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MANUAL OF BUSINESS PROCEDURES - SECTION 270
PURCHASING DEPARTMENT
Last Updated: February 2008
Purchasing Department
102 Angell Building
East Lansing, MI 48824
Telephone: 517-355-0357
Fax: 517- 353-2024
Business Hours: Monday - Friday 8 a.m. to 5 p.m.
PURCHASING DEPARTMENT
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I. GENERAL POLICY
A. The Purchasing Department has a fiduciary responsibility, based on the Delegation of Signature Authority” memorandum, for the following:
1. The authority to issue purchase orders and/or sign contracts on behalf of the Board of Trustees of Michigan State University.
2. The responsibility to procure equipment, materials, supplies and services, while insuring the bid process is open and competitive and that prices paid are fair and reasonable.
B. Purchases will be made on the basis of quality and service which includes, but is not limited to, delivery requirements, quantity, competitive market prices, and the financial stability of the supplier. Based on all of the stated criteria, the Purchasing Department has the final authority to select suppliers.
C. The Purchasing Manager and designated buying staff are the only personnel authorized to commit funds on behalf of the university for the purchase of equipment, materials, supplies and services,. The Director of University Services and/or the Purchasing Manager may delegate purchasing authority (i.e. MSU Procurement Card) and/or purchasing responsibility for approved satellite procurement activities (i.e. Food Stores and the Library) subject to prior approval by the Purchasing Manager of the satellite unit's policies and procedures.
Unauthorized commitments, made by members of the faculty and/or staff, are not binding on the university; suppliers' invoices covering these commitments may not be honored. Consequently, the individual making the commitment may be held personally responsible for the transaction.
D. Requests for an exception to provisions of the Purchasing Department’s policies must be documented, in writing, by the head of the department making the request and approved by the appropriate director before the acquisition. The Purchasing Department will then evaluate the rationale for exceptions to non-competitive procurement and make recommendation(s) for action.
E. Sole source purchases are allowable only when obtaining a competitive bid is impractical or when substitutes have been deemed unacceptable through a formal product evaluation process. Such purchases must include objective, technical or quantitative justification describing why competitive bids are not appropriate and/or detailing the product evaluation process.
F. The Purchasing Department has a Supplier Diversity Program that provides bidding opportunities to minority-owned, woman-owned and other small or disadvantaged businesses.
G. Requests for bulk food purchases are referred to Food Stores. See Section 215 of the Manual of Business Procedures. See Section 45 and Section 46 of the Manual of Business Procedures for the purchase of catered or hosted food items.
H. Every effort should be made to purchase domestically produced goods and services from domestically based sources. As policy, it is particularly important when expending funds appropriated by the State of Michigan under Public Act 352 of 2006 Section 209: Funds appropriated shall not be used for the purchase of foreign goods or services, or both, if competitively priced and of comparable quality American goods and services, or both, are available. Preference should be given to goods or services, or both, manufactured or provided by Michigan businesses if they are competitively priced and of comparable value.
II. PURCHASE REQUISITION
A. Form
1. A "paper requisition" is a numbered form, which can be obtained from University Stores stock order #14026740, requesting the purchase of goods and services.
2. An "electronic requisition" (web requisition) is a requisition sequentially numbered, by the on-line procurement system, submitted via the World Wide Web by an authorized user. Instructions for completing the web requisition are listed on each screen. The electronic requisition is the preferred and most expeditious method for submitting purchase requests. To become an authorized user, a MSU employee must have a valid MSUNet account. For assistance with web requisitioning contact the Purchasing Help Desk at 355-0357 extension 300 or the Stores Help Desk at 355-1700 extension 299.
B. Purpose
1. Both the paper and web requisitions are used to request the purchase of equipment, materials, supplies or certain services from an off-campus source. The requisition also serves to specify the appropriate account number(s) to be charged and to authorize purchases up to the designated amount stated on the requisition.
2. A purchase requisition is not required to obtain materials and supplies from University Stores.
C. Authorized Signatures
1. An authorized signer for the designated account(s) must sign paper requisitions indicating there are adequate funds for the transaction.
Web requisitions will be approved electronically by an authorized signer who insures there are adequate funds for the designated account(s) as specified in the procurement system.
