11

PurchasingShannon Soja, Tina Massaconi, Maria Pizzino, Peter Vander Veer (OSC)

Divya Chadalavada (SFS)

Tricia Holley (BSC)

2

Roadmap

• Procurement Card Use

• Purchase Orders

• Purchase Order and Contract Management

• Early Pay Discounts

• Procure-to-Pay Streamline Business Model Process

• Resources

3

Procurement Card Use

4

Scenario

• Your agency needs to order 20 boxes of pens. Each box of pens costs $5.

• How would you procure this?

5

Procurement Card (PCard) Policy

• Agencies are required to use the PCard to purchase goods and services less than $500 when a vendor accepts the PCard for payment.

– May not use the PCard to purchase from agency-specific contracts because PCard expenditures are not captured on the year-to-date and life-to-date amounts on the contract.

• Agencies are encouraged to use the PCard for small dollar purchases to facilitate a cost effective method of procurement and to obtain rebates.

GFO: XI-A.4 –Procurement Card Use

6

PCard Use

• Agencies can select the PCard on a general purchase requisition, which will then be transferred to the PO when the PO is created from the requisition.

• When agencies use a PO without first creating a purchase requisition, the agency must check the box on the PO to indicate the use of the PCard.

GFO: XI-A.4 – Procurement Card Use

7

Purchase Orders

8

Scenario

• Your agency needs to purchase a new vehicle, which you estimate should cost about $20,000.

• How would you procure this?

9

Purchase Orders

• Used as an ordering document.

– Authorizes a vendor to provide goods or services at a dollar amount within the agency’s authority as set in law or by contract.

– Communicates critical information to the vendor including the contract number, specific goods or services ordered, delivery date and the related price, thereby supporting agency and vendor collaboration.

• Establishes the encumbrance within the SFS.

GFO: XI-A.3 – Purchase Orders

10

Purchase Order Policy• Agencies are required to use a PO for:

– all single purchases of $10,000 or more, or

– where the PO is required by the contract from any vendor classified as a “procurement supplier” in the NYS vendor file.

• Vendor classification reflects the type of business relationship the vendor has with the State and affects agencies’ ability to generate POs in the SFS to the vendor. Agencies unable to issue a PO to a vendor should contact the SFS Help Desk to request a change to the vendor’s classification.

• Applicable even when the payment method is the PCard.

• All purchases from an agency contract require the use of a PO.

GFO: XI-A.3 – Purchase Orders

11

PO Policy Exemptions• For the following types of purchases, agencies are not required to use a PO

for ordering purposes:– Bulkload PCard purchases– Utilities (including, but not limited to purchases of power, water, sewer and telephone

services)– Interagency bills– Petty cash replenishment– Postage meter replenishment– Courier services– Arbitration services– Legal settlements– Centralized contract purchases made outside of the SFS through vendor ordering

systems

GFO: XI-A.3 – Purchase Orders

12

Confirming POs

• For emergency-related purchases where the agency is unable to create a PO prior to purchase, the agency may start the process with a confirming PO.

– An emergency is an urgent and unexpected requirement where health and public safety or the conservation of public resources is at risk.

– A purchase resulting from an agency’s failure to properly plan in advance to process under normal business practices does not constitute an emergency.

GFO: XI-A.3 – Purchase Orders

13

Centralized Contract POs

• Online:

– Should use a purchase requisition to begin the purchasing process for planned purchases from centralized contract vendors.

– Generally, quantity based lines should not reference a contract line number and “Amount Only” lines should reference a contract line number.

• Bulkload:

– Must include the contract ID and contract line on the PO line when the agency bulkloads a file into the SFS.

GFO: XI-A.3 – Purchase Orders

14

Electronic PO Dispatch • The vendor classification determines if a vendor is “open for

ordering,” which allows agencies to create POs for the vendor.

• The requisition or PO will inherit the email address from the vendor record in the SFS.

– The agency may edit/update the email address on the PO.

• If the PO dispatch method is “email,” once the PO has been authorized and is ready for dispatch, the SFS will send the PO to the default email address or one-time email address updated on the PO before approval.

