Enhancements to increase procurement efficiency Posted June 5, 2023

Procurement Services, part of Stanford Financial Management Services (FMS), continuously examines opportunities to enhance processes or provide new solutions to support purchasing activities for the university while maintaining financial stewardship excellence. Areas of opportunity under review are examining limits for specific payment methods, thresholds that may prompt additional reviews, and streamlined routing for lower risk purchases or contracts. 

Reducing additional reviews on purchase requisitions

On May 6, 2024, the threshold that requires central Procurement to validate competitive supplier selection for purchases of goods and services is increasing from $25,000 to $50,000. As a result, Procurement Services’ review for competitive supplier selection will only occur for purchase requisitions and purchase orders that are $50,000 and greater after taxes and fees. There are no changes to the documentation required to support validation over the threshold of $50,000 and greater. This documentation includes one of the below options: 

• Attach one or more competitive quotes, proposals, or bids from other suppliers, or,
• If the lowest cost bid was not selected, or competitive quotes, proposals, or bids were not obtained, complete and attach a Single/Sole Source Justification Form. This form was recently updated for efficiency and ease of use. See the Updated Single/Sole Source Justification (SSJ) Form section below for best practices on using the form. 

Why is the threshold increasing?

This threshold, which is in alignment with the federal guidelines for procurement transactions, was last changed at Stanford in 2018 from $10,000 to $25,000.

The increase to $50,000 will allow for increased efficiency and keep pace with inflation. This new threshold also aligns with peer higher education institution benchmarking.

What is not changing

While Procurement Services will review fewer purchase transactions, the following roles will continue to fulfill their responsibilities in the review and approval of transactions, as outlined below, to comply with university purchasing policies and guidelines, including price reasonableness and competition:

• Departments within schools and units: 
  • Determine the business and/or research need for the purchase. 
• Purchase requisition preparers: 
  • Seek training and access to the appropriate tools to facilitate the use of appropriate purchasing methods. 
  • Initiate purchases using the university’s purchasing systems.
• Financial approvers: 
  • Verify purchase complies with competitive supplier selection policy.
  • Ensure proper documentation of each expense, as documented in Administrative Guide Memo 3.2.1: Responsibility for University Funds.
  • Verify that purchases charged to their PTAs are:
    • Reasonable and necessary.
    • Consistent with established university policies and practices.
    • Consistent with sponsor or donor expenditure restrictions.
• Central Procurement: 
  • Reviews purchases with a cost of $50,000 and greater for compliance with federal and state regulations and university policies pertaining to competitive supplier selection for purchases. 
  • If a contract is required, central Procurement reviews and negotiates all contractual obligations. 

A robust, competitive, and diverse supplier base is essential to power the university and offers greater agility, innovation, and value. Visit the Supplier Diversity Initiative news page to learn how this initiative will integrate best practices into procurement processes, implement resources to support schools and units to make informed purchasing decisions, engage with other organizations, and seek ways to make it easier for more suppliers to do business with the university.

To advance Stanford’s sustainability goals, along with its responsibility to spend appropriately, consider the following:

• Does the supplier of the good or service have its own sustainability and/or greenhouse gas emissions reduction goals?
• Is the supplier’s organization supporting social responsibility goals, for example: employing a diverse workforce, or certified as a diverse supplier?
• Under what conditions was the good manufactured? For instance, were fair and ethical labor practices used in the manufacturing process or supply chain?

Refer to Policy: Responsible Purchasing to learn more.

While the threshold is changing, university’s competitive supplier selection policy will continue to require that the purchase of all goods or services be by competition between suppliers to the extent possible based upon the total value, which includes considerations such as quality, price, and performance. Competitive purchasing practices ensure excellence in financial stewardship and market competitiveness. 

Certain pricing agreements, such as those available from Amazon Business and SmartMart Catalog Suppliers, have been previously established through a competitive bid process so Stanford purchasers can buy goods and services without additional proof of competition.

To support continued compliance with purchasing by competition, schools and units can establish and/or maintain their own thresholds and process for the verification of competition for purchases below $50,000. To facilitate reviews and approvals that support competitive purchasing, schools and units can use the existing competitive supplier selection documentation options for any purchases, regardless of cost. 

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Digital Payments reimbursement threshold increasing to $5,000

FMS is increasing the reimbursement threshold to $5,000 (per individual per trip) on May 6, 2024. This change expands access to this convenient payment method, which reduces the administrative burden of setting up a visitor in the payee database. Visit the Digital Payments news page to learn more. 

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Making improvements to Expense Request transactions processing

On May 6, the Business Expense team is launching another set of enhancements to help reduce rejections and returns of Expense Reports (ERs) and Non-PO Payments (PRs) in the Expense Requests System (ERS) by central auditors. Visit the Business Expense Updates and Hot Topics page for more details on the specific changes. 

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Updated supplier instructions on the Stanford Purchase Order (PO)

On May 6, 2024, the Accounts Payable (AP) team will update the Stanford PO that is sent to suppliers to:

1. In addition to the physical mailing address, include the AP virtual mailroom email address, which is @email, in the Instructions section of the PO that specifies invoice submission methods. 
   • This update supports invoice submission by email, which can reduce manual handling of documents and any potential processing delays.
   • Note that certain invoices (such as for Capital Equipment) must be uploaded directly  by the department. Some departments, such as LBRE and R&DE have their own invoice submission address.
   • Also note that, at their discretion, departments can require the supplier to submit invoices directly to the department for review and uploading. 
2. Reflect the latest tax guidance and information in the Taxability section of the PO.
   • This update ensures alignment with federal tax laws. 

For an overview of invoice processing at Stanford, including details and instructions on all invoice submission methods, visit Topic Overview: Purchase Order Invoice Processing.