1994-074-Adopting Town Purchasing Manual Pursuant To Town Code 2.50.145RESOLUTION 1994 - 74
RESOLUTION ADOPTING TOWN PURCHASING MANUAL
PURSUANT TO TOWN CODE § 2.50.145
WHEREAS:
A. Town Code § 2.50.145 requires the preparation and adoption of a Town
Purchasing Manual to establish and guide the procedures used in purchasing services and
materials for the Town.
B. Exhibit A hereto provides an orderly and efficient process to purchase services
and materials that is both consistent with the Town Code and public policies in
demonstrating prudent and honest use of the public's monies.
RESOLVED:
I. Exhibit A is hereby adopted as the Town Purchasing Manual effective
immediately.
2. The Town Manager is directed to implement the provisions of the Town
Purchasing Manual.
3. The Town Clerk is directed to make a copy of the Town Purchasing Manual
available for public review in the Town Clerk's Office.
4. All previous editions of the Town Purchasing Manual are hereby repealed.
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town
of Los Gatos, California, held on the 6th day of June, 1994 by the following vote.
COUNCIL MEMBERS:
AYES: Steven Blanton, Linda Lubeck, Patrick O'Laughlin
Mayor Randy Attaway
NAYS: None
ABSENT: None
ABSTAIN: Joanne Benjamin
SIGNED:
MAYOR HE TOWN OF L \ GATOS
LOS GA CALIFORNIA
ATTEST: /
r—
CLERK OF THE TOWN F LOS GATOS
LOS GATOS, CALIFORNIA
TOWN OF LOS GATOS
PURCHASING MANUAL
June 6, 1994
Researched and prepared by:
VIRGINIA SCHWANER
Account Technician
TABLE OF CONTENT8
POLICY . . . . .
. . . . . . . . . . . . . . . . . . . . . . .
1
AUTHORITY OF THE PURCHASING AGENT
. . . . . . . . . . . . . . .
1
CONTRACTS . . . .
. . . . . . . . . . . . . . . . . . . . . . .
3
WHEN PURCHASE ORDERS ARE REQUIRED .
. . . . . . . . . . . . . .
4
WHEN BIDS /QUOTATIONS ARE REQUIRED .
. . . . . . . . . . . . . .
4
PURCHASING LIMITATIONS - BID /QUOTATION REQUIREMENTS -MOST CAPITAL
IMPROVEMENTS . . .
. . . . . . . . . . . . . . . . . . . .
5
PURCHASING LIMITATIONS - BID /QUOTATION REQUIREMENTS -ALL OTHERS
6
WHEN BIDDING IS NOT REQUIRED .
. . . . . . . . . . . . . . . .
7
CONSULTANT USE POLICY . .
. . . . . . . . . . . . . . . . . . .
8
REQUISITIONS . . .
. . . . . . . . . . . . . . . . . . . . . .
13
PURCHASE ORDERS . . .
. . . . . . . . . . . . . . . . . . . . .
16
PAYMENT PROCEDURES .
. . . . . . . . . . . . . . . . . . . . .
17
PROJECTS . . .
. . . . . . . . . . . . . . . . . . . . . . . .
18
PAYMENT REQUEST . . . .
. . . . . . . . . . . . . . . . . . . .
19
PETTY CASH . .
. . . . . . . . . . . . . . . . . . . . . . . .
19
TOWN CREDIT CARD POLICY
. . . . . . . . . . . . . . . . . . . .
19
CAPITAL OUTLAY ITEMS
. . . . . . . . . . . . . . . . . . .
21
DISPOSAL PROCEDURE
. . . . . . . . . . . . . . . . . . . . . .
22
ADVANCES OF FUNDS . .
. . . . . . . . . . . . . . . . . . .
23
CLAIM FOR REIMBURSEMENT
. . . . . . . . . . . . . . . . . . . .
23
MILEAGE CLAIM REIMBURSEMENT . . . . . . . . . . . . . . . . . .
23
EDUCATION /TUITION REIMBURSEMENT . . . . . . . . . . . . . . . .
23
CONTROL OF TOOLS AND EQUIPMENT . . . . . . . . . . . . . . . .
24
DEFINITIONS .
. . . . . . . . . . . . . . . . . . . . . . . . .
25
EXHIBITS . . .
. . . . . . . . . . . . . . . . . . . . . . . .
27
POLICY
An effective purchasing program cannot be maintained unless ALL
Personnel involved make it a team effort. The purchasing department
must function as an essential tool of management and for the benefit
of each department.
Town Code section 52.50.115 establishes the duties of Purchasing
Agent to be performed by the Town Manager, and as such the Town
Manager has the authority to designate a Town employee to act as
purchasing agent. The term Purchasing Agent may mean the Town Manager
or the appointed representative
The policy of the Purchasing Division of the Town of Los Gatos is as
follows:
1. To ensure accurate accounting of all expenditures.
2. To encourage competition among vendors for Town business.
3. To treat all sales representatives in a courteous and
impartial manner.
4. To cooperate with every Town Department in obtaining
supplies required within a timely manner.
5. To facilitate the prompt payment of invoices to secure
friendly relations with vendors and to take advantage of
all discounts possible.
6. To use local merchants whenever possible, quality and price
being equal.
7. To purchase all Town supplies from the best available
source, of the best quality and at the best price
available.
8. To dispose of all surplus or obsolete material at the best
possible price.
AUTHORITY OF THE PURCHASING AGENT
No officer or employee except the Purchasing Agent may negotiate any
purchase or contract for the Town, for the acquisition of supplies,
equipment or services, unless authorized to do so under the
instructions of this Manual. The Purchasing Agent requires
submission of Requisitions for the acquisition of all supplies,
equipment and services for which a Purchase Order is used.
The Purchasing Agent may consult with Department Heads and establish
standard specifications for supplies and equipment, in order to
encourage wider bidding by vendors. Items used by more than one
department may be standardized to reduce the variety of distinct
3
items purchased, if this can be done without hampering departmental
operations.
The Purchasing Agent handles all contacts with sales representatives
unless authorization is given for contacts with individual
departments. Departmental personnel are to discourage sales
representative contact unless authorized by Purchasing to make such
contacts.
