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7.06     Purchasing

The Regents affirm that the best interests of the state of Iowa and the Regent institutions are served through implementation of a fully competitive purchasing system. 

A.  Authority 

1.   The Board of Regents is authorized by statute to contract for goods, services, and capital improvements. (I.C. §262.9, §8A.122, §8A.302; and capital improvements are addressed in Chapter 9 of this Policy Manual.)  

2.   The Board delegates authority to approve agreements and contracts for all goods and services purchased by the institution, except for capital improvements, fire protection, legal services, and engineers.  (681 IAC 8.2(3)) 

3.   Remedies for breach of contract shall be in accordance with Iowa Code Chapter 554.

B.   Organization and Responsibilities 

1.   The Board of Regents shall establish policies and maintain oversight of all procurement functions. The Board Office and institutions shall meet regularly to ensure coordination of purchasing policies and procedures.  

2.   Goods and services are purchased by the chief business officer of each institution, acting through the institutional purchasing director, on the basis of competitive procedures. Such purchases need not be reported to or approved by the Board of Regents, provided that the Chief Business Officer has determined that there is no unusual circumstance which requires the special attention of the Board and provided the purchase does not involve a lease which must be approved or reported.  

                  Policies related to capital projects, including bidding, bid security, selection of architects/engineers for Regent institutions are in Chapter 9 of this Policy Manual

3.    Each Regent institution, through an institutional purchasing department, shall be responsible for purchasing goods and services.  Institutions may delegate purchasing responsibility to departments.  Low dollar procurement authority may also be delegated to institutional units through the use of credit cards or other appropriate procurement instruments, consistent with prudent, contemporary business and audit practices.   

a.   For low dollar transactions (i.e. procurement cards), each university shall establish specific procedures for departments that identify employee contractual obligations, department approval responsibilities, training requirements for users, appropriate uses, preferred vendors, restricted uses, processes for approval of exceptions, reconciliations and analysis of purchases, and other pertinent information.

b.   Each university shall monitor uses of these instruments to reduce the potential for misuse, periodically review and update processes as necessary for effective administration, and, in consultation with each university’s chief business officer, determine appropriate use of rebates created with such instruments.

4.   Each Regent institution shall establish a purchasing procedure for goods and services.  

5.   Each Regent institution shall maintain a purchasing policy and procedure document.

6.   Each Regent institution shall be custodian of its purchasing records, including but not limited to purchase requisitions, requests for quotations, purchase orders, vendor correspondence and related documents and shall maintain such records in accordance with applicable law.  

7.   Iowa State University will process purchases of $5,000 or more for the special schools.  

8.   Under the Iowa Code and the Iowa Administrative Code vendors may only charge a maximum interest of 1% per month in some situations when a claim remains unpaid after 60 days.  This does not apply to claims against the state under Chapters 25 and 669 or claims paid with federal funds.  (I.C. § 8A.514 and 681 IAC 8.2(4))  

9.   The provisions of Iowa Code Chapter 551, "Unfair Discrimination," shall not apply.  

10.  Regent institutions shall adhere to the professional ethics embodied in the  code of the National Association of Educational Buyers.  

11.  Employees, officers, and members of the Board of Regents shall comply with the Iowa Code Chapter 68B.2A, "Conflicts of Interest of Public Officers and Employees" and Regent Conflict of Interest Policy (681 IAC 8.9).  

a.   Board of Regents institutions shall take appropriate steps to notify employees, vendors, and suppliers of Regent policy on conflict of interest.  

b.   This policy shall be incorporated in the operations manual of Regent institutions, along with any other provisions relating to the subject of an explanatory or more specific or restrictive character.  

12.  Definitions:  

a.   Moveable equipment is defined as any moveable property valued at a unit acquisition cost of at least $5,000 which is identifiable, is not a replacement part, and has a useful life of one year or more.  

Fixed equipment is defined as permanently affixed/installed furniture, fixtures and equipment.  Examples include but are not limited to: elevators, kitchen cabinets, laboratory casework, building directories, library shelving, drinking fountains, signage, plumbing fixtures, building mechanical systems, fixed electronic equipment, and fixed theater or classroom seating, as well as other fixtures and equipment installed with the intent of permanent use in that location.  Fixed equipment, which is part of a capital project, is exempt from the requirements of the following subsections. 

b.   Equipment purchases are subject to the following review procedures prior to the issuance of a purchase order or any other purchase commitment by the institution.  

