Policy 4-2 PURCHASING & PAYMENT PROCEDURES


Prior to the adoption of Admin 4-2 on 09/01/2006, Policy 4-2 read as follows.

DISTRIBUTION:    All Departments

EFFECTIVE DATE:    January 1, 2003

SUBJECT:        Purchasing Policy

PURPOSE:        To establish purchase policies and procedures for the City of Lawton.

BACKGROUND:    The current purchasing policy was established in July 2002, when the City of Lawton Code was rewritten and contract limits changed. The purpose of the purchasing policy is to ensure that competitive bidding and fair purchasing practices are utilized by all City divisions, which will maximize their ability to successfully provide quality service to the citizens of Lawton.  This policy establishes primary source for purchasing procedures.

PROCEDURES:
      1. General.
        1. This policy shall be followed by all City departments, agencies or entities that utilize the services of the City of Lawton Financial Services Division, make purchases for the City of Lawton, or utilize City of Lawton funding.
        1. The Financial Services Division Supervisor is charged with monitoring compliance with this policy, with keeping department directors and division supervisors informed on problem areas and with providing necessary training to City employees on proper purchasing procedures.
        1. All supervisory personnel are charged with ensuring that all purchases made by their entities are in accordance with this policy.  They are further charged with working with the Financial Services Division Supervisor in resolving problems and requesting training for their personnel where needed.
        1. This policy does not apply to the selection of contractors for the CDBG Homeowner Rehabilitation Program, and HOME Homeowner Programs.  Procedures for selecting contractors for the Homeowner Rehabilitation Program are covered in Administrative Policy 7-1.

2.    Capital Outlay Expenditures.  In addition to this policy, Administrative Policy 13-1 must be followed for Capital Outlay expenditures.

3.    Exemptions.  §10-1-113C of the City Code exempts architectural engineering, legal and other professional services from competitive bid procedures.  Using this guidance, professionals in the arts will also be exempted.  §10-1-113D of the City Code exempts utility service from the competitive bid procedures.  Purchases for fuels, computer equipment, auto parts, road oils, and PVC pipe are accomplished by spot bidding (§10-1-101C, E and F, City Code).  These items may be purchased to a limit of $13,000 with the exception of PVC Pipe which has a limit of $75,000.  §57-8-549.1D allows purchases from the Department of Corrections without competitive bids.

4.    Encumbrances.  Departments/divisions may encumber funds when necessary to obtain a purchase order in advance.  Encumbrances are also used to set aside monies for known obligations.  Encumbrances are processed using the guidelines established by this policy.  Any requirement for quotes must be adhered to prior to processing an encumbrance.

5.    Sole Source.  There are times when an item is only available from a single source.  Sole source requests are approved when the goods/services can be obtained from one known vendor.  The following applies to sole source purchases:
        1. Sole source requests must be submitted and approved before the obligation of funds.  Sole source requests must be made using the format enclosed as Figure 1.  All information required in the draft memorandum must be provided.
        1. Before approval of a sole source request, actions will be taken by the Financial Services Division to find other sources for the goods/services.
        1. Formal bids must be processed for purchases of $13,000 or more, even though a sole source request may have been approved.
        1. For repeated purchases from the same vendor, such as library book purchases, a blanket request may be submitted.  The blanket approval will cover subsequent purchases.  Requisitions submitted after receiving blanket approval must reflect the approval number and date in the Remarks section of the requisition.  (Figure 2)
        1. No City funds are to be obligated before the approval of the Sole Source request.

6.    Computers.  Purchases of computers, computer related equipment, and software must be reviewed and approved by the Information Services Director.  The requisition must be initialed by the Information Services Director prior to being submitted to the Financial Services Division.

7.    Communications Equipment.  Prior to the purchase of any radio, pager, and telephone equipment or services, specifications that are not already approved and on file must be approved by the Information Services Director.  This action must be taken in accordance with Administrative Policy 14-1, dated August 15, 1995.

8.    Department Director Approvals. All documents submitted for processing must be approved by department directors.  This includes purchase requisitions, new specifications, requests for bids/proposals (gold sheets), and division recommendations pertaining to formal bids and proposals.

