No. 37837 (Amendment): Section R33-3-3. Small Purchases

(Amendment)

DAR File No.: 37837
Filed: 07/11/2013 01:28:06 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This amendment is required by Procurement Code amendments contained in S.B. 190 from the 2013 General Legislative Session. Subsection 63G-3-301(13) requires state agencies to make or amend their administrative rules within 180 days of the effective date of the legislation that required the rulemaking.

Summary of the rule or change:

This amendment simply refines source selection procedures for small purchases made by the Division of Purchasing and General Services.

State statutory or constitutional authorization for this rule:

• Subsection 63G-3-301(13)

Anticipated cost or savings to:

the state budget:

These rule amendments will not affect the state budget because they are simply refining source selection procedures for small purchases made by the Division of Purchasing and General Services.

local governments:

These rule amendments will not affect local governments' budgets because they are simply refining source selection procedures for small purchases made by the Division of Purchasing and General Services.

small businesses:

These rule amendments will not affect the budget of small businesses, because they are simply refining source selection procedures for small purchases made by the Division of Purchasing and General Services.

persons other than small businesses, businesses, or local governmental entities:

These rule amendments will not affect any other person's budget, because they are simply refining source selection procedures for small purchases made by the Division of Purchasing and General Services.

Compliance costs for affected persons:

There are no compliance costs for any other persons, because the amendments are simply refining source selection procedures for small purchases made by the Division of Purchasing and General Services.

Comments by the department head on the fiscal impact the rule may have on businesses:

These amendments have no fiscal impact on businesses.

Kimberly Hood, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Administrative Services
Purchasing and General Services
Room 3150 STATE OFFICE BLDG
450 N STATE ST
SALT LAKE CITY, UT 84114-1201

Direct questions regarding this rule to:

• Paul Mash at the above address, by phone at 801-538-3138, by FAX at 801-538-3882, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

09/03/2013

This rule may become effective on:

09/10/2013

Authorized by:

Kent Beers, Director

RULE TEXT

R33. Administrative Services, Purchasing and General Services.

R33-3. Source Selection and Contract Formation.

R33-3-3. Small Purchases.

3-301 [Authority to Make Small Purchases]General Provisions.

(1) All small purchases must comply with this rule unless another method of source selection provided in Title 63G-6a, the Utah Procurement Code and Administrative Rule R33 is used.

(a) Sole source procurements must follow the process outlined in the Utah Procurement Code and Administrative Rule R33-3-4.

(2) Use of State Cooperative Contracts. An executive branch procurement unit may not obtain a procurement item through this Small Purchasing Rule if the procurement item may be obtained through a state cooperative contract or a contract awarded by the chief procurement officer under Utah Code 63G-6a-2105(1) unless either (a) or (b) below is met:

(a) The procurement item is obtained for an urgent or unanticipated, emergency condition, including:

(i) an item needed to avoid stopping a public construction project;

(ii) an immediate repair to a facility or equipment; or

(iii) another emergency condition.

(b) The chief procurement officer or the head of a procurement unit that is an executive branch procurement unit with independent procurement authority determines in writing:

(i) that it is in the best interest of the state to obtain a procurement item outside of the state contract after reviewing a cost/benefit analysis comparing, as applicable, the following:

(A) the contract terms and conditions applicable to the procurement item under the state contract with the contract terms and conditions applicable to the procurement item if the procurement item is obtained outside of the state contract;

(B) the maintenance and service applicable to the procurement item under the state contract with the maintenance and service applicable to the procurement item if the procurement item is obtained outside of the state contract;

(C) the warranties applicable to the procurement item under the state contract with the warranties applicable to the procurement item if the procurement item is obtained outside of the state contract;

(D) the quality of the procurement item under the state contract with the quality of the procurement item if the procurement item is obtained outside of the state contract;

(E) the cost of the procurement item under the state contract with the cost of the procurement item if the procurement item is obtained outside of the state contract; and

(i) that for a procurement item which if defective in its manufacture, installation, or performance, may result in serious physical injury, death, or substantial property damage; the terms and conditions including insurance, indemnifications and warranties, relating to liability for injury, death, or property damage, available from the source other than the contractor who holds the state contract, are similar to, or better than, the terms and conditions available under the state contract.

(3) Prohibition Against Artificial Division of Procurements and Invoices. The Utah Procurement Code provides the following prohibitions: It is unlawful for a person to intentionally or knowingly divide a procurement into one or more smaller procurements with the intent to make a procurement:

(a) qualify as a small purchase if, before dividing the procurement, it would not have qualified as a small purchase; or

(b) meet a threshold established by rule made by the applicable rulemaking authority if, before dividing the procurement, it would not have met the threshold.

