City Policies Purchasing Procedures - 12/10/91

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       OF THE


              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


       A. PURCHASE ORDER                                              2
       B. RECEIVING AND INSPECTION OF PURCHASES                       3
       C. COMPETITION                                                 3
       D. LOCAL PREFERENCE                                            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



       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

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.


        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
   3) A properly completed Purchase Order shall be issued upon receipt of the invoice or
      statement for payment.

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


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

       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
                 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.


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.


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.


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.
      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

      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
      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
      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.

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.


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
             3) Standardization of maintenance supplies may be utilized to maintain quality and

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.


          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
             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

       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
   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.

       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.


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