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Preference for Local Purchase of Goods and ServicesCity Manager's Office City Hall 50 West 13th Street Dubuque, Iowa 52001-4864 (563) 589-4110 office (563) 589-4149 fax (563) 690-6678 TDD ctymgr@cityofdubuque.org April 30, 2008 Mr. Jim Mulgrew Mulgrew Oil Company 85 Terminal Street P.O. Box 894 Dubuque, IA 52004-0894 Dear Jim, THE CITY OF j.. ..,e ..., ._.. The City Council referred to me your letter received by the City on March 11, 2008, requesting that your business, located at Tamarack Business Park outside the City limits, be exempt from the City's preference for local purchase of goods and services. You will see that City Attorney Barry Lindahl advises that State law requires that consideration must be given to purchasing the goods or services from a locally owned business "located within the city." Barry goes on to say that, "it would not be permissible to expand the policy to include giving the preference to businesses located outside the City." As you can see from Public Works Director Don Vogt's attached March 26, 2008 memorandum, a wholesale change of the City's policy would disadvantage many businesses located within the City limits that deal in other products as they seek City business. I would like to mention to you that there is a very real possibility that Tamarack Park could be part of an annexation to the City of Dubuque within the next few years. Should that occur, Mulgrew Oil Company would then begin receiving the local preference. This item will be on the City Council meeting consent agenda on Monday, May 5, 2008, at 6:30 p.m. at the Historic Federal Building. Service People Integrity Responsibility Innovation Teamwork Mr. Jim Mulgrew April 30, 2008 Page 2 If you have any questions, please call me at 589-4110. Sincerely, ~~`, /~" v' Michael C. Van Milligen City Manager MCVM:jh /~/ MULGREW OIL CO. ~~~~~~ ~. ~~~ c~ C7`~ ~- ~; ~ ~ v ~~~ C ~ _ ~ ~_ ~~ Ch ~ ` ~° ~! Dear Dubuque City Council ~ C o Q City Clerk cD w 50 W. 13~' St. `~ Dubuque, Iowa 52001 Dear Dubuque City Council, I am writing you with a request that I believe will strongly benefit both the City of Dubuque and my company, Mulgrew Oil Co. In 2006 Mulgrew Oil Co moved its operations from 85 Terminal St. our home for 106 years to Tamarack Business Park due to zoning restrictions on Terminal St. After our move we found out that in order to do business with the city we had to be 4% lower than any other bidders in order to get any bids from the city. The fact of the matter is that when we moved we spent a great deal of money setting our new facility up to sell Bio Fuels which is exactly what the city needs. Even with the 4% rule in effect we have been getting a great deal of the cities bids. We believe strongly that we are a Dubuque business which is evidenced by our involvement in the City and its organizations.. Simply put we can save the City of Dubuque ad its tax payer's money. We request that you eliminate the 4% clause for our company. Sincerely, f J' Mulgrew 85 Terminal Street - P.O. Box 894 -Dubuque, IA 52004-0894 -Phone 563 583-7386 THE CITY OF DUB E MEMORANDUM Masterpiece on the ' sissippi BARRY LIND CITY ATTOR EY To: Michael C. Van Milligen City Manager DATE: March 27, 2008 RE: Preference for Local Purchases of Goods and Services Iowa Code § 23A.3 provides: § 23A.3 Local purchases. A city, county, area education agency, or school district shall adopt a policy for purchasing goods or services from private enterprise which requires consideration of purchasing these goods or services from a locally owned business located within the city, county, area education agency, or school district which offers these goods or services if the cost and other considerations are relatively equal. Nothing in this section shall be construed to prevent or prohibit the giving of a preference to businesses owned or operated by minorities or females as may be provided in any other provision of law. The essential elements of § 23A.3 are as follows: • The city must adopt a policy; • The policy applies to the purchase of goods and services; • The policy must provide that if the cost and other considerations are "relatively equal"; • "Consideration" must be given to purchasing the goods or services from "a locally owned business located within the city." City of Dubuque AP 3.10 is the City's policy as required by Iowa Code § 23A.3: As required by Chapter 23A, Section 3, Code of Iowa, it shall be City policy to consider purchasing goods or services from locally owned businesses located within the city of Dubuque when the cost and other considerations are relatively equal. Vendors located within the corporate OFFICE OF THE CITY ATTORNEY DUBUQUE, IOWA SUITE 330, HARBOR VIEW PLACE, 3OO MAIN STREET DUBUQUE, IA 52001-6944 TELEPHONE (563) 583-4113 /FAX (563) 583-1040 / EMAIL balesq@cityofdubuque.org limits of the city of Dubuque may be given a ten percent (10%) preference on purchases up to $500.00 and a five percent (5%) preference on purchases of $500.00 or more. Purchases which are made through the formal bid process (i.e., construction projects) must be awarded to the low bid per Code of Iowa requirements. Under AP 3.10, a local vendor's bid is reduced by the 5% or 10% "preference" to determine whether the vendor's price is "relatively equal" to other bids. If, after applying the 5% or 10% preference, the local vendor's bid is less than all other bids, the purchase will be awarded to the local