/policies/,/policies/administrative/,/policies/administrative/uwhc/,/policies/administrative/uwhc/uwhc-wide/,/policies/administrative/uwhc/uwhc-wide/procurement-services/,

/policies/administrative/uwhc/uwhc-wide/procurement-services/1112.policy

20170259

page

100

UWHC,UWMF,

Policies,Administrative,UWHC,UWHC-wide,Procurement Services

Purchase of Goods, Services, Equipment and Approval of Invoices (11.12)

Purchase of Goods, Services, Equipment and Approval of Invoices (11.12) - Policies, Administrative, UWHC, UWHC-wide, Procurement Services

11.12

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Administrative (Non-Clinical) Policy
This administrative policy applies to the operations and staff of legacy UWHC. Effective July 1, 2015, the
legacy operations and staff of UWHC and UWMF were integrated into the University of Wisconsin
Hospitals and Clinics Authority (UWHCA). All administrative policies are being transitioned to apply
UWHCA-wide, but until future revision to this policy # 11.12, it applies only to the operations and staff
of legacy UWHC.

Policy Title: Purchase of Goods, Services, Equipment and Approval of Invoices
Policy Number: 11.12
Effective Date: March 1, 2017
Chapter: Purchasing
Version: Revision
I. PURPOSE

To establish guidelines and controls for the purchase of goods, services, equipment, as well as the
approval of invoices.

II. POLICY ELEMENTS

A. Requests for non-capital goods (including minor equipment) and services will be initiated and
routed for approval through the electronic requisition within the Materials Management
Information System (MMIS), (i.e. PeopleSoft).
B. Requests for capital equipment or construction will be initiated and routed for approval through
StrataJazz (capital budgeting software). The approved requisition will be routed to PeopleSoft.
C. Staff must only have system access to initiate or approve requisitions. Access to perform both
functions is prohibited.
D. Procurement Services staff will establish purchase orders in PeopleSoft based on the approved
requisitions. Actual costs incurred with will be applied against the purchase order.
E. For procurements in which a written contract is established with the vendor for a specific
procurement (e.g. contract with J.H. Findorff and Sons to build American Family Children’s
Hospital), all expenses associated with the contract must be paid under one purchase order. For
contracts that serve multiple procurements (e.g. daily orders of medications from McKesson),
individual purchase orders must be established for each order or independent occurrence. See
additional requirements related to contract approval and signature at UW Health Administrative
Policy 4.01-Contract Approval and Signature Policy.
F. Expenses must only be allocated to the purchase order that was established on its behalf or for a
particular project.
G. Emergency Purchases: In general, goods and services must not be received before a purchase
order has been established. If an invoice is received without a purchase order, Accounts Payable
(A/P) will not pay the invoice until a requisition has been sent to Procurement Services and a
purchase order has been processed. In emergencies, goods and services may be purchased without
a purchase order; but a purchase order will be needed before Accounts Payable makes a payment.
H. Vendors should send their invoices to the Accounts Payable Department.
I. Delegation of Authority:
1. The CEO can delegate his signature authorization as needed.

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2. Staff can delegate their electronic requisition signature authorization to someone at an
equivalent or higher supervising role.
3. Staff can be delegated signature approval rights above their current job title with approval
from the Chief Financial Officer and applicable Senior Vice President.
J. Exclusions: UWHC Joint Ventures such as Wisconsin Dialysis Inc., Unity Health Plan, Inc., and
other related entities are excluded from this policy. Purchases made with a UWHC credit card and
expenses related to business travel are covered under separate administrative policies.

