Getting Started

Goals
Understand the role and responsibilities of the
procurement function
Know and understand “the rules”
Know and understand the mechanics of procurement
Be prepared to apply what you learn
Be successful in your procurement activities
Be a resource, not a roadblock

Format
Lecture
Discussion
Practical

Participation
Through discussion
Through planned activities

Assessment
Is required by AASBO & CAC
Is necessary to determine the success of the course
Session I

Overview of School Purchasing
Purchasing’s function
Procurement, not just purchasing
Common procurement cycles
Centralized & decentralized procurement
Purchasing does not operate in a vacuum

Legal Aspects of Purchasing
Authority
Contracts
Governance
Ethics
Compliance
Purchasing’s Function
More than issuing purchase orders
The Purchasing Puzzle requires that we
provide goods and services...
in the right
quantity
in the right
quality
at the
right price
at the right place
at the right time
Think Procurement,
not just purchasing

Procurement of materials, equipment,
services and construction

Warehousing and distribution of
supplies and materials

Contracts administration

Conflict resolution

Property/asset management

Surplus/obsolete property disposition

Mail room operations (not common)

Printing operations (not common)
Common Small Dollar
Procurement Cycle
Need is recognized
Goods reassigned or disposed
Type of competition determined
Reassignment or disposal
authorized
Quotes obtained
Goods become surplus
or obsolete
Requisition prepared
Goods are used
Account code & funds review
A/P verifies & pays
Purchasing review
District receives & verifies
Purchase order prepared &
issued
Vendor delivers
Common Large Dollar
Procurement Cycle
Need is recognized
Goods reassigned or disposed
Type of competition determined
Reassignment or disposal
authorized
Requisition prepared
Goods become surplus
or obsolete
Account code & funds review
Goods are used
Purchasing review
Contract administered
Purchasing prepares IFB/RFP
A/P verifies & pays
Purchasing issues IFB/RFP
District receives & verifies
Bids/proposals received
Vendor delivers/performs
Bids/proposals opened
Purchase order prepared &
issued
Bids/proposals evaluated
Contract awarded
Centralized &. Decentralized
Procurement
Centralized
Decentralized
Advantages
Advantages
Lower prices
Better budget control & mgt
Favorable vendor relationships
Improved compliance
Fewer purchases
Greater consistency
Fewer contacts for vendors
Better record keeping
Better inspection of goods
Forecasting benefits (Cost/availability)
One resolution point for issues
 Faster purchases
 Less scheduling
 Easier to address unique requirements
 Less bureaucracy
Disadvantages
Disadvantages
Slower purchases
More scheduling
Harder to address unique requirements
More bureaucracy
aaaaaaaaaaaaaaaaaaa
 Higher prices (no economies of scale)
 Less budget control & mgt
 Questionable vendor relationships
 Less compliance
 More purchases
 Less consistency in materials purchased
 More contacts for suppliers
 Better record keeping
 Less inspection of received goods
 Purchase on the fly
 Many resolution points for concerns,
problems, etc.
Purchasing Does Not Operate
in a Vacuum
Influences on Purchasing
Governing
Board
Others
Administration
Media
Purchasing
Staff
Users
Community
Suppliers
Taxpayers
Authority
Who, What and When

Legal
Rests with the governing board, by statute
May be delegated

Express
Formal authority granted by the governing board
Must be formally authorized by the governing board, and
must be stated in governing board policy

Implied
Required to carry out express authority
The things you do to do the job

Agency
The authority to act on behalf of another
Agent can act as if he/she Is the other party
Agent must act within the granted authority
An individual acting outside of his/her authority is not an
agent
Contracts

The 5 Elements of a Binding Contract
Capacity of the parties
Legality of the object
Consideration
Mutuality of agreement
Mutuality of consent

Offer
There must be an offer. The offer is a conditional
promise to do something or refrain from doing
something. It creates the power to bind the offeror by
meeting the requirements set forth in the offer. Offers
must be definitive to be enforceable. Offers may be
terminated by lapse of time, rejection, counter-offer, or
revocation.

