University Procurement and Logistics

I. Policy Statement

University Procurement and Logistics (UPL) facilitates and supports the University community in its selection and acquisition of goods and services. This policy ensures that procurement activities performed on behalf of the University adhere with federal and state law and regulations and comply with University policies.

II. Scope

This policy applies to the entire University community when conducting procurement activities and outlines obligations for all University Employees to properly document their transactions, employ fiscal responsibility, practice ethical behavior, and ensure that the prices paid for goods and services are fair and reasonable.

The Procurement Guidebook gives additional details on the procurement process.

Reference: Procurement Guidebook

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III. Definitions

• Affiliate — An entity that is controlled by, or is under common control with, the University
• Bid Preferences — To give an advantage to a Supplier on an RFx based on their protected status
• Bid Rigging — An illegal practice that involves competing parties colluding to choose the winner of a bidding process; also may be relevant if a winning bidder subcontracts to a losing bidder
• Bribery — The offering, promising, giving, accepting, or soliciting of an advantage as an inducement for an action which is illegal, unethical, or a breach of trust
• Contract and Grant Administration (CGA) — The Administrative Unit that provides contractual and financial administration of grants, cooperative agreements, and contracts
• Debarment — The exclusion of a company or individual from doing business with state or federal government
• Employee — An individual who works for the University, including temporary, on-call, student, and contract/agency workers; may include the Requestor, Fiscal Officer, Subject Matter Expert, or others involved in the procurement process
• Fiscal Officer — A University Employee responsible for the management of funds associated with one or more financial accounts
• FOIA (Freedom of Information Act) — An act that provides the public the right to request access to records from any federal agency
• Kickbacks — An occurrence where one party provides value (cash payments, gifts, inflated bills, promise of research funding or anything of inherent value) to another party in order for the receiving party to use more or pay more for the payor’s goods or services.
• Major Administrative Unit (MAU) — The University's identifier for colleges and other major Units in business and accounting systems
• MAU Administrator — The Unit Administrator who holds authority over a Major Administrative Unit
• Purchase Requisition — A document which specifies what is to be purchased and the appropriate account number(s) to be charged
• Purchase Order — The document issued to a specific Supplier committing University funds for the procurement of goods and services
• Requestor — A University Employee who submits a Purchase Requisition; Requestors have line management starting with the MAU Administrator
• RFx — General term for competitive solicitations, including Requests for Information (RFI), Requests for Quotations (RFQ), and Requests for Proposals (RFP)
• Set-asides — The limiting of an acquisition exclusively for participation by protected classes
• Signature Authority — The permission to sign contracts and agreements on behalf of the University, as delegated by the President
• Subject Matter Expert (SME) — A University Employee who has the specific, relevant knowledge required to identify the need for and specifications of a purchase
• Supplier — A company who provides goods or services to the University
• Unit — Organizational entities at the University, each with a responsible administrator; includes departments, organizations, programs, colleges, and MAUs
• University — A public land-grant research university based in East Lansing, Michigan whose Employees administer procurement functions through delegated authority
• University Procurement and Logistics (UPL) — The Major Administrative that includes a Procurement sub-unit, which competitively solicits, negotiates commercial contracts, and issues orders for goods and services on behalf of the University under delegated Signature Authority

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IV. Policy

A. Signature Authority

Pursuant to the University’s Delegation of Signature Authority Memorandum, the University’s President has delegated procurement authority to the Associate Vice President and Chief Procurement Officer, who in turn redelegates this function to the Executive Director of Procurement and Payment Systems and other qualified buying staff. In addition, the Associate Vice President and Chief Procurement Officer redelegates specialized purchasing authority to select Units.

Other than as outlined above or as set forth in the Delegation of Signature Authority Memorandum, Employees are not authorized to negotiate and execute procurement-related contracts or issue Purchase Orders on behalf of the University. Employees signing procurement-related contracts or attempting to bind the University through other means without authority may be subject to legal and University disciplinary action. Further, the University is not bound by and does not recognize as binding a contract signed by an unauthorized Employee.

Reference: Delegation of Signature Authority Memorandum

B. Conflict of Interest

The University is a subdivision of the State of Michigan and is subject to Michigan Public Act 317 of 1968. Pursuant to the act, the University may not enter into a contract with a Supplier that is affiliated with a University Employee without first disclosing certain information to the University’s Board of Trustees and subsequently receiving approval from the Board of Trustees through a formal vote.

The University is subject to federal procurement rules and regulations. Pursuant to those rules and regulations, an Employee must not be in a position to make a procurement-related decision if their personal, professional, or economic interests (or those of their immediate and extended family members) may be directly influenced or affected by the outcome. These rules and regulations apply to all purchases, irrespective of payment method or paying account, including those outside of Purchase Orders, such as PCard.

