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Administrative Procedure 8.250 Administrative Procedure 8.250

Title

Small Purchase – Goods and Services

Header

Administrative Procedure Chapter 8, Business and Finance
Administrative Procedure (AP) 8.250, Small Purchase - Goods and Services
Effective Date:  July 2019
Prior Dates Amended: October 2013
Review Date:  July 2022

Contents
I. Purpose
II. Definitions
III. General Policy
IV. Small Purchases less than $5,000
V. Small Purchases totaling $5,000 but less than $100,000
VI. Guidelines for all Purchases made with a Purchase Order
VII. Purchase Contracts
VIII. Delegation of Authority
IX. Contact Information
X. References
Attachments

I.  Purpose

Generally speaking, all purchases with public funds should be made through a competitive process to ensure fair and reasonable prices for quality goods and services.  This typically is accomplished through Competitive Sealed Bidding (“Invitation for Bids” or “IFB”) or Competitive Sealed Proposals (“Request for Proposal” or “RFP”). 

The Hawai‘i Public Procurement Code recognizes circumstances where “small purchases” warrant a more expedient, simple and informal procurement method of goods and services.  This procedure sets forth the thresholds for small purchases that do not require public notice or public bid openings that are associated with IFBs and RFPs.  This procedure incorporates the requirements of the laws, rules and regulations of the State of Hawai‘i and Board of Regents policies.
These procedures shall not apply to exempt, sole source, or emergency procurements.

II.  Definitions

The definitions set forth in Administrative Procedure (AP) 8.215 for the procurement of goods, services, and construction for the University of Hawai'i shall apply to this procedure.

III.  General Policy

  1. Small Purchase Threshold.  Any procurement less than $100,000 for goods and services made in accordance with the policies and procedures set forth herein shall be considered a Small Purchase. Any procurement not made in accordance with the policies and procedures set forth herein shall be conducted through Competitive Sealed Bidding (AP 8.235), Competitive Sealed Proposals (AP 8.240) or Professional Services Procurement (AP 8.245).

  2. Construction.  Any procurement of construction as defined in AP 8.215 shall be governed by AP 8.281.

  3. Multiple Purchases.  Multiple purchases shall not be created at the inception of a transaction so as to circumvent the bidding procedures for formally advertised procurements, and procurement requirements shall not be artificially divided or parceled so as to constitute a Small Purchase under this section.

  4. Professional Services. Contracts for “professional services” less than $100,000 may be procured in accordance with these procedures or the procedures provided in AP 8.245, Professional Services Procurement; provided that design professional services furnished by licensees under Chapter 464, HRS, shall only be procured in accordance with the Professional Services procedures in AP 8.281.

  5. Lowest Responsive Quotation.  Any award for small purchases shall be made to the lowest responsive quotation.  Consideration of evaluation criteria other than price can only be made through Competitive Sealed Proposals (AP 8.240).

  6. HCE Compliance.  A certificate of vendor compliance is required under Section 103D-310, HRS for all Small Purchases of $2,500 or more (hereafter “HCE Compliance”). For more information, visit https://vendors.ehawaii.gov/hce/splash/welcome.html.



IV.  Small Purchases less than $5,000

  1. No Minimum Number of Quotations Required.  Although University programs should seek to obtain adequate and reasonable competition through available means, no minimum number of quotations is required for purchases less than $5,000.

  2. HCE Compliance Required.  As stated in section III.F., a certificate of vendor compliance is required under HRS Section 103D-310 for all Small Purchases of $2,500 or more.


V.  Small Purchases totaling $5,000 but less than $100,000

  1. SuperQUOTE required.  Subject to the exceptions set forth in Section V.B. below, all Small Purchases totaling $5,000 but less than $100,000 shall be solicited via SuperQUOTE, the electronic online request for quotations system.  Instructions on the use of SuperQUOTE may be accessed at www.commercepoint.com.

  2. SuperQUOTE not required but optional.

    1. Solicitation of electronic quotations via SuperQUOTE is not required for the following purchases less than $25,000 (hereafter “Exceptions to SuperQUOTE”):

      1. Procurements of professional services;

      2. Purchases of airline tickets and hotel accommodations; or

      3. Purchases where the use of SuperQUOTE is not practicable or advantageous, as approved in advance by the Office of Procurement Management (OPM). OPM Form 148, Request for Exception to Use of SuperQUOTE in Source Selection shall be used for this purpose.

