Purchasing Goods and Services
Responsible University Officer(s):
- Associate Vice President and Controller
- Director of Purchasing Services
Purchasing decisions are business decisions made on behalf of the University and therefore should be made with the utmost consideration for what is in the best interest of the University, including appropriate stewardship of University assets, integrity when acquiring goods and services, and accountability to funding sources and stakeholders. This ensures competitive purchasing requirements and a fair and ethical process across the University's purchasing process.
Employees who have purchasing responsibility must document a commitment to ethical purchasing practices by signing a Purchasing Code of Ethics for Department Employee Responsible for Buying. Purchasing Services employees must document their commitment to ethical practices by signing a Purchasing Code of Ethics.
The Purchasing Code of Ethics refers to Minnesota Statute 15.43 ACCEPTANCE OF ADVANTAGE BY STATE EMPLOYEE; PENALTY. Subdivision 1.Financial interest of agents. No employee of the state or of the University of Minnesota in direct contact with suppliers or potential suppliers to the state or the university, or who may directly or indirectly influence a purchasing decision or contract by establishing specification, testing purchased products, evaluating contracted services, or otherwise has official involvement in the purchasing or contracting process may:
- have any financial interest or have any personal beneficial interest directly or indirectly in contracts or purchase orders for goods or services used by, or purchased for resale or furnished to a department or agency of the state or the university; or
- accept directly or indirectly from a person, firm, or corporation to which a contract or purchase order has been or may be, awarded, a rebate, gift, money, or anything of value other than items of nominal value. No such employee may further accept any promise, obligation or contract for future reward.
Competitive Purchasing Requirements
Departments must purchase goods and services as economically as possible according to the specified standards of quality and service while giving responsible suppliers fair consideration. Purchases that total between $10,000 and $49,999.99 require the Price and Supplier Justification Formto be completed and attached into the EFS requisition. With few exceptions, Purchasing Services will conduct a competitive process to select suppliers for single purchases $50,000 and over, AND for repetitive purchase requirements valued at $50,000 and over annually, AND for purchases $250,000 and over from UWide contract suppliers. Splitting purchases to avoid bidding is expressly prohibited. See Bid Requirements.
Departments with repetitive annual purchases from a supplier that exceed the bid threshold must submit a Requisition to Purchasing for competitive bidding.
Individual purchases and contracts valued at $1,000,000 and over must be presented to the Board of Regents for approval after the bid/proposal process has been completed and prior to executing the purchase or contract.
All departments (other than Duluth Campus and Morris Campus) are required to use University Printing Services for all official University business cards and stationery to ensure quality, consistency, and control, as directed by University Relations. Duluth Campus should use UMD Printing Services, and Morris Campus should use UMM Duplicating Services.
Potential outsourcing activity, which creates the potential for displacing University employees, will be escalated to Executive Officers and Human Resources. For other preapproved purchase situations, see Part C of the Department Request for Exception to Board of Regents Policy: Purchasing Goods and Services and Professional Services $50,000 + and Construction Professional Services $100,00+; and Construction Services $250,000+.
Exceptions to Bid Requirement
In some instances, an exception to Bid Requirements may be in the University’s best interests. If an exception is allowable, the department should submit a completed and signed Department Request for Exception to Board of Regents Policy: Purchasing Goods and Services and Professional Services $50,000+ form to Purchasing Services for review and approval before placing order or beginning work. See theDepartment Request for Exception to Board of Regents Policy: Purchasing Goods and Services and Professional Services $50,000+ form for examples of purchases that meet the Exception requirements and the signature thresholds required.
Out-of-Pocket Purchase Provision
Occasionally circumstances may make it impossible to use one of the approved purchasing processes (U Market, PCard, purchase order, etc.). Employees should attempt to secure preapproval from their approving authority to make an out-of-pocket purchase. Employees will be reimbursed for approved out-of-pocket purchases if the purchase meets all other compliance and policy requirements for reasonableness. See Administrative Procedure: Purchasing Goods and Services.
Purchasing during a University Emergency
In the case of a declared University emergency, the Director of Purchasing Services may suspend normal purchasing policies and procedures, including, but not limited to competitive bidding and establish appropriate temporary procedures in order to respond to the emergency and to ensure the continuity of the University’s business. The temporary purchasing procedures may apply to purchases directly or indirectly related to or affected by the emergency. These temporary purchasing procedures will apply until such time as the Director determines that normal purchasing procedures can be resumed.
