Florida Purchasing 101 Training

Florida Purchasing 101 Training
March 11, 2010 State Purchasing Buyer Conference

Course Objective Course Objective
Intended for state entities and local governments purchasing under Section , F.S. Recognize that fair and open competition is the basic tenet of public procurement Integrate the state’s procedures for best practices in the procurement of commodities and services Apply state laws, rules, and suggested practices to everyday purchases Course Objective Course Objective 3/11/2010

Purchasing Overview Customer has a need Submit request to purchasing office Purchasing ensures laws and rules are followed Informal quotes obtained Solicitation completed Award contract to vendor Issue PO Execute formal contract Receive and pay for goods or services Review/Inspect goods or services for receipt Invoice is submitted for payment Payment is completed Upon the completion of this training course, participants will be able to: Recognize that fair and open competition is the basic tenet of public procurement. Integrate the department’s procedures for “good practices” in the procurement of their commodities and services. Apply state of Florida laws, rules, and departmental guidelines to everyday purchases. 3/11/2010

Agenda Agenda Basic Principles Methods of Procurement
Purchasing Requirements Odds and Ends Wrap-Up / Contact Us 3/11/2010

Legislative Intent Fair and open competition – basic tenant for public procurement Public confidence – to reduce the appearance and/or opportunity for impropriety Level playing field – to provide an effective, ethical and uniform procurement process Economical – seek competition; vendors offer lowest prices and best value for the state Basic tenet of public procurement Reduces appearance/opportunity for favoritism Equitable/Ethical process – Uniform procedures Competition – Lowest price / best value The Legislative intent when creating the laws that govern the competitive solicitation process was established to provide: Fair and open competition – Is a basic tenant of public procurement Public confidence – To reduce the appearance and/or opportunity for favoritism Level the playing field – To provide an effective, ethical and uniform procurement process Economical process – Competition; vendors offer lowest prices and best value for the state. 3/11/2010

Purchasing Authority Authority for the purchase of goods and services is: Delegated to each agency from the Department of Management Services (DMS) Chapter 287, Florida Statute (F.S.) Rule 60A, Florida Administrative Code (F.A.C.) Conditional Authority Comply with 287 F.S. DMS – Supervisory Authority DMS – Can rescind delegation 287 F.S. – State’s procurement law created by Legislature 60A F.A.C. – DMS promulgated rule – Implementation of 287 F.S. The Department of Management Services (DMS), State Purchasing Office, delegated to state agencies the conditional authority to purchase commodities or contractual services. The conditions for this delegation are that the: Agencies comply with Chapter 287, Florida Statutes State Purchasing Office retains supervisory authority State Purchasing Office retains the right to rescind the agency delegation Chapter 287, F.S., is the state’s procurement law that establishes a system of uniform procedures used by state agencies in the purchase of commodities and services. Chapter 60A, Florida Administrative Code, is the rule promulgated by the Department of Management Services that provides guidelines for the implementation of the procurement law, 287, F.S. 3/11/2010

Purchasing Thresholds
Defined in Section , F.S. as: Category One - $15,000 Category Two - $25,000 Category Three - $50,000 Category Four - $150,000 Category Five - $250,000 Category I – Financial Disclosure Category II – Formal Solicitation Category III – Legal review of services Category IV – DMS approval of single source There are five different purchasing thresholds outlined in section , Florida Statutes, as a mandatory guide in spending state funds legally and effectively. In general, the more money you are trying to spend, the more work you have to do in regards to quotes, bids, documentation, etc. Approvals required per category are as follows: Category I – $15,000 – Financial disclosure required. Purchasing agents who have the authority to make purchases exceeding $15,000 must submit a financial disclosure to the Department of State as required in section , F.S. Category II – $25,000 – Formal solicitation required. The most important thing for you to remember about the purchasing categories is that Category II is the bid threshold. In other words, purchases meeting or exceeding the Category II threshold (currently $25,000) must be formally bid. Category III – $50,000 – Supporting legal office review Category IV – $150,000 – Department of Management Services single source review required Category V – $250,000 3/11/2010

