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Res 2018- 87 Updating Purchasing PolicyCITY OF MENDOTA HEIGHTS DAKOTA COUNTY, MINNESOTA RESOLUTION 2018-87 A Resolution Adopting an Updated Purchasing Policy for the Acquisition of Goods and Services by the City of Mendota Heights WHEREAS, the City of Mendota heights is obligated to provide for policies and procedures which safeguard the financial resources of the taxpayers of Mendota Heights; and WHEREAS, the City is governed by the State of Minnesota for many aspects of the acquisition of goods and services for use throughout the City organization; and WHEREAS, the City should from time to time review and update its operating policies and procedures; and WHEREAS, the Citywide Policy on Purchasing by City Employees and Authorized Users has not been updated since the listed review date of August 8,2011; and WHEREAS, some State requirements for the acquisition of goods and services have changed since that time, and should now be incorporated into a new written policy. NOW THEREFORE BE IT RESOLVED, by the Mayor and City Council of the City of Mendota Heights that the Purchasing Policy attached hereto, and dated November, 2018, is hereby adopted, BE IT FURTHER RESOLVED that said policy shall become effective upon adoption of this resolution. Adopted by the City Council of the City of Mendota Heights this seventh day of November, 2018. CITY COUNCIL CITY OF MENDOTA HEIGHTS 1 Neil Garlock, Mayor ATTE 2 Lorri Smith, City Clerk City of Mendota Heights Purchasing Policy Purpose This purchasing policy was created to: • Clarify and reconcile the complex requirements of state purchasing law, departmental procedures, and the Finance Department processes • Provide a comprehensive resource book for staff to be effective and efficient when making purchases • Standardize purchasing and payment methods to expedite the purchasing process The standards in this policy are minimum standards to ensure fiscal responsibility. Departments may set more restrictive procedures to meet their own budgetary accountability. II. Quick Reference Guide Value of Purchase Quotations Payment Request Approvals Needed Prior Needed Options to Purchasing Less than $100 None Credit Card Department X Check Request Finance City Administrator City Council $100-$2,499 Departmental Credit Card Department X Discretion Check Request Finance City Administrator City Council $2500-$4999 Two written Credit Card Department X Quotes or RFPs Check Request Finance X City Administrator City Council $5,000-$9,999 Two Written Check Request Department X Quotes or RFPs Purchase Order Finance X City Administrator X City Council $10,000-$24,999 Two Written Check Request Department X Quotes or RFPs Purchase Order Finance X City Administrator X City Council X $25,000-$99,999 Minimum of two Check Request Department X written Quotes Purchase Order Finance X or RFPs; 3 City Administrator X preferred City Council X Greater than Sealed Bids Check Request Department X $100,000 Purchase Order Finance X City Administrator X City Council X Notes: • If a cooperative purchasing agreement is in place that follows state law requirements for cooperative purchasing agreements, quotations are not needed. • All purchases must be approved as part of the annual budget or within the CIP. The level of budgetary control is established at the department level. Expenditures for departments that exceed appropriations are not authorized unless additional revenue sources, unspent appropriations, or fund balances are identified and available. The City Administrator is authorized to transfer up to $10,000 at any one time between departments if an additional revenue source, unspent appropriations, or fund balances are identified. Council approval is required for amounts over$10,000. • The City Council has pre-approved payment for items such as utility accounts and payroll transactions that occur in the normal course of business even though they may exceed $10,000. These are contractual accounts for services that are approved as part of the budget process. • Debt Service Payments are also pre-approved as listed in the Debt Service Schedule in bond documents. • Contractual services are subject to the limits in the Quick Reference Guide above. Independent contractors are required to provide proof of insurance before providing services. • RFPs are required for contracting services which are estimated to be in excess of$25,000, except for contractors included in the consultant pool. Ethics/Relations with Vendors The City of Mendota Heights holds its employees to the highest ethical standards. Purchases shall be conducted so they foster public confidence in the integrity of the City's procurement system, and open and free competition among prospective suppliers. In keeping with this value, employees shall avoid the following practices when making purchases on behalf of the City: • Circumventing competitive bidding requirements— Examples include: o Splitting purchases so that they can be made through several small purchases o Using the emergency procedure process when no true emergency exists o Using a "sole source" exemption when competition is available • Denying one or more vendors the opportunity to bid on a contract— Examples include: o Using unnecessarily restrictive specifications o Pre-qualifying bidders on a discriminatory basis o Removing companies from a bidders list without just cause o Requiring unnecessarily high bid guaranties or bonds. • Giving favored vendors an unfair advantage— Examples include: o Providing vendors with information regarding their competition's offers in advance of a bid opening o Making information available to favored vendors and not to others o Giving any vendors inaccurate or misleading information • Accepting gifts from vendors o Minnesota Statutes §471.895 prohibits government employees from receiving gifts except where they are included as part of the cost of a product, good, or service provided (such as a meal as part of a conference), or if the gifts are of an insignificant value. 