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THE PURCHASING PROCEDURES OF THE CITY OF MUSKEGON EFFECTIVE: December 10, 1991 THE PURCHASING PROCEDURES OF THE CITY OF MUSKEGON SECTION I PURCHASES OF LESS THAN $100 1 A. PETTY CASH PURCHASES 1 B. SMALL PURCHASES 1 SECTION II PURCHASES OF $100 OR MORE BUT LESS THAN $500 2 A. PURCHASE ORDER 2 B. RECEIVING AND INSPECTION OF PURCHASES 3 C. COMPETITION 3 D. LOCAL PREFERENCE 3 SECTION Ill PURCHASES OF $500 OR MORE BUT LESS THAN $2,000 3 SECTION IV PURCHASES OF $2,000 OR MORE BUT LESS THAN $8,000 3 SECTION V PURCHASES OF $8,000 OR MORE 4 A. INVITATION TO BID 4 B. BID DOCUMENT 4 C. BID SPECIFICATIONS 5 D. EVALUATION OF BIDS 6 E. AWARD OF BID 5 F. CONTRACT DOCUMENTS 6 G. APPLICABILITY OF SECTION V PROVISIONS TO OTHER PROVISIONS 6 SECTION VI PURCHASES FOR MAINTENANCE ACTIVITIES 6 SECTION VII MISCELLANEOUS PURCHASING PROVISIONS 6 A. RECYCLED PRODUCTS 6 B. BLANKET PURCHASE ORDERS 7 C. EMERGENCY PURCHASES 7 D. SOLE SOURCE PURCHASES 7 E. COOPERATIVE PURCHASING 8 F. BUDGET APPROPRIATION FOR PURCHASES 8 G. DELIVERY PROVISIONS 8 H. PAYMENTS 8 PURCHASING PROCEDURES OF THE CITY OF MUSKEGON These procedures governing City purchases have been established by the City Manager to provide guidance and instruction to all personnel involved in the purchase of goods and services used by the City. They are based upon the Purchasing Policy recommended by the City Manager and approved by the City Commission in order to promote and maintain economy, efficiency, and accountability. It shall be the responsibility of all departments and divisions of the City to ensure that these Purchasing Procedures are properly implemented and administered. Therefore, all purchases made by the City shall be in accordance with the general rules and regulations stipulated in the City's Purchasing Policy and in conformity with these specific Purchasing Procedures. SECTION I - PURCHASES OF LESS THAN $100 A. Petty Cash Purchases Purchases of less than $25 may be made by authorized department personnel by use of the department Petty Cash Fund. Employees so authorized may pay for items purchased for City use with Petty Cash. A Petty Cash Voucher must be completed for each purchase made by this method. The Petty Cash Voucher shall include the following: 1) Date and department. 2) Signature of requesting person. 3) Signature of department head or designee authorizing payment. 4) Description of items purchased. 5) Account number to be charged. 6) Amount expended. A vendor receipt or other documentation must accompany each Petty Cash Voucher. The Petty Cash Fund is intended solely as a means of providing for incidentals and shall not be used to circumvent normal purchasing procedures. B. Small Purchases This purchasing provision has been made to streamline the purchasing process and to provide a mechanism so departments can make unforeseen purchases without delaying City operations. Small purchases are purchases of less than $100 and can be made by authorized personnel subject to the following: 1) Each department head will submit a list to the Assistant City Manager of all employees authorized to make small purchases. 2) Small purchases will be made with vendors with whom the City has purchase accounts. 3) A properly completed Purchase Order shall be issued upon receipt of the invoice or statement for payment. 1 This section shall not be used to circumvent the normal purchasing procedure. Purchases pursuant to Section I, A, and B should be made through local vendors whenever possible. SECTION II - PURCHASES OF $100 OR MORE BUT LESS THAN $500 For purchases of $100 or more but less than $500 within one year, the following procedure shall be used: A. Purchase Order An order for goods and/or services shall be placed by a City department upon the issuance of an authorized Purchase Order to the lowest priced, most responsive, and responsible vendor in conformance with the provisions of the Purchasing Policy and these Purchasing Procedures. 1) Completion of Purchase Orders - Every completed purchase order shall include the following information: a. Purchase Orders shall be pre-numbered in sequence b. Date and requesting department. c. Date items(s) are needed. d. Name and description of items to be purchased. Descriptions shall include all available details such as make, model, color, size, dimension, etc. e. Quantity- it shall be specified in units such as: dozen, gross, pounds, tons, gallons, feet, etc. f. Cost of each item(s) to be purchased. g. Account number(s) to be charged. Items must be charged to accounts provided for such purchases. (For example, supply purchases cannot be charged to equipment purchase accounts.) h. Vendor name i. Delivery instructions and designation. j. City Commission proceeding, if any. k. Signature of authorized purchaser pursuant to the Purchasing Policy and Purchasing Procedures. I. The Purchase Order shall also include: City tax exempt number, invoicing procedure, instructions to vendors, and all supporting documentation. 