An unauthorized purchase is a purchase committing agency

An unauthorized purchase is a purchase committing agency funds without prior approval. Training provided by Texas Juvenile Justice Department’s Contracts and Procurement Department. February 24, 2016 Avoiding Unauthorized Purchases 1

• Also called Ratification or After-the-Fact Purchase. • No one is authorized to commit agency funds or obligate agency without proper approvals. • Only trained purchasing staff can sign PO’s to commit agency funds. • Only Executive Director can sign contracts binding TJJD. • If any staff other than Purchaser or ED commits to pay vendor for a good or service, it is unauthorized. • "I didn't Know" is not an acceptable reason. • It’s too late when vendor begins work. • Purchasing Dept usually finds out when vendor submits invoice. February 24, 2016 What You Should Know 2

• Actual examples of unauthorized purchases: § Making purchases with personal check or credit card, then expecting to be reimbursed; § Placing order for supplies or services without prior issuance of purchase order: § Signing contract or agreement of any kind, including MOU; § Renewing subscriptions or registering online; and § Committing to pay another party to do or supply something. • In all cases, the staff committed agency funds without securing the appropriate approvals first. February 24, 2016 Examples 3

• Factors to consider with unauthorized purchases: § § § § Extra cost of processing invoices; Staff time to research and reconcile the purchase; Delayed payments; Negatively impact vendor relationships; Against State of Texas Purchasing policies and statutes; There are consequences; Department Head must sign Unauthorized Purchase Letter; Employees may not receive full reimbursement for purchased items. • Many times, these costs offset the perceived savings in the purchase price or discounted offer. February 24, 2016 Consider Cost and Consequences 4

• When in doubt call someone who knows, your purchaser. • Leave purchasing to the trained staff that know the state purchasing procedures. February 24, 2016 How to Avoid • Purchasers will select best purchasing method to meet your needs and get you the best price allowed by purchasing rules. • If you have a unique requirement that requires special handling, contact procurement staff for assistance. • Want to know more? Go to State of Texas Procurement Manual http: //www. window. state. tx. us/procurement/pub/manual/ 5

What Do I Do • Notify Purchasing immediately (usually last to know). • Contact Accounts Payable (they’re first to know). • Unauthorized Purchase Letter prepared by Procurement Department. • Signed by Director of Contracts. (sample provided next slide) • Violation discussed with you, consequences explained. • Depending on severity of situation, letter is addressed to Department Head, Division Director or Executive Director. • Training may be required and is available on purchasing webpage. • Up to individual Departments if further action taken. • Put on the Unauthorized Purchase Violator’s List. • With a signed unauthorized purchase letter vendor can be paid. February 24, 2016 if a vendor submits an invoice for services rendered or products delivered and there is no PO or contract? 6

February 24, 2016 09/17/2012 Joe Director, Manager of Information Systems Texas Juvenile Justice Department Re: Receiving Services without a Contract/Purchase Order Dear Mr. Director, The Contracts and Procurement Division has identified the acquisition for renewal of SSL Certificate on July 18, 2012, as an unauthorized procurement. The total of the services provided is $164. 94. I have attached a copy of the statement from Citi. Bank. This letter serves as the instrument by which the procurement card will be paid. Upon your signature and acknowledgement of services received, we will provide this letter to TJJD Claims department. Please instruct your staff as to the importance of having a Contract/Purchase Requisition in place prior to services being provided. It is important that procurement statutes and procedures are adhered to within the TJJD. Contracts and Procurement staff can provide guidance and training to ensure that personnel are knowledgeable of requirements. Please feel free to contact me if you have any questions. Sincerely, Kenneth I. Ming, Director Contracts, Procurement and Support Services Texas Juvenile Justice Department Acknowledgement: Cc: Jim Doe, Senior Director of Finance & Technology File 7