Item 8ACity of Southlake, Texas
M E M O R A N D U M
TO: Shana Yelverton, City Manager
FROM: Sharen Elam, Director of Finance Ext. 8042
Resolution No. 07-054, Approving a new purchasing policy.
SUBJECT:
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Action Requested:
Approval of Resolution No. 07-054, amending the purchasing policy.
Background
Information:
The current purchasing policy was adopted in June 21, 2005. The proposed
updates address the changes required with the automated purchasing process
with the new Finance software system and amending the bidding parameters.
The current bidding parameters require three (3) quotes on any purchase $500
and above; the departments are experiencing frustration from vendors due to
the low dollar threshold. Various vendors that historically have not received
the business are refusing to provide any additional quotes. Also, the low
threshold is inefficient for the departments because the additional time required
obtaining quotes. The majority of all purchases exceed $500.
Existing bidding parameters:
$500-$999 require three (3) telephone quotes
$1,000-$49,999 require three (3) written quotes
*
$50,000 require sealed bids
Recommended bidding parameters:
$2,500 or less no quotes are required but are recommended when
possible
$2,501-$9,999 require three (3) informal, written quotes
$10,000-$49,999 require three (3) written or informal sealed bids
*
$50,000 require sealed bids
(*)-Purchases governed by the competitive purchasing requirements of
state law effective September 1, 2007 increased from $25,000 to
$50,000.
Finance staff completed a survey and the recommended parameters
are in line with other cities.
Financial
Considerations:
None
Citizen Input/
Board Review:
None required
Legal Review:
City attorney, Cara White reviewed proposed policy.
Alternatives:
Approve, amend or deny resolution.
Supporting
Documents:
Resolution No. 07-054
Purchasing policy
Staff
Recommendation:
Approval of Resolution No. 07-054
RESOLUTION NO. 07-054
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SOUTHLAKE, TEXAS, APPROVING A NEW PURCHASING POLICY.
WHEREAS, the City Council on June 21, 2005, of Southlake adopted a Purchasing
Policy; and
WHEREAS, the City Manager has recommended substantial revisions to same; and
WHEREAS, the City Council desires to approve the revisions; NOW THEREFORE, BE
IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS, THAT:
SECTION 1. The City of Southlake hereby adopts the Purchasing Policy, attached hereto as
Exhibit “A” and incorporated by reference herein.
SECTION 2. The former Purchasing Policy is repealed.
SECTION 3. This resolution shall become effective on the day of , 2007.
PASSED AND APPROVED THIS THE DAY OF , 2007.
Andy Wambsganss, Mayor
ATTEST:
Lori Payne, City Secretary
PURCHASING MANUAL
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FORWARD
This manual contains the policies and procedures for purchasing related activities.
Its purpose is to provide guidance and instruction for all employees new to the purchasing
process as well as a reference for staff and management.
The primary function of the purchasing program is to provide cooperative assistance
that is efficient and effective in obtaining the supplies and services needed. The intention of
the program is to buy these items at the lowest economical cost consistent with quality and
time.
Legal and organizational changes as well as data processing improvements will bring
about policy and procedural changes. Revisions will be issued that reflect these changes in
order to keep this manual current.
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FORWARD...................................................................................................................................1
DIRECTORY OF PURCHASING STAFF......................................................................................4
I. DEFINITIONS......................................................................................................................5
II. POLICY STATEMENTS......................................................................................................7
III. PURCHASING ETHICS.......................................................................................................9
IV. PURCHASING PROCEDURES........................................................................................12
A. Purpose.......................................................................................................................13
B. Bidding Parameters.....................................................................................................13
C. Historically Underutilized Vendors...............................................................................14
D. Turnaround Time.........................................................................................................15
E. Acceptance of Bids......................................................................................................15
F. Purchasing Flow Chart................................................................................................16
G. Specifications..............................................................................................................18
V. THE PURCHASING PROCESS........................................................................................19
A. Purchase Order.............................................................................................................20
B. Emergency Purchases..................................................................................................21
C. Department Purchase Order...................................................................................... 23
D. Guidelines for Price Quotations………………………………...................………………26
E. Sample of Price Quotation Form...................................................................................28
F. Annual Contracts...........................................................................................................29
G. Maintenance Agreements.............................................................................................30
H. Sole Source Purchases................................................................................................31
I. Petty Cash......................................................................................................................32
VI. TAX EXEMPT CERTIFICATES.........................................................................................33
A. Sample Tax Exemption Certificate..............................................................................35
VII. AFTER THE ORDER.........................................................................................................36
A. Purpose.......................................................................................................................37
B. Expediting....................................................................................................................37
C. Cancellation or Change Order.....................................................................................37
D. Returns to the Vendor..................................................................................................37
E. Vendor Relations.........................................................................................................37
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VIII.RECEIVING AND INSPECTION.......................................................................................38
A. Purpose.......................................................................................................................39
B. Inspection....................................................................................................................39
C. Receiving Complete Orders.........................................................................................39
IX.INVOICES.........................................................................................................................40
A. Purpose.......................................................................................................................41
B. Procedure....................................................................................................................41
C. Prompt Payment Act....................................................................................................41
X. FREIGHT...........................................................................................................................42
A. Definition......................................................................................................................43
B. Receiving.....................................................................................................................43
C. Shipping or Returns.....................................................................................................43
XI. DISPOSAL OF SURPLUS PROPERTY............................................................................44
A. Purpose.......................................................................................................................45
B. Procedure....................................................................................................................45
XII. PROCUREMENT CARD………………………………………………………………. ...........46
A. Program Overview.......................................................................................................48
B. Duties and Responsibilities.........................................................................................49
C. Purchasing Card Controls............................................................................................51
D. Sales and Use Tax......................................................................................................52
E. Security of Card/Lost or Stolen Cards.........................................................................53
F. Card Activation............................................................................................................54
G. Making the Purchase...................................................................................................54
H. Receiving.....................................................................................................................54
I. Payment Procedures...................................................................................................55
J. Returns, Credits, and Disputes....................................................................................55
K. Commonly Asked Questions.......................................................................................58
L. Cardholder Agreement................................................................................................59
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DIRECTORY OF FINANCE STAFF
DIRECTOR
………………………………………SHAREN JACKSON……………748-8042
DEPUTY DIRECTOR-ADMIN.
.........................SHARON GUESS...................748-8044
DEPUTY DIRECTOR-OPERATIONS
………….SEAN LEONARD....................748-8054
PURCHASING AGENT
…………………………..DEBORAH RUSSELL.............748-8940
COMPUTERS & SUPPLIES
COMPUTER SOFTWARE
OFFICE SUPPLIES
BUILDING MATERIALS
PRINTING
TOOLS
FURNITURE
UNIFORMS
HUBS
FLEET COORDINATOR
...................................TIM SLIFKA.............................748-8312
EMERGENCY EQUIPMENT
LARGE EQUIPMENT
ASSET DISPOSAL
TIRES
VEHICLES
ACCOUNTING ASST. II- AP
...........................VICKIE DEWEES....................748-8187
ACCOUNTANT
.................................................KAREN RANDALL..................748-8045
SENIOR ACCOUNTANT
..................................LYNN WARREN......................748-8043
CAPITAL PROJECTS
VEHICLE RECORDS (INSURANCE)
ADMINISTRATIVE SECRETARY
.....................BARBARA KIRTZ....................748-8345
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I. DEFINITIONS
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DEFINITIONS
The basic methods for obtaining supplies, equipment and services are explained in detail in
this manual, but for the purpose of introduction, they are briefly outlined below.
Purchase Requisition
The purchase requisition is used to inform Finance of the needs of individual departments.
It is used to request a P.O. authorizing purchase of specific products or services.
Department Purchase Order (DPO)
The DPO allows individual departments to place minor purchase orders directly with
approved vendors for certain miscellaneous items and services. The total order must not
exceed $2,500, including minimum shipping and handling charges.
