1. Non-commodity purchases
2. Commodity Purchases ($500 or more)
3. Services
   

1. Bid requirements and exceptions
2. Penalties for receiving gifts/beneficial interest
3. Advertisement/solicitation of bids
4. Letting of contracts without public advertisement
5. Award of contracts
6. Assignment of contracts
7. Purchase requisition requirements
8. Procedure for requisitions
• Less than the Bid Law Amount
• Exceeds the Bid Law Amount


9. Open End/Local Delivery Requisition
10. Annual Agreement Requisition
11. Contract Release
12. Agency Authority
13. Electronic Telephone Authorization
• $500.00 - $3,500.00
• $3,500.01 - $7,499.99
   
14. Purchasing negotiations
15. Products by the Alabama Institute for the Deaf and Blind (AIDB)
16. Commodities on consignment, demonstration, or furnished gratis
17. Replacement of defective parts and equipment
18. Issuance of purchase orders

4-6 Purchase Request
4-7 Purchase Order Change




4-1 Authority and Responsibility
The Division of Purchasing, Department of Finance is established by statute (Code of Alabama 1975, §41-4-110-111, as amended) and is under the direction of the State Purchasing Agent (Purchasing Director). The Division purchases all personal property, except alcoholic beverages, for all State departments, boards, bureaus, commissions, agencies, offices and institutions. The Division is also responsible for making and supervising the execution of all contracts and leases for the use and acquisition of any personal property. Education and eleemosynary institutions, State Docks and the purchase of alcoholic beverages are exempt from the authority of the Division of Purchasing (Code of Alabama 1975, §41-16-21(b)) as amended.

Sections referenced by a paragraph number are in accordance with the Code of Alabama 1975, as amended.

4-2 The Purchasing Process
The purchasing process begins with the submission of a requisition to the Division of Purchasing. Agencies that are not on-line with State Network of Automated Procurement (SNAP) will submit a Purchase Request form. Agencies that are on-line with SNAP will submit their requisition electronically to Purchasing. SNAP is integrated with the departmental accounting systems (LGFS and other automated systems) and the state level accounting system (GFS). Before purchase orders are issued to vendors, the accounting systems will ensure the availability of budgetary authority through encumbrance accounting.

4-3 Accounting and Budgetary Effects
When a requisition is entered into the SNAP system, a pre-encumbrance is created. The effect of a pre-encumbrance is to commit a portion of the department’s appropriation at the time the requisition is processed. The pre-encumbrance does not affect the department’s cash or allotment balance. The requisition will not be processed through SNAP unless the department has adequate appropriation to cover the amount of the requisition.

Once the requisition is approved and pre-encumbered, it will continue through the purchasing process (bid procedures, if applicable). When the process is completed, a purchase order is printed and a copy mailed to the vendor. The process of creating a purchase order reverses out the pre-encumbrance related to the requisition, and creates an encumbrance of the department’s funds. The department’s appropriation and allotment balances must be adequate to cover the amount of the purchase order. The purchase order will obligate the department’s appropriation and allotment by this amount.

4-4 Classification of Purchases
There are three classification of purchases: Non-commodity Purchases, Commodity Purchases (Personal Property), and Services.

1. Non-commodity Purchases (No materials, supplies, or equipment)
   
   The following non-commodity purchases do not require requisitions or purchase orders:
• Postage
• Insurance
• Membership Dues
• Building Contracts
• Real Estate Rental
• Salaries and Wages
• Professional Services
• Post Office Box Rental
• Bonds of Officials or Employees
• Department of Transportation Contracts
• Utility Services (gas, water, electricity, telephone)
• Expense Accounts (transportation, meals, lodging)
• Interdepartmental Purchase of Materials or Services
• Subscriptions $500 or less (periodicals, magazines, books)
   
2. Commodity Purchases


The following commodity purchases must be procured through the Division of Purchasing.  
• Supplies
• Materials
• Equipment, Furniture and Fixtures
• Subscriptions $500.01 or more (periodicals, magazines, books)
   
3. Services
   
   Purchases of services, other than those excluded by statute, must be procured through the Division of Purchasing. These purchases include but are not limited to:
   
   
   • Repairs $500.01 or more
   • Maintenance
   • Equipment Rental
   • Janitorial Service, Pest Control, Garbage Service

4-5 Purchase of Personal Property

1. Bid requirements and exceptions
   
   All contracts for labor, service, purchase or lease of materials, equipment, supplies, or other personal property for $7,500.00 or more by any state department, board, bureau, commission, committee, institution, corporation, authority, or office must be let by free and open competitive bidding, on sealed bids, to the lowest responsible bidder (§41-16-20).
   