9.    Local Vendor Preference.  In accordance with §10-1-102, 10-1-108, and 10-1-116 of the City Code, as amended by Ordinance 99-14, the City may give preference to local vendors who have submitted bids within five percent (5%) of the lowest responsive bidder who is not a local vendor.  This preference shall not apply to public construction contracts. “Local vendor” means any person or business whose primary place of business is located and operating within the corporate limits of the City who submits responsive bids for the purchase of goods and materials in response to the City’s solicitation for bids.

10.    State Contract.  Items on the state contract may be purchased without obtaining bids, subject to funds being available, in accordance with city code 10-1-114E

11.    Public improvement construction contracts under $25,000 may be bid using written quotes obtained by Financial Services.  Bidders must complete and sign the invitations to bid and contract form as shown in Appendix E.  Vendors will be notified at the time of solicitation if mandatory pre-quote conferences are scheduled.

12.    Specific purchasing topics are addressed in the following appendices:

a)    Appendix A – Purchasing Limits

b)    Appendix B – Approval Requirements for Purchases

c)    Appendix C – Specifications – Purchases Costing $2,000 or more

d)    Appendix D – Formal Bid Processing

e)    Appendix E – Invitations to Bid and Contract

f)    Appendix F – Contract Change Order Procedures

g)    Appendix G – Special Authorizations

h)    Appendix H – Budget Transfer

i)    Appendix I– Extension of Contracts

REFERENCES:    Chapter 10, Lawton City Code, Administrative Policies 7-1, 13-1, and 14-1, and Ordinance 99-14.

RESCISSION:    This policy rescinds Administrative Policy 4-2 dated July 1, 2002.

RESPONSIBLE
DEPARTMENT:    Finance (Financial Services)

___________________________
Bill Baker
City Manager
January 1, 2003


Attachments:
Appendix A-I
Figure 1 – Example of Sole Source Request
Figure 2 – Example of Approval of Sole Source Request
Figure 3 – Record of Quotes Obtained form
Figure 4 – Form FN 528 (Gold Sheet)
Figure 5 – Form FN 304 Requisition to Purchase
Figure 6 – Form 36-002 Contract Change Order

Appendix A
Purchasing Limits
  1. Maximum Purchase Limits.
    1. The total limit a division may spend on one order, ticket or item is $1,999.99.
    1. Three oral quotes are required to be obtained by the division on any one item or total order/invoice that costs between $500.00 and $1,999.99.  Dividing a single day’s purchase from one vendor into separate tickets will not exempt the purchase from requiring oral quotes.  Splitting a purchase to avoid the competitive bidding requirements is a violation of City Code and State law.  Oral quotes must be documented on the requisition or attached as a separate document.  A valid quote must include price, quantity, contact name, and telephone number.
    1. Purchases that cost between $2,000.00 and $13,000 must be forwarded to Financial Services for three written quotes.
    1. Any purchase $13,000 or over requires formal bidding and a contract.
  1. Purchasing limits pertain to items not covered by a City requirements contract.  Items covered by contract may be purchased above these limits.
  1. In obtaining quotes, shipping costs must be included in computing the total amount of the purchase.  The maximum limits include shipping, insurance or other delivery costs.
  1. For any requisition over $25,000, Oklahoma State Statutes require a non-collusion affidavit.  For items on contract, this affidavit will be on file in Financial Services.  It is the responsibility of the Division to obtain this affidavit when needed.
  1. When obtaining quotes, one “no-bid” may be accepted if the phone number and point of contact are recorded.  No requisition may be processed with two “no-bids”.  If the division is unable to obtain necessary quotes, they may forward to Financial Services for assistance.
  1. Multiple purchases of the same item are considered a single item purchase.  For example: one item costs $400 and may be purchased at will.  Two of this same item cost $800 and will require divisional oral quotes.  Five of these items cost $2,000 and require Financial Services to obtain written quotes.


