Understanding How to Apply Procurement Contract Prices to Transactions
The PeopleSoft Purchasing application is integrated with procurement contract functionality to streamline the use of contracts with requisitions, purchase orders, and vouchers. As part of the contract functionality, you can:
Set up and use procurement contracts by item, category, or open item reference.
Using a category or categories tied to a contract, you can set up requisitions and purchase orders to reference the contract for any items under those categories.
Use procurement contract version control and change tracking so that you can view contract versions on requisitions, purchase orders, and vouchers.
Specify whether the system automatically supplies a contract on a requisition.
Specify whether the system automatically supplies a contract on a manual purchase order.
Control whether the system automatically searches for contracts when sourcing requisitions.
When sourcing requisitions in batch or processing online purchase orders, the system evaluates system settings to determine whether to check for prices and use a contract on the purchase order.
Define price adjustments at the header level of the contract that you can apply to transactions that use the contract.
This feature helps you streamline and simplify the entry of discounts and surcharges at the contract line-item and category levels. You can apply a predesignated set of adjustment criteria to each line or category on the contract.
You can set up requisitions to automatically search for a contract to use for requisitions. Applying contract prices to requisitions enables you to receive contract prices for requisition items and to more accurately track budgets and pre-encumbrance balances. When the system applies contract prices, it controls the entire flow of the transaction, from the Requisition Loader to creation and update of purchase orders. Requesters, buyers, and administrators with the appropriate security can set to search for and use contracts on transactions at various levels.
The system uses the values in the requisition to apply negotiated contracts prices for purchases and transactions against the contract. The system searches for purchase order, general, and release-to-single PO only contracts. release-to-single PO contracts can be referenced manually on the requisition.
You use the Default Contract on Req check box on the Business Unit Options page to initiate the search. To access the page, select
To apply contracts to a requisition, the system locates possible contracts and copies them to requisition transaction lines when you create or change any of these fields on the requisition:
Supplier
Quantity
UOM (unit of measure).
Shipto
Item
Item Description
Category
To automatically supply a contract to a requisition, the system searches for and ensures that the correct contract is selected for use with the requisition and verifies that the Auto Default check box is selected on the Contract page. This makes the contract available to be automatically supplied to requisition and purchase order transactions.
You can override contracts at the line level that have been selected by the system. The initial value of the Use Contract if Available check box is Y regardless of the value of the Default Contract On Req check box for the business unit. If the item requires a contract, the system forces the Use Contract if Available check box to Y regardless of whether the contract exists on the line. Sourcing looks for the best contract if the contract is not referenced on the requisition line where this check box is selected. Deselecting this check box removes the contract information for the line (if any). However, the price will not be supplied again by default from the hierarchy to prevent overriding the user-entered price. Sourcing logic bypasses searching for the best contract for this line.
You can use pricing from contracts for requisitions and purchase orders. Using the Default Contract on Req and Default Contract on PO check boxes on the Business Unit Options page, you can make contracts available for use with requisitions and purchase orders.
Separate price calculation routines are used for online (PeopleCode) and batch processing (application engine). When pricing a purchase order line that has a contract category reference, you need to establish the base price (item supplier, manual, and so on), and then apply the category price adjustments, the supplier price adjustments, or both depending on the pricing options specified on the contract.
Copy Requisitions to Purchase Orders
When copying a requisition onto a new purchase order, the system evaluates settings on requisition lines that include the Use Contract If Applicable field.
The following table outlines how the system handles the combinations of these settings:
Use Contract if Applicable Field Setting |
Calculate Price Setting |
Is a Contract Value on the Requisition Line? |
Does the PO Supplier Match the Requisition Supplier? |
During Online Sourcing, the System: |
When the System Creates a Purchase Order, It Uses the Contract ID... |
---|---|---|---|---|---|
Y |
Y |
Y |
Y |
Recalculates the contract price and assigns the contract ID from the requisition. |
Assigned from the requisition. |
Y |
N |
Y |
Y |
Uses the price from the requisition and assigns the contract ID from the requisition. |
Assigned from the requisition. |
Y |
Y |
N |
Y |
Finds the most current contract for the supplier on the requisition and uses the item or supplier contract pricing. |
Assigned during sourcing. |
Y |
N |
N |
Y |
Finds the most current contract for the supplier on the requisition and uses the requisition price. |
Assigned during sourcing. |
N |
N |
N |
Y |
Uses the requisition price and does not assign the contract ID. |
blank |
N |
N |
N |
N |
Uses the requisition price and does not assign the contract ID. |
blank |
N |
Y |
N |
Y |
Uses the item or supplier price and does not assign the contract ID. |
blank |
N |
Y |
N |
N |
Uses the item or supplier price and does not assign the contract ID. |
blank |
N |
N |
Y |
Y |
Uses the requisition price and does not assign the contract ID. |
blank |
N |
N |
Y |
N |
Uses the requisition price and does not assign the contract ID. |
blank |
N |
N |
Y |
Y |
Not Applicable - If the use contract setting is set to N, the system prevents the entry of a contract ID on the requisition. |
NA |
N |
N |
Y |
N |
Not Applicable - If the Use Contract on Req check box is not selected. The system prevents the entry of a contract ID on the requisition. |
NA |
Y |
Y |
Y |
N |
Not Applicable - An error prevents you from copying the requisition to a purchase order when the supplier does not match the contract supplier. |
NA |
Y |
N |
Y |
N |
Not Applicable - An error prevents you from copying the requisition to a purchase order when the supplier does not match the contract supplier. |
NA |
Y |
Y |
N |
N |
Not applicable - The supplier on the contract assigned to the requisition must match the transaction's supplier. The system finds the most current contract for the supplier on the requisition, then uses the item and supplier contract pricing. |
Assigned during sourcing. |
Y |
N |
N |
N |
Not applicable - The supplier must match the requisition supplier. The system finds the most current contract for the supplier on the requisition, and then uses the requisition price. |
Assigned during sourcing. |
Contract Pricing for Manually Entered Purchase Orders
You can select to indicate that the system should automatically search for appropriate contracts for purchase order lines. The Default Contract on PO check box on the PeopleSoft Purchasing Business Unit Options page applies only to manually created purchase orders, and not include orders created using a batch process. This automates the process of selecting the most appropriate contract for use with manually created purchase orders.