Purchasing from Targeted Group Businesses
The University strongly supports and encourages purchasing from Targeted Group Businesses as a method of stimulating economic growth in the communities served by the University. Economic growth in the communities directly affects University funding and enrollment. Employees will actively seek to increase the volume of contract awards to such businesses by incorporating goals for businesses owned by minorities, women, and people with disabilities into their overall business plan.
Separation of Duties
Units must give careful consideration to the assignment of duties to staff in regards to procurement transactions so that the same employee is not allowed to select the supplier, place an order, receive the goods/services, approve the transactions, and process the associated voucher and payments.
University libraries may purchase materials in various formats, including micro formats and electronic formats that are required for instructional or research purposes and/or become part of the library collection. University Bookstores may purchase resale items. The Office of General Counsel may purchase legal services.
The University’s Energy Management Department and the Office of Investment and Banking manage the energy procurement for the University. System campuses and departments are responsible to work with Energy Management to assure they are in alignment with their buying and energy management principles.
Purchases from Fairview University Hospital that are related to research projects will not require bidding for any dollar amount.
Purchases of goods, services and professional services between the University of Minnesota and University of Minnesota Physicians will not require review and approval from Purchasing or from the Board of Regents, but will instead be consistent with the Master Agreement for the Purchase of Goods and Services Between the University of Minnesota and University of Minnesota Physicians. The Master Agreement does not apply to lease of real property from one party to the other, or to sponsored research activities and related subcontractor relationships.
REASON FOR POLICY
This policy will align with University procedure and processes and with State laws and statutes, Federal laws and guidelines, University policies, and Board of Regents Policy: Purchasing. This policy ensures appropriate stewardship of University assets, integrity when acquiring goods and services, and accountability to funding sources should be exercised when purchases are being made on behalf of the University of Minnesota.
- Basis of Supplier Selection
- Explains why a department has chosen a specific supplier over other potential suppliers of a good or service.
- Blanket Order
- A price agreement with a supplier establishing prices, discounts, or other terms, which will be in effect for a specific period of time, usually at least one year.
- Capital Equipment
- Physical resources or fixed assets for the University such as: machinery, apparatuses, instruments, etc. Equipment that costs $5,000 or more is considered capital equipment.
- A group of financial people with specialized skills and expertise, which allows for a higher level of data analysis and reporting. This promotes consistency of processes and procedures, increases data integrity, and allows the University to balance efficiency, service delivery, accountability, and risk.
- Non-PO-Related Purchases
- A list of items and services that departments may purchase directly from the supplier without competitive bidding or issuance of a purchase order. See Appendix: Non Purchase Order Related Payments.
- Basis for Price
- Explains how the supplier or contractor arrived at the dollar amount to charge the University when standard price list and catalogs are not available.
- Reasonable Price
- This is a price that can be shown to be not excessive and consistent with current market prices. Reasonable price may be ascertained by sending out a Request for Bid (RFB) or Request for Proposal (RFP) to three or more competitors and comparing bids/proposals, or by comparing a quoted price to one or more of the following:
- Comparison to previous purchases
- Comparison to peer institution's purchase
- Comparison to similar purchases
- Cost / Price breakdown of all charges + markup
- Knowledge of the market
- For the purposes of this policy, printing includes printing a project many times, and usually includes other requirements like design work, multi-colors, folding or stapling along with addressing and mailing of the end product.
- Purchase Order
- Document used to order a product or service from an external supplier.
- Request for Bid (RFB)
- A competitive process initiated through Purchasing Services. An RFB requests bids for specific goods or standard services from suppliers. The purchase order or contract is awarded based on the lowest price meeting the stated specifications.
- Request for Proposal (RFP)
- A competitive process initiated through Purchasing Services. An RFP requests solutions from several or many suppliers. The award is made to the supplier offering the best proposal or solution based on the stated evaluation criteria, one of which is price.
- Services, Professional
- These specialized services require intellectual or creative expertise, and are often original in character. Examples of professional services are artistic design services, editorial services, executive search services, audit services, and software development. See Administrative Policy: Purchasing a Professional Service.
- Services, Standard
- Standard services are services that are routinely provided to a large number of customers usually at published rates without significant customizing. Firms rather than individuals are likely to provide these services.
Examples of standard services are temporary administrative services, dry cleaning, extermination services, equipment maintenance, laboratory testing services, lawn care, and courier services.
- Targeted Business
- Businesses owned and operated by minorities, women, and disabled persons.
- University-Wide Contract
- A contract that has been bid or negotiated by Purchasing Services for products and supplies commonly used by many University departments. The UWide Contract website is used to view contract details for pricing or discounts and terms, and to identify the UWide contract #. Through reciprocal contracting, the University may use State of Minnesota contracts and the State of Minnesota and other public agencies are allowed to use the University's contracts.
