Purchasing Process
Overview
PRESENTED BY: TAMARA CLINE
Introduction
What this training is:
◦ A high-level overview of the purchasing process for 3 categories of purchases:
◦ >$10,000
◦ $10,000-$88,300
◦ > $88,300 or Public Works
◦ An explanation of process deviations that resulted in an audit finding
◦ An explanation of the corrective action plan to address the audit finding
What this training is not:
◦ Training on the requisition process
◦ Detailed training on contract code and public works
◦ A forum to ask hypothetical “what-if” questions
Training Objectives
At the end of this training, you should understand:
1. The high-level steps in the purchasing process
2. Why it’s important to follow the steps
3. The corrective action plan and how it applies to you
Purchasing Standards AP 6330
◦ All purchases shall be made according to all applicable laws, rules, and regulations.
◦ The District will purchase materials, equipment, and services from those vendors able to offer the best
prices, consistent with quality, delivery, and service. In no instance will quality be sacrificed solely in
the interest of low price.
◦ Local vendors shall be patronized where there is no measurable difference in service, quality, or cost.
◦ Unauthorized purchases made without processing through required channels may be deemed
personal purchases by the individual and are not the responsibility of the District.
Purchases < $10,000
Purchases < $10,000
Please Plan
Accordingly
Up to 2 Weeks Up to 2 Weeks
2.
1. 3.
Approved Goods/Svc 4. 5.
Purchase Purchase Ordered & Payment
Invoice
Requisition Order Rec’d
Goods must be
Authorizes Must be approved
checked in and
the purchasing dep by CFO before
stamped “received”
to issue a purchase order is placed.
by the receiving
order to a vendor.
department.
Issue:
Approval-Process Skipped
Triggered
AUDIT
2. FINDING
1. Approved 3. 4. 5.
Purchase Purchase Goods/Svcs
Order Rec’d Invoice Payment
Requisition
Goods/svcs rec’d before
REQ approved, OR P.O.
increased
for actual invoice
amount
Purchases Between
$10,000 and $88,300
QUOTE PROCESS TRIGGERED
Purchases Between
$10,000 and $88,300
3.
1. 2. Approved 4. 5. 6.
3 Written Purchase Purchase Goods/Svcs
Order Rec’d Invoice Payment
Quotes Requisition
1. Quotes provided to Purchasing
Agent.
2. Vendor chosen.
Why?
• Best value for public funds
• Prevent ‘Favoritism’
Issue:
Failure to provide quotes as Step 1
3.
1. 2. Approved 4. 5. 6.
3 Written Purchase Purchase Goods/Svcs
Order Rec’d Invoice Payment
Quotes Requisition
Quotes provided
to purchasing dpt
AFTER vendor
chosen
Issue:
Underestimating Scope of Work or Cost
3.
1. 2. Approved
4. 5.
Purchase Purchase 6.
3 Written Requisition Order Goods/Svcs Invoice
Rec’d Payment
Quotes <$10k >$10k
<$10k
Req opened
for < $10k,
invoice is for
> $10k
Other Issues
BID SPLITTING
A single purchase that would exceed the quote or bid threshold is split into two or more
smaller projects which fall below the threshold, specifically prohibited in public contract code.
CHARGING WRONG BUDGET CODE
Charging expenditures for Project A to the budget code of Project B thereby distorting the
true cost of both and possibly exceeding board-approved spending limits.
Purchases Over $88,300
or Public Works*
BID PROCESS TRIGGERED
*In excess of $15,000
Public Works
Public works definition (Code section 22002):
• Construction
• Reconstruction/Alteration
• Renovation
• Improvement
• Demolition
• Repair work
• Includes painting, repainting, concrete
Any of these activities involving any publically owned, leased or operated facility and paid in whole
or in part out of public funds.
For the most part, it is the nature of the work, not cost that determines whether a project
is “public works”
Purchases* Over $88,300 and/or
Public Works (>$15,000)
3.
1. 2. Approved 4. 5. 6.
Bid Purchase Purchase Goods/Svcs
Requisition Order Rec’d Invoice Payment
Process
*Purchased or leased: Equipment, materials, supplies, services
Competitive Bid Process
Competitive Bid:
Transparent procurement method in which bids from competing contractors,
suppliers, or vendors are invited by openly advertising the scope, specifications,
and terms and conditions of the proposed contract as well as the criteria by
which the bids will be evaluated.
Competitive bidding aims at obtaining goods and services at the lowest prices by
stimulating competition, and by preventing favoritism.
This is an involved process, a detailed explanation of which is outside of the scope of this training. See
handout for more explanation.
Corrective Action Plan
FY 16/17 AUDIT FINDING
Corrective Action Plan
AUTHORITY
As the authority on fiscal matters and with the responsibility for the purchasing, procurement,
accounting and reporting functions, the Chief Financial Officer will have the final authority on
how purchasing irregularities are handled.
PURCHASING CONSULTATION
If the estimated cost of a project or purchase comes within 75% of the bid or quote threshold, the
budget authority will meet with the purchasing agent to discuss project scope and parameters
to ensure that appropriate processes are followed.
ACCURACY AND FULL INFO ON REQS AND P.O.s
For building construction/maintenance projects the project name/location and a description of the
work to be done must be put on the P.O. and invoices.
Corrective Action Plan
TRAINING
Training on purchasing policies and procedures will be conducted at least annually.
LETTER TO VENDOR
Vendors will be issued a letter which outlines District procurement and vendor payment policies.
See handout for draft version.
MEMO TO EMPLOYEE
Employees will be made aware of purchasing procedure infractions.
See handout for draft version.
Questions?