Section 7.7 – Procurement Conflicts of Interest
Policy Statement
It is the policy of the University of Illinois System to review information disclosed by employees under the Report of Non-University Activity process as well as financial information disclosed by vendors in accordance with Sections 50-13 and 50-35 of the Procurement Code to determine if a prohibited or potential conflict of interest exists.
A proposed purchase of services or supplies from a vendor with either a prohibited or a potential conflict of interest must comply with the University of Illinois System’s internal review procedures and the review process defined in the Procurement Code.
The University of Illinois System does not have the final authority to determine whether a conflict of interest exists or whether a proposed purchase that presents a conflict may proceed. The University of Illinois System will cooperate with the review process conducted by the Procurement Policy Board and the Executive Ethics Commission as defined in the Procurement Code & Rules.
Employees also must observe the State Officials and Employee Ethics Act and the Employee Gift Policy, and should consider public perception, when making a purchase.
If you have any questions about a prohibited or potential conflict of interest, contact the Purchasing Division.
Applicability of the Policy
The policies in this section apply to all purchases, contracts for services, and contracts for supplies made by or for the University of Illinois System under the Illinois Procurement Code (30 ILCS 500/). This policy applies regardless of funding source for the purchase.
Gratuities
Employees must avoid accepting gratuities, tips, gifts, merchandise, cash, or services, in exchange for the performance of their duties, either past or future. See 9 Audits and Internal Control - Employee Gift Policy for additional information.
Related Policies and Procedures
7.7.1 Prohibited Conflicts of Interest
7.7.2 Potential Conflicts of Interest
9 Audits and Internal Control – Employee Gift Policy
Additional Resources
Conflict of Interest Review Process
Purchase Order Hold Process
Audits and Internal Control - Employee Gift Policy (Section 9)
Procurement Code Article 50
State Officials and Employees Ethics Act
Section 7.7.1 – Prohibited Conflicts of Interest
Policy Statement
In general, if an individual, their spouse, or their minor child:
- holds an elective office in this state,
- holds a seat in the General Assembly,
- is appointed or employed in any of the offices or agencies of State government [including appointments or employment at the University of Illinois] and receives compensation for such employment in excess of 60% of the Governor’s salary (currently $106,447),
- is an officer or employee of the Capital Development Board, or
- is an officer or employee of the Illinois Toll Highway Authority,
they are prohibited from contracting with the University of Illinois System (or having any direct pecuniary interest in any contract) if the contract will be wholly or partially paid with funds appropriated by the Illinois General Assembly. An individual has a direct pecuniary interest in a contract when the individual is owed a payment or otherwise receives a direct financial benefit in conjunction with performance of a contract, including finder's fees and commission payments.
Business organizations may not enter into purchase transactions with the University of Illinois System if an individual identified above or their spouse or minor child has an ownership interest in, or is entitled to distributed income from, the organization in an amount that meets or exceeds a prescribed threshold.
Exceptions to the prohibited conflicts of interest include purchases for certain personal services, including contracts for teachers.
Reason for the Policy
This policy is intended to implement Section 50-13 of the Illinois Procurement Code by providing for the identification, review and resolution of prohibited conflicts of interest relating to procurements by or for the University of Illinois System.
Procedure
The University of Illinois System is prohibited from making a purchase from a vendor or individual if the university knew or should have known that a prohibited conflict of interest exists.
Prohibited conflicts of interest can be identified in the following three manners.
- By completion of a Financial Disclosure and Conflict of Interest form or registration on the Illinois Procurement Gateway, which is required for all purchases of $50,000 or more, and all competitive solicitations;
- By completion of the University’s Report of Non-University Activities (RNUA) process; or,
- Through common knowledge of a prohibited relationship.
When a prohibited conflict of interest is identified, or presumed, the proposed vendor must complete a Financial Disclosure and Conflict of Interest form or register on the Illinois Procurement Gateway. A prohibited conflict of interest exists if:
- the vendor has submitted the Financial Disclosure and Conflict of Interest form and checked “yes” for any of the questions in Step 4; or, the vendor is registered on the Illinois Procurement Gateway and in Section I – Financial Disclosures & Conflicts of Interest has checked “yes” for any of the questions numbered 5 through 10;
- the purchase is to be made with funds appropriated by the Illinois General Assembly; and,
- the purchase is not subject to one of the statutory exceptions.
