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4.2
STUDY STUDY SESSION MEMORANDUM
TO: Mayor and Town Council October 12, 2021
SUBJECT: Update to Town Purchasing Ordinance
BACKGROUND
The Town’s purchasing ordinance (Chapter 3-8 of the Municipal Code) establishes the
required procedures for the Town to contract for services and goods. Included in the
ordinance is the dollar threshold which determines if a contract is subject to competitive
bidding and, if it is, whether the bidding is formal or informal. As explained in more
detail below, Town staff is recommending increasing those thresholds.
DISCUSSION
Bidding Requirements
With the exception of public works construction projects (which are regulated by state
law) and professional services contracts (which are awarded based on qualifications, not
just price), every city is permitted to determine when contracts can be awarded with or
without bids and what type of bidding is required. The goals of any purchasing
ordinance are to ensure an open and transparent process while also striving to ensure the
best possible price.
When bids are required, they are labelled as formal or informal. The primary difference
between the two is that formal bids must be submitted by sealed envelope and typically
have a longer, more involved timeline. Informal bids can be submitted by email or even
phone and are typically used for smaller jobs that require a faster turnaround and do not
have complicated or specialized specifications.
History of the Ordinance
The first purchasing ordinance adopted by the Town in the 1980s established the
following thresholds:
-no bids required under $1,000
-informal bids up to $10,000
-formal bids over $10,000
The ordinance was amended in 1999 and the thresholds were increased to the following
levels:
-no bids required under $2,500
-informal bids up to $15,000
-formal bids over $15,000
The ordinance was last amended in 2013, with the following changes:
-no bids required under $5,000
-informal bids stayed at up to $15,000
-formal bids stayed at over $15,000
Since the last ordinance update in 2013, inflation has increased by over 22% (and nearly
74% since the last update to the formal bids threshold in 1999). The impact, particularly
on the Town’s Maintenance Department, has meant far more contracts requiring bids and
formal bids for services and goods that are purchased on a regular basis, such as routine
tree work, ordering grass seed, etc. In order to minimize the amount of paperwork and
staff time necessary for these routine purchases, Town staff is recommending two
changes to the ordinance:
-increase the threshold for no bids from $5,000 to $10,000
-increase the threshold for formal bids from $15,000 to $25,000
All other provisions in the ordinance about who has the authority to actually award a
contract (Department Director up to $10,000; Town Manager up to $25,000; Finance
Committee up to $50,000; Town Council above $50,000) would remain unchanged.
RECOMMENDATION
Provide direction to Town staff regarding amendments to the Town’s purchasing
ordinance. Any recommended ordinance would be presented to the Town Council for
action at a regular meeting in November.
Prepared by:
Dave Casteel
Maintenance Services Director
Purchasing Ordinance Update 2 October 12, 2021