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9.h) Staff Report-Purchasing Policy Update ..� �q�� . �� `/ J �JL.�f.J.��ii.i Staff Renort Date of Meeting: October 16,2012 To: City Council From: Kristina Handt,City Administrator Re: Purchasing Policy Update Agenda Item#: 9.h) Background: The City approved a purchasing policy in July 2008. The policy provides guidance for employees to make purchases of aoods and services for the City. At the October work session,Councilmember Schneider expressed interest in reviewing the amount of funds employees can spend before coming to the Council for approval. Specific concerns were expressed about the administrator's authority to approve expenditures upto$10,000 without Council pre-authorization. Issue: Should the Purchasing Policy be amended to reduce the authority for the administrator from $]0,000 to $5,000? Proposal Details: Included in your packet is a resolution that would reduce the purchasing authority for the city administrator from $10,000 to $5,000. Also, a minor change, since the Building Official position has been eliminated it is removed from the policy. Fiscal Impact: NA-changing the purchasing authority for the administrator has no effect on the overall budget. Options: 1) ApproveResolution 10-16-12-OS 2) Amend and then Approve Resolution 10-16-12-OS 3) Make no changes to the Purchasing Policy Recommendation: Option 1. , CITY OF SCANDIA RESOLUTION NO.: 10-16-12-05 RESOLUTION UPDATING PURCHASING POLICIES WHEREAS, the Scandia City Council has determined that a purchasing policy is necessary to provide guidance to staff involved in the purchasing of materials, equipment and services; and WHEREAS,the objectives of the policy are: ■ To obtain supplies, equipment, and services as economically as possible. ■ To ensure that all purchases are best suited to the specific needs of the city. ■ To ensure adherence to the budget approved by the City Council. ■ To provide for the most efficient use of staff and City Council time and resources. ■ To ensure compliance with all applicable policies, statutes, and regulations of the City,the State, and the Federal Government. ■ To ensure that qualified and responsible bidders are selected for city projects. WHEREAS,the Scandia City Council has determined that the Purchasing Policy adopted on July 15, 2008 needs to be updated. NOW, THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF THE CITY OF SCANDIA, WASHINGTON COUNTY, MINNESOTA, that it should and hereby does adopt the attached "Purchasing Policy", said policy taking precedence over any other policy that may have been established in the past that may be in conflict. Adopted by the Scandia City Council this 16th day of October, 2012. Randall Simonson,Mayor ATTEST: Administrator/City Clerk Resolution No.: 10-16-12-OS City of Scandia Purchasing Policy Approved by the City Council October 16,2012 I. INTRODUCTION & OBJECTIVES The purchasing policy for the City of Scandia is established by the City Council to provide guidance to staff involved in the purchasing process. Council grants staff the authority to purchase materials, equipment and services,within the budget previously approved by the Council, consistent with this policy. The objectives of the policy are: a) To obtain supplies, equipment, and services as economically as possible. b) To ensure that all purchases are best suited to the specific needs of the city. c) To ensure adherence to the budget approved by the City Council. d) To provide for the most efficient use of staff and City Council time and resources. e) To ensure compliance with all applicable policies, statutes, and regulations of the City, the State, and the Federal Government. fl To ensure that qualified and responsible bidders are selected for city projects. IL PURCHASING STANDARDS AND METHODS a) Small Purchases Less than $2,000 Purchase of budgeted items or services costing less than $2,000 may be I authorized by the City Administrator or department head(Fire Chief� �9€�Si�and Maintenance Supervisor.) Such small items may be charged on account, on a city-authorized credit card or purchased with petty cash as may be appropriate or most convenient for the particular purchase. The staff inember making the purchase shall endeavor to obtain the best prices available on the open market. b) Purchases Greater than $2,000 and less than $�899�,Q00 Purchase of items or services costing more than $2,000 and less than $-�A;889 5,000 may be authorized by the City Administrator. The Administrator may require the department to obtain two or more quotes to ensure that the price is competitive. Quotes will not be required if the purchase is available from a single source. Prior review of the purchase by the City Council is required in the following cases: 1) if the purchase would cause an individual line item in the departmental budget to be exceeded by $1,000, or cause the departmental budget to be exceeded by any amount for that year; or 2) if the purchase is budgeted within the Capital Improvement, Equipment Replacement or Park Capital Improvement Fund budgets. 2 Resolution No.: 10-]6-12-OS I c) Purchases Greater than $ .�-8;8A�5,000 and less than $50,000 All purchases costing more than $�(�-5,000 and less than $50,000 must be pre-authorized by the City Council. At least two quotes shall be obtained and reviewed by the City Administrator prior to submission to the City Council. The quotes shall be kept on file for one year. d) Purchases greater than $50,000 Sealed bids shall be solicited when and in the manner provided by state law for all purchases over$50,000. Prior to solicitation of bids,the department shall prepare specifications to be reviewed by the City Administrator and approved by the City Council. The specifications shall reserve the city's right to reject any and all bids and waive informalities or irregularities. After bids are received and tabulated, the successful bid will be presented to the City Council for approval by resolution. The bid will be awarded to the lowest responsible bidder whose bid, conforming to all the material terms and conditions of the invitation for bids, represents the best combination of quality, service and price. The determination of whether or not the bidder is responsible will be made by the City Council based on Section IX of this policy. e) Consultants and Professional Services The city hires a variety of consultants and purchases professional services on an on-going basis (such as City Engineer, City Planner, City Attorney, etc.) as well as on a project-by-project basis. Competitive