If a prohibited conflict of interest exists, the University of Illinois System must consider alternative sources for supplying the services or supplies. If the services or supplies are not available from other sources, or it is in the University of Illinois System’s best interest to proceed with the proposed purchase, the university may request a conflict of interest review for approval prior to proceeding with the purchase. See Conflict of Interest Review Process.
If a proposed vendor would present a prohibited conflict other than the purchase would not be made with funds appropriated by the Illinois General Assembly, then the conflict is considered a potential conflict of interest. See Section 7.7.2 – Potential Conflict of Interest.
Forms Used in this Procedure
Financial Disclosures and Conflict of Interest form
Additional Resources
Illinois Procurement Gateway
Conflict of Interest Review Process
Purchase Order Hold Process
Section 7.7.2 – Potential Conflicts of Interest
Policy Statement
In general, if an individual, their spouse, father, mother, son or daughter:
- Is, or within the previous three* years was, a State of Illinois employee [including an employee of the University of Illinois], or
- Holds, or within the previous three* years held, an elected government (federal, state or local) office,
- Is, or within the previous three* years was, held an appointed government (federal, state or local) office,
- Is, or within the previous three* years was, a registered State of Illinois lobbyist, or
- Is, or within the past three* years was, compensated by a registered election, re-election or political action committee.
*Two years in the case of a spouse, father, mother, son or daughter.
a potential conflict of interest exists and must be reviewed prior to making a purchase from the proposed vendor. Individuals are under a continued obligation to disclose the existence of these relationships for three years (two years in the case of a spouse, father, mother, son or daughter) from the last date of employment, appointment, term or registration.
Reason for the Policy
This policy is intended to implement Section 50-35 of the Illinois Procurement Code by providing for the identification, review and resolution of potential conflicts of interest relating to procurements by or for the University of Illinois System.
Procedure
The University of Illinois System may not make a purchase from a vendor without prior review and approval if the university either knows or should know that a potential conflict of interest exists.
Potential conflicts of interest can be identified in the following three manners.
- By completion of a Financial Disclosure and Conflict of Interest form or registration on the Illinois Procurement Gateway, which is required for all purchases of $50,000 or more, and all competitive solicitations;
- By completion of the University of Illinois System’s Report of Non-University Activities (RNUA) process; or
- Through common knowledge of a relationship with an individual who has a potential conflict of interest.
When a potential conflict of interest is identified, or presumed, the potential vendor must complete a Financial Disclosure and Conflict of Interest form or register on the Illinois Procurement Gateway. A potential conflict of interest exists if:
- the potential vendor has submitted the Financial Disclosure and Conflict of Interest form and checked “yes” for any of the questions in Step 4; or, the vendor is registered on the Illinois Procurement Gateway and in Section I – Financial Disclosures & Conflicts of Interest has checked “yes” for any of the questions numbered 5 through 10 and the purchase would not be paid for wholly or in part with funds appropriated by the Illinois General Assembly;
- the potential vendor has submitted the Financial Disclosure and Conflict of Interest form and checked “yes” for any of the questions in Step 5 or the potential vendor is registered on the Illinois Procurement Gateway and in Section I – Financial Disclosures & Conflicts of Interest and has checked “yes” for any of the questions numbered 11 through 20; or,
- University personnel, through common knowledge, discover or reasonably suspect a potential conflict exists.
If a potential conflict of interest exists, the University of Illinois System should consider alternative sources for supplying the services or supplies. If the services or supplies are not available from other sources, or it is in the University of Illinois System’s best interest to proceed with the proposed purchase, the University may request a conflict of interest review for approval prior to proceeding with the purchase. See Conflict of Interest Review Process.
