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Home My WebLink About2000-09-20 PACKET 04.DREQUEST OF CITY COUNCIL ACTION COUNGL AGENDA MEETING ITEM # � p � DATE 9/20/00 � �1 PREPARED BY Finance Elizabeth Johnson ORIGINATING DEPARTMENT STAFF AUTHOR ��,<�.��.��<�«,�.��,�..<��,��.��<��.��.�� COUNCIL ACTION REQUEST: Approve the revised purchasing policy. STAFF RECOMMENDATION The state legisiature updated the purchasing Ievel when advertising and sealed bids are requiretl. The updated policy incorporates the new required levels and adds language concerning purchasing ethics and provides guidance for construction projects. BUDGET IMPLICATION ADVISORY COMMISSION ACTION BUDGETED AMOUNT DATE REVIEWED APPROVED ❑ ❑ ACTUALAMOUNT � � 1 ■ � HUMAiJ SERVICES/RIGHTS SUPPORTING DOCUMENTS: � MEMO(LETTER: ❑ RESOLUTION: ❑ ORDINANCE: ❑ ENGINEERING RECOMMENDATION: ❑ LEGAL RECOMMENDATION: � OTHER: ADMINISTRATORS COMMENTS r� � City Administrator Date * * * * * * # * * * * * * k rt k * W R R * * k * * * * * * * * * * * * * * * * * * + * �k * * * * COUNCIL ACTION TAKEN: ❑ APPROVED ❑ DENIED ❑ OTHER C:\My Documents\CC Action Form - No Macros.doc 1►/ : ��_ • r_ � � . �_� To: Honorable Mayor and City Council Ryan Schroeder, City AdministraCor From: Elizabeth Johnson, Finance Director�� Date Re: 09/12/00 Revised purchasing policy Introduction City Council is asked to consider and approve a revised purchasing policy. The ; legislature revised the municipal contracting law purchasing levels effective ust l, 2000. The level for requiring sealed bids has been split according to ilation. Municipalities with a population over 2,500 aze now reyuired to advertise �ids and accept sealed bids if the purchase is estimated to exceed $50,000. iously; all municipalities were required to advertise and accept sealed bids if the hase was estimated to exceed $25,000. The existin� purchasing policy dates from ? and`'needs clarification. Staff took the opportumty to not only update the �asing levels to a�ree with statute, but to also add language concerning purchasing is and provide guidance concerning the law governing construction contracts. Discussion Purchasing levels Purchasing levels (Section VII} was updated and clarified. The purchase table was split according to budgeted and unbudgeted purchases. The authorization level for department heads remained the same for budgeted purchases. Authorization for budgeted purchases for department head designees was increased to $1,000. The auYhorization level for the City Administrator was eapanded to include budgeted purchases to $49,999 as major purchases are approved by City Council during the budget deliberation. Authorization for unbudgeted purchases was tightened to require two quotes, rather than negotiation through the open market. September 12, 2000 Purchasing Ethics/Construction Projects A section on ethics (Section XI) was added. Purchasing goods and services is a major function of government and represents a substantial sum of money. The section prohibits activiYies, which circumvent policy guidelines and state statute. Also included is guidance for contracting for construction projects. Requested Action Approve the revised purchasing policy. CITY OF COTTAGE GROVE PURCHASING POLICY Goal: Tlie goal of fhe City of �Cottage Grove's purchasing syste�n is [o make purchases in an effcient manner that all applicable laws and policies in order to effectively ti�se public funds. Purpose: This policy, and its requiremenYs, governs purchasing procedures and the use of purchase orders. The policy is intended to establish authoriry and controls over tl�e purchasing process. This policy: � (a) Assures that purchases are made in accordance with Minnesota State Statute aud City policies. (b) Improves Yhe accuracy of budget reports and accounting records by notifying the Finance Deparhnent of intended purchases and orders in process aud Yhat a liabiiiry has been incurred. (c) Assures the vendor that the purchase is authorized and that payment will be made in a timely manner. (d) Establishes adequate internal eontrols over the purcliasing proeess. Guidelines. Planning for purchases should be dorie oi� a slao��t-term and a long- term basis. Short-term purchases are programmed in fhe budget dw�ing armual bacdget delzberations. Lo�ig-term purchases m°e progranzmed in the Capital bnprrovement Pdan for canstruction relaled projects a�id i�� the Eguipnzent Replacemen�t Schedule for capital purchases. II Definitious: AdverCisement/Sealed Bid: Formal sealed bids including a notice publisl�ed in Che official newspaper at least 10 days prior to the date for submitting bids. Bids must be kept on file for 10 years (MS 1337) Blanket Purchase Order: A purchase order that does not specify a quantity for purchase, but rather ieaves the amounT open. Typically is used for bulk items purchased throughout the fiscal year. CapiYal Outlay: Capital items which cosC n�ore than �388 �1,000 and have a service life longer than fil�ee one year. Designee: An employee auChorized by a Department