(A) Introduction/statement of policy.
(1) The purpose of this purchasing manual is to provide the City of Wood River staff with guidelines and directions for the acquisition of goods and services. When used with good judgment and common sense, the policies and procedures conveyed within will allow the city to obtain required supplies and services efficiently and economically. City Council approval adopts this manual as city policy to replace any previous purchasing policy.
(2) The manual is divided into sections dealing with purchasing policies and procedures. The policy sections contain all the purchasing policies reviewed and recommended by the City Manager and Director of Finance and adopted by the City Council, which must be adhered to by city employees. The procedures sections provide a "how to" guide for processing purchase requisitions, purchase orders, travel authorization and expense reports and other procedures regarding payment processing.
(3) Employees are expected to read the policy manual and provide the Department of Finance with feedback regarding the policies and procedures contained within. This manual is designed to be a fluid document and will be modified from time to time to conform with changes in legislation, technology and actual practice. Although it may not answer every question related to purchasing practices, it does provide general guidelines for purchasing activities. Employees who need help dealing with specific situations not covered by the manual should contact the Director of Finance for assistance.
(4) The City Manager shall be the final authority with regards to enforcement of any of the provisions of this manual. Failure to follow the procedures outlined in this manual may lead to disciplinary action in accordance with the provisions of the City of Wood River Personnel Policy Manual.
(B) Purchasing policies.
(1) Code of Ethics.
(a) All city personnel engaged in purchasing and related activities shall conduct business dealings in a manner above reproach in every respect. Transactions relating to expenditure of public funds require the highest degree of public trust to protect the interests of the city and the residents of Wood River. City employees shall strive to:
1. Ensure that public money is spent efficiently and effectively and in accordance with statutes, regulations, and city policies;
2. Maintain confidentiality at all times;
3. Not accept gifts or favors from current or potential suppliers which might compromise the integrity of their purchasing function;
4. Specify generic descriptions of goods wherever possible in lieu of brand names when compiling specifications;
5. Never allow purchase orders for identical goods or services to be split or variations to City Council approvals to be made in order to circumvent established policy;
6. Purchase without favor or prejudice;
7. Ensure that all potential suppliers are provided with adequate and identical information upon which to base their offer or quotation and that any subsequent information is made available to all bidders; and
8. Establish and maintain procedures to ensure that fair and equal consideration is given to each offer or quotation received.
(b) It shall be the responsibility of the City Manager to determine if a violation of this Code of Ethics has occurred and if disciplinary action is necessary in accordance with the city's Personnel Manual.
(2) Gifts and gratuities: city guidelines for accepting.
(a) City personnel should be aware that offers of gratitude from vendors can be designed to compromise objective judgment in product or service selection. Accordingly, it is city policy to observe the highest standards of ethics and to shield the employee, the city and the vendor from any suggestion or appearance of conflict of interest.
(b) No employee shall permit any influence by vendors which could conflict with the best interest of the city or prejudice the city's reputation. Expenditures of city funds to vendors shall not by intention personally benefit any person officially connected with the city. Employees shall strive to follow the following guidelines:
1. Tangible gifts or gratuities shall not be accepted where their value exceeds $100 per vendor annually. Such gifts should be returned with a statement of city policy. Promotional or advertising items of nominal value such as key chains, pens, coffee mugs, calendars and holiday candy are acceptable.
2. Association with vendor representatives at business meals or business organization meetings is occasionally necessary and is neither questionable nor unethical, provided the individual keeps himself/herself free of obligation.
3. Solicitation of vendors for merchandise or certificates to serve as door prizes or favors is normally prohibited. However, exceptions may be approved by the City Manager.
4. Corporate discounts granted to city employees are acceptable only if they are offered to all city employees and other corporate clients of the vendor.
(c) If in any doubt about the propriety of accepting a gift, the matter should be referred to the department director who will, if necessary, discuss the matter with the City Manager or his/her designee.
(3) Advanced approval of city purchases required.
(a) No employee shall purchase goods or services on behalf of the city without first seeking approval as required by this policy. All purchases shall require advance approval of the appropriate department director and the City Manager in accordance with the guidelines described below:
Dollar Limits | Required Approvals |
Under $5,000 | Department director or Supervisor if no department director exists |
$5,000 - $24,999 | Department director and City Manager |
$25,000 and above | Department director, City Manager and City Council |
(b) Approval for purchases shall occur before the purchase is made. At the discretion of the department director, approval levels for supervisors may be increased to an amount not to exceed the department director's authority. In addition, the City Manager can delegate approval authority to a department director at their discretion in the event they are unavailable to approve purchases.
(C) Competitive quotes and exceptions to the policy.
(1) General policy for soliciting quotes.
