Chapter 4 - Purchasing Procedures and Documents
4-1 Authority and Responsibility
4-2 The Purchasing Process
4-3 Accounting and Budgetary Effects
4-4 Classification of Purchases
- Non-commodity purchases
- Commodity Purchases ($1000 or more)
- Services
4-5 Purchase
Requirements
- Agency Authority
- Purchases between $1000 and $14,999.99
- Purchases greater than $14,999.99
- Advertisement/Solicitation of bids
- Award of contracts
- Assignment of contracts
- Letting of contracts without public
advertisement
- Priority Authorization
- Sole Source
- Open End PO/DO requirements
- Purchase Negotiations
- Products by the Alabama Institute for
the Deaf and Blind (AIDB)
-
Cancelling a contract
4-1 Authority and Responsibility
The Division of Purchasing, Department of Finance is established by
statute (Code of Alabama 1975, §41-4-110-115, as
amended) and is under the direction of the State
Purchasing Agent (State Purchasing Director).
The Division purchases all personal
property and nonprofessional services, 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 and nonprofessional
services.
Education and eleemosynary institutions, State
Port Authority, Department of Mental Health 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 through the STAARS
system.
STAARS is an integrated system that contains
both the financial and procurement activities
for the State of Alabama at both the state level
and the department level chart of accounts.
Requisitions will be converted to
purchase orders and issued to vendors with the
accounting component verifying the availability
of budgetary authority through encumbrance
accounting.
Agencies without STAARS access will send
in the Purchase Request Form to be entered into
STAARS on behalf of the agency.
The instructions for completing a
Purchase Request form can be located at
www.purchasing.alabama..gov under Purchasing
News.
4-3 Accounting and Budgetary Effects
When a requisition is entered into the STAARS system, a pre-encumbrance
may be created.
Accounting for pre-encumbrances are at
the discretion of each department.
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.
Once the requisition is approved, it continues
through the purchasing process (bid
procedures, if applicable).
When the process is completed, a purchase
order or master agreement is created and a copy
is e-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 classifications of purchases.
Non-commodity Purchases, Commodity
Purchases (Personal
Property), and Services.
A.
NON-COMMODITY PURCHASES
The following
non-commodity purchases
do not
require requisitions or purchase orders:
Postage
Insurance
Membership Dues
Building Contracts
Real Estate Rental
Salaries and Wages
Post Office Box Rentals
Bonds of Officials or Employees
Professional Services (subject
to §41-16-72) (See Chapter 5)
Department of Transportation Construction
Contracts
Utility Services (gas,
water, electricity, telephone)
Expense Accounts (transportation,
meals, lodging)
Interdepartmental
Purchase of Materials or Services
Subscriptions, one-time payment less than
$1,000 (periodicals,
magazines, books)
B.
COMMODITY PURCHASES ($1,000 OR MORE)
The following commodity purchases must be procured
through the Division of Purchasing:
Supplies
Materials
Equipment, Furniture and Fixtures
Subscriptions $1,000 or more (periodicals,
magazines, books)
C.
SERVICES
Purchases of
nonprofessional services, other than those
excluded by statute, must be procured through
the Division of Purchasing.
These purchases include but are not
limited to:
Repairs $1,000 or more
Maintenance
Equipment Rental
Janitorial Service, Pest Control, Garbage
Service, etc
4-5 Purchase Requirements
A.
AGENCY AUTHORITY
Up to $999.99 Materials, supplies, services, and
equipment,
except
weapons or when the freight and equipment total
$1,000 or more.
When the agency reaches its authority of like or
similar items (up to $999.99), agency must
procure with a PO.
If the agency inadvertently exceeds its
authority by the purchase of like or similar
items during a fiscal year, a letter must be
written to the State Purchasing Director for
approval explaining the nature and or
circumstances of the purchase(s).
B.
PURCHASES BETWEEN $1,000 AND $14,999.99
State Purchasing requires a minimum of two written
valid vendor quotes.
Purchasing may require additional quotes
depending on the circumstances.
Under no circumstances shall the agency
exceed $14,999.99 for like or similar items
during the fiscal year unless it has been
competitively bid.
Valid Quote must include at a minimum:
1. Company name, company address, individuals
name providing quote, contact information, date
of quote, item being quoted, and price of item
being quoted.
2. Quotes must be firm pricing.
When freight charges cause the authorized amount
to be exceeded, the Comptroller will allow this
charge up to
1% except in situations where freight would cause the amount to
exceed $14,999.99.
When freight charges exceed 1%, it must
have Purchasing approval.
When an agency fails to get a priority
authorization, or exceed their authority, a
letter must be written to the State Purchasing
Director for approval explaining the nature
and/or circumstances of the purchase.
C.
PURCHASES GREATER THAN $14,999.99
All contracts for labor, non-professional
services, purchase or lease of materials,
equipment, supplies, or other personal property
for $15,000.00 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 rates are fixed by law or ordinance
2.
Insurance by the State (subject to §41-16-72)
3.
Contracts to secure the services of
attorneys, physicians, architects, teachers,
appraisers, engineers, consultants, or other
individuals possessing a high degree of
professional skill (subject
to §41-16-72) (See
Chapter
5)
4.
Contracts of employment in the regular
civil service of the state
5.
Purchase of alcoholic beverages by the
ABC Board
6.