    2. Purchases of those Exceptions to SuperQUOTE totaling $5,000 but less than $15,000 shall be made by obtaining three or more verbal or written quotations. If verbal quotations are solicited, a written quotation should be obtained from the awarded vendor as supporting documentation for the purchase request.

    3. Purchases of those Exceptions to SuperQUOTE totaling $15,000 but less than $25,000 shall be made by obtaining three or more written quotations.

  3. Inability to Solicit or Obtain Minimum Quotations.  When the minimum quotations are not solicited or obtained for reasons such as insufficient sources, written justification shall be placed in the procurement file.

  4. Request for Quotations (RFQ).  The following guidelines for soliciting and evaluating quotations shall apply when utilizing SuperQUOTE or when processing an Exception to SuperQUOTE:

    1. Solicitation of Quotations

      1. When obtaining quotations, a complete description of the commodity should be provided. The description should set forth the minimum essential characteristics of the item required or the specific services the Contractor is required to perform. Unduly restrictive specifications that specify a particular feature of a product that is unique to one manufacturer shall not be used, unless the particular feature is required to meet the program's needs.

      2. Brand name specification followed by the words "or acceptable alternate" may be used, but its use shall be limited as much as possible.  If brand name specifications are used, it is recommended that more than one brand be named.  When using brand name specifications, state the brand name(s) or catalog number(s) and the minimum essential characteristics of the item required or the specific services requested. 

      3. If only one brand is solicited and alternate brands are not acceptable, a sole brand justification must be provided stating reasons why only that brand will satisfy the program's requirements. (See AP 8.255 and OPM Form 144)

      4. Quotations shall include all delivery charges and applicable taxes; recommended language is as follows:  "All prices are f.o.b. (free on board) destination, including all applicable taxes."

      5. All vendors should be treated fairly and equitably.

      6. Sufficient time should be provided for the vendors to prepare a quotation.  The length of time will vary with the particular circumstances and the vendor must not be "pressured" into preparing an insufficient or erroneous quotation.

      7. The RFQ shall specify the date and hour for the desired reply date.  Eliminate indefinite words such as "ASAP" or "reply immediately"

      8. In general, firm delivery dates should not be used.  It is recommended that delivery time be specified as a number of consecutive calendar days after receipt of order. 

      9. Quotations are confidential until the time and date set for receipt of all quotations and after evaluation of the quotations has been completed.  At the time that the purchase order is issued or the purchasing card order is placed, the quotations shall be made available to the public, if requested.

      10. OPM will assist programs having difficulties in obtaining quotations or making award(s) after quotations are received for purchases within their delegated purchasing authority. If OPM determines that the solicitation of quotations was inadequate or otherwise improper for any purchase and that the best interests of the University so require, OPM may direct the resolicitation of quotations for the subject expenditure. Moreover, OPM may direct the award to a vendor other than the one recommended by the program.  Any such action by OPM will be coordinated with the program involved.

    2. Evaluation of Quotations

      Quotations shall be evaluated, and the purchase shall be awarded to the vendor submitting the lowest responsive quotation.  To be considered for award, responsive quotations must meet all the specifications and terms and conditions set forth in the RFQ. Features, capabilities, and terms that are not stated in the RFQ shall not be considered in the evaluation of quotations.  All costs of freight, insurance and taxes shall be included in the RFQ and determined before making an award.  Programs having difficulties in making an award after quotations are received may contact OPM for assistance.

      In the event that the vendor submitting the lowest quotation does not meet the specifications and/or terms and conditions set forth in the RFQ, the low quote shall be rejected and the vendor shall be notified of the reasons for rejection. Justification shall be included in the procurement file regarding reasons for non-selection of the lowest quotation. The remaining quotations shall be considered until award can be made to the vendor submitting the lowest quotation that meets or exceeds all specifications, terms and conditions.

      Evaluate and award promptly. Keep in mind that many quotations have an expiration date.  If the expenditure exceeds the fiscal administrator's purchasing authority, the period of time that the quotation is available for acceptance must be sufficient to allow review by a designated departmental fiscal administrator with greater purchasing authority or by OPM, as applicable.