The disposition of all surplus and unneeded equipment and supplies is
handled by the Purchasing Agent, unless a department is specifically
authorized to make such disposal. Arrangements for transfer of
equipment and supplies between departments is made by the Purchasing
Agent when this is desirable.
All correspondence with suppliers shall be conducted by the
Purchasing Department except on subjects requiring technical details
which must necessarily be supplied by other departments, in which
case letters may be written directly to suppliers. Copies should be
forwarded immediately to the Purchasing Department. Exceptions are
at the discretion of the Finance Director.
The Purchasing Agent shall have authority to require a chemical and
physical test of samples submitted with bids and samples of
deliveries which are necessary to determine quality and conformation
to specifications.
2
CONTRACTS
Contracts and Purchase Orders have different purposes. A purchase
order comes from the Town showing that the Town process has
authorized the purchase; it may or may not be honored by a vendor.
In order for the Town to compel a vendor to deliver supplies or
equipment that cost more than $500, there must be a written agreement
between the Town and the vendor. In many instances, the purchase
order is issued because of a phone conversation with the vendor, and
therefore, the purchase order does not contain any agreement by the
vendor to the terms of the purchase order. In addition, purchase
orders are usually very brief and use shorthand, so that important
items such as delivery dates or warranties are not entered.
There are 2 different ways to ensure that there is a binding and
complete agreement. The first is to complete the purchase order in
full, including relevant dates and agreements, and then to attach the
offer on the vendor's stationery to the Department copy of the
purchase order; this generally constitutes a written agreement under
State law. The second is to use a short form contract (see
N: \MASTER \CONTRACT \) that is signed by both the Town and the vendor;
it is recommended this form be used if there are a number of
deliveries over time or the vendor will be spending time on Town
property so that insurance is necessary to protect the Town.
After the contract has been prepared by the department responsible,
all contracts shall be given to the Office of the Town Clerk for
tracking purposes. All contracts originate and terminate in the
Clerk's Office.
Once an acceptable contract has been achieved, the Department Head
shall obtain the necessary approvals as follows:
1. Contracts providing environmental services paid for by
development processing project applicants, obtain approval
only from the Town Manager.
2. Contracts providing services authorized in the Town Budget
of the Capital Improvement Projects Budget obtain approval
only from the Town Manager.
3. All other contracts not exceeding $4000 or $15,000, which
ever is applicable, obtain approval only from the Town
Manager.
4. All other contracts exceeding $25,000.00 obtain approval of
the Town Council.
"SIGNATURE ON CONTRACTS"
Written contracts by the Town must be executed by the Mayor unless
the Town Manager has been authorized to sign them by Council action.
3
Contracts over $1000 of all types, including consultants (for EIR's,
design of projects, appraisals, inspection of projects, special
studies, etc.) , service agreements, maintenance agreements, custodial
agreements, construction projects, etc. all require Purchase orders.
A Purchase Order is required to encumber the funds and input the
information into the accounting system.
WHEN PURCHASE ORDERS ARE REQUIRED
Purchase Orders are required for all purchases of $1,000 or more for
supplies, services, equipment, consulting and construction contracts
performed by non -Town entities or persons. However, vendors may
require purchase orders regardless of the dollar amount of the order.
Exceptions to Purchase Order requirements are at the discretion of
the Finance Director.
WHEN BIDS /ODOTATIONS ARE REODIRED
Ideally, obtaining bids or
services or equipment should
purchase. However, since th
number of purchases made,
bids /quotations are required.
Code section 2.50.130 through
Ordinance 1958).
quotations for materials /supplies,
be done each time the Town makes a
Ls is not practical due to the large
following are the guidelines when
For more detailed information see Town
2.50.133 and section 2.50.140, (Town
4
PURCHASING LIMITATIONS -BID/OUOTATION
REQUIREMENTS MOT APITALIMPROVEMENTS
Materials /Supplies
S e r v i c e s o r
Equipment with a
Value*
Approval & Procedures Required
Over $0 but no
Departmental approval of a Check request,
greater than $1,000
invoice, or a Requisition if vendor
requires a Purchase Order. Purchasing
issues a Purchase Order where necessary.
No bids or quotations required, but
inquiries should be made at least every
3 months, and contact has to be made with
3 or more vendors or from a Town list of
vendors.
Over $1,000 but no
Negotiated Bid. Requisition required.
greater than $15,000
Approved by Town Manager - No Council
Report necessary. Purchasing issues
Purchase Order.
Over $15,000 but no
Negotiated Bid. Town Manager Approval.
greater than $25,000
Subsequent Council Report. Requisition
required. Purchasing issues Purchase
Order.
Over $25,000 but no Informal Bid. Town Council Approval.
greater than $75,000 Council Report and Requisition
required. Purchasing issues Purchase
Order.
Over $75,000 Formal Bid. Town Council Approval.
Council Report and Requisition Required.
Purchasing issues Purchase Order.
a
5
IURCHASING LIMITATIONS -BID
UOTATION REQUIREMENTS-ALL OTHERS
Materials /Sunolies
S-&, r v i c e s o r
Equipment with a
Value*
Approval & Procedures Required
Over $0 but less
than $4,000
Departmental approval of a check
request, or a Requisition if vendor
requires a Purchase Order. Purchasing
issues a Purchase Order where necessary.
No bids or quotations required, but
inquiries should be made at least every
3 months, and contact has to be made with
3 or more vendors or from a Town list of
vendors.
$4,000 and over
Formal Bid. Town Council Approval.
Council Report and Requisition Required.
Purchasing issues Purchase Order.
* Values listed above are inclusive of sales /use taxes and shipping
costs. PP 5
VM BIDDING IS NOT REOUIRED
The Town can only dispense with competitive bidding under the
following circumstances:
1. Sole Source of Supply - This is used when an item is available
from only one person or firm. This situation must be well
documented and able to withstand challenge. Documentation is to
include reference to any specific documents which control the
source. An award is sole source if there is only one source
capable of supplying the item. The final determination as to
whether or not a vendor is sole source is made by the Purchasing
Agent. An example of sole source is:
GTE Customer Networks telephone service. GTE is the only vendor
that can provide for our telephone system. Please refer to
Subsection 2.50.130(b)(2) and Subsection 2.50.130(b)(3) in the
Town Code for further detail.
