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OVERVIEW SECTIONI:CONFLICTOFINTEREST,CODEOFETHICS CONFLICTOFINTEREST CODEOFETHICS PERSONALPURCHASES SECTIONII:BUYINGATHARVARD STRATEGICPROCUREMENTSROLE HOWSTRATEGICPROCUREMENTWORKSWITHTHEVENDORCOMMUNITY BESTVALUEVS.BESTPRICE LEVERAGINGHARVARDSSPEND MARKETBASKETAPPROACH VENDORDEFINITIONS HCOMANDHARVARDPARTNER,PREFERRED&PRICINGVENDORS MINORITYANDWOMENOWNEDBUSINESSENTERPRISEPROGRAM HCOMANDWOMENANDMINORITYOWNEDBUSINESSES SECTIONIII:PURCHASINGPROCEDURES THEREQUISITION/PURCHASEORDER
HarvardUniversityProcuretoPayGuide
PURCHASEORDERGUIDELINES HCOMREQUISITIONSANDPURCHASEORDERS HCOMREQUISITIONANDPURCHASEORDERGUIDELINES HCOMFOUNDATIONALPRACTICESCREATINGREQUISITIONS APPROVINGREQUISITIONS MAINTAININGPURCHASEORDERS STANDINGPURCHASEORDERS HCOMSTANDINGORDERS BLANKETPURCHASEORDERS INVOICEPROCESSING INVOICEPROCESSINGINHCOM HCOMFOUNDATIONALPRACTICEINVOICES TAXESANDEXEMPTIONS CREDITAPPLICATIONSANDREFERENCES SECTIONIV:GENERALGUIDELINESONPURCHASINGPRACTICES RECEIVINGPURCHASES RECEIVINGINHCOM HCOMFOUNDATIONALPRACTICERECEIVING
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MANAGINGVENDORRELATIONSHIPS HOWTOMANAGEAVENDORISSUE SECTIONV:ADVANCEDPURCHASINGPRACTICES SELECTINGQUALIFIEDVENDORS PREPARINGANDEVALUATINGABID NEGOTIATIONTECHNIQUES EQUIPMENTMAINTENANCEANDSERVICEAGREEMENTS PURCHASINGCAPITALEQUIPMENT SECTIONVI:SPECIALSITUATIONS PURCHASINGRADIOISOTOPES PURCHASINGTAXFREEALCOHOL PURCHASINGCONTROLLEDSUBSTANCES(NARCOTICS) PURCHASINGNEEDLESANDSYRINGES DUTYFREEENTRYFORSCIENTIFICEQUIPMENT SECTIONVII:FEDERALPROCUREMENTREQUIREMENTS OVERVIEWOFFEDERALPROCUREMENTREQUIREMENTS PURCHASINGWITHCONTRACTFUNDS PURCHASINGWITHGRANTFUNDS
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OVERVIEW
TheHarvardUniversityProcurementGuideisaresourceforfaculty,staffandstudentswhoplanormake acquisitionsofproducts,equipment,suppliesand/orserviceswithfundsheldinthecustodyoftheUniversity.This includespurchasesmadewithaPurchasingCard(PCard),purchaseorders,andpaymentrequestsgeneratedvia theHarvardCrimsonOnlineMarketplace(HCOM),pettycashorelectroniccommerce,aswellaspurchasesof goodsandserviceswhicharepurchasedwithpersonalfundsandlaterreimbursed. AtHarvardUniversity,manybuyingdecisionsaremadebyfacultyandstaffintheschoolsanddepartments.The Universityexpectstheseindividualstomakesoundpurchasingandcontractingdecisionsthatwillensurethe continuedandefficientoperationoftheUniversity. TheStrategicProcurementdepartmentexiststohelpmaximizethevalueofeveryprocurementdollar.Onewaywe dothisisbyestablishingvendorpartnershipsformajorcommodities.Thesepartnershipshavebeennegotiatedby StrategicProcurementwiththecooperationofthefacultiesusingthefullbenefitoftheUniversity'sconsiderable buyingpower. ByorderingfromtheVendorPartnerswheneverpossible,youreceivethebestvalueforyourdollarthrougha combinationofcompetitivepricing,effectiveservice,andappropriatequality.Inreturnforthisbestvalue,itis expectedthatmostspendingwillbedirectedtoVendorPartners.Thecurrentpartnershipsavailabletoyouare locatedontheVendorPartnerspage. Throughpurchasingdecisions,Universitycontrolledfundsarecommittedandthebuyerisassuringthe Universitythatyou:
identifiedalegitimateneedforyourpurchase competitivelybidornegotiatedyourpurchases,whenappropriate metFederalprocurementrequirements compliedwiththeConflictofInterestandCodeofEthics selectedqualifiedvendors dealtwithvendorsprofessionally receivedandinspectedyourpurchases sourcedminorityandwomenownedvendors sourcedlocalvendors metdocumentationrequirementstosupportyourpurchase willprocessyourinvoicespromptly
HarvardUniversityProcuretoPayGuide
SECTIONI:CONFLICTOFINTEREST,CODEOFETHICS,PERSONAL PURCHASES
CONFLICT OF INTEREST
IndividualsservingtheUniversityshallatalltimesactinamannerconsistentwiththeirfiduciary responsibilitiestotheUniversityandshallexerciseparticularcarethatnodetrimenttotheUniversityresults fromconflictsbetweentheirinterestsandthoseoftheUniversity. Anindividualisconsideredtohaveaconflictofinterestwhentheindividual,oranyofhisFamilyorAssociates (i) hasanexistingorpotentialfinancialorotherinterestwhichimpairsormightappeartoimpair theindividual'sindependenceofjudgmentinthedischargeofresponsibilitiestotheUniversity, or mayreceiveamaterial,financialorotherbenefitfromknowledgeofinformationconfidentialto theUniversity.The"Family"ofanindividualincludeshisorherspouse,parents,siblings,children and,iflivinginthesamehousehold,otherrelatives.
(ii)
An"Associate"ofanindividualincludesanyperson,trust,organization,orenterpriseof,in,orwithwhich,the individualoranymemberofhisorherFamily (i) (ii) (iii) Ifanindividualbelievesthatheorshemayhaveaconflictofinterest,theindividualshallpromptlyandfully disclosetheconflicttohisorhersupervisorandshallrefrainfromparticipatinginanywayinthematterto whichtheconflictrelatesuntiltheconflictquestionhasbeenresolved.Insomecases,itmaybedeterminedthat, afterfulldisclosuretothoseconcerned,theUniversity'sinterestsarebestservedbyparticipationbytheindividual despitetheconflict. isadirector,officer,employee,member,partner,ortrustee,or hasafinancialinterestthatenableshimorher,actingaloneorinconjunctionwithothers,to exercisecontrolorinfluencepolicysignificantly,or hasanyothermaterialassociation.
CODE OF ETHICS
IndividualspurchasinggoodsandservicesonbehalfofHarvardUniversityshouldconductbusinessinamanner thatisconsistentwiththeeducationalandresearchgoalsoftheUniversity.Purchasingactivitiesshouldbe conductedinaprofessionalmanner.Purchasingdecisionsshouldbemadeonreasonableassessmentsofquality, service,competitivepricing,andtechnicalqualifications.
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PERSONAL PURCHASES
AHarvardUniversitypurchaseorderandtheUniversity'staxexemptnumbercannotbeusedlegitimatelyfor personalpurchases.InappropriateuseofHarvard'staxexemptnumbercouldjeopardizetheUniversity'stax exemptstatus.
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SECTIONII:BUYINGATHARVARD
THE ROLE OF STRATEGIC PROCUREMENT
ThemissionofStrategicProcurementisto: DeliverprocurementservicesandsupporttotheHarvardUniversitycommunitythatfurthersthestrategicobjectives oftheschoolsandadministrativeorganizations.ImprovetheaggregatebottomlineoftheUniversityby:
[Notethatinsomecases,vendorbasesarelargelycontrolledbyHarvardgroupsoutsidetheStrategicProcurement Department(e.g.foodservicevendorsbyDiningServices;periodicalvendorsbyHarvardlibraries)].