Certified Business Enterprise (CBE)
The state is committed to providing equity in contracting to diverse vendors throughout Florida Office of Supplier Diversity (OSD) certifies vendors as certified business enterprises Certification as a minority-, women-owned or service-disabled veteran business enterprise gives a vendor preference in the situation of a tied bid MWBE Coordinator The State is committed to provide equity in contracting to diverse vendors throughout the state of Florida. OSD encourages agencies to increase the use of women-owned businesses, and racially and ethnically diverse vendors in the department’s purchasing of, and contracting for, goods and services. The objective of this plan is to continue the development and strategy to increase the participation of diverse business enterprises in the state procurement system. The Legislature granted authority to the Department of Management Services to certify vendors as minority business enterprises through the Office of Supplier Diversity (OSD). The State continues to initiate innovative solutions to increase minority participation. For questions relating to MWBE, feel free to contact the purchasing office or OSD. 3/11/2010

Purchasing Best Practices
Unless otherwise authorized by law, per Section F.S.: Purchases exceeding Category Two must be competitively solicited and awarded by competitive sealed bidding In Rule 60A F.A.C.: Purchases less than Category Two but above $2500 must obtain at least two quotes Purchases less than $2500 must be completed using sound purchasing practices The best value to the state should always be considered 3/11/2010

Methods of Procurement
PRIDE RESPECT of Florida State Term Contracts (STC) State Purchasing Agreements (SPA) Competitive solicitations Alternate Contract Sources (ACS) Single source Statutory exemptions Informal quotes Emergency purchase 10 Methods Will discuss each of these There are 10 different methods of procurement, outlined by the Florida Statutes and Florida Administrative Code for spending of state funds. Each of these has their own unique criteria and use. We will cover each of these during this training. 3/11/2010

PRIDE Prison Rehabilitative Industries and Diversified Enterprise
Similar product or service of comparable price or quality found necessary for use by any state entity may not be purchased from any source other than PRIDE Sections (2) and (4), F.S. Competition is not required with the exception of printing services PRIDE printing services are open to competition per Chapter 283 F.S. State encourages the use of; Per sections (2) and (4) Printing open to competition The state supports and encourages the use of the Florida correctional work program, the Prison Rehabilitative Industries and Diversified Enterprise or PRIDE. Section (2) and (4), F.S., allows for purchases of most PRIDE products and services without quotes. PRIDE offers a variety of commodities, including boxes, dental supplies, furniture, and sanitary supplies, to name a few. PRIDE commodities do not require quotes. There is one exception to services provided by PRIDE – printing. Printing is open to competition. This means that, if the total amount for printing is more than $2,500, you must obtain quotes. If the printing will cost more than $25,000, it requires a formal solicitation. 3/11/2010

RESPECT of Florida RESPECT works with non-profit organizations around the state who employ persons with disabilities in the production of products and services Similar product or service of comparable price or quality found necessary for use by any state entity may not be purchased from any source other than RESPECT Section , F.S. requires agencies to use RESPECT if they offer the commodities/services needed Exempt from the competitive process (no quotes or solicitations necessary) Examples of items provided: Office Supplies Janitorial Services Marker Boards Directed by statute Determination Need Quantity Reasonable delivery time Section , F.S., requires the state to use RESPECT of Florida, if they offer the commodities/services needed. RESPECT of Florida is the central nonprofit agency of the state of Florida. RESPECT works with nonprofit organizations around the state of Florida whom employ persons with disabilities in the production of products and services. The products and services offered span technologies and industries, providing a wide array of training opportunities for Florida’s citizens with disabilities. RESPECT’s purpose is to ensure a constant market for these products and services to state and local government agencies. Purchasing from RESPECT is exempt from the quoting process. Some reasons you may not use RESPECT are time, specifications, minimum order requirements, and availability. Items provided by RESPECT include maintenance supplies, white marker boards, binder clips, bulletin boards, pens, and latex exam gloves, just to name a few. Additional information about RESPECT of Florida and the products they offer is available on the RESEPCT web site, which is on your list of resources. NOTE: Both PRIDE and RESPECT purchases are exempt from quoting and formal bid requirements with the exception of printing, which is subject to all competitive requirements. 3/11/2010

