How to Buy @ Princeton Purchasing Basics

How to Buy @ Princeton: Purchasing Basics Treasurer’s Office Informational Series January 20, 2005 - Presented by… Donald E. Weston, CBM Director of Purchasing donw@princeton.edu Brian E. Rounsavill, CPM, APP Associate Director of Purchasing brouns@princeton.edu For more information: www.princeton.edu/purchasing January 20, 2005 Treasurer’s Office Informational Series 2 Overview of Purchasing Relationships… - Purchasing Matrix Purchasing January 20, 2005 Treasurer’s Office Informational Series 3 Purchasing collaborates with departments to identify needs, train & exchange information… - Purchasing Matrix Departments Liaison Training / Information Exchange January 20, 2005 Purchasing Treasurer’s Office Informational Series 4 Purchasing develops strategic supplier contracts / relationships to meet departmental needs… - Purchasing Matrix Departments Vendors Contracts / Strategic Supplier Relationships Liaison Training / Information Exchange January 20, 2005 Purchasing Treasurer’s Office Informational Series 5 Purchasing facilitates the procurement process via the application of p-tools… - Purchasing Matrix Requisitions P-Tools: •PeopleSoft •Credit Cards •E-Commerce Departments Vendors Orders Contracts / Strategic Supplier Relationships Liaison Training / Information Exchange January 20, 2005 Purchasing Treasurer’s Office Informational Series 6 Purchasing achieves cost savings & process efficiencies, while maintaining control & ensuring compliance… - Purchasing Matrix Requisitions P-Tools: •PeopleSoft •Credit Cards •E-Commerce Departments Vendors Orders Contracts / Strategic Supplier Relationships Liaison Training / Information Exchange January 20, 2005 Purchasing Cost Savings / Efficiencies / Controls / Compliance / Value 7 Treasurer’s Office Informational Series - History of Purchasing • Established in 1945 by the Trustees as the central purchasing authority for Princeton University to provide a more efficient, centralized method for purchasing equipment, supplies and services in Post-War era. • Purchasing is responsible for the acquisition of goods and services; the tagging, tracking and reporting capital equipment; and the re-use, sale, donation and disposal of surplus property. • Over the years, Purchasing has also managed Invoice Processing, Printing & Mailing, Telecommunications and Mail Services. January 20, 2005 Treasurer’s Office Informational Series 8 - Purchasing’s Responsibilities • All equipment, goods and services acquired for the University from outside sources must be purchased through the Purchasing Department. • Purchasing is responsible for managing the procurement process on a University-wide level, including orders, contracts and legal agreements associated with the acquisition of goods and services that support Princeton’s educational, research and community support initiatives. January 20, 2005 Treasurer’s Office Informational Series 9 - Purchasing Exceptions Purchasing has delegated the authority to enter into purchasing agreements for the following areas only: • Construction, Architect & Engineering Design Services - Facilities. • Employee Benefits/Personnel - Human Resources. • Food / Food Services - Dining Services. • Insurance - Risk Management. • Legal Services - General Counsel. • Library Books / Periodicals - University Library. • Software License Agreements - OIT. • Subcontracts on Sponsored Research - ORPA. January 20, 2005 Treasurer’s Office Informational Series 10 - Purchasing Facts Each year Purchasing manages: • Over 40,000 purchase orders ~ over $80 million. • Over 50,000 e-transactions ~ over $7 million. • Over 50,000 p-card transactions ~ over $9 million. • Over 400 contracts ~ over $2 million in cost savings. • Over 5,000 capital assets tagged/tracked on campus. • Over 18,000 items handled through the surplus. January 20, 2005 11 Treasurer’s Office Informational Series - Purchasing’s Mission Things we continually strive for: • To obtain acceptable quality goods/service at the right time - for the least total cost. • To maintain an ethical competitive bidding process. • To make the procurement process user-friendly. • To protect the University. • To ensure compliance with Federal, State and University procurement policies. • To develop strategic vendor partnerships. January 20, 2005 Treasurer’s Office Informational Series 12 - Purchasing Excellence Award • The Purchasing Department