1. Procurement Policy Changes April 1, 2011 Highlights of 2011 Changes John Mayes Cary Scapillato March 2011 Highlights of 2011 Changes John Mayes Cary Scapillato March 2011

2. Agenda  Procurement Transformation Overview  Policy Update Executive Summary  Specific Benefits  Select Metrics  Policy Changes  Purchasing and payment  Invoices  Out-of-Pocket expenses  Treasury Services  Concerns we’ve heard and how they are being addressed  Resources & Support  Procurement Contact Information 2

3. 3 Purchasing Policies and Procedures establish the foundation for POAP transformation 2004 - 2008 2009 FY2011-2012 Purchasing Policies and Procedures Standardize purchasing methods Drive more spend to preferred channels & vendors Provides foundation to build automated routing and approval process Expense Management Standardization Standardize approval workflow paths and authorization limits Vendor Self-Service Provide online self service access to transaction status Continuous Improvement Leverage improved spend data, faster payments, and centralized Purchasing model for ongoing contract negotiations (pricing & payment terms) POAP Transformation POAP Transformation Overview FY2011 Systems Enablement & Self- Service Infrastructure Business Intelligence & Data Warehouse SciQuest Expense Mgmt. Orbitz for Business Accuship A/P Worklist Organization & Strategic Focus Procurement Competency & Career Model Shift to Strategic Procurement Pilot Sourcing Categories Savings Tracking 3-Year Strategic Plan developed DONE DONE DONE DONE In Progress

4. Policy Update Executive Summary… Why are these changes necessary?  To streamline business processes  Increase efficiencies and lower costs  Improve internal controls What benefit will these changes bring to the University?  Improves Yale’s ability to negotiate and take prompt payment discounts  Get it right the first time with upfront charging collection, validation, and approvals  Negotiate the lowest costs for goods and services through increased preferred vendor usage (via SciQuest) What are the preferred methods of procuring goods and services?  SciQuest purchase orders and the Yale PCard 4

5. Specific Benefits What are the benefits of using SciQuest PO’s for a department?  Increased likelihood of “getting it right the first time” with upfront charging collection, validation, and approvals  Reduced rework due to upfront collection and validation of charging instructions  Improved visibility of outstanding liability by creating financial commitments  Streamlined payment processing with more purchase order transactions  Reduce vendor inquiries and more on-time payments  Increased savings from prompt payment discounts  Reduced paper handling due to automated approval workflows for requisitions and invoices  Less time on after-the-fact financial reviews of transactions because of built in up- front preventative controls 5

6. Select Metrics 6 Policy ChangeKey Metric Competitive Bidding Threshold has been raised to $10K Approx. 70% reduction in number of transactions requiring competitive bidding SciQuest Purchase Requisitions must now be used more broadly. Purchases of chemicals, computers, computer supplies, lab equipment, lab supplies, & office supplies, of any dollar amount, must be made using a SciQuest purchase requisition. 60% reduction in OK-to-Pay invoices targeted Yale University Purchasing Cards are appropriate for travel expenses and miscellaneous small dollar (<$2,000) business purchases not available through SciQuest. Impacts ~1% of all PCard transactions & ~1,600 PCard charges per year for supplies >$2K Impacts 62 PCard users Automatic-approval limits for SciQuest requisitions will be set at a minimum of $200 27% of SciQuest transactions will no longer require approval (~30,000 transactions, representing 2% of overall SciQuest spend) Impacts 1,819 active SciQuest users 14% of requisitions that are routed for approval have any PTAEO change

7. Purchasing and Payment  Competitive bidding  $10,000 threshold  Purchasing Services reviews orders >=$10K for savings  Non-contract vendors >=$10K must be negotiated or competitively bid  Sole source justification when competitive bidding is not appropriate  Use SciQuest for Purchasing (Yale University Buying Guide)  If vendor is in SciQuest, use SciQuest for purchasing  Requests to add new vendor to SciQuest (via SciQuest) processed in 24-48 hours  Purchases of all chemicals, computers and supplies, lab equipment and supplies, & office supplies, of any dollar amount, must be made through SciQuest  Use SciQuest for professional services, conferences and other organized events, supported by a quote  Paper Purchase Requisitions phasing out in favor of SciQuest online orders  Add VIP numbers via “Oracle VIP Manager” Pilot April – June Effective April 1

