ORIGINATING NO.: 04-09-ADM/OMB
AGENCY: DIVISION OF ADMINISTRATION OFFICE OF MANAGEMENT AND BUDGET
EFFECTIVE DATE: 10-27-03
EXPIRATION DATE: INDEFINITE
SUBJECT: LINE OF CREDIT (LOC) PROGRAM
ATTENTION: DIRECTORS OF ADMINISTRATION & CHIEF FISCAL OFFICERS
FOR INFORMATION CONTACT: GEORGE McELROY, DIVISION OF ADMINISTRATION
PHONE: (609) 984-6271
The Department of the Treasury's Line of Credit (LOC) Program is designed
to assist agencies in acquiring major items of equipment in the most cost
effective manner. The lease purchase of equipment allows for a more flexible
budget with the cost of equipment spread over several years. The LOC provides
for items of equipment to be financed over a three-year term. The LOC
also provides the State with the ability to refinance existing higher
interest rate leases where economic advantages exist.
It has been determined that acquisitions under this program are cost
effective when the purchase price of the items of equipment exceeds $25,000.
Any set of like items that do not exceed $25,000 will not be considered.
Examples of assets normally financed through the LOC Program are:
Public Works Vehicles
Energy Management Systems
Mainframes, Mini-computers and Networks
Personal Computers and Printers
Pre-packaged "Off the shelf" Software
Agency requests to participate in this program are reviewed by several
different entities within the Department of the Treasury. These include
but are not limited to the Division of Administration (ADM), the Division
of Purchase and Property (DPP), Office of Information Technology (OIT),
the Office of Public Finance, the Office of Management and Budget (OMB)
and the Division of Property Management and Construction (DPMC). Approval
to proceed depends upon several key factors:
- Ability of the agency to pay annual lease purchase and interest costs.
- Technical Review.
- Financial Management Review.
- Programmatic Needs Analysis.
- Availability LOC balances.
ONGOING PROJECT REVIEW PROCESS
As needs arise, agencies may request major items of equipment to be
included under the LOC by providing in writing to the Division of ADM
the programmatic justification, the allocation by organization, the total
estimated cost of the equipment or systems broken into detail, which should
include a copy of a contract vendor's price quotation and any necessary
additional backup documentation, the estimated annual payment, and the
source of funding (NJCFS account number). If the project is to be bid,
a complete copy of the specification would be required and if the agency
is seeking a waiver of advertising, a copy of the waiver should be included
in the transmittal. The estimated annual payment shall be based on the
prevailing interest rate at the time of the request and shall be provided
by the Division of ADM. Any technical approvals which may be required
(i.e. OIT - computers/telecommunications, Central Motor Pool - vehicles,
DPMC - furniture) must be received and incorporated into the Agencies'
request to the Division of ADM.
The Division of ADM will prepare a memorandum to the Director of OMB
for approval of funding and programmatic justification and attach the
departmental request. OMB will review all funding requests, and transmit
a response of approval/disapproval to the Division of ADM. This response
will then be conveyed by the Division of ADM to the Requesting Agency.
Agencies must show payments for LOC purchases in their annual budget
request in the Additions, Improvements and Equipment object on the IBN3110R
(as described in the Agency Budget instructions). The annual budget request
should include existing payments as well as estimated payments for approved
ACQUISITION OF EQUIPMENT
The Division of ADM will issue all orders or Letters of Award for equipment
either using annual term contracts, bids or waivers. Prior to the Division
of ADM completing an award letter, it must first seek OMB's approval,
so each project proposal presented for award must receive this secondary
review/approval. Departments will be notified when contract awards are
DELIVERY OF EQUIPMENT
Upon delivery of equipment to the designated agency, the authorized
receiving authority for that agency must follow the Division of ADM procedure
PAYMENT TO THE VENDOR
The Division of ADM shall also prepare a "Payment Certificate" or Equipment
Schedule and forward this document to the designated Lessor, who shall
make the necessary payment to the contract vendor.
ANNUAL LEASE PAYMENTS
The Department of the Treasury has established a Central Inter-departmental
Account for the processing of all lease and interest payments. Each agency
will be billed via Intra-Governmental Payment Voucher (UA) at the beginning
of the fiscal year for their payments and during the year if any additional
LOC draw downs are requested.
Interest begins accruing to the agency under the LOC at the time payment
is made to the vendor for product received. Any vendor payments made prior
to March 1 will be booked for the June 15 debt service payment, while
any vendor payment made prior to September 1 will be booked for the December
15 debt service payment.
Associate Deputy State Treasurer &
Director and Chief Financial Officer
Division of Administration
Charlene M. Holzbaur
Office of Management and Budget
- All LOC procurement requests must be submitted in writing to the
LOC Administrator, Division of ADM for verification of availability of
LOC funds. The purchase of items of equipment through the LOC requires
that all standard purchasing rules and regulations be followed. Items
requiring advertised bidding or waivers of advertising must be submitted
with all specifications and documentation accompanied with the written
Items purchased through term contracts should include a list of item(s)
and pricing submitted by vendors, as well as all necessary backup documentation.
All vendor prices will be verified by DPP.
Items purchased through a waiver of advertising should include a copy
of the waiver with all of the attached terms and conditions and the vendor's
- Examples of items that cannot be bought or paid through the LOC are
- Maintenance charges for equipment and computer hardware.
- Programming charges
- System conversion charges
- Design and Development charges for software, hardware, local area
- Service charges
- Professional services fees
- Consultant fees
- Assets with an economic life of less than three years
The above items may be procured and paid through standard State purchasing
and payment procedures.
- All furniture procurement requests must comply with GSA Circular
No. PC-37, i.e., Governor's Office approvals, fire code and space regulations.
- LOC procurement requests for information technology or telecommunications
hardware, software and related equipment must be accompanied with OIT
approvals. Such requests are to be submitted to OIT in the form of a Letter
of Transmittal from the requesting agency with a justification, which
includes a detailed Statement of Work as well as required pricing and
funding information to assure a timely review by OIT. Once this approval
is received from OIT, it should be incorporated into your funding request
proposal to the LOC Administrator.
- Purchase price of equipment cannot exceed the dollar amount authorized
for agencies in the LOC based upon the OMB approval/disapproval letter.
- Copies of all procurement documents processed through the LOC will
be forwarded to the respective agencies.
Delivery, Acceptance and Payment of Equipment through the LOC.
- All equipment delivered should be inspected for compliance with contract
specifications and requirements.
- Goods should be accompanied with vendor's invoice (not State Payment
Voucher) itemizing goods and unit prices. Invoice must be sent to agency
- Original invoice must be sent to LOC Administrator, Division of ADM,
accompanied with letter requesting payment processing and also stating
that each item of equipment meets contract requirements and is functioning
- Agencies should not have vendors contact the Division of ADM directly
Receipt of letter and vendor invoice at the Division of ADM will generate
the Payment Certificate (Equipment Schedule).
- Be sure equipment meets requirements and is functioning properly
prior to requesting payment processing.
- If discount terms are applicable, please provide advance notice to
the Division of ADM to expedite payment. Discount terms are applicable
- Discount period commences on the next business day after the agency
receives a correct invoice from the vendor for products accepted by
the agency which meet the terms, conditions and specifications of
the contract. If invoice is received prior to delivery, the discount
period begins on the day of acceptance of the goods.