PROCUREMENT AND
DISTRIBUTION SERVICES

• Preface
• General Purchasing Policy
• Bids & Quotations
• Blanket Purchase Order
• Capital Equipment
• Computer Hardware/Software - Approval of Orders
• Conflict of Interest (see Human Resources)
• Contract Review Procedures
• Controlled Substances
• Emergency Orders - Outside Vendor Orders
• Expediting
• Gifts and Gratuities - University Guidelines for Accepting
• Heavy Equipment Moving
• International Orders
• Leases and Rentals
• Maintenance Contracts
• Packages - Outbound for Mailing Purposes Only
• Personal Purchases
• Price Reasonableness
• Pricing Agreements
• Purchase Order
• Purchase Requisition - General Information
• Radioactive Material Ordering Procedure
• Repairs - Shipment Back to a Vendor for Repairs
• Return for Credit or Exchange
• Small, Disadvantaged, and Women-Owned Business Enterprises
• Taxes and Exemptions
• Vendor Relations - Standards of Conduct
• Warranties

Preface

The Purchasing Policies & Procedures Manual is a practical advisor to Case Western Reserve University's Purchasing Department. It is designed to acquaint you with our services and the procedures to follow to most effectively use these services. The text deals primarily with the "how-to" aspects of the various functions outlined in the following pages and will try to answer those questions which users may have about the various areas of service.

The Purchasing Department's primary function is to assist and support the university in attaining its overall goals of education and research while maintaining prudent purchasing guidelines. As a member of the Division of Finance and Administration, the Purchasing Department supports the Division's Mission Statement which commits to excellence in serving the needs of our students, faculty, staff, visitors and community. To this end, the Purchasing Department is committed to assisting the University community with the timely and cost effective procurement of quality goods and services while complying with government and Case Western Reserve University regulations.

We hope that this manual will make the use of the Purchasing Department's services more efficient and effective for all user departments. We encourage you to contact us for any assistance you might need.

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General Purchasing Policy

Case Western Reserve University's Purchasing Department, with the exception noted hereafter, has been given the responsibility by the Chief Financial & Administrative Officer for the selection of vendors, negotiation of price and assurance of quality and delivery. It is also responsible for the development of standards, specifications, materials and systems, in conjunction with the user departments. It is further responsible for issuing Purchase Order documents and advising user departments on the availability and value of materials and services in the marketplace.

The objective of the CWRU Purchasing Department is to ensure that goods and services are obtained in an effective manner. This is accomplished by achieving the best possible balance between minimizing the cost of University expenditures for goods and services and insuring reasonable response and flexibility. In addition, a Case Western Reserve University Purchasing Policies and Procedures Manual has been developed to assist CWRU personnel in their procurement related activities and for providing guidance for departmental personnel on the proper procedures to follow when making an acquisition. It is assumed that all items ordered have been determined to be necessary by the ordering department.

The Purchasing Department has the responsibility to ensure that the University abides by all applicable federal, state and local regulations and University policies, and that it abides by appropriate ethical considerations. Its purchasing files are subject to audit by University auditors and federal agencies and must include proper documentation (i.e. purchase orders, contract negotiations, bid awards, sole and single source justifications, etc.)

In compliance with OMB Circular A-110, solicitations for goods and services will provide for the following:

• Specific features of "brand name or equal" descriptions bidders are required to meet when applicable.
• Products and services dimensioned in the metric systems of measurement to the extent practicable and economically feasible.
• Preference for products and services that conserve natural resources and protect the environment and are energy efficient to the extent practicable and economically feasible.

The Purchasing Department does not have responsibility in the following areas:

the purchase, sale or lease of real estate.

the design, construction or alteration of plant facilities.

all living animals and animal parts, which are handled by the Animal Resource Center;

any personal purchases.

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Bids and Quotations

I. Policy Statement

It is the policy of the University to obtain competitive bids and price quotations whenever practical, on all purchased items. This is accomplished by negotiated pricing agreements, soliciting requests for proposal, and formal bidding procedures. Requests to vendors are conducted in a manner that provides, to the maximum extent possible, open and free competition.

All vendor bids and quotations are evaluated on the basis of product quality, technical compliance with specifications, total cost, and the vendor's acceptance of the University's terms and conditions. A vendor award will be made in the best interest of the University based on these criteria. Any and all bids and quotations may be rejected when it is in the University's best interest to do so.

Prices secured on bids and quotations are considered confidential and should not be discussed with vendors by University personnel.

II. Formal Competitive Bidding

All purchase requisitions for goods, equipment, and services with an aggregate value of $25,000.00 or more are required to be competitively bid. However, the Purchasing Department is authorized to require more than one bid for purchases with an aggregate value of less than $25,000.00 if in its judgment cost savings may be realized or other University objectives accomplished. It is a Buyer's responsibility to determine the best method of purchasing a good or service.

Solicitation of competitive quotations is the responsibility of the Purchasing Department and is based on a clear and accurate description of the technical requirements for the material, product or service to be procured. Such a description should not, in competitive procurement, contain features that unduly restrict competition. It is recognized and encouraged that highly technical equipment purchases will require the direct participation of the requisitioner and possibly others, such as department administrator, University counsel, engineers, etc., to insure that the item purchased is as the requisitioner requires and that such items as transit insurance, warranties, installation, transportation, etc. are adequately covered. Purchasing will be responsible for determining that prudent procurement practices are followed and documented. All such documentation will be retained in the Purchasing Department. Bids should be requested from at least three (3) vendors, whenever possible, which are qualified or can be qualified to meet all specifications and requirements.