2. Professional Services - Consultants - specially trained and
experienced person, firm or corporation who is able to provide
special services and advice in architectural, engineering,
surveying, inspection, construction project management
environmental, financial, economic, accounting, legal or
administrative matters. When the services of a consultant are
required the CONSULTANT USE POLICY (page 7) shall be followed.
3. Emergency - This is defined as the purchase of supplies,
equipment or services necessary to provide an essential Town
service affecting the public health, safety or welfare which
would otherwise be delayed in the normal purchasing routine. An
emergency is not a substitute for lack of planning. The Town of
Los Gatos Municipal Code, section 8.10.035 empowers the Director
of Emergency Services to make a determination that the immediate
preservation of the public peace, health or safety requires the
purchase of goods or services without going to competitive bid.
4. Length of Agreement - Agreements to provide services or
supplies or letting an open -ended contract run for longer than
3 to 5 years are inappropriate. It is important that the Town
government assure the community that the Town is seeking the best
price for the necessary service or supply. Therefore, give
consideration to how volatile the pricing of the service or
supply might be, whether unilateral or mutual extensions are
appropriate, and whether an annual adjustment (such as by
Consumers Price Index) might reassure the contractor while
providing the Town with additional termination rights.
0
CONSIILTANT USE POLICY
1. PURPOSE
Technical consultant services are of a professional nature, and
selection of technical consultants is not feasible by means of
competitive bidding; the ethical codes of the professions involved
forbid such bidding. Technical consultants must be individually
selected for a specific project with due regard for the fees to be
paid, but also with particular regard for the experience of the
consultant, their special knowledge of the subject matter, their
ability to perform the services in the time allowed, their record of
success on similar work, and their ability to operate well in the
necessary discussions, presentations, coordination, and cooperation
related to the project.
The purpose of this policy is,
guidelines for the selection of
technical consultants who will be
the finest public facilities and
consistent with quality facilities
2. DEFINITION
therefore, to establish certain
highly qualified and competent
best able to provide the Town with
services at the lowest total cost
and services.
For the purpose of this policy, the following definition will apply:
"Consultant" shall mean any individual or firm providing
professional services to the Town. The professional services may
include, but are not limited to, architectural, engineering, testing,
land surveying, appraising, environmental, planning, financial, legal,
development processing, governmental operations, special studies,
construction project management and other services related thereto.
3. CONDITIONS
A consultant may be used by the Town when one or more of the following
circumstances exist:
a. Insufficient in -house expertise exists to conduct a project
or;
b. Insufficient resources are available to complete a project
in a timely manner, or;
C. An objective third - person evaluation and /or analysis is
needed, or;
d. Cost savings may be realized by using a consultant rather
than Town staff in the conduct of a project.
0
4. SELECTION GUIDELINES
Criteria for Selection. The following factors shall be considered and
evaluated in selecting a technical consultant for a particular study
or project:
1. Educational background of the consultant.
2. Experience record of the consultant.
3. Demonstrated record of success by the consultant on work
previously performed for the Town or similar work performed
for others.
4. Qualifications of the individual within the consultant's
organization who will have direct charge of the work.
5. Whether consultant has adequate staff to perform the work
within the time allowance.
6. The process proposed by the consultant to accomplish the
required work.
7. The ability of the consultant to make effective public
presentations of the report and /or design as may be
required.
8. The ability of the consultant to work effectively with Town
staff, other public agencies, residents, and related parties
as may be required during the course of the design, study,
or other technical services.
9. Pertinent new ideas which may be presented by the consultant
during the course of the selection process.
10. Where appropriate, whether or not the consultant has
adequate knowledge of local conditions.
11. Whether the consultant has available experienced, capable,
and acceptable resource and design professional personnel
or consultants as may be pertinent to the particular
project.
12. Whether the consultant has demonstrated continuing interest
in the success, efficiency, and workability of the project
and not only during construction but after the facilities
are placed in operation.
13. Whether the consultant is already engaged in another project
which has direct and substantial physical relationship to
the proposed project.
0
14. When an existing facility is being modified or expanded,
whether the consultant that designed the original facility
should be retained for the new work on grounds of cost,
detailed knowledge of the existing facility, or necessity
to use the same design philosophy for the new work (as in
architectural design).
15. The record of the consultant in keeping costs within budget
and estimates.
16. Ability of the consultant to furnish adequate and effective
supervision services, where such services are an inherent
part of a "package" of services for which the consultant is
employed.
17. All other things being equal, local consultants are
preferred over non -local consultants.
18. All other things being equal, a non -local consultant that
intends to contract with a local consultant for services
shall be preferred to a non -local consultant that does not
intend to contract with a local consultant.
19. All other things being equal, preference shall be given to
consultants that have not recently performed work for the
Town over consultants that recently performed work for the
Town.
Selection Process. The Town Council shall authorize all contracts for
technical consultant services where the cost for such services exceeds
$4,000 or $25,000 which ever is applicable. Interviews shall be held
by the staff with interested consultants prior to making a
recommendation to the Council for a contract with a specific
consultant. Staff shall pre- screen consultants interested in a
specific project if the number of consultants that express interest
is greater than can be or should be interviewed for the work involved.
Pre- screened consultants shall be picked from either: A) a submittal
received after the Town's issuance of a "Request for Qualifications"
for the specific project, or B) submittals and brochures on file with
the Director of Building and Engineering Services.
For all construction projects, the interview and selection shall be
conducted by the Director of Building and Engineering Services and
representatives of any other departments which may be involved in the
proposed project. For other types of technical consulting services,
the interviews and selection shall be conducted by the Department
Head(s) (or their designee) having responsibilities for the subject
matter involved. The Department Head(s) having responsibility for the
selection process shall also determine the appropriate number of
interested firms to interview.
Where project or study is special or unique in scope, the Town Manager
10
may invite interested citizens and /or appoint other staff members to
serve on an interview and selection committee. The Director of
Building and Engineering Services is authorized to maintain a file of
names and brochures of the various technical consultants that have
expressed a general interest in doing work for the Town of Los Gatos,
and to use such file for the purpose of mailing inquiries to various
consultants as to their interest in the specific design work or
studies which the Town may undertake from time to time or to use such
file as a source for pre- screening.