Head to sign for purchases and invoices up to $999. Emergenc,y Purchase: A purchase that results in cc�rrection of a situation that would suspend a critical City function for an unacceptable period of time or which is necessary to respond to a life or properiy threatening event. Operation expe�ise: Goods and supplies used during the course of daily work activities. Ooen Market: Direct negoCiaYion with vendor. Ouotations: Direct negotiation with vendors obtaining two or more written quotations witbout advertising for bids. Quotes must be kept on file for 10 years with purchase documentation. Renair expense: Repair of equipment, vehicles and buildings. III UnauYhorized purchases are the sole responsibility of t�he department l�ead or designee making the purchase. Al] purchases musf be coded to the proper expenditure account. In no case shall purchases be coded to an improper account in order to use the budget amounf in that accounf. N In certain cases, authorization shall be given to carry open purchase orders annually. All open purchase orders (blaiilceC purchase orders) must be approved by the Ciry Administrator. V. Exempt purchases. The following purchases shall be exempf from the use of a purchase order. These purchases will, however, be subject to tl�e approval requirements in Section VII. (a) Professioi�al eontracted services (legal, engineering, auditing, anima] control, janitorial, assessor's, speeial studies etc). Request for Proposals shall be used whenever possible. (b) Public improvement projects ordered by City Councii (street paving, waterlsewerJstorm sewer, curb and gutter, streeTlights ete), which shall follow MN STatute 429 requirements. (c) Routine expenditures ineluding subscript�ons, license renewals and maintenance agreements, utility costs, insurance payments, em�loyer• share ofpayroll related costs, SAC, surcharge, bond przncipal and interest, publication notices. (d) Empioyee reimbursement for miscellaneous expenses, sucl� as mileage, meals, travel and Craining, periy cash and parking. Receipts or other documentation must accompany reimbursement requests prior to payment. Refer to the most current version of the Travel, Training and Edueation Policy when seeking reimbursement for this type of expenditure. ._. :...:.�+;• - - VI Purchase orders are required for all purchases of �oods and services not included in the list of exempted purchases above that are $�8 $100 or more. Purchase orders are numbered because of the importance of accounting for each purchase order form. No purchase order copies are to be destroyed or discarded. Discretion should be used in determining the use of purchase orders for purchases less tliazi �-58 $100. Purchase orders may be desired for documentarion and control. Each department will be issued a-se6-e4�pre-nun�bered three par�t purcl�ase order forms. �. The Account Payable Clerk will maintain a record of purchase arder numbers and the department to wbich they have been assigned. The following steps apply to all purchases o�£ goods and seivices requiring purchase orders. Step 1 Purchaser prepares the purchase order, including vendor name, address, deseription of item ordered, eost and budget coding. If Cl�e purchase has been previously approved by the CiYy Couneil, the date of sueh approval should appear on tl�e purchase order. Step 2 Purchaser obtains the approval required in SecYion VII and distributes fhe copies. Step 3 Purchaser places the order with the vendor. Step 4 Purchaser checks the content of the order when received and signs and dates the receiving documentation. Step 5 lipon reeeipt of tbe invoice, the purchaser attaches the }�urcl�ase order and receiving documentaYion, and submits the invoice to the Department Head or designee for approval. Step 6 Department Head or designee approves the invoice, attaches the appropriate copy and submits it, including other appropriate documentation, to the Finance Department for processing. Any voided, disa�proved or damaged copies of tl�e purchase order shall be submitted to the Finance Department. An invoice That is submitted to the Finance Departme�lt later than 30 days from tlie invoice dafe must� be aceompanied by a written explanation regarding Che delay. VII Purchase levels Purchases are divided into categories Iisted below. Department Heads a�-e authorized to approve budgeted purchases (including repairs) under �2,500. Purchase orders Chat will result in a budget deficit for a category (commodities, contracTuai, capital outlay), or will be charged to a category with an existing deficit, must be noted as such and approved by the City Administrator. Budgeted Purchases: Expenditure Leve] Purchase QuotelOpen Required Adve��tising MN Sfate Order Market A roval ��e ui��ed? i Statute Under $�&$100 I Discretionary Open Markef i Dept Head or i Nv � � desi nee ��-58-�100-$999 Required Open':Vlarket � Dept Head or � No desi nee $1,000-$2,499 Re uired O en Market De t Head No $2,500-$�4 Required Two Quotes , Administrator No $49,999 � � ei c nn��i �2�ktf� �dv9-Q�t9�eS 4� � � 4�34'� �#�feE� ' 9�eF �-24�}9 Required Sealed Bids City Council Yes 429.041 $50,000 ar over i I i ( ! 