(a) Employees are responsible for obtaining quotes for purchases of services and products in the instances outlined below. When submitting a purchase request prior to purchase, quotes shall be attached to a purchase request form (see model form at the end of this section) and returned to the appropriate department for a purchase order to be generated after signatures are obtained. Requests submitted without the required quotes or a satisfactory explanation of why quotes were not obtained (e.g. sole source, emergency, standardized vendor, and the like) will be returned to the originator without approval.
1. Up to $4,999. Employees are encouraged to seek verbal quotes at least once a year.
2. $5,000 - $14,999. Three verbal quotes should be obtained where possible. The quotes should be included on the purchase request form. Physical records regarding the dates, contacts, and quotes received shall be retained in the department's files for auditing purposes.
3. $15,000 - $24,999. Three written quotes should be obtained where possible. The quotes should be listed on the purchase request form and copies of the quotes attached to it. Hard copies shall also be retained in the department's files for auditing purposes.
4. $25,000 and above. Must be competitively bid in accordance with state law and city ordinances. City Council approval is required for all contracts of this dollar amount.
(b) Supplies purchased more than once during a fiscal year (e.g. forms, copier supplies, and the like) do not need quotes every time a purchase is made. However, competitive quotes for these items should be sought on occasion to ensure that vendor pricing remains competitive.
(c) The city acknowledges that three quotes will not always be possible to obtain for every purchase outlined above where quotes are required. It will be up to the responsible employee to provide information as to why the minimum quotes were not obtained, and to obtain permission to make the purchase from the City Manager in such an instance.
(2) Joint purchasing.
(a) State of Illinois.
1. City employees are authorized to obtain goods and services using the State of Illinois joint purchasing program. When available through the state program, it is not necessary for city employees to obtain quotes or to competitively bid the goods or services which are sought. Employees shall be responsible, however, for ensuring that the goods or services are of a quality sufficient to meet the city's needs and that pricing is competitive.
2. When making purchases using the state's assigned vendor, employees shall submit a purchase order to the vendor directly and shall include the State of Illinois contract number and the city's assigned joint purchasing member I.D. number (L2590) on the purchase order. This information should be included on the purchase order.
(b) Other units of government. Employees are permitted to purchase items jointly with other units of government when the price of the goods or services sought is competitive and the quality meets the city's standards. Prior to initiating the transaction, employees shall seek the approval of the City Manager or Director of Finance or designee. Questions regarding joint purchasing opportunities should be directed to the City Manager or Director of Finance.
(3) Sole source purchases.
(a) Contracts for parts, supplies or equipment that are available only from a single source are referred to as sole source purchases. Sole source procurements may arise from the following circumstances:
1. Products or equipment for which there is no comparable competitive product or is available only from one supplier;
2. Public utility services from natural or regulated monopolies;
3. A component or replacement part for which there is no commercially available substitute, and which can be obtained only from the manufacturer, or supplier for the manufacturer;
4. An item where compatibility is the overriding consideration, such as computer software; and
5. A used item, for example, a television transmitter tower, a used car or truck, or anything that has been previously used and is now for sale, that becomes immediately available and is subject to prior sale.
(b) These items shall not be subject to requirements for seeking competitive quotes or bids. However, purchases in excess of $25,000 shall be presented to the City Council prior to acquisition with a request to waive bids, approve the purchase and enter into a formal contract.
(4) Emergency purchases policy.
(a) Emergencies are defined as events that could not have been foreseen where immediate action is necessary to safeguard the public's health and safety. In the event of an emergency affecting the public health and safety, the City Manager or his/her designee may authorize a vendor to provide products and/or materials and to perform work necessary to resolve such emergency without formal bid solicitation. Documentation of the emergency and the need for immediate action shall be presented to the City Council in a reasonable period of time following resolution of the crisis. What is deemed to be an "emergency" shall be determined by the City Manager or his/her designee.
(b) The following procedures shall be followed in the event an emergency purchase order is needed: an emergency purchase order can be used authorizing a vendor to perform any and all work necessary only if the public health, safety, and services could be affected. The Department Director will issue an emergency purchase order to the vendor. If the emergency and the need for immediate action exceed $25,000, documentation shall be presented to the City Manager or his/her designee prior to such authorization.
(c) After the emergency has been resolved, the Department Director shall submit a purchase requisition for the goods purchased. The department shall explain the need for the emergency purchase order and reference the purchase order number that was issued to the vendor.
(d) The Director of Finance or his/her designee will then add the requisition to the emergency purchase order.
(5) Competitive bidding exemption.
