(A) PURPOSE: The purchasing policy of the City is a set of instructions so that the contracting and purchasing functions can be carried out efficiently and uniformly. Adherence to the policy by all departments is essential to accomplishing this goal. The purchasing policy is devised to follow the guidelines established by the codes and ordinances of the State of Ohio and the City of Lima.
(B) PURCHASING AUTHORITY: Contracting and purchasing authority is granted by the Charter and this policy to the Mayor. The Mayor may delegate this function.
(C) CERTIFICATION, COMMUNICATION TO COUNCIL, AND PAYMENT: No contract, agreement or other obligation involving the expenditure of money shall be entered into, nor shall any ordinance or resolution be passed, or order for the expenditure of money be issued by the Mayor, or be authorized by any officer of the City, unless the City Auditor shall first certify in writing to the Mayor or to the proper officer, as the case may be, that the money required for such contract, agreement, obligation or expenditure is in the Treasury or in the process of collection to the credit of the fund from which it is to be drawn, and not appropriated for any other purpose, which certificate shall be filed and immediately recorded. The sum so certified shall not thereafter be considered unappropriated until the City is discharged from the contract, agreement or obligation.
(1) Communications with Council. In order to keep City Council apprised of expenditures under this policy, department heads must submit to the Council Clerk a communication to Council explaining nature and purpose or need for the purchase for all amounts over $25,000, in advance of entering into such contract if possible, but not later than the next scheduled Council meeting after entering into the contract. The communication must include the name of the vendor, a clear description of the item or service being purchased, and the price.
(2) Submission to City Auditor. When submitting a purchase order to the Auditor for payment of the purchase, a copy of the above communication submitted to Council must be attached to the purchase order.
(D) DEFINITIONS: For purposes of this policy the following definitions shall apply:
(1) "Professional Services" means services that usually require education, training, skill, or expertise of an advanced, specialized, or peculiar nature including without limitation, such services as those performed by attorneys, architects, engineers, professional design firms, construction managers, surveyors, accountants, physicians, insurance advisors, third party administrators and professional design firms and services as defined in ORC 153.65.
(2) "Purchasing Policy" shall be deemed to cover all purchases of and contracts for any property or service for the City.
(3) "Real and Present Emergency" in the event of any crisis, including any breakage or any loss of equipment or other circumstances which could not be reasonably anticipated, whereby any necessary regular City service is about to be interrupted or whereby the City will suffer significant or continuing loss, the administration may enter into a contract for the necessary repairs, replacements or other goods or services, or both to restore or maintain such service or to avert or terminate such a loss, without advertising, and in such amount as may in the circumstances be necessary. A full report shall be rendered to Council at their next scheduled meeting if the amount exceeds $50,000.
(4) "Split Purchase orders or invoices" means dividing purchases into lesser amounts to circumvent dollar ceilings in the City's purchasing policy
(5) "Sole Source" means an item or service is only available from one supplier.
(E) PURCHASING LIMITATIONS:
(1) Purchases less than $1,500: Any purchase less than $1,500 does not need a purchase order (PO). All purchases must be approved by the Department Head. All invoices, after approval by the Department Head shall be submitted to the auditing department for processing. After the invoices are approved by the Auditing Department and checks signed by the City Treasurer and City Auditor, they are to be mailed to the vendor. Payment can also be made electronically.
(2) Purchases from $1,500 to $7,499.99: All purchases must be approved by the Department Head. Any purchase between $1,500 and $7,499.99 must have a minimum of two written quotations. Specifications shall not favor a particular vendor or eliminate any qualified vendor. The Department will obtain competitive quotes from reliable suppliers who can offer the lowest price and/or the best product available, in the best interests of the City. Upon getting at least two (2) quotes, the Department will prepare a purchase order and send the quotes along with PO to the Auditing Department. After approval by the Department Head, Auditor's office, Finance Department and the Mayor, the item(s) shall be ordered by the department initiating the request. Upon receiving the merchandise, the Department shall receive the item in the GEMS system, enter the invoice and send invoice to the Auditing Department for payment processing.
