Author Topic: Minimum Suggested Number of Quotes  (Read 823 times)

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Offline Lumber

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Minimum Suggested Number of Quotes
« on: February 09, 2017, 09:33:15 »
From the PAM:

Quote
The suggested minimum number of quotes required for LDV procurement:
• Less than or equal to $1000.00 - one quote;
• Greater than $1,000.00 and less than or equal to $2,500.00 - two quotes;
• Greater than $2,500.00 and less than or equal to $25,000.00 – minimum three quotes.

However, I'm getting conflicting information. I have what I would consider valid authorities telling me that it's by line-item, not by total procurement.

For example, let's say my unit is looking to buy a really really fancy underwater camera for our dive team. The camera is $800 and an additional piece of camera related equipment is $300. Total cost before tax is $1100.

I have one side saying "each line item is under $1000, so you only one quote", and the other side is saying "total value of the procurement is over $1000 so you need 2 quotes."

The reference is pretty general, so I would side with "total" value argument. Can anyone clarify?

Also, is the total amount before or after tax?

Cheers,
Lumber
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Offline Oldgateboatdriver

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Re: Minimum Suggested Number of Quotes
« Reply #1 on: February 09, 2017, 10:52:28 »
The general interpretation is pretty straight forward, Lumber: You cannot break down an acquisition into sub part in order to avoid the rule. In other words, if you look at the planned acquisition as a whole and it has to be done as a whole to fill your requirement, you must go the whole cost route. If the the acquisition is not planned as a "whole thing in one shot" type of deal, then you can go by line item.

To use your own example: If the plan is to get the camera, and it comes with a standard lens, and you are not planning in acquiring a second more powerful lens for it at this time (even if in a couple of years you may decide to get one): single quote is OK for the purchase if under $1000. If, on the other hand, the plan is to get a camera and the lens because they are separate items and the purchase of one without the other is useless to fill your requirements, then you must consider the whole cost as the basis of application of the rules.

BTW, I gather you are at a reserve unit now. Little advice: don't get the divers any nice gear - it tends to go to their head and trigger their over inflated ego  ;D.

Offline ArmyVern

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Re: Minimum Suggested Number of Quotes
« Reply #2 on: February 09, 2017, 11:35:46 »
From the PAM:

However, I'm getting conflicting information. I have what I would consider valid authorities telling me that it's by line-item, not by total procurement.

For example, let's say my unit is looking to buy a really really fancy underwater camera for our dive team. The camera is $800 and an additional piece of camera related equipment is $300. Total cost before tax is $1100.

I have one side saying "each line item is under $1000, so you only one quote", and the other side is saying "total value of the procurement is over $1000 so you need 2 quotes."

The reference is pretty general, so I would side with "total" value argument. Can anyone clarify?

Also, is the total amount before or after tax?

Cheers,
Lumber

If both camera bits are coming from the same supplier, then it's them totalled and the number of quotes you need based upon the total value of the entire purchase.  Two parts coming from different suppliers, then it is individual cost with a quote required from both suppliers.

It falls under contract splitting - illegal.

It is also still considered to be contract splitting if you hand in one LPO request today from supplier X for the camera to keep it under the limit, and then hand in another LPO request for the lens separately a few days/week later from the same supplier in an attempt to "split" the two and keep them separate and under quote limits as you are, in effect, situating your estimate, and showing favour to one supplier without giving others the benefit of providing same item (at perhaps less cost).

Check the PAM for Contract Splitting - vice LPO quote requirements and you will find the detail you seek.



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Offline Lumber

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Re: Minimum Suggested Number of Quotes
« Reply #3 on: February 09, 2017, 11:59:43 »
Maybe my example was a little bit too... obvious, I think is a good word.

Let me try something slightly different.

We're going to locally purchase some gear for several departments that we can't otherwise get through supply or standing offer. The deck department is requesting $600 dollars worth of stuff that has to do with boat ops and deck evolutions, while the Operations department is requesting $600 worth of stuff to do with whatever it is the operations department does. The point is,  these two lists of items they want are entirely unrelated. But, they can all be conveniently bought at Canadian tire. The total cost is $1200, but the two sets of $600 orders originating form different departments that are satisfying different requirements. They are not being purchased together because our unit only has one acquisition card.

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Offline Oldgateboatdriver

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Re: Minimum Suggested Number of Quotes
« Reply #4 on: February 09, 2017, 13:01:05 »
Now we are getting closer to the truth! The end of FY is coming and you figured you got money left in the kitty, so you asked the various departments if they had things they may want to purchase, didn't you?  (Don't worry! Been there, done that!  ;) )

What we were told before for such situations ( and I hope Armyvern chimes in, she is the expert) is that if the items are totally unrelated, and in fact could have each been the object of their own separate LPO, then, you should issue a separate LPO for each item or set of items that would be considered a separate purchase, but at that point, it is irrelevant that you chose to go and purchase each one at the same time, or even from the same provider.  In such case, each LPO is its own separate amount for application of rules purpose. Very important though: It must be justifiably separate items and then, you have to get separate quotes for each based on each value. In other words each one is treated as a separate purchase and the records must show it.

