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Purchasing Policies and Procedures Manual
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Purchasing Manual
X. Order Processing
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Page Index:
Policy
Procedures
   A. Preparation of Request for Purchases
      1. Review of Request for Purchases (RFP)
      2. Fund Availability Verification
         a. Regular Encumbrance Method
         b. Limit Sum Encumbrance Method
   B. Adjustments to Purchase Orders
   C. Special Commodities
      1. Library Books
      2. Drugs
   D. Open Purchase Order File
   E. Cancellation of A Purchase Order
   F. Sales Tax Exemption
   G. Freight


POLICY

  • The Materials Management Department (MMD) shall administer the processing of all Request for Purchases and Purchase Orders.
  • All encumbrance verification for Request for Purchases will be coordinated and conducted by MMD.
  • The expediting of Purchase Orders is the responsibility of MMD. Therefore, all inquiries regarding Purchase Orders should be directed to the Materials Management Department.

PROCEDURES

A. Preparation of Request for Purchases

The User Department is responsible for completing the Request for Purchases using the Online Financial Records System.  The user shall complete the Requisition Header Information and the Line Item Description screens before budget approval is obtained.  When budget information is verified through the Financial Records System the Request is approved online by all authorized signatures and processed by Materials Management.   The department should provide a basic description of the commodities being purchased, quantity, correct account number and expense code, and correct address for delivery if the item is to be drop-shipped. The department should also indicate a suggested vendor and the estimated cost of the commodity. 

1. Review of Request for Purchases (RFP)

When a Request for Purchases is transmitted to MMD it should be reviewed to verify that all necessary information is provided. In the event of any missing or incomplete information, the Request for Purchases is printed and returned to the user department with a memorandum indicating the type of information necessary to complete the Request for Purchases.

Request for Purchases will be returned to department if Request was rejected for insufficient funds in the budget and indicates date of action on the Request for Purchases.

When Request for Purchases has been returned to department, its disposition will be noted in the purchasing system.

MMD will consult with departments regarding Request for Purchases that are rejected due to entry errors and/or other reasons impacting negatively on processing the Request for Purchases timely.

2. Fund Availability Verification

All Request for Purchases, except Emergency Purchases, must be encumbered to ascertain that budget funds are available for procurement of commodities before the purchase order is transmitted to the vendor.

a. Regular Encumbrance Method

Under the regular encumbrance method, the requesting department prepares and transmits a Request for Purchases to the Materials Management Department indicating the dollar amount to obligate funds for the requested purchases. After the bid/negotiation process has been completed, the accepted bid/negotiated price for the purchase is entered on the Request for Purchases and the appropriate budget account encumbered. However, the Materials Management Department shall obtain additional approval from the issuer of the Request for Purchases, prior to processing a purchase order for an increase greater than five percent (5%) of the amount approved on the initial Request for Purchases. Additionally, all construction/renovation projects that exceed five percent (5%) of the amount approved on the original Request for Purchases must have the additional approval of the respective executive level administrator. Five percent (5%) lead way is necessary to expedite procurement action and not delay the process for an insignificant increase in price that may have a tremendous negative effect on commencing or completing the project timely.

b. Limit Sum Encumbrance Method

A Limit Sum Request for Purchases establishes a blanket amount of funds that is used for recurring purchases. Limit Sum Request for Purchases are prepared by the user department for the period of the fiscal year. Limit Sum Request for Purchases are prepared for the estimated cost of annual usage of materials or services. Limit Sum Request for Purchases are processed under the same procedure as Regular Request for Purchase in that Limit Sum Requests for Purchases are solicited for competitive pricing and are required to have budgetary approval.

Funds for the Limit Sum Request for Purchases are encumbered from the appropriate budget for the entire amount of the Request for Purchases. Once MMD has processed the Limit Sum Request for Purchases the user department becomes responsible for placing its own orders with the vendor monitors all transactions and assures that the established ceiling for the account is not exceeded. The price of commodity indicated on a Limit Sum Request for Purchases shall remain in effect for the period of the contract. 