Annual Contract
Contracts protect pricing for a period of one year and are awarded to vendors for supplies,
equipment and services routinely required by one or more departments.
Maintenance Agreements
The City maintains service agreements with manufacturers and authorized service centers
for most of its copiers. For more information on which machines are covered, please
contact Technical Services. The City also maintains service agreements for facility related
equipment. For more information on what equipment is covered, please contact facility
maintenance.
Emergency Purchase Order
At times, circumstances will occur that require obtaining goods or services without following
normal purchasing procedures. Under certain circumstances, Finance will issue a verbal
P.O. number. A confirming requisition, authorized by the department head, must be
submitted by the next working day.
Petty Cash
Any item bought with petty cash cannot exceed $100. User departments make these non-
routine, below-minimum purchases directly with the vendor and are reimbursed provided the
proper form and receipts are presented to Finance.
Blanket P.O.
Annual P.O. generated by Finance for recurring purchases.
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II. POLICY STATEMENTS
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POLICY STATEMENTS
Purchasing is a function of all Departments. Department Directors are responsible for
ensuring that departmental purchases are in compliance with the approved budget and the
city’s purchasing policy. Purchasing procedures are guided by several established policies.
These policies are:
All purchasing shall be in accordance with the laws of the State of Texas including
Chapters 252 and 271 of the Texas Local Government Code, and City of Southlake
City Charter.
All purchasing shall adhere to sound purchasing policies to ensure that Southlake
taxpayers receive the best value for city purchases.
Purchasing activities will be managed with proper controls, and all requisitions will be
processed in a timely manner to ensure efficient practices.
When required or preferred, a competitive bidding process will be utilized to obtain
purchases at the lowest possible cost, and to provide for an open and fair process for
all interested vendors.
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III. PURCHASING ETHICS
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PURCHASING ETHICS
This Manual is designed to assist departments in following all laws and regulations related
to purchasing and to treat vendors in a fair manner, while avoiding the perception of
immoral, illegal or unethical behavior. It shall also serve as a reminder that behavior which
is considered acceptable in the private sector may be inappropriate for the public sector.
Purchasing Code of Ethics
I.Employee Responsibility to the City of Southlake
Follow the policies and lawful instructions of the City.
Understand the purchasing authority granted to the employee by the City.
Avoid activities that would compromise or give the perception of compromising
the best interest of the City.
Reduce the potential for any charges of preferential treatment by actively
promoting the concept of competition.
II.Conflict of Interest
Conflicts of interest arise when personal involvement and/or gain in a decision
could lead to prejudice, or the appearance of prejudice in that decision.
All employees shall comply with the conflicts of interest provisions found in the
Employee Personnel Policies and Procedures, “Code of Ethics and Conduct.”
III.Employees Relations with Businesses or People Doing Business with the City
It cannot be overstated that the Southlake Values can be greatly compromised by
the improper acceptance of gifts. Even the appearance of accepting gifts can be
damaging.
No city employee shall accept any gift that might reasonably tend to influence the
employee in the discharge of his or her official duties, or grant any improper favor,
service or thing of value. Neither shall any employee use his or her official
position to secure special privileges or exemptions for themselves or others.
[Refer to Employee Personnel Policies and Procedures, “Code of Ethics and
Conduct.”]
Bidding and contracting can bring great discredit upon the City if it is not
conducted in a legal and appropriate manner. Any private gain by employees of
the City or any gain beyond reasonable compensation for the contractor is
prohibited.
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IV.Relations with Those to Whom Services are Rendered
No gift, reward, favor or any other considerations shall be accepted or retained for
services rendered by the employee.The employee shall notify his or her
supervisor of such offer and the employee’s refusal.
Gifts, rewards, favors or any other considerations which are given to an employee
under circumstances which do not permit the employee’s immediate refusal shall
be reported and given to the employee’s department head immediately. The
department head shall return the gift with a proper letter expressing gratitude and
explanation to the person giving the gift. A copy of the letter will be sent to the
City Manager.
When a gift, reward, favor or any other consideration cannot be returned it will be
used for the benefit of all employees in the department involved or otherwise
disposed of so that no individual gains from the gift. The manner of disposal of
the gift shall be reported in writing to the City Manager. Small items such as
cakes, cookies and candy may be accepted if used for the entire department.
Large gifts or donations of gratitude to benefit the employees of a department are
not permitted. Any such individual or group wishing to express their gratitude may
make a contribution to a charitable organization in the name of that department.
Any service rendered by an employee is considered part of the employee’s job
and since the employee is paid, no special gratitude is necessary.
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IV. PURCHASING PROCEDURES
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PURCHASING PROCEDURES
Purpose
The following policies are to be adhered to when processing goods and services for the
City.
Bidding Parameters
1. Purchases of $2,500 or less.
No quotes are required but are recommended when possible. Orders may be placed by
Finance or the user department directly with vendors by telephone, by a mailed copy of
the purchase order, by a department purchase order (DPO), or procurement card
transaction.
2. Purchases of $2,500 to $9,999.
These purchases require at least three (3) informal, written quotes and shall be
completed by the user department and submitted to finance through an electronic
requisition. At least two (2) of the contacts solicited for quotations must be from vendors
on the Texas Department of Commerce Certified Listings for Disadvantaged Business
Enterprises (DBE’s), aka Historically Underutilized Businesses (HUBS). The written
quotes must be attached to the requisition for retention.
3. Purchases of $10,000 to $49,999.
These purchases require at least three written or informal sealed bids called “Non-
Council” bids, with the appropriate method being left to the discretion of the Purchasing
Agent. Finance will complete the bidding process. At least two (2) of the contacts
solicited for quotations must be from vendors on the Texas Department of Commerce
Certified Listings for Disadvantaged Business Enterprises (DBE’s), aka HUBS. The
written quotes/bids must be retained in the Finance Department
4. Purchases governed by the competitive purchasing requirements of state law.
As of the date of approval of this policy, state law requires competitive purchasing for
expenditures or procurements by the City of $50,000 or more. The City may use either
Competitive Sealed Bidding or Competitive Sealed Proposals for expenditures or
procurements by the City of $50,000 or more. However, before the competitive sealed
proposal method may be used, the City Council, or its designee must determine, before
notice is given, the method of purchase which provides the best value to the City.
(1) Competitive Sealed Bidding: Formal bids called “Council Bids” are required.
Notice to bidders must be publicly advertised in the newspaper for two (2) consecutive
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weeks, with the first date of publication being at least fourteen (14) days prior to the
opening of the bids or proposals. All sealed bids must be submitted to the City
Secretary’s Office. Finance will conduct a public bid opening and tabulate the bids.
Contracts procured by competitive bids are awarded by the City Council.
The City will use the “best value” method to award contracts under the competitive
sealed bid method. The City will indicate in the bid specifications that the contract may
be awarded either to the lowest responsible bidder or to the bidder who provides goods
and services as the best value to the city. The City will further indicate in the bid
specifications that it reserves the right to reject any or all bids and reopen the bidding
process if it is in the best interest to the city.
(2)Competitive Sealed Proposals: Formal proposals are required. Notice of the
request for proposals must be publicly advertised in the newspaper for two (2)
consecutive weeks, with the first date of publication being at least fourteen (14) days
prior to the opening of the bids or proposals. All sealed proposals are submitted to City
Secretary’s Office.
All Competitive Sealed Proposals are opened so as to avoid disclosure of the
contents of proposals to competing proposers until after the award of the contract.
Contracts awarded by competitive sealed proposals are awarded by the City Council.
When evaluating proposals, the City will consider the following:
(a) the Purchase Price;
(b) the reputation of the proposer and the proposer’s goods and services;
(c) the quality of the proposers goods or services;
(d) the extent to which the goods or services meet the City’s needs;
(e) the proposer’s past relationship with the City;
(f) the impact on the ability of the municipality to comply with laws and
rules relating to contracting with historically underutilized businesses
and non profit organizations employing persons with disabilities;
(g) the total long-term cost to the city to acquire the proposer’s goods or
services; and
(h) any relevant criteria specifically listed in the request for bids or
proposals.