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Thebestpricedoesnotalwaysreflectthebestvalue.Thebestvaluecanbedeterminedbyevaluatingthefactors listedbelow.Anyorallofthesemaybetakenunderconsiderationpriortocommittingtoasignificant/complex purchase. Thepriceoftheproductorservice Provisionsforongoingmaintenance(e.g.lifecyclecosting) Qualityoftheproductorservice,oritstechnicalcompetency Reliabilityofdeliveryandimplementationschedules Warranties,guaranteesandreturnpolicy Supplierfinancialstability Industryandprogramexperience Priorrecordofsupplierperformance Supplierexpertisewithengagementsofsimilarscopeandcomplexity Provendevelopmentmethodologiesandtools Innovativeuseofcurrenttechnologiesandqualityresults
LEVERAGINGHARVARDSSPEND
Harvardisbestabletomaximizetheimpactofitspurchasingdollarswhenitpositionsitselfasafavored customerwithaselectedgroupofsuppliers.TheUniversityislesslikelytoenjoyspecialconsiderationfroma vendorwhenpurchasesaredistributedamongmanyoftheircompetitorsforthesameorsimilarproducts.When Harvardexpendituresareviewedintheaggregate(vs.byindividualschoolsordepartments),Harvardcan commandbetterpricingandhigherservicelevelsforall.Focusingonfewersupplierscanprovideadditional advantagesbyloweringprocessingcostsandtransportationfees.Campustrafficcanbereducedforpositive environmentalbenefitsandconsolidatingspendcouldleadtotheabilitytoidentifyproductsthatareappropriate forstandardization,basedonvolume.ByusingvendorsfoundintheHCOMMarketplaceforasignificantnumberof purchases,youareincreasingHarvardsleverageprovidingStrategicProcurementanopportunitytonegotiate improvedpricingandadditionalsupplierbenefits
HarvardUniversityProcuretoPayGuide
viaadiscountfrompublishedlistprice.Thenetpriceditemstypicallyaccountforthelargestpercentageof overallUniversityvolume(eitherdollarorquantity)withthatsupplier. Themarketbasketisreviewedannuallytocheckthattheproductmixisrelevantandappropriate.Whenusing thismethod,departmentpurchasersmayfindspecificitemsavailablefromothersuppliersatlowerpricepointsat anygiventime.But,theinvestmentinemployeetimeandeffortrequiredtoexploretheseoptionsmayactually resultinahigheroverallcosttotheUniversity. StrategicProcurementregularlybenchmarksagainstcompetitorsandeducationalgrouppurchasingorganizations tohelpensurethatpricingisontarget.PeriodicanalysisofselectedHarvarddepartmentsspendinghasindicated thatthebestpricingandlongtermvalueisachievedusingthemarketbasketmodel. ByusingtheHCOMMarketplace,staffwillbeabletomaximizethevalueofthemarketbasketmodelwitha selectedgroupofsuppliers.
VENDORDEFINITIONS
VendorPartners
Products/servicesprovidedimpactalargesectionofthecommunitywithsignificantspend. TheselectionprocessinvolvesacomprehensiveRFP(RequestforProposal)process,coordinatedby StrategicProcurement,involvingstakeholdersfromaroundtheUniversity. AUniversitycontractisdevelopedincollaborationwiththeOGC. StrategicProcurementmanages,measures,andmonitorsthevendorsactivityoncampusthroughregular meetingsandreporting. StrategicProcurementandthevendorpartneractivelyseekopportunitiestoaddvalueandreducecosts. StrategicProcurementworkstokeepapprisedofshiftingmarketfactorsandthecompetitivemarketplace inthecommoditythevendorsrepresent.Vendorsmaybesubjecttobenchmarkingandauditing. Stakeholdersmaymeetperiodicallytoreviewthestatusoftherelationshipandprovidefeedback. Examplesinclude:officesupplies,officefurniture,copiers,expressmail,temporaryhelp,datashredding services,securityguardservices,generallaboratorysupplies
Preferred/SuggestedVendors
TheselectionprocessgenerallyinvolvesanRFP,usuallywithinputfromagroupofinterested stakeholders.
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HarvardPricingVendors
StrategicProcurementactivelyinitiatesnegotiationswiththevendor. Thegoalistoachievemostfavoredcustomerpricing,inpart,basedonUniversitywideexpenditures. PricingisconsistentandUniversitywide,underthesameconditionsofsale. VendorsthatparticipateinGPOs[GroupPurchasingOrganizations](e.g.theMassachusettsHigher EducationConsortium)mayextendspecialpricingtoHarvardbasedonthevolumeparticipationofallthe GPOsmembers,includingHarvard(e.g.WhalensMovingisaconsortiumbasedpriceagreement). Thisgroupofvendorsmaybeusedtofillspecificorproprietaryneeds,areroutinelyusedbytheHarvard community,andtheoptionsforshiftingspendtoacompetitivesuppliermaybelimited. Examplesinclude:laboratorysupplierssupportingresearch,internationalcourierservices,medicalwaste disposal
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HCOMANDHARVARDPARTNER,PREFERRED&HARVARDPRICINGVENDORS
ManyofthevendorsincludedintheabovecategoriesarefoundintheHCOMMarketplace.TheMarketplace providesaccesstothesevendorswithpreestablished,preferredHarvardpricingforgoodsandservices.Harvard staffcaneasilyselectitemsfromthesevendors,placethemintheelectronicShoppingCart,checkoutthecartand createarequisitionforpurchase.HCOMautomaticallygeneratesapurchaseorderuponrequisitionapproval, whichisthenautomaticallytransmittedtothevendorforfulfillment.InvoicesaredirectedtoUniversityFinancial Services.OnceastaffmemberconfirmsreceiptoftheitemsinHCOM,theinvoiceismatchedifcorrectandpaidby centralUFS.HCOMsavesyouandHarvardtimeandmoneywithastreamlinedprocuretopayprocess,introduces systemiccontrolstoensureaccuracyofpayments,andprovidesaneasywaytotakefulladvantageofthe agreementsnegotiatedbetweenStrategicProcurementandvendorpartners,preferredvendorsandHarvard pricingvendors. ForinstructiononhowtoshopwithvendorsintheHCOMMarketplace,seeEureka,HarvardsLearning ManagementSystem.OnceatEureka,selectFinancials,thenHCOM.
HarvardUniversityProcuretoPayGuide
HCOMANDWOMENANDMINORITYOWNEDBUSINESSES
HCOMprovidesaneasywaytoidentifyitemspurchasedfromawomanorminorityownedbusiness.Vendors meetingthesecriteriawillhavetheseicons: ,forsmallbusinessorwomanowedbusinesses,respectively. Thismayassistwiththepurchasingprocess,particularlyifsponsoredpurchaseshavecompliancerequirements.
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SECTIONIII:PURCHASINGPROCEDURES
NON-HCOM PURCHASE ORDERS
Thepurchaseorderistheacceptedbusinessstandardfortransmittingorderinginformationtoasupplier.The purchaseordercanbeusedfortrackingpurchases,forprovidingarecordoftheorder,forcheckingtheprice quotedbythevendorwiththepriceontheinvoice,andforcomparingitemsoriginallyorderedwithitemsreceived andinvoiced. ThereareanumberofpurchaseorderformscurrentlyinuseatHarvard.Somedepartmentshavedeveloped purchaseorderformsspecificallyfortheirstandalonepurchasingsystems.Specificschoolsanddepartments determinehowandwhenpurchaseordersareused. NotethatintheHCOMMarketplace,orderfieldsareautomaticallypopulatedwithallnecessarypurchase orderinformationwhenauserplacesanorder.Requireddeliverydateandtheshiptoaddresscanbe editedbythepurchaser. Purchaseordersgenerallycontainthefollowinginformation: POForm(clickheretoviewatemplate);foranexampleofanHCOMPurchaseOrder,pleaseseeEureka:select Financials,thenHCOM. 1.PurchaseOrderDate Thedatetheorderisplacedwiththevendor. 2.PurchaseOrderNumber Thepurchaseorderformmayreferenceapurchaseordernumber.Apurchaseordernumberistheonereference pointcommontotherequisitioner,departmentalpurchasing,andthevendor,andisaneffectivetoolfortracking thepurchasefromtheorderingthroughpaymentprocesses. 3.RequiredDeliveryDate Beasspecificaspossible.AvoidusingASAP,UrgentorImmediately.Theseinstructionsleavetheactualdelivery dateuptothevendor. 4.SupplierNameandAddress
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Includethesupplierscompleteaddressandthenameofthepersonwithwhomtheorderwasplaced,ifpossible. Thisinformationishelpfuliftheorderneedstobechangedorifadditionalfollowupisrequired. 5.ShiptoAddress Providethevendorwithacompleteaddress.Includetheschoolorfaculty,streetandcityaddress,department and/orsubdepartment,laboratory,roomnumber,andthenameofthepersonreceivingtheorder. 6.BilltoAddress IfthevendorissendingtheinvoicetothesameaddressastheShipToaddresswrite"sameasShipTo"inthespace providedforthebillingaddress.Ifthebillingaddressisdifferent,providethevendorwiththecompleteaddress, includingthenameofthepersontowhomthebillshouldbesent. 7.PaymentTerms Net30isstandard(payment30daysfromtheinvoicedate).Othertermsmayapply. 8.F.O.B.(FreightonBoard)Point Thisisthepointintimeatwhichthecustomer(Harvard)legallyownsthemerchandise.Basically,therearetwo F.O.B.options:DestinationandOrigin(alsoreferredtoasShipPoint).AlwaystrytonegotiateF.O.B.Destination (theHarvardoffice,lab,receivingdock,etc.),especiallyifthemerchandiseisfragileand/orexpensive.Iftheitemis damagedintransit,thevendorisresponsiblefortheconditionofthemerchandiseandmustinitiateanydamage claims. IftheF.O.B.PointisOriginorShipPoint,thecustomer(Harvard)ownsthemerchandisewhenitleavesthe vendor'splantorwarehouseandisresponsibleforfilingadamageclaimagainstthecarrier.ContactHarvard's InsuranceDepartment(4958668)toobtainadequatetransitinsuranceorrequestitfromthevendor. Deliverychargesandmethodofpayment(FreightTerms)shouldbedeterminedwhentheorderisplaced.The vendormaypaytransportationandinsurancedirectlytothecarrierandthenitemizethesechargesonyour invoice(PrePayandAdd). 9.Harvard33DigitCode/ContractorGrantNumber(HCOMA) Therecordofthisnumberonthepurchaseorderformmayassistindepartmentrecordkeeping.