(a) When, in the ordinary course of city business, no single purchase of, or individual contract for, specific types of supplies, materials or services exceeds $25,000, but the total dollar value of all purchases and/or contracts for said specific types of supplies, materials, or services during the city's fiscal year does exceed said amount, said purchases may not be subject to the competitive bidding requirement and may not require the City Council to waive the competitive bidding requirement. At his/her discretion, the City Manager shall determine whether these purchases require City Council approval of a waiver of bids. Where a bid waiver is determined to not be necessary, said purchases shall still be subject to the requirements of division (C)(1) above concerning quote solicitation for purchases under $25,000.
(b) It is not the intent of this division to encourage the circumvention of the bidding requirements and, to the extent practicable, city staff is encouraged to rely upon the competitive bidding process. Rather, the competitive bidding exemption provided by this section is intended to recognize and address those situations in which a competitive bidding requirement is not necessarily practicable and can be eliminated without jeopardizing the city's ability to obtain a low and competitive price from a qualified responsible contractor/vendor. An example would be automotive service on police and fire equipment which requires continuity of service as a health and safety concern, but the aggregate cost of the services may exceed $25,000 in a given fiscal year; in this example, it is not safe, efficient, or practicable to obtain bids for all of the service necessary to keep the police and fire vehicles properly serviced and available to serve the citizens of Wood River.
(D) Competitive bidding and requests for professional services.
(1) When a formal bid is required.
(a) All purchases of goods or services exceeding $25,000, except as noted in division (C) above, shall be subject to the competitive bidding process, including a notice of municipal letting for Council approval, and shall be let, by free and open competitive bidding after advertisement, to the lowest responsible bidder or any other bidder whom the City Council deems to be in the best interest of the city.
(b) With the exception of bids for capital projects handled through an engineering contract, all bids shall be issued using the city's standard bid document as approved by the City Attorney.
(2) Preparing the bid document.
(a) It is the responsibility of the respective departments to prepare the bid document. When preparing the bid document, each department shall be responsible for obtaining a bid document number from the executive assistant and for ensuring that the most recent version of the bid document has been used.
(b) All bid documents should attempt to contain the following information:
1. Cover memo (includes signature line for City Manager approval);
2. Table of contents;
3. Notice to bidders;
4. General terms, conditions, and instructions;
5. Specifications of the item/service;
6. Bid proposal form;
7. An appropriate sample contract (required if the bid is for goods, services, construction services, or goods and installation services); and
8. All contractor certification forms (e.g. sexual harassment, tax compliance, contract execution).
(c) After the bid document has been prepared, it may be reviewed and approved by the applicable department director and City Manager. Then a "notice of municipal letting" request asking to go out for bids, including bids specs if possible, must be approved by the City Council.
(d) The department director will be responsible for forwarding the legal notice to the newspaper for publication. A legal notice of the bid must be placed in a newspaper with a general circulation in the city at least 15 days prior to the bid opening, and in accordance with Illinois Law.
(e) The department director may mail the approved document to prospective bidders. Bid documents should not be mailed to bidders before the ad is placed in the newspaper. This will help ensure that all prospective bidders have the same amount of time to complete the bid document.
(3) Additional requirements for the bid document.
(a) Bid bonds and the like. A bid bond, cashier's check, certified check, or other approved security in an amount equal to 5% of the bid is required to guarantee the successful bidder will sign a contract in the following instances: (1) the bid is for a construction project; and (2) any other bid for which the City Manager or Director of Finance deems it necessary to protect the interest of the city.
(b) Performance bond. When preparing the bid document, departments should consider whether to require contractors to provide a performance bond if awarded the contract. In instances where the bid is for construction services or significant building improvements, it is customary to require the contractor to provide a performance bond. A performance bond, issued by a surety company, stipulates a legal, written obligation to guarantee 100% payment for any financial loss caused by default of the contractor. When assigned to the City of Wood River, it grants an assurance as to the performance and successful completion of the terms of the contract and assures payment of the taxes, licenses or assessments associated with the contract. The contractor shall provide the performance bond with the appropriate labor and material bonds within ten calendar days of award of the bid. Bonds required to guarantee performance and payment for labor and material for the work shall be in a form acceptable to the city and shall provide that they shall not terminate on completion of the work, but shall be reduced to 10% of the contract sum upon the date of final payment by the city for a period of one year to cover a warranty and maintenance period which contractor agrees shall apply to all material and workmanship for one year from the date of issuance of the final payment by the city.