Forms Used in this Procedure
Financial Disclosures and Conflict of Interest form
Additional Resources
Illinois Procurement Gateway
Conflict of Interest Review Process
Purchase Order Hold Process
Conflict of Interest Review Process
Prior to entering into a purchase contract with (or making a purchase from) a vendor with a prohibited or potential conflict of interest, the University of Illinois System must complete the following conflict of interest review process to determine whether the purchase is allowed under the Procurement Code.
Purchases from a vendor with a prohibited or potential conflict are prohibited on university Purchasing Cards (P-Cards) and Travel Cards (T-Cards).
All proposed procurements subject to the Illinois Procurement Code (30 ILCS 500/) that present conflicts or potential conflicts of interest are thoughtfully considered by the University of Illinois System and reviewed by independent state authorities as required by the Illinois Procurement Code. (30 ILCS 500/50-35(d))
The University of Illinois System does not have the final authority to determine whether a conflict of interest exists or whether a proposed purchase that presents a conflict may proceed. When a potential conflict of interest is identified, OBFS – Procurement Services must complete a Conflict of Interest Review Request that describes the circumstances of the potential conflict along with the University’s justification for proceeding with the purchase.
Conflict review requests involving vendors that have not undergone a review within the fiscal year must be considered by the respective state purchasing officer (SPO) and the Illinois Procurement Policy Board (PPB). The SPO also may refer the review request to the Chief Procurement Officer (CPO) prior to submission to the PPB for final review. The SPO may complete the review request without PPB approval if it involves a vendor that has undergone a review within the fiscal year or if the purchase is less than $50,000.
The University of Illinois System will cooperate with the review process conducted by the PPB and the Executive Ethics Commission as defined in the Procurement Code & Rules.
The University of Illinois System may not proceed with a procurement until:
- the PPB has completed a review of the potential conflict of interest review and authorizes the University to proceed;
- the SPO has completed a review of the potential conflict of interest review (when a review has previously been completed within the same fiscal year) and authorizes the University to proceed; or,
- after the PPB has sent communication indicating that they find the potential conflict to be an actual conflict, the EEC has held a hearing, and the EEC authorizes the University to proceed.
Additional Resources
Illinois Procurement Gateway
Purchase Order Hold Process
Conflict of Interest Review and Determination Form
Purchase Order Hold Process
The University of Illinois System will place a purchase order hold on the vendor’s record in Banner when: the vendor has had a previously identified prohibited or potential conflict of interest; it is determined at the time of vendor setup that the vendor has a relationship with a University of Illinois System employee; or, for vendors that are disclosed in the Report of Non-University Activities (RNUA) process and meet specific requirements.
When a purchase order hold is placed on a vendor’s record, the vendor may be asked to supply additional information and participate in the Conflict of Interest Review Process.
This process is intended to prevent the University of Illinois System from improperly entering into procurement transactions when a conflict or potential conflict of interest exists and has not been reviewed and cleared.
Vendor with Past Prohibited or Potential Conflict of Interest
The University of Illinois System will place a purchase order hold on the Banner profile of any vendor that has a previously identified prohibited or potential conflict of interest. Unless the University of Illinois System is able to demonstrate that the previous conflict of interest no longer exists or is beyond the reporting requirements in the Procurement Code, prior to completion of a purchase with a potential vendor, the potential vendor will be required to complete a Disclosure of Financial Interest and Conflict of Interest form. This form will be used to determine whether a prohibited or potential conflict continues to exist. If a prohibited or potential conflict of interest exists, the Conflict of Interest Review Process must be completed to determine if the University may proceed with the purchase. The purchase order hold will remain in place until the prohibited or potential conflict of interest no longer exists.
Vendor Relationship with University Employee at Time of Vendor Set Up
The University of Illinois System will place purchase order holds on the Banner profiles of any new vendors with an identified relationship with a University of Illinois System employee. Unless the University of Illinois System is able to demonstrate that the conflict of interest no longer exists or is beyond the reporting requirements in the Procurement Code, prior to completion of a purchase with the potential vendor, the potential vendor will be required to complete a Disclosure of Financial Interest and Conflict of Interest form. This form will be used to determine whether a prohibited or potential conflict exists. If a prohibited or potential conflict of interest exists, the Conflict of Interest Review Process must be completed to determine whether or not the University of Illinois System may proceed with the purchase. The purchase order hold will remain in place until the prohibited or potential conflict of interest no longer exists.
