Finance and Administration Policies
I. Justification and Statement of Policy
This policy addresses the ethical practices and procurement requirements associated with purchasing methods, vendor selection, comparative pricing, approval of purchasing transactions, signing authority, receipt of products and services acknowledgment, and sales tax issues.
F&M College personnel shall purchase products and services using practices that are compliant with federal and state laws and aligned with the mission of F&M. Furthermore, products and services purchased with sponsored funds must comply with the sponsor's terms and conditions. If procuring products and services on a federal prime or federal pass-through award, the College must avoid the acquisition of unnecessary or duplicative items.
The following principles-based questions should serve as a guide when deciding on the purchase of a product or service:
Is it necessary to perform a valid business purpose fulfilling the mission of the College; and
Is it reasonable in that the expense is not extreme or excessive and reflects a prudent decision to incur the expense; and
Is it appropriate in that the expense is suitable and fitting in the context of the valid business purpose; and
Is it allowable according to the terms of any federal regulation, sponsored contract, or College policy?
College personnel should purchase products and services using the College's preferred vendors through the eProcurement system for synergies, simplification, and better pricing (F&M preferred vendors are identified in the eProcurement system with a preferred vendor tag). Purchase requisitions should be created prior to the receipt of products or services.
This policy is applicable to all employees, students, and other individuals who initiate, review, or approve purchases on behalf of the College.
a. Approver: College purchases must be approved by the departmental financial manager, Senior Officers, and when required, the Board of Trustees.
b. Certificate of Insurance: Proof of insurance provided by a vendor.
c. Comparative Pricing: The process of procurement through which the purchaser compares pricing from multiple sources for a product or service and evaluates the options to determine which is most advantageous.
d. Competitive Bidding: A method of comparative pricing that requires the solicitation of requests for bids from at least three (3) sources on all purchases greater than $5,000. F&M will consider all proposals, conduct a technical evaluation, and award a procurement contract to a vendor whose proposal represents the best value.
e. Diversity Vendor: A vendor that meets the standards for minority, and/or women-owned, small, or veteran-owned vendors, as defined by the federal Small Business Administration.
f. Environmentally Preferable Purchasing (EPP): The purchase of products and services that have a reduced effect on human health and the environment when compared with competing products that serve the same purpose. This comparison should consider raw materials acquisition, production, manufacturing, packaging, distribution, reuse, operation, maintenance, and disposal of the product.
g. Micro-Purchase: A purchase of products or services less than $5,000.
h. Preferred Vendor: A vendor with whom the Business Office has established a special arrangement to maximize the purchasing power of the College and reduce the overall cost of products and services by establishing a master contract. Departments utilizing contracts with preferred vendors, as long as the contract is still in effect, are exempt from participating in the competitive bidding process. When available, preferred vendors are required to be used to secure products and services.
i. Purchase Order: An offer made by the College to a vendor to purchase products and/or services pursuant to certain terms and conditions. When a vendor accepts the purchase order, a legally binding contract is formed.
j. Purchase Requisition: the preauthorization mechanism required to generate a purchase order. Purchase requisitions must be entered into the College's eProcurement system and include a description of the purchase, any requirements, delivery instructions, and the required departmental approval.
k. Purchasing Card (PCard): A corporate-liability charge card issued by F&M to qualified employees to use for travel and entertainment only to support F&M business or in accordance with this policy.
l. Senior Officer: For purposes of this policy, the President or Divisional leaders of the College who report directly to the President.
m. Sole Source: The concept of selecting a vendor without a competitive process, based on one or more of the following: a justification that a product or service is unique or proprietary (e.g., specialized and unique laboratory equipment, specialized software, patented materials or techniques); if a vendor has an exclusive agreement or territorial limitation; the federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals by written request; the requirement will not meet the criteria for competition; or public exigency or public emergency (i.e., imminent threat to persons or property) for the requirement will not permit the delay that would result from competitive solicitation.
n. Select Source: A select source procurement is one in which two or more vendors can supply the product or service required by a department, but the department selects one vendor over the others for reasons such as expertise or previous experience with similar projects.
o. Vendor: A person or entity that provides products or services to the College.
a. General Provisions:
Other College Policies Applicable
All purchases for products and services are subject to all other College policies, where applicable.
To protect a vendor's right to confidentiality, and the College's interests, competing vendors must not be told the prices, terms, or conditions quoted by other vendors. All College employees must respect confidentiality in all procurement activities.
Separation of Duties
Departments must separate the duties of purchasing, receiving, and authorizing payment for products and services by distributing these duties among two or more people. If staff limitations require one person to be responsible for these functions, a supervisor must accept responsibility for monitoring and verifying the transactions.
Exclusions from Comparative Pricing
While the overall policy must be followed, exemptions are granted from the comparative bidding process pricing by providing substantiation of select source or sole source documentation for review by the Business Office. Examples include:
Investment management services (expenses uniquely and specifically related to investment asset management.)