State Term Contracts (STC)
Negotiated and managed by DMS Division of State Purchasing More than 60 contracts currently, totaling more than $2 billion in state savings annually Mandatory usage for state agencies and optional for OEUs Multiple award contract emphasis on flexibility/ choice Good pricing Multiple award contract with RFQ process Requires quote from at least three STC vendors to obtain best value Meets the competitive solicitation requirement of Section , F.S. Determines need – seeks competition Method of Procurement Contracts now all Mandatory Process In accordance with section 60A-1.044, F.A.C., state contracts are term contracts executed by the Department of Management Services (DMS) for use by all state agencies and local governments. The Department of Management Services (DMS) collects data to determine the need for state contracts according to the combined spending of all agencies. Once they identify a need, DMS issues a formal solicitation using an invitation to bid (ITB), request for proposal (RFP) or invitation to negotiate (ITN). A state contract results from the solicitation process. We will discuss those later. Use of state contracts is mandatory. However, there are instances where there is a minimum order requirement. However, these minimum order amounts are not to be used to circumvent the procurement process. Quotes are not required when using state contracts unless specified in the contract. A RFQ is an oral or a written request for written pricing or service information from a contractor for products available under that state contract. We are required to maintain written records of oral and written requests, as well as records of quotes received. These quotes are informal and need not be received or posted publicly. 3/11/2010

State Purchasing Agreements (SPA)
Negotiated per agency request Negotiated and managed by DMS State Purchasing Usage cannot exceed an annual combined total of $25,000 Not to be used to circumvent competitive processes Driven by agency requirements Negotiates best value Can’t exceed Category II Optional Under authority of sections (1)(a) and (2)(a), F.S., the purpose of a state purchasing agreement (SPA) is to establish the terms and conditions for the sale and purchase of commodities or services between the vendor and the state of Florida. The use of a SPA is optional. These agreements do not establish a vendor as the exclusive source for the services/commodities needed. SPAs are requested by agencies depending on their individual need and are good for one fiscal year. The state has a variety of SPA agreements for commodities/services and additional quotes are not required. Need for a SPA agreement is initiated at the program level, and all requests must come through the central Purchasing Office for approval and submission to the Department of Management Services (DMS) for execution. Once the request has been sent to DMS, an “E-quote” is created in MyFloridaMarketPlace to solicit quotes from various vendors. DMS will evaluate responses, seek requestor input as needed, negotiate with respondents as needed, and award the purchase to the company with the most advantageous offer to assure the best price is obtained. All SPA agreements are maintained by DMS. The number of SPA agreements is declining. SP is focusing more on providing greater value and savings through more STC and ACS contracts. 3/11/2010

Competitive Solicitations
Invitation to Bid (ITB) Driven by low cost Request for Proposal (RFP) Used when there is a good understanding of the goods/services requested but shouldn’t be solely driven by low cost Invitation to Negotiate (ITN) Used when there isn’t a clear understanding of exactly how a problem should be solved and are inviting vendors to submit solutions The only solicitation method that allows for negotiation with vendors In excess of Category II ($25,000) Types of exemptions – examples: Statutory Exemptions State Contracts Single Sources Emergencies In accordance with section (1), F.S., and rule 60A-1.002(4), F.A.C., all purchases of commodities or contractual services in excess of $25,000 (Category II), unless otherwise authorized by law, must be competitively bid. The three (3) types of formal solicitations are: Invitation to bid (ITB): The ITB is for the purchase of commodities or services that are specifically defined by the requesting office. Bidders offer pricing based on set requirements (manufacturer, model, size, color, etc.). Bidder qualifications and the commodity/service requested will be compared to the requirements of the solicitation, but not to each other. The award is made to the responsive (meets specifications/qualifications of the bid), responsible (capable of performing or providing the service) bidder offering the lowest price. This is the method preferred by the Legislature and is low-price driven. A few examples of an ITB solicitation are printing, palletized freight, transcription services, janitorial services, promotional items, and lab equipment; to name a few. An ITB can take up to four (4) to five (5) weeks to complete depending on the degree of difficulty. Request for Proposal (RFP): Vendor qualifications, experience, and quality of service are more important than price. We request the vendors propose a commodity or service to meet the specifications of the solicitation. RFPs must have scoring criteria that can include price as well. Examples of other criteria that may be considered in addition to price are the vendor’s proposed method of achieving the agency’s stated objective, past experience, current available resources, schedule, work samples, staff resumes, etc. The award will be made to the vendor that scores the highest using the scoring criteria of the RFP. This solicitation process can take four (4) to six (6) months to complete due to the complexity of the requirements. Invitation to Negotiate (ITN): An ITN is used when an agency determines negotiations may be necessary to achieve the best value. It is similar to an RFP, but incorporates a two-step process of scoring proposals and then negotiating with some or all vendors based on the ITN criteria. Contractor qualifications and quality of service may be considered more important than price. Responses to an ITN may contain innovative solutions that differ from what may have been originally specified. As you may have guessed, an ITN also allows for negotiation on price and/or service to meet the needs of the customer. You should allow four (4) to six (6) months, prior to the contract beginning date, to complete this process. 3/11/2010