2. All equipment purchased with federal funds, 61-0000 through 61-5999, must have the following certification on or attached to the requisition:
"Equipment purchases with federal funds:
I certify that this equipment is necessary and will be used primarily, or exclusively for the project(s) to which the costs will be charged and that similar equipment is not available for my use.
_______________________________________________
PI or Project Representative"
3. Contract and Grant accounts 61-0000 through 61-9999 must be reviewed and approved by Contract and Grant Administration if the requisition totals $5,000 or greater.
4. Agency accounts must be reviewed for both authorized signature and adequate fund encumbrances. Agency accounts are those accounts in the ranges 31-3500 through 31-4999 and 71-5000 through 71-5999.
D. Distribution
1. Once the paper requisition is completed, forward the original to the Purchasing Department and retain a copy for record purposes.
2. Web requisitions will be sent electronically to the Purchasing Department, once completed and approved by the requisitioning department.
III. BIDDING PROCEDURES
A. Policy
The purchase of equipment, materials, supplies, and/or services is subject to the provisions of university policy whereas the bidding process is open and competitive, and prices paid can be shown to be fair and reasonable. Certain building construction projects, renovations, improvements and corresponding furnishings, that exceed the dollar threshold established by the university, will be purchased through Campus Planning & Administration. All purchases processed by the Purchasing Department are subject to the following bid requirements:
1. Competitive bids are defined as follows:
a) A "Request for Quotation" (RFQ) is processed for acquisitions that are greater than $5,000 and less than $50,000.
b) A "Sealed Bid” is processed for all acquisitions that exceed $50,000. Generally, sealed bid openings are accessible to the public and bids are read aloud.
c) A "Request for Proposal" (RFP) is used for all acquisitions with service requirements where selection criteria exceeds the scope of price and product quality (i.e. design, art work, reference checks, project time lines, etc.). A RFP typically does not require a sealed bid but can occur at the discretion of the buyer.
d) A Professional Service Contract over $10,000 will be reviewed for bid.
2. The following purchases may be made without competitive bidding:
a) Maintenance contracts purchased from the manufacturer (OEM) or authorized dealers for the specific equipment.
b) Purchases made under contracts established by Michigan State University, public agency (i.e. State of Michigan) or cooperative buying groups (i.e. CIC-PC, E & I Cooperative, HPS, HPPI/Novation, MACUPA, MLSPC etc.) on the basis of competitive bidding and/or negotiations.
c) Purchases in case of (i) emergency animal feed needs, (ii) protection of university property, human and animal health, (iii) emergency repairs to equipment and (iv) care of the dead.
d) Purchase of livestock at auction.
e) Competitive bids are not required for requisitions totaling less than $5,000. However, the buyer may choose to obtain additional quotes.
f) Proprietary software support when available only from the licensor.
g) Professional Services Contracts less than $10,000 and Professional Service Contracts greater than $10,000 will be authorized by the Purchasing Department.
Requests for an exception to the bidding procedure, such as a sole source purchase, must be documented in writing by an authorized signer for the account to be charged and approved by the appropriate department chair.
The Purchasing Department will evaluate all requests for exception to the competitive bid requirement for appropriateness and it will make the final determination if a sole source purchase is acceptable. Single source (only one bid response) purchases are allowable when substitute products have been deemed unacceptable through a formal product evaluation process. Such purchases must include a detailed report describing the evaluation process and why the substitute product(s) is not acceptable. Once a sole source or single source purchase is approved, a supplier quotation/proposal will be solicited by the Purchasing Department to establish contract pricing with mutually agreeable terms and conditions.
B. Request for Information
The Purchasing Department can assist faculty and staff early in the procurement process by participating on product evaluation committees or by soliciting a “Request for Information” (RFI) on behalf of the department. The purpose of a RFI is to identify potential supplier sources (particularly helpful when buying new technology), or to learn about products that are new on the market or new to a university department. The RFI process typically asks for product information, descriptive literature, possible product demonstrations and/or evaluations and a reference list for other customers with projects of similar size and scope. Budgetary pricing can be obtained if funding is required to move the project forward. Suppliers will typically provide list price information when budgetary pricing is requested.
