Procurement 2008Columbia University

An Introduction to University Purchasing Policies and Procedures

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Topics to be covered:

I. What is Procurement?II. Purchasing ProcessIII. Payment ProcessIV. Major Compliance and Policy IssuesV. Where to Turn for More Information

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The Life of a University ExpenseThe Life of a University Expense

Your Department: 1.Identify a need

2.Determine sourcing3.Create and approve requisition or

use P-Card to place order

Request > Approval > Order > Invoice > Process > Approval > Payment

Purchasing reviews and

creates purchase order or Dept Creates EZPO

Accounts Payable reviews and

approves invoice for payment

Order is placed withVendor

Expense recorded in

FASYour Department receives

and accepts goods/services

Your Department entersand approves invoice

in AP/CAR

Payment generated and sent to vendor

Accounts Payable reviews and places

on hold/reject

Your Departmentinvestigates andprovides revised

information P-Card is used to order

and pay for goods

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What is Procurement?

• Procurement is Purchasing and Paying• Purchasing is the process of awarding the

purchase of specified goods or services to a vendor in order to obtain the best value. This process is administered by the University Purchasing Office, and often requires issuance of a Purchase Order to the vendor or processing a Purchasing card transaction.

• Payments and disbursements are administered by Accounts Payable.

• When buying and/or paying for goods, you are required to comply with University Policies and Govt. Regulations.

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The Goal: Getting the Best Value By Leveraging the University’s Purchasing Power

Purchasing Power – United We StandThe University Spends More Than $1 Billion Per Year On Goods And Services

24%

12%

10%8%7%

4%4%

2%

29%

Engineering and Research and Technology Based Services

Financial and Insurance Services

Healthcare Services

Management and Business Professionals and Administrative Services

Building and Construction and Maintenance Services

Public Utilities and Public Sector Related Services

Information Technology Broadcasting and Telecommunications

Laboratory and Measuring and Observing and Testing Equipment

Other

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The University’s Purchasing Power

You are not alone in your purchasing habits. As the breakdown of the University’s annual expenditures by commodity category on the previous chart suggests, most purchases are not unique. Chances are, if you’re buying it, someone else is too.

By leveraging our collective purchasing power, all University departments, whether large or small, can benefit from the greatest value – as long as we work together.

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The Department should:• Identify and define the need for the good

or service.

• Determine the best source of supply, using a University-wide Purchasing Agreement where feasible, and bidding competitively in accordance with policy.

• Determine the appropriate purchasing mechanism: P-Card, EZPO, central Purchase Order requisition (or Voucher – no PO Required)

• Take full advantage of Purchasing Department resources in selecting vendor.

How To Begin: Initiating A Purchase

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Determining The Best Source of Supply

We encourage you to utilize all of the resources Purchasing makes available to determine the best vendor to meet your needs. If you are unsure of the best source or need help getting competitive bids, contact Purchasing.

Purchasing has staff with expertise in all major commodity areas, and has negotiated University-wide Purchasing Agreements with numerous vendors for most commodities, such as:

furniture

scientific equipment and supplies

office supplies

computer equipment and supplies

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University-wide Purchasing Agreements: Helping to Stretch Departmental Budgets

University-wide Purchasing Agreements are competitively bid or negotiated, with the goal of taking maximum advantage of the University’s buying power.

Through this mechanism, the University obtains the best overall value for repetitively purchased products and services.

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University-wide Purchasing Agreements: How to Learn More

For a complete listing of University wide Purchasing Agreements, please click the “Preferred Vendor List” button located on the Purchasing Department’s web page at:

http://www.columbia.edu/cu/purchasing/

,

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If your department’s need cannot be met via an existing University-wide Purchasing Agreement, it is your responsibility to spend the University’s resources wisely by obtaining competitive pricing and value.

What would you do if you were buying the item with your own money?

Competitive Pricing and Value

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When Are Bids Required: Competitive Bidding Thresholds

If no University-wide Agreement is available for your purchase, the following competitive bid thresholds are required depending upon the dollar value of the purchase:

• $ 1 – $ 2,500: Minimum of one (1) written bid, quote and / or proposal required.

• $ 2,500 - $ 10,000: Two written, faxed or e-mailed bids, quotes and /or proposals. This is mandatory. Oral bids are not acceptable.

• $ 10,000 – & higher: Three written, faxed or e-mailed bids, quotes and/or proposals. Oral bids are not acceptable.

