3201 PR.02 Pricing Documentation Process

Revision Date: 
November 30, 2022

Contents

1.     Overview

2.     Purchase Thresholds and Requirements

3.     Competitive Bidding Process

4.     Sole Source Justification

5.     Analyzing Bids and Quotes and Selecting Suppliers

6.     Completing the Comparative Pricing Process

1.  Overview

This procedure outlines the process for obtaining goods and services from a supplier that is not a University Preferred Supplier (listed in the University Buying Guide) when the purchase cost of such goods and services is greater than or equal to $10,000.  Per Policy 3201 General Purchasing, such purchases require comparative pricing.  This procedure details additional dollar thresholds and the comparative pricing options applicable at each threshold.

2.  Purchase Thresholds and Requirements

A.  Purchase Cost < $10,000

If the purchases cost is less than $10,000, refer to Procedure 3201 PR.01 Purchase Order Process for detailed information on the requisition process.

B.  Purchase Cost ≥ $10,000 and ≤ $250,000

If the purchase cost is within this dollar range, Yale requires one of the following:

  • Submission of 2 or more Quotes: Quote documentation can include a supplier price list, an Internet search of supplier websites to determine market and published prices, or prices provided in writing directly from the supplier.  Use Form 3201 FR.05 Pricing Documentation (Comparative Pricing & Competitive Bidding);
  • Comparison of recent (within 12 months) quotations for the same service/product.  Use Form 3201 FR.05 Pricing Documentation (Comparative Pricing & Competitive Bidding);
  • Conducting a competitive bidding process:  2 or more bids/quotes are compared for reasonableness and responsiveness to the request for quote/bid (see Section 3, below, for further details); or
  • Sole Source Justification: Document justification for sole source purchases (see Section 4, below, for further details).

C.  Purchase Cost > $250,000 and NOT on Federal or Federal Pass-through Award

If the purchase cost exceeds $250,000 and will not charge a federal or federal pass-through award, Yale requires one of the following:

  • Submission of 2 or more (3 preferred) Quotes: Quote documentation to be provided in writing directly from the supplier.  Use Form 3201 FR.05 Pricing Documentation (Comparative Pricing & Competitive Bidding);
  • Conducting a competitive bidding process:  2 or more (3 preferred) bids/quotes are compared for reasonableness and responsiveness to the request for quote/bid (see Section 3, below, for further details); or
  • Sole Source Justification: Document justification for sole source purchases (see Section 4, below, for further details).

D.  Purchase Cost > $250,000 and ON Federal or Federal Pass-through Award

If the purchase cost exceeds $250,000 and will charge a federal or federal pass-through award, Yale requires one of the following:

  • Conducting a competitive bidding process:  2 or more (3 preferred) bids/quotes are compared for reasonableness and responsiveness to the published request for quote/bid (see Section 3, below, for further details); or
  • Sole Source Justification: Document justification for sole source purchases (see Section 4, below, for further details).

3.  Competitive Bidding Process

A.  Preparing to Request Competitive Bids and Quotes

When utilizing a competitive bidding process, per Section 2, above, the requestor must work with the Procurement Department to develop a Request for Proposal (“RFP”), Request for Quotations (“RFQ”), or Request for Information (“RFI”), to solicit bids from potential suppliers.  The difference between RFPs, RFQs, and RFIs is explained below.  The Procurement Department assists departments in selecting, completing, and reviewing the most appropriate method.

Note: a competitive bidding process is not utilized for all purchases.  Rather, it is one of several options described in Section 2, above.  Follow this section only when utilizing a competitive bidding process.    

  • Request for Proposal (“RFP”): RFPs should be used when the department’s business needs could be met in multiple ways, the ultimate product or quantity is uncertain, or the scope of work could change.  RFPs allow competing suppliers to describe their proposed methodologies or processes for meeting the University’s needs, in addition to their pricing information.  In general, most purchases of services should use an RFP to request competitive bids.
  • Request for Quotations (“RFQ”): RFQs should be used if a purchase has clearly defined parameters and the scope of work is unlikely to change.  RFQs provide clear specifications for the desired good or service and do not generally request information on the suppliers’ processes or methodologies.  RFQs are most appropriate when the good or service is standardized and suppliers’ products or services are very similar.
  • Request for Information (“RFI”): RFIs are used when a good or service has been identified, but more information from suppliers is needed to assist the decision-making process and identify next steps.  RFIs are seldom the final stage of a procurement process and are often used prior to and in combination with either an RFQ or RFP.  RFIs clearly indicate that an award of a contract will not automatically follow and is not an offer by Yale to enter an agreement with any supplier.

