HomeMy WebLinkAbout5E Purchasing Policy Report
Phone 952.447.9800 / Fax 952.447.4245 / www.cityofpriorlake.com
4646 Dakota Street SE
Prior Lake, MN 55372
CITY COUNCIL AGENDA REPORT
MEETING DATE: FEBRUARY 19, 2019
AGENDA #: 5E
PREPARED BY: CATHY ERICKSON, FINANCE DIRECTOR
SARAH SCHWARZHOFF, CITY ATTORNEY
PRESENTED BY: CATHY ERICKSON, FINANCE DIRECTOR
AGENDA ITEM:
CONSIDER APPROVAL OF AN UPDATED PURCHASING POLICY
GOAL AREA AND
OBJECTIVE:
High-Value City Services
1. Establish financial stability for all funds.
DISCUSSION: Introduction
The purpose of this agenda item is to seek City Council approval for an updated
Purchasing Policy.
Current Circumstances
The City maintains a Purchasing Policy which sets forth procedure and approval
requirements for all City purchase. The purpose of the Policy is to ensure all
purchases are consistent with Minnesota statutes and have a public purpose, to
establish internal controls, to maintain the appropriate documentation, to ensure
the best value for the public money, and to assign purchasing responsibility and
authority to the level consistent with good business practice and sound financial
management to the extent possible.
The Purchasing Policy has not been updated since 2014. Since that time State law
has changed, the City has purchased and implemented new financial software,
and City practices have been updated. In order to bring the Policy up to date, the
City Attorney and Finance Director have completed an extensive review and
update of the entire Policy, considering the existing Policy, existing City practices,
State law, and neighboring city’s policies. The draft Policy was then reviewed by
the City Manager and Department Heads.
Due to the extensiveness of the revisions, there is no redline version of the Policy.
However, below is a summary of the revisions:
Disposition of Property – the draft Policy includes a reference to the City Code
Section regulating disposition of property.
Tables – the existing Policy has two tables which address who needs to approve
each purchase and what procedures need to be followed. One table is for
professional services the other for all other purchases. The combination of
authority and procedure into one table is fairly complicated. The draft Policy
includes rearranged tables, separating authority from procedure, which staff
believes will make the Policy more transparent and user friendly.
Approval Authority - The draft Policy includes one table for approval authority.
Every purchase must be approved per the approval authority listed regardless of
the type of purchase. The only changes made to the purchasing authority were 1)
moving it to a separate table and 2) allowing the City IT Coordinator to approve IT
purchases up to $10,000 vs requiring approval from the Department Head. The IT
Coordinator is the most knowledgeable person regarding the technological order
specifications and invoice detail.
Approval Procedure - The draft Policy has a separate table for purchasing
procedure. The table includes all types of purchases and provides the procedure
and required documentation by type of purchase and price. The procedures in the
new table were updated as follows:
• Level for sealed bids was increased from $100,000 to $175,000 per State
statute amendments.
• Created three categories for types of purchase – Real Estate; Professional
Services/Consultant/Software; and all others. This allows the policy to
more accurately address each type of purchase while keeping all of the
purchasing procedures in one location.
• A column was added for authorizing document to clarify how each
purchase must be completed and documented.
• Increased the threshold for requiring two written quotes from $5,000 to
$10,000 to adjust for inflationary price increases and challenges due to
delays in receiving quotes for low price items. Staff has found it difficult at
times to obtain quotes due to lack of interest or lack of quality products.
• Increased the threshold for requiring an RFP for Professional
Services/Consultant/Software from $20,000 to $50,000 to more accurately
reflect the need for two written quotes vs full RFPs. Staff can still choose to
use an RFP for a lower priced purchase when it would provide the City with
increased quality or decreased price.
Procedures – the detailed requirements of each procedure were removed from
the table and placed into paragraph form below the table. In addition, the details
were expanded for each procedure to clarify how each procedure works for staff
who may not regularly use these procedures.
Purchase Change Orders – the existing Policy has a fairly complicated change
order procedure. The draft Policy includes simplified procedures for two change
order categories: 1) construction and public improvement contracts (including
related professional services) and 2) all other contracts.