Alternate Contract Sources (ACS)
ACS are similar to STC, but are not mandatory If an agency’s ACS is cost-effective and in the best interest of the state, DMS approves the use of the contract for all entities May approve the contract for a single transaction or multiple transactions A complete listing of all ACS is available at Agency-specific ACS are not posted online Competitively established Authorizing use Process Cost effective Best interest of state Alternate contract sources for commodities and services are available for purchase by state agencies, in accordance with rule 60A-1.047, F.A.C. Agencies may request permission from DMS to purchase commodities or services from contracts competitively established by other government entities. All such requests must be forwarded to the central Purchasing Office for review and submittal to DMS for approval. Alternate contract sources are similar to state contracts, but are not mandatory to use. If DMS determines that the agency’s alternate contract source is cost-effective and in the best interest of the state, they will approve the use of the contract. DMS reserves the right to approve the contract for a single transaction or multiple transactions. DMS also maintains a list on their web site of all current, alternate contract sources and the agencies authorized to use them. 3/11/2010

Single Source Per Section (5)(c), F.S., and Rule 60A-1.045, F.A C., a single source is defined as a purchase of commodities or services available only from one vendor For purchases less than Category Two, approval of the justification must be obtained from the individual agency’s purchasing office Discretionary Documentation 2 Questions Addressed (5)(c) and 60A-1.045 Not Allowed Per section (5)(c), F.S., and section 60A-1.045, F.A C., a single source is defined as a purchase of commodities or services available only from a single source; that is, no one else offers the commodity or service. Such purchases are exempt from the competitive solicitation process. If a requestor wishes to purchase a commodity or service that is available from only one source, he/she must submit a justification to Agency Purchasing Office detailing the necessity of the item or service. Justifications should state the conditions and circumstances requiring purchase, including the purpose and need, and stating why the item or service is the only one that will produce the desired results. Two questions must be answered: Why is this the only commodity or service that will meet our needs? Why is this the only vendor that can provide the commodity or service? Acceptable single source justifications may include vendor proprietary products and territorial boundaries for distribution. Unacceptable single source justifications include “product manufacturer” and “only known source” (unless substantiated by market research). Note: Purchases of less than $2,500 are considered discretionary – quotes are not required. 3/11/2010

Single Source Procedures
For single source purchases exceeding Category Two, a separate process must be followed: Advertised on Vendor Bid System (VBS) PUR 7776 Seven business days If the purchase exceeds Category Four, DMS approval is required PUR 7777 Post Intent to Award on VBS PUR 7778 72 business hours (excluding weekends and holidays) 7 Days – vendor comments Up to $150,000 Agency Decision Exceeds $150,000 – DMS Approval Describe Forms There are several steps in the procedures for processing a single source purchase greater than $25,000 (Category II) depending on the dollar amount. The following steps are handled by the Purchasing Office The intended single-source purchase must be advertised on the Vendor Bid System (VBS) for seven (7) business days. Once the seven (7) day advertisement has been completed, in-house approvals are obtained by the Purchasing Office. If the total purchase exceeds $150,000 (Category IV), approval must be obtained from the Department of Management Services prior to the final posting. DMS approval is obtained by the administrative lead. After all approvals have been obtained, the final intent to award must be posted on the Vendor Bid System for 72 hours, excluding weekends and holidays. If it is determined that the commodity or service continues to be available only from a single source, then the agency must repeat the single-source process as outlined above prior to the term of the original single source ending. A single source cannot be renewed. Note: The Vendor Bid System is a database used by all state agencies to public notice formal advertisements and decisions (i.e. solicitations, single sources public notices) for all registered vendors. 3/11/2010

