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� � � � � � Memo To: Mayor and City Council Neal Beets, City Manager From: Chris Miller, Finance Director �� Date: August 16,2004 Re: Overview of the City's Purchasing Function Date: 08/23/04 Item: 7. City's Purchasing Policy Date: 08/ 16/04 Item: 8 Purchasing Policies Introduction At the last three successive City Council meetings, the Council expressed an inquiry regarding the types of purchases begin made as well as the City's internal purchasing controls. The following is a brief overview of the City's purchasing function. The overview is intended to provide general information and to address the inquiries raised at the meetings. Overview of the City's Purchasing Function The City's purchasing function is governed by State Statute, City Code and internal purchasing policies. There are a number of provisions in State Statute that prescribe the types of purchases the City can make. In general terms, State Statute prescribes that the City may only make purchases that are for a`lawful purpose'. The purchase must be directly related to the provision of the City's programs and services, and cannot be explicitly prohibited by State Statute. As a Statutory Plan B form of Government, The City Manager is assigned as the City's purchasing agent. As is common in other cities, the City Manager has designated purchasing authority to various Department Heads and other managers with certain limitations. By designated purchasing authority to the Department level, the City is effectively decentralizing the purchasing function and putting the responsibility and accountability with those persons that are most knowledgeable about the purchases being made. Purchasing Control System The City maintains a purchasing control system that is limited by the annual budget appropriation approved by the City Council, as well as the restrictions noted above. With a decentralized purchasing system, the Department Head is accountable for purchases made in their respective area. In some instances, the Department Head may further designate purchasing authority to senior Staff inembers, to take advantage of the Staffs knowledge and expertise. This allows the Department Head to focus more on policy level matters and long-term planning efforts.