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10.BodyofthePurchaseOrder Specifyexactquantity,cataloguenumber,description,andprice.Arecordofthequotedpriceishelpfulfor comparisonwiththeinvoice. Theordershouldbedescribedinasmuchdetailasspacepermits.Forexample,insidedeliveryandinstallation informationshouldbefoundhere,particularlyiffurnitureoralargepieceofequipmentisbeingdeliveredand installed.Ifdeliveryandinstallationhavenotbeenarrangedwiththevendorbeforehand,theequipmentor furnituremaybedeliveredonlyasfarasareceivingdockorthestepsofthebuilding.Besuretomeasure elevators/doorwaysforaccessibility.Rentingacranetohoisttheequipmentorfurniturethroughthewindowcan substantiallyincreasethecostoftheitem. NotestoSuppliercanalsobeusedforthispurposeortospecifyanyotheradditionalinformationthatwouldbe helpfulforthevendortoeffectivelyprocesstheorder.Forexample,ContactBuyer24hourspriortodeliveryat thenumberlistedabovecouldbeincludedintheNotestoSupplierfield. 11.Other HarvardUniversitystandardpurchaseordertermsandconditionsandtaxexemptioncertificatescanbefoundat theStrategicProcurementwebsite. PurchasesmadewithFederalfundsrequirevendorstoadheretoadditionalrequirementsEEOandCivilRights, fairwagestandards,antikickbackanddebarmentregulations,etc.AttachmentAliststhesetermsandconditions andshouldbeincludedwiththestandardpurchaseordertermsandconditionsforfederallyfundedpurchases. 12.Confirming/OriginalOrders(paperpurchaseorders,only) Toavoidduplicateshipments,apurchaseordershouldindicatewhethertheorderisconfirming(theorderhas alreadybeenplacedwiththevendorbyphone,byfaxorinpersonorbyothermeans)ortheorderisoriginal(the purchaseorderistheonlyvehicleusedtotransmittheordertothevendor).
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Alldepartmentsareresponsibleformanagingtheirownprocurementrecords.Departmentsareresponsiblefor reviewingthecontentoftheirpurchaseorders,correctlycommunicatingtheorderstothevendorsand maintainingsystemsthatcomplywithFederalprocurementregulations. Apurchaseorderisacontractbetweenyou(Harvard)andthevendor.TheStatuteofLimitationsoncontractscan beaslongasSIXyears.Departmentsshouldmakearrangementstomaintainapurchaseorderhistory electronically,onfiche,orbyfilinghardcopiesoftheordersforaperiodofsevenyears.(Theextrayearensures thatthedocumentisretainedforsixcalendaryearsafterthedateofthedocument).Purchaseordersshouldbe destroyedaftersevenyearsunless: a.theyarethesubjectofadisputeorlitigation,or b.theyarethesubjectofanauditbytheIRSorothergovernmentalagency. Youmaywanttoconsiderprovidingacopyofthepurchaseordertothevendorif: Notethatusingapurchaseorderformorpurchaseordernumbertoprocessordersisatthediscretionof theusingdepartment. Theorderisanoriginalorder(hasnotbeenphonedorfaxedtothevendor) Thepurchaseorderisforcapitalequipment Thepurchaseorderisablanketorstandingorder Thevendorortherequisitionerhasrequesteditbemailed
HCOMREQUISITIONSANDPURCHASEORDERS
HCOMcreatesrequisitionswhentheusersubmitsaShoppingCartwithgoodsandservicesandgeneratesaPO(or PaymentRequest)whenthepurchasesareapprovedbyoneormoreindividualswithappropriateauthorization. TherearethreedifferenttypesofHCOMRequisitions: 1.MarketplaceOrder(alsoknownasaPunchoutRequestoraCatalogRequest):AMarketplaceorderis placedwithoneofHarvardsvendorsdirectlyintheHCOMMarketplace.Whenausershopsforitemsfroma Marketplacevendor,theuseridentifiesthequantityofitemsneededandsubmitstheitemstoaShoppingCart.The userthenchecksoutthecartinHCOM,andarequisitioniscreated.Dependingontheamountandtypeoforder, therequisitionmayrequirenoapproval,oritmayrequiremanylevelsofapproval.Oncetherequisitionhas receivedallrequiredapprovals,apurchaseorderisautomaticallygeneratedandtransmittedelectronicallytothe vendorforfulfillment. 2.NonCatalogRequest:ANonCatalogRequestiscreatedwhenagood,serviceorrequiredsupplieris unavailableintheMarketplace.ANonCatalogRequestcanbecreatedforaonetimeorderofgoodsorservices,as
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wellasforaRecurringOrder(seetheHCOMStandingOrdersectionbelowformoreinformation).Whenusinga NonCatalogRequest,thelocalunittakesallresponsibilityforresearchingpricing,itemdetailsandobtainingthe quotefromthevendorpriortocreatingaNonCatalogRequest. WhencreatingaNonCatalogRequest,theItemDescriptionismanuallyinputintoHCOMbytheschool/unit creatingtherequest.TheItemDescription(s)shouldcorrespondwiththequotereceivedfromtheVendor ascloselyaspossible,sothePurchaseOrderwillmatchtheinvoicewhenitisreceivedbyUniversity FinancialServices.Failuretoinputthisinformationaccuratelywillresultindelayinprocessingtheinvoice. Whentherequisitionhasreceivedallrequiredapprovals,thepurchaseorderisgenerated.Thestaffmemberis responsibleforcalling,faxing,mailingoremailingthisordertothevendor. Foraonetimeorderforgoods,thestaffmembercancall,fax,mailoremailtheorder.Theinvoice remittoaddresswillbeUniversityFinancialServices. Foraonetimeorderforservices(orforanHCOMRecurringOrder),thestaffmembermustchange theremittoaddressfromUniversityFinancialServicestothatofthelocalunit.Thelocalunitwill reviewtheinvoiceforaccuracy,receivetheorderinthesystem,andthenforwardtheinvoiceto UniversityFinancialServicesforpayment.
HCOMREQUISITIONANDPURCHASEORDERGUIDELINES
Inadditiontothegeneralguidelineslistedabove,thereisaseriesofHCOMFoundationalPracticesthatapplywhen creatingarequisitionandmanagingthesubsequentpurchaseordercreateduponapproval.Thesepracticesare listedthroughoutthisdocument;seetheHCOMiSiteforthestandaloneFoundationalPracticesdocument. HCOMFOUNDATIONALPRACTICESCREATINGREQUISITIONS 1.1BusinessPurpose Theshoppersandapproversareresponsibleforensuringthattheappropriatelevelofdetailisprovidedinthe designatedfieldsinHCOMtosupportavalidbusinesspurpose. 1.2HighRiskConfidentialInformation(HRCI) ShoppersandapproversshouldnotattachdocumentsthatcontainHRCIdataorenterHRCIdatainfreeformtext fields.PleasenotethatUniversityFinancialServicesdoesnotpreauditinvoicesforconfidentialinformation.Ifa vendorinvoicemaycontainconfidentialdata,Shoppersshouldnotifythevendortomailtheinvoicetothelocal unit.ShoppersshouldthenremoveanyconfidentialdatabeforeforwardingtheinvoicetoUFS. 1.3PaymentRequest
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Paymentrequestmaybesubmittedfordirectpaymenttononemployeesandotherdirectpaymentsthatcannotbe madeusingthePCard(Seebelow).ShoppersandApproversareresponsibleforensuringthatapaymentrequestis theappropriatepaymentmethodasdefinedinthepurchasingmatrix,priortoinitiatingandapprovingthe transaction. 1.4PCard&CorporateCard TheUniversitysPCardisissuedtoemployeesattherequestoftubsandlocalunitsinaccordancewiththe UniversitysPCardpolicy.Theintentofthecardistostreamlinethepurchaseofandpaymentforcertain commoditiesbyreducingdisbursementsofpettycash,paymentrequests,employeereimbursementsandthe processingcostsassociatedwiththesetransactions. TheUniversitysPCardandCorporatecardshouldnotbeusedtotransactwithvendorsenabledwithintheHCOM Marketplace.Foracomplete,currentlistofenabledvendors,whileintheMarketplaceonthemainShoppage,click onthelinkmarkedBrowse:Suppliers. 1.5AfterthefactPurchaseOrder Toensureconsistentuseofpurchaseordersandappropriatecontrols,AftertheFactpurchaseordersarenot allowed.AftertheFactpurchaseordersarethosedefinedaspurchaseorderscreateduponreceiptoftheinvoice. ImplementationofHCOMrequiresapurchaseorderbecreatedforallgoodsandservicesexceptthosepayments thatareappropriateforprocessingviathePaymentRequest.Purchaseordersshouldnotbecreatedatthetime theinvoiceisreceived. APPROVINGREQUISITIONS 2.1SelfApprovalThreshold Selfapprovalispermittedupto$2,499.99fornonsponsoredpurchases.Thelocalunithasthediscretiontosetthe thresholdto$0forApprovers.Accordingtosponsoredguidelines,selfapprovalofsponsoredpurchases, regardlessofamount,isnotallowed. 2.2ApprovalThresholds UniversityapprovalthresholdsaredefinedbytheOfficeoftheController.Schoolfinancialofficesareresponsible forassigningapprovalthresholdstoindividuals.Theshopperisresponsibleforselectingtheappropriate approver(s).Allpurchasesgreaterthan250kwillrequireapprovalbytheOfficeoftheController. 2.3DelegationofApprovalAuthority Approvershavetheabilitytosystemicallydelegatetheirapprovalauthoritytoanappropriateresourceintheir absence(VacationRule)ortosharetheworkload(SharedWorklist).Theinitialapproverisaccountablefor delegatingapprovalauthoritytotheappropriateindividual,andforthedecisionsmadebytheirdelegate.