Contract and Fees. After a consultant is selected, but before a
recommendation is made to the Town Council, the fee for the technical
services shall be negotiated. If agreement cannot be reached on the
fee, negotiations shall be terminated and another consultant shall be
selected and fee negotiations undertaken. Wherever appropriate, fees
shall be related to published fee schedules prepared by the various
professional organizations.
Before settling on one final consultant, it is imperative that the
fees and contract terms for the technical service be negotiated. If
a Town employee lets a consultant know that the consultant is the only
one left for consideration, the costs to the Town will usually be
higher than necessary, and the contract will be difficult to reach.
A mutually satisfactory written contract (see N: \MASTER\ CONTRACT\)
approved by the Town Attorney and signed by the consultant shall form
the basis of retaining a specific consultant, and such contract shall
be presented to the Town Council at the time authorization is sought
for retainment of the consultant.
Once an acceptable contract has been achieved, the Department Head
shall obtain the necessary approvals as follows:
1. Contracts providing environmental services paid for by
development processing project applicants, obtain approval
from the Town Manager.
2. Contracts providing services authorized in the Town Budget
of the Capital Improvement Projects Budget obtain approval
from the Town Manager.
3. All other contracts not exceeding $4,000 or $25,000, which
ever is applicable, obtain approval from the Town Manager.
4. All other contracts exceeding $25,000.00 obtain approval of
the Town Council.
11
Once a contract is approved and signed by all parties, distribution
shall be made as follows:
1. One original signed copy filed with the Town Clerk. Town
Code §2.30.030.
2. One original signed copy transmitted to the consultant.
3. One signed copy sent to the Department Head who is
responsible for administering the contract.
Though professional services are not required to be bid, a Purchase
Order is required for any service costing $1,000 or more.
12
Purchases of materials/ supplies, services or equipment are made using
a Verbal Request to vendor, Payment Request, Purchase Order, or in
unusual circumstances by use of a credit card or petty cash. A
Purchase Order can only be generated by completing a Requisition (see
Exhibit A) . The Requisition is not a Purchase Order. The Requisition
is utilized when a department wishes to procure materials /supplies,
services or equipment. The manner in which the Requisition is used
is as follows:
1. PRE - REQUISITION REQUIREMENTS
Each Department has the sole responsibility for researching, data
gathering, soliciting quotes /bids, verifying current Town
business licenses, and that signed contracts are on file with the
Clerk's Office and providing essential information for Purchase
order preparation.
2. METHOD OF ORDERING
A computerized request (Requisition) must be submitted to
Finance. Requisitions will be returned if all requirements have
not been completed.
3. FILLING OUT A PURCHASE REQUISITION
The Requisition must contain the following information to be
accepted by Finance.
Requisition No: This number is automatically generated by
the system and is used to identify the requisition. This
number is not used when the requisition becomes a purchase
order.
2. Budget Unit: This identifies the program /department. The
entry is edited against the organization table in the Fund
Accountant. Valid organizations may be viewed by calling
the "window" option (control -I).
3. Date Requested is the requisition date, and Date Required
is the target /need date for the commodities or service.
4. Shin Code: Specifies the location where the requested
supplies/ service should be delivered. Valid shipping codes
may be viewed by calling the "window" option (control -I).
5. Recommended Vendor: The requisitioner will enter a valid
vendor number to identify a particular vendor to be used in
the purchase of these items. Valid vendor codes may be
viewed by calling the "window" option (control -I).
13
6. Date Approved: This date may be the requisition date or
council action date.
7. The remaining data on the requisition screen is optional and
is generally input through the CHANGE option.
8. Purchase Order: This is assigned by the system at the time
the purchase order is issued.
9. Buyer: Used to identify the individual buying the requested
commodity or service.
10. Council Action: The agenda item number and date passed by
the Town Council.
11. Comments: This area is used to type in the vendor name and
any additional instructions and /or information associated
with the requisition or purchase order. As examples:
Purchase Order not to be mailed, less than net 30 days
(authorization must come from the Finance Manager), Town
Business License on file.
Secondary Screen (Commodity Information): The commodity screen
will appear after the requisition screen is completed. This
screen is designed to accommodate multiple entries (up to 100 may
be entered for a single requisition).
12. Commodities: May be entered without a commodity code. Up
to five lines of descriptive information may be entered to
specify the commodity desired.
13. Quantity: Number of items to be purchased.
14. Unit of Measure: Unit of measure to be applied to quantity.
Examples: ea., gal., doz., etc.
15. Estimate: Estimated price will be entered by the
requisitioner.
Accounting information should reflect the appropriate budget unit
(program /dept.) account number, project /task, and account at
which the requisition will be encumbered.
Valid budget unit and accounts may be viewed by calling the
"window" option (control -I).
16. Approval: Once the requisition has been printed and routed
to the department by finance, the Department Manager must
approve the purchase request by signing the requisition.
14
17. Business License: If a business license is required, a copy
of the business license screen must be attached to the
requisition. To access this screen through Pentamation
choose (11) Business Licence; then (7) Display Business
Data, and retieve the business license file. Escape to the
second screen and at the bottom choose "H" for History.
When this third screen comes up, look at the BILLING
REFERENCE and arrow up or down to find the current year
license billing reference. This will then show a license
number below the billing reference with the first two
numbers the same as the current year (i.e., 1994 LICENSE
will show a license number of 94XXXXX) . If there is a
current license, print the screen and attach to the
requistion. If there is not a current business license,
contact the vendor before submitting the requisition to
Finance.
18. Contract /Agreement: If a contract is required (see page 5)
have a staff member of the Office of the Town Clerk date and
initial the requisition prior to submitting the requisition
to finance.
19. Insurance: All insurance (liability, auto, worker's
compensation etc.) required by the contract /agreement must
be on file with the Office of the Town Clerk. Have a staff
member of the Clerk's Office initial the requisition prior
to submitting the requisition to finance.
20. Worker's Compensation: On all requests for services from
a vendor, that vendor must have proof of worker's
compensation insurance on file with the Office of the Town
Clerk, with the exception of the following: PG &E, San Jose
Water Company, Pacific Bell, Santa Clara Valley Water
District and GTE. (The Office of the Town Clerk will, on a
yearly basis, acquire proof of worker's compensation from
these vendors and will have them on file.) Have a staff
member of the Clerk's Office initial the requisition prior
to submitting the requisition to finance.