Approval of Invoice Discrepancies for Non-Blanket/Standing Orders
The following table summarizes the authorization levels that must be obtained prior to A/P processing
payment of an invoice:

Variance

(Invoice vs.
Purchase
Order
Amount)
No Variance


< $250


$250 - $500

$501 - $5,000 > $5,000
Invoice
Amount
< $250

PeopleSoft
Receipt
None Negative
Confirmation
Not Applicable Not Applicable Not Applicable
No PeopleSoft
Receipt
Negative
Confirmation
Negative
Confirmation
Not Applicable Not Applicable Not Applicable
Invoice
Amount
$250 -$5,000

PeopleSoft
Receipt
None Negative
Confirmation
Negative
Confirmation
Department
Delegate
Not Applicable
No PeopleSoft
Receipt
Negative
Confirmation
Negative
Confirmation
Department
Delegate
Department
Delegate
Not Applicable
Invoice
Amount
>$5,000

PeopleSoft
Receipt
None Negative
Confirmation
Negative
Confirmation
Director Change Order
Required
No PeopleSoft
Receipt
Department
Delegate
Department
Delegate
Department
Delegate
Director Change Order
Required
1. Approvals must be in writing (i.e., signed invoice, email, or memo).
2. For variances greater than $500 (in aggregate, not per line), A/P will also notify the appropriate
Procurement Services staff via email.




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Approval of Invoices for Blanket/Standing Orders
1. A/P may pay invoices without additional departmental approval when the invoice description
matches the purchase order and the invoice amount is less than $250.
2. Invoice amounts $250 to $5,000 require written approval for payment from delegated staff
appointed by the department director.
3. Invoice amounts greater than $5,000 require written approval for payment from the director
except that the Construction Manager can approve capital construction invoices less than
$25,000.
All Purchase Orders
1. Negative variance (total amount expensed exceeds the purchase order amount) between the
purchase order and invoice that exceeds $5,000 requires a change order (PeopleSoft electronic
requisition) prior to payment of the invoice. Positive variances (total amount expensed is less than
the purchase order) that exceed $5,000 do not require a change order, but the director must submit
to A/P written approval for payment of the invoice.
2. Shipping and handling charges are excluded when determining the purchase order to invoice
discrepancy.
3. Departments can request any order as requiring signature by indicating FS or "for signature."
Accounts Payable must obtain departmental approval prior to payment of an invoice (regardless
of amount) on any purchase order coded "FS" (For Signature).
4. Department delegates are excluded from having approval on any invoices coded to salary
accounts. Director and VP level approval are required on salary invoices.
III. DEFINITIONS

MINOR EQUIPMENT - Single item of equipment with an initial acquisition cost of $100.00 to $4,999.99;
useful life may or may not exceed two years (see Administrative Policy 2.29).
CAPITAL EQUIPMENT- Single item of equipment with a cost of $5,000 or more and a useful life of 2
years or more, or a group purchase of similar items when total cost exceeds $100,000, upon review and
approval by Fiscal Affairs. Initial purchase of software qualifies as Capital if greater than $5,000 and
UWHC obtains ownership of the software. An annual payment for the right to use the vendor’s software
does not qualify for capital. Subsequent yearly licensing fees and maintenance do not. Software upgrades
may be capitalized if the cost is greater than $5,000 and the upgrade has a useful life of over two years.
ELECTRONIC REQUISITION -A request submitted in PeopleSoft for the purchase of goods, services, or
equipment.
PURCHASE ORDER - A contract to purchase goods, services, or equipment.
PURCHASE ORDER UNIT PRICE- The total dollars of the purchase order line amount divided by the
number of units on the line.
VOUCHER – Within the PeopleSoft system, it includes among other things the vendor name, item
description, item quantity, and dollar amount of the invoice that is to be paid.
POSITIVE APPROVAL NOTICE- Notification of differences between the purchase order and
invoice. Approval or confirmation from the department is required.
NEGATIVE CONFIRMATION NOTICE - Notification of invoice or notification of differences between
the purchase order and invoice. Approval or confirmation from the department is not required.
DEPARTMENT DELEGATE – Appointed by the Department Director to authorize the payment of an
invoice or approval of a requisition. Procurement Services staff cannot be appointed as a delegate. The
appointment is documented in writing and is maintained by the Accounts Payable Department.
INVOICE VARIANCE – The difference is calculated as follows for each of the line items on the voucher:

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1. Purchase Order Quantity is More Than Voucher Line Quantity (voucher line quantity (x) voucher
line unit price) – (voucher line quantity (x) purchase order unit price).
2. Purchase Order Quantity is Less Than Voucher Line Quantity (voucher line quantity (x) voucher
line unit price) – (purchase order line quantity (x) purchase order unit price).
3. The net sum of the differences for each line item is the “invoice variance” amount.
NO PEOPLESOFT RECEIPT – Any difference between the quantity per the voucher and the quantity
received in the PeopleSoft system.
AMERICAN CENTER PRESIDENT – Approvals are limited to American Center cost centers.