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MAINTAININGPURCHASEORDERS 3.1POEdit,Close,andCancel WhoCanEdit,Close,andCancelPurchaseOrders? POEditandCancelisaCentralSystemAdministrationonlyfunctionandisnotavailabletoSchoolsor departments.Aprocesshasbeendevelopedtoexpediterequestsforanychangesordeletionsofpurchase orders.ChangescanbemadethroughtheUISHelpDeskbycalling4962001oremailat uis_helpdesk@harvard.edu. WhatTypesofPOEditsarenotallowed? AccountCodingChangesarenotallowedafterarequisitionhasbeenapprovedandaPOhasbeen generated.ChangesshouldbemadebyprocessingajournalentrythroughtheGLandtheinvoicenumber shouldbeincludedinthedescription.ForSponsoredFunds,theCostTransferPolicy(CTP)willapplyto transactionsthathavebeenpostedtothegeneralledger. POEditisnotpermittedforMarketplaceorders,buttheseorderscanstillbeClosedorCanceled.When electronicinvoicingisavailableinHCOM,POEditswillnotbeallowedforHCOMMarketplaceorders.
HCOMRECURRINGORDER
TherearedifferencesbetweentheStandingOrderdefinitionaboveandwhatisconsideredinHCOMtobea RecurringOrder.AnHCOMRecurringOrderisasingleormultilinePurchaseOrdercreatedbyFacilitiesand/ora
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FinancialManagerforprenegotiatedserviceswherepaymentsaremadethroughoutthefiscalyearagainstastatic accountcode.ThismeansthatinHCOM:
InHCOM,aRecurringOrderiscreatedviaaNonCatalogRequest.AswithallNonCatalogRequests;
BLANKETPURCHASEORDERS(NOTINHCOM)
ABlanketOrderisusedwhenthebuyerknowshewillbeorderingavarietyofitems,buthasnotdetermined specificquantitiesordeliverydatesatthetimetheorderiscreated.Theordershouldinclude: Thebuyershouldincludea"nottoexceed"dollarvalueforindividualorderreleasesandthetotalamountofthe purchaseorder.Theorderisdeliveredonrequestandthebuyershouldprovidethevendorwithalistofpeople authorizedtorequestdeliveries.ABlanketOrderusuallyextendsforaperiodofoneyear.Attheendoftheyear,a newpurchaseordernumbershouldbeobtainedandanewpurchaseordergenerated. Atthistime,BlanketOrdersarecurrentlynotpermittedinHCOM. adescriptionorcataloguenumberoftheitemsthebuyeranticipatesordering thepriceorpercentageofdiscountthebuyerandvendoragreeupon estimatedquantities,ifpossible effectivedatesoftheorder
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INVOICEPROCESSINGINHCOM
1. ForHCOMMarketplaceorders,thepurchaseorderisautomaticallygeneratedandtransmittedtothe vendor(excludesnoncatalog).TheinvoicewilldesignateaspecificUniversityFinancialServicesPOBox astheremittoaddress.ThevendorwillsendtheinvoicesdirectlytoUFS(excludingservices,as mentionedpreviously).OnceastaffmemberacknowledgesthereceiptofgoodsinHCOM(ifrequired),UFS willpaytheinvoice.Notethatoncertain,nonsponsoredpurchasesoflessthan$2500,receivingisnot requiredinHCOM.Insuchcases,theinvoicewillbepaidbyUFSuponreceiptandmatchtothePO. 2. InthecaseofanHCOMNonCatalogOrder,thestaffmembercreatestheRequisitionandthePurchase Orderisgenerateduponapproval.ThestaffmemberisthenrequiredtosendthePurchaseOrderdirectly tothevendor,eitherbyphone,emailorfax. a. Incaseofaonetimeorderforgoods,thevendorwillsendtheinvoicedirectlytoUniversity FinancialServicesasindicatedintheBillTosectionofthePurchaseOrder. b. InthecaseofaonetimeorderforservicesorforanHCOMRecurringOrder,theshoppermust instructthevendortosendtheinvoicedirectlytothelocalunit.Thelocalunitwillreviewthe invoice,completereceiving,andforwardittoUniversityFinancialServicesforprocessing. 3. InthecaseofaPaymentRequest,thelocalunitwillalreadyhaveaccesstoaninvoiceand/orother appropriatedocumentation.OncethePaymentRequesthasbeenprocessedandapprovedinHCOM,the userwillclearlystatethePaymentrequestnumberontheinvoiceandforwardtheinvoiceandall supportingdocumentation(containingnoconfidentialdata)toUniversityFinancialServicesforprocessing.
INVOICEHOLDRESOLUTIONPROCESS
WhenaninvoiceisreceivedatUFSandenteredintoOracle,thesystemattemptstovalidatetheinvoicefor payment.Inordertovalidate,eachlineitemmustsuccessfullypassathreewaymatchbetweenpurchaseorder, invoiceandreceiving(ifrequired). Whenoneormorelineitemscannotbevalidated,thesystemplacestheentireinvoiceinholdstatusandpayment iswithheld.UniversityFinancialServicestheninitiatesaholdresolutionprocess,outreachingtotheshopperor finalapproverofthepurchaseorderinordertoresolvetheholdandprocesspaymenttimelyandaccurately. TypesofHolds: 1. Receiving:AninvoicearrivesinCentralAPandisprocessed,butelectronicreceiptforoneormoreinvoice lineitemsisnotyetcomplete.
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2. QuantityOrdered:Aninvoicebillsforalineitematahigherquantitythenthequantityorderedor receivedonthepurchaseorder. 3. Price(MaxTolerance):Aninvoicebillsforalineitematanamountoverthepricingtoleranceestablished byFinancialAdministrationsOfficeoftheController.Pricingoverageswithinthetolerancearenotplaced onhold.ForHCOMMarketplaceorderswithpricingoverages,UFSprocessesaninternaldebitmemoto reducetheinvoicepaymenttotheguaranteedpricinglistedonthepurchaseorder,whichreleasestheprice hold. RolesofUFSandLocalDepartmentsinResolvingHolds: Whenaninvoiceisplacedonhold,UFSinformsthedepartmentbyemailingaholdnotification.Receivinghold notificationsareissuedtotheshopper.QuantityBilledandPriceholdnotificationsareissuedtothefinalapprover. Basedontheholdtype,thedepartmentrespondstotheemailaccordinglytoresolvethehold.Resolutions typicallyinvolveeithercompletionofthereceivingprocess,agreementtopaythevendorforapriceorquantity overage,orrefusaltopaythevendorforapriceorquantityoverage.Whenrespondingtoholdnotifications,itis theresponsibilityofthefinalapprovertoreviewholddetails,outreachtotheShopper,vendor,orothersasneeded forclarification,andtothenadviseUFSonpaymentinatimelymanner.UniversityFinancialServiceswillattempt tocontactthedepartmentthreetimestoresolveahold.Afterthreeattempts,holdresolutionwillbeescalatedto theTUBslocalfinanceoffice.