is proud to be a recipient of the 9th Annual Achievement of Excellence in Procurement Award. • The Achievement of Excellence in Procurement Award is designed to recognize organizational excellence in procurement. • The award is sponsored by the National Purchasing Institute (NPI), the Institute for Supply Management (ISM), and the National Institute of Governmental Purchasing (NIGP). January 20, 2005 Treasurer’s Office Informational Series 13 - 2004 Campus Satisfaction Survey  179 surveys / 29% response rate  83% either 4 / 5 rating  98% either 3 / 4 / 5 rating January 20, 2005 Treasurer’s Office Informational Series 14 - Purchasing Environment • Decentralized Purchasing environment at Princeton that leverages campus economies of scale. • Campus community originates purchasing requests (requisitions), which are routed through the various systems via specific approval workflows that have the ability to distribute charges over multiple project grants. • Integrated Purchasing tools: • Purchase orders – PeopleSoft Financials. • Credit Cards – PNC Bank Visa Cards (Works). • E-commerce – Vendor-specific B2B Applications. January 20, 2005 Treasurer’s Office Informational Series 15 - Purchasing Basics: 6 Keys to Success The six basic rules from which all Purchasing policies and procedures originate: 1. Signature Authority (Who?). 2. Approved Expenses (What?). 3. Authorized Methods of Procurement (How?). 4. Strategic Supplier Selection (Where?). 5. Required Documentation (When?). 6. Code of Ethics (Why?). January 20, 2005 Treasurer’s Office Informational Series 16 - Rule 1. Signature Authority Only the Purchasing Department has the authority to enter into a contract/lease or purchasing obligation on behalf of the University unless: 1. The Trustees have specifically authorized the individual to do so in writing; or 2. The Purchasing Department has specifically delegated purchasing authority to the individual for a specific term or purpose. January 20, 2005 Treasurer’s Office Informational Series 17 - Rule 1. Signature Authority • In general, Faculty, staff and employees are not authorized to sign vendor agreements/contracts on behalf of the University, or to bind the University in any manner. • Under New Jersey law, individuals who are not authorized, and who enter into an unauthorized agreement, may be held personally liable for the cost of the goods or services purchased. January 20, 2005 Treasurer’s Office Informational Series 18 - Rule 1. Signature Authority • Faculty and staff should develop specifications (get the quote) detailing what they want, how many, when/where it should be delivered. Adequate lead-time is essential! • All vendor forms of agreement such as, quotations, contracts, leases, agreements, should be sent to the Purchasing Department for review and signature. Departments should not sign quotes, as Purchasing may need to negotiate the terms and conditions of the sale/agreement prior to the transaction. January 20, 2005 Treasurer’s Office Informational Series 19 - Rule 2. Approved Expenses • When purchasing with University funds, the transaction can only be used for permitted University expenditures. • Refer to the November 1, 2004 memorandum from the Treasurer entitled, “University Guidelines for NonCompensation Expenses” for a definition of acceptable transactions and required controls (two signatures). http://web.princeton.edu/sites/TreasurersOffice/Treasurer/ univExpPoliciesProcedures.html January 20, 2005 Treasurer’s Office Informational Series 20 - Rule 3. Methods of Purchasing The four authorized methods for purchasing: 1. Purchase Orders - PeopleSoft Financials is the primary purchasing tool for doing business with vendors. Purchase Orders must be used for highdollar (over $2,500), high-volume purchases. Ideal transactions include: transactions over $2,500, capital equipment and government contract purchases. January 20, 2005 Treasurer’s Office Informational Series 21 - Rule 3. Methods of Purchasing 2. E-Commerce – Business-to-Business (B2B) relationships have been established with selected vendors in an effort to facilitate/streamline the ordering, invoicing and payment processes. Ideal transactions include: office supplies, lab supplies, overnight delivery service, and computer equipment. January 20, 2005 Treasurer’s Office Informational Series 22 - Rule 3. Methods of Purchasing 3. Credit Cards – Departmental credit cards are primarily