COP 04-1003: Procurement and Financial Encumbrance Procedure

Purpose Statement

The purpose of this Procurement and Financial Encumbrance Procedure 04-1002 (“COP”) is to establish a consistent and controlled framework for the acquisition of goods and services on behalf of the College. This COP is intended to ensure that procurement activities are conducted in a manner that promotes transparency, fairness, competition, fiscal responsibility, and compliance with applicable laws, regulations, and funding restrictions. It further establishes appropriate internal controls to safeguard institutional assets and mitigate financial and operational risk. 

Guidelines

This COP applies to all departments, units, and employees engaged in the procurement of goods and services using College-administered funds, regardless of funding source. It governs procurement transactions only and does not apply to payroll and compensation, student financial aid, internal fund transfers, debt service, or other non-procurement disbursements. No employee or representative of the College may obligate institutional funds except in accordance with this Procedure. 

Procedures

I.  Common Categories of Procurement Expenditures.

    Expenditures generally consist of the acquisition of tangible goods and contracted services necessary to support instructional, research, administrative, and operational activities. Below is a list of common, but not exhaustive, expenditure types that are made at the College.  

    A.  Operating supplies include consumable or low-dollar goods required for routine departmental functions. These items typically include office supplies, instructional materials, laboratory supplies, maintenance materials, and similar items that do not meet capitalization thresholds and are expended within a short period of time. 

    B.  Purchases for equipment consist of tangible property with a useful life extending beyond one fiscal year. Equipment may be classified as non-capital or capital in accordance with the College’s capitalization policy. Capital equipment is defined by established dollar thresholds ($5,000) and useful life criteria and requires enhanced review, asset tracking, and financial reporting controls. 

    C.  Professional services include engagements requiring specialized expertise, such as consulting, legal services, engineering services, audit services, and certain information technology services. These services typically require a written agreement outlining scope, deliverables, compensation, and applicable legal protections. 

    D.  Contracted and operational services include recurring or project-based services that support College operations, such as maintenance agreements, equipment repair, software licensing, temporary staffing, and event services. 

    E.  Construction and facilities-related procurements include renovation, construction, infrastructure improvements, and major repairs. Due to the elevated financial and operational risk associated with such activities, these procurements may require formal solicitation processes and contract execution consistent with institutional authority. 

    F.  Technology and software procurements include software licenses, cloud-based services, data hosting agreements, and enterprise systems. These procurements may require review by Information Technology and Information Security personnel to ensure compatibility, data protection, and compliance with cybersecurity standards, and other considerations. 

    G.  Catering and official event services are considered procurement transactions when the College directly contracts for such services. These expenditures require documentation of legitimate business purposes and compliance with applicable funding restrictions.

II.  Procurement Methods and Encumbrance of Funds. 

     The College utilizes defined procurement mechanisms to ensure that financial commitments are properly authorized, documented, and recorded prior to payment. An encumbrance represents the formal reservation or commitment of institutional funds for a specific procurement transaction. No employee may obligate College funds except through an authorized encumbrance method described herein.  The three authorized encumbrance and payment mechanisms are: (1) Purchase Order (“PO”), (2) Procurement Card (“PCard”), and (3) Check Request. The appropriate method depends on the nature, complexity, dollar value, and risk associated with the transaction. 

     A.  Purchase Order ("PO").  

          1.  The PO is the College’s primary procurement instrument. A PO is issued by Procurement Services ("Procurement") following submission and approval of a purchase requisition. It serves as the College’s formal authorization to a vendor to provide specified goods or services at agreed-upon pricing and terms. Funds are encumbered at the time the PO is issued, thereby reserving budget capacity and preventing over-expenditure. In the event of necessary changes to a PO, an amendment to a PO (“Change Order”) may be created to adjust price, quantity, add or remove items or their description after the changes have been approved.  

           2.  POs are required for most goods and services that involve moderate to high dollar value, contractual terms, ongoing obligations, elevated institutional risk, or capital equipment. Common appropriate uses include the acquisition of equipment, technology systems, professional services, consulting engagements, construction or renovation projects, maintenance agreements, recurring operational services, bulk supply purchases, and repetitive smaller dollar purchases (i.e. Standing Purchase Order). A PO may be used to pay a vendor where the purchase requires additional approvals that are not accommodated by other encumbrance methods. 

            3.  A PO must be used when a written contract is required, when competitive solicitation is mandated by policy or regulation, or when the vendor requires a formal institutional commitment prior to delivery. 

            4.  A PO may not be used retroactively to legitimize a commitment that was made without prior authorization, except in documented and approved emergency circumstances.

            5.  Departments may not fragment or “split” transactions to avoid Purchase Order requirements or competitive bidding thresholds. 

     B.   Procurement Card (“PCard”). 

           1.  A PCard is an institutionally issued payment mechanism intended to streamline the acquisition of low-dollar, routine, and operational purchases. The PCard functions similarly to a corporate credit card and is subject to transaction and monthly limits established by the College. While PCard transactions may not generate a pre-encumbrance in the same manner as a PO, expenditures must be reconciled and recorded in the financial system in a timely manner to ensure accurate budget monitoring. 

           2.  Appropriate uses of the PCard include routine operating supplies, instructional materials, conference registrations, travel expenses, online subscriptions such as newspaper, small-dollar technology peripherals, and other low-risk goods or services that do not require complex contractual terms. 

           3.  A PCard may not be used for capital equipment above institutional thresholds, construction services, professional services requiring a signed agreement, multi-year contractual obligations, restricted or prohibited commodities, or any transaction that would otherwise require competitive solicitation. The PCard may not be used to circumvent established procurement requirements or approval thresholds. Personal purchases, cash advances, and unauthorized contractual commitments are strictly prohibited. 

