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R-75-11 Res Adopting Purchasing Authority Policy & Procedures'RESOLUTION NO. R'S--// A RESOLUTION ADOPTING A PURCHASING AUTHORITY POLICY AND PROCEDURES WHEREAS, the Village of Lemont desires to adopt a Purchasing Authority Policy and Procedures; and, WHEREAS, the President and Board of Trustees find that adopting the attached Village of Lemont Purchasing Authority Policy and Procedures is in the interest of the public. NOW, THEREFORE, BE IT RESOLVED BY THE PRESIDENT AND BOARD OF TRUSTEES as follows: SECTION 1: That the Village of Lemont Purchasing Authority Policy and Procedures, attached as Exhibit A hereto is hereby adopted and is effective January 1, 2012. SECTION 2: This Resolution shall be in full force and effect from and after its passage as provided by law. SECTION 3: The Village Clerk of the Village of Lemont shall certify to the adoption of this Resolution and cause the same to be published in pamphlet form. PASSED AND APPROVED BY THE PRESIDENT AND BOARD OF TRUSTEES OF THE VILLAGE OF LEMONT, COUNTIES OF COOK, WILL AND DUPAGE, ILLINOIS on this 24th day of October 2011. Debby Blatzer Paul Chialdikas Clifford Miklos Ron Stapleton Rick Sniegowski Jeanette Virgilio ATTEST: PRESIDENT AND VILLAGE BOARD MEMBERS: AYES: NAYS: ABSENT: ABSTAIN V CHARLENE M. SMOLLEN Village Clerk BRIAN K. REAVES President Village of Lemont Purchasing Authority Policy and Procedures Adopted: October 24, 2011 TABLE OF CONTENTS A. Purpose 1 B. Code of Ethics 1 C. Conflict of Interest 2 D. Gifts and Gratuities — Village Guidelines for Accepting 3 E. General Purchasing Procedure and Responsibilities 3 F. Pricing Requirements 4 G. Purchase Orders 5 H. Budget Amendments 5 I. Emergency Purchases 6 J. Payroll 6 K. Manual Checks 6 L. Petty Cash 7 M. Village Purchase Card 8 N. On -Line Purchasing 8 O. Mileage and Toll Reimbursement 8 P. Signing of Contracts 8 Q. Overnight Travel 9 R. Year End Accrual Calculations and Procedures 11 The Village of Lemont Purchasing Authority Policy and Procedures Adopted: October 24, 201 .1 A. Purpose The purpose of this policy is to provide the Village of Lemont staff with guidelines and directions for the acquisition of goods and services. When used with good judgment and common sense, the policies and procedures conveyed within will allow the Village to obtain required supplies and services efficiently and economically. Employees are expected to read this policy and provide the Finance Department with feedback regarding the policies and procedures contained within. This policy is designed to be a fluid document and will be modified from time to time to conform with changes in legislation, technology and actual practice. Although it may not answer every question related to purchasing practices, it does provide general guidelines for purchasing activities. Employees who need help dealing with specific situations not covered by the manual should contact the Village Treasurer for assistance. The Village Administrator, or his /her designee, shall be the final authority with regards to enforcement of any of the provisions of this policy. Failure to follow the procedures outlined in this policy may lead to disciplinary action. B. Code of Ethics All Village personnel engaged in purchasing and related activities shall conduct business dealings in a manner above reproach in every respect. Transactions relating to expenditure of public funds require the highest degree of public trust to protect the interests of the Village and the residents of Lemont. Village employees shall strive to: Ensure that public money is spent efficiently and effectively and in accordance with statutes, regulations and Village policies. Maintain confidentiality at all times. Not accept gifts or favors from current or potential suppliers, which might compromise the integrity of their purchasing function. Specify generic descriptions of goods wherever possible in lieu of brand names when compiling specifications. - Never allow purchase orders for identical goods or services to be split or variations to Village Board approvals to be made in order to circumvent established policy. Purchase without favor or prejudice. - Ensure that all potential suppliers are provided with adequate and identical information upon which to base their offer or quotation and that any subsequent information is made available to all bidders. 1 The Village of Lemont Purchasing Authority Policy and Procedures Adopted: October 24, 2011 - Establish and maintain procedures to ensure that fair and equal consideration is given to each offer or quotation received and selection is based upon the lowest total cost compliant bid. - Offer a prompt and courteous response to all inquiries from potential or existing suppliers. It shall be the responsibility of the Village Administrator to deteiiiiine if a violation of this Code of Ethics has occurred and if disciplinary action is necessary. C. Conflict of Interest Policy Except as may be disclosed to and permitted by the Village Board, it shall be a breach of ethical standards for any employee to participate directly or indirectly in the purchasing process when the employee knows that: 1. The employee is contemporaneously employed by a bidder, vendor or contractor involved in the procurement transaction; or 2. The employee, the employee's partner, or any member of the employee's immediate family holds a position with a bidder, offeror or contractor such as an officer, director, trustee, partner or the like, or is employed in a capacity involving personal and substantial participation in the procurement transaction, or owns or controls an interest in the company; or 3. The employee, the employee's pal leer, or any member of the employee's immediate family has a financial