April 10, 2025
As part of our ongoing commitment to ensuring UTMB’s compliance with State and UT System procurement rules and guidelines, UTMB Supply Chain is implementing immediate changes to help ensure best sourcing and procurement practices are followed across the institution. You are receiving this message as you have been identified as a requestor/buyer of goods and services through the eProcurement module in PeopleSoft.
Why are these changes occurring?
This initiative addresses UTMB's internal audit and Supply Chain assessments, highlighting gaps in current procurement practices, such as overuse of Exclusive Acquisition Justification (EAJ) and inadequate documentation. The goal of these changes is to ensure that anyone with procurement privileges is executing those responsibilities appropriately.
How does this affect my procurement practices?
- All requisitions must include the UTMB contract reference.
- Specific quote requirements based on purchase amount off-contract are being reinforced:
- $0 – $14,999: One vendor quote.
- $15,000 – $49,999: Three quotes from different vendors.
- ≥ $50,000: Competitive sourcing event.
- Non-contracted services or products obtained without prior authorization will be documented as unauthorized purchases.
- Payment Only POs, created after goods or services are received, are strictly prohibited.
- Use of EAJ is restricted. All EAJ’s will be reviewed by the Supply Chain Leadership for appropriateness of use.
These changes aim to improve procurement accountability, ensure compliance, and mitigate financial risks.
Having highlighted the main points, let's explore the reasoning behind reinforcing these measures and the detailed effects they might have on your procurement practices.
Updated Procurement SBAR – Reinforcing Established Procedures and Incorporating Audit Findings
Situation
A comprehensive audit conducted by Supply Chain Leadership and UTMB Internal Audit identified critical gaps in the consistent application of State, UT System, and UTMB procurement policies. This communication outlines reinforced procedures and key findings from the 2024 Supply Chain Operations audit to mitigate institutional risk and ensure compliance.
The audit revealed specific weaknesses, including overuse of Exclusive Acquisition Justifications (EAJ’s), inadequate documentation, and insufficient enforcement of procurement policies. These problems are measurable: EAJ’s accounted for 40% of all contracts and $239 million in value between FY2022 and FY2024, with a 35% increase in usage from FY2023 to FY2024.
The proposed corrective actions are achievable through targeted policy updates, enhanced process and systems controls, and reinforced approval processes, enabling UTMB to align with regulatory expectations. These efforts are highly relevant, as they are essential to mitigating financial risks, ensuring compliance, and improving overall procurement efficiency.
Background
- Overuse of Exclusive Acquisition Justifications (EAJ’s), especially under the Best Value category.
- Inadequate segregation of duties: individuals could approve EAJ’s, submit requisitions, and approve purchase orders without oversight.
- Off-contract spending despite available contracted alternatives.
- Insufficient supporting documentation for EAJ’s, leading to approval of vague or unjustified requests.
- Absence of monthly oversight reporting to detect EAJ usage trends and anomalies.
Assessment
In response to audit findings and internal risk assessments, UTMB has initiated a series of methodical and immediate procedural reinforcements to improve procurement accountability and ensure compliance with institutional, UT System, and State policies.
Recommendations
Contract Authority Required for All Requisitions
Under Texas state procurement law, Contracting Authority refers to the legal authority granted to a person, office, or organization to enter into binding contracts on behalf of a governmental entity, such as a state agency, public university, or institution. Under the UT System Board of Regents Rules this authority is delegated by the President only to selected individuals within our institution. If an individual initiates a purchase or signs an agreement without proper delegated contracting authority, it is considered a policy violation, and such transactions may be void, require retroactive justification, or trigger an internal audit or disciplinary action.
Requisitioners must include the UTMB contract reference for all on-contract purchases in requisition submissions.
All Requisitions without Contract Authority
$0 – $14,999: One vendor quote.
$15,000 – $49,999: Three quotes from different vendors are required.
≥ $50,000: Competitive sourcing event
Restricted Use of EAJ’s
- The approval of EAJ will be determined by the Supply Chain Organization per policy.
- EAJ’s will be reset this coming fiscal year. No new purchases will be made using old EAJ documents.
- SOPs will be updated and aligned with the Contract Management Handbook.
- Regular reporting and review cycles will be established.
Payment Only POs are Strictly Prohibited
- A Payment Only Purchase Order (PO) refers to a PO created after a good or service has already been received, solely for the purpose of processing payment. This practice is not compliant with procurement policies and is considered an unauthorized purchase since it bypasses the required procurement approval and sourcing processes that must occur before goods or services are obtained.
- Non-contracted services or products obtained without prior authorization will be documented as unauthorized purchases.
- In accordance with Rider 103, UTMB is prohibited from paying for goods or services unless there is a valid, approved Purchase Order or UTMB-executed Contract in place before the transaction occurs.
- More information can be found on the Procurement Policies and Procedures page.
Policy and Procedure Governance and Training
- Training has commenced and will be ongoing until the end of the fiscal year.
- A hard-wired training approach is in discussion with HR / Onboarding.
- Training sessions for ePro requester users will be held over the next few months.
Monthly Reporting
- Executive reports will track EAJ usage, identify anomalies, and compare with other sourcing methods (RFPs, GPOs, Direct Negotiations).
- Corrective action will be required for all instances of procurement out of compliance with policy.
Next Steps
- Ongoing collaboration between departments and Supply Chain to promote transparency and compliance.
- Continuous policy refinement, employee education, and reporting enhancements to ensure procurement integrity.
For additional information, please refer to the Contract Management Handbook FAQ document.