I. UNIVERSITY ORGANIZATION FOR PROCUREMENT
Policy Title: Delegation of Procurement Authority and Applicability of University Purchasing Policies
Policy Number: 1.1
Effective: February 2006
Latest Revision: January 2009
Pursuant to ABOR Policy 3-802 the Chief Procurement Officer of the University, under the direction of the University President, has the authority to commit University funds for the procurement of supplies, equipment and contractual services on behalf of the University and Arizona Board of Regents. Consistent with this ABOR Policy, the Chief Procurement Officer has the authority to promulgate written policies and procedures governing the procurement and management of materials, services and construction to be procured by the University and the disposal of materials. Unauthorized purchases may be considered a personal obligation.
Only the Chief Procurement Officer, or designees and other University personnel designated by the President may commit the University to the purchase of either goods or services, or both.
Sponsored Projects is responsible for negotiating, writing, administering, and closing out subcontracts for research.
Applicability of University Purchasing Policies
- This manual consists of rules prescribing procurement policies and procedures for the University in accordance with the requirements of the ABOR University Procurement Code. Such rules shall be known as the "University Purchasing Policies."
- Except as provided in Policy 1.1, paragraphs 3. and 4. (Applicability of University Purchasing Policies) below, these Policies shall apply to every expenditure of public monies, including federal assistance monies (subject to requirements of federal law as referred to in ABOR Policy 3-808H (Intergovernmental Procurement), by the University. These Policies also apply to the disposal of University materials.
- These Policies do not apply to the following:
a. To either grants or contracts between the University and either other state governmental units or other governments except as provided in ABOR Policy 3-808 (Intergovernmental Procurement).
b. To contracts for professional witnesses if the purpose of such contracts is to provide for professional services or testimony relating to an existing or probable judicial proceeding in which the University is or may become a party or to a contract for special investigative services for law enforcement purposes.
c. To agreements negotiated by legal counsel representing the University in settlement of litigation or threatened litigation.
d. To internal cooperative agreements or consortium agreements existing solely between and among the Board and/or any institution under the jurisdiction of the board.
e. To items purchased by the University for resale.
- Nothing in the ABOR University Procurement Code or these Policies prevents the Board or University from complying with terms and conditions of any grant, gift, bequest or cooperative agreement.
Procurement policies articulate the procedures, rules and standards that govern how goods and services are to be acquired by UA departments/units. An example of such rules and procedures are: 1) The competitive sealed bidding selection process; 2) procurements of either goods or services, or both, costing $10,000 or less; 3) procurements of either goods or services, or both, not exceeding $100,000; 4) the Request for Proposal process; and 5) exceptions to the competitive selection process, e.g. sole source procurements, emergency procurements, livestock/animal procurements, and professional services.
While the rules and procedures governing procurements are ordinarily found in procurement policies, the acquisition of either goods or services, or both, also may be affected by certain financial policies. Such financial policies generally focus on what may be purchased. Often they manifest themselves as restrictions relating to the source of funds that may be used to pay for a purchase or the identification of types of purchases that are prohibited regardless of the source of funds. Expenditure rules listing allowable items that may be purchased by fund type and examples of types of expenditures that are prohibited using University funds may be found in the UA Financial Services Policies and Procedures Manual (FSM). Refer to FSM Policy 9.10.
Since a large number of University purchases are made using the Purchasing Card (P-card), purchase restrictions and prohibitions applicable to P-Card use may be found at PCard Program Policy Restrictions.
In spite of the existence of the ABOR University Procurement Code, supplemented by UA purchasing and financial policies, there are occasions when the rules and procedures are not followed. Generally, the most prevalent violations are: 1) purchases using an inappropriate fund source; 2) dividing a purchase into components to avoid a mandatory competitive selection process (all purchases exceeding $10,000 are subject to a competitive selection process in accordance with Purchasing Policy 4.5, or procured as an exception to the competitive selection process); and 3) use of University funds to make purchases for personal benefit or for non-university business.
The purpose of this policy is twofold: First, to establish general procedures and practices to deal with deviations by UA units or individuals from the procedures or methods prescribed by University Purchasing Policies (contained herein) and the ABOR University Procurement Code governing the purchase of either goods or services, or both. Second, to inform the Campus Community of the process that shall be used by the Procurement and Contracting Services Department in handling violations of UA Purchasing Policies & the ABOR University Procurement Code.
- University departments/units and employees are required to make all purchases of goods and services in accordance with the procedures prescribed by University and ABOR Procurement Policies.
- Unit heads at all levels are responsible for ensuring that a system is in place in the unit which promotes purchases of goods and services in accordance with these policies. The Procurement and Contracting Services Department is available to assist any unit with this process. Deans and vice presidents should review violations brought to their attention, and decide whether to authorize payment of the expenditure in question, taking into account the seriousness of the violation and the benefit or detriment to the University.