Informal Quotes For purchases more than $2500 and under Category Two, at least two quotes must be obtained Quotes: Can be obtained by phone, written, or the MFMP eQuote tool Should be stored for audit purposes with the purchase documents Are awarded to the vendor with the best value for the state i.e. the best cost for the goods/services that meet the needs of the state Request for Quote (RFQ): Used for STC such as Consulting Services IT Consulting Management Consulting 3/11/2010

Emergency Purchases Determination Emergency Exceeding Category Two
An emergency or urgent purchase must pose immediate danger or risk to public health or safety Certification For emergency purchases, a notarized certification must be received from an agency head or designee Procedure PUR 7800 Notice of Emergency Purchase to DMS Governor declares “State of Emergency,” suspending all procurement rules directly related to emergency efforts Agency head Public health and safety Over $25,000 exempt from solicitation Under oath – notary public Examples An emergency purchase is defined in section (5)(a), F.S., and section 60A-1.046, F.A.C., as a purchase necessitated by a sudden unexpected turn of events, such as acts of God, riots, fires, floods, accidents, or any circumstances beyond the control of the agency, where the delay of a competitive solicitation would be detrimental to the interests of the state or public health or safety. Emergency purchases require the agency to obtain pricing from at least two vendors UNLESS determined in writing by the agency head or designee that the time to obtain the quotes would be detrimental to the State of public health or safety. For “emergency” type purchases less than $25,000 a justification must be made to justify why it wasn’t possible to receive competitive quotes. A justification must accompany all purchases, regardless of whether or not it is an emergency. Examples of an emergency purchase are: The pipes burst, the halls are filled with water, and you have to call a plumber immediately. The roof was blown off by a storm and rain is coming in. The air conditioning failed, and it is 100 degrees outside and even hotter inside. In an instance where a true emergency exists and the amount exceeds the Category II level ($25,000), Florida Statutes requires that the agency must furnish copies of all written determinations certified under oath and any other documents relating to the emergency action to the Department of Management Services certifying the conditions and circumstances requiring an emergency purchase of commodities/contractual services. Such emergency purchases must be made to allow as much competition as is practicable under the circumstances. The statement must be submitted using form PUR 7800 “Notice of Emergency Purchase” within thirty (30) days after date of any direct order or contract made as a result of an emergency, and it must include complete details surrounding the event(s) that meet the criteria of an emergency purchase. This certification must also accompany the payment to DFS Audit (for state agencies). A copy of the direct order or contract must accompany the statement. Contact your supporting purchasing office for more details about this process. 3/11/2010

Statutory Exemptions Section (5)(f), F.S., includes services exempt from competition such as: Artistic services Lectures by individuals (not training services) Auditing services Legal services Health services Government entity Commodities and services Exempt from competition Statutory exemptions from quoting and competitive solicitations are outlined in section (5)(f), F.S., and use of each exemption is strictly monitored. Artistic Services: Any artistic work performed by an artist, as defined in section (3), F. S. Lectures by individuals: A formal or methodical reading or presentation on any subject, but it does not include anything in connection with, training personnel. Auditing services provided by a licensee under Chapter 473, F. S., in which the licensee attests, as an expert, to the reliability or fairness of the presentation of financial information. Legal services include attorney, paralegal, expert witness, appraisal, or mediator services. Health services include examination, diagnosis, treatment, prevention, medical consultation, or administration. Note: Lectures are speeches given to address a specific subject, offering the speaker’s opinion, normally without feedback from the audience. Training is specialized instruction in a particular area that will allow the participant to become proficient in that area. Therefore, the statutory exemption for lectures by individuals cannot be used when purchasing training services. 3/11/2010

