Artificial Division of Purchases

No Artificial Division of Purchases



No purchase shall be ARTIFICIALLY DIVIDED so as to constitute a small purchase under $5,000 or to reduce a solicitation to a lesser or no bid requirement. In the absence of a good faith business basis, no purchase or procurement shall be artificially divided within a budget unit, or its equivalent. (Executive OrderBJ 10-16)

 

Artificially Divided Defined

Executive Order BJ 10-16 authorizes the governor to establish procedures for the procurement of small purchases with the caveat that "procurement requirements shall not be artificially divided so as to constitute a small purchase under this Section." In other words, a budget unit cannot submit two or more requisitions to the same vendor or similar vendors in order to avoid competitive bid requirements or to avoid the formal solicitation of competitive sealed bids.

 

Executive Order BJ 10-16 establishes the following small purchase requirements:

 

  • Purchases up to $5,000 - no competitive bidding is required (Administration does look for faculty and staff to exercise due diligence and comparison price purchases for lowest cost.)
  • Purchases over $5,000 to $15,000 - informal quote to at least 3 sources
  • Purchases over $15,000 to $25,000 - written or fax bid to at least 5 sources

 

Artificial division of purchases can be outlined as follows:

 

1.  Budget unit submitting two or more requisitions of $5,000 each or less for the identical commodity on the same day or within the same week.

 

Example: (1) desk @ $2,050 & (1) desk @ $3,000 received 2/21/2007

 

2.  Budget unit submitting two or more requisitions of $5,000 each or less to the same vendor on the same day or within the same week.

 

Example: (1) desk @ $4,000 to Acme Office Company received 4/13/2007

(1) chair @ $1,050 to Acme Office Company received 4/15/2007

 

3.  Budget unit submitting two or more requisitions of $5,000 each or less to similar vendors* for identical or similar commodities** on the same day or within the same week.

 

Example: (2) balances = $2,500 to Acme Scientific received 5/16/2007

(8) beakers = $2,000 to Wholesale Lab Supply received 5/16/2007

(9) thermometers = $600 to Best Buy Labs received 5/16/2007

 

* Similar vendors are suppliers selling products within the same industry category, i.e., athletic, automotive, data processing, electrical, medical, office, scientific, etc.

 

** Similar commodities are items which possess general characteristics within the same industry category, i.e., athletic, automotive, data processing, electrical, medical, office, scientific, etc.

 

4.  Budget unit head submitting separate requisitions for the same requester totaling $5,000 each or less which meet criteria 1, 2 or 3 above.

 

5.  Recurring pattern of requisitioning over the course of a fiscal year exceeding $5,000 for the same commodity from the same or similar vendors*.

 

The Purchasing Department will combine requisitions it interprets in possible violation of the Executive Order and it will solicit the necessary bids unless the requisition is accompanied by a suitable explanation (Artificial Division Exception Form) for dividing a purchase. In a few cases there are daily or weekly reoccurrences of small non-competitive purchases necessary to perform unanticipated remedial maintenance. However, such exceptions are to be handled with a prior Purchasing approved purchase requisition.



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