GFO: XI-A.7 – Electronic Purchase Order Authorization and Purchase Order Dispatch

15

One-time Electronic PO Dispatch

• Agencies can enter an alternate “one-time” email address on a PO if:

– the vendor does not have an ordering email address

– there is a need to send the PO to an alternate email address from the existing default ordering address.

• The SFS will deliver the PO to this alternate address.

• When an agency uses a one-time email address, a notification is sent to the primary contact listed on the vendor record if the vendor record does not have an ordering email address.

GFO: XI-A.7 – Electronic Purchase Order Authorization and Purchase Order Dispatch

16

One-time Electronic PO Dispatch

If No Ordering Email on Vendor

Record

One-time email will default to ordering email

Primary contact receives

notification

POs will always be dispatched to one-time email

17

PO Detail• Agencies must include adequate details in the PO line(s) to

describe the specific goods or services ordered as well as the quantity ordered and the related price(s).

– Ideally, PO lines are inherited from adequately detailed contract lines. Detailed contract and PO lines facilitate the receiving and matching functions in the SFS.

• In instances where the goods and services will be received against a PO, the PO should be configured for receiving.

GFO: XI-A.3 – Purchase Orders

18

Quantity Based Ordering

• Quantity based purchase orders allow the agency to order and receive up to the specific quantity and unit price of goods or services at a particular unit of measure.

• For items with price fluctuations such as milk and fuel, agencies can still use quantity based ordering. Payment tolerances applied in the SFS to purchases such as these allow vouchers to process without a match exception.

GFO: XI-A.9 - Receiving

19

Amount Only Based Ordering

• Amount only based ordering allows the agency to order and receive based on the total cost of the goods or services purchased and provided.

– Amount only ordering should be used when quantity based ordering would not add value or services are not ordered on a specified unit of measure basis.

– For example, amount only ordering may be appropriate for copier repair services, when the agency does not know ahead of time the extent and cost of necessary repairs.

GFO: XI-A.9 - Receiving

20

Purchase Orders and Contract Management

21

Contract Lines

• Agencies should set up their SFS contracts in a way that maps to specific terms or deliverables defined in the contract. For contracts that include multiple category codes, one line should be created for each unique category code that is included in the contract.

• Agencies should ensure the correct category code is used on the SFS contract line.

22

Contract Lines

• Contract lines should be created with a description that references a contract term, deliverable or contract section.

• Terms that can be quantified (hours, units, monthly, etc.) with little or no fluctuation in price should be classified as quantity based lines. Where the contract terms cannot be quantified, the line can be created as “Amount Only”.

23

Optimize use of Corporate (Centralized) Contracts

• Corporate contracts are created by OGS Procurement Services for use by all agencies.

• These contracts can primarily be used without reference to a contract line when purchasing in quantities.

• These contracts are generally established with a single line that represents the goods or services included in the contract to support “Amount Only” orders.

24

Optimize use of Corporate (Centralized) Contracts

• Agencies can make purchases against a centralized contract at a more detailed category level on the PO to represent the specific procurement made.

– For example, an agency plans to purchase pencils off of the centralized contract for office supplies. Agencies can use the category code for office supplies on the contract line and create a PO against that line with the category code for pencils.

25

Early Pay Discounts

26

Early Pay Discounts

• State Finance Law § 179-f requires agencies to pay vendors within 30 days after receipt of an invoice (15 days for certified small businesses).

– Holding payment for 30 days allows the State to maximize short-term interest earnings.

• So why pay early?

– If the vendor offers an incentive (discount)

27

Early Pay Discounts

• Agencies are encouraged to request early pay discounts from vendors when feasible.

• In the SFS, discount terms can be established by vendors at the location level, or by agencies at the contract, purchase order, or voucher level and will default in the SFS in this order.

GFO: XII.5.F.4 – Selecting the Appropriate Payment Terms

28

Early Pay Discounts

• If early pay discount terms are included in a contract, the awarding agency should add the payment terms to the contract’s PO defaults in the SFS.

• Early pay discounts should not be used as a factor to evaluate proposals/bids.

GFO: XI.11.H – Early Pay Discounts for Procurement Contract Purchases

29

Procure-to-Pay (P2P) Streamline Business Model Process

30

SFS Requester vs. SFS BuyerRequester Buyer

A person with the need for the goods or services at your agency who enters the requisition in the SFS.

