Office of Origin: Purchasing
Original Date Adopted: 10-26-93
Dates Reviewed: 3-08-17, 4-27-18
Last Date Modified & Approved: 4-27-18
The procedures herein have been developed to ensure that Lake Michigan College (the College) obtains goods and services in an efficient and prudent business manner and in accordance with other College policies and procedures.
Authority to Purchase
Many situations may constitute a contract under Michigan law. Basically, Black’s Law Dictionary states that a contract is “a verbal or written agreement between two or more persons which creates an obligation to do or not to do a particular thing.” One type of contract is the purchase contract.
The Board has authorized the President and certain staff to bind the College by entering into contracts on behalf of the College; see policy entitled “Authority to Bind College to External Agreements” for details.
Although departments are allocated funds in the budgets for a given period, this allocation is an authority to requisition, not to purchase. Only those authorized in the “Authority to Bind College to External Agreements” policy may approve purchase contracts. Furthermore, purchases may only be made if there are adequate budgeted funds over which the purchaser has authority, or with written approval by the VP Finance to exceed allocated budgeted. Individuals making unauthorized or unapproved purchases will be subject to disciplinary action, up to and including termination.
Fund, Organization, and Account Codes
Fund, organization (org), and account codes are established by the Finance Office. Orders to suppliers and other departmental transactions may be processed only against org codes that have sufficient budgeted funds and that have the approval of an individual authorized to charge to the org code.
Conflict of Interest with Vendors
Employees of the College are expected to conduct business according to the highest legal and ethical standards. For the protection of the College as well as the employee, employees must maintain a high degree of integrity in dealing with all past, current, and potential vendors providing goods and services to the College.
All College employees are to avoid accepting any kind of gratuity, tips, or gifts, including merchandise, cash, services, entertainment, etc. It is essential to both the College and its suppliers that all decisions and actions regarding purchasing are based on proper business considerations and are not influenced in any way by personal obligations. See the “Gifts & Gratuities” policy for details.
The Purchasing Department (Purchasing) is charged with the responsibility of conducting College purchasing functions in a manner that results in the greatest benefit to the College while upholding the ethical practices of the purchasing profession. The Purchasing subscribes to the National Association of Educational Buyers’ (NAEB) code of ethics, which governs the relationships between purchasing professionals and their suppliers.
Sales Tax Exemption Status
The College (other than Mendel Center Operations) is exempt from all federal, state, and local taxes. Although most commonly used vendors will have a Tax Exempt Certificate on file for the College, advise each vendor with whom business is done that the purchase is tax exempt. In addition, College purchase orders (PO) indicate tax exempt status on the face.
For those vendors who need a Tax Exempt Certificate, Purchasing will provide such on request. Purchasing also has tax exempt certificates from states other than Michigan, which may be particularly useful when travelling. Contact Purchasing for further information.
Note that the College’s tax exemption number can be found at the bottom of a College procurement card (procard).
For purchases related to Mendel Center Operations, see “Collection & Review of Tax Exemption Forms” procedure.
PROCEDURES & RESTRICTIONS
Initiating a Purchase
The following outlines requirements for initiating purchases or contracts:
- less than $5,000 (less than $10,000 for Facilities and IT departments) – no requisition is required or comparison pricing is required, although comparison pricing is always expected to occur as a prudent purchasing standard. Purchases should be completed by direct pay (i.e., check request) or procard.
- $5,000 to $24,999 ($10,000 to $24,999 for Facilities and IT departments) – a requisition and minimum of 3 written quotes are request. The written quotes may be solicited either by Purchasing or by the requestor if approved in advance by Purchasing. The purchase/contract will be awarded to the supplier whose quote is most advantageous to the College, using price, quality, and other factors as considerations. All quotes will remain on file in Purchasing for at least 3 years.
- $25,000 or more – require a requisition and competitive sealed bids solicited by Purchasing, other than as outlined following. Such solicitations require advertisement through appropriate media (e.g., solicited by mail, by e-mail, by public notice in a newspaper of general circulation, or on the internet). All bids will remain on file in Purchasing for at least 3 years.
When it is determined that it is neither practicable nor advantageous to solicit bids because of unique or unquantifiable nature of the material or service (such as professional services), the competitive Request for Proposal or Request for Qualifications method may be used as outlined in the Bid/Proposal Specifications & Documents section herein.
