Policy on the Acquisition of Merchandise and Services

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					                        Policy on the Acquisition of Merchandise and Services
PURPOSE: The purpose of this policy is to describe the different methods for acquiring merchandise and services
and identify when these methods should be used.

GENERAL CONDITIONS: The policies regarding the acquisition of merchandise and services established by the
State of Texas and the Board of Regents will be followed. No liability will be assumed for payment of obligations
except for those incurred in accordance with authority granted, such as official purchasing agents and specific
designees of the University.

MERCHANDISE: In most cases, there is a competitive marketplace from which to purchase consumable materials,
supplies, and equipment. To avoid conflicts of interest, conserve university funds and meet policy goals, UT
Southwestern requires the procurement of consumable materials, supplies, maintenance and equipment be
requisitioned through the Department of Purchasing. Upon receipt in Purchasing, requisitions will be processed in
accordance with established bidding guidelines, including efforts to meet the goals set for purchases from historically
underutilized businesses. Failure to process purchase requisitions properly could lead to overpaying for merchandise,
loss of sales tax exemptions, and internal control failures.

SERVICES: Similar to merchandise, there is a competitive marketplace from which to purchase most services.
Services are provided by business entities and individuals functioning as independent contractors. Note the categories
of services set forth as follows:

            PROFESSIONAL SERVICES: Professional services are directly related to professional practices as
             defined by the Professional Services Procurement Act, (Government Code, Section 2254.002). These
             include services within the scope of the practices of: accounting, architecture, optometry, medicine,
             land surveying, landscape architecture, professional nursing/registered nurse, and professional
             engineering. These services require a written contract processed through the Office of Contracts

            CONSULTING SERVICES: Consulting is the practice of studying or advising with respect to some
             aspect of UT Southwestern operations or management without the traditional relationship of employer
             and employee (Government Code, Section 2254.021). The legislature has established specific statutory
             requirements and procedures which must be followed prior to establishing a contract for consulting
             services. Specifically, the procedures include providing notification of intent to enter into the contract to
             the Legislative Budget Board and the governor’s Budget and Planning Office (BPO). The BPO must
             issue a finding of fact that the services are necessary. Publication of an invitation to provide offers of
             consulting services must be made in the Texas Register at least 30 days prior to awarding a contract.
             Finally, publication in the Texas Register must be made within 10 days after entering into a contract for
             consulting services. All services of this type will require a contract to be processed through the Office of
             Contracts Management to ensure compliance with statutory Requirements.

            OTHER PERSONAL SERVICES: Services which are not considered Professional Services or
             Consulting Services as defined by statute and detailed above are included in this category. These
             services may be provided by a business entity (corporation, partnership, sole proprietorship) or by
             individual independent contractors (see below). All services will require a contract to be processed
             through the Office of Contracts Management to ensure compliance with statutory requirements.

            CONSULTANT AND LECTURER SERVICES: Payments for outside services relating to teaching
             or research that are not otherwise available from our faculty are requested on a Consultant and Lecturer
             Form (form # 3060) which represents a standard contractual agreement. These services, which are
             generally short-term in nature (10 days or less), are allowed to be purchased outside the bidding process
             because the provider is selected based on experience and reputation in their particular field. In the case
             of grants, this form will be used to pay for only essential consultant services which are anticipated and
             provided for in the grant application. Costs generally include fees and travel.      The Consultant and
             Lecturer Form indicates the type of service provided, by whom, the qualifications of the person
             performing the service, and the benefit to the University. Payment of consultant or lecturer fees to
Policy on the Acquisition of Merchandise and Services
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             faculty and staff of UT Southwestern, UT System Health Institutions and UT System Academic
             Institutions is allowable in accordance with Board of Regents Rules and Regulations, Guidelines for
             Payment of Fees to Faculty and Staff of UT System Health Institutions and institutional policy for
             approved continuing education. General revenue funds shall not be used for these payments. Consultant
             and lecturer fees may not be paid to full-time employees of the federal government.

Independent contractors are individuals who provide services outside the traditional relationship of employer and
employee. Completion of a 20-point questionnaire [see Exhibit Al] is required to determine if the relationship meets
the criteria of an independent contractor before paying an individual. All requests for personal, professional or
consulting services must be referred to the Office of Contracts Management to process a contract for services. This
will assure all legal issues associated with the purchase of these services are resolved. If an employee/employer
relationship exists, payment requests will be reviewed by Human Resources to ensure all necessary records for
employment are completed.