C. Software Licenses and Maintenance Agreements
Software license agreements, maintenance services agreements and any other contract documents must be reviewed for both legal and business issues. The Purchasing Department forwards agreements to the Office of the General Counsel for legal review. The buying staff reviews agreements for business issues. The requisitioning department will be included in all negotiations with the vendor so the final contract terms and conditions are acceptable to all parties. If suppliers provide contracts, agreements or licenses to the end user, those documents must be provided to the Purchasing Department. The documentation can be attached to a paper requisition or sent under separate cover with the requisition number noted on the documentation.
D. Electronic Protection Systems
All requisitions for the purchase of electronic protection systems or services must be processed in accordance with the memorandum from the Vice President for Finance and Operations dated July 3, 2002 (see Exhibit 6).
IV. PURCHASE ORDER
A. Purpose
A purchase order is the legal document to a specific supplier committing university funds for the procurement of goods and services. All purchase orders are generated from a requisition or a Professional Service Contract.
1. A purchase order authorizes a supplier to deliver and charge the university for equipment, materials, supplies and services, (see Exhibit 3). The purchase order is distributed to the supplier, Invoice Audit, the buyer, University Stores, Inventory (fixed assets only) and the requisitioning department via Campus Mail. Unauthorized commitments of funds (i.e. confirming orders for equipment, materials, supplies and services) may be the personal responsibility of the individual making the commitment.
2. Confirming orders less than $5,000 on account numbers starting with 11-xxxx, 21-xxxx, 71-xxxx & 81-xxxx may be processed on a non-purchase order basis.
3. Section 76 of the Manual of Business Procedures, "Independent Contractors", describes the process that must be completed to formalize personal service relationships with unincorporated contractors and all providers of medical or legal services, whether incorporated or not.
4. See Section 201 of the Manual of Business Procedures, "Alterations and Improvements of Facilities", for procedures for an alteration or improvement within an existing building. Board of Trustee approved construction and facility improvement projects use purchase orders only as a vehicle to pay the suppliers.
5. See Section 320 of the Manual of Business Procedures “Lease, Lease Purchase and Installment Purchase Agreements” as purchase orders can be used as a means for lease payments. Lease equipment is not automatically insured. Contact the buyer for more information.
B. Shipping Inquiries
Questions concerning an order, up to the time of delivery, can be directed to the Purchasing Department (355-0357 press “0”); once an order has been received by the university, questions can be directed to University Stores Receiving, (355-1700 extension 209).
C. Damaged and Shortage
Material received in a damaged condition must be reported to the Shipping section of University Stores at 355-1700, Extension 212. Time is of the essence. In order for a claim to be considered, concealed damage must be reported to the freight carrier within fifteen (15) days of the date received by MSU and within five (5) days of receipt for express shipments. Contact University Stores immediately for instructions. In all cases, the package and contents including inner packaging must be preserved as received. Do not remove anything from the package until it has been inspected or a determination made for return or replacement. Value of the damaged item must exceed $50 before a formal claim can be filed.
Disposition of damaged items is processed on a Material Return and/or Shipping Permit form (stock number 14025620). The form must be completed and sent to University Stores. Suppliers are contacted by University Stores to verify such information as:
• Whether the claim is to be handled by MSU or by the supplier
• Shipping address, if returned to the supplier
• Type of transaction to be used and who is responsible for shipping expenses
• Whether the shipment requires additional insurance and at whose expense
• The exact dollar amount of the claim
Once a claim is initiated, University Stores contacts the department regarding responsibility for payment of invoices or handling of credits.
Any overage or shortage arriving on a purchase order should be reported to University Stores Receiving at 355-1700, Extension 209 for advice (i.e. pick-up, redelivery or Material Return).
D. Open Purchase Orders
1. Campus open orders are issued to cover certain supplies, materials, services or emergency repair needs for frequently used vendors with low dollar purchases (less than or equal to $1,000 per transaction) which are not available from on-campus sources and for which the Purchasing Department agrees that the establishment of an open order will best serve the interest of the university.
Campus open orders cover a specified period of time (typically up to one year in length) and are restricted to a fixed dollar amount, typically $5,000 per year. Campus open orders issued for annual expenditures greater than $5,000 must contain the following statement: “No equipment may be purchased on this order” and “No one shipping release is to exceed $1,000”. Campus open orders over $5,000 will be competitively bid where possible.
2. Equipment items (object code 090) cannot be charged against an open order. (The only exception is for computer orders placed through Computer Stores.)