HarvardUniversityProcuretoPayGuide
SECTIONIV:GENERALGUIDELINESONPURCHASINGPRACTICES
RECEIVING PURCHASES
Deliveriescanbemadedirectlytotheenduser'soffice,lab,receivingdock,oranyotherlocationspecifiedonthe purchaseorder.Allpackagingshouldbecarefullyexaminedforanyvisibleevidenceofdamage,particularlyif thepurchaseisfragileorcostly.Theperson'receiving'thepurchaseshouldmakeanoteofthedatetheorderwas received,thenameofthevendor,thequantityreceived,andthepurchaseordernumber.Thereceivingand purchaseorderinformationcanbecheckedagainsttheinvoicetomakesurethatthequantitiesreceivedarethe sameasthequantitiesbeinginvoiced.
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1.DamagedShipmentsandShortages UnderInterstateCommerceCommissionregulations,damagedshipmentscannotberefusedunlesstotally destroyedorunlessthebrokencontentswouldcausecontamination.Iftheshipmentisrefused,thevendoror shippercoulddisposeoftheshipment,makingitverydifficultforthebuyerorendusertoinitiateasuccessful claim.Anydamagetothepackage,nomatterhowslight,shouldbenotedonthecarrier'sandreceiver'sdelivery receipt.Iftheshipperisunwillingtowaitwhilethecontentsofthepackageareinspected,thereceivershouldnote onthedeliveryreceiptthattheconditionofthecontentsisunknown.Ifconcealeddamageisdiscoveredduring unpacking,stopunpacking,notifytheshipper,andrequestanimmediateinspection.Savedamagedpackagingand cartonsfortheshipper'sclaimsinspectorand,ifpossible,photographthedamagedshipment. 2.InitiatingaClaim Theshipper'smainofficeshouldbenotifiedinwritingwithin15daysofreceiptofthedamagedmerchandise.The formalclaimlettershould: TheInterstateCommerceCommissionrequirestheshippertoacknowledgetheclaimwithin30daysandtooffera settlementwithin120days.WhentermsareF.O.B.Destination,thebuyerorendusershouldnotifythevendor immediatelysothatthevendorcanfileaclaim. 3.ReturningGoodstotheVendor Goodsshouldnotbereturnedwithoutfirstnotifyingthevendor.Somevendorsrequirethebuyertoobtaina returnauthorizationnumberandhaveproceduresastohowandwhenareturnshipmentshouldbemade.Some vendorsmayalsochargearestockingfeetooffsetthecostofreturningtheitemtoinventory.Thebuyerorend usershouldkeeparecordofthenameoftheindividualauthorizingthereturn,theauthorizationnumberanddate, notesofanyconversationswiththevendorauthorizingthereturn,thedatetheshipmentwasreturned,thename ofthecarrier,andthevendor'scompleteaddressandthenameoftheindividualreceivingthereturnedgoods.If describethedamage givethedatetheshipmentwasreceived includeacopyofthedeliveryreceiptwiththeshipper'ssignatureandthereceiver'sdescriptionofthe damage providethenameofthevendor includeawrittenestimatefromthevendorofthecoststoreplaceorrepairthedamageditems provideacopyofthevendor'soriginalinvoice providecopiesofallcorrespondencepertainingtotheclaim
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theitembeingreturnedisexpensiveorfragile,itshouldbeinsured.ContacttheHarvardUniversityInsurance Department(4958668)foradequateinsurance.
RECEIVINGINHCOM
HCOMprovidesawaytoelectronicallyacknowledgereceiptofgoodsandservicesinthesystem.Electronic receivingallowsadepartmentto: Providepaymentcontrolbyensuringvendorpaymentsareissuedonlyafterthedepartmenthasphysically receivedtheitem. ProvideanaudittrailofthereceiptsenteredinHCOM(theelectronicHCOMreceiptandassociatedhistory (e.g.,amountreceived,receiptdate)isanacceptableformofproofofreceiptinthecaseofanaudit). ImprovetheprocessofreceivingcreditforitemsthatneedtobereturnedtoSuppliers. Storeasmuchinformationaspossibleonallyourpurchaseswithinasinglelocation.
HCOMFOUNDATIONALPRACTICESRECEIVING
4.Receiving ReceivingforNonSponsoredFundsReceiptacknowledgementinHCOMisrequiredforallnonsponsored PurchaseOrdersover$2,499.99oncereceiptofthegoodorserviceisconfirmed.Invoiceswillnotbepaidforthese ordersuntilreceivingiscompletedinHCOM. ReceivingforSponsoredFunds(fundrange10000002999999)ReceiptacknowledgementinHCOMis requiredforallsponsoredPOsoncereceiptofthegoodorserviceisconfirmed.Invoiceswillnotbepaidforthese sponsoredfundordersuntilreceivingiscompletedinHCOM. ReceiptacknowledgementinHCOMshouldoccuratthetimeofphysicalreceiptofpurchasedgoods,or receiptofinvoiceforservices.
HarvardUniversityProcuretoPayGuide
2. Thereisalsoapublicrelationsaspecttopurchasingthatshouldnotbeoverlooked.Anorganization'spublic imagecanbeavaluableasset.Avendorwhoistreatedequitablyandprofessionallyislikelyto communicatehispositiveexperienceswithyourorganizationtohisassociates. 3. GuidelinesforSuccessfulVendorRelationships: UseestablishedvendorpartnershipstobestleveragethecollectiveUniversityvolume,toconsolidate orders,andtoreduceadministrativeprocessingcosts.Youwillreceiveoutstandingpricesand excellentservice. Befair.Giveallqualifiedvendorsanequalopportunitytocompeteforbusiness. Maintainintegrity.Avendor'spricingisconfidentialandshouldneverbesharedwithanothervendor foranyreason. Behonest.Neverinflaterequirementstoobtainbetterpricing.Negotiateingoodfaith.Don'tchange therequirementsandexpectthevendortoholdhispricing. Beethical.Procurementdecisionsshouldbemadeobjectively,freefromanypersonalconsiderations orbenefits. Becourteous.Abuyershouldmakeanefforttoreceivesalespersonstotheextentthathisorher workschedulepermits. Bereasonable.Avendorisentitledtoafairprofit. Paypromptly.Thepurchaseorderyouissuetothevendorisyourpromisetopayforgoodsand servicesinatimelymanner(usuallywithin30daysoftheinvoicedate).Whenvendorsexpend additionalresourcesfordebtcollection,itbecomesmoreexpensivetodobusinesswithHarvardand thisisreflectedinhigherpricesandlowerservicelevelsforall.
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Recapanypromisesmadepriortothepurchaseregardingmodificationstotheinstrumentsfunctionality. Whenandbywhomthesecommitmentsweremadewouldalsobeimportant.Anythingyouhaveinwriting, oranyactionsyouknowthevendorhastakenonyourbehalf,mayservetostrengthenyourposition. Discusswhatyouwillacceptasasatisfactoryresolutiontotheproblem,beitarefund,replacementor other.(Unlessotherwisenegotiated,youralternativesforthisareoftenfoundinthevendortermsand conditionsgenerallyfoundonthereversesideofthevendorquotationyoumaywanttolookattheseand seewhatthevendorbelievesyouareentitledto). YoumaybeabletoleveragetheUniversitysspend,supportingtheargumentthatHarvardisagoodand importantcustomer.ContactStrategicProcurementforinformationonHarvardannualexpendituresfor thesupplierinquestion. Setadate.Indicatethatyouarehopefulthatthevendorwillcontactyou(providenameandphone/email) bythisdateinordertoworkoutamutuallyagreeableresolutiontothisproblem.However,ifthisdoesnot occur,tellthemyouplantoforwardtheinformationtoHarvardsOfficeoftheGeneralCounselforpossible furtheraction.(Ifthisbecomesnecessaryandthedollarvalueofthepotentiallossissubstantial,collectall youhaveonthepurchaseandinvolvetheOGC). Ifyouhavealreadybeenincontactwiththelocalsalesrepresentative(nottheservicepersonnel)and he/shehasnotofferedtomakeadequaterestitution,youcandirectthelettertotheregionalVicePresident ofSalesorthehighestrankingcompanyofficeryoucanidentify. Sendtheletterregisteredmail,returnreceiptrequested,andCCtheDirectorofStrategicProcurement.
SECTIONV:ADVANCEDPURCHASINGPRACTICES
HOW TO SELECT QUALIFIED VENDORS
Vendorselectionandevaluationisaprocessthatcantakesometimeandenergydependingontheproductor service,butiswellworththeeffortwhenthevendorchoseniscompetitivelypricedandresponsivetothe needsoftheUniversity. 1. Thefirststepinselectingvendorsisoftenresearch,particularlyiftheproductorservicehasnotbeen purchasedbefore.Thereareanumberoftoolsavailableforthisinitialphase: UselibraryandwebreferencessuchastheThomasRegister.ForprocurementrelatedwebsitesseeHelpful andInterestingWebSites. ConsulttheYellowPagesforlocalsuppliers. Consulttradepublications,directories,vendorcatalogues,andprofessionaljournals. Talktosalespersons.
