Policy on the Acquisition of Merchandise and Services
11/20/2003
PURPOSE: The purpose of this policy is to describe the different methods for acquiring merchandise and services and identify when these methods should be used.
GENERAL CONDITIONS: The policies regarding the acquisition of merchandise and services established by the State of Texas and the Board of Regents will be followed. No liability will be assumed for payment of obligations except for those incurred in accordance with authority granted, such as official purchasing agents and specific designees of the University.
MERCHANDISE: In most cases, there is a competitive marketplace from which to purchase consumable materials, supplies, and equipment. To avoid conflicts of interest, conserve university funds and meet policy goals, UT Southwestern requires the procurement of consumable materials, supplies, maintenance and equipment be requisitioned through the Department of Purchasing. Upon receipt in Purchasing, requisitions will be processed in accordance with established bidding guidelines, including efforts to meet the goals set for purchases from historically underutilized businesses. Failure to process purchase requisitions properly could lead to overpaying for merchandise, loss of sales tax exemptions, and internal control failures.
SERVICES: Similar to merchandise, there is a competitive marketplace from which to purchase most services. Services are provided by business entities and individuals functioning as independent contractors. Note the categories of services set forth as follows:
PROFESSIONAL SERVICES: Professional services are directly related to professional practices as defined by the Professional Services Procurement Act, (Government Code, Section 2254.002). These include services within the scope of the practices of: accounting, architecture, optometry, medicine, land surveying, landscape architecture, professional nursing/registered nurse, and professional engineering. These services require a written contract processed through the Office of Contracts Management.
CONSULTING SERVICES: Consulting is the practice of studying or advising with respect to some aspect of UT Southwestern operations or management without the traditional relationship of employer and employee (Government Code, Section 2254.021). The legislature has established specific statutory requirements and procedures which must be followed prior to establishing a contract for consulting services. Specifically, the procedures include providing notification of intent to enter into the contract to the Legislative Budget Board and the governor's Budget and Planning Office (BPO). The BPO must issue a finding of fact that the services are necessary. Publication of an invitation to provide offers of consulting services must be made in the Texas Register at least 30 days prior to awarding a contract. Finally, publication in the Texas Register must be made within 10 days after entering into a contract for consulting services. All services of this type will require a contract to be processed through the Office of Contracts Management to ensure compliance with statutory requirements.
OTHER PERSONAL SERVICES: Services which are not considered Professional Services or Consulting Services as defined by statute and detailed above are included in this category. These services may be provided by a business entity (corporation, partnership, sole proprietorship) or by individual independent contractors (see below). All services will require a contract to be processed through the Office of Contracts Management to ensure compliance with statutory requirements.
CONSULTANT AND LECTURER SERVICES: Payments for outside services relating to teaching or research that are not otherwise available from our faculty are requested on a Consultant and Lecturer Form (form # 3060) which represents a standard contractual agreement. These services, which are generally short-term in nature (10 days or less), are allowed to be purchased outside the bidding process because the provider is selected based on experience and reputation in their particular field. In the case of grants, this form will be used to pay for only essential consultant services which are anticipated and provided for in the grant application. Costs generally include fees and travel. The Consultant and Lecturer Form indicates the type of service provided, by whom, the qualifications of the person performing the service, and the benefit to the University. Payment of consultant or lecturer fees to faculty and staff of UT Southwestern, UT System Health Institutions and UT System Academic Institutions is allowable in accordance with Board of Regents Rules and Regulations, Guidelines for Payment of Fees to Faculty and Staff of UT System Health Institutions and institutional policy for approved continuing education. General revenue funds shall not be used for these payments. Consultant and lecturer fees may not be paid to full-time employees of the federal government.
Independent contractors are individuals who provide services outside the traditional relationship of employer and employee. Completion of a 20-point questionnaire [see Exhibit Al] is required to determine if the relationship meets the criteria of an independent contractor before paying an individual. All requests for personal, professional or consulting services must be referred to the Office of Contracts Management to process a contract for services. This will assure all legal issues associated with the purchase of these services are resolved. If an employee/employer relationship exists, payment requests will be reviewed by Human Resources to ensure all necessary records for employment are completed.