5.Exceptions to competitive purchasing requirements.
Exemptions the competitive purchasing requirements are outlined in the Texas
Local Government Code Section 252.022. Any questions regarding these
exceptions or their application should be directed to Finance.
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Historically Underutilized Vendors
The City of Southlake, in making an expenditure of more than $3,000 but less than $50,000,
is required by state law to contact at least two historically underutilized businesses on a
rotating basis, based on information provided by the General Services Commission. If the
list fails to identify a historically underutilized business in the county in which the municipality
is situated, the municipality is exempt from this requirement.
Please contact the Finance Department for a listing of historically underutilized businesses
within the particular commodity for which you may be soliciting pricing.
Turnaround Time
Normal requisitions are usually placed within four (4) working days or less. Requisitions that
require the written bid process normally take fifteen (15) days to process, and council bids
generally take as long as six (6) weeks or forty-five (45) days.
Acceptance of Bids
Department Directors and Finance have the discretion to select which vendor/bid
acceptance to buy from on purchases up to $50,000. On orders $50,000 and over, the City
Council will make the final award.
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City of Southlake
Bid/Quote Process Flow Chart
Page 1 of 2
Decision to buy made
in Department
Director seeks
approval from
NoNo
No
Council to bid for
<=$2,500?<$10,000?<$50,000?
purchase (usually
done during Budget
Process)
Yes
YesYes
Department Department Department
Implement
develops develops develops
PO/
SpecificationsSpecificationsSpecifications
Requisition
Process
Department
Department sends Department sends
contacts 3 vendors
specifications and specifications and
End
for informal written
Vendor List to Vendor List to
quotes – 2 must
PurchasingPurchasing
be H.U.B.s
Purchasing
Purchasing solicits
obtains written
formal sealed
bids or informal
written bids from
sealed bids from
Implement
3+ Vendors
3+ Vendors
PO/
Requisition
Process
Quotes and bid
tabulation must be
City Secretary
attached to
Purchasing and
receives sealed
Requisition
Department award
bids up to deadline
bid
Implement Purchasing
PO/opens and
End
Requisition tallies
Processsealed bids
Pg2-a
Pg2-b
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City of Southlake
Page 2 of 2
Bid/Quote Process Flow Chart
Pg1-aPg1-b
Bid Documents Purchasing and
are stored in Department
Financerecommend bid award
End
Department
prepares
Council
Agenda item
for bid award
Council
approves bid
award
Implement
PO/
Requisition
Process
Bid Documents
are stored in
Finance
End
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SPECIFICATIONS
Definition
A specification is a concise description of a good or service the City seeks to buy,
and the requirements the vendor must meet in order to be considered for the award.
A specification may include requirements for testing, inspection or preparing an item
for delivery, or preparing or installing it for use.The specification is the total
description of the purchase. See flowchart when specifications are required.
Purpose
The purpose of any specification is to provide personnel with clear guides to
purchasing, and to provide vendors with firm criteria of minimum product or service
acceptability. A good specification has four characteristics:
1.It sets a minimum acceptability of the good or service. The term “minimum
acceptability” is key, since the vendor must know the minimum standard to
determine what to provide. A standard too high means tax dollars will be
wasted. A standard too low means the goods or services will not meet the
expectations of the user.
2.It should promote competitive bidding. The maximum number of responsible
vendors should be able to bid the specification. Restrictive specifications
decrease competition.
3.It should contain provisions for reasonable tests and inspections for
acceptability of the good or service. The methods and timing of testing and
inspection must be indicated in the specification. Tests should refer to
nationally recognized practices and standards, whenever possible.
4.It should provide for an equitable award to the lowest responsible bidder. The
buyer obtains goods or services that will perform to expectations, and the
vendor is able to provide the goods or services at an agreeable price.
Preparing Specifications
The specifications may be prepared by Finance, the using division, or by a
professional consultant hired by the City. The ultimate responsibility for accurate and
comprehensive specifications rests with the requesting department. For more
information or assistance on writing proper bid specifications, please call Finance.
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V. THE PURCHASING PROCESS
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PURCHASE ORDER
Purpose
The end result of a requisition is the purchase order. The P.O. is used to place the actual
order with the vendor. The purchase order is a legal contract and gives the vendor
authorization to ship the materials, as specified. It is designed to expedite and control
buying for the City.
Procedure
Once the requisition is approved and the vendor is selected, the requisition is converted to a
P.O. It may be printed or emailed to the vendor. Notification is distributed as follows:
Originator:
Approver:
Vendor:
Comments
In order to comply Texas Government Code, Chapter 2251 and avoid the interest penalty,
invoices must be paid within thirty (30) days after delivery. Attach all packing slips or
delivery tickets to the receiving record in the system no later than the next working day.
Finance will automatically be notified once the receipt is posted in the system.
For detailed instructions on receiving see Receiving and Inspection, page 36.
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EMERGENCY PURCHASES
Emergencies do occur. Emergency purchases are those needed to avoid interruption in
City Services or to protect public health and safety.
Purchases made in emergency situations are generally more costly than
routine purchases. Therefore, they must be kept to a minimum. Poor planning, overlooked
requirements, or negligence are not true “emergencies.”
Emergency Purchases
They must meet one of the qualifications for exempt purchases in Section 252.022 of the
Texas Local Government Code. The three (3) true emergency exemptions, as listed in the
above statute, are listed below:
1) A purchase made because of a public calamity and the prompt purchase of items
is required to provide for the needs of the public or to preserve the property of
the City.
2) The item is necessary to preserve or protect the public health or safety of the
residents of the City.
3) The item is made necessary by unforeseen damage to public machinery,
equipment or other property.
When emergencies arise and there are no applicable maintenance agreements or blanket
P.O.'s in place, please follow the procedures set forth below under “Requisitioning of
Emergency Purchases.”
Requisitioning of Emergency Purchases
Normal WorkingHours. All emergency purchases occurring during normal working hours
are processed through the Finance Department as follows:
1. The using department will immediately notify Finance by telephone with as much
information as possible about the emergency purchase required, so that the
appropriate action can be initiated.
2. Simultaneously, a purchasing requisition is being prepared by the using department
and is sent through the normal channels.
3. Finance or using Department Head contacts as many vendors as necessary to
arrange the emergency purchase. If time permits, the purchase order is completed
according to procedure. Otherwise, the purchase is completed by telephone, and the
purchase order is completed, after the fact, and delivered to the vendor.
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4. The buyer requests expedited delivery. The person making the requisition may be
required to pick-up the emergency purchase from the vendor if the expedited delivery
is not available.
Evening, Weekends and Holidays. For other than normal working hours, when purchasing
support is unavailable, process emergency purchases as follows:
1. The responsible official of the using department takes whatever steps are necessary
to procure needed supplies, services or equipment to relieve the emergency situation.
If possible, only those goods or services needed during the evening, weekend or
holiday are procured.
2. On the first working day following the emergency, the responsible official prepares an
on-line requisition and personally attaches any invoices, packing slips, or receipts to
the requisition for processing.
The Department Head of the using department must certify, in writing, the next business
day, or as soon thereafter as possible, that the purchase involved was necessary because
of one of the three reasons listed as emergency exemption in Texas Local Government
Code.
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DEPARTMENT PURCHASE ORDER (DPO)
Purpose
The DPO allows individual departments to place orders up to a maximum of $2,500 for
certain supplies, materials, or services directly with vendors. This requisition is used to
eliminate the processing time and expense of minor purchase orders. DPO’s shall be used
as a payment mechanism for purchases under $2,500 with the exceptions specified on page
22.
For every DPO issued, each department is responsible for assuring that sufficient funds are
available within the appropriate budget, and that the purchase meets the criteria established
especially for department purchase orders.