used to purchase goods/services with a value under $1,000 and when the transaction is a one-time/exceptional purchase, the vendor does not accept purchase orders, or credit cards are the industry standard payment option. Ideal transactions include: computer supplies, water & coffee service, cell phone / pager charges, subscriptions, and catering for department events. January 20, 2005 Treasurer’s Office Informational Series 23 - Rule 3. Methods of Purchasing 4. Miscellaneous Invoices - Miscellaneous invoices are typically used in cases where it is necessary to reimburse an individual for approved departmental expenses when a purchase order, e-commerce vendor or departmental credit card cannot be used. Ideal transactions include: travel & personal reimbursements, speaker honorariums, professional consulting services, and cash advances. January 20, 2005 Treasurer’s Office Informational Series 24 - Rule 4. Supplier Selection • Purchasing is responsible for selecting the best sources of supply for the University. The individual department is responsible for developing the specifications. • Purchasing has developed over 400 strategic supplier relationships that leverage the University’s buying power and maximize key supplier competencies to obtain goods and services at the best value. • Always ask first, “Can I get it from a Purchasing contract source?” January 20, 2005 Treasurer’s Office Informational Series 25 - Rule 4. Supplier Selection • Many factors in combination, not necessarily listed in their order of importance, are considered in evaluating bids and awarding bids/contracts: • price • previous performance/service record • ability to provide satisfactory goods/service • quality and conformation to specification • use of substitutes • rebates • administrative cost reductions. • If all factors are equal, the order/contract is generally placed with the lowest bidder / “best value.” January 20, 2005 Treasurer’s Office Informational Series 26 - Rule 5. Proper Documentation • All University purchases and expenditures must be made in accordance with the University Purchasing policies, regardless of the source of funds. • A standard set of competitive bid and justification procedures are required to properly document all purchases to comply with Federal, State and University requirements. January 20, 2005 Treasurer’s Office Informational Series 27 - Rule 5. Proper Documentation • Bids must be solicited whenever the items can be purchased from multiple sources. • Quotations (verbal or written) are recommended for all requirements totaling up to $2,500. • Three written quotations are required for all orders totaling $2,500 or more. A fourth, “opportunity” small, disadvantaged business should be included whenever possible. • Those items considered sole/single source or proprietary must be properly justified by the requisitioner (Sole Source Justification Form). January 20, 2005 Treasurer’s Office Informational Series 28 - Rule 6. Code of Ethics • All pricing, terms and other information furnished by the vendor throughout (before, during and after) the competitive bidding process must remain confidential. • Purchasing is committed to fair and ethical business practices that promote open and fair competition in the best interests of the University and also work toward the success of our strategic supplier relationships. • Purchasing abides by the National Association of Educational Buyers’ professional Code of Ethics. January 20, 2005 Treasurer’s Office Informational Series 29 - Buying Roles • Purchasing’s Role – Ultimate authority for purchasing goods & services for the University. • Department’s Role – Delegated authority to purchase goods & services when: • They do not exceed $2,500. • Don’t qualify as equipment (cost more than $5,000 and have a useful life of one year or more ). • Are not for restricted items. • Do not require a signed contract. January 20, 2005 Treasurer’s Office Informational Series 30 - Common Vendor Sales Techniques • Motivation to land the “Princeton” account. • Limited time, end of month/quarter/year “deals”. • Quotas. • Low-balling (Is price so low that service is at risk?). • The “deal is done.” • Scams (credible invoices / order by trick). • Know your rights! • Don’t hesitate to let Purchasing be the “bad cop.” January 20, 2005 Treasurer’s Office Informational Series 31 - Ethical Considerations • Conflict of Interest – Never use