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City staff ask for per-unit threshold to expedite expenditures

(Sept. 6, 2013) Following a suggestion by the head of its Public Works Department, the city is considering streamlining its purchasing procedures to eliminate some, but not all, of the tedious bid openings that fill many of City Council’s work sessions.

Public Works Director Hal Adkins suggested last week that the town apply its value rubric for purchases not to the total price of the purchase, but to the unit price of the item in the case of large-quantity orders.

“I feel like we could come up with a wording, that you would find it in your means to account for, that would streamline the policy and make it more effective,” Adkins said.

Currently, the city’s department heads may authorize a purchase of up to $500 without getting a price quote. Expenditures over that, and up to $2,500, require staff to find and record price quotes via telephone. Over $2,500, but under $10,000, staff are required to seek and record written price quotes.

For purchases in excess of $10,000, bid documents must be approved by the City Council, issued to vendors and the sealed bid envelopes opened and read into the record before the elected body. For purchases of over $25,000, the council must expressly recognize and award the bid to the apparent low bidder.

This is a worthwhile process for single large items, which the council may want to weigh in on, Adkins said. But in the case of purchases that involve many low-value materials, whose price has little variation between bidders, the process is tedious.

During last week’s session, for example, Adkins sought the council’s approval to buy 600 cast-iron storm drain grates. Although the cost each was slightly less than $400, he needed approval given the total cost of roughly $23,000.

“For these types of items, there’s not a lot of competitive pricing out there,” Finance Administrator Martha Bennett said. “We have to go with a nearby supplier, because of the weight of materials like this. They make them in Ohio and Alabama, too, but the shipping costs is prohibitively high.”

“I guess the devil’s in the details,” Councilman Dennis Dare said. “You could bid a $1 bag of sand and then spend millions covering the whole beach without the council knowing. Instead of trying to walk the line…maybe we just ought to raise the current levels. Maybe they should be higher numbers.”

However, the purchase would still be in the city’s budget, which the council expressly approves every year, Adkins said. The only difference between lower- and higher-level items is how the bids are garnered, and staff are still bound to accountable pricing on anything over $500.

“If you tell the vendor up front the quantity, they’re going to give you a competitive price whether it’s by phone, mail or what have you,” Adkins said.

The only effect of the sealed bid process is to bring the price quotes before the council, so the elected body can examine what deals the city is being offered on major item. This may be practical for high-profile expenditures, but the ability of the council to pass judgment on the economy of storm drain grates, for instance, is likely less so.

“I still feel we can do this and present a competitive rate,” Adkins said. “Right now the procedural manual ties my hands from doing that.”

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