Abuse or misuse of this system will result in the withdrawal of authorization to use the DPO.
Examples of misuse include:
1. Using the DPO for unauthorized items or services.
2. Exceeding the $2,500 maximum limit.
3. Using DPO's when sufficient funds are not available within the appropriate
budget.
4. Using DPO's during the period when purchases are suspended at the end of
each fiscal year.
5. Splitting, dividing or separating requirements to keep DPO’s under the $2,500
limit and thus avoid submitting a standard requisition or to avoid the
competitive bidding process in any way.
Authorization will be withdrawn after three (3) violations during any one period from October
through September of each year. Reinstatement in a subsequent year may be granted on a
case by case basis as deemed appropriate by the City Manager’s Office.
Authorized Purchases By DPO’s:
1. Goods and services up to a maximum of $2,500, including freight, delivery and
installation.
2. Memberships, subscriptions and registration fees for conferences and
seminars, when a vendor will take a DPO number and invoice you at a later
date.
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Unauthorized Purchases By DPO’s:
1. Maintenance agreements.
2. Travel related expenses such as airfare, lodging, rentals, etc.
3. Splitting, dividing, or separating requirements to keep DPO’s under the $2,501
limit and thus avoid submitting a standard requisition or to avoid the
competitive bidding process in any way.
4. Items where the vendor requires payment before the merchandise will be
delivered.
5. Computer hardware or software.
6. Any rolling stock, fleet equipment etc.
Procedure
The using departments are responsible for obtaining verbal quotes, and purchase
requirements are to be consolidated when possible. To avoid charges of favoritism and
price collusion, purchases should be rotated among vendors offering comparable prices,
quality and service.
The City is exempt from paying any local or state sales tax, and federal excise tax. For
more information, see Tax Exemption Certificates, page 32.
A bid/quote tabulation form shall be attached to the DPO. Quotes are recommended at this
level but not required.
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GUIDELINES FOR PRICE QUOTATIONS
Bidding limits are established to ensure that sizable purchases are subject to fair
competition among available, responsible vendors. To effectively expedite and control
purchases of goods and services that are not governed by the competitive purchasing
requirements established by the Texas Local Government Code, Chapter 252, the following
guidelines have been established by the City of Southlake to assist employees in obtaining
competitive quotes. These guidelines are based on the Texas Comptroller of Public
Accounts Model Purchasing Manual for Texas Cities and Counties. Even though certain
purchases are exempt from the statutory requirements for formal competitive purchasing,
they should have adequate controls and be subject to all practical competition.
The following statutes are quoted from the Texas Local Government Code (“LGC”), Chapter
252 and are listed as a reference for any representatives of the City of Southlake in
obtaining quotations for goods or services that are not governed by the competitive
purchasing requirements.
A. 252.021 LGC - Competitive Bidding and Competitive Proposal Requirements
(a) Before a municipality may enter into a contract that requires an expenditure of
more than $50,000 from one or more municipal funds, the municipality must:
(1) comply with the procedure prescribed by this chapter . . . for
competitive sealed bidding or competitive sealed proposals. . . .
B. 252.0215 LGC - Competitive Bidding in Relation to Historically Underutilized
Business
(a) A municipality, in making an expenditure of more than $3,000 but less than
$50,000, shall contact at least two historically underutilized businesses on a
rotating basis, based on information provided by the General Services
Commission pursuant to Chapter 2161, Government Code. If the list fails to
identify a historically underutilized business in the county in which the
municipality is situated, the municipality is exempt from this section.
C.252.062 LGC - Criminal Penalties
(a) A municipal officer or employee commits an offense, if the officer or employee
intentionally or knowingly makes or authorizes separate, sequential, or
component purchases to avoid the competitive bidding requirements of
Section 252.021. An offense under this subsection is a Class B misdemeanor.
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D.252.001 LGC – Definitions
(2) “Component purchases” means purchases of the component parts of an item
that in normal purchasing practices would be purchased in one purchase.
(6) “Separate purchases” means purchases, made separately, of items that in
normal purchasing practices would be purchased in one purchase.
(7) “Sequential purchases” means purchases, made over a period, of items that in
normal purchasing practices would be purchased in one purchase.
Guidelines for Purchases below $10,000
1
Price quotations should be solicited from an adequate number of vendors to ensure
competition. Procedures for obtaining price quotations are not established by state
law and are structured to the needs of the City of Southlake. City employees should
use the following guidelines. To protect the integrity of the process, all solicitations of
quotes shall comply with the following.
A. Vendors should be informed that only price quotes are being solicited at
this time.
B. Vendors should not be privileged to quotes from other vendors.
C. Vendors should be rotated to ensure competition.
D. Finance should be contacted if additional vendors for a particular
product or service are needed.
E. Finance should be contacted for historically underutilized businesses
for purchases over $2500.
F. Purchases should be monitored to determine if separate, sequential, or
component purchases might exceed the bid limits.
G. Quotes should be submitted with a requisition to the Finance
Department for vendor selection, processing, and ordering.
H. The user department shall never place orders unless a purchase order
has been obtained through the procedures established in the Purchasing
Manual.
Contact Finance staff with any concerns or questions you may have.
I.
1
For purchases of $2500.01 to $9,999.99, at least three quotes must be obtained.
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SAMPLE PRICE QUOTATION FORMS
PRICE QUOTATION FORM
A.Purpose
The price quotation form provides City employees a consistent means of soliciting
quotes from prospective vendors for those items under $10,000. This form can be
found in the Purchasing section on the city’s network.
B.Instructions for Completion
A. Enter your department and contact person.
B. Enter your department phone number.
C. Enter your department fax number.
D. Enter the name and address of the vendor, one for each vendor
selected.
E. Enter the vendor contact name.
F. Enter the vendor phone number.
G. Enter the vendor fax number.
H. Enter the vendor e-mail address.
I. Enter the complete description of the item(s) including any installation,
warranty or other pertinent information for consistent quotes.
J. Enter the estimated quantity to be purchased.
K. Enter the required delivery date.
L. Enter the fax number of the vendor to return the quote.
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M. Enter the date by which the quote should be returned.
ANNUAL CONTRACTS
Purpose
Finance awards annual contracts to vendors for supplies, equipment and services routinely
required by one or more departments. Contracts protect pricing for a one-year period and
allow a user department to telephone orders directly to the vendor. This eliminates
requisitions and processing time.
Procedure
Each user department is responsible for keeping a copy of the contract purchase order on
file. All purchases under the contract during the contract year will be placed directly by the
using department under the same original P.O. number each time. Blanket P.O.’s are
th
issued on a Fiscal Year basis. All P.O.’s expire on September 30 of each Fiscal Year.
After the items have been received, attach the packing slip or delivery ticket to a completed
Partial Receipt Record and send it to Finance no later than the next day.
Comments
It is important for the using department to remember that they are actually the “contract
administrator” of these types of contracts. After Finance solicits the bids and makes an
award to a particular vendor, it is the responsibility of the using department to notify Finance
of any problems relative to the contract (i.e. the inability of the vendor to provide the
products and/or services on a timely basis). Proper documentation of problems is essential
in determining the responsiveness of the vendor. Without written documentation, it is
difficult and often impossible to prevent that vendor from bidding and receiving the award of
the contract again. It is the responsibility of the using department to submit in writing,
problems that are pertinent so that the city may discuss the situation and possible
repercussions with the vendor.
Finance keeps an updated list of existing contracts by commodity, name of vendor and
opening/closing dates, and makes copies available, upon request. Should a department
have a need for a certain contract, please contact Finance.
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MAINTENANCE AGREEMENTS
Purpose
The City maintains service agreements with manufacturers and authorized service centers
for many office machines such as copiers, microfilm equipment, fax machines and other
specialized equipment.
