Policy BS07 AUTHORITY AND PROCUREMENT

Policy Steward:  Associate Vice President for Auxiliary & Business Services

Contents:

  • Purpose
  • Authority
  • Procurement
  • Responsibilities
  • Requisition / Purchase Order
  • Contractual Documents
  • Conflict of Interest
  • Emergency Declaration
  • Title and Ownership
  • Purchase for Employees and Other Personal Use
  • Further Information
  • Cross References

  • PURPOSE:

    To state the authority for and method of procurement of equipment, materials, goods and services, including consulting. (For special provisions concerning Consultants, see Policy BS17.)

    AUTHORITY:

    The Board of Trustees of The Pennsylvania State University, through the President and the Treasurer, has delegated to the Director of Procurement and Materials Management, who is responsible for Purchasing Services, specific responsibility and authority for the negotiation and procurement of equipment, materials, goods and services. The Director is the University's principal agent to make commitments for equipment, materials, goods and services.

    Limited delegation of purchasing authority has been made to several administrative units of the University because of their unique purchasing requirements.

    These are:

    Also, by Agency Authority, the Purchasing Department at the Penn State Milton S. Hershey Medical Center will accomplish the acquisition of equipment, materials, goods, and services for Penn State's College of Medicine.

    Questions concerning any specific authority or delegation should be referred to the Director of Procurement and Materials Management.

    PROCUREMENT:

    In order to insure appropriate expenditure of University funds, these general principles will be followed:

    1. All funds deposited with the University, regardless of source, are considered University funds. Purchases of equipment, materials, goods and services using these funds must comply with established University purchasing policies and procedures.

    2. A properly executed eBuy+ Requisition is the prime valid method of committing the University for the purchase of equipment, materials, goods or services. The resulting Purchase Order must be approved by the Director of Procurement or his/her delegate. Faculty and staff, unless specifically authorized by the Board of Trustees, are not permitted to make a financial commitment on behalf of the University.

    NOTE 1:  Due to their independent purchasing authority, Housing and Food Services, the Applied Research Laboratory, and the Penn State Milton S. Hershey Medical Center do not utilize the eBuy+ system and therefore do not use the eBuy+ requisition.  They utilize their unique requisitioning systems rather than the one designated above.

    NOTE 2: Material items and authorized services up to and including $2,000 (including delivery, shipping, or special handling, and excluding several specific classes of items) may be charged on the Penn State Purchasing Card. (See Policy BS14 and the Procedure PC2009 for more information about the University Purchasing Card.)

    NOTE 3: Delegation to acquire materials, goods or services up to $500, and equipment up to $250, has been granted to faculty and staff by using a properly approved Limited Order. (See Policy BS16). The Limited Order is available for limited use only if the purchasing card cannot be used.

    See "Exceptions" below for other considerations.

    3. Vendors which require contracts, equipment leases, or agreements in addition to or in place of a University Purchase Order, must have these documents approved by the Director of Procurement or other duly authorized Officer of the University.

    4. Any procurement transaction involving the expenditure of $1,000,000 or more, unless previously approved by the University Board of Trustees, must be approved by the President or the Treasurer of the University before execution of a Purchase Order.

    5. All purchases of equipment, materials, goods and services (including consultants) shall be made in a fair and equitable manner. Competitive purchasing shall be defined in University written policies and procedures where the same serves the best interests of the University. (Refer to Policies BS09 and BS17.)

    RESPONSIBILITIES:

    University Purchasing Services is charged with the following responsibilities:

    1. Comply with all policies of the Board of Trustees and Officers of the University governing the procurement of equipment, materials, goods and services.

    2. Ensure the procurement of equipment, materials, goods and services are accomplished according to established laws, University policies and proper ethical conduct.

    3. Procure the required equipment, materials, goods and services for the academic, administrative and research departments of the University in a fair and equitable manner.

    4. Ensure compliance with competitive purchasing requirements in accordance with written policies and procedures.

    5. Authorize and sign Purchase Orders, contracts, leases or agreements for the procurement of equipment, materials, goods and services.

