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UNIVERSITY OF TENNESSEE SYSTEM POLICY
FISCAL

POLICY NO: FI0415 SUBJECT:  PURCHASING - REQUISITIONS AND PURCHASE ORDERS  
EFFECTIVE: 06/01/2006 REVISION NO: 15

TOPICS:
Requisitions Related Policies
Completing Requisitions Procedures
Purchase Orders Contacts
Issuing Purchase Orders

OBJECTIVE:

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To provide policies on requisitions and purchase orders and to provide instructions for their completion. All requisitions and purchase orders are processed and approved within the IRIS system.


POLICY:

Requisitions[top]

  1. There are two types of requisitions in IRIS that can be used by departments. They are Purchase Requisitions and Department Framework Requisitions. Campus or unit purchasing departments are not responsible for determining the quality or quantity of items to be purchased except in an advisory capacity.

    Requisitions should be transmitted to the purchasing department in advance to allow time for securing bids, processing the order, and delivery.

Completing Requisitions[top]

  1. IRIS training manuals and the help features provide instructions for the completion and approval of both types of requisitions. Requisition procedures are uniform throughout the university.

    Approval of Requisition. The requisition must be approved by the head of the department, college, or division, or by the person to whom such authority is delegated.

Purchase Orders[top]

  1. The purchase order is the official document for all purchasing activities. The terms and conditions of the purchase order give legal protection to the initiating department and to the university. This order also provides legal reference and backup in disputes over shipping, quality, damage, etc.

    Each requisition processed by the purchasing department generally results in the issuance of a purchase order. Each purchase order reflects information from the requisition and may contain changes, quantity, additional terms, etc. This order is the formal record and reference document for the actual transaction and is sent to a vendor to initiate and/or confirm a purchase. Copies of the document electronically or by paper are sent to the initiator and, when applicable, to receiving stations. The purchasing department issues the following types of orders.

  2. Standard Purchase Order. Purchasing issues this order for supplies, equipment, or services whenever a department submits a properly approved requisition. If required, bids are taken before a purchase order is issued.

  3. Confirming Purchase Order. A confirming purchase order is issued when the formal written order is sent to the vendor after the order has been placed verbally, usually by telephone. The order is marked "confirming" to advise the vendor of the previous placement and to avoid duplication. This procedure is normally used to facilitate order placement and delivery. If required, competitive bids are obtained before the verbal order is placed.

  4. Framework Order. A framework order covers purchases made during a specific time period and may be issued to cover a variety of purchases. Generally, these orders are issued for the following types of purchases:

    1. Maximum Fixed-dollar Purchases. This type of purchase order permits a department to purchase items up to a fixed dollar limit (determined by the purchasing department and indicated on the framework order) from one vendor within a specified time period. Purchases exceeding the limits shown on the order should be requisitioned separately.

    2. Purchases for Specific Item(s) Based on Bids. These purchase orders are issued for specific items in estimated quantities to be purchased during a given time period. An order is awarded on the basis of bids taken, and items may be released by the department in any dollar amount up to the specified order total.

  5. Change Order. When revisions are required in a purchase order, a change order is issued by the campus or unit purchasing department. A change order is issued and distributed in the same manner as the original purchase order. Departments must send the purchasing department a memorandum that specifies (1) the original purchase order number, (2) the name of the vendor, (3) the desired change, and (4) the reason for the request (see CHANGE ORDER, SAMPLE FORM AND MEMO).

    1. Reasons for Amendments or Corrections to Purchase Order. Generally, change orders are issued for the following reasons:

      • To correct errors in the original purchase order.
      • To amend prices or quantities in accordance with existing contracts and purchase orders.
      • To add equipment or supply items that are necessary to operate specific equipment provided such additions do not exceed the original award by 20 percent.
      • To retain an acceptable overshipment of supply items or printing overruns provided they do not exceed the original quantity or award by 10 percent.
      • To facilitate emergency purchases in accordance with 44 of FISCAL POLICY FI0410.
      • To increase the original award for contracted services provided the increase does not exceed 20 percent.
      • To cancel an outstanding purchase order in accordance with 24 of FISCAL POLICY FI0410.

    2. Change Order Approvals and Reviews.

      • Change order requests (other than those under existing state or university requirement contracts) up to 10 percent of the original award or up to $25,000 may be reviewed and approved by buyers or other designated purchasing department personnel.

      • All other change order requests must be reviewed and approved by the campus or unit chief purchasing officer (or a designee in his or her absence).

Issuing Purchase Orders[top]

  1. Distribution of Purchase Orders. Purchase orders are issued by the campus or unit purchasing department after the receipt of properly approved electronic IRIS requisitions from the departments.

    After the purchasing department has issued the purchase order, copies will be distributed to the requesting department and others in accordance with campus/unit procedures.

    The requesting department should thoroughly check the copy of the purchase order against the requisition and immediately report any discrepancies to the purchasing department.

  2. Encumbrance of Operating Funds. When a purchase order is issued, functionality within IRIS encumbers the total amount of the order against the account number. After the goods are received and the vendor is paid, the original amount encumbered is replaced with the actual cost incurred.

  3. Correspondence With Vendors. Correspondence with vendors about a purchase order should be conducted by the purchasing department, but the requesting department may also contact vendors with purchasing's knowledge and approval.

RELATED POLICIES
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PROCEDURES
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Knoxville:  http://web.utk.edu/~dfinance/fiscal-policy.shtml
Health Science Center:  http://www.uthsc.edu/policies/w932_document_list.php?app=FSC
Space Institute:   
Chattanooga:   
Martin:  http://www.utm.edu/departments/finadmin/procedures.php
FOR MORE INFORMATION
:
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  Samantha Johnson  (865) 974-3311  samantha@tennessee.edu