PURCHASE ORDERS: Purchase orders are contractual agreements in which two parties agree upon the purchase
of equipment, goods or services. All purchases are to be processed through the Department of Purchasing on a
purchase requisition ensuring compliance with the institution's bidding practices and minimum dollar threshold.
Invoices related to Purchase Orders should be mailed by the vendor directly to the Accounting Department to avoid
payment processing delays. If the department receives an invoice directly from the vendor, it should be routed to the
Office of Accounting, Accounts Payable division immediately for processing. EXAMPLES of items processed for
payment on a purchase order include:

         Coffee services
         Computer hardware and software (including licenses)
         Custom orders for patients – dental related items, hearing loss items
         Educational supplies/awards/testing materials
         Faculty moving/relocating services
         Fees for usage and servicing of computer systems
         Films and film processing
         Lab fees to external labs/companies
         Laboratory supplies and materials
         Lease purchases
         Maintenance agreements
         Medical supplies
         Office and computer supplies
         Office and lab furniture/equipment
         Reprints, publications, page charges
         Routine repairs or servicing of instruments/equipment
         Services other than consulting or professional:
                  Printing, duplicating and reproduction services
                  Paging services
                  Answering services
         Specialized artwork and photographic expenses
         Student store supplies - resale materials/stock
         Subscriptions to professional journals
         Storage rental
         Uniforms and dry cleaning services
         Waste disposal
         Water service including rental of machine

Any construction or remodeling of office/lab space will be requested on a Physical Plant Work Order form. Physical
Plant will provide estimates and either perform the work or contract the job.
Policy on the Acquisition of Merchandise and Services
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Departments are authorized to process purchases up to $1000.00 (including freight), directly through the Small Order
(PRO) system which may be accessed by on-line forms system.

Purchase orders will not be issued by the Purchasing Department for less than $100 with the exception of radioactive
isotopes and controlled drugs. Requests for such items under $100.00 should be processed by the following options:

         1) Delay purchase until items total $100 or more before processing a purchase order whenever possible
         2) Purchase item through PRO system
         3) Purchase item and request reimbursement by Check Request Form.
         4) Emergency purchase item and request reimbursement by Petty Cash Form
         5) Procurement Card

CONTRACTS: Contractual agreements for furnishing resources or the performance of services between UT
Southwestern and another entity specify terms such as the duration of the agreement, description of requested services
to be furnished or performed and the agreed amount to be remitted for such services. If there is a competitive market
for these services, bids must be taken or sole source justification must be provided. Contractual agreements are
encumbered on a Contract Management Order (CMO) or a Grant Management Order (GMO) and processed through
the Office of Accounting, Accounts Payable division. Should the full amount of the encumbrance be unknown at the
time of the first payment or initial set up of the contract management order, the amount is estimated and adjusted after
thorough review. EXAMPLES of payments processed through the issuance of a contract are:

         Contracts for services of individuals (regardless of services being provided)
         Educational services contracts (training services)
         Health related services contracts (dental, pharmaceutical or professional medical services)
         Material transfer agreements
         Other personal services
         Professional services
         Software license agreements (OCM to review only; final agreement handled by Purchasing)
         Sponsored research or collaboration agreements
         Technical/computer consulting, trouble shooting services
         Transcription services


CHECK REQUEST FORM: Check Requests should be used for items purchased for which there is no competitive
marketplace. Reimbursement of business expenses for which use of the normal purchasing process is not possible may
also be processed on a check request. Departments are authorized to obtain items and pay for these by completing a
Check Request Form and submitting it to the Office of Accounting, Check Disbursement division. Please note that
many of these expenditures are subject to the prior approval of expenditures policy. This policy is maintained on the
Accounting Department’s website. Individuals processing those transactions must be familiar with those
requirements. EXAMPLES of items processed for payment on a Check Request Form are as follows:

         Abstract fees and submission fees
         Aston Optical Clinic – glasses or other ophthalmology items
         Board exams, fees, certification expenses
         Books- $250.00 limit
         Business meal reimbursement
         Coffee and coffee service
         Computer supplies- $250.00 limit
         Custom orders for patients- dental related items, hearing loss items
         Delivery/Courier charges, FedEx, UPS, Airborne, etc.
         Experimental subject payments (non-employee)
         Institutional dues
         Lab fees to external labs/companies
         Legal settlements
         Medical Board certification
Policy on the Acquisition of Merchandise and Services
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         Memberships in professional organizations for individuals
         MSP insurance refunds to patients
         Non-employee payments for participation incentives
         Official entertainment/Official functions, including retreats
         Pagers and paging services
         Patient models
         Poster presentation costs, medical illustration and artwork charges
         Professional liability insurance for clinical providers not covered by UT System Professional Liability Plan
         (e.g. psychologists, nurses, technicians, etc.)
         Professional licenses
         Repairs and servicing of instruments/equipment
         Reprints, publications, page charges
         Resident and student activities/functions
         Sales tax, payroll related payments - ORP, TDA, etc.
         Software- $250.00 limit
         Student activities - supplies for functions and resale materials or tickets
         Subject screening and eligibility fees
         Subscriptions to professional journals
         Technical certifications
         Telephone payments and approved cellular/mobile phone bills
         Transplant services and willed body transport charges
         Utility payments
         Water service, including rental of machine

PETTY CASH REIMBURSEMENT: To facilitate the purchase of small dollar items, departments may use the
Petty Cash Form for reimbursement. This process begins with a Petty Cash Reimbursement Form initiated by the
department. EXAMPLES of items allowable for reimbursement on a Petty Cash Form are:

         Experimental subject payments (limited to $50)
         Food items for University functions (limited to $50)
         Gas for University vehicles and transplant services
         Maintenance supplies
         Office supplies
         Travel for transplant services and study participants

Payments from Petty Cash or via Check Requests follow the same guidelines required to disburse funds-including
proper authorization and original receipts. Since the University is exempt from payment of state sales tax on goods
and services, employees are encouraged to obtain a sales tax exemption form prior to making their purchases. Sales
tax is not reimbursable on state and federal accounts

INTERDEPARTMENTAL REQUISITIONS (IDR'S): Interdepartmental requisitions are used to purchase goods
and services from the University's service departments and auxiliary enterprises departments. Even though these
goods or services may be available outside the University, the special nature of these goods and services is often met
through these internal departments. Examples are:

         Animal Resources Center
         Audio/Visual Services
         Duplicating Services
         Environmental Health and Safety
         Gas Cylinders
         General Stores
         Human Resources-Southwest Temporaries
         Information Systems
Policy on the Acquisition of Merchandise and Services
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        Mail Services
        Medical Illustration Services
        Physical Plant
        Student Store

It is important that all payment transactions be supported by sufficient documentation for identification of the
expenditure. In most cases the vendor invoice is adequate, although some expenditures may require additional
information to document business purpose and properly account for the transaction. Adherence to this policy
facilitates compliance with applicable laws and regulations, and the internal control structure of UT Southwestern.

PROCUREMENT CARD: The Procurement Card Program is a fast, flexible purchasing method for processing
small dollar purchases from vendors that accept credit cards. The procurement card is not designed to replace the
current UT Southwestern purchasing process. UT Southwestern will comply with the terms and conditions of the
Procurement Card Contract as specified and authorized by the State of Texas- Texas Building Procurement
Commission. UT Southwestern is utilizing the State of Texas contract for procurement card services with Bank
One. The Bank One MasterCard will be issued in the card holder’s name with the State of Texas emblem and the
wording “Official Use Only” clearly shown on the card. The Procurement is for business purposes only and may not
be used for personal transactions.

Some important points of the program:

       Contact the Procurement Card Administrator (Marion Colorado) for detail information
       Dollar limit for one single transaction is $1500.00
       Dollar limit for billing cycle (30 days) is $15,000.00
       Obtain management approval or authorization prior to making a purchase
       All records (sales receipts, etc.) and record retention are kept in the department for 5 years
       All purchases are tracked in the P-Card Solution Software

Items that can be purchased with the Procurement Card:

       Books
       Chemicals
       Computer Supplies
       Construction Supplies (lumber, nails, etc.)
       Equipment Services
       Film and Film Development
       Hardware/Tool Items
       Janitorial Supplies
       Laboratory Supplies
       Medical Supplies
       Meter Postage
       Office Furnishings and Equipment (object code 231)
       Office Supplies
       Plants and Flowers for Landscaping University Property (Physical Plant Only)
       Registration Fees for Conference and Seminars *
       Reprints, Publications, Page Charges
       Repairs
       Safety Supplies

* Each fee must be entered into the P-Card individually
(input valid trip number in REQ NO field and you must use object code 380)