Step by Step
- 1. Understand Your Role as a Department Buyer
- 2. Understand VCU’s responsibility as a state-agency
- 3. Know the definition of a business expenditure
- 4. Know what you Can and Cannot Buy
- 5. Know the Mandatory Sources
- 6. Understand Conflict of Interest Policy
- 7. Know Board of Visitors’ Approval Requirements
- 8. Know the Fiscal Year-End Cut-Off Dates
- 9. Know Rules regarding Taxes and Freight Charges
Employees are responsible for knowing and complying with established University and State policies and procedures when creating/approving requisitions and/or purchase orders, completing receiving reports, requesting/approving a direct payment (e.g. personal reimbursement), requesting/approving a travel reimbursement, authorizing/making corporate card charges, or approving another employee’s P-card transactions. All documentation provided in support of a procurement or payment transaction must be factual and becomes public information. Vendors routinely review procurement files to satisfy themselves that the procurement was conducted fairly, ethically, and consistent with procedures. Falsifying any documentation (e.g. providing nonfactual documentation supporting a purchase transaction, altering/creating vendor invoices, improper receiving of goods/services, etc.), are serious breaches of policy. Failure to comply with established University and State policies and procedures may result in revocation of the employee’s system access to eVA and/or corporate card privileges, even for a first offense. Deliberate or recurring noncompliance or failure to perform required duties may constitute cause for disciplinary action up to and including termination in accordance with the Employee Standards of Conduct, the University’s Rules and Procedures, the Promotion and Tenure Policies and Procedures, the University Policy for Administrative and Professional Faculty and Faculty Holding Administrative Appointments, and/or any other applicable University procedure.
With the exception of written delegated purchasing authority granted to University departments for goods or services, University Purchasing has the sole authority and responsibility to obligate Virginia Commonwealth University for the purchase of goods or services. Failure to comply with this policy may result in loss of departmental procurement authority. In addition, the individual making the purchase may be held personally and legally responsible for the financial commitment when the procurement is not in accordance with the Management Agreement and Rules Document and/or other State policies/procedures. Departments are advised to electronically forward all requisitions for goods or services totaling over the delegated purchasing limits to University Purchasing for processing. Splitting purchase orders is a circumvention of procurement requirements.
Employees involved in the procurement process are responsible for proper planning to ensure that they initiate the requirement sufficiently in advance to allow necessary internal approval(s), administrative/procurement leadtimes, and vendor delivery leadtime. Failure to plan does not constitute an emergency or justify a sole source procurement. Departments should:
- Anticipate departmental needs in advance of the actual delivery requirements in order to allow all interested vendors to compete on the items or services;
- Anticipate departmental needs in advance, in order to avoid last minute rush orders as well as numerous small repetitive orders over a short period of time;
- Consolidate similar items that can be supplied from one vendor onto a single requisition;
- Provide clear and complete specifications on items to be purchased, including the important features or functional requirements of the item, in addition to the brand name and model number;
- Identify a required delivery date when delivery time is to be a consideration in the evaluation process;
- Identify “equal” brands and models which can perform the required functions, whenever possible;
- Use only current catalogs and catalog numbers for items to be requisitioned;
- Document and communicate poor or unsatisfactory vendor performance to University Purchasing; and
- Procure goods and services within their delegated authority, in accordance with stated policies and procedures.
The University is a nonprofit State-assisted institution and its expenditures receive a more substantive review because it operates in the public sector. As such, the University must ensure that all expenditures are necessary in the fulfillment of its stated mission and are incurred at a reasonable cost. All requests for disbursements, whether funded from State or Federal sources or “Local” (non-State) sources, must be reasonable business related expenditures. Individuals submitting and approving the expenditure for processing are responsible for ensuring that the expenditure is reasonable, meets all external (e.g., Commonwealth of Virginia, Management Agreement and Rules Document, State Travel Regulations, Federal government) or internal (e.g., University, school, department) guidelines, and is coded to the proper University accounting code. Departments that improperly use another department’s account are responsible for resolving the error. It is the responsibility of persons submitting or approving an expenditure to ensure the most efficient and effective use of the University’s financial resources. It is the responsibility of fiscal administrators to ensure that all expenditures, regardless of funding source, contain appropriate justification as to the reasonableness of the expenditure and the business related purpose of the expenditure. Any question concerning this policy or a question regarding the reasonability and/or business purpose of an expenditure should be directed to your fiscal administrator.
A “Business Related Expenditure” is an expenditure that is directly related to the operation of a functional area (i.e., school, department, administrative area, etc.) in the fulfillment of its stated mission or objective as part of the University (i.e., instruction, research, public service, support services, etc.). The term reasonable is defined to mean an amount that a prudent businessperson would expend to obtain that particular good or service on behalf of a public agency of the Commonwealth of Virginia. This also infers that the good or service has been acquired under a competitive procurement process, when applicable.