Acceptance
The offer must be accepted. Acceptance of an offer is
the exercising of the power to bind the offeror to his
promise to perform or not perform. Once the offer is
accepted, neither party can unilaterally withdraw without
liability. Acceptance must be under the terms of the offer
and unequivocal.
Must a contract be in writing to be binding &
enforceable?!?
Contracts

Contract Types
Fixed price
Cost
Specific requirement vs. Term

Determining the Appropriate Contract Type
How much and what type of data can the user gather?
Is there competition?
Can a firm price be obtained?
How much risk is there?
What is the vendors’ performance capability and
history for similar requirements?
Governance
School procurement is governed by…

Governing Board Policy
Varies by school district

Arizona Revised Statutes
A.R.S. § 15-213-A is key to procurement
Other subsections also apply

Uniform System of Financial Records (USFR)
Applies to purchases under the bid threshold
(currently $50,000)
Sets the competitive quotation requirements for those
purchases
Applies to inventory management
Applies to fixed assets management
Section VI (Accounting) is the applicable section
Governance
USFR Competitive Procurement Requirements

Purchases up to $5,000
Formal quotations are not required, but, …

Purchases from $5,000 to under $25,000
Must seek verbal quotes from 3 or more vendors
Written quotes are OK

Purchases from $25,000 up to the bid
threshold
Must seek written quotes from 3 vendors
Quotes must be written on the vendors’ document

Purchases at or above the bid threshold
Require formal competitive sealed bids or proposals &
are not covered by the USFR
See the Arizona State Board of Education School
District Procurement Rules
Governance
Arizona State Board of Education School District
Procurement Rules

Title 7, Chapter 2, Articles 10 & 11 of the Arizona
Administrative Code
Referred to as the school procurement rules or school
procurement code
These rules are not the same as the Arizona State
Procurement Code.

Apply to all procurement with values over the bid threshold
set by the Arizona State Board of Education
The bid threshold is currently $50,000
The bid threshold for schools will match the amount
specified in Title 41 of the Arizona Revised Statutes (State
Bid Limit)
The State Board of Education no longer approves the bid
threshold amount

Authorize the Governing Board to delegate procurement
authority
Delegated authority must be specified in governing board
policy
Certain requirements must be met
Governance
Arizona State Board of Education School
District Procurement Rules

Authorize purchases by…
Competitive Sealed Bid
Multi-step Bid
Competitive Sealed Proposal
Sole Source Procurement
Emergency Procurement
Cooperative Procurement
Specialized Procurements

Specify contract requirements

Provide an administrative process for protest & contract
claims resolution

Specify requirements for disposition of surplus property
Governance

Uniform Commercial Code (UCC)
Regulates business transactions throughout the U.S.
Title 47 of the Arizona Revised Statutes

Education Department General Administrative
Regulations (EDGAR)
Applies to procurement with Federal grants

Arizona Department of Library & Archives Records
Retention & Disposition Schedule
Applies to records management

Common Law
Notable for its inclusion of extensive non-statutory law
reflecting a consensus of centuries of judgments by jurists.
Non-statutory law authority rests not on legislation passed
and eventually codified, but rather tradition, custom, and
especially precedent.
Non-statutory law is recognized within the Constitution as
being essentially inviolable. However, as customs and
traditions change and evolve, common, non-statutory law
must change and evolve with them, and occasionally be
amended by statute.
Ethics

Purchasing personnel are custodians of public
funds
We have a duty to use those funds for their intended use
We have a duty to spend the funds fairly
We have a duty to practice the highest ethical standards

Ethical standards come in several forms
Professional organizations
Governing board policy
Statute

The penalties for violating ethical standards can
be severe

Proper ethical standards are demonstrated by:
Ensuring fair and open competition for all interested
parties
Maintaining proper “arms length” relationships with
vendors
Complying with and enforcing rules, regulations and
statutes
Reporting infractions
Never seeking or accepting personal gain through
employment

Remember, perception is reality
Compliance

Schools district and employees are responsible for
compliance with rules, regulations and statutes
Penalties for non-compliance can be severe
Penalties may be assessed against the district, a vendor
or an employee
Penalties can be avoided by working to ensure
compliance

Tools for compliance are available
The Arizona Revised Statutes
The USFR
The State Board of Education School District Procurement
Rules
The USFR Compliance Questionnaire

Use the tools
Know the applicable requirements
Prepare guides for schools & departments
Show the requirements, as well as refer to them
Develop documentation programs that match the various
requirements