In-depth performance and risk analytics;
Specialized IT support and software systems and platforms;
Confidential printing services;
Lecturers and guest speakers, portrait artists, musical professionals, theatrical artists involved in the production or performance of a live event;
Museum artifacts and art collections, rare books, and other rare collection materials.
Library licenses for electronic scholarly content (databases, journal collections and other e-resources intended to support academic work)
Sales Tax Exemption
Franklin & Marshall College qualifies for sales tax exemptions in many states when purchasing products or services, including meals and lodging. To obtain an exemption, the payment must be made directly to the vendor using a PCard or check. If personal funds are used for expenses, the College will reimburse for sales tax paid.
b. Methods of Purchasing
The College's preferred and recommended method to obtain products and services to conduct College business is the issuance of electronic purchase requisitions and purchase orders. For certain departments, and in certain situations, the College does allow purchases to be made using College-issued PCards.
Contracts are required for all services provided to the College. A contract is required even if there will be no remuneration for the services. A contract is meant to protect the College and its employees and resources. It is used to outline the responsibilities of the parties, agreements for payment, etc. A vendor accepted purchase order forms a legally binding contract.
Electronic purchase requisitions are required for procuring most common products and services. Electronic purchase requisitions must be entered into the College's eProcurement system, DiploMart, and will then be processed through the appropriate approval chains. Once completed, the purchase requisition will be converted into an electronic purchase order, which will be sent to the vendor. A completed, approved purchase order constitutes a legally binding contract.
Purchase requisitions shall be created prior to the receipt of products or services and must include a quote from the vendor selected to provide the product or service. If all products or services have not been received in full and additional products or services remain outstanding, a purchase requisition should be created to cover the remaining products or services.
Purchasing Card (PCard)
Individuals authorized to use an F&M Purchasing Card (PCard) may use the card to pay for travel and entertainment expenses in accordance with their transaction limit and authorization level. In limited situations, with valid business reasons, individuals authorized to use a PCard may use the card to pay for miscellaneous small dollar business-related products and services (<$2,000). Purchases greater than $2,000 on a Pcard require special approval by the Senior Officer and communication with the Business Office.
All PCard transactions must be processed and approved in a timely manner using the PNC management solution.
In very limited circumstances, small dollar purchases may be made using personal funds. Reimbursement for purchases of this type must be submitted through the F&M eProcurement system DiploMart as an employee expense reimbursement. All employees are responsible for submitting their own employee expense reimbursement requests along with the required substantiation. Any expenses submitted without substantiation will be declined and returned to the employee for correction.
c. Vendor Considerations
Competition and Vendor Selection
The College encourages competition among vendors in providing products and services to the College. Competition assures a mix of quality, service, and price that matches the stated needs of the College. Accordingly, those involved in vendor selection have the responsibility to search broadly and completely for viable vendors. The Business Office is available to assist in the vendor selection process.
College preferred vendors (listed in the DiploMart system with the "Preferred" tag) have already undergone a competitive bidding process conducted by the Business Office. Competitive bidding is not required when acquiring products or services from a preferred vendor.
Every effort must be made to utilize diversity vendors. These are vendors who can certify they meet the standards for minority, and/or women-owned, small, or veteran-owned vendors set by the federal Small Business Administration. These vendors are identified with tags in the DiploMart system.
Suspended or Debarred Vendors
The Federal Government suspends or debars contractors to protect its interests. Other than a procurement contract for the purchase of a commercially available off-the-shelf item, F&M shall not enter into a procurement contract in excess of $5,000 with a vendor that is debarred, suspended, or proposed for debarment by any federal executive agency, unless there is a compelling reason to do so.
d. Purchasing Procedures
Micro-Purchases (< $5,000)
Micro-purchases may be made without soliciting competitive quotes as long as the requisitioner considers the price to be reasonable. To the extent practicable, F&M distributes micro-purchases equitably among existing vendors. Micro-purchases require a purchase requisition, along with a quote, prior to committing College funds for the purchase.
Small Purchase (≥$5,000 and ≤$250,000)
Small purchases require price or rate quotations from no fewer than three qualified vendors. To accomplish this, the College requires that at least one of the following actions occur:
Quote documentation shall include a vendor price list, an Internet search of vendor websites to determine market and published prices, or prices provided in writing directly from the vendor (within 6 months);
For federal or federal pass-through awards the quotes must take the form of pricing provided by the vendor in writing within 6 months;
Conducting a competitive bidding process: at least 3 bids/quotes are compared for reasonableness and responsiveness to the request for quote/bid. Contact the Business Office for assistance with this process; or
Sole source justification: Document justification for sole source purchases.
Purchases in excess of $10,000 require approval from the Senior Officer of your division. Purchases in excess of $25,000 require approval from the Chief Financial Officer. Purchases in excess of $100,000 require approval from the College President.