The items listed in the Allowable and Non Allowable Expenditure charts are based on specific expenditures that are made with some frequency and have specific funding and/or approval requirements. It is not intended to be a comprehensive list of all types of expenditures. All purchases must be reasonable and business related. Goods must be shipped to a University address. Any exceptions to the expenditure requirements in the Allowable and Non Allowable Expenditure charts require Vice President approval.
The Management Agreement and Rules Document and/or University or State policies require that certain goods and services be procured, where applicable, from designated state agencies, state or university contracts. Whenever such a mandatory source is designated, the University is required to use that source. Current sources designated as “Mandatory” are:
The University has a Conflict of Interest Policy which establishes parameters for individuals involved in procurement transactions. The policy precludes individuals from participating in the procurement process under certain circumstances (i.e. the employee is contemporaneously employed by a company involved in the procurement transaction; the employee’s immediate family holds a position with a company involved in the procurement transaction; the employee or any member of the employee’s immediate family has a pecuniary interest arising from the procurement transaction; etc.). Because of the extraordinary trust and responsibility exercised by University employees conducting procurement transactions, and because of the legitimate expectation by the public that this trust and responsibility be exercised properly, State laws dictate a higher standard of conduct for employees involved in the procurement process. Employees and vendors must be cognizant of these laws which include the Virginia Public Procurement Act, the State and Local Government Conflict of Interests Act, and the Governmental Frauds Act. All University employees having responsibility for procurement transactions shall conduct business with vendors in a manner above reproach in every respect. Transactions relating to the expenditure of public funds require the highest degree of public trust.
University employees having administrative or operating authority, whether intermediate or final, to initiate, approve, disapprove, or otherwise affect a procurement transaction, or any claim resulting there from:
- shall not solicit, demand, accept, or agree to accept from a bidder, offeror, contractor or subcontractor any payment, loan, subscription, advance, deposit of money, services, gifts, transportation, lodging, meals, tickets to events or shows or anything else of value.
- shall not accept employment from any bidder, offeror or contractor with whom the employee or former employee dealt in an official capacity concerning procurement transactions for a period of one year from the cessation of employment by the state unless the employee or former employee provides written notification to the head of the state agency prior to commencement of employment by that bidder, offeror or contractor (Code of Virginia, Section 2.2-4370).
In some situations it may be necessary for University personnel to make site visits to evaluate vendor capability and equipment. If site visits are required for evaluation purposes the University and not the vendors being evaluated should pay for such visits. Exceptions to this policy can be made by the respective Vice President. Any exception must be made on a case by case basis. University employees making such site visits will incur and recover travel costs from the University in accordance with state travel regulations. No direct reimbursement of individuals by a vendor is permitted. The University will determine all costs incurred by University employees in connection with the site visit and bill the appropriate vendor for reimbursement of costs by means of a check payable to the University.
University employees having official responsibility for procurement transactions may attend vendor-sponsored seminars or trade shows where they will benefit from receiving product information and learning of new techniques and product or service trends. Food, drinks and give-away items offered to all participants at such Functions may be accepted by University employees attending.
All personnel having official responsibility for procurement transactions shall be knowledgeable about the provisions of Article 4, Sections 2.2-4367 through 2.2-4377, Code of Virginia, entitled “Ethics in Public Contracting.” No public employee having official responsibility for a procurement transaction shall knowingly falsify, conceal, or misrepresent a material fact; knowingly make any false, fictitious or fraudulent statements or representations; or make or use any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry” (Code of Virginia, Section 2.2-4376). “Any person convicted of a willful violation of any provision of this article shall be guilty of a Class 1 misdemeanor. Upon conviction, any public employee, in addition to any other fine or penalty provided by law, shall forfeit his employment.” (Code of Virginia, Section 2.2-4377).
If you have any questions or concerns regarding the Conflict of Interest Policy, please contact the Office of the General Counsel at 8-6610.
The following types of contracts and documents require the prior approval of the Board of Visitors (or an appropriate committee thereof):
- contracts for the acquisition, sale or conveyance of real estate, regardless of amount;
- contracts for the lease of real estate which have an annual cost of $250,000 or greater, or which are of a term of five years or greater;
- change orders having a projected total cost of $1,000,000 or greater; and
- initiation of capital outlay projects having a total projected cost of $2,000,000 or greater.