1)   Equipment with a unit cost of less than $250,000 or a total purchase cost less than $500,000, will be purchased by the Chief Business Officer of each institution, acting through the institutional purchasing agent, as outlined in Section B.2 of this Policy Manual.  

2)   Equipment with a unit cost greater than $250,000 or a total purchase cost of $500,000 to $1,000,000 will be submitted to the Board Office for approval.  The Executive Director will notify the Board of such actions.  At the discretion of the Executive Director, the equipment purchase may be submitted to the Board for approval.  

3)   Equipment costing more than $1,000,000 will be submitted to the Board for approval.  

c.   The Executive Director may approve emergency purchases which exceed $1,000,000 to be followed by Board ratification. 

      Emergency purchases are defined as purchases that are critical to sustaining patient care or human life, maintaining critical research equipment, or similar instances. Emergency purchases may also be defined as those purchases that are time sensitive.

d.   Before submission to the Executive Director for approval, emergency purchase requests must be approved by the vice president for business and finance, superintendent, or equivalent title, or their designees, with subsequent ratification by the Board of Regents at the next scheduled meeting.

e.   Any request submitted to the Board Office for approval pursuant to sections 12(c) and 12(d) of this policy will include the following information regarding the equipment to be purchased:  

1)      Description of the equipment.  

2)      Justification of the need for the equipment.  

3)      Any known alternatives to the equipment proposed.  

4)      Estimated cost and source of funding.  

C.  Qualified Vendors of Goods and Services 

1.   Each institutional purchasing department shall maintain a master list of prospective suppliers.  This list is a resource to be used at the discretion of the Purchasing Director.  

2.   Any person, agency, or firm wishing to supply goods or services in a category may request, in writing, that its name be added to the institutional master list.  The name is added to the institutional master list if, in the professional judgment of the Purchasing Director, the addition would aid in fostering a competitive situation.  The Purchasing Director may require the requesting party to furnish information on qualifications to supply the item(s) indicated and financial responsibility prior to determining whether to add a vendor’s name to the institution’s master list.  

3.   Third party bid subscription services, who themselves do not supply goods or services utilized by Regent institutions, are not approved vendors.  The institutions need not add these bid services to their institutional master list of suppliers, nor provide electronic access for downloading copies of bids, if access is reserved for approved vendors.  Third party bid subscription services and non-approved vendors may request copies of bids under public records statutes.  Institutions providing copies may charge a reasonable fee to cover the costs including, but not limited to, copying, labor, and postage.  The opportunity to receive copies may be suspended should reimbursement of such costs not be made promptly.  (Iowa Code §§22.3 – 22.3A)  

4.   Nonresponsive and Nonresponsible Vendors.

      Once a supplier is added to the master list, the name shall not be removed from the list by an institution except for good and sufficient reasons.  Such reasons shall include, but not be limited to, the following:  

                  a.   Delivery of goods and services that do not comply with specifications; 

                  b.   Failure to deliver within the specified time; 

c.    Refusal to deliver after submitting a quotation, bid, or proposal and after receiving an order;  

                  d.   Withdrawal of quotations, bids, or proposals prior to the placing of an order; 

e.    Failure to have qualified service available in the area to set up, check out, or instruct personnel in use of goods or failure to have parts to service goods, if a part of the agreement or warranty, written or implied;  

f.     Bankruptcy or other evidence of insolvency, or any other fact which might cause substantial doubt about the supplier's ability to continue as a responsible source and fulfill obligations;  

g.     Failure to comply with the Regent Equal Employment Opportunity
        Policy; 

h.     Illegal purchasing practices; 

                  i.    Failure to respond to requests for prices; 

                  j.    No longer in business;  

                  k.   No bids or orders issued in the last consecutive two-year period;  

                  l.    Failure to timely cure one or more noncompliant deliveries;   

                  m.    Removal from an institutional master list of another Regent institution. 

5.   Removal for cause is not to exceed three years, except upon specific authorization of the Board.  Reinstatement requires application to the institution.