Computer equipment is now maintained through Technical Services. No computer
maintenance agreements will be contracted for, unless first approved by Technical Services.
It is the responsibility of the using department to budget funds for and to inform Finance of
any equipment that needs to be covered under a maintenance agreement. It is also the
duty of each department to inform Finance of any disposition of equipment that makes it
necessary to cancel an existing maintenance agreement.
All lease purchases or capital leases shall be coordinated with the Finance Department.
This type of purchase and financing is unique and is accounted for through debt service
funds, not the customary departmental expenditure accounts.
Procedure
Finance is responsible for automatically renewing all maintenance agreements unless
notified in advance by written memo from the user department. If the department will not be
renewing a maintenance agreement; the Department Head must notify Finance forty-five
(45) days before the agreement expires.
Each City department is responsible for arranging repair service for equipment that is
covered under a maintenance agreement.
Should a piece of equipment need repair and maintenance agreement does not exist,
submit either a standard on-line requisition or (if applicable) request an emergency
purchase order.
LEASE PURCHASES
All lease purchases or capital leases shall be coordinated with the Finance Department.
This type of purchase and financing is unique and is accounted for through debt service
funds, not the customary departmental expenditure accounts.
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SOLE SOURCE PURCHASES
The following are reasons why a purchase might be practical from only one vendor.
1. There is no competitive product. The good/service is a one-of-a-kind, a patented
product or a copyrighted publication available from only one source, or a unique item
such as a work of art.
2. The product is only available from a regulated or natural monopoly.
For example: utilities, gravel from the only pit in the area, etc.
3. The product is a component of an existing system that is only available from one
supplier. The replacement of a component or a repair part may be only available
from the original supplier.
Procedure
Sole source purchases are handled the same as other purchases, with these exceptions:
1. A comment in the “Comments” section of the on-line requisition must be made to
verify that the requisitioning party has contacted a sufficient number of vendors and
has reason to believe that only one practical source of supply exists. An official
memo shall be attached to the requisition from the department.
2. The requisition is completed in accordance with the on-line requisition system.
3. The Department Director will determine if the item is a sole source purchase.
4. All sole source purchases must be approved by the City Manager. The approval
must be done before a purchase order is issued.
5. After the requisition is approved, the purchase order is prepared.
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PETTY CASH
Purpose
Finance maintains a petty cash fund that can be used by City departments. Any item
bought with petty cash cannot exceed $100.User departments make these purchases
directly with the vendor and reimbursements are made providing the proper “Petty Cash
Voucher” is completed and a copy of the receipt is attached.
Comments
It is important to remember that the City is exempt from paying any local or state sales tax.
Therefore, employees will need a signed Tax Exemption Certificate at the time of purchase
to verify employment with the City. Otherwise, tax will be charged by the vendor and that
amount shall not be reimbursed
Preparation
Explanations of the various fields are as follows:
1. $: Indicate, in numerals, the dollar amount.
2. DATE OF VOUCHER: (current date)
3. PAY TO: Vendor name if cash is to be paid directly to them or your name if for
reimbursement.
4. DOLLARS: Spell out the dollar amount.
5. FOR: Reason for cash.
6. CHARGE ACCOUNT NO.: Account number to be charged.
7. APPROVED BY: To be completed by Finance.
8. RECEIVED BY: Person requesting petty cash.
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VI. TAX EXEMPTION CERTIFICATES
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TAX EXEMPTION CERTIFICATES
Purpose
all
The City is exempt from payment of local and state sales tax, and federal excise tax, with
the exception of Hotel Occupancy Tax.
Procedure
Many times a vendor will ask for the City’s “Tax Exempt Number”. We do not have a
number; we are exempt by law because we are a municipality. The Finance Department
can provide the vendor with a copy of a tax exemption letter when necessary. The tax
exemption certificate is also available on the city’s network in the Purchasing section.
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Sample Tax Exemption Certificate
FINANCE DEPARTMENT
1400 MAIN STREET SUITE 440
SOUTHLAKE, TX 76092
JUNE 20, 1997
BLANKET CERTIFICATE OF EXEMPTION
STATE OF TEXAS
SALES TAX
The undersigned hereby claims a blanket exemption from payment of Limited Sales, Excise and Use Tax,
under Section 151.309, Texas Tax Code Annotated, for the purchase of tangible personal property (bought,
leased or rented.)
The Blanket Exemption is being claimed by the City of Southlake, Texas, as a Governmental Organization in
accordance with the above mentioned statue.
of the City of Southlake, Texas, and that
The undersigned hereby certifies that she is the Director of Finance
she is authorized to execute this certificate in behalf of the City of Southlake, Texas.
The Purchaser will be liable for payment of the Limited Sales, Excise & Use Tax if the Purchaser uses the
tangible property in some other manner or for some other use than for City of Southlake, Texas, and shall pay
the tax based on the price paid for the tangible property.
Signed________________________________________
Director of Finance
Sharen Jackson
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VII. AFTER THE ORDER
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AFTER THE ORDER
Purpose
The purchasing function is not accomplished by simply placing an order with a supplier.
Sometimes satisfactory delivery requires expediting, cancellation or changes.
Expediting
Follow-up or expediting delivery of the order is part of the purchase process. User
departments should direct any inquiries concerning late deliveries or long lead times to the
vendors.
Cancellation Or Change Order
Since a purchase order is a legal document, it cannot be amended unless a change order is
processed. To cancel or change a purchase order, the user department must inform
Finance, by written memo or e-mail as soon as possible. Departments will then notify the
vendor the change order will be completed and processed by Finance.
Occasionally the vendor will over ship an item and the department will decide to keep the
extra or the vendor will under ship an item and the department will decide to cancel the
remaining balance. In these instances, the department should make the proper notations
on the receiving copy of the purchase order so that Accounts Payable may make any
needed adjustments.
Returns To The Vendor
It is the duty of the individual department to inspect all items or services received. If the
items delivered are not acceptable, notify Finance at once. Departments are required to
take immediate action to obtain replacements by the vendor.
Vendor Relations
If the user department experiences problems with a vendor pertaining to delinquent delivery,
quality of product or service, invoicing problems, etc., please notify Finance as soon as
possible. These problems should be handled professionally, and persistent problems
should be documented in writing for future vendor evaluation.
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VIII. RECEIVING AND INSPECTION
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RECEIVING AND INSPECTION
Purpose
When any materials, equipment or supplies are received, the department that placed the
order is responsible for inspecting the shipment and initiating the payment process. This
should be done as promptly as possible to take advantage of early payment discounts
and/or give the Finance Department the processing time it needs to avoid interest penalties.
Inspection
All items must be inspected upon receipt, and whenever possible, in the presence of the
vendor or shipper. Inspection should include:
Verification of correct delivery site.
Verification of correct quantities.
Verification of correct P.O. number on the packing slip.
Checking for damaged or defective goods.
Receiving Complete Orders
When all items or services ordered on a purchase order are received complete (except for
contracts), attach the packing slip or delivery ticket to the P.O. receiving record, and post to
the procurement system.
Finance Department will be unable to pay invoice without the Receiving portion of the PO,
completed by the department.
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IX. INVOICES
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INVOICES
Purpose
An invoice is an itemized statement of merchandise or service provided by the vendor. It
contains the same information as the purchase order and is the means for settlement of
financial obligations incurred when the purchase order is issued.
Procedure
All invoices must be sent directly to Finance where they are held until the P.O. is received in
the system. If the shipping and receiving forms are in agreement, they will be processed for
payment.
If there is a discrepancy between the original P.O. and the receiving paperwork that affects
the quantity ordered or unit price, and results in the P.O. and invoice not matching, a
change order must be processed to insure invoice payment. (See the system procedure
manual for Change Order steps)
Comments
Should an invoice be received by the using department, please forward it immediately to the
Finance Department. Vendors should be notified that all future invoices are to be sent
directly to Finance.
