Goals
Restrictions
General
Advance Payments
Agreement on Internal Trade (AIT)
Airfare
Airfare
Purchases via Internet
Asset
Purchases
Automatic or Recurring Debit Arrangements
Freedom of Information and Protection of Privacy Act (FOIPPA)
Goods and Services Tax (GST)
Internet Purchases
Legally Encumbered Suppliers
Other Government Charge Cards and Accounts
Phone Purchases
Provincial Sales Tax on Out-of-Province Purchases
Purchasing in Foreign Funds
Corporate Supply Arrangments/Standing Offers
Surcharges
for Using the Purchasing Card
Withholding Tax on Payments to Non-residents
Purchasing Card Decision Guide
Authority
to Make the Purchase
Type
of Purchase
Purchasing
Method
6.0
Making Purchases
The Procurement Governance
Office in the Office of the Comptroller General has overall responsibility for
purchasing policies in government. Using the purchasing card does not replace
the reliance on sound procurement practices. Procurement policy regarding purchasing
in the public sector is contained in the Core Policy and Procedures Manual (CPPM)
manual, chapter 6.
In addition to adhering
to policies in CPPM chapter 6, and chapter 4.3.19,
cardholders are also responsible for following the procedures contained in this
manual. Ministries are authorized to place further restrictions on the use of
the purchasing card.
A Decision Guide is provided
at the end of this chapter which brings all of these policies and procedures
together. It is suggested that the cardholder review the Decision Guide after
reading this chapter and refer to it when uncertain how to use the purchasing
card in a particular situation.
Cardholders who are still
uncertain how to proceed in a specific situation or who need more information
about the purchasing card can contact their purchasing card coordinator.
Goals
The goals of purchasing
policy are to:
- ensure the best value
for the public’s purchasing dollar;
- ensure all purchasing
activities are undertaken in a visibly fair, ethical and prudent manner;
- promote BC economic
development by creating access to sales opportunities for BC suppliers;
- ensure equitable trade
practices with other jurisdictions; and
- ensure all vendor concerns
are dealt with in a timely, fair and equitable manner.
Restrictions
The purchasing card is not
to be used by anyone other than the person whose name appears on the card.
Purchasing cards will be
used to make government purchases of up to the maximum approved transaction
limit and monthly limit subject to purchasing policy.
The purchasing card has
been blocked from use with certain merchants. The Merchant Category Code Blocking
has been set government-wide; however, ministries may add or delete merchants
to create a ministry Merchant Category Code Blocking table. Where ministries
have changed the default blocking, they are to provide a list to their cardholders
and the Financial Management Branch (Office of the Comptroller General).
For purchases in excess
of $1000, at least three competitive quotations should be obtained before making
the purchase. Documentation of quotations must be kept on file in the branch
for audit and Freedom of Information purposes. (See the section later in this
chapter on the Freedom
of Information and Protection of Privacy Act.)
If a total purchase price
(including tax and delivery) exceeds a cardholder's transaction limit, it is
not acceptable to split a purchase into multiple transactions.
The purchasing card must not be used:
- if the purchase exceeds
the cardholder's per transaction or monthly limit (this information is recorded
on the Request for Card/Card Detail Change form and is available from
the purchasing card coordinator);
- to purchase goods and
services from Merchant Category Code blocked suppliers.
Where ministries have added
or deleted merchants from the default government list, they are to provide cardholders
with their ministry list.
- to purchase any goods
or services presently made with the Motor Vehicle Charge Card;
- for repairs to general
fleet plan vehicles (Classes A to P);
- for individual travel
related expenses such as hotel accommodation, car rentals and meals where
the employee would normally be reimbursed through a claim processed on a travel
voucher (note that the purchasing card can be used for travel expenses normally
directly booked and paid by the ministry or organization, such as convention
expenses and assured loading passes);
- to obtain cash advances,
even if related to government business;
- for training that is
a taxable benefit to the employee;
- to pay for intra-governmental
purchases that are made by manual or electronic accounting transfers (such
as purchases from the Office Products Centre);
- for printing including
copying, duplicating, typesetting and supplies, unless prior authorization
is obtained from Queen's Printer; and
- with suppliers known
to be legally encumbered (e.g., garnishing orders, third party demand notes,
etc. filed against them).
Use of the purchasing card
does not, in itself, create a contract between the buyer and seller. It is merely
an instrument to make a payment. Where a suitable verbal or written contract
is in place and the supplier is willing to accept payment by the purchasing
card the following types of payments can be made:
- systems development/maintenance/enhancements
(i.e., professional or general service contracts for LAN maintenance , custom
software development, enhancements or related items);
- professional service
contracts;
- data processing related
services;
- rental renewals;
- vehicle rentals for operational
purposes exceeding 30 calendar days;
- photocopying equipment
(contact CBS first); annual repair and maintenance contracts.
