INTRODUCTION

Rose-Hulman Institute of Technology operates a system of decentralized purchasing in which each department/unit is authorized to purchase goods and services on behalf of the Institution. Purchasing policies and procedures have been established to ensure sound, consistent, purchasing practices for cost-effective buying while adhering to external funding source requirements for bidding, documentation and reporting. The purpose of this guide is to assist the Rose-Hulman Community in understanding the purchasing policies and procedures employed by the Institute when acquiring supplies, equipment, and contractual services necessary for the operation of the Institute.

These policies and procedures are designed to meet three objectives:

To provide efficient and effective purchasing services to the Institute.

To meet the fiduciary and policy requirements of the Institute and the Board of Trustees.

To ensure compliance with applicable Federal and State regulations.

II. POLICY

A summary of the Institute’s purchasing policy is outlined in the chart below:

Purchase Dollar Scope	Documentation Requirements	Section Reference	Exceptions	Section Reference
< $ 2,500	No Purchase Order Required Use Invoice Transmittal/Check Request or Purchasing Card	III. A	Petty Cash - $35 or less Hazardous Materials, Controlled Substances, & Animal Research Materials	IV. A IV. E

$ 2,500 – $ 4,999	Purchase Order Required	III. B	Exempt Goods & Services	III. A

$ 5,000 – $ 100,000	Purchase Order Vendor Selection Form	III. B II. C	Exempt Goods & Services Group Purchasing Vendors	III. A II. K

$ 100,000 or more	Purchase Order Vendor Selection Form Request for Bid Form 2 Written Bids or Quotes	III. B II. C II. F II. F	Exempt Goods & Services (unless purchased on government grant) Group Purchasing Vendors	III. A II. K

Rose-Hulman Institute of Technology adheres to the following principles and practices when acquiring goods and services:

A. Competitive Fairness –

RHIT requires fair, unbiased vendor relationships. This includes, whenever feasible, positive efforts to ensure that small businesses, minority-owned firms, and women-owned business enterprises are used to the fullest extent practicable.

B. Absence of Personal Interest/Conflict of Interest –

RHIT expects that no employee, officer, or agent participate in the selection, award or administration of a contract if a real or apparent conflict of interest (financial or otherwise) is involved. The RHIT Conflict of Interest Policy and Procedures can be read in their entirety at: http://www.rose-hulman.edu/research/Policies/RHIT_COI_Policy_final.doc

C. Vendor Selection & Cost/Price Analysis –

Some form of cost analysis will be made in connection with each procurement action. Part of this analysis includes selecting the appropriate vendor considering price and quality and ensuring RHIT avoids purchasing unnecessary items. While this analysis is required each time purchases are made on behalf of the Institute, formal documentation of the analysis must be forwarded to Administrative Services when individual items of $5,000 or more are purchased from a single vendor. The formal documentation consists of a completed Vendor Selection Form. This form must accompany the Purchase Order to Administrative Services in order for the Purchase Order to be completed.

D. Allowability, Allocability and Reasonableness Assessment –

Each element of cost must be reasonable, allowable, and allocable to the account being charged. To determine the appropriateness of costs for sponsored projects contact the Director of Sponsored Programs - ext. 8454. For expenditures utilizing other funds, address questions to the Controller - ext. 8421.

E. Lease Purchase Analysis –

There are circumstances in which a lease or lease purchase agreement for the procurement of goods (primarily equipment) for the Institute may be the most cost effective option. Administrative Services coordinates and negotiates all lease arrangements with vendors. Contact Administrative Services prior to beginning discussions with the vendor for leasing equipment.

Only the President of Rose-Hulman and Vice President/Chief Administrative Officer, are authorized to sign capital or operating leases or any other debt instruments. No capital or operating lease may be entered into or will be binding on the Institute unless provisions of this policy and procedure are satisfied.

F. Competitive Bids –

The Institute follows a general policy of obtaining a minimum of two written competitive bids or quotations for purchases of $ 100,000 or more. If service and quality are considered equal, the lowest reputable bidder meeting the specifications will be awarded the contract. Rose-Hulman reserves the right to award the contract to other than the lowest bidder, to waive any and all formalities not required by law, and to reject any and all bids if this action serves the best interests of the Institute.