- Exceptions to this process:
- The following do not require use of the requisition and PO process regardless of dollar amount:
- Purchase of items and services intended for resale by Mendel Center Operations (e.g., food, beverage, rental of equipment or similar, contracted services billed to the customer, and the like)
- Mendel Center Mainstage show contracts
- Advertising contracted services
- Utility services (e.g., electric, gas, trash, phone, cable, etc.)
- Any purchase that is a capital purchase or part of a capital project must go through the requisition process regardless of dollar value to ensure proper tagging as a capital asset. See Capital Asset procedure for information on what qualifies as a capital asset.
- The College participates in certain cooperative purchasing programs, which benefit member organizations by developing volume contracts for goods and services with suppliers. Purchases through a cooperative purchasing vendor may be made up to $100,000 without solicitation of bids. Use of requisition requirements follows the procedures above.
- An emergency is an occurrence that is thought to be disruptive to College operations or to create a hazard to the health or safety of persons or property if not corrected as soon as possible. When an emergency occurs during working hours, Purchasing must be contacted for an emergency PO. If an emergency occurs after hours, purchase of emergency items may be done on the authority of the President, Vice President of Administrative Services, Vice President of Finance, or Executive Director of Facilities. Purchasing must be notified within 2 working days of the purchase so that it can be properly documented as an emergency purchase.
If an emergency purchase exceeds $100,000, the President will apprise the Board on or before the next scheduled Board meeting of any purchase made under this emergency exception and the factual basis for the emergency purchase.
- The following do not require use of the requisition and PO process regardless of dollar amount:
It is the responsibility of each and every employee to know and abide by the content of this procedure. In the event an employee is found to be out of compliance with this procedure, the following three progressive options are available to college administration depending on the nature of the non-compliance:
- Verbal reminder of the procedure and review of the procedure with the employee
- Verbal warning to the employee by Human Resources
- Written warning to personnel file or discipline up to and including termination
Personal Goods or Services
The College will not purchase any good or service for the personal use of College staff nor will arrangements be made by Purchasing to create any buyer-seller arrangements between staff and College suppliers.
The College has contracted with a vendor that offers on-line ordering of an extensive selection of office supplies at reduced prices with next-day delivery. This program is limited to office supplies only; furniture, computer equipment, and office machines are excluded. Contact Purchasing to enroll in this program and for details.
Computers, Peripherals & Software for College Use
All requests for technology items must be approved by the Information Technology Department prior to or upon requisitioning.
Certain grant programs for which the equipment and software do not become College property and/or are not installed on the College network are an exception to this requirement. The grant administrator is required authorize such purchases prior to or upon requisitioning.
Purchase of Alcohol
Only the following org units may purchase consumable alcohol, and only for the following purposes:
• Enology & Viticulture department for direct instructional purposes
• Culinary department for direct instructional purposes
• Hospitality program for direct instructional purposes
• Mendel Center Operations for resale business purposes.
• Mendel Center Mainstage to satisfy production rider requirements
• President’s Office as upon occasion it may be appropriate to purchase alcoholic beverages when entertaining College guests or when hosting a College-related group activity. All such occasions must be hosted by the President or the expense must be authorized in writing by the President.
Printing and Graphics
All publications (brochures, newsletters, catalogs, and forms) that will be distributed outside the College must be approved by the Marketing Department to ensure consistent, high-quality publications and graphics standards.
Hazardous materials are chemicals and materials that are toxic, carcinogenic, irritating, sensitizing, reactive, corrosive, or combustible. If a PO is required, the following must be indicated in the document text portion of each PO:
"Sellers furnishing supplies which contain hazardous materials must label each container listing the identity of such materials. A Material Safety Data Sheet for each item must be included with the shipped container."
All Material Safety Data Sheets (MSDS) must be forwarded to the Vice President, Administrative Services. Copies of each MSDS will then be distributed to Student Services, Facilities Management, and other College campus locations to be maintained according to OSHA and MIOSHA regulations.
Maintenance agreements are not generally a prudent use of College resources. If warranted, as indicated by approval of the Vice President of the division, all maintenance agreements are to be sent to Purchasing to be maintained in the master contract file. It is the responsibility of the budget manager to insure compliance with an established maintenance agreement.