    NOTE: Refer to "Contractual Documents" for limitations.

    REQUISITION / PURCHASE ORDER:

    The purchase requisition is initially prepared by the using department by completing an eBuy Requisition. After this initial preparation, the resulting Purchase Order serves as a requisition until it is approved by Purchasing Services.

    Exceptions:

    1. Those expenses connected with travel must either be paid by the University employee, or on a Penn State purchasing card.  Settlement of travel expenses must be done through the submission of a travel report in the Employee Reimbursement System (ERS).
    2. Those items which are available from General Stores are obtained through eBuy+ .
    3. Those items which are available from other departments of the University are obtained by using the Interdepartmental Charges and Credits form (IBIS "IDCC"), direct billing (see Procedure CR2069), or the University Purchasing Card (also refer to Policy FN16 and #5, below).
    4. Those items which are permitted to be purchased with petty cash or operating funds.
    5. Those items authorized to be acquired by using a validly issued University Purchasing Card. (See Policy BS14 and Procedure PC2009.)
    6. Those items which are permitted to be purchased with the Limited Order.
    7. Those types of contractual documents requiring additional approval by any one of the University officials specified in Policy FN11 and authorized by the Board of Trustees to commit the University. If a Purchase Order is also required to accompany these documents, the package must be processed through Purchasing Services for approval before it goes to other University Officials.

    CONTRACTUAL DOCUMENTS:

    The following guidelines have been established for the signing of certain contracts by Purchasing Services:

    1. If the contractual document includes a "Non-Funding Clause," Purchasing Services can sign regardless of the time period involved. A "Non-Funding Clause" is one which releases the University from the contract in the event its annual appropriation from the Commonwealth is not forthcoming.
    2. All non-financial contractual documents (such as volume buying agreements and other similar contracts) which do not obligate the University to any specific commitment can be signed by Purchasing Services.
    3. If the contractual document or purchase order calls for pre-payment of a multi-year obligation (payment for services for more than 12 months) which exceeds $50,000 per year or $100,000 in total and there is a no cancellation clause,  the budget executive for the unit will be contacted and provided the amount of prepayment and the terms (i.e. no cancellation), who the original requestor was for follow-up, and will be asked for their acceptance of all inherent risks involved, including potential for paying for services that will not be used in the future.

    Financial Officers would be responsible for assuring that appropriate accruals are posted for proper accounting in the University's financial records.

    1. If the contractual document covers a period in excess of 12 calendar months, and is in excess of $50,000, the document must be forwarded to the Assistant Treasurer by Purchasing Services for an additional approval signature.

    See Policy FN11 and Financial Guideline No. 2 (FNG02) for the overall University policy on Contracts and Leases.

    CONFLICT OF INTEREST:

    All employed or associated with the University have an obligation to disclose all outside financial relationships which have any potential for a real or perceived conflict of interest for the University.  There are several types of conflicts which can arise, including conflict of commitment, research conflict of interests and individual and institutional conflict of interest.  More detail on conflicts of interest and commitment can be found on the University Ethics site. This policy addresses conflicts of interest related to the procurement of equipment, materials, goods and/or services, by any procurement process (Purchase Order, Purchasing Card, Special Request for Check and/or related contracts/agreements).

    1. Employees must disclose to his/her budget executive all outside financial interests that have a potential for a real or perceived conflict of interest, which includes ownership interest of 10% or more in any business held by the employee, spouse/partner and/or children, including their children’s spouses/partners and/or income received by engaging in outside professional services or private consulting with a business  (each an “employee-related business”).  In these situations, any unit (administrative areas) to which the employee has a direct or indirect reporting line shall not make any purchases of equipment, materials, goods, or services from the employee-related business, except as outlined in number 2 below.


