7.3 Purchase Orders
Policy Statement
All purchase orders for goods and services within the University of Illinois System must adhere to established procurement protocols designed to ensure responsible stewardship of system and university resources. Departments shall utilize approved procurement systems and follow standardized procedures when acquiring commodities, contractual services, and specialized items. This includes ensuring compliance with all federal, state, and local laws as well as system- and university-specific policies, such as those governing recycled content in products, radioactive material handling, and the acquisition of weapons.
Reason for Policy
The purpose of this policy is to promote transparency, accountability, and consistency in system and university purchasing practices. By clearly outlining the expectations and requirements for purchase orders, this policy safeguards system and university funds, mitigates risk, and supports compliance with legal and regulatory obligations. Additionally, this policy helps foster sustainability and safety by prioritizing products with recycled content and strictly regulating the purchase of hazardous or controlled items.
Applicability
This policy applies to all units, departments, and personnel involved in procurement activities across the University of Illinois System. It governs the purchase of goods, services, and specialized items, including those involving recycled materials, radioactive substances, and weapons. The policy covers transactions processed through university procurement systems such as iBuy, Banner, and the University Purchasing Card (PCard), and is applicable regardless of the source of university funding used for purchases.
Procedure
Procurement Systems
The University of Illinois System offers two systems to purchase commodities and contractual services from external vendors: iBuy and the purchasing card (PCard).
- iBuy requisitions, or PCard, should be used for most purchases of $7,500 or less.
- Purchases of more than $7,500 must be made using either an iBuy catalog punchouts or the applicable purchase requisition form for all PCard prohibited commodities.
- When the vendor does not accept the PCard for payment.
When submitting requisitions, departments are required to follow existing policy regarding substantiation of quotes and competitive pricing (see 7.2 Purchase of Goods and Services).
Banner Financial System
The Banner Financial System (Banner) is a web-enabled system that was previously utilized for online requisitioning, issuance, and tracking of purchase orders to external vendors. Banner usage is secondary to iBuy. Banner is the financial system of record for the system. (For Banner documentation, training registration, training, and job aids see Banner Alerts & Resources and the Business & Finance website.)
iBuy Procurement System
iBuy is a web-based system for purchasing goods and services. iBuy provides online requisitioning, issuance, and tracking of purchase orders to external vendors (vendors outside of the system), combining internet technology with procurement best practices to simplify the purchasing process and reduce costs. iBuy is the system's preferred purchase requisition method.
For information about iBuy training or job aids see "Training and Resources" on the iBuy website.
PCard Procurement System
See 8.12 The University Purchasing Card (PCard)
Exceptions to Purchase Requisitions
A Purchase Requisition is not required for the following:
Regular Purchase Orders
A regular purchase order is issued for a one-time procurement of a commodity or service. When the commodity or service is delivered and paid in full, the order is complete. The appropriate university or system purchasing office issues these orders based on a purchasing requisition having been submitted by a department to the Banner or iBuy systems. iBuy requisitions to external vendors, when processed, become regular purchase orders in Banner, the system's financial system of record.
Regular purchase orders may be issued:
- For a defined list of items with an accurate quantity and unit price, typically for a one-time payment, although multiple payments may occur when partial quantities of an order are shipped and invoiced.
- For purchases involving specific multiple-year agreements, using either a single CFOAPAL or limited CFOAPALs with a consistent distribution (i.e., for the entire contract period).
- For purchases of fixed assets with a unit price of $2,500 or more.
- For leases, whether they are for a single year or multiple-years; and whether they provide for scheduled payments or individually-invoiced payments.
Invoices received for payment against a regular purchase order must be paid from the CFOAPAL(s) assigned to it when it was established. Departments cannot change CFOAPAL(s) for invoices received against regular purchase orders.
Standing Purchase Orders
Standing purchase orders in iBuy may be issued for purchases that will be made on-demand over a defined period of eligible purchases include: Goods or services where exact quantities or costs cannot be estimated in advance.
Examples:
On-demand supplies (e.g., "vehicle parts as requested by an authorized requestor from the university")
Services with variable costs and a large number of line items (e.g., catering, travel arrangements). A standing purchase order must have a product description and the unit price serves as the expenditure total. The system automatically sets the quantity and catalog number, these fields cannot be changed. A standing purchase order should not be used for recurring payments that are pre-determined (the same amount each month) or for purchases where quantities/costs can be reasonably estimated. Use of standing purchase orders should be limited.
