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HomeMy WebLinkAbout7.g. Purchang Policy F-1 ,- � CITY OF ROSEMOUNT EXECUTIVE SUMMARY FOR ACTION a � 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¢�� � � Ii j ATTACHMENTS: Letter from City Auditor, Copy of APPROVED BY: Purchasing Policy F-1 J 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: � ' 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. s ' 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. . 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, '"`'"� 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