advancing into management program purchasing goods & services june 2005

Advancing Into Management Program

Purchasing Goods & Services

June 2005

June 2005www.procurement.utoronto.ca

Presentation Objectives

• What the purchasing policy is and why it’s important.

• What are the objectives of the policy?• How do we achieve the objectives?• Tools and support mechanisms.• Where to access additional information.


Background

• Decentralized – No mandated suppliers• Objective: To ensure that goods and services

are acquired in a manner that reflects effective use of resources while maintaining high legal, ethical and professional standards.

• Responsibility to achieve this objective rests both centrally and at the local departmental level.


Role of Procurement Services

• Information repository - www• Institution-wide supply agreements• Purchasing facilitation programs • Purchasing consulting services

Sourcing (RFx) Contract review Financing alternatives

• Monitor compliance with Purchasing Policy


Purchasing Policy

Objective• To provide a framework to

Ensure we get the best value Meet legal and ethical obligations Conduct a Fair, Open and Objective process


Ensure Optimum Value

• Institution-wide supply contracts for broadly used commodities and services

• Competitive quotes on purchases over $5,000• Public tendering on major purchases and

projects


Legal & Ethical Obligations

Publicly-funded institution = rigorous standards• arms length business relationships• competitive bids/proposals• evaluation processes that are open to public

scrutiny:- Objective - Consistently applied- Quantifiable - Transparent


Result…

• Assurance that the public monies entrusted to the university by various contributors are expended in a manner that reflects effective use of resources in accordance with the highest legal, ethical and professional standards.


Where to focus?

• 99% transactions <$25,000 = 40% total spend• 1% transactions >$25,000 = 60% total spend

For transactions valued:<$25,000 – focus on transactional process used including

control & monitoring

>$25,000 – focus on individual transactions to ensure that appropriate competitive bidding process is applied


Purchasing Methods

• Under $5,000 Purchasing Card Purchase Order (optional) Certified Invoice (avoid)

• Over $5,000 - Purchase Order

• Travel – American Express / Expense reimbursement system


• Web based access to university’s contracted suppliers• Fully integrated with financial system and funds

management• Most efficient process - Saves up to 90% time and effort• Locally defined business rules• Use for:

Lab Supplies Equipment Chemicals Office Supplies Computers Radio nucleotides More… MRO Supplies, Furniture, and UofT Bookstore


Purchasing Credit CardWhy use it ?What do we use it for ?Control and monitoring rolesAdministrative processes

No cash required


Purchasing Card

• Used for University purchases: Low value, Frequently purchased commodities & services Purchases less than $5,000 (with some exceptions)


Purchasing Card Benefits

• Low administrative burden• Convenient• Reduced requirement for petty cash• Charges recorded in FIS next day• Transaction detail capture


Purchasing Card:Why not for Travel?

• Requires “one-up” approval Canada Revenue Agency requirement Additional scrutiny appropriate

Alternative: American Express Corporate Card No annual fee, free insurance: Life, Flight delay,

baggage loss, LDW for car rental; 45-day grace period


Purchasing Card –Administrative Roles & Responsibilities

• Cardholder• Phone, fax, present or place on-line order• Reconcile monthly statement• Forward statement invoice/sales slip to departmental

administrator

• Departmental Administrator• Conducts monthly reconciliation of payments• Files back-up documentation


Department Level of Responsibility

Under $5,000 maintain audit trail.

$5,001 - $25,000 maintain audit trail documented competitive bids Purchase Order created by Business Officer


RFPs, RFQs, RFIs, Tenders

• What are they for?• What are the advantages?• What are the disadvantages?


Higher Value Purchases

• Over $5,000 – multiple quotes required “Sole sourcing” exceptions

• Highly specialized scientific equipment• Unique specifications with only one supplier

• Request for Quotation (RFQ) – specifications known; only variable is price

• Request for Proposal (RFP) – desired outcome known; variety of means to achieve outcome


Competitive SolicitationTransaction Levels & Authority

Public RFPSize of Invited

RFP

or Tender call Authority toPurchase Purchase Verba

lWritten or prequalifying issue purchase

Transaction Order Quotes QuotesTender call

statement order

Up to $5,000

P.O. Not req'd use P-card Optional Optional No No Budgetary Unit

$5,001 to$25,000 Yes Yes Optional Optional No Budgetary Unit$25,001 to$100,000 Yes - Yes Optional No

Procurement Services

$100,001 to$500,000 Yes - - Yes Optional

Procurement ServicesProcurement

Over $500,000 Yes - - - Yes Services

Purchase Process Requirements


Consulting, Contracts

Engaging consultants• < $25K/yr - Head of budgetary unit• > $25K/yr - Dean or V.P. approval

Note: If consultant is employee of UofT, payment must be processed through HRIS. To determine whether employee relationship exists: http://www.utoronto.ca/hrhome/incomtax.pdf

Executing Contracts Contact Procurement Services at the outset – contract

vetting, supplier vetting


Procurement Methods

Sole Sourcing • Technical compatibility• Only one supplier, no

substitute exists• Unforeseeable urgency• Honour guarantees,

warranties• Procure a prototype

Competitive Solicitation• Request for Quotation:

price is sole selection criterion

• Request for Proposal: desired outcome known, means and cost to achieve may vary; multiple selection criteria


Scenario Discussion

1. The Freebie2. The Offer You Can’t Refuse3. The Convenient Resource4. The Good, the Bad and the Obstinate


Demo

• Simple purchase• Purchase with approval• Goods receiptDemo link


Where to Get More Information

• Your Business Officer• Procurement Services• www.procurement.utoronto.ca

Purchasing Policies “How-to” Guides Pcard and travel card applications Vendor lists with links to web sites On-line forms Frequently Asked Questions Departmental Contact information


The End

Any questions?

advancing into management program purchasing goods & services june 2005

Documents

purchasing policy slide

objective process slide

uoft bookstore slide

policy objective

commodities services

goods services

services competitive

legal ethical obligations