3. Requests to establish open orders must be directed to the buying staff with approval from the Purchasing Manager.
4. University Stores has a number of open order contracts. Payment terms, shipping terms and/or university wide discounts have been established by the Contract Administrator. Open order releases through University Stores can be used for transactions up to or equal to $2,500. Prime Vendor contracts with established pricing can be used for transactions up to or equal to $4,999. This process should be utilized whenever possible (see University Stores, Section 220 for ordering procedures).
Materials that can be obtained locally can be picked up by a University Stores truck and delivered where requested. Call 355-1700 to provide an account number and a delivery address.
E. Emergency Orders
Emergency orders must be designated and restricted to cases involving the breakdown of equipment, or where human or animal life is endangered. A phone call alerting the buyer of the emergency is strongly encouraged and an explanation of both the nature of the requirement and the emergency is required so the order can be handled in the most expedient way. The requisition will be referred to the appropriate buyer, who will place the purchase order in the most expeditious manner or provide a pre-approval enabling the university department to obtain service or product delivery as soon as possible. In emergency situations where the above procedures cannot be followed (such as during evening or weekend hours), a department may procure the required item or service and send a confirming requisition marked “Confirming Order” with an explanation of the emergency. Departments are encouraged to have MSU Purchasing cards to accommodate emergency situations.
F. Maintenance Service Contracts
1. Departments requiring a preventative maintenance service contract for equipment to be inspected, cleaned and/or serviced periodically must prepare a requisition that indicates:
a) Type of equipment, including manufacturer name
b) Serial number
c) Period covered
d) Location of unit
e) Account name and number
2. Typically, most preventative maintenance contracts require the department to schedule and arrange the preventative maintenance inspection(s). It is the responsibility of the end user to read and understand the terms and conditions of all preventative maintenance contracts to insure the department receives full benefit of the contract.
3. Supplier renewal notices sent directly to departments must be forwarded to the Purchasing Department with a signed requisition to insure uninterrupted service. If the maintenance service contract is no longer needed (equipment is past useful life or equipment will soon be disposed of), no action or notice to the Purchasing Department is required.
4. If a maintenance service contract is terminated prior to the contract expiration date due to sale, trade-in, transfer of equipment, or any other purpose, a proportionate refund, if applicable, will be obtained by the Purchasing Department and returned to the account originally charged. The Purchasing Department must be notified of the contract status change in order to negotiate the settlement with the vendor.
5. University Stores has several maintenance contracts in place for the ease of use and payment.
G. Change Order to a Purchase Order
A "change order" is a change to an existing purchase order.
A change order is processed when a product or service listed in the purchase order is altered significantly either in description, quantity, price or scope of work.
H. Vendor Exhibits on Campus
A department may request a vendor equipment demonstration on campus with prior approval from the Purchasing Department. The Purchasing Department will contact the vendor to arrange a delivery schedule, length of time the equipment is to be on campus, determine a pick-up date and negotiate the university’s liability for the equipment while it is in transit and while it is in the university’s possession. A no-charge purchase order will be issued detailing all of the terms and conditions of the demonstration. The only exceptions to this policy are: Career Carnival, the Business Women's Annual Display and Ag Expo.
V. MATERIAL RETURNS
A. Available Forms (http://universitystores.msu.edu/html/stores/forms.asp)
1. Material Return and/or Shipping Permit (MR)
University Stores stock order #14025620.*
2. Transportation Service Request (TSR)
University Stores stock order #14028200.*
*Also available in downloadable form.
B. Purpose
One of these forms is required when any type of material is returned to a vendor, as in the case of duplicate shipments, exchange of items, sending materials off campus for repairs or trade-in, and return of equipment due to expiration of lease.
C. Usage
1. The Material Return (MR) form is required when a purchase order or a purchase order draft is involved and the value of the material is over $500 or a credit/payment will be issued.
2. Repairs requiring a payment must use the MR form. The completed MR along with a requisition should be sent to Purchasing for processing.
3. Using the MR form is always acceptable but the Transportation Service Request (TSR) is permissible only under certain conditions, listed below, and is an expedient means of shipping for some items.
a) When items are purchased on a purchase order at a cost of less than $500.
b) When items were not purchased on a purchase order (i.e. MSU Purchasing card transaction).
c) For shipments with no dollar value (i.e. warranty repair or even exchanges). Since warranty documentation remains with the department, the department must arrange the Return Authorization and include it on the TSR or the MR form.