Equipment Rental or Leasing
Rental or lease of equipment follows the same requirements established above with respect to use requisitions and purchase orders. If a purchase order is required, a multiple year rental or leases agreement will require a new purchase order for each new fiscal year. All rental and lease agreements must be sent to Purchasing to be maintained in the master contract file.
Replacement of Stolen Equipment or Damaged Property
When items are discovered to be missing or damaged:
- Notify the Executive Director of Facilities immediately, who will determine if the police should be notified.
- Complete a Claim/Incident Form and provide to Executive Director of Facilities, who will add a police report if appropriate and forward to the Public Safety Director.
- Notify Purchasing, who will then provide information as necessary to the College’s insurance company.
- If the item damaged or stolen is not covered under College insurance, the appropriate budget manager must determine the source of funding for replacement.
Purchases Made Using Procurement Card
Certain pre-approved College employees may use a College procurement card for College purchases. Under no circumstances may it be used for personal purchases. The procurement card program is designed to limit low dollar purchase orders, direct payment vouchers, and expense reimbursement vouchers.
See Procurement Card procedure for specific procedures and requirements.
Reimbursement for Out-of-Pocket Purchases
Reimbursement for out-of-pocket purchases will be made by Finance upon receipt of a properly completed and approved expense report. Appropriate supporting documentation (receipts, etc.) must be included for all purchases. Submission of the form should be at the earliest practical date but no later than 30 days after purchase; requests beyond 30 days will not be honored.
A Form W-9 is required for cumulative purchases of $600 or more to a single vendor.
Reimbursement for out-of-pocket purchases may not be used to circumvent the College purchasing policy.
DIRECT PAY REQUEST (CHECK REQUEST)
See the “Procedures & Restrictions” section above for when to use direct pay check requests. Essentially, a direct pay request is used for purchases for which a PO is not required or accepted. The Direct Pay Request may not be used to circumvent College purchasing procedures, for services provided by a College employee (which must go through payroll), or for purchases that will result in a deficit budget balance for the purchasing org unit. See Direct Pay (Check) Request Procedure for specific procedures and requirements.
REQUISITIONS & PURCHASE ORDERS
The College is not financially obligated to a vendor for goods or services provided unless an approved purchasing method is used. See the “Procedures & Restrictions” section above for when to use requisitions and purchase orders.
Purchase requisitions are entered into the Banner Purchasing module by the requestor or other designated individual. The requisition moves through an electronic approval process and is then forwarded to Purchasing to become a PO.
Only those with a Banner username and password and who have completed Banner Orientation & Basic Navigation training and Banner Requisition / Approval training are allowed to enter requisitions.
An automated budget check for sufficient funds is performed when the requisition is input. If sufficient funds do not exist, the requestor must determine if sufficient budget exists in another non-salary account within the same org unit to cover the expenditure. Bear in mind that purchases may only be made if there are adequate budgeted funds over which the purchaser has authority, or with written approval by the VP Finance to exceed allocated budgeted. Individuals making unauthorized or unapproved purchases are subject to disciplinary action, up to and including termination.
Any documentation that should be enclosed with the PO must be forwarded to Purchasing with the requisition. PO’s are emailed, faxed, or mailed to the vendor.
Rush / Confirming
On a limited basis, a rush PO can be issued to the requestor by Purchasing so that an order may be placed or used to pick-up goods from the vendor. Contact Purchasing with the vendor name, dollar amount of purchase, and appropriate org code. The generated rush PO number must be indicated on the follow-up requisition to avoid duplication.
Blanket Purchase Order
Blanket PO’s (also known as standing or open) are open authorizations against which departments may request material or services directly from the vendor, and are suggested under the following circumstances:
• Items are required on a substantially frequent basis
• Material is of an expendable or consumable nature
• Items are homogenous in nature (e.g., all art supplies)
• A contract does not exist
A blanket PO encumbers a specific amount for a specific length of time, no longer than a fiscal year. It contains an overview of goods / services to be purchased, an expiration date and dollar amount, for instance: "Water service for ABC Department, room C206, for the period July 1, 20XX, thru June 30, 20XX. Not to exceed $500."
Cancellation or Modification
Requests for cancellation or modification of PO’s, including an increase / decrease in quantities or dollar amount, should be directed to Purchasing at which time a Change Order will be sent to the vendor. If the increase in the PO is in excess of the original approver authority level, the next level approver must authorize the increase.
