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Section 7 - Purchasing

Section 7.2 - Purchase of Goods and Services

Date: 9/24/07 — Approved: Finance Board, editorial change 12/12/07

The Accounting Department has the authority and establishes procedures to facilitate the purchase of equipment, materials, commodities, supplies, and services. No other individual or AS department has the authority to commit the AS to purchasing goods and services, unless that authority has been specifically given to them.

The area departments makes all formal negotiations for prices, determines the appropriate prices and ensures the product or service is suitable, reasonable, and delivered in a timely manner.

METHOD OF ORDERING GOODS AND GENERAL SERVICES

There are three methods for ordering goods and general services

• Purchase Order - Issued for a one-time delivery for a specific good or service. When the good or service is delivered and paid in full, the order is complete and the purchase order is closed.
• Lines of credit with established vendors – The AS has established various commercial credit card programs for the purchase of goods and services.  Use of a line of credit eliminates the need for purchase orders and can streamline the purchasing process for these smaller dollar purchases (amounts less than minimum required for a purchase order).  Commercial credit cards may be issued to staff to make purchases on behalf of the AS  Approved invoices must be forwarded to the AS business office as soon as possible after the purchase of goods or services, with appropriate supporting documentation and accounting distribution.
• Procurement Card (P-Card) - See Section 7.6, The AS P-Card.  (The AS P-Card may only be used to purchase goods.)

Bid Requirements

The following are the bid requirements for purchases.  The thresholds depend on the total cost of the purchase.  Total cost includes cost of product, shipping, set-up, sales tax, etc.
Purchases less than $2,499 – No alternate vendors are required to be shown on the Purchase Order Request form.
Purchases between $2,500 and $9,999 – Telephone quotations are required.  Three alternate vendors must be contacted for prices, terms, and availability.  When vendors have been contacted, this information should be indicated on the Purchase Order Request.  List three or more vendors including ADDRESS, TELEPHONE NUMBER, NAME OF INDIVIDUAL WHO QUOTED PRICE and the DATE.  Furnish sufficient specifications to solicit competitive bids even though item proposed is a “Single Source” item.  INCLUDE MODEL NUMBER, DESCRIPTION, SIZE, COLOR, and any other applicable specifications that might be necessary to assure purchase of the correct item.  Descriptive literature or brochures should be attached if available.  Individual departments are responsible for obtaining the quotations.
If three bids are not obtained by the account budget manager, the order will not be processed until the required bids are submitted.
Purchases of $10,000 or more – Require three (3) written bids, which are submitted by the proposed vendors in writing.  These bids must be attached with the Purchase Order Request form.  Purchase may not be finalized until a purchase order is processed and signed.
WE MUST BE COMPETITIVE—“Single Source” or “No Substitutions” is not enough.  Justification for “Single Source” should include:

• Unique performance factors of the product specified.
• Why these specific factors are required.
• What other products have been examined and rejected.
• Indicate if item is “Equipment Components.”

PURCHASES REQUIRING SPECIAL APPROVALS

Advertising

AS funds may be used for public relations, promoting educational exhibits, informational announcements, official notices, recruitment notices for faculty/staff, and publication of brochures. The AS will not pay for entertainment, community relations, or public relations not directly related to the objectives of the AS This prohibition includes, but is not limited to, athletic events, cultural events, conventions, or any other activity not conducted by the AS

Decorations

Office decorations such as paintings, prints, wall hangings, plants, planters, and other art or decorative objects may be purchased only when specific budget appropriations are made for this purpose.

Safety

All decorations must conform to the appropriate campus safety regulations.

EQUIPMENT LOANED TO THE AS

Vendors occasionally loan equipment to the A.S. for trial purposes, testing, evaluation, or short-term projects at no cost. The individual departments handle the arrangements for such loans.

FREIGHT

When freight bills are received directly by the department, they should be sent immediately to AS business office. The freight bill should be signed and dated to signify approval for payment. Include account number and/or the purchase order number (if known) on the freight bill. 

MULTIPLE PURCHASES

Separate purchases from one vendor that total more than $10,000 in a fiscal year must be bid on an annual basis.

OPERATING AND CAPITAL LEASES OF EQUIPMENT

Departments may acquire the use of equipment over some specified time period through a lease agreement. There are two types of lease agreements: capital leases and operating leases. Capital leases essentially transfer the benefits and risks inherent in ownership of the property to the A.S.; operating leases do not. (See Section 12.2 -Capitalization and Valuation of Property and Equipment for official AS definitions.) Some capital leases also provide for acquisition of equipment with title passing to the AS after a specified number of payments. The accounting department is responsible for monitoring lease agreements and properly classifying them at their inception.

Occasionally departments may find it convenient to seek outside financing for an acquisition; however external financing should be sought only when there are no internal sources of funds.  Outside financing must be approved by accounting prior to starting this process.

Conditions for Leases

Departments may acquire equipment through an operating or capital lease arrangement if the following conditions are met:

• Operating or capital leases from vendors or third party financiers are not made for transactions less than the bid requirements (principal amount). Exceptions to these guidelines must be approved by the accounting department. Attempts should be made to fund these transactions within the A.S. Any internal financing must be reviewed and approved by the Finance Board. Additional reviews and approvals may be required depending on the nature of the purchase and campus requirements. Contact the accounting department for information on additional requirements.
• The source of first-year funding must be determined. The account number(s) and title must be included to show adequate funding resources.

EXPEDITING

The ordering department follows up as requested on purchase orders to speed the purchasing process. The purchasing department handles correspondence with vendors regarding any aspect of the order.

Losses, damages, and adjustments

When the wrong item is received, or an order is damaged or lost, the ordering department should communicate directly with the vendors or carriers. Losses and damages are reported according to appropriate AS procedures.

GRATUITIES

Work related gifts that are used in the office (calendar, clocks, etc.) may be accepted by any employee.  All personal gifts with a value greater than $25 must be reported to the Executive Director.  A personal gift with a value of under $25 may be accepted by any employee.  Personal gifts that are valued at over $25 should be forwarded to the Executive Director to be placed in the corporate pool for distribution at employee events (holiday party, raffle, etc.).

A.S. PAYMENTS TO NON-RESIDENT ALIENS

A Non-Resident Alien service vendor is a vendor who provides services to the Associated Student and their primary residence is not in California.

All 1st time service vendors must be pre-approved via a purchase order or a contract to ensure we are complying with non-resident alien Federal and State laws.  The vendor will be required to fill out a Federal form W-9 and detail their tax status with the Federal and State taxing agencies.  We cannot process the purchase order of contract until we have receive the appropriate tax documents.

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