1000 Procurement Policy
|AUTHORIZING BODY:||PRESIDENT'S CABINET|
|RESPONSIBLE OFFICE:||VICE PRESIDENT FOR FINANCE AND ADMINISTRATION|
|DATE ISSUED:||JULY 2009|
|LAST UPDATE:||JANUARY 2012|
RATIONALE: To offer structure and guidance for the procurement of goods and services by the Oakland University (“University”) community and to provide internal control procedures for the commitment of University Funds for such procurement activities
POLICY: Procurement of goods or services through the commitment of University Funds may be transacted via six methods:
All procurement transactions must be in compliance with the supporting procedures and requirements for this policy. No procurement shall be divided for the purpose of circumventing the requirements of this policy.
SCOPE AND APPLICABILITY: All University departments and employees must adhere to this policy when making purchases on behalf of the University using University Funds.
Account Number: The accounting designation used to indicate the type of expenditure.
Available Procurement Methods
1. P-Card – Up to $5,000
The P-Card program enables employees to make small dollar procurements similar to those allowed under the SOP. The program is designed to make procurements easier and more convenient by reducing the use of departmental petty cash, personal funds, and SOP’s for University expenditures and is the preferred method of purchase for items of $5,000 or less unless prohibited by policy. Refer to OU AP&P #1020 Purchasing Card Procedures for information on the use of the P-Card.
2. SOP - Up to $5,000
The Small Order Purchase process is designed to allow departments to obtain goods and certain services, except where prohibited, directly from vendors when the total does not exceed $5,000 (excluding freight), particularly when the vendor does not accept the P-Card. Procurement using the SOP is handled entirely by the originating department.
3. Direct Purchases
Departments may procure certain services up to $5,000 without a PO or an SOP. For allowable Direct Purchases over $5,000, see Exhibit 3, Goods and Services with Special Procurement Requirements Table.
Reimbursements of out-of-pocket employee expenditures of $500 or less to pay University obligations and departmental petty cash purchases (see OU AP&P #266 Petty Cash Funds) are processed on the PV. The total amount of any individual transaction may not exceed $500 (petty cash $200). Purchases may not be split for purposes of circumventing the $500 per transaction maximum. Original itemized receipt/proof of payment required.
5. Purchase Requisition/Purchase Order– Required for Purchases Greater than $5,000
Procurements greater than $5,000 are performed by Purchasing and require a PR and a PO. For exceptions to this requirement, see Exhibit 3, Goods and Services with Special Procurement Requirements Table.
The Purchasing Manager or Buyer determines if procurement qualifies for an emergency PO.
6. Preferred Provider Purchases – May be used for goods and services of any amount
The University may establish accounts with vendors that bill Accounts Payable for multiple departmental purchasing activities directly, thereby eliminating the requirement for departments to submit monthly paperwork for payment processing. Examples of these types of accounts would be the preferred office supply vendor, the campus bookstore, rental cars and some hotels.
Purchases up to and including $2,500
There is no bidding requirement.
Purchases greater than $2,500 up to and including $10,000
Competitive bidding by Purchasing is not required for an individual purchase with an anticipated value, excluding shipping charges, of $10,000 or less; however, the requesting department must investigate and obtain pricing from at least two sources to ensure that it is making sound, economical purchases. Faxed, e-mailed, original written quotes or verbal quotes that are transcribed to paper by the requesting department are acceptable. Attach proof of pricing to PR, SOP, PV or P-Card statement.
Purchasing retains the right to obtain additional quotes and make final selection for Contract award. Purchasing will perform spot audits throughout the year on purchases up to and including $10,000. If such audits reveal that pricing was not optimum, Purchasing will alert the department and will assist it in strategies to achieve better economic pricing in the future. Problems that persist may result in rescinded departmental authority to obtain quotes up to and including $10,000 until purchasing improvements are in place.
A department can request that Purchasing obtain competitive quotations on any procurement transaction.
Purchases Greater than $10,000 but less than $50,000
Competitive bidding for purchases greater than $10,000 but less than $50,000 is required. Purchasing will request at least three (3) competitive bids or quotes. Procurement transactions in this category must be processed by Purchasing.