For construction and public improvement contracts, including professional services
related to those contracts, it is common to have changes which are within the
scope of work, reasonably minor, and need to be addressed quickly to ensure the
project is not delayed. These changes may consist of change in quantities needed
(e.g. pavement/pipe/gravel) or in changes to the work itself (e.g. location of a trail,
size of a sign, change from one type of valve to another). The existing Policy limits
written change orders up to $100,000 provided such modification does not exceed
25% of the original total contract amount and provided the item change was part of
the original scope of work. The draft Policy proposes that the dollar limit of the
change is increased from $100,000 to $175,000 (up to 25% of the original contract
amount). This is consistent with the dollar amount of the statute change for sealed
bid requirements and reflects project inflationary cost increases. The draft Policy
also clarifies that the City Engineer/Public Works Director has the authority to
approve written change orders that fall within these established limits.
Any change in the funding source, budget amendment, transfer, etc. would be
brought back to the Council for approval with the final request for payment on the
project. This is consistent with the existing practice.
All other contract changes are referenced back to the original purchasing authority
and procedure for re-approval.
Public Purpose – the draft Policy includes a new section on public purpose.
Every expenditure made by the City must be for a public purpose. In updating the
Policy staff found that many cities include a public purpose expenditures section in
their purchasing policies to address this issue. This new section includes a general
public purpose requirement as well as a list of meals and employee recognitions
which are deemed by the City to have a public purpose. However, the section
makes clear that the lists only identify a public purpose, they do not approve any
particular expenditure. Each expenditure must still be budged and approved.
The employee recognition section existed as a separate “Employee Recognition
Policy”. However, as a stand-alone policy many did not know it existed. By placing
the appropriate portions in the draft Policy, it will be more readily available.
Ethics and Gifts – the draft Policy includes a section on ethics and acceptance of
gifts. This policy reflects existing City practice, but staff thought it was of value to
put it into writing.
Approval/Documentation Procedures – sections related to approval and
documentation procedure are updated in the draft Policy. W ith the implementation
of the new financial software the procedures for entering, coding and approving
purchases has been updated. The BS&A software provides an “approval workflow”
system which guides each purchase through the process.
Document Retention – there is a regulatory inconsistency regarding how long
quotes must be retained. The purchasing statute, 471.345, requires that all written
quotes be maintained for a year. However, the State records retention schedule
which has been adopted by the City requires all quotes/RFPs to be maintained for
6 years if not accepted or 10 if accepted. Staff has put the longer retention
requirements into the draft Policy.
New Sections – the draft Policy has new sections for budget, buy local,
responsible contractor, electronic signatures, and tax exemptions. These items
have either been standard practice or have been adopted by the Sate or City
Council over the last several years but have not been reflected in the Purchasing
Policy. Placing them all in the draft Policy encourages transparency.
Contract Documents – the draft Policy has updated where the City’s standard
contracts are saved on the network. It also includes additional procedures for
contract negotiation and execution to ensure all contracts are full vetted before
being approved. The new section also adds information on consultants to clarify
how contracts will be used when outside consultants are involved.
Payment Procedure – the draft Policy has a new section for payment which
incorporates the new workflow procedures in the financial software and document
requirements such as W9s and lien waivers.
FINANCIAL
IMPACT:
The Purchasing Policy does not approve any expenditures, instead it provides the
process and approval required for each expenditure.
The policy ensures all purchases are consistent with Minnesota statues, meet the
public purpose requirement, establishes internal controls, maintains appropriate
documentation, ensures the best value for public money, and assigns purchasing
responsibility/authority to the level consistent with good business practice and
sound financial management policy to the extent practical.
Our financial software will allow us to incorporate controls and purchasing
approval authority into the financial system.
ALTERNATIVES: 1. Motion and second as part of the consent agenda to approve the updated
Purchasing Policy.
2. Motion and a second remove this item from the consent agenda for additional
discussion.
RECOMMENDED
MOTION:
Alternative #1
ATTACHMENTS 1. Purchasing Policy
4646 Dakota Street SE
Prior Lake, MN 55372
RESOLUTION 19-___
A RESOLUTION APPROVING A REVISED PURCHASING POLICY
Motion By: Second By:
WHEREAS, Minnesota Statute 471.345 sets forth the law regulating the sale or purchase of
supplies, materials, equipment or the rental thereof, or the construction, alteration,
repair or maintenance of real or personal property in Minnesota Cities; and
WHEREAS, The goals of the Purchasing Policy are to ensure all purchases are consistent with
Minnesota statutes and have a public purpose, to establish internal controls, to
maintain the appropriate documentation, to ensure the best value for the public
money, and to assign purchasing responsibility and authority to the level consistent
with good business practice and sound financial management to the extent
possible; and
WHEREAS, The City of Prior Lake’s current Purchasing Policy was last revised in 2014. Since
that time State law has changed, the City has purchased and implemented new
financial software, and City practices have been updated; and
WHEREAS, The Council finds the revised Purchasing Policy, dated February 19, 2019, is
consistent with Minnesota statutes and public purpose requirements, to establish
internal controls, to maintain the appropriate documentation, to ensure the best
value for the public money, and to assign purchasing responsibility and authority to
the level consistent with good business practice and sound financial management.
NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE,
MINNESOTA as follows:
1. The recitals set forth above are incorporated herein.
2. The City of Prior Lake Purchasing Policy, dated February 19,2019, is hereby approved.
Passed and adopted by the Prior Lake City Council this 19th day of February 2019.
VOTE Briggs Thompson Burkart Braid Erickson
Aye ☐ ☐ ☐ ☐ ☐
Nay ☐ ☐ ☐ ☐ ☐
Abstain ☐ ☐ ☐ ☐ ☐
Absent ☐ ☐ ☐ ☐ ☐
______________________________
Michael Plante, City Manager
City of Prior Lake
Purchasing Policy
Adopted February 19, 2019
Table of Contents
Introduction.............................................................................................................................................. 1
Purchasing Authority ............................................................................................................................... 1
Purchasing Procedures and Authorizing Documents Reference Table .................................................. 2
Purchasing Procedures Detailed Requirements ............................................................................... 3
Purchase Change Orders .......................................................................................................................... 4
Changes Within Existing Scope of Work ............................................................................................... 4
Addition to Approved Scope of Work ................................................................................................... 4
Construction/Public Improvement Change Orders .............................................................................. 4
Public Purpose
Meals…………………………………………………………………………………………………………………………………………….4
Employee Appreciation………………………………………………………………………………………………………………….5
Ethics and Acceptance of Gifts ............................................................................................................... 6
Additional Purchasing Requirements ...................................................................................................... 6
Contract Documents ................................................................................................................................ 7
Contract and Procedure Documents Available on R:/Standard Agreements ....................................... 7
Payment
Procedures for Verifying Receipt of Goods or Services for Payment ....................................................... 8
Emergency Purchases .............................................................................................................................. 9
Credit Card Use ......................................................................................................................................... 9
Authority for Credit Card Holder........................................................................................................... 9
Types of Purchases Allowed by Credit Card ........................................................................................ 10
Types of Purchases Prohibited/Violations .......................................................................................... 10
Limit on Charges .................................................................................................................................. 10
Procedures and Documentation ......................................................................................................... 10
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PURPOSE
The purpose of this Purchasing Policy is to ensure all purchases are consistent with Minnesota
statutes and have a public purpose, to establish internal controls, to maintain the appropriate
documentation, to ensure the best value for the public money, and to assign purchasing
responsibility and authority to the level consistent with good business practice and sound
financial management to the extent possible.
INTRODUCTION
Minnesota Statutes § 471.345 sets forth the law regulating the sale or purchase of supplies,
materials, equipment or the rental thereof, or the construction, alteration, repair or maintenance
of real or personal property in Minnesota Cities and the City of Prior Lake. This Policy is consistent
with Minnesota Statutes and provides additional purchasing procedures and regulations for all
City purchases.
DISPOSITION OF PROPERTY
Disposition of property is governed by Minnesota Statutes § 471.345 and City Code Section 110.
VIOLATIONS
Failure to comply with any portion of this policy may result in disciplinary action (up to and
including termination), cancellation of a City issued credit card, and legal and/or financial
consequences.
