III.D. Purchasing and Acquisitions
III.D.1. Purchasing Overview
III.D.1.01 Legal Responsibility of System for Debts
The Board shall assume responsibility for debts incurred in the name of the System so long as those debts are for purchases made in accordance with adopted Board policy, and current administrative procedures regarding contracting and purchasing. The Board shall not be responsible for debts incurred by persons or organizations not directly under Board control. The Board shall not be responsible for any other unauthorized purchase or debt. All vendors are charged with the responsibility to discover an individual or an organization’s authority before any purchase, contract or debt is incurred. Persons making unauthorized purchases shall assume full responsibility for all such debts.
The System utilizes four forms of purchasing: check requests, approved credit card transactions (including Procurement Cards), petty cash disbursements, and purchase orders.
- Check Requests should be used to request payment for goods and services where a purchase order is not warranted. Specific procedures concerning the use of check requests are to be developed by the Associate Vice Chancellor for Business Support Services and approved by the Executive Council.
- System credit cards may be used to purchase travel-related services, including registration for approved conferences, and other small dollar purchases as approved by the Chancellor or Executive Council.
- The Petty Cash Fund is set up to fund “out of pocket” expenditures by the employees of the System. Petty cash fund use must be approved in advance by the supervisor and no petty cash expenditure may exceed $75.00. Each petty cash expenditure shall be documented with a receipt appropriate to the purchase.
- All other purchases shall be made by purchase order. All purchase orders shall be under the control of the System Purchasing Department. Creditors of the System shall be notified that purchase commitments made without a properly drawn purchase order and not authorized by the System Purchasing Director, or other designee of the Chancellor, will not be honored for payment.
III.D.1.03 Responsibilities of LSCS Employees
All System employees engaged in the purchasing processes are to conduct themselves fairly, objectively, and will observe the confidentiality of the decision-making and award processes so as to serve the best interests of the System.
Purchases are not authorized from an employee or members of an employee’s family, nor are purchases authorized from a company in which an employee or his or her family member owns a five percent (5%) or greater interest. For purposes of this policy, a family member (natural, foster, adopted or step), means a spouse, child, in-law, sister, brother, mother, father, grandparent, significant other or life partner.
A purchase that would otherwise not be permitted because of this conflict of interest policy may be allowed if obtained via a competitive process and:
- The goods or services being purchased are not under the direct or indirect authority of the approving employees’ department or division, and;
- The family member’s bid is the lowest price bid that meets all bid specifications.
The Texas Ethics Commission has adopted a conflict of interest questionnaire that requires a vendor to disclose the vendors’ business relationships and certain gifts or income provided to local government officers and/or their family members that may cause a potential conflict of interest with the System.
The records administrator of the System shall maintain a list of local government officers of the entity and shall make that list available to the public and any vendor who may be required to file a conflict of interest questionnaire.
These completed questionnaires are subject to the Public Information Act and shall also be made available on the System’s website.
Regardless of the transactional form of the purchase, each purchase must be approved in advance by the appropriate budget manager or authorized designee and funds must be available in the appropriate budget.
III.D.1.07 Purchasing Procedures
Purchasing procedures are to be developed by the Associate Vice Chancellor for Business Support Services and approved by the Executive Council.
As used in this policy, the term "contract" refers to all written documents, whether entitled contracts, leases, licenses, memoranda of understanding, purchase orders, informal letter agreements and other instruments and agreements that seek to obligate the System or any of its colleges, programs or activities to pay money, to purchase insurance, to provide staff or other in-kind services to a third party. The term contract does not include any form of oral agreement.
As used in this Policy, the term "approval" refers to the process of securing necessary approval of the form, contents and business terms of a proposed contract from a member of the Board, the Chancellor, LEO, or authorized designee authorized by this Policy to give approval to the contract.
The execution of an agreement by an authorized System official, and the other party or parties to the contract makes the contract enforceable against the System.
Any contract requiring Board approval pursuant to this Policy, must be approved by the Board of Trustees, and executed by the Board Chair, the Chancellor, or authorized designee. However, any employment contract is to be executed by both the Board Chair and the Chancellor.
- Renewals or Amendments
As used in this policy, the term "renewal" refers to the practice of extending the term of an already executed contract for an additional length of time. The term "amendment" refers to the practice of revising specific terms of an already executed contract. Amendments to contracts must be approved and executed at the same level of authority as the underlying contract.
As used in this policy, Location Executive Officer ("LEO") refers to System Vice Chancellors and Presidents.
The following types of contracts require the approval of the Board of Trustees:
- Employment contracts;
- Finance agreements;
- Purchases or sales of real property;
- Contracts, excluding legal services, and leases with a term exceeding one year (including options to renew) that have a cumulative expenditure of $100,000 or more over the contract term;
- Contracts involving the sale of intellectual property or technology transfer, including software licenses, owned in whole or in part, by the System.