Upon occasion, Purchasing receives inquiries from vendors regarding item substitutions, minimum order quantities, price problems, etc. Significant changes will not be made without the approval of the requisitioner.
BID / PROPOSAL SPECIFICATIONS & DOCUMENTS
Other than as noted directly following, the section below outlines the bid, proposal, specification, and document requirements of the College.
Exceptions to the bid / quote process are:
- Library books and subscription renewals
- Mendel Center Mainstage show contracts
- Advertising contracted services
- Utility services
- Cooperative and association purchases
- Documented sole source purchases
When preparing competitive bids, a sufficient number of vendors should be contacted / solicited to ensure fair and open competition in the procurement process.
In cooperation with the requesting department, Purchasing will gather information about the goods or services desired, write specifications, and solicit bids / proposals from suppliers maintained on commodity specific bid lists, as well as those provided by the requestor. Per Code of Federal Regulations (CFR) Part 215.44(a)(3)(iv) solicitations will include the specific features of “brand name or equal” descriptions that bidders are required to meet when such items are included in the solicitation. Bids will be advertised through appropriate media (e.g., solicited by mail, by e-mail, by public notice in a newspaper of general circulation, or on the internet).
The type of solicitation issued by Purchasing depends, in part, upon the complexity of the specifications. The following are the options available.
- Requests for Bids (RFB) – issued when specifications are of a nature that the award is to be made upon the lowest bid meeting specifications.
- Requests for Proposals (RFP) – issued when specifications or scope of work is complex or when subjective factors, other than price alone, can be used in evaluation for award.
- Requests for Qualifications (RFQ) – describes the scope of the work and requests information as to why a vendor would be best suited to provide the service. A selection committee rates candidates based on predetermined ratings format. Negotiations then proceed with the highest-rated candidate as to price and statement of work. Should an agreement not be negotiated with the highest-rated candidate, the process repeats with the next highest-rated candidate until procurement is completed.
Regardless of the type of solicitation, the vendor/service provider may be required to provide certification that they are not an Iran-linked business nor on the Government Services Administration’s Excluded Parties List.
It is the responsibility of Purchasing to ensure that potential vendors have a reasonable amount of time to prepare bids and proposals and submit them. In determining this time, the relative complexity of each request, as well as the manner in which it is to be transmitted to and received from prospective vendors are to be considered. For written requests that are to be physically transported and submitted / delivered or mailed, 10 business days is the norm with 15 business days or more allowed for requests that are more complex. For requests transmitted and received electronically, a shorter time period may be used.
As a State supported institution, the College is required to make available documentation and information relative to various purchasing records and bidding documents. It is appropriate for the Purchasing Manager to release pricing information to interested vendors when requests are made regarding a specific bid or purchase order. No information, however, may be released concerning a bid in process. Additionally, all bid response information marked "proprietary" will be considered confidential and not released.
Purchasing is responsible for the selection of reputable and responsible vendors. Vendors who have not previously done business with the College are advised to contact Purchasing and request an application to be added to the vendor list. Purchasing may solicit quotes, bids, and / or proposals from suppliers in any particular category or select those who it believes are best qualified to provide supplies or services. The department submitting a request to Purchasing may also suggest vendors as potential suppliers.
Purchasing may bar a vendor from consideration for award of contract or purchase order if:
- Within the past 3 years, the vendor, a company officer, or owner of a 25% or more share of the company has been convicted of a criminal offense incident to the application for, or performance of, a contract or subcontract.
- Within the past 3 years, the vendor, a company officer, or owner of a 25% or more share of the company has been convicted of an offense that reflects on vendor’s business integrity such as embezzlement, theft, forgery, bribery, falsification, or destruction of records, receiving stolen property, or breaking state or federal antitrust laws.
- Vendor has in the past failed to substantially perform a College contract or subcontract according to its terms, conditions, and specifications within specified time limits.
- Vendor has abused the solicitation process or violated terms of a request for solicitation after bid submission.
- Vendor has failed to cooperate in monitoring contract performance by failing to provide information or documents required by contract, failed to respond to complaints to vendor, or accumulated repeated justified complaints regarding performance of a contract.
- Vendor is listed on the General Services Administration’s Excluded Parties List System.
- Vendor is an Iran-linked business, as defined.
