Emerson College Finance

Procurement Policy - Draft

Draft Procurement Policy

DRAFT 6/28/2019

General Policy

Purchasing activities are conducted in Procurement Services as well as by academic and administrative departmental employees.  Purchasing activities include obligations for proper transaction documentation, fiscal responsibility, ethical behavior, alignment with College values, adherence to federal and state government regulations, and compliance with college by-laws and policies.

Reason for the Policy

Procurement of goods and services must support the mission of the College and the prices paid must be fair and reasonable. 

Key Officer to Contact Regarding this Policy

The Vice President of Administration and Finance is the Responsible Official for oversight and implementation of this policy.  Please direct any questions to the Associate Vice President for Financial Business Services.  

Related Policies

Signatory Authority:   http://www.emerson.edu/policy/signatory-authorization

Contract Policy:  https://www.emerson.edu/policy/travel-business-policy

Conflict of Interest:  http://www.emerson.edu/policy/conflict-interest

Records Management: http://www.emerson.edu/policy/records-management

Elaboration of the Policy

PROCUREMENT

Procurement of goods and services for the College must be conducted in an open and competitive environment to ensure that prices paid are fair and reasonable.  Whether taking place in Procurement Services or in academic and administrative departments, College employees must ensure proper transaction documentation is maintained, fiscal responsibility is observed, transactions are ethical and aligned with the values of the College, federal and state government regulations and College by-laws and policies are adhered to.

Procurement Services provides support to the College community in the selection, acquisition, use and disposal of goods and services by:

Maximizing the College’s purchasing power by focusing on strategic sourcing and obtaining the best value.

Leveraging its expertise in contract negotiations and supplier management to advantage the College.

Streamlining processes and investing in new technologies to provide administrative efficiencies.

Ensuring that purchases are made in accordance with all applicable College bylaws, laws, regulations, codes and ordinances.

Minimizing risk exposure while maintaining flexibility in procurement activity.

 

PROCUREMENT AUTHORITY

The College’s Signatory Policy identifies which positions are authorized to commit Emerson resources; establishes associated dollar thresholds; defines the events which Colleges associates are authorized to exercise delegated authorities over, and set forth the College’s expectations of individuals who sign legally binding contracts on its behalf.

 

 III. PURCHASING WITH SPONSORED FUNDS

Purchases using sponsored funds must be made in accordance with the US Government’s Office of Management and Budget “Uniform Guidance.”

 

ETHICAL CONDUCT

Care must be taken to avoid the intent and appearance of unethical practice in relationships, actions and communications.  All procurement activities conducted on behalf of the College must be in compliance with the standards outlined in federal, state and local laws; College policies; and Procurement Services procedures.  For more information about the College’s polices visit https://www.emerson.edu/policy.  It is the responsibility of each faculty and staff member of the college to ensure that the College does not knowingly enter into any purchase commitment that could result in a conflict of interest.  Departments with questions about a particular situation should contact the Procurement Services. The ultimate decision maker on whether a procurement-related activity has the intent or appearance of unethical practice is the Vice President and General Counsel.

Procurement Services is charged with the responsibility of maintaining an open and competitive process for procuring goods and services.  Bids and proposals from competing suppliers will be evaluated by Procurement Services.  As part of their stewardship responsibilities, departmental end users are encouraged to compare prices between suppliers even when the purchase amount does not require a formal bidding procedure.  An open and competitive purchasing environment requires that information pertinent to the bidding process be kept confidential.

 

PURCHASING THAT REFLECTS THE COLLEGE’S VALUES

Diversity, social responsibility and environmental sustainability are central to the College’s mission.  The College is committed to providing business opportunities to suppliers who help the College honor these values.  Visit https://www.emerson.edu/about-emerson/strategic-plan/vision-objective-values for more information

 

TAXES

College purchases are not subject to Massachusetts sales and use taxes when used for educational purposes. Certain other states also honor this or have an equivalent rule however California does not. College employees with questions about a particular situation should contact Purchasing Services.

