HomeMy WebLinkAboutDocumentation_Regular_Tab 08_11/12/20091. VILLAGE COUNCIL MEETING:
VILLAGE OF TEQUESTA
AGENDA ITEM TRANSMITTAL FORM
Meeting Date:
11 /12/2009 Meeting Type: Regular Ordinance #: N/A
Consent Agenda: Yes Resolution #: Click here to enter text.
Originating Department: Finance
2. AGENDA ITEM TITLE: (Wording form the SUBJECT line of your staff report)
Village Council approval of Purchasing Policies and Procedures
3. BUDGET /FINANCIAL IMPACT:
N/A Amount of this item: N/A
Current Budgeted Amount Available:
N/A Amount Remaining after item:
N/A
Budget Transfer Required: Yes Appropriate Fund Balance: Yes
4. EXECUTIVE SUMMARY OF MAJOR ISSUES: (This is a snap shot description of the agenda item)
J
Approval of Purchasing Policies and Procedures.
5. AF'F'KUVALS:
n
Dept. Head: JoAnn Forsythe Finance Director:
Attorney: (for legal sufficiency) ~ Yes ^ No ^
Village Manager: -~°'"'~ r~ ~-'~.,
• SUBMIT FOR COUNCIL DISCUSSION:
• APPROVE ITEM: ^
• DENY ITEM: ^
MEMORANDUM
FI'_~.1NCE DFP~~RTIIENT
DATE: NOVEMBER 6, 2009
TO: MICHAEL COUZZO, VILLAGE MANAGER
CC: LORI MCWILLIAMS, VILLAGE CLERK
FROM: JOANN FORSYTHE, FINANCE DIRECTOR
RE: APPROVAL OF THE VILLAGE OF TEQUESTA'S PURCHASING POLICIES
AND PROCEDURES
Please add the attached Purchasing Policies and Procedures to the November 12, 2009 agenda of the Village
of Tequesta's Regular Meeting of the Village Council for their approval.
11/9/098:56 AM
vr~L~~. ~ ~,~r~~sT~
PURCHASING POLICY AND PROCEDURES
Rev Nov 2009
STATEMENT OF PURPOSE
To establish policies, procedures and guidelines to insure that all goods, materials, supplies and/or
services (herein after referred to as items) are acquired in the most efficient, effective and
economical manner available.
POLICY
This policy will apply to all purchases of the Village irrespective of the funding source. It shall be
the responsibility of all Village corporate officers and employees involved in the purchasing process
to comply with all procedures, guidelines and instructions as set forth in this policy. This policy is
designed to insure that the Village procures all items at the lowest and best price consistent with the
quality of materials, workmanship or level of service performance required. No purchase of items
shall be authorized unless adequate funds have been appropriated.
EXCEPTION -Grant agreements may contain provisions or requirements related to purchasing
procedures, the disposition of fixed assets, etc., that differ from the Village's procedures. In the
event there is a conflict between a grant provision/requirement and a Village procedure, the grant
provision /requirement will take precedence over the Village procedure.
DEFINITIONS
AGREEMENT - A written commitment between the Village and a vendor which provides the
vendor to provide goods or services to the Village at a future date under general terms with specific
jobs to be assigned at a later date for an agreed upon amount.
APPROPRIATION - An act of the Village Council that authorizes the expenditure of specific
dollar amounts for various purposes including the purchase of items.
AUTHORIZATION - An act by a specific corporate officer, approving the expenditure of Village
funds. For the originating department, the authorizing officer would be the Department Director or
designee. For the Finance Department, which must authorize all purchases, the authorizing officer
would be the Finance Director or designee. For all purchases over $2,000, authorization must also
come from the Village Manager or designee.
CHANGE ORDER - A modification to an original contract or change in contract scope which
occurs during construction (after bidding and contractual award) which may result in an increase or
decrease in contract cost and/or contract time.
CONTINUING CONTRACT - A contract for professional services entered into in accordance with
the Consultants Competitive Negotiating Act (FS 287.055) whereby the firm or individual provides
professional services to the Village on an on-going basis.
