HomeMy WebLinkAbout20180917 - VI-02 - Adopt City Purchasing Policy
City Council Memorandum
To: Mayor Hicks & City Councilmembers
From: Melanie Lammers, Finance Manager
Date: September 17th, 2018
Item: Purchasing Policy
Council Action Requested:
Council to adopt formal purchasing policy.
Background Information:
The City has no formal purchasing policy on record. We currently have purchasing
procedures in place. The attached policy outlines guidelines departments should use when
making purchases. Competitive bidding requirements and dollar thresholds are stated in
the policy to guide staff on how they should be proceeding with a purchase. The dollar
amounts are the same as MN statute. The thresholds were recently amended and can be
found at Minn. Stat. 471.345, subd. 3.
Financial Impact:
No financial impacts.
Advisory Commission Discussion:
N/A
Council Committee Discussion:
N/A
Attachments:
Purchasing policy
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PURCHASING
Purchasing Policy –
Purpose
To comply with Minnesota Statue 471.345 and to establish specific guidelines for the
purchase of goods and services by the employees of the City of Hastings. For purchases
made under federal or State grant funded programs, additional restrictions are identified
within the uniform grant guidance regulations (2 CFR 200.318).
Policy
It is the policy of the city to acquire goods and services through a competitive process
whenever practical that results in supply arrangements at the most effective net cost, in
the correct quantities, of the appropriate quality, and from the most responsive and
responsible source. Purchasing and supply management functions at the city are
delegated to the department directors, requiring diligent attention to the governing laws
and rules.
Purchasing goods and services using a purchasing card is covered under the Purchasing
Card Policy.
All federal grant expenditures will be in compliance with OMB 2CFR200 (Uniform
Guidance). All federal grant expenditures must be reasonable, necessary, and
adequately documented. All federal grant expenditures must be deemed to be
allowable under specific grant agreements and in accordance with 2CFR200, subpart E.
Cooperative Purchasing Agreements
When possible, every effort should be used to take advantage of cooperative purchasing
agreements as a cost savings measure. The city shall maintain its membership with the
State Cooperative Purchasing Program. By using the State’s plan, bidding
requirements are already fulfilled.
Governing Laws Contracting Bid State Laws
A city entering into an agreement for the sale or purchase of supplies, materials,
equipment or the rental thereof, or the construction, alteration, repair or maintenance of
real or personal property must abide by the statutes relating to contracting and bidding.
Minnesota Statute 471.345 was established to provide dollar limits for all cities upon
contracts that shall or may be entered into on the basis of competitive bids, quotations
or purchase or sale in the open market. This statute puts the following basic
requirements on cities (based on the estimated contract amount):
For contracts over $175,000 – sealed bids shall be solicited by public notice in the
manner and subject to the particular requirements of the city. The sealed bids shall be
solicited by public notice and be kept on file. City Council will approve these
contracts during a regularly scheduled meeting.
For contracts exceeding $25,000 but not $175,000 – sealed bids or by direct
negotiation, by obtaining two or more quotations for the purchase or sale when
possible, and without advertising for bids or otherwise complying with the
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requirements of competitive bidding. All quotations obtained shall be kept on file for
a period of at least one year after receipt thereof.
For contracts $25,000 or less – the contract may be made upon quotation or in the
open market, at the discretion of the city. If the contract is made upon quotation it
shall be based, so far as practicable, on at least two quotations which shall be kept on
file for a period of at least one year after their receipt.
Extra care should be exercised when using sole source vendors. The City Administrator
and Finance Manager must approve such purchases in advance. Procurements will not be
split to avoid competition or council action.
Director/Manager Responsibilities
Department Directors/Managers and other persons authorized to purchase are responsible
for certain functions related to purchasing and payment for goods and services received.
The responsibilities are:
Purchasing done on a competitive basis and consistent with the approved annual
budget.
Control of purchased goods and services to ensure only authorized use.
No reimbursement for use of personal gift cards or store rebates.
All terms and conditions (including pricing) of the purchase as specified in the
purchase order and applicable contract are attained prior to the payment of the claim.
Providing the Finance Department with approved invoices and supporting written
documentation in a timely manner.
Immediate notification to the Finance Department of any circumstances affecting
acceptability, performance, or any other reason which may lead to withholding of
payment.
Cooperation with the Finance Department in resolving disputes with vendors
regarding terms, quantity, or any questions of performance.
Designating budget coding of all invoices.
House documents showing multiple bids or state bid pricing.
Finance Department Responsibilities
The Finance Department personnel are responsible for the following:
Assistance in seeking vendors to provide the best price availability.
Reasonable audit tests to determine fund availability, legality and validity of
obligations for payment.
Pay authorized bills that meet procedural requirements.
Competitive Price Quote/Bids
Competitive price quote/bids require the following:
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Purchaser must obtain competitive price quotes/bids for services or commodities as
outlined in Contracting Bid Law Section of this policy.
Purchaser will prepare a purchase order or documented invoice and submit to the
Department Director/Manager and the Finance Department for approval.
A documented invoice allows all necessary information and approvals to be placed
directly on the invoice. This would apply to emergency purchases of goods and
services and to routine items such as utility bills.
Purchases
Purchases under $5,000 are approved by department directors/managers when in the
budget. Unbudgeted expense under $5,000 must have City Administrator sign off.
Purchases from $5,000 to $175,000 will have approval from department
directors/managers and the City Administrator when in the budget. Unbudgeted expense
over $5,000 must be approved by City Council.
Purchases over $175,000 will be approved by City Council during a City Council
meeting.
Expense Vouchers
Expense vouchers must have the following:
Tabulation of quotes/bids where appropriate;
Account number and project information if applicable;
Budget appropriation for item or service requisitioned;
Department Director/Manager approval;
Date ordered and approximate date to be received;
Full vendor name/address – no abbreviations;
All items purchased must be listed separately with respective costs;
Additional Provisions/Resources
The provisions noted in this policy are not intended to be an exhaustive list of Minnesota
laws. Additional resources on purchasing include:
Handbook for Minnesota Cities, published by the League of Minnesota Cities
Emergency Contracts, published by the League of Minnesota Cities
City of Hastings Finance Department
Authority for Implementation and Enforcement
All employees are responsible for adhering to this policy when purchasing goods or services.
Managers are responsible for monitoring performance within their areas of jurisdiction. The City
Administrator is the chief purchasing officer of the city. Responsibility for administering
established Purchasing Policies and Procedures has been delegated to the Finance Department.
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