Materials Management and
Payment Procedures
Manual
Revised July 2013
MATERIALS MANAGEMENT DIVISION
901 B TEXAS STREET
DENTON, TEXAS 76209
[email protected]
(Service Center Complex)
Materials Management Division Phone Numbers
Purchasing Main
(940) 349-7100
Distribution Center Main (940) 349-8437
Fax
(940) 293-1837
MATERIALS MANAGEMENT STAFF
Purchasing:
Elton Brock, Purchasing Manager
(940) 349-7133
Karen Smith, Assistant Purchasing Manager
(940) 349-8436
Rebecca Hunter, Senior Buyer
(940) 349-7139
Jody Hays, Buyer
(940) 349-7132
Cindy Alonzo, Buyer
(940) 349-7318
Julia Klinck, Contract Administration Supervisor
(940) 349-7130
Belinda Hawkins, Procurement Assistant
(940) 349-7149
Kelly Smith, Procurement Assistant
(940) 349-7143
Distribution Center:
Nelson Orozco, Warehouse Operations Specialist (940) 349-8435
Ronald Shaw, Warehouse Operations Specialist
(940) 349-8437
Mark Swinscoe, Warehouse Operations Specialist (940) 349-7178
Steve Haley, Courier
(940) 349-8446
Quick Reference Guide
What is the dollar threshold for competitive sealed bids?
See Chapter 1, Section 1
Can my manager or director sign an agreement or proposal submitted by a vendor?
See Chapter 2, Section 6
What kind of purchases can be made using a check requisition?
See Chapter 3, Section 3
I cannot find three vendors to obtain the quotes needed to purchase the product that my
department needs? What are my options?
See Chapter 4, Section 2
What is considered Professional Services?
See Chapter 7, Section 2
Can I set up an open purchase order for multiple purchases throughout the year?
See Chapter 9, Section 3
Why am I being charged for freight if the vendor did not include it in their quotation?
See Chapter 10, Section 1
When is a vendor required to have performance or payment bonds?
See Chapter 1, Section 8
When is workers’ compensation insurance required?
See Chapter 1, Section 10
TABLE OF CONTENTS
INTRODUCTION.........................................................................................................................................1
CHAPTER 1 LAWS AND STATUTES GOVERNING PURCHASING..............................................2
SECTION 1.
BIDDING REQUIREMENTS ........................................................................................2
SECTION 2.
LEGAL ADVERTISING REQUIREMENTS ................................................................2
SECTION 3.
RECIPROCAL LAW ......................................................................................................3
SECTION 4.
EXEMPTIONS FROM COMPETITIVE BIDDING REQUIREMENTS ......................3
SECTION 5.
CHANGE ORDERS........................................................................................................4
SECTION 6.
PROMPT PAYMENT ACT............................................................................................5
SECTION 7.
AWARD OF A CONTRACT .........................................................................................6
SECTION 8.
BOND REQUIREMENTS ..............................................................................................7
SECTION 9.
RETAINAGE ..................................................................................................................8
SECTION 10. WORKERS’ COMPENSATION INSURANCE ............................................................8
CHAPTER 2 CITY OF DENTON INTERNAL PROCUREMENT POLICIES ................................9
SECTION 1.
PURCHASE OF MATERIALS, EQUIPMENT, AND SUPPLIES FOR
PERSONAL USE ............................................................................................................9
SECTION 2.
PROCUREMENT OF GOODS/SERVICES FROM CITY EMPLOYEES
AND/OR IMMEDIATE FAMILY .................................................................................9
SECTION 3.
PROCUREMENT OF SEASONAL DECORATIONS, FLOWERS, GIFTS
FOR EMPLOYEES, RETIREMENT AND CELEBRATION ACTIVITIES ................9
SECTION 4.
FORMAL CONTRACTS................................................................................................9
SECTION 5.
INSURANCE REQUIREMENTS ................................................................................10
SECTION 6.
SIGNATURE/AUTHORIZATION ..............................................................................10
SECTION 7.
TAX EXEMPTION STATUS.......................................................................................10
SECTION 8.
PURCHASING AUTHORITY THRESHOLDS ..........................................................11
SECTION 9.
APPROVAL PROCEDURES .......................................................................................11
SECTION 10. SOLE SOURCE PURCHASES ....................................................................................11
SECTION 11. SINGLE SOURCE PURCHASES ................................................................................12
SECTION 12. EMERGENCY PURCHASES ......................................................................................13
SECTION 13. LOCAL PREFERENCE PURCHASES .......................................................................13
SECTION 14. ENVIRONMENTALLY PREFERABLE PURCHASING (EPP) ................................14
SECTION 15. VENDORS THAT MEET OR EXCEED AIR QUALITY STANDARDS..................15
SECTION 16. ADMINISTRATIVE APPROVALS OF CERTAIN PURCHASES ............................15
SECTION 17. FEDERAL REQUIREMENTS: ....................................................................................16
SECTION 18. ETHICS .........................................................................................................................16
SECTION 19. NON DISCRIMINATION POLICY.............................................................................17
SECTION 20. DENTON MUNICIPAL ELECTRIC (DME) PROCUREMENT
PROCEDURES .............................................................................................................18
CHAPTER 3 PROCUREMENT PROCEDURES.................................................................................19
SECTION 1.
PETTY CASH ...............................................................................................................19
SECTION 2.
PROCUREMENT CARD PROGRAM ........................................................................19
SECTION 3.
CHECK REQUISITION ...............................................................................................19
SECTION 4.
PAYMENT PROCEDURES .........................................................................................20
CHAPTER 4 INFORMAL QUOTES .....................................................................................................21
SECTION 1.
GOODS OR SERVICES – $3,000 AND UNDER .......................................................21
SECTION 2.
GOODS OR SERVICES $3,000.01 - $50,000 .............................................................22
CHAPTER 5 FORMAL SOLICITATIONS AND COOPERATIVE PURCHASING ......................24
SECTION 1.
INVITATION FOR BID (IFB) .....................................................................................25
SECTION 2.
REQUEST FOR PROPOSALS (RFP) ..........................................................................27
SECTION 3.
ADDITIONAL PROCEDURES AS APPLICABLE ....................................................33
SECTION 4.
COOPERATIVE BUYING AGREEMENTS ...............................................................34
CHAPTER 6 PUBLIC WORKS PROJECTS .......................................................................................35
SECTION 1.
DEFINITION ................................................................................................................35
SECTION 2.
PROFESSIONAL ENGINEERING REQUIREMENTS ..............................................35
SECTION 3.
PROFESSIONAL ARCHITECT REQUIREMENTS ..................................................36
SECTION 4.
OTHER PROFESSIONAL SERVICES REQUIREMENTS........................................37
SECTION 5.
PREVAILING WAGE RATES ....................................................................................37
SECTION 6.
BONDING.....................................................................................................................37
SECTION 7.
INSURANCE REQUIREMENTS ................................................................................37
SECTION 8.
AWARD OF CONTRACT ...........................................................................................38
SECTION 9.
ALTERNATIVE PROJECT DELIVERY METHODS FOR
CONSTRUCTION SERVICES ....................................................................................38
SECTION 10. CHANGE ORDERS......................................................................................................38
SECTION 11. PROGRESS PAYMENTS ............................................................................................39
SECTION 12. RETAINAGE ................................................................................................................39
CHAPTER 7 PROCUREMENT OF PROFESSIONAL SERVICES ..................................................41
SECTION 1.
PURPOSE OF POLICY AND PROCEDURES ...........................................................41
SECTION 2.
DEFINITION OF PROFESSIONAL SERVICES ........................................................41
SECTION 3.
PROFESSIONAL SERVICES PROCUREMENT ACT ..............................................41
SECTION 4.
PROCUREMENT OF PROFESSIONAL SERVICES – GENERAL ..........................42
SECTION 5.
PROCUREMENT OF PROFESSIONAL SERVICES .................................................42
SECTION 6.
PROCUREMENT OF OTHER SERVICES .................................................................45
CHAPTER 8 PURCHASE REQUISITION ...........................................................................................46
SECTION 1.
WHY REQUISITION ...................................................................................................46
SECTION 2.
WHEN TO REQUISITION ..........................................................................................46
SECTION 3.
HOW TO REQUISITION .............................................................................................46
SECTION 4.
HOW REQUISITIONS ARE PROCESSED ................................................................47
CHAPTER 9 PURCHASE ORDERS AND RECEIVING ...................................................................48
SECTION 1.
PURPOSE OF A PURCHASE ORDER .......................................................................48
SECTION 2.
HOW A PURCHASE ORDER IS PROCESSED .........................................................48
SECTION 3.
OPEN PURCHASE ORDER ........................................................................................48
SECTION 4.
EMERGENCY/CONFIRMATION PURCHASE ORDER ..........................................49
SECTION 5.
INSPECTING GOODS OR SERVICES ......................................................................49
CHAPTER 10 PAYMENT OF INVOICES AND TRANSPORTATION CHARGES .......................51
SECTION 1.
INVOICE PAYMENTS ................................................................................................51
SECTION 2.
SHIPPING TERMS .......................................................................................................51
CHAPTER 11 GENERAL INFORMATION .........................................................................................53
SECTION 1.
TERM CONTRACT PURCHASES .............................................................................53
SECTION 2.
OFFICE SUPPLIES ......................................................................................................53
SECTION 3.
FURNITURE.................................................................................................................53
SECTION 4.
PRINTING SERVICES ................................................................................................53
SECTION 5.
COPIERS.......................................................................................................................53
SECTION 6.
UNIFORMS ..................................................................................................................54
CHAPTER 12 DISPOSAL OF CITY-OWNED PERSONAL PROPERTY, MATERIALS, ...........55
AND EQUIPMENT ....................................................................................................................................55
SECTION 1.
PERMITTED METHODS FOR PERSONAL PROPERTY DISPOSAL ....................55
SECTION 2.
DISPOSAL OF ABANDONED PROPERTY ..............................................................57
SECTION 3.
PURCHASE BY OFFICERS AND EMPLOYEES ......................................................57
SECTION 4.
DISPOSITION OF FEDERAL AND GRANT FUNDED ASSETS ............................58
SECTION 5.
DISPOSITION OF ITEMS FUNDED WITH BONDS ................................................58
SECTION 6.
COMMON PERSONAL PROPERTY TERMS: ..........................................................58
GLOSSARY OF TERMS ...........................................................................................................................60
APPENDICES .............................................................................................................................................67
APPENDIX A –
APPENDIX B –
APPENDIX C –
APPENDIX D –
PROCUREMENT PROCESS FLOW CHARTS
CODE OF ORDINANCE AMENDMENT (ORDINANCE #2001-376)
SALE OF PERSONAL PROPERTY (ORDINANCE #2008-11)
EXPENDITURE AUTHORITY OF CITY MANAGER
(ORDINANCE #2006-237)
APPENDIX E – CHANGE ORDER AUTHORITY (ORDINANCE #2009-034)
APPENDIX F – ENVIRONMENTALLY PREFERABLE PURCHASING POLICY
(RESOLUTION #R2007-032)
APPENDIX G – ENVIRONMENTAL AIR QUALITY POLICY
(RESOLUTION #R2008-042)
APPENDIX H – DENTON MUNICIPAL ELECTRIC PROCUREMENT PROCEDURES
(ORDINANCE #2009-189)
APPENDIX I – CITY FACILITIES CONSTRUCTION AND RENOVATION
APPENDIX J – LOCAL PREFERENCE PURCHASES
APPENDIX K– PETTY CASH FORM
APPENDIX L – CHECK REQUISITION FORM & PROCEDURES
APPENDIX M – PAYMENT PROCEDURES
APPENDIX N – INSURANCE REQUIREMENTS
APPENDIX O – PURCHASING AGENT SIGNATURE AUTHORITY
APPENDIX P – PRINTING SERVICES
APPENDIX Q – PROCUREMENT PROCEDURES FOR DISTRIBUTION CENTER
STOCK ITEMS
APPENDIX R – WORKERS’ COMPENSATION INSURANCE REQUIREMENTS
(ATTORNEY GENERAL OPINION DM-300)
Content of this manual is intended to comply with the Charter of the City of Denton, the Code of
Ordinances, and the State of Texas Local Government Code, Texas Government Code, Texas
Labor Code, and Texas Occupations Code.
INTRODUCTION
Materials Management, a division of the Finance Department, is designated as the central
procurement and property disposal function for the City of Denton. It is responsible for assisting
all departments in locating and securing supplies, equipment and/or services in the most efficient
and economical way.
The Materials Management Division operates as a service agency and should be included in all
stages of acquisition; from planning – to ordering, and receiving. The intention is not to
influence what is purchased but to utilize the division’s knowledge and expertise of Materials
Management techniques and products, and to insure compliance with the State’s competitive
bidding statutes and the City’s Purchasing and Procurement policy.
A proper understanding of Purchasing and Procurement policies and procedures can save the
City, the taxpayer, and the ratepayer time and money. This manual may be used as a reference
guide for the best interest of all concerned.
Ordinance No. 2001-376 (See Appendix B)
ARTICLE II. PURCHASING
Sec. 10-26
Purchasing and Procurement Methods and Procedures.
(a) The Purchasing Manager of the City of Denton (the “Purchasing Manager”) shall make
all purchases and sales for the City in accordance with the provisions of state law, the
Charter and in accordance with this article. The City may utilize any purchasing or
procurement method or procedure authorized by law to purchase or contract for goods,
services or public works. The Purchasing Manager is authorized to determine which
method of procurement provides the best value to the City under V.T.C.A. Local
Government Code, §§ 271.113, 271.114, and 252.022(d), as amended. As authorized by
V.T.C.A. Local Government Code §252.022(c) the Purchasing Manager is hereby
authorized to use any procurement procedure or method for the construction or
installation of any public work that is authorized by V.T.C.A. Government Code, Ch.
2267, as amended, even if the public work is for the construction of a public work
defined in V.T.C.A. Local Government Code §252.043(d). This ordinance shall
constitute a resolution for purposes of V.T.C.A. Local Government Code, §252.022(c).
(b) The Purchasing Manager shall have full authority to purchase or provide for the
purchase of all materials, supplies and equipment for the use of all departments, utilities,
commissions and boards comprising the city government.
