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1i Amendment to City's Purchasing Policy CITY OF CHANHASSEN 7700 Market Boulevard PO Box 147 Chanhassen, MN 55317 Administration Phone: 952.2271100 Fax 952.227 1110 Building Inspections Phone 952.227 1180 Fax 952.227 1190 Engineering Phone 952.2271160 Fax 952.2271170 Finance Phone 952.2271140 Fax 952.2271110 Park & Recreation Phone 952.2271120 Fax: 952.227 1110 Recreation Center 2310 Coulter Boulevard Phone: 952.2271400 Fax 952.2271404 Planning & Natural Resources Phone 952.2271130 Fax 952.2271110 Public Works 1591 Park Road Phone 952.227 1300 Fax 952.2271310 Senior Center Phone 952.227 1125 Fax 952.2271110 Web Site www.ci.chanhassen.mn.us . 1-,(... MEMORANDUM TO: Mayor City Council Members Greg Sticha, Finance Director Ctfd-f't 7' <' '" / June 14,2006 FROM: DATE: SUBJ: Amendment to City's Purchasing Policy BACKGROUND Dunng the 2005 audit performed by HLB Tautges Redpath, the audit staff noticed that our Purchasing Policy requires both the City Manager's and Finance Director's approval on purchases between $5,000 and $15,000. There were a few instances where both signatures were not included. The auditors have recommended that the city revise the Purchasmg Policy & Procedures Manual to require only one of the two signatures; which would be sufficient internal control for purchases in this price range. RECOMMENDA TION Staff recommends that the City Council approve the revised Purchasing Policies and Procedures Manual as recommended by the city's audit firm (the changes are shown in bold). This action requires a simple majority vote of those City Council members present at the meeting. ATTACHMENT 1. Revised Purchasing Policies & Procedures Manual The City of Chanhassen . A growing community with clean lakes, quality schools, a charming downtown, thriving businesses, winding trails, and beautiful parks. A great place to live, work, and play. Section 1. Purchasing Guidelines 1.3 Quick Reference Guide Value of Purchase Quotations Needed Payment Request Approvals Needed Prior Options to PurchasinQ Less than $1 00 None Petty Cash Department Yes Credit Card Finance No Check Request City Manager No City Council No $100-$4,999 Departmental Discretion Credit Card Department Yes Check Request Finance No Purchase Order City Manager No City Council No $5,000-$14,999 Two Written Quotes or Check Request Department Yes/No RFP's Purchase Order Finance Yes/No City Manager Yes City Council No $15,000-$49,999 Two Written Quotes or Check Request Department Yes RFP's Purchase Order Finance Yes City Manager Yes City Council Yes Greater than $50,000 Sealed Bids Check Request Department Yes Purchase Order Finance Yes City Manager Yes City Council Yes Notes: If a cooperative purchasing agreement is in place, quotations are not needed. RFP's are required for contracting services in excess of $15,000 on an annual basis except from the consultant pool (see RFP section of this document). The city manager may delegate authority for approval of agreements less than $15,000 (see Agreement Processing section of this document). Purchases between $5,000 and $15,000 can be approved by either the City Manager or Finance Director. The city council has pre-approved payment for utility accounts and payroll transfers that occur in the normal course of business even though they may exceed $15,000 because these are contractual accounts. The vendors that fall under this situation include Minnegasco, Northern States Power, Metropolitan Council Environmental Services, United States Treasury, State of Minnesota, Medica, PERA, and St. Paul Companies and other similar companies. Any payments to these vendors that are outside the normal course of business will be presented to the City Council for individual approval. Section 3. Authorization The City of Chanhassen has a decentralized purchasing program where individual departments are responsible for making their own purchases. There are a few exceptions including the supplies maintained in the office supply closet, paper and stationery products, and modular furniture and chairs. The front desk receptionists will assist staff members who need help with research or purchase of items in cases where staff are not familiar with particular products. Payment Authorization Process 1 . Determine the need for commodities and services. 2. Research the cost of the purchase and determine proper purchasing alternative. 3. Determine the appropriate account coding and whether there is sufficient funds available in that budget line item. 4. Forward request to department director or designee for approval. If purchase exceeds $5,000 approval is needed by Finance Director or City Manager. 5. Department director forwards request for payment with invoice to the Finance Department for approval and input into financial accounting system. 6. Finance produces check register for approval by the city manager or his/her designee and review by city council. 7. Payment is made by the finance department.