 

VII. FINANCIAL CONTROLS

Financial controls provide reasonable assurance of the effectiveness and efficiency of operations, compliance with laws and regulations, and reliability of financial reporting.  Procurement internal controls focus on ordering, approving, receiving, and reconciling.  Each College department should have the appropriate procedures in place to provide for adequate controls in each of these steps within the procurement process and must separate among two or more people the duties of these steps; whenever possible, there should be no direct reporting relationship among these individuals.

 

VIII. INFORMATION TECHNOLOGY SECURITY AND PRIVACY

All acquisitions of information technology or data goods and services require advance consultation/approval with Information Technology

 

PROCURE-TO-PAY PROCESS

All purchases of goods and services must be done in an open and competitive environment to ensure that the prices that the College pays are fair and reasonable.  Below is an outline of the appropriate steps to take each time a purchase is made.  While Procurement Services’ involvement is required for some of these steps, its staff can assist with any and all steps.  Note that purchases of $10,000 or more must also follow the competitive bid process, as described in the Competitive Bid Process section below.

DETERMINE NEEDS

The first step in the purchasing process is to determine the need.  The specifications, performance standards and/or scope of work should be outlined.  These items should be general in nature to allow for sufficient competition in meeting them; they should neither reference nor be written specific to a particular brand, model or company.

IDENTIFY POTENTIAL SOURCES

The College requires and encourages competition among suppliers in providing goods and services to the college. Competition provides the greatest opportunity for the college to procure goods and services at the best value.  Accordingly, those involved in supplier selection have the responsibility to search broadly and completely for viable suppliers.  Sources for the goods or services should be considered in the following order:

Internal Service Provider

An Internal Service Provider is a College department that provides goods and/or services to another College unit. Related costs are billed to the receiving unit at a reasonable rate.

Supplier with a Strategic Contract

Strategic Contracts are contracts with suppliers that have been through a competitive process and the terms have been secured at the best value and are available to authorized users College-wide.  These suppliers provide goods and services with favorable terms for pricing, delivery and other factors and thus are the preferred source for purchasing goods or services from external entities. Procurement Services should be contacted before placing large-quantity orders off of Strategic Contracts, as the orders may be eligible for additional discounts.

Other Supplier

When neither of the aforementioned sources offers the goods or services that the unit needs, Procurement Services should be contacted to identify other suppliers. Procurement Services may establish a department-level contract if there is a purchasing need unique to a specific unit and either 1) the unit will be making repetitive purchases of a good and/or service from the same supplier over a period of time or 2) a contract is necessary to adequately define the goods and/or services to be provided.

COLLECT QUOTES AND SELECT BEST VALUE

It is generally good practice to price transactions and collect quotes from a variety of sources before selecting one. The lowest price may not always be the best value. Departments should consider the total cost of ownership, which includes the purchase price, transportation, handling, inspection, quality, rework, maintenance, disposal and other associated costs.  For purchases under $10,000, department end users should obtain pricing from the supplier before creating a Purchase Order.  Purchases of $10,000 or more must follow the competitive bid process, as described in the Competitive Bid Process section below.

PLACE THE ORDER

If ordering from an Internal Service Provider, the unit providing the good or service should be contacted for instructions on how to place the order.  Ordering methods for purchasing from a College Contract vary; instructions for the appropriate way to place an order are available from Procurement Services.  If not ordering from an Internal Service Provider, authorized College employees may order goods or services using a Purchase Order or PCard.  Because Purchase Orders offer the College the best legal and financial protections, they are the preferred method for ordering goods and services.  Procurement Services, however, should be contacted before any repetitive purchases are made with a Purchase Order, as a supplier contract may be more appropriate and efficient.

The Purchase Order is the mechanism that places the order with the supplier and provides a method for payment of the invoice; goods and services should not be obtained prior to the supplier receiving the Purchase Order.  For information about how to request a Purchase Order, visit the Procurement Services website.  The order quantities, pricing and payment schedule on the Purchase Order should be established in the same way as the supplier will invoice.