Exceptions to the formal competitive bid process are identified in Sections IV-VI.

III. Evaluation of Proposals and Selection of Vendor

The evaluation of bids and proposals and ultimately the vendor award are based on a number of criteria. These include product quality, the vendor's compliance with University specifications, total cost, delivery requirements, vendor service capabilities, product warranties, the vendor's financial stability, the vendor's acceptance of the University's terms and conditions, and any other relevant factors that should be considered.

A vendor award will be made in the best interest of the University based on the criteria listed above and any other factors that should be considered. When formal bids are received, evaluated and analyzed, and all things being equal, the low bidder shall be awarded the contract. In the event other than low bidder is selected, the Buyer must provide written documentation for the decision. The Buyer will assure that the documentation of the data required to support the award is proper and complete. All documentation will become a part of the permanent file.

The University reserves the right to reject any and all bids when it is in their best interest to do so.

The Purchasing Department will notify the successful vendor and issue a purchase order. The decision to notify unsuccessful vendors is to be made by the Buyer and/or Purchasing management.

IV. Strategic Vendor Partnerships, Preferred Vendor Agreements, Pricing Agreements

The first exception to formal competitive bidding are items covered under Purchasing Department Strategic Vendor Partnerships, Preferred Vendor Agreements, and Preferred Pricing Agreements. Strategic Vendor Partnerships have been competitively bid and offer a full line of products along with value added services (i.e. on-line ordering, direct delivery, summary billing). Preferred Vendor Agreements are competitively bid or negotiated agreements which lock in competitive pricing for a select group of products or services. Pricing Agreements cover a wide range of products and services whenever it is in the University's best interest.  These agreements may be University negotiated or made available to the University through one of several Group Purchasing organizations of which the University is a member (for example, the Educational & Institutional Cooperative). 

V.  Sole and Single Source Purchases

The second exception is when the user must occasionally make a purchase involving a single or sole source vendor due to technical requirements.  Purchases from sole or single source vendors must be accompanied by a Bid Waiver Justification Letter to be approved by the Purchasing Department.  The Buyer is required to show evidence of price reasonableness.  If you obtain pricing information useful to support the purchase price as reasonable, please forward it to Purchasing with your Bid Waiver Justification Letter.     

A. Definitions

1) Sole Source Vendor

The vendor is the only known vendor in the world who sells the particular item requested.

2) Single Source Vendor

The item may be available from multiple vendors, but only the requested vendor is acceptable for technical or other reasons including, but not necessarily limited to:
• a.       repair or replacement parts;
• b.      equipment must be compatible with other equipment currently in use in the department;
• c.       supplementary components of the same manufacturer;
• d.      unique manufacture features essential to the intended application;

• e.       compliance with the University's standard programs;

• f.        necessary to meet physical design.

B. Bid Waiver Justification Letter

If the requisitioning department has researched the market and the suggested vendor is a sole or single source then a Bid Waiver Justification Letter must accompany the purchase requisition for a purchase of $25,000.00 or greater. This memorandum, from the requesting department should document the reason(s) for restricting the purchase to a particular vendor or brand based on the above definitions.  As an alternative, you may complete the Single/Sole Source Justification Form and send it to the Purchasing Department. 

University guidelines and all federally sponsored grants and contracts require some form of written competitive bid or an acceptable bid waiver justification letter if bidding is to be waived.

VI.            Exempt Commodities

The third exception is commodities listed below that are exempt to the formal competitive bid process.  In all cases, with purchases in any of these commodities the purchaser is responsible for assuring the price paid is fair and reasonable.  Please refer to the Price Reasonableness Guidelines for assistance.

Advertising Charges

Artwork and Design Charges (does not include print production costs)

Consulting/Professional Service Agreements

Florists

Hotel Accommodations/Travel (refer to Travel Policy)

Meeting/Conference Room Space

Membership/Dues

On-Line Computer Time

Patient Lab Work

Reprints/Page Charges

Seminars/Training

Subscriptions/Periodicals

VII.        Determination of Price Reasonableness

An analysis of offer/offers to determine that the price paid is fair, reasonable, and in the best interests of the University must be conducted on all purchases.  Refer to the policy on Price Reasonableness.

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Blanket Purchase Order

A Blanket Purchase Order (BPO) is a type of purchase order designed to consolidate repetitive and frequent purchases from qualified vendors. It is designed to give a department flexibility in ordering like or similar supplies and services. A blanket order may not be used to purchase capital equipment.

BPOs are used to order (1) supplies repetitively on a scheduled or "as needed" basis, (2) services, such as maintenance agreements or service contracts, provided over a specific period of time, or (3) research subcontracts.

To have the Purchasing Department consider a blanket order for a particular type of material, contact the appropriate Buyer for that commodity to discuss your requirements. The final decision to implement a blanket order is the responsibility of the Purchasing Department.

A purchase requisition is used to initiate a blanket order. In addition to the standard information required, the requesting department should also indicate the following on the purchase requisition:

• The specific type of supply or service needed.
• The total estimated purchases over a defined time period.
• If applicable, the set quantity and delivery schedule.
• The date to begin and the date to end the shipments or service.

