Financial Affairs

PURCHASING PROCESSES

Purchasing at DePaul University is partially decentralized, where departments are free to select vendors and make most purchasing decisions within the guidelines set by Procurement Services.

Procurement's role is to assist departments find the best possible vendor, product or service that is best able to meet their needs. This is done through the purchasing process which includes the following areas:

Determining Purchasing Authority
In general, budget managers are authorized to spend up to $2,500 through either the university procard or other processes.

Purchases over $2,500 require a requisition and approval from Procurement Services prior to the order being placed.  Additional approvals may be required, depending on the type of purchase and/or dollar amount:

Type of Purchase Required Approval
Approval occurs via requisition routing
Fund 5xx Office of Sponsored Programs & Research
Greater than $25,000 Director of Procurement Services
Greater than $75,000 Office of the Treasurer
Greater than $5,000 and
fund 700		 Financial Accounting
Category MS201 Student Centers
Technology purchases

 Information Services
Office of the EVP and/or Provost
Departments responsible for review and/or approval
Greater than $50,000 and/or “special risk” purchase

 Office of the General Counsel

Leases (non-PC)

 Financial Accounting
Office of the Treasurer
Trademark orders

 Athletic Department

Choosing a Vendor
Departments should take care when choosing a vendor to ensure that they are selecting one who is able to provide the best possible product or service for the university. There are several methods available for selecting a vendor:

Preferred Vendors
Procurement Services maintains a list of preferred vendors who have negotiated contracts with the university and generally provide lower costs, higher quality or other benefits over competitors.

Minority and Women Owned Vendors
Procurement also maintains a listing of minority and women owned businesses that have been used by the university in the past. Instructions on how to find these companies can be found here (pdf).

Other and New Vendors
For items that are not sold by a preferred vendor, departments may select their own vendor. When doing so, departments should evaluate the quality, cost, delivery methods and services provided.

All new vendors must be authorized by Procurement Services or Accounts Payable prior to use. New vendors are required to fill out paperwork that is required by the IRS and other tax entities to determine their payment eligibility (eg vendor, consultant, employee, etc.)

Cost and Value Analysis
To ensure the best products are services are obtained, some form of cost or process analysis should be made in purchasing decisions. 

Price analysis can be accomplished in various ways including the comparison of quotes, market prices or discounts.  Costs should be analyzed by reviewing and evaluating each element (eg product, shipping, warranty, etc) for reasonableness, appropriateness and acceptability.

Making Purchases under $2,500
University departments are generally able to spend up to $2,500 without the involvement of Procurement Services. Most of these purchases can be placed on the ProCard. This method allows individuals to make purchasing and payment decisions quickly and efficiently.

Please note that several restrictions exist when using the ProCard:

If the vendor does not accept credit cards, the invoice or a voucher check form can be used for payment. See the Voucher Checks page from Accounts Payable for more information.

Making Purchases over $2,500
For purchases over $2,500, the university requires that a requisition be opened and a purchase order generated by Procurement Services prior to the order being placed. See the next section for details on the requisition process.

Some services can be paid without the need for a purchase order and can be submitted directly to Accounts Payable for processing. These include:

  • Chartwells
  • Dues
  • FedEx
  • Honorariums and stipends
  • Insurance
  • Legal services
  • Library services (non-technology)
  • Medical benefits, pension and payroll taxes
  • Petty cash
  • Reimbursements
  • Rent and lease payments
  • Staples orders
  • Subscriptions
  • Tuition payments
  • Utilities (water, gas, electric, phone)
  • Wire transfers

Requisitions and Purchase Orders
A requisition is a request made via the eProcurement system giving Procurement Services authorization to order the goods or services specified and to encumber the departmental budget.

Once a requisition has been received, it will be reviewed by a buyer in Procurement Services, who will look for appropriate business need/price, vendor selection, compliance with existing policies, bid processes, fiscal year accounting and any potential conflict of interest. Additional approvals may also take place, per the chart in the Purchasing Authority section above.