      1. Firm Price vs. Estimated Price

        Firm prices and estimated prices should be distinguished when evaluating quotations. 
        Purchase orders should not be awarded based on an estimated price.  Firm Price and Estimated Price are distinguished as follows:

        1. Firm Price

          A firm price offer is an offer by a vendor to provide goods or services in a signed, written quotation which shall be valid for a specific time period or, if no such time is stated, for a reasonable time.

          The price agreed to by the vendor and the University when the order is placed will not change until the commodity is delivered and the transaction completed.  Catalog, brochure, advertisement or flyer prices are not firm prices but offers to negotiate.  Therefore, prices obtained from these sources are never to be considered firm.

        2. Estimated Price

          Estimated price is an approximate calculation only and the vendor is not bound by the price provided.

      2. Taxes (Refer to AP 8.220)

        Since Hawai'i permits the vendor to pass excise taxes on to the consumer, requests for quotations should include the phrase "including all applicable taxes."

      3. Delivery and Shipping Charges

        RFQ should state that prices are f.o.b. destination, which is defined as free on board and point where title passes.  It is to the advantage of the University to have the title pass in Hawai'i. The seller assumes the responsibility for risk of transportation including the filing of claims for losses or damages. If title passes before it is shipped to the University, the University assumes this responsibility. If shipping charges are not included in the price, it should be quoted as a separate line item.

      4. Only One Quotation Received

        For purchases of $5,000 or more where vendors are solicited but only one quotation is received, award of a purchase order may be made to the vendor submitting the sole quotation if the price is determined to be fair and reasonable and the basis for the decision is included in the procurement file.  This determination may be based on a comparison of the proposed price with prices found reasonable on previous expenditures for similar items, discounts given to the University from the vendor's normal fee, comparisons with expenditures of similar institutions, comparisons with catalog prices, the buyer's or fiscal administrator's personal knowledge of the item being purchased, or any other means.  OPM Form 95 should be utilized to establish price reasonableness and maintained in the procurement file.

      5. No Quotations Received

        If no quotations are received, it shall be determined whether it is neither practicable nor advantageous to the University to issue another request for quotations. For purposes of this determination, consideration shall be given to whether the preparation of revised specifications for the request could result in quotations being received, as well as the reasons why it would be neither practicable nor advantageous, e.g., time constraints, lack of competition in the marketplace, etc. If this determination is made, an alternative procurement method, e.g., informal solicitation of quotations, direct negotiations, etc., may be used to make the purchase. The foregoing determination may be made by fiscal administrators when acting within their purchasing authority; otherwise, the matter shall be forwarded to the OPM for review and determination. Documentation of the alternative procurement determination shall be made part of the procurement file.

    3. Verbal Quotations

      1. All verbal quotations received may be recorded on the University of Hawai'i "Record of Verbal Quotations" form (OPM Form 31 (see Instructions for Completion of University of Hawai'i Record of Verbal Quotations Form)) or an alternative form deemed acceptable by the purchasing officer and placed in the procurement file in order to demonstrate the propriety of placing the order at the price quoted with the vendor concerned.  In most cases, the procurement file should include the completed "Record of Verbal Quotations" form, or alternative form, a written quotation from the vendor who submitted the lowest verbal quotation, and a copy of the requisition and purchase order awarded. 

      2. Electronic (e-mail/Internet) and facsimile (fax) quotations are acceptable for those purchases that require verbal quotations.

      3. Upon determination of the lowest quoted price, a written quotation should be obtained from the vendor submitting the lowest verbal quotation.

    4. Written Quotations

      Written quotations should be obtained by utilizing the SuperQUOTE system.  For purchases not subject to the use of SuperQUOTE as specified in Section D, the standard University of Hawai'i "Request for Quotation (RFQ)" form (OPM Form 32 (see Instructions for Preparation of Hard Copy University of Hawai'i Request for Quotation Form)) may be used to obtain written quotations from vendors.  All quotations received shall be retained in the procurement file.

      Electronic (e-mail/Internet) and Facsimile (fax) quotations are acceptable for those purchases that require written quotations.