A Buyer may contact a user department to request establishing a blanket order in the case of recurring demand for an item(s) if it is felt it would be in the department's best interest.

Generally, Purchasing will work with the requesting department to price the order and attempt to obtain firm pricing and an institutional discount. Orders exceeding the current bid threshold are subject to the competitive bid process.

The established purchase order number must be indicated on all vendor shipments and invoices to insure timely delivery and uninterrupted service.

A renewal notice will be sent by the Purchasing Department to a user department notifying them of an upcoming expiration of a blanket order. A new purchase requisition is required to continue any and all expiring blanket orders.

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Capital Equipment

Capital equipment as defined by Case Western Reserve University is all major equipment, furniture and fixtures with an acquisition cost of $5000.00 or more and a useful life of at least two years. Additionally, component pieces costing less than $5000.00, but part of a larger system, will be capitalized.

Purchases of capital equipment are subject to the purchase Workflow approval process and the bidding process. Refer to these sections concerning specific information.

The Equipment Accounting Department is responsible for recording and monitoring all capital equipment purchases. Equipment Accounting will verify the purchase requisition for proper expense classification prior to order placement and will contact the requesting department if a change of expense class must be made.

see also EQUIPMENT MANUAL

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Contract Review Procedures

1. Maintenance Contracts for scientific equipment, office equipment and other miscellaneous equipment.
2. Equipment and personal property purchases, rentals, leases and/or financing agreements.
3. Licensing Agreements.
4. C. To expedite the contract review and approval process, the Office of General Counsel and the Contract Coordinator suggest the following to user departments:

1. Provide as much lead-time as possible before the actual date the contract must be approved.
2. Clearly indicate any deadlines involved.
3. Provide all documentation including a properly authorized purchase requisition when appropriate. 

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Controlled Substances & Pharmaceuticals

The Purchasing Department has responsibility for maintaining a file on all controlled substances ordered for the University requiring a Federal DEA License and Ohio State Board of Pharmacy License. The following guidelines should be used when requisitioning such products.

1. Any department wishing to purchase controlled substances must complete an authorized Requisition online using PeopleSoft eProcurement. Once the requisition is approved, it will go to the appropriate buyer for processing.

2. Each purchase requisition must have the following information:

1. Description - Catalog number, Name of the item, & Strength of the substance required - (i.e. 5mg/1ml).
2. Category = CONTROLLEDSUB or PHARMACEUTICALS
3. Quantity
4. Unit of Measure
5. Unit Price
6. Due Date

3. All controlled substances which require DEA licensing are ordered under the Animal Resource Center 's (ARC) current Drug Enforcement Administration (DEA) Controlled Substances Registration Certificate and Ohio State Board of Pharmacy License. Exception: University Health Services and the Dental School maintain their own certifications and, therefore, orders are shipped directly to their facilities.

4. The buyer identifies DEA items and has said items ship directly to Animal Resource Center. Once the items arrive departments will be notified by Animal Resource personnel to arrange pick-up of their orders.

5. Investigators conducting research on behalf of Case Western Reserve University who require DEA Schedule I controlled substances are required to obtain individual DEA and State of Ohio licensing. Contact the local Drug Enforcement Administration office for further information at DEA/Detroit Division, 431 Howard Street , Detroit , MI 48226 , (313) 234-4000.

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Emergency Orders - Outside Vendor Orders

When a department is faced with an emergency that requires a purchase order they should generate the purchase requisition indicating both the due date and a "RUSH" notation in the comment section. It is also advisable that the department contact the appropriate Buyer via telephone to inform them of the emergency and that a requisition is forthcoming.

Caution - The purchase requisition number should never be given to a vendor as a purchase order number. Vendors will only be paid for their services through the issuance of a purchase order number.

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Expediting

Peoplesoft eProcurement allows departments to track their orders from purchase requisition creation through the issuance of the purchase order by accessing the Circle of Life. If you experience an excessive delay in receipt of materials and you've confirmed a purchase order number has been issued, you can either contact the vendor yourself or call the appropriate buyer to expedite the order for you.

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Gifts and Gratuities - University Guidelines for Accepting

Policy

University personnel should be aware that offers of gratitude from vendors can be designed to compromise objective judgment in product or service selection. Accordingly, it is University policy to observe the highest standards of business ethics and to shield the employee, the University and the vendor from any suggestion or appearance of conflict of interest.

Guidelines

1. No employee shall permit any influence by vendors which could conflict with the best interest of the University or prejudice the University's reputation. Expenditures of University funds to vendors shall not by intention benefit any person officially connected with the University.
1. Tangible gifts or gratuities shall not be accepted where their value suggests something more than merely a social gesture. Such gifts should be returned with a statement of University policy. Promotional or advertising items of nominal value such as key chains, pens, coffee mugs, calendars and holiday candy are acceptable.
2. Association with vendor representatives at modest business meals or business organization meetings is occasionally necessary and is neither questionable nor unethical, provided the individual keeps himself/herself free of obligation.
3. Personal loans of money or equipment are not to be accepted from an individual or vendor.
4. Solicitation of vendors for merchandise or certificates to serve as door prizes or favors is normally prohibited. However, exceptions may be approved by the Chief Financial & Administrative Officer.