(c) Insurance. Contractor agrees to provide and maintain certificates of insurance and endorsements evidencing the minimum insurance coverage and limits set forth below during the term of the contract. Such policies shall be in force and from companies acceptable and satisfactory to the owner to afford protection against all claims for damages to public or private property, and injuries to persons, arising out of and during the contract term. A copy of the certificate of insurance and endorsement section of the insured's policy shall name the City of Wood River, its officers, agents, employees, representatives and assigns as additional insured. The policy of insurance shall contain no provisions that invalidate the naming of the owner as additional insured. The insurance coverage and limits set forth below shall be deemed to be minimum coverage and shall not be construed in any way as a limitation on contractor's duty to carry adequate insurance or on contractor's liability for losses or damages under this contract. The minimum insurance coverage and limits that shall be maintained by the contractor and his sub-contractors at all times while providing, performing, or completing the work are as follows:
1. Worker's compensation. The contractor is required to carry, with a company authorized under the laws of the State of Illinois, a policy for protection against liability under the Worker's Compensation and the Occupational Disease Statutes of the State of Illinois with limits of not less than $1,000,000 per claim. If the minimum amount of insurance required is increased by the State of Illinois, that new minimum amount shall automatically replace the stated amount in this policy.
2. General liability. The contractor shall carry a comprehensive general umbrella liability policy for all operations with limits of not less than $1,000,000 each accident for bodily injury liability and not less than $1,000,000 each accident for property damage liability. If the minimum amount of insurance required is increased by the State of Illinois, that new minimum amount shall automatically replace the stated amount in this policy.
3. Professional liability insurance. The contractor shall carry a minimum of $1,000,000. If the minimum amount of insurance required is increased by the State of Illinois, that new minimum amount shall automatically replace the stated amount in this policy. All such insurance must include an endorsement whereby the insurer agrees to notify the owner at least 30 days prior to non-renewal, reduction, or cancellation. The contractor shall cease operations if the insurance is canceled or reduced below the required amount of coverage. All costs for insurance as specified herein will not be paid for separately but shall be considered as incidental to the contract. The City Manager may require more insurance minimums based on the scope of the project.
4. Additional documents required. The following forms must also be attached in order to be acceptable: hold harmless and indemnity agreement, certificate of compliance with the substance abuse prevention program certification, certificate that the contractor is not barred from contracting with unit of local government because of conviction of an offense related to bidding, prevailing wage information, and a certificate on non-delinquency of tax. The City Manager may require additional documents depending on the scope of the project.
5. Bid submittal. All companies or individuals who wish to bid on a good or service must submit their bids in a sealed envelope before the deadline of the bid. Upon receipt of a sealed bid, the City Clerk will initial and stamp the date and time of receipt on the outside of the envelope. The sealed bid will be held until the bid opening and the appropriate department will publicly open and read the bids. If bid documents are to be distributed at the City Hall, the front desk personnel must be supplied with at least three copies (or more depending on the number of bidders expected) of the bid document.
6. Pre-bid conference. If a pre-bid conference is conducted, departments should specify in the notice to bidders whether attendance is a mandatory condition of bidding. At the pre-bid conference, the responsible department should ensure that all attendees sign a "sign-in" sheet to ensure compliance with this requirement of bidding. Failure to attend a mandatory pre-bid conference shall disqualify a bidder from being awarded the contract unless, at the department's discretion, bidders are allowed to not attend by signing a waiver.
(d) Bid opening procedures.
1. All sealed bids shall be publicly opened by the City Manager and/or department director or his/her designee at the time stated in the legal notice. At least one other employee shall serve as a witness and tabulate the bid results. All proposals shall be open to public inspection and a tabulation of all bids shall be available from the department director. The following procedures must be completed prior to the bid opening:
a. If the bid opening will be conducted at the City Hall, the originating department shall be responsible for reserving a conference room for the day and time. This can be done by contacting the City Clerk.
b. All bids must be received before the deadline on the day of the bid. Each bid shall be marked with the initials of the city recipient and a date and time of receipt of the bid document. City Hall front desk personnel should be notified of the time and place of the bid opening for that day and reminded that any bids received after the deadline for accepting bids should be labels "not received in time" on the bid document and initialed and marked with the date and time of receipt.
c. A bid tabulation form must be completed. The outline of the bid proposal form may be used to do this. During the bid opening, both the person opening the bids and the person tabulating the bids must sign the bid tabulation sheet as witnesses.
2. If bid security is required, it shall be forwarded to the City Clerk immediately following the bid opening. Procedures for depositing and returning bid security is described below in division (D)(3)(e) below.
(e) Post bid opening requirements.
