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(A) Duties and functions of the Purchasing Agent. The Purchasing Department is under the supervision of the Mayor. The general duties of the Purchasing Agent will be as follows:
(1) Observe and enforce the procedures outlined in this manual;
(2) Encourage competitive bidding at all times;
(3) Conduct the Purchasing Department in such a way that bidders:
(a) Will be aware of the fairness of the awards; and
(b) Will be encouraged to continue bidding, and will furnish competition to assure the city of the highest quality merchandise at the lowest possible cost.
(4) Investigate and report any possibilities of collusion among bidders;
(5) Purchase or contract all supplies, materials and contractual services for the city;
(6) Promote good supplier relations;
(7) Keep abreast of current developments in the field of purchasing, prices, market conditions and new products. Investigate and analyze, for the benefit of the city, research done in the field of purchasing by other governmental agencies and by private industry;
(8) Explore the possibilities of quantity buying to take full advantage of discounts;
(9) The Purchasing Agent has the responsibility for office supplies, and management of the Purchasing Department. He or she must maintain sufficient quantities of materials in stores to satisfy the normal needs of the city for a reasonable length of time;
(10) He or she joins with other governmental agencies in cooperative purchasing plans when it is in the best interest of the city;
(11) The city purchasing agent is responsible for the inspection of deliveries, although he or she may delegate this responsibility to the head of the using department. He or she may subject purchased articles to such tests as he or she may deem necessary to determine their compliance with specifications;
(12) The objective of the purchasing agent is to purchase at the lowest possible price and highest quality. However, a low price paid to an out-of-town supplier may be outweighed by slow delivery, poor packing and crating, resulting in having to make long-distance calls, writing letters and the like. A low price paid for a large quantity may be outweighed by the cost of storage and handling. Quality should be considered before attention is given to price. Seller’s responsibility should be considered in determining ultimate cost. In competitive bidding there are other factors besides the price that must be taken into consideration: F.O.B. point, discount, service offered by seller and delivery date. The Purchasing Agent reserves the right to accept or reject all or any part of a bid and accept the offer considered the most advantageous to the city on items under $200. Items over $200 are referred to the Mayor for action. Items over $5,000 are presented to the City Council for action.
(B) Duties of the using department.
(1) The using department should plan their work so “Rush Orders” and emergencies will be held to an absolute minimum. Requests should be forwarded to the Purchasing Department far enough in advance to allow the seller sufficient time to obtain prices from their suppliers and complete the request for quotation. After the bid closing, a tabulation is made and the bids evaluated with the assistance of the using department. If the total amount exceeds $200 the bid is presented to the Mayor for approval. If it exceeds $5,000, it is presented to the City Council for approval. Considering the seller’s delivery date, it is possible for 45 days or more to lapse before the merchandise is actually received.
(2) The using department should assist the Purchasing Department by suggesting names of sellers that have access to their particular item or items being requested, especially items of a technical nature. However, the Purchasing Agent is in no way confined to the list of sellers suggested. The Purchasing Department will maintain a listing of vendors classified according to materials, equipment, supplies and services. Any responsible firm may be placed on the lists upon application by telephone, letter or in person.
(3) The city is not obligated to purchase equipment or accessories that are delivered for use on a trial basis.
(4) The using department is to prepare specifications for materials that require engineering or technical background.
(5) Specifications should be:
(a) As simple as is consistent with exactness, but so specific that no loophole will allow any bidder to evade any of the provisions and thereby take advantage of either his or her competitors or the buyer; and
(b) Capable of being checked. Specifications that cannot be checked are of little value.
(6) The using department is to assist the Purchasing Agent in establishing maximum and minimum quantities for stored items and advise the Purchasing Agent of any abnormal usage of materials sufficiently in advance that he or she may maintain an adequate supply.
(7) No city employee shall purchase supplies, materials, or equipment of any kind through the Purchasing Department for personal use.
(8) Department heads should not write specifications which are considered closed (written around one specific brand). Brand names, catalogue numbers, and the like, may be submitted as a guide to the seller as to the type and quality of merchandise desired. However, the wording “or approved equal” will always be added as we do not want to discriminate against any seller’s merchandise. Competition must be kept in mind throughout the writing of specifications. Most vendors or sellers are taxpayers and citizens of this community and must be given equal opportunity to submit a quotation on their merchandise.
(C) Purchasing policy and procedures.
(1) Authority. The position of Purchasing Agent is created by § 31.04 of this code of ordinances.
