OFFICE OF PROCUREMENT AND REAL PROPERTY MANAGEMENT

1. OFFICE OF PROCUREMENT AND REAL PROPERTY MANAGEMENT Fiscal Year End - June 30, 2012 Contract/PO Conversions over $25,000

2. OPEN ENCUMBRANCES OPRPM was provided with a list of open encumbrances as of June 30, 2012. The data is summarized as follows: 1) There were 7,256 accounting lines of open encumbrances for all contracts and purchase orders in FMIS. (This included open encumbrances for purchase orders issued by the FA’s within their purchasing authority). 2) Of the 7,256 accounting lines of open encumbrances, it was determined that approximately 2,100+ lines were for contracts and purchase orders issued by OPRPM. OPRPM created over 1,100 PO conversion documents. Note: Many contracts and purchase orders have multiple accounting lines.

3. CONVERSION ISSUES 1) A number of open encumbrances were for contracts and or purchase orders that were issued over ten years ago and could not be cross referenced to OPRPM’s database. 2) Numerous vendor codes did not transfer over to KFS. 3) Account codes may have been frozen. 4) Conversion documents may have been disapproved by FA’s. 5) Some conversion documents are still waiting for FA approval.

4. MOVING FORWARD 1) OPRPM will send department FA’s a list of their outstanding encumbrances for OPRPM issued contracts and/or purchase orders that have not been converted to KFS. 2) FA’s will be responsible for notifying OPRPM of any contracts and/or purchase orders that are still active and require conversion to KFS. 3) If vendor codes are required, for conversion purposes, FA’s are responsible for establishing those vendor codes. 4) If the work under a contract or purchase order has been completed and a department does not want to carry over the open encumbrance(s) to KFS, departments shall submit an OPRPM Form 127b (Attachment 275.1b) and OPRPM will properly close out the contract or purchase order.

6. Dangling Encumbrances/ Purchase Order Amendments

7. Dangling Encumbrances Dangling encumbrances generally result from changes made after the issuance of a purchase order document. As such, departments should ensure that purchase order amendments are issued prior to payment of the purchase order to eliminate the likelihood of a dangling encumbrance remaining after final payment.

8. Purchase Order AmendmentsAPM A8.250, paragraph 15 Purchase order amendments should be issued prior to payment when there are significant modifications to material elements of the order which affect price, as follows: 1) Increase or decrease in quantity; 2) Significant increase in total dollar amount; 3) Changes to purchase orders issued by OPRPM; 4) Changes to purchase orders which result in a purchase which exceeds the limits of a fiscal administrator’s purchasing authority; 5) Changes which would significantly alter the original specifications of the item(s) to be purchased or would significantly modify the terms of the purchase; 6) Partial or total cancellation of the order.

9. Purchase Order AmendmentsAPM A8.250, paragraph 15 Examples of conditions that would not necessitate the issuance of a purchase order amendment for a purchase order within a fiscal administrator’s signing authority: 1) Changes to tax (e.g. purchase order indicated 4.712% tax, vendor actually charges 4.5% tax); 2) Changes to shipping charges or insurance (e.g. estimated shipping on the purchase order was $500, actual shipping cost is $450); 3) Any price adjustment of a non-substantial dollar amount determined to be reasonable by the Fiscal Administrator.

10. OPRPMPurchase Orders Departments should not delete any remaining encumbrances or close a purchase order that was issued by OPRPM. All changes to such purchase orders, regardless of dollar amount, should be forwarded to OPRPM for review and approval. Instructions will be forthcoming on how to liquidate encumbrances in KFS without issuance of a purchase order amendment.

11. QUESTIONS?