interest arising from the procurement transaction; or 4. The employee, the employee's partner, or any member of the employee's immediate family is negotiating, or has an arrangement concerning, prospective employment with a bidder, vendor or contractor. The employee's immediate family shall be defined as a spouse, children, parents, brothers and sisters and any other person living in the same household as the employee. It shall be the responsibility of the Village Administrator to determine if a violation of this Conflict of Interest policy has occurred and if disciplinary action is necessary. D. Gifts and Gratuities — Village Guidelines for Accepting 2 The Village of Lemont Purchasing Authority Policy and Procedures Adopted: October 24, 2011 Village personnel should be aware that offers of gratitude from vendors could be designed to compromise objective judgment in product or service selection. Accordingly, it is Village policy to observe the highest standards of ethics and to shield the employee, the Village and the vendor from any suggestion or appearance of conflict of interest. No employee shall permit any influence by vendors, which could conflict with the best interest of the Village, or prejudice the Village's reputation. Expenditures of Village funds to vendors shall not by intention personally benefit any person employed with the Village. Employees shall strive to follow the following guidelines: 1. Tangible gifts or gratuities shall not be accepted where their value suggests something more than merely a social gesture. Such gifts should be returned with a statement of Village policy. Promotional or advertising items of nominal value such as key chains, pens, coffee mugs, calendars and holiday candy are acceptable. Promotional gifts that are capable of being shared, such as a box of chocolates, shall be shared within the office or section where the recipient works. 2. Association with vendor representatives at business meals or business organization meetings is occasionally necessary and is neither questionable nor unethical, provided the individual keeps himself /herself free of obligation. 3. Personal loans of money or equipment are not to be accepted from a vendor or an individual associated with a vendor doing business with the Village. 4. Solicitation of vendors for merchandise or certificates to serve as door prizes or favors is normally prohibited. However, the Village Administrator may approve exceptions. 5. Corporate discounts granted to Village employees are acceptable only if they are offered to all Village employees and other corporate clients of the vendor. If in any doubt about the propriety of accepting a gift, the matter should be referred to the Department Head who will, if necessary, discuss the matter with the Village Administrator or his /her designee. E. General Purchasing Procedure and Responsibilities The Village Board adopts a budget for the fiscal year. 2. Purchases of goods /services for budgeted items may be ordered by Department Heads provided that expenditures do not exceed the amount available in the budget. Exceptions to this general rule will occur when a purchase order is required (Section G), pricing requires Board action (Section F), or a budget amendment is required (Section H). 3. The level of budget authority (the level at which expenditures cannot legally exceed the budget) granted to the Village Treasurer is established at the individual fund level. 3 The Village of Lemont Purchasing Authority Policy and Procedures Adopted: October 24, 2011 4. Approved invoices are forwarded by Departments to the Finance Department for inclusion in the Village's Warrant List approval process. Invoices should be submitted to Finance on a regular basis as received. 5. The Finance Department sends any invoices received directly by the Finance Department to appropriate departments for review and signature of Department Head on invoice. Certain recurring invoices (e. g., contract amounts, utilities) do not need to be returned to the individual department for approval. In these instances, a memo from the Department Head with the appropriate coding will be maintained in the vendor file as evidence of approval and coding. 6. Checks maybe processed on a weekly basis based on operational needs of the Village. Those checks not requiring specific board approval can be mailed 30 days from date of invoice or earlier if a discount is allowed. 7. All checks will be co- signed by two of the four authorized approval authorities: Mayor, Village Administrator, Village Treasurer or Assistant Village Administrator. 8. All properly approved invoices are then compiled by the Finance Department on a Warrant List for Board approval. The Warrant List is included in the agenda packet for the Board Meeting. 9. The Board approves the Warrant List at the Board Meeting F. Pricing Requirements The Village's policy is to obtain the most cost effective price available for purchases through competitive pricing. Pricing should generally be obtained from at least three vendors except as noted in the following guidelines or as otherwise required by law. The following guidelines will determine the level of pricing required for purchases. 1. Purchase total less than $2,500 — One verbal quote is sufficient. If the nature of the purchase is repetitive (i.e. monthly), pricing does not need to be obtained every time, but should be reviewed annually. Employees are encouraged to seek additional pricing when possible. 2. Purchase total $2,500 - $4,999 — Three verbal quotes required. 3. Purchase total $5,000 - $7,499 — Three written quotes required. 