CONTRACT - A written commitment between the Village and a vendor, which obligates the
Village to pay the vendor a specific dollar amount for specific goods and/or services.
CORPORATE OFFICER -Village Manager.
DESIGNEE - An individual appointed by a corporate officer to authorize expenditures. Except for
the position of Acting/Interim Village Manager appointed by the Village Council, all corporate
officers are responsible for the action of individuals appointed by them as designee.
EMERGENCY PURCHASE -For purchasing purposes, an emergency is a circumstance in which
damage to Village facilities, personnel or serious damage to Village programs will result if prompt
action is not taken. This purchase would be required by a sudden and unexpected turn of events (acts
of God or uncontrollable circumstances) which involves, or could involve, a threat to the health,
safety and welfare of citizens, and which can be rectified in whole or in part by the immediate
purchase of items.
Emergency Purchase Orders are considered on their individual merits. They will be processed as
emergencies only when the Village Manager and the Finance department, determines that it is
necessary, based on the requesting department's written explanation.
ENCUMBRANCE -Reservation of Village funds that have been authorized for a purchase that has
not yet been completed.
LAW ENFORCEMENT TRUST FUNDS (Forfeiture Funds) -Those funds governed as to their
use by Chapter 932 of Florida State Statutes. These funds may only enter the purchasing process
after a recommendation of funding use is provided by the Chief of Police and approved by the
Village Council.
PREPAYMENT - To pay an agreed upon sum before receiving the item(s).
QUOTATION - An informal statement, either verbal or in writing, of price, terms and/or conditions
of sale.
SOLE SOURCE -The acquisition of items that for all practical purposes can only be obtained from
a single vendor, usually because of limiting technology, technological compatibility with existing
systems or goods or services already in use by the village of other unique qualities of the goods or
services that preclude a competitor's price comparison. The Village Manager, irrespective of the
cost of the item, must approve all sole source purchases.
PROCEDURES: The dollar amount of the purchase and/or commodity being acquired is the basis for
determining the correct purchasing procedure. These procedures, using sound business practices, provide
the basis for prudent purchasing at any dollar value.
ETHICAL CONDUCT: Ethical business standards shall govern all procurement transactions. Infractions
of the Village's procurement policy will be reported to the Village Manager, the department director.
Disciplinary action for those violating ethical business standards will be taken in accordance with applicable
Village policy.
Village personnel shall not solicit any gift or accept any significant gift from any supplier or prospective
supplier. A `significant gift' is defined as any item, service, favor, monies, credits, or discounts not available
to others and/or which could influence purchasing decisions. Village personnel may accept trivial items as a
matter of courtesy, but may not solicit them. Questions about the value of a gift or the appropriateness of an
invitation should be referred to your supervisor or the Village Manager to ensure compliance with the
Village's guidelines. The Village values its supplier and assumes that vendors, in turn, value the Village's
business. No token or display or this appreciation is necessary or encouraged.
The Village's reputation for impartiality and objectivity, as well as sound business practice, requires that
employees not make decisions for the Village if their personal economic interests are directly affected by the
outcome. A business entity in which an employee has an economic interest represents a conflict of interest if
the employee has any involvement in the selection of that entity as a Village vendor. An economic interest
includes the employee's or a relative's ownership or partnership in the business, including serving as
stockholder, director, or officer in anon-publicly held company. Engaging a relative as an independent
contractor is also a conflict of interest for an employee. Conflict of interest is avoided if the employee brings
a supervisor into the decision to engage the vendor. Such a conflict and the arrangement to avoid it must be
documented and approved by the Village Manager.
AUTHORITY AND RESPONSIBILITY:
The Village has determined that purchasing and contracting decisions are made most effectively by
the end-user of the materials, supplies, equipment, or services. This approach requires that
employees involved at every stage of the purchasing process take responsibility for understanding
the Village's policies and procedures regarding purchasing and vendor relations.
Employees must be authorized to commit the Village's resources to a purchase, and are subject to
disciplinary action up to and including the terminations of employment if proper authorization is not
obtained.
The Finance department has the right to review and question any purchasing transaction.
