Session II
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Small Dollar Purchases
Definition
Effect on purchasing
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Small Dollar Purchase Methods
Petty cash
Cash purchase orders
Purchase certificates/Limited value purchase orders
Blanket purchase orders
Procurement cards
Cooperative purchasing
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Competitive Quotations
Verbal
Written
Sometimes Three Quotes are not Available!!
Session II

Large Dollar Purchases
Definition
Effect on Purchasing

Large Dollar Purchase Methods
Competitive Sealed Bids
Competitive Sealed Proposals
Specialty Competitive Purchases
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Large Dollar Purchase Exceptions
Sole Source Purchases
Emergency Purchases
Cooperative Purchasing
GSA Contracts
Electronic On-line Bidding

Compliance
Small or Large?
Small Dollar Purchases
Definition
Small dollar purchases are procurements with values below the
formal competitive procurement threshold.
While these purchases do not require formal competitive
procurement, small dollar purchases represent significant amounts
of school district and taxpayer dollars. They should be made with
reasonable care and diligence.
Effect on Purchasing
Small dollar purchases follow the principle of the 80/20 rule. That
rule states that 80% percent of the results from any effort will be
achieved by 20% of the people.
The 80/20 rule would state that 80% of your purchases account for
20% of your procurement dollars. In reality, small dollar
purchases probably account for a greater percentage of purchases
and lower percentage of purchasing dollars.
Purchasing often uses a lot of effort to spend a proportionately
small amount of money. This makes small dollar purchases the
most expensive procurements your school district will make.
Purchasing’s goal should be to reduce the effort and cost
associated with small dollar purchases.
Small Dollar Purchase Methods
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Petty Cash
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Cash Purchase Orders
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Purchase Certificates/Limited Value
Purchase Orders
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Blanket Purchase Orders
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Procurement Cards
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Cooperative Purchasing
Competitive Quotations
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Verbal Quotations
Are required for purchases with values of at least $5,000, but
less than $15,000.
Use quotation summary form, memo or write on the
requisition
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Written Quotations
Are required for purchases with values of at least $15,000,
but less than the bid threshold.
Must be typed or written on the vendor’s letterhead or quote
form. Or, submitted in response to the district’s request for
quotation. (A written summary of a verbal quotation is not a
written quote.)
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All Quotations
Come from vendors. (catalog prices cannot be used for
quotes)
Include the name of the person obtaining quote, date of the
quotation, name of the firm, person giving quote, description
& part number of item quoted, unit price, freight charge (if
any), sales tax (if any) for each quotation.
Competitive Quotations

Successful Quotes
Clearly define the product or service with brand, model, part
number, or complete purchase description
Clearly define vendor performance requirements: warranty,
delivery time, F.O.B. point, quote deadline, etc.
Clearly define vendor qualifications (if applicable)
Generally, requirements should be industry standard
Contact vendors who have a reasonable opportunity to quote
Contact vendors with whom you are willing to purchase
Allow a reasonable amount of time for vendor to prepare
quote
Use available resources: fax, email, Internet, etc.
Appropriate documentation shall be provided if the purchase
is not made from the lowest quote

Sometimes Three Quotes are not Available!!
Document your effort to obtain the quotes
Documentation includes the name(s) of the firm(s)
contacted, date(s) of contact, name(s) of person(s) declining
to quote, statement that firm declined to quote & why (if
reason is stated)
If the purchase is at least $5,000, ask for a written “no
quote.” If the vendor does not provide one, prepare
documentation as described immediately above.
Are sole source and emergency purchases viable options?!?
Large Dollar Purchases

Definition
Large dollar purchases are procurements with values at or above
the formal competitive procurement threshold.
These procurements are governed by detailed rules that must be
followed to ensure that the school district enters into legal
contracts that are fair to the vendor and beneficial to the district.
These purchases should be made with reasonable care and
diligence. Failure to do so can result in lost time, inappropriate
materials or services, tarnished business relationships, protests,
claims, and controversies.