PURCHASING LIMIT GUIDELINES  
Maximum Purchase Limits  
Department/  
Division  
Financial  
Services  

Remarks  
0 - $499.99  
X  
No quotes needed  
$500.00 - $1,999.99  
X  
Three oral quotes  
$2,000.00 - $13,000  
X  
Three written quotes  
$13,000 – Above  
X  
Requires formal bidding  

Appendix B
Approval Requirements for Purchases

Types of Payments  
Routine  
Requisitions  
Communication
Equipment4   
Motive  
Equipment  
Division Supervisor  
XX  
XX1      
XX  
Department Director  
XX  
XX1      
XX  
Financial Services  
XX  
XX1      
XX  
Finance Director  
XX  
XX  
XX1  
City Manager  
XX  
XX2   
Special Approval  
XX³  
XX4      
XX5   


    Note:
      1. Special payments include (1) damage claims, education reimbursements, petty cash reimbursements, employee reimbursements, dues and membership payments, professional services payments and travel.
      1. Special payments (2) include petty cash reimbursements and travel expenses paid to department directors.
      1. Purchases of computer and computer related equipment must be approved by the IS Director.  This includes any hardware or software purchases.  Computer supplies (e.g., paper, cartridges, etc.) do not fall in this category.
      1. Purchases of communications equipment (radios, telephone systems, pagers, etc.) must be approved by the IS Director.
      1. Purchases of motive equipment must be approved by the Equipment Maintenance Superintendent.
Appendix C
Specifications Committee – Purchases Costing $2,000 or More
  1. GENERAL:
    1. A Specifications Committee will be established to review all specifications of goods and services whose cost is estimated to be $2,000 or greater, and have no existing approved specifications.
    2. The Specifications Committee will be composed of the City Manger, or designee, City Attorney, or designee, Equipment Maintenance Superintendent the Finance Director or designee and the Parks and Grounds Superintendent.
    3. Contracts and services administered by the City Engineer’s office will not be required to have review/approval by the Specifications Committee.
  2. RESPONSIBILITIES:
    1. Financial Services Division
      1. The Financial Services Supervisor, or designated representative, shall:
        1. Attend all meetings to provide information and act in the capacity of advisor.
        2. Have the authority to make recommendations and provide alternate specifications for consideration.
        3. Schedule meetings as necessary and prepare agenda.
        4. Assist Departments/Divisions in the preparation of specifications.
        5. Maintain a file of all approved specifications.
    2. The Office of the City Attorney shall:
      1. Attend all meetings in the capacity of legal advisor and voting member of the Committee.
      2. Review specifications to assure that all legal requirements are met and make recommendations for changes at the Specification Committee Meeting.
    3. Department/Division Responsibility:
      1. Develop specifications for purchase/services that exceed $2,000.
      2. Specifications shall not be restrictive and should allow for competitive bidding.
      3. Prior to going to the Specification Committee for consideration, specifications for computers and computer related equipment must be approved by the MIS Director; specifications for radios, telephone equipment or services must be approved by the Communication Director; specifications for motive equipment must be approved by the Equipment Maintenance Superintendent.
      4. Special requirements, such as insurance needs, delivery times, or maintenance contracts should be addressed in the specifications.
      5. Submit the specifications to the Financial Services Division.  Ensure that all necessary documents are submitted with the specifications.
      6. Attend Specifications Committee meeting to explain specifications.
Appendix D
Formal Bid Processing
  1. Formal bids are required for purchases of $13,000 or more.
  1. The following documents are required to be submitted by the requesting department:
    1. Request for Bids/Proposal, Form FN 528 (Gold Sheet) (Figure 4).
    1. If the specifications have been previously approved, the requester must review and certify that the specifications are current.  If specifications have not been approved, they must be submitted to the Financial Services Division for review/approval prior to the Financial Services Division advertising for bids. See Appendix C.
    1. Requisitions.  A Requisition to Purchase (Form FN 304) must be attached to the Gold Sheet, except for requirement-type contracts.  See Figure 5.
  1. All the above documents must be submitted prior to the Financial Services Division soliciting bids.
  1. All documents pertaining to a formal bid request (Gold Sheet, Requisition and Division Recommendation for Award) must be signed by the Department Director.
  1. All contracts that are included as part of a bid package must be the standard form contract that has been approved by the Legal Department.  If deviations are required, the contract must be reviewed by the Legal Department prior to submission as part of a bid.