vendor, assuming other considerations, such as the quality of the goods or services, warranties, or the availability of service for equipment, are also relatively equal. I have not found any case law interpreting Iowa Code § 23A.3, however, in my opinion, because the section requires that the policy provide for consideration for purchasing the goods or services from "a locally owned business located within the city," it would not be permissible to expand the policy to include giving the preference to businesses located outside the city. We have also interpreted the phrase "a locally owned business located within the city" quite literally to require that the principle office of the business be located within the corporate limits. If you have any questions about this opinion, I would be happy to discuss it with you further. cc: Ken TeKippe, Finance Director Don Vogt, Public Works Director F:\USERS\tsteckle\Lindahl\Memos\MVM_PreferenceForLocalPu rchases_032708.doc Dubuque THE CTTY OF Du L T ;II-Ame~icac i ~+ I I.~ Masterpiece on the Mississippi zoos TO: Michael C. Van Milligen, City Manager FROM: Don Vogt, Public Works Director SUBJECT: Local Cost Preference Purchasingl~ `J " ~~ DATE: March 26, 2008 Public Works Department 925 Kerper Boulevard Dubuque, Iowa 52001-2405 Office (563) 589-4250 FAX (563) 589-4252 T'TY (563) 589-4193 publicworks@cityofdubuque.org www.cityofdubuque.org INTRODUCTION The purpose of this memorandum is to provide information regarding the equipment, materials, supplies, and services purchased by the Public Works Department, where preference is given to local providers - as prescribed by A.P. 3.10 and Iowa Code. BACKGROUND At a meeting yesterday, you asked that I report back to you regarding purchases by the Public Works Department affected by the local preference requirement. DISCUSSION The following are purchased by the Public Works Department with consideration given to providers located within Dubuque's corporate limits: concrete, office supplies, janitorial supplies, automobiles, trucks, weed-cutting equipment, lawn mowers, automotive maintenance and repair parts, vehicle fuel, tires, motor oil, hydraulic fluid, antifreeze, pumps, air compressors, hand tools, pressure washers, snow blowers, recycling bins and carts, uniforms, outsourced vehicle repairs, HVAC system maintenance and repairs, rug and towel service, window cleaning service, lawn fertilizing and weed control service, animal-trapping service, sod and lawn repair service, tire repair service, engineering services, and fence repairs. Items such as road deicer salt, stone, sand, heavy equipment, asphalt, and outsourced heavy equipment repairs are not impacted by the local preference requirement due to none of the bidders being located in the city (such as heavy equipment and deicer salt) or there being only one viable bidder in the entire area (stone, sand, asphalt). ACTION STEP This is for your information, as directed. Service People Integrity Responsibility Innovation Teamwork CITY OF Dl1BlIQVE ADMINISTRATIVE POLICY POLICY NUMBER: 3.10 Sli6]ECT: PURCHASING POLICY APPROVED BY: CITY MANAGER EFFECTIVE DATE: ]LILY 1, 2000 (Revised) PURPOSE The purpose of this Administrative Policy (AP) is to state the City policy on purchases of goods and services and to provide standard procedures in the use of purchase orders for the purchase of goods and services for all departments of the City. SCOPE This AP establishes a policy for purchasing goods or services from and describes procedures for the preparation, processing, authorization and approval of all purchase orders by City employees. As required by Chapter 23A. Section 3. Code of Iowa, it shall be City policy to consider purchasing goods or services from locally owned businesses located within the city of Dubuque when the cost and other considerations are relatively equal. Vendors located within the corporate limits of the city of Dubuque may be given a ten percent (10~) preference on purchases up to $500.00 and a five percent (5~) preference on purchases of $500.00 or more. Purchases which are made through the formal bid process (i.e., construction projects) must be awarded to the low bid per Code of Iowa requirements. POLICY RESPONSIBILITY. The Finance Director is responsible for the establishment and administration of an orderly process of purchasing materials and services for the City. Purchases for which the City will be expected to make payment or reimbursement shall be accomplished through a purchase order system and in accordance with the provisions of this AP. Department/division managers are responsible for the dissemination and monitoring of the requirements of this AP far all personnel under their jurisdiction. POLICY NO: 3.10 PURCHASING POLICY PAGE20F8 PROCEDURE. The purchase order is a contract between the City and the vendor wherein the City agrees to purchase and the vendor agrees to furnish materials or services as described in the purchase order together with, when necessary, a separate document which describes in detail the terms and conditions of the transaction. Such additional documentation shall be provided to the Finance Department or referenced in the body of the purchase order. The following procedure shall be followed for the purchase of all goods and services, including bid contracts and lease or lease purchase agreements for all departments of the City. 1. Com lp eting the Purchase Order The purchase order, a copy of which the person desiring to