1. After the bid opening has taken place, the department director shall prepare a memorandum that explains the purpose of the bid, includes the names and addresses of the companies who submitted bids as well as the amount each company bid, and recommends which company should be awarded the bid. The recommendation should be based on the following:
a. The ability, capacity, and skill of the bidder to perform the contract to provide the service required;
b. Whether the bidder can perform the contract or provide the service promptly, or within the time specified, without delay or interference;
c. The character, integrity, reputation, judgment, experience and efficiency of the bidder;
d. The quality of performance of previous contracts of services;
e. The previous and existing compliance by the bidder with laws and ordinance relating to the contract or service;
f. The sufficiency of the financial resources and ability of the bidder to perform the contract or provide the service;
g. The quality, availability, and adaptability of the supplies or contractual service to the particular use required;
h. The ability of the bidder to provide future maintenance and service for the use of the subject of the contract;
i. The number and scope of conditions attached to the bid;
j. Responsiveness to the exact requirements of the invitation to bid;
k. Ability to work cooperatively with the city and its administration; and
l. Past records of the bidder's transactions with the city or with other entities as evidence of the bidder's responsibility, character, integrity, reputation, judgment, experience, efficiency and cooperativeness.
2. Once approved by the department director, their memo recommending award of bid should be given to the City Clerk.
3. With the exception of contracts let through an engineering contract, all bid files shall be maintained by the department requesting the bid. After the issuing department has prepared the City Council agenda item, the bid file shall be sent to the City Clerk along with the bid packages, original bid tabulation sheet, and all other documentation. After Council approval, the bids will be stored in the City Clerk's office where they can be accessed when necessary (state law requires bid files be maintained for ten years following the bid opening). The signed contract will be forwarded to the City Clerk for safekeeping after it is received. Signed contracts, certificates of insurance and performance bonds must be obtained from the contractor before work begins. It is the responsibility of the applicable department to ensure that the city's contract has been signed, and certificate of insurance and performance bond obtained before work begins.
4. The City Clerk or designee shall be responsible for handling bid deposits. If a bid deposit was required, it must be returned to all except the three lowest responsive and responsible bidders on each contract within 14 calendar days after the opening of the bid and within 24 hours of when the award letter is mailed. The bid deposit of the accepted bidder is to be returned only after acceptance by the city of satisfactory performance bond where such bond is required or completion of contract where no performance bond is required. The remaining bid deposits of each contractor should be returned within 14 days after the City Council has awarded the contract.
(f) Waiver of competitive bidding. The City Council, by a two-thirds vote of all the Councilpersons then holding office, may waive the bidding procedures and enter into a contract or agreement. Requests for bid waivers shall be made only when goods or services are proprietary (i.e. sole source), where standardization is necessary or desirable (e.g. furniture), in emergencies as defined in this manual, or when it is in the best interests of the city to do so. In any instance, a statement justifying the need for a bid waiver shall be included in the department's recommendation and accompany the memo for inclusion on the City Council's agenda.
(g) Requests for professional services.
1. Some contracts, by their nature, are not adapted to award by competitive bidding. Examples include, but are not limited to, contracts for the services of individuals possessing a high degree of professional skill where the education, experience or character of the individual is a significant factor in determining their ability to meet the city's needs. These contracts generally result from a request for proposal (RFP) solicited from consultants for "professional services." Other than architects, engineers, and land surveyors, which are discussed below, examples of "professional services" may include, but are not limited to, lawyers and consultants.
2. The city is required by the Local Government Professional Services Selection Act to follow specific procedures when hiring an architect, engineer, or land surveyor. The procedures must be followed unless (1) an emergency situation exists and an architect, engineer or land surveyor must be selected in an expeditious manner; or (2) when the cost of such services "is expected to be less than $40,000"; or (3) the city has a satisfactory relationship for services with one or more firms." If none of these conditions apply, the city must solicit proposals and adhere to the following requirements:
a. Public notice. Permitting firms engaged in the lawful practice of their professions to annually file a statement of qualifications and performance data with the city. The city must also: (1) mail a notice requesting a statement of interest in the specific project to all firms who have a current statement of qualifications and performance data on file with the city; and (2) place an advertisement in a local newspaper of general circulation throughout the city, requesting a statement of interest in the specific project and further requesting statements of qualifications and performance data from those firms which do not have such a statement on file with the city. Such advertisement shall state the day, hour and place the statement of interest and the statements of qualifications and performance data shall be due.
b. Selection procedure. The city then must evaluate the firms submitting letters of interest, taking into account qualifications, ability of professional personnel, past record and experience, performance data on file, willingness to meet time and budget requirements, location, workload of the firm and such other factors as the city may determine in writing are applicable. The city may conduct discussions with and require public presentations by firms deemed to be the most qualified regarding their qualifications, approach to the project and ability to furnish the required services.
c. On the basis of evaluations, discussions and presentations, the city shall select no fewer than three firms which it determines to be the most qualified to provide services for the project and rank them in order of qualifications to provide services regarding the specific project. The city shall then contact the firm ranked most preferred and attempt to negotiate a contract at a fair and reasonable compensation, taking into account the estimated value, scope, complexity, and professional nature of the services to be rendered. If fewer than three firms submit letters of interest and the city determines that one or both of those firms are so qualified, the city may proceed to negotiate a contract.