A College purchasing card or PCard is a credit card, granted to authorized users, that the College issues through a banking institution and that the College pays directly.  PCards are intended for travel and for small-dollar, infrequent transactions.  PCards should rarely be used to make purchases from payment systems that do not provide on the PCard statement visibility into the item(s) that was purchased (e.g., PayPal, Google Wallet, etc.).  If such a system is the only way the supplier accepts payment, detailed receipts showing the final supplier and item details must be provided.

The PCard may be used when a supplier does not accept a Purchase Order and when buying goods or services not available through Internal Service Providers or College Contracts.  The cardholder is accountable for all purchases made on his or her card and must load all required receipts into Workday.  Cardholders or their delegates must expense PCard transactions monthly and secure the appropriate College approval(s).

Cardholders should contact Procurement Services as needs arise or are identified for 1) purchases to any one supplier or for any one good or service for $5,000 or more; 2) more than $25,000 in purchases of any good or service in one year; or 3) more than six purchases of any good or service in a year.  Procurement Services will assist the cardholder in determining if another procurement method is more appropriate.

Cardholders are responsible to make sure Massachusetts sale taxes are not included.  The Tax Exempt number is included on the front of every PCard.

RECEIVE THE GOODS OR SERVICES

College departments have a number of responsibilities related to receiving goods and services.  It is College’s practice to have suppliers’ direct shipments to either the location of the departmental end user or to an appropriate receiving point.  Suppliers may only direct shipments to either a college address or other college-approved location.  Guidance for help in choosing the appropriate address for receiving goods is available by contacting Procurement Services.

Upon receipt, the College unit should immediately inspect the shipment to be sure that it is correct, complete and not damaged.

If there are any order-related problems, including discrepancies in pricing or amount, incorrect or missing items, etc. the supplier should be contacted immediately.

If the goods are damaged, save all materials and the shipper should be contacted to come and inspect the items.

If either of these situations arise or if there are delivery or supplier performance issues, contact Accounts Payable to request a hold on payment. Once an invoice is paid, Procurement Services’ ability to provide assistance in resolving disputes is diminished.

If there is a problem with goods or services received and they were purchased through a College Contract, then Procurement Services can provide assistance in resolving disputes with suppliers.  For supplier performance tracking, College departments should notify Procurement Services of any significant supplier performance issues.

Finally, the end-user department is responsible for returning items that need to be returned and for verifying that the proper credit, if needed, is made.

 

INVOICING AND PAYMENT

Accounts Payable is responsible for processing the payment of goods and services to suppliers in compliance with College policies and standard processes, external regulations and legal requirements.  It is standard process for suppliers to send invoices directly to Accounts Payable.  Suppliers that send invoices to end users may experience delays in payment.  If a college unit receives an invoice, it should be scanned immediately and a copy of that invoice should be emailed to Accounts Payable.

When a College unit approves a payment, it is attesting that it received the good or service, where applicable; that the payment amount is correct; that the payment should be made; and that the payment is business appropriate. 

The college’s payment terms are Net60.  This means, unless agreed to by a duel signed agreement that the college will pay its vendors within sixty days of the invoice date.  Suppliers, with or without a duel signed agreement may elect to be paid faster in exchange for a discount.  These discount options are shown in the table below.

 

RECONCILE ACCOUNTS

College units must reconcile their budget reports and PCard statements on a timely basis to:

Verify the business appropriateness of each transaction.

Confirm that all purchases were allowable and within budget and spending limits.

Ensure proper reporting of payments to suppliers.

Resolve any errors as soon as possible.

Check that proper credits have been made.

Ensure that the appropriate buying method was used.

As part of this process, the statement should be matched to the Purchase Order and packing slip or other documentation that documents the transaction.

MAINTAIN RECORDS

College units must maintain records for all transactions as described in the record retention policy.  When purchasing with sponsored funds, the retention requirements may be much longer; questions regarding retention requirements should be directed to Sponsored Programs.