OR

A person who enters the requisition in the SFS on behalf of an employee who does not have internet access.

In either case, the Requester does not need to know State procurement guidelines / rules.

A person who performs purchasing activities for your agency (including vendor negotiations and sourcing) to satisfy a Requester’s request, and who prepares the procurement record to ensure the buying activity is consistent with NYS Finance Law.

A person who makes buying decisions on requisitions prior to converting it to a PO or after the PO is created, and who stages request for auto sourcing to PO.

A Buyer must have knowledge of State procurement guidelines / rules.

31

Submitting Purchase Requests

Purchase request forms and separate systems are being replaced with the

ability to enter and submit requests directly

into the SFS.

The person with the need enters the request in the SFS, and the request is systematically routed for necessary

approvals based on agency business rules. Sample Agency purchase request forms for illustrative purposes

32

Simplified Requisition Page

33

Requisition Process

Requester:

Identify need for good or service

Requester:

Enter request in the SFS

and submit for review

and approval

Supervisor and Other Reviewers:

Review and approve request

SFS System:

Budget check

request

Buyer:

Researches sources or

vendors and finalizes

order

After the Buyer finalizes the request, the request is turned into a PO in the SFS, reviewed by additional

approvers, and sent to the vendor.

34

Requisition Review & Approval

• After the requisition has been created and submitted, it is routed for review through workflow in the SFS.

• Requisitions awaiting review and approval can be found on a Worklist in the SFS.

– Worklist is used to view and take action on requisitions pending approval.

• Approvers at any level can insert an Ad-Hoc Approver/Reviewer at any level in workflow.

35

Requisition Review & Approval

• Requisitions move through workflow from one approval level to the next in accordance with agency business rules; up to three levels of approval may be defined by the agency.

• Approval levels are pooled, meaning the requisition is routed to a group of people within your agency, designated at that approval level.

– Once one of the users takes an action on a requisition, the requisition is moved to the next approval level.

36

Purchase Orders Overview

• Requests are recorded electronically by the requesters in the SFS.

• Approved and budget check requisitions are routed to the agency and/or the BSC purchasing staff.

– Agency/BSC purchasing staff will receive the request in the SFS (new!) and then perform all the buying activity necessary to create a PO (unchanged).

• Purchasing staff are referred to as Buyers.

37

Purchase Orders Overview

• POs are created in the system from the requisition information and reviewed and finalized by the purchasing staff (Buyers) before being dispatched to the vendor.

• For BSC customer agencies, POs can be created by agency Buyers, and then be reviewed by BSC procurement staff to ensure the procurement record is complete and consistent with State Finance Law and procurement guidelines.

38

Purchasing Staff (Buyers)

• Buyers can be staff within your agency or OGS-BSC, with knowledge and expertise of purchasing and State procurement requirements.

• The Buyer performs activities to satisfy a requisition, and prepares the procurement record to ensure buying activity was conducted in accordance with State Finance law and procurement guidelines.

• Buyers have roles and access in the SFS to efficiently perform sourcing and purchasing activities.

• Buyers are involved in the procurement process after the requisition has been submitted by a Requester and approved.

39

Purchase Requests and The Buyer

• The Buyer role in the SFS spans the requisition and the PO.

• After approval and successful budget check, requisitions are routed to the Buyer, who “shops” or “selects an appropriate vendor” to satisfy the request before it is turned into a PO for the vendor.

• Buyers can use a new set of tools in the SFS to manage their workload and source requisitions to POs:

– Requisition Selection page

– Sourcing Workbench

– PO Workbench

– Buyer WorkCenter

40

Buyer WorkCenter and PO WorkbenchBuyer WorkCenter

The Buyer WorkCenter provides queries and links to documents requiring action (i.e.,requisitions needing budget approval) from the Buyer.

Buyers can focus their attention on priority requisition and PO needs through this Buyer information “command center.”

PO Workbench

The PO Workbench provides Buyers with the ability to view the POs assigned to them and take actions on one or more POs.

Buyers have greater control over their POs, can review their POs prior to submission to workflow and can take actions on those POs, including closingPOs.

