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PURCHASING 101. Additional information and notes are available about each slide. The n otes are not available when viewing the slide show. The notes are available in “Normal” view underneath the slide. See below. . When Making Purchases for the State. Remember to:

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slide2

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.

when making purchases for the state
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
sections
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
slide6

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”

first steps agency contracts
First Steps: Agency Contracts

Does your agency have a current agency contract?

Yes

Purchase directly from the contract

No

first steps mandatory use providers
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

first step state cooperative contract
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

state cooperative contract exception
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).

state cooperative contract exception1
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

state cooperative contract exception2
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:

state cooperative contract exception3
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;

state cooperative contract
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).

state cooperative contract1
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).

state cooperative contracts
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.

slide23

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.

small purchase rule
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

small purchase thresholds
Small Purchase Thresholds
  • Individual procurement threshold ($1,000)
  • Single procurement aggregate threshold ($5,000)
  • Annual cumulative threshold ($50,000)
small purchase thresholds1
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

small purchase thresholds2
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.

small purchase thresholds3
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.

small purchase thresholds4
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.

small purchase rule1
Small Purchase Rule

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

how to purchase real items
How to Purchase “Real” Items

1st – Agency Contract

2nd– Mandatory Use Providers

3rd – State Cooperative Contract

4th – Small Purchase Rules

(Watch the Thresholds)

slide32

SECTION 3 – Purchasing

Items $1,001- $5,000

(Bidding Required)

slide33

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

telephone email quote
Telephone/Email Quote

Click above for document

slide35

Telephone/Email Quote

DO NOT disclose any information of other quotes obtained –

including price, delivery, brand, etc.

purchasing items 1 001 5 000 bidding required
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

slide37

SECTION 4 –

Purchasing

Items over $5,000

(State Purchasing)

purchasing items over 5 000
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

purchasing items over 5 000 by state purchasing
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.

purchasing items over 5 000 by state purchasing1
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
slide41

Purchasing Items over $5,000By State Purchasing

Just a reminder:

RQS can become a PO or a Contract

RQM can only become a Contract

slide42

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
slide43

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
your responsibility
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
first steps sole source
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

sole source procurement1
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. . . .

slide49

Sole Source Procurement

Sole Source does NOT mean:

  • BEST source
  • PREFERRED source
  • MOST CONVENIENT source
  • FAVORITE source
  • CHEAPEST source
sole source requests
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.

slide51

Sole Source Request Form

Version

10/23/2013

Always check purchasing.utah.gov for the most up-to-date form

sole source requests1
Sole Source Requests

A signed sole source

  • Is NOT the same as a contract
  • Once the sole source has been signed by State Purchasing, a contract MUST be created by the agency
  • The contract must be signed by all parties including State Purchasing before any goods or services can be obtained
notice
Notice

The following information discusses matters of law. You are strongly advised to consult with your attorney regarding any and all legal issues presented herein. The Division of Purchasing and General Services is not authorized to give legal advice.

small purchase rule2
Small Purchase Rule

Do NOT divide a purchase to stay under the thresholds

63g 6a 2305 penalties for artificially dividing a purchases
63G-6a-2305Penalties for Artificially Dividing a Purchases

(8) It is unlawful for a person to intentionally or knowingly divide a procurement into one or more smaller procurements with the intent to make a procurement:

(a) qualify as a small purchase, if, before dividing the procurement, it would not have qualified as a small purchase; or

(b) meet a threshold established by rule made by the applicable rulemaking authority, if, before dividing the procurement, it would not have met the threshold.

63g 6a 2305 penalties for artificially dividing a purchases1
63G-6a-2305Penalties for Artificially Dividing a Purchases

(9) A division of a procurement that is prohibited under Subsection (8) includes doing any of the following with the intent or knowledge described in Subsection (8):

(a) making two or more separate purchases;

(b) dividing an invoice or purchase order into two or more invoices or purchase orders; or

(c) making smaller purchases over a period of time.

