Except as otherwise expressly authorized by law or the provisions of this chapter, a purchase order shall be required for all purchases over $1,000, and no village employee shall make any purchase without first obtaining a duly issued purchase order for purchases exceeding $1,000. A purchase order shall be sought by submitting such form as prescribed from time to time by the Finance Director, which form shall be completed with such information and with such signatures as are hereinafter required.
(A) General purchase authority. No employee may purchase products or services over $1,000 on behalf of the village without first seeking approval as required by this policy. All purchases require advanced approval of the appropriate department head or Village Manager in accordance with the following guidelines:
Dollar Limit | Required Approval
|
Up to $5,000 | Department head (or other supervisor designated by department head) and Finance Director |
$5,000.01 - $19,999.99 | Department head, Finance Director and Village Manager |
$20,000 and above | Department head, Finance Director and Village Manager and documentation of Board approval |
(B) General policy for soliciting quotes. Employees are responsible for obtaining quotes for purchases in the instances outlined below:
Dollar Limit | Quote/Bid Required
|
Up to $5,000 | No quotes are required, employees are encouraged to seek one or more quotes when possible or otherwise ensure that competitive prices are obtained. |
$5,000.01 - $19,999.99 | A requisition for a purchase must include either (i) a minimum of 3 quotes or (ii) memo explaining why three quotes are not available. |
$20,000 and above | Board of Trustees must approve through ordinance, resolution or motion. The Board can approve through a bid process, through the formal RFP process, approval of a contract for services, and approval for state contract. |
(C) Purchase orders. Unless specifically exempt from the purchase order process, all purchases must be entered and approved in the purchase order system prior to making the purchase.
(D) Purchases exempt from the purchase order process include the following:
(1) Energy and utility bills;
(2) Garbage disposal;
(3) Telephone;
(4) Insurance;
(5) Bulk fuel;
(6) Escrow, deposits, or refunds for service payments;
(7) Employee benefits;
(8) Emergency purchases (See division (G) below);
(9) Purchases and invoices under $100.
(E) Purchase orders shall contain the following information:
(1) Vendor name and address;
(2) Shipping address and billing address;
(3) Budget account number/line item number that the expenditure is to be charged to;
(4) Date the purchase order initiated;
(5) Quantity;
(6) Description of item and/or service and its intended use. This description should be easily understood by a reader from another department;
(7) Unit price, total price and total price including shipping costs;
(8) Requester. This should be the person to whom all questions regarding the item or service will be referred;
(9) Project number if applicable (all capital projects must indicate project number);
(10) Discounts;
(11) Proper approvals.
(F) Joint/cooperative purchasing. Cooperative purchasing between the village and the state and other local governments can result in significant savings on the purchase price of many items. It is the policy of the village to enter into cooperative purchasing agreements when:
(1) Substantial saving will result;
(2) Quality, availability or service will not be sacrificed;
(3) The village will be separately billed for its purchases;
(4) Purchases must be included in the currently approved annual budget.
(G) Emergency purchases. In case of an emergency affecting immediate public health, safety, and/or welfare, the Mayor or Village Manager may authorize a vendor to perform any and all work necessary to resolve such emergency without an approved purchase order and/or formal bid. A purchase order will be prepared after the emergency has been resolved. A purchase over $20,000 must be ultimately ratified by the Village Board. A full report of the circumstances of the emergency purchase must be filed with the Village Board, entered in the minutes of the Village Board, and open for public inspection. Written documentation will include a complete description of the services, materials and equipment required and the costs incurred. A purchase order may be prepared and approved after the emergency purchase.
(H) Blanket purchase orders.
(1) Annual vendor total below $20,000. Blanket purchase orders may be utilized to facilitate the purchase of routine purchase of goods and services throughout the year. Blanket purchase orders for vendors where the aggregate annual purchase from the vendor will be under $20,000 and no individual order will be above $5,000 will not require quotes but will require the proper signatory approval.
(2) Annual vendor total above $20,000. At the start of each fiscal year, the departments will review annual purchases to determine what vendors should be included in the annual purchase resolution prepared by the Finance Department. The resolution will request purchase authorization for routine purchases that exceed $20,000. In order to qualify for the blanket purchase order resolution, the vendor's total annual purchases are estimated above $20,000 but individual purchases will be less than $5,000. And the purchase must not be for any of the following:
(a) Equipment purchased over $20,000,
(b) Non-routine professional services over $20,000,
(c) Bulk orders of an item over $20,000,
(d) Individual items purchased from a sole supplier over $20,000.
(I) Annual purchase resolution. To assist in facilitating the Board of Trustees’ awareness of recurring and routine expenditures. The Finance Department shall, prior to the start of each fiscal year, prepare an annual purchasing resolution that, when adopted by the Village Board, will approve or ratify a large number of annually recurring and foreseeable routine purchases. Once adopted, the annual purchasing resolution shall serve as the equivalent of a purchase order for the purposes of this chapter with respect to the transactions contained therein. The various types of transactions eligible for inclusion in the annual purchasing resolution include the following:
(1) Blanket purchase orders detailed above in division (H) of this section.
(2) Contract: Vendors where the annual total purchases therefrom will exceed $20,000 for the year and the village already has a signed contract and/or previous Board approval for the purchase. Individual or cumulative purchases may exceed $20,000 per year.
(3) Sole supplier: A vendor that is the only source available to the village to provide the particular goods or services, where individual purchases may fall between $5,000 and $20,000.
(4) System supplier: A vendor who is the current provider to the village for particular goods and services, where individual purchases may fall between $5,000 and $20,000, under circumstance where it would be unusually disruptive to the village to switch to another vendor.
(5) Professional services: Refers to the current vendor approved by the Board, for professional services of a routine, ongoing nature where the annual total will exceed $20,000 and individual bills may exceed $20,000.
(J) Purchases in excess of budget. The requesting department proposing a purchase that will exceed the line item budget must first get authorization for either a budget adjustment or budget relief.
(1) Budget adjustment. Departments making the request for a budget adjustment complete the form showing there are sufficient savings within other line items within the same fund and department cost centers or that there are additional revenues directly associated with the request that cover the additional expenditures. Budget adjustments for the purchase of operational expenses should be offset from other operational accounts within the fund and cost center. Adjustments should not be made increasing operational expense accounts with transfers from a budgeted capital project account if the capital project is only being deferred to a future year. If the budget adjustment is between two different department accounts, both department heads must sign the form.
(2) Budget relief. If the proposed purchase cannot be offset by savings from another expense account or additional revenue, a request for budget relief authorization can be made to the Village Manager allowing the purchase to exceed the line item budget.
(K) Purchases tolerance rules. If an invoice amount is over the PO original amount by 5% or less, accounts payable will automatically process the invoice provided the following conditions apply:
(1) The excess dollar amount does not change the purchase from being under $20,000 to over $20,000.
(2) The account the purchase is budgeted in still has sufficient funds, Accounts Payable Department will automatically process the invoice.
(3) The change order does not exceed $50,000.
(Ord. 2189-92, passed 9-16-92; Am. Ord. 21-1706, passed 5-19-21)