PROBLEM ORDERS

• 1.0 Purpose
• 2.0 Policy
  • 2.1 Late or Incorrect Shipments
  • 2.2 Disputes With Vendors
  • 2.3 Limited Purchase Orders
  • 2.4 Complaints about Vendors
• 3.0 Definitions
• 4.0 References
• 5.0 Approvals and Revisions

1.0 Purpose

This policy describes how all areas of the University should handle problem orders.

2.0 Policy [Top]

2.1 Late or Incorrect Shipments

Occasionally, departments may not receive orders as they have requested. If such occurs, departments have the authority to contact the vendor directly by telephone or by letter to resolve the problem. Repeated contacts may be needed. If the vendor does not adequately respond in a timely manner, the department should notify the appropriate Procurement Services buyer IN WRITING. At that point, the buyer will assume responsibility for dealing with the vendor on the department's behalf.

Proper methods in dealing with vendors include:

• Being assertive but not aggressive;
• KEEPING A WRITTEN FILE OF ALL VERBAL AND WRITTEN COMMUNICATIONS TO INCLUDE DATE, NAME, PROMISES MADE, AND ANY FOLLOW-UP COMMENTS;
• Citing the purchase order number on all written communications. Forwarding copies of all related correspondence to the appropriate Procurement Services commodity buyer;
• Notifying Procurement Services in writing of any situation beyond the department's control.

2.2 Disputes With Vendors

Under certain conditions, departments may find it necessary to withhold payment of a vendor's invoice. Prior to taking such action, the department should contact the appropriate commodity buyer in Procurement Services to discuss the situation. If the decision is to withhold payment, the department notifies Accounts Payable and sends a registered letter to the vendor stating payment is being withheld and the reason why. Copies must be forwarded to the Director of Procurement Services.

Below is a list of potential disputes with vendors and the suggested approaches to resolving those disputes.

REGARDLESS OF THE SITUATION, THE DEPARTMENT SHOULD KEEP PROCUREMENT SERVICES INFORMED OF PROBLEMS AND DEVELOPMENTS.

NOTE: Departments must not alter a vendor's invoice.

Problem	Recommended Approach
Non-Delivery of Goods	Write or telephone the vendor, referencing the purchase order number and the expected delivery date.
Partial Shipment	Departmental discretion is suggested. A partial shipment, causing the entire order to be unusable, should not be paid until resolved. A partial shipment, capable of being used by the department, should be paid promptly, by: Paying only for the amount received, or Requesting an amended invoice, or Paying the entire invoice amount if a credit memo has been received from the vendor to offset the overcharge. The vendor and Accounts Payable must be notified.
Damaged or Non-functional Merchandise	Contact appropriate commodity buyer in Procurement Services for instructions.
Unsatisfactory Installation	If vendor is to furnish services or install goods, the department may with hold payment, if the services were not performed in accordance with the purchase order or contract, or if the equipment is not performing in accordance with specifications.
Incorrect Invoice Amount	Accounts Payable should pay purchase order price informing the vendor in writing as to adjusted invoice payment.
Prior Shipment Problems	Each order must be handled on a case-by-case basis. Accounts Payable must immediately pay invoices for shipments satisfactorily received, even if a problem exists with a prior order from the same vendor.

 

2.3 Limited Purchase Orders

For goods and services totalling less than $5,000, departments have 10 business days to notify the Accounts Payable division of Procurement Services of any problems with the order. If no problems are reported within that time, Accounts Payable will pay the invoice for the order.

2.4 Complaints about Vendors

Inferior, substandard, or otherwise unacceptable merchandise may be received by departments. Also, vendors may refuse to replace incorrect shipments. Under these conditions, departments should immediately notify Procurement Services in writing. Procurement Services will send to the vendor an official "Complaint to State Vendor" form, with a copy going to the State Division of Purchases and Supply (DPS). If the vendor does not correct the situation, DPS can temporarily remove the vendor from the approved State Vendor's list, or debar the vendor either indefinitely or permanently.

3.0 Definitions [Top]

4.0 References [Top]

Policy VI.F.1, "Disbursements: General Requirements."

Policy VI.F.3, "Timely Payments to Vendors." 

5.0 Approvals and Revisions [Top]

Previous version in effect from 9/1/88 to 7/1/01 available in policy archive.