As a part of the process, all requisitions must pass budget checking. Budget checking will ensure the budget has enough funds available to cover the requested purchase. For example:

Original budget  
$ 30,000
Previously expensed funds  
18,000
Pre-encumbered funds  
   3,000
Encumbered funds  
2,000
Available funds  
   7,000
 
Requisition request of $3,000: Budget Checking - Pass
Requisition request of $10,000: Budget Checking - Fail

The opening of a requisition results in a pre-encumbrance or temporary commitment of funds that is reflected on the department's financial statements. The pre-encumbrance is liquidated after the requisition is cancelled or transformed into a purchase order.

The approval of a requisition to a purchase order results in an encumbrance of the ordering department's budget and it is reflected on the financial statements. The encumbrance replaces the pre-encumbrance that resulted from the corresponding requisition. The encumbrance is liquidated after the purchase order is cancelled or when the invoice has been paid.

If funds are available but the requisition fails budget check, there are two possible reasons:

  1. An invalid chart field may have been used to allocate the line items. To resolve this, verify the validity of the chart field and modify it if necessary.
  2. There may be insufficient funds available. To resolve this, choose another chart field, or review the financial statements to monitor all outstanding pre-encumbrances and encumbrances. Contact Procurement Services if these items need to be removed from the budget.

Once approved by all levels, the requisition is converted into a purchase order, which Procurement will transmit to the vendor initiating an order.

For more information on training programs or requisitions and purchase orders, see the Guides & Resources page

Competitive Bidding
For any purchases of goods or services over $25,000, a competitive bid must be conducted and the basis for the vendor selection documented.  The $25,000 amount encompasses all costs that may occur during the term of the contract (e.g. not a smaller subset of the contract).

A competitive bid can be obtained through one of the following methods:

Obtaining Quotes
Quotes are generally obtained when purchasing a product or service that is fairly straightforward (eg furniture orders, common consulting requests, etc).  The department may call prospective vendors and ask for a quote or review material in catalogs or online. 

In general, at least three quotes should be obtained to ensure that best pricing/service is received.

Conducting an RFP Process
An RFP is generally conducted for large, complex purchases (eg selecting a vendor to handle the university’s banking services, complex consulting relationship or purchases that impact multiple areas of the university).

A typical RFP process includes:

Procurement Services provides general RFP and RFQ templates online and is available to assist in these processes or in any case where purchasing assistance is needed.

Exceptions
Purchases made from preferred vendors are exempt from the competitive bid process. 

Additionally, exceptions may be approved by Procurement Services prior to purchase, in the following situations:

Purchases that fall under a master service agreement are also exempt from this process, so long as the master service agreement is bid at the expiration of its term.  A copy of the master service agreement should be on file with Procurement Services.

For additional information, see the RFP Template, RFQ Template and Negotiation Tips on the Resources and Guides page.

Leasing
On occasion, departments will find themselves in a position to consider leasing property (e.g. equipment, furniture, computers, etc.) as an alternative to an outright purchase.  Procurement Services offers a standard leasing program for computers.  All other lease transactions must be evaluated by Financial Affairs before they are finalized.

PC Leasing
The PC Leasing program allows departments to lease computer equipment (e.g. desktops, laptops, monitors) for business use.  The lease agreement generally lasts for three years.

Lease orders cannot be revoked or modified once the order is submitted.  Procurement Services will charge the appropriate budget accounts for lease payments at the beginning of the lease.  At the end of the lease, it will be terminated and the equipment returned to the leasing company.  Leases cannot be terminated prior to that date.

Departments are responsible for any costs associated with lost or stolen machines as well as damages beyond normal wear and tear.  

In certain circumstances, other technology equipment (e.g. printers, scanners) may be leased under this program.  Contact Procurement Services to discuss these options.

See the Technology Buying Guide on the Guides & Resources page for additional information.

Other Leasing
Leases for other types of equipment must be reviewed by Financial Affairs, regardless of dollar amount, before they can be finalized.  These reviews are designed to protect the department initiating the lease as well as the University and include a review of financing options, legal considerations, tax issues and proper accounting.

Upon completion of the Financial Affairs review, leases and other contracts should be forwarded to the Office of the General Counsel by the initiating department in accordance with the Contract Requirements and Procedures policy.

Once all reviews have been completed and the contract has been finalized, the lessor should return a signed copy of the lease agreement to the Controller's Office.

Specific Considerations
Some purchases have additional guidelines to keep in mind, which include: