(A) Introduction.
(1) This policy is the result of the recognition of a need to improve and modernize the city’s purchasing capability and to enhance and assure fiscal responsibility in the procurement process.
(2) The express purpose of the policy is to establish an efficient, fiscally responsible purchasing system capable of providing daily service and support on an organization wide basis. The policy outlined herein recognizes and addresses the importance of the overall support mission of the procurement process and the need for maximizing the value of each tax and utility dollar expended. The objectives, policies and procedures set forth in subsequent divisions of this policy were written and designed to ensure the citizenry, City Council and employees are receiving maximum value for each tax and utility dollar spent.
(3) The “art” of purchasing is a dynamic process. For this reason, this policy shall be reviewed, and will be revised periodically in order to keep abreast of, and current with continued developments in the “state of the art” as it pertains to purchasing.
(B) Objectives of purchasing system. The objectives of the city’s purchasing system are:
(1) To maintain minimum investment in materials inventory,
(2) To avoid duplication, waste and obsolescence with respect to materials,
(3) To ensure that materials, equipment and services are purchased at the lowest prices consistent with quality and performance,
(4) To provide adequate controls over city expenditures and financial commitments,
(5) To obtain quality goods required by city departments and to ensure that these goods are at the place needed and the time needed, and
(6) To provide a standardized system of purchasing for use by all city departments.
(C) Authority to purchase.
(1) Routine purchases made by the city may be grouped under the following categories:
(a) Purchases $150,000 and over.
(b) Purchases over $5,000 and under $75,000.
(c) Purchases under $5,000.
(d) Purchases over $75,000 and under $150,000.
(e) Charge purchases paid by statement.
(2) Each of these categories requires a different level of organizational approval:
(a) Purchases in excess of $150,000 are made through the formal bid procedure, I.C. 5-22-7.
(b) Purchases of $5,000, but less than $75,000, are made through informal quote procedure that requires a minimum of three quotes for items costing between $5,000 and $75,000. Two quotes are acceptable in circumstances that three are unattainable, clarification with the Clerk-Treasurer is required. Purchases may be subject to the approval of the department governing board.
(c) Purchases of $75,000, but less than $150,000, are made through formal quote procedure that requires a minimum of three quotes for items costing between $75,000 and $150,000. Two quotes are acceptable in circumstances that three are unattainable, clarification with the Clerk-Treasurer is required. Purchases may be subject to the approval of the department governing board.
(d) Purchases under $5,000 may be authorized by the department head through normal request to purchase and purchase order procedure.
(D) Competitive bidding.
(1) It is the policy of the city to procure needed materials, equipment and services at the lowest cost consistent with quality and performance. Whenever possible, purchase will be made only after two or more price quotations have been obtained through either formal or informal means. The only exceptions to this policy are:
(a) Sole-source purchases where only one supplier is available,
(b) Emergency purchases,
(c) Petty cash purchases, and
(d) Certain professional services such as architectural, banking, engineering, insurance, and legal.
(2) For all other purchases, the following guidelines should be followed:
(a) Informal telephone/email/online price quotations should be obtained when:
1. Urgency is of prime consideration.
2. Specifications are clear and simple.
3. Cost of items is under $5,000.
4. Special note: Telephone/email/online price quotations should be documented.
(b) Informal written price quotations should be obtained when:
1. Specifications are detailed.
2. Potential suppliers are not located nearby.
3. Needed items are “made to order.”
4. Cost of item is over $5,000 and is below $75,000.
(c) Formal written quotes will be solicited when the cost of items exceeds $75,000 but is less than $150,000. This requires a formal letter detailing the good or service being solicited and sent to intended vendors. The delivery of said letter can be by USPS, hand delivered, or email.
(E) Emergency procedures. Covering supplies or services costing in excess of $5,000.
(1) In case of an actual emergency and with the Clerk-Treasurer’s permission, if possible, department heads may purchase directly any supplies or services whose immediate procurement is essential to prevent delays in work which may vitally affect the life, health and safety, or convenience of Rochester residents.
(2) Within two working days, the department shall send to the Clerk-Treasurer a purchase order with vendors invoice attached, with a full written report of the circumstances of the emergency. If necessary, the Clerk-Treasurer will authorize a confirming purchase order to cover the emergency purchase.
(F) Charge account purchases.
(1) Charge account purchases are the preferred method of purchase for the city and may be used for those vendors for whom many repetitive purchases are made as supplies are required. A purchase order is required for all purchases over $5,000.
(2) Materials and services, for which purchase orders are used, will be determined by each department head and approved by the Clerk-Treasurer and Mayor. The following guidelines shall be used when utilizing charge account purchases:
(a) All charge accounts will be established by the Clerk-Treasurer to ensure appropriate vendor information is collected and accounts are uniformly established with all vendors.