IV. FORMS

UWHC Electronic Requisition
UWHC Purchase Order

V. PROCEDURE
A. To purchase goods, services, and equipment, departments must submit an approved electronic
requisition for review by the Procurement Services Department. If Procurement Services approves the
purchase, a Purchase Order will be issued.
1. The following authorization levels are used in this process (see section 3 below for
exceptions to Requisition/P.O. process):
APPROVAL OF REQUISITIONS (Non Capital Goods and Services)

Total Expenditure Level of Authorization
$0- $4,999 Department Delegates
$5,000-
$49,999
Directors and Surgical Services Manager
$50,000-
$99,999
Appropriate VP
$100,000 - $499,000 Appropriate Senior VP
> $500,000 CFO, CEO

Notes:
1. Public Affairs/Marketing managers can approve requisitions up to $10,000.
2. Document Authorized: Electronic requisition via PeopleSoft system.
3. Exception: Electronic requisitions coded to salary accounts will route directly to Director and
VP.










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APPROVAL OF REQUISITIONS (through StrataJazz) (Budgeted Capital Goods and Services)
Total Expenditure CIP and Repairs and
Maintenance (See Note
#1)
Change Orders (See Note
#2)
Capital Equipment
(See Note #3)
< $5,000 Director of Facilities or
PE
Construction Manager or
Construction Coordinator
Appropriate Director
$5,000 - $49,999 Director of Facilities or
PE
Director of Facilities or PE Appropriate Director or
Vice President
$50,000 - $99,999 VP of Facilities VP of Facilities Appropriate Vice
President
$100,000 - $499,000 Appropriate Senior VP Appropriate Senior VP Appropriate Senior VP
> $500,000 CFO, CEO CFO, CEO CFO, CEO

Notes:
1. For CIP and repair and maintenance expenditures, there must be a separate requisition for each
vendor involved in the individual project. All CIP requisitions must be approved by the Facilities
Group before purchase orders are established.
2. All contractor change order documents must be signed based on the expenditure levels noted
above.
3. Equipment items less than $5,000 are considered minor equipment and/or minor alterations and
are considered part of the operating expense budgets as set forth in the UWHC "Capital Budget
Overview."
4. Documents Authorized:
a. Requisition through StrataJazz (Capital Budgeting Software).
b. Change Order Forms Provided by the Contractors (e.g., Findorff).

APPROVAL OF STRATEGIC AND CONTINGENCY FUNDS
1. As a part of the capital budget process, contingency funds are developed for unplanned capital
equipment items. As part of the operating budget, a strategic and contingency fund is also created
for expenditures of $10,000 or greater. Expenditures less than $10,000 must be charged to a
departmental budget and cannot be charged to the strategic operating contingency fund.
2. The following levels of review and approval are required for the use of contingency funds:

Supervisor/Manager Develops the rationale and financial prospectus for requests
Director Reviews and approves request
Appropriate VP Reviews and approves request
Appropriate Senior
VP
Reviews and approves use of capital contingency funds for items
$100,000 and under
CFO Chairs Capital Allocation Committee and approves use of contingency
funds for individual unbudgeted capital items over $100,000. Also
approves all expenditures over $100,000 charged to the strategic
and operating contingency funds.
CEO Approves individual unbudgeted capital items over $100,000 and all
items over $100,000 charged to the strategic and operating contingency
fund.

