Getting Started

1. Getting Started • Goals Understand the role and responsibilities of the procurement function Know and understand “the rules” Know and understand the mechanics of procurement Be prepared to apply what you learn Be successful in your procurement activities Be a resource, not a roadblock • Format Lecture Discussion Practical • Participation Through discussion Through planned activities • Assessment Is required by AASBO & CAC Is necessary to determine the success of the course

2. Session I • Overview of School Purchasing Purchasing’s function Procurement, not just purchasing Common procurement cycles Centralized & decentralized procurement Purchasing does not operate in a vacuum • Legal Aspects of Purchasing Authority Contracts Governance Ethics Compliance

3. in the right quality in the right quantity at the right price at the right place at the right time Purchasing’s FunctionMore than issuing purchase orders The Purchasing Puzzle requires that we provide goods and services...

4. Think Procurement,not just purchasing • Procurement of materials, equipment, services and construction • Warehousing and distribution of supplies and materials • Contracts administration • Conflict resolution • Property/asset management • Surplus/obsolete property disposition • Mail room operations (not common) • Printing operations (not common)

5. Need is recognized Goods reassigned or disposed Type of competition determined Reassignment or disposal authorized Quotes obtained Goods become surplus or obsolete Requisition prepared Goods are used Account code & funds review A/P verifies & pays District receives & verifies Purchasing review Vendor delivers Purchase order prepared & issued Common Small DollarProcurement Cycle

6. Need is recognized Goods reassigned or disposed Type of competition determined Reassignment or disposal authorized Requisition prepared Goods become surplus or obsolete Account code & funds review Goods are used Contract administered Purchasing review Purchasing prepares IFB/RFP A/P verifies & pays District receives & verifies Purchasing issues IFB/RFP Bids/proposals received Vendor delivers/performs Bids/proposals opened Purchase order prepared & issued Contract awarded Bids/proposals evaluated Common Large DollarProcurement Cycle

7. Centralized &. DecentralizedProcurement • Decentralized • Advantages • Faster purchases • Less scheduling • Easier to address unique requirements • Less bureaucracy • Disadvantages • Higher prices (no economies of scale) • Less budget control & mgt • Questionable vendor relationships • Less compliance • More purchases • Less consistency in materials purchased • More contacts for suppliers • Better record keeping • Less inspection of received goods • Purchase on the fly • Many resolution points for concerns, problems, etc. • Centralized • Advantages • Lower prices • Better budget control & mgt • Favorable vendor relationships • Improved compliance • Fewer purchases • Greater consistency • Fewer contacts for vendors • Better record keeping • Better inspection of goods • Forecasting benefits (Cost/availability) • One resolution point for issues • Disadvantages • Slower purchases • More scheduling • Harder to address unique requirements • More bureaucracy aaaaaaaaaaaaaaaaaaa

8. Governing Board Others Administration Media Users Community Suppliers Taxpayers Purchasing Does Not Operatein a Vacuum Influences on Purchasing Purchasing Staff

9. AuthorityWho, What and When • Legal Rests with the governing board, by statute May be delegated • Express Formal authority granted by the governing board Must be formally authorized by the governing board, and must be stated in governing board policy • Implied Required to carry out express authority The things you do to do the job • Agency The authority to act on behalf of another Agent can act as if he/she Is the other party Agent must act within the granted authority An individual acting outside of his/her authority is not an agent

10. Contracts • The 5 Elements of a Binding Contract Capacity of the parties Legality of the object Consideration Mutuality of agreement Mutuality of consent • Offer There must be an offer. The offer is a conditional promise to do something or refrain from doing something. It creates the power to bind the offeror by meeting the requirements set forth in the offer. Offers must be definitive to be enforceable. Offers may be terminated by lapse of time, rejection, counter-offer, or revocation. • Acceptance The offer must be accepted. Acceptance of an offer is the exercising of the power to bind the offeror to his promise to perform or not perform. Once the offer is accepted, neither party can unilaterally withdraw without liability. Acceptance must be under the terms of the offer and unequivocal. Must a contract be in writing to be binding & enforceable?!?