- Procurement and Contracting Services Department is under no obligation to authorize payment for expenditures not made in compliance with the applicable policies, and financial responsibility for any such payment may become the personal liability of the employee who effected the improper purchase or transaction.
The procedure outlined below is designed and established to provide guidance to UA units, minimize or eliminate procurement policy violations and to preclude repetitive occurrences by the same unit or individual.
A. Negligent, Inadvertent or De Minimus Violations
- On the first violation by an employee in a department or unit, the Chief Procurement Officer, or designee, will notify and caution the individual and expenditure approver of the violation and obtain commitment that corrective action will be taken to preclude future occurrences. The Chief Procurement Officer, or designee, may ratify the purchase after considering the facts.
- On the second violation by the same employee, or Unit, the Chief Procurement Officer, or designee, will, in writing, contact the department head or the next level of authority above the person committing the violation. The memorandum shall inquire as to actions that are being taken or will be taken to preclude future occurrences in the unit. Upon receipt of the response, the Chief Procurement Officer, or designee, after considering the information received, may authorize payment of the expenditure. Failure to respond or failure to respond adequately may result in withdrawal of purchasing privileges from the unit or individual and recommendation for disciplinary action.
- On the third Procurement Policy violation by the same employee in the unit, or by a unit, the Chief Procurement Officer, or designee, will notify the appropriate dean (for academic units) or vice president (for non-academic units), in writing, of the infraction and include all information concerning prior infractions. The Dean or VP shall provide a written explanation of action(s) to be taken to prevent future occurrences and, if circumstances warrant, request that action be taken by Procurement and Contracting Services to authorize payment for the purchase. Failure to respond within a reasonable period of time or inadequately shall result in the matter being forwarded to the appropriate Senior Vice President for disposition
B. Violations of a Serious or Criminal Nature
Regardless of method of purchase, violations that could cause an embarrassment to the department/unit or University or appear to involve criminal activity shall be made known as appropriate, to the Department Head, Dean, Senior VP for Business Affairs and Executive Vice President. Such notification will be made as expeditiously as possible in accordance with the procedures outlined in the Misuse of University Assets Policy .
Questions may be directed to the Purchasing office to determine whether a purchase is appropriate or should be considered personal.
It is the policy of the Purchasing Office, as well as other related personnel of the University, to decline personal gifts or gratuities in connection with the purchasing function. University Purchasing Staff in any of its locations may not accept personal gifts or gratuities from any current or potential suppliers of goods or services to the University.
THE ANTI-KICKBACK ACT of 1986
- Federal Acquisition Regulations (FAR 52.203-7) requires that the University have in place and follow reasonable procedures designed to prevent and detect violations of the Anti-Kickback Act of 1986 in its operations and direct business relationships.
- "Kickback", as defined by the FAR, means any money, fee, commission, credit, gift, gratuity, thing of value, or compensation of any kind which is provided, directly or indirectly, to any prime Contractor, prime Contractor employee, subcontractor, or subcontractor employee for the purpose of improperly obtaining or rewarding favorable treatment in connection with a subcontract relating to a prime contract.
The University has the following policies and procedures in place:
- The University of Arizona Purchasing Policy Manual incorporates the Procurement and Contracting Services (PACS) Code of Ethics; Policy on Gift and Gratuities (this Section 1.3); Policy on Conflict of Interest (Section 1.4); and is a member of the National Association of Educational Procurement (NAEP) and endorses their Code of Ethics.
- Internal and external audits (Office of Naval Research (ONR), CPSR reviews, A110 audits, etc.) provide additional checks and balances.
- The University Purchasing Department also established levels of authority for approving transactions, the purpose of which is to detect any discrepancies or failure to follow required policies and procedures. If an employee becomes aware of any activity of the type described in Paragraph 2 above, they should immediately report any such activity in accordance with procedures established by the President of the University. If the President or the person appointed by the President to receive such reports, is the person alleged to have received the kickback, then the activity should be reported to the Vice President of Business Affairs. These reports shall be examined and, if warranted, investigated. When the University has reasonable grounds to believe that such activity has occurred, it shall be reported as described in FAR 52.203-7.
- Pursuant to FAR 3.502-2, the Anti-Kickback Act of 1986 (41 U.S.C. 51-58)
a) imposes criminal penalties on any person who knowingly and willingly engages in the prohibited conduct stated above and
b) provides for the recovery of civil penalties by the United States from any person who knowingly engages in such prohibited conduct and from any person whose employee, subcontractor, or subcontractor employee provides, accepts, or charges a kickback.