(2) Minor purchases. The following rules are hereby adopted to regulate the control and disbursement of certain funds through a petty cash system:
(a) The petty cash box will keep a maximum of $200;
(b) The City Secretary will be responsible for the disbursement of the money by using a petty cash voucher;
(c) The City Secretary will be the only person allowed to access the petty cash box at any time. If the City Secretary is unavailable, it will be the responsibility of the City Secretary to name a temporary substitute;
(d) The maximum disbursement of petty cash will be $20. Any purchase over $20 will be made using a properly executed Purchase Order;
(e) The City Secretary will be responsible for the balance of funds in the petty cash box at all times;
(f) The City Secretary will assure that there are sufficient funds in the petty cash box at all times in order to allow a smooth flow of city purchases;
(g) The City Secretary will make random audits of the petty cash box to assure the fund is being handled properly;
(h) No other available cash will be used for petty cash purposes;
(i) Any city employee wishing to make a petty cash purchase will present a petty cash voucher to the City Secretary with their supervisor’s signature and the amount they wish to receive. This voucher will be used by the City Secretary to account for the disposition of funds in the petty cash box;
(j) After the purchase has been made, the purchaser will submit to the City Secretary the proper receipt and any change back. This will be done the same day of the purchase, unless other arrangements are made with the City Secretary; and
(k) Any employee violating any part or parts of this policy will be subject to disciplinary action.
(3) Other purchases. All purchases of more than $20 require a Purchase Order and approval by the Purchasing Agent as to availability of funds before order can be placed. The Purchasing Agent will take telephone or written bids on purchases of $20 to $200 and will place the order. Telephone quotes will be taken for purchases of more than $200 but less than $5,000. Then approval to purchase is obtained from the Mayor. Purchases of $5,000 or more require advertising for two weeks, then approval by the City Council.
(4) Emergency purchases. Emergencies occur as a result of breakdown of equipment which must be kept in operation or stop major programs. If the occasion arises during the hours of normal operation of the Purchasing Office, the Purchasing Agent is to be contacted and he or she may make the purchase or authorize the department head to do so, assigning a purchase order number at that time. A memo explaining the emergency, attached to a confirming requisition, must be sent to the Purchasing Office no later than the following working day. If an emergency arises after normal hours, the department head will make the purchase and contact the Purchasing Agent the next working morning for a purchase order number and immediately send in a confirming requisition with a memo explaining the emergency.
(a) Emergencies created through negligence. Emergencies created through negligence must be avoided; typical examples of these situations are: depletion of stock due to negligence, buildings or equipment needing repairs or painting for some time suddenly becoming emergencies overnight, orders for pipe and similar materials for projects, most of which must be planned weeks or months ahead, yet material is requested 12 to 24 hours before it is to be used, and the like.
(b) Pricing. Most sellers will charge a premium if labor, supplies or printing are required at once. Better prices can always be obtained if the material is purchased on bids. Most sellers will go through the manufacturers for a price which is always lower than the seller’s wholesale price.
(c) Only source purchases. Requisitions for any material or service costing in excess of $20 which can only be supplied by one source should be accompanied by a written memo explaining the conditions which make the supplier an only source. Make sure it is an only source item, for if the memo is questioned by the auditors or the City Council, the burden of proof will be on the department head signing the memo. The purchasing Department will attach the signed copy of this memo to the purchase order copy, to support the Finance Department’s voucher disbursement of funds. Also, the memo informs the auditors (annual outside auditors) why bids were not taken.
1. It must contain complete information and specifications as the using departments are the only ones that know exactly what is needed. All pertinent information should be given (size, weight, and the like) and the Purchasing Agent should be referred to certain vendors or sellers that handle the desired material when that information is available to the department head.
2. Realistic delivery dates as to when the material is needed must be used, because such notations as “RUSH”, “Soon as Possible” and the like do not tell the Purchasing Agent anything.
3. All requisitions will be typed or printed when possible. Purchase orders will be made exactly as on the original requisition.
(5) Time requirements. Purchases of $20 or more will be bought on a telephone bid basis and requisitions should be prepared far enough in advance of the time materials are needed so as not to create an emergency. This enables the Purchasing Agent to secure telephone bids and allows for delivery.
(a) Requisitions for less than $20 may be purchased by the department head, using the petty cash system.
(b) Requisitions for $20 to $5,000 should be turned over to the Purchasing Agent a minimum of three days for local purchases and a minimum of ten days for out-of-city purchases before delivery date.
(c) Requisitions for $5,000 and up, requiring prior approval by the City Council, should be turned over to the Purchasing Agent a minimum of three weeks before material is needed.