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As we all know from our experience as individual consumers, price is not the only thing to consider when you are making a purchase. For example, just as you probably do in making personal purchases, you should also consider:

• Quality of Product• Customer Service• Delivery Terms• Prior Performance• Insurance Requirements

Purchasing can assist you in identifying, selecting and negotiating terms with a vendor.

Other Things to Consider When Buying

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Paying As You OrderUniversity P-Card

• A P-Card is a credit card issued to authorized University personnel, for payment of non-travel related small dollar purchases of goods and services for use by the University. CU is liable to the issuing bank for all valid transactions and pays the bank directly.

• Also note: Some vendors (i.e. Corporate Express) have special payment arrangement set-ups – see website for info

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Purchase Orders and EZPO’s are a contractual documents that protect the University’s interests and clearly define terms and conditions associated with the purchase. An EZPO is issued directly by the Department, while a PO is issued by the Purchasing Department in response to an approved requisition issued by the Department.

When should you issue an EZPO?An EZPO is issued for most purchases (including certain approved

restricted commodities) under $2,500 and for purchases of up to $25k formany University-wide Purchasing Agreements. Consult the contract listings by clicking the Preferred Vendor List button at http://www.columbia.edu/cu/purchasing/ for the relevant EZPO limit.

When should you submit a requisition to Purchasing to request issuance of a Purchase Order?

A Central Purchasing Department Purchase Order is issued for all purchasesabove $2,500 that are not eligible for an EZPO and ALL requests forconsultant services, construction related services, and restricted commodities not eligible for purchase via an EZPO.

Paying After You OrderEZPOs and PO Requisitions

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When is Neither a Purchase Order nor an EZPO Required?

In the case of the following purchases, neither an EZPO nor a PO is required:

honoraria, postage, registration fees, membership dues, individual books, subscriptions, reprints, printing services, short term rentals, advertisements, food, and utility bills

For more details, see the

INTERACTIVE PURCHASING GUIDE http://tp194.purch.columbia.edu/purchasing/purchasingguide/index.php

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Determining the Purchasing Mechanisms: Hiring Consultants

All consultant services require a Requisition for a Central Purchase Order and must be accompanied by a consultant contract that appropriately minimizes University risk. A Consultant is defined as a firm or individual with whom a Consultant Services Contract is entered into for a specialized type of service that Columbia does not ordinarily provide as a normal course of business. Additional information on University Consultant Policies and Procedures can be found at

http://www.columbia.edu/cu/purchasing/consultant.html

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How to Issue an EZPO or a Purchase Order Requisition: FFE

The Financial Front End (FFE) is used to issue both EZPOs and Purchase Requisitions.

Visit the Purchasing Web Site at http://www.columbia.edu/cu/purchasing/ffe_training.html

for a step by step tutorial on how to create a requisition using the Financial Front End system

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The Approver (DAF) must approve the requisition and/or EZPO in FFE and:

• Certify that the purchase complies with University policies.

• Certify that the purchase meets a legitimate University need.

• Certify that all supporting documentation is accurate and complete.

• Certify that all purchasing activity has been conducted in a professional, ethical manner.

• Certify that the purchase appropriately minimizes risk to the University.

How to Issue an EZPO or a Purchase Order Requisition: FFE Approval

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Approving a requisition is equivalent to authorizing the expenditure of funds. You are also making a commitment to the Vendor for the purchase.

The Approver (DAF) needs to know that:

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How to Become a DAF Approver

• Go to the DAF (Departmental Approval Function) Info Page on the Finance Gateway for instructions and to fill out the Combined DAF/FFE Application Form

http://www.finance.columbia.edu/controller/financial_reporting/DAFFFEInfo.html

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DAF Authority In General, DO NOT sign contracts

DAF Authority is not equivalent to Contract Signature Authority.

Typically, it is the Purchasing Department’s role to execute both purchase orders and contracts, and only Senior Officers who have been formally and explicitly delegated “Signature Authority” by the University Trustees may sign contracts on behalf of the University. Proposed contracts should be forwarded to Purchasing in conjunction with the requisition.

Purchasing will work with you to obtain approval from General Counsel as required.

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Role of the Purchasing Department

By now, you’re probably wondering what Purchasing can do for you.

The goal of the Purchasing Department is to help end usersget the best overall value for the goods and services requiredto support the University’s academic and research mission.