(3) Purchases from $7,500 to $19,999.99: Any purchase between $7,500 and $19,999.99 must have a minimum of three (3) written quotations. Specifications shall not favor a particular vendor or eliminate any qualified vendor. The Department will obtain competitive quotes from reliable suppliers who can offer the lowest and/or the best product available, in the best interests of the City. Upon getting at least three (3) quotes the Department will prepare a purchase order and send the quotes along with the PO to the Auditing Department. After approval by the Department Head, Auditor's office, Finance Department, and the Mayor, the item(s) shall be ordered by the department initiating the request. Upon receiving the merchandise, the Department shall receive the item in the GEMS system, enter the invoice and send invoice to the Auditing Department for payment processing.
(4) Purchases over $20,000: Any purchase over $20,000 must be in the form of a written request, signed by the Department Head and approved by the Mayor. Specifications shall not favor a particular vendor or eliminate any qualified vendor. The item(s) requested must be advertised in a public forum (such as newspaper or City of Lima web page) at least two (2) times. The advertisement must contain a general description of the item, specify that the bids be sealed, properly marked as a bid, and the date, time and place when the bids will be received and opened. Bid specifications for all items bid must be posted on the City of Lima website. Complete specifications will be on file in the Auditor's office through the Purchasing Department.
(5) Purchases over $50,000: Any purchase over $50,000 must be in the form of a written request, signed by the Department Head and approved by the Mayor. This request shall be filed with the Clerk of Council. This request will be brought before the Council at the appropriate time and if Council approves, the Mayor may enter into contract for the item(s) requested. Specifications shall not favor a particular vendor or eliminate any qualified vendor. The item(s) requested must be advertised in a public forum (such as newspaper or City of Lima web page) at least two (2) times. The advertisement must contain a general description of the item, specify that the bids be sealed, properly marked as a bid, and the date, time and place when the bids will be received and opened. Bid specifications for all items bid must be posted on the City of Lima website. Complete specifications will be on file in the Auditor's office through the Purchasing Department.
(F) BID OPENINGS: The Auditor or his/her designee shall be present at all bid openings. The department requesting the bids should also have a representative present at the bid opening. After opening the bids, they will be given to the department initiating the request. The Mayor has the authority to reject any/or all bids. No bids may be changed after opening. The original bids are forwarded to the Purchasing Department after the tabulation of the bids by the department which made the initial request.
(G) AWARD OF BID: The department requesting the bid will review all bids and make a recommendation to the Mayor as to the best/lowest bidder. Based on this recommendation, the Mayor may award the contract to the best/lowest bidder. All contracts must be in writing and must be followed as to its terms and conditions. An adequate number of copies of the contract shall be prepared. An original will be kept on file in the Auditor's office; a copy goes to the Director of Law and the vendor. The original bids must remain on file in the Auditor's office. The contracts must be fully executed by all parties concerned, certified as to funds by the Auditor, approved as to form by the Director of Law, approved by the Mayor and accepted by the vendor. A Purchase Order shall be issued at the time of the contract and for the full amount of said contract. This encumbrance of funds will protect your appropriations and ensure that ample funds are available and reserved for your project.
(H) EXCEPTIONS TO OBTAINING QUOTES OR COMPETITIVE BIDDING: In the following circumstances quotes or sealed bids are not necessary:
(1) Purchases available only from a sole source supplier where the products or services may be met by only one supplier.
(2) Cooperative purchase contracts where the price for an item or service has been established by State of Ohio or another government entity.
(3) Any real and present emergency.
(4) Purchases of used equipment or supplies at an auction open to the public or at a sale where used equipment or supplies are sold.
(5) Purchases of utilities such as natural gas, telephone or electric services.