This goes further than which department orders it. In your example, if the various items requested by the deck department could have been the subject of separate LPOs, then you should go that route. For instance if their "$600" is made up of say, a $250 small boat tool kit, then $200 set of racks for storing oars (do we still use those?) and finally $150 for a new trailer jack, then each one of these is unrelated to the others and could have been made at a different time without regards for the others. The fact that you chose to go out and buy them at the same time, even from the same provider, is irrelevant so long as all the proper paperwork for each separate purchase is kept straight.

Offline ArmyVern

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Re: Minimum Suggested Number of Quotes
« Reply #5 on: February 09, 2017, 14:10:32 »
Maybe my example was a little bit too... obvious, I think is a good word.

Let me try something slightly different.

We're going to locally purchase some gear for several departments that we can't otherwise get through supply or standing offer. The deck department is requesting $600 dollars worth of stuff that has to do with boat ops and deck evolutions, while the Operations department is requesting $600 worth of stuff to do with whatever it is the operations department does. The point is,  these two lists of items they want are entirely unrelated. But, they can all be conveniently bought at Canadian tire. The total cost is $1200, but the two sets of $600 orders originating form different departments that are satisfying different requirements. They are not being purchased together because our unit only has one acquisition card.

Simple:

If the Deck Department is a separate fin code from the Ops Department and they have Section 32 authority over their own Department slice of the budget, then it is from different people and they are thus separate purchases utilizing separate fin codes.

If your unit is set up so that all Departments share a unit-wide fin coding (even if Section 32 authorities are delegated down by sections etc), then it is ONE procurement from ONE source using ONE fin code. 


The number of acquisition cards your unit holds matters not ...  the same LPO clerk can buy with ONE card from the same place for 4 different Squadrons etc.  The important bit is the fin coding utilized:

1)  2 Departments with their own fin coding delegated down in DRMIS and delegated section 32 auth to department heads = 2 separate purchases as it is for two legally separate requirements/people.

      ***LPO guy that utilized the one card to buy all of this stuff together, then causes the SA to be made to proper fin code & GL when reconciling his credit card at end month so that each separate budget and Department gets billed for it's own items and not the others.

2) Departments sharing a Unit fin code (even with department heads heads having 32 auth to spend against that ONE budget) = 1 purchase from 1 supplier and thus the total value requires more quotes.

3) Case three = no matter how fin codes are devolved, if the Section 32 Authority rests with same individual - then it is considered as same purchase.



Budgets must be actually ALLOCATED down in DRMIS by your CO to those department heads along with Section 32 authority to the Department head to spend against their own budget to make them "separate budgets" and thus separate purchases. 

I call this "Questions your LPO Clerk should be asking and absolutely part of the required vetting prior to LPOing as this will keep his *** out of jail".
« Last Edit: February 09, 2017, 14:29:17 by ArmyVern »
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Offline Lumber

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Re: Minimum Suggested Number of Quotes
« Reply #6 on: February 09, 2017, 14:31:53 »
Vern,  I liked OGBD's response much more!   [Xp

We only have one fin code for all purchases,  and I section 32 all purchases at the unit.

So, based on that and your response, I will need separate quotes for all purchases.

However,  if the deck department comes to me one week and submits a request for $600 in purchases,  I'll approve it. If the next week the ops department comes to me with a request for $600 of completely separate purchases, I'll approve that to. If I notice they are both lists of items available from Canadian Tire,  am I suppose to go back and take away the approval from the previous week, and hope our purchaser didn't yet make the purchase? What if t
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Offline ArmyVern

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Re: Minimum Suggested Number of Quotes
« Reply #7 on: February 10, 2017, 00:45:08 »
Vern,  I liked OGBD's response much more!   [Xp

We only have one fin code for all purchases,  and I section 32 all purchases at the unit.

So, based on that and your response, I will need separate quotes for all purchases.

The old RQ in me has a habit of trying to keep butts out of jail; the RSM in me ...  >:D

Quote
However,  if the deck department comes to me one week and submits a request for $600 in purchases,  I'll approve it. If the next week the ops department comes to me with a request for $600 of completely separate purchases, I'll approve that to. If I notice they are both lists of items available from Canadian Tire,  am I suppose to go back and take away the approval from the previous week, and hope our purchaser didn't yet make the purchase? What if t

No, as you would have two different 2227s in two different weeks from two different departments - legit two separate purchases.

Quite different from what you described below where, I think even you already knew it was one purchase else you would not have hesitated/asked the question here.  Your ethics kicked in and there's nothing wrong with that.

As I tell my troops, if you are ever in doubt, get the extra f'n quote as it won't kill 'ya and might save your butt.

« Last Edit: February 10, 2017, 00:48:10 by ArmyVern »
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Re: Minimum Suggested Number of Quotes
« Reply #8 on: February 10, 2017, 02:03:25 »
BTW, I gather you are at a reserve unit now. Little advice: don't get the divers any nice gear - it tends to go to their head and trigger their over inflated ego  ;D.

Wouldn't that give them the bends or something? 😵


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