Purchasing Goods and Services

Overview

The following procedure covers the purchase of equipment, supplies and standard services. To purchase professional services (for example, consultants or graphic design) see the Administrative Policy: Purchasing a Professional Service.

Purchasing Goods and Services Under $50,000

Departments can make purchases under $50,000 by using one of the following purchasing methods.

• Electronic Requisition/Purchase Order
• Purchasing Card for one time purchases up to $2499 (See the Administrative Policy: Using the University Purchasing Card)
• Non-PO-Related Purchase for items listed on the Non-PO Related Purchases list.

Requisition/Purchase Order

Initiate an electronic requisition to order from UStores, U-Wide Contract Vendors, and non-U-Wide Contract vendors.

When entering a requisition, it's important to remember to:

• Include justification for the purchase. Provide this information in the comments field for the first item on your requisition.
• Select the correct Category Code. The Account Code is inferred from the category code, so it's important that the category code you select is accurate for your purchase.

Freight Terms and Payment Terms for Orders

• U Stores Orders - Not Applicable
• Orders from University-Wide Contracts - Payment Terms and Shipping Terms appear on the U-Wide Contract site for each contract. Make sure your order includes the freight and payment terms as defined in the contract.
• Orders from non-U-Wide Contract vendors - See Freight Terms

Freight Terms

Specify favorable freight terms on the purchase order for your departmental orders under $50,000.

Freight Terms are defined as the FOB (Freight on Board) point, which refers to the point at which ownership or title, and therefore, responsibility for the safety of the goods in transit, transfers to the University.

The preferred FOB point is either FOB Delivered or FOB University of Minnesota. This means that the University takes ownership only when the goods are delivered to the University. Then, any damage or loss of the goods in transit is the vendor's responsibility, not the University's. If a vendor insists on shipping FOB Factory or FOB Shipping Point, then you may want to have the vendor insure the package. You will be billed for the insurance, but you will avoid the risk of incurring the costs associated with loss or damage to your shipment.

Payment options for shipping charges are defined as either prepaid or collect. If you tell the vendor you'd like the freight for your shipment to be prepaid, then the vendor will pay the carrier's charge and usually add it as a separate line on the invoice he'll send you for the goods. Sometimes the vendor will tell you that freight is included in the cost he's quoted you for the goods. Then, there will be no separate freight line. You should know that freight charges included on the vendor's invoice will often include a markup from the vendor.

If you tell the vendor you'd like the freight paid collect, then you'll receive a separate bill from the carrier for the actual cost of the shipping, and you'll avoid any markups.

Payment Terms

Payment terms refers to how quickly the vendor will be paid. The University's standard payment terms are net 30. The net amount of the invoice is paid in 30 days.

Some vendors offer discounts for early payment by quoting 2% 10, net 30. This means that the University can take a 2% discount off the vendor's invoice for paying in 10 days. The University does encourage paying early when there is a discount.

Purchasing Goods and Services over $50,000

For purchases $50,000 and over, policy requires that Purchasing Services conduct a public competitive process to select a vendor. Requisitions $50,000 and over automatically route to Purchasing Services.

Purchasing Services uses a variety of tools to perform the competitive process. The most commonly used tool is the bid process, used for products for which exact specifications (see Bid Specifications) can be written and communicated to bidders. Purchasing solicits bids and refers the bids to the department for evaluation. (See Evaluating the Bids.) The vendor offering the lowest bid for the product as specified is awarded the purchase order or contract.

The competitive proposal is used for services or combinations of goods and services. In this process a variety of factors or evaluation criteria including price are considered in selecting a vendor. The vendor offering the best overall solution is awarded the purchase order or contract. For more information on the process, see Request for Proposal Process Overview.

Equipment purchases $100,000 and over require a lease vs buy analysis. Refer to the Administrative Policy: Leasing and Financing Equipment.

Changing a Purchase Order

A purchase order which has been electronically sourced and dispatched can only be changed at the cluster level by the Procurement Specialist.

Blanket Orders/Time Period Contracts

Departments may issue blanket orders, spanning up to a 3-year period, so long as the total of the contract is less than $50,000. Purchases of goods or services from the same vendor which will total $50,000 or more over a 3-year period, will need to be bid and awarded through Purchasing.