4. Purchase total $7,500 - $19,999 - Authorization required by purchase order which must be approved by the Village Administrator. Written price quotes are required. Purchase Orders are discussed further in Section G. 5. Purchases $20,000 or more - Must be authorized by the Village Board prior to Purchase Order approval. Formal bid or RFP /RFQ process required. 4 The Village of Lemont Purchasing Authority Policy and Procedures Adopted: October 24, 2011 Exceptions to the pricing requirements include single source vendors, repetitive purchases, requirements by State statute or local ordinance, purchases thru the State of Illinois Joint Purchasing program or other state cooperatives, financially advantageous joint purchases with other units of government, emergency purchases, contractual obligations, professional associations, professional services for legal, engineering, architect, insurance, medical, accounting, auditing, technology, surveying or any other unusual purchasing situation. G. Purchase Orders The policy intends to limit the use of purchase orders. Departments will be required to file purchase orders only if one of the following criteria is met: 1. Purchase is for $7,500 or more. 2. Vendor requires a purchase order in order to deliver the good or service and invoice for the item at a later date. 3. A significant time period is anticipated between the ordering of an item and the payment of such item. Examples include capital projects which take place over several months, commodities used over several months (e.g. road salt) and items ordered well in advance of delivery (e.g. fire engine). In order to expedite purchasing throughout the year, blanket purchase orders may also be prepared on a fiscal year basis if authorized by the Village Administrator. Blanket purchase orders are for vendors that require a purchase order amount for small item or per unit purchases. H. Budget Amendments If a department determines that a significant individual purchase will cause a budgeted account number to go over budget, the department should submit a budget amendment request. Approval of a budget amendment request is as follows: 1. If the amount is less than $7,500 and can be transferred from another account where a positive budget variance is anticipated, the Village Treasurer has the authority to approve the request. 2. If the amount is $7,500 or greater and can be covered by another account, the Village Administrator has the authority to approve the request. 3. If the amount cannot be offset by a reduction in spending from another account, then the budget amendment request will be presented to the Board for approval. The preferred method of presentation to the Board is for the Department Head to include the preparation of a budget amendment request along with an agenda item. However, the Department Head can also prepare a written memorandum to the Village Administrator requesting inclusion of an amendment on the board agenda should the purchase itself (e.g. contract approval) not require prior Board approval. Such inclusion must be approved by the Village Administrator. 5 The Village of Lemont Purchasing Authority Policy and Procedures Adopted: October 24, 2011 I. Emergency Purchases Emergencies are defined as events that could not have been foreseen where immediate action is necessary to safeguard the public's health and safety. In the event of an emergency affecting the public health and safety, the Public Works Director and Chief of Police shall have additional authority up to $10,000 for emergency purchases for the following items: • Services /maintenance to maintain vehicles. • Services /materials to maintain wells. • Services /materials to maintain streets. • Services /materials to maintain sewer system. • Services /materials to maintain water system. • Emergency contracts for equipment and other services • Sheltering needs The Village Administrator approval is required for any emergency over $10,000. Documentation of the emergency and the need for immediate action shall be presented to the Village Administrator, together with an itemized account of all expenditures. Reporting to the Board would be handled through the first warrant list process immediately following the emergency expenditure. J. Payroll The Mayor and Board of Trustees authorize the Village Treasurer on a fiscal year basis to pay wages and salaries of Village employees in accordance with the rates of compensation established by the Board along with the payment of all payroll taxes, pension contributions, and such other obligations according to Federal, State, local, or pension fund requirements. K. Manual Checks Occasionally, a need will arise for a check to be prepared manually outside of the normal claims list process. These manual checks are needed when a check has to be remitted prior to the next Board Meeting warrant list process. The Village's policy is to keep requests for manual checks at a minimum. Common items for which manual checks can be prepared include 1) Payroll related checks; 2) Late notification of seminar registrations or late decisions to attend; 3) Unavoidable cash on delivery transactions; 4) Board approved contractual obligations requiring check; 5) Emergency purchases, 6) Agreed to arrangements pre- approved by the Village Administrator with vendors, 7) Situations which will significantly impair the Village financially if a check is not prepared; and 8) Situations which would significantly impair the Village's operations if a check is not prepared. 