1. Exceptions

a) The competitive bid requirement is waived when departments utilize negotiated contract pricing available through the Horizon Resource Group (HRG) or the Educational & Institutional Cooperative group purchasing consortium(s). Each organization maintains a web site which provides a list of currently contracted vendors for goods and services (see section

II. K. for URLs).

b) The competitive bid requirement is waived for purchases of “exempt goods and services” which includes memberships, service agreements, insurance, travel, subscriptions, licenses, mail services, utilities, registration fees, and advertisements. However, the Vendor Selection Form must still be completed, providing justification for selection of the vendor.

c) All procurement of professional services for insurance, legal and audit fees for the Institute will be coordinated by the Vice-President and Chief Administrative Officer. These services may be bid periodically, depending upon facts and circumstances. Such bid process will be coordinated with the Rose-Hulman Board of Trustees Audit Committee.

d) All other procurement of professional services are subject to the same

$ 100,000 threshold for bid purposes.

2. Bid Request Preparation - RHIT has developed a “Request for Bid Form” to assist purchasers in preparing an appropriate request for bid or quote.

a) For goods and services not related to Capital Projects (see section II.I. for definition), completed Request for Bid forms and forward to Administrative Services along with the Purchase Order and the Vendor Selection Form.

b) For capital projects, construction, maintenance, alterations, furnishings, improving or repairing buildings or property, the Vice President of Facilities prepares bid solicitations.

G. Contractual/Legal Agreements –

Only the President of Rose-Hulman and the VP & Chief Administrative Officer, or their designees, are authorized to sign contractual/legal agreements. Agreements should be forwarded to the following offices for initial review:

1. Director, Sponsored Programs - Research agreements, subcontracts (sub-recipient agreements) and other contracts for goods and services entered into on behalf of the Institute utilizing grant or contract funds or agreements involving faculty or student project work

2. Associate VP for Business Affairs - All Institute Intellectual Property and all Rose-Hulman Ventures contractual agreements

3. Director, Administrative Services - All other contractual agreements

Upon completion of these reviews, final documents are forwarded to the President and/or VP & CAO as appropriate for final review and execution.

H. Equipment, Furniture & Vehicles –

Institute equipment, vehicles and furniture acquisitions with a cost of $5,000 or more are capitalized as fixed assets. All equipment with a purchase price of $2,500 or more will be tracked in the Institute’s fixed asset system for subsequent verification by departments. Expenditures for general equipment are unallowable as direct charges to grants and contracts except when approved in advance by the sponsoring agency.

I. Capital Projects –

Projects with a cost of $25,000 or more to construct, maintain, alter, furnish, or improve buildings or property are termed “capital projects”. All capital projects must be reviewed and approved by the Vice President of Facilities prior to committing Institute funds. Capital projects are also subject to competitive bidding requirements outlined in Section II.F of this document. Capital expenditures for buildings or land are unallowable as direct charges to grants and contracts except when approved in advance by the sponsoring agency.

J. Purchasing Card Program –

The Institute administers a limited purchasing card program for specific departments. The primary purpose of this program is to provide a more secure and efficient purchasing mechanism for those departments that are required to make a significant number of small purchases from a wide variety of vendors to support their ongoing operations.

1. All purchasing card program expenditures will be made in accordance with the Institute’s Purchasing Guide principles and practices outlined in this document.

2. Requests for an Institute purchasing card should be made to the Director of Administrative Services. Approval is required from both the employee’s supervisor and the Director of Administrative Services

3. Institute purchasing cards are to be used only for Institute materials, supplies and expenses. Under no circumstances should purchasing cards be used for travel and entertainment expenses.