I.WHAT IS THE PURPOSE AND GENERAL THRUST OF THE CONFLICT OF INTEREST STATUTE?
The purpose of conflict of interest statutes is to remove or limit the possibility of personal influence that might bear upon a public employee’s decision in his or her capacity as a public employee. Accordingly, Arizona statute (A.R.S. 38-503 et seq.) requires an employee who has, or whose relative has a substantial interest in any contract, sale, purchase, or service by or to the Board of Regents or the universities, as well as in any decision, to disclose said interest in the official records of the Board. If such an interest exists, the employee shall refrain from participating in the decision, contract, sale, or purchase in any manner.
II.WHO ARE EMPLOYEES AND RELATIVES?
Employees are all persons who are employed by the Board and universities on a full-time, part-time, or contract basis (including student employees). Relatives are defined to include spouse, children, grandchildren, parents, grandparents, brothers, sisters (including half-brothers and half-sisters), brothers and sisters-in-law, parents-in-law, and children-in-law of the employees. If any substantial interest is present in a relative, that interest will be considered to be that of the employee.
III.WHAT IS A SUBSTANTIAL INTEREST?
A substantial interest is any interest, which cannot be defined as a remote interest and which confers a pecuniary or proprietary interest, either direct or indirect. A remote interest means:
- That of a non-salaried officer of a nonprofit corporation.
- That of a landlord or tenant of the contracting party.
- That of an attorney of a contracting party.
- That of a member of a nonprofit cooperative marketing association.
- Ownership of less than three percent (3%) of the shares of a corporation for profit, provided the total annual income from dividends, including dividends payable in stock, received from that corporation does not exceed five percent (5%) of the total annual income of the employee and further providing that any other payments from that corporation do not exceed five (5%) percent of the total annual income of the employee.
- That of an employee in being reimbursed for expenses incurred in performance of official duty.
- That of a recipient of services generally provided by the Board or universities on the same basis as if to any member of the public. (Examples: An employee whose spouse, son, or daughter attends a state university would have a remote interest in the setting of fees and tuition. Non-remote interest—an employee whose relative has a contract with the University, has a substantial interest in the contract and thus cannot participate in any University decision related to that contract).
- That of a public school board member provided the relative involved is not a spouse or a dependent as defined by state income tax laws. (A.R.S. 43-1001).
- That of a public officer or employee of any other public agency unless the action of that agency would confer a direct economic benefit or detriment upon a Board member or employee.
- That of a member of a trade, business, occupation, profession, or class of persons consisting of at least ten members which is no greater than the interest of the other members of that trade, business, occupation, profession or class of person.
IV.WHAT ARE THE AFFIRMATIVE RESPONSIBILITIES OF EMPLOYEES?
Any employee who has or whose relative has a substantial interest shall make known that interest in a special file open to the public and kept by the university and the Board. He or she shall thereafter refrain from voting or participating in any manner in the contract, sale, purchase or decision. The university and the Board will keep the required file. It will be the responsibility of each employee to keep the disclosure current. Disclosure forms may be obtained from and shall be filed with the Office of the Chief Procurement Officer.
V.MAY AN EMPLOYEE WHO HAS OR WHOSE RELATIVE HAS A SUBSTANTIAL INTEREST, SUPPLY EQUIPMENT, MATERIAL, SUPPLIES, OR SERVICES TO THE BOARD AND UNIVERSITIES?
Yes. An employee who has or whose relative has a substantial interest may supply equipment, material, supplies, or services to the Board and the universities, in accordance with the following: 1) the interest is disclosed in the special file or in the minutes of the Board; 2) the contract is with the employee and the contract is awarded as a result of a public sealed competitive solicitation irrespective of the dollar amount; 3) if the contract is with a relative, a public competitive solicitation is not required; and 4) in both instances (2 & 3) the employee must refrain from voting or participating in any manner in the contract, sale, purchase, or decision.
VI.WHAT ARE THE REMEDIES IN EVENT OF VIOLATION?
Any contract entered into in violation of the statute is voidable or subject to cancellation at the option of the Board and the University. Any persons affected by Board or University action may commence a civil suit to enforce the provisions of the statute. The court may order appropriate relief, including reasonable costs and attorney’s fees to the prevailing party.
VII.WHAT ARE THE PENALTIES IN EVENT OF VIOLATION?
Criminal penalties are provided for two classes of violations: 1) Persons who intentionally or knowingly violate the statute may be guilty of a class 6 felony. 2) Persons who recklessly or negligently violate the statute may be guilty of a class 1 misdemeanor. A person found guilty of either shall forfeit his or her employment.
If you have any questions concerning a possible conflict, please contact the Chief Procurement Officer for clarification.