A bidder may withdraw a bid prior to the bid opening time and date by contacting the Purchasing Manager. Requests for return of a bid after the due date will not be honored as the bid becomes College property and is, therefore, not returnable.
Every bid includes criteria for determining which vendor offers the best value to the College and meets vendor qualifications, delivery time, specifications, terms, and conditions contained in the solicitation. When a solicitation requires an oral presentation or submission of test samples, or inspection of facilities or place of business, these factors are part of the bid evaluation. The total cost may include unit price, delivery and installation, maintenance and cost of operation, as defined in the solicitation. If there is a discrepancy between a unit price and its extension, the unit price will prevail.
Purchasing does not consider the following in evaluating bids:
- Assistance in developing specifications or other advisory services a vendor provides. Although such assistance is valuable and appreciated, there is no preferential treatment for these services.
- Equipment a vendor installs on a free trial basis.
- Financial contribution to the College or the College Foundation as there is there is no understanding or agreement that a vendor will be awarded a contract or purchase order based upon making such.
Award of a PO and / or contract is based on the best value to the College. The solicitation will indicate the various criteria that will be used in determining the best value, including price, quality, availability, delivery, and fitness for the particular purpose. Consideration is also given to vendor’s potential ability to successfully perform under the terms and conditions, and vendors past performance record.
The College reserves the right to award by item, group of items, or total bid. The College further reserves the right to reject any and all bids if it is determined that the best interests of the College are served by doing so. The College may reject all bids for a solicitation and not award, may cancel a solicitation, or conduct a rebid. Purchasing notifies successful and unsuccessful bidders in writing.
For awards of $25,000 or more or anyone responding to a bid/RFP, Purchasing will verify that the vendor is not on the General Services Administration’s Excluded Parties List System or an Iran-linked business, as defined.
If the lowest, most responsible, and most responsive bids received are for the same amount or unit price and all the identified criteria are equal, then the award will be made to the local vendor. If both vendors are local, then the following criteria will be used:
- Ability to provide service / goods (i.e., most favorable references / recommendations)
- Most timely submission in terms of date and time of bid submission
Only a bidder on the solicitation may appeal an award decision. A bidder is considered a vendor who has submitted a formal offer that meets all specified requirements. To initiate an appeal, a vendor must:
- Issue a written appeal to Purchasing Manager within 24 workday hours (based on 8 a.m.to 5 p.m.) of the bid opening; only information provided in the 24-hour deadline will be considered.
- Include in the written appeal the bid name and clearly stated facts believed to constitute an error in award recommendation.
Purchasing Manager or appropriate College designee will provide a written decision after investigating the matter. This decision is final.
Until issuing a final decision, Purchasing will not award a contract or purchase order pursuant to a disputed solicitation. If there is, however, a threat to public health, safety or welfare or danger of immediate and substantial harm to College property from delay in making an award, the College may proceed with an award and provide written justification for such action.
Appeals requesting a waiver for failure to do the following cannot be granted:
- sign a bid
- properly submit a bid per bid instructions
- submit the bid by the required date and time
- initial erasure or correction to pricing information in ink
- provide a required bid deposit or performance bond by date and time required
- submit a timely appeal
If there were no responsive bids, these requirements may be waived.
Rebids / Cancellations
College may cancel or rebid a solicitation before award of a contract or receipt of a PO by a vendor for any of the following reasons:
- Initiating College department requests cancellation for financial or program reasons
- No bids were received
- All of the responsive bids exceed the cost estimated for the bid
- No bid met required specifications or complied with terms and conditions of solicitation
- A vendor appeal was granted
- The best interest of the College will be served by continuing
- Specifications, statement of work, or terms and conditions will not accomplish intended objective or do not adequately protect College’s best interest
- Solicitation or the resulting contract would be in violation of law
Bid bonds are required on all construction or maintenance project bids that are estimated at $100,000 or more. Bid bonds are normally required in the amount of 5% of the vendor bid. Exceptions to this policy must be approved by the Vice President, Administrative Services.
Performance and Labor / Material Bonds are required on all construction or maintenance project bids estimated at $100,000 or more. Bonds are normally required to be 100% of the vendor's total bid. Exceptions to this policy must be approved by the Vice President of Administrative Services.
All bonds must be from bonding companies licensed to do business in State of Michigan.