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Heavy Equipment Moving

The University is not equipped to receive and deliver heavy equipment and supplies through Central Receiving and Package Delivery. Therefore, it has been determined that for insurance liability purposes heavy and/or oversized items will be directed to a contracted outside moving company or the University Movers for delivery directly to the originating department. Factors that are considered include the weight and/or overall dimensions of the item, accessibility to the building and room location, and whether the item is crated or uncrated.

The Purchasing Department has the responsibility for determining where incoming goods are to be shipped at the time of order placement with the vendor. If an outside mover is used the purchase order will be noted accordingly.

Purchasing will notify the movers of an incoming shipment. Delivery arrangements will be made directly between the movers and the originating department. All packing materials will be disposed of by the contracted mover at the time of delivery. All costs incurred are the responsibility of the originating department.

If a Buyer is unable to establish weight and dimensions at the time of order placement and the order cannot be properly received at the time of delivery, the University's Central Receiving Department has the authority to redirect the incoming shipment to the attention of the mover.

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International Orders

reviewed 05/01/2004
revised 3/2/1992

All international orders are processed by the Purchasing Department to the vendor based on properly executed purchase requisitions.

Incoming orders are cleared through Customs based on the following procedures:

1. The package carrier will notify the University's Customs broker that a package has arrived and will forward the paperwork to the broker for processing.
2. The Customs broker will contact the Purchasing Department of the arrived package.
3. The Purchasing Department will notify the user department.
1. If the value of the order does not exceed $1000.00 the department has the option to clear the package themselves or allow the University's Customs broker to clear the package.
2. If the value of the order exceeds $1000.00 the package must be cleared by the University's Customs broker.
4. Customs broker's fees and duty costs are the responsibility of the user department.

When ordering from an international vendor, please take into consideration the cost of freight, broker's fees and approximately 9-12 percent in duty.

There are situations where items can be received duty free upon application. If qualified, application approval may take up to 12 weeks. Please contact the Purchasing Department prior to generating the purchase requisition to discuss qualifications.

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Leases and Rentals

The vast majority of the University's equipment and personal property is purchased outright. However, the Purchasing Department may recommend that leasing is more advantageous to a department considering relevant facts.

The decision to lease or rent versus buy equipment and personal property is made by the University on a case by case basis. The factors considered are purchase price, maintenance/service costs, life expectancy of equipment, duration of need for equipment, obsolescence, cash flow, prevailing interest rates and funding source.

The Purchasing Department will work with the user department to obtain the most advantageous leasing or rental arrangement available under the circumstances. An external lease will be formalized with the issuance of a purchase order. Refer to the BID section for specific competitive bidding guidelines.

When considering a lease or rental agreement the following factors should be considered:

• Advantages of owning the equipment or personal property from day one (for example, to avoid paying personal property tax).
• Options at the end of the lease.
• The application of any lease/rental credits toward a purchase at the end of the agreement period.
• The right to cancel prior to the end of the term and any penalties involved.
• Insurance responsibility during the term of the agreement.

Leases and rental agreements are contracts and as such are subject to prior review and approval by the Contract Coordinator and/or the Office of General Counsel. Additionally, all leases and rentals must be signed by an officer of the University or, where authority to sign has been delegated, by the Director of Procurement and Distribution Services. A signature by anyone other than those listed above is not legally sufficient to bind the University. Refer to CONTRACT.1 for specific contract review procedures.

Equipment may be financed using various types of lease or rental transactions. Leases and rental agreements are initiated from a user department with a properly authorized purchase requisition and are subject to competitive bidding.

Departments leasing or renting equipment or personal property should budget into their account the annual funds necessary to cover the appropriate number of lease/rental payments. In the case of a research account, the home department's account will be charged for the remaining term of the contract if the research account specified in the contract is discontinued, and no valid replacement account is specified.

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Maintenance Contracts

Maintenance contracts are established with vendors to provide uninterrupted preventative and/or remedial maintenance for all types of equipment at a predetermined cost. A purchase requisition is required to initiate all maintenance contracts and should be submitted to the Purchasing Department with the vendor's maintenance contract form if it is available. The following information should be indicated on the purchase requisition in addition to the standard required information.

• Type of equipment to be covered. Include brand, model and serial number.
• Period of time to be covered
• Location of each piece of equipment

The vendor's maintenance contract must be reviewed and approved by the Contract Coordinator, located in the Purchasing Department, and/or the Office of General Counsel prior to the contractual document being signed by the Chief Financial and Administrative Officer, his designee or the Director of Procurement and Distribution Servicest. A purchase order will be issued upon receipt of the fully authorized contract.

Copies of maintenance contracts processed through the Purchasing Department are kept on file. Any questions concerning terms and conditions should be referred to the Contract Coordinator.

A contract renewal notice is issued by the Purchasing Department to the user department to inform them that the current term for covered maintenance is due to expire. These notices are generally issued no later than one(1) month prior to the expiration of the current contract. It is the user department's responsibility to notify the Purchasing Department on a timely basis of their intention to renew or cancel. Failure to provide such notification may result in the vendor taking an action the department did not intend.

The user department has the responsibility to see that service on the equipment is performed in accordance with the terms of the maintenance contract. In the event that service is not rendered, or is not satisfactory, the Purchasing Department should be notified immediately in writing with reference being made to the purchase order number.