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CHAPTER 1
LAWS AND STATUTES GOVERNING PURCHASING
CHAPTER 1 LAWS AND STATUTES GOVERNING PURCHASING
The City of Denton, Texas (“City”) is a Home Rule city, operating pursuant to Article 11,
Section 5 of the Texas Constitution, State law and the City’s Home Rule Charter. In determining
purchasing practices, the City is guided by the City Charter, State law, and City ordinances,
supplemented from time to time by City Council resolution and City administrative policies and
procedures.
Procurement procedures for Texas Local Government entities which are most pertinent in terms
of this manual include: Texas Local Government Code Chapter 252 and Chapter 271 and Texas
Government Code Chapters 2252, 2253, 2254 and 2267. Where appropriate, various codes are
referenced throughout this manual as it pertains to specific procurement activities.
Procurement for Denton Municipal Electric (DME) may be exempt from specific provisions of
Texas Local Government Code Chapter 252 (See Chapter 2 – Section 20, and Appendix H)
SECTION 1. BIDDING REQUIREMENTS
A. In accordance with Texas Local Government Code 252.021, before a municipality may
enter into a contract that requires any expenditures of more than $50,000 from one or
more municipal funds, the municipality must (i) comply with the procedures of Chapter
252 and Chapter 271 for competitive sealed bidding or competitive sealed proposals; (ii)
use the reverse auction procedure as defined by Section 2155.062, Texas Government
Code and Texas Local Government Code 271.906 (iii) comply with a method prescribed
by Texas Government Code 2267(alternative project delivery methods for certain
projects).
B. Provided that the competitive sealed bidding requirement applies to a procurement
opportunity, a contract for commodities and/or services must be awarded to the lowest
responsible bidder, or alternatively, a contract for commodities and/or services may be
awarded to the respondent who provides the best value for the Municipality, considering
the factors defined in Texas Local Government Code 252.043(b) and the
negotiations/discussions conducted under Section 252.042.
C. Exemptions to competitive bidding requirements may apply. Refer to Section 4 for
specific items.
SECTION 2. LEGAL ADVERTISING REQUIREMENTS
(Local Government Code, 252.041 and Government Code, 2267.052)
A. If the competitive sealed bidding requirement applies, notice of the time and place at
which bids will be publicly opened and read aloud must be published at least once a week
for two consecutive weeks in a local newspaper, with the date of the first publication
being before the 14th day before the date set to publicly open the bids and read them
aloud.
B. If the competitive sealed proposal requirement applies notice of the time and place at
which the proposals will be due must be published at least once a week for two
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LAWS AND STATUTES GOVERNING PURCHASING
consecutive weeks in a local newspaper, with the date of the first publication being
before the 14th day before the date set to receive proposals.
SECTION 3. RECIPROCAL LAW
(Government Code, 2252.002)
Texas Government Code Chapter 2252.002 - Subchapter A, Section 2252.002 relates in part to
bids by nonresident bidders for any type of contract awarded by a municipality, such as general
construction, improvements, supplies, services, a public work project or for purchase of supplies,
materials, or equipment.
A. Texas Government Code Section 2252.002, Subchapter A, “A government entity may not
award a governmental contract to a nonresident bidder unless the nonresident underbids
the lowest bid submitted by a responsible resident bidder by an amount that is not less
than the amount by which a resident bidder would be required to underbid the
nonresident bidder to obtain a comparable contract in the State in which the nonresident’s
principal place of business is located.” The city reviews the applicability of this statute
for all expenditures over $50,000.
B. This requirement does not apply to a contract involving federal funds.
C. For purposes of this statute, a
1. "Nonresident bidder" means a person who is not a resident of Texas.
2. "Resident bidder" means a person whose principal place of business is in this state
including a contractor whose ultimate parent company or majority owner has its
principal place of business in this state.
SECTION 4. EXEMPTIONS FROM COMPETITIVE BIDDING REQUIREMENTS
(Local Government Code, 252.022)
Some purchases are exempt from the competitive bid requirements of the Local Government
Code. Chapter 252.022 specifically names purchase that are exempt, they include:
“(1) a procurement made because of a public calamity that requires the immediate
appropriation of money to relieve the necessity of the municipality's residents or to
preserve the property of the municipality;
(2) a procurement necessary to preserve or protect the public health or safety of the
municipality's residents;
(3) a procurement necessary because of unforeseen damage to public machinery, equipment,
or other property;
(4) a procurement for personal, professional, or planning services;
(5) a procurement for work that is performed and paid for by the day as the work progresses;
(6) a purchase of land or a right-of-way;
(7) a procurement of items that are available from only one source, including:
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CHAPTER 1
LAWS AND STATUTES GOVERNING PURCHASING
(A) items that are available from only one source because of patents, copyrights, secret
processes, or natural monopolies;
(B) films, manuscripts, or books;
(C) gas, water, and other utility services;
(D) captive replacement parts or components for equipment;
(E) books, papers, and other library materials for a public library that are available only
from the persons holding exclusive distribution rights to the materials; and
(F) management services provided by a nonprofit organization to a municipal museum,
park, zoo, or other facility to which the organization has provided significant
financial or other benefits;
(8) a purchase of rare books, papers, and other library materials for a public library;
(9) paving drainage, street widening, and other public improvements, or related matters, if at
least one-third of the cost is to be paid by or through special assessments levied on
property that will benefit from the improvements;
(10) a public improvement project, already in progress, authorized by the voters of the
municipality, for which there is a deficiency of funds for completing the project in
accordance with the plans and purposes authorized by the voters;
(11) a payment under a contract by which a developer participates in the construction of a
public improvement as provided by Subchapter C, Chapter 212;
(12) personal property sold:
(A) at an auction by a state licensed auctioneer;
(B) at a going out of business sale held in compliance with Subchapter F, Chapter 17,
Business and Commerce Code;
(C) by a political subdivision of this state, a state agency of this state, or an entity of the
federal government; or
(D) under an interlocal contract for cooperative purchasing administered by a regional
planning commission established under Chapter 391;
(13) services performed by blind or severely disabled persons;
(14) goods purchased by a municipality for subsequent retail sale by the municipality;
(15) electricity; or
(16) advertising, other than legal notices.”
Chapter 252 also does not apply to:
•
Bonds or warrants issued under Subchapter A, Chapter 571.
•
Certain purchases for Denton Municipal Electric per Ordinance 2009-189 (Appendix H).
•
Expenditures described by Section 252.021(a) if the governing body of the municipality
finds that a method described by Texas Government Code, Chapter 2267 provides a
better value for the municipality than the procedures described in Chapter 252.
SECTION 5. CHANGE ORDERS
(Local Government Code, 252.048 and 271.060)
A change order occurs when changes in plans or specifications are necessary after the
performance of a contract is begun, or if it is necessary to increase or decrease the quantity of
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LAWS AND STATUTES GOVERNING PURCHASING
work to be performed and/or of materials, equipment, or supplies to be furnished. Change orders
under this section do not apply to professional services, or contracts awarded under Local
Government Code 252.022. Refer to Chapter 1, Section 4.
Individual change orders for an increase or decrease of $50,000 or less may be approved by the
Materials Management staff. The change order shall be initiated in writing by the contractor to
the project manager. The project manager shall review the change order to ensure that it is a
necessity and that representative pricing has been offered. If applicable, the engineer/architect
shall review and approve the change order. If applicable, the project manager and/or owning
department will carry the change order through the Public Utilities Board for recommendation
prior to presentation to City Council and then carry it through the Council approval process.
Once approved and all signatures are received, the project manager shall forward the request to
Materials Management. Materials Management personnel will review the request, sign, and
enter a change order into the financial system. A hard copy of the change order will be
forwarded to the contractor and a copy retained in the procurement file.
Individual change orders involving an increase or a decrease in excess of $50,000 require
approval by the City Council. The approval procedures are discussed in Chapter 2, Section 9 of
this manual.
A change order, or the cumulative total of change orders, cannot increase the original contract
price by more than twenty-five percent (25%) except as provided under Chapter 271.060. A
change order, or cumulative total of change orders, may not decrease the contract total by more
than twenty-five percent (25%) without consent of the contractor. Additional work in excess of
the twenty-five percent (25%) must be re-solicited.
Ordinance 2009-034 (See Appendix E)
SECTION 6. PROMPT PAYMENT ACT
(Government Code, 2251)
A. Chapter 2251 of the Texas Government Code, sometimes referred to as the Prompt
Payment Act, establishes a time period for payment by the City of goods and services and
the payment of interest on late payments.
1. A payment under a contract on or after September 1, 1987 is overdue on the 31st day
after the later of:
a. the date the City receives the good under the contract; or
b. the date the performance of the service under the contract is completed; or
c. the date the City receives an invoice for the goods or service, or if in dispute with
the vendor, within 31 days after the disputed issue has been resolved.
2. Interest starts accruing on the date the payment becomes overdue.
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LAWS AND STATUTES GOVERNING PURCHASING
3. The rate of interest that accrues on an overdue payment is the rate in effect on
September 1 of the fiscal year in which the payment becomes overdue. The rate in
effect on September 1 is equal to the sum of:
a. one percent; and
b. the prime rate as published by the Wall Street Journal on the first day of July of
the preceding fiscal year that does not fall on a Saturday or Sunday.
4. Interest stops accruing on the day payment is mailed or electronically transmitted.
5. Payment of interest must be made automatically and at the same time the bill
(principal) is paid. The City must submit the interest payment with the net amount
due for the goods or service.
6. The City may not require a vendor or subcontractor to agree to waive the vendor’s or
subcontractor’s right to interest under this chapter as a condition of the contract
between the parties. The City may not require a vendor to petition bill, or wait an
additional day to receive the interest due.
B. Departments will not be responsible for interest payment caused by the Finance and
Accounting Department.
C. To minimize the amount of interest the City must pay, departments must keep Accounts
Payable informed regarding the receipt of merchandise, returns and cancellations, back
orders, etc.
SECTION 7. AWARD OF A CONTRACT
(Local Government Code, 252.042, 252.043 and 271.027)
A. If the competitive sealed bidding requirement applies to a contract for goods and/or
services, the contract must be awarded to the lowest responsible bidder or to the bidder
who provides goods or services at the best value for the municipality.
B. The utilization of an award based upon best value must be determined prior to bid
solicitation and notice of same must be included in the specifications. The criteria for
award must include a relative value for each evaluation factor.
C. If the request for proposal requirement applies to a contract for goods or services, the
contract may be awarded to the supplier/contractor providing the “best value” to the City
based upon evaluation criteria published in the specifications. The evaluation criteria
must include a relative value for each factor. The City may solicit best and final offers
(B.A.F.O), or conduct formal negotiations, from respondents; to arrive at an overall best
valued solution.
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LAWS AND STATUTES GOVERNING PURCHASING
SECTION 8. BOND REQUIREMENTS
(Government Code, 2253.021)
The bonding requirements of the City of Denton are intended to protect the contractor, the
service provider and the City of Denton.
A. Performance Bonds - A performance bond secures the performance and fulfillment of all
the undertakings, covenants, terms, conditions and agreements contained in the contract
and specifications. For contracts in excess of $100,000, a performance bond must be
executed in the full amount of the contract that covers the time period the project will be
allowed for construction. The City’s policy is to require 110% of the contract amount for
a performance bond. The bond must be executed by a corporate surety in accordance
with the law, the corporate surety must be licensed by the State of Texas to issue surety
bonds and appear on the U.S. Treasury List of acceptable sureties. (Government Code
2253.021). Though not statutorily required, the City extends the performance bond for
two years from final acceptance. This provides a bond for defects in workmanship and/or
materials.
B. Payment Bonds - A Payment bond protects beneficiaries who supply materials or labor to
the public works project and have a direct contractual relationship with the contractor. A
payment bond is required because materials suppliers and laborers do not enjoy the same
lien rights on public projects as they do on private projects. The payment bond
requirements essentially replace the protections afforded by lien rights with protections
guaranteed by a surety. For contracts in excess of $50,000, a payment bond must also be
executed in the full amount of the contract that covers the time period the project will be
allowed for construction. The City’s policy is to require 110% of the contract amount
for a payment bond. “A bond required by this section must be executed by a corporate
surety in accordance with Section 1, Chapter 87, Acts of the 56th Legislature, Regular
Session, 1959 (Article 7.19-1, Vernon's Texas Insurance Code).” (Government Code
2253.021)
C. Bid Bonds - A bid bond is submitted with a bid and is a guarantee that the bidder will
proceed with the contract and will replace the bid bond with a performance and payment
bonds. The bid bond is an instrument intended to prevent bidders from underbidding and
then withdrawing their bid. A bid bond is not statutorily required, but is generally used
by the City on public works contracts. If a department prefers not to use a bid bond or to
utilize an alternate method, please inform the assigned buyer before the bid is released.
Ultimately, the decision of whether or not to use a bid bond is at the discretion of the
using department.
Government Code 2253 defines a “public work contract” as “a contract for constructing, altering,
or repairing a public building or carrying out or completing any public work.”
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LAWS AND STATUTES GOVERNING PURCHASING
SECTION 9. RETAINAGE
(Government Code, 2252.031, 2252.032 and 2252.033)
The City is required to withhold retainage for public works contracts in which the total contract
price estimate at the time of execution is more than $400,000; however, this requirement is
typically applied by the City for all public works contracts in excess of $50,000. The City may
require varying percentage withholding amounts; however, the City typically requires five
percent. For retainage percentages in excess of five percent, the City must deposit the retainage
into an interest-bearing account and pay the interest earned to the contractor on completion of the
contract. Under this statute, “public works” is defined as including “the construction, alteration,
or repair of a public building or the construction of a public work.” Refer to Chapter 6 for a
discussion of how this provision applies to public works projects.
SECTION 10. WORKERS’ COMPENSATION INSURANCE
(Labor Code, 406.096)
The City is required to ensure that contractors have workers’ compensation insurance for
building and construction contracts. The contractor shall provide a certificate of insurance to the
Materials Management Department before a purchase order for work is executed. Under this
code, building or construction includes:
1) Erecting or preparing to erect a structure, including a building, bridge, roadway, public
utility facility, or related appurtenance;
2) Remodeling, extending, repairing, or demolishing a structure; or
3) Otherwise improving real property on an appurtenance to real property through similar
activities.
The Attorney General ruled that there are no de minimis exceptions to the requirement as
provided in Appendix R.