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How Can Purchasing Help?

Purchasing is your partnerworking to make your job easier!

How can Purchasing help?• Obtain competitive bids• Negotiate University-wide Purchasing Agreements• Guide you through the purchasing process• Support and help you understand your role in

compliance

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What else can Purchasing do for you?

You provide a product description and Purchasing will assist you by:

• Identifying qualified vendors• Negotiating price and terms, or applying University-wide

Purchasing Agreement pricing and terms• Exercise the University’s full purchasing leverage on your

behalf• Awarding the Purchase Order• Helping to resolve post-award issues and/or disputes

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Receiving Your Purchase & Paying the Invoice

In order to complete the “Req to Check” process once a purchase order has been issued, an authorized departmental representative must also:

- Confirm receipt of goods and services, consistent with terms of the purchase order.

- Review and approve invoices for payment in accordance with terms of purchase order.

NOTE: Certain payments originate at this point, including T&E reports, Petty cash reimbursements, and other non-PO expenditures

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Questions to ask yourself before paying for ANY expenditure

• Is there a clear business reason? (Please write out the business reason on the documentation if it’s not obvious.)

• What are we paying for? Were the goods received or was the service satisfactory?

• Do I have needed original documentation or backup?

• Is the amount “necessary & reasonable”? Will it bear scrutiny from a third party?

• Is the amount owed correct? Are there taxes included for which CU, as a non-profit, is exempt? (CU does not pay NY or NJ Sales Tax. See the AP Website more info)

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How Do You Pay?

• Payment Instruments (if P-Card is not used)• Invoice• Check Request• Travel and Business Expense Report• Petty Cash• See AP WEB SITE FOR DETAILS

• System Used• AP/CAR - The “Accounts Payable / Controlled Analytical

Review” system is a user-friendly, real-time environment for departmental users to electronically submit invoices to the AP Department. (This is the system you will use to pay for things or reimburse people.)

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Corporate AMEX Charge CardFor Business Expenses Already Incurred

• A convenient method of paying for University-approved travel and business-related expenses, which usually eliminates the need for travel advances.

• Any full-time officer with a salary greater than $20,000 may apply.

• Use it to purchase an airline ticket for a business trip at least a month in advance and obtain reimbursement before the trip.

• Supplies and equipment should be billed directly to Columbia University and processed through AP, not charged on a corporate card.

• The University will not pay the corporate charge card company directly

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Compliance: Everyone’s Responsibility

The procurement process must comply with:• Federal Regulations• University Policies• Tax Regulations

In addition to the policies and procedures presented throughout, we have highlighted additional compliance issues to be aware of.

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Compliance: Everyone’s Responsibility

Compliance – Using Common Sense to Protect Our Future.

As a recipient of federal funds, the University is required to comply with federal regulations when making purchases. The importance of University and Federal compliance cannot be understated and remains of the highest importance to the University

It is an important goal of the University to maintain compliance in order to maintain the flow of funds. Any instance of noncompliance found in a sampling by auditors may translate into a proportionate decrease in federal funding

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Federal Compliance: OMB Circular A-110 and FAR

By complying with policy, you ensure that the University adopts best business practices, and that we use our resources wisely.

The University is required to comply with OMB Circular A-110 and

the Federal Acquisition Regulations (FAR). Compliance entails:• Ensuring sufficient and fair competition in vendor selection• Adherence to clear ethical standards to avoid real or apparent

conflict of interest by University employees or agents• Adherence to clear purchasing procedures• Incorporating government specified contract language• Consistent documentation of purchases, including record

retention for audit and other purposes• Making an affirmative, pro-active effort to utilize small

businesses, minority-owned firms and women’s business enterprises

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Compliance with UNIVERSITY POLICIES

University policies not only mirror and reinforce federal regulations with which the University must comply, but they also represent good business practices and have been drafted to protect the best interests of the University.

For more information, the University-wide Administrative Policy Library:

http://finance.columbia.edu/policies.html

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University Policies: Important Things to Consider

The following are some key elements of the University’s Procurement policies to consider:

1. Conflict of Interest2. Restricted Commodities3. Sole Source Purchase4. Columbia University Fire Code5. Construction/Facilities Related Purchases6. Small Business Compliance/Local Initiative7. Legal Services

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University Policies: Important Things to Consider

Conflict of Interest – Purchases from or payments to a business in which a University employee has an interest are prohibited. The University does not enter into purchasing contracts with students, staff, faculty or members of their immediate family.