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2. Oncealistofpotentialvendorshasbeendeveloped,beginevaluatingeachsupplier'scapabilities.Insome cases,obtainingaDun&Bradstreetfinancialreport('runningaD&B')isagoodplacetostart.However,aD&B containsonlypubliclyavailableinformationorinformationthatthevendorchoosestoprovide.SomeD&Bs alsoincludebriefprofilesofkeymanagementpersonnelandhistoricalinformationonthecompany.Buyers canalsocheckwithlocalBetterBusinessBureaus. HarvardBusinessSchool'sBakerLibraryoffersmanyfinancialdatabasesthroughaPINloginat http://www.library.hbs.edu/. 3.Thereareanumberofguidelinesforvendorselection*: 4. Thesestepsshouldnarrowthefieldtothethreetofivevendorswhowillbeaskedtobidontheparticular productorservice. Investigateavendor'sfinancialstability. Checkbankreferences. Iftimepermitsandthesupplierisapubliccorporation,obtainacurrentannualreport. Findouthowlongthevendorhasbeeninbusiness. Findoutwhoarethevendor'sprimarycustomersandaskforandcheckreferences. Tourthevendor'sfacilities,ifpossible. Doesthefacilityappearprosperous? Doesthevendorusestateofthearttechnology? IsthevendorreallyinterestedindoingbusinesswiththeUniversity? Talktocolleaguesinotherinstitutionswhomighthavepurchasedasimilarproductorservice.
*Vendorpartnershavebeenprequalified.
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NOTE:Dependingonthecommodity,educationalpricing,basedonGSA(GeneralServicesAdministration)pricing maybeavailable.WhenavendoroffersGSApricingoreducationalpricingbasedonGSApricing,itistypically competitive. Thebidprocessbeginswiththebuyerdevelopingasetofspecificationsorobjectives.Thebuyermustdo somehomework,andbeabletodefinetherequirementsexactly.Thebuyercanconsultcolleagues,technical personnel,trademanuals,andvendorsforassistanceindevelopingspecifications.Thebuyerthencommunicates therequirementstotheselectedvendorsbyawrittenRequestforQuotation(RFQ)oraRequestforProposal (RFP). 1. TheRFQprocessisdesignedtoidentifythevendorwhocanmeetthebuyer'srequirementsforthebest price.TheRFQshouldbeusedforbiddingfamiliar,standarditems.Price,deliveryandinventoryareusually themostimportantelementsoftheRFQ.TheRFQshouldcontainALLtheinformationnecessaryforthevendor tosubmitavalidquote: 2. AN RFPshouldbeusedforbiddingservicessuchasconsulting,advertising,publication,maintenance,and computerprogramming.TheRFPusuallybeginswithastatementofpurposeorgoalsandobjectives whatthebuyerhopestoaccomplish.TheRFP: shouldclearlydefineanacceptablelevelofperformanceforthevendorandadefinitetimeframefor achievingthisgoal shouldaskthevendortodescribethequalificationsofthoseindividualswhomaybeinvolvedin implementingthegoalsandobjectivesoftheRFP shouldaskforalloftheinformationcontainedinanRFQ(seeabove)butalsocanaskforinputfromthe vendors.Thevendorsmightbeaskedhowtheywouldmeetaspecificobjective,whatuniquecontributions theywouldmaketowardachievingthegoalsoutlinedintheproposal,andwhatalternativeproposalsthey wouldoffer.Thevendorsmightalsobeaskedtosolvespecificproblemsconcerningtimeconstraints,new technology,oronthejobtrainingforendusers."How"isasimportantas"howmuch". Theproduct(s)shouldbedescribedindetail. Specificationsshouldbeclear,conciseandcomplete. Quantity,qualityrequirements,packaging,F.O.B.point,paymentterms,andwarranty,deliveryand InventoryrequirementsshouldallbeincludedintheRFQ. givesthebuyerastandardforcomparingprice,quality,andservice givesthebuyeralistofqualifiedvendorsforfuturebids
3. Tipsonpreparingabid(RFQorRFP):
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Thebuyerneedssufficienttimetoprepareagoodbidandthevendorsneedsufficienttimetorespond(two tofourweeks). AllvendorsshouldreceiveidenticalcopiesoftheRFQorRFPandanysubsequentchangesinthebid specification. Specifyadeadlineforsubmittingallbids.Ifthedeadlineisextendedforonevendor,itmustbeextendedfor all. Allvendorsshouldbenotifiedinwritingifthebidspecificationschange.Ifthechangesaresubstantial,it maybenecessarytoextendthesubmissiondeadline.Allvendorsshouldbenotifiedoftheextensionin writing. Ifthebuyerreceivesanumberofquestionsaboutthebid,thebuyershouldconsiderholdingaprebid conference.ThebuyerwillhaveanopportunitytoclarifytheRFQorRFPforallthevendorsandnovendor willhavetheunfairadvantageofadditionalinformation. Whenthebidsarereceived,thebuyershouldsign,dateandindicatethetimethateachisreceived.All competitivebidsareconfidentialandshouldneverbeusedasabargainingtool.
4.TipsonEvaluatingbids: Takethetimetoreviewthebidscarefully. Narrowthefieldbydeterminingwhichvendorsare"responsive".A"responsive"bidprovidesALLthe informationaskedforandaddressesALLtheissuesintheRFQorRFP.Eliminatebidderswhoare unresponsive. Lookcarefullyatproposedprices.Bewaryofavendorwhosubstantiallyunderbidshiscompetitors.He maybe'lowballing"towinthebidbutthequalityofhisproductcouldsufferorhemightbeunabletomeet thedeliveryrequirements.Asubstantiallylowerpricemightalsoindicatethatthevendorhas misunderstoodormisinterpretedtherequirements. Ifappropriate,obtainandevaluatesamples. Ifthebiddingisclose,askforextendedwarranties(ifappropriate)andcompareprices. Considerthevendors'pastperformances,aftersalesupportandservices,technology,andthecreativity usedtomeetthebuyer'srequirementsorobjectives.
NEGOTIATION TECHNIQUES
Negotiatingsuccessfullytakesskillandpracticeandshouldresultinawinwinsituationforboththebuyerand theseller.Forindividualswhoregularlynegotiatewithvendorsandotherorganizations,itmaybeappropriateto pursuetrainingand/ormembershipinoneormoreappropriateprofessionalsocieties.Asguidelines,good negotiators:
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WhentoNegotiate Buyersshouldnegotiatewhen: NegotiationStrategies Wheneverpossible,thebuyersshould: negotiateontheirown"turf".Thephysicalenvironmentshouldbepleasant,wellventilatedandlighted. prepareanagendaandbriefthemembersofthenegotiatingteambeforehandsothattheirstrategyisn't compromised neverlosesightofthetargetwhatshouldbegainedfromthenegotiation haveconfidenceintheirfactsandfigures.Neveruseinformationthatcouldbequestionedorproven inaccurate. negotiateonlywithvendorrepresentativeswhoareempoweredtomakeconcessions leaveplentyofroomtomaneuver.Thegreatertheinitialdemands,thegreatertheprobabilityforsuccess. notbeafraidtobesilent.Silencecanbeaneffectivenegotiatingtool.Ifthevendorfearsheislosingthe business,hemaytalkhimselfintoofferingmoreandbetterconcessionsthanexpected.
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NegotiationStrategiestoAvoid Buyers: shouldn'trevealtheirstrategiestooearlyintothenegotiationprocess shouldavoidgettingsoboggeddownindetailsthattheoverallobjectivesarelost shouldnevertrytoprovethevendorwrong.Leavethevendorroomtoretreatgracefullyfromastated position. shouldavoiddisplaysoftemper,frustrationandangerthatcanhandicapthenegotiationprocessand logicalthinking. shouldnotcommunicateanythingtothevendorthatreducesbargainingpower,forexample:"You'reour onlysource.""Wehave$21Kbudgetedforthispurchase.""Ihavetohaveitnow."etc.Beintelligentand cautious. callarecessorlunchbreakifnegotiationsbreakdown. alwayswithholdsomethingforconcessioninreturnforapointthevendoriswillingtoconcede alwaysbefair.Thevendorisentitledtoareasonableprofitonethatallowshimtostayinbusinessforthe longrun.
