HomeMy WebLinkAboutIR 7178 INFORMAL REPORT TO CITY COLIWIL -MEMBERS No. 7178
5op" To the Mayor and Members of the City Council March 10 , 1987
Subject: PROPOSED CHANGES TO PURCHASING POLICY
The amendment of the City Charter approved in November, 1983 changed the
requirements for competitive bidding on City contracts and approval of
contracts by the City Council. This change requires the City Council, by
ordinance, to establish rules by which a contract may be signed by, the City
Manager without Council approval.
Subsequent to the Charter amendment, on M&C G-5872 (1/3/84), the Council
chose to reflect the then existing state law and authorized the City
Manager to sign any contract not exceeding $5,000 without Council approval
when let to the lowest responsive bidder, quality considered. In the last
session of the Legislature the limit allowed by state law was increased
from $5,000 to $10,000. Approval to increase the authorization given to
the City Manager to the $10,000 level has been delayed until the
recommendations of two different reviews of the City's purchasing policies
and procedures could be more fully analyzed.
During 1986, both a review by an outside purchasing consultant and an
internal audit were conducted with the objective of improving the
efficiency and effectiveness of the City's purchasing function. The
findings of the review and the audit have been evaluated and monitored by
the City's new Purchasing Manager. Additionally, the audit findings and
the Purchasing Manager's response to those findings have been discussed
with the City Council Audit Committee.-
Among other findings, these two reviews agreed that large dollar amounts
are being spent to control relatively small expenditures resulting in an
on-going backlog in the purchasing process and a hindrance to departments`
accomplishing their assigned duties.
i,educing, by ordinance, the dollar level for contracts which must go before
the City Council along with two other basic changes to the City's
purchasing policy should have a positive impact on purchasing process.
These changes are to increase the level at which written bids are required
from $2,500 to $5,000 and to increase the level of purchasing aul'-hority
delegated to departments from $50 to $250 as outlined on the attachment to
this informal report. It is the staff's position that these enchancements
coupled with an on-going internal audit program can be made to the
purchasing process without lessening the City's internal control standards.
In addition to the input previously received from the Audit Committee, the
staff welcomes comments from the rest of the Council prior to these
recommendations .being placed before the Council for action on the agenda
for 3/17/87.
6kuglas HarmanV
i"
City Manager
ISSUED BY T E CITY MANAGER FORT WORTH, TEXAS
PROPOSED POLICY CHANGES
PURCHASING DIVISION
CURRENT PROCEDURES
• <$50.00 - CONTROL NUMBER ISSUED
• >$50.00 & <$2.5 - VERBAL BIDS
• >2.5K - WRITTEN BIDS
• >$5K - WRITTEN BIDS ADV. ,M&C
EFFECTS OF CURRENT PROCEDURES
WRITTEN BIDS :
1000 WRITTEN BIDS PROCESSED ANNUALLY
4 MANHOURS USED PER EACH WRITTEN BID
(1000 BIDS`f 4 HRS/BID) / 1500 HRS AVAILABLE = 3 BUYERS
VERBAL BIDS :
13,324 VERBAL BIDS PROCESSED ANNUALLY
3/4 MANHOURS USED PER EACH VERBAL BID A*j
(13,324 ^.75 HRS) / 1500 HRS AVAIABLE = 7 BUYERS
10 BUYERS NEEDED TO PROCESS
8 BUYERS CURRENTLY ON STAFF
PROPOSED ?PROCEDURES
• <$250.00 - LOCAL PURCHASE ORDER
• >$250.00 & <$5K - VERBAL BIDS
• 5K & <10K - WRITTEN BIDS, ADV. IF NECESSARY
• $10K & ABOVE - WRITTEN, ADV. , M&C
EFFECTS OF PROPOSED PROCEDURES
750 WRITTEN BIDS REQUIRING COUNCIL APPROVAL
(750 * 4 HRS/BID) /1500 HRS AVAILABLE = 2 BUYERS
11,500 VERBAL BIDS PROCESSED ANNUALLY ARE OVER $250.00
(11,500 '^ .75 HRS/BID) /1500 HRS AVAIL = 6 BUYERS „%
EFFECTS OF "STATUS QUO"
830 REQUISITIONS CURRENTLY SHOW NO ACTIVITY
SOME OF THESE DATE BACK TO NOVEMBER.
AVERAGE DAYS TO PROCESS A WRITTEN BID FROM RECEIPT OF REQUISTION - P.O. PRINT = 68.4
DAYS, OUR GOAL IS 40 DAYS.
AVERAGE DAYS TO PROCESS A VERBAL BID FROM RECEIPT OF REQUISITION - P.O. PRINT = 18
DAYS, OUR GOAL IS 10 DAYS.