Purchasing Requirements
Purchasing requirements are defined by Chapter 287, F.S. for the following: Vehicle purchases Recycled content Public printing Advance payment Blanket Purchase Order (BPO) 3/11/2010

Vehicle Purchase Requirements
Per Chapter 287, F.S.: DMS Form MP 6301 Statewide Fleet Approver Justification Acknowledgment of order from the dealer Budget authority Approximately 75% of all new vehicles must be alternative fuel vehicles Not including hybrids Leasing- more than 30 days Rental Vehicle STC Mandatory use Special Approvals – Fleet, Budget DMS Required Yearly allotted funds Federal regulation When purchasing a motor vehicle, use Department of Management (DMS) form MP-6301, “Request for Purchase of Mobile Equipment,” which the DMS Bureau of Motor Vehicles and Watercraft must approve. You will need to complete the form and attach it to your MFMP requisition. Approvals (along with a fleet and DMS approvals) are electronically obtained through the MFMP System. This is only for State Agency customers. The vehicle state contract requires dealerships to provide an “Acknowledgement of Order” form to requestors issuing direct orders to them within 14 days of receipt of the purchase order (PO). This form contains information relevant to the vehicle purchase, such as the date the order was placed and the expected delivery date. Requestors should contact the dealership to obtain the acknowledgement of order form, if one is not provided within the above timeframe. In accordance with federal regulations, 75% of all new vehicles purchased and titled to the state must be classified as alternative fuel-capable. Alternative fuel means the vehicle has the capability to use both unleaded fuel and alternative fuels such as ethanol. Hybrids are not considered alternative fuel vehicles. This regulation does not apply to vehicles that are currently in our fleet or new vehicles that will be titled to a county. If an alternative fuel vehicle is available on the state’s term contract in the vehicle class you are requesting, you must select it for purchase in lieu of a non-alternative fuel vehicle. Leasing of motor vehicles for a period in excess of thirty (30) continuous days must also have the approval of the Bureau of Motor Vehicles and Watercraft. The rental of motor vehicles must be in accordance with the state’s “Rental Car Contract.” All motor vehicles purchases or leases must be of the subcompact class, except vehicles used for law enforcement purposes, to tow vehicles, to routinely transport more than three adults, or for vehicles operated frequently on unpaved roads. All vehicles purchased must be of the smallest class that can safely and adequately meet the transportation requirements. A justification is required in order to purchase a vehicle larger than a subcompact. 3/11/2010

Recycled Content Requirements
Per Section , F.S.: Paper must contain 65% recycled content Office paper STC line item catalog in MFMP MFMP displays a recycled indicator on all recycled products in line item catalogs Mandated by FS Paper must contain 65% recycled content Example: copy paper At least 10% post consumer Otherwise, sufficient justification Section , F.S., mandates use of recycled content. Recycled content is defined as: Materials that have been recycled that are contained in the products or materials to be procured, including, but not limited to, paper, aluminum, steel, glass, plastics, and composted material. At least 65% of all printing and fine writing papers purchased by state agencies must contain recycled material. Recycled paper must contain at least 10% post-consumer recovered materials. So, what does this means to you? When you order paper or printing, you have to order recycled paper or provide sufficient justification about why products containing recycled material will not meet your requirements. Such justification must be detailed on your requisition or included with your p-card reconciliation. 3/11/2010

