Rochester City Council members on Monday, October 23, approved the introduction and first reading of an ordinance amendment to raise the threshold for purchases requiring a competitive bid process from $2,000 to $15,000.
The change came at the recommendation of Rochester City Attorney Jeffrey Kragt, who said it stemmed from a recent review of policies and other updates to city procedures. Under the city's charter, the threshold for purchases and disposal of city property is set by ordinance. Kragt said the current thresholds have been in place since 1965 and were later codified in 1982. Those now need to be changed in order to make purchases in an efficient manner, he said.
"Two thousand dollars in 1965 equates to a value of approximately $15,000 in today's dollars," he said. "While there have been discussions on inserting a threshold in excess of this figure and below this figure, for discussion purposes, $15,000 was deemed to be appropriate in light of the 1965 threshold established."
The threshold determines what purchases are required to go to competitive bidding by way of sealed bids and those on a smaller scale that competitive pricing may be obtained by way of direct contact with vendors to get pricing on a more informal basis. Lower cost items would still require a contract or purchase order reflecting the purchase, he said.
The proposed amendment would also update methods of obtaining pricing, including electronic means and bidding in conjunction with other governmental agencies in competitive bidding opportunities, which often procure lower prices on items than if the city bid by itself.
Because the city charter prescribing the purchasing policy is defined by city ordinance, Kragt recommended the city consider a charter revision at some point in the future to bring it into alignment.
"While significant purchases still are required to go through this process and be brought before city council, it is administration's belief that the routine purchases of items, such as consumable supplies, need not be brought before city council for approval each time," Kragt said. "We have met with the city auditor on these items and (she) doesn't object to these changes, especially if a charter revision is going to be considered at some point in the future."
Revisions to the city charter must be approved by a vote of city residents.
The current city charter section regarding purchasing and contractual procedure specifically states that "all expenditures for supplies, materials, equipment or contractual services involving more than $2,000 shall be made on written contract, and such contract shall be awarded to the lowest responsible bidder after such public notice and competition as may be prescribed by ordinance: Provided, however, that council shall have the power to reject all bids and advertise again."
Council unanimously approved the introduction of the ordinance amendment and a motion to look at sometime in 2018 to draft a charter amendment for consideration.