Managing Potential Institutional Conflicts of Interest: Purchasing

Explanation:

A conflict, or the appearance of a conflict, can arise in purchasing situations when a University official covered by this policy has a financial, personal, or business interest in a vendor whose products or services are being considered for purchase at the University. These conflicts are generally regulated by Minnesota State Statute 15.43, Acceptance of Advantage by State Employee, Administrative Policy: Individual Conflict of Interest, Administrative Policy: Purchasing Goods and Services and the Board of Regents Policy: Gifts Received and Given by Regents and University Officials.

Example of potential conflict situation:
The University senior officer owns 25% equity share in a company that manufactures office equipment. A University department wants to purchase $25,000 worth of equipment from that company.

Process for Potential Conflict Identification and Management:

This procedure covers potential conflicts of interest in purchasing that are identified through the central purchasing process. Potential conflicts in purchasing that are disclosed by University officials through their annual financial disclosure statements are handled accord to Procedure 2.1.19.6, Managing Potential Institutional Conflicts of Interest: Disclosures by University Officials and Other Individuals.

1. Identify the potential conflict:

   Buyers and staff in Purchasing Services may identify potential conflicts when they participate in or review purchasing decisions. They refer the potential conflict to the Director of Purchasing Services. Employees or other individuals concerned about possible conflicts of interest may report situations to University officials.

2. Review any potential conflict:

   The Director of Purchasing Services conducts a written assessment of the potential conflict.

3. Create a management plan, if needed:

   If a potential institutional conflict of interest could develop, the Director may use the Institutional Conflict Review Committee as appropriate to draft a plan to manage, reduce, or eliminate the potential conflict. If the conflict cannot be adequately addressed, the purchase will not be approved.

4. Review the management plan, if needed.

   The Vice President and Chief Financial Officer will review the assessment and act on the management plan, as appropriate, or refer it to the Regulatory Affairs Offfice.

5. Determine whether the potential conflict management plan must be approved by the Regents

   For management plans referred to the Regulatory Affairs Office, the Executive Committee of the Institutional Conflict Review Committee, along with the Regulatory Affairs Officer and the Vice President and Chief Financial Officer will evaluate whether the potential conflict management plan fits the criteria for Regents' approval (it presents an unusually significant financial impact, it involves the president, it raises serious policy issues or has a significant public impact on the University's mission or reputation, or it needs their review under the Reservation and Delegation of Authority policy). If so, the President or delegate will bring the plan to them for review and action. If not, the Regulatory Affairs Officer will summarize the management plan in an annual report to the Regents.

6. Implement the management plan

   Once the Vice President and Chief Financial Officer or Regents approve the management plan, the Director of Purchasing Services works with the appropriate senior officer to implement conflict management decisions.

7. Oversight

   The Institutional Conflict Review Committee verifies post-approval compliance with the management plan and addresses any issues that arise.