11. Contracts • Contract Types Fixed price Cost Specific requirement vs. Term • Determining the Appropriate Contract Type How much and what type of data can the user gather? Is there competition? Can a firm price be obtained? How much risk is there? What is the vendors’ performance capability and history for similar requirements?

12. Governance School procurement is governed by… • Governing Board Policy Varies by school district • Arizona Revised Statutes A.R.S. § 15-213-A is key to procurement Other subsections also apply • Uniform System of Financial Records (USFR) Applies to purchases under the bid threshold (currently $50,000) Sets the competitive quotation requirements for those purchases Applies to inventory management Applies to fixed assets management Section VI (Accounting) is the applicable section

13. USFR Competitive Procurement Requirements Governance • Purchases up to $5,000 Formal quotations are not required, but,… • Purchases from $5,000 to under $25,000 Must seek verbal quotes from 3 or more vendors Written quotes are OK • Purchases from $25,000 up to the bid threshold Must seek written quotes from 3 vendors Quotes must be written on the vendors’ document • Purchases at or above the bid threshold Require formal competitive sealed bids or proposals & are not covered by the USFR See the Arizona State Board of Education School District Procurement Rules

14. Governance Arizona State Board of Education School District Procurement Rules • Title 7, Chapter 2, Articles 10 & 11 of the Arizona Administrative Code Referred to as the school procurement rules or school procurement code These rules are not the same as the Arizona State Procurement Code. • Apply to all procurement with values over the bid threshold set by the Arizona State Board of Education The bid threshold is currently $50,000 The bid threshold for schools will match the amount specified in Title 41 of the Arizona Revised Statutes (State Bid Limit) The State Board of Education no longer approves the bid threshold amount • Authorize the Governing Board to delegate procurement authority Delegated authority must be specified in governing board policy Certain requirements must be met

15. Governance Arizona State Board of Education School District Procurement Rules • Authorize purchases by… Competitive Sealed Bid Multi-step Bid Competitive Sealed Proposal Sole Source Procurement Emergency Procurement Cooperative Procurement Specialized Procurements • Specify contract requirements • Provide an administrative process for protest & contract claims resolution • Specify requirements for disposition of surplus property

16. Governance • Uniform Commercial Code (UCC) Regulates business transactions throughout the U.S. Title 47 of the Arizona Revised Statutes • Education Department General Administrative Regulations (EDGAR) Applies to procurement with Federal grants • Arizona Department of Library & Archives Records Retention & Disposition Schedule Applies to records management • Common Law Notable for its inclusion of extensive non-statutory law reflecting a consensus of centuries of judgments by jurists. Non-statutory law authority rests not on legislation passed and eventually codified, but rather tradition, custom, and especially precedent. Non-statutory law is recognized within the Constitution as being essentially inviolable. However, as customs and traditions change and evolve, common, non-statutory law must change and evolve with them, and occasionally be amended by statute.

17. Ethics • Purchasing personnel are custodians of public funds We have a duty to use those funds for their intended use We have a duty to spend the funds fairly We have a duty to practice the highest ethical standards • Ethical standards come in several forms Professional organizations Governing board policy Statute • The penalties for violating ethical standards can be severe • Proper ethical standards are demonstrated by: Ensuring fair and open competition for all interested parties Maintaining proper “arms length” relationships with vendors Complying with and enforcing rules, regulations and statutes Reporting infractions Never seeking or accepting personal gain through employment • Remember, perception is reality

18. Compliance • Schools district and employees are responsible for compliance with rules, regulations and statutes Penalties for non-compliance can be severe Penalties may be assessed against the district, a vendor or an employee Penalties can be avoided by working to ensure compliance • Tools for compliance are available The Arizona Revised Statutes The USFR The State Board of Education School District Procurement Rules The USFR Compliance Questionnaire • Use the tools Know the applicable requirements Prepare guides for schools & departments Show the requirements, as well as refer to them Develop documentation programs that match the various requirements