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Buyersnegotiatingequipmentmaintenance/serviceagreementsshouldfullydescribethescopeoftheworkto avoidanymisunderstandingsorunsatisfactorylevelsofservice.Termsandconditionsthatshouldbeagreedupon betweenthebuyerandvendorincludeworkinghours,labor,excludedservices(whatthevendorisnotobligatedto do),warranty,excludedparts,responsetime,loanerequipment,andappropriateinsurancecoverage.Vendors usuallyhavestandardtermsandconditionsavailableforreviewbythebuyer.Ifthebuyerfeelsadditionalservices mightberequiredorifthetermsandconditionsrequireamending,thebuyershouldnegotiatetheseelementswith thevendorbeforetheservice/maintenanceagreementissigned.Thebuyershouldalsotrytonegotiateshipping termsincasetheequipmentneedstobereturnedtothemanufacturerforrepairs. Equipmentthatcanbeservicedunderacommonagreementshouldbegroupedandidentifiedbymodelnumber andmanufacturer.Ifanumberofpiecesofequipmentneedservicing,thevendormightbewillingtoextenda quantitydiscount.Thebuyershouldrequestinformationfromindividualmanufacturersonstandardmaintenance agreementsandwhat,ifany,policythemanufacturerhasonmaintaininganothermanufacturer'sequipment.The buyerandvendorshoulddevelopamutuallyagreeablemaintenanceschedulesothattheequipmentwillbe availableandaccessibleforservicing. Iftimepermits,thebuyershouldlookatthecostofobtainingathirdpartyfirmtohandlerepairsandmaintenance versustheoriginalequipmentmanufacturer(OEM).ServicerepresentativesfromtheOEMmayhavetotravel somedistancetorepairyourequipmenttraveltimethebuyerwillhavetopayfor. Sometimes,athirdpartyfirmwillbeabletohandleserviceandrepairrequirementsforalowerratebecausethe servicerepresentativesarecloser.However,thebuyermustbeconfidentthatthisfirmcanobtainthepartsand personnelneededtoserviceandrepairtheequipment.
HarvardUniversityProcuretoPayGuide
MakingtheBuy Oncethedecisionhasbeenmadetopurchasetheequipment,thebuyershouldpreparethespecifications,select thevendors,anddeveloptheRFQorRFP.Iftheequipmentisstandardandrequiresnomodifications,thebuyer canusetheRFQformat(PreparingandEvaluatingaBid).Iftheequipmentrequiresspecificmodifications,the buyershouldusetheRFPformatandclearlydefinethespecificationsandthescopeoftheworktobeperformed. GuidelinesforShippingCapitalEquipment NegotiatetheF.O.B.Point.IfthetermsareF.O.B.Destination,thevendorislegallyresponsiblefortheequipment untilitisdeliveredtothespecifiedlocationand,iftheequipmentisdamagedintransit,isalsoresponsibleforfiling thefreightclaim.IfthetermsareF.O.B.Origin,Harvardislegallyresponsiblefortheequipmentintransitfromthe vendor'swarehouseordock.Harvardwouldfileafreightclaimiftheequipmentisdamagedintransit.Whenthe F.O.BpointisOrigin,theequipmentshouldbeinsuredforfullreplacementvaluethroughtheHarvardUniversity InsuranceOffice(4958668)orbythevendor. OtherIssuestoAddressBeforePurchasingCapitalEquipment: PhysicalSitePreparation Doesthereceivingsitehaveanylimitationssuchastrucksize,weight,oraccessibility?Haveprovisionsbeen madetoremoveoldequipment,ifnecessary?Canthefloorstructurallysupporttheequipment?Arefreight elevatorsavailableandwilltheequipmentfit?(Takethetimetomeasuredoorwaysandelevators.)Are electricalconnectionsinplaceandcompatible?Willthenewequipmentinterfacewithexistingequipmentand howwillthisbeaccomplished?Requestthatthevendorgivenotification2448hoursbeforedelivery. Installation Whowillberesponsible?Whatdoesitinclude?Iftheinstallationwillbeperformedbythevendor'spersonnel, makesurethevendorhasadequateliabilityandworker'scompensationinsurance.CanUniversitypersonnel installtheequipment?Howlongwillinstallationtake?Isinstallationaseparatecostorincluded(F.O.B. Installed). Training Istrainingavailableforendusers?Wherewillittakeplace?Howlongwillittake?Istrainingincludedinthe purchaseprice?Isauser'smanualincluded;completewithpartslistandschematic,andinEnglish?Willthe vendorprovideongoingtechnicalassistanceifneeded? Acceptance
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ServiceandMaintenance
SeeEquipmentMaintenanceandServiceAgreements(above) PaymentTerms
VendorTermsandConditionsofSale
ForeignImport
Bonds
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SECTIONVI:SPECIALSITUATIONS
PURCHASING RADIOISOTOPES
Seehttp://www.uos.harvard.edu/ehs/radiation/purchasing_procedures.shtmlforinformationonrequirements forpurchasingradioisotopesatHarvard.
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forinformationonrequirementsforpurchasingcontrolledsubstancesatHarvard.
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SECTIONVII:FEDERALPROCUREMENTREQUIREMENTS
OVERVIEW OF FEDERAL PROCUREMENT REQUIREMENTS
HarvardUniversityreceivessignificantfundingfromFederalsourcesandisrequiredtocomplywiththeFederal AcquisitionsRegulation(FAR)forpurchaseswiththesefunds.Thesepurchasesarereviewedforcompliancewith theFederalAcquisitionRegulationandtheOfficeofManagementandBudgetCircularA110.Departmentsare requiredtoretainbackupdocumentation,suchasbids,quotes,andcost/priceanalysesonfileforFederal auditors. RequireddocumentationforFederallyfundedpurchasescanincludepurchaseorders,invoices,copiesof competitivequotesorproposals,justificationforsolesourceselection,andcost/priceanalysis.Typically,these documentationrequirementscanbemetbycompletingtheVendorJustificationFormandbyretainingcopiesof quotesandproposalsindepartmentfiles.TheVendorJustificationFormmustbeusedfordocumentingall purchaseorders$5,000andovermadewithFederalfunds.SectionAandSectionBoftheVendorJustification Formcovervendorselectionjustification.SectionCcoverscost/priceanalysisrequirements. AnyquestionsconcerningFederalprocurementregulationsshouldbedirectedto(617)4955401.
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SmallPurchaseProcedures HarvardUniversityrequiresthatanypurchaseorderover$5,000(20%ofthesmalldollarpurchasethresholdof $25,000)complywithCompetitionandPriceReasonablenessprocedures. CompetitiveBiddingforContracts HarvardUniversityrequirescompetitivebiddinganddocumentationforeverypurchaseorder$5,000andover. Buyersareexpectedtopromotecompetitionandensureadvantageouspricingbysolicitingbidsfromaminimum ofthreevendorsandtoselectthelowestbidderabletomeettherequirements.Quotationscanbesolicited orally,withtheexceptionofconstructioncontractsover$2,000.Thebuyershouldrecordthebid/quoteresults onSectionAoftheVendorJustificationForm(VJF)andretaincopiesofwrittenbids/quotationsindepartment filesforauditpurposes.Ifthebuyerreceivesonlyonequote/bidinresponsetohisRequestforQuotation/ RequestforProposal,indicatethebidderonSectionAandcompletecost/priceanalysisSectionCoftheVJF. NonCompetitiveVendorSelection:SELECTEDandSOLESOURCES Occasionally,abuyerisunableorchoosesnottocompetitivelybidhisrequirements.Thesesituationsinvolve selectedorsolesources.Aselectedsource:alternativevendorsexistinthecompetitivemarket,butthebuyer choosesaparticularvendorbecauseoftechnicalrequirements(precision,reliability)orpastperformancebyother vendors(poorservice,availabilityofparts).Asolesource:noothervendorcapableoffullymeetingthe requirementsexists.ThebuyershouldcompleteSectionBandSectionCoftheVendorJustificationFormfor selectedorsolesourcepurchases.Solesourcesshouldbetheexception,nottherule. Cost/PriceAnalysisforContracts HarvardUniversityalsorequiresdocumentationverifyingthatthepurchasepriceisfairandreasonable.The buyermustprovidedocumentationofcost/priceanalysisforallnoncompetitivepurchaseorders$5,000and over.Documentationcanbebasedonthepriceofpreviousandsimilarpurchases,currentpricelists,catalogues, advertisements,andnegotiatedpricingagreements(includingvendorpartnerships).SectionCoftheVendor JustificationFormlistscost/priceanalysisoptions.Thebuyershouldcheckallthatapply. UsingtheVendorJustificationFormforContractFundedPurchases InstructionsforcompletingtheVJFareontheformitself.However,tosummarize: RecordcompetitivebidsonSectionA.