PURCHASING AUTHORITY
The City of Prior Lake has a “decentralized” purchasing program where individual departments
are responsible for making their own purchases. The City Manager or Department Heads may
delegate the authority to make purchases and execute documents for purchasing items or
services as long as the amount involved does not exceed the City Manager’s purchasing authority
of $20,000. The staff designated as authorized purchasers must be communicated to the Finance
Department. The following chart sets forth the minimum authority required for each purchasing
level:
Purchase Level Minimum Approving Authority
$0 - $1,000 Non-Supervisor Designated Staff
$1,001 - $5,000 Designated Supervisor
$5,001 - $10,000 Department Head/IT Coordinator
$10,001 - $20,000 City Manager
Above $20,000 City Council
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PURCHASING PROCEDURES AND AUTHORIZING DOCUMENTS
The required purchasing procedures and authorizing documents by type and price are set out in
the following reference table. The detailed requirements of each purchasing procedure are
described below the reference table
Purchase Type Price Procedures
Authorizing Document
All purchases except
Professional/
Consultant/Software
and Real Estate
$0 - $5,000
Open Market/Negotiation or
Written Quotes or
Cooperative Purchasing
Quotes are not required
Invoice/Receipt
No Purchase Order Required
$5,001 - $10,000
Open Market/Negotiation or
Written Quotes or
Cooperative Purchasing
Quotes are not required
Purchase Order
$10,001 - $25,000 Written Quotes or
Cooperative Purchasing
Purchase Order,
Contract and
City Council Resolution if
over $20,000
$25,001 to
$175,000
Written Quotes or
Cooperative Purchasing or
Sealed Bids
Purchase Order,
Contract and
City Council Resolution
Over $175,000 Cooperative Purchasing or
Sealed Bids
Purchase Order,
Contract and
City Council Resolution
Professional
Services/Consultant/
Software
(engineering,
architecture, legal,
financial,
management, etc.)
$0 - $10,000
Open Market/Negotiation or
Written Quotes
Quotes are not required
Invoice
No Purchase Order Required
$10,001 - $75,000
Written Quotes or
Request for Proposals
*Quote/RFP may not be required
if deemed unnecessary by the City
Manager due to continuity, cost,
quality or time efficiencies.
Purchase Order,
Contract and
City Council Resolution if over
$20,000
Over $75,000
Request for Proposals
*RFP may not be required if
deemed unnecessary by the City
Manager due to continuity, cost,
quality or time efficiencies.
Purchase Order,
Contract and
City Council Resolution
Real Estate
All prices Open Market/Negotiation
Purchase Agreement
City Council Resolution
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Open Market/Negotiation:
• Written quotes are not required but at least two verbal quotes or other price comparisons
are recommended.
• Any quotes obtained, and any additional information should be documented.
• Generally, the lowest price should be selected. If not, the reasons for selecting an
alternative price should be documented.
Written Quotes:
• Obtain at least two written quotes. If two written quotes cannot be obtained document
the reason and any efforts to solicit additional quotes.
• Generally, the lowest quote should be selected. If not, the reasons for selecting an
alternative quote should be documented.
Cooperative Purchasing:
• Review approved cooperative purchasing ventures to determine if the
equipment/materials are available at a competitive price. Approved cooperative
purchasing ventures include: Minnesota Cooperative Purchasing V enture; Hennepin
County Cooperative Purchasing Group; US Communities Cooperative Purchasing
Organization and a Street Maintenance Joint Powers Agreement.
• Purchases from any other cooperative purchasing venture must be approved in advance
by the City Attorney and Finance Department.
Sealed Bids:
• Create the request for bids. Draft and/or obtain instructions to bidders (background,
procedure, timeline of procedure, submittal requirements, legal terms),
plans/specifications/requirements, responsible contractor verification, bond forms, and
contract form.
• Publish and/or post notice. At least 10 days before the public bid opening notice must be
published in the City’s official newspaper and posted on the City website. For construction
projects (labor and materials) in excess of $175,000 the notice must be published at least
3 weeks before the bid opening in the City’s official newspaper and a trade publication.
Additional notice may be required if the project is to be financed through Minnesota
Statute Chapter 429.
• The contract must be awarded to the lowest responsible bidder.
There is an alternative to sealed bids described as the “best value” option.
If interested contact the City Attorney for additional information.
Request for Proposals:
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• Create the request for proposals. Draft and/or obtain instructions to bidders (background,
procedure, timeline of procedure, submittal requirements, legal terms),
plans/specifications/requirements, bond forms, and contract form.
• Publish and/or post notice or solicit proposals from specific vendors.
• The contract should be awarded to the proposal that presents the best value to the City.
Document the reasons the proposal was selected.
If there are any irregularities or questions, contact the Finance Director or the City Attorney.