General
When using the purchasing
card to purchase goods or services, the following procedures are to be followed:
- obtain pre-authorization
from the expense authority whose budget will be charged with the purchase.
It is preferable that this authorization be in written form (email is acceptable)
where possible;
- utilize local vendors
whenever possible;
- obtain three competitive
quotes for purchases in excess of $1,000, if possible; and
- keep a record of all
paperwork, such as receipts, packing slips and correspondence.
Advance
Payments
Payments may not be made
in advance of receipt of goods or services except where:
- the payment date is set
by contract;
- the contracted price
is based on payment within a specified time;
- industry practice is
to accept advance payments only (such as subscription fees for periodicals
and course registration fees); or
- an early payment discount
is available.
Agreement
on Internal Trade (AIT)
The Agreement on Internal
Trade (AIT) is an agreement between the provinces and the federal government
intended to provide businesses across Canada with equal access to procurement
opportunities with government.
The provincial and federal
governments are required to report purchases of goods and services and construction.
Reports include most government purchases although some types of services and
products are exempt. For further information, see CPPM chapter 6 or contact
the Procurement Governance
Office.
Airfare
Airfare (bus and train tickets)
can be purchased GST-exempt with the purchasing card. The traveller should check
with the airline to see if they will be required to produce the purchasing card
at the airport for boarding. In these cases the cardholder name on the purchasing
card should be the same as the traveller's name.
Airfare
Purchases Via Internet
In some cases, the most
economical airfare is only available via an airline's internet site. Currently,
some of these sites do not permit GST free purchases. If the web-based fare,
including GST, is less than the best fare available through a travel agent,
including their service fee, it is acceptable to acquire the web-based fare.
Please also see the sections below on Goods and Services Tax and Internet Purchases.
Asset
Purchases
Purchases made to acquire
fixed assets are coded to fixed asset STOBs. Policy on fixed assets can be found
in CPPM chapter
8.
Automatic
or Recurring Debit Arrangements
Automatic or recurring debit
arrangements enable vendors, with the prior consent of the cardholder, to charge
payments to a specified card number at regular intervals without obtaining the
cardholder's signature each time. Once established, these arrangements are valid
until cancelled in writing.
Cardholders entering into
automatic or recurring debit arrangements must ensure that:
- the risk of making duplicate
payments is minimized (e.g., by ensuring that accounts staff are aware that
invoices from the company receiving the automatic payment should never be
processed through accounts payable); and
- the automatic debit
arrangement is documented and known to the cardholder's backup, supervisor,
or purchasing card coordinator as appropriate or as directed by ministry policy.
Documentation should identify the details and terms of the arrangement and
a contact name.
Freedom
of Information (FOI) and Protection of Privacy Act
The primary purpose of the Freedom of
Information and Protection of Privacy Act is to make public bodies more
accountable to the public and to protect personal privacy. Follow ministry or
agency procedures or contact your FOI representative for information and instructions
before releasing information to outside parties.
Goods
and Services Tax (GST)
The government of British
Columbia is exempt from paying GST and cardholders are responsible for informing
vendors of the exemption at the time of purchase. Some vendors require that
shipping or invoicing addresses include "Province of BC" in the name
in order to identify the purchase as a government purchase.
Where vendors have charged
GST, it is the responsibility of the cardholder to obtain a refund of the GST
amount. A letter explaining the province's GST status is contained in Appendix
2. This letter can be used by cardholders when dealing with a vendor who has
charged the GST. It should be written on ministry letterhead and signed by a
senior official in the ministry (preferably the senior financial officer). At
the request of cardholders or purchasing card coordinators, the Director, Financial
Management Branch, Office of the Comptroller General, will send a letter to
specific merchants explaining the exemption. Where vendors continue to charge
GST alternative vendors should be considered.
There is no such thing as
a GST-exemption number. Vendors requesting one may be given our GST registration
number (R107864738). For further information, refer to Office of the Comptroller
General's Information and Resources site for GST (government access only).
Internet
Purchases
Purchases may be made over
the Internet using the purchasing card for payment.
If you cannot comply
with the following, you must not buy over the internet. Non-compliance with
policy is a misuse of the purchasing card.
All purchasing policies
apply to internet purchases. These include, but are not limited to, provisions
for the use of Standing Offers and obtaining competitive quotes.
Before making a purchase
over the internet, you must:
- Deal with known merchants.
Only use well known/well
established vendors. Review the vendor's website and read their guarantees,
warranties and return policies prior to making a purchase. The Better Business
Bureau online and other consumer agencies may have information about specific
merchants. Also, you may look for the Canadian Institute of Chartered Accountants'
sponsored "WebTrust" certification.
