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Section 7 - Purchasing

Section 7.3 - Purchase Orders

Date: 11/17/03 — Approved: Finance Board, editorial change 12/12/07

REGULAR PURCHASE ORDERS

Definition

This type of purchase order is issued for a one-time delivery of a specific commodity or service. When the commodity or service is delivered and paid in full, the order is complete. The accounting department issues these orders based on a Purchase Order Request form submitted by a department.

Responsibilities

The budget managers delegated or authorized to issue a Purchase Order Request form is responsible for the accuracy of the information and compliance with A.S. and other applicable regulations.

The purchasing department is responsible for verification of receipt of commodities or services against a valid purchase order.

Bid Requirements

see section 7.2 for bid requirements.

Payment in Advance

Payment in advance for services/goods received in the future are not allowed. Some alternatives to offer a vendor are:

1. Purchase Order - This guarantees our payment.
2. Progress Payments — This allows for smaller, multiple payments after receiving a portion of the goods or for services completed to date.
3. COD (check on delivery) — We cut a check and give to the A.S. staff member who can then hand it to the vendor upon receipt of goods or completion of services.

OPEN-ENDED PURCHASE ORDERS

The accounting department issues open-ended purchase orders and is responsible for the accuracy of the order and its compliance with A.S. and other applicable regulations.

Open-ended purchase orders (OPOs) are used when goods or services will be purchased on a repetitive basis or for priced contractual purchases. This includes lease purchases when monthly or periodic payments will be made. OPOs are not used for single purchase transactions or for transactions that cover a short time span. OPOs are not used for equipment purchases except when the transaction is a lease-purchase agreement.

Unless otherwise delegated, these orders are approved and issued only by the accounting department based on a Purchase Order Request form submitted by a department or departments.

Departments request vendors to make deliveries against these continuous purchase orders as they need the commodity or service. Vendors then invoice the A.S. for the items delivered.

The open-ended purchase order is available for review by the department originating the order. The purchasing department is responsible for reviewing the open-ended purchase order and notifying the accounting department of any errors.

In addition, the purchasing department is responsible for ensuring that (1) the items delivered comply with the original continuous purchase order; and (2) the necessary funds are available to cover the amount as shown on the vendor's invoice.

Because of the nature of this type of purchase order, budget managers should make a special effort to ensure that there is a separation of duties between staff members who order and receive the items and those who review the vendor's invoice.

Definitions of Open-ended Purchase Orders

There are three types of OPOs: annual, multi-year and until terminated (UTCPO).

Annual

Annual OPOs are used for priced purchases. These priced renewable OPOs have a starting date and an expiration date, usually July 1 through June 30 of each fiscal year. They can be for leases or for items that have specific prices. Annual OPOs may be established as a result of a formal bid or a vendor quotation. An estimate of annual expenditures must be shown.

Multi-year

Multi-year OPOs are for a predetermined, contracted amount. They may be established as a result of a formal bid or a vendor quotation where pricing is valid for several years. Multi-year lease-purchases may be for the lease purchase of equipment and may be issued for up to ten years.

Establishment and Renewal Procedures for Open-ended Purchase Orders

Submit a Purchase Order Request form to the accounting department. Use OPOs only for items ordered frequently. For items ordered only occasionally, use these alternate purchasing methods: purchase orders or commercial credit cards

Annual

To establish an annual OPO, submit a Purchase Order Request form to the accounting department. Each year all departments receive an annual renewal information letter from the accounting department concerning OPOs. To renew orders for the next fiscal year submit a Purchase Order Request form for each annually renewable OPO.

Multi-year

To establish multi-year OPOs, submit a Purchase Order Request form to the accounting department. These orders are renewed only when the order has expired, not at the beginning of each fiscal year.

Lease or Lease purchase

To establish a lease or lease purchase OPO, submit a Purchase Order Request form to the accounting department. These orders are created for those orders that have predetermined, contracted monthly, quarterly, or annual payment amounts.

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