HomeMy WebLinkAbout7.g. Purchang Policy F-1 ,- � CITY OF ROSEMOUNT
EXECUTIVE SUMMARY FOR ACTION
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CITY COUNCIL MEETING DATE: June 7, 1994
AGENDA ITEM: Purchasing Policy F-1 AGENDA SECTION:
New Business
PREPARED BY: Jeff May, Finance Director AGENDA I�t¢�� � �
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ATTACHMENTS: Letter from City Auditor, Copy of APPROVED BY:
Purchasing Policy F-1
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Attached for your consideration is an amended policy regarding the purchasing policies for the
City of Rosemount. The purpose of the policy is to establish specific guidelines for the
purchase of goods and services by employees of the City of Rosemount. This policy has not
been updated since 1989 and we feel that now would be an appropriate time to do so. The
updated policy addresses legal requirements concerning contracting and addresses appropriate
internal controls regarding other purchases. Staff feels that this updated policy wiil enhance our
ability to operate efficiently, and at the same time, give Council assurances that all tegal and
control measures are being taken that are necessary.
RECOMMENDED ACTION: Motion to approve the amended Purchasing Policy F-1 .
COUNCIL ACTION:
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CITY OF ROSEMOUNT
POLICY TITLE: PURCHASiNG POLICY
POLICY NUMBER: F - 1
PROPOSED BY: FINANCE
DATE APPROVED
BY COUNGL: June 7, 1994
PURPOSE
The purpose of this poiicy is to establish specific guidelines for the purchase of goods
and services by employees of the City of Rosemount.
The use of pubtic 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 Iaws 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 eompetitive
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 $25,000 - sealed bids, solicited by pubfic notice and
subject to the particufar requirements of the City. The sealed bids should be
solicited by public notice and be kept on file.
2. For contracts from $10,000 to $25,000 - sealed bids or direct negotiation,
with two quotations whenever possible. If sealed bids are used they should be
solicited by public notice and be kept on file. If quotations are used, the quotes
should be kept on file.
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Page 2 - Policy F-1
3. For contracts under $10,000 - open market or quotations (with at least two
contract quotations). If quotations are used, the quotes should be kept on file.
Also, there are other considerations in the statute as fallows:
1. Group Insurance: Any City that provides group insurance #or 25 or more
employees must comply with certain bidding requirements in contracting for or
renewing that insurance, including issuing written RFP's at least every five
years.
2. Specifications on Contracts: The specifications on contracts must be written
so as not to exclude all but one type or kind of supplies or equipment.
3. Contractor's Performance Bonds: Contractors doing public work are
required to give a performance bond in an amount not less than the contract
price if the contract is more than $10,000. If the contract is under $50,000, the
contractor may provide an irrevocable bank letter of credit in lieu of a bond.
4. Advertising for Bids: Advertisements for bids must be published at Jeast
once in the official newspaper and at least ten days in advance (or 21 days in
advance for Chapter 429 public improvement projects) of the last date for
submission of bids.
5. Awarding of Bids: If the contract was not awarded to the lowest responsible
bidder, the reasons must be documented in the minutes.
6. Conflicts of Interesfi Minnesota statutes forbid any public officer authorized
to take part in the making of a sale, lease or contract to voluntarily have a
personal financial interest in the transaction or personally benefit financially from
it.
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. Any expenditure over budget must be approved by the
appropriate level of responsible official. 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 payrnent must be approved
by the appropriate department head or supervisor and reviewed for reasonableness
and proper account coding by the Finance Department.
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BD�CK�R1Vf��ilN1�EINEN� 1���Y�R
C E ft 7 t F L E D P U B L 1 C A C C O U N 'i A N i S
June 1, 1994
Honorable Mayor and Members of the City Council
City of Rosemount, Minnesota
Attached is a new purchasing policy for your consideration. We recommend that the City's
policy be updated due to several changes in state statutes the past few years. The new
policy meets the legal compliance requirements as defined by the most recent edition of the
Legal Compliance Audit Guide published by Office of the State Auditor. Again, we
suggest the City adopt this policy to maintain compliance with current state statutes.
Sincerely,
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a. ��.�-�--
Roger A. Schanus, C.P.A.
Vice-President
MINNEAPOLIS,MN
Norwest Financeal Cenfer
7900 Xerxes Avenue Sou[!�,Suite 2200
B�oomingWn,MN 55431-1I t3
f612)84A-2500
Fvc(612)844-2525