Contract Validation Process

Based on the rule hierarchy, this list describes the validation process that the system uses to provide contracts onto requisition and purchase order transactions by default:

1. If the contract is a Release to Single PO Only process option contract or the Auto Default check box on the contract is not selected, the contract will not automatically be supplied by default onto transactions regardless of whether the item or the category has an exact match.

2. The system then sorts all valid contracts by date, using the contract begin date. The contract with the begin date closest to, but not later than, the transaction date is the most valid contract.

3. The system considers Manufacturer contracts first using the priority established for the distributor contracts and the distributor contract supplier.

   Then non–Manufacturer contracts that match the transaction supplier are considered.

4. The system determines whether the type of contract reference is item, ad hoc, category, or open item:

   1. The system first tries to match at the contract-line level. If an item ID is on the transaction, the system checks for the same item ID on the contract.

      If a match is found, the contract and contract line number are referenced on the transaction:

   2. If the transaction line is order-by-description (ad hoc), the system checks for a match using the category and an alternate item identifier such as supplier item id, manufacturer item id, or UPN ID, when line matching options are enabled on the Contract and Vendor Rebate Controls Page. If a match is found, the contract and contract line number are referenced on the transaction

   3. If a match is not found at the contract-line level, the system checks the category reference level.

      If the category for the line item on the transaction matches the contract category reference, and the item is not listed as a category item exception on the contract, then the contract and category are referenced on the transaction.

   4. If a match is not found on the contract line item or contract category reference, the system looks for and uses an open item reference contract.

5. The system uses the control type to restrict contract usage to specific ship-to locations, contract domains (regions), or business units, and matches one of the following conditions”

   1. The transaction line ship-to location matches the contract control ship to when the contract’s control type is Ship To.

   2. The transaction line ship-to location belongs to a control domain (region) that matches the contract’s contract control domain (region) when the contract control type is Contract Domain.

   3. The transaction is setup for the transactional business unit and the control type is business unit. Non–corporate contracts are setup using the contract control type Business Unit

The preceding defaulting rules are also applicable to the purchase order sourcing batch process with the exception that the batch process automatically matches transactions with Release-to-single PO Only process option contracts if the item or the category has an exact match.

For ad hoc requisition lines, you have to manually reference a contract line for requisition lines. And as with requisition lines that reference a contract when the ad hoc requisition lines are sourced to a purchase order, if the contract referenced at the requisition line is no longer valid during purchase order sourcing, the system displays an error message and rejects sourcing the transaction.