K. Group Purchasing Consortiums –

Rose-Hulman is a participant in two group purchasing consortiums, E&I Cooperative Service, Inc. and Horizon Resource Group (HRG). These groups have contracted with various vendors to extend favorable pricing to the Institute. Each of these organizations maintains a web site which provides a list of currently contracted vendors by goods/services category. Departments are encouraged to utilize these vendors when making purchases on behalf of the Institute. Items purchased through these consortiums are subject to Institute purchasing policy and procedures outlined in this document.

For a complete let of suppliers and categories, click here, or see below:

L. Product and Service Standards –

Purchases for the following goods and services should be coordinated by the departments listed below to maintain standard product or services. Purchasers must contact the appropriate department prior to ordering these goods and services.

GOODS & SERVICES DEPARTMENT - CONTACT

Computers & Networking IAIT – Dr. Louis Turcotte

Electronic & Peripherals IAIT – Dr. Louis Turcotte

Furnishings Facilities – Wayne Spary

M. Internet Auction Sites –

Purchasing from internet bidding sites may include the following risks:

1. Adequate invoicing documentation may not be provided to substantiate the purchase.

2. Uncertainty as to the seller’s legal title to the property being purchased.

3. Time commitment to process “auction-type” purchases exceeds the possible cost-saving benefits.

4. Warranty, working condition of the equipment and guarantee of shipment may not be assured.

Therefore, purchases from internet sites that conduct bidding auctions for products or services on behalf of individuals or other third parties is NOT permitted.

III. STANDARD PURCHASING PROCEDURES – OUTLINE

The following procedures have been established to ensure compliance with the General Institute Purchasing Policy as described in section II of this guide. The practices and guidelines outlined in the policy are to be followed each time goods and are services are acquired on behalf of the Institute.

A. Purchases less than $2,500 or of Exempt Goods and Services – Do NOT require a Purchase Order.

The Institute does not require a purchase order for purchases less than $2,500 when the total purchase (excluding freight) from a single vendor or for “exempt goods and services”. The following are examples of “exempt goods and services”: memberships, professional consultants, fees, service agreements, insurance, travel subscriptions, licenses, mail services, utilities, registration fees, and advertisements. For these purchases, an Invoice Transmittal/Check Request Form or the Institute purchasing card may be used. If the vendor requires a Purchase Order, follow the guidelines under section III.B.

1. Invoice Transmittal/Check Request Form

a) Requesting Department Responsibilities

(1) It is the responsibility of each budget manager to ensure that the Invoice Transmittal/Check Request Form is properly used, is for legitimate Institute transactions, and is charged to the appropriate FOAPAL based upon the type of expenditure.

(2) Budget managers must approve Invoice Transmittal/Check Request Form charged to their specific FOAPAL account numbers.

b) Actual Steps and Routing of Documents

(1) Place order with a vendor. These types of purchases are generally made in person, by telephone, or via the web. All receipts, electronic confirmations, or confirmation codes should be retained for later reconciliation to the invoice.

(2) Upon receipt of the goods and subsequently the invoice, the requesting department will:

(a) Reconcile the vendor packing slip quantity and description with the original order to verify correct items and quantities received and that items are in good working order.

(b) Reconcile the invoice amount with the original order to ensure the invoice reflects the correct price.

(3) Prepare an Invoice Transmittal/Check Request Formfor each vendor. Provide the invoice number, date, description, and appropriate accounting information (FOAPAL) on the document and attach the invoice(s). Obtain the appropriate budget manager’s signature and forward to the accounts payable office (RHIT CM #23).

B. Purchases of $2,500 or more, and Purchases of Hazardous Materials, Controlled Substances, Animal Research Materials – Require a Purchase Order

Purchases of non-exempt goods and services of $2,500 or more from a single vendor require a Purchase Order. Regardless of the dollar amount when purchasing hazardous materials, controlled substances and animal research materials, a purchase order is required. (see section IV. E).

1. Requesting Department Responsibilities

a) Budget managers or their approved designees are authorized to initiate Purchase Orders.

b) It is the responsibility of each budget manager/designee to ensure that the Purchase Order is properly used, is for legitimate Institute transactions, and is charged to the appropriate FOAPAL based upon the type of expenditure.

c) Budget managers/designees are required to approve the invoice associated with the Purchase Order.

d) Purchase Orders are required to be completed at the time the order is placed with the vendor. Preparing the Purchase Order after receipt of the vendor invoice could delay payment to the vendor and create inaccurate reporting of the department’s budget balances.