RFPs, RFQs, and RFIs must not contain features that unduly restrict competition.  Such features may include, but are not limited to:

  • Placing unreasonable requirements on firms in order for them to qualify to do business;
  • Requiring unnecessary experience and excessive bonding;
  • Noncompetitive pricing practices between firms or between affiliated companies;
  • Noncompetitive contracts to consultants that are on retainer contracts;
  • Organizational conflicts of interest;
  • Specifying only a “brand name” product instead of allowing “an equal” product to be offered and describing the performance or other relevant requirements of the procurement; or
  • Any arbitrary action in the procurement process.

RFPs, RFQs, and RFIs may, however, include a statement of the qualitative nature of the material, product, or service to be procured and, when necessary, must set forth the minimum essential characteristics and standards to which it must conform in order to satisfy its intended use (they should identify all requirements which the suppliers must fulfill and any other factors to be used in evaluating bids or quotes).  Detailed product specifications should be avoided, if at all possible; When it is impractical or uneconomical to make a clear and accurate description of the technical requirements, a “brand name or equivalent” description may be used as a means to define the performance or other salient requirements of procurement (the specific features of the named brand which must be met by offers must be clearly stated).

B.  Obtaining Bids or Quotes from Suppliers

The following processes and guidelines ensure that each supplier has an equal chance in the competition when requesting formal bids or quotes.  The Procurement Department assists departments in the bid/quote solicitation process.

Note:  For purchases greater than $250,000 on federal and federal pass-through awards, the Procurement Department will perform the competitive bidding process.  This process requires 2 or more (3 preferred) suppliers to respond to a publicized request for proposal/quote.  In the alternative, the Procurement Department may validate a requestor’s sole source justification.  In addition, the requestor is responsible for completing Form 3201 FR.04 Independent Cost Estimate.

  • Send Request to Suppliers

The requestor, with assistance from the Procurement Department, sends the request (RFP, RFQ, or RFI, as appropriate) to at least three qualified suppliers (additional suppliers must not be precluded from qualifying during the solicitation period).  Each request must be identical and sent to each supplier at the same time to ensure a fair competition.  In order to ensure objective supplier performance and eliminate unfair competitive advantage, suppliers that develop or draft specifications, requirements, statements of work, and invitations for bids or requests for proposals must be excluded from competing for such procurements.

Note:  For procurements on federal or federal pass-through awards, federal regulations prohibit the use of statutorily or administratively imposed state or local geographical preferences in the evaluation of bids or proposals, except in those cases where applicable federal statutes expressly mandate or encourage geographic preference.  

Note:  Prior to the established due date, competing suppliers may submit questions on the request to the University.  All supplier questions and the subsequent University answers must be provided to each of the competing suppliers in writing and at the same time.

  • Receive Bids or Quotes

Supplier bids or quotations may be received prior to the request’s due date by U.S. mail, fax, e-mail, overnight mail, or hand delivery.  Bids or quotes received by the Procurement Department will be forwarded to the appropriate Buyer for review and analysis.  As soon as a bid or quote is received, it should be stored in a secure area.  Bids or quotes must not be shared with any person unless he or she is participating in the decision-making process.  Bids or quotes submitted to the University are strictly confidential and under no circumstances should suppliers be given information about bids or quotes from competing sources.

  • Confirm Bids or Quotes Are Complete

The requestor, with assistance from the Procurement Department, should review all received supplier bids or quotations to ensure that they are complete.  The University may choose not to consider incomplete submissions in order to preserve the fairness of the competition.  The following information should be included in each bid or quote:  

  • Clear and accurate description, including specifications, for the product or service;
  • Net cost of the product or service, the cost broken down by components or work phase;
  • Other related costs (e.g., surcharges, maintenance, handling fees, expenses, shipping, and/or installation costs);
  • Delivery schedule (include date and time as appropriate);
  • Payment terms.  Note: Yale University’s standard payment terms are Net 45, meaning that the University will pay properly authorized invoices within 45 days of the supplier invoice date;
  • Environmental specifications of the product or service including, but not limited to, product life cycle analysis, raw materials and energy costs of product manufacturing and delivery, recycled content and recyclables of the product, any possible health concerns regarding its use and disposal (e.g., toxicity of materials or ingredients), and possible end-of-life product recovery by its company; and
  • Warranty and other data applicable to individual situations.
  • Professional Services and Consulting Agreement terms and conditions, if applicable.  Refer to Policy 3210 Purchase Contracts.

The requestor, with assistance from the Procurement Department, should document bids and quotes using Form 3201 FR.05 Pricing Documentation (Comparative Pricing & Competitive Bidding).  The requestor, with assistance from the Procurement Department, should then analyze the received bids or quotes and choose an appropriate supplier in accordance with Section 5, below.

Note:  The Procurement Department is one of the few offices authorized to sign Yale University contracts.  If a contract is provided with a quotation or bid, it must be sent, along with supporting documentation and the purchase requisition, to the Procurement Department for review and signature.