The University is not bound to accept the lowest bid but can accept the most responsive and responsible bid that is determined to be in the best interest of the University. If a department does not agree to the lowest bid, a written justification must be sent to the respective Buyer for his/her approval. Purchasing retains the right to obtain additional bids and make final selection for Contract award.
Purchases of $50,000 or Greater
Competitive sealed bids for purchases of $50,000 or greater are required and Purchasing will request at least three (3) competitive bids or quotes. Procurement transactions in this category must be processed by Purchasing. Purchasing will determine the best competitive sealed bid process for each purchase on a case-by-case basis.
The University is not bound to accept the lowest bid but can accept the most responsive and responsible bid that is determined to be in the best interest of the University. If a department does not agree to the lowest bid, a written justification must be sent to the respective Buyer in the Purchasing department for his/her approval. Purchasing retains the right to obtain additional bids.
Specific Procurement Requirements:
University employees should not have a personal financial interest in transactions with the University. Recognizing, however, that such interests may be unavoidable, there should be full disclosure of any such conflict of interest in advance of the transaction, and special approval of the transaction is required as set forth in the OU AP&P #406 Conflicts of Interest Policy. Purchasing is required to delay the processing of any requisition that appears to be in violation of the Conflicts of Interest Policy until the question of conflict of interests has been resolved at the appropriate University level.
All Contracts, agreements, licenses, IC agreements, performance agreements, etc. must be reviewed by the Office of Legal Affairs prior to execution unless a pre-approved standard document is available and the OU terms and conditions are unaltered.
Purchases that may require insurance to protect the University from loss must be reviewed by University Risk Management, regardless of whether or not a PO is required. See OU AP&P #1050 Risk Management/Insurance.
No software purchases can be made on a P-card without UTS review and approval. Before securing software purchases, please refer to the Campus Software section of the University Technology Services website as well as OU AP&P #870 Software Regulations and OU AP&P #1000 Procurement.
All building repairs, upgrades, alterations, and renovations, including plans, must be approved by Facilities Management, regardless of the funding source or work force.
All purchases involving banking or financing of any kind, including leases, must be reviewed by the Treasury Management Office.
All agreements or purchases that involve receiving payment must be reviewed by the Controller’s Office. See OU AP&P #210 Cash Receipts and OU AP&P #212 Bankcard Information Security Requirements.
Communication intended for external audiences (all media) must be pre-approved in writing by Communications & Marketing.
All non-payroll payments to students or on behalf of students, except for Reimbursements, must be approved by the Financial Aid Office. All payments for work (including graduate student stipends) must be paid through payroll.
All grant expenditures must be approved by Office of Research Administration. Purchasing reserves the right to debar a vendor from participating in the bid process for grant or Contract expenditures exceeding $25,000.
All floral tributes for death or illness of a staff member (or staff member’s family) are requested through University Human Resources (staff) or Academic Human Resources (faculty) and handled by the President's Office per OU AP&P #455 Death of Faculty, Staff and Retiree and Floral Tributes.
All payments to foreign entities require special documentation and must be reviewed by Accounts Payable prior to securing procurement.
Original paperwork including itemized receipts, invoices, packing slips to confirm that the goods have been received (or confirmation signature), and original Contracts, if applicable, are required for payment processing. If a faxed or emailed invoice is your original, it will be accepted as original if the invoice contains a distinct invoice number to ensure that there will be no duplicate payments. If original documentation is unavailable, please complete an Lost/Missing Receipt Form with a copy of appropriate documentation.
All payment forms may be found on the Accounts Payable website.
Recurring Payment Voucher (“RPV”)
Departments may choose to prepare an RPV for payments that occur at regularly scheduled intervals and where the payee, payment amount, and accounting distribution remain constant.
RPV’s may be used for both PO and non-PO payments. Examples include rent, leases, maintenance agreements, or other payments paid on a monthly basis. Once the recurring payment is established, the departments will no longer be required to submit additional vouchers for each monthly payment. Departments are responsible for annual renewal of PO’s to ensure funds are available to support the RPV.
Individual departments using the RPV will be responsible for ensuring that duplicate payments associated with recurring payments are not submitted. Departments are also responsible for notifying Accounts Payable if changes, such as accounting distribution or remittance address, are needed on a recurring payment by submitting an RPV with a checkmark next to “Revision”.