Department Staff
Department personnel are responsible for:
• Ascertaining needs
• Researching vendors
• Conducting price or cost analysis
• Selecting a vendor
• Initiating a purchase requisition/purchase order
• Tracking documents and paperwork flow
• Ensuring the proper receipt of ordered goods or services
• Reviewing invoices or purchases, verifying receipt of ordered purchases and forwarding
approved invoices to the finance department in a timely manner for payment
Department Directors
Department directors are responsible for:
a. Determining the bona-fde business purpose of the transaction
b. Approving every purchase request
c. Determining that adequate funding is available prior to committing to the purchase
transaction
d. Ensuring compliance with the Village of Tequesta's purchasing policies and procedures
e. Negotiating and resolving disputes with vendors
£ Monitoring and reconciling all purchase transactions for their departments
Finance Department
The Finance department is responsible for:
• Paying invoices
• Preparing purchase orders and forwarding them to departments
• Reviewing and approving reimbursement requests and other special purchasing transactions
• Monitoring budgets
• Ensuring compliance with the Village of Tequesta's purchasing policies and procedures
PURCHASE REOUISITION/PURCHASE ORDERS
Purchase requisitions and purchase orders are required for acquisitions of goods and/or services with a total
purchase price of $2,000.00 or more.
Purchase Requisitions:
The originating department will be responsible for completely and accurately preparing the requisition. The
purchase requisitions must include descriptions, prices, quantities, terms, delivery, vendor, contract numbers,
charge (account) codes and any other standard or special instructions or explanations.
Purchase requisitions may not be approved for any purchases, which would result in spending in excess of
amounts authorized in the annual operating budget. The Village Manager, Finance Director or designee and
the Department Director must approve the purchase requisition. This approval certifies that (1) budgeted
funds are available to cover the requests; (2) the requisitions include only appropriate and allowable items;
and (3) the requisitions are prepared and authorized in accordance with established policies and procedures.
Departments may take advantage and `piggy-back', a State or other government entities' purchasing contract
as long as the contract was awarded in compliance with the Village's quotation and bidding requirements.
Purchase requisitions for items under contract must comply with the specifications of the contract listing.
In the event that competitive quotations cannot be obtained, or circumstances do not allow for bidding (e.g.
emergency situations), reasons for the exception to policy must be fully documented and approved by the
respective director.
Department Directors are ultimately responsible for the purchasing activities of their departments. The
director or the director's designee must sign all requisitions. Directors may delegate requisition approval
authority up to a specified amount. Delegation of authority must be designated in writing, signed by the
department director and forwarded to the finance department where it will be kept on file. The finance
department will only recognize those designees that are on file. The delegation must be specific as to the
individual'(s) delegated such authority and the extent to which authority is delegated (i.e. dollar amounts,
types of purchases, etc.). In addition, directors are responsible for ensuring that their designees are aware
that they are required to be knowledgeable of and in compliance with purchasing policies and procedures.
Purchase Orders
All purchase orders are to be processed rip ~or to the purchase of goods or services from outside vendors.
Blanket purchase orders may be used where appropriate; however, they must contain firm dollar amounts
and time limits. They will also be subject to the established approval authorization requirements.
Blanket purchase orders could be used when the ordering department will
• Purchase specified services or items, or categories of items from the same vendor, which are
purchased and paid in a predictable manner during a specified time period usually one (1 year)
• Order standard materials or maintenance supplies, which require numerous shipments and/or
payments
• Obtain more favorable pricing through volume commitments
Blanket purchase orders should not be used when
• It is a means to provide an open line of credit with a vendor
• When prices are unknown at the time of ordering or subject to change later without notice. There are
certain exceptions when small-item purchases are being made locally
• When the quality of the vendor and/or services is questionable
• When control over the department's expenditures would be weakened significantly.
The Finance Department will generate the purchase order once the appropriate officers, directors or
designees have approved the requisition. Orders must be placed only for items included on the approved
requisition, at stated quantities and prices. Any changes to purchase requisitions must be approved in
accordance with delegated authorization levels.
Splitting orders, or even failing to combine orders when this logically should be done in the interest of
economy, for the purpose of keeping total cost of each order below purchase order and/or bid limits, will be
construed as a deliberate evasion of this policy.
