Vice President for Finance and Treasurer
Jason Knoch, assistant vice president for financial services, (609) 258-9181
I. Policy StatementBACK TO TOP
Princeton University supports a purchasing environment that recognizes departments have special expertise and are in the best position to determine what they need to run their programs. Policies and procedures are provided to facilitate the purchase of goods and services needed to run programs in a timely, efficient, and cost effective manner. The Purchasing of Goods and Services Policy contains the following policy sections:
- General Principles
- Suppliers & Contracts
- Capital Equipment
- Computer Equipment
- Mobile Communication Devices
- Sales Tax Exemption
It is essential to obtain prior approval to bind the university in any agreement (Transaction Authority Policy) and to obtain prior approval to make any payment. All purchases must be charged against the correct chartstring, and must be compliant with related sponsor contracts. A centralized purchasing system is used to leverage purchases for best pricing and to maintain an inventory of all purchased items.
II. Who is Affected by this PolicyBACK TO TOP
All faculty, staff, researchers, graduate students, undergraduate students and independent contractors.
A purchase, whether a physical good or intangible property, that has monetary value and is accounted for in the owner's balance sheet.
A physical item other than money, real estate, or services.
Suppliers which have been awarded business through a competitive bidding process, typically through Procurement, and which have an active, negotiated contract with terms favorable to the University.
Small Business Concern
A small business that is independently owned and operated, and is not dominant in its field of operation.
A purchase where the supplier selection process does not include competitive bidding with more than one qualified supplier.
IV. PolicyBACK TO TOP
Procurement Services is the central purchasing authority for the University and is responsible for managing the purchasing process on a University-wide level. The Purchasing Department staff is made up of licensed purchasing professionals who are pleased to assist University departments.
Procurement Services staff is available to work on large and complex projects, but departments may work independently to source their needs and select the supplier in accordance with University policies. The University department and Procurement Services will jointly communicate technical details to suppliers as needed. Procurement Services staff are available to communicate with suppliers regarding prices and quotes, perform due diligence, and execute the final contract. Procurement Services has the responsibility for making the final determination of source of supply, quantities purchased, delivery schedules, and price negotiations.
All written vendor forms of agreement for the purchase of goods and services, such as quotations, contracts, terms and conditions, etc., should be sent to General Counsel and Procurement Services for review via the Contracting website, which is a University-wide website to facilitate contract review.
AUTHORITY TO BIND THE UNIVERSITY and APPROVAL OF PAYMENTS
Princeton University’s bylaws provide that only officers of the corporation or their delegates may bind the University in contracts, leases, and other legal agreements. The Transaction Authority Policy clarifies the delegation of authority to individuals to make legally binding obligations on the University.
All purchase contracts, vendor agreements, and transactions for the purchase of goods and services must receive approval for both contract signature and payment approval. The Transaction Authority Policy and annual certification process record the delegation of authority to specific department heads and office heads. These individuals only are authorized to commit University resources and approve payments up to a specified threshold. Procurement Services is authorized to execute contracts and place orders for goods and services, subject to the receipt of an approved purchase requisition from the initiating department. Procurement Services has delegated authority to the departments to work directly with suppliers when the transaction dollar value is less than $10,000.
According to New Jersey law, individuals who do not have delegated authority and enter into an unauthorized agreement may be held personally liable and responsible for the cost of the goods or services purchased.
Please coordinate with other University departments for the purchase of goods and services:
- Office of the General Counsel - Review of service agreements, supplier contracts, purchase transactions (of any value), contract claims, and disputes.
- Office of Risk Management - Review of insurance certificates and issues regarding insurance coverage.
- Facilities Procurement Office - Contracts for goods and services that are used primarily by the Facilities Department.
- Office of Research and Project Administration - Federal grants and reporting requirements related to property or small business/small disadvantaged business/woman-owned business subcontracting plans.
- Office of Environmental Health and Safety - Contracts for goods and services related to personal protection or issues regarding potentially hazardous substances or equipment.
MINIMUM BID REQUIREMENTS
Competition between suppliers is one of the most effective ways to ensure that a product or service is secured at the most favorable price and terms. Competitive bidding is required for products or services with an aggregate total value of $10,000 or more. However, competitive bidding is not appropriate in every situation.
