purchase methods

Purchasing Procedures DE 213 : 

Purchasing Procedures DE 213

Definitions : 

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 bidder’s 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.

Definitions : 

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.

So how does this all fit together? : 

So how does this all fit together?

Basic Purchasing Procedure : 

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. Someone needs something. What is it? How many does she need?

Elements of the Requisition : 

Elements of the Requisition Item Description: What does the requestor want? What is it we’re going to purchase? What are the functional specifications? What is important to the requestor to accomplish the task?

Elements of the Requisition : 

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 requestor’s needs are.

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Examples of specification features: Size Color Speed Compatibility Weight Capacity Composition Volume Elements of the Requisition

Elements of the Requisition : 

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 _____?

Purchases Requiring Special Approval : 

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 Controller’s 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.

Basic Purchasing Procedure : 

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…

Estimated Costs: How Much Are We Planning to Spend? : 

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 You’ve 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?

Purchasing Methods : 

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).

Purchasing Methods : 

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 time—may 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.

Small Purchases (PBOs or PB3s) : 

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

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

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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Purchasing solicits bids Requires price quote from a least three sources—normally 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 Orders Totaling over $25,000 (PB4s)

Best Value Procurement : 

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

State Term Contracts : 

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

State Term Contracts : 

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

Group/Cooperative Purchases : 

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/purchasing/cooppurch.html

Group/Cooperative Purchase : 

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

Blanket Orders : 

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

Proprietary Purchases - Sole Source or No Substitute : 

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/purchasing/docs/word/ssnosub.doc

Just a Reminder. . . : 

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, Don’t Forget. . . Payment Terms Free On Board (FOB)

Payment Terms : 

Payment Terms Net 30: Preferred by the university—indicates payment is due within 30 days of receipt of goods or receipt of invoice, whichever is later. Prompt payment terms such as 2%10, 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.

Free on Board (FOB) : 

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 freight—the seller or the buyer Most common are destination or shipping Point

Basic Purchasing Procedure : 

Basic Purchasing Procedure Create a requisition. Obtain a bid. 3. Issue a purchase order.

Who Issues Orders for The University of Texas at Austin? : 

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.

Basic Purchasing Procedure : 

Basic Purchasing Procedure Create a requisition. Obtain a bid. Issue a purchase order. 4. Receive material or goods and inspect.

Central Receiving : 

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.

Items That Should NOT Be Shipped Directly to Central Receiving : 

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

Basic Purchasing Procedure : 

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.

Basic Purchasing Procedure : 

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.

Basic Purchasing Procedure : 

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.

Basic Purchasing Procedure : 

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.

Items Not Requiring Purchase Orders : 

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. . .

Thank you for viewing this presentation. : 

Thank you for viewing this presentation. For more information, contact: Trina Bickford 512-471-2860 tbickford@austin.utexas.edu www.utexas.edu/admin/purchasing