Purchasing Procedures DE 213

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Purchasing Procedures DE 213
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Course Objectives

• To familiarize you with current University of
  Texas at Austin procedures for purchasing, the
  HUB Program, and Procards
• To introduce you to POINT Plus, the universitys
  online purchasing system

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Definitions

• Invoice A bill from the vendor requesting
  payment.
• Informal Invitation to Bid An informal
  invitation to a prospective bidder to offer a
  firm price quote (bid). This may be by phone,
  fax, or e-mail.
• Invitation to Bid A formal (written) invitation
  to a prospective bidder to provide a firm price
  quote (bid).
• Quotation A bidders offer to sell goods or
  services at a certain price, terms of sale and
  description of goods, or services offered to
  prospective buyer.
• Payment The actual check issued to the vendor.

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Definitions

• Purchase order A formal agreement to buy based
  on an offer to sell.
• Receiving report A report informing appropriate
  parties (Central Receiving, Accounts Payable,
  Expediting) of goods received against a purchase
  order.
• Requisition A written or electronic request for
  goods or services received from requestor.
• Voucher An authorization of payment for goods
  and services received.

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So how does this all fit together?
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Basic Purchasing Procedure

• Create a requisition.
• Obtain a bid.
• Issue a purchase order.
• Receive material or goods and inspect.
• Issue a receiving report.
• Receive an invoice from the vendor.
• Prepare a payment voucher.
• Send a check to the vendor.

• Create a requisition.

Someone needs something. What is it? How many
does she need?
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Elements of the Requisition

• The Requestor
• Who wants the goods or service to be ordered?
• Professor Bill?
• Grad Student Bob?
• Dean Smith?
• You?
• The requestor is an important source of info on
  what exactly to order.

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Elements of the Requisition

• Item Description
• What does the requestor want?
• What is it were going to purchase?
• What are the functional specifications?
• What is important to the requestor to accomplish
  the task?

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Elements of the Requisition

• Specifications
• Specifications should include the important
  functional features of the items or services
  being purchased.
• Important features will vary depending on what is
  being purchased and what the requestors needs
  are.

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Elements of the Requisition

• Examples of specification features
• Size
• Color
• Speed
• Compatibility
• Weight
• Capacity
• Composition
• Volume

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Elements of the Requisition

• Quantity and unit of measure
• How many and how are they packaged?
• Package (pkg) of _____?
• Carton (ctn) of _____?
• Each?
• Box (bx) of _____?

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Purchases Requiring Special Approval

• Vehicles require the approval of the Vice
  President for Financial Affairs and Parking and
  Transportation/Fleet Management.
• Appliances other than for laboratory use may
  require the approval of the Controllers Office
  (check with your buyer) and must be on local
  funds.
• Radioactive materials require the approval of the
  Office of Environmental Health and Safety.
• Live animals require the approval of Animal
  Resource Center.

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Basic Purchasing Procedure

• Create a requisition.

2. Obtain a bid.
How much will it cost?
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Determining How to Obtain Bids
First take a look at the estimated cost
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Estimated Costs How Much Are We Planning to
Spend?

• Can be determined from various sources such as
  informal (verbal) quotes or pricing obtained from
  catalogs or price lists. Previous orders may be
  used to determine estimated cost.
• Determines the method for processing the
  requisition.
• Should include estimate of shipping costs.

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Now That Youve Determined the Estimated Total. .
.

• What purchasing method should be used?
• How many bids or offers are required?
• Is there an established contract?
• What type of electronic document should be used?

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Purchasing Methods

• Competitive bids Minimum of three bids, award
  based on lowest bid meeting specifications.
• Best value Minimum of three bids, allows for
  evaluation of responses based on established
  criteria, award based on highest scoring vendor.
• State term contracts Contracts competitively bid
  by the Texas Building Procurement Commission
  (TBPC) that are available to all state agencies.
  Processing now handled by Texas Procurement and
  Support Services (TPASS).