Sole proprietors may be exempt from this requirement, but shall provide a signed letter, to the
Materials Management Department, certifying they are a sole proprietor.
(See Appendices N and R)
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CHAPTER 2
CITY OF DENTON INTERNAL PROCUREMENT POLICIES
CHAPTER 2
CITY OF DENTON INTERNAL PROCUREMENT POLICIES
SECTION 1. PURCHASE OF MATERIALS, EQUIPMENT, AND SUPPLIES FOR
PERSONAL USE
A. Employees of the City and their immediate family are allowed to participate in the
purchase of material at auctions, by bid, or established sale conducted for the City of
Denton except as referenced in Chapter 12, Section 3.
B. Employees cannot use the City’s business accounts for personal purchases. Employees
that are involved in contract negotiations should use caution when purchasing
merchandise or services for personal use with a vendor that is currently or has worked for
the City.
SECTION 2. PROCUREMENT OF GOODS/SERVICES FROM CITY EMPLOYEES
AND/OR IMMEDIATE FAMILY
It is the general policy of the City of Denton to not enter into contracts or purchases for supplies,
goods or services from employees of the City of Denton or members of their immediate family.
Exceptions are reviewed on a case by case basis by Human Resources (HR). Departments
should contact the HR Compliance Specialist for a formal review. The review may include the
completion of an IRS independent contractor test or other formal instrument. When approved by
HR, departments shall forward all documentation to the Materials Management Division.
SECTION 3. PROCUREMENT OF SEASONAL DECORATIONS, FLOWERS, GIFTS
FOR EMPLOYEES, RETIREMENT AND CELEBRATION ACTIVITIES
A. Purchase of seasonal decorations i.e., Christmas, Halloween, Valentine’s Day, etc.,
condolence and celebration flowers, parties and celebration activities using City funds
requires the approval of the department director.
B. The City’s contribution for retirement parties and/or events that recognize an employee
which is separating employment should be at the discretion of the department director.
City contributions should not be used for gifts. If a department wishes to give a gift, a
collection should be taken up for that purpose.
SECTION 4. FORMAL CONTRACTS
All contracts shall be on a form developed by the City Attorney or reviewed by the City
Attorney, if prepared by someone other than the City Attorney. Copies of the executed contract
will be provided to the department, the Materials Management Division, and to the supplier or
contractor. An official approved copy shall be filed with the City Secretary.
For samples of current City of Denton contracts, contact Materials Management.
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SECTION 5. INSURANCE REQUIREMENTS
The insurance requirements of the City of Denton are intended to protect the Contractor, the
Service Provider and the City of Denton from loss claims. Sample insurance documents are
enclosed (See Appendix N). The required amount of insurance may vary at the discretion of the
Risk Manager, depending upon the circumstances of each project.
SECTION 6. SIGNATURE/AUTHORIZATION
Applications for Title, Tax Exemption Certificates, Agreements, and Contracts shall not be
signed by any City employee unless authorized by the City Manager, or delegated authority is
authorized by City Council.
SECTION 7. TAX EXEMPTION STATUS
A. The City of Denton is exempt from all Federal Excise Tax and the State of Texas Sales
Tax, excluding Hotel Occupancy Tax (HOT). The purchase order serves as the required
exemption certificate for tax exemption. The Materials Management Division will issue
other exemption certificates as required. The City of Denton is exempt from all ad
valorem taxes from all taxing entities.
B. Section 151.309 of the Texas Tax Code (“TTC”), as amended, provides that “taxable
items sold, leased, or rented to, or stored, used or consumed by” a city or other political
subdivision of the state of Texas are “exempt from the taxes imposed” under Chapter 151
of the TTC.
C. Section 151.355 of the TTC and Code 3.318 of the Texas Administrative Code provide a
State Sales and Use tax exemption for equipment, services and supplies used to construct
and operate a regional water supply or wastewater system.
D. Section 151.311(a) of the TTC, as amended, provides that “The purchase of tangible
personal property for use in the performance of a contract for an improvement to realty
for an organization exempted under Section 151.309 or 151.310 of this code is exempt if
the tangible personal property is incorporated into realty in the performance of the
contract.” Sections 151.311 (b)(1) and (2) of the TTC, as amended, further provide that
“The purchase of tangible personal property, other than machinery or equipment and its
accessories and repair and replacement parts, for use in the performance of a contract for
an improvement to realty for an exempt organization is exempted under Section 151.309
or 151.310 of this code is exempt if the tangible personal property is: (1) necessary and
essential for the performance of the contract; and (2) completely consumed at the job
site.” Sections 151.311 (c) of the TTC further provides that “The purchase of taxable
service for use in the performance of a contract for an improvement to realty that is
performed for an organization exempted under Section 151.309 or 151.310 of this code is
exempt if the service is performed at the job site and if: (1) the contract expressly requires
the specific service to be provided or purchased by the person performing the contract; or
(2) the service is integral to the performance of the contract.”
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SECTION 8. PURCHASING AUTHORITY THRESHOLDS
A. The City Manager has extended authority to the Purchasing Manager to approve
purchases and change orders up to $50,000. (See Appendix O)
B. The City Council has extended a $100,000 authority to the City Manager to approve
purchases for general expenditures, which includes: fees, professional services, personal
services, and other categories exempted from the bid process by the Local Government
Code Chapter 252.022. Ordinance 2006-237 (See Appendix D)
C. Sole Source expenditures in excess of $50,000 must be approved by the City Council.
D. Individual expenditures and contracts in excess of $100,000 must be approved by City
Council.
E. Purchases by Denton Municipal Electric (DME) of equipment, supplies, materials, and
services used on electric production, transmission, distribution, and station systems may
have different authority levels. Ordinance 2009-189 (See Appendix H)
SECTION 9. APPROVAL PROCEDURES
A. The Materials Management Division may approve contracts and non-contracted
expenditures up to $50,000. Expenditures in excess of $50,000 may require additional
approvals including Boards, Committees, City Council or the City Manager. Up front
coordination of purchased items that go through various approval processes can help to
avoid later compliance issues and insure internal communication and consistency.
Materials Management should be able to assist with the determination of the relevant and
applicable statutory requirements in this regard and can offer assistance to departments
with the approval process when requested.
B. If an IFB/RFP/RFQ number is not already assigned, Materials Management will assign a
file number. This assists Materials Management in tracking the expenditure and creates a
procurement file.
C. Departments may contact their assigned buyer in advance of a procurement need to
solicit assistance in the procurement process and the approval process.
D. Inventory purchases may be exempt from Public Utility Board review. (See Appendix H
and Q)
SECTION 10. SOLE SOURCE PURCHASES
A. Sole sourcing is the acquisition of a specific commodity or service in which there is no
competition.
B. A written justification attached to the requisition from the requesting city department
explaining and fully describing the conditions which make the supplier an “only source”
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CITY OF DENTON INTERNAL PROCUREMENT POLICIES
for any commodity or services requested shall be provided. The department’s requisition
shall include written documentation from the manufacturer of the product or service
provider on company letterhead as to the sole source nature of the product or service.
Samples of sole source procurements include (Chapter 252.022 (a)(7)):
1.
2.
3.
4.
5.
patents, copyrights, secret processes, or natural monopolies;
films, manuscripts, or books;
gas, water, and other utility services;
captive replacement parts or components for equipment;
books, papers, and other library materials for a public library that are available
only from the persons holding exclusive distribution rights to the materials; and
6. management services provided by a nonprofit organization to a municipal
museum, park, zoo, or other facility to which the organization has provided
significant financial or other benefits;
C. Sole source acquisitions exceeding $50,000 will require Council approval. If a product
or service is presently used at the City of Denton or ongoing annual support and
maintenance are presently used to support a product, then that item or service or future
upgrades of that product are hereby recognized as sole source and do not require
additional determination from the governing body as a sole source item, provided the
original documentation is on file in the Materials Management Division.
SECTION 11.SINGLE SOURCE PURCHASES
A. Single sourcing is the acquisition of a specific commodity or service which performs the
same function as other products/services available in a competitive environment. Single
sourcing may be necessary for a particular justifiable reason. In some cases, multiple
distributors can provide competitive quotes for the single sourced product. For example,
there are numerous brands of computers; however, one particular brand and model may
be cited as a single source due to a particular function that is not offered by competitors.
B. A written justification attached to the requisition from the requesting city department
explaining and fully describing the conditions which make the supplier a single source
for any commodity or services requested shall be provided. Prior departmental
experience alone is not a justifiable reason.
C. A single source acquisition exceeding $50,000 may require the competitive formal bid or
solicitation process as outlined in Chapter 5 or the use of a cooperative contract if
adequate justification is not provided.
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SECTION 12. EMERGENCY PURCHASES
A “Declaration of an Emergency” form or other written documentation from the department
director explaining and fully describing the conditions which make the acquisition an
“emergency” should be forwarded to Materials Management as soon as possible for any goods or
services which are to be acquired as an emergency. The most current Declaration of Emergency
form is located on the City of Denton’s intranet. The Materials Management Division will attach
the signed copy of this document to the file copy of the purchase order. Emergency status
acquisitions exceeding $50,000 may require ratification of the purchase by City Council, and
potentially by the Public Utility Board (PUB) depending on the funding source used, which may
occur post acquisition due to the nature of the emergency and its timing with respect to the PUB
and City Council meeting schedules as applicable. Materials Management should consult with
Legal for expenditures in excess of $50,000.
SECTION 13. LOCAL PREFERENCE PURCHASES
(See Appendix J)
A. It is the intent of the City of Denton to comply with Sections 271.905 and 271.9051 of
Texas Local Government Code allowing for consideration of the location of a bidder’s
principal place of business in award of a bid.
B. Scope
This policy applies to the purchase of real property and personal property that is not
affixed to real property or services (including construction services) through a
Competitive Bid.
a. Lowest Responsible Bid – Price is the single determinant factor when
awarding a bid to a responsible bidder.
b. Best Value Bid – Price is only one of a number of determining factors that are
weighted for evaluation purposes. (Texas Local Government Code 252.043)
C. Criteria
1. Lowest Responsible Bids
a. A five percent (5%) price differential will apply to construction bids less than
$100,000 and all other bids, including services, less than $500,000. Excludes
telecommunication and information services.
b. A three percent (3%) price differential will apply to bids, excluding
construction and services, greater than $500,000.
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c. The chart below is a summary of the criteria for Lowest Responsible Bids:
Local Government Code 271.9051
5% price differential
Local Government Code 271.905
3% price differential
Construction bids less than $100,000
All other bids, including services, less
than $500,000
All other bids, excludes construction
and services, greater than $500,000
2. Best Value Bids
Price is only one of a number of determining factors that are weighted for evaluation
purposes as provided in Local Government Code 252.043. As a result, an additional
weighted factor will be added to all such bids for bidders meeting local preference
criteria. The appropriate weight, either 5% or 3%, will be consistent with the criteria
outlined in the chart above.
3. Local Bidder Preference Consideration Application (See Appendix J)
a. A new and complete application must be submitted with each competitive bid by
the due date, including a Tax Certification from the Denton County Tax
Assessor/Collector.
b. This application serves to ensure the qualification of a bidder as a local bidder and
serves as the basis for meeting the statute’s requirement that the governing body
find, in writing, that a bidder is a local bidder.
4. Bidders seeking local preference must meet all specifications and minimum
requirements contained in the bid documents.
D. Exceptions
This policy does not apply to purchases obtained through a Request for Qualifications
(RFQ), Request for Proposals (RFP), bids involving Federal funds, Cooperative
Programs or Interlocal Agreements.
E. Award of Contract
The City Council may award a competitively bid contract to the lowest responsible
bidder, local bidder or reject all bids.
SECTION 14. ENVIRONMENTALLY PREFERABLE PURCHASING (EPP)
The City Council passed Resolution R2007-032 for City staff to develop an EPP policy to
promote the purchase of environmentally preferable products throughout City departments, by
incorporating environmental considerations into public purchasing, “to the extent it is available,
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CITY OF DENTON INTERNAL PROCUREMENT POLICIES
to the extent it is practicable, and to extent reasonably permitted by the Texas State purchasing
laws”, to reduce the burden of municipal operations on the environments. This resolution
encompasses the purchases of goods and services; energy efficiency of new construction and
renovations of existing buildings; and the consideration of alternative fuel vehicles.
Resolution No. R2007-032 (See Appendix F)
SECTION 15.VENDORS THAT MEET OR EXCEED AIR QUALITY STANDARDS
“Sec. 271.907. VENDORS THAT MEET OR EXCEED AIR QUALITY STANDARDS
A. In this section, "governmental agency" has the meaning assigned by Section 271.003.
B. This section applies only to a contract to be performed, wholly or partly, in a nonattainment area or in an affected county, as those terms are defined by Section 386.001,
Health and Safety Code.
C. A governmental agency procuring goods or services may:
1. give preference to goods or services of a vendor that demonstrates that the vendor
meets or exceeds any state or federal environmental standards, including voluntary
standards, relating to air quality; or
2. require that a vendor demonstrate that the vendor meets or exceeds any state or
federal environmental standards, including voluntary standards, relating to air quality.
D. The preference may be given only if the cost to the governmental agency for the goods or
services would not exceed 105 percent of the cost of the goods or services provided by a
vendor who does not meet the standards.”
Resolution R2008-042 (See Appendix G)
SECTION 16. ADMINISTRATIVE APPROVALS OF CERTAIN PURCHASES
Certain purchases require administrative approvals from internal service departments. Using
departments are encouraged to seek input from the internal service department related to the
procurement need in advance. These internal service departments can assist users in
recommending suppliers, products, or assist in the procurement process. Before a purchase order
is issued by the Materials Management Division, written approvals may be required from the
appropriate department.
A. City Facility Construction and Renovation Projects
At no time should departmental personnel be allowed to demolish, construct, or renovate
a City owned facility unless such work is done by or in coordination with the Facilities
Management staff. Projects not intended to be included in this policy include basic
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CITY OF DENTON INTERNAL PROCUREMENT POLICIES
infrastructure projects for parks, streets, transportation, drainage, landfill and utility
infrastructure projects.
(See Appendix I)
B. Technology Purchases
Digital computer equipment and all software must be authorized, purchased, and installed by
the appropriate personnel. Only software, hardware, and communication protocols with
administrative approval from the Technology Service Department will be utilized unless an
exception has been documented in writing.
