Contract Purchase Agreement

When to Use a Contract Purchase Agreement
You create contract purchase agreements with your suppliers to agree on specific terms and conditions without indicating the goods and services that you will be purchasing.  A contract purchase agreement is an agreement between you and a supplier for unspecified goods or services.  This agreement may include terms and conditions, committed amount and an effective and expiration date.  Contract purchase agreements are referenced on standard purchase order lines. Oracle Purchasing monitors the amount you have spent against contract purchase agreements. 
Navigation: MCR PO > Purchase Orders > Purchase Orders

 

Header: This agreement may include terms and conditions, committed amount, and effective and expiration dates.

Amount Agreed: When creating a contract purchase agreement, you can indicate the dollar amount of the agreement.

Released: The dollar value displayed in this field is the total dollar value of all standard purchase order lines referencing the contract.

Global: Select the Global checkbox only if you are creating a global agreement. Global agreements were discussed in the blanket agreement topic.

Terms and Conditions

Save the records. Once the save Approval button will enable for approve the CPA

Click on Approve.We may get error like Purchasing Document has no rate type, to resolve this issue, go to Currency Button, and change the Currency.

Now Click on Approve and Submit for Approval and click on OK.

You can access the Agreement Controls area of the Terms button.  The effective start and stop dates for the contract can be entered.  Standard purchase orders can only reference the contract during its effective dates.

Amount Agreed is used for Hierarchy Approval limit and it is an advanced amount for a specific CPA.

Amount Limit is used for purchases and we can change the Amount Limit at any point of time.

Initially this value is equal to the Amount Agreed.  We can provide a higher value in the Amount Limit field which will allow the released amount to total in excess of the Amount Agreed, but not higher than the Amount Limit.

Line, Shipment and Distribution Windows: Although these windows appear as part of the Purchase Order form, you cannot enter these details on a contract purchase agreement.  These details will be provided once the contract is approved as standard purchase orders are issued with reference to the contract.

In Order to release CPA, we need to create Standard Purchase Order.

MCR PO > Purchase Orders > Purchase Orders

Go to Reference Document tab and enter the CPA details.

Standard Purchase Order Line - Reference Documents Tabbed Region

Contract: You cannot enter a contract number until you have entered a supplier in the header, and the contract must be for this supplier. The contract you choose must be effective; that is, the current date has to be within the effective date and the expiration date of the contract.  If you reference a contract purchase agreement on a standard purchase order line, Purchasing adds the total amount of the purchase order line to the total amount of the contract purchase agreement after the purchase order is approved. Oracle Purchasing lists only those contracts with the same supplier as the one on your standard purchase order.

Save the changes and Click on Approve and submit for approval click on OK.

Now PO is approved.

Now query for CPA 3000, where we can observe the release amount 50000.00.

Again if you create another PO with amount of more than 100,000.00 against the same CPA (Amount limit as 150000.00 ), we will get an alert message, PO total amount is exceeding the CPA Amount Limit.

Global Contract Agreements

Creating Global Contract Agreements

Global agreements are negotiated for enterprise-wide pricing. The global agreement can be assigned to the organizations which are allowed to use them using Enable Organizations in the Tools menu. The organizations available to enable in this window are determined by the supplier sites for the agreement’s assigned supplier.

Important Setup Considerations

Purchasing supplier sites must be defined for each operating unit required.

Inter company transaction flows must be created for inter company invoicing to take place.

Note: Global contract purchase agreements are part of the Center-Led Procurement feature set in Oracle Purchasing which was discussed earlier in this module.