Purchases > $250,000
Purchases in excess of $250,000 require approval from the Finance Committee of the College. Purchases in excess of $500,000 require approval from the Board of Trustees.
The College requires that for purchases in excess of $250,000, one of the following actions is completed:
Conducting a competitive bidding process: at least 3 bids/quotes are compared for reasonableness and responsiveness to the published request for quote/bid; or
Sole source justification: Document justification for sole source purchases.
For purchases greater than $250,000 on federal and federal pass-through awards, the Principal Investigator (PI) must make an independent estimate and receive grant funding approval before receiving bids or proposals. The PI should work with the Associate Dean of the Faculty (Research).
As a recipient of federal funding, the PI should work with the Institutional Review Board (IRB) on this process to ensure all guidelines are followed and the purchase is compliant with the requirements of the granting agency. The purpose of either analysis is to ensure the price for the products or services is fair and reasonable and to avoid charging the Federal Government excessive costs for major procurement contracts. The method and degree of analysis may vary depending on the facts surrounding the particular procurement situation.
Contract Signing Authority
Only those officers of the College assigned or delegated signature authority by the F&M Board of Trustees may sign contracts, agreements, or other official documents to purchase products or services on behalf of the College.
Exceptions to this policy must be approved by the Controller's Office, in consultation with the Provost's Office, General Counsel, or other Senior Officer, as appropriate.
e. Exemptions: Sole and Select Sourcing
A sole source procurement is one in which only one vendor can supply the products or services required by a buyer. Procurement by this method must be documented by completing a Non-Competitive Sole and Select Source Justification Form and providing an explanation of: (i) the unique nature of the requirement; (ii) the basis upon which it was determined that there is only one known vendor able to meet the need, i.e., the steps taken to identify potential competitors; and (iii) the basis upon which the department determined the cost to be reasonable (i.e., a "fair market price" that could be anticipated had normal competitive conditions existed) and how that conclusion was reached. (Examples of such a determination may include a comparison to product catalogs, published price lists, retail market surveys, records of previous similar purchases, consulting other purchasing officials, or using professional experience.)
A select source procurement is one in which two or more vendors can supply the product or service required by a department, but the department selects one vendor over the others for reasons such as expertise or previous experience with similar projects. Circumstances leading a department to select this method of procurement may include a department's need for a specific consultant firm where a number of firms are available to perform the work. In such a case, the department can demonstrate a rational basis for selecting a single vendor because of specific factors such as past experience with a particular issue, familiarity with specific department operations, experience with similar projects within other departments or at other institutions, demonstrated expertise, or capacity and willingness to respond to the situation.
In a select source procurement, the department must complete a Non-Competitive Sole and Select Source Justification Form and document: (i) the circumstances leading to the selection of the vendor, including the alternatives considered; (ii) its rationale for selecting the specific vendor; and (iii) the basis upon which it determined the cost was reasonable, as in the case of a Sole Source procurement, and how that conclusion was reached.
f. Contact Roles and Responsibilities for Travel Expense Reports
1. Responsibility of Travelers/Purchasers
College travelers/purchasers are expected to spend College funds prudently.
Travelers/purchasers are expected to familiarize themselves with the College's Purchasing and Business Expense Policies.
Expenses will be paid or reimbursed by the College if they are reasonable, appropriately documented, properly authorized, and within the standards of this policy.
Individuals who incur authorized expenses should neither gain nor lose personal funds as a result of travel/purchases for F&M.
2. Responsibility of Approvers
The approval process is essential to the reimbursement of expenses incurred by employees, travel and otherwise.
Travel Expense Reports should be signed by the employee and should also contain a signature of approval by the appropriate authority.
As each college department has a different structure, the appropriate authority is defined as the Department Head.
The traveler/purchaser's required approver is the person who is the next highest level with budget authority for the index to which the expenditures will be charged.
Under no circumstances should an employee approve their own Travel Expense Report or general purchases.
Furthermore, in no situation should a peer or subordinate approve another employee's Travel Expense Report.
The approver's signature indicates that the reviewer has examined the Travel Expense Reports in detail and verified the validity of the expenditures in accordance with College policy, attests to the accuracy of the form, and is in full agreement with the amount expended and/or due to the employee.
3. Responsibility of Accounts Payable and Finance
Review of forms and attachments for completeness, accuracy, reasonableness, and compliance with government regulations and college policies;
Return of forms to employee or the approver when items appear unreasonable, incomplete, personal in nature, or violate government regulations or College policies;
Maintenance of auditable records of expenses;
Verification of required approved signatures;
Ensuring the proper tax treatment of taxable income items and compliance with IRS regulations.
V. Related Documents and Forms
Policy Maintained By: Office of Finance and Administration, Vice President for Finance and Administration
Original Effective Date: April 3, 2023