Note: The default contract on purchase order option does not apply to blanket purchase orders or to sourced PeopleSoft Strategic Sourcing purchase orders.
If you select to search for contracts, the system begins its search for contracts with process types of Purchase Order or General, and that are in a current version with an Approved status. If multiple contracts exist, the system selects the one with the most recent (but not future) contract begin date. After validating the contract and using it on the transaction, the system:
Updates released amounts and quantities.
Creates a contract event.
Updates the transaction with contract information.
The default contract on purchase order option does not apply to PeopleSoft Services Procurement project roles on the contract. The Services Procurement system searches for an applicable contract on the work order, and uses it on a purchase order regardless of the Default Contract on PO check box value.
When the system determines the best contract, the contract is already validated. When you save the purchase order, the system validates the contract again in case you update released amounts and quantities and create the contract event. Other considerations for when the Default Contract on PO check box is selected include:
The system finds the most current active contract for the supplier and item. After that contract is determined, the system determines the most granular level to use as the contract reference, such as the line, then category, and then open item. If the contract uses line groups and multiple line references exist for the item, the system returns the line with the lowest price, or the lowest line number when there is a duplicate situation.
When the system finds a better contract for the purchase order than the existing contract, it provides a message with the option to let you keep the existing contract or load the new contract. This can happen when you update a purchase order line field and the change results in a different contract ID, line number or category line number.
When you are editing an existing purchase order line that has a contract ID, and the best contract cannot be found due to the version, you can replace the version number. If you do not have the authority to replace the number, the system keeps the existing version.
If the system finds the best contract based on a different contract ID, you can select to either use the new contract or keep the existing contract. If you select the new contract, the system replaces the contract ID and line, category line, and version number.
When you are copying an existing purchase order to a new purchase order and if changing a field results in a different contract ID, line number, or category line number, the system displays a message and provides you the option to replace the existing contract. If the new contract found is the same as the existing one on the purchase order, but version numbers are different, the system does not provide an option to replace the contract, but will use the most current version.
Source Requisitions and Create Purchase Orders Using Batch Processing
During sourcing requisitions in batch mode, the sourcing function evaluates the requisition line settings to determine how to price the order and assign the contract. The following table provides the valid combinations and corresponding results:
Use Contract if Applicable |
Calculate Price Flag |
Contract Value on Requisition Line |
Consolidate with Other Requisitions |
Override Suggested Supplier |
During Batch Sourcing, the System Determines the Price by… |
When PO is Created, Contract ID Is: |
---|---|---|---|---|---|---|
Y |
Y |
Y |
N |
N |
Recalculating the contract price using the contract from the requisition. |
Assigned from requisition. |
Y |
N |
Y |
N |
N |
Passing the price from the requisition and the contract ID assigned from the requisition. |
Assigned from requisition. |
Y |
Y |
N |
Y/N |
Y/N |
Finding the most current contract for the supplier on the requisition, then using item and supplier contract pricing. |
Assigned during sourcing. |
Y |
Y |
N |
N |
N |
Finding the most current contract for the supplier on the requisition, then by using item and supplier contract pricing. |
Assigned during sourcing. |
Y |
N |
N |
N |
N |
Finding the most current contract for the supplier on requisition, and then using the requisition price. |
Assigned during sourcing. |
N |
N |
N |
N |
N |
Using the requisition price and not assigning the contract ID. |
Blank |
N |
Y |
N |
N |
N |
Using the item and supplier price and not assigning the contract ID. |
Blank |
N |
Y |
N |
Y |
Y |
Using the item and supplier price and not assigning the contract ID. |
Blank |