Procurement Manual
Section II-1

Recommended Purchasing Procedures

THE REQUISITION/PURCHASE ORDER

The requisition/purchase order form can be used for tracking purchases in a particular commodity, for providing a record of the order, for checking the price quoted by the vendor with the price on the invoice, and for comparing items originally ordered with items received and invoiced.

There are a number of requisition/purchase order forms currently in use at Harvard. A number of departments have developed purchase order forms specifically for their standalone purchasing systems.

ALL purchase order forms should contain the following information:

PO Form (click here to view a sample form)

1. Ship to Address

   Provide the vendor with a complete address. Include the school or faculty, street and city address, department and/or subdepartment, laboratory, room number, and the name of the person receiving the order.

2. Vendor Name and Address

   Include the vendor's complete address and the name of the person with whom the order was placed. This information is helpful if the order needs to be changed or there is a problem with the order. It is also helpful to have the name of person responsible for generating the invoice in case there is a discrepancy between the price the vendor quoted and the amount of the invoice.

3. Invoice (Billing) Address

   If the vendor is sending the invoice to the same address as the Ship To address write "same as Ship To" in the space provided for the billing address. If the billing address is different, provide the vendor with the complete address, including the name of the person to whom the bill should be sent.

4. Purchase Order Number

   The purchase order form may reference a purchase order number. A purchase order number is the one reference point common to the requisitioner, departmental purchasing, and the vendor, and is an effective tool for tracking the purchase from the ordering through payment processes.

5. Confirming/Original Orders

   To avoid duplicate shipments, a purchase order should indicate whether the order is confirming (the order has already been placed with the vendor by phone, by fax or in person) or the order is original (the purchase order is the only vehicle used to transmit the order to the vendor).

6. Date Wanted

   Be as specific as possible. Avoid using ASAP, Urgent or Immediately. These instructions leave the actual delivery date up to the vendor.

7. F.O.B. (Freight on Board) Point

   Is the point in time at which the customer (Harvard) legally owns the merchandise. Very basically, there are two F.O.B. options: Destination and Origin (also referred to as ship point). Always try to negotiate F.O.B. Destination (the Harvard office, lab, receiving dock, etc.), especially if the merchandise is fragile and/or expensive. If the item is damaged in transit, the vendor is responsible for the condition of the merchandise and must initiate any damage claims.

   If the F.O.B. Point is Origin or Ship Point, the customer (Harvard) owns the merchandise when it leaves the vendor's plant or warehouse and is responsible for filing a damage claim against the carrier. Contact Harvard's Insurance Department (495-8668) to obtain adequate transit insurance.

   Delivery charges and method of payment should be determined when the order is placed. The vendor may pay transportation and insurance directly to the carrier (F.O.B. Pre-Pay and Add) and then itemize these charges on your invoice.

   Contract or Grant Number
   Purchases made with Federal funds require vendors to adhere to certain terms and conditions - EEO and Civil Rights requirements, fair wage standards, anti-kickback and debarment regulations, etc. Form Attachment A lists these terms and conditions and can be obtained from the Procurement Management Department or from the web site.

8. Body of the Purchase Order

   The order should be described in as much detail as space permits. Specify exact quantity, catalogue number, description, and price. A record of the quoted price is helpful for comparison with the invoice.

   Inside delivery and installation information should be included here, particularly if furniture or a large piece of equipment is being delivered and installed. If delivery and installation have not been arranged with the vendor beforehand, the equipment or furniture may be delivered only as far as a receiving dock or the steps of the building. Be sure to measure elevators/doorways for accessibility. Renting a crane to hoist the equipment or furniture through the window can substantially increase the cost of the item.

9. Requisitioner's Signature

   Indicates departmental approval for the purchase. Typing the name is not sufficient.

10. Requisition Date

    The date the order is written and/or placed with the vendor.

    PURCHASE ORDER
    ATTACHMENT A (Click here to download Attachment A)

    Effective July 1, 1999 departments became responsible for monitoring their own purchase order and purchase order number systems and ensuring that these systems comply with Federal procurement audit requirements.

