Diane Holley, Editor

The Buyers Network is Published Monthly by the Purchasing Division of the West
Virginia Department of Administration to Promote Better Value in Public Purchasing

Welcome to the May 1999 Issue of the The Buyers Network!

Why require the acceptance of the State Purchasing Card as a payment method for statewide contacts? It all comes down to dollars and cents...It's simply more cost effective.

Prior to implementing the Purchasing Card Program, the payment process for several agencies was reviewed and, as a result, it was found that the cost to pay vendors using the manual method ranged from $50 to $120 per invoice. This was not a cost effective way to pay bills nor a prudent use of tax dollars. Therefore, the Purchasing Card Program was  introduced to provide electronic payment for purchases.

Implementing this program has dramatically changed the way state agencies pay for small dollar purchases, but it has also affected how the Purchasing Division contracts and pays for statewide contract purchases. By using the Purchasing Card as a payment method for purchases $1,000 or less per transaction, the Purchasing Division has had to make changes to the terms and conditions of statewide contracts to support the use of the card. Currently, all new statewide contracts, which the Purchasing Division issues for products costing $1,000 or less, are now requiring vendors to accept the Purchasing Card as a condition of award.

In addition, acceptance of this card on all current statewide contracts with the option to renew will be an issue for negotiation as part of the renewal process. Most vendors with which we have discussed this issue as part of the renewal process see the obvious benefits and have eagerly complied.

How do you use the Purchasing Card for payment against a statewide contract orders $1,000 or less? Just follow these simple steps depending on your particular need:

Pickup Orders

When visiting a vendor’s location to receive an order, simply call in advance (or provide a written State Contract Order [SCO]) with the contract item numbers, the quantity and present the Purchasing Card to the vendor for payment. Check your VISA and sales receipt in order to reconcile your statement and perform the post audit. Make sure the vendor does NOT charge sales tax and the transaction total does not exceed $1,000. The $1,000 limit per transaction is inclusive of any freight or shipping charges.

Phone Orders

Contact the vendor and identify yourself and agency by name. Provide the vendor with the statewide contract number, the item number of the desired commodity on the contract and the quantity for each item. Explain to the vendor that you want to pay using the Purchasing Card. Inform the vendor that you are tax-exempt, then provide the vendor your Purchasing Card number.

The vendor must fax you a paid receipt showing a $0.00 balance due on this order to reconcile your statement and for the Purchasing Card post audit. Again, be sure the total order does not exceed $1,000 and that the vendor does NOT charge you sales tax.

Written SCO’s

Mail or fax a copy of the SCO to the vendor. Request on the SCO that the vendor must submit the invoice with the items ordered when delivery is made. The order must be checked against the invoice after which the vendor’s accounts receivable staff must be contacted. Identify yourself and agency by name and invoice number.

Remind the vendor that this transaction is tax-exempt, and offer your Purchasing Card number. The vendor must fax you a paid receipt showing a $0.00 balance due on this transaction. Remember, no sales tax is permitted on any state transactions made with the Purchasing Card. Keep the paid receipt to reconcile your Purchasing Card statement and for post audit activities.

REMEMBER: NO transaction which exceeds $1,000 is eligible as a Purchasing Card purchase.

Don't Forget About Our State Purchasing Card Training!

Do you or any of your staff need training on the procedures and guidelines on using the State Purchasing Card? You are in luck!

To address the needs of new and existing participants of the State Purchasing Card Program, the State Auditor's Office, IS&C and the Purchasing Division are offering training on the Purchasing Card Program the last Friday of every month at 1:00 p.m. in the Purchasing Division's conference room.

For more information or to register for these training sessions, please call Sue Smith at (304) 558-2306.

Have you started thinking of an agency purchaser who you would like to see as the recipient of the Purchasing Division's annual Agency Procurement Officer of the Year award? Well, it is time to start considering potential nominees for this prestigious honor.

How better to understand the rapid movement of business and the market of products and services than to sit down and talk one-on-one with those who are in the business. This is the basis for periodic meetings with vendors who service our statewide contracts.

These meetings focus on the status of the contract and how we can make improvements to the contract to benefit its users. We have learned a great deal by talking to our statewide vendors as to what products and services are available now and in the future. Technology is such a vital force in all business; therefore, markets are changing at record speeds.

Another benefit from these meetings from the vendors' perspective is the opportunity for the company representatives to ask questions relating to the contract or the state purchasing process in general. Conducting these informal meetings often spark valuable information that certainly would not have come to the forefront through written, telephone or electronic mail conversations.

The staff at the Purchasing Division strive to keep the lines of communication open among those whom we serve: state agencies, political subdivisions, the general public and businesses.

The Letter "Z" is the Key
      Encumbrance Module Addresses ANtecedent Purchase Orders

A memorandum issued March 30, 1999 by Purchasing Director Dave Tincher addressed the issue of antecedent purchase orders that are being renewed or extended. During the implementation process, agencies were not required to encumber existing purchase orders; however, many of these, now referred to as antecedent purchase orders, are due to be renewed or extended.

The Purchasing Division is suggesting that a "Z" be added to the original TEAM/agency purchase order number to distinguish these transactions. The renewal is to begin with the remaining balance of the contract, encumbering only the current fiscal year amount. The new contract must reference the old contract purchase order number and should include an explanation on the agency requisition or higher education agency purchase order similar to the following:

Multi-Year Contracts

These purchase orders must be added to the WVFIMS Purchase Order Encumbrance Module, beginning fiscal year 2000. For example, a purchase order would be renewed as PO #1234Z under the same terms and conditions previously agreed upon within PO#1234 for the remaining two-year periods, beginning July 1, 1999 through June 30, 2001 at a rate of $20,000 per year. The total amount of PO#1234Z is $40,000.

Contracts Renewed from Year to Year

These purchase orders must be added to the WVFIMS Purchase Order Encumbrance Module, beginning fiscal year 2000. An example is a purchase order renewed as PO#1234Z under the same terms and conditions previously agreed upon within PO#1234 for fiscal year 2000, beginning July 1, 1999 through June 30, 2000, at a rate of $20,000 per year.

Contact Jo Ann Dunlap, Administration Unit Manager, at (304) 558-0059 or the Purchasing Division buyer processing the renewal with questions.

PURCHASING ONLINE
                Electronic Commercing...The Wave of the Future

Many consider online purchasing healthy; however, statistics show that customer satisfaction may be affected.

U.S. households spent about $3.14 billion shopping online during November and December last year. Approximately 74 percent felt satisfied by the experience — a decline of 14 percent from an identical study conducted in June 1998. Only 37 percent said they expected to spend more money online; 58 percent thought they would spend about the same; and 5 percent intended to spend less.

What were the reasons behind consumer dissatisfaction? Technical glitches and retailers' lack of preparedness to fill order topped the list.

Source: Research by Jupiter Communications

MONEYWISE...Tips for the Thrifty

Avoid Statement Shock

One credit card company offers customers a record-keeping booklet similar to a checkbook. They recommend that cardholders list charges just as they would list checks in a checkbook. By logging each purchase and keeping track of charges, the cardholder will not suffer "statement shock" when the bill arrives. Staying in contact with amounts already charged may also inspire consumers to wait before charging again or to just pay cash.

In April, Purchasing Director Dave Tincher offered state agency representatives an opportunity to talk about purchasing-related issues in an open, informal setting.

These open forums were only scheduled for April; however, Tincher explained that the benefits of these meetings will be evaluated for effectiveness. "It's my hope that those state employees who participated gained valuable information about the programs and services we provide to our customers," according to Tincher.