Advancing Into Management Program Purchasing Goods

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Advancing Into Management ProgramPurchasing
Goods Services

• June 2005

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Presentation Objectives

• What the purchasing policy is and why its
  important.
• What are the objectives of the policy?
• How do we achieve the objectives?
• Tools and support mechanisms.
• Where to access additional information.

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Background

• Decentralized No mandated suppliers
• Objective To ensure that goods and services are
  acquired in a manner that reflects effective use
  of resources while maintaining high legal,
  ethical and professional standards.
• Responsibility to achieve this objective rests
  both centrally and at the local departmental
  level.

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Role of Procurement Services

• Information repository - www
• Institution-wide supply agreements
• Purchasing facilitation programs
• Purchasing consulting services
• Sourcing (RFx)
• Contract review
• Financing alternatives
• Monitor compliance with Purchasing Policy

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Purchasing Policy

• Objective
• To provide a framework to
• Ensure we get the best value
• Meet legal and ethical obligations
• Conduct a Fair, Open and Objective process

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Ensure Optimum Value

• Institution-wide supply contracts for broadly
  used commodities and services
• Competitive quotes on purchases over 5,000
• Public tendering on major purchases and projects

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Legal Ethical Obligations

• Publicly-funded institution rigorous standards
• arms length business relationships
• competitive bids/proposals
• evaluation processes that are open to public
  scrutiny
• - Objective - Consistently applied
• - Quantifiable - Transparent

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Result

• Assurance that the public monies entrusted to the
  university by various contributors are expended
  in a manner that reflects effective use of
  resources in accordance with the highest legal,
  ethical and professional standards.

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Where to focus?

• 99 transactions lt25,000 40 total spend
• 1 transactions gt25,000 60 total spend
• For transactions valued
• lt25,000 focus on transactional process used
  including control monitoring
• gt25,000 focus on individual transactions to
  ensure that appropriate competitive bidding
  process is applied

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Purchasing Methods

• Under 5,000
• Purchasing Card
• Purchase Order (optional)
• Certified Invoice (avoid)
• Over 5,000 - Purchase Order
• Travel American Express / Expense reimbursement
  system

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• Web based access to universitys contracted
  suppliers
• Fully integrated with financial system and funds
  management
• Most efficient process - Saves up to 90 time and
  effort
• Locally defined business rules
• Use for
• Lab Supplies Equipment Chemicals
• Office Supplies Computers Radio nucleotides
• More MRO Supplies, Furniture, and UofT
  Bookstore

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No cash required
Purchasing Credit Card Why use it ? What do we
use it for ? Control and monitoring
roles Administrative processes
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Purchasing Card

• Used for University purchases
• Low value,
• Frequently purchased commodities services
• Purchases less than 5,000 (with some exceptions)

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Purchasing Card Benefits

• Low administrative burden
• Convenient
• Reduced requirement for petty cash
• Charges recorded in FIS next day
• Transaction detail capture

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Purchasing CardWhy not for Travel?

• Requires one-up approval
• Canada Revenue Agency requirement
• Additional scrutiny appropriate
• Alternative American Express Corporate Card
• No annual fee, free insurance Life, Flight
  delay, baggage loss, LDW for car rental 45-day
  grace period

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Purchasing Card Administrative Roles
Responsibilities

• Cardholder
• Phone, fax, present or place on-line order
• Reconcile monthly statement
• Forward statement invoice/sales slip to
  departmental administrator
• Departmental Administrator
• Conducts monthly reconciliation of payments
• Files back-up documentation

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Department Level of Responsibility

• Under 5,000
• maintain audit trail.
• 5,001 - 25,000
• maintain audit trail
• documented competitive bids
• Purchase Order created by Business Officer

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RFPs, RFQs, RFIs, Tenders

• What are they for?
• What are the advantages?
• What are the disadvantages?

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Higher Value Purchases

• Over 5,000 multiple quotes required
• Sole sourcing exceptions
• Highly specialized scientific equipment
• Unique specifications with only one supplier
• Request for Quotation (RFQ) specifications
  known only variable is price
• Request for Proposal (RFP) desired outcome
  known variety of means to achieve outcome

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Competitive Solicitation Transaction Levels
Authority
Purchase Process Requirements
Public RFP
or Tender call
Size of
Authority to
Invited RFP
Verbal
Purchase
Purchase
Written
or prequalifying
issue purchase
Tender call
Transaction
Order
Quotes
Quotes
statement
order
P.O. Not req'd use P-card
Up to 5,000
Optional
Optional
No
No
Budgetary Unit
5,001 to
25,000
Yes
Yes
Optional
Optional
No
Budgetary Unit
25,001 to
Procurement Services
100,000
Yes
-
Yes
Optional
No
100,001 to
Procurement Services
500,000
Yes
-
-
Yes
Optional
Procurement
Services
Over 500,000
Yes
-
-
-
Yes
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Consulting, Contracts

• Engaging consultants
• lt 25K/yr - Head of budgetary unit
• gt 25K/yr - Dean or V.P. approval
• Note If consultant is employee of UofT, payment
  must be processed through HRIS. To determine
  whether employee relationship exists
  http//www.utoronto.ca/hrhome/incomtax.pdf
• Executing Contracts
• Contact Procurement Services at the outset
  contract vetting, supplier vetting

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Procurement Methods

• Sole Sourcing
• Technical compatibility
• Only one supplier, no substitute exists
• Unforeseeable urgency
• Honour guarantees, warranties
• Procure a prototype

• Competitive Solicitation
• Request for Quotation price is sole selection
  criterion
• Request for Proposal desired outcome known,
  means and cost to achieve may vary multiple
  selection criteria

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Scenario Discussion

• The Freebie
• The Offer You Cant Refuse
• The Convenient Resource
• The Good, the Bad and the Obstinate

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Demo

• Simple purchase
• Purchase with approval
• Goods receipt
• Demo link

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Where to Get More Information

• Your Business Officer
• Procurement Services
• www.procurement.utoronto.ca
• Purchasing Policies
• How-to Guides
• Pcard and travel card applications
• Vendor lists with links to web sites
• On-line forms
• Frequently Asked Questions
• Departmental Contact information

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The End Any questions?