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Notes:
1. Document Authorized: Strategic Contingency Fund Allocation Form

B. Exceptions to Procedure:
1. Requisition and Purchase Order Not Required:
a. Loan payments;
b. Malpractice payments and other similar payments (i.e. broker fee, financed insurance
premium payments, worker's compensation payments and patient compensation fund);
c. Payments that are the function of systems, such as payroll withholdings (credit union,
federal and state tax withholdings, etc.) and patient accounting and non-patient refund;
d. Payment related to employee reimbursement requests submitted via memo;
e. Background checks;
f. Specialty equipment associated with Kinetic Concepts, Hillrom, Sizewise, etc.;
g. Non-patient refunds;
h. Deposits with the UW Foundation;
i. Expenditures for outside legal counsel and consultants in confidential matters, at the
discretion of the General Counsel;
j. Legal settlements;
k. Expenditures for regulated services such as utilities (gas/electric/water, etc.);
l. Ambulatory pharmacies (McKesson EDI orders only) (See approval limits in Section
V(C));
m. Gift shop (inventory items only);
n. Related entity payments to University of Wisconsin Medical Foundation, University
Health Care, SwedishAmerican, InnTowner, Chartwell, and Regional Division;
o. Academic department funding (i.e., affiliation and Academic Advancement Agreement
payments);
p. Taxes;
q. Organ Procurement Organization (OPO) expenses related to living donors, organ
recoveries and evaluation tests;
r. Invoices from vendors in which their services are used throughout the organization and
there is a consolidated invoice. Examples include FedEx Office, Standard Register,
Office Max, Airgas Puritan Medical, Gordon Flesch, Corporate Business Systems,
Cardinal Health (Optifreight only), Access Information, Department of Administration,
Badger Graphics, United Mailing Services, United Postal Services (UPS) and U.S. Bank
for corporate credit card and Payment Plus Program;
s. Institutional memberships, seminars, and conferences (e.g., trade organizations);
t. Requests for donations and sponsorships <$100,000 (payments to charitable
organizations that are contributions or sponsorships, but not for goods or services
purchased from such organizations other than those received as sponsorship benefits e.g.,
table at an event) should be sent to the Director of Community Relations for
consideration.
2. The appropriate Vice President must approve payment for such items but may delegate their
approval authority up to $5,000 to their Directors and Managers. Such delegation for specific
items must be documented and forwarded to the Accounts Payable Department for reference
purposes when processing related check requests and invoices.
3. Exceptions to Approval Limits:
a. OPO invoices related to organ recoveries and evaluation tests, and living donor invoices
require the Manager of Transplant Services up to $5,000. The Director of Transplant
Services approval is required for invoices between $5,001 and $50,000. Invoices over
$50,000 require vice president approval.

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b. Ambulatory pharmacy invoices must be approved in accordance with limits noted in
Section V(C).
c. Gift shop purchases (only operating expenses). Invoices $5,000 and under require the gift
shop supervisor and gift shop delegate approval. Invoices over $5,000 require the gift
shop supervisor and vice president approval.
d. Payments for payroll withholding amounts such as health insurance premiums, retirement
plan contributions, Federal and State withholding taxes, etc. are to be communicated by
the payroll manager and submitted to the Senior Accountant for Treasury Functions for
payment. The Senior Accountant for Treasury Functions will verify the payroll
withholding amounts to the "PeopleSoft Tax Report" (which can be found in an
electronic shared file found in an electronic shared file) and then initiate an ACH
electronic wire transfer to the appropriate payees.
4. Invoices from vendors in which their services are used throughout the organization and there is a
consolidated invoice do not require invoice approval. Examples are included above under the
Exceptions to Procedures section. Documents Authorized: Invoices, memos, etc.
C. Delegation of Purchasing Privileges to Specific Departments:
1. Clinical Lab, Culinary Services, Home Care Services, Central Services, Pharmacy , Facilities and
Engineering Services, and Clinical Engineering have been delegated the privileges to utilize the
PeopleSoft purchasing system to issue requisitions and purchase orders for supplies under
contract in accordance with the parameters below.
2. Note: This delegation does not pertain to executing contracts, blanket purchase orders, or
consignment agreements/purchase orders.