(d) Requisitions for more than $5,000 requiring advertising for 15 days and acceptance of bid by the City Council, should be submitted at least four weeks before material is needed.
(6) Processing requisitions. A copy of the requisition should be retained by the Requisitioning Department for reference. After a price is determined by the regular approved purchasing procedure, the requisition goes to the Finance Department.
(a) If sufficient funds are available, a Purchase Order is then made. The original Purchase Order is mailed to the seller, a copy is returned to the using department head, and a copy is retained in the Finance Department. On receipt of the merchandise, the department must return to Finance a copy of the Purchase Order, properly signed by the receiving employee, indicating that the merchandise is received in good order. Any damage or shortage must be noted.
(b) If sufficient funds are not budgeted for the purchase, the department head will be notified, and any purchase not covered by budgeted funds, unexpended, must be approved by the Mayor before the purchase order is made. It is the responsibility of the department head to see that budgeted funds are not overspent.
(D) Purchase order. The Purchase Order is the seller’s authorization to ship and invoice the materials as specified. The Purchase Order is a contract and must be considered as such. The Purchase Order is designed to expedite and control buying for the city.
(1) Routing of purchase orders. The Purchase Order set contains the original and two copies.
(a) The original is mailed directly to the vendor or seller.
(b) A second copy (yellow) goes to the department head of the using department and must be retained until the merchandise ordered has been received. Upon receipt of the merchandise, this copy is signed by the receiving employee and returned to the Finance Office. Any damage, shortage or difference must be noted. This copy is designated as a receiving copy that all may know that the purchase has been received and by whom.
(c) A third copy (pink) goes to the Finance Department, that proper encumbrance may be made on the city’s accounting records, and properly charged to the correct budgeted account. When the receiving order reaches the Finance Department, indicating that the material purchased has been properly received, a voucher is made and the seller is paid for the materials received. Packing slips and freight bills, when these are a part of the transaction, must be sent to the Finance Office also.
(2) Cancelling purchase orders. Upon request from the department head, the Purchasing Agent may cancel a purchase order, with the consent of the seller, provided the merchandise has not been shipped.
(1) An invoice is an itemized statement of merchandise shipped by the seller or vendor. Invoices are based upon the Purchase Orders and should contain the same information.
(2) All invoices in the hands of any department head or employee of the city must be sent immediately to the Finance Department, where they are matched with the Purchase Order and checked for errors in quantities or extensions. It is very urgent that all employees send in all paperwork pertaining to each transaction. Invoices should be signed, not initialed only. Personnel are requested to please not hold paperwork, but forward promptly to keep a more efficient flow of work being processed.
(F) Partial receipts and damaged merchandise. Of course there will be times when the seller will ship an incomplete order or when the merchandise will become damaged during shipment, therefore freight bills and packing slips are very important. They should be checked and signed by the individual receiving the merchandise and turned in promptly to the Finance Office. Each shipment received should be carefully checked for damages and shortages. If there are any shortages or damages, these should be noted on the freight bill and the delivery driver must sign noting such damage or shortage. In the event of concealed damage, the Purchasing Agent should be notified promptly so that proper action may be taken. Any damaged item must be held for inspection by the freight company.
(G) Inventory control.
(1) A system of procedures should be established to protect and control the city’s property.
(2) An inventory record shall be maintained for each item with a value exceeding $50. At the time an item is received by the city, a prenumbered tag is permanently affixed to the item, and the number of the tag is entered on an inventory form which registers a description of the item, the department to which the item was assigned, and the place where the item is to be used or stored.
(3) Property shall never be relocated or transferred to another department without notifying the person responsible for maintaining inventory records. Whenever a change occurs, an immediate notation of the change shall be made in the records.
(4) A complete physical inventory of all city property shall be conducted once per year. Discrepancies between inventory records and the findings of the physical inventory shall be investigated; adjustments then shall be made to bring the book inventory into line with the actual properties on hand.
(H) Disposition of surplus items.
(1) Pieces of equipment and supplies that are no longer needed shall be disposed of through surplus or scrap. Many surplus items retain a certain amount of market value, and their proper disposition can result in economic financial gains for the city.
(2) The following disposition options can be used to dispose of property:
(a) Disposal of the items at a public auction or sale;
(b) Other units of government may buy the items;
(c) The surplus equipment or supplies can be transferred to another department, thus avoiding the necessity for purchasing new items; and
(d) If there is no other alternative, the surplus items can be sold to scrap dealers.
(3) Following the disposition of a surplus item, the city’s inventory records shall be modified to reflect the change.
(Res. 11-90, passed 11-12-1990)