2 Additional information and notes are available about each slide Additional information and notes are available about each slide. The notes are not available when viewing the slide show. The notes are available in “Normal” view underneath the slide. See below.This is where you will find additional information about the slide
3 When Making Purchases for the State Remember to:Encourage Fair and Open CompetitionPurchase Best Value Goods and ServicesObey the LawAct Only in the Public Interest
4 Sections First Steps in Purchasing Small Purchase Rule ($1,000 or less)Purchases between $1,001 - $5,000Purchases over $5,000Sole Source PurchasesEthics & Penalties for Illegal ActivitiesThe purpose of this presentation is to make sure that we understand the right way to purchase for the State of Utah – in other words, the way that will keep us out of trouble. No one wants to have their names in the newspaper unless it is an award or a commendation.I am going to use the word “AUDITOR” several times in the presentation. I used to call it the seven-letter-dirty word, but recently I came to the conclusion that auditors are people just like us. They are trying to do their jobs – that being making sure the State’s money is protected from fraud. When they find a problem in the course of their research, they have to make sure that fraud is not the reason.
6 This is the Purchasing Flow Chart This is the Purchasing Flow Chart. We will be discussing the first three items in this section (Section 1: First Steps in Purchasing)Flow chart can be downloaded from purchasing.utah.gov home page. Click “Purchasing Forms” on the right and then on “Purchasing Flow Chart” under the heading “Agency Contract Information”
7 First Steps: Agency Contracts Does your agency have a current agency contract?Purchase directly from the contractYesNoWhen you need to purchase a goods or service, first check to see if you agency has a current agency contract with the goods or services that you need. If you find a contract, then the goods or service directly from the contract.
8 First Steps: Mandatory Use Providers Is the item/service available from another state agency?Mandatory Use ProvidersYesState Fleet OperationsUtah Correctional IndustriesState Mail and DistributionDepartment of Technology ServicesState Print ServicesExecutive Branch Agencies are required by law to use the providers in the box on the right when the providers offer the products/services that meet agency requirementsFleet: The Division of Fleet Operations is charged with handling State Vehicle acquisition, repair, preventive maintenance, and fueling for those vehicles. They also offer a daily vehicle rental option for state employees needing to complete official state business.Utah Correctional Industries (UCI): Clothing & uniforms, Data Entry, Document Scanning, Furniture, Metal Chairs, Micrographics, Signs, Printing, Asbestos Abatement, Beverage Processing, Panel Reconfiguration…State Mail: Provides mail preparation and distribution. Services include intelligent inserting, automated inserting, folding, tabbing, address printing, presorting and mail design.DTS: Executive branch agencies are required by law to go through DTS for any technology purchases. The Office of Education is exempt from this requirementState Print Services: manages essential document production services for state government. Digital Copier Service: offers walkup copier management to agencies statewide. State Copy Center: provides high-quality, production digital printing and related publishing services. The print center provides printing-on-demand in the form of high volume black & white or color impressions. Additionally, the center is equipped with a variety of binding and finishing services.No
9 First Step: State Cooperative Contract Executive branch procurements units are required to use State Cooperative Contracts when the contract offers products/services that meet agency requirements.Is the item/ service available from a State Cooperative Contract?Yes"Executive branch procurement unit" means each department, division, office, bureau, agency, or other organization within the state executive branch, including the division and the attorney general's office. [Utah Code 63G-6a-107 (7)]The definition does not limit it to just offices that procure in the name of the division. Why? Because every department, division, office, bureau, agency, or other organization within the state executive branch make purchases.No
10 State Cooperative Contract: Exception Utah Procurement Code §63G-6a-408 (4)(4) Except as provided in Subsection (5), an executive branch procurement unit may not obtain a procurement item through a small purchase standard procurement process if the procurement item may be obtained through a state cooperative contract or a contract awarded by the chief procurement officer under Subsection 63G-6a-2105(1).The law states that items available on a state cooperative contract MUST be obtained from the state cooperative contract.
