Source and Price Justification (01.03.22)

Happy New Year from Procurement!  To start off the new calendar year we thought it would be good to take a step back and describe, at a most basic level, what Procurement is tasked with doing to make sure that your Purchase Order can be processed.  We can condense all of what we are doing down to being able to justify the source and price of the good or service that we are buying.  Let’s take a look into how that is done. 

Source Justification 

Source justification is the process where Procurement determines that the actual source of where we are buying a good or service is appropriate.  The process generally starts in one of two ways: 

  1. Competitive Procurement: Procurement may compete, either formally through and RFx (RFQ or RFP) process or informally through quotes received from multiple suppliers.   
  2. Sole Source Procurement: This justification occurs when it is determined that there is only one legitimate source for the goods or services available in the marketplace, and that substitute goods or services are not available or acceptable.  Procurement will work with the requesting department to understand the nature of the need.  The department will need to complete the Sole Source Justification form to document the nature of the sole source request.  Procurement makes the final judgement on all sole source requests. 

Source justification also can include the negotiation of terms and conditions, warranties, scope of services, and other details.  Procurement can help you navigate these this situations and give you guidance on the best path forward. 

Price Justification 

Price justification is the process where Procurement determines that the price being paid for the good or service is fair and reasonable.  When competitive procurement is employed, price justification is satisfied at the same time as source justification.  In sole source situations, other methods are used to decide if the price of the good or service being purchased is fair and reasonable.  These other methods may include comparing pricing to other similar goods or services, examining what the University paid for like or similar items in the past, and requesting additional details from the supplier. 

In all situations, Procurement is here to help guide you through the process and get your goods or services ordered in a timely manner.  If you have questions, please reach out to the purchasing staff responsible for that particular purchase.