LEASE AGREEMENTS -Department Directors are required to submit a copy of all lease agreements
associated with their department to the Finance Department at the beginning of each fiscal year or when
entered into during the fiscal year. No lease agreement invoices will be processed without this supporting
documentation. The originating department will prepare an annual requisition and the Finance Department
will create and issue purchase orders from properly approved purchase requisitions. These purchase orders
shall not exceed the end of the fiscal year in which they were issued. Lease invoices will then be paid each
month or as noted in signed lease agreements, by the Finance Department.
CONTRACTS
All contracts and progress payments will be entered through the purchasing system as a purchase order so
that the entire contract amount for the fiscal year is encumbered in the accounting system immediately.
Contracts in progress will need to be requisitioned at the beginning of a new fiscal year. Department
Directors may administratively approve change orders to contracts previously approved by the Village
Council provided that the total cost of the project budget approved by the Village Council is not exceeded.
The Department Director may, administratively renew those contracts previously approved by the Village
Council, which contain renewal options, provided that the total cost, and ultimate expiration date of the
contract is not exceeded.
QUOTATION AND BIDDING REQUIREMENTS
Purchases less than $2.000 will not require the use of either formal or informal bidding procedures.
However, the department making the purchase is still required to make a reasonable attempt to insure
that the Village receives the lowest and best price that is consistent with the desired quality of
materials, workmanship and/or level of performance.
Competitive Bidding
It is generally recognized that the surest way to determine the best source is to conduct a competitive
bid among potential suppliers. True competition requires comparing prices, terms, and conditions of
equal or similar items. It is important to consider the criteria on which to determine the best source.
Even, when there is only one supplier of a specific item, bidding maintains a competitive
environment. It is competition, either actual or perceived, which forces suppliers to keep their prices
reasonable.
Sound fiscal management and common sense dictates that purchases of goods or services should be
made from the best source considering price, quality and service. This logic applies regardless of the
size or complexity of the transaction. Sound business practices indicate that the requesting
department maintaining three bids on file.
Purchases of $2,000 but less than $5,000 shall require at least three verbal quotes, which shall be
recorded in a quotation memo. Purchases of $5,000 but less than $10,000 shall require at least three
written quotes, Andpurchase of items costing $10,000 or more shall require the use of competitive
bids. Purchases of more than $25,000 shall also require the approval of the Village Council unless it
qualifies as an exception as provided below. All contracts shall be approved by the Village Attorney
as to form and legal sufficiency, by the Finance Director, or designee, as to sufficiency of
appropriated funds, and the Village Manager. All contracts under $25,000 may be signed and
executed by the Village Manager, providing that such contracts shall be presented to the Village
Council at the next regular meeting. Village Council approval shall not be required for any payroll
related expenses or utility expenses. In lieu of the bidding procedures outlined above, the Village
may "piggyback" a State or other governmental entity contract pursuant to all Village quotation and
bidding requirements. The use of a sole source vendor must be approved by the Village Manager
and shall be based on written justification provided by the Department Director.
DOLLAR LIMITATIONS
Purchase orders in an amount between $2,000.00 and $25,000.00 must first be authorized by the
Department Director or designee, second, by the Finance Director or designee and then by the
Village Manager. Purchases over $25,000 or more shall also require the approval of the Village
Council except where the item qualifies as an exception below.
Purchases made under continuing professional contracts are limited to construction capital projects,
which do not exceed $250,000 and study activities, which do not exceed $25,000, or for work of a
specified nature as spelled out in the contract. Expenditures, which exceed these dollar limits, shall
be done through competitive selection pursuant to the requirements of the Consultants Competitive
Negotiations Act.
DESIGNEES
The Finance Department must be informed in writing of all designee appointment changes, deletions
of previously appointed designees and limitations of authority.
EXCEPTIONS
Purchases of continuing services, the professional services of accountants, attorneys, architects,
engineers, physicians or other persons possessing a high degree of professional skill shall be exempt
from the requirements of advertising and competitive bidding and/or shall be as specified in
Florida's Statute 287.055 (Consultants Competitive Negotiation Act), if applicable.