your position for personal gain – be aware of the appearance of impropriety! • Confidentiality – All bids must remain confidential throughout the entire bidding process (even after). • Gifts/Gratuities – Never accept gifts or gratuities. • Split Transactions – Never split a transaction to bypass the minimum bid or single transaction thresholds. • Sharp Practices – Never misrepresent the quantity required or resort to unscrupulous shrewdness. January 20, 2005 Treasurer’s Office Informational Series 32 - Ethics Test Questions to ask yourself: • Was the decision made fairly and without bias? • Was the decision made in an open, competitive environment? • Is the price fair and reasonable? • Would you be comfortable defending the decision criteria in court? • Does the decision pass the “gut / mirror” test? January 20, 2005 Treasurer’s Office Informational Series 33 - Purchasing Tips Tips for successful transactions: • Develop adequate specifications. • Check with Purchasing contract vendors first. • Get at least three bids. • Ask for (and only accept) “best and final offers”. • Keep bids/pricing confidential at all times. • Never appear to be desperate or in a hurry. • Allow for plenty of lead-time. • Contact Purchasing for advice. January 20, 2005 Treasurer’s Office Informational Series 34 - Purchasing Services • Purchasing is knowledgeable of the collective needs of the Institution and can leverage them effectively. • Call Purchasing before you have to make a complex purchase. We can save you time and money, as well as limit your exposure. • Plan ahead by building sufficient lead-time into your calendar of needs. January 20, 2005 Treasurer’s Office Informational Series 35 - On-Line Purchasing Training • Purchasing Overview - The six general principles that enable you to be a good steward with University resources. • Purchasing Basics – A synopsis of the basic purchasing policies, procedures and terminology. • Purchasing Roles - A clear distinction has been outlined for reference between the two primary roles at Princeton. • Purchasing Wizard – Use our interactive tutorial on the procurement process to guide you in the right direction. • How to Buy @ Princeton - An interactive matrix of the vendors contracts, commodities and procurement methods. • Purchasing Policies - An online resource for University procurement policies and procedures. January 20, 2005 Treasurer’s Office Informational Series 36 - “Purchasing Wizard” • An interactive tutorial of the Purchasing process at Princeton. Click on the answers and you will be guided through the purchasing process... January 20, 2005 Treasurer’s Office Informational Series 37 - “How to Buy” Online Matrix • An interactive “How to Buy” matrix of commodities, vendors and buying methods is available online. Click on “Active Contracts”... January 20, 2005 Treasurer’s Office Informational Series 38 - “How to Buy” Online Matrix • Search the contracts by description or vendor. Choose the search method… January 20, 2005 Treasurer’s Office Informational Series 39 - “How to Buy” Online Matrix • Or click on the commodity code to see all vendors. Click on desired commodity... January 20, 2005 Treasurer’s Office Informational Series 40 - “How to Buy” Online Matrix • The list of all active contracts for the commodity is returned with a link to the preferred method for buying. View contract details with web links... January 20, 2005 Treasurer’s Office Informational Series 41 - “How to Buy” Online Matrix • Each contract is associated with one of the four authorized methods for procuring and paying for goods and services at Princeton based on the most efficient means for placing orders with the designated vendor. January 20, 2005 Treasurer’s Office Informational Series 42 - Purchasing Training Brochures Purchasing publishes the following two brochures for the campus community: • Purchasing Services – An Overview • How to Buy @ Princeton – A Guide for Departments - Contact us for copies. January 20, 2005 Treasurer’s Office Informational Series 43 - Purchasing Outreach Material • How to Do Business with Princeton Brochure. • Vendor Bidding System User’s Manual on CD. January 20, 2005 Treasurer’s Office Informational Series 44 - Questions & Comments • Thank you for your time. • Questions & Answers. January 20, 2005 Treasurer’s Office Informational Series 45 - Notes • • • • • • • January 20, 2005 Treasurer’s Office Informational Series 46