4. TSR Form. For more information on the TSR form see the University Stores website at http://universitystores.msu.edu/html/shipping/guidelines.asp
5. Hazardous Materials. When shipping hazardous material, either by MR or TSR, a “Material Safety Data Sheet” as well as a “Hazardous Materials Transportation Form” must be included. New federal regulations require more complete documentation. Descriptions must be complete and accurate. Abbreviations are not allowed. Failure to comply puts the university and the individual at risk for substantial fines. Questions regarding the shipment of hazardous materials can be answered by University Stores Shipping (5-1700 x 212). (http://universitystores.msu.edu/html/shipping/hazmat.asp)
6. International Shipments. Export controls are federal laws that regulate the export of sensitive technologies, equipment, software, biological agents and related data and software. Exporting requires proper documentation to ensure the shipment is processed without delay. In order for University Stores to properly prepare and classify a shipment, departments are required to complete and provide the International Shipping Form: http://universitystores.msu.edu/html/forms/international.doc
Exports involving research-related material and data require review and documentation from the Office of Export Controls and Trade Sanctions: http://www.msu.edu/unit/vprgs/expregs/overview.htm
D. Preparation and Routing of the Material Return Form
1. Particular attention should be given to completing the following necessary information on the form.
a) A complete address with street number (post office box numbers are not acceptable)
b) A complete description of material
c) Purchase order number, if applicable
d) Account number
e) Dollar value of shipment
f) Authorized signature
g) Department contact and phone number
2. Forward the completed from to Purchasing (or directly to University Stores, if no dollar value on the shipment.)
3. A MR number is assigned and a buyer’s name is listed.
4. The Purchasing Department will contact the supplier to obtain a material return authorization before materials are returned. Therefore, do not return materials directly to the supplier before approval is granted.
5. Once supplier approval is obtained, the Purchasing Department will forward the MR to University Stores for pick-up. If a return-authorization is denied, the MR will be returned to the department with an explanation.
6. University Stores will pick-up the material and leave a copy of the MR with the department. The copy will indicate driver's name and the date of the pick-up.
7. University Stores will indicate the shipping information on the original form. (University Stores retains the right to make the final determination of method and terms of shipment.)
8. The original MR is then forwarded to Invoice Audit to determine if credit is due to MSU. If credit is due, either a credit memo is requested from the supplier or Invoice Audit may use the MR as a credit memo document. If no future payments are expected, a refund check may be requested by the auditor. After processing, a copy of the credit memo, MR or deposit slip (if refund check) will be sent to the department for its records. The credit will be applied to payments made to the supplier and will appear on the departmental account ledger when the next payment is processed.
9. Departments inquiring about the status of Material Returns should call:
a) Purchasing (355-0357 press “0”), prior to material pick-up.
b) University Stores (355-1700), after material picked up.
VI. PURCHASING CARD
A. Purpose
The MSU Purchasing card (MasterCard® ) is designed to allow for the direct procurement of low dollar purchases by the faculty and staff through the use of a credit card. The intent is to increase efficiency by eliminating the need for small dollar requisitions, direct payment vouchers, reimbursement vouchers and petty cash funds. This will result in quicker turn around time, greater flexibility in ordering, and reduce paperwork. The MSU Purchasing card is to be utilized for purchases up to or equal to $2,500. There are restrictions with the use of the MSU Purchasing card (i.e. personal use, travel, radioactive material, etc.). For a complete list of the restrictions as well as other information regarding the MSU Purchasing card see http://purchasing.msu.edu/PurCard/purcard.htm.
The card is a privilege granted to departments’ faculty and staff (excluding on-call, temporary employees, students and graduate students). It must be used in a responsible and appropriate manner. Fraudulent or intentional misuse of the card will result in revocation of the card and/or possible criminal charges. Periodic audits of each cardholder's transaction file and monthly statement reconciliations are conducted by Internal Audit. In addition, the MSU Purchasing Card Coordinator reviews various reports to ensure that cardholders are adhering to MSU, MasterCard® and bank policies and procedures. Questionable activity is referred to Internal Audit for further investigation. The university will seek restitution for any inappropriate charges made to the card. Fraudulent or intentional misues (including personal use of the card) will result in revocation of the card, possible criminal charges, and/or discipline up to and including termination.
