Number IPP 11

Dated: 5/15/07
Replaces: 02/06/02

Internal Policy and Procedures

Change and Cancellation Orders

POLICY:

A cancellation of requisition/order will be processed when a department no longer requires the item(s) from that vendor.

A change to the order will be processed, to correct an item(s), price(s), term(s) or condition(s) that differs from the existing order.

PROCEDURES:

A. CANCELLING A REQUISITION

If a requisition has been entered at Purchasing Services, and the department then wants it cancelled, Purchasing will cancel the requisition on the purchasing system and Accounting is automatically notified to cancel the requisition (via an electronic reporting system.)  The  text message code (CA/CAN) will be used only when there has been nothing paid against a requisition.  If some monies have been paid, the text message code (CH/CHG) will be used and will be processed as a change order. 

If a requisition has not been entered at Purchasing Services, and the department decides they don't want the items and you have it in your assigned requisitions, call department to request them to cancel requisition on 3270. Note on requisition "cancelled by __________ at department", highlight with an "X" and send to file.

B. CHANGE AND CANCELLATION ORDERS

A request for a change order often requires judgment on the agents' part. The agent must file/note documentation to support the change if it exceeds $100. Events that would trigger a change order for all open PO’s (either a specific or blanket order):
 

  • The Vendor Number changes.
  • The Vendor Name changes.  Accounting Services has requested that Purchasing always issue change orders for name changes (for their audit tracking purposes).
  • A key element of the contract against which the PO has been issued changes (FOB, terms, items ordered etc).
  • A key element of the order has changed (FOB, terms, referenced documents, item ordered etc).
  • The scope of the deliverable service changes significantly.
  • Additional items were added to the order by the department.
  • The vendor requests (and receives agent approval for) a language change on the PO.
  • The department wishes to change a beginning and ending date to coincide with a grant term.

Things that would NOT trigger a change order:

  • The department changes the funding."

1.The following information is needed to process a change or cancellation order:

1.1    Purchase order number.
1.2    Item(s) to be changed or canceled.
1.3    Reason for change or cancellation order.
1.4    Name of person requesting change or cancellation order.
1.5    Date change or cancellation order request received.
1.6    Has the department changed/canceled with the vendor? If yes, obtain vendor contact
         name and date. If no, see #3.
1.7    Does the vendor require a copy of the change or cancellation order? (See #3)

2.   The agent of record is responsible for approval and issuance of a change and/or cancellation order.

3.   The agent will ensure that the vendor has been appropriately notified of the change or cancellation order. The agent/designee will release the change or cancellation order within one working day of notification. No print change order (CHN) will be issued if the items have been received and accepted by the department. Or if a vendor requests to have a copy sent. The same will apply if the vendor does not need a copy of the cancellation order.

3.1    An order message on the purchase order is required and should include the reason, date of verbal change or cancellation to vendor, and the full name of person accepting verbal change or cancellation order. Use text message codes (CHG) for a change order or (CAN) for a cancellation order (see 4.3 and 4.4).

3.2    Document the reason and/or source for the change or cancellation order with an order action and/or vendor file.

4. If an attempt to cancel an item(s) or order reveals an item(s) has been shipped, the department must be contacted for further direction.

4.1    If a return is required, the department person calling the vendor, regardless of the dollar value of the item(s), must obtain vendor authorization for return of item(s) before change order or cancellation is completed. (See 3.2)

4.2    A Return Material Authorization (RMA) may be required by the vendor. For return of unwanted material with value of $50,000 or more and for capital equipment defined as having a value of $5,000 or more or having a useful life of two years or more. (see PPP #7).

4.3    If cancellation, restocking, or any other charge is required, the agent will review and determine validity of the charge and may negotiate with the vendor. When agreement has been reached, the agreement is documented. (See 3.2)

4.3.1    The order type must be CH/CHG (change order). The description of the order message must clarify to the vendor the reason for the change order. The restocking or cancellation charge is entered as an amount on one of the items, and must be explained in the order message screen.

4.4    If the item has not been shipped and there will be no charges against the order, the order type should be CA/CAN (Cancellation). In the order message screen, use the CAN text message and explain the department no longer requires the items or whatever the reason for cancellation.

When doing a change or cancellation order, you must update at least one item prior to updating the ship to and F11 screen.

5.   Release of a change or cancellation order on the purchasing system updates the order summary information and changes or cancels either part or all of the purchase order.

C. RETURNING A REQUISITION TO THE ORIGINATING DEPARTMENT.

If a department wishes to have a requisition returned to their department, and the agent’s discretion is in keeping with this request, the requisition may be returned under the following process:

1.   If the requisition has been entered into the main purchasing system, but not released, it must be completely canceled prior to returning it to the department by the process outlined in this IPP (Also see Cancel/Combine Procedures, Purchasing System Guide).

2.   The agent must return the requisition to the purchasing pre-audit staff so the requisition can be documented as being returned to the department.

NOTE:  Do not return requisitions to the originating department if a purchase order has been released.

REFERENCES:

PPP 7 (Return Material Process)
Uniform Commercial Code (UCC) #2-201