9.01 Determining Purchasing Method

Policy Information

Purpose and Summary

To provide policies and procedures for determining the appropriate University purchasing method for goods and services. Regardless of which method is utilized to initiate a purchase, University expenditure policies and procedures must be followed. Expenditures must be Allowable to be purchased with University funds. Refer to 9.10 General Expenditure Policy for policy related to allowability.

Travel expenditure policies and procedures are covered in section 14.00 Travel.

Source

Arizona Board of Regents (ABOR) Policy 
Misuse of University Assets Policy 
Purchasing Policy 4.4 Requests for Bids (RFB)/Proposals (RFP)

Scope

This policy applies to all University locations and units, including all University extensions, satellite locations, and off-site campus units, both domestic and international.

Definitions

1. Allowable: Expenditures that are: Reasonable, Business-Related, have adequate supporting documentation and a University Business Purpose and benefit, and are not prohibited by any policy or law, and are therefore payable from University funds. Note that not all Allowable expenditures are permitted on all funding sources.
2. Arizona BuyWays: The University’s web-based E-Procurement system that provides access to multiple vendors and contracted pricing via UAccess Financials Shop Catalogs .
3. Disbursement Voucher (DV): An electronic document (eDoc) within the University’s financial system that is utilized for reimbursing individuals for out-of-pocket expenses incurred while conducting University business or to pay Vendors for small dollar goods or services after the purchase or service are provided.
4. Internal Billing (IB): An eDoc within the University’s financial system that is used to bill for goods or services provided by one University department to another University department, reflecting income to the provider and expense to the customer.
5. Motor Pool Services: A method to request vehicles for use by faculty, staff and students to use for University sanctioned and sponsored trips.
6. Purchasing Card (PCard): A University credit card for traditional small dollar purchases not to exceed $10,000 that is used wherever Visa is accepted. PCard transactions feed from the University banking partner into UAccess Financials and create a PCDO eDoc .
7. Pyramiding: Making a purchase greater than the single transaction limit on a PCard or exceeding the University purchase threshold and paying for the item(s) in multiple payments over an interval of time to circumvent procurement thresholds. May also be referred to as fragmenting.
8. Requisition (REQS): An eDoc within the University’s financial system that is utilized for initiating a Purchase Order for the purchase of goods or services before the purchase is made or the services are performed.
9. Service Billing (SB): An eDoc within the University’s financial system that is used to bill for goods or services provided by one University department to another University department, reflecting income to the provider and expense to the customer. The SB is restricted and can only be used by approved Service Billers.
10. Small Dollar Direct Purchases: Purchases not exceeding $10,000 utilizing the University Purchasing Card (PCard) or $25,000 utilizing Arizona BuyWays when existing University Contracts or Inter-Departmental sources cannot satisfy the need.
11. Vendor: A company offering goods or services to the University or receiving reimbursement for Business-Related expenses, or a person who is a non-University employee. Examples include corporations, Designated Campus Colleagues (DCCs), students, or entities such as outside entities or Independent Contractors.  

Policy

1. All purchases, regardless of purchasing method, must be Allowable and permitted on the funding source.
2. An individual purchase from any merchant may not exceed the single transaction limit of $10,000 when utilizing the PCard.
3. Purchases exceeding $25,000, regardless of purchasing method, require a competitive solicitation in accordance with Purchasing Policy 4.4 Requests for Bids (RFB)/Proposals (RFP).
4. Pyramiding to circumvent procurement thresholds is prohibited. Intentional fragmenting of a purchase will result in administrative or disciplinary action, including cancellation of the PCard when utilized as the purchasing method.
5. The PCard is to be used only for purchases from external (non-University) Vendors.
6. PCard purchases made as an incorrect method will result in administrative or disciplinary action, including suspension or cancellation of the PCard when utilized as the purchasing method.
7. Initiating a Requisition and subsequently paying the invoice with a PCard or paying with PCard and seeking reimbursement is prohibited to avoid duplicate payments.