D.     Vendor Appeal Procedures 

The following procedures shall be used by any Vendor who wishes to file a complaint regarding a Purchasing action made pursuant to Chapter VII of this policy manual, with the exception of disputes involving the terms, conditions, obligations and interpretations of executed contracts or purchase orders; including, but not limited to, change orders.  If an executed contract or purchase order contains a dispute resolution clause, that clause shall apply and not the procedure outlined in this section.  The filing of a complaint shall not delay the award process if it is determined to be in the best interest of the institution.  Failure to raise a timely complaint in accordance with the following procedure shall be deemed a waiver of the right to contest the matter further.

1.   Informal Dispute Resolution with the University Department

A Vendor who has a concern with a decision made by a Purchasing Agent shall contact the Purchasing Agent within five (5) working days of when the Vendor became aware, or reasonably should have become aware, of the decision or action which forms the basis of the concern.  The Purchasing Agent shall discuss the issue(s) with the Vendor in an attempt to resolve the dispute.

2.    Initiation of Complaint to University Administration

a.   Within five (5) working days of discussing the matter with the Purchasing Agent, a Vendor (hereinafter “Complainant”) shall outline the concern in writing to the institutional Purchasing Director.

b.   The complaint shall be in writing and shall include the following information:

                              i.        Name, address, and contact information
          of the Complainant;

                             ii.        Identification of the purchasing action
         complained of, including the RFQ/RFP
         number if available;

                            iii.        A detailed statement of the legal and
         factual grounds of the complaint, including
         copies of relevant documents;

                           iv.        The specific relief requested; and

                            v.        Signature of the Complainant.

c.   Upon receipt of the complaint, the Purchasing Director shall conduct a review of the complaint and render a decision within ten (10) working days.  Where information needed for the decision must be obtained from sources outside the Purchasing Department, the university’s response may be delayed up to ten (10) additional working days.

d.   The Purchasing Director’s decision shall be in writing and shall contain the name and contact information of the individual to whom the decision may be appealed.

e.   The decision of the Purchasing Director is final unless written appeal is filed with the individual identified in the written decision to receive the appeal.  The appeal must be filed within five (5) working days of receipt of the Purchasing Director’s written decision, and shall contain the specific grounds upon which appeal is made.

3.  Appeal to University Administration

a.   Upon receipt of the appeal, the institution’s Business Vice President, or his/her designee, shall conduct a review of the written record of the complaint and render a decision in writing within ten (10) working days.

b.   Copies of the decision of the institution’s Business Vice President, or his/her designee, shall be provided to the Complainant and the institution’s Purchasing Director. 

c.   The written decision of the institution’s Business Vice President shall be final unless written appeal is filed with the General Counsel for the Board of  Regents.

4.   Should the complaint be affirmed at any stage of institutional review, the institutional representative responsible for reviewing the complaint may, in his/her discretion, grant the requested relief or fashion an alternate remedy as deemed appropriate.  The issuance of a specific remedy shall not be subject to appeal under this procedure. 

5.   Copies of any written complaint received by the institution and any decision rendered pursuant to this procedure shall be forwarded to the Office of the Board of Regents if there are inter-institutional implications.

6.   Appeal to the Board of Regents

a.   Written appeal to the Board of Regents must be filed with the General Counsel for the Board of Regents within five (5) working days of receipt of the final decision of the institution’s Business Vice President.  The appeal must state the specific grounds on which appeal is made and include copies of all relevant documents and written institutional decisions.

b.   Upon receipt of an appeal to the Board of Regents, the Executive Director, or his/her designee, shall take steps to assist the Complainant and the Institution in resolving the issue(s)

c.   If the issue(s) remain unresolved, and in the opinion of the Executive Director the complaint involves serious questions of law or allegations of procedural error having a material impact on the award process, the appeal will be docketed for further review by the Board of Regents.  If the appeal is docketed, the Executive Director shall notify the parties in writing of the date on which the appeal will be heard. 

d.   If a right of review is granted, the parties may submit additional written argument for review by the Board of Regents.  The Executive Director shall notify the parties of the deadline for submission of additional written materials.  Oral argument before the Board of Regents shall not be permitted.

e.   Following review, the Board may affirm, reverse, modify or remand all or any part of the final institutional decision.  The decision of the Board of Regents is considered final agency action.

E.   Competitive Conditions 

The following policies establish the competitive conditions under which Regent institutions shall operate.  

