Confirming Orders Afterthefact orders Definition of a Confirming

Confirming Orders (After-the-fact orders)

Definition of a Confirming Order n. A purchase, letter of intent to purchase, or request for scheduling in advance of an order that is made by an individual, without having a valid purchase order number, p-card or approved payment request form.

University and Purchasing Policies n Use of confirming Requisitions and Purchase Orders without an approved University payment method to authorize retroactively commitments to vendors by personnel are a violation of University policy.

Delegation of Procurement The President, through the Senior Vice President for Finance and Administration, has delegated the procurement function to the Director of Purchasing. Any acquisition of a commodity or a service made before the Purchasing Department issues a purchase order may become the personal obligation of the individual obtaining the commodity or service.

Delegation of Procurement The requirements stated herein apply to all purchases of commodities and contractual services regardless of the funding source. It is the responsibility of the Purchasing Department to determine the price and secure the source of supply (vendor) for the purchase. Requisitioning departments shall never assume that their recommended vendor will be the vendor/contractor to whom the purchase order will be issued. Requisitioning departments are urged to contact the Purchasing Department prior to preparing a requisition to secure information about specifications, sources of supply, terms and prices. A contractor should never be allowed to provide a service or deliver a commodity before a requisition is prepared and a purchase order issued.

Delegation of Procurement Even when legal authority exists via a power of attorney, all contracts and agreements require review and approval by the Purchasing Department prior to the signing of the contract document, and a Requisition must be submitted, and a Purchase Order issued, before any contract documents are released to the contractor/vendor. If this policy is not followed, the individual signing the contract may be personally liable for any costs incurred.

Audit for Fiscal Year 2005 -06 n An audit for FSU for fiscal year 2005 -06 by the State of Florida, Office of the Auditor General recommended: n “The University should ensure that University personnel do not enter into written contracts that exceed their authorized limits, and that contracts are reviewed first by Purchasing, and then if necessary, Purchasing will obtain approval by the Office of the General Counsel prior to executing written contracts, as required by University policy. ”

Unauthorized signing of Contracts n March 2006 memorandum by John Carnaghi to all DDD’s advising Faculty and Staff who purchase equipment, supplies or services before obtaining FSU Purchasing Department approval assume the risk of personal liability for payment.

Prohibited Purchasing Practices Placing orders for goods or services directly with vendors, instructing the vendor to invoice Florida State University before the Purchasing Department has issued a purchase order to that vendor. n Using a personal credit card or personal funds to purchase goods or services for the department, with the expectation of being reimbursed by FSU, unless the amount is less than $25. 00. n

Prohibited Purchasing Practices IMPORTANT Please post this notice and advise all faculty and staff, including graduate staff of the following policy:

Prohibited Purchasing Practices Any individual who engages in a prohibited purchasing practice is hereby notified that he or she is risking their personal funds only, and not the funds of Florida State University. This policy applies to all funds on deposit with Florida State University, regardless of the source. Lack of knowledge of proper procedures, or a perceived lack of time to follow them, when circumstances do not indicate that a true emergency existed, will result in the return of all payment requests, expense reimbursements or requisitions for handling by the individual making the charge, or the individual approving it after the fact within the department.

Applies to: n Requisitions n Expense Reimbursements (especially over $25) n Payment Request Forms for unencumbered payments

Expense Reimbursements Anything over $25. 00 requires a justification n Employee must be considered in Travel Status Acceptable Reimbursements: (i. e. at a conference and you need to purchase a book but they don’t take p-card or out in the field performing research at a more remote location and you need to purchase something for that research but vendor doesn’t take p-card and no access to the OMNI system) n

Expense Reimbursements n Sales Tax: The University is sales tax exempt for purchases made in Florida. When using a purchase order or p-card we don’t pay sales tax. When making a personal purchase and you are charged sales tax, if approved, the University reimburses you back the full cost of the purchase including the sales tax but the University never recoups sales tax. As you can imagine this can add up over time.

Payment Request Forms n Goods and Services should all come through FSU Purchasing, however, there is an allowable Unencumbered Disbursements list for certain things that can be purchased using a payment request form (PRF). For a complete listing, contact Accounts Payable. n Items being paid via a PRF should not be after the fact and thus a check would be cut to the vendor and the vendor would be shipping the merchandise, not the other way around. n PRF’s can be used when a vendor doesn’t take purchase orders or pcard. If possible the University should consider other vendors that do accept purchase orders before using the payment request method.

Authority to Sign Contracts n Only certain individuals have the authority to sign contracts (the President, Vice Presidents, Director of Purchasing and certain Deans up to a particular dollar amount). Purchasing requires a power of attorney to be kept on file for anyone that has signature authority. n Even with signature authority, all Federal and State laws and University policies and procedures must be followed.