III.D.2.03 Educational Agreements
Board approval is not required for educational agreements. For purposes of this policy, educational agreements refer to agreements between the System and a third party for establishing the terms for the sharing or use of facilities, staff, or other educational resources. Educational agreements will be reported to the Board by the Chancellor at least annually.
III.D.2.04 Delegation of Authority
Unless delegated pursuant to another section of this Policy Manual, the Board delegates to the Chancellor the authority to approve and execute contracts not specifically required by this Policy or by law to be approved by the Board. The Chancellor is authorized to delegate specific contract authority to System LEOs and the System's Director of Purchasing. The Chancellor or authorized designee shall develop procedures to implement this section which shall specify the type of contract authority delegated to administrative positions, the process to secure legal review of such contracts and any permitted sub-delegation authority, if any.
No employee or agent of the System has the authority to enter into any contract on behalf of the System, except as otherwise expressly provided by this Policy. If a System employee signs a contract without authority, or falsely represents to a third party that he or she has authority to sign a contract, the employee may be held personally responsible to the third party under Texas law. An agreement that is not expressed in writing and approved and executed in accordance with this Policy, shall not be binding on or enforceable against the System.
Any employee who signs a contract or seeks to bind the System to an agreement in violation of this Policy may be subject to discipline, up to and including discharge of employment.
Professional Services Agreements, excluding legal services, with a value of $100,000 or more over the contract term, shall be approved by the Board of Trustees. Professional Services Agreements with a value of less than $100,000 over the contract term must be approved by the Chancellor, LEO, or authorized designee.
Professional services include, but are not limited to: accounting, technology, financial, auditing, architecture, landscape architecture, land surveying, medical, optometry, professional engineering, legal, real estate appraising, or professional nursing.
Professional service providers are independent contractors retained to provide services to the System when regular employees, within the scope of their employment, cannot provide such services.
Procurement of professional services must be conducted in accordance with the Texas Government Code for Professional Services, to the extent applicable. This requires that contracts for the procurement of defined professional services may not be awarded on the basis of competitive bids. Instead, these contracts must be awarded on the basis of demonstrated competence and qualifications to perform the services, so long as the professional fees are:
- Within the budget for the services;
- A fair and reasonable price;
- Do not exceed any maximums provided by state law; and
- Consistent with, and not higher than, the recommended practices and fees published by the applicable professional associations.
III.D.3.04 Term of Service
The Board may engage a professional services provider for a maximum period of five years. However, the Board will retain the right to terminate the engagement at any time upon due notice, such notice never requiring more than thirty (30) days prior notice.
A professional service provider currently under contract is eligible to respond to a request for proposal/qualifications for a subsequent term.
The System shall comply with Texas Education Code Section 44.031 in establishing open and fair purchasing and bidding practices that provide the best value to the System.
Board approval is required for purchases or contracts of $100,000 or more over the contract term including options to renew. Authority for purchases and contracts for the procurement of goods or services below $100,000 can only be delegated by the Chancellor. Delegated authority to procurement personnel may be removed if unacceptable behavior or job performance is observed.
The authority to approve purchase orders, check requests, and employee expense and petty cash reimbursements is given to directors, managers and other employees as delegated by the Chancellor and LEOs.
This policy applies to the purchase of tangible personal property or services except as follows:
- Purchases of real property; or
- Purchases of professional services (see “Purchasing Professional Services” subsection, above);
When purchasing equipment, supplies, materials, services, hardware, and software, the two factors which drive the purchasing process, and the decisions to be made, are:
- Obtaining the best overall value for the System; and
- Fairness. Procurement activities shall be conducted in an open and fair manner with equal opportunity provided to all qualified suppliers. The System will provide equal contracting opportunities as provided by federal, state and local laws and regulations to historically underutilized businesses.
The purchase of equipment, supplies, materials and services shall be based upon a competitive process, except as otherwise provided in this Policy. Purchases may not be subdivided to avoid the competitive requirements of this Policy.
Unless otherwise covered by the sections above or required by law to meet other requirements, purchases of goods or services made on behalf of the System shall meet the following administrative requirements outlined below.
- Purchases Valued at $50,000 or More
All purchases of $50,000 or more for goods or services shall be coordinated through the System Purchasing Department. These purchases shall follow a formal competitive process that includes:
- Pre-qualification and selection of suppliers;
- Standards and specifications;
- Requests for bids/proposals;
- Submission of bids/proposals, and public openings; and
- Award of purchase orders and contracts.
