MCPPO Contracting Principles Flashcards

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Questions and Answers

What are the public purchasing objectives?

To obtain materials, services, and facilities (correct)

To limit vendor options

To minimize costs (correct)

To ensure open competition (correct)

What does 'Price' refer to in a contract?

Contract amount

What does 'Cost' refer to?

What is paid to the vendor and other associated costs

What are key control activities related to procurement?

Establishing authority for transaction approval Signup and view all the answers

What is meant by segregation of duties?

No employee should handle every aspect of a transaction. Signup and view all the answers

What must be monitored in an internal control system?

Transactions and individual performance Signup and view all the answers

What are the four elements of contract formation?

Mutual assent, offer and acceptance, consideration and definiteness of contract terms. Signup and view all the answers

What is 'mutual assent'?

A meeting of the minds between parties Signup and view all the answers

What constitutes an 'offer' in contract law?

An intentional proposal to do something. Signup and view all the answers

What is 'consideration' in a contract?

Giving up of value Signup and view all the answers

Can a contract be formed without appropriation funds?

False Signup and view all the answers

What are the essential phases of the purchasing cycle?

Needs assessment Signup and view all the answers

What are 'blanket contracts'?

Contracts based on estimated annual requirements Signup and view all the answers

What does 'quality requirements' refer to?

Standards of acceptability for supplies or services Signup and view all the answers

What is the Operational Services Division (OSD)?

A division responsible for statewide contracts Signup and view all the answers

Does MGL c7, section 22A pertain to construction services?

False Signup and view all the answers

What are the statutory rules governing payment of bills by cities and towns in the Commonwealth?

City auditor inspects bills; town accountant examines and approves payments. Signup and view all the answers

What is required for record keeping under MGL c30B?

Maintain a file on contracts over $10K for six years. Signup and view all the answers

Study Notes

Public Purchasing Objectives

Primary aim is to acquire materials, services, and facilities for public organizations at the best available price through open and fair competition.

Price vs. Cost

Price refers to the contract amount.
Cost encompasses payments made to vendors and other expenses such as time, research, and administration associated with the procurement process.

Key Control Activities for Procurement

Establish clear authority for transaction approvals.
Designate specific responsibilities for executing transactions.
Implement segregation of duties to prevent fraud and errors.
Maintain control over access to valuable assets and records.
Continuous monitoring and assessment of the internal control system.

Segregation of Duties

Prevents any single employee from authorizing, executing, and recording a transaction independently, reducing the risk of fraud and collusion.

Control of Access to Assets and Records

Secure physical storage of assets and maintain a sign-out system for valuable equipment.
Limit access to records based on job responsibilities to enhance security and accountability.

Monitoring

Regular review of transaction processes and reports to ensure accuracy and efficiency of internal controls, weighing the cost of controls against the benefits.

Formation of a Contract

Four essential elements: mutual assent, offer and acceptance, consideration, and definiteness of contract terms.

Mutual Assent

Agreement between parties characterized by a "meeting of the minds" regarding contract obligations.

Offer and Acceptance

A valid contract requires a conscious offer from one party and intentional acceptance from another, detailing essential terms such as parties involved, subject matter, and payment terms.

Consideration

Value exchanged in the contract, usually money, but can include other forms of value.

Definiteness of Contract Terms

Contracts must specify parties’ names, subject matter, pricing, essential terms, and conditions. Ambiguities can render contracts unenforceable.

Prior Appropriation Requirement

Funds must be appropriated before contract execution, and expenditures cannot exceed available appropriations.

Contract Authority

Public officials must possess authority to enter into contracts for them to be valid and enforceable.

Authority Types

Express Authority: Direct, written or verbal permission given to an employee to act.
Implied Authority: Necessary authority implied for an employee to perform their job functions effectively.

Compliance with Laws

Non-compliance with applicable laws, such as bidding laws, can invalidate contracts and prohibit payment to vendors.

Phases of the Purchasing Cycle

Consists of needs assessment, source selection, and contract administration.

Needs Assessment Activities

Involves planning, market research, value analysis, cost calculations, and establishing specifications.

Blanket Contracts

Established based on estimated annual needs, specifying prices and maximum quantities; used for items like fuel oil and office supplies.

Collective Purchasing Agreements

Multiple jurisdictions can collaborate to solicit bids, with one acting as the lead jurisdiction.

Market Research Sources

Utilizes periodicals, trade journals, purchasing associations, and vendor community insights for informed purchasing decisions.

Value Analysis

Evaluates the function, cost, and efficiency of products or services to identify the best approaches for procurement.

Life-Cycle Cost Calculation

Considers total costs associated with ownership, including purchase price, operational, and maintenance costs, minus any residual value.

Standard vs. Proprietary Specifications

Standard specifications encourage bulk purchasing and reduce complexity, while proprietary specifications restrict competition and should be used sparingly.

Quality Requirements

Establish standards for acceptability and necessary vendor qualifications, crucial for ensuring best value contracting.

Source Selection Processes

Involves acquiring products or services from vendors via existing contracts or soliciting new bids while ensuring compliance with procurement laws.

Statewide Contracts

Allow local jurisdictions to purchase without formal competitive processes under specific conditions outlined in MGL c7, section 22A, excluding construction services.

Competitive Procurement

Adheres to defined solicitation rules, ensuring a fair procurement process and valid contracts.

Contract Administration Components

Includes quality assurance, financial oversight, vendor evaluation, and thorough record-keeping practices.

Vendor Evaluation

Essential for documenting both product and vendor performance, preserving warranties, and enhancing future procurement specifications.

Record Keeping Requirements

Contracts over $10,000 must have maintained files for six years post-final payment, ensuring they are auditor-ready as per MGL c30B standards.

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Description

Explore the key principles of public purchasing through these flashcards. Understand objectives such as obtaining necessary materials and services at the best prices, while ensuring fair competition. Perfect for anyone studying public sector contracting principles.