C. Fleet Purchases and Rental of Equipment
All vehicle and equipment related purchases, leases, and/or rentals must be facilitated
through and require written approval from the City of Denton’s Fleet Services
Department. Specific departmental needs may be brought to the attention of the Fleet
Superintendent along with the properly executed paperwork. All approvals and
communications shall be documented in the procurement file, which is maintained by
Materials Management.
D. Printing and Reprographics Purchases
All printing, copying, finishing and print-related materials on behalf of the City will be
performed or purchased through the city’s Reprographics division. This excludes utility
billing.
(See Appendix P)
SECTION 17. FEDERAL REQUIREMENTS
A. All applicable federal required documents as listed in the latest version of the Federal
Transit
Administration’s
Best
Practices
Procurement
Manual
(http://www.fta.dot.gov/grants/13054_6037.html) shall be utilized when an acquisition
involves federal funding in part or whole.
B. If making a purchase from other than a cooperative purchasing contract, and using
Federal Grant Funds, the Materials Management Division shall first check the GSA
Excluded Parties List System website, www.sam.gov, to verify that the vendor to be used
by the City is not on the excluded parties list.
SECTION 18. ETHICS
A. Suppliers who transact business with the City of Denton will be dealt with equally and in
a manner that is consistent with good business practices, professional ethics, and the
requirements of law. All prospective bidders shall be given identical information. The
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CITY OF DENTON INTERNAL PROCUREMENT POLICIES
specifications, terms, and conditions of all bids and quotations will be prepared in a
language familiar to the trade, and in a manner that will encourage competitive bidding.
B. No officers or any employee shall accept any commission, expenses paid trip, or anything
of material value from any individual, company, partnership, corporation, or any
organization supplying or seeking to supply equipment, supplies, or services to the City
for any purpose except those minor items of nominal value that are widely distributed by
the individual company as part of a public relations or advertising program. Examples of
such minor items include a business lunch or client appreciation dinner at an annual
conference. These provisions shall not apply to trips and expenses related solely to the
witnessing of factory tests, inspections of manufacturing processes, or similar
certification type activities by employees or agents of the City in conjunction with the
requirements of published technical specifications. Also excluded would be factory or
plant tours to review manufacturing processes, quality control measures, or end user
satisfaction with materials or high technology equipment. Employees should use good
judgment and discretion for these situations to insure there is no conflict of interest or
influence and when in doubt decline these offers or pay for these travel expenses using
departmental funds.
C. No officer or employee of the City shall ever accept, directly or indirectly, any gift, favor,
or privilege from any public utility corporation, or other company, contractor, or
individual which currently has a grant, franchise, or contract with the City during the
term of office of such officer, or during the term of employment of such employee,
except as authorized by law or ordinance. These same restrictions shall extend to the
acceptance of employment with any public utility corporation, or other company,
contractor, or individual as so described above if it can be shown that the employment is
extended to the employee in return for selection, favors or other benefits from the
employee or as a direct result of the employee’s actions.
D. No current employee of the City shall have a financial interest, direct or indirect, in any
contract with the City, or be financially interested, directly or indirectly, in the sale to the
City of any land, materials, supplies, or services, except on behalf of the City as an
officer or employee.
E. No officer of the City may use his position to influence or to promote the approval of a
contract that purports to hire as an independent contractor any person relating within the
second degree by affinity or within the third degree by consanguinity to such office of the
City.
SECTION 19. NON DISCRIMINATION POLICY
It is the policy of the City of Denton to afford all providers an equal opportunity to bid on any
contract being let by the City. The City of Denton has a policy that prohibits discrimination
against any person because of race, color, sex, religion, age, disability or national origin, in the
award or performance of any contract. The City of Denton will require its officers, employees,
agents, and contractors to adhere to this policy.
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CITY OF DENTON INTERNAL PROCUREMENT POLICIES
SECTION 20. DENTON MUNICIPAL ELECTRIC (DME) PROCUREMENT
PROCEDURES
Purchases for Denton Municipal Electric (DME) of equipment, supplies, materials, and services
used on electric production, transmission, distribution, and station systems may be exempt from
sections of the Texas Local Government Code Chapter 252.
Ordinance No. 2009-189 (See Appendix H)
18
CHAPTER 3 PROCUREMENT PROCEDURES
CHAPTER 3 PROCUREMENT PROCEDURES
The procedures discussed in this chapter are intended to ensure compliance with state and local
requirements for purchases of supplies and services and to assure tracking and accountability of
the expenditures. Services and supplies shall be purchased following all applicable state and
local regulations, and shall be performed in one of the following ways:
•
Submitted on a requisition for purchase prior to placing any order,
•
Utilization of the Procurement Card process,
•
Utilization of Petty Cash process, or
•
Utilization of Check Requisition process.
SECTION 1. PETTY CASH
After supervisor permission is obtained, minor purchases of goods or services that are less than
$50 and not available in the City of Denton Distribution Center from inventory may be
purchased by the department directly from the vendor. Sales tax should not be paid and will not
be reimbursed for materials. The cost is reimbursed from the Petty Cash Fund upon presentation
of a paid invoice or receipt and a signed Petty Cash Voucher Form. (See Appendix K) This form
is available through the Distribution Center’s inventory.
SECTION 2. PROCUREMENT CARD PROGRAM
It is the policy of the City of Denton to maintain a procurement card program for the purchase of
small dollar goods and services, and travel related expenses. Procurement cards are available to
individual employees upon written request by their department director. Basic cards are limited
by single purchase and a monthly expenditure as per the individual user agreement. Any
adjustment to those amounts requires approval from the department director with a written
request to the Materials Management Division.
Approved travel related expenses for hotel, airfare, auto rental, and some miscellaneous services,
excluding meals, may be charged to procurement cards.
(See Procurement Card Manual located on City of Denton’s intranet.)
SECTION 3. CHECK REQUISITION
A. Check requisitions will typically only be used for payment of the following items if the
procurement card process is not applicable:
Legal filings including liens
Employment related services
Seminar registration and hotel reservations
Subscriptions
19
Dues and membership fees
Newspaper ads
Towing invoices
CHAPTER 3 PROCUREMENT PROCEDURES
Rebates and refunds (to citizens or customers)
Federal Express and freight bills (not associated with a purchase order)
Exceptions to the use of check requisitions for other expenditures will be made on a caseby-case basis as requested with director level approval.
B. Please complete the most current Check Requisition form located on City of Denton’s
intranet. Forward all completed check requisitions on pink paper, with the appropriate
supporting documentation attached, to the Materials Management Division for review.
(See Appendix L)
C. Check requisitions over $5,000 require a signature from the department director before
submission.
D. Check Requisitions for reimbursement to employees for work-related expenses will not
be accepted.
Employees must submit an expense report for any necessary
reimbursement.
SECTION 4. PAYMENT PROCEDURES
See Appendix M
20
CHAPTER 4 INFORMAL QUOTES
CHAPTER 4 INFORMAL QUOTES
Departments are encouraged to seek the best value for expenditures. Best value may not always
be the lowest initial priced cost; other factors such as product reliability, compatibility,
interchangeability with existing devices, product delivery timeframes, familiarity with the
product particularly for highly technical devices that require specialized training, consideration
of long-term energy losses, local preference, vendor responsiveness for replacement parts and
warranty issues, etc. may all be variables that could be considered to ensure that the City of
Denton receives the best value for expenditures. In cases of single and sole source purchases,
quotes may not be necessary.
The intentional issuance of sequential, component or separate requisitions and subsequent
purchase orders (“split purchases”) to circumvent the competitive bid requirements is a direct
violation of state law and may be cause for disciplinary action. (Local Government Code
252.062)
SECTION 1. GOODS OR SERVICES – $3,000 AND UNDER
A. Purchases not exceeding $3,000 may be quoted on an informal basis. Quotations are
accepted via mail, delivery services, telephone, facsimile, or email. Using departments
may receive quotations. A requisition must be entered through the JD Edwards system,
and all quotations must be submitted to the Materials Management Division for
processing. The use of a procurement card (p-card) for small purchases should be
utilized when possible in compliance with the Procurement Card Manual. Please refer to
the Procurement Card Manual, located on the City of Denton’s intranet.
B. Small dollar purchases $3,000 and under may be made at the discretion of the using
department. In all instances, local service and supply providers should be considered in
the procurement decision. The using department is encouraged to obtain more than one
price quote for purchases $3,000 and under when possible but are not required to by
Local Government Code 252.
C. The Department will enter a requisition in JD Edwards, and Materials Management will
issue a PO for the procurement of the goods or services. Departments should not
authorize shipment or services in advance of a PO being issued.
D. The vendor shall forward the invoice or statement to the using department or directly to
Accounts Payable if so instructed by the using department, unless the invoice
accompanies goods (See E3 of the subsection below).
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CHAPTER 4 INFORMAL QUOTES
E. Once the items have been received:
1. The department representative will generate the receipt within the system.
2. The receipt should be entered into the system within a reasonable period of time of
receipt of shipment.
3. In those instances when the invoice accompanies goods, the invoice shall be
forwarded to Accounts Payable.
F. Estimated amounts shall be used on requisitions when the exact amount cannot be
determined at the time the requisition is issued. Departments shall note on the requisition
that the amount is estimated and the reason why an estimate is necessary. Within three
days of the receipt of goods and services for which a PO was issued with an estimated
amount, a change order within the system should be completed to ensure that Accounts
Payable can process the invoice in a timely manner.
DO NOT OBLIGATE THE CITY WHEN REQUESTING A QUOTATION FOR SUPPLIES
OR SERVICES
SECTION 2. GOODS OR SERVICES $3,000.01 - $50,000
Purchases of $3,000.01 to $50,000 are processed as above, with the following additional
requirements:
A. The departments should coordinate with the Materials Management Division to
determine if Historically Underutilized Business (HUB) is registered in Denton County
for that good or service and extend at least two HUBs an opportunity to provide price
quotations. If no HUBS are present in the county in which the municipality is situated,
then the municipality is exempt from the provisions of Local Government Code
252.0215.
B. A minimum of two HUB quotations, if available, should be provided. A non-response
quotation is considered a quotation for this purpose provided the HUB was given a
reasonable time to respond.
The State maintains a database of HUBs at
www.window.state.tx.us/cmbl/index.html.
C. For increasingly greater procurement amounts, the using departments should take greater
effort to insure the prices are competitive. As a general guideline, at least three informal
price quotations should be obtained when possible and where practical. Exceptions to
this guideline may include sole source and/or single source vendors, standardized
equipment used within the city’s utility and public works infrastructure, and highly
specialized goods and services that are not readily available in the marketplace. Using
departments are encouraged to consult with their Materials Management representative
for assistance in locating vendors or suppliers when they are unable to obtain at least
three informal price quotations.
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CHAPTER 4 INFORMAL QUOTES
For purchases of $3,000.01 to $50,000.00 the following apply:
A. The using department will create a requisition in the financial system, and complete the
routing for approval before a purchase is made. (Refer to the Finance Department’s JDE
Users Info folder on the intranet.)
All departments should endeavor to promote fair and open competition for every
purchase and to secure the best value, and the highest quality goods or services at the
lowest possible cost.
B. The using department is responsible for soliciting informal quotations.
1. The department or designee shall obtain written quotations from at least three
vendors, whenever possible.
2. At least two HUBs, if available, shall be contacted.
3. The names and prices of the vendors contacted must be noted on the requisition, or
quotes can be scanned and attached to the requisition. Materials Management will
attach a permanent copy to the PO.
4. Quotations received from vendors shall not be divulged to other bidders until after the
award has been made and in accordance to the Texas Public Information Act, Chapter
552, Texas Government Code.
C. Materials Management will offer assistance in the using department’s review of the
informal price quotations in the department’s efforts to ensure that the purchase will be
issued to the most responsive and responsible vendor conforming to the specifications
and delivery requirement. In addition, Material Management will work with the using
department to ensure that all additional requirements are met, including but not limited to
insurance requirements, internal department approvals, and purchase terms and
conditions.
D. Regarding the issuance of the Purchase Order: Refer to Chapter 9.
23
CHAPTER 5 FORMAL SOLICITATIONS AND COOPERATIVE PURCHASING
CHAPTER 5 FORMAL SOLICITATIONS AND COOPERATIVE PURCHASING
All purchases exceeding $50,000 must be competitively bid through the formal bid process
unless specifically excluded by Chapters 252 and 271 of the Texas Local Government Code or
Chapter 2267 of the Texas Government Code. Purchases exceeding $50,000 and up to $100,000
may be approved by the City Manager (refer to Chapter 2, Section 8). Purchases at or above
$100,000 shall be placed on the City Council agenda for review and consideration for approval.
Any purchase, excluding sole sources, exceeding $50,000 and up to $100,000 may be routed
through the appropriate reviewing board, commission or committee as applicable in advance of
City Manager approval at the discretion of the using department and the City Manager. Any
purchases at or above $100,000 shall be routed through the appropriate reviewing board,
commission or committee as applicable in advance of City Council consideration. Some
purchases for Denton Municipal Electric (DME) are exempt from certain Texas Local
Government Code provisions in accordance with City of Denton Ordinance No. 2009-189 (See
Appendix H).
There are several approaches or types of solicitations formats that can be used. The City of
Denton using department will determine the type of solicitation to be utilized to obtain
commodities and services in consultation with the Materials Management division as necessary
and applicable. Normally, an Invitation for Bid (IFB) will be used for standard commodity
purchases where the commodity is readily available and price is the primary concern. However,
when a commodity or a service is required that the City of Denton could potentially benefit by
having multiple evaluation factors to help obtain the best value for the City then a Request for
Proposals (RFP) may be used for procurement of services and technical equipment.
Procurements for Professional Services are discussed in Chapter 7 of this Purchasing Manual.
An effective procurement program reduces the cost of doing business and directly improves the
quality and timeliness of services rendered by the City of Denton. For City of Denton
departments, procurement is a service function, supporting programs by the acquisition of
supplies and services. For potential suppliers, it is an opportunity to provide supplies and
services to the City of Denton. The procurement goals for the City of Denton are:
•
To obtain the needed supplies and services at favorable prices without compromise of
suitability, quality, and reliable vendor performance.
•
To secure goods and services at the “best value”, while establishing and maintaining a
reputation for fairness and integrity.