(b) Department heads shall establish, by department, the names of those employees authorized to purchase, order, receive, and sign for items under charge account purchases. Employees must be full-time with the exception of the Parks Department seasonal operations. The Clerk-Treasurer has discretion over the total number of employees per department on charge accounts to ensure internal controls and management oversight.
(c) When charging supplies, the vendor’s package advice, packing slip, or charge ticket or invoice must be signed by the authorized employee receiving the material.
(d) Department heads, or authorized employee, shall confirm receipt of the item by initialing the vendor’s package advice, packing slip, or charge ticket if a purchase order is not completed.
(e) Each dpartment is responsible to see that all vendor invoices are submitted directly from the vendor to the Clerk-Treasurer’s office in a timely manner to ensure prompt claims processing. The vendor may email Accounts Payable directly.
(f) Invoices signed by unauthorized personnel may not be paid.
(G) Joint purchasing with the State of Indiana. The city is authorized to participate with the State of Indiana in joint purchasing. From time to time, the city receives notices of various state contracts that show items available for joint purchase. If these items are needed by the city and if it is determined that the “state contract” items meet the city specifications at a cost savings, then the item will be purchased under state joint purchasing arrangements. A purchase order is placed directly with the supplier who has been awarded the state contract.
(H) Joint purchasing. Where appropriate, the city shall continually explore joint purchasing with other units of government. Joint purchasing can result in substantially lower costs due to quantity purchasing.
(I) Gifts and gratuities.
(1) City employees are expressly prohibited from soliciting or accepting any rebate, money or costly entertainment, gift or gratuity (excepting mementos and novelties of nominal value) from any person, company, firm or corporation to which any purchase order or contract is, or might be awarded. The city will not tolerate circumstances that produce, or reasonably appear to produce, conflicts between the personal interests of an employee and interests of the city.
(2) Accordingly, the city may terminate, at no charge to the city, any purchase order or contract if it is found that substantial gifts or gratuities were offered to a city employee. The city may also take disciplinary action, including dismissal, against an employee who solicits or accepts gifts or gratuities of any value whatsoever.
(3) Employees attending continuing education conferences may utilize the vendor booths/exhibitor hall to acquire novelty items such as but not limited to pens, pencils, notepads, and the like. Vendors offering networking opportunities including dining opportunities are also acceptable and should not construed as a conflict as stated above.
(J) Purchasing recycled products and materials. Department heads shall make every effort to purchase items that have been recycled or contain substantially recycled materials. Department heads shall continuously review their purchases to identify items where recycled materials may be substituted.
(K) Procurement procedure - request to purchase.
(1) The preparation of the purchase order initiates the procurement cycle. The receipt of the purchase order with the necessary information and required signature gives authority for each specific purchase. A vendor invoice may not be paid unless proper procurement procedures are followed.
(2) The following procedure shall be followed for all purchases over $5,000 and under $75,000:
(a) Department head or designated city employee (“employee”) determines the need for a specific service or item(s). The employee will provide the appropriate number of quotes/bids as determined by the guidelines outlined above. All charges pertinent to the purchase should be included in the quote; freight, labor, type of materials, discounts for a total due, net 30 days. No sales tax: if sales tax is included, the department head/employee will be responsible for paying the tax out of their pocket.
(b) Department head or designated authority reviews purchase request and evaluates need for the item or service.
(c) Department head or designated authority checks budget to verify funds are appropriated and available then completes the procurement process.
(d) Department head approves purchase order and forwards the request, to the Mayor’s Office for review and signature.
(e) The Mayor then forwards the purchase order to the Clerk-Treasurer, who reviews the purchase order for accuracy and completeness. Additionally, the Clerk-Treasurer will check the budget report and outstanding purchase orders to verify funds are appropriated and available.
(f) The purchase order is then submitted to Accounts Payable for review and processing.
(g) Department heads shall designate an employee to receive items from vendors. The receiver inspects items to ensure they conform to specifications and quantities shown on purchase order/invoice.
(h) Purchase orders shall be forwarded to the Clerk-Treasurer office as soon as they are created with the accompanying invoice. Nothing will be paid using an estimate or quote, all purchases must have an invoice or charge account slip.
(i) For purchases under $5,000 the same procedure is followed except the request to purchase does not require a purchase order.
(3) This policy and these procedures are designed to ensure proper measures are in place to establish an efficient and responsible manner of purchasing. The objectives set forth have been designed to ensure standard and uniform practices are being implemented in every department of the city. It is the desire of the Clerk-Treasurer’s Office and Common Council to provide direction and supervision in this area so as to assist and support the quality of service to the residents of the city.
(Ord. 22-1998, passed 7-14-98; Am. Ord. 09-2023, passed 12-19-23)