The Materials Management Department has the authority to cancel a Limit Sum Request for Purchases for the following reasons:

  •  Exceeding Limit Sum authorization without proper authority.
  • Abuse or noncompliance with Limit Sum operating procedures by the user department.
  • It becomes evident that the items on the Limit Sum Request for Purchases is no longer required on a recurring basis. The Materials Management Department shall review the justification of recurring purchases before approval and issuance of a Limit Sum Request for Purchases to attest that the Limit Sum method is warranted.

B. Adjustments to Purchase Orders

Any adjustments requested by a user department to a Purchase Order after it has been transmitted to the vendor are made on a Request for Purchases. Supplement to the purchase order may be necessary as a result of:

. change in quantity orders

. price increase or decrease of commodities ordered 

. Change in vendor

The Materials Management Department shall compute a new total price of the order and the Purchase Order shall be amended to reflect the new price, dated and transmitted to the vendor.

"Change Order" will be typed on the purchase order to indicate to the vendor that adjustments are being made to the original Purchase Order. The appropriate buyer reviews and signs the order or forwards it for review and the appropriate approval. Once approved, a copy is transmitted to the vendor and the remaining copies are distributed as follows:

  • Property Management
  • Office of the Comptroller, Accounts Payable Section
  • Central Services i.e. (Central Receiving Office)
  • User Department.

C. Special Commodities

1. Library Books

Library Books are not purchased under the procedures of the Materials Management Department (MMD) purchasing system. 

2. Drugs

The purchase of drugs requires that a narcotic drug number be assigned to the Purchase Order by the Materials Management Department (MMD). All Purchase Orders for drugs must be approved by the Radiation Safety Office and the Director, MMD.

D. Open Purchase Order File

The Materials Management Department (MMD) shall maintain an Open Purchase Order File, e.g., a file comprised of the Expediter copy of Purchase Order, Bid Tabulation form, and Purchasing copy of Request for Purchases.

When receiving reports are received by Central Services, they are matched with the appropriate purchase order contained in the Open Purchase Order File i.e. Quantities and descriptions of items originally ordered. Any discrepancies are submitted to the Central Services Coordinator for investigation and appropriate action. If no discrepancies are noted, the Purchase Order is considered closed.

E. Cancellation of a Purchase Order

When it is necessary to cancel a purchase order, the user department must complete the Request for Cancellation of an Encumbrance or Check. (See Section 40161 of Howard University Policies and Procedures Manual for instruction on preparation). The user department retains the fourth part (gold copy) and forwards the remaining three copies to the Materials Management Department (MMD).

Upon receipt of the Request for Cancellation of an Encumbrance or Check, MMD shall investigate the user department's reason for the cancellation. A Purchase Order shall not be cancelled for reasons resulting from improper planning and scheduling by the user department. If the reason for cancellation is acceptable then the processing procedures shall be initiated.

The purchase order and accompanying documents are obtained from the open purchase order file matched with the Request for Cancellation of an Encumbrance or Check. If there are any discrepancies between the purchase order and Request for Cancellation of an Encumbrance or Check, MMD shall contact the user department to investigate, and if necessary, correct the difference. MMD shall indicate the action taken (i.e. approval, amount of cancellation) in the area designated "Purchasing Office Use" of the Request for Cancellation of an Encumbrance or Check. This document then becomes a permanent record of action taken. 

A Request for cancellation order (4 copies) is prepared and distributed as follows:

  • Vendor, MMD Purchase Order Files - Alpha and Expeditor; User Department

Finally, MMD distributes the Request for Cancellation of an Encumbrance or Check Form in the following manner:

White copy - Office of the Comptroller; Yellow copy - MMD - Expediter File; Pink copy - User Department

F. Sales Tax Exemption

Howard University is exempt from paying District of Columbia, Maryland State Sales and Use Tax and all Federal Taxes. Local Suppliers should be made aware of this exemption as discussed in the Vendor's Guide for Doing Business with Howard University. Tax exemption numbers are printed on the Purchase Order form for vendor reference. All prices computed by the Materials Management shall be exclusive of any type of sales tax.

G. Freight

All commodities purchased by Howard University should be shipped FOB destination whenever possible. Howard University shall not pay any freight charges for commodities which have been procured for the University unless otherwise noted on the Purchase Order.

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