PURCHASE ORDER GUIDELINES

All departments are responsible for managing their own procurement records. Departments are responsible for reviewing the content of their purchase orders, correctly communicating the orders to the vendors and maintaining systems that comply with Federal procurement regulations.

A purchase order is a contract between you (Harvard) and the vendor. The Statute of Limitations on contracts can be as long as SIX years. Departments should make arrangements to maintain a purchase order history electronically, on fiche, or by filing hard copies of the orders for a period of seven years. (The extra year ensures that the document is retained for six calendar years after the date of the document). Purchase orders should be destroyed after seven years unless:

1. they are the subject of a dispute or litigation, or
2. they are the subject of an audit by the IRS or other governmental agency.

You may want to consider providing (mailing) a hard copy of the purchase order to the vendor if:

• The order is an original order (has not been phoned or faxed to the vendor).
• The purchase order is for capital equipment.
• The purchase order is a blanket or standing order.
• The vendor or the requisitioner has requested it be mailed.

Note that using a purchase order form or purchase order number to process orders is at the descretion of the using department.

INVOICE PROCESSING

1. Information on purchasing can be located on ABLE at http://able.harvard.edu.
2. Departments and faculties are responsible for processing their own invoices. It is important to communicate a complete billing address to the vendor at the time the order is placed either via a purchase order, telephone, or fax. The Procurement Management Department should not be used as a "Bill to" address.
3. All departments are urged to pay their invoices promptly. Delaying payment to a vendor can result in the vendor placing the University on credit hold. Eventually the University will pay higher prices to offset the vendor's collection costs.
4. Invoices should be sent to Accounts Payable (1033 Massachusetts Avenue, Cambridge, MA 02138) for processing, not to the Procurement Management Department.

TAXES AND EXEMPTIONS

1. Harvard University is exempt from Massachusetts State Sales Tax. Harvard's tax exempt number is E042103580.
2. A vendor doing business with the University for the first time will request a copy of the University's Massachusetts tax exempt certificate. Vendors doing business with the University on a regular basis will request a copy of this form annually for their own records.
3. Copies of the Massachusetts tax exempt certificate can be obtained from the Procurement Management Department (495-4441). This form can be copied as needed.
4. Harvard's purchases are also tax exempt in a number of other states. Departments purchasing goods or services from other states for use in that state, should contact 617-496-5224 to see if the University is exempt from the sales tax in that state.
5. Goods and services purchased from out-of-state vendors for delivery and use in Massachusetts are exempt from sales tax if they are used in the conduct of the University's exempt enterprise, i.e. education and research.
6. The University is not exempt from the Room Tax levied by hotels, motels and inns in Massachusetts or any other state or city charging room tax.
7. Massachusetts Meals Tax. The University is exempt from Mass Meals Tax if all of the following conditions are met:
   • the meals are for students, employees, or guests of the University,
   • the meals are used in the conduct of the University's exempt enterprise, i.e. education and research,
   • the University is billed directly by the outside caterer, restaurant, or hotel,
   • the University pays the entire bill directly,
   • no amount is paid by the consumers of the meal, and
   • the vendor takes from the University a properly completed Exempt Purchaser Certificate (Form ST-5), keeps a record of the price of each separate sale, the name of the purchaser, the date of each separate sale, and the number of the University's Exempt Purchaser Certificate.

Employees, students, and guests who purchase meals themselves are not exempt even if they are on University business. However, University Students purchasing meals in University-operated dining facilities are exempt from Mass Meals Tax. Students may be asked for evidence (i.e. ID cards) of their student status.

PURCHASING RADIOISOTOPES

Please visit http://www.uos.harvard.edu/ehs/rad.shtml for information on requirements for purchasing radioisotopes at Harvard.

PURCHASING TAX-FREE ALCOHOL

1. The Department of the Tresury - Alcohol and Tabacco Tax and Trade Bureau (TTB) requires tax-free alcohol permits for all departments using absolute alcohol for research. Harvard has tax-free permits for The Chemical Laboratories, Harvard Forest, The New England Regional Primate Research Center, The Medical Area, and The Cambridge Area.
2. Alcohol Usage Procedures: Alcohol must be stored in locked cabinets. Only one or two individuals in each area can be authorized to dispense alcohol. Records must be kept by authorized dispensers and contain the following documentation:
   • the amount and date of each shipment,
   • the names of persons requisitioning alcohol,
   • the amount of alcohol dispensed, and
   • the results of the monthly tabulation (the quantity of alcohol on hand at the beginning of the month plus any shipments received minus the alcohol used is the physical balance on hand at the end of the month).

