Purchasing Goods & Services A Guide for Academic Administrators

1. Purchasing Goods & ServicesA Guide for Academic Administrators November 2005 Stephen Whittaker Director of Procurement Services

2. Today’s Objectives • What the purchasing policy is and why it’s important. • What are the objectives of the policy? • How do we achieve the objectives? • What is the role of the Academic Administrator? The Business Officer? • What tools and support mechanisms are available to you? www.procurement.utoronto.ca

3. 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. www.procurement.utoronto.ca

4. 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 www.procurement.utoronto.ca

5. Purchasing Policy Objective • To provide a framework to • Ensure we get the best value for academic purpose • Meet legal and ethical obligations www.procurement.utoronto.ca

6. Ensure Best 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 www.procurement.utoronto.ca

7. Legal & Ethical Obligations Publicly-funded institution = rigorous standards • arms length business relationships • competitive bids • bid evaluation processes that are open to public scrutiny: - Objective - Consistently applied - Quantifiable - Transparent www.procurement.utoronto.ca

8. 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. www.procurement.utoronto.ca

9. Where to focus? • 99% transactions <$25,000 = 40% total spend • 1% transactions >$25,000 = 60% total spend For transactions valued: <$25,000 – focus on transactional process used including control & monitoring >$25,000 – focus on individual transactions to ensure that appropriate competitive bidding process is applied www.procurement.utoronto.ca

10. Purchasing Methods • Under $5,000 • Purchasing Card • Purchase Order (optional) • Certified Invoice (avoid) • Over $5,000 - Purchase Order • Travel – American Express / Expense reimbursement system www.procurement.utoronto.ca

11. Web based access to university’s 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… www.procurement.utoronto.ca

12. Purchasing Card • Used for: • Low value, frequently purchased commodities & services • Not Used for: • Purchases over $5,000 • Personal use • Radioactive materials • Temporary staffing • Travel – transportation, accommodation, food www.procurement.utoronto.ca

13. Purchasing Card:Business Officer’s Role Department is liable for all cardholder charges • Administer new card authorization • Conduct monthly reviews of cardholder individual billing reports for propriety of use • Follow-up on questionable purchases with the cardholder • Maintain a reference file • Monthly activity report to head of the department www.procurement.utoronto.ca

14. Purchasing Card:Academic Administrator Role • Review monthly activity report from Business Officer • Review and sign-off on Business Officer’s pCard purchases www.procurement.utoronto.ca

15. Purchasing Card:Why 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 www.procurement.utoronto.ca

16. Other lower value Purchases Under $5,000 • maintain audit trail. $5,001 - $25,000 • maintain audit trail • documented competitive bids • Purchase Order created by Business Officer www.procurement.utoronto.ca

17. 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 www.procurement.utoronto.ca

18. 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 Procurement Methods www.procurement.utoronto.ca

19. Sole Sourcing Document justification for sole sourcing Create Purchase Requisition or Purchase Order File or forward justification to Procurement Services Competitive Solicitation Compile competitive bids Create Purchase Requisition or Purchase Order File or forward requisition, supporting documents to Procurement Services Procurement Methods Business Officer’s Role www.procurement.utoronto.ca

20. Consulting, Contracts Engaging consultants • < $25K/yr - Head of budgetary unit • > $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 http://www.utoronto.ca/govcncl/pap/policies/contracts.html www.procurement.utoronto.ca

21. Scenario Discussion • The Freebie • The Offer You Can’t Refuse • The Convenient Resource • The Good, the Bad and the Obstinate www.procurement.utoronto.ca

22. 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 www.procurement.utoronto.ca

23. Thank you! Stephen Whittaker s.whittaker@utoronto.ca www.procurement.utoronto.ca