Under what condition will a Level 3 hierarchy not be established?

A Level 3 hierarchy is typically established to ensure effective oversight and management of procurement processes, particularly when there is ambiguity in who has the authority to make purchases. The absence of clear delegations of procurement authority signifies a potential for confusion or lack of responsibility in procurement activities, which is a primary condition leading to the need for an established hierarchy. Without clear delegations, the organization may not have a defined structure for who in the procurement process has the authority to act, thus making it essential to implement a Level 3 hierarchy to clarify roles and maintain control over purchasing actions. This approach helps in mitigating risks associated with unauthorized spending and ensuring compliance with regulatory requirements.

In contrast, clear delegations of procurement authority and sufficient funding can facilitate streamlined purchasing processes and may reduce the need for an additional oversight layer like a Level 3 hierarchy. Compliance with previous purchase requirements pertains to following established protocols but does not necessarily impact the establishment of a hierarchy directly, as it focuses more on adherence to past practices rather than clarifying roles and responsibilities within the procurement framework.