Use only secure
sites and browsers. To determine if a merchant site is secure, look for:
- an unbroken lock
or key symbol,
an URL that begins
with https://, or
- the words Secure
Sockets Layer (SSL).
Browsers that are acceptable
for purchasing card transactions are version 4.0 (or later) of Microsoft
Internet Explorer or version 4 (or later) of Netscape Navigator. These browsers
use SSL technology that allow your browser to automatically encrypt data
before sending it via the Internet. A Web site is secure when an unbroken
key (as in Netscape) or a lock (as in Microsoft Internet Explorer) appears
in your browser window.
In addition, some merchants
may require an account to be created that uses a password for order entry.
This is a secure method as long as the password is not shared. Passwords
created for these accounts should not be based on personal references (e.g.,
birth dates, phone number, family names or social insurance number) as they
can be easily guessed.
SET Secure Electronic
Transaction TM, is another acceptable technology designed specifically for
online payment security. In addition to encrypting payment information,
it also uses digital certificates to verify that purchasers and vendors
are both authorized to use and accept credit cards.
Never send your purchasing
card number via email. Information that travels over the Internet as
regular electronic mail is not fully protected from being read by outside
parties. All reputable merchant sites use encryption methods that will protect
your private data from being read by others as you make an online transaction.
Read delivery and
return policies and privacy statements. Read the merchant's privacy
policy and explanation of how your information will be protected. Consider
if the vendor stores the credit card number in their database and how they
protect it after the purchase has been conducted. Does the privacy statement
indicate that purchasing profiles and other data will not be sold.
Before you buy, make sure you can return any unsatisfactory items and get
a refund. Sales policies should cover the delivery methods and cost of delivery,
currency, taxes applied, return and refund policy, and a contact number
or email address.
The Province does
not pay GST. You must ensure either that the vendor does not charge GST on your
transaction, or that you have a procedure in place to obtain the necessary
credit. See the section above on Goods and Services Tax (GST).
Keep a record of
the transaction. Enter the record of the transaction on the transaction
log. Back up the transaction by saving and printing the online confirmation
of your order. Ensure that the web site (URL) is identified. Attach the
printed online confirmation to your transaction log and statement. You may
wish to print a copy of the vendor's delivery, return and privacy statements
for future reference. See Chapter 7 of the of this manual for policy regarding
recording of transactions.
Review and reconcile
your transactions routinely,
so that any fraud is identified as early as possible. There have been instances
where a vendor's database of stored credit card numbers has been accessed
through the Internet. Thus, it is imperative that cardholders review and
reconcile transactions as soon as possible. See Chapter 9 of this manual
regarding disputed items.
-
Your purchasing card
is for government purchases only; you must not provide your purchasing card
details to a web site for any other purpose (e.g., surveys or other
instances where you are not making a purchase).
Legally
Encumbered Suppliers
Cardholders may not make
payments to suppliers they know have legal encumbrances (garnishing orders,
third party demand notices, etc.) filed against them. Payments to legally encumbered
suppliers must be passed through the Legal
Encumbrance Branch so that payments can be diverted, as appropriate. For
further information, refer to CPPM E.1.
Other
Government Charge Cards and Accounts
The purchasing card must
not be used to purchase goods and services that other government charge cards
or payment programs are used for, such as:
- purchases normally processed
using the Vehicle Management Charge card; and
- payment for travel-related
expenses normally associated with the travel card unless authority has already
been given to bill the government directly (convention expenses, assured loading
tickets).
Phone
Purchases
Government policy allows
cardholders to arrange purchases by phone. Purchases should be made using secure
telephones, not non-secure ones such as cellular or portable phones
On all phone orders, cardholders
must ensure that they record a description of the item(s) ordered, quantity,
date of order, supplier, and total dollar value of the purchase.
Provincial
Sales Tax on Out-of-Province Purchases
Many out-of-province vendors
are not licensed to collect Provincial Sales Tax (PST) and do not charge it.
Nevertheless, the amount may be due to the province. Contact the Consumer Taxation
Branch, Ministry of Provincial Revenue (604 660-4500 or 1 877 388-4440) for
instructions for paying PST.
Purchasing
in Foreign Funds
The purchasing card is a
convenient method of purchasing in foreign funds. Cardholders may place orders
by mail or over the phone. When the charge is put through, the total is converted
into Canadian dollars by the bank.
When purchasing goods in
foreign funds, cardholders should obtain the current exchange rate to estimate
the total cost in Canadian funds. Exchange rates are readily available from
any financial institution.