order goods is attached, is to be completed by or a service: (a) List the vendor and complete address in the section labeled "To". (b) Complete the sections for "Date", "Bill and Ship Prepaid To" and "Ordered By". (c) Complete the body of the purchase order by listing the quantity and unit along with a complete description of the item to be ordered. Fill in the unit price and amount if known. If the dollar amount is unknown, a reasonable estimate must be inserted. Designate an estimated figure by following the dollar amount with the letter "E". This should be put 9~7].X on the RECEIVING and subsequent copies. (Example: X100.00 E) (d) The coding must be complete and valid, including Activity and Object. Use your department/division Monthly Activity Reports to determine the code: if not in the above report, request help from the Purchasing Coordinator. Also insert the "Order Amount". If the order amount is an estimate, designate by typing the word "Estimate" above order amount. You must also insert the "Vendor Number." Once the purchase order is completed, it is to be forwarded to the Purchasing Coordinator for review and processing. Purchase Orders should not be held by a department until the product/service is completed or until an invoice is received. POLICY NO: 3.10 PURCHASING POLICY PAGE3OF8 2 3 4 Informal Bids Where purchases are made under an informal bid process, the name of all vendors submitting quotations and the bid amounts shall be listed in the lower left of the description area of the RECEIVING (pink) copy of the purchase order. In the event the lowest bid was not honored, an explanation shall be attached to the purchase order before it will be accepted for processing by the Finance Department. Department/Division Authorization Purchase orders for $1,000 or more shall be personally signed by the department/division manager. All other purchase orders may be signed by a designated representative. A list of such authorized persons shall be kept on file with the Finance Director. Purchase orders shall be originally signed. Purchase orders signed by a signature stamp or by an unauthorized person shall be returned. (a) Purchase orders under $1.000 and having sufficient appropriation will be processed immediately by the Finance Department. (b) Purchase orders over $1,000 will be processed after approval by the City Manager or his designee. (c) Purchase orders that will cause an overexpenditure of a depart- ment's total appropriation and purchase orders covering non- appropriated items will be forwarded to the City Manager's Office for consideration. Documentation to explain or justify such purchase should accompany the purchase order to allow for timely processing. Appropriations will be considered at the department level by fund rather than at the activity level. Distribution of Purchase Orders The purchase order is a preprinted form in snap-out sets of five copies and after processing and approval, is distributed as follows: Vendor's Copy (white) Mailed to the vendor. Encumbrance Copy (green) Serves as the source data input POLICY NO: 3.10 PURCHASING POLICY PAGE4OF8 document to reserve the appropriation in the City financial system. Receiving Copy (pink) Purchasing Copy (yellow) Department Copy (gold) 5 6 Blanket Purcha e Orders Returned to the ordering department/ division until the goods or services invoice is received. It is then signed by the authorized individual and sent to the Finance Department where it will be paid. Filed numerically in the Purchasing Office. Returned to the originating department/division for their use. Blanket purchase orders may be used for frequently used vendors. Such orders may be requisitioned on an annual basis and provides the employee the authority to make purchases under $250. Individuals purchasing items under blanket order must obtain and sign an original copy of the invoice from the vendor. After being coded and approved by the respective department/division supervisor, it will serve as the invoice for payment to the vendor. Direct Paym nt Direct Payment forms may be used when making payments to a vendor using the following guidelines: (a) If your department is purchasing an item or service from a seldom- used for $250 or less, you will no longer be required to issue a purchase order. 1. If placing an order by phone with a vendor, the City employee will be required to give a department name and phone number. POLICY NO: 3.10 PURCHASING POLICY PAGE 5 OF 8 Z. If picking up an order, the employee must sign the invoice and give the vendor his/her name and the name of the department he/she is purchasing the item for. The invoice will then be submitted to the department for payment processing. (b) When a payment to a vendor is over $250, a direct payment is be used in the following instances: 1. Monthly utility bill payments (gas. electric, water, phone) regardless of cost. 2. Payments of contracted monthly or quarterly services (janitorial services, office equipment maintenance, leases and rentals, etc.). A signed contract must be negotiated kept on file in the department 3. Travel and mileage reimbursements 4. Medical payments (glasses, prescriptions, health exams, safety glasses, etc.). • Individuals purchasing goods or services under the direct payment process must obtain and sign the original copy of the invoice. The invoice is then submitted to the appropriate person within the department for direct payment processing. • Dividing an invoice so as not to exceed the established $250 limit is expressly prohibited. • A Vendor Set-Up Sheet must be completed when purchasing from a vendor for the first time. A master copy of the Direct Payment form and pre-named Direct Payment forms for frequently used vendors can be found on the City's network under F:Users/Publicin/directpay and may be copied to the user's directory. A master copy is also available by contacting the Purchasing Coordinator in the Finance Department. 