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Competitive Bidding Policy
This policy applies to The Johns Hopkins Health System Corp. (JHHS) and all affiliates. It does not apply to energy purchases made by JHMI Utilities LLC.
Purchases Under Federal Grants
Competitive bidding must be performed for all purchases under federal grants that exceed $3,000. For expenditures under federal grants that are greater than $3,000 but less than $150,000, quotes must be obtained from an adequate number of qualified sources (per the Federal Acquisition Regulation), and no cost or price analysis is required. For all purchases under federal grants, this policy should be followed, but Policy FIN028, Grant Accounting, should also be referenced for any additional requirements.”
Purchases Not Under Federal Grants
Competitive bidding is required for the procurement of supplies, equipment, furniture and services with total estimated costs of $100,000 and higher. Rationale to waive the requirement for competitive bidding may be provided through an appropriately completed Sole Source Justification Form or identification of a current and appropriate JHHS or GPO contract. Reference to a current JHHS or GPO contract should be documented within the internal notes section of the SAP shopping cart (or affiliate equivalent materials management information system tool).
For transactions from $10,000 to $100,000, benchmarking and/or competitive quotes are required. Transactions below $10,000 do not require benchmarking or competitive quotes to be obtained, although Purchasing Departments should seek to obtain products or services at competitive prices. Prior to executing a purchase for a transaction up to $100,000, the respective Purchasing Department must determine whether: a) an appropriate contract exists, under which the product/service can be purchased; b) the product/service is on a bid schedule; and/or c) the product/service can be grouped with another transaction to realize additional cost savings. “Purchasing Departments”, for the purposes of this policy, include Supply Chain Shared Services (SCSS), Facilities Design & Construction (JHH, JHBMC, HCGH) and Facilities Management (JHH, JHBMC, HCGH). Additionally, each affiliate shall implement procedures/processes to comply with this policy.
The following guidelines apply to the procurement of goods and services. See below for guidelines specific to construction projects.
A. Total estimated cost of less than $10,000:
1. Transactions below $10,000 do not require benchmarking or competitive quotes to be obtained.However, the respective Purchasing Department must determine whether: a) an appropriate contract exists, under which the product/service can be purchased; b) the product/service is on a bid schedule; and/or c) the product/service can be grouped with another transaction to realize additional cost savings.
2. Purchasing Departments should perform a commensurate level of due diligence on pricing options to ensure that products or services are obtained at competitive prices.
B. Total estimated cost of $10,000 to $100,000:
1. If the requestor believes that the requested product/service should be sole sourced, he/she should document the requested vendor and rationale within the shopping cart (or affiliate equivalent materials management information system tool). However, the respective Purchasing Department will review the rationale and determine whether:
a. the sole source decision is appropriate;
b. a sole source may be appropriate, but the Sole Source Justification Form should be completed to fully document the rationale and conclusion; or
c. a sole source is not appropriate, and the steps below should be followed
2. The respective Purchasing Department must determine whether: a) an appropriate contract exists, under which the product/service can be purchased; b) the product/service is on a bid schedule; and/or c) the product/service can be grouped with another transaction to realize additional cost savings.
3. If an applicable contract exists, the Purchasing Department will award the purchase order in accordance with the contract. If condition (b) or (c) in #1 applies, the Purchasing Department will further analyze the relevant opportunity.
• Note: If the Purchasing Department or the requestor believes that the product/service may be available from another vendor that a price lower than an existing contract, then the potentially lower price should be documented within the shopping cart (or affiliate equivalent materials management information system tool). The Purchasing Department will then verify whether the lower price warrants the alternative vendor being selected, based upon the products/services requested. The Purchasing Department will provide the rationale for its determination to the requestor and the parties will discuss until resolution, if required.
4. The Purchasing Department, through benchmarking, negotiation, and/or bidding, will identify the preferred vendor and pricing.The steps and results of these activities will be documented in a summarized fashion and communicated to the requestor.
5. If the requestor does not agree with the Purchasing Department’s vendor recommendation, the parties will work together to reach an agreement. Summarized documentation of any alternative decisions should be added to the internal notes section of the shopping cart (or affiliate equivalent materials management information system tool).
6. A purchase order will be issued to the agreed upon vendor.
C. Total estimated cost equal to or greater than $100,000, with the exception of purchases under an existing and appropriate JHHS or GPO contract1, requires that:
1. For capital procurement requests, the requestor will review and adhere to the purchasing capital quote guidelines found in JHHS Supply Chain Website, http://ssc.jhmi.edu/supplychain (Capital Quotation Guidelines).
2. For time sensitive procurements, the requestor will communicate timeline and related project information to the Purchasing Department.