Procedures

1. Prior to making any purchase, first ensure that the expenditure is Allowable and permitted on the funding source.
2. Determine if the purchase is restricted to certain purchasing methods, requires pre-approval, or is subject to exception procedures by referring to the Purchasing Methods Table.
3. Determine if existing University Contracts or inter-departmental sources can satisfy the need. If not, refer to Purchasing Policy 4.13 University Wide Contracts & Strategic Alliances for documentation requirements when deviating from a University-wide contract or strategic alliance. Select a Vendor and proceed with the required purchasing method.
4. Purchases not being made under Purchasing Policy 3.2 Small Dollar Expenditures should always be initiated using a Requisition to ensure that State purchasing guidelines are followed.
5. If the Requisition exceeds $10,000 and the Vendor is not a Small Business, provide documentation with the Requisition as to why it is impracticable to utilize a Small Business.

Small Dollar Direct Purchases

6. Determine if the item to be purchased falls into a category that is restricted or not allowed on the PCard. If not eligible for purchase on the PCard, utilize a Requisition.
7. Obtain competitive quotes prior to placing an order, whenever feasible.
8. If practicable, Small Dollar Direct Purchases should be restricted to Small Businesses.
9. If a Small Dollar Direct Purchase must be accompanied by a contract requiring signature, send the contract to the Contracting team for approval and signature prior to making the purchase and allow for adequate contract processing time.

Frequently Asked Questions

1. What are the benefits of Small Dollar Direct Purchases?
   Small Dollar Direct Purchases provide an alternative to the Requisition process and are generally more efficient and cost-effective for the university. Departments should work directly with the Vendor whenever possible. Benefits include:
   • Elimination of the need for small dollar transactions to flow through Purchasing
   • Faster receipt of merchandise based on immediate payments from the PCard
   • Improved relationships with Vendors
   • Simplified procurement process
   • Shipping directly to the Department (except for orders placed via Arizona BuyWays)
      
2. Can personal funds be used for making small purchases and then be reimbursed via a Disbursement Voucher?
   Using personal funds and seeking reimbursement is strongly discouraged. It is more costly for the university to process reimbursements, and the employee runs the risk of not being reimbursed if the purchase is deemed not Allowable.
    
3. How do I place an order that is a Small Dollar Direct Purchase?
   Orders may be placed by phone, electronic commerce, fax, at the Vendor’s place of business, directly with the university’s inter-departmental source, or Arizona BuyWays. When placing an order with a non-contract Vendor, always ask for the university discount.
    
4. Can I use my PCard to pay for a purchase under a university-wide contract?
   Depending on the agreement with each Vendor, use of the PCard to pay for items may or may not be allowed. Refer to Contracted Vendors for a list of university-wide contracts and contact information. If the vendor accepts PCard, ensure items are allowed on the PCard and within purchasing limits.
    
5. The prohibition on using the PCard with university departments, such as the Student Union, makes it difficult to purchase internally. What is your advice?
   Please connect with Finance Strategy & Solutions support for the Student Union to learn about how to process Service Billings. Alternatively, you could consider SU catering services. It is worth considering whether the purchase is a necessary business meeting requirement. Refer to 9.13 Business Meals. Please ensure the expenses are Allowable, including providing an appropriate Business Purpose statement.

Related Information

Arizona BuyWays
Business Purpose Guide 
Contracting Services
Contracted Vendors
FSM 9.10 General Expenditure Policy 
FSM 9.12 Independent Contractors
FSM 9.13 Business Meals
Internal Billings and Service Billings – Best Practices 
Misuse of University Assets Policy 
Motor Pool Services 
PCard Program 
Purchasing Methods Table
PUR 3.2 Small Dollar Expenditures 
PUR 4.3 Small Business Utilization Program 
PUR 4.4 Requests for Bids (RFB)/Proposals (RFP) 
PUR 4.13 University Wide Contracts & Strategic Alliances

* Please note that sections titled Frequently Asked Questions and Related Information are provided solely for the convenience of users and are not part of the official University policy.