(I) CHANGE ORDERS ON CONTRACTS: Change orders must be made for any changes throughout the term of a given contract. Cumulative change orders exceeding the following thresholds will require Council authority prior to work commencing except in the case of an emergency. In the event that dollar amounts exceed the parameters and an emergency exists the administration shall notify the committee chair person as soon as possible after the fact. Original contract amount:
$46,000 to $100,000 | 10% or $10,000 |
$100,001 to $250,000 | 10% or $25,000 |
$250,001 to $500,000 | 10% or $50,000 |
$500,001 to $1,000,000 | 10% or $100,000 |
$1,000,000 to $5,000,000 | 10% or $300,000 |
$5,000,001 to $10,000,000 | 10% or $750,000 |
$10,000,001+ | $900,000 |
Approval of all change order allocations at the end of any project is required by Council regardless of the percentage or size. | |
(J) STATE PURCHASING CONTRACTS: In accordance with ordinance 19-88, dated February 22, 1988, the administration is authorized to participate in contracts with the State of Ohio, Department of Administrative Services. The Purchasing Department will maintain the master contract file. Items on the State contract may be sent out to bid, but do not need to be bid or advertised if bought through the State contract. If a local vendor is able to meet or beat the State contract price the item may be purchased from the local vendor without utilizing the formal bid process. The item being purchased from the local vendor must equal or exceed the specifications on the state contract.
(K) BLANKET PURCHASE ORDERS: Blanket purchase orders should be used whenever possible. Use of blanket purchase orders helps to expedite the invoice payment process. Blanket purchase orders are vendor specific and the normal purchasing procedures with regards to quotes or bids must be followed when applicable. Typical uses for blanket purchase orders include recurring invoices such as utility bills, service contracts and other contracted services that result in multiple invoices. Blanket purchase orders must be closed at the end of every fiscal year per the Ohio Revised Code.
(L) SALE, TRADE-IN OR OTHER DISPOSITION OF PROPERTY: The Mayor shall conduct all sales of real or personal property which the Council may authorize to be sold as having become unnecessary or unfit for the City's use. The Mayor shall choose the method of sale at his discretion. Any employee may only purchase items for sale from an auction or bidding process.
(M) EQUIPMENT LEASES: The total dollar amount of lease will determine its threshold of accountability. It must meet the criteria of the purchasing policy based upon dollar amounts. (Over $50,000 needs Council approval).
(N) RELATED PARTY TRANSACTIONS: Related party transactions shall be governed according to Section 85 of the City of Lima Charter.
(O) FIXED ASSET POLICY: The City's current capital asset policy considers any item with a cost of $2,500 or greater and a useful life of greater than one year as a capital asset. Any purchase meeting these criteria should be charged to a capital account. Capital accounts are those accounts where the object portion of the number begins with 58 (ex. XXX-XXXX-58XXX-XXXX-XXX).
(P) EMERGENCIES: Emergency contracts for the operation and maintenance of any municipal government are authorized by section 735.051 of the Ohio Revised Code. These contracts must be for a real and present emergency. Any emergency expenditure $50,000 or above must be approved by a two-thirds vote of City Council at their next regular scheduled meeting. These contracts do not require sealed competitive bids secured by advertising and they may be granted to the vendor based upon ability to immediately supply the items or do what is required by the emergency. In emergency situations, when obtaining written quotations would result in an unusual delay and therefore cause a hardship for the citizens of Lima, verbal quotations may be accepted. These verbal quotations must be properly documented to show the name of the vendor and the individual making the quotation. Payment of any invoices will not be authorized until written confirmation of the quotation is received by the City.
(Q) OTHER CONSIDERATIONS:
(1) It is the Department Head's responsibility to approve all purchase orders and invoices and to ascertain that all items are received as ordered prior to submitting invoices for payment.
(2) There shall be no "split" purchase orders or invoices as a means to circumvent dollar ceilings per our purchasing policy.
(3) There shall be no purchase of any items or service above $1,500 without a purchase order.
(4) No purchase order or invoice may be changed after going through the approval process without prior authorization from the Purchasing Department and the Department Head placing the order.
(5) Periodic checks of suppliers who are used on a regular basis should be made to ascertain that their quality and pricing are still the best value for the City of Lima.
(6) All invoices shall be processed quickly to avoid the loss of discounts or penalties for late payment.
(7) Local contractors or bidders should be used whenever possible if they meet all the conditions of this policy.
(8) The City of Lima may not do business with any supplier that has a delinquent tax liability or lien.
(9) If an item is available from only one supplier, the department requesting the item must be able to support this in writing as a "sole source item".
(R) EXCEPTIONS: For any sale or purchase, exceptions may be made to any provision of this policy, and different procedures or terms may be utilized if approved by Council as being in the best interests of the City.
(Ord. 133-12. Passed 7-9-12; Ord. 044-22. Passed 2-28-22.)