PURCHASE CHANGE ORDERS
Generally, changes in scope of work or price that occur after the approval of a purchase must be
re-approved. For any such change follow the procedures in the Purchasing Procedures and
Authorizing Document reference table shown above. Changes to construction and public
improvement projects, including professional services related to those projects, may be made as
follows:
Construction/Public Improvements Change Orders:
From time to time, it may be necessary to modify the work approved by the City Council in a
construction or public improvement contract. It is common to have changes which are within
the scope of work, reasonably minor, and need to be addressed quickly to ensure the project is
not delayed. These changes may consist of change in quantities needed (e.g. pavement/
pipe/gravel) or in changes to the work itself (ego location of a trail, size of a sign, change from
one type of valve to another).
A contract approved by the City Council for construction and public improvement projects, including
professional services related to those projects, may be changed by written change order up to
$175,000 provided such modification does not exceed 25% of the original total contract amount, and
provided the item changed was part of the original bid award. All changes must be documented in
written change orders. The City Engineer/Public Works Director has the authority to approve written
change orders that fall within these established limits. If there is a change in the scope of work or a
change that exceeds 25% of the total contract cost the change must be approved by the City
Council and re-bidding the project may be required.
PUBLIC PURPOSE
No City funds shall be used to make purchases for personal use. City employees are responsible
for conserving and protecting City resources for the benefit of public interest. As good stewards
of public funds, City employees must only use City funds for public purpose expenditures. The
following purchases are deemed to have a public purpose. However, simply because the
purchase is included in the following lists does not mean the purchase is authorized. Each
purchase must also be budgeted and approved by the proper authority as identified by this Policy.
Meals:
Meals generally may not be purchased using City funds unless related to City business. The
following is a list of authorized expenditures for meals:
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• Provided immediately before or in conjunction with meetings of the Council, committees
or subgroups.
• When a breakfast, lunch or dinner meeting is conducted for official City business when it
is the only practical time to meet and when it involves non-City employee participants.
• In connection with a conference, workshop, seminar or meeting which the employee has
been authorized to attend.
• For employees while traveling outside of the City limits on City business.
• Department-sponsored meetings, conferences or workshops where invited participants
include non-City employees.
• Regularly scheduled supervisor trainings facilitated by Human Resources
• An organization-wide or department-wide annual meeting.
• In connection with work activities requiring continuous service when it is not possible to
break for meals (e.g., election days, water main breaks, high profile criminal
investigations, on-going emergency response activities).
• At the discretion of the City Manager.
Employee Appreciation/Motivation:
Events and gifts for City employees – however small – may not be purchased using City funds
except as set forth below. These permitted expenditures are intended to serve the public purpose
of recruitment and retention of the City’s largest asset, its personnel. These practices are meant
to ensure high employee productivity and morale and reduce expenses resulting from low
productivity and high turnover (e.g., recruitment, training, inexperience, and lack of knowledge).
The following is a list of authorized expenditures:
• Water/coffee/beverages: Regular provision of water/coffee/beverages.
• Service Awards: Years of Service Awards and Employee of the Year award.
• Annual Department Appreciation Events: Each department may schedule one annual
appreciation event.
• Annual City-wide Appreciation Event: There will be one City wide holiday appreciation
event which will be organized by the Employee Council.
• Wellness: Events or awards recognizing participants in a City-sponsored wellness
program.
• Retirement/ Resignation: For employees with 5+ years employment with the city and
leaving in good standing, a party may be scheduled by the department. Contact HR prior
to the event to order a cake and obtain a card to be passed around the department(s). If
applicable, the City Council will present a plaque per plaque guidelines below. For
employees with less than 5 years of experience, at the discretion of the supervisor,
departments may organize a party or pass around a card. The city will pay $200 towards
food for an employee’ s retirement party with 20 years of service and $300 towards food
for an employee with 30 years of service.
• Sailboat Plaques Award Guidelines: This City-funded program states that public
expenditures for appropriate Council / advisory committee / employee r ecognition
programs serve a public purpose because formally recognizing significant contributions
and demonstrated commitment during the performance of duties results in higher morale
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and productivity; thereby helping the City fulfill its statutory responsibilities of promoting
public health, safety, general welfare, security, prosperity and contentment for all of the
city’s residents in an efficient and cost-effective manner. The City Manager shall be
responsible for administering this program and may vary from the guidelines, as he/ she
deems appropriate.
Guidelines for eligibility:
City Council Fulfillment of a complete four-year term.
Commissions & Advisory Committee Fulfillment of three terms or complete term
limit of nine years.
Employees Completion of 10 years of full-time service
and leaving in good standing.