2 Purchasing Process The City of Mendota Heights has a decentralized purchasing program where individual departments are responsible for making their own purchases. There are a few exceptions including centralized office supplies, paper, and stationery products, and modular furniture and chairs. The Finance Director or designee will assist staff members who need assistance with research or the purchase of items in cases where staff are not familiar with particular products. The Purchasing Process shall generally consist of: • Determine the need for commodities or services. • Research the cost of the purchase and determine proper purchasing alternative. • Determine the appropriate account coding, and whether there is sufficient funds available in that budget line item. • Forward requests to department head or designee for approval. If the purchase exceeds $5,000, City Administrator approval is required. If the purchase exceeds $10,000, City Council approval is required. • Department head forwards the request for payment with invoice to the Finance Department for approval and input into financial accounting system. • Finance produces claims list for approval by City Council. • Payment is made by the Finance Department. V. Purchasing Alternatives SEALED BIDS • A formal sealed bid procedure is required for all purchases in excess of$100,000, except for professional services. • A published notice of bid is required in the official City newspaper at least fourteen days in advance of bid opening. The published notice must state where the plans and specifications can be obtained by bidders and specifically, where the bid opening will be held. The notice may also be published on the City's official web site; however, this publication is in addition to the official newspaper publication. Special Assessment projects shall also meet statutory requirements, codified in Minnesota Statutes, Chapter 429, as amended. • All bid openings are to be administered by originating department. • The preparation of all specifications are to be the responsibility of the originating department. • Required authorization for all plans and specifications is the responsibility of the originating department. • The City Council must formally approve the bid contract. STATE, COUNTY, AND OTHER COOPERATIVE PURCHASING CONTRACTS The City of Mendota Heights participates in the State of Minnesota Cooperative Purchasing Venture (CPV). This enables participants to buy goods and services at a reduced cost under the terms of contracts already negotiated by the State of Minnesota. • The City has access to the releases and listings of products/services that can be purchased on state contract. 3 • If it is determined that a product/service is on a state contract, vendors should be told that the purchase will be made using that contract. When completing the purchasing paperwork, note that the purchase is per state contract and indicate the contract number. QUOTES If a purchase is estimated to exceed $5,000 but not exceed $99,999, the purchase is to be made by direct negotiation based upon quotations. If a purchase is made in this range, staff members are required to obtain at least two quotes if at all possible. These quotes should be in writing. If the quotes are not written, the requestor who received the verbal quote must document the quote in writing. All such quotes must be forwarded to the Finance Department with the purchasing documents. EMERGENCY Emergency situations may arise where the normal purchasing process cannot be followed for the procurement of goods and services. An emergency means an unforeseen combination of circumstances that calls for immediate action to prevent a disaster from developing or occurring. Minnesota Statute §12.29 gives the Mayor the authority to declare a local emergency for up to three days, which period may be extended by the City Council. During such an emergency, if authorized by City Council, the City is not required to use the typically mandated procedures for purchasing and contracts. During that time, the governing body may waive compliance with the prescribed purchasing guidelines, including compliance with Minnesota Statute §471.345, the Uniform Municipal Contracting Law. Whenever possible the current purchasing policies and procedures should be followed even when an emergency is declared, but as described above if the emergency requires speedy action essential to the health, safety, and welfare of the community and if there has been an emergency declaration, the standard purchasing policies and procedures can be waived in accordance with Minnesota Statute §12.37. REQUEST FOR PROPOSALS (RFP) RFPs may be used to solicit proposals for professional services. Typical information to address in RFPs includes: • Background and scope of the project • The