.11.12 4.11.11

Selling Products and Services



61

Cross-ReferencedSpreadsheet



62

Cross Cross

Ref Current Policy Ref Comment Ref Proposed Policy Ref Comment

C1 4.11—BUYING AND SELLING GOODS AND SERVICES P1 4.11—BUYING AND SELLING PRODUCTS AND SERVICES

Proposed Policy uses the word "Products" versus the word "Goods" throughout. New Subsections are added requiring the new numbering and renumbering of some Subsections.Some reorganization of content has been made to facilitate and improve reading and comprehension.

C2 4.11.1—POLICY P2 4.11.1—POLICY

C3

The University’s legal capacity to acquire goods and services from others in exchange for payment, and to provide goods and services to others in exchange for revenue, originates with the Board of Regents. University funds are budgeted on an annual basis, and these budgets are approved by the Board of Regents. The Board of Regents recognizes that this is a large institution with sizeable annual cash flow, and realizes that substantial authority must be delegated.

P3P4

No substantive change from Current to Proposed Policy

P3

The University’s authority to (1) acquire products and services; (2) make payments in support of University purposes; (3) negotiate, execute, monitor, renew, and terminate contracts with others pursuant to University purposes, and (4) sell and otherwise dispose of University property originates with the Board of Regents (The Board). The Board delegates substantial authority in order for the University to carry out its mission effectively, efficiently, and in compliance with governing laws and regulations.

C3No substantive change from Current to Proposed Policy

C4 4.11.2—BUYING GOODS AND SERVICES P4

The University Departments of Administration & Finance (University Administration) have the overall responsibility for establishing and enforcing related controls. University Administration may further assign responsibilities to enable compliant, effective, and efficient processes and procedures.

C3Proposed Policy adds language assigning overall responsibility to University Administration.

Thorough Reference / Cross Reference Document on Excel Spreadsheet (C1-C68 // P1-P104). Partial example below.



Purchases From Auxiliary Enterprises & Service UnitsNo Change

University auxiliary enterprises and service units offer various products and services for sale. Examples are food services, printing services, and maintenance and repair of working spaces. Any excess of revenues over expenses generated by these entities is used to ensure future operations, renew and replace plant and equipment, and contribute back to the University’s education and research missions through Presidential priorities. When a University department purchases such products or services, the University department must allow the related auxiliary enterprise or service unit first opportunity to service the transaction. Such Purchases may be awarded to outside vendors only upon sufficient justification or upon refusal by the auxiliary enterprise or service unit.

63



Auxiliary Enterprises & Service Units

64

if i could rewrite my institution’s purchasing policies here’s what they’d be

Documents

direct purchases

policies heres

board of regents

burr millsap

sole source purchases

university of oklahoma

organization current

appointed members