471.345 Unbudgeted Furchases: Expenditure Level Purchase Quote/Open Required Advertisirzg MN State � Order Market A roval re uired? Statute Under $100 Discretionary Open ?vIarket Dept Head or � No ! Desi nee � $100-$949 Re uired O en Market Administrator No i $1,000-$4 � Required � E3��eF � Adnvnistrator i No � $49,999 i Two quotes � with Council I ( � A roval � �-�;989�f�-1-4 � � �=�ve-c�t�etes ^�r �de � ..:�w�� i '$50,000 or over Ra uired Sealed bids Cit CQUncil Yes 471345 Blanket Purchase Orders. Blanket purehase orders may be used for� budgeted purchases Prom the same vendor that occur in similar inerements during the fisca] year (i.e. uniform aliowance, cleaning service etc) One copy of tbe purchase order shall be filed with the Accounts Payable Clerk. The purehase order number shall be noted on each invoice. Purchases are to be charged to the budget year that the good is received or the service rendered. VIII Bidding Requirements. Specificafions for suppZies and equipment, which af competitive in natu��e (i.e. computers, printers, cars, b-ucks and plows etc), cannot exclude one type of egutpment or supply. Pro�osals and specifications must allow free and full com�etition. Bidding requirements may not be avoided by splitting tlze purcha�se into several smaller contracts, each of whzah is below the required levels in table VII above. Sealed bids are required for purchases over $SQ000. Invitations to bid must be published in the City's official newspaper. Contracts must be awarded to the Iowest r�esponsible bidder. This does not mean that the contracf is awa��ded to the lowest bidder fn terms of dollars, but rather the lowest cost bidder� who has the technical skz�ll and financial responsibility to �erform the work. IX Constr P��ojects. Contracting for co�zstruction projects sha11 comply with Mn Statute 429. Plans and specifications must be approved by City Council prior to advertising for bids on improvement projects. A. AdvertisingforlmprovementProjecfs: Ifthe estzmated cost of�the irnprovement is greater than $25,000 but not �nore than $IOQOOQ the�� bids shall b� a�dvertised in the newspaper and such othe�� papers and for such length� of time as the Courtcil may deem advisable. If the estinzated cost of the inzprovernent is greater than $100,000 then t]ze publication shall be made in tke newspaper and a trade paper not less than three weeks before the bid submission date. The advertiseinent n�i1l specify the type of worlc and the time and place the bids are due arsd when tlzey will be publicly opened. B. Bids: AZI bids rnust be accompanied by a bid bond, cash deposit, cczshier's check o�^ certi�ed check payable to the Ciry of Cotfage Grove in the amount of S% of the estimated cost. Invitations to bid on improvement pr•ojects must be publislied in ihe City's offzcial newspaper and the Constr Bulletin as specified by applicable State law. In addition to the legal notice, the City must pr instructioras to bidders a�id general specifzcations for the sealed bids. The bid opening date must not be less than 10 days after the first publication if the improve�nenf project is esti�nated to be less than $100,000. The bid oyeningdate niust not l�e less tlsa�a 3 weeks after the fzrst publication if the improve�nent project is estimated to be greater than $IOQ 000. The improvement will be awarded and a written contract executed with the lowest responsible bidder. Contracts may be naodi�ed froni time to time. If a contract is a unit based contract, then it �nay be modified by the Council without advertising for bids at the sa�ne unit price if the cost of the additional work does not exceed 25% of tlze original contract price. X Cooperative Purchasing This policy allows for co�2tracfiing for the purchase of supplies, n2aterials aiid eyuipnzen�t withoa�t regard to the competitive bidding ��equiremerzts of Statute 471.345 if the purchase is through a national mu�zicipal association's purchasing allim�ce or� cooperative created by a joint pomers agreement that pui�chases items fronz �nore thmi one source on the basis of conzpetitive bids or competitive qu�otations per 471.345 sub I5. XI Ethicad Considerations. Purchasing becomes an instrumer�t ofpublzc policy. Therefore, �zo personal purchases shall be allowed through the City purclxasing systenz. Adclitionally: A. Competitive bidding requirements will n�ot be circumvenfed by splitting purchases B. Requesting an eme��gency purchase, when in fact, nv en2ergency exists C. Requesting or making a`sole source' patirchase when competition is availafile. D. Makin� bidding specifzcations unnecessarily restrictive E. Pre-qualifying bidders on a discriminato�y basis F. Removing bidders from tlze bidder's list without jz�st eause G. Requiri��g unnecessa�°ily h�igh bid bond aniounts H. Giving unfair advantage by providing a� vendor with irifornzation concer°ning their competitor's bid l:/Clerk/Misceilaneous/Purci�asing I'olicy.doe