1.   Competitive Procedures.  Each purchasing director or chief business officer - shall be responsible for establishing procedures to ensure that goods and services are competitively selected.  Written bids are required for purchases, which are expected to exceed $25,000. Competitive selection may incorporate multiple criteria of award, with awards made based on bidder whose proposal provides the best value as determined by the institution / purchasing department.  

Negotiated, noncompetitive, and sole source purchases are recognized by the Regents as proper procurement procedures in appropriate circum­stances where the public will be served.   With appropriate institutional review, both competitive negotiation and noncompetitive negotiation processes may replace written competitive bidding when the purchase is anticipated to exceed $25,000.  Regent institutions shall justify the use of negotiated, noncompetitive, and sole source purchasing procedures upon request.  

2.   Bidding. 

a.    Two types of bid solicitations, either formal or informal shall be used.  The determination of which type of bid to be used shall be at the discretion of the institutional purchasing department, except as otherwise provided by law or administrative rule.   

1)  Formal Sealed Bid.  Public notice is required for formal sealed bidding with a bid opening at a specified place on a scheduled day and at a scheduled time.  Sealed bids will be publicly opened and read at the date and time specified in the written notice, unless otherwise indicated in the bid documents.   

2)  Informal Quotation.  This is a request for prices or quotations that is mailed, faxed, communicated by telephone, emailed or otherwise delivered electronically by the institutional purchasing department with due date and time noted.  There is no public reading of bids or quotations.  

Institutional purchasing departments shall provide an opportunity for qualified prospective vendors to prepare timely bids or quotations.  

3)   Bids or quotations are tabulated in the purchasing department.  A buyer either makes the award decision or consults with the requesting department for assistance in the decision, particularly when alternate products are offered by bidders.  

4)  The names of the bidders and the amounts bid shall be supplied to any person upon request after the opening of the bids and as soon as the evaluation of the bids is completed and the award is made.  Information will not be released in situations in which the release would provide a competitive advantage to any of the bidders.   

5)  Nothing contained in these conditions shall be construed to mean that the lowest priced goods or inferior or substandard goods must be purchased.  The Regent institutions are to purchase goods at the lowest cost consistent with the quality and service required.  

6)  Should a buyer recommend an award to other than the low compliant and responsible bidder, a review of the recommendation shall be conducted by the institutional purchasing director or  designee.  It shall be the responsibility of the chief business officer or his/her designee to monitor the low bid rejections.   

b.    Withdrawal of Bids.  Bids may be withdrawn prior to the time set for receipt of bids.  Bids shall not be withdrawn after that time, except as noted herein, without penalty.   

       Only in the event of an obvious and documented error where it would be a manifest injustice to require the vendor to perform, can a vendor withdraw a bid after the time set for receipt of bids.  Such withdraw­al of bids can be done only upon the recommendation of the institution under procedures approved by the Executive Director. 

c.      Procedure for Withdrawal of Bids 

1)   A request to withdraw a bid shall be provided in writing to the institutional purchasing director or designee of the institution taking such bids.  

2)   A vendor is required to provide written documentation of any alleged error.  

3)   Each request for withdrawal will be considered on its own merit.  

4)   An investigation into the request of the vendor to withdraw a bid shall be carried out by the institutional purchasing director or designee.  

5)   A request for withdrawal of bids shall be made part of the vendor’s record.  

6)   Any future request for bid withdrawal by the same vendor may be cause for removal from all Regent institutions' bid lists as an indication of a nonresponsible vendor .  

d.    Bid Security.   Regent institutions have discretion to use bid security as an incentive to vendors to enter into contractual requirements.   

e.    Common Conditions for Use of Bid Security 

1)   Bid security shall be used in cases where the purchasing director determines there is a need to protect the interest of the institution.  The need for bid security may, in part, be deter­mined by the size of the proposed purchase, the item or items being bid, the competitive conditions surrounding the purchase, and the history of such purchases, including general reliability of vendors being requested to bid a particular purchase. 

2)   Occasionally, it may be appropriate to require bid security from prospective buyers.  

Bid security, when utilized for purchasing, shall follow bid security requirements as set forth in the 681 IAC 8.6(2 & 4). 

3.   Sole Source Purchases.  The Regents recognize that in some instances scientific, mechanical, and technical equipment or supplies or services may be required which are obtainable only from a sole source.  