Prompt Payment
Texas Government Code Chapter 2251stipulates that all local governments shall pay for
goods and services within thirty (30) days of the delivery or invoice date or interest is
automatically imposed.
In order to comply with Chapter 2251 and avoid the interest penalty, all invoices must be
sent directly to Finance, and all receiving reports and partials must be submitted for
processing no later than the next working day.
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X. FREIGHT
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FREIGHT
Purpose
Most purchases require shipping materials to the City. The cost of shipping is either paid
directly by invoice, or indirectly when shipping is included in the quoted price of the goods.
Once shipping terms are established, they are specified on the purchase order.
Definition
The following terms are designated shipping arrangements:
Title and Control of Goods
1.FOB Destination
The seller retains the title and control of the goods, and the invoice covering
them does not become payable until they are delivered. The seller selects the
carrier and is responsible for the risk of transportation, including the filing for
loss or damages.This is the preferred method of delivery.
2.FOB Shipping Point
The purchaser assumes title the moment the carrier signs the bill of lading. The
purchaser assumes risk of transportation, is entitled to route the shipment, is
responsible for getting the goods to the destination, and for filing claims for loss
or damage – regardless of who pays freight charges.
Receiving
Each department is responsible for receiving and inspecting all items and services
requested.
Shipping or Returns
If it becomes necessary to return goods to a vendor orship a package, it is the responsibility
of each department to prepare the item for shipment and coordinate its return.
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XII. DISPOSAL OF SURPLUS PROPERTY
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DISPOSAL OF SURPLUS PROPERTY
Purpose
Finance is responsible for the final disposition of City-owned, surplus property, ranging from
rolling stock (automobiles, trucks, tractors, backhoes, etc.) to antiquated equipment,
furniture, or fixtures.
Disposal of this surplus property is accomplished by a public or Internet sale to the highest
bidder.
Procedure
Four weeks prior to a scheduled auction, the Finance Department will notify each
department to prepare and submit a list of surplus properties. A comprehensive list will then
be circulated to all departments to determine whether any items could be used in other
areas of the City.
Each department is responsible for tagging and identifying items for auction, as well as,
physically moving the surplus items to designated area for storage. The Finance
Department and Materials Management personnel will prepare all properties for auction.
The public sale is conducted by a private auctioneer, with items being sold to the highest
bidder. All proceeds derived from the auction(s) are deposited back into each respective
fund.
Auction Form
An Auction Form may be acquired from Finance and should be forwarded to Finance. The
auction forms should be completed with the information requested on the form.
A memo should be sent to Finance listing all items that are being requested for auction.
Comments
As per the City of Southlake charter, all City of Southlake employees, directly or indirectly,
cannot bid on, or purchase any article offered for sale at a City auction.
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XV. PROCUREMENT CARD
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PROCUREMENT CARD PROGRAM
To maximize the benefits the City of Southlake receives from the purchasing card program
and to enhance the program’s success, it is recommended that all users be formally trained
on how the system operates. Cardholders are most likely to use the purchasing card
properly if cardholders understand the following:
How the program benefits cardholders as well as the City:
Allows cardholders to obtain goods and services faster and easier than
before.
Reduces paperwork and processing in the cardholder's department and in
Finance.
Allows all groups and individuals involved in the program to be more
effective and to focus on the value-added aspects of their jobs.
Promotes cost savings through consolidated payment - one monthly
payment to the banking entity, versus multiple vendor payments.
The City’s policies and procedures governing the use of the purchasing card:
Transaction and credit limits
Types of purchases within the parameters of the purchasing card
Approved suppliers and merchants
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To whom cardholders should go for assistance:
Program Administrator/Departmental Administrator – Purchasing Manager
Department Manager
JP Morgan Chases Customer Service
PROGRAM OVERVIEW
The purpose of the purchasing card program is to establish a more efficient, cost-effective
method of purchasing and paying for small dollar transactions as well as high-volume,
repetitive purchases. The program was designed as an alternative to the traditional
purchasing process for supplies and services. If used to its potential, the program will result
in a significant reduction in the volume of purchase orders and related documentation
including invoices and checks. In addition, corresponding work processes associated with
ordering and check writing will be eliminated. The purchasing card can be used with any
supplier that accepts MasterCard as a form of payment.
TheCardholder User's Guide provides the general guidelines for using the purchasing card.
Please read it carefully. Your signature on the Cardholder Agreement shows that you
understand the intent of the program and agree to follow the established guidelines.
It includes the Program and Departmental Administrator(s) and JP Morgan Chase contacts
for questions you may have. It also includes your single transaction limit, types of purchases
acceptable with the purchasing card and restricted suppliers and merchants, if any.
The following important points should be reviewed before using the purchasing card:
Cardholder’s purchasing card is issued in cardholder’s name. All purchases made on the
purchasing card must be made only by the cardholder. Cardholders are responsible for
If cardholders do
the security of the purchasing card and the transactions made with it.
not follow guidelines when using thepurchasing card, cardholder could receive
corrective action, including termination.
Cardholder can use the purchasing card at any vendor or service provider that accepts
MasterCard/Visa and is not on the restricted list. It may be used for in store purchases,
mail, and telephone or fax orders.
Cardholder may use the purchasing card to purchase supplies and services less than
the single transaction limit that was established.
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Use must not exceed the credit limit assigned to cardholder in a given month.
Cardholder must reconcile the statement received from JP Morgan Chase to ensure all
. The statement reconciliation MUST be completed within
charges are accurate
seven days of receipt of your statement.
The purchasing card is not intended to avoid or bypass appropriate purchasing or
payment procedures as outlined in the City of Southlake Purchasing Manual. This
program complements the existing processes available.
The purchasing card is not for personal use.
The purchasing card must be returned to the Program Administrator upon your transfer
to another department or when employment with the City ceases.
GENERAL INFORMATION
Duties and Responsibilities
Program Administrator – (Purchasing Manager)
The Program Administrator is designated to answer questions and assist with issues
with, and administration of, the program. This person will be knowledgeable on all
procedures in the Cardholder User's Guide. The Program Administrator has a direct
relationship with JP Morgan Chase. All purchasing card requests must go through the
Program Administrator.
Departmental Administrator
A Departmental Administrator will be designated to keep documentation for the
purchasing card activities within a division; particularly if the division is in a separate
location than where the Program Administrator will be. Departmental Administrators
are knowledgeable about the program and can help with purchasing card changes
(i.e., credit limits, purchasing card information, etc.). Cardholders should first contact
the departmental administrator, who will then refer questions or potential problems to
the Program Administrator, when necessary.
Cardholder
The person designated by the Department Administrator to utilize the purchasing
card for purchasing small dollar supplies and services is the cardholder. The
cardholder is responsible for following the guidelines in regards to purchases,
selection of vendors, security of card and monthly reconciliation.
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Department Director
The Department Director, or equivalent, is responsible for designating cardholders
and for approving monthly purchasing card statements of cardholders to ensure they
are compliant with City policy. The Department Director will also assist in assigning
cardholder spending limits and regulations.
JP Morgan Chase
The purchasing card program is serviced using a team approach with JP Morgan
Chase Customer Service Center. This center is available 24 hours a day, 7 days a
the cardholder
week to assist with general questions about the purchasing card
account. If a card is lost or stolen, Customer Service should be notified immediately.
1-800-890-0669
The Customer Service number is:
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Purchasing Card Controls
Credit Limits
All purchasing cards have monthly cardholder spending limits. Limits may vary for
each cardholder and will be established by the Program Administrator in conjunction
with the user Department Director.
Each cardholder will be given information on the limits of his/her card upon signing up
for the program. In order to change limits on any card, the Cardholder’s Department
Director should complete the Exception Request Form, and forward it to the Program
Administrator. The Program Administrator will then forward the request to JP Morgan
Chase for processing.* Please allow 2 to 3 days to process any changes*
Transaction Limits
All purchasing cards will have a single transaction limit. This is the amount available
on the purchasing card for a single purchase. A transaction includes the purchase
price, plus freight. Cardholders should not attempt to make a purchase greater than
his/her approved amount. The Program Administrator must also handle changes to
the transaction limit.