ACQUISITION METHODS FOR WHICH THERE MAY BE A COMPETITVE MARKETPLACE:
PURCHASE ORDERS: Purchase orders are contractual agreements in which two parties agree upon the purchase of equipment, goods or services. All purchases are to be processed through the Department of Purchasing on a purchase requisition ensuring compliance with the institution's bidding practices and minimum dollar threshold. Invoices related to Purchase Orders should be mailed by the vendor directly to the Accounting Department to avoid payment processing delays. If the department receives an invoice directly from the vendor, it should be routed to the Office of Accounting, Accounts Payable division immediately for processing. EXAMPLES of items processed for payment on a purchase order include:
Books
Chemicals
Coffee services
Computer hardware and software (including licenses)
Custom orders for patients - dental related items, hearing loss items
Educational supplies/awards/testing materials
Faculty moving/relocating services
Fees for usage and servicing of computer systems
Films and film processing
Lab fees to external labs/companies
Laboratory supplies and materials
Lease purchases
Maintenance agreements
Medical supplies
Office and computer supplies
Office and lab furniture/equipment
Pharmaceuticals
Reprints, publications, page charges
Routine repairs or servicing of instruments/equipment
Services other than consulting or professional:
Printing, duplicating and reproduction services
Paging services
Answering services
Specialized artwork and photographic expenses
Student store supplies - resale materials/stock
Subscriptions to professional journals
Storage rental
Uniforms and dry cleaning services
Waste disposal
Water service including rental of machine
Any construction or remodeling of office/lab space will be requested on a Physical Plant Work Order form. Physical Plant will provide estimates and either perform the work or contract the job.
Departments are authorized to process purchases up to $1000.00 (including freight), directly through the Small Order (PRO) system which may be accessed by on-line forms system.
Purchase orders will not be issued by the Purchasing Department for less than $100 with the exception of radioactive isotopes and controlled drugs. Requests for such items under $100.00 should be processed by the following options:
1) Delay purchase until items total $100 or more before processing a purchase order whenever possible
2) Purchase item through PRO system
3) Purchase item and request reimbursement by Check Request Form.
4) Emergency purchase item and request reimbursement by Petty Cash Form
5) Procurement Card
CONTRACTS: Contractual agreements for furnishing resources or the performance of services between UT Southwestern and another entity specify terms such as the duration of the agreement, description of requested services to be furnished or performed and the agreed amount to be remitted for such services. If there is a competitive market for these services, bids must be taken or sole source justification must be provided. Contractual agreements are encumbered on a Contract Management Order (CMO) or a Grant Management Order (GMO) and processed through the Office of Accounting, Accounts Payable division. Should the full amount of the encumbrance be unknown at the time of the first payment or initial set up of the contract management order, the amount is estimated and adjusted after thorough review. EXAMPLES of payments processed through the issuance of a contract are:
Contracts for services of individuals (regardless of services being provided)
Educational services contracts (training services)
Health related services contracts (dental, pharmaceutical or professional medical services)
Material transfer agreements
Other personal services
Professional services
Software license agreements (OCM to review only; final agreement handled by Purchasing)
Sponsored research or collaboration agreements
Technical/computer consulting, trouble shooting services
Transcription services
ACQUISITIONS FOR WHICH THERE MAY BE NO COMPETITIVE MARKETPLACE:
CHECK REQUEST FORM: Check Requests should be used for items purchased for which there is no competitive marketplace. Reimbursement of business expenses for which use of the normal purchasing process is not possible may also be processed on a check request. Departments are authorized to obtain items and pay for these by completing a Check Request Form and submitting it to the Office of Accounting, Check Disbursement division. Please note that many of these expenditures are subject to the prior approval of expenditures policy. This policy is maintained on the Accounting Department's website. Individuals processing those transactions must be familiar with those requirements. EXAMPLES of items processed for payment on a Check Request Form are as follows:
Abstract fees and submission fees
Aston Optical Clinic - glasses or other ophthalmology items
Board exams, fees, certification expenses
Books- $250.00 limit
Business meal reimbursement
Coffee and coffee service
Computer supplies- $250.00 limit
Custom orders for patients- dental related items, hearing loss items
Delivery/Courier charges, FedEx, UPS, Airborne, etc.