d. Contract negotiation. The city shall prepare a written description of the scope of the proposed services to be used as a basis for negotiations and shall negotiate a contract with the highest qualified firm at compensation the city determines in writing to be fair and reasonable. In making this decision, the city shall take into account the estimated value, scope, complexity and professional nature of the services to be rendered.
e. If the city is unable to negotiate a contract with the preferred firm, negotiations with that firm shall be terminated. The city shall then begin negotiations with the firm which is next preferred. If the city is unable to negotiate a contract with that firm, negotiations with that firm shall be terminated. The city shall then begin negotiations with the firm which is next preferred.
f. If the city is unable to negotiate a satisfactory contract with any of the selected firms, it shall re-evaluate the architectural, engineering or land surveying services requested, including the estimated value, scope, and complexity and fee requirements. The city shall then compile a second list of not less than three qualified firms and proceed in accordance with these procedures.
3. If a contract is used other than the city's standard contract, the following items should be included: indemnification, insurance, and venue. This language can be obtained from the City Manager or the City Attorney.
4. If, after reviewing these procedures, employees have questions regarding which services are exempt, they should contact the City Attorney for clarification.
(E) Methods of payment processing.
(1) Regular purchase orders. All individual purchases over $5,000 shall require the issuance of a regular purchase order to the vendor before an order for goods or services is filled. No employee shall have the authority to purchase items on the city's behalf without first entering a purchase requisition and obtaining the required approvals from supervisory staff or the City Council where applicable. Employees shall be responsible to plan for purchases exceeding $5,000 in advance and should allow sufficient time to have a requisition processed and purchase order issued to the vendor. With the exception of emergency purchase orders, the Department of Finance will not issue purchase order numbers in advance unless a requisition has been processed and has received the necessary approvals. Receiving tickets will need to be turned in to the Finance Department as soon as possible after the item or items are received with the receiving date clearly marked.
(2) Change orders to regular purchase orders. After a regular purchase order is issued to the vendor, it may become necessary to change it to include additional quantities, shipping costs, and the like. When this occurs, the employee who completed the original requisition shall process another requisition for the change order. The employee shall note the original purchase order number for which the change is being made and explain briefly the need for the change. Please note that change orders to original contracts of $25,000 or more require the prior approval of either the City Manager or City Council. For more information, please refer to the financial policy on change orders included in this manual.
(3) Confirming purchase orders. Except in the case of emergency purchase orders, the city will not issue confirming purchase orders to vendors.
(4) Prepayments. The city will not pay for goods and services until the goods are received or the service is rendered. Exceptions:
(a) Deposits on certain jobs when approved by the Director of Finance or City Manager;
(b) Memberships and books or periodicals;
(c) Payments to local, state, and federal government entities;
(d) Service and maintenance contracts where necessary;
(e) Small orders (under $1,500) where the department director approves prepayment; and
(f) Approval by the Director of Finance or City Manager.
(5) Manual checks.
(a) Manual checks are interim checks issued to vendors as payments for goods delivered or services performed. The checks are issued between normal accounts payable cycles when an emergency or other extenuating circumstance as determined by the Finance Department makes it impractical or unreasonable to process the payment following normal payment methods. As the name implies, manual checks are labor intensive and time consuming to issue, therefore, their use as a method of payment shall be restricted to unique or special circumstances.
(b) All requests for manual checks must be processed by completing a purchase requisition form. The completed form shall include the vendor's name and address, the account number against which it is being charged, a description of the item purchased, and an explanation as to need for the check. The form shall also include the signature of the applicable department director. Completed forms shall be submitted to the Finance Department for approval.
(6) Petty cash.
(a) This policy sets forth procedures for the handling of petty cash monies city-wide. It further establishes the procedures for reporting petty cash disbursements by department to the Department of Finance as well as reimbursements to each petty cash box. Each location's department director is responsible for seeing that the total number of receipts and cash equal the amounts detailed in division (E)(2) above. The petty cash box is subject to audit and the department director will be accountable for any non-compliance with this procedure or shortage of funds.
(b) All forms needed in order to effectively manage the petty cash process are referred to in the procedures section and are contained as exhibits to this policy.
(c) The following policy and procedural guidelines have been established to promote a more efficient and accountable petty cash operation. All departments within the city are responsible for abiding by this policy. There are no exceptions.