The standing purchase order permits departments to request supplies or services on an as-needed basis, via phone or other contact, without having to submit additional requisitions through the appropriate system or university purchasing office. Since quantities are not specified, and the encumbrance is based on total dollar amount, departments do not have the option to request a receipt against standing purchase orders. Invoices received against standing purchase orders are imaged, and payments are made according to the payment terms of the orders. Departments can access imaged invoices after payment, for reconciliation.
Individual invoices received for payment against standing purchase orders must be paid from the CFOAPAL(s) assigned to it when it was established. Departments cannot change CFOAPAL(s) for each invoice received against a standing purchase order. Invoices that total $50,000 or more processed in iBuy requires an iBuy invoice acknowledger approval, in lieu of receiving. Invoices that total $50,000 or more processed in Banner may require Banner receiving due to system limitations.
Limitations of a Standing Purchase Order:
- Because a standing purchase order indicates no quantity, departments do not have the option to request "Receiving" for these orders.
- Fixed Assets should not be purchased using a standing purchase order.
- In the event a unit has a fixed asset purchase requisition with excessive line items that comprise a single fixed asset, an iBuy standing purchase order may be used. The standing purchase order should combine the multiple lines to a single line and reference a quote that should be attached to the requisition. For questions, contact the appropriate system or university purchasing office.
Blanket Purchase Orders
A blanket purchase order is a master document that permits tracking of multiple transactions related to a specific vendor and/or agreement. A blanket purchase order may be used to record a multiple-year agreement or contract. A blanket purchase order requires no CFOAPAL(s) at all, therefore does not encumber funds. As there are no CFOAPAL(s), invoices are not paid against a blanket purchase order.
A regular purchase order must be issued against the blanket purchase order, referencing the blanket purchase order to identify CFOAPAL(s), establish an encumbrance, and make payments. Blanket purchase orders are used at the discretion of the appropriate university or system purchasing office as an internal tool, to manage multiple-year agreements, such as leases. Blanket purchase order numbers should not be given to vendors, since payments cannot be made against them.
Multiple-Year Agreements
Regular Purchase Orders
If a regular purchase order is generated, the terms of the contract should be outlined in the body of the purchase order, although the order is issued for the current fiscal year dollar amount (expenditure). This allows the funds for the current fiscal year to be encumbered.
At the beginning of subsequent fiscal years, departments must submit a new requisition so that a new regular purchase order can be issued. This new requisition can be created by copying the current year's regular purchase order into a new requisition, updating (if applicable) the commodity/service information, and changing the dollar amounts and transaction date, to encumber the funds for the new fiscal year. The new regular purchase order always references the purchase order number from the previous fiscal year.
Standing Purchase Orders
If a standing purchase order is generated, the contract terms should be outlined in the body of the order, although the order is issued for the current fiscal year dollar amount (expenditures). This allows the funds for the current fiscal year to be encumbered.
At the beginning of each new fiscal year, departments must submit a new requisition that references the previous standing purchase order number in "Document Text." Purchasing then creates a new standing purchase order to encumber the next fiscal year's expenditures.
Banner Receiving
When creating a requisition in Banner, departments do have the option to choose whether they want "Receiving." NOTE that when creating a Banner requisition of $5000 or more, departments must select "No Receipt Required," or the Banner system will default to "Receipt Required."
There is no Receiving function in iBuy at this time. However, when University Payables receives an individual invoice of $50,000 or greater on a regular purchase order, and the order indicates a status of "No Receipt Required" or "Unspecified," the Banner Financial System will require a Banner Receiving Document (FPARCVD), in order for the individual invoice to be matched, and payment made.
Should this situation occur, the Receipt Required invoice transaction will appear on the Receiving Report that is published daily on the Business & Finance website for departments to review and act upon. (See Banner Alerts & Resources and the Business & Finance website for information about Banner Receiving, including training and job aids.) The Banner Receiving Module contains the forms used in the process of Receipt, Adjustment, and Return of Goods and Services on "Regular Purchase Orders."
The Banner "Optional Receipt Required" allows payment of an invoice only after matching invoiced items are correctly received. The Invoiced and Received commodity item quantities must match in order for payment to be made.