Acquisition Types - 304

Acquisition types are a high-level or general description of what is being purchased.  Buyers must identify one of the following four acquisition types for every procurement that will result in a contract (a FI$Cal purchasing “PO” is also considered a contract):

• Non-IT Services
• Non-IT Goods
• IT Goods
• IT Services

The following are listed in FI$Cal as acquisition types, but must not be used by buyers executing contracts and conducting acquisitions under DGS’ procurement authority:

• Encumbrance Only:
  • Only to be used by accounting personnel to encumber funds for transactions that do not require a contract (aka “agreement” or” Purchase Order”) such as the following:
    • Court Orders / Settlements
    • Payroll Estimates
    • Workers Compensation Claims
    • Retirement Cash-Out / Payout
    • Debt Services
    • Travel / CalATERS
    • Grants
  • It is prohibited to use the “Encumbrance Only” acquisition type for procurement transactions such as conducting acquisitions, executing any contract (aka “agreement” or “Purchase Order”), and CAL-Card transactions. The use of the “Encumbrance Only” acquisition type for prohibited transactions will result in non-compliant transactions which may jeopardize purchasing authority granted by the DGS/PD.

• Telecommunications (aka “Telecom”):
  • Only to be used when executing contracts or conducting telecommunications acquisition under CDT’s procurement authority.

Determine the Main Purpose Non-IT vs. IT

To determine whether a contract is for IT or non-IT, the buyer must consider the predominant purpose or value of the purchase and whether IT skills and knowledge are involved as the primary purpose of the contract or whether such knowledge or skills are used to further an overarching purpose.

Many items depend on IT to operate, yet they may not be classified as IT.

Example 1:

Ten personal computers (PC) keyboards are purchased for replacement stock to issue when an existing keyboard fails. The purchase of PC keyboards is classified as IT. A PC processes data electronically and the keyboard is a critical component to the operation of the PC.

Consequently, the purchase is made under the IT purchasing authority.

Example 2:

A department purchases a vehicle for enforcement use. The vehicle has been fitted with an electronic mapping system and telecommunications equipment.

The purchase is made under the non-IT purchasing authority after securing required approvals from DGS Office of Fleet and Asset Management. The features of the car are secondary to the purpose of the vehicle, which is a means of transportation.

Distinguish Goods from Services

When determining if an acquisition is for goods or services, the following concepts should be considered:

• Does the contract have as its sole or main purpose the acquisition of tangible items, such as equipment, parts, supplies, or other merchandise?
• What is the main value of the contract – the good or the service? If the main value is a good with minimal or no services, it is handled as a good.
• If the main value is the service, the transaction should be treated as a service contract.
• Non-IT services included with the purchase of non-IT goods may not exceed $9,999.99 and must be directly related to the purchase of the goods, such as set up or installation. Non-IT services such as maintenance is not allowed and must be procured separately unless available on a leveraged procurement agreement (LPA).
• Large-scale system integration projects are classified as IT services.

Example of goods vs. services

Example #1:

A business solution is required that uses specialized software. Currently a commercial-off-the-shelf (COTS) product is not available to meet the department’s need. The department’s business needs can be met by developing a customized software application. The main purpose of the purchase is the technical expertise that creates a software product to satisfy the department’s business problem. The request would be treated as an IT service.

Example #2:

A manager has requested new furniture for the office. The buyer needs to purchase the new furniture and acquire the services necessary to position that furniture in the office. The main value is the furniture. The request would be treated as a non-IT goods contract.