Cardholders must estimate
the conversion of quoted prices to Canadian dollars when obtaining expense authority
approval to avoid exceeding either the expense authority or cardholder limits.
The amount appearing on the purchasing card statement is based on the exchange
rate at the time the transaction is processed by the bank and may differ slightly
from the estimated converted value.
Corporate
Supply Arrangements/Standing Offers
Common Business Services
(CBS) and ministries have negotiated agreements (Corporate Supply Arrangements
CSA, Standing Offers SO) with various vendors to supply a range of goods and
services to the government. Terms such as price, quantity, time frame, warranty
coverage and delivery are pre-negotiated, so cardholders taking advantage of
these purchasing agreements can be assured that the comparison shopping has
been done and that pricing and other terms stated represent best value for the
province. Therefore, no comparison quotes need be obtained.
Either a purchasing card
or a Purchase Order on a Standing Offer (POSO, PC199 Ordering PC199 Ordering
#DCV 4064 from Queen's Printer) can be used to purchase items from a Standing
Offer or a Corporate Supply Arrangement. Cardholders should consult with the
vendor to ensure that the purchasing card is accepted, as some Corporate Supply
Arrangement contract terms do not stipulate the purchasing card as a payment
method.
Surcharges
for Using the Purchasing Card
MasterCard International
does not permit its merchants to assess a surcharge for accepting MasterCard.
Purchasing card coordinators should contact the Bank of Montreal's Service Representative
(see chapter 9 for contact numbers) as soon as possible with the vendor name
and address, cardholder name and number and proof of charge when surcharges
are assessed.
Withholding
Tax on Payments to Non-residents
Revenue Canada requires
that an income tax withholding of 15% be taken from all payments of fees, commissions
or other amounts paid to non-resident individuals, partnerships or corporations
in respect of services rendered in Canada. Where the withholding of tax is required,
do not make a payment using the purchasing card unless tax can be deducted from
the payment before being processed by the bank. For further information regarding
withholding tax on payments to non-residents, refer to the Canada Revenue Agency's Guide on Withholding
Tax.
Purchasing
Card Decision Guide
Cardholders may use the
questions below to guide their decisions to use the purchasing card for a particular
transaction and to determine some of the procedures to be followed if the purchasing
card is indicated.
Authority
to Make the Purchase
Have you obtained expense authority approval to initiate an expenditure?
Y |
Proceed to next
question. |
N |
Obtain approval,
according to ministry-specific procedures. |
Is the item within your
transaction limit?
Y |
Proceed to next
question. |
N |
Do not use the
purchasing card. |
Would making this transaction
allow you to remain within your monthly dollar limit?
Y |
Proceed to next
question. |
N |
Do not use the
purchasing card. If this is a recurring situation, contact your expense
authority and purchasing card coordinator to discuss your limit. |
Is the item in a Merchant
Category Code you are restricted from using?
Y |
Do not make the
purchase. If the nature of the purchases you are asked to make is
changing, contact your expense authority and purchasing card coordinator. |
N |
Proceed to next
question. |
Type
of Purchase
Is it an authorized government purchase?
Y |
Proceed to next
question. |
N |
Do not make the
purchase |
Is the item subject to any
ministry-imposed restrictions?
Y |
Follow ministry-specific
procedures. |
N |
Proceed to next
question. |
Is the item subject to any
restrictions? (Refer to the section on Restrictions in this manual.)
Y |
Do not make the
purchase. |
N |
Proceed to next
question. |
Is the transaction for a
business meeting expense?
Y |
Has your senior
financial officer given prior authorization for direct billing? |
| |
Y |
Obtain
pre-approval on a Business Meeting Expense Approval form. |
| |
N |
Do
not use the purchasing card. |
N |
Proceed to next
question. |
Purchasing
Method
Have you obtained at least three competitive quotes if the cost
is over $1,000?
Y |
Proceed to next
question. |
N |
Obtain three competitive
quotes from suppliers and keep this information on file. |
Have you notified the supplier
that the government is GST-exempt?
Y |
Proceed to next
question. |
N |
Advise the supplier
the BC Government is GST-exempt and that GST must not be charged on
the invoice. |
Is it more convenient to
place the order over the phone?
Y |
Place the order
over the phone and follow-up with a faxed confirmation letter if the
supplier requests it. |
N |
Go to merchant’s
premises to conduct the transaction. |
Is the item available on
a Standing Offer or Corporate Supply Arrangement?
Y |
Does the vendor
accept the purchasing card? |
| |
Y |
Complete
the transaction. |
| |
N |
Complete
a Purchase Order on a Standing Offer, if you are authorized to do so,
and do not use the purchasing card. |
N |
Use one-time purchase
procedures to a select supplier. |
| 