2. Actual Steps and Routing of Documents

a) Rose-Hulman uses a web-based Purchase Order process. An authorized purchaser enters a vendor, shipping instructions, a description of the material, current prices, and quantities on the web-based form. For step-by-step instructions to this procedure see web based PO instructions.

b) Upon completion of the purchase order, the purchaser’s Adobe Acrobat reader is populated with a copy of the order. The purchaser may either print a hard copy of the order or archive the electronic copy (recommended). Upon completion of this step, the Purchase Order is transmitted directly to the Banner administrative computing system.

c) The Purchase Order is recorded as an “encumbrance” against the budget (FOAPAL) entered on the Purchase Order and deducted from the available balance. This process will occur regardless of whether or not a budget is available for this specific line item.

d) Upon receipt of the goods and subsequently an invoice, the requesting department will:

(1) Reconcile the vendor packing slip quantity and description with the Purchase Order to verify correct items and quantities were received and that items are in good working order.

(2) Reconcile the invoice amount with the Purchase Order to ensure the invoice reflects the correct price.

(3) Attach a copy of the Purchase Order behind the invoice, noting material discrepancies (+/- 20% of purchase price) between the invoice and the purchase order.

(4) Stamp the face of the invoice as “APPROVED FOR PAYMENT” and complete the following:

· P.O. #

· Adjustment Code

· Description (optional)

· Signature of the Budget Manager

· Date

(5) Forward the invoice with Purchase Order attached to Accounts Payable for processing (CM #23). NOTE: in order for invoices to be processed for payment, the Purchase Order must be entered and completed in the system. Entering this information after the fact will delay payment of the invoice.

C. Purchase of Office Supplies - Online

The Institution purchases office supplies online through an approved office supply vendor. Departments may submit office supply requisitions directly to the supplier via phone, fax, web or mail. Orders for amounts $2,500 or more must be placed using a Purchase Order.

1. Departments are encouraged to use the authorized vendor’s on-line order system when purchasing office supplies. The current contracted supplier is:

a) Corporate Express located at www.eway.com

D. General Encumbrances

In certain instances where frequent purchases are required and there are a large number of items being ordered (e.g. 250 line items - chemicals, books, maintenance supplies, etc) from a single vendor, the department may request a general encumbrance be used in lieu of a RHIT Purchase Order. An encumbrance number will be created and given to the department to use for the initial order and supplemental orders until the encumbrance balance has been depleted.

Generally, a specified dollar amount must be established at the time the general encumbrance is created and must be depleted before the end of the current fiscal year. General encumbrances can only be charged to a single FOAPAL which can not be changed during its use. Also, general encumbrances can not be used for individual equipment items of $2,500 or more.

1. Actual Steps and Routing of Documents

a) Send a request for a general encumbrance with the following information to the Director of Administrative Services

· Vendor name and Banner ID # (if known)

· FOAPAL

· Dollar amount of encumbrance

· Reason the encumbrance is being requested

b) Upon receipt of the invoice, the requesting department will reconcile the vendor packing slip quantity and description with the original order to verify that the correct items and quantities are received and are in good working order. The invoice amount is reconciled with the order to ensure the invoice reflects the correct pricing.

c) An Invoice Transmittal/Check Request Formis prepared for each vendor. Include the General Encumbrance Number on the Invoice Transmittal/Check Request Form above the “Accounting Information” block and highlight in yellow. The invoice number, date, description, and appropriate accounting information (FOAPAL) are noted on the form and the invoice(s) attached. After signature, forward the form with attachments to the Accounts Payable office (RHIT CM #23).

E. Purchasing Records

Purchase Orders and related documentation are maintained centrally by Accounts Payable. Vendor Selection Forms and competitive bid documentation related to Purchase Orders are maintained in the purchasing files in the Office of Administrative Services.