(10) A person who violates Subsection (8) is subject to the criminal penalties described in Section 63G-6a-2305.

63g 6a 2305 penalties for artificially dividing a purchases2
63G-6a-2305Penalties for Artificially Dividing a Purchases

Dividing a procurement in order to remain under the small procurement threshold is fraud and is illegal.

If it is discovered that a person has intentionally or knowingly divided procurements, he or she can be charged as follows:

  • Less than $100,000 = class B misdemeanor
  • Between $100,000 and $250,000 = class A misdemeanor
  • Between $250,000 and $1,000,000 = third degree felony
  • Over $1,000,000 = second degree felony
  • Shall be dismissed
ethical actions
Ethical Actions
  • Be Independent
  • Do Not Accept Gifts from Vendors
  • Do Not Socialize with Vendors
  • Do Not Play Favorites
  • Maintain Confidentiality
slide62

Ethical Actions

  • Follow the Law
  • Act Only in the Public Interest
  • Remember - You are a Trustee of the Public’s Money
slide63

63G-6a-2304.5 Gratuities, Kickbacks, Unlawful Use of Position or Influence

(1) (c) "Gratuity" means anything of value, including:

(i) money;

(ii) a loan at an interest rate below the market rate or with terms that are more advantageous to the person receiving the loan than terms offered generally on the market;

(iii) an award;

(iv) employment;

(v) admission to an event;

(vi) a meal;

(vii) lodging;

(viii) travel; or

(ix) entertainment for which a charge is normally made.

slide64

63G-6a-2304.5 Gratuities, Kickbacks, Unlawful Use of Position or Influence

(1) (g) "Kickback" means a gratuity given in exchange for favorable treatment in a pending procurement or the administration of a contract.

(2) Nothing in this section exempts a person subject to the provisions of Title 67, Chapter 16, Utah Public Officers' and Employees Ethics Act, from complying with the provisions of the Utah Public Officers' and Employees Ethics Act.

slide65

63G-6a-2304.5 Gratuities, Kickbacks, Unlawful Use of Position or Influence

(3) (a) Except as provided in Subsection (6) or (7), it is unlawful for an interested person to give, offer, or promise to give a gratuity to:

(i) a procurement participant; or

      • an individual who the person knows is a family member of a procurement participant.
  • Except as provided in Subsection (6) or (7), it is unlawful for a procurement participant to ask, receive, offer to receive, accept, or ask for a promise to receive a gratuity from an interested person.
slide66

63G-6a-2304.5 Gratuities, Kickbacks, Unlawful Use of Position or Influence

(8) A person who violates this section is guilty of:

(a) a felony of the second degree if the total value of the gratuity or kickback is $1,000 or more;

(b) a felony of the third degree if the total value of the gratuity or kickback is $250 or more, but less then $1,000;

(c) a class A misdemeanor if the total value of the gratuity or kickback is $100 or more, but less than $250; or

(d) a class B misdemeanor if the total value of the gratuity or kickback is less than $100.

slide67

63G-6a-2306Penalties

  • . . .in addition to any penalty contained in any other provision of law, a public officer or public employee who intentionally violates a provision of Section 63G-6a-2304.5, or Section 63G-6a-2305 shall be dismissed from employment or removed from office.
  • Except as provided in Subsection (4), a public officer or public employee who intentionally violates a provision of this chapter is subject to disciplinary action, up to and including dismissal from employment or dismissal from office.
gratuities and kickbacks presentation
Gratuities and Kickbacks Presentation

Cronyism: an anticompetitive practice that may violate federal antitrust law. Cronyism is a form of favoritism where contracts (or purchase orders) are awarded on the basis of friendships, associations or political connections instead of fair and open competition.

gratuities and kickbacks presentation1
Gratuities and Kickbacks Presentation

For further understanding, please see the training entitled “Gratuities, Kickbacks, & Undue Influence”

  • Purchasing.utah.gov
  • Click “Agency Training”
  • Click “Gratuities, Kickbacks, & Undue Influence”