This page covers the processes and related best practices for selecting a supplier. For schools and units that have already selected a new supplier, refer to Topic Overview: Setting Up a New Supplier or Payee.
Stanford engages with a wide range of suppliers, also referred to as vendors, to provide the necessary products and services to support its mission. A supplier is defined as an individual or organization that provides goods or services on a limited or potentially ongoing basis to Stanford through an agreed exchange of money or service. Schools and units are generally free to work with the suppliers that best fit their needs, provided the engagement complies with university policy and standards for financial stewardship, ethics and risk management.
The overarching policies governing how suppliers are selected at Stanford can be referenced in Administrative Guide 5.1.1: Procurement Policies and Topic Overview: Purchasing Policies and Guidelines.
Analyze the Need for a New Supplier
Before selecting a new supplier, schools and units should review purchasing policies and guidelines from Procurement Services, discuss with stakeholders whether engaging a new supplier is appropriate and necessary, and review any associated risks. This includes reviewing the following questions:
- Can this purchase be completed through iProcurement with Amazon Business or SmartMart Catalog Suppliers?
- SmartMart Catalog Suppliers: Stanford’s online catalog ordering system that is used for purchasing goods from suppliers that have special pricing provided to Stanford.
- Amazon Business: Stanford’s method of making business purchases on the Amazon platform.
- Does the university already have a supplier, program (e.g., CardinalTemps) or Master Agreement in place that can meet the need?
- The Procurement Services team manages numerous Master Agreements with existing suppliers, which schools and units can search for in the SmartMart Contracts system. Schools and units can create a Statement of Work that references the Master Agreement by its contract number.
Purchasers may reference Topic Overview: Categories of Purchases for other guidance by specific types of purchases.
Define Scope of Supplier Engagement
Once a school or unit determines that a new supplier is appropriate and necessary, the scope of the supplier engagement can then be documented in a Statement of Work (SOW). Financial Management Services (FMS) has developed a SOW template that schools and units can use for this process. Not all supplier engagements require a SOW, but completing one can help define the scope of the supplier engagement.
For any project or contract, it is important to answer the following questions:
- Duration of the supplier engagement: Is it long term (three to five years), short term (one to three years), or ad hoc (less than 12 months)?
- Roles and responsibilities: Which roles and responsibilities will the supplier own? What will remain under the university’s direct control?
- Key performance indicators (KPIs): What are the metrics of success? How will they be measured, tracked and reported, and how frequently?
Schools and units may get assistance with defining the scope of the supplier engagement from FMS’ Vendor Services team by submitting a support request.
Comply With the University’s Competitive Supplier Selection Process
University policy requires that the purchase of products or services be by competition between suppliers to the extent possible based upon the requirements of quality, price and performance. Competitive purchasing practices include conducting research into potential suppliers and their prospective solutions and pricing.
Certain pricing agreements, such as those available from Amazon Business and SmartMart Catalog Suppliers, have been established through a competitive bid process and Stanford purchasers can buy goods and services without additional proof of competition.
Validation of Competition for Purchases $25,000 or Higher
When purchasing a product or service with a cost of $25,000 or greater, the purchase requisition must include documentation verifying that the requirement for competition has been met. This documentation is reviewed by Procurement Services before school or unit financial approval. There are two documentation options available, which can be attached to the purchase requisition in iProcurement:
- In addition to the quote from the selected supplier, attach at least one or more competitive quotes, proposals or bids from other suppliers, or,
- Attach a completed single or sole source justification form.
- A single source is a supplier specifically selected amongst others, due to superior compatibility, quality, service, support, continuity, etc.
- A sole source is a supplier for which there are no alternatives for their given product or service.
The source justification should include a statement that demonstrates the unique qualifications of the product or service, description of efforts made to locate other sources (suppliers), and documentation that the anticipated cost is fair and reasonable.
Proposal and Bidding Process
In some cases a school or unit may want to create a more formal proposal or bidding process for their product or service requirements. In these situations, professional buyers in the Purchasing and Contracts department generate formal Requests for Proposals (RFP). A RFP is generally used when requesting that the supplier provide a proposal to solve a problem or issue (e.g., a supplier submits a proposal, including cost estimate, to provide catering services at an event for 50 people).
