1. PURCHASING 101

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 Competition
Purchase Best Value Goods and Services
Obey the Law
Act Only in the Public Interest

4. Sections First Steps in Purchasing
Small Purchase Rule ($1,000 or less)
Purchases between $1,001 - $5,000
Purchases over $5,000
Sole Source Purchases
Ethics & Penalties for Illegal Activities
The 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.

5. SECTION 1 – First Steps in Purchasing

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 contract
Yes No
When 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 Providers
Yes
State Fleet Operations
Utah Correctional Industries
State Mail and Distribution
Department of Technology Services
State Print Services
Executive 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 requirements
Fleet: 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 requirement
State 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 condition
Subsection 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 unit
determines 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.gov
How 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 Source
Yes
Does the individual item(s) cost less than $1,000? No
Are 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 Rule
Items under $1,000 do not need to be competitively bid
Small Purchase Rule applies
Does the individual item(s) cost $1,000 or less?
Yes No

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 rule
The 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 Rule
Individual procurement threshold
Single procurement aggregate threshold
Annual 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 Contract
2nd – Mandatory Use Providers
3rd – State Cooperative Contract
Remember 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 years
Name of all vendors
Copy of quote
Date of quote
All other paperwork
Does the individual item(s) cost between $1,001 and $5,000?
Yes
State Purchasing highly recommends that any phone quote be followed up in writing by an quote. No

34. Telephone/Email Quote
Click above for document
The 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 complete
All agency procedures MUST be complete before awarding bid
Does the individual item(s) cost between $1,001 and $5,000?
Yes No

37. SECTION 4 –
Purchasing
Items over $5,000
(State Purchasing)

38. Purchasing Items over $5,000
Follow internal procedures
Enter RQS (results in a purchase order) or RQM (results in an agency contract) in FINET
Include description & approximate cost
Is 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 Purchasing
Quantity required
Date required (if applicable)
Delivery location
Other pertinent information
Can 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 Contract
RQM can only become a Contract
Put 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 Solicitation
Less than $50,000
Formal Solicitation
Posted for Public Notice on BidSync
Items greater than $50,000 must be posted
At discretion of State Purchasing agent, items less than $50,000 can be posted
Put 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 Source
The 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 Responsibility
Make sure specifications are written to obtain adequate competition
Never let vendors write specifications
Allow sufficient time for all internal agency procedures & State Purchasing procedures
If you don’t know – please ask
Keep good documentation on your purchases
Lack 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.

46. Sole Source Procurement

47. First Steps: Sole Source
Is the total purchase over $1,001 with only one vendor?
Yes
All known vendors contacted-only one bid
If over $1,000, must be approved by the Division of Purchasing.
A quote from the vendor MUST be submitted with the sole source request
The 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 procurement
Sole 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 source
PREFERRED source
MOST CONVENIENT source
FAVORITE source
CHEAPEST source
Make sure it really is a sole source! Justify the sole source in writing on the sole source request form.

50. Sole Source Requests
All 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
Version
10/23/2013
Always 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 contract
Once the sole source has been signed by State Purchasing, a contract MUST be created by the agency
The contract must be signed by all parties including State Purchasing before any goods or services can be obtained

53. Ethics & Penalties for Illegal Activities

54. Notice
The 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.

55. Dividing Procurements

56. Small Purchase Rule
Individual procurement threshold
Single procurement aggregate threshold
Annual 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 misdemeanor
Between $100,000 and $250,000 = class A misdemeanor
Between $250,000 and $1,000,000 = third degree felony
Over $1,000,000 = second degree felony
Shall 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 Vendors
Do Not Play Favorites
Maintain 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; or
an 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.gov
Click “Agency Training”
Click “Gratuities, Kickbacks, & Undue Influence”