Restricted Vendors
The purchasing card program may be restricted for use with certain types of
suppliers and merchants. If a cardholder presents a purchasing card for payment to
these vendors, the authorization request will be declined.
Cardholders who feel a particular vendor should be added or deleted should contact
the Program Administrator.
Maintaining Your Purchasing Card
Always obtain a receipt when using the purchasing card. It is every cardholder's
responsibility to ensure there is a receipt for each purchase. The receipts should be
kept in a receipt envelope. This envelope should be forwarded to the department
administrator at the end of each cycle for retention.
A cardholder who submits his/her monthly report without an attached receipt will be
required to reimburse the City for the entire amount of the missing receipt. Appeals
shall be made to the City Manager’s Office.
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A cardholder who is found to be non-compliant with the competitive purchasing
requirements found in this City of Southlake Purchasing Manual is subject to
suspension of the employee’s purchasing card at the discretion of the City Manager’s
Office.
Cardholder Responsibilities
At the end of each billing cycle, every cardholder will receive a cardholder monthly
statement, which lists purchases made to that account. Upon receipt of this
statement, the cardholder should reconcile the statement with their receipts. Attach
all documentation, note any additional information pertinent to the purchase, and
forward the package to their supervisor for approval.
After reviewing the information sent by each cardholder, the supervisor should
approve the purchases and forward the documentation to the Finance Department.
Finance shall then verify that the cardholder monthly statement is consistent with the
statement memo summary detail received from JP Morgan Chase for the company's
files.
Traveling with the Purchasing Card
The purchasing card is an excellent payment tool for travel and training. The
Purchasing Card may be used to book airfare, lodging at hotels, training registrations
and such expenses directly related to city approved travel for employees. The
Purchasing Card is intended for City purchases only and is not to be used to pay for
travel expenses for spouses even if those expenses are being reimbursed to the City.
If you are traveling with your spouse on city business, only your expenses should be
charged to the Purchasing Card. Expenses for spouses are to be paid in cash or
split and paid for on a personal credit card at the time of purchase. This policy also
applies to other non-city related travel purchases such as movie rentals,
miscellaneous sundries, entertainment, alcoholic beverages, etc. Hotels are very
accommodating to split these charges upon check out.
Sales and Use Tax
The City of Southlake is a tax-exempt entity and does not pay sales tax. The
purchasing card will have our federal identification number printed on the card and
the merchant should be reminded that sales tax should not be included in the
transaction. The card does not automatically alert the merchant of our exempt
status. Cardholders must tell merchants at the time of check out that this is a tax-
exempt purchase and that no tax should be added to the sale. Cardholders should
check the store receipt prior toleaving the store to makesure sales tax was not
included in the total. If tax was added to the sale, then the cardholder should
immediately ask the merchant to credit the amount of the sales tax.
It is the cardholder’s responsibility to see that no sales tax is paid or that credit is
received on any sales tax paid by mistake on all transactions.
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Security of the Purchasing card
The cardholder is responsible for the security of the card. This card should be treated
with the same level of care, as the cardholder would use with his/her own personal
charge cards. Guard the purchasing card account number carefully. It should not be
posted in a work area, or left in a conspicuous place. It should be kept in an
accessible, but secure location.
The only person authorized to use the purchasing card is the cardholder whose name
appears on the card. Purchasing cards are not to be shared by other employees as
individual cards may be issued to any employee as requested by the Department
Director. The card is to be used for business purposes only.
Card Cancellation/Replacement
Upon request of the Program Administrator or Department Director or when
employment with the City ceases, cards must be cut down the center of the magnetic
strip and returned to the program administrator immediately.
Lost or Stolen Cards
If a purchasing card is lost or stolen, immediately contact JP Morgan Chase
1-800-890-0669
Customer Service at .After contacting JP Morgan Chase, notify the
Program Administrator. Prompt action can reduce the city’s liability of fraudulent
activity.
PURCHASINGCARD PROCEDURES
Purchasing cards will be centrally distributed through the Program Administrator. When a
new card is issued, JP Morgan Chase will send it to the Program Administrator for
distribution to the cardholders. Cards should not be released to cardholders until each
cardholder has gone through training, has received all supplies related to the program, and
has signed the cardholder agreement.
The following items should be provided to you, the cardholder, during training:
Cardholder Purchasing Card Agreement:This is an agreement between the
1.
cardholder and the City of Southlake, which affirms that the cardholder has read
and understands the policy and procedures for the purchasing card. The
cardholder, Department Director and the Program Administrator usually sign this
agreement at the end of the training session.
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Cardholder User's GuideThis document outlines the city's policies and
2.
:
procedures in regard to the purchasing card program. It also outlines approved
types of purchases and preferred vendors.
Cardholder SurveyThis document provides a feedback mechanism for the
3.
:
cardholder to inform Finance about how the program is working on a day-to-day
basis, report on vendor success, and give suggestions for improvements.
Purchasing card Transaction LogThe cardholder shall use this form to record
4.
:
purchases and returns during the reconciliation process.
Statement of Disputed Items Form 700: The cardholder shall use this form if
5.
the cardholder is disputing a transaction that appears on the cardholder’s monthly
statement.
Purchasing Card Activation
1-800-890-0669
The cardholder must call to activate the purchasing card before
using it. Upon receipt of the card, the cardholder should sign the back of the
purchasing card and always keep the card in a secure place.
Making the Purchase
Cardholders should promote and encourage positive interactions with suppliers, and
be informed if the City has a list of "preferred suppliers and merchants" that should
be used. Honesty and courtesy are essential ingredients in all aspects of a
buyer/supplier relationship.
Receiving Supplies and Services
A copy of the charge slip, sales receipt, or any other information related to the
purchase must be kept with the transaction log on each transaction. Receipts should
be itemized as much as possible to show what is being purchased. If the receipt
does not give some type of description, the cardholder should write on the receipt
exactly what was purchased. Normally, the merchant will provide an itemized store
receipt, as well as, the credit card transaction receipt, which only shows the merchant
and total sale charged to the credit card.Both receipts should be retained for
submission with the cardholder’s monthly reconciliation.
The original travel receipts should be sent to Accounting attached to the Travel
Expense Form.
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Invoices with no amount due, are the most optimal documentation since they itemize
the purchases. A vendor's entry system usually prints an automatic invoice with the
processed order. Instruct the vendor not to send the invoice to Accounting but
directly to the individual cardholder making the purchase (this will prevent duplicate
payments to vendors). If a purchase is made via mail or telephone, ask the vendor to
include the receipt with the goods when shipping the product.
Purchasing Card Payment
Employees do not pay their own monthly statement. The program does not affect
your credit rating in any way. The purchasing card program carries corporate, not
individual, liability.
Returns, Credits and Disputed Charges
Should a problem arise with a purchased item, service or charges, every attempt
should be made to first resolve the issue directly with the supplier. Review of future
statements is vital to ensure the account is properly credited for returns, credits and
disputed charges. The returned, credited or disputed item should be noted on the
Purchasing Card Transaction Log.
Returns:
Ifa cardholder needs to return an item to a supplier, contact the
supplier and obtain instructions for return. Note that some suppliers may
charge a restocking or handling fee for returns. All returns should be indicated
in the transaction log.
Credits:
Ifthe supplier accepts an item as a return, a credit for this item
should appear on the following month's statement. All credits should be
indicated in the transaction log.
Disputed Charges:
Ifa cardholder finds a discrepancy on a monthly
statement, the cardholder should contact the supplier and attempt to resolve
the problem immediately. If the cardholder and the merchant can resolve the
dispute, a credit should appear on the next billing cycle statement. If the credit
does not appear on the next statement, then the JP Morgan Chase Form 700
must be submitted. JP Morgan Chase will not honor or try to help us dispute
transactions to merchants that are not reported on Form 700 within 45 days of
the dispute and the City is responsible for the charge.
