advancing into management program purchasing goods & services june 2005
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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.
June 2005www.procurement.utoronto.ca
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.
June 2005www.procurement.utoronto.ca
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
June 2005www.procurement.utoronto.ca
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
June 2005www.procurement.utoronto.ca
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
June 2005www.procurement.utoronto.ca
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
June 2005www.procurement.utoronto.ca
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.
June 2005www.procurement.utoronto.ca
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
June 2005www.procurement.utoronto.ca
Purchasing Methods
• Under $5,000 Purchasing Card Purchase Order (optional) Certified Invoice (avoid)
• Over $5,000 - Purchase Order
• Travel – American Express / Expense reimbursement system
June 2005www.procurement.utoronto.ca
• 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
June 2005www.procurement.utoronto.ca
Purchasing Credit CardWhy use it ?What do we use it for ?Control and monitoring rolesAdministrative processes
No cash required
June 2005www.procurement.utoronto.ca
Purchasing Card
• Used for University purchases: Low value, Frequently purchased commodities & services Purchases less than $5,000 (with some exceptions)
June 2005www.procurement.utoronto.ca
Purchasing Card Benefits
• Low administrative burden• Convenient• Reduced requirement for petty cash• Charges recorded in FIS next day• Transaction detail capture
June 2005www.procurement.utoronto.ca
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
June 2005www.procurement.utoronto.ca
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
June 2005www.procurement.utoronto.ca
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
June 2005www.procurement.utoronto.ca
RFPs, RFQs, RFIs, Tenders
• What are they for?• What are the advantages?• What are the disadvantages?
June 2005www.procurement.utoronto.ca
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
June 2005www.procurement.utoronto.ca
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
June 2005www.procurement.utoronto.ca
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
June 2005www.procurement.utoronto.ca
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
June 2005www.procurement.utoronto.ca
Scenario Discussion
1. The Freebie2. The Offer You Can’t Refuse3. The Convenient Resource4. The Good, the Bad and the Obstinate
June 2005www.procurement.utoronto.ca
Demo
• Simple purchase• Purchase with approval• Goods receiptDemo link
June 2005www.procurement.utoronto.ca
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
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