 

COMPETITIVE BID PROCESS

All transactions $10,000 and greater must be competitively bid.  For orders under $25,000 this requirement may be satisfied by attaching three competitive quotes to the requisition. Competitive bidding is the process that allows the College to properly survey the marketplace and secure goods and services at fair and reasonable prices.  It helps ensure that the College receives goods and services of the best value while also satisfying federal, state and College requirements.  For competitive bids over $25,000, Procurement Services is the authorized organization to conduct the competitive bid process.

Goods or services bought from Internal Service Providers are exempt from this requirement since the transactions are internal to the College.  Similarly, because Procurement Services has already completed a competitive analysis for suppliers with College Contracts, it is not necessary to hold another competitive bid process for purchases from those contracts. 

Splitting a transaction into smaller dollar amounts, delaying, staggering purchases, and using multiple staff members to purchase the same or related items to avoid the competitive bid process are serious policy violations.  All transactions found to be in violation of the College’s competitive bid process will be reported to senior management as unauthorized purchases.  Employees responsible for violating transaction(s) may be subject to disciplinary action up to and including termination.

Although Procurement Services conducts the competitive bid process, College units have responsibilities as well.  Upon request, Procurement Services will assist College units with any of their responsibilities related to the competitive bid process.

SUBMIT SPECIFICATIONS

College units must outline and submit to Procurement Services the detailed specifications, performance standards and/or scope of work of the goods or services needed.  These items should be generic in nature to allow for sufficient competition in meeting them; they should neither reference nor be written specific to a particular brand, model or company.  If a supplier’s assistance is required to develop the bid specifications that supplier cannot submit a bid without approval of the Sr. Director of Procurement Services and all materials gathered or prepared must be shared with all potential bidders.

SOLICIT BIDS

Informed by the specifications that the College unit provides, Procurement Services develops and issues a Request for Information (RFI), Request for Quotation (RFQ) or Request for Proposal (RFP) to solicit bids from suppliers.  Each supplier receives the same directions, information, terms and conditions.  Procurement Services only considers valid those submissions from suppliers that meet the bid requirements and are sent to Procurement Services by the specified deadline.

EVALUATE PROPOSALS

Procurement Services works with the college unit to assess each proposal to determine which represents the best value to the College.

An open and competitive purchasing environment requires that information related to the bidding process be kept confidential; College employees must conduct themselves ethically, as described above, at all times. Suppliers must contact Procurement Services to obtain bid results.

NEGOTIATE THE AGREEMENT AND MAKE THE AWARD

Procurement Services negotiates the final proposals and contracts, however since the College department is the ultimate owner of the relationship, it makes the final determination as to which provider receives the award.

 

SOLE SOURCE PROCESS

The College is expected to make purchases in an open and competitive environment to ensure that the College receives fair and reasonable pricing.  Because a sole source process doesn’t include a survey of the marketplace nor competition among suppliers, it makes it difficult for the College to meet these expectations.  Despite these drawbacks, there are some situations in which a sole source process is in the best interest of the College.

When submitting a request to deviate from the standard competitive bid process, the College unit must complete the Sole Source Justification Form available on the Procurement Services website.  Completion of this form does not guarantee that Procurement Services will approve the request.  Goods or services available from more than one supplier are subject to the competitive bid process described above.  Procurement Services will help the unit identify suppliers and facilitate a competitive bid process.

Units must not create or attempt to create sole source situations through delay or other manipulation of the procurement process.  Procurement Services will work with units to determine whether a sole source situation exists and, in such cases, reserves the right to negotiate pricing or solicit additional information. 

 

XII. NON PO PURCHASES

Already addressed are PCard purchases, beyond that, there are very few purchases that do not require a PO.

A  REAL ESTATE

Real Estate purchases and leases have their own process and controls.

B  EMPLOYEE/VISITOR EXPENSE REIMBURSEMENT

See the Travel Policy for details

C  STATUTORY FEES/TAXES/INSURANCE/DEBT SERVICE

These are centrally managed and have their own process and controls.

D UTILITIES

These are centrally managed and have their own process and controls.

E HONORARIA & SPEAKER FEES BELOW $600

Complete a Create Supplier Invoice Request form in Workday for all stipends & speaker fees below $600. Attach proper documentation with request.

 

 

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