4.  Sole Source Justification

A purchase may be completed by requesting a sole source waiver to the University’s comparative pricing requirements based on one or more of the following: a justification that a good or service is unique or proprietary (e.g., specialized and unique laboratory equipment, specialized software, patented materials or techniques); if a supplier has an exclusive agreement or territorial limitation; the Federal awarding agency or pass-through entity expressly authorized noncompetitive proposals in response to Yale’s written request; the requirement will not meet the criteria for competition; or public exigency or public emergency (i.e., imminent threat to persons or property) for the requirement will not permit a delay resulting from competitive solicitation.

In these situations, the requestor must complete and submit Form 3201 FR.06 Sole Source Documentation, along with other supporting pricing documentation (e.g., a valid quote and/or pricing schedule for the specific amount of time that the purchase period will be active).

5.  Analyzing Bids and Quotes and Selecting Suppliers

Yale requires a thorough analysis of each bid or quote prior to selecting the final supplier.  Therefore, the requestor, with assistance from the Procurement Department, must read each bid or quote carefully and consider the guidelines stated in this section to ensure that the University’s resources are used effectively.

A.  Analyze the Bids or Quotes

The following are key questions when reviewing bids and quotes:  

  • Does the supplier provide the best mix of quality, service, and price for the specified University need?
    • Note:  Federal regulations may require primary consideration of the lowest price from a qualified supplier whose bid was received by the bid closing date unless quality, service, or delivery time takes priority based on documented need.
  • Does the supplier have the financial stability, size, and service infrastructure to effectively meet the University’s needs?
  • Perform a technical evaluation.  Does the bid or quote satisfy the technical requirements stated in the request?
  • Will the proposed delivery schedule meet the departments “need-by” date?
  • Are the product’s quality and supplier’s performance reputation acceptable in the context of University use?
  • Will the supplier satisfy all requirements of the sponsored award, if applicable?
    • Note:  Be aware of applicable Federal or other sponsored program regulations regarding purchases funded by grants or contracts, including those regarding debarred or suspended suppliers, as noted in Policy 3201 General Purchasing.
  • Do the supplier’s proposed terms and conditions and stated insurance level deviate substantially from the University’s Standard Terms and Conditions and Insurance Requirements?
    • Note:  Analysis of supplier terms and conditions or insurance levels may be complex. It is strongly recommended that the requestor request assistance from the Procurement Department in reviewing this information.
  • Does the supplier qualify as a diversity supplier or otherwise support University initiatives?
  • Do the supplier’s business practices and products support the University’s environmental sustainability initiatives?
  • What is the total life-cycle cost of the product and/or service?

B.  Request New Bids or Quotes, if Necessary

If the requestor determines that none of the bids or quotes can meet the department’s business needs, based on the results of the bid or quote analysis, a new request may be issued.  It is strongly recommended that the department contact the Procurement Department for assistance prior to initiating a new bidding process.      

If a new request is issued, the requestor, with assistance from the Procurement Department, must ensure that all suppliers who submitted bids or quotes for the original request are notified and have an equal chance to submit another bid or quote.

C.  Select a Supplier

  • Negotiate with Suppliers

Based on the results of the bid or quote analysis, the requestor must identify the supplier(s) that appear best able to meet the department’s business needs.  The requestor may then initiate discussions with suppliers to ask any questions and clarify any details regarding the bid or quote.  During these discussions, it is appropriate to negotiate any required or desired price, performance, or terms and conditions improvements.

Note:  It is not permissible to discuss the specifics of competing bids with suppliers or any University employee outside of the negotiation team; such information is confidential.

Prior to negotiations, the requestor should: 

  • Contact the Procurement Department to request assistance in establishing an appropriate negotiation team;
  • Consider and decide on negotiation points, positions, and possibilities for supplier concessions; and
  • Establish an appropriate timeframe to negotiate and make the purchase decision. 
  • Make the Supplier Selection

Once negotiations are complete, the department must determine which supplier will provide the best overall product or service based on the documented business needs and results of the bid or quote analysis. 

  • Document the Supplier Selection Process

Document the selection and evaluation of suppliers with respect to the life-cycle cost and other factors described in Section 5.A., above.

Note:  Special documentation considerations apply if the purchase involves consulting or other professional services.  Refer to Policy 3210 Purchase Contracts.

6.  Completing the Comparative Pricing Process

Once a supplier has been selected, the requestor (or initiator) prepares a requisition, as detailed in Procedure 3201 PR.01 Purchase Order Process.  The requisition should include the following:

  • A completed Form 3201 FR.04 Independent Cost Estimate, if appropriate, with supporting documentation;
  • Either a completed Form 3201 FR.05 Pricing Documentation (Comparative Pricing & Competitive Bidding) or Form 3201 FR.06 Sole Source Documentation, as appropriate, with accompanying documentation;
  • A copy of the RFP, RFQ, or RFI, as appropriate;
  • A copy of all relevant bids and quotes; and
  • Certificate of Insurance or a Waiver from the Office of Enterprise Risk Management.