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Advisory Number: 5
Date Issued:

7/12/2012

Date Last Updated:

7/12/2012

Advisory Name: Encumbering a Contract Transaction in the Statewide Financial System

Subject: Correctly creating contract related purchase orders in SFS and understanding their status  

Guidance:

Creating a Contract Related Purchase Order

When creating purchase orders (encumbrances) for contract transactions in the SFS, agencies must ensure all data is entered accurately to avoid delays.  There is no ability for either the agency or OSC to modify a purchase order once its status has been set to “Pending OSC.”  Important steps include:

  • Selecting a contract ID when creating the PO.  Failure to associate a PO to a contract will result in the PO acting as a Stand Alone PO in SFS.
  • Selecting the appropriate contract amendment sequence number. The PO must be associated with the correct amendment sequence if multiple amendment transactions exist in the SFS for the contract.

When establishing the PO amount, agencies need to understand:

  • The total of all contract encumbrances (POs) associated to an amendment sequence cannot exceed the transaction amount for that specific amendment. 
  • Contract transactions with a negative value - to reduce a contract amount (“Maximum Amount”) - can only be created in the SFS after the agency has reduced the encumbered amount (total value of purchase orders) to the revised contract amount. A contract amount cannot be reduced to a value lower than the amount encumbered.

  • If during its contract review, BOC determines that an agency did not encumber sufficient funds, the agency can create additional POs against the transaction. 

  • BOC is unable to reject a PO associated to a contract so that it may be resubmitted at a higher value or for any other reason. 

The PO Date must fall within the contract period.  For an amendment transaction that extends the Expire Date of the contract, the PO Date must fall within the contract period reflected on the Contract Header.  Note: Since the Contract Header does not reflect the amended Expire Date prior to BOC approval of the transaction, the selected PO Date must be within the already approved contract period.

 “Request PO” status

  • For a particular amendment sequence, Request PO status indicates BOC has requested that the agency create a PO (encumbrance) against the transaction being audited.

  • On the Contract Header will remain at Request PO once a PO has been requested for amendment sequence 0.  This status will not change when sequence 0 is approved or revert back when a subsequent amendment transaction is processed.

BOC Approval

BOC’s request for a purchase order should not be interpreted to mean that the contract transaction is approved or that it will be approved.  The request for the purchase order is an indication that the BOC audit of the transaction has reached the point where submission of the purchase order is appropriate.  BOC approval/non-approval of a transaction will be displayed as the status for the specific amendment sequence. 

 
References: Job Aid JAA-CN210-004, Encumbering a Contract