NOTE: Once the Requisition is reviewed by Finance and all pertinent
information is entered and attached, this data will be transferred to
the Purchase Order. Accounts Payable is the only one authorized to
create a Purchase order. Purchase orders for bids authorized by
Council and under $4,000 maybe signed by the Town Manager, Assistant
Town Manager or the Finance Manager. If the Purchase Order is over
$4,000 and no council action is necessary the Purchase Order will be
signed by the Town Manager.
15
PURCHASE ORDERS
Finance will issue a Purchase order (see Exhibit B) within two working
days after receipt of a signed (by Dept. Manager) , complete, and
accurate requisition. Before submitting the requisition to finance,
if required, the vendor will have a current Town Business License on
file and a completed contract on file in the Clerks office.
A three -part Purchase Order will be issued with the copies being
distributed as follows:
1. The original copy is mailed to the selected vendor.
2. The second copy goes to Finance.
3. The third copy is sent to and retained by the Department for
their files.
Subsequent to the issuance of the Purchase Order, Finance will merge
the information from the requisition into the Accounting System,
thereby encumbering funds for the amount of the purchase. Once it has
been printed, the Finance Manager will review and sign the Purchase
Order.
It is the responsibility of all persons receiving materials/ supplies,
services and equipment to verify that the correct quantity of all
items ordered is received, and that the quality of all items received
agrees with the purchase requirements.
If there is a partial shipment on the purchase order, contact Accounts
Payable and let them know you will need to process a partial payment
request.
Departments are responsible for keeping track of partial payments, or
progress payments, on purchase orders. Finance will also track the
payments but the department remains responsible. If there is an over-
billing, accounts payable will make a courtesy call to the user
department. The user department is responsible for rectifying the
problem with the vendor. Accounts payable will withhold payment until
the issue is resolved and accounts payable is appropriately notified
of the resolution.
Requisitions that have not been returned with an authorized signature
or Purchase Orders that have not been filled will expire within six
(6) months. At that time the Requisition or Purchase Order will be
cancelled and funds unencumbered.
i[.1
PAYMENT PROCEDURES
It shall be the policy of the Town to pay promptly (net 30 days) all
bills which become due and payable by the Town. It shall also be the
policy of the Town to require vendors to send all original invoices
to Finance, attention Accounts Payable, this includes all progress
payments for consultants and project construction contractors.
Finance will route all invoices to the appropriate department for
their approval and subsequent return to Accounts Payable. If for any
�L L.nev nave nociriea the vendor that payment may be delved Finance
can not be responsible for timely payment of invoices submitted by
vendors to departments. It is not the policy of the Town to pay any
invoices from statements. Only the original invoice or facsimile will
be processed for payment. Exceptions to this policy are at the
discretion of the Finance Director.
In order to assure timely payment of all invoices it is incumbent on
the departments to process invoices in a timely manner. Each
department is ultimately responsible for assuring that the Town pays
its bills in a timely manner. Payables are processed in accordance
with the schedule prepared by Accounts Payable and distributed to all
departments.
All invoices will be stamped with the accounts payable stamp (see
Exhibit C) and the project stamp (see Exhibit D) (if appropriate).
Information necessary is as follows:
1. DATE RECEIVED Date materials/ supplies or services were
received.
2. DEPT.APPROVAL Signature of the Department Head or delegated
representative.
3. P.O. NUMBER The purchase order number if applicable.
4. P.O. STATUS P= Partial Payment or F =Final Payment.
5. ACCOUNT NUMBER Program number (4- digits) Expense number
starting with 116" or "7" (5- digits) . (Can be
more than one account).
6. PROJECT # Up to 8 alpha- numeric characters. (See
PROJECTS).
No vendor shall be paid an amount in excess of the contractually
agreed upon amount + contingency as approved by Council. In the event
the vendor's change orders exceed the authorized contingency, a
council report is required to: 1) authorize overage, and 2) identify
funding.
17
PROJECTS
Projects are a method of accounting for expenditures over multiple
years. Unlike the expense accounts, they do not automatically return
to zero at the beginning of each fiscal year. Every project must be
included in a program. Not every program is required to have a
project. At any time you wish to have any material or capital expense
charged to a project, you must use the project stamp.
Projects can be accounted for at two levels. A project can be a stand
alone and tie directly to a project number or a project may have
several "tasks" that all tie together to one project identification.
General fund projects that have been requested by any of the
departments for record keeping purposes are accounted for at the
"task" level, and are assigned at the project level to the department
requesting the project. Examples: The Planning Department has
requested a project to keep track of cost for annexations. The
project is "PLANNING" and the task where the expenditures are charged
is "ED- ANEX". Parks, Forestry & Maintenance has requested an
accounting for costs associated with the maintenance of the field at
Van Meter School. The project is "PFMDEPT" and the task where the
expenditures are charged is "FD @VANMT".
General fund projects that have a direct income source associated with
them begin with 11100G" followed by a 4 character acronym for the
project. This alerts users of the project that expenses and revenues
must be accounted for within the project. Example: the Police
Department is getting reimbursed for supplying crossing guards at
Pollard Road. The project is 11100GXPLD", revenues and expenses are
accounted for at the project level.
Projects that are not funded within the general fund have the
following guidelines:
Projects may be up to eight (8) alpha- numeric characters. The first
three characters must be numeric and must be the same as the fund
where the project has been budgeted. Therefore, if you have a project
that is being funded by gas tax (fund 480) the project number must
begin with 480. The fourth character must be either:
R
The
project
is financed by the equipment replacement fund.
C
The
project
is in
the
public building /equipment section of
the
CIP.
D
The
project
is in
the
storm drain section of the CIP.
L
The
project
is in
the
parking lot section of the CIP.
P
The
project
is in
the
parks section of the CIP.
S
The
project
is in
the
street & signals section of the CIP.
U
The
project
is in
the
utility undergrounding section of the
CIP.
The remaining four (4) characters are intended to be a code for the
project. For example: "LOT4" is for the project "parking lot #411.
m
�' �1YI411 4 �
Departments requesting checks should do so by filling out a Payment
Request Form (see Exhibit E) available through Finance.
Payment Request Forms are used primarily when a check is required
prior to available documentation (invoice, subscription forms,
registration forms, etc.). Examples include postage stamps and
certain police department funds.