- Deans, Directors, and Department Heads
- Ensure that all purchasing activity conducted in their units complies with applicable policies.
- Director of Purchasing
- Recommend policy changes. Establish and maintain University of Minnesota purchasing processes that incorporate compliance with applicable policies, laws, and guidelines. Oversee the competitive process for purchases over the bid threshold. Provide assistance to University departments to ensure adequate supplier performance. Maintain a supplier relations program that includes new supplier orientation and a supplier access plan. Provide a supplier environment that is inclusive, participatory and competitive. When appropriate, approve requests for exceptions to the Purchasing policy.
Report purchasing activity to the Board of Regents, and seek approval from the Regents for all purchases of $1,000,000 and over.
- Purchasing Services Category Managers
- Ensure that all purchases made by or through University employees comply with applicable policies, laws, guidelines and ethical practices. Adhere to Purchasing Services Code of Ethics.
- University Employees Involved in Purchasing Activities
- Comply with applicable policies and ethical practices related to purchasing. Learn and follow University purchasing procedures. Document unacceptable or exceptional supplier performance and notify Purchasing Services. Sign Purchasing Code of Ethics for Employees Responsible for Buying.
Board of Regents Policies:
- Alcoholic Beverages on Campus
- Board Operation & Agenda Guidelines
- Code of Conduct
- Equity Diversity, Equal Opportunity, and Affirmative Action
- Individual Conflicts of Interest
- Institutional Conflict of Interest
- Reservation and Delegation of Authority
- Selection of Design Professionals
- Targeted Business, Urban Community Economic Development, and Small Business Programs
- Wage Rates for Contractors
- Hospitality, Alcoholic Beverages & Other Special Expenses
- Purchasing a Professional Service
- Traveling on University Business
- Using Controlled Substances for Research
- Using the University Procurement Card
Other Related Information:
- OMB Uniform Guidance
- Minnesota 15.43, Acceptance of advantage by state employee; penalty.
- Minnesota 179A.01 and 179A.11, "External Subcontracting"
- Federal Acquisition Regulation
- Office for Business & Community Economic Development
- December 2014 - Reference to A-21/A-110 changed to OBM Uniform Guidance in Related Information.
- November 2012 - Comprehensive Review, Minor Revisions. Revisions made for clarification, and enhanced language about Purchasing from Targeted Group Businesses.
- March 2010 - Defined what circumstances justify faculty or staff making an out of pocket purchase and what may not be purchased out of pocket. Removed the dollar threshold for an out of pocket purchase. Provided for management discretion to withhold approval of the personal reimbursement if the authority determines that an approved purchasing process could and should have been used. Provided new language to provide for normal purchasing procedures to be suspended and emergency purchasing procedures implemented when a University emergency is declared. Expanded the explanation of bidding requirements and exceptions to bidding. Threshold for purchases requiring Board of Regents approval increased from $250,000 to $1,000,000.
- June 2008 - Policy completely revised to address the Enterprise Financial System rollout. Updated language in the Laws, Policies, Requirements of the Planning Purchases procedure. Appendix A and Bid Specifications added.
- February 2007 - Bid Threshold increased from $10,000 to $50,000 for non-UWide contract vendors. Changes made throughout policy to reflect this.
- July 2006 - Policy Statement amended to make it explicitly clear that splitting purchases to avoid bidding is expressly forbidden.
- April 2006 - Added the following to Special Situations: "Purchases of goods, services and professional services from Fairview will be handled consistent with University Purchasing Policy, but purchases from Fairview that are related to research projects will not require bidding for any dollar amount." Added Audit Committee Charter and Attorneys and Related Services Regents policies to Related Information.
- January 2006 - Updated definitions, responsibilities, procedures, forms and appendices. The policy statement was slightly abridged.
- December 2004 - Emergency Purchase limit increased from $200.00 to $500.00 in Special Situations section.
- January 2004 - Added Common Audit Recommendations - Purchasing & Disbursements to appendices.
- April 2002 - All references to "Special Payments" changed to "Non Purchase Order Related Payments".
- January 2001 - Appendices B and C updated to reflect current requirments for documentation and justification within the POT and PVA.
- February 1999 - Policy Statement wording change in 2nd paragraph. Third paragraph added with link to Departmental Code of Ethics.
- June 1998 - Added passes and tickets category to Special Payments table in Appendix B: Direct Purchase Procedures.
- February 1998 - Clarified the exclusions section to more accurately reflect the purchasing authority granted to University Libraries in the Regents Policy on Libraries and Archives.
- January 1998
- Purchasing and Restricted Commodities