2) Distribution of Purchase Orders - Purchase Orders shall be distributed as follows: a. The first and/or original copy shall be mailed or taken to the vendor when the order is placed. b. The second copy shall be issued to the Finance Department at the time the order is placed. c. The third copy shall be issued to the Assistant City Manager at the time the order is placed. d. The fourth and fifth copies will be retained by the issuing department until the goods and invoice are received. Both copies will be sent to the Assistant City Manager for approval for payment once the originating department 2 has received the invoice and has determined that all materials have been received and are in an acceptable condition. The appropriate backup information will be attached to these copies. Once approved for payment by the Assistant City Manager, the fourth copy will be sent to Finance for payment. The fifth copy along with the backup material will be sent to the originating department. B. Receiving and Inspection of Purchases The requisitioning department is responsible for the inspection and acceptance of all materials, supplies, and equipment purchased. If an incorrect amount is received, an item(s) is/are defective, or not to specification the vendor must be notified immediately. Tardy claims are usually suspect and there is a risk of the City having recourse due to delayed notification. The purchase order should not be processed for payment until any such issues are resolved to the satisfaction of the requisitioning department head. C. Competition Pursuant to the City's Purchasing Policy, the requisitioning department must make every attempt to provide for competition for each purchase. For purchases of $100 or more but less than $500 within one year, departments should seek bids or quotations whenever possible to allow for competition. D. Local Preference Purchases made pursuant to this section should be made utilizing local vendors whenever possible. Local shall mean the City of Muskegon. SECTION Ill - PURCHASES OF $500 OR MORE BUT LESS THAN $2,000 All requirements provided in Section II of these Purchasing Procedures shall also be applicable to this Section with the further requirement that, pursuant to Section IV-D of the City's Purchasing Policy, there shall be the solicitation of no less than three (3) verbal or telephone price quotations when feasible and practical to do so. The purchase order shall be issued to the lowest cost vendor unless good cause exists not to do so, in accordance with the City's Purchasing Policy. Written notes of quotes shall be kept by the Department Head. SECTION IV PURCHASES OF $2,000 OR MORE BUT LESS THAN $8,000 All requirements of Section II of these Purchasing Procedures shall be applicable to this Section with the additional exception that pursuant to Section IV-E of the Purchasing Policy, there shall be the solicitation of no less than three (3) written price quotations. In addition, purchases made in accordance with this Section shall also be preapproved by the Assistant City Manager. 3 SECTION V PURCHASES OR CONTRACTS OF $8,000 OR MORE All requirements of Section Ill of these Purchasing Procedures shall be applicable to this Section. In addition to that Section and pursuant to the Purchasing Policy, there shall be the solicitation of formal bids for goods and services of $8,000 or more within one fiscal year. A. Invitation to Bid An Invitation to Bid shall be prepared for each purchase to inform bidders about all relevant factors to the bid. It shall include at minimum the following information: 1) Purchase or Project Title 2) Description of purchase to be made and/or work to be performed. 3) Date, time, and place sealed bids will be received. 4) Where plans or specifications for this purchase or project can be obtained. S) The cost, if any, for the plans or specifications. 6) That the City reserves the right to reject and or all bids or to waive any informalities or irregularities in the bidding. The Invitations to Bid when required must be published in at least one newspaper of general circulation of the City at least ten {10) days prior to the bid opening. The publication is not required on professional services, sole source, intergovernmental, and cooperative purchasing contracts. B. Bid Document In soliciting bids for purchases, the bid documents shall include all the information included in the Invitation to Bid along with the following information. 1) Proposal Form - Bids shall be submitted only on the forms provided by the City unless otherwise state. The bidder shall submit one copy signed and sealed in an envelope. 2) Late Bids - Formal bids, amendments thereto, or request for withdrawal of bids received after the time specified for bid opening will not be opened or considered and shall be returned to the vendor. 3) Withdrawal of Bids -A written request for the withdrawal of a bid or any part thereof may be granted if the request is received by the City prior to the specified time of opening unless otherwise provided and shall be personally retrieved by an authorized representative of the vendor. 