PETTY CASH
The petty cash voucher (see Exhibit F) form should be completely
filled out, including account number and authorized signature (Town
Manager, Finance Manager, Department Head or designee).
Reimbursable expenses shall be limited to one -time expenditures such
as miscellaneous office supplies, special postage charges, emergency
repair parts, bridge tolls, etc. Maximum cash reimbursement is $20,
with two allowable exceptions:
1. Roll of stamps (currently $29)
2. One -time expense such as a working lunch or special
framing /engraving, not to exceed $50
Employees who routinely attend monthly professional meetings or incur
other routine charges should submit a Request for Reimbursement on a
monthly basis. With approval of the Town Manager or the Finance
Manager, petty cash can be used for routine meetings.
Mileage reimbursement is not to be reimbursed by petty cash. Use the
Mileage Claim Reimbursement Form.
Should a vendor not accept a purchase order, Town credit card, or
otherwise be unwilling to invoice the Town, petty cash reimbursement
is an acceptable alternative. The amount should not exceed $30 in
most instances.
TOWN CREDIT CARD POLICY
The use of Town Credit Cards shall be in accordance with the policy
as set forth below.
1. PURPOSE
To establish a Town Credit Card Use Policy to be followed by all
departments and personnel employed by the Town.
19
2. DEFINITION
For the purpose of this policy the following definition shall apply:
Credit Card shall mean all Town Credit cards currently in use and
shall include American Express, Chevron and BP Oil.
3. POLICY
It shall be the Policy of the Town of Los Gatos that the use of credit
cards by Town employees shall be restricted to those occasions when
no other means to obtain the desired materials /supplies, services or
equipment is feasible due to time constraints, vendor requirements
(such as ordering by phone), use of a local restaurant for Oral Board
(limited to $10 per person), etc. It shall also be the policy that
no employee except the Town Manager and the Chief of Police shall
normally have a Town credit card in their possession. Persons
desiring to use a Town credit card must secure permission from the
Town Finance Manager before requesting Accounts Payable to release any
cards. If any employee is authorized by the Town Manager to carry,
on a regular basis, a Town credit card they must, each time they use
the card (within 24 hours), turn in the sales slip and any other
documentation they may receive when making the purchase.
4. PROCEDURE
CHECKING OUT CARD
The sign out sheet must be signed, the purpose and dates need to
be recorded.
RETURNING THE CARD
All credit cards are to be returned as soon as possible to
Finance after use. When a credit card is returned, all receipts
for all charges must accompany the returned card and all receipts
must be stamped with the accounts payable stamp and the proper
account number(s) recorded.
1. Finance will verify that the receipts are returned and
comply with the intended use. An explanation of any
deviation from the intended use must accompany the returned
card.
2. Finance will record on the sign out sheet the date the card
was returned and by whom.
20
CAPITAL OUTLAY ITEMS
DEFINITION:
A Capital Outlay (fixed asset) item is defined as any single item or
piece of equipment that costs $1000 or more and has a useful life of
more than one year.
Any improvement, upgrade, or replacement of major components to an
existing capital item are also considered a capital outlay. Repair
to an existing capital item is considered capital outlay if the repair
increases the useful life of the item bring repaired. Routine
maintenance is not considered capital outlay. If you become confused
as to what is and what is not a capital outlay item, contact the
Purchasing Agent or Finance for assistance.
AUTHORITY FOR PURCHASE:
Capital Outlay items MUST be identified and approved in the current
Fiscal Year Budget before they can be purchased. If a needed Capital
Outlay item is not budgeted for but is still a requirement, then the
department must receive authorization from the Town Council to
substitute the new item in -lieu of the budgeted item.
CAPITAL OUTLAY - FIXED ASSET NUMBER:
Each Capital Outlay item is assigned a Fixed Asset Number by personnel
in Finance at the time of purchase. To maintain control over fixed
assets in the Pentamation system the "Detail for Fixed Asset Purchase"
form (see Exhibit G) is required for each Capital Outlay purchase.
When you are submitting your requisition to Purchasing the "info for
asset being replaced" and "info for asset being purchased" MUST be
completed in duplicate and attached to the requisition (one form for
each asset). Upon receipt of the item and invoice the remainder of
this form must be completed by the department acquiring the item(s).
For warranty and copyright purposes all software that is installed
will be treated as a Capital Outlay item and the serial number of the
software will be assigned to the PC in which the software will be
installed.
ITEMS UNDER $1000:
Although not defined as a fixed asset, an item which was purchased for
less than $1000 may be assigned a fixed asset number to enhance
internal controls.
21
DISPOSAL PROCEDURE
There are two purposes of the disposal procedure. First, is to
provide an orderly method for the disposal of commodities which are
not needed by the Town, are of no value or of little value, and should
not be retained. Second, is the disposal at the most advantageous
price, by trade or sale of equipment which is no longer needed.
The Purchasing Agent is responsible for disposal of all Town owned
property. The Department Head has the responsibility of verifying and
informing the Purchasing Agent of any restrictions regarding the
disposal of a commodity.
The Purchasing Agent personally controls the disposal of equipment.
A Department Head wishing to dispose of an item of equipment prepares
a report, indicating the piece of equipment, the fixed asset number,
reasons for wishing to dispose of the item and its condition, and
forwards this report to the Purchasing Agent without taking action to
move the equipment. The Purchasing Agent ascertains whether to
dispose of the equipment or if the equipment can advantageously be
used by another department. If approval is given for disposal, it
will be arranged by the Purchasing Agent at the best possible terms,
and the Department Head will be advised with instructions as to the
disposition of the article.
Auction
Surplus Town Property may also be auctioned. An auction is held
annually or by special arrangement in the event of certain
circumstances. Each year in January, the Police Department Services
Division Captain, acting as Purchasing Agent for the Town Manager,
will contact Town Department Heads to identify surplus equipment.
Each department then prepares a list of each surplus item which
includes a description and any model and serial number. After
determining that no other Department has a use for the identified
items, the auction company will be contacted for release and eventual
sale. Upon advisement by the Auction coordinator, the Town Clerk's
office will place the required public notice. Each Department is
responsible for storage of items until pick -up date and for notifying
the Purchasing Agent to ensure that all property of fixed asset nature
is documented on the fixed asset retirement /transfer form.
