September 15, 2014

Suppliers and Competition

The purpose of this policy is to ensure the best overall value to the university for the expenditure of funds; this includes the use of preferred suppliers, establishes USC’s competitive bidding requirements, and identifies other supplier requirements.

Preferred Suppliers

Whenever possible, preferred suppliers should be used. Preferred suppliers are those suppliers with which the university has a negotiated or competitively bid master agreement that includes price discounts and negotiated legal and business terms and conditions. The university may have more than one preferred supplier in any given category. See the Business Services website for the university’s preferred supplier list.

Competition

1.  Bidding authority

The university will conduct formal competitive bidding in order to get the best value for the expenditure of funds, follow best business practices, and comply with funding source requirements. University departments should utilize Business Services for required competitive bidding, as Business Services will ensure that all bids are conducted in compliance with university and funding source policies and will deploy best-practice bid procedures. University departments that solicit bids from suppliers without Business Services involvement are responsible for complying with university bidding guidelines.

2.  Bidding threshold

Competitive bidding must be conducted when the total cost is $10,000 or more, including tax and delivery, regardless of source of funds. Exceptions to the competitive bid policy are stated in Sections 4 and 5.

3.  Formal bidding practices

All supplier bids must be in writing; verbal bids cannot be accepted. Bid solicitations must clearly state in writing the scope of the work to be performed or the item(s) to be purchased. The university is committed to fair and ethical business practices and it is critical for all university employees to maintain the confidentiality of supplier proposals, quotes, contracts and other proprietary material. Confidential materials are not to be disclosed to other suppliers or outside organizations. It is unethical for university departments to obtain bids and use them to “bargain” with other bidders.

Suppliers interested in submitting proposals to the university are subject to specific requirements documented in the university’s solicitations (e.g. Request For Proposals, Request For Information, and Request For Quotations). All solicitations conducted by university personnel must contain these requirements. Companies or individuals that develop or draft project specifications or bid invitations must be excluded from competing for such procurements. An exception to this policy is granted to capital construction projects that are not funded directly by a federal contract or grant, as detailed below.

4.  Competitive bidding for capital construction projects

Competitive bidding must be conducted on capital construction projects when the total project cost is $50,000 or greater. Competitive bidding must follow one of two methods: “guaranteed maximum price (GMP)” or “lowest responsive bidder.”

When the GMP methodology is used, the university will assess solicitation responses through the scoring of written proposals, and then a subsequent round of scoring of finalist presentations. The general contractor with the highest score will be awarded the project.

When the “lowest responsive bidder” methodology is used, the following process applies:

  • From a pre-approved list of major general contractors maintained by Procurement Services, the university will select one general contractor to assist with pre-construction work (e.g., developing design elements, scope of work, cost estimates, etc.) and will pay selected contractor for those services.
  • Opportunity to participate in this pre-construction work will rotate among the pre-approved general contractors, in order to avoid any apparent conflicts of interest or unfair competitive advantages.
  • After pre-construction work is complete and the project fully designed, the university will distribute a solicitation to all pre-approved general contractors, including the contractor who participated in pre-construction work, in a sealed bidding process with the award going to the lowest responsive bidder.

5.  Exceptions to competitive bidding requirement

  • Bidding is not required when purchasing through a preferred supplier even if the purchase exceeds $10,000, as long as the contract with that supplier covers the product or service being purchased.
  • Bidding is not required when it is determined only one supplier is able to provide the goods or services. This is documented on a “Sole Source Justification Form” or a memorandum that includes applicable justifications. The form or memorandum must be signed by the Principal Investigator if purchase is on a Sponsored Project Account.
  • Bidding is not required for the following services: hotels, event venues, restaurants, caterers, advertisements, airlines, independent contractors, and professional services. However, whenever possible multiple options should be investigated through a process of due diligence to ensure price reasonableness.
  • Bidding is not required when purchasing Physician Preference Items (PPI), which are implants and/or implantable devices, as well as expensive disposable items used during surgical procedures. Examples of PPI include stents, catheters, heart valves, pacemakers, leads, total joint implants, spine implants, and bone products. Physicians have manufacturer preferences based on surgical procedures and clinical outcomes.

Supplier Requirements

The university prefers to purchase from companies that have been in business at least two years.

Unless more specific insurance provisions are stipulated in an agreement, such as, but not limited to, agreements for construction, maintenance, facilities, architects, and independent contractors, a supplier performing work at or for the university will be required to maintain the charted insurance coverage at the supplier’s own expense. It is the supplier’s responsibility to ensure that the required insurances remain in effect for the entire duration of the awarded contract. If requested by the university, it will be the supplier’s full responsibility to provide the university with evidence of the required insurances.

Insurance Corresponding Insurance Details
Worker’s Compensation The supplier must maintain workers’ compensation insurance with statutory
limits if required to do so by California state law. If the supplier is self-insured for workers’ compensation, the supplier will maintain a certified copy of the
“Certificate of Consent to Self-Insure” issued by the state of California, 1.7.2 Department of Industrial Relations.
Comprehensive General Liability and Automobile Liability Insurance USC requires coverage for bodily injury and property damage with the combined
single limits of $1,000,000 each occurrence.
Additional Insured USC requires comprehensive general liability and automobile liability certificates that name USC as an additional insured. Such insurance will waive any right of subrogation against USC and will specifically cover supplier’s obligations to defend, indemnify and hold USC harmless as provided therein.

Responsible Office

Business Services

https://businessservices.usc.edu/purchases/
purchasing@usc.edu
(213) 740-2716

Issued by

Robert Abeles, Senior Vice President, Finance and Chief Financial Officer
University of Southern California