• Deceased Current Employee: For current full-time and part-time employees who pass
away while employed, flowers will be sent on behalf of the City employees to the
employee’s immediate family and a plaque will be placed at Lakefront Memorial and/ or
a tree will be planted with a plaque in one of the City parks in remembrance of the
employee. For temporary employees, flowers and a card will be sent to immediate family.
• Deceased Former City Employee/ Stakeholder: The city may elect to recognize previous
employees (including council members, advisory committee members and firefighters)
who pass away based upon criteria such as: 1) length of service 2) record of
accomplishments or 3) other criteria as the city manager deems appropriate. Recognition
may include a monument of some sort (park bench, plaque, art rendering or small
structure or renaming of a street, park or public building) as deemed appropriate in the
circumstances.
ETHICS AND ACCEPTANCE OF GIFTS
Minnesota Statutes § 471.87 states that employees authorized to take part in making any sale,
lease or contract in an official capacity shall not voluntarily have a personal financial interest in
that sale, lease or contract, or personally benefit financially from it.
For non-business related purchases, employees may only take advantage of special pricing
offered to employees of the City if the same pricing is offered to government employees state or
country wide. However, special pricing offered to the City by vendors may not be accepted by
employees in a position to make purchasing decisions or recommendations within that same
category of goods or services.
ADDITIONAL PURCHASING REQUIREMENTS
Approval:
The City’s financial system approval workflow has been designed to comply with the City’s
purchasing policy. Final approval of all purchases must be completed through this system. The
purchase is evidenced by the authorized purchaser’s invoice and/or receipt. The purchase must
also be approved and coded within the financial system.
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Documentation:
Purchase order requirements are defined in the Purchasing Procedures and Authorizing
Documents reference table above. A purchase order is used to ensure accountability, provide
amount verification and avoid any misunderstanding with respect to cost between the vendor
and the City. The purchase order shall document the procedure used, the approving authority
and any relevant comments (i.e. which cooperative purchasing venture was used, other
quotes/prices obtained, efforts to obtain additional quotes/prices, why the lowest quote/price
was not selected). In addition, any purchase approved by the City Council shall be accompanied
by a Resolution. The Resolution, similar to the purchase order, shall document the procedure
used, the approving authority and any relevant comments.
Document Retention:
All written quotes/bids/proposals shall be retained for 6 years. All accepted written
quotes/bids/proposals shall be retained for 10 years. All written quotes/bids/proposals for
capital improvements shall be retained for 10 years. All accepted written quotes/bids/proposals
for capital improvements shall be retained permanently. All contracts shall be retained for 10
years.
Budget:
All expenditures must be within the limits established by the department budget. Any non-
budgeted items must be approved by the Department Head and either the City Manager or City
Council (City Council if > $20,000).
Buy local:
Whenever possible, and consistent with State law and this Policy, the City shall endeavor to
purchase from local businesses.
Responsible Contractor:
Any construction (labor and materials) contract awarded by sealed bids shall include “responsible
contractor” language in both the request for bids and the contract, confirming that the contractor
is a “responsible contractor” pursuant to Minnesota Statute § 16C.285 and the vendor shall
provide a signed verification.
Technology Purchases (Hardware and Software):
Authorized purchasers must consult with Information Technology personnel prior to acquiring
any hardware and/or software to ensure it is consistent with the Technology Plan.
Electronic Signatures:
Signatures from City personnel and/or vendors may be obtained in electronic format. Any
acceptance of electronic signature shall be approved by the Finance Department.
Tax Exemption:
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City purchases are generally tax exempt pursuant to Minnesota Statute § 297A.70. However, if
the purchase is related to a construction contract (labor and materials) the process is fairly
complicated, including the requirement that the materials to be tax exempt are bid out
separately. Anyone interested in utilizing the tax exemption in connection with a construction
contract (labor and materials) should contact the Finance Department and City Attorney to
ensure compliance with the law.
CONTRACT DOCUMENTS
The City has established a set of standard documents to be used for City projects and purchases.
City staff shall select the appropriate document and complete it as set forth on the chart in Exhibit
A. The forms are located R:/Standard Agreements. For each purchase, the form shall be copied
from R:/Standard Agreements and “saved as” in the appropriate folder to ensure use of the most
recent form.