•
To generate fair and open competition among all responsible vendors and to seek out new
and local vendors, when possible, as sources of supply.
•
To institute and maintain an effective and economical program for purchasing supplies
and services.
•
To ensure the integrity of the procurement process for the City of Denton and to provide
good stewardship of public funds.
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CHAPTER 5 FORMAL SOLICITATIONS AND COOPERATIVE PURCHASING
SECTION 1. INVITATION FOR BID (IFB)
A. The IFB is generally used for standard commodity purchases where the commodity is
readily available from multiple vendors or suppliers and price is the only selection
criteria. Negotiation of pricing or changes after the competitive sealed bids are opened is
not permitted.
B. There are two methods of IFBs, the lowest responsible bidder method, and the best value
method. All criteria for evaluation are required to be outlined in the bid specification
documents and the City must indicate that the contract may be awarded to either the
lowest responsible bidder or to the bidder who provides goods or services at the best
value for the City. Each method is defined below:
1. Lowest Responsible Bidder Method - The responsible bidder meeting the minimum
stated specifications and qualifications with the lowest price is awarded the bid.
2. Best Value Bid Method - In determining the best value, the City may consider certain
factors which are listed below.
a. Purchase price;
b. Reputation of the bidder and the bidder’s goods or services;
c. Quality of the bidder’s goods and services;
d. The extent to which the good or service meet the municipality or requesting
Department’s needs;
e. Bidder’s past relationship with the Municipality or requesting Department;
f. Impact on the ability of the Municipality to comply with laws and rules, relating
to contracting with historically underutilized businesses with non-profit
organizations employing person with disabilities;
g. Total long term cost to the municipality to acquire the bidder’s goods or services;
and
h. Any relevant criteria specifically listed in the request for bids or proposals (i.e.,
experience, local preference, etc.).
C. Bids for the construction of a facility (generally will mean buildings or improvements to
real property such as highways, road, streets, bridges, utilities, water supply projects,
water plants, wastewater plants, water and wastewater distribution or conveyance
facilities, airport runways and taxiways, drainage projects or related types of projects
associated with civil engineering construction projects) must be awarded to the lowest
responsible bidder if the competitive sealed bidding requirement applies and the “Best
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CHAPTER 5 FORMAL SOLICITATIONS AND COOPERATIVE PURCHASING
Value Bid Method” is not employed (Local Government Code 252.043(e) references
Government Code Section 2267.001 for the definition of “facility” in this context) or
awarded under the method described by Government Code 2267.
D. Preparation and issuance of an IFB include the following steps:
1. Format - Prepare the IFB using the format adopted by the using department using
standard contracts, forms, etc. approved by the Legal Department and issued through
Materials Management.
2. Coordinate with Materials Management - Establish a bid opening due date and time
that will allow sufficient time for potential bidders to seek clarification and for the
issuance of addenda, if necessary.
3. Scope - Specify in detail the materials, equipment, and supplies to be furnished or the
scope of work to be performed by the contractor, including or incorporating by
reference the specifications, drawings and contractual terms and conditions applicable
to the procurement.
4. Prebid Meetings - Can be utilized with IFBs to clarify bid documents and identify
items appropriate for addenda.
E. Advertising Requirement
All IFBs are required to advertise a notice of the time and place at which the bids will be
publically opened and read aloud. The legal notice must be published at least once a
week for two consecutive weeks in a newspaper published in the municipality. The date
of the first publication must be before the fourteenth (14th) day before the date set to
publicly open the bids and read them aloud. (Local Government Code 252.041)
F. Sealed Bids - Receipt, Opening, Evaluation, and Award
1. Receipt - Bids shall be received until the date and time specified in the IFB. Bids are
then publicly opened and read aloud. Late bids shall not be opened nor considered
and shall be returned to the originator.
2. Opening - After bid opening, each bid is reviewed jointly by Materials Management
and the using department to determine if it is responsive to the IFB.
3. Department Evaluation - The lowest responsive and responsible bidder is then
evaluated by the using department to determine if the bidder meets bid specifications.
4. Recommendation- A written recommendation will be sent to Materials Management.
If bidders do not meet the minimum specifications, the reason should be noted.
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CHAPTER 5 FORMAL SOLICITATIONS AND COOPERATIVE PURCHASING
5. Award - The contract is then awarded by the City Manager or the City Council to the
lowest responsive and responsible bidder that meets specifications. Only the City
Council may reject any and all bids. (Local Government Code 252.043.f)
SECTION 2. REQUEST FOR PROPOSALS (RFP)
The RFP is used to allow firms and individuals the opportunity to propose demonstrated
competence and qualifications for commodities and services which best meet the City of
Denton’s needs. To obtain the best value for the City of Denton the RFP process will require
additional time to complete than when using the IFB method. The RFP allows the City of
Denton an opportunity to negotiate with the highest ranking proposer a Best and Final Offer
(BAFO) prior to award. The RFP process does not involve the procurement of professional
services (refer to Chapters 6 and 7).
The requesting using department should include within the RFP detailed information such as:
•
Identifying statement of the project.
•
Scope of work to be performed.
•
Time frames in which the work is to be completed.
•
Request for proposed solutions.
•
Directions on preparation of the proposal.
•
Evaluation criteria and relative importance that will be used in evaluating and ranking
proposals.
•
The minimum qualifications that are required to be considered for the commodity or
service.
A. Competitive RFP Procedure
1. A written Request for Proposal (RFP) is issued by the using department through
Materials Management to qualified firms or individuals that can be reasonably
anticipated to submit proposals in response to the particular request. The RFP may
contain a formal pre-proposal meeting, and will require a formal close date and time.
2. Evaluation criteria must be carefully developed and listed within the RFP. To
demonstrate the relative importance of each criterion, individual weights shall be
assigned to each criterion. The criteria shall be looked upon as standards which
measure how well a firm's approach meets desired performance requirements, and
which permit an evaluation of the differences between desired performance
characteristics and what the firm proposes to do. Once a scoring system is devised, it
must be impartially applied to each proposal. Proposals shall be evaluated based on
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CHAPTER 5 FORMAL SOLICITATIONS AND COOPERATIVE PURCHASING
the criteria listed in the RFP. Information and/or factors gathered during interviews,
discussions, and/or negotiations can all be utilized in the final selection decision.
Criteria are normally divided into several categories covering the firm's technical
capability and the approach for meeting performance requirements, managerial
capability, and the competitiveness and reasonableness of cost of services. Examples
of evaluation criteria are listed below:
a. Scope of work the firm will provide. Firms must be instructed that a mere
repetition of tasks taken from the scope of work will not be considered as
responsive to the RFP.
b. The proposer must show an understanding of the significance of each individual
task.
c. Clearly demonstrated understanding of the project and completeness and
reasonableness of the proposer’s plan to provide the required services.
d. General comments concerning the particular way in which the firm would approach
the assignment.
e. Resumes of principals and key personnel who would be assigned to the project.
f. Substantiated representation regarding the proposer’s' technical capabilities and
professional competence to accomplish the required work.
g. A review of the firm's management approach and philosophy.
h. Number of personnel by job title and a manpower utilization program.
i. A review of the depth and variety of staff disciplines available within the company
or corporate structure.
j. References from former clients, along with names, addresses, and a listing or
review of similar projects or cases undertaken.
k. Information concerning financial strength and stability.
l. Provide present known workload in relation to available man-hours.
m. Estimated time of contract completion.
n. Alternate concepts and approaches suggested by the firm.
o. Substantial successful experience in performing similar projects.
p. Price.
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CHAPTER 5 FORMAL SOLICITATIONS AND COOPERATIVE PURCHASING
B. Scope of Work (SOW)
Scope of Work is vital to the procurement process as it can either promote or restrict
competition. The purpose of any SOW is to establish specific requirements, and to
provide respondents with firm criteria for minimum product or service acceptability.
A SOW is a concise statement of a set of requirements to be satisfied by a product,
material, or a process that accomplishes and satisfies the needs of the using department.
SOWs typically consist of two sections:
1. The technical section that comes from the requesting using department which
details exactly what commodity or service is needed.
2. The non-technical section or standard terms and conditions of the solicitation
commonly called the “boilerplate.” A standard boilerplate comes in a template
that can be supplied through Materials Management and has language that has
been pre-approved by the using department and the City of Denton’s Legal and
Risk Management Departments. Sometimes it is necessary for the requesting
using department to work with Materials Management to revise and modify the
standard boilerplate to accomplish specific or unique tasks. The most up to date
boilerplate may be obtained through Materials Management.
SOWs are intended to serve as a means of assuring that the items purchased have the
desired quality and performance characteristics. The majority of SOWs typically include
the following characteristics:
1. The minimum standards of acceptability for the good or service. The term
“minimum acceptability” is key, since the vendor must know the minimum
standard to determine what to provide.
2. The promotion of competition. Where possible a large number of responsible
offerors should be able to provide proposals.
3. Provisions for reasonable tests and inspections for acceptability of the goods or
service. The methods and timing of testing and inspecting should be indicated.
Tests and material quality should refer to nationally recognized practices and
standards whenever possible.
The SOW process starts at the user level, where the goods or services to be purchased are
identified and described in a formalized fashion. These descriptions could be quite
general, could be prepared from catalogs or prior purchase records, or could be very
detailed and specific.
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CHAPTER 5 FORMAL SOLICITATIONS AND COOPERATIVE PURCHASING
C. Advertising Requirement
For all RFPs, notice of the time and place at which the proposals are due must be
published at least once a week for two consecutive weeks in a newspaper published in the
municipality. The date of the first publication must be before the 14th day before the
proposal due date (refer to in the Local Government Code 252.041b). Most RFPs are not
publically read aloud at the published date and time to allow for unbiased best and final
offers and to protect the City’s competitive advantage. Some public works RFPs are
required to be publically opened and read aloud. See Chapter 6 in this manual for more
information on dealing with public works projects.
D. Pre-Proposal Conference
Pre-proposal conferences can be a valuable tool for the early detection and clarification
of possible ambiguities, unforeseen and nonessential restrictions, or technical errors in
the specifications. The conference is a meeting of potential proposers and the City of
Denton representatives. At the conference, the City of Denton goes over the
specifications, explaining the scope, objectives, and techniques of the proposed purchase.
Vendor inquiries and points of possible conflict are noted. Clarification may be provided
at the conference so long as the specifications or conditions are not altered. When a
decision is made to make a change to the specifications, coordination between the
requesting department, design professional(s), and Materials Management shall occur.
When sealed documents are issued as part of the RFP solicitation and modifications or
clarifications are required as needed during the RFP preparation process at the discretion
of the design professional(s) and/or the owning entity, sealed addenda will be issued by
the design professional. Materials Management will publish addenda or notices to all
respondents either by a written addendum or notification on Materials Management’s
website as applicable.
E. Initial Review
After all proposals have been received, the using department and Materials Management
will examine each proposal. Each proposal will be checked for completeness, and that
minimum qualifications have been met. A summary sheet will be prepared noting all the
pertinent data and any discrepancies and will be forwarded to the evaluation committee
established for the RFP.
Evaluation ranking forms should be utilized and may be adapted and tailored to the
specific needs based upon the specifications. The only evaluation criteria and weighting
factors that should be used in the evaluation process are those included in the RFP.
F. Evaluation Procedures for Competitive Proposals
The following procedures should be used as a guide in the evaluation process of
competitive proposals to ensure that the final recommendation is without bias and is
legally defensible in the event the decision is questioned or challenged.
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CHAPTER 5 FORMAL SOLICITATIONS AND COOPERATIVE PURCHASING
Materials Management utilizes a standard formula for pricing evaluation when
applicable; however, no set formula can be devised for all products or services. The
quality and delivery requirements may vary for different products, services or for
different uses. The delivery requirements may vary for different orders as well. For
these reasons, the act of selecting the proposal, which best suits the need of the requesting
using department at the City of Denton is one that requires judgment, consistency, and
experience.
Determination of the recommendation for award will be made only after all aspects,
including preferences of the requesting using department, have been considered.
G. Evaluation Committee
A committee may be formed to evaluate each proposal using the criteria as defined within
the specifications. The use of a committee is recommended for complex, large
expenditures, or when multiple proposals are received. This committee will consist of a
diverse group of City staff, and consultants when applicable. Committee members are
selected by the using department on the basis of their knowledge of the particular project
being developed and/or of their knowledge of the particular field involved. A
representative of Materials Management may participate, as a non-voting member, to
provide guidance and assistance as needed or requested.
Each voting committee member is expected to attend all committee meetings and oral
presentations. Absenteeism of a member may require a substitution. The committee
should remain intact throughout the evaluation process to help avoid unbalanced scoring.
It is imperative that the each proposal be treated as confidential throughout the evaluation
process. Committee members shall not divulge any information on any proposal or
evaluations to anyone outside the committee during the evaluation process.
H. Committee Evaluation Process (Chronological Order)
1. Distribution of Proposals - Copies of the RFP, submitted proposals, corrections to
deficiencies, and the evaluation form should be distributed to each committee
member during or before the initial committee meeting. The selection committee
chair or the Materials Management representative shall review evaluation procedures
and appropriate guidelines at the initial committee meeting.
2. Review of Responses by Individual Committee Members - Each member shall
independently review and score the responses utilizing the evaluation form. If a
committee member scores a proposer extremely high or low when compared with the
scores of other committee members, the committee member will likely be asked to
provide an explanation for the unusual score. It is possible that the committee may
elect to conduct a joint or cooperative evaluation.
3. Review the Responses by the Full Committee - The committee chair will assemble the
total combined score of all members and the ranking of the firms. This combined
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CHAPTER 5 FORMAL SOLICITATIONS AND COOPERATIVE PURCHASING
scoring may be distributed via email to the committee members or a meeting may be
scheduled to discuss the results. After discussions, the scores may be revised and/or
re-ranked at the discretion of the chair and committee.
4. Determine Top Ranked Finalists – If a clear single finalist is not selected through this
process, the committee may select the top ranked finalists (usually two to three but
possibly more at the discretion of the chair and the committee) for further evaluation.
The remaining proposals will be eliminated from further consideration.
5. Perform Mandatory Reference Check of Finalists – The committee shall investigate
the performance of the proposers in contracts with parties listed as references or other
parties not listed as references but provided in the experience record or known by the
chair or a committee member(s).
