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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Legal Aspects of PurchasingHow to Navigate the Jungle
Presented by:Bramby Ann Tollen, C.P.M.,CPPO, CPSM, CPSD
Director, Purchasing & WarehousingClark County School District
Las Vegas, Nevada
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Overview
• Purchasing Law-Navigating the Jungle• Staying on Solid Ground with Terms & Conditions• Avoiding Quicksand• Surviving the Swamp• Going Forward with Sturdy Footing• Using Life Lines• Time for Questions
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
The Jungle-Purchasing Law-Can you Navigate it?
1. Purchasing competes requirements because:a) We are naturally competitive people.b) We enjoy the extra paperwork. (Not!)c) We like to torture our customers with anticipation.d) It is a good business practice and those pesky State
statutes and Board policies require that we do so.
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
The Jungle-Purchasing Law-Can you Navigate it?
2. State statutes and Board regulations are usually created in response to :
a) Legislative whimsy.b) Divine inspiration.c) The need for more red tape.d) Actual incidents of fraud, waste, and abuse.
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
The Jungle-Purchasing Law-Can you Navigate it?
3. It is okay to accept gratuities from suppliers when:a) The supplier is your uncle Bob.b) You have never played golf at Pebble Beach and
this is a great opportunity.c) You are really hungry and you do not have any
cash for lunch.d) Never
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
The Jungle-Purchasing Law-Can you Navigate it?
4. Conflict of Interest arises when:a) You want to go to an action movie and your spouse wants
to see a romantic comedy.b) You have to choose between wearing the paisley green &
orange sweater your mom gave you or the plaid purple & yellow sweater your grandma gave you.
c) You have the opportunity to spend the mortgage money on a great deal on a really cool motorcycle.
d) You need to purchase volleyballs for the athletic department and your uncle sells them and offers you a personal rebate.
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
The Jungle-Purchasing Law-Can you Navigate it?
5. The reason indemnification is important is:a) The airports require a picture id to get on the airplane.b) The lawyer is paid by the word and he has not billed you
the full contract amount yet.c) Letters look better when paragraphs are indemnted.d) Funds are better spent on textbooks than injury, loss, or
damage caused by suppliers.
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Staying on Solid Ground with Terms & Conditions
Lions, Tigers and Small Print…..
1.Assignment of Contract only with Agency Consent Should not be unreasonably withheld
2.Attorney Fees Paid by Each Party American Rule vs. Equitable Remedies
3.Conflict of Interest Duty of Loyalty
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Staying on Solid Ground with Terms & Conditions
Lions, Tigers and Small Print…..
4. Cooling Off Period Separated Employee-similar work? Earning maximum?
5.Dispute Resolution Process Written issues of non-compliance Informal Mediation Arbitration and/or Litigation
6. Fiscal Fund Out
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Staying on Solid Ground with Terms & Conditions
Lions, Tigers and Small Print…..
7. Four Corners Rule Overall intent rather than individual words
8. Full Disclosure Employee Buyer Authorizing Official Governing Body Supplier
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Staying on Solid Ground with Terms & Conditions
Lions, Tigers and Small Print…..
9. IndemnityMandatory requirement?
10.Insurance Work with Risk Management Department Provide certificate of insurance with agency named. Working with students? Insurance should include coverage for abuse, molestation, and corporal punishment…normally a part of, or an endorsement to, a commercial liability policy.
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Staying on Solid Ground with Terms & Conditions
Lions, Tigers and Small Print…..
11.Payment Tied to Performance Pay for items delivered or performed
Lock in firm pricing for maintenance and increased based on index Allow increases & decreases based on market
12. Prevailing Law & Jurisdiction Your paper, your rules!
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Staying on Solid Ground with Terms & Conditions
Lions, Tigers and Small Print…..
13. Sub-contracting Not unless defined and approval in advance.
14.Supplier Defines “Team” & Project Manager Do not allow “Bate and Switch” Define account/project managers Define who is responsible for each task/deliverable
15.Termination for Convenience
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Avoiding Quicksand-Terms to Avoid
• Anti-Trust• Collusion• Conflict of Interest
o Current Employeeso Relatives & Friendso Work Day & Responsibilities
• Credits• Favors
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Avoiding Quicksand-Terms to Avoid
• Gratuities• Limited Time Offer or Special Deal “Just for You”• Nepotism• Oral Agreements• Perceived Advantage
o Advance Knowledgeo Incumbent Supplier
• Prepayments
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Avoiding Quicksand-Terms to Avoid
• Rebates• Split Purchases• Suppliers-Arms Length Principle• Vendor’s Contract/Agreement/Paper• Verbal Representations
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Surviving the Swamp
• Prepackaged software licenses• Software & equipment maintenance• Subscription services• Speaking engagements• Musicians & other performers• Other low risk ventures that do not include on-site
services nor interacting with students
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Going Forward with Sturdy Footing
• Full Disclosure• Use your own “paper”• Indemnity• Point of Contact/Responsible Party
o Supplier & Buyer• Deliverables defined with time frame and payment• Acceptance and rejection process• Project management or communication process
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Going Forward with Sturdy Footing
• Competitiono Consumption or Purchase Estimates
• Right to negotiate if quantities increase or decrease by 25%
o Warranty & Specifications• Take advantage of UCC
o Balance of Line Discount• Discount for future unidentified requirements• Must equal discount for identified bid items
o Question & Answer Phase• No pre-bid conferences• All information sent out via addenda
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Going Forward with Sturdy Footing
Top Five Reasons to Compete1. Despite the offers of free lunches and trinkets, suppliers’ best
interests rarely coincide with the buyers.2. Our Legal and Risk Management Departments are not sitting around
idly in eager anticipation of liability claims due the actions of uninsured suppliers.
3. Our Superintendent stubbornly clings to the notion that the budget is limited and insists that we get the best value for our money.
4. Contracting with relatives may get you a better holiday present, but ask for a sweater. It gets cold in the unemployment line.
5. State statutes are not suggestive in nature.
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Using Life Lines
• NAEP• Legal Department• Suppliers• GSA & Cooperatives• Other Purchasing Agencies• Internet Search• Friends & Contacts
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Legal Aspects of Purchasing
Summary
• Questions?• Thank you!
• Contact Information: Bramby Tollen
batollen@interact.ccsd.net702-855-5461