The Finance Director and Village Manager's authorization, as evidenced by a manual signature, shall
not be required for any normal and customary payroll related expenditure.
The approval of the Village Council shall not be required for any interim payment when the full cost
has been previously approved. Changes to purchases previously approved may be authorized by the
Village Manager provided the total dollar amount and other substantial matters do not exceed
previously authorized maximum limits granted by the Village Council.
Again, it is an express violation of this policy to intentionally "split" contracts or purchase orders or
otherwise manipulate them for the purpose of avoiding dollar limitations or any of the Village's
purchasing policies.
PAYMENT
By issuing a purchase order in advance of the purchase, funds are properly encumbered and set-aside
to pay these obligations. The encumbrance is not a contract but ensures that the required funding is
available to meet the financial obligations. Accounts Payable pays invoices for the Village including
those for external vendor purchases, employee business travel and entertainment reimbursements and
payments to non-employee independent contractors.
It is the originating department's responsibility to approve invoices and submit them to the finance
department /accounts payable within the proper timeframe.
Every vendor's invoice is due for payment within some period of time after it is generated. This is
normally computed as a number of days after the invoice date. The Village's standard for payment
of vendor's invoices is within thirty days of the invoice date.
The Village must pay its obligations in a timely manner. Failure to comply with payment terms
often leads to:
• Credit hold, where a vendor refuses to fill any subsequent order until the outstanding
obligation has been paid
• Stiffer terms where the vendor may even demand payment in advance
• Higher prices on future purchases.
Finance does what is necessary to prevent any of the above from happening while acting within
sound financial controls. Departments must ensure that purchases are properly accounted for to
enable the invoice to be paid once it is received in Finance. Finance pays against approved original
invoices -not statements, proposals or quotations The accounts payable staff will match invoices
submitted against purchase orders and will give highest payment priority to original invoices
supported by properly issued and approved purchase order and confirmation of receipt of goods and
services.
SALES AND USE TAX
The Village of Tequesta is exempt from paying sales tax, thus sales and use tax are generally not
reimbursable, except for approved business travel and entertainment services. An individual may request
reimbursement from the department director where it can be shown that it was not reasonable to require the
individual to obtain the tax exemption.
CREDIT MEMOS
If a department believes it is entitled to a credit from a vendor or receives a credit memorandum that is
deemed to be valid the department should notify Accounts Payable and send all credit memos there for
processing.
ADVANCING PERSONAL FUNDS
Individuals, as a general rule, should not advance their own funds to purchase supplies and services on behalf
of the Village. Purchases should be made through established purchasing policies and procedures. The
Village should deal directly with vendors to arrange for the receipt of goods and the payment of obligations.
In limited instances, most often related to business travel and entertainment expenses, the department or
individual may pay for the item and be reimbursed. If it is necessary that an individual advance funds to
purchase supplies or services for Village business, the immediate supervisor must first authorize the
purchase. The reimbursement request must be supported by the business purpose of the transaction, bona-
fide proof of payment AND must include the signatures of the purchaser AND of a direct supervisor who can
attest to the receipt of the supplies or services by the department. Requests for reimbursements lacking these
signatures will be returned to departments. The immediate supervisor should always review and approve a
reimbursement request. This is a basic financial control pursuant to Generally Accepted Accounting
Principles.
Any actions that might be construed to be an intentional manipulation or circumvention of these policies will
be documented and forwarded to the Village Manager.
FISCAL YEAR-END PROCEDURES:
The Finance department seeks to close the fiscal year, complete rate change calculations and prepare the
Village of Tequesta's financial statements in a timely manner. The following policies are being implemented
In order to accomplish this goal.
All purchase orders must be received in the Finance department by August 31St in order to be processed in
the fiscal year ending September 30~'. Any purchase orders received after August 31St will be held and
processed in the following fiscal year and encumbered against the following fiscal year budget
The Accounts Payable staff must receive all invoices by November 15th of the following fiscal year in order
to be processed in the prior fiscal year ending September 30th. Any invoices received after that date will be
recorded in the following year and charged against the following year's budget.
Village of Tequesta Purchasing Policy & Procedure
Revised November 2009