The warning message that currently alerts agency personnel that a Purchase Order exceeds the Outline Agreement (Contract) has been changed to a hard error.
Agencies will continue to receive the warning message for purchases made against a State Contract.
This change has been implemented to help prevent overspending on purchases made against Agency Contracts.
The hard error is triggered when:
1. The Purchase Order line item quantity and price exceeds the Contract line item quantity and price.
For example, line item 1 on the Agency Contract lists 10 as the quantity, with the price of $50.00 for each material. Line item 1 on the Agency Purchase Order cannot exceed 10 ordered materials nor can the price exceed $500.00.
2. The Purchase Order entries have exceeded some contract line item quantity and prices while some of the Purchase Order line items have fewer or no purchases against the defined quantity and price.
In other words, agencies can no longer use different quantity/price combinations on Purchase Orders, while remaining under the total quantity/price established by the Contract.
For example, an agency Contract contains four (4) line items, each with a quantity of five (5) and the price of $100.00. Agencies cannot “balance” spending by adjusting quantities and/or prices between all line items; i.e., purchasing seven (7) quantities at $100.00 on line item 1, and purchasing three (3) quantities at $30.00 on line item 2.
3. The Purchase Order(s) total cannot exceed the target value [sum of line items] of the Agency Contract.
For example, the Agency Contract contains two (2) line items. Line item one (1) lists 5 as the quantity, with the price of $100.00 for each material. Line item two (2) lists 10 as the quantity, with the price of $500.00 for each material.
The total target value of the Contract is $5,500. Agency Purchase Orders made against the above Agency Contract cannot exceed the line item quantity and amounts nor can they exceed the total target value [sum of line items] of the Contract.
Purchase Order A orders a total of three (3) material units against Line Item 1 of the above Agency Contract.
Purchase Order B orders a total of two (2) material units against Line Item 1 of the above Agency Contract.
Purchase Order C can still order materials against line item 2 of the Agency Contract but not from Line Item 1.