Procurement Process for Private Nonprofits
1. What will be Purchased
Goods and Services
Small Purchase method may be used when:
- Price is less than the cost limitations established by TAC §5.10
- ≤$25,000 in the aggregate:
- For single purchases or individual recurring purchases made without contract: aggregate costs means the cost of the individual purchase
- For contracts: aggregate costs means the total potential cost of the contract, including any option years and amendments, or the time between full procurements for that same goods/services/etc
- Any purchase in excess of $5,000 requires prior written approval from the Department, established by TAC §5.12
- Determining factor: Lowest written price
- Example: Office supplies; miscellaneous repairs/equipment, vehicle purchase, equipment repair services
2. Procurement Type: Small Purchase
Small Purchase is a relatively simple procurement method used for securing supplies, services, or other materials. The responsible personnel submits a written or verbal request for price quotes to multiple vendors for goods or services described in detail. The Small Purchase method should only be used when the only determining factor for procurement is lowest cost, and the services, supplies, or equipment will not exceed $25,000 individually or in the aggregate.
3. Identify Staff Involved in Purchase Process
Individuals involved in the procurement process may include, but are not limited to:
- Program Director or Manager
- Construction inspector or manager
- Quality Control
- Accounting/budget/audit professionals
The Administrator does not need to identify separate individuals for each of the following roles. One individual may assume several of the roles outlined below as long as the assignment of roles maintains separation of duties and avoids conflict of interest.
Avoid Conflict of Interest
Administrator must ensure there is sufficient separation of staff duties to avoid conflicts of interest during the procurement process. For example: Someone other than the person(s) conducting the purchasing processes should review and approve payment for the goods/services procured; employees in the purchasing function should not have record-keeping responsibilities in the cash disbursement system; employees involved in the receipt of goods from vendors should not be involved in the purchasing or cash disbursement processes.
Conflict of interest occurs when a "covered person" inappropriately benefits, either directly or indirectly, as a result of:
- Procurement actions taken in the administration of federal funding; or
- Receipt of assistance provided by federal funding
Covered persons include:
- All employees, officers, elected or appointed officials, and agents of the Administrator, and their family members, partners, and associates
Covered persons CANNOT:
- Participate in procurement of the beneficiary for contractual award or selection of the beneficiary for assistance
- Conduct business with the procured provider or the assisted individual
- Solicit or accept gratuities, favors, or items of monetary value from the procured provider or the assisted individual
One individual may assume several duties outlined below as long as the assignment maintains separation of duties and avoids conflict of interest.
Procurement Oversight: The individual responsible for procurement oversight assumes all responsibility for ensuring that the procurement process is compliant and timely.
Compliance with Internal Policy: Administrator must identify individual(s) responsible for ensuring appropriate procurement procedures are conducted in accordance with Administrator's written procurement policies and procedures to:
- Ensure free and open competition
- Use appropriate methods for soliciting goods and services
- Determine the best value for goods and services purchased
- Comply with local/state/federal requirements
Contract Management: The individual(s) responsible for overseeing contract management must ensure the following factors are appropriately addressed:
- Compliance with applicable local/state/federal policies, procedures, rules, and regulations
- Development of contractual timelines to ensure program benchmarks are met
- Records management and documentation
- Appropriate expenditure of funds
- Quality goods and services obtained at lowest reasonable prices
- Development and negotiation of contracts/agreements awarded
- Post-procurement monitoring of contractor performance
Timeline Tracking: The individual responsible for overseeing procurement timelines must ensure that procedures are undertaken in a timely manner so that goods/services are received in sufficient time to allow compliance with program requirements and contractual benchmarks. Any variations must be acknowledged and the procurement timeline adjusted as necessary. See #4 for additional guidance.
Developing the of Scope of Work: The individual responsible for developing the Scope of Work must be qualified to assess the technical requirements for the required materials/products/services. See #5 for additional guidance.
Evaluation of Proposals Received: Administrator must designate a committee responsible for the objective assessment and selection of proposals based on established evaluation criteria. See #8 for additional guidance.
4. Establish Timeframes
Ensure procurement procedures are undertaken in a timely manner so that goods/services are received in sufficient time to allow compliance with program requirements and contractual benchmarks. Consider the following factors:
- Time required to develop the Scope of Work
- Goods/services – requires analysis of product/services required and descriptive write-up for solicitation of quotes or proposals
- Time required to develop Cost Quotation Form
- Time required for solicitation of quotes from vendors
- Time required to review quotes
- Time required for formal approval by city/county/board (if applicable)
- Time required to develop an appropriate contract (if applicable) and execute the agreement
- Allowance for unforeseen circumstances or delay
- Allowance for potential bidder protest
- Be aware of contractual benchmarks or terms
Contract or Agreement Terms: Consider the length of the contract being awarded, and include sufficient time for the vendor/service provider to prepare, implement and finish the entire project.
Threshold or Production Timelines: Consider including performance thresholds with specific benchmark completion dates identified in the contract.
5. Develop Scope of Work
Create a thorough, detailed description of the goods/services to be purchased. Include specifications, standards, and minimum qualifications desired. Factors to be considered in the Scope of Work include, but are not limited to:
- Essential characteristics of the required product/service
- Quality and quantity of materials/products/services
- Minimum required standards for labor or materials, as applicable
- Requirements related to:
- Program rules and regulations
- Applicable codes/standards and plans/specifications (especially as related to construction)
- Methods and materials
- Required date of completion
6. Create Quote
The Small Purchase method of procurement requires that quotes be obtained from several vendors. Quotes may be obtained in writing, online, or by telephone.
Develop a Quote Form for use in documenting quotes received:
- Includes detailed description of specific goods/services being purchased
- Size, color, style of goods/services being purchased
- Manufacturer catalog or model numbers (or equivalent), as applicable
Document the quote solicitation activity:
- Name of individual obtaining the quotes
- Vendor names, addresses, phone numbers
- Name of individual providing the quote for the vendor
- Prices quoted by each vendor
- Record of discussion and/or negotiation conducted
- Dates price quotes were received
- Expiration date, if applicable, for prices quoted
Include a copy of your purchase requisition or purchase order in the procurement records. Identify the final price and source of funds used for the purchase. Document the date on which the purchased goods were received. Document payment for the purchase.
7. Solicit Quotes
The Small Purchase method of procurement requires that quotes be obtained from several vendors.
- Quotes may be obtained in writing, online, or by telephone.
- Minimum of 3 quotes from qualified vendors.
8. Accept and Evaluate
Record the receipt of all quotes. Evaluate the quote information using the stated evaluation criteria and determine the most reasonable and responsible response, including using cost/price analysis done by the Subrecipient - TAC §5.10(a) (Secretary of State site). Confirm and document the absence of conflict of interest. Confirm and document the bidder has not been state debarred or federally debarred. Accept the lowest reasonable price offer.
9. Make Purchase
Accept the lowest reasonable price offered. Select the responsive and most advantageous to Nonprofit: price, quality and other factors considered
Notify the accepted vendor.
Document your Procurement file with a copy of your purchase requisition or purchase order identifying the final price and source of funds being used for the purchase. Document the date and payment for the purchase.