8. Purchasing and Payment 8  Purchasing Card (PCard)  Travel and business meal expenses  Conference and seminar fees, catering costs, within PCard limit  Miscellaneous small dollar business purchases < $2,000, not available though SciQuest  Non-travel limit: $2,000 per transaction; $10,000 per month  Not appropriate for purchases of chemicals, computers and supplies, lab equipment and supplies, & office supplies, of any dollar amount (use SciQuest instead)  Minimize OK-to-Pay  Appropriate only for specified categories: utility, tax payments, municipality payments, building rentals, energy, utilities  Do not use for catering services over your PCard limit, professional services or conferences  Automatic-approval for small dollar transactions  For SciQuest requisitions: $200 minimum; consistent with Expense Management System (EMS) limit Pilot April – June Effective April 1

9. Invoices 9  Vendors must submit all invoices directly to Accounts Payable (AP)  Minimize direct orders from vendors without a PO (often called OK-to-Pays).  If you are ordering goods or services without a PO, instruct the vendor to include the name of the department and the orderer on the invoice and to send the invoice directly to AP to ensure timely entry and payment.  SciQuest POs automatically capture this information and instruct vendors to submit invoices to AP Effective April 1

10. Out-of-pocket expenses  Expense Management System (EMS)  Most efficient method for processing and reimbursing out-of-pocket expenses  All out-of-pocket expenses  All PCard transactions  Out-of pocket expenses submitted more than 120 days after transaction date will not be reimbursed  Individuals out of the country > 120 days, contact the Controller’s office  Treasury Services (2 Whitney and YSM)  No more out-of- pocket reimbursements for faculty and staff (submit via EMS instead)  Will reimburse out-of- pocket expenses for students and visitors only  Will issue cash advances to faculty, staff, students 10 Effective April 1

11. Concerns we have heard Self approved Sciquest purchases <$200 cause risk in units in which the initiators are not familiar with policies and charging instructions Use of SciQuest/PCard for most commonly used goods & services needs to be addressed in some areas SciQuest only takes VIP numbers which creates problems in departments that use only PTAEO Reduction in PCard non-travel limits to $2,000 could cause issues in some departments Training may need to be offered more frequently during the implementation period Departments may need help training on initiator, preparer & approver roles More time may be needed for change management in some departments 11

12. How we are addressing concerns Use pilot approach for policy components that cause concern (SOM, Beinecke, Child Study Center, Genetics) –Includes Use of Sciquest as primary purchasing method Sciquest auto-approvals <$200 Reduction of P card limits to $2,000 –Pilot period 4/11 to 6/11 Remind departments about web training for SciQuest Add additional SciQuest classroom training sessions during the implementation period if needed Provide a streamlined version of the ORA “Lab Staff” training curriculum as a web reference guide Procurement and Controller’s Office to monitor impact of changes and exceptions to policies (may need increased reporting for departments) Review and finalize department and central process owner pre- implementation readiness activities 12

13. Resources & Support  Purchasing Policy 3201 and Procedure 3201PR  At-a-Glance Purchasing Policy 2011  FAQ’s Purchasing Policy Revision 2011  Online SciQuest training http://yalebiz.yale.edu/transactions/sciquest http://yalebiz.yale.edu/transactions/sciquest  Yale Procurement Buying Guide http://buying-guide.yale.edu/ 13

14. Procurement Contact information  For Purchasing Questions: Purchasing Services HelpDesk purchasing.helpdesk@yale.edu (203) 432-9955  For Payment Questions: AP HelpDesk aphelpdesk@yale.edu (203) 432-5394  For Procurement Systems (Oracle, SciQuest, EMS) Questions: ITS HelpDesk helpdesk@yale.edu (203) 432-9000 14