Multiple Check Voucher
Multiple Check Voucher is the form used to process similar payments to multiple payees, resulting in a separate check for each payee.
Departments are to prepare a Multiple Check Voucher when ALL of the following apply:
If your speaker charges a fee, IC payment procedures must be followed (see IC below). Honoraria are typically only paid to academics of distinction discussing scholarly works who are not charging a fee. Complete the "Employee vs. Independent Contractor Classification Checklist" per OU AP&P #262 Tax Classification: Independent Contractor Versus Employee before the visitor arrives to receive a determination on whether your speaker can be paid through the Honoraria process.
Once the Accounting Office has approved the payee for Honoraria, complete the Honoraria Form and attach an event flyer to a PV to process payment. Because Honoraria are tokens of appreciation and not fees or services rendered, there will be no invoice or Contract for Honoraria. Honoraria are typically no more than $1,000.
Payment Processing Approvals
Fund Signing Authority for payment processing is distinct from Commitment Authority for procurement. Vouchers for already established and approved purchases (such as PO’s and Contractual agreements) must be signed by the fund signer taking responsibility for the current transaction. Typically, this will be the department business manager or department head.
Vouchers without prior authority, such as SOP’s and PV’s, must be signed by the person who has the appropriate level of Commitment Authority and Fund Signing Authority. Multiple approvals may be required as in the case of purchases charged to grant funds, software license purchases, and purchases requiring the review of Risk Management (see OU AP&P #1050 Risk Management/Insurance).
The Office of Research Administration must approve all grant fund payments before they will be processed.
New Vendor and Vendor Maintenance
The procurement system allows for many types of purchasing and payment transactions to be handled by the operating department. Therefore, departments must be responsible for assisting Accounts Payable and Purchasing in maintaining accurate and up-to-date vendor information. Vendor information includes company or Contractor name, “Pay To” (PT) and “PO” address, contact information and Tax Identification Number.
When departments initiate procurement or payment processing for a new vendor, they must submit an IRS Form W-9 or Substitute W-9/Vendor Maintenance Form (found on the Accounts Payable website) to Purchasing or Accounts Payable, which includes IRS Form W-9 information.
Independent Contractors: To determine vendor status (employee or IC), complete the "Employee vs. Independent Contractor Classification Checklist" per OU AP&P #262 Tax Classification: Independent Contractor Versus Employee and submit to the Accounting Office for approval before the person begins work. If the person is found to be an employee instead of an IC, University Human Resources or Academic Human Resoources must verify the person on the federal employment database no later than three (3) days after the person begins work or the University will be in violation of federal law. IC's working on campus must provide certificate of insurance and have an OU Standard Services agreement or a PO in force before work begins.
Foreign Vendors: If the vendor is a non-U.S. person or company, use the chart below as a guideline when choosing which form to request from that payee. Foreign individuals coming to the University should also fill out the International Visitors Payment Information Form and provide a copy of their visa. Contact Accounts Payable for more information on paying foreign vendors before work has begun or goods are received to ensure that there are no issues at time of payment.
Original W-8 or 8233 with vendors original signature required for payments for services provided in the US.
Payments to foreign vendors for services provided in the US are subject to 30% federal withholding unless the vendor is eligible for a US tax treaty exemption and the vendor has a US tax number (EIN or SSN).
IRS Form W8-BEN and 8233 can be downloaded from the Accounts Payable website.
Contact Accounts Payable or Purchasing with questions on establishing new vendors.
The Purchasing Manager or Accounts Payable Manager each have the authority to approve or deny exceptions as deemed appropriate while maintaining the integrity of the policy. The minimum requirement for approval of any exception is a memo from the requestor which provides an explanation of the exception including a signature from the requestor’s direct supervisor. The Purchasing Manager or Accounts Payable Manager will determine the necessary level of additional approval required when an exception is requested.
RELATED POLICIES AND FORMS:
OU AP&P #200 Authorized Signers
Purchase Order Adjustment Form
Recurring Payment Voucher
Small Order Purchase Form
Substitute W-9/Vendor Maintenance Form
IRS Form W-8BEN
IRS Form W-9
IRS Form 8233
International Visitors Payment Information Form
Lost/Missing Receipt Form