VI.  Guidelines for all Purchases made with a Purchase Order

The following guidelines apply to all purchases made with a Purchase Order

  1. Authority for Issuance of Purchase Orders

    1. Approval of Purchase Request

      Each purchase request must be authorized by a responsible official in charge of the applicable program to certify that the purchase is consistent with the program it is intended to support.

    2. Certification of Funds and Compliance with University Policies and Procedures

      The fiscal administrator responsible for the funds of the applicable program shall certify that sufficient funds are available to pay for the goods or services, and that the purchase is in accordance with applicable University policies and procedures.

    3. Delegated Purchasing Authority

      Fiscal administrators receive their delegated purchasing authority from the Vice President or Chancellor who has fiscal jurisdiction over their respective departmental units. Only individuals who have been granted purchasing authority can issue purchase orders within their delegated limits.
      Individuals who issue purchase orders which exceed their delegated limits may have their purchasing authority revoked, may be held personally responsible for the purchase, and may be subject to disciplinary action.

  2. Requisitions and Purchase Orders Process

    1. General

      The requisition should be used to request the expenditure of funds for goods or services by purchase order. Requisitions shall be submitted through appropriate staff and fiscal administrators for approval and purchasing action.

    2. Action by Program

      1. Prepare the requisition pursuant to instructions in this section for Preparing Electronically Generated Purchasing Documents.

      2. Complete pertinent supporting documents as appropriate and obtain approvals by pertinent approving authorities.

      3. Route requisition package to fiscal administrator for further processing.

    3. Action by Fiscal Administrator

      1. Verify purchase specifications, including but not limited to, vendor name/address, delivery method and deadlines, special order instructions, amounts, account code(s), object code(s), and addresses.

      2. Ensure that description is adequate and precise.

      3. Verify that purchase is in accordance with state and federal laws, rules and regulations and University policy.

      4. Examine and verify request for quotations.

      5. Verify basis for award.

      6. Verify requisite approvals.

      7. Certify fund availability and policy compliance by approving requisition.

      8. Approve requisition to generate purchase order.

      9. Ensure that purchase order terms and conditions are attached.

      10. If requirement is within fiscal administrator's approving authority, sign and issue purchase order. 

      11. If requirement exceeds departmental purchasing authority, the requisition, request for quotations, and supporting documents shall be routed to the OPM for approval and issuance of a purchase order.

  3. Preparing Electronically Generated Purchasing Documents. 

    Refer to Kuali Financial System, User Guides, which are available at the following website: http://www.fmo.hawaii.edu/financial_systems/index.html.
  4.    
  5. Administration of Purchase Orders

    1. Procurement File

      All quotations received shall be recorded and placed in the procurement file.  When a specified number of quotations are required but are not obtained, e.g., sufficient sources are not available, the reason(s) shall be recorded and placed in the procurement file.

      The procurement file should contain the following documents, where applicable:

      1. Requisition;

      2. Quotations - written, and/or a Record of Verbal Quotations or alternative form;

      3. Abstract of prices from each vendor;

      4. Written justification when award is made to other than the vendor submitting the lowest quotation;

      5. Purchase order and/or other contractual document;

      6. Purchase order change form and any modifications to the specifications;

      7. Evidence of purchase completion and date;

      8. Copy of payment document; and

      9. Correspondence

  6. Purchase Order Amendments

    1. General

      1. A purchase order amendment (as referred to in the Kuali Financial System) is written documentation of a change or modification to a purchase order after it has been issued to the vendor.  Purchase order amendments serve as formal notification to the vendor of a change to a previously issued purchase order, and should be used to clarify the order specifications, thereby minimizing potential liability to University departments and personnel relating to the order.  Accordingly, while a purchase order amendment would generally not be required for minor or non-substantial modifications, purchase order amendments should be issued when there are significant modifications to material elements of the order, as determined by the fiscal administrator, which affect price (e.g., quantity, unit price, total dollar amount, etc.), delivery (e.g., delivery date or method, etc.), or terms (e.g., item specifications, payment terms, period of performance, etc.).  In addition, when the modification, even if minor, would result in a purchase which exceeds the limits of a fiscal administrator’s purchasing authority, a purchase order amendment should be issued.