Book sales
Discarded library materials may be sold by the Friends of the Library
at special booksales or on the booksale table in the Library. The
funds raised by these sales are used to purchase new materials and
equipment for the Library.
22
ADVANCES OF FUNDS
Requests for advance of funds of estimated reimbursable costs shall
be requested by the Department Head and be approved by the Town
Manager. These costs shall approximate the out -of- pocket expenses to
be incurred by the employee. If traveling out of town for an overnight
stay an "AUTHORIZATION FOR TRAVEL" (see Exhibit H) must be completed
and appropriate approval obtained prior to the out -of -town travel.
CLAIM FOR REIMBURSEMENT
All expenses other than automobile related shall be reimbursed at the
actual cost thereof. Costs associated with the attendance of a family
member are not eligible for reimbursement. Within thirty (30) days
after the conclusion of the event, a "Claim for Reimbursement" (see
Exhibit I) shall be filed with the Town Manager, with a copy of the
"Authorization for Travel" if applicable and receipts or other
approved forms of documentation to support actual and necessary
expenses. If an advance of funds were issued, any unexpended balance
shall be returned at this time.
MILEAGE CLAIM REIMBURSEMENT
The cost of private automobile transportation shall be reimbursed at
the rate of $.24 per mile for round trip mileage by the most direct
route, provided that reimbursement for transportation expenses by
private automobile on trips shall not be greater than the equivalent
lowest cost of round trip air fare if air service is provided from the
City of San Jose to the destination (or from any Bay Area airport for
out -of -State destinations) . When submitting the "Mileage Claim
Reimbursement" (see Exhibit J) the beginning and ending odometer
readings are required. For mandated Police Officer appearances,
mileage is pre- determined and the beginning and ending odometer
readings do not have to be completed. Employees receiving monthly
car allowance will be eligible for reimbursement on the use of private
automobile as stated above only when a trip exceeds one hundred (100)
miles in round trip.
EDUCATION/TUITION REIMBURSEMENT
All requests for reimbursement must be approved in advance on a
"Education /Tuition Reimbursement" form (see Exhibit K). If a cash
advance is requested a "Claim for Reimbursement" form must be
completed with a copy of the "Education /Tuition Reimbursement" form
and copies of the course description, flyer, registration forms, etc.
attached. If an advance is not requested, after completion of the
course, all expenses must be documented and a "Claim for
Reimbursement" must be completed.
23
CONTROL OF TOOLS AND EQUIPMENT
Each Department Head is responsible for issuing regulations governing
the control and use of the departmental tools and equipment to fit the
operating needs and conditions of the department. Employees will be
responsible for the tools and equipment in their care.
When a tool is issued to an individual, the employee receiving it
signs a Tool Receipt showing the date and type of tool. Tools are
ordinarily issued for a day or portion thereof, but may be issued for
longer periods of time if justified. Upon the return of the tool, the
Tool Receipt is destroyed.
A damaged tool is accepted by the issuing employee as evidence of the
return of the tool issued. If a tool is lost, the issuing employee
reports the loss to their supervisor. The supervisor seeks to
determine the cause of the loss and recommends disciplinary action if
appropriate. The supervisor maintains a continuous record of the
employees who have lost or damaged tools, and this record is to be
reflected in the employee's evaluation report. A disciplinary notice
may be issued when an employee shows repeated disregard for the value
of Town property.
24
DEFINITIONS
Account Numbers - Designates fund, department program, type of account
(revenue /expenditure).
Bid - A price quotation received from a vendor for an item(s), and may
be obtained by phone, informal letter (or fax) or sealed envelope.
Budget - Annual Fiscal document detailing authorized revenues and
expenditures.
Capital Outlay - Any single item or piece of equipment which costs
more than $1,000 and has a use full life of more than one year.
Change Order - A revision to the statement of work, number or types
of items previously ordered, change in price of the item of service
previously ordered. Applies to Purchase Orders and Contracts.
Consultant - Any individual or company, etc. who provides services
rather than supplies of equipment.
Encumbrance - Sum of money set aside for a particular purpose.
Expense - Spending or using up of money.
Fixed Asset - Capital Outlay
Formal Bid / Ouotation - A bid or quotation for goods or services with
a value in excess or $1000, including sales tax and shipping charges.
Informal Bid - A quotation requested from a vendor by phone, letter
or fax not requiring a sealed bid.
Invoice - Itemized list provided by vendor for payment.
Payment Request - Written request to Accounts Payable for payment.
Petty Cash - Cash set aside for purchases under $20.00.
Project Numbers - Predetermined number to identify specific projects.
Purchase Order - Written authorization to vendor which guarantees
payment for purchase of materials /supplies, services or equipment.
Requisition - Written request to Finance to buy materials /supplies,
services or equipment, etc.
Revenue - Item or source of income.
25
R.F.P. - An R.F.P. is a "Request for Proposal" and may be formal or
informal. Usually used when requesting prices for contractual
services such as consulting, preparation of an EIR, engineering
design, etc.
Statement - Monthly summary of invoices from a vendor.
Telephone Bid - A quotation (bid) solicited from a vendor for an item
or service by telephone.
Unit - Describes the basis of measurement of the goods being
purchased, such as (1) ea for each, (2) box, (3) case, (4) doz for
dozen, etc.
Vendor - Provider of materials /supplies, services and /or equipment.
26
EXHIBITS
EXHIBIT A Requisitions
EXHIBIT B Purchase Orders
EXHIBIT C Accounts Payable Stamp
EXHIBIT D Project Stamp
EXHIBIT E Payment Request
EXHIBIT F Petty Cash Voucher
EXHIBIT G Detail for Fixed Asset Purchase
EXHIBIT H Authorization to Travel
EXHIBIT I Claim for Reimbursement
EXHIBIT J Mileage Claim Reimbursement
EXHIBIT K Education /Tuition Reimbursement
27
THIS IS NOT A PURCHASE ORDER
Vendor Note: Do not ship any goods without a confirming purchase order.
The Town will not pay for any goods shipped without a purchase order.
AGENDA ACTIOMDATE AND COMMENTS:
DATE REJECTED I DATE APPROVED I DATE BID DUE
EXHIBIT A
X
DEPARTMENT AUTHORIZATION
DATE
• • • I
• - •'9
Town of Los Gatos is exempt from Federal Excise Tax and Finance Charges.