3. The requestor will provide to the Purchasing Department all relevant information to facilitate the competitive bidding process and/or negotiation, including, if known, suggestions of competing vendors and budgetary price quotations. The Purchasing Department will recommend the bid documents and criteria to be used for the requestor’s approval.
4. The Purchasing Department will conduct the competitive bidding process, requesting additional required information from the requestor.The competitive bidding process will include the solicitation of bids from no less than three legitimate vendors.In any case where bids are obtained from less than three vendors, the Purchasing Department will document the rationale within the internal notes section of the shopping cart (or affiliate equivalent materials management information system tool).
5. Once the bid evaluations have been completed, a vendor recommendation will be communicated to the requestor. Upon the requestor’s acceptance and execution of any required agreements, a purchase order will be issued.
It is important to note that this document includes the overall JHHS policies related to competitive bidding and related activities, including the exceptions noted below. Each Purchasing Department should establish procedures by which it will execute each type of purchase, including roles and responsibilities of those involved in the process. These procedures should be approved by the respective Vice President or higher.
III. POLICY EXCEPTIONS
A. In certain cases, the policies listed above may not be appropriate to satisfy the particular business requirements or needs. Exception to, or variations on, those policies fall under the following categories:
1. Emergency Procurements
2. Compatible Product Requirements
3. Recently Bid Products/Services
B. Emergency Procurement Process
1. Definition: An emergency procurement under this policy is required when circumstances dictate the need for a purchase to fill an immediate, unexpected need when there is insufficient time to conduct competitive bidding. These procurements should be reserved for situations in which there is an immediate threat to the safety of patients, staff and/or visitors, or when the ability to conduct core operations is in jeopardy.
2. For all procurements, approval must be obtained in accordance with the authority limits within Policy No. FIN004, Required Levels of Approval Authority: Purchases for Non-Capital Goods and Services.
3. When requesting an emergency procurement, the requestor should:
a. Document the need for the emergency procurement, including:
i. The issue necessitating the emergency procurement
ii. Rationale for the emergency – i.e., the specific threat to JHHS operations, personnel, patients, visitors, etc.
iii. The product/service required
iv. The preferred vendor and a brief explanation of why the vendor should be used
b. Obtain written (i.e., via email) approval from an authorized approver
i. If the emergency requires immediate attention and only verbal approval can be obtained from an authorized approver, then the requester should document the verbal conversation and obtain written confirmation of the approval as soon as possible.
c. Submit the written approval (or documentation of verbal approval) to the respective Purchasing Department for authorization to proceed.If the emergency requires immediate attention and it is not possible or feasible to obtain Purchasing Department authorization before procuring the product or service, then the Purchasing Department should be notified as soon as possible.
d. Upon authorization to proceed from the Purchasing Department (if applicable, per #3), engage the vendor.
e. Submit a Purchase Order as soon as possible to formally document and record the purchase request, approval and details.
C. Compatible Product Requirements
1. In some cases, an existing product may require specific replacement parts, supplies, or compatible equipment that can only be purchased from a single vendor. In such cases, rather than completing a Sole Source Justification Form, the requestor should indicate within the shopping cart notes that the specific item requested is required and why no substitute product or vendor will suffice.
D. Recently Bid Products/Services
1. If a specific product or service was procured through the competitive bidding process within the past six months, the same product or service may be procured without engaging in the bidding process again. If known to the requestor, he/she should indicate within the shopping cart (or affiliate equivalent materials management information system tool) notes that the product/service was bid within the past six months and request that the purchase be made without conducting competitive bidding.
A. Requesting Department
1. Provide Purchasing Department with all required request and vendor documentation, as well as all required departmental approvals for the purchase request. As required, also complete and provide Sole Source Justification Form.
2. Comply with the required steps above for Emergency Procurements.
B. Purchasing Department
1. Review submitted shopping carts and verify that all required information is included. Review requests for sole sourced products/services, and per the guidelines above: determine whether requested products/services can be procured under an existing contract, are on a bid schedule and/or can be grouped with other procurement requests; determine validity of sole source request; conduct additional research/benchmarking, if required; work with the requesting department to resolve any disputes over the applicability of sole sourcing. Conduct competitive bidding events when required.
2. Authorize Emergency Procurements in accordance with guidelines above.
Director of Procurement, JHHS
VI. REVIEW CYCLE
Three (3) years
SVP Finance & CFO of JHHS
1 See #2 in the section above related to the procurement of items under existing contracts. Similar to that process, should
the Purchasing Department or the requestor believe that a lower cost is available with another vendor such that a competitive
bidding process would be practical, then the below process may be conducted.