Authority to Sign Contracts over $10, 000 require legal review and must be either stamped or signed off by General Counsel. n All contracts or agreements must be reviewed first by Purchasing and then if necessary will be reviewed by legal. Again, if over $10, 000 legal must review after Purchasing reviews.

Authority to Sign Contracts n If at all possible this language is preferred for all engagement letters, contract documents or agreements: “If the conditions are satisfactory with you, please sign below and return a copy of this letter to me. Upon receipt of the signed agreement, the University will create a purchase order, which will serve as the contract”. The purchase order should be the contract and any agreement or contract document should be supplemental to the purchase order.

Examples of Recent Confirming Orders n Catering at the University Center Club *unaware of the cost of the catered services or the service charges. n Blanket orders not issued as services are required and then submitted 7 -8 months later.

Examples of Recent Confirming Orders n Printing or design work submitted after the work was completed. n Copies n Charter buses secured 2 days prior to departure. n Clothing (i. e. uniforms, shirts, etc. ) n Computer or A/V supplies

Adverse Effects of Confirming Orders n Vendor assumes risk by providing goods/services. n FSU employee assumes risk by requesting goods/services without having an established payment method.

Adverse effects of Confirming Orders n Insufficient funds n Budget closed or grant ended or grant may not allow the purchase n Overpayment for goods/services n Potential Liability n EH&S Issues n Construction/Facilities Issues n Property Tag / Asset Management Issues

Adverse Effects of Confirming Orders n n n n n Lack of Administrative Approvals By-passing State Law for procurement methods By-passing Legal Review Taxation Issues – Conflict of Interest (Employee Employer relationship) Interest penalties / University Credit rating Supplier Diversity Initiative Lack of Internal University Approvals Risk of Audit write-up If it continues, and University continues to support it, we would be granting inherent authority to continue the practice

Internal University Approvals n n n n Computing Equipment (over $20, 000) Security Systems and Fire Alarms Renovations Copiers Printing and Copying Telephones and Telephone Equipment Radiological Material Uniforms or clothing for employees Legal Services Signs, exterior (permanent) Controlled Substances Fans, Heaters, air circulators, etc. Hazardous Waste Traffic control & Personal Safety Devices / Law enforcement Contract and Grant Requisitions

Acceptable Purchasing Methods FSU Visa Purchasing Card (“the p-card”) if allowable by the p-card program. Newly revised policies and procedures have expanded the flexibility of the p-card, so that its use can be more closely tailored to the needs of the department. n Submission of a requisition to Purchasing via OMNI. n Payment Request Form if allowable per the allowable Unencumbered Disbursements list. n

Emergencies n If you have a bona-fide emergency and the University is closed or your in travel status and do not have a p-card or vendor doesn’t accept p-card, document the nature of the emergency and turn in your paperwork by the next business day to Purchasing for review. If it’s a true emergency then Purchasing will approve the request.

Confirming Order Log Purchasing keeps a confirming order log which is reviewed by the Provost, and the Sr. V. P. for F&A. We check for reoccurrences from the same department, same individual and same vendor. Vendors are sent a letter putting them on notice that if it happens again, they will not be paid and they must obtain a University payment method (i. e. valid PO number, P-card number or University check).

How to Prevent Confirming Orders? n Plan Ahead n Call Purchasing for help or expediting orders, obtaining price quotes, bidding, or contract information. n Know or read the University and Purchasing policies and procedures. n Use a p-card for allowable p-card purchases when you can. n Enter a requisition in a timely manner to allow Purchasing to be able to obtain competitive pricing, vendor information, missing requisition information, etc. n Lack of knowledge or saying someone was new is not sufficient for approval.

How to Prevent Confirming Orders? n When watching for the PO number in OMNI, make sure that the PO is in “Dispatched” status before providing the PO number to the vendor. Dispatched status means that the purchase order has passed budget checking. If not in dispatched status the PO could be in budget error.

How to prevent Confirming Orders? n Remember, it takes more time to do it the wrong way than the right way. If in doubt our your not sure the correct way to handle something, please contact Purchasing.

How to Prevent Confirming Orders? n FSU Purchasing Department Main Phone Number: 644 -6850 Website: www. purchasing. fsu. edu n To apply for a p-card contact Nancy Milburn at 644 -9725 or nmilburn@admin. fsu. edu P-card web page: http: //www. purchasing. fsu. edu/Purchasing-Card. Information n Confirming Orders: contact Karen Gibson, Associate Director of Purchasing, at 644 -9729 or kgibson@admin. fsu. edu Confirming Order Justification Form And Reimbursement Justification Form (routes to AP for approval): http: //www. purchasing. fsu. edu/DEPARTMENTAL-INFORMATION/Forms n On-site training can be made available to discuss compliance and procedures by contacting Karen Gibson or Nancy Milburn in Purchasing Services, at 644 -6850.