   Competitive bids are not required for the following (§41-16-21):
   
   
   
   1. Utility services - no competition exists, or law or ordinance fixes rates.
       
   2. Insurance by the state.
       
   3. Contracts to secure services of attorneys, physicians, architects, teachers, artists, superintendents of construction, appraisers, engineers, consultants, or other individuals possessing a high degree of professional skill.
       
   4. Contracts of employment in the regular civil service of the state.
       
   5. Tourist advertising by the State Bureau of Tourism and Travel. (§41-7-4).
       
   6. Purchase of alcoholic beverages by the ABC Board.
       
   7. Purchases by the Department of Transportation of local materials from any property owners in the vicinity of a project; or purchases and contracts for the repair of equipment used in the construction and maintenance of highways by the Department of Transportation.
       
   8. Products made by Alabama Institute for The Deaf and Blind (§21-2-1 to 4).
       
   9. Maps, photographs, or other items from a federal agency.
       
   10. Books, maps, manuscripts, pamphlets, or periodicals purchased for use by any state library or any other state supported library.
        
   11. Contract services/purchase of personal commodities when only one vendor.
        
   12. Contractual services and purchases of personal property, which by their nature are impossible to award by competitive bidding.
        
   13. Barter transactions by the Department of Corrections.
        
   14. Purchases, contracts, or repairs by the Alabama State Docks when it is determined by the Director of State Docks that such purchases, contracts, or repairs are impractical to award by competitive bidding. The Director of State Docks will provide a signed sworn statement as to the emergency or necessity for negotiation, instead of proceeding by the competitive bidding requirements (§41-16-21).
        
   15. Purchases for any hospital or campus medical facility which has a total licensed bed capacity of no less than 800 beds operated by any state department, except the Department of Mental Health and Mental Retardation.
        
2. Penalties for receiving gifts/beneficial interest
   
   An employee having "...any personal beneficial interest, either directly or indirectly, in the purchase of any personal property or contractual service..." or "...by rebate, gifts or otherwise, any money or thing of value whatsoever or any promise... for future reward or compensation..." is in violation of the law. Any violation is a misdemeanor, and upon conviction, the individual may be imprisoned for not more than 12 months or fined not more than $500 or both. The individual will also be removed from office. (§41-16-30)
    
3. Advertisement/Solicitation of Bids
   
   The State Purchasing Director is required to advertise for sealed bids on all purchases in excess of $7,500 by posting a notice on a bulletin board in the reception area of State Purchasing, or by publication of a one time notice in a newspaper published in Montgomery County, Alabama. Under the direction of the State Purchasing Director sealed bids will be mailed to all Alabama persons, firms, or corporations... and other persons, firms, or corporations the Purchasing Director deems necessary to insure competition. No purchase or contract involving an amount in excess of $7,500 may be divided into partial contracts to avoid the requirements of this article. (§41-16-24)
    
4. Letting of Contracts without public advertisement
   
   In case of emergency affecting the public health, safety or convenience, as declared in writing by the department or agency head, the contract may be let to the extent necessary to meet the emergency without public advertisement. The Comptroller's Office will honor payment for a period of one year from the date of declaration posting; should the emergency continue to exist after a one year time period, it will be necessary to re-declare the emergency (this one year cycle should be repeated until the emergency is corrected).  The declaration and the reasons for it will be made public by the awarding authority (§41-16-23; §39-2-2(e); §41-16-72(6)).  The public declaration must include the following:
   
        1.  Code of Alabama Section(s) executed
        2.  Date and location emergency occurred
        3.  Description of damage and affect to the health, safety, or convenience of the  general
             public of Alabama
        4.  Estimated Date of post-emergency
        5.  Estimated total cost of emergency correction
        6.  Name of contractor(s) associated with recovery
    
5. Award of Contracts
   
   Purchases made through competitive bidding will be awarded to the lowest responsible bidder, with consideration given to the quality of the commodities, conformity to specifications, terms of delivery, and freight charges. A contract for the purchase of personal property or service will be let for periods no greater than three years. (§41-16-27)
    
6. Assignment of Contracts

   An awarded contract is not assignable by the bidder without written consent of the awarding authority and the requisitioning agency. A contract cannot be assigned to a bidder whose bid was rejected (§41-16-29).
    