Public Printing Per Section 283.33, F.S.: Recycled paper
Purchases exceeding Category Two must be competitively solicited (including PRIDE) Pre-production proofs required MeadWestvcaco punchout catalog F.S. Less than Category II - 45 Days Over Category II – 90 Days Competitively procured Minority vendor participation encouraged Proofs approved by Communications/Legal 10% post consumer All requisitions for printing must include specifications that detail such things as type, weight, and color of paper (paper containing recycled content must be used, whenever practical); colors and numbers of inks; size and number of pages; folds; type of bind; and special features such as bleeds, half-tones, etc. Requisition must also include a sample (envelope, letterhead or form), or artwork. If ordering reprints of a previous printing job, please note the prior direct order number on the requisition. Stock levels of printed materials need to be monitored closely. Requisitions for printing that do not require bidding (less than $25,000) need to be submitted timely. Requisitions for printing that do require bidding ($25,000 and over) need to be submitted at least 90 days before the material is required to give adequate time for the purchasing process. Pre-production proofs should be required when the printer provides typesetting and/or other artwork. In cases where camera-ready artwork is provided to the printer, the proofs are an exact reproduction of that artwork. Keep in mind that requiring proofs affects the time required for completion of a printing job. 3/11/2010

Advance Payment Requirements
Per Section (14), F.S.: Justification is required DFS Bureau of Accounting & Auditing requires approval for advanced payment purchases exceeding Category Two MFMP allows you to indicate a purchase marked for advanced purchase and to select a agency user to be notified (14) F.S. Savings must be more than interest earned Essential to the operation of the agency Only method of payment acceptable by vendor Requires Bureau of Auditing approval over Category II ($25,000) Documentation required on PR Most of the time, orders only require payment after the receipt of commodities or performance of services. However, there are some instances where payment must be furnished to the vendor in advance (such as service agreements, subscriptions, membership dues, registrations, etc.). Advance payments are only allowed if the result is a cost savings for the Department, if the service is required to meet the department’s statutory obligations, or if the service is available only when advance payment is made. If advance payment will be required for an annual service, it must be noted on the requisition with the justification attached. Prior approval of the Bureau of Auditing is required for advance payments that exceed the threshold of Category II ($25,000). Requests for advance payment approval must include information indicating that the payment meets one of the above criteria and that the agency has complied with applicable procurement requirements. 3/11/2010

Blanket Purchase Orders (BPO)
In accordance with Memorandum No. 3 ( ): Blanket Purchase Orders (BPOs) are purchase orders issued to one vendor in which multiple purchases can be made for a specific period of time Can be set up in different ways but should reflect the unit price of the good/service When setting up a BPO, be mindful of how you will subsequently receive and pay from this order BPOs should not exceed Category Two without being competitively solicited For large BPOs completed in MFMP, a contract or master agreement should be set up Commodities/Service Fiscal Year Maximum Dollar Monthly Rate/Set Payment Examples A blanket direct order is an arrangement under which a purchaser contracts with a vendor to provide an item, or group of items, ordered on an as-needed basis. A blanket direct order is generally issued for a fiscal year period for such items as copier supplies, office supplies, and paper purchased on an as needed basis. All purchasing categories, thresholds, and special requirements apply to blanket direct orders, just as they would to any other purchase. Each purchase made under a blanket direct order must be of a kind that could be made without competitive bidding or quotes if there were no blanket direct order. For state agencies, when creating a blanket order in MFMP, the dollar amount and quantity are flipped. For example, if you are creating a blanket order for a total of $1,000, the quantity would be “1,000” and the unit price would be $1.00 (example: 1000 $1.00 = $1,000). In the line item description, you would list the unit price, (example: $20.52/case, 12 cans per case). The MFMP system only generates receiving reports for commodity purchases. Due to the way receiving reports work within the MFMP system, by creating your blanket in the manner explained, it allows you to receive up to 1000 times. How do you receive in MFMP? You receive an invoice from the vendor in the amount of $ You would show on your receiving report that you received 46.54, which at $1.00 would equal $ This works because the MFMP system allows fractions. Blanket direct orders are subject to the following guidelines and limitations: The total amount of the blanket order cannot meet or exceed the Category II threshold, for any given period unless the bid or single-source approval has been obtained or state/agency term contract is being used. Blankets should not be for a period exceeding one fiscal year and not less than one quarter. Blanket direct orders may not cross fiscal year lines. (Example: You buy a new copier in January and want to do a blanket for supplies. You could only issue a blanket through June 30 for the current fiscal year.) Commodities available through state or departmental contracts must be purchased from the appropriate suppliers and be subject to all terms and conditions of the applicable contracts. Blankets should be issued for the estimated minimum dollar amount necessary to support operations and are encumbered for the total amount up front. Blankets must contain a statement outlining the maximum dollar amount allowed per individual purchase and a list of personnel authorized to use the direct order. Payments will be made in arrears unless otherwise specified on the direct order. Pricing, discount, and rate schedule (hourly, monthly, etc.) should be listed where appropriate. 3/11/2010

