The City Manager shall purchase or contract for the equipment, materials, supplies and services required by the city, for which expenditures have been authorized in the budget or by other action of the Council. The Council shall establish by ordinance or resolution the conditions under which purchases shall be made only after competitive bidding, shall specify these amounts and conditions under which Council approval is required for specific items of purchase, and shall prescribe conditions under which all bids may be rejected and new bids invited. In the case of materials, supplies and equipment, a preference of not to exceed five percent may be allowed to firms or individuals who regularly maintain a place of business and transact business in, or maintain an inventory of merchandise for sale in the city.