B. Procedures
Completion of a Cardholder Account Form (See Exhibit 4), approval by an authorized signer for the account and attendance at a training session are the only requirements for obtaining a MSU Purchasing card.
C. Responsibilities
There are specific duties and responsibilities for the "Cardholder", “Statement Approver" and “Contact Person”. These duties and responsibilities are as follows:
Cardholder Responsibilities:
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Ensure that the university's resources are spent in a responsible and ethical manner in accordance with the MSU Manual of Business Procedures.
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Never share a purchasing card. Only the authorized cardholder may use the card.
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Be aware of the strictly prohibited items that are not to be purchased with the card.
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Never use the purchasing card for personal use.
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Immediately report a lost or stolen card.
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Obtain original itemized receipts for all purchases.
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Notify the merchant that MSU is tax exempt and provide the tax ID number or Sales and Use Tax Exemption Certificate if requested by the merchant.
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Reconcile Cardholder Statement of Account within 60 days of the posting date, attach receipts and sign the statement. The statement must then be reviewed, approved and signed by someone administratively senior to the cardholder or when authorized, by the unit's Statement Approver. However, a Statement Approver may not provide the oversight approval for his/her own statement.
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Ensure receipt of materials and resolve any delivery problems, discrepancies, damaged goods, billing problems or returns with merchants.
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Submit a Statement of Questioned Item form ( Exhibit F) to the bank for disputes that cannot be resolved directly with the merchant.
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When transferring to a new MAU, notify the Purchasing Card Coordinator, in writing, of the change prior to the effective transfer date. Once in the new department the employee should submit a new Purchasing Card Application signed by his/her new Dean, Director or Chairperson. If the cardholder transfers to a new department under the same MAU, a memo must be sent to the Purchasing Card Coordinator indicating the new account number. In either case, all receipts for outstanding purchases should be turned over to the Statement Approver so the final statement can be reconciled.
Note: Failure to comply with the above requirements will lead to a suspended or canceled card.
Statement Approver Responsibilities:
- Verify that the Purchasing Card Coordinator has been notified when a cardholder terminates the university or transfers to another department on campus.
- It is the recommendation of both Internal Audit and the Purchasing Department that an appropriate separation of duties exist. However, if the cardholder is also the same person who receives the fund ledger, it is essential that a person senior to the cardholder review and sign the "Cardholder Statement of Account" on a timely basis each month.
- Memos to change the account number and/or monthly spending limit on a card must be signed by the Authorized Signer. Internal Audit requires verification of signatures for these types of changes.
- Must be at least one level administratively senior to the cardholder, or have been delegated signature authority, in writing, by the Dean, Director or Chairperson. A Statement Approver may not provide the oversight approval for his/her own statement.
- Must review all transactions and receipts and verify that they are appropriate expenditures of university funds and are in compliance with university policy.
- Will complete final statement reconciliation for employees whose last statement arrives after they have left their position (the cardholder will leave all outstanding receipts with the Statement Approver in this case).
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Is strongly encouraged to attend a cardholder orientation session in order to better understand the program and enforce compliance.
Contact Person Responsibilities:
- Receives and distributes to the cardholder his/her monthly Cardholder Statement of Account and a copy of the monthly cover letter.
- If aware that a cardholder has left the department or terminated the university, verify with the Statement Approver that the Purchasing Card Coordinator has been notified.
- Advise the Purchasing Card Coordinator of any address changes for cardholders.
- Must attend cardholder orientation regardless of whether they are a cardholder or not.
VII. FOREIGN MERCHANDISE ACQUISITIONS
A. Purchases of foreign manufactured items or from foreign countries must be noted by the end user on the requisition before sending it to the Contract and Grant Administration for approval on federally funded research grant accounts. “Buy American” policies should be confirmed with Contract and Grant Administration prior to the acquisition of any foreign merchandise or foreign equipment over $5,000.
B. The U.S. Treasury Department’s Office of Foreign Asset Control (OFAC) maintains a list of countries with which economic trade sanctions have been imposed. The sanctions pertain to importing and exporting goods and services to and from countries whose practices are inconsistent with U.S. foreign policy and national security. Current sanctioned countries are listed at http://www.treas.gov/offices/enforcement/ofac/sdn/index.shtml. Under no circumstances should a shipment or purchase be made to or from a country, business, or individual that appears on the sanctioned list.