7. Purchase requisition requirements
   
1. Each item must be identified by a commodity number (class/sub-class/item number) if one has been assigned. Refer to the Commodity Database (COMM) screen in SNAP to obtain this information, or the CDES screen (Commodity Description) listed by the item noun, i.e. Desk, wood, 36"W, 60"L, 30"H..., Ladder, extension, aluminum... etc. If the item has not been assigned a commodity number, the class/sub-class must be determined and listed on the requisition.
2. The requisition must be signed by the department head or designee under the statement "The named articles/services are necessary to be used in conducting public business." The department head must notify the Director of Finance by letter authorizing an employee to sign fiscal documents as designee.
3. All state agencies and all locations have been registered and included in the agency database. The requisition requires the agency number, the "Bill To" number, and one or more "Ship To" numbers. The Bill To and Ship To numbers must be entered accurately to insure the correct state agency is billed for the item and the correct location receives the goods.
4. The requisition must show the accounting distribution for each appropriation.
5. Sufficient description should be given so that a complete and accurate purchase may be made and a purchase order can be issued on a timely basis. Drawings, specifications, references, and other supporting information should be attached to the requisition.
    
6. If the purchase is a repeat of a previous purchase, reference the previous purchase order number and/or previous requisition number.
7. Brand names of materials or equipment may be specified to show type of merchandise and level of quality desired.
8. A requisition is to include only items of the same general nature. Example: do not include computer equipment and cleaning supplies or automobile parts and office furniture on the same requisition.
9. Prior to an award, the bid package is sent to the requesting agency for evaluation. The agency returns the bid package and evaluation to the Purchasing Division.
10. The preferred method to receive requisitions is to transmit them electronically through SNAP. SNAP training is offered through the Division of Purchasing.
     
8. Procedure for requisitions
   
   Initiated through SNAP or Form FD-PUR 1000, Rev 01/96.

 
1. Less than the Bid Law Amount
   
   Requires a minimum of two (2) written valid vendor quotes. Additional written quotes may be obtained at Buyer’s discretion. Every effort is to be made to obtain quotes from minority and small business. Quotes must be firm and include the vendor name and FEIN.
    
2. Exceeds the Bid Law Amount
   
   Purchase options determined by the Division of Purchasing:
1. Sealed Bid
2. Sole Source letters (Agency and Vendor) approved by the Purchasing Director.
3. Exemption from competitive bid by the Code of Alabama,1975.
    
9. Open end/local delivery requisition
   
   If there is a repetitive need for parts or supplies from a vendor in a particular locale, an open end purchase order may be issued (e.g., Department may need Ford automobile parts and service in Dothan or crushed limestone in Dekalb County on a regular basis during a fiscal year). The requisition type will be OP (Open End) or LD (Local Delivery). A requisition is required for each vendor used in a locale. These requisitions should be submitted well in advance of the actual need. A LD or OP request cannot exceed the competitive bid law limit, unless written approval has been obtained from the State Purchasing Director, whereby another LD or OP request will be issued. The request must indicate the department’s employees who are authorized to sign the delivery order. Once the LD or OP request has been approved, the department can order parts or supplies as needed from the vendor. The department may call or take the specific order to the vendor for the items required.
    
10. Annual agreement requisition
    
    The requisition type will be AN (Annual Agreement). This request is used when there is an agreement with a vendor to provide rental or maintenance on equipment and other types of services for a specified period of time. A purchase order number will be assigned by SNAP and funds will be encumbered by GFS.
     
11. Contract release
    
    The requisition type will be REL (Contract Release) since the commodities are on a statewide or agency contract. The description field may include any special delivery instructions. Items may be combined from multiple contracts on the same request if all items are charged to the same fund and the Bill To address is the same. The Ship To addresses may be different as designated by line number.
     
12. Agency Authority
    
    Purchasing Approval NOT Required
    
    Up to $500.00 -Materials, supplies, services, contract items, except equipment.
    
    Up to $499.99 -All equipment, including contracts, except when the freight and equipment total $500.00 or more, and weapons.
    
    Equipment or combination of items from the same vendor costing $500 or more must have Purchasing approval. When using this authority for contract items, they must be purchased from the contract vendor. The agency is to mail or fax a request to the contract vendor for the items needed. When the agency authority is exceeded by the purchase of materials, supplies, equipment or freight, Purchasing approval is required. A letter must be written to the Purchasing Director for approval explaining the nature and/or circumstances of the purchases and/or approval.
     
13. Electronic telephone authorization
    
    The phone authorization (PA) is initiated through SNAP by on-line agencies. Agencies not on-line are to call the Buyer with all information and the Buyer will enter in SNAP. The phone authorization is to be used for emergency/critical situations only.

 
1. $500.00 - $3,500.00. Requires a minimum of one (1) written quote. Additional written quotes may be requested at Buyer’s discretion.
2. $3,500.01 - $7,499.99. Requires a minimum of two (2) written quotes. Additional written quotes may be requested at Buyer’s discretion. When the situation exists where only one vendor is available, it must be indicated on the phone authorization.