bidding is not required for professional services. For new on-going services, and for projects or assignments exceeding $2,000 in cost,the City Council shall review and approve a request for proposals prior to its issuance. The Council shall also determine the procedure to be used to select the consultant or contractor. III.EMERGENCY PURCHASES Emergency purchases not meeting the requirements of this policy may be made by staff where an immediate purchase is necessary to correct a situation which would adversely affect the life,the health and safety of people,personnel and/or to protect the environment. To the greatest extent possible,this policy should be followed, and every effort shall be made to notify the department head and City Administrator as soon as possible when the need for an emergency purchase arises. Such emergency purchase shall be explained to the City Administrator on the next working day, and to the City Council at their next regular meeting. IV.COOPERATIVE PURCHASING Where a purchase contract has been awarded in compliance with applicable state statutes, and where it is legally permissible for the city to participate in that contract, the City Administrator or appropriate Department Head may purchase supplies named in that contract,without obtaining quotes or fulfilling the competitive bidding 3 Resolution No.: 10-16-12-OS requirements. V. CITY CREDIT CARD ACCOUNTS The City Council authorizes city credit cards to be issued in the names of the City Administrator, Treasurer, Fire Chief and Maintenance Supervisor. Credit cards may be used for small purchases less than $2,000 as authorized by this policy. No cash advances or checks for transfers shall be permitted. Any purchase directed by or made by an employee using a city credit card that is not approved by the Council shall be the responsibility of the employee. VI.DOCUMENTATION OF PURCHASES As soon as practica] following any purchase,the responsible staff person shall submit documentation including receipts and quotes to the department head, who shall initial them signifying approval before forwarding them to the City Administrator's office. Credit card statements alone will not qualify as adequate documentation. The City Administrator shall ensure that proper documentation has been provided before submitting claims to the City Council for approval. All receipts and quotes shall be retained as required by the city's retention policy. VII. PAYMENT OF CLAIMS The City Administrator/Clerk shall present a list of all claims to be paid to the City Council for approval at its regular monthly meeting. The Council delegates authority to staff to pay the following type of clairns prior to Council approval: a) Payroll and related expenses (such as taxes, employee benefits, etc.) b) Principal and interest payments on obligations of the city. c) Claims that would result in payment of late charges or interest if payment is deferred until the next regular Council meeting. d) Electronic funds transfers to the State of Minnesota for permit surcharges. e) Payments for postage to the U.S. Post Office or for refilling a postage meter, if credit card payments are not accepted or timely Council approval is not practical. VIII. DISPOSITION OF SURPLUS PROPERTY Surplus, salvage, obsolete and unneeded materials or equipment belonging to the city may be disposed of by the City Administrator, or by a department head upon the approval of the Administrator. Disposal of any item valued at $100 or more shall require prior authorization by the City Council. The method of disposition shall be appropriate to the type of item and shall be approved by the Council at the time they determine that the item may be disposed of. The method of disposal shall comply with all requirements of state law, including all restrictions on the sale of city-owned property to a city officer or employee. 4 Resolution No.: 10-16-12-OS IX.RESPONSIBLE BIDDER POLICY The City Council will review the qualifications and experiences of bidders for construction, alteration,repair, or maintenance of real or personal property after bids are opened and before a contract is awarded, to determine if the bidder is "responsible". A "responsible" bidder is a bidder qualified to do the work. This will be determined by assessing the bidder's skill, resources, experience, successful performance or similar contracts (on time and on budget), and all other matters bearing upon the likelihood that the contract will be successfully completed. In all cases where a bidder is unknown or where there are any questions about the qualifications of the bidder,the following information will be required of the apparent low bidder in the form of a questionnaire, as follows: You are required to complete and return this questionnaire before the Scandia City Council considers awarding you the contract. 1. Identify all similar public projects in which you were the contractor. If you have had more than five such contracts, list only the last five contracts, and as to each contract identified provide the following information: Project Description: Date: Contact Person at City/County/State: Were change orders in excess of 5%requested? If yes, explain the circumstances. Were liquidated damages assessed? If yes, explain the circumstances. Was the project completed on schedule? If no, explain the circumstances. 2. Describe all construction arbitration claims and any construction or project litigation in which you have been a party in the last five years. 3. Identify all public projects you have had with the City of Scandia or New Scandia Township in the last 5 years. 5 Resolution No.: 10-16-12-OS 4. In the last five years has a bonding company ever refused to issue you a performance bond? If yes, explain the circumstances. 5. In the last five years have any claims been filed against a performance or payment bond that you have provided a public entity? If yes, explain the circumstances. 6. In the last five years,has your firm or any of its owners or employees been fined by a federal or state agency for a contract or workplace matter(such as wage or hour or safety violations), or debarred under Part 29, Title 49 CFR or any other law from submitting bids on public projects? If yes, explain the circumstances. 7. In the last five years, has your firm or any of its owners or employees been charged or convicted of a crime involving the awarding,bidding or performance of a government contract? If yes,provide full details. 8. Are any of the owners or employees of your firm an elected official or employee of the City of Scandia? 6