Purchases and contracts for the repair of
equipment used in the construction and
maintenance of highways
by the Department of Transportation
7.
Products made by Alabama Institute for
the Deaf and Blind or products purchased from
Alabama
Correctional
Industries (§21-2-1
to 4)
8.
Maps, photographs, or other items from a
federal agency
9.
Contract services/personal property when
there is only one vendor (§41-16-75)
10. Contractual services and purchases of
personal property, which by their nature are
impossible to award by competitive bidding
11. Barter transactions by the Department
of Corrections
12. Purchases, contracts, or repairs by
the Alabama Port Authority when it is deemed by
the Director and the
Secretary-Treasurer of the Alabama Port
Authority that the purchases, contracts, or
repairs are
impractical to award by competitive
bidding.
The Director and the Secretary-Treasurer
of the Alabama Port
Authority 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).
D.
ADVERTISEMENT/SOLICITATION OF BIDS
The State Purchasing Director is required to
advertise for sealed bids, on all purchases in
excess of $14,999.99.
Under the direction of the State
Purchasing Director, notice of sealed bids will
be provided to all Alabama persons, firms, or
corporations… and other persons, firms, or
corporations the State Purchasing Director deems
necessary to insure competition.
No purchase or contract involving an
amount of $15,000 or greater may be divided into
partial contracts to avoid the requirements of
this article
(§41-16-24).
E. 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 or personal
property or nonprofessional service will be let
for periods no greater than five years.
Multiple-awards may be issued, if notice
is contained within the competitive bid, when
technical compatibility and/or operational
specifications are required (§41-16-27). All
state agencies are required to use established
statewide contracts (Master Agreements).
F. 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).
G.
LETTING OF CONTRACTS WITHOUT PUBLIC
ADVERTISEMENT
In case of emergency affecting the public health,
safety, economic welfare, security, or
convenience; as declared in writing by the
department or agency head, a 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 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 & 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, economic welfare, or
inconvenience of the general public of Alabama
4.
Estimated date of post-emergency
correction
5. Estimated total cost of emergency
correction
6.
Name of contractor(s) associated with
recovery
H. PRIORITY
AUTHORIZATION
The priority authorization (PA) is initiated
through STAARS.
The priority authorization is used for
emergency/critical situations only.
A justification must be included and a
quote attached.
A priority authorization cannot exceed
$14,999.99 unless sole source justification is
attached.
When freight charges cause the authorized amount
to be exceeded, the Comptroller will allow this
charge up to 1% except in situations where
freight would cause the amount to exceed
$14,999.99.
When freight charges exceed 1%, it must
have Purchasing approval.
When an agency fails to get a priority
authorization, or exceeds their authority, a
letter must be written to the State Purchasing
Director for approval explaining the nature
and/or circumstances of the purchase.
I. SOLE
SOURCE
For a product or service to be purchased via a
sole source declaration (§41-16-75),
the agency must establish that no other products
or services can meet its needs and that no other
vendor offers substantially equivalent products
or services that can accomplish the purpose for
which they are required.
The agency must submit a signed letter to
the State Purchasing Director, on agency
letterhead, attesting to the above along with a
letter from the vendor declaring their sole
source status and a quote for the products or
services.
J.
OPEN END PO/DO REQUIREMENTS
Open End PO’s/DO’s will only be processed by the
Division of Purchasing under the following
circumstances:
1.
For services (i.e. pest control, garbage,
cell phones, temporary IT personnel services,
etc.)
Agencies will establish the PO/DO with an
amount of money and modify the amount as needed
to cover invoices.
2.
For items used in the maintenance or
repair of facilities/physical infrastructure
where the need cannot be
planned
or predicted, open end DO’s will be allowed in
the following manner.
3.
To establish an open end from a Master
Agreement, the DO must reference ‘Open End’ in
the Header Document name.
4.
To establish an open end with a
non-contract vendor to purchase non-contract
items, a RQM will be submitted referencing ‘Open
End-M&R’ (Maintenance & Repair) in the Header
Document Name, then a
MAOP1 will be created.
5.
To establish an open end with a
non-contract vendor, in cases where a facility
is not located near a
contract vendor, the agency may set up one MAOP1
to purchase these items.
Prior to submitting a RQM,
the
agency must submit a justification letter to the
Purchasing Director for approval.
The approved letter
must be submitted with the RQM which references
‘Open End-M&R’ in the Header Document name.
For other situations, the purchase of goods with
an open end PO/DO will be considered on a case
by case basis with a letter of justification
submitted to the State Purchasing Director.
K.
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 State Purchasing
Director.
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.
L.
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).
M.
CANCELLING A CONTRACT
A term contract can only be cancelled by the
Division of Purchasing, for documented
justifiable cause.
The burden of such cause rests with the
agency for whom the contract was established.
A vendor may request cancellation and the
Division of Purchasing may grant the request if
performance is prevented by an act of God, act
of War, order of legal authority, or other
unavoidable circumstances not attributable to
the fault or negligence of the vendor.
The burden of proof for such relief rests
with the vendor.
All correspondence pertaining to
cancellation of a term contract must be
addressed to the State Purchasing Director.
Contracts for services may be cancelled,
for justifiable cause, by the Division of
Purchasing, by giving the vendor 72 hours’
written notice.
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