4) Completeness - All information required by the Invitation for Bids, specifications, terms, conditions, items of the proposal form and any attachments thereto must be submitted with the bid. 5) Bids Binding 60 Days- Unless otherwise specified, all formal bids submitted shall be binding for sixty calendar days following bid opening date, unless the bidder(s), upon request of the Department head, agrees to an extension. 6) Conditional Bids - Bids qualified by the bidder in regard to terms and conditions inconsistent with those required by the City may be subject to rejection in part or in whole at the option of the City. 4 7) Bids for All or Part - Unless otherwise specified by the City or the bidder, the City reserves the right to make award on all items, or any of the items according to the best interests of the City. Bidder may restrict his/her bid to consideration in the aggregate by so stating, but should name a unit cost on each item bid upon; any bid in which the bidder names a total cost for all the articles without quoting a cost on each and every separate item, may be rejected at the option of the City. 8) Taxes -The City of Muskegon is exempt from all State and Federal taxes. The City's tax exempt number is 38-600-4S22. 9) Insurance Requirements - Vendors will be required to provide insurance pursuant to the City's Risk Manual in accordance with the type of service performed. All purchase and contract documents shall identify the insurances and risk management provisions necessary to meet the City's Risk Management Policy. C. Bid Specifications Specifications shall be prepared for each purchase to be bid. The following shall apply to specifications: 1) Specifications will include a description of the physical or functional characteristics, or of the nature of a supply, service, equipment, or construction item. It may also include a description of any requirement for inspecting or testing. 2) The requesting department shall prepare, issue, revise, and monitor the use of specifications for supplies, services, equipment, and construction as required by the City. 3) All specifications shall seek to promote overall economy for the purposes intended and encourage competition in satisfying the City's needs and shall not be unduly restrictive. 4) Bid specifications shall include the Affirmative Action requirement pursuant to Section IV-G of the Purchasing Policy. D. Evaluation of Bids The requesting department shall evaluate the bids received and make a recommendation to the City Commission relative to selecting the successful bidder; as endorsed by the City Manager. The following items must be considered when evaluation the bids: 1) Cost of the items including cost factors such as: maintenance-service, energy use, and life cycle analysis. 2) Quality of goods or workmanship. 3) Timing and cost of delivery. 4) The ability, capacity, and skill of the bidder to satisfactorily perform the service required within the specified time. S) The character, integrity, reputation, experience, and efficiency of the bidder. 5 E. Award of Bid The City Commission will award the bid to the successful vendor pursuant to Section IV-F-(9) of the Purchasing Policy. 1) Notice of Acceptance - Once the City Commission awards the contract, an authorized purchase order shall be issued to the successful bidder. F. Contract Documents All contract document shall be reviewed by the City Attorney and submitted upon recommendation for purchase. If these are standard documents, they should be so stated so in the resolution approving the bid. G. Applicability of Section V Provisions to Other Purchases Where applicable, the requirements specified in Section V shall also apply to purchases under $8,000 that do not require formal bidding. SECITON VI - PURCHASES FOR MAINTENANCE ACTIVITIES Maintenance supplies and products are defined as follows: Automotive parts and supplies limited to: spark plugs, filters, hoses, clamps, belts, lights, etc., wood and hardware products for repair of equipment and facilities. Purchases of maintenance supplies may be made by the following process: A. Annual selection of one or more vendors to supply these products. This selection will be made utilizing the following: 1) Written quotes or formal bids will be sought on a substantial selection of various maintenance products used by the department. 2) Vendor selection will be made based on the lowest prices from a responsible bidder. 3) Standardization of maintenance supplies may be utilized to maintain quality and uniformity. The selected vendor(s) may be utilized for up to one full year without getting additional quotes or bids as long as their prices do not increase during that time. SECTION VII - MISCELLANEOUS PURCHASING PROVISIONS A. Recycled Products City departments will make every effort to utilize recycled products, pursuant to the City's Purchasing Policy, Section IV-H. The following provisions will serve to meet this goal: 1) Products and service specifications shall be prepared so that they do not exclude the use of recycled material. The only exception to this requirement is when a 6 department head can demonstrate that these recycled products will not achieve the necessary performance standard. 