Not valid without Purchase Order No, and signature of Purchasing Agent. All purchases are
subject to the conditions printed below. Mail two copies of your invoice to ACCOUNTS
PAYABLE, P.O. BOX 949, LOS GATOS, CA 95031. All purchases prepaid freight.
VENDOR
EXHIBIT 8
SHIP
TO
TERMS AND CONDITIONS
The Town of Los Gatos will not be responsible for articles or services furnished officials or employees without
a Purchase Order signed by the authorized purchasing agent.
The right is reserved to purchase in the open market and to charge the difference to the Vendor in the event
that deliveries are not made at the time specified in the bid or contract.
Whenever a delivery is rejected the Vendor shall be notified and given reason for the rejection. All rejected
deliveries shall be held at Vendor's risk and he shall bear the expense of removal.
BY
EXHIBIT C
1 DATE RECEIVED
2 DEPT. APPROVAL
3 P.O. NUMBER
4 P.O. STATUS
S ACCOUNT NUMBER
8 ACCOUNT NUMBER
7 ACCOUNT NUMBER
8 FUNDING CHECK
9 FINANCE APPROVAL
P
F
TOWN OF LOS /ATOS
Los Gatos, Callfomla
EXHIBIT E
A
a
PAYMENT
REQUISITION
7 DATER UISTTIONED
AMOUNT
J s ��l
AUTHORIZATION
BUDGET
REFERENCE
PURPOSE
APPROVAL
REQUESTED
(DEPARTMENT HEAD)
AMOUNT
CERTIFIED
S
PAYMENT
REVIEWED
(DATE)
ACCOUNT NUMBER
AMOUNT
(FiNANCEADWMW MOR)
PAYMENT
APPROVED
(DATE
/TOWN MANAGER)
Pay to:
EXHIBIT F
P.. f TY CASH VOUCHE. I
TOWN OF LOS GATOS
Date:
Total: $
(Department)
ITEM ACCOUNT NO. AMOUNT
I
Maximum payment for Petty Cash is $20.00.
Please attach all receipts to the back of this voucher.
(Audwdzed Signature)
(Cash Received 8y)
(Town ManagedRnance Manager) (Cash Disbursed SY)
EXHIBITG DETAIL FOR FIXED ASSET PURCHASE
To maintain control over foxed assets in the Pentamation system this form is required for each foxed asset purchase
When you are submitting your requisition to a /p's for a purchase order, this form (in duplicate) with the top two portions
completed must be attached. (ONE FORM FOR EACH ASSET). After the item(s) have been received complete the bottom
portion and return completed form to the Finance Department.
INFO FOR ASSET BEING REPLACED (fund 201)
ASSET # BEING REPLACED
SERIAL #
MASTER ASSET # (computer sys # /vehide #)
PERSON'S NAME
ESTIMATED REPLACEMENT YEAR
DEPARTMENT
PROGRAM #
CONDITION
ESTIMATED LIFE
(for p.c. related & car radios)
(for p.c. related)
1/13/94 8:58 AM Page 1 FAREQ.XLS- gienda3
NAME DEPARTMENT -..
Receipts or o umentation required
•A - Taxi, Bus, etc.
8 - Telephone
C - Parking Fees, Toils
D - Plane Fare
E - Car Rental
F - Registration Fees
H - Miscellaneous
I certify that this claim is a true record of
expenses incurred on official business of
the Town of Los Gatos during the above
period.
(Claimant Signor")
(Date Su&*MWI
(APPmvel or DepartrrnM H"&Dw)
(Vendav Nu/MSr)
Total Amount ............ ............................... $
Less Advance Payment .... ............................... $
Total Amount Due ......... ............................... $
NOTE Claim shall be submitted nolawthansbdy (60) days after expenses have occurei
FOR USE BY THE TOWN MANAGER'S OFFICE
(Appmvel of rows ManWIDen)
Advance ... ..............................$
Less Amount of Claim ....................... $
Amount Returned .......................... $
Amount Invoice ............................ $
AUTH^RIZATION FOR
TOWN OF LOS
EXHIBIT I
NAME DEPARTMENT POSITION
Departure Date:
Return Date:
CONFERENCE NAME OR PURPOSE DESTINATION REASON METHOD OF TRAVEL
ESTIMATED EXPENSES
Reglstratlon
Travel
Hotel
Made
Mlagllanaoua
Total
$
1 $
1 No. of Days ( 1 $
$
Is
Is
Account No.:
Budget Balance:
Within 60 days of returning, I will submit a claim for reimbursement, including required receipts and /or other
supporting documentation.
EMPLOYEE SIGNATURE
FINANCE ADMINISTRATOR REVIEW
DEPARTMENT HEAD APPROVAL
TOWN MANAGER APPROVAL
Cash Advance Requested: YES ❑ NO ❑
(Over)
TOWN OF LOS GATOS
EXHIBIT J MILEAGE CLAIM REIMBURSEMENT FORM
Employee
DATE B
ODOMETER READING
MILES P
PURPOSE
BEGINNING E
ENDING M
Total Miles —
Account No. runt
Total miles 2 $0.24 per mile $
I hereby certify that the foregoing mileage and expense
were u�cu i n
as indicated.
_Employee signature Date
Supervisor's approval Date
EXHIBIT K T jWN OF LOS GATE S
EDUCATION/TUITION REIMBURSEMENT
NAME OF COURSE
LOCATION
COURSE DESCRIPTION
(EMPLOYEE - PRINT) (DATE)
(BARGAINING UNIT)
ESTIMATED EXPENSES
TUITION /REGISTRATION $
BOOKS
PARKING
OTHER (Describe)
TOTAL ESTIMATE S
AMOUNT AUTHORIZED PER M.O.U. OR
MANAGEMENT PAY PLAN
PREVIOUS AMOUNTS APPROVED
AMOUNT OF CURRENT REQUEST
BALANCE AVAILABLE
COURSE COMPLETION DATE
(DEPARTMENTHEA 1) (DATE)
(ASSISTANT TOWN MG R.) (DATE)
THIS COMPLETED FORM IS TO BE ATTACHED TO A CLAIM FOR REIMBURSEMENT REQUEST WITH RECEIPTS
FOR ALL EXPENSES.
(OVER)