11 State Cooperative Contract: Exception Utah Procurement Code §63G-6a-408 (5) Subsection (4) does not apply if: (a) the procurement item is obtained for an unanticipated, urgent or unanticipated, emergency condition, including:(i) an item needed to avoid stopping a public construction project;(ii) an immediate repair to a facility or equipment; or(iii) another emergency conditionSubsection 4 was on the previous slide. It stated that executive branch agencies HAVE to buy from State Cooperative Contracts if items or services are available.This section allows for an exception to buying from those contracts when there is an UNANCITIPATED URGENT or UNANTICIPATED EMERGENCY condition which requires a purchase. It then lists some examples.Keep in mind, these are unanticipated. Procurements made outside of a state cooperative contract using this provision should be the rare exception not a frequently used excuse.
12 State Cooperative Contract: Exception Utah Procurement Code §63G-6a-408 (5) (5)(b) the chief procurement officer or the head of a procurement unit that is an executive branch procurement unit with independent procurement authority: (i) determines in writing that it is in the best interest of the procurement unit to obtain an individual procurement item outside of the state contract, comparing:The exception to obtain a procurement item through another procurement method if the procurement item may be obtained through a state cooperative contract can only come from a written document signed by the CHIEF PROCUREMENT OFFICER (Kent Beers) in order for it to be valid.
13 State Cooperative Contract: Exception Utah Procurement Code §63G-6a-408 (5)the contract terms and conditions . . .the maintenance and service . . .the warranties . . .the quality . . .the cost . . .. . . applicable to the procurement item under the state contract with the contract terms and conditions applicable to the procurement item if the procurement item is obtained outside of the state contract;The written determination to buy outside of the state contracts must include proof that the good or services has terms & conditions, maintenance and service, warranties, quality, and cost that are equal to or better than those items on the state contract.
14 State Cooperative Contract Utah Procurement Code §63G-6a-408 (5)(ii) for a procurement item that, if defective in its manufacture, installation, or performance, may result in serious physical injury, death, or substantial property damage, determines in writing that the terms and conditions, relating to liability for injury, death, or property damage, available from the source other than the contractor who holds the state contract, are similar to, or better than, the terms and conditions available under the state contract; and(iii) grants an exception, in writing, to the requirement described in Subsection (4).If the item could cause serious physical injury, death, or substantial property damage should something go wrong, then the written determination must also the conditions covering liability for those items are equal to or better than the state contract.
15 State Cooperative Contract Review of §63G-6a-408 (5)(5)(b) the chief procurement officer. . .determines in writing that it is in the best interest of the procurement unitdetermines in writing that the terms and conditions, relating to liability for injury, death, or property damage, are similar to, or better than, the terms and conditions available under the state contract(iii) grants an exception, in writing, to the requirement described in Subsection (4).An exception for executive branch agencies to purchasing from state cooperative contracts MUST be written/signed by the CHIEF PROCUREMENT OFFICER, Kent Beers.
16 purchasing.utah.govHow to find an item on a state cooperative contract.
17 Any of the above fields are searchable on the webpage Any of the above fields are searchable on the webpage. It is highly recommend that you only search one field at a time.If you can’t find a contract using the first three fields and if you know which State Purchasing Agent is responsible for the commodity, use the “Select an agent from list” field. Choose the agent and look at just their contracts.
18 To see a summary of the contract, click “View” in the contract summary column for the contract that you want to use.
19 This slide displays the top of the first page of the contract summary for the Staples contract. Note the contact name for the vendor and the State Purchasing agent.The contract summary page contains the information agencies need to make a purchase.
20 State Cooperative Contracts Because State Cooperative Contracts were created after a competitive process, purchases made from the contracts are NOT subject to the small purchase rule in the next section.
