Term Purchases - 406

Departments granted purchasing authority to conduct competitive solicitations may establish term purchase contracts through a competitive bid process.

A term purchase establishes a purchasing mechanism for:

• A specified period of time – not to exceed 36-months.
• A specified list of products and quantities.
• Items a department acquires on a routine basis.

Buyers conducting a competitive solicitation for a term purchase must adhere to the following:

• A competitive bid must be conducted whenever the dollar amount is $5,000.00 or greater.
• The solicitation must clearly identify contract start and end dates and the contract period may not exceed a 36-month period.
• The solicitation must clearly state the aggregate amount of the contract, but in no event may it exceed a department's approved purchasing authority limit for goods, as applicable to the procurement.
• The solicitation, the resulting contract or the cumulative value of orders released against the contract may not exceed the amount of a department's approved purchasing authority for goods, as applicable to the procurement.
• The solicitation must clearly state a maximum number of units that may be purchased.

Example:

10 units will be purchased upon award, and the department reserves the right to purchase up to 10 more units during the contract term.

Evaluation and award must be based upon the total quantities per line item to be purchased during the contract term. Using the above example, the evaluation and award would be based upon 20 units.

1. The solicitation must clearly state the delivery terms over the course of the contract term.
2. The solicitation must clearly define whether or not pricing is firm over the course of the contract or if allowances will be made for price increases or decreases.
3. The department must keep a running total of orders placed against each term purchase contract in the procurement file.

A term purchase is not a suitable solicitation approach if a department is unable to commit to the stated quantities.