7. Minor Purch se from P tty Gash Minor purchases (under $25.00) may be made without a purchase order providing that approval by the department manager or his/her designated representative(s) is received. A properly coded and signed POLICY NO: 3.10 PURCHASING POLICY PAGE 6 OF 8 invoice/receipt or some descriptive evidence of the item and amount of purchase is necessary and must be presented to the City Treasurer for payment out of petty cash. Petty cash shall not be used to cash personal checks or to provide advances for personal expenditures. Care should be taken that no sales tax is applied to such transactions, as local governments are exempt from payment by state statute. Petty cash accounts may be established at the department/division level with the prior approval of the Finance Director. Expenditures from petty cash are limited to minor miscellaneous items costing less than $25.00 for which a purchase order may not be warranted. Examples of such expenditures include postage and parking meters. Cost of meals is not to be charged to petty cash unless previously authorized by the Finance Director. Petty cash accounts shall be balanced daily and are subject to audit without notice by the Finance Director or his designated representative. 8. Emergency Purchases (a) During working hours, obtain the necessary goods or services as required. Forward a completed purchase order to the Purchasing Coordinator for processing. Emergency purchase orders which exceed the budget appropriation are subject to the approval procedures set out in Section 3. (b) After working hours, obtain the necessary item or service. On the next working day, deliver a completed order to the Purchasing Coordinator so that a "Confirmation Order" may be forwarded to the vendor. The frequent occurrence of emergency purchases is to be avoided and authority to purchase in this manner may be withdrawn if such purchases indicate a lack of foresight. 9 . Ad j.~ m nt Purchase order adjustments shall be provided to the Finance Department on a PURCHASE ORDER ADJUSTMENT AND CANCELLATIONS form. All forms, regardless of dollar value, require department/division manager POLICY NO: 3.10 PURCHASING POLICY PAGE 7 OF 8 approval. Purchase order adjustments greater than $1,000 will be forwarded to the City Manager's Office for approval. 10 11 12 13 Cancellations Whenever a service or material is canceled, a PURCHASE ORDER ADJUSTMENT AND CANCELLATION form shall be completed and forwarded to the Finance Department with the RECEIVING copy of the canceled purchase order attached so that the encumbrance against the purchase order may be released. F w- It is the responsibility of the ordering departmentldivision to follow-up on materials and services if such items are not received in a reasonable time. Review of Purchase Orders Outstanding purchase orders shall be reviewed against month-end reports and discrepancies immediately reported to the Finance Director. At the end of each fiscal year all outstanding purchase orders will be reviewed by the Budget Officer to ascertain whether such orders shall be carried over to the next fiscal year or canceled. Payment of Invoices All invoices will be received and processed by the ordering department/division after verifying the data on the receiving copy of the purchase order with that on the invoice. In the case of blanket orders, the invoice copy received by the person picking up the item should be signed by the person making the pickup, and by a department/division supervisor, coded, and a direct pay form completed. It is then forwarded to the Finance Department for payment. The invoices shall contain any notations that will assist the Finance Department in processing invoices for payment. Receiving copies shall be promptly signed, dated and sent to the Finance Department so that the vendors may be promptly paid and discounts taken. POLICY NO: 3.10 Pl1RCHASING POLICY PAGE 8 OF 8 When making a partial payment, a photocopy of the RECEIVING copy of the purchase order must be sent to the Finance Department with the invoice. This photocopy must have an original signature, and date. Forward the photocopy to the Finance Department for partial payment. The pink RECEIVING copy will be sent to the Finance Department for final payment. 14. Office SuRplies Stock Room The Finance Department maintains a central office supply stock room to facilitate the purchases of universally used office supplies. This function: (a) Permits the purchase of small commonly used items in quantity at reduced prices; (b) Provides a convenient source of small items; (c) Greatly reduces the number of purchase transactions; (d) Standardizes the quality of small items purchased; and (e) Acts as a control against overexpending for unneeded quantity. An updated standard form for obtaining items from the central supply is sent to each departmentldivision at the beginning of each fiscal year. The Finance Department will charge the appropriate departure tal activity. A ~~ /1/~ Michael C. Van Milligen