Appendix E
City of Lawton
INVITATION TO BID AND CONTRACT


MAIL SEALED BIDS TO:  
City Clerk  
City of Lawton  
103 SW 4th Street  
Lawton, OK  73501  
DIRECT INQUIRIES TO:  

                          , Buyer
 Phone:    
Date Bid Typed:  
Dates Bid Advertised:  
No Bids Received After:  

              2:00 P.M.  
Contract Number and Title:                                                Requirements-type Contract:        YES NO  
Contract Period:  

   
Vendor Name and Point of Contact:  
Reason for No Bid:  
Mailing Address:  
Terms:  
City:                State:               Zip:  
Delivery:  
Area Code and Phone Number:  
FAX Area Code and Phone Number:  

Federal Employer Identification Number or Social Security Number  

THIS BID INVALID IF NOT SIGNED AND NOTARIZED

AFFIDAVIT:

STATE OF________________________________COUNTY OF_______________________________, of lawful age, being first duly sworn, on oath says that:

1.  Affiant is the duly authorized agent of the bidder/vendor and/or contractor submitting the competitive bid and executing the contract which is attached to this statement, and that as such agent Affiant has the authority to bind the bidder/vendor, whether an individual, partnership, or corporation, for the purpose of negotiating and entering into said agreement, and for certifying the facts pertaining to the existence of collusion among bidders and between bidders and City officials or employees, as well as facts pertaining to the giving or offering of things of value to government personnel in return for special consideration in the letting of any contract pursuant to the bid to which this statement is attached; 2.  Affiant is fully aware of the facts and circumstances surrounding the making of the bid and/or the procurement of the contract to which this statement is attached and has been personally and directly involved in the proceedings leading to the submission of such bids; 3.  Neither the bidder/vendor nor anyone subject to the bidder/vendor’s direction or control has been a party:  a. to any collusion among bidders in restraint of freedom of competition by agreement to bid at a fixed price or to refrain from bidding, b. to any collusion with any municipal official or employee as to quantity, quality or price in the prospective contract, or as to any other terms of such prospective contract, c. in any discussions between bidders and any municipal official concerning exchange of money or other thing of value for special consideration in the letting of a contract, nor d. to paying, giving or donating or agreeing to pay, give or donate to any officer or employee of the City of Lawton, any money or other thing of value, either directly or indirectly, in procuring the contract to which his statement is attached.  4. Affiant further agrees to be held personally liable in the event that Affiant has misrepresented the scope or extend of Affiant’s authority to bind the bidder herein, and to indemnify and hold harmless the City of Lawton its departments, boards, commissions, agencies, institutions, and all employees of the aforementioned from all damages based upon such misrepresentation, including but not limited to all costs and attorney fees incurred, in addition to any other remedies available by law.




Firm:_______________________________________________________  

Address:____________________________________________________  

___________________________________________________________  
(City, State, Zip)  

Phone:_____________________________________________________  

_________________________________________________________________  
SIGNATURE OF AUTHORIZED AGENT  

_________________________________________________________________  
PRINT/TYPE NAME/TITLE  

Subscribed & sworn before me this _____ day of ________________, 20______.  