21 SECTION 2 – Small Purchase Rule (No Bidding Required)
22 Having discussed the top three steps on the flow chart, lets move on to the bottom portion.
23 Does the individual item(s) cost less than $1,000? Is the total purchase more than $1,000 with only one possible vendor?The agency must complete a sole source request and submit it with a quote from the vendor to State Purchasing. A sole source for a PO must also have an RQS number.Sole SourceYesDoes the individual item(s) cost less than $1,000?NoAre the individual item(s) more than $1,000 but less than $5,000 AND the total purchase will cost less than $5,000?Is the total purchase more than $5,000 with multiple vendors available?These are small purchases. The agency may select the best source without seeking competitive quotes. The complete procurement must total no more than $5,000 with each item in the procurement costing no more than $1,000. When using this process, the agency may not spend more than $50,000 in a fiscal year with an individual vendor. (UCA 63G-6a-408)The agency shall obtain competitive quotes and purchase the item/service from supplier offering the lowest quote meeting specifications.If all known vendors have been contacted and only one vendor offers a quote, the purchase is a sole source – proceed to the box below.The agency shall enter an RQS (results in a purchase order) or an RQM (results in an agency contract). The agency does not collect quotes. Quotes/bids will be obtained by the Division of Purchasing.Zoomed in on bottom portion
24 Does the individual item(s) cost $1,000 or less? Small Purchase RuleItems under $1,000 do not need to be competitively bidSmall Purchase Rule appliesDoes the individual item(s) cost $1,000 or less?YesNo
25 Small Purchase Thresholds Individual procurement threshold ($1,000)Single procurement aggregate threshold ($5,000)Annual cumulative threshold ($50,000)Reminder: Items bought through agency contracts or state cooperative contracts do not apply to the small purchase threshold because the contracts were established after a competitive solicitation.
26 Small Purchase Thresholds Individual Procurement Threshold:The maximum amount that can be spent on one item under the small purchase ruleThe threshold, or limit, is $1,000 for one item
27 Small Purchase Thresholds Single Procurement Aggregate Threshold:The maximum amount that can be spent at one time (a single procurement) with all individual items in the procurement being under $1,000.The threshold, or limit, is $5,000 for the total purchase. You can buy many items under $1,000 in the same purchase as long as the total does not exceed $5,000.Do not split a purchase in order to stay under the limit.
28 Small Purchase Thresholds Annual Cumulative Threshold – the maximum amount that an agency can spend with a single vendor in one year using the small purchase rules.When using the small purchase rules, the limit is $50,000 for a single vendor in a year.
29 Small Purchase Thresholds Reminder:Items bought through agency contracts or state cooperative contracts are NOT subject to the small purchase thresholds because the contracts were established after a competitive bid.
30 Small Purchase RuleIndividual procurement thresholdSingle procurement aggregate thresholdAnnual cumulative threshold($1,000)($5,000)($50,000)If a procurement item fits within the small purchase rules, the agency DOES NOT HAVE TO do a competitive bid. They may purchase from a convenient source. HOWEVER, with your budgets in mind, don’t buy from an expensive source! If the price seems high, look somewhere else.If a threshold will be exceeded, competition is required to obtain the procurement item.
31 How to Purchase “Real” Items 1st – Agency Contract2nd – Mandatory Use Providers3rd – State Cooperative ContractRemember the Purchasing flow chart and the steps we have to follow to purchase an item.1st – check your agency contracts. 2nd – Does a mandatory use provider have the item available. 3rd – Is it on a State Cooperative Contracts – check the database. 4th – Determine if the $ amount of the item(s) allows you to purchase using the Small Purchase Rules.4th – Small Purchase Rules(Watch the Thresholds)
32 SECTION 3 – Purchasing Items $1,001- $5,000 (Bidding Required) Once you do an informal bid/quote, the small purchase thresholds do not apply (meaning the $1,000 and $5,000 and $50,000 thresholds do not apply once quotes are requested.Items costing $1, $5,000 must be purchased using an informal phone/ quote.Agencies may purchase these items so long as the total of the purchase is not over $5,000. If it is over $5,000, State Purchasing will handle the purchase on your agencies behalf.
33 Purchasing Items $1,001 - $5,000 (Bidding Required) Obtain competitive quotes by phone/Two quotes required but three quotes preferred.Keep all documentation for 5 yearsName of all vendorsCopy of quoteDate of quoteAll other paperworkDoes the individual item(s) cost between $1,001 and $5,000?YesState Purchasing highly recommends that any phone quote be followed up in writing by an quote.No
34 Telephone/Email Quote Click above for documentThe Telephone Quotation Sheet is located online at purchasing.utah.gov look under the DAS SERVICES heading for Purchasing Forms. Then click Phone Quotation Worksheet.Read and understand the General Information document that comes with the Telephone Quotation Sheet.
35 Telephone/Email Quote DO NOT disclose any information of other quotes obtained –including price, delivery, brand, etc.The purchase must be made from the vendor providing the lowest responsive and responsible quote.