2) City departments shall purchase only copiers capable of utilizing recycled paper of the appropriate grade. 3) Recycled paper shall be purchased and used in all currently owned copiers that will accept it. 4) A price preference will be given to recycled products pursuant to the Purchasing Policy Section IV-G. B. Blanket Purchase Orders Blanket Purchase orders may be used with approved vendors to make repetitive purchases of specific services or products from the same vendor over periods of less than one year or on a monthly basis. Blanket purchase orders cannot be issued for more than one year at a time. C. Emergency Purchases Emergency purchases are made when there is a situation that requires immediate purchasing action to prevent delays of service that might adversely affect the public health, safety, welfare, or present a hardship in the performance of City operations. The department head may purchase goods or services under this sections subject to the following: 1) Department Report - As soon as possible, the department making an emergency purchase shall submit a complete written report to the Assistant City Manager reviewing the nature of the emergency and action taken, including; a. The circumstances giving rise to the emergency and the factors necessitating the exercise of departmental emergency action. b. The name and address of the vendor used and the rationale for selection of that vendor (quotations will sought whenever possible). c. A full description of the items purchased, the total cost incurred to the City, and the budget account from which funds will be derived to pay for the purchase. 2) Issuance of After-the-Fact Purchase Order - The department head shall issue and execute an after-the-fact purchase order captioned: "Emergency Purchase." The operating department emergency report shall be attached with the purchase order to be retained in the files. 3) Emergency Purchases of $2,000 or More - In addition to other requirements of Emergency Purchases, those of $2,000 or more shall have the approval of the City Manager or Assistant City Manager. 4) Emergency Purchases of $8,000 or More - Emergency purchases of $8,000 or more shall be subject to all emergency purchase requirements. Additionally, these purchases will be reported to the City Commission by submission of a copy of the department report relative to the purchase. D. Sole Source Purchases Some goods or services can be obtained through purchase from only one vendor. In these cases, a written justification must accompany the Purchase Order explaining the reasons why the vendor is the sole source. The department must look into the intended use of the item and assure that only one vendor is able to provide the item or service that will satisfy the intended use. 7 1) Sole Source Purchases of Over $8,000- For sole source purchases of $8,000, the requesting department must seek approval from the City Commission for waiver of bid requirements and to purchase from the sole vendor. E. Cooperative Purchasing Departments must make every attempt to reduce the purchase price of goods and services through cooperative purchasing with local and state governmental agencies. Specifically, departments should utilize the State of Michigan's Extended Purchasing Program whenever possible. City departments should also make every effort to do volume purchasing with other City departments for similar items. F. Budget Appropriation for Purchases All purchases must be charged to the appropriate account number pursuant to Section II-A (7) of these Purchasing Procedures. Purchases cannot be charged to any account number unless there is a sufficient balance in that account to cover the expenditure. In order to accommodate a purchase when there is not a sufficient balance in an account, a budget transfer may be requested. The budget transfer request will include the following information: 1) Budget Name 2) Account number to be transferred from with the amount. 3) Account number to be transferred to with the amount. 4) New balance for each account. 5) Reason for the transfer. The budget transfer request must be approved by the department head, Finance Director, and Assistant City Manager. G. Delivery Provisions Deliveries should be made directly to the requesting department. Every attempt should be made to have the delivery F.O.B. (free on board). When delivery costs are not included in the purchase price that should be considered when evaluating the quoted or bids. H. Payments Partial payments to contractors/vendors shall be less 10%. Final payments of any contract/purchase exceeding 10% to 20% but not in excess of $30,000 of the original bid shall be submitted to the City Manager for approval and those contracts/purchases exceeding 20% or $30,000 of the original bid shall be submitted to the City Commission for approval. 8
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