Clinical Lab

Total Expenditure Level of Authorization
$0 - $19,999 Department’s Designated Procurement Specialist
$20,000 - $74,999 Director
> $74,449 Appropriate VP
> $500,000 CFO, CEO

Culinary Services and Home Care Services

Total Expenditure Level of Authorization
$0- $7,499 Department’s Designated Procurement Specialist
$7,500 - $49,999 Director
> $49,999 Appropriate VP
> $500,000 CFO, CEO

Central Services

Expenditure Levels Level of Authorization
$0 - $99,999 Department’s Designated Procurement Specialist
>$99,999 Appropriate Vice President
> $500,000 CFO, CEO

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Note: Purchase orders processed via requisitions from the CS on-line catalog must follow limits listed in
Section A.
Pharmacy
Inpatient – Immune Glob IV
(GammaGard Liquid)
Total Expenditure
Level
(All Pharmacy
Areas)
Level of Authorization
$0 - $249,999 $0 - $99,999 Department’s Designated
Procurement Staff
N/A $100,000 - $249,999 Supervisor or Manager
$250,000 -
$500,000
$250,000 - $500,000 Director
>$500,000 >$500,000 Appropriate VP, CFO, CEO

3. Facilities and Engineering Services and Clinical Engineering
a. Facilities and Engineering Services and Clinical Engineering have been delegated the
authority to process requisitions and purchase orders less than or equal to $5,000.
Requisitions greater than $5,000 must be submitted via an electronic request to
Procurement Services.
OTHER PROVISIONS:
1. Item Master Substitutions: If an active item is temporarily backordered, the delegated department
may order a replacement item with or without an item number or contract in quantities necessary
to span the timeframe of the backorder.
2. Specific Orders-Supplies Not Listed in the Item Master: Delegated Departments may process
specific orders for medical products not listed in the item master (or listed as inactive) up to a
limit of $500.
3. Orders over $500 for items not under contract require an electronic requisition to be completed
and approved according to the limits in Section A. The requisition is then routed to Procurement
Services for creation and processing of a purchase order.
4. Repairs: Delegated departments may issue a purchase order for repairs of equipment not to
exceed $5,000. Repairs greater than $5,000 requires an electronic requisition to be completed and
approved according to the limits in Section A. The requisition is then routed to Procurement
Services for creation and processing of a purchase order.

D. Approval of Purchase Orders:
Total Amount Level of Authorization
$0 - $49,999 Procurement Specialist., Procurement Services
$50,000 - $149,999 Manager of Procurement Services
> $150,000 Director of Procurement Services

Note: Document Authorized-Purchase Order via PeopleSoft system

E. Receiving:
1. All items delivered to University Hospital will be received at the University Hospital Receiving
Dock located (D4/136) and transferred to the location indicated on the purchase order by
Receiving Dock personnel. If the purchase order indicates installed delivery, the vendor is

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responsible for final delivery and installation. University Hospital Receiving is responsible for
electronically receiving the purchase order into the Material Management Information System
(PeopleSoft).
2. All items requested by departments not located at University Hospital may be received directly at
the department location.
3. Home Care Services (HCS) may both physically and electronically receive purchase orders. For
HCS, certain vendors will ship the medical equipment/supply directly to the patient’s home
address. Prior to approving the invoice, HCS management will verify there is documentation,
including shipping receipt, supporting the invoice amounts.
4. Note: All items delivered by UW Health couriers or University Hospital Receiving staff are
electronic receipted into the Materials Management Information System. For these items, the
packing slips can be destroyed by the departments. If the items are delivered by other means
(Federal Express, UPS, USPS, DHL, etc.), the department should note on the packing slips if all
of the items listed have been physically received and also complete one of the following three
options:
a. Fax packing slips to 608-890-6605 (University Hospital Receiving).
b. Scan and email packing slips to Receiving@uwhealth.org.
c. Send packing slips via interdepartmental mail to University Hospital Receiving at mail
code 1515.To avoid not meeting month-end deadlines for financial reporting purposes,
this option must not be used at the end of the month.

VI. COORDINATION

Sr. Management Sponsor: VP, Facilities & Support Services
Author: Director, Purchasing Operations; General Accounting Manager

Approval Committee: UW Health Administrative Policy and Procedure Committee
SIGNED BY

Elizabeth Bolt
UW Health Chief Administrative Officer


Revision Detail

Previous revision: 012017
Next revision: 032020