1. Petty cash disbursements to employees.
a. Requests for petty cash may be made to the office manager at each location or Accounts Payable Clerk at City Hall.
b. There is a $75 limit per petty cash request per employee per day. Any amount above $75 must be submitted through the accounts payable process.
c. No one is allowed to take money from petty cash without a petty cash request form and a cash receipt which must be signed by the appropriate supervisor. The petty cash request form must also be signed by the employee who will receive the money.
i. If a petty cash request form is submitted without a receipt, the employee must bring back a receipt before they are reimbursed. If for some reason the employee did not obtain a receipt for submittal with the petty cash request form, supervisory approval MUST be noted on the petty cash receipt form.
ii. All receipts must be original. If desired, copies may be made and kept by each individual employee, but the original must be given to the respective person responsible for petty cash in each department.
d. All petty cash request forms must contain the following information:
i. Date;
ii. Detailed description of the expenditure;
iii. Name of person(s) to receive money;
iv. Department; and
v. Receipt signed by the supervisor.
2. Reimbursing each petty cash box.
a. The person responsible for the petty cash shall not only disburse petty cash to various employees, they must reconcile the petty cash box and request petty cash reimbursements by the payables deadline. It is recommended that this be done on a bi-weekly basis, as needed.
b. The maximum amount of petty cash allotted at City Hall is $1,000. If this amount is not sufficient to meet the needs of the department, the department director can request an increase in the petty cash allotment. This request must be approved by the Director of Finance.
c. Petty cash will be subject to periodic announced and unannounced audits to determine compliance with these procedures. Any discrepancies with compliance or cash balance shall be immediately reported to the Director of Finance and a written report shall be provided with copies to the City Manager and department director.
d. Any questions regarding these procedures may be directed to the Finance Department at City Hall.
(7) Credit card payments.
(a) The City Council has provided each department director and various supervisory staff with a corporate credit card for use in making purchases. Each cardholder is responsible for the security of the card and should not permit its use for means other than those permitted by this policy. Credit card use shall be limited to the purchase of items under $5,000 (excluding payment of travel expenses) where a purchase order cannot be used (e.g. airline reservations, restaurants and the like). Credit card purchases of $5,000 or more must be approved by the Finance Director or City Manager. Credit cards shall not be used to circumvent the normal payment process.
(b) As with all purchases made on the city's behalf, goods purchased with a credit card are exempt from sales tax. Therefore, employees shall provide the vendor with a sales tax exemption form in order to avoid being charged sales tax.
(c) Receipts for goods or services, or printout of orders placed on line, purchased with a credit card shall be obtained and submitted to accounts payable by the end of the billing cycle. If a receipt is not issued, a packing slip may be provided to accounts payable. Payment will not be made unless receipts (or an explanation as to why receipts are not available) are included with the credit card statement. It is not permitted to utilize the credit card for personal purchases at any time.
(d) The Finance Department shall maintain a list of the credit cards issued to each employee/department and shall request that they be returned prior to termination of employment. Returned cards shall be forwarded to the Director of Finance or his/her designee and shall be canceled.
(8) Accounts payable (purchases made without purchase orders).
(a) Purchase orders are the preferred method of payment for most city transactions. However, in the following instances, payments will be made without purchase orders, after approval from the department director or supervisor:
1. Recurring monthly bills (i.e. phone bills, utility bills, and the like);
2. Credit card payments; and
3. Reimbursements to city employees for expenses incurred.
(b) The city will make every effort to pay invoices in a timely manner in order to receive any discounts available.
(c) Purchases made pursuant to contracts and/or professional services will not require purchase requisition forms or purchase orders.
(9) Local vendors. Any items purchased from a local vendor may be charged to the city account with the vendor giving the employee a copy of the ticket for the item purchased (some places do not give tickets). The employee will need to put an account number on the ticket, sign it clearly, and submit it to the supervisor. The supervisor shall signify approval with initials, indicate account number, and submit it to the appropriate departmental payable processing staff or Finance Department. Accounts payable processing staff will match the tickets with the statement and set them up for payment. A listing of local vendors utilized can be obtained from the Finance Department.
(F) Miscellaneous purchasing policies and guidelines.
(1) Change order policy.
(a) This policy requires City Council approval of all change orders for $25,000 or more and for all change orders which, when combined with those previously approved, increase or reduce the contract price by more than $25,000.
(b) Change orders which increase or reduce the time for completion of the contract by more than 180 days (regardless of the original contract price) require City Council approval. In these instances, departments shall follow the procedures for submitting change orders to the City Council outlined above.
(c) It shall be the responsibility of each department director to ensure that all change orders are submitted to the City Manager or City Council for approval. In addition, department directors shall be responsible for monitoring all contract payouts and retainages and ensuring that the amount of the change order is correct.
(d) Changes to professional service contracts (e.g. engineering, architectural or land surveying work) shall be treated as contract amendments.
(e) Procedures for submitting change orders to the City Council.
1. Change orders requiring City Council approval shall be placed on the City Council's agenda and shall be accompanied by a memorandum explaining the need for the contract revision. If a change order for less than $25,000 is submitted to the City Council for approval, departments shall explain that City Council approval is necessary because the total value of all change orders exceeds $25,000.