4.   Emergency Purchases.  The Regents recognize that in some emergency situations the taking of competitive bids or quotations is not feasible or possible.  In such situations the requirements to do so may be waived.  Emergency purchases are defined in Policy Manual § 7.06B(12)(c).  

5.   Iowa Prison Industries.  Regent institutions  are encouraged to purchase products produced by Iowa Prison Industries unless the exceptions in the Iowa Code apply. Iowa Code §904.808  Nothing herein shall require Regent institutions to procure items from Iowa Prison Industries when such items are purchased from Targeted Small Businesses.  

6.   Iowa Products.  All state agencies shall use those products produced within the State of Iowa, when they are of a quality reasonably suited to the purpose intended, and can be secured without additional cost over foreign products or products of other states. (Iowa Code §§73.1)  

7.   Targeted Small Business.  It is the policy of the Board of Regents, State of Iowa to provide contract opportunities to targeted small businesses.  All laws and rules pertaining to solicitations, bid evaluations, contract awards, and other procurement matters apply to targeted small businesses.  (681 IAC 7.7, Regent Policy Manual § 5.05) 

8.   Professional Service Contracts.

a)     “Professional Service Agreements are contracts for unique, technical and/or infrequent functions performed by an independent contractor qualified by education, experience and/or technical ability to provide services.  In most cases these services are of a specific project nature, and are not a continuing, on-going responsibility of the institution.  The services rendered are predominately intellectual in character even though the contractor may not be required to be licensed.  Professional service agreements may be with partnerships, firms or corporations as well as with individuals.   

b)    Selection of a Provider.  Professional service agreements for greater than $25,000 must be selected through a competitive Request for Proposal (RFP) process unless the service is a sole source purchase that is appropriately documented.  The $25,000 threshold is not based on a one-time cost, but rather on a cumulative cost for on-going services under the terms of the project engagement.  Professional service agreements, which are less than $25,000 over the course of service, may be entered into without using the required competitive bidding process.  Total payment to a professional services provider for services provided to any one university department may not exceed $25,000 in a fiscal year, unless subject to competitive bidding or review and approval by the institutional purchasing department.  Selection of a professional service provider shall be based on a variety of criteria including, but not limited to, demonstrated competence, knowledge, references and unique qualifications to perform the services, in addition to offering a fair and reasonable price that is consistent with current market conditions.  Additional criteria may be used as appropriate to the circumstances. 

c)    Provider Accountability.  Work requirements should clearly define all performance objectives, work expectations and project milestones, and hold the contractor accountable for successful completion of the resultant agreement.  Requirements may include, but not be limited to, reports, training sessions, assessments, evaluations or other tangible services.

d)    Provisions of Professional Service Agreements.  The following terms and conditions must be addressed:

1)   Performance Requirements.  Performance requirements should be precise and written in such a way that it can easily be determined if and when the contractor has successfully fulfilled his/her obligations under the Agreement.  Consequences for noncompliance such as non-payment and/or termination of the contract must also be defined.  Scheduled due dates that specify milestone targets must be clearly identified and may include, but not be limited to, regular meetings scheduled to evaluate progress, identification of problem areas to determine actions to be taken to resolve any concerns, dates for formal written reports, required oral progress reports, and contract monitoring requirements.

2)  Period of Performance.  The resultant agreement must specify a start date and a completion date.  While there may be exceptions, in most circumstances an end date to the agreement will be required.  If an end date cannot be determined, a maximum time limit or maximum number of hours must be stated.  Agreements with organizations are typically written for a specific term of successive years.  In some instances, these agreements are annually renewable.  Other provisions of an agreement may include a renewal clause beyond the original term of the agreement.  Extended term agreements for individuals are discouraged.

3)  Compensation and Payment.  Compensation and payment terms include elements relating to cost and payment, such as maximum cost, (i.e. not to exceed cost), cost per deliverable, hourly rates for individuals providing services, number of hours required, allowable expenses and total authorized for expenses, payment and invoicing procedures.  Compensation and payment terms should also include a statement as to whether the Regent institution will pay expenses incurred by the contractor and if so, which ones.  Such expenses may include, but not be limited to, airfare (economy or coach class), lodging and subsistence necessary during periods of required travel; expenses incurred during travel for telephone, copying and postage, and private vehicle mileage.  If other types of expenses are allowed, they must be clearly defined.