36 Purchasing Items $1,001 - $5,000 (Bidding Required) Do NOT tell the vendor they are the winner until all internal processes are completeAll agency procedures MUST be complete before awarding bidDoes the individual item(s) cost between $1,001 and $5,000?YesNo
37 SECTION 4 –PurchasingItems over $5,000(State Purchasing)
38 Purchasing Items over $5,000 Follow internal proceduresEnter RQS (results in a purchase order) or RQM (results in an agency contract) in FINETInclude description & approximate costIs the total purchase over $5,000 with multiple vendors?Yes
39 Purchasing Items over $5,000 By State Purchasing Purchases over $5,000, must be sent to the Division of Purchasing for processing.Work with your agency’s purchasing and finance offices to follow the correct process.
40 Purchasing Items over $5,000 By State Purchasing Send detailed specifications to State PurchasingQuantity requiredDate required (if applicable)Delivery locationOther pertinent informationCan include a list of recommended suppliers with vendor contact information, address & phone number
41 Purchasing Items over $5,000 By State Purchasing Just a reminder:RQS can become a PO or a ContractRQM can only become a ContractPut in FINET. Goes through approval process within agency.Purchasing cannot move forward without a RQS or RQM
42 Purchasing Items over $5,000 By State Purchasing Process for Procurement:Informal SolicitationLess than $50,000Formal SolicitationPosted for Public Notice on BidSyncItems greater than $50,000 must be postedAt discretion of State Purchasing agent, items less than $50,000 can be postedPut in FINET. Goes through approval process within DNR.Purchasing cannot move forward without a RQS or RQM
43 Common Procurement Methods for Formal Solicitation Request for Information (RFI)Request for Quotation (RFQ)Invitation for Bid (IFB)Multi-Step Bid (MSB)Request for Proposal (RFP)Sole SourceThe State Purchasing Agent will work with you to determine which method is best for your requirements.Templates for Multi-Step Bid, RFP, and Sole Source are available at:Put in FINET. Goes through approval process within DNR.Purchasing cannot move forward without a RQS or RQM
45 Your ResponsibilityMake sure specifications are written to obtain adequate competitionNever let vendors write specificationsAllow sufficient time for all internal agency procedures & State Purchasing proceduresIf you don’t know – please askKeep good documentation on your purchasesLack of planning on your part may make an “emergency” for you, but that does not mean that State Purchasing can by-pass the law or the rules to shorten the process.
47 First Steps: Sole Source Is the total purchase over $1,001 with only one vendor?YesAll known vendors contacted-only one bidIf over $1,000, must be approved by the Division of Purchasing.A quote from the vendor MUST be submitted with the sole source requestThe current sole source request paperwork is located on purchasing.utah.gov Click Purchasing Forms under the DAS SERVICES header. The paperwork is located under the PURCHASING FORMS AND INFORMATION header.Only use the current sole source request paperwork.
48 Sole Source Procurement Conditions for use of sole source procurementSole source procurement shall be used only if a requirement is reasonably available from a single supplier
49 Sole Source Procurement Sole Source does NOT mean:BEST sourcePREFERRED sourceMOST CONVENIENT sourceFAVORITE sourceCHEAPEST sourceMake sure it really is a sole source! Justify the sole source in writing on the sole source request form.
50 Sole Source RequestsAll sole source purchases over $1,000 must go to State Purchasing. Sole source requests estimated to be $50,000 and above must be posted for a minimum of 7 calendar days for public comment.State Purchasing agents have the prerogative to post any sole source, even those under $50,000, if they feel it is in the best interest of the State.
51 Sole Source Request Form Version10/23/2013Always check purchasing.utah.gov for the most up-to-date form
52 Sole Source Requests A signed sole source Is NOT the same as a contractOnce the sole source has been signed by State Purchasing, a contract MUST be created by the agencyThe contract must be signed by all parties including State Purchasing before any goods or services can be obtained
54 NoticeThe following information discusses matters of law. You are strongly advised to consult with your attorney regarding any and all legal issues presented herein The Division of Purchasing and General Services is not authorized to give legal advice.
56 Small Purchase RuleIndividual procurement thresholdSingle procurement aggregate thresholdAnnual cumulative threshold($1,000)($5,000)($50,000)Do NOT divide a purchase to stay under the thresholds
57 63G-6a-2305 Penalties for Artificially Dividing a Purchases (8) It is unlawful for a person to intentionally or knowingly divide a procurement into one or more smaller procurements with the intent to make a procurement: (a) qualify as a small purchase, if, before dividing the procurement, it would not have qualified as a small purchase; or (b) meet a threshold established by rule made by the applicable rulemaking authority, if, before dividing the procurement, it would not have met the threshold.