Employees must prevent organizational conflicts of interest, which occur when the University is unable or appears to be unable to be impartial in conducting a procurement action involving an Affiliate. To prevent organizational conflicts, Affiliates seeking to do business with the University must be treated identically to unaffiliated third parties.

Reference: Conflict of Interest

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C. Ethical Conduct

All University Employees have the responsibility to conduct procurement activities ethically and in compliance with applicable federal and state laws and regulations, as well as University policies. Examples of illegal and unethical practices include but are not limited to: engaging in price fixing arrangements; Bid Rigging; agreements with competitors to divide or allocate markets or customers (including allowing losing bidders to be subcontractors to winning bidders); falsifying accounting records; intentional misrepresentations to the University’s auditors; Bribery; and Kickbacks. Employees acting unethically may be subject to discipline up to and including termination and may be subject to criminal prosecution. The University may not defend or indemnify Employees for actions that violate University policy.

D. Gifts from Suppliers

Employees involved in any aspect of the procurement process must not solicit or accept money, loans, credits, entertainment, favors, services, or gifts from current or prospective Suppliers. Such gratuities, even of seemingly low value, can create a conflict of interest or the appearance of a conflict of interest. If it is deemed necessary to visit a Supplier site for a demonstration (usually within the context of an RFx), the University must pay all related travel expenses. This policy applies to all Employees, including temporary and student Employees, as well as staff augmentation and contract labor.

E. Confidentiality

Employees involved in procurement activities on behalf of the University must ensure that confidentiality is maintained with respect to Supplier proposals, quotations, prices, contracts, and other proprietary materials. Except for disclosures made pursuant to applicable law, confidential information must not be disclosed in any way to any other Supplier, potential Supplier, other third party, or uninvolved Employee.

F. Supplier Relationships

UPL is the Unit authorized to manage Supplier relationships on behalf of the University, coordinate demonstrations, and communicate regarding contracts or RFx events under its Signature Authority. This ensures each Supplier receives consistent information at the same time and has the same expectation for the return of information. In addition, the entire communication chain retains traceability for purposes of audit and FOIA compliance.

G. Foreign Suppliers

Consistent with state and federal law and University policy, preference is given to domestic Suppliers. Where comparable quality goods and services can be obtained domestically, the University will bias toward the domestic Supplier. Consequently, Requestors must include justification to UPL that addresses the necessity to procure from a Supplier located outside of the United States (i.e., a foreign Supplier). Procurement of goods or services from foreign Suppliers requires additional processing and approvals.

Reference: Office of Export Control and Trade Sanctions

Reference: Office of Research and Innovation

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H. Restricted Party and Related Screening

All Suppliers must be processed through an automated compliance screening for potential regulatory deficiencies, including suspension and Debarment listings). Unless an exception applies under 2 CFR 180.135, which has been approved in writing by CGA and EVPA, The University may not enter into agreements if a Supplier is debarred, suspended, or declared ineligible by a statutory or regulatory authority.

Reference: System of Award Management (SAM)

Reference: Office of Foreign Assets Control (OFAC)

I. Supplier Diversity

The University supports providing business opportunities to a diverse base of Suppliers. Pursuant to the Michigan constitution, the University may not discriminate on the basis of race, sex, color, ethnicity, or national origin. Additionally, preferential treatment may not be granted to Suppliers based on their status as one of these protected classes except to establish or maintain eligibility for any federal program. Examples of preferential treatment include providing Bid Preferences, discounts, or Set-asides to Suppliers based on their status as a protected class. The University is prohibited from using quotas related to protected classes, except in limited federal contract-related cases.

Where federal funds are used and subject to state law, the University will take necessary affirmative steps, including those identified in 2 CFR § 200.321(b), to ensure minority businesses, women’s business enterprises, and labor surplus area firms are used, when possible, for contracts.

J. Sustainability

The University is committed to meeting the needs for goods and services that achieve value for the University, society, and the economy, while minimizing environmental impact.

When federal funds are used, the University will comply with Section 6002 of the Solid Waste Disposal Act as amended by the Resource Conservation and Recovery Act, 40 CFR § 247, and 2 CFR § 200.323.

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K. Specialized Purchases Requiring Coordination with Other Units

Certain types of procurement activities require the engagement of other Units to assist in vetting Suppliers, the goods and services they offer, and the risk to the University. For example, acquisitions involving information technology, hazardous materials, controlled substances, or export-controlled items may require additional review by Units external to UPL.

