Advancing Into Management Program Purchasing Goods & Services June 2005

Presentation Objectives What the purchasing policy is and why its important. What are the objectives of the policy? How do we achieve the objectives? Tools and support mechanisms. Where to access additional information.

June 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.

June 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

June Purchasing Policy Objective To provide a framework to Ensure we get the best value Meet legal and ethical obligations Conduct a Fair, Open and Objective process

June Ensure Optimum 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

June Legal & Ethical Obligations Publicly-funded institution = rigorous standards arms length business relationships competitive bids/proposals evaluation processes that are open to public scrutiny: - Objective- Consistently applied - Quantifiable- Transparent

June 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.

June 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

June Purchasing Methods Under $5,000 Purchasing Card Purchase Order (optional) Certified Invoice (avoid) Over $5,000 - Purchase Order Travel – American Express / Expense reimbursement system

June Web based access to universitys 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 EquipmentChemicals Office SuppliesComputersRadio nucleotides More… MRO Supplies, Furniture, and UofT Bookstore

June Purchasing Credit Card Why use it ? What do we use it for ? Control and monitoring roles Administrative processes No cash required

June Purchasing Card Used for University purchases: Low value, Frequently purchased commodities & services Purchases less than $5,000 (with some exceptions)

June Purchasing Card Benefits Low administrative burden Convenient Reduced requirement for petty cash Charges recorded in FIS next day Transaction detail capture

June 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

June Purchasing Card – Administrative Roles & Responsibilities Cardholder Phone, fax, present or place on-line order Reconcile monthly statement Forward statement invoice/sales slip to departmental administrator Departmental Administrator Conducts monthly reconciliation of payments Files back-up documentation

June Department Level of Responsibility Under $5,000 maintain audit trail. $5,001 - $25,000 maintain audit trail documented competitive bids Purchase Order created by Business Officer

June RFPs, RFQs, RFIs, Tenders What are they for? What are the advantages? What are the disadvantages?

June Higher Value Purchases Over $5,000 – multiple quotes required Sole sourcing exceptions Highly specialized scientific equipment Unique specifications with only one supplier Request for Quotation (RFQ) – specifications known; only variable is price Request for Proposal (RFP) – desired outcome known; variety of means to achieve outcome

June Competitive Solicitation Transaction Levels & Authority Public RFP Size of Invited RFP or Tender call Authority to Purchase Verbal Writtenor prequalifyingissue purchase TransactionOrderQuotes Tender call statementorder Up to $5,000 P.O. Not req'd use P-card Optional No Budgetary Unit $5,001 to $25,000Yes Optional NoBudgetary Unit $25,001 to $100,000Yes- OptionalNo Procurement Services $100,001 to $500,000Yes-- Optional Procurement Services Procurement Over $500,000Yes--- Services Purchase Process Requirements

June 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: Executing Contracts Contact Procurement Services at the outset – contract vetting, supplier vetting

June Procurement Methods 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

June Scenario Discussion 1. The Freebie 2. The Offer You Cant Refuse 3. The Convenient Resource 4. The Good, the Bad and the Obstinate

June Demo Simple purchase Purchase with approval Goods receipt Demo link

June Where to Get More Information Your Business Officer Procurement Services 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

June The End Any questions?