6. Hear Oral Presentations - The scores of finalists, although a good indicator of their
capabilities may not always be an absolute indicator of the finalists’ ability to perform
the required task. Another tool in the evaluation process is an oral interview of the
top-ranked firms. The intent of the oral presentation to ensure a common
understanding of the required product or service and affirmation that the company is
qualified and able to meet the City’s needs. This process is an opportunity for both
the City and proposer to ensure common understanding and have any unanswered
questions or concerns addressed.
A second written submission (in addition to the original response) may be required of
the finalists. The written submission shall be delivered prior to the date of the oral
presentations to allow the committee members time for review. A list of questions or
points to expand upon may be prepared for each finalist. The questions should be
similar for each finalist in order to promote fairness among all participants. Complete
records should be kept that indicate results of any committee voting and any other
information that supports the final award recommendation.
Each of the finalist firms may be asked to submit their best and final offers (BAFO)
to be factored into the final recommendation if this negotiation technique is employed
on the acquisition.
7. Determine Final Ranking of Finalists - Following the oral presentations, committee
members should discuss the presentations and review any additional written
submissions received, including any BAFO. If necessary, the finalists may be reranked. The committee will then prepare a final ranking, and the participants will be
notified.
8. Negotiate Contract (If applicable) - Negotiation may be conducted with the top
ranked firm(s). The negotiators must be familiar with the project and the specialty
area of the finalists. Negotiations may include a staff member from Materials
Management as necessary and requested by the using department. If a successful
contract cannot be negotiated with the highest ranked firm then the staff will begin
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CHAPTER 5 FORMAL SOLICITATIONS AND COOPERATIVE PURCHASING
negotiations with the next highest ranked firm, and continue this process until
successful negotiations are completed.
9. Recommendation - Once the negotiations are complete, a written recommendation
outlining the recommendations of the selection committee shall be carried forward
through any applicable boards, committees or commissions and City Council for
approval, either by the using department or the Materials Management Division.
10. Committee Transparency Documentation - The buyer is responsible for assuring that
rankings, proposals, evaluation forms, and other pertinent documents are maintained
in the procurement file.
11. Notify Respondents of Contract Award - Following the approval of a contract by the
City Manager or Council, Materials Management shall provide notification to all
proposers of the decision.
SECTION 3. ADDITIONAL PROCEDURES AS APPLICABLE
A. Identical Bids When Price is the Only Award Factor
(Local Government Code, 271.901)
If two identical bids are received and one of the bids is from a resident of the City of
Denton, the City must award to that bidder. If two or more bidders submitting identical
bids are residents of the municipality, then the City must select one of those bidders by
the casting of lots. In all other cases, the municipality must select one of the bidders by
the casting of lots.
B. Protest Procedures
1. Formal Written Protest - A formal protest from a bidder or proposer shall be
submitted in writing to the City of Denton’s Purchasing Manager for consideration.
The Purchasing Manager will work with the using department, Legal and other
subject matter experts as necessary and appropriate, to formulate a response to the
protest. A protest must be in writing and must be supported by sufficient information
to enable the protest to be considered. A protest will not be considered if it is not
supported with adequate justification, or if it is not received by the Purchasing
Manager within the time limits set forth in the sections below. A protest, if any, may
be submitted upon the following reasons:
a. A protest relating to restrictive procedures, alleged improprieties, or other similar
situations arising prior to bid opening or proposal due date must be submitted so
that it is received by the City of Denton’s Purchasing Manager no later than five
(5) working days prior to the specified opening or due date, and may only be
protested once;
b. A protest relating to requests for changes to or approval of equals, or clarifications
and modifications of the specifications must be submitted so that it is received by
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CHAPTER 5 FORMAL SOLICITATIONS AND COOPERATIVE PURCHASING
City of Denton’s Purchasing Manager within five (5) working days prior to the
specified opening or due date, and may only be protested once;
c. A protest of the award of contract must be submitted so that it is received by the
City of Denton’s Purchasing Manager no later than five (5) working days prior to
the award date.
2. Notification Process - In the event staff is notified of a potential protest, staff shall
notify Materials Management, applicable chain-of-command, and City Council, as
appropriate.
3. Protests related to the Purchasing Manager’s practices may be submitted directly to
the City Manager within five (5) working days following any action taken by the
Purchasing Manager.
SECTION 4. COOPERATIVE BUYING AGREEMENTS
The City of Denton may purchase goods and services through cooperative contracts (Local
Government Code 271.102). If the purchase is less than $50,000, Materials Management may
approve the expenditure. If the purchase is in excess of $50,000 and less than $100,000, the City
Manager may approve the expenditure. Purchases in excess of $100,000 will require Council
approval, possibly with a prior recommendation through a board, committee or commission as
appropriate and applicable. The City must have a bilateral contract in place with the cooperative
agency before a purchase can be made. Additional documentation may be required to ensure that
the cooperative contract provides the best value to the City. Examples of cooperative contracts
available to the City are:
•
•
•
•
•
•
•
•
•
•
The State of Texas Procurement and Support Services (TPASS)
Texas Multiple Award Schedule (TXMAS)
State of Texas Department of Information Resources (DIR)
U.S. Communities
Buy Board Cooperative Purchasing
Houston Council of Governments (HGAC)
Tarrant County Cooperative Program
United States General Services Administration (GSA) for schedules 70 and 84 only.
These include information technology, law enforcement, facility management
systems, and fire, rescue, and disaster response purchases.
National IPA
Texas Education Agency – Region 8
34
CHAPTER 6 PUBLIC WORKS PROJECTS
CHAPTER 6 PUBLIC WORKS PROJECTS
SECTION 1. DEFINITION
Public Works projects are generally those projects that require the construction, repair, or
renovation of a structure, building, street, highway, bridge, park, water distribution or treatment
facility, wastewater collection or treatment facility, airport runway or taxiway, drainage project,
or other improvement or addition to real property.
SECTION 2. PROFESSIONAL ENGINEERING REQUIREMENTS
A frequent question encountered is whether or not the services of a professional engineer are
required on a contract or project. First of all, it is necessary to understand what constitutes the
practice of engineering. From the Texas Occupations Code, Chapter 1001.003, the practice of
engineering is defined as “the performance of or an offer or attempt to perform any public or
private service or creative work, the adequate performance of which requires engineering
education, training, and experience in applying special knowledge or judgment of the
mathematical, physical, or engineering sciences to that service or creative work.”
Section 1001.407 of the Occupations Code states that “The state or a political subdivision of the
state may not construct a public work involving engineering in which the public health, welfare,
or safety is involved, unless:
(1) the engineering plans, specifications, and estimates have been prepared by an engineer;
and
(2) the engineering construction is to be performed under the direct supervision of an
engineer.”
The Occupations Code does allow for exemptions under Chapter 1001.053: “The following
work is exempt from this chapter:
(1) a public work that involves electrical or mechanical engineering, if the contemplated
expense for the completed project is $8,000 or less; or
(2) a public work that does not involve electrical or mechanical engineering, if the
contemplated expense for the completed project is $20,000 or less; or
(3) road maintenance or improvement undertaken by the commissioners’ court of a county.”
In other words, if the City is to expend more than $8,000 on a public work that involves
electrical or mechanical engineering or more than $20,000 on a public work that does not
involve electrical or mechanical engineering, a professional engineer must be retained. In
general, it is good practice for risk avoidance to involve a professional engineer any time a
public works project is undertaken by a public entity.
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CHAPTER 6 PUBLIC WORKS PROJECTS
SECTION 3. PROFESSIONAL ARCHITECT REQUIREMENTS
A registered architect may be required for certain public works contracts. From the Texas
Occupations Code, Chapter 1051.703, the practice of architecture is defined as “a service or
creative work applying the art and science of developing design concepts, planning for functional
relationships and intended uses, and establishing the form, appearance, aesthetics, and
construction details for the construction, enlargement, or alteration of a building or environs
intended for human use or occupancy, the proper application of which requires education,
training, and experience in those matters.”
”An architectural plan or specification for any of the following may be prepared only by an
architect:
(1) a new building or modification of an existing building intended for occupancy on a 24hour basis by persons who are receiving custodial care from the proprietor or operator of
the building, regardless of the number of stories or square footage of the building.
(2) a new building having construction costs exceeding $100,000 that is to be:
(A) constructed and owned by a state agency, a political subdivision of this state, or any
other public entity in this state; and
(B) used for education, assembly, or office occupancy; or
(3) an alteration or addition having construction costs exceeding $50,000 that:
(A) is to be made to an existing building that:
(i.) is owned by a state agency, a political subdivision of this state, or any other public
entity in this state; and
(ii.) is or will be used for education, assembly, or office occupancy; and
(B) requires the removal, relocation, or addition of a wall or partition of the alteration or
addition of an exit.
(4) This section does not prohibit an owner of a building from contracting with an architect
or engineer as the prime design professional for a building construction, alteration, or
addition project. Designation as the prime design professional does not expand the scope
of the practice of an architect or engineer beyond the scope of practice that the architect
or engineer is authorized to practice under Chapter 1001 or 1051.”
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CHAPTER 6 PUBLIC WORKS PROJECTS
SECTION 4. OTHER PROFESSIONAL SERVICES REQUIREMENTS
Certain aspects of the relevant sections of the Texas Government Code as they apply to the use
of professional engineers and architects on public works projects have been listed under the
previous two sections of this chapter. While these two disciplines may be the most common
professional services retained on public works projects for the City of Denton, they may not be
the only types of professional services ever retained on public works projects, or certainly on
other types of projects or assignments for the City of Denton. Other sections of State law may
apply to the proper solicitation and hiring of other professionals as defined by Texas Government
Code Section 2254. It is the responsibility of the soliciting entity to observe all such
requirements.
SECTION 5. PREVAILING WAGE RATES
(Government Code, 2258)
The State Legislature has given special treatment to public works projects, not necessarily
applied to other expenditures or purchases by a municipality. Wages for workers on construction
projects shall not be paid at less than the schedule of general prevailing rates of per diem wages
as defined by the United States Department of Labor Davis and Bacon Wage Determination at
http://www.dol.gov/whd/contracts/dbra.htm and at the Wage Determinations website
(www.wdol.gov) for Denton County, Texas (WD-2509). The prevailing wage rate or a link to
the wage rates shall be included in public works projects.
The prevailing wage rate does not apply to work done directly by a public utility company or for
maintenance work.
SECTION 6. BONDING
Bonds are written instruments executed by a bidder or contractor and a second party to assure
fulfillment of their obligations to the City. For additional information refer to Chapter 1, Section
8.
SECTION 7. INSURANCE REQUIREMENTS
The minimum insurance required will be the types and amounts required in the most recent
edition of the Standard Specifications for Public Works Construction issued by the North Central
Texas Council of Governments or as determined by the City. The Purchasing Manager, Risk
Manager, City Engineer, Consulting Engineer, or Architect may provide input on a possible
increase to the amounts of insurance required for any project. (See Appendix N for detailed
insurance requirements.)
For construction and construction-related projects, all contractors and sub-contractors, including
those delivering equipment or materials, performing service on a public works project, shall
provide Texas workers' compensation for all employees. All Contractors shall provide proof of
coverage satisfactory to the City. Prime Contractors are responsible for seeing that subcontractors carry the same or higher insurance amounts as those required of the prime contractor.
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CHAPTER 6 PUBLIC WORKS PROJECTS
Contractors shall post required signs at job site(s) informing all workers of their right to workers'
compensation coverage. For additional information refer to Chapter 1, Section 10.
SECTION 8. AWARD OF CONTRACT
The governing body is entitled to reject any and all bids.
If using an Invitation for Bid (IFB), the contract will be awarded to the lowest responsible bidder
as outlined in Chapter 5. If using an alternative project delivery method (as outlined below) the
contract will be awarded to the contractor providing the best value to the City of Denton.
Contracts in excess of $50,000 must be awarded by the City Manager or City Council as
described in Chapter 2 Section 8. Certain Denton Municipal Electric (DME) projects under
$500,000 may be awarded by the City Manager (Appendix H)
SECTION 9. ALTERNATIVE PROJECT DELIVERY METHODS FOR
CONSTRUCTION SERVICES
(Government Code, 2267)
The City has alternate tools available for the procurement of public works projects. These
alternate methods have varying statutory requirements. Departments desiring to learn more about
the pros and cons of each method may visit with the Materials Management Division. The
alternate project delivery methods include:
•
Best value competitive bidding
•
Competitive sealed proposals for construction services
•
Contract for facilities design-build
•
Contracts for civil work design-build
•
Construction manager at-risk
•
Construction manager-agent
•
Job order contracting (JOC)
SECTION 10. CHANGE ORDERS
(Local Government Code, 252.048 and 271.060)
A change order is a change in plans or specifications after the performance of a contract is
begun, or if it is necessary to increase the quantity of work to be performed or of materials,
equipment, or supplies to be furnished. Refer to Chapter 1, Section 5 for specific change order
thresholds and approval process.
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CHAPTER 6 PUBLIC WORKS PROJECTS
The change order shall be initiated in writing by the contractor to the project manager. The
project manager shall review the change order to ensure that it is a necessity and that
representative pricing has been offered. If applicable, the engineer/architect shall review and
approve the change order. If applicable, the project manager and/or owning department will
carry the change order through the Public Utilities Board for recommendation prior to
presentation to City Council and then carry it through the Council approval process. Once
approved and all signatures are received, the project manager shall forward the request to
Materials Management. Materials Management personnel will review the request, sign, and
enter a change order into the financial system. A hard copy of the change order will be
forwarded to the contractor and a copy retained in the procurement file.
SECTION 11. PROGRESS PAYMENTS
Progress payments shall be forwarded to the Accounts Payable Department. The payment
request shall be initiated in writing by the contractor to the project manager. The project
manager shall review each payment request to ensure that the portion of the work is completed
and meets the acceptable standards in compliance with the specifications. If applicable, the
engineer/architect shall review and approve the payment request. Once approved and all
signatures are received, the project manager shall enter a receiver in the financial system, and
forward a hard copy of the payment request to Accounts Payable.
SECTION 12. RETAINAGE
Retainage is the part of a public works contract payment withheld by the City to secure
performance of the contract.
The City is required to withhold retainage for public works contracts in which the total contract
price estimate at the time of execution is more than $400,000. The City may require varying
percentage withholding amounts; however, generally the City requires five percent. For
retainage percentages in excess of five percent, the City must deposit the retainage into an
interest-bearing account and pay the interest earned to the contractor on completion of the
contract. Generally, the City requires retainage for all public works contracts over $50,000.
