7/06/2015

PCARD PROCUREMENT GUIDELINES

  1. The following shall be effective immediately:
  1. Temporary Unblocks Require a Requisition

Cardholders must create a requisition for all temporary unblock requests. After the requisition is approved by the FA, the Department Coordinator (DC) or Alternate (DCA) shall go to the Temporary Unblock Request link on the new PCard website ( to fill out and submit the onlineform (the requisition eDoc number is now required for temporary unblocks).

  1. MCC Restriction Group & Limit ChangesRequire a Memo from the Approving Official

In accordance with A8.266, the Approving Official is responsible for setting the card limits and determining the exceptions/restrictions for the Cardholder, therefore, a memo is required from the Approving Official for changes to the above.

  1. Construction, Repair & Maintenance Purchases Only Allowedon a PO or theFA’s PCard
  • Definition of Construction: Process of building, altering, repairing, improving or demolishing any UH structure, building or improvement to real property, including painting and decorating. The term includes routine operation, repair or maintenance of existing UH structures, buildings or real property.
  • Definition of Maintenance: Commonly defined as “making or keeping a structure, fixture or foundation in proper condition in a routine, scheduled, or anticipated fashion, preventing its failure or decline.”
  • Definition of Repair: Work required as the result of unanticipated failure.
  • Cardholders who have the “Contractor” categories “unblocked” are only allowed to purchase construction supplies with their PCards, not construction services.
  1. Purchases Restricted tothe FA’s PCard

A purchase order is the proper purchasing vehicle for the following items. However, if necessary and appropriate, these items can be purchased on the Fiscal Administrator’s PCard.

  • Goods or Services with Special Requirements (e.g. required time of performance, terms & conditions, insurance requirements, standards of performance, etc.)
  • Deposits or Advance Payments
  • Gift Cards
  • Expenses for Non-Employees and Students
  • Hotel Reservations
  1. PCard Should Not be Used to Purchase Gasoline w/o Pre-Approval

PCards should not be used to purchase gasoline unless a request for exception has been submitted to OPRPM showing sufficient justification or extenuating circumstances. For State vehicles, gas/diesel fuelmust be acquired from Transportation Services or a gas credit card should be obtained via SPO Price List Contract No. 13-14.

  1. Although the PCard is the preferred method of purchase for small dollar goods and services, it is NOT appropriate for all small purchases. The PCard should not be used for the following:
  • After-the-Fact Purchases
  • Car Rentals for Non-Employees
  • Payment Towards a Continuation (Open) Purchase Order
  • Stipend payments
  • Real Property Leases & Rental Payments
  • Legal Services
  • High Risk Purchases
  • Payments to Individuals
  • Professional Services
  • Moving or Relocation Expenses
  • Gasoline (unless request for exception has been approved)
  • Services on a Contractual Basis (ref. A8.230, Payment for Services)
  • Honorariums
  • Biological Commodities, Hazardous Materials , Radioactive Materials, Ethyl Alcohol & Narcotics (unless request for exception has been approved and on file with the Fiscal Office)
  • Copier Leases/Maintenance Fees
  • Purchases that are Ultimately Charged to RCUH Revolving or UH Foundation Accounts
  1. The guidelines below are meant to clarify PCard requirements for various commodities.
  1. No “After-the-Fact” Purchases with the PCard
  • An after-the-fact purchase is a procurement made without authorization; the request for approval of the purchase is made after the purchase has occurred, thus violating the proper procedures.(ref. HAR 3-131-1)
  • PCard is a purchasing card, not a payment card, so the PCard transaction must be made at the time the goods are ordered or the services rendered. If the dollar amount of the service cannot be determined until after the work is completed, a requisition with an estimated amount must be prepared in advance.
  • “After-the-fact” purchases are a procurement violation and must be avoided.
  1. PCard Cannot be Used for Purchases that are Ultimately Charged to RCUH Revolving or UH Foundation Accounts.

It is not acceptable toallocate a PCard transaction to a UH account (or leave it in the default account), then reimburse the account with RCUH revolving or UHF funds.

  1. Travel Related Expenses
  • Requires T-doc # or documentation showing that travel was approved
  • In accordance with A8.851, travel expenses must be ordinary & necessary to accomplish the business purpose of the trip
  1. Meals & Refreshments

As provided in A8.265, section 12, paragraph b, Guidelines, meals and refreshments should not be purchased with University controlled funds using either the PCard or PO forinternal University staff meetings, training sessions and similar activities.

