PURCHASING 101

1. PURCHASING 101

2. Additional information and notes are available about each slide. The notes are not available when viewing the slide show. The notes are available in “Normal” view underneath the slide. See below.

3. When Making Purchases for the State Remember to: • Encourage Fair and Open Competition • Purchase Best Value Goods and Services • Obey the Law • Act Only in the Public Interest

4. Sections • First Steps in Purchasing • Small Purchase Rule ($1,000 or less) • Purchases between $1,001 - $5,000 • Purchases over $5,000 • Sole Source Purchases • Ethics & Penalties for Illegal Activities

5. SECTION 1 – First Steps in Purchasing

6. Flow chart can be downloaded from purchasing.utah.gov home page. Click “Purchasing Forms” on the right and then on “Purchasing Flow Chart” under the heading “Agency Contract Information”

7. First Steps: Agency Contracts Does your agency have a current agency contract? Yes Purchase directly from the contract No

8. First Steps: Mandatory Use Providers Is the item/service available from another state agency? Mandatory Use Providers • State Fleet Operations • Utah Correctional Industries • State Mail and Distribution • Department of Technology Services • State Print Services Yes No

9. First Step: State Cooperative Contract Executive branch procurements units are required to use State Cooperative Contracts when the contract offers products/services that meet agency requirements. Is the item/ service available from a State Cooperative Contract? Yes No

10. State Cooperative Contract: Exception Utah Procurement Code §63G-6a-408 (4) (4) Except as provided in Subsection (5), an executive branch procurement unit may not obtain a procurement item through a small purchase standard procurement process if the procurement item may be obtained through a state cooperative contract or a contract awarded by the chief procurement officer under Subsection 63G-6a-2105(1).

11. State Cooperative Contract: Exception Utah Procurement Code §63G-6a-408 (5) Subsection (4) does not apply if: (a) the procurement item is obtained for an unanticipated, urgent or unanticipated, emergency condition, including: (i) an item needed to avoid stopping a public construction project; (ii) an immediate repair to a facility or equipment; or (iii) another emergency condition

12. State Cooperative Contract: Exception Utah Procurement Code §63G-6a-408 (5) (5)(b) the chief procurement officer or the head of a procurement unit that is an executive branch procurement unit with independent procurement authority: (i) determines in writing that it is in the best interest of the procurement unit to obtain an individual procurement item outside of the state contract, comparing:

13. State Cooperative Contract: Exception Utah Procurement Code §63G-6a-408 (5) • the contract terms and conditions . . . • the maintenance and service . . . • the warranties . . . • the quality . . . • the cost . . . . . . applicable to the procurement item under the state contract with the contract terms and conditions applicable to the procurement item if the procurement item is obtained outside of the state contract;

14. State Cooperative Contract Utah Procurement Code §63G-6a-408 (5) (ii) for a procurement item that, if defective in its manufacture, installation, or performance, may result in serious physical injury, death, or substantial property damage, determines in writing that the terms and conditions, relating to liability for injury, death, or property damage, available from the source other than the contractor who holds the state contract, are similar to, or better than, the terms and conditions available under the state contract; and (iii) grants an exception, in writing, to the requirement described in Subsection (4).

15. State Cooperative Contract Review of §63G-6a-408 (5) (5)(b) the chief procurement officer. . . • determines in writing that it is in the best interest of the procurement unit • determines in writing that the terms and conditions, relating to liability for injury, death, or property damage, . . . are similar to, or better than, the terms and conditions available under the state contract (iii) grants an exception, in writing, to the requirement described in Subsection (4).

16. purchasing.utah.gov

20. State Cooperative Contracts Because State Cooperative Contracts were created after a competitive process, purchases made from the contracts are NOT subject to the small purchase rule in the next section.

21. SECTION 2 – Small Purchase Rule (No Bidding Required)

23. Does the individual item(s) cost less than $1,000? Are the individual item(s) more than $1,000 but less than $5,000 AND the total purchase will cost less than $5,000? Is the total purchase more than $5,000 with multiple vendors available? Sole Source No No Yes Yes Yes These are small purchases. The agency may select the best source without seeking competitive quotes. The complete procurement must total no more than $5,000 with each item in the procurement costing no more than $1,000. When using this process, the agency may not spend more than $50,000 in a fiscal year with an individual vendor. (UCA 63G-6a-408) The agency shall obtain competitive quotes and purchase the item/service from supplier offering the lowest quote meeting specifications. If all known vendors have been contacted and only one vendor offers a quote, the purchase is a sole source – proceed to the box below. Is the total purchase more than $1,000 with only one possible vendor? The agency must complete a sole source request and submit it with a quote from the vendor to State Purchasing. A sole source for a PO must also have an RQS number. The agency shall enter an RQS (results in a purchase order) or an RQM (results in an agency contract). The agency does not collect quotes. Quotes/bids will be obtained by the Division of Purchasing.