      2. Examples of conditions which would call for the issuance of a purchase order amendment to the vendor include:

        1. Increase or decrease in quantity;

        2. Significant increase in total dollar amount;

        3. Changes to purchase orders issued by OPM;

        4. Changes to purchase orders which result in a purchase which exceeds the limits of a fiscal officer’s purchasing authority;

        5. Changes which would significantly alter the original specifications of the item(s) to be purchased or would significantly modify the terms of the purchase;

        6. Significant changes in delivery dates or method of delivery;

        7. Partial or total cancellation of the order.

      3. Examples of conditions which would not necessitate the issuance of a purchase order amendment to the vendor include:

        1. Vendor-initiated decrease in quantity about which the University is notified in writing by the vendor due to its inability to fulfill the order;

        2. Price increases of a non-substantial amount, as determined by the fiscal administrator, for purchase orders issued under the fiscal officer’s purchasing authority and which would not result in a purchase which exceeds that authority;

        3. Addition of or changes to tax, shipping charges or insurance, in any dollar amount deemed reasonable by the fiscal administrator, on purchase orders issued under the fiscal administrator’s purchasing authority and which would not result in a purchase which exceeds that authority;

        4. Any decrease in dollar amount.

    2. Procedure

      The procedure for issuing a purchase order amendment is as follows:

      1. If the changed order results in a purchase which remains within the limits of a fiscal administrator’s purchasing authority, the purchase order amendment should be issued by the fiscal administrator.

      2. If the changed order results in a purchase which exceeds the limits of a fiscal administrator’s purchasing authority, the fiscal administrator should initiate the purchase order amendment and forward it, together with any required supporting documentation, to a designated departmental fiscal administrator with greater purchasing authority or to the OPM, as applicable, for review and execution.

      3. The purchase order amendment should not be used to change the vendor with whom you are doing business or to add new items to the purchase order.  In these instances, another purchase order should be issued to the new vendor or for the new items.  However, a purchase order amendment form may be used to add taxes, shipping charges or insurance to the purchase order.

      4. Purchase order amendments may also be used as a processing document to record internal University changes, e.g., account/object code changes, addition of new account/object codes, vendor code changes, etc. If the purchase order amendment is being used to record internal University changes only, a copy should not be issued to the vendor. 

    3. Preparation of Purchase Order Amendment

      1. Refer to Kuali Financial System, User Guides, which are available at the following website: http://www.fmo.hawaii.edu/financial_systems/index.html, to prepare electronically generated purchase order amendments.

  7. Status of Purchase Orders

    After purchase orders are awarded, fiscal administrators shall be responsible for maintaining their status to assure that vendors deliver goods and perform services in accordance with the delivery schedule specified in the purchase orders.  To preclude long outstanding purchase orders, fiscal administrators shall maintain a suspense file which will indicate delinquency one day after the due date. On the day following the due date, fiscal administrators shall initiate follow-up by telephone, if feasible, or by letter with a requirement for the vendor to reply by a specified date.  If telephone inquiry is made, fiscal administrators shall document the purchase order file to show the date, name of person contacted, and record of conversation, for future reference. When inquiries reveal excessive delays in making delivery without valid reason(s), consideration shall be given to canceling the order and reordering from another vendor.

    Where a large, complex and important order or an order that has been placed with a vendor of uncertain capability is involved, follow-up shall be made periodically between award and delivery date to detect any probable difficulties in advance.  Complete files shall be maintained on these cases to support the University in any subsequent dispute action.

  8. Receipt and Acceptance of Supplies or Services

    1. Inspection and Acceptance

      The buyer has the right before payment or acceptance to inspect the goods at any reasonable place and time and in any reasonable manner. Expenses of inspection shall be borne by the buyer. The procedure for inspection is as follows:

      1. Check all packages and weights against shipper's manifest.

      2. Observe and record the condition of packing or other evidence of rough or faulty handling, with the carrier's representative present, prior to acceptance.