4)  Performance Monitoring.  The institution shall monitor the compliance with the terms and conditions of the agreement and applicable laws and regulations.

5)  Provision of Liability.  The provider may be required to show proof of insurance coverage and workers compensation in compliance with statutory requirements, in the form specified by the institution. 

F.   Specifications and Standards 

1.   Consistent with the Board's purchasing policies and procedures, institutions, when establishing standards and specifications and size of orders for  goods and services, shall give due consideration to the ability of Iowa businesses to compete in bidding for those  goods or services.  The institutions shall continue to observe the goals of quality and economy in purchasing while meeting the needs of the institutions.   

2.   Specifications shall be prepared to assure that they do not restrict or preclude competition.  

3.   All requests for bids and proposals for goods and services and other needed articles to be purchased at public expense shall, whenever possible and practical, be made in general terms addressing functional specifications rather than brand, trade name, or other individual mark.  Brand names and numbers, when used, are for reference purposes and indicate the character or quality desired.  If brand names are used, the specifications shall contain an “or equal” or "or acceptable alternate" clause.  The institutional purchasing director shall determine what is an acceptable alternate.  

4.   Recognition is also given to standardization and compatibility requirements which should be maintained for purposes of economies in replace­ment and maintenance. 

5.   Life cycle cost and energy efficiency shall be included in the criteria used by institutions under the Board of Regents in developing standards and specifications for purchasing energy consuming products.  Life cycle cost means the expected total cost of ownership during the life of a product.  (Iowa Code §8A.311(19))  Institutional procedures may identify the parameters for which energy consuming products are subject to this section. 

“Preference shall be given to purchasing American-made products and purchases from American-based businesses if the life cycle costs are comparable to those products of foreign businesses which most adequately fulfill the institution's need.” 

Iowa Code addresses purchasing paper and other recycled products.  (Iowa Code §262.9(4-6) 

6.   Standard terms and conditions, contained on requests for bids, quotations, and purchase orders, are intended to ensure that all the basic considerations relevant to the agreement are covered.  For purposes of internal consistency all Regent institutions shall standardize general terms and conditions on purchase orders and bid solicitations.  Such terms and conditions shall include, but not be limited to, exclusive agreements between parties, acceptance agreements between parties, acceptance conditions, guarantees and warranties, rights of inspection, termination, and listing of specific federal regulations. 

7.   Regent institutions are encouraged to use specifications for flexible fuel vehicles when purchasing light-duty vehicles and when equivalent flexible fuel models are available.  Flexible fuels are defined in Iowa Code §8A.362(5) and include E85.  The provisions outlined in this policy do not pertain to those used for the purchase of vehicles used for law enforcement, off-road maintenance work, or to pull loaded trailers.  Regent institutions are encouraged to operate flexible fuel vehicles on E85 fuel when an E85 fueling station is available.  Regent institutions are also encouraged to use biodiesel blends in diesel vehicles when the blends are available.

G.  Inspection and Testing 

1.   When practical and feasible, Regent institutions should test and evaluate all goods. 

2.   Product association testing reports, independent research laboratories or governmental testing reports may be utilized in evaluation criteria. 

3.   An inspection of goods shall be performed at time of receipt and/or use. 

H.   Cooperative Purchasing 

1.   Regent institutions are encouraged to exchange price information, vendor lists, bidder histories, and standard specifications and to implement interinstitutional purchasing arrangements wherever practical and feasible so that maximum value can be obtained. 

2.   Regent institutions are encouraged to participate in interagency cooperative purchasing agreements.  It is the Regents’ intent that such cooperative purchasing continue to provide the lowest competitive price consistent with quality and service requirements of Regent institutions.  

3.   Regent institutions may purchase from state central purchasing contracts if it is in the best interest of the institution.  

4.   State agencies, by prior agreement, may purchase items through Regent institutions providing that such purchases shall not jeopardize educational discounts accruing to Regent institutions.  

5.    Regent institutions are encouraged to participate in interinstitutional cooperatives with other universities, health care organizations, and similar affinity groups to gain better prices and choices.  

I.    Reporting 

An annual report on purchasing, including purchases from Regent employees, shall be submitted by each institution to the Board Office.