The University Bookstore can provide maintenance service on many computer and office products. Specific questions and applications should be directed to their attention.

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Packages - Outbound for Mailing Purposes Only

Departments requiring packages to be shipped for mailing purposes only must complete a purchase requisition.

The following information should be indicated on the purchase requisition in addition to the standard information.

• Contents of package(s).
• Complete shipping address (no P.O. Box Numbers).
• Number of cartons being shipped.
• Account number to be charged.
• Whether the department wants the contents insured. If so, the value must be provided.

Note: If more than one package is being shipped, the value of each package must be indicated.

All items must be properly packed and each package completely sealed and labeled for shipment. Purchasing or Shipping will not assume the responsibility for poorly packed material that results in damage.

If the department requires the material be picked up, the purchase requisition must be sent to the Purchasing Department, noting on the purchase requisition the building and room number from which the package(s) is to be picked up. A pickup order will be generated and processed to Package Delivery. The purchase requisition number should be noted in the upper right-hand corner of each package.

Departments wishing to bring the material directly for shipment should take the package(s) to the Shipping/Receiving Department located on the first floor of the Service Building. The purchase requisition should be attached to the package and the purchase requisition number should be noted in the upper right-hand corner of the package(s).

This service is for University business only. Personal items cannot be sent or personal business cannot be transacted using University funds.

The University Bookstore and U.S. Postal Substation offer mailing services for personal packages.

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Personal Purchases

The Purchasing Department does not enter into any negotiation or become involved in any transaction for purchases of a personal nature for the University faculty, staff or students.

The Purchasing Department may question requisitioned items that seem to be of a personal nature or an inappropriate expense against University funds.

Vendors are under no obligation to offer discounts to individuals and do so with the understanding that their offer places the University under no obligation to do business with them except within strict business practices.

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Determination Of Price Reasonableness

Price reasonableness is the business practice of assuring that the price to be paid is fair and reasonable. This responsibility rests with the purchaser. The ONR's purchase guidelines require some form of cost or price analysis be made and documented in the procurement files.  For each purchase, a Buyer must document that the price paid is fair and reasonable.  The Buyers are required to provide the appropriate documentation for purchases valued from $2,500.00 < $25,000.00. . Obviously, price competition is the preferred choice and competitive bids and price quotations should be obtained, whenever practical, on all purchased items.  However, several additional common business practices are available to the Buyers to enable them to determine price reasonableness.  The ONR has provided the following useful guide. 

A Short and Easy Guide To Methods Commonly

Used to Determine Price Reasonableness

Provided to CWRU by the Office of Naval Research (ONR)

I.                    Introduction:  University Purchasing Agents or Buyers are the primary personnel who make decisions on behalf of the University with respect to the purchase of goods and services needed by the University Community.  Frequently, these purchases involve the expenditure of Federally provided funds.  In all cases, a main consideration is to assure that the price to be paid for these goods and services is fair and reasonable.  This is essential to insure that both University and Government funds are utilized in a cost-effective manner and to conserve funding where resources are limited.

II.                 Why Price or Cost Analysis: The most basic reason for requiring that price or cost analyses be performed and documented is that it is a sound business practice.  This, as noted above, insures that funds are expended in the most cost-effective manner and conserves limited resources.  A price, which is excessive or unreasonable, fails completely to accomplish this important goal; a price that is determined to be fair and reasonable is the fulfillment of this important objective.

Equally important is that performing and documenting that prices to be paid are fair and reasonable is a requirement when expending or using federal funds for the purchase of required goods and services.

III.               What is Price Analysis: In simple terms, a price analysis is a review, analysis or examination of the price proposed by a vendor and an assessment or evaluation as to whether or not it is fair and reasonable.  A determination that a price is fair and reasonable is really a conclusion that the proposed price is fair to both parties, considering the quality, delivery and other factors.  The basis for reaching that conclusion is found in the facts and information considered and analyzed by the Buyer.  This is what is called price analysis.

IV.              What is Cost Analysis: First, a cost analysis is different form price analysis.  The major difference is that a price analysis looks at the whole price.  It does not involve an examination of the individual cost elements or components that collectively comprise the seller's price.

A cost analysis, on the other hand, actually examines the individual cost elements that comprise the total proposed price.  Depending on the purchase, these elements may vary but generally include such things as labor rates, material costs, overhead or indirect rates, a cost of money factor, general and administrative expenses (G&A) and a profit or fee.

