Supply Chain Management


"Splitting" Purchases

Our role in managing University controlled funds demands that we make every effort to leverage our purchasing volume effectively.  If you consciously choose to divide a purchase in order to avoid a competition threshold, you are breaking the law.  Repetitive purchases should be forecasted (using past purchasing history, current demand, known future needs, etc.) and consolidated when evaluating the level at which competition must be solicited.  For example, if you know that you generally use 10 widgets on a monthly basis, it is incumbent on you to bid out your annual requirement for that in order to get the best “bang” for the State's “buck”.   Many commodities may be difficult to forecast in this way, but if you can reasonably anticipate that a purchase will be required more than once on an annual basis, you should solicit competition appropriate for the commodity involved and the combined annual requirement.

Examples of situations that would be considered artificial divisions:

You are renovating an office and replacing furniture.  Buying a desk now (for less than $5000, and thus soliciting no quotes) and a couple of chairs in a few weeks (less than $5000, and thus soliciting no quotes) would be a “split”.  You know that you are going to renovate and replace furniture and should make sure that you do a complete analysis of your needs before proceeding with a purchase.  If you made the above decision to avoid getting the quotations required when the total purchase crosses $5000, you have broken the law.

You identify the need to purchase a system of components to accomplish a specific purpose.  If a certain group of components from a single source is required, as a group, to accomplish the purpose, purchasing the individual components separately is an artificial division.  For example, if the system is made of three components costing approximately $20,000 each, soliciting fax quotations for the three components separately is a split.  A sealed bid should be advertised and solicited for the total $60,000 purchase.

As stated above, repetitive purchase should be consolidated, bid out, and a blanket purchase order should be used for ordering.  A blanket order is the best solution from a variety of perspectives:  simplified ordering, billing, emergency/disaster planning, etc.  Consult you departmental buyer for more guidance on the establishment of blanket purchase orders.


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