- Library Goods and Services
The purchase, acquisition, or license of library goods and services shall not apply to the requirements set forth by D.4.04 (a) above.
“Library goods and services” means:
Purchase, license or otherwise acquisition of library goods and services are acquired in any manner including but not limited to:
- Serial and journal subscriptions, including electronic databases, digital content, and information products;
- Other library materials and resources, including books, e-books, and media not available under a statewide contract and papers;
- Library services, including periodical jobber and binding services not available under a statewide contract;
- Library equipment and supplies; and
- Library or resource-sharing programs operated by the Texas State Library and Archives Commission.
- Statewide purchasing contracts
- Library or resource-sharing programs
- Available from one source
- Any other manner as authorized by Texas law with respect to a Public Senior College or University as defined under Texas Education Code §61.003.
- Administrative Approval
Purchases valued at $50,000 or more and less than $100,000 require approval by the Vice Chancellor of Administration and Finance or designee.
- Board Approval
All purchases of $100,000 or more for goods or services require Board approval, except as otherwise stated in this policy.
- Emergency and Sole Source Purchases
At times, it may not be in the System’s best interest to engage in a formal competitive process. Purchases necessary to respond to emergencies (situations that jeopardize public or employee safety, or that could result in significant financial or operational loss), and sole source purchases which are purchases where only one supplier can provide the product or service (e.g. the product or service is protected by patent, copyright or trademark; or due to schedule conflicts, etc., only one supplier can provide the product or service when it is required) do not require a formal competitive process. Sole source purchases must be justified in writing and approved in advance by the System Director of Purchasing. Emergency purchases must be justified in writing and approved in advance by the Chancellor for purchases $100,000 or more, by the Vice Chancellor of Administration and Finance or designee for purchases under $100,000. Emergency and Sole Source purchases of $100,000 or more must be approved or ratified by the Board of Trustees.
The System may enter into an inter-local purchase agreement with another local government or with the state or a state agency to purchase goods or services. Inter-local purchase agreements that are $100,000 or more, whether payable in a one time payment or in installments, over the contract term, shall be approved by the Board of Trustees. Purchases may be made through the agreement without a competitive bid process after a market analysis determines that the best value for the System is through the agreement. Documentation of the best value decision must accompany purchases for $50,000 or more.
There may be instances that justify a departure from the normal competitive process. Departures from this policy shall be approved, in advance, by the Chancellor or authorized designee.
In awarding a contract, the System must consider:
- Purchase price, including delivery and installation,
- The reputation of the vendor and of the vendor’s goods or services,
- The quality of the vendor’s goods or services,
- The extent to which the goods or services meet the System’s needs,
- The vendor’s past relationship with the System,
- The impact on the ability of the System to comply with laws relating to historically underutilized businesses,
- The total long-term cost to the System to acquire the goods or services, and
- Any other relevant factor specifically listed in the request for bids or proposals.
The use of long-term contracts is encouraged to maximize the efficiency of the procurement process or to optimize long-term pricing. Long-term contracts shall not exceed five years. A contract that exceeds the end of the System’s fiscal year must include a provision that permits termination at the end of the fiscal year if funding is unavailable.
All bidding practices shall be in conformance with state law. The System will establish practices to identify when bids shall be required and when other practices of obtaining needed goods and services shall be utilized.
Bid openings shall be public and those submitting bids are invited to attend. The Board or authorized designee has authority to reject any and all bids.
All bids shall be conducted through the System Purchasing Department unless specific authorization is granted through Board approval.
The System may hold pre-bid conferences and may, upon proper notice, make the attendance at such a conference mandatory. The System will not open or consider any bid submitted by any vendor who did not attend a mandatory pre-bid conference.
The System may, at the discretion of the Chief Financial Officer, require bid surety, payment bonds and performance bonds.
Bid surety bonds shall be returned to all bidders except the successful bidder at the time the award is made. The surety bond of the successful bidder shall be retained until the merchandise has been delivered and inspected for quality and other requirements of the bid.
System employees shall not be permitted to purchase supplies or equipment for personal use through the System.
III.D.4.11 Further Guidance
Guidelines and procedures for compliance with this Policy shall be developed and implemented by the Chancellor or authorized designee.
III.D.5.01 Petty Cash Purchases
Petty Cash Funds are intended to handle small, "out of pocket" expenditures by the employees of the System. Each Petty Cash Fund must have a custodian of record who is responsible and accountable for managing the fund. Petty cash audits are to be performed by an administrative business officer or designee, other than the fund’s custodian, as part of routine oversight of business procedures.
There is a limitation of $75 for any one transaction. Purchases may not be subdivided to fall under this $75 limit.
LSCS Policy Manual Section adopted by the Borad of Trustees on September 3, 2009