C. The preferred method of shipment on overseas orders is air express (Federal Express). Orders that ship air express do not require the involvement of a customs broker. University Stores can assist (5-1700 ext. 212) departments with international shipments both inbound and outbound.
D. Foreign merchandise acquisitions that cannot be shipped via air express require a University Stores Open Order Release issued to a customs broker (currently, Trans Overseas Corporation).
E. To ensure proper handling, the following statement is to appear on the merchandise purchase order:
Whether ocean or air, the bill of lading should indicate Detroit as the destination. Notify Trans-Overseas Corporation for customs services; custom broker name should appear in the notify section of the bill of lading.”
F. Duty free entry:
1. When foreign made scientific equipment is purchased, a customs duty charge is included in the price or added separately regardless whether the order is placed with a foreign or U.S.A. supplier. As a university, end users are entitled to request duty free entry, which is accomplished by filing Department of Commerce forms which are acted on by Congress. To receive a duty free status, it must be shown that a comparable product is not manufactured in the U.S.A. and there will be no commercial use within a five-year period. The process usually takes between six to nine months and may be initiated either before or after order placement but does not affect delivery. Some suppliers will assist with preparing paper work. Since duty charges vary from seven to fifteen percent, the savings can be substantial.
2. Although not required, it is requested that a copy of the completed Department of Commerce Request for Duty Free Entry of Scientific Instruments or Apparatus form and copies of letters stating pending status, decision, etc., be sent to the Purchasing Department so that a file may be maintained.
3. When negotiating a contract with a successful supplier it is possible to place an order without duty by adding the following statements:
a) Duty not included in price.
b) MSU will apply for duty free entry.
c) If duty free entry is not approved, MSU will process an additional purchase order to cover the duty at a later date.
VIII. SUPPLIER DIVERSITY PROGRAM
A. Purpose
The Purchasing Department is actively involved in expanding and promoting its Suppler Diversity Program. This program offers minority-owned business enterprises (MBE), woman-owned business enterprises (WBE), and other small or disadvantaged businesses the opportunity to develop sound business relationships with Michigan State University. Outreach activities are sponsored to introduce suppliers to the university community and to foster the growth of supplier contracts inclusive of a diverse vendor database.
MBE and WBE companies are legally defined as, “a privately or publicly owned corporation, joint venture or any other type of business organization that is more than fifty percent beneficially owned and controlled by one or more minority persons or women”.
The Supplier Diversity Program coordinator assists campus departments with creating subcontracting plans for federally funded contracts and grants.
B. Preparation
University departments can contact the Supplier Diversity Coordinator to obtain supplier and commodity information.
IX. CODE OF ETHICS
A. Purpose
The Purchasing Department conducts its business operations in an ethical manner and in compliance with applicable laws, government regulations, and University policies and procedures.
The Purchasing Department abides by the Code of Ethics promoted by the National Association of Educational Procurement (NAEP). To view the complete NAEP Code of Ethics see (Exhibit 5), or visit the NAEP web site at http://www.naepnet.org.
B. Gifts and Entertainment
Purchasing Department employees will not accept supplier gifts or entertainment.
C. Conflict of Interest
Michigan law requires that the Board of Trustees approve the terms of any contract between the University and one of the following: (1) a University employee, (2) a business or other entity of which a University employee is a partner, member or employee, (3) a private corporation in which a University employee has a specified ownership interest or is a director, officer, or employee, or (4) a trust of which a University employee is a beneficiary or trustee. (See Contracts of Public Servants with Public Entities; MCLA 15.321 et. seq.) Contracts or other agreements falling within the scope of this state law should be provided to the Office of the General Counsel for review and approval by the Board of Trustees.
University employees must take all appropriate steps to assure that the University does not knowingly enter into purchase commitments which would violate Michigan law or result in a conflict of interest. For the purpose of this section, a conflict of interest exists when an employee's financial interests or other opportunities for personal benefit may compromise, or reasonably appear to compromise, the independence of judgment with which the employee performs his/her responsibilities at the University. Employees should refer questionable purchase transactions to the Director of University Services or the Purchasing Manager.
Additional information on conflicts of interest and other related topics can be found in both the Faculty Handbook and the Employee Handbook - Rules Governing Personal Conduct of Employees.
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