An Invitation for Bid (IFB), which can be included in the RFP process, is generally used when the school or unit has a detailed set of criteria (e.g., detailed design drawings and specifications) and the supplier selection will be based solely on the lowest bid received that meets such specifications. For assistance with the preparation of a RFP, please submit a support request.
Proposal or bid solicitations managed by the school or unit, without assistance from the Purchasing department, must comply with federal, state and local regulations as well as university policies that pertain to hiring contractors and consultants.
The school or unit requestor may consult directly with a supplier representative for technical information and assistance in developing specifications. The resulting purchase order, contract, agreement, memorandum of understanding, letter of intent, etc., must be executed only by the Procurement Services staff with specifically delegated authority.
Review for and Disclose Any Potential Conflicts of Interest
All Stanford community members, including Stanford’s suppliers, must comply with university policy, including the Code of Conduct and policies on Conflict of Commitment and Interest, including the Faculty Policy on Conflict of Commitment and Interest.
Relationships between Stanford and its suppliers or sponsors must be free of any real or perceived impropriety or favoritism. University community members should not solicit any gift and should not personally accept any material gift, gratuity or payment, in cash or in kind, from any third party seeking to do business with the university or currently doing business with the university. The School of Medicine has a special policy related to medical industry suppliers.
Some examples of circumstances that may create a conflict of interest:
- A Stanford employee is also an employee, officer or adviser of the supplier's organization
- A Stanford employee or immediate family member has a financial interest in the supplier
- A supplier offered, or a Stanford employee accepted, any gift or favor
If a staff member is aware of conduct that violates or anticipates a situation that potentially violates university policies on Conflict of Commitment and Interest, that staff member must immediately disclose in writing the details of the situation, through their supervisor, to the appropriate university officer or reach out to the Ethics & Compliance helpline. Exceptions to conflict policies must be approved in advance by the appropriate officer in writing.
Evaluate Supplier Engagement Risks
Schools and units must consider all risk factors that are involved in selecting a new supplier.
This includes answering the following questions:
- Does the engagement create a critical dependency on the supplier’s products or services?
- Does the proposed engagement include any of the following?
- How difficult would it be to manage or exit the supplier relationship if something goes wrong or if needs and priorities shift?
Additionally, schools and units should consider if the supplier can demonstrate an excellent reputation for delivering high quality products and services, verified with professional references and reviews.
The Vendor Services team can also assist schools and units in assessing how a new supplier:
- Complies with university policies and procedures
- Demonstrates current and long-term financial viability
- Monitors and evaluates their performance on an ongoing basis
- Responds to supply chain disruptions and loss
Obtain Further Assistance from Procurement Services
The Vendor Services team can assist schools and units with the vendor onboarding process. This includes assessing appropriateness, risk and other supplier engagement considerations. Schools and units can submit a support request to receive assistance from the Vendor Services team.
Purchasing and Contracts
The Procurement Services team supports schools and units in the acquisition of high-quality products and services. Specifically, the Purchasing and Contracts team:
- Works with university staff to ensure the effective management and delivery of quality procurement services.
- Designs, implements and trains university staff on effective procurement processes.
- Maintains suitable sources of supply by facilitating supplier outreach for department requirements and ensuring equal opportunity in university business contracting.
- Establishes competition wherever practicable, including:
- Assisting in the development of procurement specifications
- Soliciting and processing RFPs
- Conducting negotiations for price, terms and conditions.
- Where necessary, conferring with counsel for advice and resolution of matters.
- Establishes annual price agreements and contracts in accordance with sound procurement practices, including participation in specialty contracts and consortium agreements.
- Administers and maintains purchase records for federal, state and internal audits.
To receive support on the acquisition of goods and services from the Purchasing and Contracts team, submit a support request.
Move Forward With Selection Process
If a school or unit has completed the selection of a supplier per the above process, they should follow these steps to move forward:
- Proceed to Topic Overview: Setting Up a New Supplier or Payee for guidance on submitting a request to create a supplier or payee active record in the university’s database.
- Determine whether a contract will be required. Refer to Topic Overview: Contracts for guidance on the procurement contracting process at Stanford.
- Refer to Topic Overview: Purchase Order Process to initiate the purchase requisition and purchase order process.