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Purchasing Methods

• Group or cooperative purchases Contracts
  competitively bid by various entities that are
  available to eligible members.
• Blanket orders Contracts competitively bid by UT
  that are available to multiple users for an
  established period of timemay be bid
  competitively or as best value procurements.
• Proprietary purchases Purchases where
  competition is not available either because only
  one source exists, or only one product/service is
  available from multiple sources.

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Small Purchases (PBOs or PB3s)

• Order totals 5,000 or less
• Requires a price quote from one vendor
• Quotes are usually obtained by phone
• Use of historically underutilized businesses
  (HUBs) is strongly encouraged
• Reason for award is Prime Source

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Orders Totaling 5,000 - 25,000 (PB3s)

• Departments Solicit Bids
• Requires price quote from at least three bidders,
  two of which must be HUB vendors (one
  ethnic-owned HUB, one women-owned HUB)
• Price quotes are usually obtained by the
  department by phone
• Reason for award varies, but is usually low bid

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Orders Totaling over 25,000 (PB4s)

• Purchasing solicits bids
• Requires price quote from a least three
  sourcesnormally sent to several sources,
  including a minimum of two HUB vendors, one
  ethnic-owned and one woman-owned
• Price quote must be obtained in writing by the
  Purchasing Office

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Best Value Procurement

• Allows decisions to be made based on other than
  just low bid
• Requires an evaluation criteria be included in
  specifications provided to potential bidders
• Responses are scored and the highest scorer
  receives the award
• Same dollar guidelines for determining which
  document type to use, same minimum number of
  bidders required

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State Term Contracts

• Established by competitive bids issued by the
  state and administered by (TPASS)
• Cover items commonly used by many state agencies
• Use is optional but these contracts may represent
  the best value in many instances
• No bidding is required as TPASS has already
  satisfied the competitive bidding requirements

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State Term Contracts

• Automated, covering off the shelf type items
• PB7 documents are used
• Orders are electronically transmitted to TPASS
  for processing
• Nonautomated, covering more custom or specialized
  items
• PB8 documents are used
• Orders are processed by the university and TPASS
  receives notification that an order was processed

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Group/Cooperative Purchases

• Established by various organizations following
  competitive bidding guidelines, including HUB
  requirements
• Available to the university because we are a
  member of an eligible group such as state
  agencies or institutions of higher education
• Cover many different items depending on the
  organization
• Listing available at http//www.utexas.edu/admin/p
  urchasing/cooppurch.html

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Group/Cooperative Purchase

• Bidding not required as the contracts have
  already been competitively bid, but all options
  should be examined to determine which contract
  represents the best value for that particular
  purchase
• For orders under 5000, a PBO or PB3 may be used
• For orders exceeding 5000, a PB4 must be used
• Must provide a written quote from contract vendor

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Blanket Orders

• Two types
• Blanket orders for specific items at specific
  pricing, terms, and conditions
• Discount agreements covering terms and conditions
  as well discount amounts but no specific items
• Competitively bid by the Purchasing Office or by
  other institutions of higher education that have
  included a provision to allow use by other
  universities. May also be processed by individual
  departments for their own use.

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Blanket Orders

• Cover a specific time period, are not exclusive,
  generally not mandatory, and indicate that no
  minimum or maximum purchase is guaranteed
• Same dollar guidelines for determining which
  document type to use, same minimum number of
  bidders required

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Proprietary Purchases - Sole Source or No
Substitute

• Written justification is required for proprietary
  purchases exceeding 5000
• Must include the following information
• What the proprietary items use will be
• The unique or exclusive feature(s) of the item(s)
• Why the unique or exclusive feature(s) are
  required to accomplish goals
• Why no other product or manufacturer will suffice
• What existing equipment item(s) will be used in
  conjunction with
• What else has been considered

Form available at http//www.utexas.edu/admin/purc
hasing/docs/word/ssnosub.doc
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Just a Reminder. . .