2. Change orders shall be numbered sequentially and shall bear the signature of the department director. In instances where a final balancing change order (regardless of the amount) reduces the contract price, departments shall instruct Finance to close out the remaining encumbered funds.
3. In special circumstances, a change order requiring City Council approval may be authorized by the City Manager or his/her designee prior to being placed on the City Council agenda. After receiving authorization, however, the department, following the requirements outlined above, shall have the change order placed on the City Council's agenda for the following meeting.
(2) Fixed asset policy.
(a) A fixed asset policy is herein established to insure compliance with governmental financial reporting standards and to safeguard city assets.
(b) Fixed assets shall include land, buildings, machinery, equipment and vehicles with a life expectancy of one year or more. To be included in this definition, the capitalization threshold of the asset or minimum value of the asset at the time of acquisition is established at $20,000.
(c) Responsibility for control of fixed assets rests with the operating department wherein the asset is located. The Director of Finance shall ensure that such control is being maintained by establishing a fixed asset inventmy that is updated on a regular basis and which documents all additions and deletions to the fixed asset inventory. Operating departments shall report the disposal or relocation of a fixed asset promptly to the Director of Finance or his/her designee.
(d) Assets acquired during the year shall be recorded as an expenditure against the appropriate capital expenditure account. In the comprehensive annual financial report, these expenses are depreciated over the useful life of the asset.
(e) Assets shall be recorded in the fixed asset inventory by using an appropriate description and by recording serial numbers where applicable. Tagging of all assets will not be required. Assets not capitalized under this policy but which, in the opinion of the Director of Finance may, in the aggregate, account for a substantial asset group, shall be inventoried by the appropriate operating department by a means or system suitable for maintaining control of the assets. The Director of Finance shall determine the appropriate means or system to be used in these situations.
(3) Disposal of city property (not real property).
(a) City property of value may not be sold or traded without prior approval of the City Council.
(b) If the item has value, notify the Finance Department to determine if the item needs to be removed from the city's records. Include information such as identifying the equipment to be disposed, the name of the manufacturer, model number, serial number, and an estimate of salvage value if applicable. The Finance Department is authorized to transfer usable surplus materials to another department requesting such materials, or to approve disposal of the property where appropriate. The department director shall have the City Attorney prepare an ordinance for the City Council agenda recommending disposal of the property.
(4) Purchases near the end of the fiscal year. When purchases are made near the end of the fiscal year (i.e. April 30), departments shall be responsible for ensuring that they are expensed (i.e. charged) against the fiscal year in which they were received. The date goods are received or services are performed determines which fiscal year they are expensed against. Consequently, goods and services will be expensed in the current fiscal year only if they are received or performed by April 30. This is true regardless of when the purchase requisition is processed or the purchase order is issued. Items not received by April 30 will be expensed in the next fiscal year.
(5) Use of sales tax exemption number.
(a) Use by employees.
1. City purchases are not subject to sales tax; therefore, employees shall make efforts to inform vendors of the city's tax-exempt status and to ensure that sales tax is not paid for purchases made with petty cash or credit cards. Sales tax exemption forms may be obtained from the Finance Department.
2. Use of the city's sales tax exemption number is restricted to purchases made on behalf of the city. State law prohibits use of the city's sales tax exemption number to secure exemptions for personal reasons and such use will subject the responsible individual and all guilty parties to a fine of not more than $10,000 or to imprisonment for not more than five years or both, together with costs of prosecutions.
(b) Use by outside contractors or vendors.
1. The Illinois Department of Revenue regulations allow contractors to use the city's sales tax exemption number to purchase materials used in construction of public improvements which will be eventually dedicated to the city. Use of the exemption number is limited to purchases directly related to work being done on behalf of the city. Contractors are responsible for any tax due on purchases determined to be non-exempt and for purchases not made on the city's behalf.
2. Requests by contractors for the city's sales tax exemption number shall be forwarded to the Director of Finance or his/her designee. The city will provide a letter of explanation regarding the correct use of the city's tax-exempt number along with a sales tax exemption certificate. It is the responsibility of the contractor to properly account for the use of the city's tax exemption number. The City of Wood River reserves the right to audit purchases to assure compliance with the terms and conditions governing use in accordance with Illinois law.
PURCHASE REQUEST
Item Date
Department Employee
Account Number
Company | Address | Quote |
1.) | ||
2.) | ||
3.) |
Company recommended for purchase
* If low quote is not recommended, please explain
Approved
Disapproved
Department Director signature
City Manager signature
* Attach written quotes if request is $15,000 - $24,999. $25,000 and above requires competitive bids. (See purchasing policy)
(Ord. 24-9, passed 2-20-2024)