Experimental subject payments (non-employee)
Institutional dues
Lab fees to external labs/companies
Legal settlements
Medical Board certification
Memberships in professional organizations for individuals
MSP insurance refunds to patients
Non-employee payments for participation incentives
Official entertainment/Official functions, including retreats
Pagers and paging services
Patient models
Poster presentation costs, medical illustration and artwork charges
Professional liability insurance for clinical providers not covered by UT System Professional Liability Plan (e.g. psychologists, nurses, technicians, etc.)
Professional licenses
Repairs and servicing of instruments/equipment
Reprints, publications, page charges
Resident and student activities/functions
Sales tax, payroll related payments - ORP, TDA, etc.
Software- $250.00 limit
Student activities - supplies for functions and resale materials or tickets
Subject screening and eligibility fees
Subscriptions to professional journals
Technical certifications
Telephone payments and approved cellular/mobile phone bills
Transplant services and willed body transport charges
Tuition/scholarships
Utility payments
Water service, including rental of machine
PETTY CASH REIMBURSEMENT: To facilitate the purchase of small dollar items, departments may use the Petty Cash Form for reimbursement. This process begins with a Petty Cash Reimbursement Form initiated by the department. EXAMPLES of items allowable for reimbursement on a Petty Cash Form are:
Experimental subject payments (limited to $50)
Food items for University functions (limited to $50)
Gas for University vehicles and transplant services
Maintenance supplies
Office supplies
Travel for transplant services and study participants
Payments from Petty Cash or via Check Requests follow the same guidelines required to disburse funds-including proper authorization and original receipts. Since the University is exempt from payment of state sales tax on goods and services, employees are encouraged to obtain a sales tax exemption form prior to making their purchases. Sales tax is not reimbursable on state and federal accounts
INTERDEPARTMENTAL REQUISITIONS (IDR'S): Interdepartmental requisitions are used to purchase goods and services from the University's service departments and auxiliary enterprises departments. Even though these goods or services may be available outside the University, the special nature of these goods and services is often met through these internal departments. Examples are:
Animal Resources Center
Audio/Visual Services
Bioinstrumentation
Cafeteria
Duplicating Services
Environmental Health and Safety
Gas Cylinders
General Stores
Human Resources-Southwest Temporaries
Information Systems
Library
Mail Services
Medical Illustration Services
Physical Plant
Student Store
Telecommunications
It is important that all payment transactions be supported by sufficient documentation for identification of the expenditure. In most cases the vendor invoice is adequate, although some expenditures may require additional information to document business purpose and properly account for the transaction. Adherence to this policy facilitates compliance with applicable laws and regulations, and the internal control structure of UT Southwestern.
PROCUREMENT CARD: The Procurement Card Program is a fast, flexible purchasing method for processing small dollar purchases from vendors that accept credit cards. The procurement card is not designed to replace the current UT Southwestern purchasing process. UT Southwestern will comply with the terms and conditions of the Procurement Card Contract as specified and authorized by the State of Texas- Texas Building Procurement Commission. UT Southwestern is utilizing the State of Texas contract for procurement card services with Bank One. The Bank One MasterCard will be issued in the card holder's name with the State of Texas emblem and the wording "Official Use Only" clearly shown on the card. The Procurement is for business purposes only and may not be used for personal transactions.
Some important points of the program:
· Contact the Procurement Card Administrator (Marion Colorado) for detail information
· Dollar limit for one single transaction is $1500.00
· Dollar limit for billing cycle (30 days) is $15,000.00
· Obtain management approval or authorization prior to making a purchase
· All records (sales receipts, etc.) and record retention are kept in the department for 5 years
· All purchases are tracked in the P-Card Solution Software
Items that can be purchased with the Procurement Card:
· Books
· Chemicals
· Computer Supplies
· Construction Supplies (lumber, nails, etc.)
· Equipment Services
· Film and Film Development
· Hardware/Tool Items
· Janitorial Supplies
· Laboratory Supplies
· Medical Supplies
· Meter Postage
· Office Furnishings and Equipment (object code 231)
· Office Supplies
· Plants and Flowers for Landscaping University Property (Physical Plant Only)
· Registration Fees for Conference and Seminars *
· Reprints, Publications, Page Charges
· Repairs
· Safety Supplies
* Each fee must be entered into the P-Card individually
(input valid trip number in REQ NO field and you must use object code 380)