F. Audits/Review

Periodic review of purchasing documents and records will be performed by Administrative Services, the Sponsored Programs Office, governmental agencies, and Institute external auditors to ensure compliance with Institutional and federal procurement policies and procedures.

IV. SPECIAL PURCHASES/CIRCUMSTANCES

A. Petty Cash Reimbursements $35 or less

When purchases are made on behalf of the Institute for $ 35 or less, employees may be reimbursed via petty cash. Each request for reimbursement must include an original receipt, a description of the expenditure/business purpose, and a proper FOAPAL (account number). Institute Petty cash funds are maintained in the Business Office.

B. Prepayments Required by a Vendor

There are special circumstances when a vendor may require prepayment before processing an order. In these circumstances, departments must complete an Invoice Transmittal/Check Request Form for the prepayment amount and submit it along with a copy of the Purchase Order to Accounts Payable. For questions regarding the following process, contact Administrative Services (x8205) or the Business Office (x8421).

1. Actual Steps and Routing of Documents

a) A RHIT Purchase Order is prepared for the full acquisition cost. The buyer enters the required purchase information into the web-based form, including vendor, shipping instructions, a description of the material, current prices, and quantities. For step-by-step instructions to this procedure see web based PO section .

b) An Invoice Transmittal/Check Request Form is prepared for the amount of the prepayment noting the RHIT Purchase Order number on the form above the “Accounting Information” block and highlighted in yellow. Enter the same Fund and Organization number as used on the Purchase Order, but use account code “1830”. This account code designates this as a prepayment transaction.

If multiple progress payments are required, repeat the above steps, indicating each prepayment request number, i.e. #1, #2, etc in the description field on the Invoice Transmittal/Check Request Form, and include a copy of the Purchase Order for each transaction.

c) Accounts Payable will prepare the check and mail to the vendor.

d) Upon receipt of the goods and subsequently a “FINAL” invoice, the requesting department will:

(1) Reconcile the vendor packing slip quantity and description with the Purchase Order to verify correct items and quantities were received and that items are in good working order.

(2) Reconcile the invoice amount with the Purchase Order to ensure the invoice reflects the correct price.

(3) Attach a copy of the Purchase Order behind the invoice, noting material discrepancies (+/- 20% of purchase price) between the invoice and the purchase order.

(4) Stamp the face of the invoice as “APPROVED FOR PAYMENT” and complete the following:

P.O. #

Adjustment Code

Description

Signature of the Budget Manager

Date

(5) Forward the invoice with Purchase Order attached to the Accounts Payable office for processing (CM #23) and include copies of all previous Invoice Transmittal/Check Request Forms submitted for prepayment.

C. Change Orders/Cancellations

When it becomes necessary to change or cancel a completed Purchase Order, issuing departments may make the appropriate modifications by following the procedure below:

1. Purchase Order Change

a) A change to an outstanding Purchase Order concerning quantity, price, or specifications should be made electronically by the issuing department via the web form. See Sample Forms and Instructions, section V and VI.

b) An official notice (facsimile or written) should be given to the vendor by the issuing department.

2. Purchase Order Cancellation

a) The issuing department must notify the vendor of the Purchase Order cancellation (facsimile, or written).

b) The issuing department must notify Administrative Services of the cancellation to remove the encumbrance from the department’s budget.

c) Any cancellation charges incurred by the Institute, such as freight cost, re-stocking charges, or special/custom production costs will be charged to the issuing department.

D. Equipment, Furniture, Vehicles and Capital Projects

1. Equipment, Furniture & Vehicles - All property acquisitions should be coded to the appropriate Account Code as shown in the chart below: An Institute pre-numbered property tag will be issued when required.

When preparing a Purchase Order, please remember that $2,500 or $5,000 means “UNIT” price, not “TOTAL” price AND the quantity entered equals the number of property tags created.