Any changes to the standard documents must be reviewed and approved by the City Attorney
before the contract is submitted for approval. Any use of a contract other than a standard
document must be reviewed and approved by the City Attorney before the contract is submitted
for approval
Consultant Involvement:
If a consultant is involved in creating contract documents such as plans and specifications, the
consultant must use the City contract form unless approval is obtained from City Attorney. The
consultant should provide technical terms but not legal terms. If the consultant desires to add
legal terms (i.e. insurance, liquidated damages, termination, remedies) they must coordinate
with the City Attorney. Please talk to the consultant early in the process to ensure approval can
be obtained.
Contract Approval:
Prior to submitting a contract to the Department Head, City Manager or City Council for approval,
each contract shall:
• Be signed by the vendor;
• Have any exhibits attached;
• Have copies of all required bonds and insurance certificates attached;
• Include responsible contractor verification if applicable.
PAYMENT
All invoices should be addressed to the Finance Department at 4646 Dakota Street SE. Each
invoice will be stamped with the date received and forwarded to the appropriate department.
Each authorized purchaser will review and approve all invoices pertaining to their department
purchases through the City’s financial system approval workflow.
The Finance Department may request a W-9 prior to payment being made.
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Prior to payment of any invoices related to construction contracts (labor and materials) the
following documentation shall be submitted to the Finance Department:
• Lien waivers;
• Contractor’s affidavit that all obligations have been paid;
• Certificate of withholding from Commissioner of Revenue (IC134).
All claims should be presented to the Council for review after payment.
EMERGENCY PURCHASES
Under Minnesota’s Emergency Management Act (Minn. Stat. §§12.01-12.61), the City has the
authority to enter into contracts during an emergency without following many normally required
procedures. An emergency is defined “an unforeseen combination of circu mstances that calls
for immediate action to prevent a disaster from developing or occurring.” A disaster is “a
situation that creates an actual or imminent serious threat to the health and safety of persons,
or a situation that has resulted or is likely t o result in catastrophic loss to property or the
environment, and for which traditional sources of relief and assistance within the affected area
are unable to repair or prevent the injury or loss.”
During an emergency or disaster and in compliance with the Emergency Management Act, the
City Council may waive compliance with the time-consuming procedures or formalities
concerning:
• The performance of public work;
• Contracting;
• Incurring obligations;
• Renting equipment; and
• Purchasing supplies and materials.
Emergency purchases will only be allowed when the mayor issues a proclamation declaring an
emergency and the steps listed in Minn. Stat. § 12.29 are completed.
CREDIT CARD USE
According to Minnesota Statute § 471.382, the City Council may authorize the use of a credit card
by any City officer or employee otherwise authorized to make a purchase on behalf of the City.
The purpose of this policy is to authorize such use and establish criteria for who may be issued a
credit card and the specific use of the credit card.
Authority for Credit Card Holder:
City staff having authority to make certain purchases are eligible to request credit cards. A
Department Head may request a credit card for City authorized purchas ers when there is a
demonstrated efficiency to be gained. The Finance Director must review and approve each
request before the card is issued. Such requests must include the following information:
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• The name of the specific user or users;
• The general reason and types of purchases they will be making.
• Any other information necessary to complete the credit card process.
The Department Head is responsible for notifying the Finance Director when any changes occur
to the cardholder’s status.
Types of Purchases Allowed by Credit Card:
A purchase by credit card must comply with all statutes, rules, and City policies applicable to City
purchases. Specifically:
• All purchases must be made by the authorized card holder or designated authorized
personnel.
• All credit card purchases must comply with the City’s Purchasing Policy guidelines for
quotes and bids.
• All expenditures must be within the limits established by the department budget.
Types of Purchases Prohibited:
Use of a City credit card is prohibited for the following purchases:
• Personal purchases of any kind.
• Alcoholic beverages of any kind.
If a City employee makes or directs a purchase by credit card that is inconsistent with this policy
and/or is not approved by the Council, the employee may be personally liable for the amount of
the purchase.
Limit on Charges:
Any purchase on a City credit cart must receive pre -approval from the appropriate authority
based on the amount of the purchase as set forth above in the Purchasing Authority section of
this Policy. In no case shall any purchase in an amount greater than $20,000 be made without
prior City Council approval.
Procedures and Documentation:
The Finance Department will receive the monthly bill and the cardholder will receive a copy of
the monthly statement of their charges. The cardholder will scan the invoice and credit card
recap form to Finance when invoice/receipt is received. Finance will enter the invoice in the city’s
financial system for workflow approval. Payment will be made when the in voices/receipts
entered match all cardholder credit card statements and documentation.
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END POLICY