           4.  All PCard transactions must be supported by adequate documentation, including business purpose justification and funding source verification, and are subject to supervisory review and audit. 

For more information on PCard procedures, please see COP 04-1003, Purchasing Card Program. 

      C.  Check Request. 

           1.  A Check Request is a limited-use payment mechanism designed for specific transactions where issuance of a Purchase Order or use of a PCard is not practical or appropriate. Check Requests do not serve as advance authorization to procure goods or services; rather, they are generally used to process certain allowable payments that do not involve competitive procurement or contractual risk. 

           2.  Appropriate uses of a Check Request may include institutional membership dues, registration fees where PCard use is not accepted, honoraria when permitted by policy, refunds, utilities, reimbursements, government issued license, or other payments expressly authorized by the Procurement. Check Requests may also be used in circumstances where payment must accompany a form or application and no goods or negotiated services are being provided. 

            3.  A Check Request may not be used for the routine acquisition of goods, for services requiring a written contract, for equipment purchases, or to avoid the PO process. It may not be used after goods or services have been ordered without proper authorization. Use of a Check Request in lieu of a required PO or contract is prohibited. 

             4.  All Check Requests must include sufficient documentation to support the business purpose, funding source, and compliance with institutional policy. For more information on Check Request, please see COP 04-0101, Check Request. 

        D.  Notwithstanding the other provisions of this COP, Procurement ultimately determines the appropriate procurement method for any transaction based on risk, funding source restrictions, regulatory requirements, or institutional policy considerations. Failure to utilize the correct encumbrance method may result in delayed payment, reassignment of expense to an alternate funding source, or other corrective action. Furthermore, the President or his designees may authorize emergency procurements when immediate action is necessary to protect health, safety, property, or essential operations. Such procurements require written justification and are subject to post-transaction review.

        F.  The following table summarizes the procurement methods by expenditure type:  

Expenditure Type	Typical Procurement Method	Notes
Operating Supplies	PCard or PO	PCard within limits; PO for bulk or higher dollar
Non-Capital Equipment	PO (PCard if within threshold)
Capital Equipment	Requisition → Competitive Process → PO	Capital review required
Professional Services	Contract + PO
Software / SaaS	Contract + PO or PCard (low dollar)	IT/security review required
Construction / Renovation	Formal Solicitation + Contract + PO	Facilities oversight required
Maintenance Agreements	Contract + PO	Multi-year terms require review
Catering / Event Services	PO or PCard	Business purpose documentation required. May require contract in which case PO should be used
Travel	PCard	Must comply with travel policy

III.  Funding Source Compliance 

      A.  All procurement transactions must be charged to a department’s budgeted funds by index and fund source.  The requesting department bears responsibility for ensuring that the selected funding source permits the intended expenditure and that the procurement directly benefits the purpose of the fund charged. No procurement may proceed without confirmation of sufficient available budget authority.

      B.  Funding sources may include general operating funds (Fund 10), restricted donor funds (Fund 2), sponsored program funds (Fund 2), student activities funds (fund 2), auxiliary enterprise funds (Fund 3), and capital or plant funds (Fund 7). Where restrictions apply, including sponsor regulations or donor-imposed limitations, the department must ensure compliance prior to initiating the procurement process. 

IV.  Roles and Responsibilities  

      A.  Departments initiating procurement requests are responsible for establishing a legitimate business purpose, verifying the necessity of the purchase, confirming availability of funds, and ensuring compliance with funding restrictions and institutional policy. Departments are further responsible for confirming receipt of goods or satisfactory performance of services prior to payment. 

      B.  Departmental approvers are responsible for reviewing procurement requests to confirm budget availability, appropriateness of funding source, and compliance with institutional requirements. 

      C.  The Procurement Office is responsible for overseeing competitive solicitation processes where required, issuing POs, negotiating pricing and other business terms in contracts where appropriate, maintaining vendor records, and ensuring that procurement activities comply with applicable statutes, regulations and institutional standards. 

      D.  The Office of the General Counsel is responsible for reviewing contractual terms to ensure legal sufficiency and appropriate allocation of risk. 

      E.  Accounts Payable personnel within the Finance Department is responsible for verifying documentation, matching invoices to POs when applicable, and processing payments in accordance with approved terms. 

V.   Internal Controls  

      A.  The College applies internal controls, commensurate with the risk, complexity, and dollar value of procurement transactions. Lower-risk, low-dollar transactions are subject to supervisory review and periodic audit sampling. Moderate-risk transactions require documented approval workflows and budget verification prior to issuance of a PO. High-risk or high-dollar procurements, including capital equipment, professional services contracts, and construction projects, may require formal solicitation where applicable, written contractual agreements, multi-level approval, and documented oversight. 

      B.  Segregation of duties shall be maintained to the extent practicable so that no individual controls all phases of a procurement transaction. Requesting, approving, receiving, and payment functions should be distributed among different individuals to reduce the risk of error or fraud. 

VI.  Prohibited Practices  

      The intentional circumvention of procurement requirements is strictly prohibited. This includes, but is not limited to, splitting transactions to avoid approval or bidding thresholds, entering into unauthorized agreements, making personal purchases with institutional funds, or issuing retroactive Purchase Orders without proper justification and approval. Violations of this COP may result in disciplinary action and may expose the College to financial or legal risk. 

VII. Compliance and Audit 

      Procurement activities are subject to periodic review by external auditors, and, where applicable, sponsors or regulatory agencies. The College must maintain documentation sufficient to support the business purpose of each procurement, compliance with competitive requirements, proper funding source selection, and receipt of goods or services.  Failure to maintain adequate documentation may result in disallowance of the expenditure or reassignment of the cost to an alternative funding source.