      3. Check all items to ascertain conformance with the supplier's packing slip.       

      4. Open all packages immediately after delivery and check to determine that goods received are as ordered.

      5. Record overages, shortages, and damaged and incorrect materials.

      6. If necessary, perform testing of the goods.

      7. If goods are damaged:

        1. Do not dispose of shipping containers;

        2. Do not move the goods until the carrier's claim representative has made an inspection.

      8. Notify the carrier immediately (by telephone and follow-up in writing) of any shipment problems.

        Maintain a "log" of all events, stating names, dates and locations. If the goods are conforming, the buyer has an obligation to pay for the goods accepted. However, if the goods are nonconforming, the buyer must immediately notify the vendor that the goods are unacceptable and specify the reason for rejection if the defects are ascertainable by inspection.  Failure to notify the seller immediately of any defect(s) may constitute acceptance and the buyer may have no legal recourse.  In general, the parties to a contract are excused from their performance obligations when performance has been rendered impossible or unreasonably burdensome by circumstance beyond the control of the parties at the time the contract was consummated.  Under these circumstances, the seller must notify the buyer immediately that the seller is unable to fulfill the terms of the contract and state the reason for nonperformance.

    2. Receipt and Certification of Goods, Services, and Construction

      Refer to Kuali Financial System, User Guides, which are available at the following website: http://www.fmo.hawaii.edu/financial_systems/index.html

    3. Receipt of Damaged, Defective, or Discrepant Goods

      After conducting the inspection as outlined in subparagraph 1, Inspection and Acceptance, and defects are noted, the requisitioner shall retain all bills of lading, airway bills, packing slips, damaged containers or goods, and copies of invoices and forward them to the fiscal administrator. The fiscal administrator will contact the vendor for replacement.

    4. Report of Discrepant Shipping or Invoicing

      Mistakes in invoicing or shipping shall be reported to the fiscal administrator, referring to the order number and vendor involved, so that negotiations or corrections can be conducted. Fiscal administrators shall maintain a detailed report of negotiations or attempts at correction.   

  9. Use of Non-Standard Purchase Orders

    1. The following libraries are authorized to issue departmental purchase orders in lieu of standard University purchase orders for research and reference materials including books, maps, periodicals and pamphlets, which are published in print, video, audio, magnetic, or electronic form:

      1. Hamilton Library

      2. Sinclair Library

      3. Law Library

      4. Community Colleges Libraries

      5. UH Hilo Library

      6. UH West Oahu Library

      The libraries shall be exempt from the requirement for certification of fund availability on the purchase order form.

    2. The UH Bookstores are authorized to issue departmental purchase orders in lieu of standard University purchase orders for resale items only. UH Bookstores shall be exempt from the requirement for certification of fund availability on the purchase order form.


    VII.  Purchase Contracts

    Fiscal administrators are authorized to execute purchase contracts (e.g., equipment maintenance and rental agreements, software license agreements, etc.) within their purchasing authority.

    Most terms and conditions in vendor contracts are acceptable to the University and their forms can be used to effect a contract.  However, fiscal administrators shall not execute contracts with clauses requiring the University to indemnify, defend, or hold harmless contractors and/or third parties, to submit to arbitration, or to pay attorney's fees and costs of contractors or third parties. Fiscal administrators shall review the terms and conditions of vendor contracts pertaining to indemnification, liability, damages, attorney's fees, arbitration, and other questionable areas. Questions on contract provisions pertaining to the aforementioned areas may be referred to the Office of the Vice President for Legal Affairs and University General Counsel.  Questions pertaining to insurance should be referred to the Office of Risk Management for review. 

    VIII.  Delegation of Authority

    In accordance with Executive Policy (EP) 8.105, the Vice President for Administration and his/her designees are delegated authority to carry out the responsibilities relating to the procurement of goods, services, and construction for the University of Hawai'i, consistent with applicable law and Board of Regents policies, and to execute contractual documents relating to such procurement actions.

    In accordance with EP 8.107, Vice Presidents and Chancellors and their designees are delegated authority to execute contractual documents for procuring goods, services, and construction in amounts less than $25,000.  Such authority may be delegated to fiscal administrators of departmental units under their direction and jurisdiction.

    IX.  Contact Information

    Office of Procurement Management, Tel. No. (808) 956-8687

    X.  References

    Administrative Procedures Archive: http://www.hawaii.edu/policy/archives/apm/

    Approved

    Signed
    Jan Gouveia
    July 01, 2019
    Date
    VP for Admin

    Topics

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