• All purchases of 25,000 or more
  (excluding purchases from
  existing contracts and emergencies) will
  have to be issued
  through the Purchasing Office
  and most are posted
  electronically for 14 days
  on the Texas Marketplace.

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When Obtaining Quotes, Dont Forget. . .

• Payment Terms
• Free On Board (FOB)

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Payment Terms

• Net 30 Preferred by the universityindicates
  payment is due within 30 days of receipt of goods
  or receipt of invoice, whichever is later.
• Prompt payment terms such as 210, Net 30 Vendor
  will allow a two percent discount if payment is
  received within 10 days, otherwise full payment
  is due in accordance with Net 30 terms. Discount
  may not be used when comparing bids.
• Prepayment Vendor requires prepayment prior to
  shipping goods or materials.

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Free on Board (FOB)

• Refers to the point at which the title to the
  goods passes from seller to buyer. The title
  holder is responsible for goods in transit and
  for filing any freight claims.

• Determines who pays the freightthe seller or the
  buyer
• Most common are destination or shipping Point

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Basic Purchasing Procedure

• Create a requisition.
• Obtain a bid.

3. Issue a purchase order.
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Who Issues Orders for The University of Texas at
Austin?

• The University of Texas at Austin Purchasing
  Office
• All open market (nonterm contract) purchase
  orders
• Nonautomated state term contract orders
• The Texas Procurement and Support Services
  (TPASS) is for automated state term contract
  orders.

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Basic Purchasing Procedure

• Create a requisition.
• Obtain a bid.
• Issue a purchase order.

4. Receive material or goods and inspect.
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Central Receiving

• Central Receiving is now outsourced to MagRabbit.
  There is no cost to departments for
  deliveries.
• This reduces the number of vehicles on campus.
• Central Receiving does not open or inspect
  packages they only deliver packages.
• All packages delivered to Central Receiving will
  be paid by Accounts Payable. Anything delivered
  to the department must be paid by the department.

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Items That Should NOT Be Shipped Directly to
Central Receiving

• Food for human consumption
• Bulk petroleum or other products in 55-gallon
  drums
• Live plants or animals
• Wet or dry ice
• Bottled gas

• Plate glass, sheet rock or other fragile
  materials
• Unusually heavy or large items such as steel
  beams
• Items for delivery to remote locations outside of
  campus or outside of Austin

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Basic Purchasing Procedure

• Create a requisition.
• Obtain a bid.
• Issue a purchase order.
• Receive material or goods and inspect.

5. Issue a receiving report.
Verification of receipt of goods.
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Basic Purchasing Procedure

• Create a requisition.
• Obtain a bid.
• Issue a purchase order.
• Receive material or goods and inspect.
• Issue a receiving report.

6. Receive an invoice from the vendor.
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Basic Purchasing Procedure

• Create a requisition.
• Obtain a bid.
• Issue a purchase order.
• Receive material or goods and inspect.
• Issue a receiving report.
• The vendor sends an invoice.

7. Prepare a payment voucher.
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Basic Purchasing Procedure

• Create a requisition.
• Obtain a bid.
• Issue a purchase order.
• Receive material or goods and inspect.
• Issue a receiving report.
• The vendor sends an invoice.
• A payment voucher is prepared.

8. Send a check to the vendor.
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Items Not Requiring Purchase Orders

• Classified advertising
• Demurrage charges
• Freight
• Membership fees or dues
• Professional dues
• Registration fees and associated books and
  materials
• Tuition
• Utilities
• Books on local funds, only purchased from the
  publisher
• Cell phone and pager service
• Temporary personnel

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Now on to Procards POINT Plus. . .
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Thank you for viewing this presentation.
For more information, contact Trina Bickford
512-471-2860 tbickford_at_austin.utexas.edu www.utex
as.edu/admin/purchasing