The University requires competitive bidding in order to appropriately safeguard University assets. As a condition for receiving federal funding for research, the University maintains a federally approved purchasing system that is routinely audited to confirm compliance with Federal Acquisition Regulations (FAR) and The Office of Management and Budget's Uniform Guidance. These regulations mandate competitive bidding and require that the University must take affirmative steps to ensure diverse suppliers are used. When audited, the University must certify that the University’s policies are in compliance for all transactions - not just those that are federally funded. An audit failure would result in a requirement for government approval for every individual purchase transaction when federal funding is involved. An additional federal requirement is that suppliers designated as “Disadvantaged Businesses" be given an opportunity to compete for the University’s business. As a result, Procurement Services makes efforts to request bids from firms with such designations. In some circumstances, competitive bids are not appropriate and the requirement for obtaining them is waived. These circumstances include those outlined on the Sole Source Purchasing section below.
The following minimum bid requirements guidelines have been established to promote competitive bidding. Bids should be solicited whenever the items can be purchased from multiple sources. Upon request, Procurement Services will assist in locating potential suppliers and obtaining pricing and product availability information.
Preferred suppliers should be the first sourcing choice as these suppliers were competitively bid and are under contract with the University. Competitive bids are not required when purchasing directly from a preferred suppllier, except as noted below:
- Purchases less than $10,000 – The University recommends but does not require competitive bids for all requisitions less than $10,000 in total.
- Purchases $10,000 or more – The University requires a minimum of three written competitive bids for a product or service with a potential aggregate total value of $10,000 or more. The University encourages the use of diverse suppliers and should be included whenever possible.
- Purchases above $250,000 – A structured process to solicit and evaluate competitive bids is required for Federally funded purchases, and encouraged for all purchases, where the aggregate value of the purchase exceeds $250,000. This solicitation process includes written requirements and evaluation criteria, public notification of sourcing events and a cost or price analysis in advance of the purchase. Procurement Services will conduct these solicitations in partnership with and on the behalf of departments, and departments are strongly encouraged to contact Procurement Services as early as possible to discuss the need for a formal competitive bid.
SOLE SOURCE PURCHASING
The University usually obtains the lowest prices through the competitive bidding process. However, when only one supplier is capable of providing a product or service, the noncompetitive transaction must be documented with the Sole Source Justification to support the absence of bids. Procurement Services will evaluate requests and supporting documentation for Sole Source classification. Procurement Services may contact the originating department for clarification or additional supporting documentation.
Sole Source purchases made with Federal funding have additional requirements which include the need to negotiate supplier profit separately, and for purchases above $250,000, a cost or price analysis is also required. Procurement Services is available to determine if a purchase qualifies to be sole source or to assist with the purchase.
SUPPLIER PRICING CONFIDENTIALITY
Maintaining the confidentiality of pricing information results in a more fruitful competitive bidding process. As a private institution, the University is not required to divulge quoted supplier prices to their competition. Revealing quotes from one supplier to a competitor may open the door to legal difficulties, and undermines the competitive bidding practice as competing suppliers may not bid the best prices possible.
Both Procurement Services and other departments that solicit supplier bids are required to keep bids confidential. Prompt notification of both successful and unsuccessful bidders should be completed immediately after the conclusion of the bidding period.
CONFLICTS OF INTEREST AND ETHICS
Employees of the University have an obligation to avoid activities or situations that may appear to be, or could result in, a conflict of interest. Employees must not use their University positions to influence outside organizations or individuals for the direct financial, personal, or professional benefit of themselves, members of their families, or others with whom there is a personal relationship.
Procurement Services is committed to fair and ethical business practices that promote open and fair competition in the best interests of the University and the success of its supplier relationships. Procurement Services abides by the National Association of Educational Buyers Code of Ethics.
CHECK THE RESOURCE RECOVERY PROGRAM
Prior to contacting a supplier to purchase common equipment, departments should review the Resource Recovery Program web listing. In fact, federally funded project contracts require the University to look for suitable equipment in the Surplus Program prior to acquiring new equipment. The Surplus Program provides an inventory and access to underutilized equipment that is available for repurposing within the University.
V. Procedures BACK TO TOP
VI. Forms BACK TO TOP
VII. Contact Roles and Responsibilities BACK TO TOP
VIII. Update Log BACK TO TOP
Updated Surplus Program to Resource Recovery Program.
Update to formatting, no change of substance.
Updated Executive Sponsor listing.
Updated threshold from $150,000 to $250,000.
Updated to reflect changes required for Uniform Guidance.
No change to policy or substance; updated link to Transaction Authority Policy.
No change to policy or substance; updated department name from Purchasing to Procurement Services.
No change to policy or substance; revised organization and language for web-based policy library.