Under this statute, a public works is defined as the construction, alteration, or repair of a public
building or the construction or completion of a public work. (Government Code 2252.031 and
2252.033)
Requests for release of retainage shall be forwarded to Materials Management. The retainage
request shall be initiated in writing by the contractor to the project manager, and include an
affidavit of lien release and waiver. The project manager shall review the request to ensure that
project is fully completed and accepted in compliance with the contract and specifications. If
applicable, the engineer/architect shall review and approve the request. The project manager
shall also provide to Materials Management consent of the surety for final payment and release
of retainage from the bonding company. All lien notices shall be forwarded to the project
manager.
The project manager shall forward an approved signed hard copy of the release of retainage
request to Materials Management. Materials Management will then review the release of
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CHAPTER 6 PUBLIC WORKS PROJECTS
retainage request and conduct reconciliation with the City’s financial records. Upon approval,
Materials Management will keep a copy for their files and forward the original hard copy to
Accounts Payable for final release of retainage.
Partial release of retainage may occur before the project is completed. This is usually reserved
for large projects that have longer time periods for completion.
40
CHAPTER 7 PROCUREMENT OF PROFESSIONAL SERVICES
CHAPTER 7 PROCUREMENT OF PROFESSIONAL SERVICES
SECTION 1. PURPOSE OF POLICY AND PROCEDURES
The following policies and procedures are designed to assist the City’s staff in the selection of
individuals or firms to perform professional services. The desire is to establish fairness and
consistency in the selection process while obtaining the best value (quality services at a
reasonable price) for the City in accordance with the applicable legal requirements.
SECTION 2. DEFINITION OF PROFESSIONAL SERVICES
Professional services generally refer to those services performed by an individual or group of
individuals where education, degrees, certification, license and/or registration is required for
qualification to perform the service. The service is usually based on intellectual qualifications as
opposed to craftsmanship. According to the Texas Attorney General’s Office, professional
services include “members of disciplines requiring special knowledge or attainment and a high
order of learning, skill and intelligence.” (Attorney General Opinion No. JM-940 (1988))
Certain Professions are specifically named in the Professional Services Procurement Act (Act),
Chapter 2254, Subchapter A, Texas Government Code (refer to Section 3). The following are
some of the other services held to be professional services in Texas cases or Attorney General
Opinions, according to the LBJ School Of Public Affairs, Advanced Public Purchasing course:
Abstracters, Appraisers, Artists, Attorneys, Auditors, Construction Manager Consultants,
Coordinators of Criminal Investigation, Financial Services Advisors, Fiscal Agents, Law
Enforcement Consultants, Map Makers, Models, Plat Book Preparers, Private Consultants,
Property Tax Consultants, Scientists, Supervisors of Public Construction Projects, Teachers, and
Third Party Administrators.
If a department is not sure if a service is a “professional service”, the department should contact
Materials Management, the Legal Department, or the City Engineer before securing these
services.
SECTION 3. PROFESSIONAL SERVICES PROCUREMENT ACT
(Government Code, 2254.004, Subchapter A)
This Act states that a provider of defined professional services or a group or association of
providers may not be selected on the basis of competitive bids submitted for the contract or for
the services. Instead, the selection and award of a firm for the provision of such services or
contract must first be on the basis of demonstrated competence and qualifications to perform the
services. A contract is then awarded on the basis of a fair and reasonable price as discussed in
Section 4. From a baseline standpoint, professional fees under the contract should generally be
consistent with the recommended practices and fees published by the applicable professional
association, and based on Government Code Chapter 2254.003 (b) may not exceed any
maximum provided by law. The determination of an acceptable negotiated fee amount should be
made with the assistance of a qualified staff professional that is experienced in these matters.
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CHAPTER 7 PROCUREMENT OF PROFESSIONAL SERVICES
Professional services are defined as services (a) within the scope of the practices, as defined by
State law of: (i) accounting; (ii) architecture; (iii) landscape architecture; (iv) land surveying; (v)
medicine; (vi) optometry; (vii) professional engineering; (viii) real estate appraising; or (ix)
professional nursing; or (b) provided in connection with the professional employment or practice
of a person who is licensed or registered as: (i) a certified public accountant; (ii) an architect;
(iii) a landscape architect; (iv) a land surveyor; (v) a physician, including a surgeon; (vi) an
optometrist; (vii) a professional engineer; (viii) a state certified or licensed real estate appraiser;
or (ix) a registered nurse.
SECTION 4. PROCUREMENT OF PROFESSIONAL SERVICES – GENERAL
(Government Code, 2254.004)
When procuring professional services, the City shall use a two-step selection process: First, the
City shall select the most highly qualified provider of those services on the basis of demonstrated
competence and qualifications; and then attempt to negotiate with that provider on a contract at a
fair and reasonable price.
If the City is unable to negotiate a satisfactory contract with the most highly qualified provider of
the desired professional services, the City shall formally end negotiations with that provider,
select the next most highly qualified provider, and attempt to negotiate a contract with that
provider at a fair and reasonable price. The City must continue this process to select and
negotiate with providers until a contract is entered into.
Departments are encouraged to seek proposals or qualifications for indefinite quantity
professional services contracts at least every five years to help ensure diversity in the selection of
professional services by the City of Denton. These contracts are typically for a set time period (a
set number of years or annual renewals up to a set number of years) with a maximum not-toexceed without authorization amount. Although there is great value in maintaining long-term
relationships with professional service providers, departments are also encouraged to attempt to
establish relationships with new providers of these services as appropriate and as qualified firms
become available.
SECTION 5. PROCUREMENT OF PROFESSIONAL SERVICES
There are a number of tools available to the City in the procurement of services as discussed in
Section 4 above. The process can be fairly simple and involve a single firm or individual, or it
may follow a lengthier, more complicated process to screen qualifications. Ultimately the
decision on the most appropriate approach to use in the procurement of these services is up to the
City’s using department or the appropriate professional staff acting in their stead for the project.
Factors that can be considered in this process may include the following:
A. The estimated fee budgeted or projected for the professional service agreement. Larger
fee and overall budgetary amounts may lend themselves to a more complicated process;
however, smaller fees/budgets may not justify a full-blown advertisement or multi-firm
solicitation and a selection committee.
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CHAPTER 7 PROCUREMENT OF PROFESSIONAL SERVICES
B. The complexity and level of specialized expertise required for the project. Similar to the
considerations for fee, the more complicated the project, the more consideration should
be given towards a higher level of solicitation.
C. The using department’s experience, or the experience of the professional acting in their
stead, with projects similar to that for which the services are being procured and their
familiarity with the available professional service providers that are qualified to perform
these services. This issue is similar to item B above. If a project is one-of-a-kind or
simply new to the organization, the solicitation of professional service providers may
involve research into qualified firms possibly with other municipalities or similar
organizations and may justify a full-blown advertisement (newspaper advertisements,
direct solicitations by the using department or professional acting in their stead, web
based solicitations, etc.) and the use of a selection committee.
D. The potential sensitivity of the project from the perspective of the public, citizen groups,
the City Council, and advisory boards or commissions. Similar to the considerations
given for fee, the more sensitive the project, the consideration for a higher level of effort
in the professional services solicitation may be justified.
E. From a practical standpoint, staff needs to be aware of or sensitive to the costs associated
with conducting a formal, involved solicitation process, both for the City and the
professional service providers to be solicited. In addition, staff also should consider the
project’s overall schedule and the time required to successfully complete the solicitation
and selection process, to complete the negotiation process, and to gain the necessary
approvals, whether that is administratively or through the appropriate boards/committees
and City Council.
After consideration of the various costs, complexity and other relevant issues affecting the
project, the City’s using department, or the appropriate professional staff acting in their stead,
shall solicit a proposal(s) from a qualified professional(s). The using department or professional
staff, or the committee if the RFQ process is employed, will select an individual or firm capable
of performing the service on the basis of demonstrated competence and qualifications. The using
department, or the appropriate professional staff acting in their stead, may then enter into
negotiations with the selected individual or firm and follow the procedures established by the
Professional Services Procurement Act. City staff may choose to proceed in a variety of ways to
identify the appropriate professional service provider:
A. The using department, or the appropriate professional staff acting in their stead, may
select a qualified professional to perform the desired services based on personal
knowledge of the professional’s exhibited ability to provide such services or through the
recommendation of a qualified professional with knowledge of the professional’s ability
to provide such services.
B. The using department, or the professional staff acting in their stead, may elect to issue a
Request for Qualifications (RFQ) to multiple qualified professionals to perform the
desired services. The list of potential providers to perform the services shall be derived
from personal knowledge of the professionals’ exhibited ability to provide such services
43
CHAPTER 7 PROCUREMENT OF PROFESSIONAL SERVICES
or through the recommendation of a qualified professional(s) with knowledge of the
professionals’ ability to provide such services.
C. An advertisement may be placed with a newspaper, normally used for legal advertising,
soliciting Request for Qualifications (RFQ) from all qualified professionals interested in
providing the needed services. The advertisement may be run at a minimum in one
edition of the selected newspaper, at least one week prior to the date Request for
Qualifications are due.
After a firm or individual has been selected as the desired provider of the professional services
and a proposal has been solicited from the selected firm (this can be as informal as the issuance
of a letter from staff), the establishment of a detailed scope of services can be achieved. Staff
may then enter into negotiations with the selected professional and follow the procedures
established by the Professional Services Procurement Act.
If an RFQ is utilized, it shall contain sufficient information to inform potential professional
service providers as to the type of project, scope of services to be performed, and the selection
criteria to be used. The RFQ will give the relative importance, or weighting, assigned to each of
the criteria to be used in the selection process. The following general criteria may be used, but
the RFQ is not necessarily limited to these criteria:
•
The provider’s experience in successfully performing similar assignments, scope and
size, for others.
•
The provider’s current staff, both size and related experience, is qualified to provide the
desired services.
•
Whether or not sufficient finances and other resources are available to accomplish the
assignment within the time to be allowed by the City, and whether or not the provider
will be able to provide continuing service if required by the City.
•
How previous clients of the provider for similar projects express satisfaction with the
provider’s work.
•
Whether or not the provider’s response, as perceived by the City’s staff, is complete and
of acceptable quality.
The using department, or the professional staff acting in their stead, may also elect to include the
solicitation of proposed responses or approaches to resolving the problem or task for which the
professional services are to be provided in the RFQ, so long as that solicitation does not include
the provision of fees for various options or data from which fees may be derived or extrapolated.
A professional service provider may be selected after the evaluation of the submitted Requests
for Qualifications or it may be necessary (as determined by the using department) to interview
several of the firms and further evaluate them on the basis of the interview or a presentation,
narrowing the field until one firm is selected for negotiations.
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CHAPTER 7 PROCUREMENT OF PROFESSIONAL SERVICES
When negotiations are concluded, a recommendation will be made to the City Council through
the appropriate committee or board as applicable that a contract be awarded to the firm that the
using department has determined is the most highly qualified provider.
SECTION 6. PROCUREMENT OF OTHER SERVICES
Services other than those named in the Professional Services Procurement Act or otherwise
recognized as a professional service may be contracted through the use of Request for Proposals
(RFP). The selection of a service provider should be made on the basis of criteria similar to those
for professional services, with the difference that cost can be included as an additional criterion
in the selection process.
Services with fees under $50,000 per year may be solicited, evaluated, and awarded by the using
department and the Materials Management Division. (See Appendix O)
Services with fees of $50,000 or more may be advertised in one edition of the newspaper to run
at least one week prior to the due date for RFPs. The selection process will typically be similar
to that used for professional services. After negotiations are successfully concluded by the using
department and a recommendation is presented to the appropriate committee or board as
applicable, the City Manager or City Council shall be asked to award a contract.
45
CHAPTER 8 PURCHASE REQUISITION
CHAPTER 8 PURCHASE REQUISITION
SECTION 1. WHY REQUISITION
A requisition informs Materials Management of a department’s needs. It is utilized to initiate the
purchase of commodities or services. It enables the Materials Management Division to ensure
funds are available and appropriate approvals are in place. A requisition is an internal document
and is not a contract with a supplier or a notice to proceed. Materials Management issues
purchase orders with the authority of the City Manager and City Charter.
SECTION 2. WHEN TO REQUISITION
Requisitions should be entered for all commodities and services that may not be purchased on a
procurement card, check requisition or through the office supply contract as described in
Chapters 3 and 11.
A. Requisitions should be prepared far enough in advance to avoid “emergencies.” This
allows the Materials Management Division time to review the documentation submitted
by the using department and obtain any additional documentation necessary.
B. Requisitions up to $50,000 should meet all statutory and internal requirements as outlined
in this manual.
C. Acquisitions in excess of $50,000 may require additional formal approval as outlined in
Chapter 2 and may require a formal procurement method as described in Chapter 5, 6, or
7. Departments should collaborate with Materials Management to determine the best
procurement method for their specific need.
SECTION 3. HOW TO REQUISITION
A. The City utilizes an enterprise financial software package called JD Edwards (JDE).
Users must apply for access through Technology Services. Application forms are
available on the intranet at Technology Services, user request form tab.
B. The requisition is to be submitted by the using department through the JDE system as
directed in the Oracle/JD Edwards User Productivity Kit. (Refer to the Finance
Department’s JDE Users Info folder on the intranet.) The requisition should contain the
following information:
1. Recommended supplier or default supplier (999999)
2. Date (month, day, year) (automatic default)
3. Delivery destination (JDE Ship To code)
4. Name of department (automatic default)
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CHAPTER 8 PURCHASE REQUISITION
5. Date required (use a definite date)
6. Departmental contact name (automatic default)
7. Quantity required, if applicable
8. Unit of issue (box, case, ounce, lump sum, etc.)
9. Account number(s) (sufficient funds must be available)
10. Description (Clearly describe the commodity or service being ordered including any
technical requirements. If the department assisted in the formulation of the
specifications/quotes, they should be scanned and attached to the requisition in JDE.)
11. Cost
12. Bid/RFP/File number, if applicable (i.e. rental of equipment)
13. Additional documentation (Departments shall include any additional documentation
requirements as outlined in Chapter 2 or 4 of this manual.)