_________________________________________________________________  
Notary Public  
My Commission expires:_____________________________________________  
Appendix F
Contract Change Order Procedures
  1. Requests for contract change orders will be processed on Contract Change Order form, Form 36-002.  See Figure 6.
  1. Contract change orders will be processed using the following procedures:
    1. When there is a change of conditions that requires modifications to a current contract, the responsible department will coordinate the change.  The responsible department will obtain a letter from the vendor outlining the changes and the costs associated with each change.  The department director will submit a memorandum, with vendor’s letter attached, and recommendation regarding changes to the Financial Services Division.
    1. The Financial Services Division will review the request and send it to the City Attorney’s office for review.  Upon completion of the legal review, the Financial Services Division will prepare Contract Change Order, Form 36-002, then forward to the originating department for signature.
    1. The responsible department will forward the form to the vendor for completion. Upon return from the vendor, the completed form will be forwarded to the Financial Services Division for further processing.
    1. The Financial Services Division will prepare the agenda item for City Council approval.
    1. After approval, the Financial Services Division will provide copies of the approved Form 36-002 to the vendor and responsible department.  If disapproved, the Financial Services Division will notify the originating department.
  1. Approval authority.  The City Council is the approving authority for contract change orders.
Appendix G
Special Authorizations
  1. Emergency Purchase Orders
    1. Emergency situations occur which justify purchasing goods or services immediately, circumventing established policy.
    1. During normal duty hours.  Before obtaining the goods/services, the department director or his representative must call the Financial Services Division for an Emergency Purchase Order number.  An Emergency Purchase Order will be issued only after it is determined that the goods/services cannot be obtained utilizing the routine procedures.
    1. After normal duty hours.  If an emergency occurs after normal duty hours, the department director or his representative should have the work done.  On the first business day after the emergency, contact the Financial Services Division to obtain an Emergency Purchase Order number.  The department director must include a memorandum with the requisition explaining the circumstances that necessitated the work being done on an emergency basis.
    1. The Emergency Purchase Order is to cover the existing emergency.  Any other work that needs to be done must be processed in accordance with this policy.
    1. Emergency Purchase Orders will not be issued for work expected to exceed $13,000.  These emergencies must be approved by the City Council prior to the work being done.
    1. The following information must be provided when requesting an Emergency Purchase Order number:
      1. Nature of emergency
      1. Efforts taken to resolve using routine procedures
      1. Length of time problem existed
      1. Estimated cost of goods/services
      1. Vendor to be used to provide service
    1. The Emergency Purchase Order number must be listed on the purchase requisition.
  1. Authorization Numbers
    1. Certain repairs are provided from a rotating vendors list.  The Financial Services Division maintains a list of approved vendors for the following services:
      1. Alternator/Starter Repairs
      1. Appliance Repairs
      1. Electrical Work
      1. Plumbing Services
      1. Heat/Air Conditioning Repairs (for work not covered by contract)
      1. Overhead Door Repairs
      1. Upholstery
    1. Before obtaining these services, an authorization number must be obtained from the Financial Services Division.
    1. Authorization numbers are issued only for repair of current equipment.
    1. After the repairs have been completed, the division must inform the Financial Services Division of the costs incurred.
    1. The authorization number must be listed on the requisition.


Appendix H
Budget Transfers

Transfers of funds within budged accounts may be made using controlled Internal Transfer forms obtained from Financial Services.  The following procedures must be followed to transfer appropriated budgeted amounts:
  1. All transfers must be signed by the Department Director and the Financial Director.
  2. The City Manager will sign:
    1. Any transfers out of the personal services (100 series) accounts.
    2. All transfers within the capital outlay (300 series) accounts for the purchase of items not previously budgeted.
    3. Any transfer over $5,000.00.
    4. Transfers between statutory accounts, such as 100 series to 200 series, etc.
  3. Transfers from one department to another department require City Council approval.
  4. Transmittal letters are not required to accompany a transfer form.  However, in the reason for transfer section, a brief description must explain the need for the funds going to the transfer-in account and the reason funds are not required in the transfer-out account.
Appendix I
Extension of Contracts

Requirement contracts are bid for one year, with the possibility of renewal for two further years. The following procedures shall be followed to extend an existing contract.
  1. Approximately 90 days before expiration date, the Financial Services Division will notify in writing the using Department Director(s) of the expiration date and request their recommendation in writing on whether to renew the contract.  All recommendations must be signed or initialed by the Department Director or Assistant Director.
    1. If the department reply is affirmative, Financial Services will notify the vendor in writing and request that the contract be extended.  If the vendor agrees, a new contract is drawn.  If the vendor declines, Financial Services will proceed with the bid process.
    2. If the department reply is negative, specific reasons for dissatisfaction with the contract must be stated.  Financial Services will then proceed with the bid process.
    3. For all contracts that are going out for the bidding process, instructions are provided in Appendix C, Specifications, and Appendix D, Formal Bid Processing.

B.    For contracts that are being extended, Financial Services will prepare an agenda item and the contract for review by the City Attorney’s office and submittal to the City Council.  When the extension is approved by City Council, the contract extension form is signed and copies are sent to the Department and to the Vendor.

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