(4) A division of a procurement that is prohibited includes doing any of the following with the intent or knowledge described in (3)(a) or (3)(b):

(a) making two or more separate purchases;

(b) dividing an invoice or purchase order into two or more invoices or purchase orders; or

(c) making smaller purchases over a period of time.

(5) A procurement unit subject to these rules may implement more, but not less, restrictive thresholds or require threshold limits to be consolidated at the highest administrative level within the organization.[(1) Amount. The Office of the Chief Procurement Officer or purchasing agency may use these procedures if the procurement is estimated to be less than $50,000 for supplies, services or construction. If these procedures are not used, the other methods of source selection provided in Section 63G-6-410 of the Utah Procurement Code and these rules shall apply.

(2) Existing Statewide Contracts. Supplies, services, or construction items available under statewide contracts or similar agreements shall be procured under these agreements in accordance with the provisions or requirements for use and not under this subpart unless otherwise authorized by the Chief Procurement Officer.

(3) Available from One Business Only. If the supply, service, or construction item is available only from one business, the sole source procurement method set forth in subpart 3-4 of these rules shall be used.

(4) Division of Requirements. Procurement requirements shall not be artificially divided to avoid using the other source selection methods set forth in Section 63G-6-410 of the Utah Procurement Code.]

3-302 [Small Purchases of Supplies, Services or Construction Between $5,000 and $50,000.]Small Purchase Thresholds for Individual Procurement Item(s) under $1,000.

(1) Thresholds for Individual Procurement Item(s) under $1,000:

(a) "Individual Procurement Threshold" means the maximum amount for which a procurement unit subject to these rules may purchase an individual procurement item under this Rule R33-3-302.

(b) "Single Procurement Aggregate Threshold" means the maximum total amount that a procurement unit subject to these rules may expend to obtain multiple individual procurement items from one source at one time under this Rule R33-3-302.

(c) "Annual Cumulative Threshold" means the maximum total amount that a procurement unit subject to these rules may expend to obtain individual procurement items from the same source under this Rule R33-3-302.

(i) For the purpose of this rule, "annual" is defined as the applicable fiscal year of each entity subject to these rules.

(d) The individual procurement threshold $1,000 for a procurement item;

(e) The single procurement aggregate threshold is $5,000 for multiple procurement item(s)purchased from one source at one time; and

(f) The annual cumulative threshold from the same source is $50,000.

(2) For individual procurement item(s) costing up to $1,000, an entity subject to these rules may select the best source by direct award and without seeking competitive bids or quotes.

(3) Competition. Whenever practicable, the Division of Purchasing and General Services and entities subject to these rules shall use a rotation system or other system designed to allow for competition when using the small purchases process.

(4) A procurement unit may not use the small purchase process described in this rule for ongoing, continuous, and regularly scheduled individual procurement items that exceed the annual cumulative threshold and shall make its ongoing, continuous, and regularly scheduled procurements for individual procurement items that exceed the annual cumulative threshold through a contract awarded in accordance with the Utah Procurement Code.

(5) Small purchase expenditures may not exceed the thresholds established under this rule unless the chief procurement officer or the head of a procurement unit with independent procurement authority provides written justification for exceeding a threshold.

3-303 Professional Services, Including Architectural and Engineering Services Threshold.

(1) "Professional Services, Including Architectural and Engineering" means the total cost to be paid to a professional services provider in conjunction with a small project or purchase under this Rule R33-3-3.

(a) The small purchase threshold for professional services, including architectural and engineering services, is $100,000;

(b) Procurement units subject to these rules shall follow the process outlined in Utah Procurement Code 63G-6a-403 (Prequalification of Potential Vendors) and 63G-6a-404 (Approved Vendor List) or other applicable selection methods outlined in the Utah Procurement Code for the procurement of professional services that include minimum specifications. Executive Branch procurement units, to the extent they do not have independent procurement authority, shall involve the Division of Purchasing and General Services in the procurement of professional services;

(c) A contract may not be awarded through a sole source, except as provided in the Utah Procurement Code or Administrative Rule R33-3-4.

3-304 Small Construction Project Threshold.

(1) "Small Construction Project" means the total amount of the construction project including programming, design, and all associated construction costs for a purchase under this Rule33-3-3.

(a) The small construction project threshold is $2,500,000;

(b) Procurement units subject to these rules shall follow the process outlined in the Utah Procurement Code 63G-6a-403 (Prequalification of Potential Vendors) and 63G-6a-404 (Approved Vendor List) or other applicable selection methods outlined in the Utah Procurement Code for construction services.