When freight charges cause the authorized amount to be exceeded, the Comptroller will allow this charge up to $100.00 except in situations where freight would cause the amount to exceed $7,499.99. When freight charges exceed $100.00, it must have Purchasing approval. When an agency fails to get a phone authorization, or exceeds their authority, a letter must be written to the Purchasing Director for approval explaining the nature and/or circumstances of the purchase.
 

14. Purchase negotiations
    
    All negotiations pertaining to the purchase of commodities, leases, or lease/purchase agreements are to be handled only by or with the knowledge and consent of the Division of Purchasing. The departments are authorized to obtain price quotations from local vendors and submit these quotes with the requisition. The Division of Purchasing will obtain and furnish information regarding sources of supplies, quotations, or other data, which may be requested.
     
15. Products by the Alabama Institute for the Deaf and Blind (AIDB)
    
    Whenever products made by the AIDB meet the requirements of the department or agency in terms of quality and quantity, then these products will have preference. These products do not take priority over products produced or manufactured by Alabama Correctional Industries (Code of Alabama 1975, §21-2-2, as amended).
     
16. Commodities on consignment, demonstration, or furnished gratis
    
    Commodities to be used on a trial basis or given without charge for demonstration purposes must always be approved by letter from the Division of Purchasing. The letter must state the terms of the trial basis or demonstration and a statement relieving the State of possible claims for liability, other than vandalism by an employee, or unavoidable circumstances.
     
17. Replacement of defective parts and equipment
    
    The Division of Purchasing must be notified and give approval for the replacement of defective parts or equipment within the manufacturer’s guarantee period. The Division will give shipping and handling instructions at the request of the department/agency.
     
18. Issuance of Purchase Orders
    
    A purchase order is issued upon a properly completed and approved original requisition which is retained in the Division of Purchasing. Before the purchase order is printed, the funds are encumbered by the Comptroller’s Office.

4-6 Purchase request

The Purchase Request Form FD-PUR 1000, Rev 01/96, (Exhibit 4-6-1) is used by agencies that are not SNAP generated. It is used to purchase commodities and services in all of the following methods: Purchase Requisition (PR1, PR2), Annual Agreement (AN1, AN2), Open Purchase (OP1, OP2), Local Delivery (LD1, LD2) and Contract Release (REL).

Entering the Data

• Requisition Title: List the product or service
• Requisition Type: Indicate one of the methods above
• Requisition Date: Date initiated
• Agency Contact: Who to contact for information
• Agency Phone: Contact person's number
• Sub-Agency No: Number assigned to Agency for Ship to/Bill to
• Ship To: Actual delivery address
• Bill To: Actual address to send invoice
   
• Solicitation No: SNAP generated
• SNAP Req. No: SNAP generated
• Agency Req. No: Agency assigned
• Fiscal Year: Budget Fiscal year funds are expended
   
• Vendor: Provide FEIN (Federal Employee ID Number), Name, Address, Phone Number
• Accounting: Enter correct accounting distribution
• Signature: Signed by the department head or designee
   

Identify completely and describe items

• Estimate Unit Cost: Estimated cost for the item
• Quantity & Unit Cost: Number of items and the unit of measure
• Description: Include the commodity number (class/sub-class or complete number, if item number assigned), and complete description of item.
• Total: Enter total cost of all items

4-7 Purchase Order Change

Form FD-PUR 1200, Rev 8-93 (Exhibit 4-7-1) is used to change the following:

• Quantity
• Commodity Number/Description
• Bill To/Ship To Address
• Encumbrance changes
• Accounting distribution (Use Agency accounting codes)

Administrative Change Text - Is used for any changes that do not alter encumbrances. Can also be used in conjunction with fiscal changes, i.e., explanation, clarification, etc.

Commodity Line Adjustments:

1. If purchase order was written from a contract, enter contract number.
2. Enter purchase order line number that is being adjusted.
3. Enter contract line number, if applicable.
4. Enter appropriate action to be taken - Decrease or Increase, Amount of Adjustment & Inventory
    

Space for only two lines are provided on the form. If more line changes are necessary, the back of the form may be used following the same format. The notation "additional lines on back" should be written in the space beside "Commodity Line Adjustments".

Accounting Distribution (Use Agency Accounting Codes):

1. Specify if the accounting line is old (O) or new (N).
2. Enter line number.
3. Enter appropriate AGENCY account codes. Use only the spaces necessary.
4. Indicate if the change is an increase (I) or decrease (D).
5. Enter the amount of the change in dollars and cents, not percentage.

Approved:

The Authorized Department Signature must be original.
Division of Purchasing Approval:
Signed by the Buyer.