Departments have the responsibility to ensure that requisitions to purchase goods and services which are to be paid from the current fiscal year funds are submitted to University Purchasing early enough to allow for processing, vendor delivery, and invoice payment prior to fiscal year end close out deadlines. Obviously, no absolute date can be established which will guarantee procurement process, delivery, and invoicing will be completed prior to the year-end close since external factors such as product availability and manufacturing time have a major influence on the delivery and receipt of material. In general, the department should identify a required delivery (and invoicing) date on the purchase requisition at any time during the year when the vendor’s performance in those regards is critical. Delivery times may be considered in the evaluation process. Potential loss of funds at year end is not a valid reason for requesting an emergency procurement.
Federal Excise Tax. VCU, an instrumentality of the Commonwealth of Virginia, is generally exempt from paying most federal excise taxes. There are various exceptions to this general rule, for example:
- Purchases of certain vaccines are subject to a federal excise tax to be paid by the purchaser
- Purchases of certain medical devices from a manufacturer are subject to a 2.3% federal manufactures excise tax, which is required to be collected and remitted by the manufacturer (seller). Typically, this type of tax is shown as a separate line item on the purchase invoice. There are several notable exceptions to this basic rule, so please contact the University Controller’s Office if uncertain.
State Sales and Use Tax. VCU, an instrumentality of the Commonwealth of Virginia, is generally exempt from paying Virginia sales and use tax when the University purchases, leases or rents tangible personal property, if the items are for use or consumption in an activity related to the University’s tax exempt function and purpose (i.e., related to education, research, public service, etc.), AND the purchase is made pursuant to the required official purchase order(s) to be paid out of public funds.
Purchases made by the University of the following items are typically NOT subject to state sales and use tax at the time of purchase:
- Cost of services and labor (i.e., not tangible personal property)
- Items purchased for resale by the University (resale certificate needed)
- Exempt computer software, where no tangible personal property is transferred
VCU’s general exemption from state sales and use tax on purchases of tangible personal property is NOT allowed in the following circumstances (i.e., the following types of purchases are typically subject to state sales tax):
- The item is purchased for use or consumption in an activity unrelated to the University’s tax exempt function and purpose
- The purchase is made without the required official purchase order(s) to be paid out of public funds
- The item is a motor vehicle (purchased, leased or rented)
- The item is not purchased by the University with University/public funds (e.g., when an item is purchased by an individual who requests reimbursement from the University)
- The item purchased relates to (most types of) lodging, retail meals or conference facilities, as follows:
- Lodging – The cost of any room, accommodation or lodging furnished by any hotel, motel, inn, tourist camp, tourist cabin, camping grounds, club or similar facility, as well as any additional charges related to the lodging (e.g., movie charges, local telephone call costs, etc.) are generally subject to state sales tax. Long distance telephone calls are generally exempt from state sales tax.
- Retail meals – Purchases of retail meals from restaurants, hotels, motels, clubs, caterers, cafes and other facilities, as well as any related service charges (e.g., cover charges, minimum purchase fees, room service charges, etc.) are generally subject to state sales tax. Any applicable gratuity or tip typically is exempt from state sales tax.
An authorized employee or agent of VCU can generally purchase items tax-free for the University if he/she follows all relevant guidelines and provides the vendor with VCU’s completed Sales Tax Exemption Certificate, which is hosted on the University Controller’s Office website.
If an item is purchased tax-free by the University, the item must be used or consumed in an activity related to the University’s tax exempt purpose (i.e., related to education, research, public service, etc.). The item cannot be used for any private party or individual benefit, or for any activity unrelated to the University’s tax exempt purpose.
Please contact the University Controller’s Office with any questions.
It is the basic policy of the University to purchase goods “FOB Destination”. This means that the vendor pays the freight charges for shipping the goods to the ordering department (in essence the cost of shipping is included in the price of the goods), the vendor retains title to the goods until the carrier delivers the goods, and any claim for loss or damage incurred during delivery shall be between the vendor and the carrier. Delivery FOB Destination without any qualifying language following the term is the preferred method of purchase.
A department may pay freight charges and/or change the FOB point when the product could otherwise not be purchased. Departments are cautioned that changing the FOB point can create problems in the event the product is damaged or lost in transit. In such cases, any claim for loss or damage incurred during delivery shall be between the University and the carrier.
If departments are paying freight cost on a procurement, the department must add a shipping line item to the purchase order. This designation on the purchase order is notification to the vendor that the University accepts title only when goods are received. This will also notify Accounts Payable that the department has authorized the vendor to prepay the freight cost and add it as a separate line item on the invoice. Accordingly, Accounts Payable will reimburse the vendor for the actual freight cost when processing payment.
Remember when purchasing goods “FOB Destination, Prepay and Add”, the department has the responsibility to determine the actual (or maximum) freight charge. This will ensure that the total amount of the order does not exceed the department’s delegated purchasing limit, since that limit includes freight and handling charges.