V.                 Means Commonly Used in Price Analysis: In performing a price analysis, that is, determining a price to be fair and reasonable without examining the individual components of the price, a Buyer depends on the facts or information of the individual purchases.  What follows is a listing of the most common methods or criteria used to determine a price fair and reasonable by price analysis.

a)                  Price Competition: When three or more acceptable offers are received and the lowest price is selected, the price of the lowest offer or can be concluded to be fair and reasonable.  It is noted that generally where the difference in prices between the offers ranges up to 15%, the price competition is said to exist.  A price that is very low must be checked to assure that the seller understands what he is selling and has made no errors.  Example: Seller A proposes a price of $2592.00; Seller B, a price of $2550.00 and Seller C, a price of $1400.00.  Seller C is low but the difference is too great.  This must be checked to see if Seller C is proposing the same item and has made no errors in his/her pricing.  If selection is made to other than the low, acceptable offer, the price must be determined to be fair and reasonable by other means.

b)                  Catalog or Established Price List: Where only one offer is received and the seller has a published or established price list or catalog which sets forth the price of a commercial item, this fact can be used to find the price fair and reasonable.  The catalog should be current (within one year, generally).  It is a good idea to obtain a name of another recent purchaser and confirm that this is price paid.  Often, discounts off of the price list are offered.  If this is the case, it should be noted in the written analysis.  The item to be purchased should generally be a commercially produced one sold to the general public in substantial quantities.

c)                  Price Based on Prior Competition: It may be that only one Seller will propose.  If this is the case and the item was previously purchased based on competition, this may be acceptable.  In such cases, you want to cite the price of prior purchase (within one year) and note if it was competitive or based on catalog price or other.  An increase in price, with no current catalog or competition, should be about the current rate of inflation. 

d)                  Comparison to a Substantially Similar Item: Often an item is very similar to a commercial one but has added features which are required.  If the Seller can provide the price of the base item, by a catalog, and then state the costs of the additional features, the Buyer can then find the price reasonable based on these two factors.  The reasonableness of the extra cost can be checked from other purchasers who had some or all of the extras or based on an evaluation of the extra cost by technical personnel.

e)                  Sales of the Same Item to Other Purchasers: if the Seller has no catalog but has sold the same item to others in the recent past, the price can be determined to be fair and reasonable by verifying with those other purchasers what price they paid.  This must be noted in the written documentation with name, telephone and date of confirmation.

f)                    Comparison to Prices with Other Similarities: If an item is generic, there may be a number of similar products, such as computers.  If the low price for a computer is $1800.00, then a quote from another firm asking for a price on a similarly configured machine can be used.  Say the other is $1925.00.  That can be used.

g)                  Market Prices: Where an item has an established market price, verification of an equal or lower price also establishes the price to be fair and reasonable.  Example, the purchase of metals, such as lead, gold, silver or commodities, such as grains.

h)                  Historical Prices: Where an item has a history of the purchase of the item over several years, use of this information, taking into account inflation factors, can be used to determine a price fair and reasonable.

i)                    Independent University Estimate: If an independent estimate of the item has been prepared and other method or information is available, a price can be compared to the estimate and if it compares favorably, this can be a basis to find a price fair and reasonable.  The estimate, however, must be independent.  Use of a Seller's pricing to make an independent estimate is NOT independent.

VI.              Cost Analysis: A cost analysis looks at the individual elements of the price and analyzes these.  Overhead or indirect rates may be verified and found reasonable by verifying such rates with the government, in many cases.  The technical or scientific folks should evaluate the number of hours proposed not the price.  The reasonableness of the percent or fee profit is the responsibility of the Buyer.  It is negotiable in most cases.  An asking price is not always a taking price.

VII.            Documentation:  Each price analysis or cost analysis MUST be documented in writing.

THE ABOVE IS NOT INTENDED TO BE EXHAUSTIVE, COMPLETE OR CONTAIN ALL POSSIBILITIES.  IT IS ONLY A GUIDE, NOT A RULE.

see also BIDS

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Pricing Agreements

The Purchasing Department negotiates pricing agreements with selected vendors for quantities of supplies in order to obtain low competitive prices, price protection, and to lower the administrative costs of purchasing these goods. These agreements usually extend for a period of one year.

Pricing agreements are initiated by the Purchasing Department when it is in the University's best interest to do so. Existing pricing agreements are reevaluated by the Purchasing Department to maximize cost savings. This insures competitiveness among vendors, allows new vendors to participate, and addresses market trends and economic changes that may occur with particular commodities.

The University is a member of several Group Purchasing Programs and receives the benefits of agreements negotiated between a group and various vendors. The Purchasing Department utilizes these agreements whenever feasible to obtain the best total dost for the University. However, in cases where the price from a non-group vendor is identifies to be less and the product is equal to that offered by the group contract vendor, it is in the University's best interest to consider purchase from the non-group contract vendor provided the University has make no commitment to the Group Purchasing Program prior to the contract being awarded. Prices from Group Purchasing agreements are never used to secure improved pricing from the nongroup vendors.

Pricing agreements affect source selection by Purchasing and are treated as confidential information. As is the case with all bids, prices and terms are not disclosed to competitors.

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Purchase Order

ERP Manuals and Guides

A purchase order is used for various types of special requests for goods and services. A purchase order is processed by a Buyer based on the category of the pre-approved electronic requisition from a requester.

Once a requisition is approved and budget checked, a purchase order is dispatched by the Purchasing Department based on the information provided on the electronic requisition. The information supplied by the Buyer such as price confirmation, method of shipment, expected delivery date and any special terms or notations, will be forwarded to the vendor.

The purchase order is a legally binding obligation when accepted by a vendor. Acceptance may be evidenced by written notification or a delivery of goods conforming to the terms of the contract. The purchase order is binding also on the University and may be changed or canceled by the Purchasing Department only in accordance with the terms of the order.

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Purchase Requisition - General Information

ERP Manuals and Guides

The Case Western Reserve University purchase requisition is the official University document used to initiate a purchase order with all outside vendors. A properly completed and executed eProcurement requisition electronically submitted to the Purchasing Department authorizes Purchasing to process the Special Request and issue a purchase order. A properly completed requisition includes budget checking.