6 The Village of Lemont Purchasing Authority Policy and Procedures Adopted: October 24, 2011 The Finance Department will process manual checks no more frequently than weekly. The Finance Director may authorize a non - emergency related check between weekly cycles in situations where immediate issuance of the check is needed to prevent an adverse impact on the Village. The Department Head must submit a written request for a manual check to the Village Administrator or designee. All manual checks are to be approved by the Department Head and Village Treasurer. In the Village Treasurer's absence either the Assistant Village Administrator may approve manual checks. Departments will have to demonstrate that a manual check fits one of the above criteria. Once a check is prepared, reporting to the Board including invoice approval, will take place through the first following warrant list process which corresponds to the manual check date. L. Petty Cash The Village Board has approved three petty cash funds within the Village as follows: Village Hall - $500; Public Works -$400; Police Chief- $500. Responsibility for custody and safeguarding of each fund and for all fund disbursements rests with the appropriate Department Head. The Department Head may designate an employee in their department as custodian of the petty cash fund, which shall be designated in writing to the Village Administrator and Village Treasurer. Petty cash is to be used to reimburse employees for Village expenses which the employee incurs up front and for small purchases which are handled most efficiently by utilizing petty cash. The following restrictions apply: 1. Individual petty cash purchases are limited to a maximum of $75.00. 2. Employee must prepare a petty cash voucher which is approved by the Department Head. 3. Receipts documenting the expense must be attached to the petty cash voucher. Disbursements from petty cash funds cannot be ultimately approved without receipts. If cash is provided in advance of the purchase, the employee must return the unused cash along with the receipt. If an employee cannot provide a receipt, alternative verification approved by the Department Head must be attached. Each department is responsible for balancing and reconciling its own petty cash fund. Departments replenish petty cash funds by submitting a request to the Finance Department. The request is then processed through the Warrant List procedure. The request for replenishment must be supported by petty cash vouchers /receipts which agree to the amount of the request. The fund must be at least 50% depleted for the Finance Department to process a check to replenish. The fund must be replenished at fiscal year -end for all expenses at that point in time. Departments can request an increase to their petty cash fund amount through the regular warrant list process. Approval of such a request by the Village Board will also constitute approval of amending this policy to reflect the increased amount. 7 The Village of Lemont Purchasing Authority Policy and Procedures Adopted: October 24, 2011 M. Village Purchase Card The Village purchase card is administered under a separate Purchase Card Policy. See that policy for applicable guidelines. N. On -Line Purchasing/Reimbursement The Internet may be utilized for on -line purchasing as a tool for obtaining favorable pricing, preferred products /services and securing expedited procurement. On -line purchasing is subject to all requirements of this policy and is not to be used for means other than allowed by this policy. On -line purchasing shall be subject to the pricing requirements of purchasing procedures Section F. On -line purchases are to be made preferably utilizing a Village issued purchase card which is subject to the procedures as discussed in the Village Purchase Card Policy. Situations when an employee utilizes their own credit card to make a purchase on behalf of the Village are subject to pre - approval of the employee's Department Head. Such pre- approved purchases will be reimbursed directly to the employee through the Village's regular warrant list process. The employee must obtain a receipt or other form of documentation substantiating the on -line purchase. Should an employee make an on -line purchase without pre- approval, reimbursement of that purchase can be denied by the Village. All attempts should be made to utilize the methods outlined in this policy to make purchases on behalf of the Village. From time to time, there may be a need for one to seek reimbursement for purchases made on the Village's behalf. Cost of reimbursement shall not exceed $500, unless approved by the Village Administrator. Travel reimbursement follows sections 0 and Q below. O. Mileage & Toll Reimbursement Reimbursement for the mileage for non - overnight travel when driving a personal vehicle for Village business and for related tolls incurred shall be made to employees on a monthly basis. Employees shall complete the Monthly Mileage & Toll Reimbursement form and submit the form for payment thru the Village's regular claims list process. The form is attached as Exhibit B. It is the Village's policy to reimburse employees for every business mile driven with a personal vehicle at the Internal Revenue Service (IRS) standard mileage rate. The form will be modified by the Finance Department each time the IRS adjusts the rate; typically on a calendar year basis. Employees will be reimbursed for actual toll expenses. Employees using personal vehicles on Village business must have adequate automobile insurance coverage. 