(c) Executive Branch procurement units, to the extent they do not have independent procurement authority, shall involve the Division of Purchasing and General Services in the procurement of all construction services.

(d) The Division of Purchasing and General Services may procure small construction projects costing less than $25,001 by direct award without seeking competitive bids or quotes after documenting that all building code approvals, licensing requirements, permitting and other construction related requirements are met. The awarded contractor must certify that they are capable of meeting the minimum specifications of the project.

(e) Procurement units, with independent procurement authority and subject to these rules, may procure small construction projects costing less than $25,001 by direct award without seeking competitive bids or quotes after documenting that all applicable building code approvals, licensing requirements, permitting and other construction related requirements are met. The awarded contractor must certify that they are capable of meeting the minimum specifications of the project.

(f) The Division of Purchasing and General Services may procure small construction projects costing between $25,001 and $100,000 by obtaining a minimum of two competitive quotes that include minimum specifications and shall award to the contractor with the lowest quote that meets the specification after documenting that all applicable building code approvals, licensing requirements, permitting and other construction related requirements are met.

(g) Procurement units, with independent procurement authority and subject to these rules, may procure small construction projects costing between $25,001 and $100,000 by obtaining a minimum of two competitive quotes that include minimum specifications and shall award to the contractor with the lowest quote that meets the specification after documenting that all applicable building code approvals, licensing requirements, permitting and other construction related requirements are met.

(h) Procurement units with independent procurement authority and subject to these rules, shall procure small construction projects over $100,000 using an invitation to bid or other approve source selection method outlined in the Utah Procurement Code that include minimum specifications and shall award to the contractor meeting the specifications after documenting that all applicable building code approvals, licensing requirements, permitting and other construction related requirements are met.

(i) A contract may not be awarded through a sole source, except as provided in the Utah Procurement Code or Administrative Rule R33-3-4.[(1) Procedure. Insofar as it is practical for small purchases of supplies, services or construction between $5,000 and $50,000, no less than two businesses shall be solicited to submit electronic, telephone or written quotations. Award shall be made to the business offering the lowest acceptable quotation.

(2) Records. The names of the businesses offering quotations and the date and amount of each quotation shall be recorded and maintained as a public record.]

3-305[3-303] [Small Purchases of $5,000 or Less]Small Purchases from $1,001 to $50,000 Requiring Quotes.

[The Chief Procurement Officer shall delegate to state agencies the ability to make purchases up to $5,000 without involvement of the Division of Purchasing and General Services. For purchases up to $1,000, the agency may select the best source without seeking competitive quotes. For purchases over $1,000 and up to $5,000, agencies shall obtain price competition, and shall purchase the item from the vendor offering the lowest quote. Unless otherwise delegated requests for all purchases over $5,000, and sole source purchases exceeding $1,000 shall be submitted to the Division of Purchasing and General Services.](1) Procedures.

(a) For procurement item(s) costing between $1,001 and $5,000, an entity subject to these rules shall obtain a minimum of two competitive quotes that include minimum specifications and shall purchase the procurement item from the responsible vendor offering the lowest quote that meets the specifications.

(b) For procurement item(s) costing between $5,001 and $50,000, a procurement unit with independent procurement authority that is subject to these rules or the Division of Purchasing and General Services on behalf of an executive branch procurement unit without independent procurement authority, as applicable, shall obtain a minimum of two competitive quotes that include minimum specifications and shall purchase the procurement item from the responsible vendor offering the lowest quote that meets the specification.

(c) For procurement item(s) costing over $50,000, a procurement unit with independent procurement authority that is subject to these rules or the Division of Purchasing and General Services on behalf of an executive branch procurement unit without independent procurement authority, as applicable, shall conduct an invitation for bids or other procurement process outlined in the Utah Procurement Code.

(2) Limited Purchasing Delegation for Small Purchases. The Division of Purchasing and General Services may delegate limited purchasing authority for small purchases costing between $5,001 and $50,000, provided that the executive branch procurement unit enters into an agreement with the Division outlining the duties and responsibilities of the unit to comply with applicable laws, rules, policies and other requirements of the Division.

(3) Records. The names of the vendors offering quotations and bids and the date and amount of each quotation or bid shall be recorded and maintained as a governmental record.

3-30[4]6 Small Purchases of Services of Professionals, Providers, and Consultants.

If it is expected that the services of professionals, providers, and consultants can be procured for less than $50,000, the procedures specified in this subpart may be used.

KEY: government purchasing

Date of Enactment or Last Substantive Amendment: [March 30, 2012]2013

Notice of Continuation: July 2, 2012

Authorizing, and Implemented or Interpreted Law: 63G-6

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