Advance planning by departments for their needs is extremely important. Time factors for generating the purchase requisition, obtaining necessary prior approvals, processing to Purchasing, and procurement and delivery times must all be considered in determining an adequate lead time.

The Purchasing Department has the responsibility and authority to ask reconsideration of source, specifications and/or quantities if, in the judgment of the Department, the interest of the University can be better served. The Purchasing Department also has the responsibility to ensure that the University aides by all applicable federal, state and local regulations and University policies, and that it abides by appropriate ethical considerations. The Purchasing department reserves the right to purchase from a source other than the one suggested.

The purchase requisition number should never be given to a vendor in place of a purchase order number. Vendors will only be paid for their goods and services if they reference a valid purchase order.

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Radioactive Material Ordering Procedure

The Office of Radiation Safety has established the following procedure when ordering radioactive material.

1. All radioactive material will be ordered using the CWRU purchase requisition, including replacement orders and no charge samples.
2. Each purchase requisition must have the following information:
1. Isotope
2. Quantity and Unit of isotope ordered - (i.e. 1x250 uCi).
3. Inventory of isotope on hand in the laboratory
4. Signature of Authorized User or authorized alternate.
3. When complete, the purchase requisition must be mailed, brought, or faxed (368-2236) by the originating department to the Office of Radiation Safety, Service Building 1^st Floor, 7227 (location code) for approval.

4. Upon approval by the Office of Radiation Safety the purchase requisition will be forwarded to the Purchasing Department for processing.

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Repairs - Shipment Back to a Vendor for Repairs

A purchase requisition is required to initiate all repair orders except warranty repairs. Warranty repair orders must be referenced by the original purchase order number. The following information should be indicated on the requisition in addition to the standard required information.

• Description of equipment. Include brand, model an serial number.
• Estimated cost of repair or warranty information.
• Purchase order number the item was originally purchased against (if available).
• Number of cartons being shipped to the vendor.
• Complete shipping address (no P.O. Box Numbers).
• Weight of package (if known)
• Whether the department wants the equipment insured; if so, the value must be provided.

Note: If more than one package is being shipped, the value of each package must be indicated.

All items must be properly packed and each package completely sealed and labeled for shipment. Purchasing or Shipping will not assume the responsibility for poorly packed material that results in damage.

Some vendors require that a repair authorization number be assigned to the repair prior to shipping. The Purchasing Department will obtain the proper authorization if required. If the department has obtained the number so indicate on the purchase requisition.

If the department requires the material to be picked up, the purchase requisition must be sent to the Purchasing Department, noting on the purchase requisition the building and room number from which the package(s) will be picked up. A pickup order will be generated following a pickup number and faxed to the department in which copies will be forwarded to the Package Delivery Department for pick-up. The purchase requisition/pickup numbers should be noted in the upper right-hand corner of each package.

Departments wishing to bring the material directly to Receiving for shipment should take the package(s) to the Shipping/Receiving Department located on the first floor of the Service Building or Cedar Avenue Service Center Mail Center. The purchase requisition should be attached to the package and the purchase requisition/pickup number should be noted in the upper right-hand corner of the package(s), along with any applicable repair authorization number. Purchasing will not assume the responsibility for packages with incorrect shipping addresses, improper labeling of contents, contact person, etc.

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Return for Credit or Exchange

Occasionally it becomes necessary for a department to return materials ordered to the vendor for credit or exchange. The Purchasing Department coordinates the following types of returns:

• Incorrect items being returned in exchange for correct items.
• Defective or damaged items.
• Over shipments.
• Excess material ordered by the department.
• Material as received is not acceptable.
• Goods are no longer required.

The requesting department should contact the Purchasing Department with the following information: original purchase order number, vendor name, items and quantities of materials to be returned, reason for return.

The Purchasing department will make the necessary arrangements with the vendor and obtain a return goods authorization number if required. Purchasing will contact the requesting department to arrange for the return of the material from the department after the proper return authorization has been received from the vendor. Do not bring materials to the Shipping/Receiving Department until the Purchasing Department has approved the return.

Any restocking charges due will be the responsibility of the requesting department. Additionally, some vendors do not accept returns if fault lies with the ordering department. Proper planning of needs when generating orders can avoid costly and unnecessary returns. Damaged charges due the vendor or freight company will assume the responsibility if merchandise received was defective after a thorough investigation.

All items must be properly packed and each package completely sealed and labeled for shipment. Purchasing or Shipping will not assume the responsibility for poorly packed material that results in damage.

If the original purchase was form the University Bookstore, the Printing Department, Printing Central Stores or Purchasing Stores any return should be initiated by directly contacting the respective department involved.

see also RECEIVING AND INSPECTION

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Small, Disadvantaged, and Women-Owned Business Enterprises

It is the policy of the United States Government (Public Law 95-507) that small business enterprises and small disadvantaged and women-owned business enterprises have the maximum practicable opportunity to participate in the performance of contracts let by any federal agency.

It is also the objective of Case Western Reserve University to provide the opportunity to minority and women-owned business enterprises to become sources of supply for the University. Our basic posture is to meet our objectives through normal bidding and procurement procedures conducted in a manner that provides, to the maximum extent possible, open and free competition that does not give one vendor a competitive advantage over other vendors.