58 63G-6a-2305 Penalties for Artificially Dividing a Purchases (9) A division of a procurement that is prohibited under Subsection (8) includes doing any of the following with the intent or knowledge described in Subsection (8): (a) making two or more separate purchases; (b) dividing an invoice or purchase order into two or more invoices or purchase orders; or (c) making smaller purchases over a period of time. (10) A person who violates Subsection (8) is subject to the criminal penalties described in Section 63G-6a
59 63G-6a-2305 Penalties for Artificially Dividing a Purchases Dividing a procurement in order to remain under the small procurement threshold is fraud and is illegal.If it is discovered that a person has intentionally or knowingly divided procurements, he or she can be charged as follows:Less than $100,000 = class B misdemeanorBetween $100,000 and $250,000 = class A misdemeanorBetween $250,000 and $1,000,000 = third degree felonyOver $1,000,000 = second degree felonyShall be dismissed
60 Gratuities, Kickbacks, Unlawful Use of Position or Influence
61 Ethical Actions Be Independent Do Not Accept Gifts from Vendors Do Not Socialize with VendorsDo Not Play FavoritesMaintain Confidentiality
62 Ethical Actions Follow the Law Act Only in the Public Interest Remember - You are a Trustee of the Public’s Money
63 63G-6a-2304.5 Gratuities, Kickbacks, Unlawful Use of Position or Influence (1) (c) "Gratuity" means anything of value, including:(i) money;(ii) a loan at an interest rate below the market rate or with terms that are more advantageous to the person receiving the loan than terms offered generally on the market;(iii) an award;(iv) employment;(v) admission to an event;(vi) a meal;(vii) lodging;(viii) travel; or(ix) entertainment for which a charge is normally made.
64 63G-6a-2304.5 Gratuities, Kickbacks, Unlawful Use of Position or Influence (1) (g) "Kickback" means a gratuity given in exchange for favorable treatment in a pending procurement or the administration of a contract.(2) Nothing in this section exempts a person subject to the provisions of Title 67, Chapter 16, Utah Public Officers' and Employees Ethics Act, from complying with the provisions of the Utah Public Officers' and Employees Ethics Act.
65 63G-6a-2304.5 Gratuities, Kickbacks, Unlawful Use of Position or Influence (3) (a) Except as provided in Subsection (6) or (7), it is unlawful for an interested person to give, offer, or promise to give a gratuity to:(i) a procurement participant; oran individual who the person knows is a family member of a procurement participant.Except as provided in Subsection (6) or (7), it is unlawful for a procurement participant to ask, receive, offer to receive, accept, or ask for a promise to receive a gratuity from an interested person.
66 63G-6a-2304.5 Gratuities, Kickbacks, Unlawful Use of Position or Influence (8) A person who violates this section is guilty of:(a) a felony of the second degree if the total value of the gratuity or kickback is $1,000 or more;(b) a felony of the third degree if the total value of the gratuity or kickback is $250 or more, but less then $1,000;(c) a class A misdemeanor if the total value of the gratuity or kickback is $100 or more, but less than $250; or(d) a class B misdemeanor if the total value of the gratuity or kickback is less than $100.
67 63G-6a-2306 Penalties. . .in addition to any penalty contained in any other provision of law, a public officer or public employee who intentionally violates a provision of Section 63G- 6a , or Section 63G-6a-2305 shall be dismissed from employment or removed from office.Except as provided in Subsection (4), a public officer or public employee who intentionally violates a provision of this chapter is subject to disciplinary action, up to and including dismissal from employment or dismissal from office.
68 Gratuities and Kickbacks Presentation Cronyism: an anticompetitive practice that may violate federal antitrust law. Cronyism is a form of favoritism where contracts (or purchase orders) are awarded on the basis of friendships, associations or political connections instead of fair and open competition.(8) "Contract" means an agreement for the procurement or disposal of a procurement item.
69 Gratuities and Kickbacks Presentation For further understanding, please see the training entitled “Gratuities, Kickbacks, & Undue Influence”Purchasing.utah.govClick “Agency Training”Click “Gratuities, Kickbacks, & Undue Influence”