All bonds in effect are to remain in Purchasing and are the responsibility of Purchasing Manager. All bonds are returned to the vendor after approved project completion.
Sole Source Purchases
The procurement of goods and services without competition is only done under exceptional and limited circumstances. The requestor must complete a Justification for Sole Source Procurement Request Form prior to purchasing the goods or services.
Sole source procurements may be made only if:
- This is the only known good or service that will meet this specific need and it is only available from one vendor.
- This is the only known vendor that can provide this good or service because of the vendor’s unique expertise, which is required.
- The good required must be of the same brand as the existing item being repaired / modified, and no other brand or vendor good will meet the requirements, and there is no other source of this brand.
- The good or service is already clearly and definitively being provided at terms most favorable to the College (e.g., lowest price) by this vendor; this can be plainly documented.
- There is substantial risk in contracting with any other vendor to provide this good or service (e.g., only one vendor has been successful to date in providing this good or service).
Uniformity with existing equipment or replacement parts is not a justification for sole source purchases.
Cost analysis must be performed by the requestor to ensure that the cost charged by the vendor is reasonable and customary by comparison the cost with:
- proposed prices received in response to a competitive solicitation,
- previously proposed prices for the same or similar items,
- competitive published price lists, market indexes, etc., or
- independent market research.
For sole source purchases over $100,000, the Board must be informed at the next regular meeting. Sole source and reasonable cost justification will be kept in the purchase order file by Purchasing for a minimum of 3 years.
Government Contracts & Grants
The College receives support from state and federal governments in the form of contracts, grants, and other agreements. Specific agencies and individual agreements will sometimes impose unique administrative requirements. An inherent responsibility in accepting government funding is that financial administration and procurement will be carried out with the same care and control as is exercised in the College's purchasing procedures.
Purchasing will assist persons involved with special sources to solicit bids and/or quotes, where appropriate, to maximize to the fullest extent the purchasing value of these funds.
Most shipments will be received in Central Receiving (Receiving.) Some, however, may be delivered directly to the requestor.
If delivered to Receiving, the shipment will be examined for visible carton damage. If found, Receiving will make note of the damage on the bill of lading. In cases of significant damage, the delivery may be refused and Purchasing will assist with submitting a claim with the freight company. A claim must be made within 15 days and the shipment must remain in the original shipping carton until inspected by a representative of the freight company.
Certain larger items (furniture) will be removed from the carton by Receiving and inspected for concealed damage. If found, Purchasing will assist with submitting a claim with the vendor/freight company. A claim must be made within 15 days
When goods are delivered by Receiving, the requestor will be required to sign a log as proof of delivery. The requestor is then expected to compare the items received to a copy of the PO.
- If all items are received, requestor must initial the PO and return to Accounts Payable.
- If extra or incorrect goods are received, the requestor must contact the vendor for return authorization and complete an Authorization for Return to Vendor form. Goods will be returned via Receiving; see Shipping of Outbound Goods below.
- If a shortage in shipment, the requestor must contact the vendor for order completion.
- If a partial shipment has been received, the requestor may:
- Hold the PO copy until all items are received for submission to Accounts Payable.
- Duplicate the PO, indicate items received, initial, and forward to Accounts Payable. Once the remainder of the order has been received, initial and forward final copy of PO to Accounts Payable.
Vendor invoices will be paid until requestor confirmation of receipt of goods / services has been received in Accounts Payable.
Receiving Capital Assets
To ensure that capital assets are acquired, safeguarded, disposed of, and accounted for in accordance with state and federal regulations, audit requirements, and generally accepted accounting principles, refer to the Capital Asset procedure.
Shipping of Outbound Goods
All outbound goods must be sent through Receiving. The requestor returning goods must perform the following steps:
- Obtain a return authorization from the vendor.
- Complete an Authorization for Return to Vendor Form.
- Package the goods for shipment.
- Prepare a shipping label, including vendor return authorization number on the label, and attach to the package.
- Deliver to Receiving or call for pick-up if package is large.
- Maintain a copy of Authorization for Return to Vendor Form on file.
If goods ordered via a PO are being returned to the vendor, the requestor must contact Accounts Payable where the necessary changes can be made to the order.
Responsibility: Purchasing Manager
References: IRS Section 501(c) (3); Code of Federal Regulations (CFR) Part 215.44(a)(3)(iv)