Effect on Purchasing
Large dollar purchases also follow the principle of the 80/20 rule.
The 80/20 rule would state that 80% of your procurement dollars
account for 20% of your purchases. Converse to small dollar
purchases, large dollar purchases probably account for more than
80% of dollars spent and less than 20% of purchases.
Purchasing’s goal should be to find ways to concentrate its efforts
on large dollar purchases.
Large Dollar Purchase Methods
Competitive Sealed Bids
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Specified method of formal competitive procurement
Solicited through an Invitation for Bids (IFB)
Formal requests for offers from the school district
Formal offers from vendors
Firm as received. No negotiation is allowed
Awarded to the lowest responsible & responsive bidder
Utilized most often for commodity or services purchases where
the requirements can be clearly defined and award is based
primarily, but not solely, on price
Competitive Sealed Proposals
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Exception to competitive sealed bidding
Solicited through a Request for Proposals (RFP)
Governing board must make a written determination that
competitive sealed bidding is not practicable or not advantageous
prior to using competitive sealed proposals
Specific requirements should be addressed in the written
determination
Formal requests for offers from the school district.
Formal offers from vendors.
Subject to revision by means of best & final offers.
Awarded to the vendor whose proposal is determined to be most
advantageous to the District.
Utilized most often for commodity or services purchases where
the requirements are not clearly defined and award is based
primarily on factors other than price.
Large Dollar Purchase Methods
Multistep Sealed Bidding
(R7-2-1035)
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Multistep sealed bidding shall be initiated by the issuance of
an invitation to submit technical offers. The invitation to
submit technical offers shall be issued according to R7-21024(A).
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Upon completion of phase one, the school district shall issue
an invitation for bids and conduct phase two under R7-21024 through R7-2-1032 as a competitive sealed bidding
procurement, except that the invitation for bids shall be
issued only to bidders whose technical offers were
determined to be acceptable in phase one.
Large Dollar Purchase Methods
Services Of Clergy, Certified Public Accountants,
Physicians, Dentists and Legal Counsel
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(R7-2-1061)
Vendors submit statements of qualifications
The school district prepares and issues a request for proposals
If price is an evaluation factor
The contract is awarded to the vendor whose proposal
is determined to be most advantageous to the school district
If price is not an evaluation factor
Vendors are evaluated and ranked
The highest ranked vendor submits cost and pricing data
Contract negotiations begin with highest ranked vendor
A contract is awarded or negotiations are terminated
If negotiations are terminated, negotiations start with next
highest ranked vendor
Price shall be an evaluation factor unless the school district
determines that it is either not practicable or not advantageous
to include price as an evaluation factor
A.R.S. 15-914(B) requires that contracts for financial and
compliance audits shall be approved by the Auditor General
Large Dollar Purchase Methods
Procurement of Specified Professional Services
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(R7-2-1117)
Specified professional services include architects, engineers,
land surveyors, assayers, geologists, and landscape architects
(R7-2-1001-72)
The two methods of award of a contract for specified
professional services are the single negotiated fee method of
award and the multiple fee proposal method of award
Single negotiated fee is the most common method of award
Vendors submit statements of qualifications
Vendors respond to a request for proposals
Vendors are evaluated and ranked
Contract negotiations begin with highest ranked vendor
A contract is awarded or negotiations are terminated
If negotiations are terminated, negotiations start with next
highest ranked vendor
The multiple fee proposal method of award is seldom used
A set of drawings is prepared and stamped
A request for proposals is prepared and issued
Vendors respond to the RFP
Contract is awarded to the vendor whose proposal is
determined to be most advantageous to the school district
Large Dollar Purchase Methods
Procurement of Construction
(R7-2-1111)
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Historically limited to competitive sealed bidding
Qualifications based selection authorized alternative
project delivery methods
There are now 4 project delivery methods for purchasing
construction
Design-Bid-Build (DBB)
Design-Build (DB)
Construction Manager at Risk (CMR or CM@R)
Job Order Contracting (JOC)
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Bid security is required
Annual or 1-time bid bond underwritten by surety company licensed to
issue bid bonds in AZ
A certified or cashier's check.
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Various performance & payment bond requirements
Insurance protection is needed
Various progress payment & retention requirements
Best chance of success comes with proper matching of
requirement and methodology
See R7-2-1033 for requirements for construction projects
with cost not exceeding $150,000 (Simplified School
Construction Procurement Program)
Qualified Select Bidders List
A.R.S. §15-213-I Requires the state board of education to adopt rules
authorizing school districts to procure construction services by
qualified select bidders list.
The rules have not been adopted.
A.R.S. §15-2041-M specifies that until the state board of education
adopts the rules, the school facilities board may allow school districts
to contract for construction services and materials through the qualified
select bidders list method of project delivery for new school facilities.
Procurement of Construction
D-B-B
Best
Suited
For
Least
Suited
For
D-B
CM@R
JOC
New projects
that are not
schedule
sensitive nor
subject to
change
New,
renovation or
complex
projects that
are sequence or
schedule
sensitive,
difficult to
define or
subject to
change.
Approached in
a team concept.
New, renovation
or complex
projects that are
sequence or
schedule
sensitive,
difficult to
define or subject
to change.
Approached in a
team concept.
Schedule
sensitive,
single or
multi-trade
repair,
alteration or
renovation
projects .
New,
