HomeMy WebLinkAbout5.F.8. Purchasing Limits CITY OF SHAKOPEE
Memorandum ~ ~
TO: Mayor and Council
Mark McNeill, City Administrator
FROM: Gregg Voxland, Finance Director
SUBJ: Purchasing Limits
DATE: May 29, 2008
Introduction
State law setting the threshold amount for quotes and formal bids is
increasing August 1st. This change applies to the state and almost all
political subdivisions.
Background
City code section 2.05 sub 5H. currently reads as follows: (City
Administrator) "Purchase or enter into contracts for previously budgeted items
when the amount thereof does not exceed $10,000, and purchase or enter into
contracts for previously budgeted services, when the annual amount of such
contract does not exceed $10,000. For items and services in excess of $10,000,
the City Administrator shall receive estimates, quotations, proposals, or
sealed bids, as appropriate, and present them to the Council for official
action" .
State law is increasing the threshold for quotations from $10,000 to $25,000.
City code is currently at $10,000. There some comments made by council members
at a recent meeting about not changing the amount but there didn't seem to be a
consensus on the issue.
The threshold for formal bids goes from $50,000 to $100,000. There are cost
savings and significantly less staff time involved in doing quotes rather than
formal bids, specifications and advertising, and it is much quicker. Current
city code does not contain a threshold for going to formal bids but follows
state law.
Alternatives
1. Status quo - keep quotation threshold at $10,000.
2. Increase quotation threshold to $25,000.
3. Increase quotation threshold to $15,000.
A. Status quo - follow state law for formal bids.
B. Amend city code to require formal bids at $50,000.
Recommendation
Several staff members had expressed support for increasing the quote
threshold. At a recent council meeting there were comments from council to
the. effect of not increasing the quote threshold. Staff is recommending
increasing the quotations threshold to $15,000.
It is recommended to continue following state law for formal bids due to the
cost and time efficiency compared to quotations.
Action
Move to direct staff to prepare an amendment to the City Code to increase the
purchasing threshold for quotations from $10,000 to $15,000 and to follow
state law for the threshold for formal bidding.
Gre g Voxland
Finance Director
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