L. Federal Funds

Procurement activities using federal funds must adhere to 2 CFR 200 Procurement Standards (See 2 CFR § 200.317-327) and may require additional review and approval by CGA.

M. Procurement Process

To initiate the procurement process for the purchase of equipment, materials, supplies, or services from an external Supplier, the Requestor must use an approved purchasing method. Unless an approved, alternative purchasing method is used (PCard or Spartan Marketplace), a Purchase Requisition is required for each of the methods outlined below and should be initiated prior to engagement with external Suppliers.

All purchases of goods and services must be made in an open and competitive environment ensuring prices and terms are fair and reasonable. As a recipient of federal and state funds, the University must comply with certain competitive solicitation requirements. Additionally, based on audit requirements, all procurement activities must comply with University policies. The University’s competitive solicitation policies, outlined below, are based on federal procurement standards.

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1. Micro-purchases

   When the value of the procurement does not exceed MSU’s Micro-purchase Threshold, competitive solicitation is not required if the price is reasonable based on research, experience, purchase history, or other information. To the extent practicable, the University must distribute micro-purchases equitably among qualified Suppliers.
   
   Splitting a transaction into smaller dollar amounts, delaying, staggering purchases, and using multiple Employees to purchase the same or related items to avoid the competitive solicitation process is a violation of policy.
   

   Reference: MSU’s micro-purchase threshold

2. Small Purchases

   Small purchases are purchases where the cost of the procurement exceeds the Micro-purchase Threshold but does not exceed the Simplified Acquisition Threshold set forth in the Procurement Guidebook. While formal competitive solicitation is not required for small purchases, the University must still obtain price or rate quotations from an adequate number of qualified Suppliers as determined appropriate by UPL.
   
   Small purchases require formal, documented price analysis in order to determine that the prices paid were fair and reasonable. UPL is responsible for handling all aspects of a small purchase, including determination if an RFx event is required, and conducting the price or cost analysis.

3. Large Purchases

   When the cost of the procurement exceeds the Simplified Acquisition Threshold set forth in the Procurement Guidebook, an RFx event is required. RFx events is a collective term for Requests for Information (RFI), Requests for Quote (RFQ), and Requests for Proposal (RFP). RFx events must be publicly posted on UPL’s website unless an exception applies.
   
   An RFx document will include standard process requirements maintained by UPL as well as functional requirements developed by the Subject Matter Expert. The RFx document must contain weighted criteria, based on those requirements. The RFx document should include a range of acceptable specifications, along with any mandatory minimum requirements, but must not contain parameters that unduly restrict competition. External Suppliers cannot participate in requirement development of the RFx document unless specifically approved by UPL. Suppliers that participate in the requirement development of the RFx will be disqualified from the solicitation process for that RFx event.
   
   If any changes are made after the RFx document has been issued, all respondents must be notified in writing by UPL.

4. Sole and Single Source

   Sole source purchase requests are considered when the good or service is only available from one Supplier, which must be documented and verifiable.
   
   Single source purchase requests are considered when alternate products and Suppliers exist, but only one truly meets the needs of the Subject Matter Expert or competition is determined inadequate after solicitation.
   
   Sole and single source purchase requests must include detailed justification outlining the rationale for exception to the competitive solicitation process. All single and sole source justifications must include a formal, documented analysis that prices are fair and reasonable. The justification must be approved by the appropriate Unit Administrator, and if applicable, the MAU Administrator.
   
   All single and sole source requests must be approved by UPL.
   

   Reference: Single/Sole Source Justification form

5. Exceptions to Competitive Solicitation

   The following type of purchases are exempt from competitive solicitation:
   
   • Purchases with approved single or sole source justification
   • The aggregate dollar amount of the procurement does not exceed the Micro-purchase Threshold
   • The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation
   • A federal awarding agency or pass-through entity expressly authorizes a non-competitive procurement in writing to the University
   • After soliciting many Suppliers, competition is determined inadequate
   • Purchase of animals and animal-related items at auction
   • Purchase of emergency equipment repair
   • Purchase of emergency animal feed
   • Purchases involving the protection of University property, human and animal life
   • Purchase of care of the dead
   
   Signed documentation and approval routing are required for these types of purchases.

V. Policy Procedures

Processes that support this policy are outlined in the Procurement Guidebook.

VI. Violations

Employees who violate this policy may be subject to discipline up to and including termination. Violations of certain state and federal laws related to procurement may be subject to criminal prosecution.

VII. Related Information and Attachments 

• Delegation of Signature Authority Memorandum
• MBP Section 224: Capital Asset Management
• MBP Section 271: PCard
• MBP Section 74: Invoice Processing

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