renovation
and/or
complex
projects that
are sequence
or schedule
sensitive.
Projects
subject to
change
New projects
easily defined
lacking
schedule
sensitivity.
New projects
easily defined
lacking schedule
sensitivity.
Simple
projects with
defined work
scope lacking
schedule
sensitivity.
Procurement of Construction
D-B-B
Selection
Process
Selection of
architect/
engineer is
through single
negotiated fee
or multiple fee
proposal
method.
Selection of
construction
manager
through
competitive
proposal.
Selection of
general
contractor
through
competitive
bid.
D-B
CM@R
Selection of the
design-builder
is through the
one-step or
two-step
APDM
method.
Design-builder
is responsible
for design &
construction.
Selection of
architect/
engineer is
through single
negotiated fee or
multiple fee
proposal method.
Selection of
construction
manager at risk
through one-step
APDM method
Construction
manager at risk
serves as, or
hires, general
contractor.
JOC
Selection of
job order
contractor is
through the
one-step or
two-step
APDM
method.
Job order
contractor
does the work
and can do the
design.
Procurement of Construction
D-B-B
Pros
Familiar
delivery
method.
Defined scope.
D-B
CM@R
JOC
Qualifications
based selection.
Team concept.
Common goals &
objectives.
Design phase
assistance.
Faster schedule
delivery.
Less expensive.
Change
flexibility.
Fewer claims,
legal issues.
Qualifications
based selection.
Team concept.
Common goals
& objectives.
Design phase
assistance.
Faster schedule
delivery.
Less expensive.
Change
flexibility.
Fewer claims,
legal issues.
Qualifications
based selection.
Faster schedule
delivery.
Reduced up
front time &
cost.
Less expensive.
Fewer changes.
Incentive for
high quality.
Trade
subcontractor
may serve as
job order
contractor.
Procurement of Construction
Cons
D-B-B
D-B
CM@R
JOC
No design
phase
assistance.
Longer
schedule
duration.
Price not
established
until bidding is
complete.
Can be more
expensive.
Lack of change
flexibility.
Adversarial
relationships.
More claims
and legal
issues.
Owner must
provide project
parameters (cost,
schedule, quality,
etc.).
Team concept
must be
implemented
(open
communication,
trust,
commitment,
etc.).
This may be a
cultural problem.
Owner must
provide project
parameters (cost,
schedule,
quality, etc.).
Team concept
must be
implemented
(open
communication,
trust,
commitment,
etc.).
This may be a
cultural problem.
Perception of
threat to inhouse staff.
Requires
teamwork to
reach
potential.
Need trained
owner
personnel to
best
administer
contract.
Large Dollar Purchase Exceptions
Sole Source Purchases
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(R7-2-1053)
A contract may be awarded for a material, service or
construction item without competition if the governing board
determines in writing that there is only one source for the
required material, service or construction item
The school district may require the submission of cost or
pricing data in connection with a sole source award
Sole source procurement shall be avoided, except when no
reasonable alternative source exists
A copy of the written evidence and determination of the
basis for the sole source procurement shall be retained in the
procurement file by the school district
The school district shall, to the extent practicable, negotiate
with the single supplier a contract advantageous to the school
district
The governing board must approve the sole source purchase
before the contract is issued
Large Dollar Purchase Exceptions
Emergency Purchases
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(R7-2-1056)
An emergency condition creates an immediate and serious
need for materials, services, or construction that cannot be met
through normal procurement methods and seriously threatens
the functioning of the school district, the preservation or
protection of property or the public health, welfare or safety
Some examples of emergency conditions are floods,
epidemics, or other natural disasters, riots, fire or equipment
failures
An emergency procurement shall be limited to the materials,
services, or construction necessary to satisfy the emergency
need
The governing board shall designate a board member or
members or school district official or officials authorized to
make emergency procurements, and may prescribe limiting
factors including maximum spending limits with regard to
emergency procurements
Large Dollar Purchase Exceptions
Emergency Purchase Procedure
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(R7-2-1057)
A school district initiating emergency procurement shall prepare
a written statement documenting the basis for the emergency and
the basis for the selection of the particular contractor
The statement shall be signed by the designated district official
authorized to initiate emergency procurements
The designated board member or district official who makes an
emergency procurement shall, at the first scheduled governing
board meeting following the procurement, provide to the
governing board a report concerning the emergency procurement
including the following information
1. The basis for the emergency which necessitated the emergency
procurement, and why it was impracticable to convene a meeting
of the governing board;
2. The basis for the selection of the particular contractor,
including an explanation of how the procurement was made with
as much competition as was practicable under the circumstances;
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3. Why the price paid was reasonable
The documentation shall be retained in the procurement file
Large Dollar Purchase Exceptions
Cooperative Purchasing
(R7-2-1191)
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Cooperative purchasing is not an exception to the competitive
purchase requirements, but another option for satisfying those
requirements
Multiple public procurement units share contracts, when the
contracts meet the requirements of the procurement rules
The administering agency is authorized to collect a fee to cover
the costs of administering the cooperative purchasing contract
The buying agency remains responsible for compliance with all
competitive procurement requirements
If the administering agency meets the competitive procurement
requirements, then the using agency is considered to have met the
requirements, just as if it had gone to bid itself
The administering agency must qualify as a public procurement
unit before a school district can use its contracts
A cooperative may not be a viable option for a school district if
that district’s participation materially alters the scope of the
awarded contract.
Large Dollar Purchase Exceptions
GSA Contracts
(A.R.S. § 15-213(J))