project's budget to ensure that the proposals stay within that range • Proposal requirements should include adequate information to allow for proper review and evaluation including: o Description of firm and qualifications, including any specialized experience related to the project o A list of similar projects that the firm has completed o Project timetables including: estimate of hours, breakdown by hours by phase, and the City's expectation of a completion date o Designation of a firm principal who will be in charge of the project o Resumes for all staff who will work on the project o Statement that either no subcontractors are allowed or that all subcontractors will be identified and are subject to the City's approval o Estimate of cost to provide the service, outline of fee schedule and payment schedule o Description of City's selection process o City's evaluation criteria, which typically may include: ■ Quality and thoroughness of the proposal ■ Similar past experience and/or experience ■ References ■ Cost estimate 4 o The following statement must be included: "The City reserves the right to reject any and all proposals, waive all technicalities and accept any proposal deemed to be in the City's best interest." o Submittal deadline: date, time, project name, and addressee o Statement: "Proposers are solely responsible for delivery of their proposals to the City before the deadline. Any proposal received after the deadline will not be considered and will be returned." o Information about where questions should be directed Attach a copy of the agreement proposed to be used for the project, including the City's insurance certificate. The agreement includes provisions to which the firm must agree, so it is important that they see the agreement up front. It is suggested that the RFP be submitted to the City attorney for review prior to distribution. LEASE PURCHASES All operating and capital lease agreements require approval through the Finance Department and legal counsel prior to initiating a lease. Staff will conduct a lease versus buy analysis to determine the most cost-effective method. In some cases, a capital lease may result in a debt obligation being issued, which may have tax implications to the City. ON-LINE PURCHASES The following guidelines are recommended for purchasing products over the internet: • Purchases should be made only from vendors that use secure servers for e-commerce. • Standard purchasing guidelines should be followed. VI. Payment The City of Mendota Heights uses various processes in making payments for goods and services. STANDARD PURCHASE ORDERS Purchase orders are used when required by the vendor to acknowledge the City's request for goods and services. A copy of the purchase order will be sent to the vendor when requested. • The purchase order number used will be a combination of the department and the sequence of orders issued for the year, e.g., the second purchase order for Public Works in 2019 would be PW-201902. Return an invoice for payment to the Finance Department when the purchase order is complete. CHECK REQUESTS The Finance Department policy is for bills to be paid on the claims list. For certain exceptions, requests for checks may be used under the following guidelines: • Requests for checks are for payments that need to be made prior to the claims list. Examples include discounts, avoiding late charges, or purchases requiring payment with an order. BLANKET PURCHASE ORDERS, CHARGE ACCOUNTS, AND HOUSE ACCOUNTS The City uses charge accounts and house accounts for frequently used vendors. This process requires submission of a receipt with an account code and department approval. All new open accounts must be authorized by the requesting department head and the Finance Department. 5 INVOICES Department heads should submit invoices with an account code and department approval. If provided, packing lists should also be submitted with the invoice. Documentation must be returned to the Finance Department to be processed on the claims list. In all instances, the City will comply with the Prompt Payment of Local Government Bills statute, found at Minnesota Statutes, Section 471.425, as amended. STATEMENTS The Finance Department tracks all statements — reviewing for old invoices or credits. All statements are to be mailed directly to the Finance Department. CREDIT CARDS The City will issue credit cards to certain individuals to allow for more efficient purchasing and to make purchases at businesses that no longer allow open accounts. The Finance Department will also make available a City credit card for use by departments which have infrequent need to use this type of instrument. The City has a separate Credit Card Policy for these transactions. ELECTRONIC FUNDS TRANSFER Electronic Funds Transfer may be required in some cases to complete a business transaction and is often used for recurring items such as tax withholding, PERA remittances, and utility bills. EXPENSE REIMBURSEMENT A completed and property authorized form is required for reimbursement to employees for City-related expenses. Mileage will be paid at the current IRS rate. All requests must contain proper account codes, department approval, and original receipts must be attached where applicable. Expenses will be reimbursed by check on the next claims list. VII. Purchasing Policy Adoption This Policy will become effective immediately upon adoption by the City Council. 6