   At the end of each month a physical inventory must be taken and compared with the recorded balance. Any loss or gain must be noted and the results converted to "proof" gallons. The Procurement Management Department coordinates the monthly reconciliation for alcohol purchased under the Cambridge area permit only (excluding the Chemical Laboratories).

3. Tax-Free Alcohol Annual Survey. In January of each year, the Procurement Management Department surveys annual alcohol usage by each of the tax-free permit areas. The Procurement Management Department sends forms from the TTB to the authorized dispensers in each area. Each area must record the monthly data described above for the previous year on the form and return it to the Procurement Management Department. These records must be available for inspection at any time by the Bureau of Alcohol, Tobacco and Firearms.
4. Effective January 1, 1988, the Department of Alcohol, Tobacco and Firearms imposed a "Special Tax Registration and Return" fee of $250 per permit location. The Tax Services Department (617-495-3976) coordinates payment of the fee.

PURCHASING CONTROLLED SUBSTANCES

1. A Federal Drug Enforcement Agency (DEA) license and DEA requisition number are required for purchasing controlled substances.
2. The FDA, in the Controlled Substances Act, has established strict ordering procedures that must be followed before a vendor is permitted to fill an order. Orders for DEA Schedule I and Schedule II drugs must be accompanied by DEA Form 222. This form is numbered sequentially and issued only to holders of DEA registration numbers. Schedule III and IV controlled substances can be purchased by citing the DEA requisition number from Form 223. The three-part form must be completed as the directions on the back of the form specify. The licensee must keep Part 3 of the form and have it available for inspection by enforcement officers for a period of two years from the date the order was placed. Space is provided on Part 3 for receiving information.
3. The license holder is responsible for maintaining adequate records regarding ordering, receiving, storage, and distribution of these substances.
4. Controlled substances must be kept in secured locations accessible only to authorized personnel. A DEA representative will explain these procedures to the license applicant during the preliminary inspection prior to issuing an DEA Controlled Substance License.

PURCHASING NEEDLES AND SYRINGES FOR NON-HUMAN,
NON-ANIMAL INJECTION - RESEARCH PURPOSES

Effective September 18, 2006, the Massachusetts Department of Public Health, Division of Food and Drugs no longer issues Massachusetts Controlled Substances Registrations (MCSP) to obtain needels and syringes. For a copy of the anmended regulation: http://massriverways.org/legis/laws/mgl/94c-27.htm

DUTY-FREE ENTRY FOR SCIENTIFIC EQUIPMENT

• the scientific instruments and apparatus must be used exclusively for educational purposes and scientific research, and
• the scientific instrument or apparatus, or its equivalent, is not manufactured in the United States.

If the equipment arrives at Customs before duty-free entry has been approved, or if no Request for Duty-Free Entry was made prior to the purchase, the applicant can request a delay of liquidation (Customs classifies the equipment and assesses duty). A delay of liquidation is usually granted for up to 180 days, but may be extended.

If the equipment has been received, classified and assessed, and the duty paid, a Request for Duty-Free Entry application can still be filed. This application must be filed within ninety days from the date of liquidation.

• Some categories of scientific equipment can be imported duty-free by educational institutions under certain conditions:
• A Request for Duty-Free Application should be completed and filed with the United States Customs before placing the order with the vendor. If Customs approves the duty-free purchase, the purchase order must be issued to the vendor within sixty days.
• Duty on scientific equipment is usually substantial. Departments should apply for duty-free entry well in advance of making the purchase. If duty must be paid, then departments can budget accordingly; before funds may be committed elsewhere.
• The customs broker for Harvard University is:

  DHL Danzas AEI
  (formerly, Radix Group International)
  500 Rutherford Ave.
  Charlestown, MA 02129
  Phone: 617 886-6652