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Purchasing Card Guidelines
All cardholders should follow these guidelines below when using the purchasing card:
1. Determine if the transaction is an acceptable use of the card, and if it is within the
cardholder's spending limit.
2. Identify the supplier, call, fax, or visit the supplier to place your order.
3. If order is by mail, specify cardholder name, City name, department name and shipping
instructions. Also, specify the purchasing card number, expiration date and name as it
appears on the card.
4. Make sure that tax is not included in the purchase as the City of Southlake is a tax-
exempt entity. Should the merchant request a tax exemption certificate, please contact
the Finance Department.
5. Confirm pricing and freight.
6. Request that a hard copy of the pricing and freight be faxed to the cardholder and/or
included in the shipment of supplies.
7. Request that the supplier indicate the cardholder’s name and the words “P-Card" on all
packing and lists and box labels. This will enable the receiving department to facilitate
delivery of supplies.
8. If a cardholder cannot resolve a disputed item directly with the vendor, the cardholder
should complete the Dispute Form 700. JP Morgan Chase will place the charge in a
“State of Dispute" and the account may be given a provisional credit until receipt of
adequate documentation from the vendor. If the documentation appears to be in order,
the transaction will be re-posted to the account and the dispute considered closed. If the
charge is suspected to be fraudulent, the card will be immediately blocked, continue to
have a provisional credit (if given) and an investigation of the charge will continue. A new
card will then be re-issued to the cardholder, if appropriate. If the charge appears
legitimate, the transaction will then post to the new account.
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Examples of Acceptable Purchases/Vendors
A typical cardholder is any employee who is a high volume purchaser. A typical
purchasing card buys:
Promotional Items Airline Tickets
Grocery Items Recreation Program – Supplies & Services
Courier Services Hotel Reservations
Advertising Specialties Car Rental
Florists Memberships
Postage Stamps Medical Supplies
Dues & Subscriptions Safety Supplies
Books Catering
Training Courses and Seminars
Safety Supplies
Any items which are on annual contract (i.e. office supplies, electrical services,
copies/printing, etc.)
An approved list of Purchasing Card Vendors shall be provided by Finance
Examples of Unacceptable Purchases
Personnel Services
Computer Hardware or Software
Capital Items – any single item which cost over $5,000
Medical/Insurance Services
Meals/lodging for spouses, movie rentals, miscellaneous sundries,
entertainment or alcoholic beverages during city-related travel
PERSONAL CHARGES OF ANY DESCRIPTION
At no time may a cardholder other than the Accounts Payable Finance staff pay an invoice
with a Purchasing Card.
If there are any questions about what can be purchased using the purchasing card, please
contact the Finance Department.
Departmental Procurement Card Audits
Finance will conduct monthly compliance monitoring for each cardholder by
evaluating the departmental records. The process will evaluate compliance with the
procedures outlined in the documents provided in this manual. A monthly
Compliance Review will be presented by the Finance Director at a Directors Meeting
addressing the results of the Review.
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COMMONLY ASKED QUESTIONS & ANSWERS
For what types of purchases should I use the purchasing card?
The City of Southlake Finance Department governs how you can use the purchasing card.
The Program Administrator, along with your Department Director will determine the types of
purchases, as well as the maximum dollar amount for which you will be authorized.
In what ways do I benefit from using the purchasing card?
When you use the purchasing card, you enjoy reduced paperwork, direct contact with
suppliers, quick and efficient order processing, faster delivery, and fewer errors.
How does the City benefit from the purchasing card program?
When employees use the purchasing card, the City enjoys greater productivity as a result of
reduced paperwork, savings from consolidated multiple supplier invoices to one statement
from JP Morgan Chase, and greater control over spending.
What should I do if my purchasing card is lost or stolen?
toll-free, 1-800-890-0669
Call JP Morgan Chase Customer Service, immediately, to report
the purchasing card missing and request a replacement.
What do I do if a purchase is denied?
Your purchase may have exceeded a spending or transaction limit, the company excluded
that type of supplier or merchant or the supplier or merchant is not equipped to accept
MasterCard as payment. Contact your Program Administrator to determine the reason.
What should I do if I want to change the “per month” or “per transaction limits?”
Contact your Department Director, who will contact the Program Administrator.
What should I do if a supplier does not accept the purchasing card?
Contact the Program Administrator, who will then contact JP Morgan Chase. Please provide
the supplier's name, address, and phone number.
Will use of the purchasing card affect my credit report?
No. The Purchasing card is a corporate liability card, and carries no personal liability for
cardholders that use the purchasing card according to city policy.
Whom should I contact to resolve an error or dispute concerning my account?
You should first contact the supplier. Most exceptions or issues can be resolved between you
and the supplier. If you cannot resolve an issue with the supplier, contact your Program
Administrator for a Dispute Form (Form 700), complete and fax to JP Morgan Chase, per the
instructions.
When I use my purchasing card to make a purchase, how is the transaction authorized?
When you use the purchasing card to make a purchase, the supplier verifies the account
number with JP Morgan Chase. Your spending limits are checked automatically against City
policy.
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CITY OF SOUTHLAKE
CARDHOLDER CREDIT CARD AGREEMENT
The City of Southlake, Texas,
is pleased to present you with this credit card for official City
use. It represents trust in you and your empowerment as a responsible agent for the City to
safeguard and protect City assets.
The undersigned hereby acknowledges receipt of a City of Southlake, Texas MasterCard
credit card, No_________________________________. As an authorized cardholder, the
undersigned agrees to comply with the terms and conditions of this Agreement, the credit
card procedures, and any policies or rules governing credit card usage adopted by the City
from time to time.
The undersigned acknowledges receipt of a copy of this Agreement and confirms that he or
she has read and understands the terms and conditions set forth herein. The undersigned
acknowledges that the City of Soutlake, Texas is liable to JP Morgan Chase and/or
MasterCard for all City of Southlake charges made pursuant to this credit card. In the event
this credit card is lost or stolen, the undersigned shall be liable for any deductible or other
expenses or costs charged by JP Morgan Chase and/or MasterCard to the City of
Southlake, Texas, for the unauthorized use of the lost credit card.
The undersigned further agrees that this credit card may be used only for City-approved
purchases and that the credit card may not be used for personal use or purchases. The
undersigned agrees and acknowledges that the City of Southlake, Texas may audit the
undersigned's use of this credit card and will report any unauthorized use or charges to the
employee. The undersigned shall be liable for all unauthorized charges made through the
use of the credit card.
The undersigned understands that the unauthorized, improper, or misuse of this credit card
may result in disciplinary action up to and including termination of employment. The
undersigned further understands that any unauthorized use, improper or misuse, of the
credit card may subject the undersigned to criminal prosecution and/or to civil suit for the
collection of any sums due and owing to JP Morgan Chase and/or MasterCard/Visa. The
undersigned hereby authorizes the City of Southlake, Texas to implement a pay-roll
deduction and to deduct from my salary and other compensation due and owing to me an
amount equal to the total of any unauthorized charges to the City credit card account. The
undersigned further agrees that the City of Southlake, Texas may collect any amounts owed
by me as a result of unauthorized use, improper or misuse, of the credit card even if I am no
longer an employee of the City.
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Cardholder Credit Card Agreement
Page 2
The undersigned further understands that the City of Southlake, Texas may terminate my
right to use the credit card at any time for any reason. The undersigned agrees to
immediately return the credit card to his/her supervisor immediately upon request or upon
termination of employment.
CARDHOLDER:
Signature: _________________________________
Printed Name: _____________________________
Date: ____________________________________
PROGRAM ADMINISTRATOR:
Signature: ________________________________
Printed Name: Sharon Guess, DDFA
Date: ___________________________________
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NOTES
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