Category/ Type	Dollar Threshold	Tagged (Y)/(N)	Account Code
Equipment	Less than $ 2,500	N	7845
	$ 2,500 - $ 4,999	Y	7840
	$ 5,000 or more	Y	7940

Furniture	Less than $ 5,000	N	7825
	$ 5,000 or more	Y	7925

Vehicles	All licensed vehicles	Y	7945

2. Capital Projects & Other Assets - Capital Projects for acquisition of land, land improvements, buildings, building improvements, art, library periodicals, books, and gifts-in-kind should be coded to the appropriate Account Code as shown in the chart below. Each capital project must also be assigned an Activity Code by the Business Office for tracking purposes. Please contact the Controller (x 8421) to obtain the applicable Activity Code.

Category/ Type	Dollar Threshold	Tagged (Y)/(N)	Account Code
Land	All amounts	Y	7910
Land Improvements	Less than $ 25,000	N	6442
	Less than $ 25,000	N	6443
	Less than $ 25,000	N	6448
	Less than $ 25,000	N	6449
	More than $ 25,000	N	7918

Buildings	All amounts	Y	7915
Building Improvements	Less than $ 25,000	N	6420
	Less than $ 25,000	N	6425
	Less than $ 25,000	N	6449
	More than $ 25,000	N	7919

Art	All amounts	N	7921

Periodicals	All amounts	N	7920

Gifts-in-kind	All amounts	N	7950

3. Tagging - Equipment will be tagged, according to the dollar thresholds identified in section D.1. above, by the Office of Administrative Services. At the time of tagging the equipment, Administrative Services will ask the department to complete the following information on the “Fixed Asset Notification Form”:

Tag number
Purchase order number
Asset description
Insurance value
Make
Model
Manufacturer
Serial number
Title to property (federal, state, institute)
Location of property
Grant Information

4. Dispositions - All tagged Institute property requested to be sold or traded must be coordinated with the Manager, Procurement and Contract Services in Administrative Services, prior to disposal. A Fixed Asset Notification Form must be completed for each tagged item being sold or traded. Please complete the following information on the form:

RHIT Tag #
Asset Description
Method of Disposal

Administrative Services will review the list to determine if any Federal, State, or other grant property is included and confer with the appropriate RHIT personnel to determine the proper disposal alternative.

All asset disposal proceeds must be forwarded to the Office of Administrative Services along with the attached Fixed Asset Notification Form for each item sold.

All lost, stolen, destroyed, or discarded property must be reported immediately to the Manager, Procurement and Contract Services in Administrative Services on the Fixed Asset Notification Form.

5. Inventory - A bi-annual inventory list will be supplied to each department to be used in updating the location, property’s physical condition, ownership, and property’s custodian. Each department will be required to return the updated inventory report to the Office of Administrative Services within 90 days.

6. Transfers of Property - Notification of property transfers between departments or changes in location of the property may be sent to the Office of Administrative Services at any time during the year.

E. Hazardous Materials, Controlled Substances and Animal Research Materials

All purchases of hazardous materials, controlled substances and animal research materials (e.g.. animals, narcotics, medicines, etc.) which could pose potential health problems to the Campus must be submitted to and approved by the appropriate Department Head and the Manager of Environmental Health & Safety. The buyer is responsible for obtaining a material safety data sheet (MSDS) and forwarding a copy directly to the Manager of Environmental Health & Safety prior to ordering a hazardous substance. All purchases of this type of items, REGARDLESS OF DOLLAR VALUE, must be made via the RHIT web based Purchase Order system. A copy of the Purchase Order must be forwarded to the Manager of Environmental Health & Safety and must include the expected delivery date in order to schedule appropriate handling. A copy of the Rose-Hulman Institute of Technology Hazard Communication Program, which more fully explains the requirements for hazardous substance inventory and care, is available on the Rose-Hulman EHS Website.

V. Sample Forms

Conflict of Interest Disclosure Form

Fixed Asset Notification Form

Invoice Transmittal/Check Request Form

Request for Bid Form

VI. Instructions

How to Create a Web-based Purchase Order

How to Complete an Incomplete Web-based Purchase Order

How to Change a Web-based Purchase Order

How to Delete a Web-based Purchase Order

How to Submit an Invoice for Payment

How to Identify the Originator of a Purchase Order