    2. In unusual circumstances, if the employee-related business is offering unique goods or services that cannot be obtained elsewhere, it may be possible to use the employee-related business in the unit.  However, a full disclosure of the outside financial interest must be made in the sole source justification of the purchase order or as a back-up documentation for other procurement methods, and the employee cannot be involved in any discussion, decisions or approvals of the transaction or make any assessments of the goods or services provided. The employee and the budget executive must approve use of the employee-related business.


          NOTE:  This applies for procurement of goods and services for research awards and sub-contracts as well.  The employee with the financial interest must complete a formal disclosure through the COINS system, per RP06 - Disclosure and Management of Significant Financial Interests (Formerly RA20, Individual Conflict of Interest) .

    3. University personnel, by policy, must decline personal gifts or gratuities associated with the procurement process, including the purchasing card.


    4. According to Board BYLAWS, Article #6, the University may not enter into any contract or transaction of $10,000 or more with any organization in which a current or emeritus member of the University Board of Trustees (or any member's spouse or minor child) holds a beneficial ownership (10% or greater) unless the contract has been awarded through an open and public bidding process, in accordance with University purchasing policy, or has been fully disclosed to the Board of Trustees and approved by the affirmative votes of a majority of the disinterested members of the Board of Trustees before the Purchase Order is initiated.  ("Fully disclosed" shall mean disclosure of the material facts as to the relationship or interest of the member or members of the Board of Trustees, or spouse or minor child of such member or members, and disclosure of the material facts as to the contract or transaction, including a Sole Source Justification.)


    5. Members of the Board of Trustees shall also comply with Board BYLAWS Article #6 and, in connection therewith, shall, to the extent possible, avoid person-to-person discussion or negotiation with the officers and employees of the University for the purpose of procuring business with the University.

          NOTE: In order for the Trustees to authorize University transactions of $10,000 or more, the Trustee whose business is impacted must present to the Board the situation and conditions surrounding the transaction that may result in a possible conflict of interest.

    EMERGENCY DECLARATION:

    If an emergency is declared at any University location by the Senior Vice President for Finance & Business or pre-determined delegate, general purchasing regulations, including competitive bidding requirements, may be suspended to address the emergency response and other purchasing decisions.  The period of emergency will begin when declared and will end when stated by the Senior Vice President for Finance & Business.

    During an emergency, the Director of Procurement, or if unavailable, the pre-determined delegate, can activate and raise goods and services limits on existing purchasing cards as required to address purchases required to continue operations during the state of emergency.

    TITLE AND OWNERSHIP:

    The title to and ownership of all equipment obtained at the University by purchase, through a funded project or grant, or by gift, is vested in and remains the property of the University upon the completion or expiration of the project or assignment. No property or equipment shall become the personal property of any individual unless obtained through the Salvage and Surplus Operation. (Refer to Policy BS15.)

    PURCHASE FOR EMPLOYEES AND OTHER PERSONAL USE:

    It is the policy of Purchasing Services of The Pennsylvania State University not to permit any buying through the University's purchasing procedures for the personal use of any faculty, staff member or student; or for organizations other than those recognized departments who have University budgets against which purchases may be charged.

    FURTHER INFORMATION:

    For questions, additional detail, or to request changes to this policy, please contact the Office of the Associate Vice President, Auxiliary & Business Services.

    CROSS REFERENCES:

    Other Policies in this Manual may apply, especially:

    BS09 - Initiating Purchases from Vendors Outside the University,

    BS15 - Disposal and Purchase of Obsolete, Surplus or Scrap University Owned Equipment, Supplies and/or Materials,

    BS16 - Limited Order,

    BS17 - Use and Procurement of External Consultants,

    FN11 - Contracts and Leases,

    FN16 - Interdepartmental Transactions,

    FNG02 - Limited Delegation of Contract Approvals, and

    HR91 - Conflict of Interest.


    Effective Date: February 18, 2013
    Date Approved: February 13, 2013
    Date Published: February 18, 2013 (Editorial changes, June 13, 2016)

    Most Recent Changes:

    Revision History (and effective dates):

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