41

Managing Requisition Budget Errors

• Buyers can identify requisition budget error issues that need their attention by running a query (Requisition in Budget Error) from the Buyer WorkCenter.

– A Buyer working with the Requester can resolve the budget errors on the requisition.

– The requisition ChartField information will need to be corrected from the Manage Requisitions page before re-budget checking the requisition.

42

PO Workflow in SFS – Review and Approval

• After the requisition is sourced to the PO, it must go through PO workflow in the SFS for review and approval before budget check and dispatch.

• PO workflow is dependent on the origin of the transaction:

– ONL (Internal) origin – Review by your Agency Approvers only

– EXT (External) origin – Review by your Agency and BSC Approvers

– BSC origin – Review by BSC Approvers only

43

PO Workflow in SFS – Review and Approval

• The origin can be assigned and driven by the Agency Buyer on the PO and the Buyer’s origin:

– Buyers with POs that are not reviewed by the BSC – default origin of ONL

– Buyers with POs that are reviewed by the BSC – default origin of EXT

• Based on the Origin and Department ID, the PO is sent to the appropriate pooled group of approvers.

44

Sample PO Approval Workflow Internal (ONL) Reporting

External (EXT) Reporting

• The PO is sent to approvers by Department ID.

• If an approver holds multiple approval roles it auto approvers at subsequent approvals.• Optional Ad-Hoc Approvers can be

added between approver roles.• PO Approver All role can be used for a

one-step agency approval.

PO Processor

(Buyer)

Agency PO

Approver 1

Agency PO

Approver 2

Agency PO

Approver 3

BSC PO

Approver 1

BSC PO

Approver 2

45

PO Auto Approval

• The SFS is able to create POs from your requisition information, eliminating the need for data entry.

• Based on the type of request the PO may be auto approved.

• Auto Approval Criteria:

– Requests from a catalog will auto approve up to your agency’s threshold.

– Requests with a PCard as the payment method will auto approve up to your agency’s threshold.

– All other requests will leverage PO workflow to ensure the purchase adheres to procurement guidelines.

46

New Feature – Routing ID

• Routing IDs:– Can be used to route transactions, primarily invoices, to the correct set of

reviewers.– Can be seen as a new field in the PO Header and are found in a dispatched PO.– Can default onto the PO Header from the requisition in the SFS based on the

default Routing ID assigned to a Requester by the agency’s Employee Data Administrator (EDA).

– Can be changed on the PO Header or the Requisition Selection page, and should only be changed if the assigned Routing ID is incorrect.

– Can be searched to identify a particular PO or group of POs.

Routing IDs will provide agencies more flexibility in defining how to manage their workload among multiple approvers across multiple locations.

47

PO Change Notice Process

• Agency buyers are able to enter a Purchase Order Change Notice (POCN) that will get routed to the BSC, where appropriate, via workflow.

• Change order requests are submitted to Buyers.

• Change orders are dispatched to the vendor using the same method as the original PO.

48

P2P Model Process: Takeaways

• Entry and review of requests are done in the SFS through the use of SFS requisitions without the need for a paper form, email, or other request system.

• Requesters do not need State procurement expertise.• Submitted requisitions are routed for review and approval in the SFS, with

the ability to support multiple levels of approval, based on agency business needs.

• Agency buying activities occur as steps between requisitions and POs. These activities are managed by the Buyer who has the necessary procurement expertise.

• Agencies and the BSC have the ability to systematically route documents and collaborate on POs.

49

Resources• OSC Guide to Financial Operations

– XI-A.3 – Purchase Orders

– XI-A.4 – Procurement Card Use

– XI-A.7 – Electronic Purchase Order Authorization and Purchase Order Dispatch

– XI-A.9 - Receiving

– XII.5.F.4 – Selecting the Appropriate Payment Terms

– XI.11.H – Early Pay Discounts for Procurement Contract Purchases

• SFS Coach– Step-by-step job aids

– Interactive trainings

50

Contact Us

• For inquiries related to policies or voucher processing, please contact voucherauditmailbox@osc.ny.gov or stexpend@osc.ny.gov.

• For contract related inquiries, please contact KMAS@osc.ny.gov.

• For BSC hosted agencies, please contact BSCFinance@ogs.ny.gov for other purchasing inquiries.

51