8 The Village of Lemont Purchasing Authority Policy and Procedures Adopted: October 24, 2011 P. Signing of Contracts All contracts in excess of $5,000 must be signed by the Village Administrator. Additionally, all contracts or documents requiring the signature of the Mayor and /or Village Administrator, and /or any other person designated by the Village Board must be executed accordingly. Q. Overnight Travel Occasionally it will be advantageous to the Village for employees to incur overnight travel when conducting Village business. Overnight travel is most typically utilized for educational events such as conferences. Overnight travel is basically a two part process: 1) approval of the travel in advance; and 2) expense reporting of the trip. 1. Authorization All travel requiring an overnight stay must be approved in advance by both . the employee's Department Head and the Village Administrator. Requests for travel authorization must be made utilizing the Travel Authorization and Expense form; which is attached along with its instructions as Exhibit D. 2. Travel Arrangements Employees should make travel arrangements which seek to facilitate efficient and timely travel while maintaining reasonable costs. Employees are encouraged to utilize the travel arrangements and rates generally secured by the sponsor of the conference or seminar. Employees are also encouraged to seek government discounts when available. Employees should arrive at the destination in a timely enough manner which allows the employee to attend all activities that are the subject of the trip. Generally, events which begin early in the morning will necessitate the employee arriving the night before. At the conclusion of the business purpose of the trip, expenses will be paid for the employee to travel home, but not for additional nights unless such is beyond the employee's control, or is approved by the Village Administrator. 3. Air Fare Employees are encouraged to seek flights which generally facilitate the efficient and timely attendance for the business purpose of the travel. All airfare at Village expense will be limited to coach/economy class. Upgrades above coach/economy class will be paid by the employee. Travel by train or another form of mass transportation may be substituted in lieu of air travel provided such cost does not exceed that of air fare. The Village of Lemont Purchasing Authority Policy and Procedures Adopted: October 24, 2011 4. Ground Transportation Employees should utilize one of four forms of ground transportation: taxi, hotel transportation, airport transportation, or personal or Village owned vehicle. If a rental automobile is necessary, such rental must be pre- approved by the Department Head and Village Administrator with such approval noted on the Travel Authorization and Expense form. Employees utilizing personal vehicles to travel to the destination shall be reimbursed at the standard IRS mileage rate. When utilizing a personal vehicle, expenses for tolls and parking will also be paid by the Village. Expenses will also be paid for ground transportation that is necessary for business purposes during the travel while at the destination. 5. Lodging Employees may obtain comfortable lodging at reasonable prices. When available, employees should utilize lodging and rates generally secured by the sponsor of the conference or seminars. Should an employee secure lodging other than that offered by the sponsor, reimbursement will not be made for costs in excess of what is available thru the sponsor. Employees are also encouraged to seek government discounts when available. 6. Meals Employees engaged in travel which requires an overnight stay will receive a per diem amount up to a maximum of $46 per day including tax and tip (as of April 1, 2011). The per diem amount shall be adjusted May 1 of each year using the U. S. General Services Administration (GSA) CONUS rate. Any costs exceeding the per diem amount are the responsibility of the employee. 7. Accompaniment on Trip The Village will not pay for any travel expenses of any non - employee (e.g. family members) accompanying the employee on a trip. Only those expenses related to the employee's business travel will be paid 8. Non - Allowable Expenses The Village shall not pay for any expenses which are considered to be personal in nature including, but not limited to, the following: • Personal entertainment • Personal phone calls except to report schedule changes to family members • Laundry expenses • Grooming expenses (e.g., beautician, barber) 10 The Village of Lemont Purchasing Authority Policy and Procedures Adopted: October 24, 2011 • Traffic violations and court costs • Membership fees for airline or hotel clubs • Books and magazines unless work related 9. Advances Employees are encouraged to request an advance to cover out of pocket costs for their trip related to items 4 (ground transportation) and 6 (meals). The purpose of such advance is to provide the employee cash for the trip and minimize the employee's need to utilize a personal charge 10. Requesting Payments and Reporting Expenses Each time a payment is to be made related to the trip; the employee is to submit the Travel Authorization and Expense form and should follow all instructions accompanying the form. At the conclusion of the trip, a final accounting is to be made by utilizing the form and the employee will either receive a reimbursement or will remit any unused advance back to the Village. Receipts or similar supporting documentation must be submitted with the form to support all expenses. If a receipt is not submitted for a certain expense, a written explanation must be provided as to why a receipt was not submitted. The Village may deny any request submitted by an employee for payment of undocumented expenses. R. Year -End Accrual Calculations and Procedures The Village shall calculate all year -end accruals with a goal of preparing complete, fully- adjusted trial balances at April 30 each year reflecting all purchase related accruals. Each year in March, the Treasurer shall issue a memorandum to the Village's department directors detailing the year end accrual calculations and procedures. The memorandum should include, but not be limited to items such as the year end accounts payable accrual, unbilled goods or services at year end, year -end purchase order procedures and the manual check cut -off date. 11