Awarded by the General Services Administration of the
federal government
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Use of GSA contracts requires that the governing
board determine in writing that all of the following
apply:
1. The price for materials or services is equal to or less
than the contractor's current federal supply contract
price with the general services administration.
2. The contractor has indicated in writing that the
contractor is willing to extend the current federal supply
contract pricing, terms and conditions to the school
district or charter school.
3. The purchase order adequately identifies the federal
supply contract on which the order is based.
4. The purchase contract is cost effective and is in the
best interests of the school district or charter school.
Large Dollar Purchase Exceptions
Electronic On-line Bidding
(A.R.S. § 15-213(A)(3))
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On-line bidding includes reverse auctions
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However, before schools can use on-line bidding one
of the following must happen:
The Arizona State Board of Education must adopt rules
prescribing the use of on-line bidding; or
The Arizona Department of Administration must adopt
rules prescribing use of on-line bidding
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Neither entity has on-line bidding rules published in the
Arizona Administrative Code
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Schools must wait for one of the entities to adopt and
publish rules before using on-line bidding
Compliance

The USFR Compliance Questionnaire contains
requirements for the following topics:
Verbal Quotations
Written Quotations
Specialty Large Dollar Purchase Methods
Sole Source Purchases
Emergency Purchases
Cooperative purchasing
GSA Contracts
On-line Bidding
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A copy of the requirements are included in the
supplemental handout.
Small or Large?
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R7-2-1002. Applicability (Procurement Rules)
A. This Article applies to every expenditure of public
monies, including federal assistance monies, by a school
district as specified in A.R.S. § 15-213(A) for the
procurement of all construction, materials and services when
the total procurement cost exceeds the maximum amount
specified in A.R.S. § 15-213(A)(1)…

USFR Section VI
5. Whether to request an oral or written quote is determined
by analyzing the known requirements for an item or a
collection of items that, in the aggregate, may result in the
purchase of the item or items from one vendor.
Small or Large?
USFR Compliance Questionnaire
8. Based upon review of (_____) expenditures for the procurement
of construction, materials, and services that met or exceeded the
amount requiring sealed bids, as calculated by the Arizona State
Board of Education in accordance with A.R.S. §15-213, did the
District follow the School District Procurement Rules (Arizona
Administrative Code R7-2-1001 et seq)?
11. Based upon review of (_____) purchases costing at least $5,000
but less than $15,000, did the District obtain and document oral
price quotations from at least 3 vendors and follow the guidelines
governing competitive purchasing below the dollar limits for
sealed bids prescribed by the USFR?
12. Based upon review of (_____) purchases costing at least $15,000
but less than the amount requiring sealed bids, as calculated by
the Arizona State Board of Education in accordance with A.R.S.
§15-213, did the District obtain written price quotations from at
least 3 vendors and follow the guidelines governing competitive
purchasing below the dollar limits for sealed bids prescribed by
the USFR?
13. Based on the test work performed in questions 8, 11, and 12, did
the District analyze the known requirements for an item or a
collection of items that, in the aggregate, would result in the
purchase of the item or items from one vendor through the use of
oral quotes, written quotes, or formal competitive
bids/proposals?