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Ifthebuyercompetitivelybidsthepurchase,SectionAoftheVendorJustificationFormshouldbecompleted.Ifthe vendorisaselectedsource(alternativevendorsexistbutthebuyerchoosesaparticularvendorbasedon technicalrequirementsorpastperformancebytheothervendors)orsolesource(noothervendorcapableof meetingtherequirementsexists),thebuyershouldcompleteSectionBandSectionC(cost/priceanalysis)ofthe VendorJustificationForm.Solesourcesshouldbetheexception,nottherule. GrantPurchases$5,000$9,999: HarvardUniversityrequirescost/priceanalysisforeverypurchaseatorabovethislevel.Foreachpurchaseof $5,000$9,999,thebuyermustcompleteSectionC(Cost/PriceAnalysis)oftheVendorJustificationForm. Vendorselectionjustification(SectionAorSectionB)isnotrequiredforGrantPurchasesunder$10,000. Grantpurchasesunder$5,000: HarvardUniversityrequiressomeformofpriceorcostanalysisbemadeforeverypurchasetoensureafairand reasonableprice.BuyersarenotrequiredtocompleteaVendorJustificationFormforpurchaseordersunder $5,000.Nevertheless,buyersshouldmakeanefforttouseandverifyHarvarddiscounts,checkmarketprices, reviewpastpurchaseordersforsimilaritems,anddemonstrategoodbusinesspractices. UsingtheVendorJustificationFormforGrantFundedPurchases: InstructionsforcompletingtheVJFareontheformitself.However,tosummarize: CompleteSectionAorBandSectionCforpurchaseorders$10,000andover. CompleteSectionCforallpurchaseorders$5,000andover.
QUICKREFERENCEREGARDINGTHEVJF:
TheVJFmustbecompletedforpurchasesofgreaterthanorequalto$5,000madewithfederalfunds.This regulationappliestofundingfromallfederalcontractingandgrantingagencies. AVJFisnotrequiredforpurchasesunder$5,000;however,someformofpriceorcostanalysisshouldbe completed. The$5,000requirementreferstothetotalofthepurchaseorder,notpriceperitem. DonotsendyourVJFstoStrategicProcurement.Retaintheformlocallyforgeneralauditpurposes. Freightcostsareconsideredpartofthepurchasepriceandmustbeincludedinthetotalcostoftheitem(s), evenifthesecostsincreasethepurchaseorderto$5,000orover. TheVJFshouldbesignedbyanindividualwithknowledgeofthevendorselectionprocessandrationale. InterdepartmentalbillingsdonotrequireaVJF. Ifyouaremakingprogresspaymentsgreaterthanorequalto$5,000,theprogresspaymentsareaddressed bytheoriginalVJF.
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The$5,000requirementappliestoanyandallpurchasesofgoodsorservices,regardlessoftheformof payment.Itincludesinvoicedtransactions,PCardtransactions,andreimbursements. IfthescopeofagrantorcontractrequiresanindividualtospendtimeoutsidetheU.S.andgoodsand/or servicesarepurchasedabroad,itisstillnecessarytoabidebyfederalprocurementregulationsasoutlined intheVJF. AVJFisnotrequiredforsubcontractsoriginatingatanotherinstitution.Anyrequiredsupporting documentationshouldbeheldbythesponsoringinstitution. UsersoftheHarvardCrimsonOnlineMarketplace(HCOM)maycompletetheVJFonline.Inthesecases, thereisnoneedtoretainapapercopy. NotethatinHCOM,ausercanimmediatelyaccessandcompletetheVendorJustificationFormfor sponsoredpurchases.
HarvardUniversityProcuretoPayGuide
generallyhasfewerthan500employeesincludingaffiliates,isindependentlyownedandoperated,andisnot dominantinitsfieldofoperation. ASmallDisadvantagedBusiness: isasmallbusinessconcernwhichisatleast51%owned,managed,andoperatedonadailybasisbyamember ofadefinableminoritygroup.DefinableminoritygroupsincludeAfricanAmericans,HispanicAmericans,Asian Americans,NativeAmericans,NativeHawaiians,Inuit,andAsianPacificAmericans. AWomenOwnedBusiness: isasmallbusinessconcernwhichisatleast51%owned,managed,andoperatedonadailybasisbyawoman/ womenwhoisaUnitedStatescitizen.WomenOwnedbusinessesarenotconsidereddisadvantaged, unlessownedbyawomanwhoisalsoamemberofadefinableminoritygroup. 3.PreparingaSubcontractingPlan TheOfficeforSponsoredProgramsnotifiesthePrincipalInvestigatorwhenaplanisrequiredandwhetheror notthecontractingagencyhassetspecificgoals.Ineithercase,theplanmustsetseparategoalsforsmalland smalldisadvantagedbusinesses.StrategicProcurementisavailabletoassistthePrimaryInvestigatorwiththe identificationofvendorsthatmeetspecificminority,womenowned,smallbusinessorotherrequirements. 4.TheSubcontractingPlanForm Oncesubcontractingopportunitieshavebeenidentifiedanddollarsandpercentagegoalscalculated,this informationisenteredonaSubcontractingPlanform.Somecontractingagenciesprovidetheseforms.The NationalInstituteofHealth(NIH),forinstance,willnotacceptasubcontractingplanthatisnotonanNIHform. However,mostagenciesareflexibleaslongastherequiredinformationisincluded.TheSubcontractingPlan formismodeledontheNIHformandgenerallyacceptedbyfederalcontractingagencies.Thecompleted SubcontractingPlanmustbesignedbytheindividualsubmittingitandsenttothecontractingagencyfor approval. 5.SubcontractingPlanReportingForm294 ThecontractingagencyrequiresthePrincipalInvestigatortocompleteonlinesemiannualreportingcharting his/herprogressinmeetingsubcontractinggoals.TheOfficeofSponsoredPrograms,alongwithStrategic Procurement,coordinatesthereportingwiththePrincipalInvestigator(s).Buyersshouldbealertedto subcontractinggoalsandshouldidentifysmallandminoritybusinessesatthestartofthecontractsinceitis difficulttomeetgoalsafterthemoneyhasbeenspent.Failuretodemonstratea"goodfaitheffort"canresultin
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HarvardUniversityProcuretoPayGuide
theprimecontractorbeingassessedliquidateddamages.Thecompletedformmustindicatethenameofthe administratoroftheplan. 6.EPAGrant/CooperativeAgreementRequirementsForm570052A UniversityrecipientsofEPAgrantsandcooperativeagreementsarerequiredtosetaFairSharegoal.The PrincipalInvestigatormustreporthisprogressannuallytotheEPAonForm570052A.Thisformisavailable fromtheEPAandcanbecopied.Form570052A RegardlessofthedollarvalueofaprojectawardedaGrant,theFederalStateRevolvingFund(SRF)Grant Programrequiresthatanyprimecontractsorsubcontractsforservices,construction,goods,orequipment procuredbyaGranteetoimplementtheprojectfundedfromtheGrantmustcontaintheapplicableFederal FairShareMinorityandWomenOwnedBusinessEnterprises(M/WBE)UtilizationGoals. StrategicProcurementisavailabletoassistthePrincipalInvestigatorwiththeidentificationofvendorsthat meetspecificminority,womenowned,smallbusinessorotherrequirements.
DEBARMENT
TheFederalAcquisitionRegulation (FAR)52.2095requiresthatHarvardobtainwrittencertificationfromvendorsreceivingapurchaseorderor commitmentof$25,000andoverandmadewithFederalfundsthattheyhavenotbeendebarred(prohibited) fromdoingbusinesswiththeFederalGovernment.AprimecontractorsuchasHarvard,whoknowinglydoes businesswithadebarredvendor,riskshavingitsFederalcontractterminated. CausesforDebarment Avendorisdebarredforseriouscriminaloffensessuchasembezzlement,theft,forgery,bribery,andotheroffenses indicatingalackofbusinessintegrity.Dependingonthespecificcause,thelengthofthedebarmentcanbe anywherefromthreeyearstoindefinitely.
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HarvardUniversityProcuretoPayGuide
CertificationRequirements ThebuyermakingthepurchaseisrequiredtoobtainasignedDebarmentCertificationFormfromthevendorprior tomakingapurchasecommitment.Typically,thisisdoneaspartofaquotationprocessorimmediatelypriorto placingtheorder.Thevendorcanemail,mail,orfaxthecompletedformtothebuyer.Thesigneddebarment certificationformshouldberetainedlocallyalongwiththeVJFforauditpurposes. AlthoughtheGeneralServicesAdministrationmaintainstheExcludedPartiesListSystem(EPLS)identifying debarredvendors,itisnotsufficientforpurchaserstoreferencethislistasameansofcertifyingthatavendoris notdebarred.SincetheFARrequiresthatawrittencertificationbeobtainedfromthevendor,theEPLSshouldbe usedonlyasareference. Ifprogresspaymentsgreaterthanorequalto$25,000willbemade,allprogresspaymentsareaddressedbythe originaldebarmentform.
SPONSOREDPURCHASESINHCOM
1.Approvalisrequiredforallsponsoredpurchases,regardlessofamount. 2.ReceivingisrequiredinHCOMforallsponsoredpurchases,regardlessofamount. 3.TheVendorJustificationFormcanbeaccessedwithinHCOM,andcompletedatthetimeoforder. 4.InformationabouttheDebarmentFormcanbefoundinHCOMwithalinktotheforminABLE.
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HarvardUniversity StrategicProcurement