  1. Gift Cards
  • Gift cards should be purchased with a PO; however, if the vendor does not accept a PO, the FA’s PCard may be used to purchase gift cards.
  • Departments should establish written procedures for safeguarding, custody & tracking of the gift cards.
  • Departments should establish written procedures for payments to individuals receiving compensation for participation in research projects, surveys, or studies. Procedures should ensure compliance with federal income tax and/or employment tax withholding requirements and proper reporting of payments to the IRS.
  • Disbursing does not capture tax reporting information from the PCDO. Therefore, when using the PCard, the responsibility for tracking payments for IRS 1099 reporting rests with the department. Be sure to utilize the proper object codes and obtain adequate information to allow the University to fulfill its tax reporting responsibilities. Contact Ken Lum () for more information.
  1. Copier Leases/Maintenance Fees

Funds for copier lease/maintenance fees must be encumbered in advance w/ a PO.

  1. Insurance

All requests for the purchase of insurance shall be submitted for review & processing by the Office of Risk Management.

  1. No Personal Use of PCards

Cardholders are prohibited from using the PCard to make purchases for personal use. If a Cardholder inadvertently makes a personal purchase using the PCard, the Cardholder should attempt to have the transaction reversed. If the vendor is unable to reverse the charge, the Cardholder must self-report this transaction in writing to the FA within FIVE (5) working days. A check shall accompany the explanation, which must be signed by the Cardholder and approved by the Cardholder’s supervisor. Unreported personal purchases may be considered a serious violation and the Cardholder may be subject to immediate card cancellation and disciplinary action.

  1. Using UH Buying Power is Considered Personal Use

Using the UH buying power for personal benefit is considered personal use. A good example is the Hawaiian Air Corporate Account. In accordance with the terms of the Corporate Account and the SPO Vendor List Contract No. 13-21, the bonus miles earned from the Corporate Account Incentive Program must only be redeemed and used forfuture UH authorized business.

  1. Parceling is Prohibited

Parceling is one of the most common procurement challenges. As provided in A8.220, parceling is a procurement violation and defined as the artificial or intentional division or fragmentation of a purchase of same, like, or related items of goods, services, or construction into several purchases of smaller quantities, in order to evade procurement requirements or the limits of delegated purchasing authority. Therefore, splitting purchases (parceling) to avoid PCard limits (e.g. single purchase limit) or the competitive threshold is prohibited. Splitting purchases between multiple cards to circumvent the limit on individual cards is also not allowed. To avoid multiple procurements that, when combined, exceed the card limit,repetitive purchases should be forecasted and consolidated.

  1. Procurement Violations

Procurement violations may result in civil or criminal penalties. Most procurement violations are inadvertent and the result of administrative error. A civil penalty occurs when a person contracts for, or purchases goods, services or construction, and knows that the procurement is contrary to the requirements of the procurement law. Criminal penalties apply when a person knowingly or intentionally engages in a scheme to avoid the requirements of the law. The violation must have been committed in a deliberate manner, involving some calculated means, such as parceling for a single procurement, a deliberate misstatement of fact, or an after-the-fact purchase, which is purposely designed to avoid the requirements of the law. In addition to any civil or criminal penalties allowed by law, the Chief Procurement Officer (CPO) may take action against any government employee found to be in violation of any provision of the Hawaii Public Procurement Code, HRS 103D.

  1. Purchasing Ethics

Cardholders are delegated the authority to purchase non-restricted small-dollar goods and services with their PCards and with this delegation, comes certain responsibilities. All public employees must conduct and participate in public procurement in an ethical manner. Hawaii Revised Statute 103D-101(a) requires public employees to act in good faith, to practice purchasing ethics, and to display business integrity.

In addition, Hawaii Administrative Rule 3-131-1.02 requires employees who engage in purchasing activities to diligently follow the procurement laws, rules and procedures.

Whenever rules are silent, you must rely on common sense when conducting public procurement. For example, there are no specific rules stating that you can’t purchase Costco or Sam’s Club memberships with PCards, but the memberships are in the name of the cardholder and can easily be considered a personal benefit. Amazon Prime membership may have a legitimate business purpose, but the Cardholder could also benefit personally from such membership. To avoid the appearance of unethical behavior, an Amazon business account for official University use should be opened as opposed to an AmazonPrime membership,and all shipments sent to the University.

Approvals should be required before apps, mobile hotspots, etc. are purchased to ensure that there is a legitimate business need for these types of items or services. The apps and mobile hot spot plans must be purchased under the department name and not the individual’s name and departments should have internal procedures specifying that these items/services are for official University business use only.

A government purchaser is a fiduciary for the public’s money, therefore, we must spend the public’s money with care. Remember, everything we do in public purchasing is transparent and the purchaser is held accountable for the conduct of the procurement.

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