BPO Requirements con’t
BPOs must also identify: All necessary organizational and accounting codes Vendor name Items or types of items authorized for purchase Item prices or a reference to how prices will be established at the time of purchase Authorized user(s), by name and/or title and/or function Time period (term) Maximum total dollar amount of purchases authorized during the term 3/11/2010

Restrictions from Expenditures
Congratulatory / condolence cards Plants, flowers, pictures Entertainment Refreshments Convenience appliances When purchased for the convenience of employees Includes heaters, refrigerators, microwaves Items not in accordance with state, federal or local laws Per Rule 69I , F.A.C., unless “expressly provided by law”: Per Section , F.S., use of state funds for greeting cards is prohibited. Give examples of each When making a purchase that you are not sure is allowed, an official ‘rule of thumb’ for you to follow is: State agencies may purchase only items necessary to carry out statutory duties and should select items on an economically prudent and cost-effective basis. Items should not be chosen to satisfy the personal preference of individuals. Examples of disallowed purchases include, but are not limited to, the following (when in doubt about the appropriateness of a purchase, please contact the Purchasing Office for guidance): Congratulatory or condolence telegrams. Plants, flowers, pictures, plaques, statues, globes, and other decorative items (except those associated with fixed capital outlay projects). Entertainment (except where specifically allowed by statute). Refreshments (except where specifically allowed by statute). Convenience appliances such as heaters, fans, refrigerators, stoves, microwaves, dishwashers, coffeemakers, smoke filters, etc. More expensive office supplies, furniture, lamps, etc., not necessary to meet a legitimate need. 3/11/2010

Commodity Codes Commodity codes are 13-digit codes
The class and group are the first six digits Commodity codes for services begin with a “9” Commodity Codes in VBS determine what vendors receive notification SPURSView: Commodity Code search: Modeled after NIGP codes Services begin with a ‘9’ MFMP only for commodity purchases Special approver into MFMP IT – IRR Approver Vehicle – Fleet Approver OCO List on Purchasing web site A commodity code is a six-digit code identifying the class and group of the item being purchased. These codes are modeled after the National Institute of Governmental Purchasing (NIGP) codes. Commodity codes beginning with a “9” indicate a service, and it allows the MFMP system to electronically generate a receiving report for that purchase. Some commodity codes will pull a special approver into the approval flow of your MFMP requisition. Examples of this special approver are an “IRR Approver” and a “Fleet Approver.” 3/11/2010

Common Mistakes Leaving payment terms out of the procurement
A statement of work that is unclear or not defined Not following purchasing laws and rules Preventing the perception of partiality to the vendor community Not focusing on getting the best price for the right product/service at the right time Signing agreements- consult your purchasing office first P-card purchases exceeding Category Two After-the-fact purchases 3/11/2010

Resources DMS Division of State Purchasing
(850) MyFloridaMarketPlace (MFMP) Office of Supplier Diversity (OSD) 3/11/2010

Contact Us Team Member E-mail Phone Number Communications Analyst
(850) F&A Process Analyst (850) Operations Manager (850) Purchasing Process Analyst (850) Vendor Management Analyst (850) DMS Division of State Purchasing (850) 3/11/2010

Questions? Wrap-Up Any questions?
We have covered a lot of information in today’s training. I appreciate your participation. Your participant’s guide is yours to keep for reference for when you return to your office. Does anyone have any additional questions that we have not covered today? Instructor’s Note: Review the parking lot questions. For questions that you cannot answer, make note of the questions and indicate to the participants that you will forward answers at a later date. Let’s wrap up with the course evaluations. Please take a moment to complete the “Participant’s Evaluation Form” on page 65 of your participant’s guide. Thank you again for your participation and have a safe trip back home. 3/11/2010

Florida Purchasing 101 Training

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