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HomeMy WebLinkAbout6.f. Purchasing Policy 4ROSEMOLINIT SUMMARY CITY COUNCIL City Council Meeting Date: June 17, 2008 AGENDA ITEM: Purchasing Policy AGENDA SECTION: Consent PREPARED BY: Jeff May, Finance Director AGENDA NO. L.4. ATTACHMENTS: Revised Purchasing Policy APPROVED BY: ‘t) RECOMMENDED ACTION: Approve the City's revised Purchasing Policy. ISSUE The issue before the City Council is the approval of the modifications to the City's current Purchasing Policy to reflect changes in State Statutes. BACKGROUND This item is on the agenda to bring forth suggestions for modifications to the City's Purchasing Policy. The last time the policy was updated was in 2001 after the State had made changes in the competitive bid thresholds. Because of changes in the costs of doing business the State has made further changes in the statutes to once again increase the competitive bid thresholds. In 2001 the policy was amended to incorporate part of the statute changes but our policy remained more restrictive than the statute required in relation to what the City Council must approve before the purchases were made. As you can see from the suggestions in the draft policy we would continue to be more restrictive than statute. The changes are a reflection of the discussion that was held at the Council work session on June 3` SUMMARY Recommend the above motion to approve the revised Purchasing Policy for the City of Rosemount. CITY OF ROSEMOUNT POLICY TITLE: PURCHASING POLICY PROPOSED BY: FINANCE DATE APPROVED BY COUNCIL: June 21, 1994 (Amended June 17, 2008) PURPOSE The purpose of this policy is to establish specific guidelines for the purchase of goods and services by employees of the City of Rosemount. The use of public funds requires diligent scrutiny and careful regulation. The controls necessary are in two areas. First, the statutory law, which clearly details procedures for the purchase of goods and services by City employees. Second, the controls not required by statute, but that are important to a good system of internal control and a sound management program. This policy will outline the laws governing contracts and bids and describe the basis for a good internal control system. Following the law and the City's purchase system should help City officials obtain maximum benefit from each dollar of public funds. CONTRACTING BID 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 which 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): 1. For contracts over $100,000 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. 2. For contracts from $25,000 to $100,000 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 requirements of competitive bidding. All quotations obtained shall be kept on file for a period of at least one year after receipt thereof. Page 2 Purchasing Policy 3. For contracts under $25,000 the contract may be made upon quotation or in the open market, in 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. The provisions noted in this policy are not intended to be an exhaustive list of Minnesota bid laws. CITY POLICY It is the policy of the City of Rosemount that we follow State statutory guidelines in purchasing matters. However, we additionally require City Council approval on all expenditures over $25,000 before the purchases are made. INTERNAL CONTROLS The primary basis for the City's system of internal control is the City's annual budget. The budget, as adopted by the City Council, serves as the basis for the City's spending for that year. The appropriate level of responsible official must approve any expenditure over budget. Also, any expenditure that would utilize money budgeted from one area of a department budget for another purpose must be communicated by that department head to the City Administrator for his /her verbal approval. In addition, all purchase orders and invoices presented for payment must be approved by the appropriate department head or supervisor and reviewed for reasonableness and proper account coding by the Finance Department. In order to expedite payments to vendors in a timely fashion, law allows the City Council to delegate authority to an appointed official to pay claims prior to their approval. The City Council, by resolution (see attached Resolution 1996 -94), has delegated this authority to either the City Administrator or the City Clerk.