Vendors Identified in Conflict of Interest/Commitment Management and Oversight Plans
The University of Illinois System will place a purchase order hold on the Banner profile of any vendor that is identified in a Conflict of Interest/Commitment Management and Oversight Plan. Unless the University of Illinois System is able to demonstrate that the conflict of interest no longer exists or is beyond the reporting requirements in the Procurement Code, prior to completion of a purchase with the potential vendor, the potential vendor will be required to complete a Disclosure of Financial Interest and Conflict of Interest form. This form will be used to determine whether a prohibited or potential conflict exists. If a prohibited or potential conflict of interest exists, the Conflict of Interest Review Process must be completed to determine if the university may proceed with the purchase. The purchase order hold will remain in place until the prohibited or potential conflict of interest no longer exists.
Report of Non-University Activity (RNUA) Disclosed Entities
In the RNUA process, University of Illinois System employees may disclose relationships with entities that do not constitute actual or potential conflicts of interest under the Procurement Code because the entities:
- within the last three years, do not conduct and have not conducted business with the University of Illinois System;
- are not-for-profit organizations;
- are governmental entities;
- are not disclosed using their complete legal business name; or
- are large corporations for which the ownership interest or distributive income share of the employee or their family member would not exceed the disclosure threshold in the Procurement Code. These typically are corporations that must file 10K reports with the U.S. Securities and Exchange Commission.
Procurement Services will annually review approved RNUAs to identify reported relationships that may implicate the Procurement Code conflicts of interest provisions. Procurement Services will place a purchase order hold on vendor profiles in Banner that are determined from the RNUA reviews to present potential or actual conflicts of interest. The purchase order hold will remain in place until information is received that demonstrates a potential or actual conflict of interest does not exist under the Procurement Code.
Vendors with purchase order holds will be required to complete a Disclosure of Financial Interest and Conflict of Interest form to determine whether a prohibited or potential conflict exists. If a prohibited or potential conflict of interest exists, the Conflict of Interest Review Process must be completed to determine if the University may proceed with the purchase. The purchase order hold will remain in place until the prohibited or potential conflict of interest no longer exists.
Effects of a Purchase Order Hold
Banner Purchase Orders
When a purchase order hold is placed on a vendor profile, a Banner purchase requisition can be created, submitted, approved and routed to the Purchasing Division. The Purchasing Division, however, may not complete the transaction until the purchase order hold is removed from the vendor’s Banner profile or the purchase order is otherwise approved by the Office of Procurement Services after completion of the Conflict of Interest Review Process without finding of an actual conflict of interest.
iBuy Purchase Orders
If a unit is creating an iBuy purchase requisition for a vendor with a known purchase order hold, the unit must submit the requisition on the “Route to Purchasing” form. This requisition can still be created, submitted, approved and routed to the Purchasing Division. However, the Purchasing Division will not complete the transaction until the purchase order hold is removed from the vendor’s Banner record or the purchase order is otherwise approved by the Office of Procurement Services after the Conflict of Interest Review Process has been completed without finding of an actual conflict of interest.
Procurement Services will run a monthly report to find purchase orders created in iBuy with vendors subject to a purchase order hold. Procurement Services will use the report to verify that a Conflict of Interest Review Process was completed on the purchase order in question. If a Conflict of Interest Review Process was not completed, the Office of Procurement Services may suspend any services not performed and delivery of any supplies not received in order to conduct the Conflict of Interest Review Process. If all services have been performed and all supplies have been delivered, Procurement Services will notify the unit of the vendor’s purchase order hold and instruct the unit to use the “Route to Purchasing” form for all future purchases from the vendor. The report also will be used to identify any iBuy purchases for which a Purchasing Division did not identify a purchase order hold on a vendor profile prior to completion of the transaction.
Additional Resources
Job Aid: How to Determine if a Vendor has a Purchase Order Hold
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