Definition (based on Federal Procurement regulations)

1. Small Business Concern
1. The term "small business concern" means a small business as defined pursuant to section 3 of the Small Business Act and relevant regulations promulgated thereto (i.e., a concern, including its affiliates, which is independently owned and operated, is not dominant in its fields of operations, and can further qualify under the criteria concerning number of employees, average annual receipts, or other criteria, as prescribed by the Small Business Administration).
2. Small Disadvantaged Business Concern
1. The term "small disadvantaged business concern" means any small business concern:
1. which is at least 51 percent owned by one or more socially and economically disadvantaged individuals; or, in the case of any publicly owned business, at least 51 percent of the stock is owned by one or more socially and economically disadvantaged individuals and one or more such individuals manage and control the daily operations of the business.
1. Socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities.
2. Economically disadvantaged individuals are those socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same business area who are not socially disadvantaged.
2. whose management and daily business operations are controlled by one or more of such individuals. It is presumed that socially and economically disadvantaged individuals include Black Americans, Hispanic Americans, Native Americans (such as American Indians, Eskimos, Aleuts and Native Hawaiians) and other minorities, or any other individuals found to be disadvantaged by the Small Business Administration.
3. Small Women-Owned Business Concern
1. the term "small woman-owned business concern" means a business that is at least 51 percent owned, controlled and operated by a woman or women; or in the case of any publicly owned business, at least 51 percent of the stock is owned by a women and one or more such individuals manage and control the daily operation of the business.
2. for the purpose of this definition, businesses which are publicly owned, joint stock associations and business trusts are exempted. Exempted businesses may voluntarily represent that they are, or are not, women-owned if this information is available.

Case Western Reserve University acting in good faith may rely on representations by vendors regarding their status.

The Purchasing Department is committed to:

1. Interact with various public and private agencies and/or organizations dedicated to the identification and introduction of small, small disadvantaged business concerns and small women-owned business concerns.
2. Interact with the CWRU Department of Research Administration and the appropriate Federal regulatory agencies.
3. Provide the opportunity to minority and women-owned business enterprises to become sources of supply for the University and to the degree possible, provide assistance to such businesses to qualify them for bidding or assist them in supporting the University's needs.
4. Maintain appropriate records of such business dealing.

Responsibilities

This procedure specifies the principle functions of the user departments and the Purchasing Department that are directed toward identifying Small, Small Disadvantaged and Women-owned Business Enterprises. These tasks are primarily clerical and, in general, consist of preparing and maintaining records and files.

Federal Contracts subject to the Small Business Subcontracting Plan (Public Law 95-507)

1. User Department

• Departments purchasing against a federal contract account (contracts over $500,000) will process an authorized purchase requisition stamped "Public Law 95-507 Applies, Small/Minority Sources Preferred". This stamp is available form the Department of Research Administration.

1. Purchasing Department
1. The appropriate Buyer will, whenever possible, source the product to identify qualified vendors. Suggested sources include:

• Purchasing Vendors List coded by vendor type (see below)
• Vendor suggested by the requisitioner
• Source publications.

1. The Contract Analyst has responsibility to maintain the vendor type list and can be consulted by the Buyers for resource purposes.
   Vendor Type Categories

• SM - Small, Minority
• SMW - Small, Minority, Women-Owned
• SN - Small, Non-Minority
• SNW - Small, Non-Minority, Women-owned

1. The Buyer will verify the vendor type with the selected vendor, if it is not known, and note the code number on the purchase requisition for record purposes. Copies of the purchase requisition will be given to the Contract Analyst to ensure that each appropriate vendor is correctly coded in the computer system.

Accounts Payable

• Accounts Payable is responsible for the periodic reporting to the appropriate government agencies. As such, a report is run by the Information Services Department that shows total dollars spent with vendors in each of these categories by department account number for the time period specified.

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Taxes and Exemptions

Case Western Reserve University is an Ohio nonprofit corporation exempt from sales & use tax and exempt from federal income tax as an organization described in section 501(C)(3) of the Internal Revenue Code. The University's federal tax identification number is 34-1018992.

Certificates of Exemption are provided to vendors by the Purchasing Department upon request.

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Vendor Relations - Standards of Conduct

All interactions involving vendors should be conducted at the highest level of personal and institutional integrity and fairness.

University employees should recognize potential conflicts of interest in conducting University business with vendors and firms in which they have a financial interest, or in which family members or relatives are employed, and should avoid these situations. This applies particularly to University employees engaged in procurement, financial affairs, those handling or approving funds, and persons involved in determining what is to be procured.

Whenever an apparent conflict of interest is suggested or identified, immediate disclosure by the University employee involved should be reported through the channels identified in the University's Conflict of Interest Policy and the employee involved should disqualify himself/herself from that particular situation.

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Warranties

Many purchased items are delivered with manufacturer warranty cards or certificates. When necessary, it is the user department's responsibility to complete the card and return it to the vendor immediately for proper certification.

All warranty information should be retained by the originating department for future reference. In the event repair service is required during the warranty period, the warranty information should be included on the purchase requisition that is processed to the Purchasing Department.

see also REPAIRS, SHIPMENT BACK TO A VENDOR

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