2. Restricted Commodities – Commodities which require prior approval from oversight departments must be processed via a Central Purchase Order or an EZPO. Restricted Commodities include but are not limited to: ethyl alcohol, refrigeration, animals and animal related products, radioactive materials, narcotics, and upholstered furniture.

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University Policies: Important Things to Consider

3. Sole/Single Source Purchases – may be used as justification for vendor selection without competition when there is only one vendor capable, authorized or available to provide the goods or services (for regular POs). System will prompt you to enter in explanation.

4. Fire Code – The University mandates compliance with the Boston Fire Code for all upholstered furniture. The City of Boston has adopted the standards specified in California Technical Bulletin 133. All upholstered furniture must comply with this code.

5. Construction Related Purchases – All purchases for construction, renovation or alteration to physical space at the University require the review and prior approval of Facilities Management’s Office of Design and Construction on the Morningside campus or the Office of Facilities, Medical Center.

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University Policies: Important Things to Consider

6. Small Business Compliance/Local Purchasing Goals –The University is committed to increasing the diversity of its vendors and to maximizing its contribution to the economic growth of the communities in which it is located. Purchasing can assist you in identifying and supporting local, small and minority-owned vendors.

• Small Business Compliance – The Federal Government mandates that in spending Federal grant funds the University make best efforts to purchase from small business concerns, particularly those owned and controlled by socially and economically disadvantaged individuals or women, and that these business concerns shall have the maximum practicable opportunity to provide goods and services to the University. In order show that “best effort” was made, purchasers are required to complete best effort or affirmative effort statements when approving requisitions. More detailed information on Small Business Compliance and required Subcontracting Plans, can be found at

http://www.columbia.edu/cu/administration/policylibrary/policies/pchs/00bb9c6412a1f43b0112aee6175d0001.html?base=responsible_office

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University Policies: Important Things to Consider

• Local Purchasing Goals – It is the University’s policy to seek to increase the positive effects of employment, construction spending, purchasing and, research and development for the benefit of local neighborhoods in Manhattan north of 110th St and in the South Bronx. Total local payments by the University to vendors in this area were approximately $42 million in 2003. Schools and Departments are strongly encouraged to seek out and utilize local businesses. Where possible, Purchasing will enter into University-wide Purchasing Agreements with local businesses. These contracts make possible the regular purchase of large volumes of goods and services from these neighboring businesses. For more information on the University’s local impact, see: http://neighbors.columbia.edu/economic/economicOverview.php

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University Policies: Important Things to Consider

7. Legal Services - Only the Office of the General Counsel may retain outside lawyers or law firms to represent the University or an affiliated party. No other departments are allowed to do so. This policy allows the University to avoid conflicts of interest and maintain quality as well as cost control. Payment for legal bills may only be authorized by the General Counsel’s Office.

Exception: A payment to a law firm for visa processing may be submitted by any department without authorization from the Office of the General Counsel.

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We’re here to help:Procurement Resources

Purchasing Policy and Procedure Guidelines can found on the Purchasing web page at:

http://www.columbia.edu/cu/purchasing/

Accounts Payable Policy and Procedure Guidelines can be found at: http://www.finance.columbia.edu/procurement/ap/

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Website Tour

• Buying@Columbia• Preferred Vendor List• P-Card Info• Interactive Purchasing Guide• Consultant Form Selector• Fax Coversheet• Forms Library• How to Call? Commodities Search• Training (see next slide)

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Available Purchasing Trainings

• Introduction to FFE (monthly)• Using FFE for Purchasing Requisitions

(monthly)• Procurement Overview for Senior DAF

Approvers (monthly)• P-Card training (as needed)• Online Procurement Training (required to

use FFE)• GO TO TRAINING WEBSITE FOR INFO:

http://finance.columbia.edu/hr/training/

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Where to Call for More Information

Please call or visit the Purchasing Department or Accounts Payable for additional information – we are here to serve you!

Morningside Purchasing Department615 West 131st Street, 3rd Floor-Studebaker Building(212) 854-4179purchasing@columbia.edu

CUMC Purchasing Department 601 West 168th Street, #47(212) 305-4198

Accounts Payable 615 West 131st Street, 3rd Floor-Studebaker Building(212) 854-2122