24. Small Purchase Rule • Items under $1,000 do not need to be competitively bid • Small Purchase Rule applies Does the individual item(s) cost $1,000 or less? Yes No

25. Small Purchase Thresholds • Individual procurement threshold ($1,000) • Single procurement aggregate threshold ($5,000) • Annual cumulative threshold ($50,000)

26. Small Purchase Thresholds Individual Procurement Threshold: The maximum amount that can be spent on one item under the small purchase rule The threshold, or limit, is $1,000 for one item

27. Small Purchase Thresholds Single Procurement Aggregate Threshold: The maximum amount that can be spent at one time (a single procurement) with all individual items in the procurement being under $1,000. The threshold, or limit, is $5,000 for the total purchase. You can buy many items under $1,000 in the same purchase as long as the total does not exceed $5,000. Do not split a purchase in order to stay under the limit.

28. Small Purchase Thresholds Annual Cumulative Threshold – the maximum amount that an agency can spend with a single vendor in one year using the small purchase rules. When using the small purchase rules, the limit is $50,000 for a single vendor in a year.

29. Small Purchase Thresholds Reminder: Items bought through agency contracts or state cooperative contracts are NOT subject to the small purchase thresholds because the contracts were established after a competitive bid.

30. Small Purchase Rule If a threshold will be exceeded, competition is required to obtain the procurement item.

31. How to Purchase “Real” Items 1st – Agency Contract 2nd– Mandatory Use Providers 3rd – State Cooperative Contract 4th – Small Purchase Rules (Watch the Thresholds)

32. SECTION 3 – Purchasing Items $1,001- $5,000 (Bidding Required)

33. Purchasing Items$1,001 - $5,000 (Bidding Required) • Obtain competitive quotes by phone/email • Two quotes required but three quotes preferred. • Keep all documentation for 5 years • Name of all vendors • Copy of quote • Date of quote • All other paperwork Does the individual item(s) cost between $1,001 and $5,000? Yes No

34. Telephone/Email Quote Click above for document

35. Telephone/Email Quote DO NOT disclose any information of other quotes obtained – including price, delivery, brand, etc.

36. Purchasing Items$1,001 - $5,000 (Bidding Required) • Do NOT tell the vendor they are the winner until all internal processes are complete • All agency procedures MUST be complete before awarding bid Does the individual item(s) cost between $1,001 and $5,000? Yes No

37. SECTION 4 – Purchasing Items over $5,000 (State Purchasing)

38. Purchasing Items over $5,000 • Follow internal procedures • Enter RQS (results in a purchase order) or RQM (results in an agency contract) in FINET • Include description & approximate cost Is the total purchase over $5,000 with multiple vendors? Yes

39. Purchasing Items over $5,000By State Purchasing Purchases over $5,000, must be sent to the Division of Purchasing for processing. Work with your agency’s purchasing and finance offices to follow the correct process.

40. Purchasing Items over $5,000By State Purchasing Send detailed specifications to State Purchasing • Quantity required • Date required (if applicable) • Delivery location • Other pertinent information • Can include a list of recommended suppliers with vendor contact information, e-mail address & phone number

41. Purchasing Items over $5,000By State Purchasing Just a reminder: RQS can become a PO or a Contract RQM can only become a Contract

42. Purchasing Items over $5,000By State Purchasing Process for Procurement: Informal Solicitation • Less than $50,000 Formal Solicitation • Posted for Public Notice on BidSync • Items greater than $50,000 must be posted • At discretion of State Purchasing agent, items less than $50,000 can be posted

43. Common Procurement Methods for Formal Solicitation • Request for Information (RFI) • Request for Quotation (RFQ) • Invitation for Bid (IFB) • Multi-Step Bid (MSB) • Request for Proposal (RFP) • Sole Source • The State Purchasing Agent will work with you to determine which method is best for your requirements. • Templates for Multi-Step Bid, RFP, and Sole Source are available at: • http://purchasing.utah.gov/2012-08-30-20-32-26.html

45. Your Responsibility • Make sure specifications are written to obtain adequate competition • Never let vendors write specifications • Allow sufficient time for all internal agency procedures & State Purchasing procedures • If you don’t know – please ask • Keep good documentation on your purchases

46. Sole Source Procurement

47. First Steps: Sole Source Is the total purchase over $1,001 with only one vendor? • All known vendors contacted-only one bid • If over $1,000, must be approved by the Division of Purchasing. • A quote from the vendor MUST be submitted with the sole source request Yes

48. Sole Source Procurement R33-3-401 Conditions for use of sole source procurement Sole source procurement shall be used only if a requirement is reasonably available from a single supplier. . . .

49. Sole Source Procurement Sole Source does NOT mean: • BEST source • PREFERRED source • MOST CONVENIENT source • FAVORITE source • CHEAPEST source

50. Sole Source Requests All sole source purchases over $1,000 must go to State Purchasing. Sole source requests estimated to be $50,000 and above must be posted for a minimum of 7 calendar days for public comment.