SECTION 4. HOW REQUISITIONS ARE PROCESSED
Requisitions are processed as follows by the Materials Management Division:
A. Once the requisition has advanced through the budget check and department approval
process, the requisition is forwarded to the Materials Management Division for review.
B. The requisition is approved by the buyer and converted to a purchase order.
C. Materials Management emails the purchase order and any supporting documentation to
the supplier. A notice is simultaneously sent to the requisitioner.
D. The purchase order is stored in Laserfiche and may be viewed by departments through
the intranet at the Materials Management site.
47
CHAPTER 9 PURCHASE ORDER AND RECEIVING
CHAPTER 9 PURCHASE ORDERS AND RECEIVING
SECTION 1. PURPOSE OF A PURCHASE ORDER
The purchase order (PO) is a legally binding contract issued by the Materials Management
Division to describe the goods or services, terms and conditions of the purchase.
SECTION 2. HOW A PURCHASE ORDER IS PROCESSED
The PO is created from an approved requisition in the JD Edwards system. An original PO is
electronically created and emailed to the supplier and is used as authorization to furnish the City
with such goods or services as indicated and in compliance with the terms and conditions agreed
upon or as published on the Materials Management website. The requisitioner is simultaneously
emailed an electronic copy of the PO. Materials Management then stores the PO in Laserfiche to
meet record retention requirements.
Accounting and the requisitioner have the ability to view and print copies of the purchase orders
by using the JD Edwards system (Refer to the Finance Department’s JDE Users Info folder on
the intranet.) or they may be viewed electronically through Laserfiche on the Materials
Management intranet site.
SECTION 3. OPEN PURCHASE ORDER
An open PO (a.k.a. Blanket or Standing PO) may be used when the prices quoted are based on
“estimated dollar amount or period of time requirements”. It is issued to a specified supplier for
a stated period of time during a budget year to purchase goods or services of a general category.
Open POs may be used for annual contract purchases where the vendor and price is established
through the formal solicitation process. Departments may then release individual orders against
the open PO as needed, not to exceed the PO amount.
Requisitions for open POs should include a quantity, not-to-exceed amount by line item when
possible. For example, when creating a requisition for boots, the exact value may not be known
until the employee selects a particular boot. The requisition and subsequent PO should state one
pair of boots, not to exceed $150 per pair.
Partial payments for items received against an open PO may be authorized by inputting a
receiver into the JD Edwards system as each purchase is received. Once the last item has been
received, the department can close the purchase order by coding the last receiver as a “7” in the
JD Edwards system.
Open POs can also be used for special projects that will only last for a short period of time but
could generate many small purchases. This type of purchase involves a minimum dollar value,
but could generate more paperwork than necessary. An open PO with prior approval from
Materials Management can reduce paperwork and save time.
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CHAPTER 9 PURCHASE ORDER AND RECEIVING
Open POs should be limited in use. They can put the organization at risk by having fewer
controls and less tracking of expenditures. The procurement card is the preferred method for
small purchases. Please consult the Materials Management Division for assistance in
determining the best procurement method to meet individual needs.
SECTION 4. EMERGENCY/CONFIRMATION PURCHASE ORDER
A. During Business Hours
When an emergency occurs, as defined in Chapter 2, during office hours, contact the
Materials Management Division for assistance in expediting procurements or finding
resources. A PO can be issued after the fact or expedited depending on the department or
supplier need. Additional documentation and a written declaration of an emergency will
be required before a confirming PO is issued.
B. After Business Hours
No purchase of any item or service shall be made by any department director or
employee of the City independently of the approved procurement process, except in the
case of an immediate emergency occurring when the Materials Management Division is
not open for the conduct of business.
In such instances, the department director or their designee may make the necessary
emergency purchase using any means determined to be appropriate, and shall report the
purchase in writing to the Purchasing Manager within twenty-four (24) hours,
accompanied by a definite statement of the occasion and reasons for such emergency
purchase.
SECTION 5. INSPECTING GOODS OR SERVICES
A. It shall be the responsibility of the using department to inspect all equipment, supplies,
services performed, and to initiate the payment process.
B. All deliveries should be inspected promptly and in the presence of the supplier or shipper,
whenever possible. The individual inspecting the merchandise or service performed
should pay particular attention to the following:
1. That the quantity shipped is consistent with the quantity ordered.
2. Note any damaged or defective merchandise on both the receipt (loading) ticket
and/or the PO.
3. Verify that merchandise received meets the specifications defined on the PO or
annual contract agreement. When an item is defective, damaged, or does not meet
specifications, the vendor shall be notified by the receiving department to arrange
return of the merchandise. Returns for orders placed by the using departments will be
the responsibility of the department.
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CHAPTER 9 PURCHASE ORDER AND RECEIVING
4. Verify that the scope of services detailed on the Purchase order has been performed to
the using department's satisfaction.
C. After verifying that the materials received are accurate and in good condition, or that
services have been performed, the using department shall create a receipt for the goods or
services in the system.
50
CHAPTER 10 PAYMENT OF INVOICES AND TRANSPORTATION CHARGES
CHAPTER 10 PAYMENT OF INVOICES AND TRANSPORTATION CHARGES
SECTION 1. INVOICE PAYMENTS
Once goods and/or services have been received, the purchase order (PO) and the invoice are
verified for accuracy and approved by authorized personnel. The supplier should be directed to
send the original invoice to Accounts Payable for processing at 215 East McKinney Street,
Denton, Texas 76201 or [email protected]. If there is a discrepancy in the
amount of the invoice and the PO that cannot be resolved by the requisitioner, please contact the
Materials Management Division for assistance. Accounts Payable will be responsible for
providing the ordering department the invoice(s) in a timely manner.
SECTION 2. SHIPPING TERMS
A. PO terms regarding transportation charges and transfer of title generally fall into the
following categories:
1. Free on Board (F.O.B.) Destination: The supplier maintains responsibility (title) until
the merchandise reaches its destination as noted on the PO. The cost of shipping and
the risk of loss are borne by the supplier. This is the preferred method to reduce risk
and liability for the City of Denton.
2. F.O.B. Destination, Freight Collect: Title passes at destination, and the City pays the
freight.
3. F.O.B. Destination, Freight Collect and Allowed: Title passes at destination, and the
City pays the freight and deducts it from the supplier’s invoice.
4. F.O.B. Destination, Freight Prepaid: Title passes at destination, and supplier pays the
freight.
5. F.O.B. Origin: The responsibility/title is transferred from the supplier to the City at
the origin of the shipment. The City owns the goods in transit and files any claims.
The City has total responsibility. The payment of the freight charges is determined
by contract terms. Materials Management does not recommend this method as it
imposes the greatest risk and liability on the City.
6. F.O.B. Origin, Freight Collect: Title passes at origin, and the City pays the freight.
7. F.O.B. Origin, Freight Prepaid and Added: Title passes at origin, and supplier pays
the freight and then collects the charges from the City by adding them to the invoice.
This shipping term is commonly seen on suppliers’ quotes.
8. F.O.B. Origin, Freight Prepaid and Charged Back: Title passes at origin; supplier
pays the freight and adds it on to the supplier’s invoice.
9. Cash on Delivery (COD): The City of Denton does not accept or pay COD charges.
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CHAPTER 10 PAYMENT OF INVOICES AND TRANSPORTATION CHARGES
B. The PO will indicate F.O.B. Destination unless the using department specifies otherwise
after consultation with Materials Management. It is not recommended to use any of the
F.O.B. Origin terms, since it transfers the responsibility of filing claims to the City if the
merchandise is damaged or stolen during transit.
52
CHAPTER 11 GENERAL INFORMATION
CHAPTER 11 GENERAL INFORMATION
SECTION 1. TERM CONTRACT PURCHASES
City Departments shall use existing term contracts for the procurement of items such as office
supplies, furniture, printing needs, copiers, and uniforms. A term contract is a competitively bid
contract for a specific period of time with an indefinite quantity.
SECTION 2. OFFICE SUPPLIES
Office supplies should be ordered online through the approved online contracted office supply
vendor.
A. A complete account number and departmental approval signature must be noted on the
packing slip before forwarding the packing slip to Materials Management for approval.
If no object code is listed, it will automatically default to 6302.
B. The ordering departments are responsible for all returns. Returns should be submitted
online through the contracted vendor. The original invoice must be paid, and then credit
is issued.
C. Quotations are not necessary: The contract prices on the internet are the prices paid by
the City of Denton.
D. Furniture should be ordered from the term contract for furniture.
E. See the Online Ordering Procedures as posted on the Materials Management’s intranet
site.
SECTION 3. FURNITURE
The City has standardized furniture through the single source use of HON products, which can
be purchased through a term contract. This contract should be utilized when ordering furniture
and file cabinets. For current pricing, please contact the Materials Management Division.
SECTION 4. PRINTING SERVICES
All printing, copying, finishing and print-related materials on behalf of the City of Denton will
be performed or purchased through the City’s Reprographics division. Exceptions must follow
approved guidelines. (See Appendix P)
SECTION 5. COPIERS
The City currently has a contract in place for the copier and multifunction devices (e.g. print /
fax / scan devices). Contact the Reprographics Office for more information.
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CHAPTER 11 GENERAL INFORMATION
SECTION 6. UNIFORMS
The City must follow Administrative Directive 102.11 for all non civil services uniform
purchases. Civil service employees (Police and Fire Departments) are governed by their
individual departmental policies.
Uniforms and uniform maintenance (e.g. dry cleaning, sewing, embroidery, etc.) procurements
must follow approved guidelines and policies.
The Materials Management Division maintains a term contract for uniforms.
54
CHAPTER 12 DISPOSAL OF CITY-OWNED PERSONAL PROPERTY, MATERIALS,
AND EQUIPMENT
CHAPTER 12 DISPOSAL OF CITY-OWNED PERSONAL PROPERTY, MATERIALS,
AND EQUIPMENT
The transfer, donation, or sale of City property shall be administered as detailed below, and in
compliance with Ordinance 2008-11 (See Appendix C).
Departments wishing to dispose of any City owned property, with the exception of scrap
materials, must complete the “City of Denton Surplus Property Form” and submit the form to the
Materials Management Division. (Refer to the Materials Management Division’s Auction Forms
on the intranet.) Department director or designee shall determine the method used for the
disposition of items. Departments are encouraged to reuse or recycle when appropriate. City
recycling programs or contracts shall be considered first.
SECTION 1. PERMITTED METHODS FOR PERSONAL PROPERTY DISPOSAL
A. Transfer of City-owned Personal Property within City Departments
Excess or obsolete city-owned personal property that is no longer required by one City
department (sending department) can be transferred either to another group within the
same department or to another City department in need (receiving department), in
accordance with steps identified below, if a department in need can be immediately
identified by the sending department.
1. If the original cost of the equipment to be transferred to another City department is at
least $5,000, the department director shall notify the Finance Department so the fixed
assets records will reflect the appropriate change(s).
2. Department directors may recommend disposal of city owned personal property if the
replacement value of the item is less than $100, and is not considered being in good
working order. A department that has an item that has an unknown replacement
value shall consult with Materials Management before taking any action.
B. Transfer of City-owned Personal Property to Another Governmental Entity
Any transfer by the City of city-owned personal property to another governmental entity,
except through the auction process, shall be pursuant to an Interlocal Agreement
approved by the City Council if in excess of $500.
C. Transfer of City-owned Personal Property, Through Public Sale or, Trade-in, Donation,
Destroyed or Returned for Credit
The Purchasing Manager of the City of Denton is additionally authorized to sell wornout, scrap, obsolete or unused city owned personal property (other than items routinely
discarded as waste, excavated material), offer the property for trade-in, dispose of
property by donation, or order property to be destroyed, through any of the following
processes:
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CHAPTER 12 DISPOSAL OF CITY-OWNED PERSONAL PROPERTY, MATERIALS,
AND EQUIPMENT
1. Public Sale or Auction - A public auction (sale) held on site, at a City facility, or
through utilization of the internet and conducted by an auctioneer licensed by the
State of Texas. The guidelines of Texas Local Government Code 252, for
competitive bidding, shall be followed. For City-owned Personal Property items
having a value less than $100, the sale may be made at an advertised location where
members of the public may purchase the item.
a. All items to be sold to the highest bidder unless pricing is determined by the
owning department to not be sufficient. In this instance, the City may refuse the
bid and hold the item(s) for sale at another time.
b. After determining the time and place for a public auction, the Purchasing
Manager shall give notice of the auction by advertising in the official newspaper
of the City for at least once a week for two consecutive weeks. The date of the
first publication must be at least 14 days prior to the date of the auction and the
second publication must be no sooner than 7 days prior to the auction or posting
on the City of Denton website for a period of 10 days prior to the auction.
2. Trade-In - Offer the property as a trade-in for new property of the same general type
if the Purchasing Manager and owning department consider that action to be in the
best interest of the City. The trade-in will be recorded as a negative value on the
purchase order for the new equipment of property, once approved. This action will
reflect that the purchase price of the new equipment is adjusted with the value of the
trade-in equipment. If determined necessary to determine “fair market value”, the
Purchasing Manager may employ outside resources to make such determination. In
all instances, best value for City owned property will be achieved and properly
documented by the Purchasing Manager and credit shall be applied to the appropriate
department.
3. Third Party Appraisals - The City of Denton may utilize third party consultants to
determine authenticity or market value of any commodity. The department
responsible for the commodity shall consent to and pay for the third party appraisal.
4. Sealed Bid - Property may be disposed of through the sealed bid process and sold to
the highest bidder, unless rejected by the using department and Materials
Management.
5. Donation - Dispose of the property by donating it to a civic or charitable organization
or another governmental entity, if allowed by law. However in such case, Denton
City Council approval will be necessary if the item has value of more than $500.
6. Destroyed - The Purchasing Manager may order any of the property to be destroyed
or otherwise disposed of as worthless, if the City undertakes to sell that property and
is unable to do so because no bids are received, or it is determined to be scrap
material(s).
56
CHAPTER 12 DISPOSAL OF CITY-OWNED PERSONAL PROPERTY, MATERIALS,
AND EQUIPMENT
a. Scrap: City owned personal property which has been transferred to the Materials
Management Division and has been found to be damaged, destroyed, or in any
other way having no recoverable value will be accumulated and disposed of in
accordance with existing scrap metal/refuse contracts or as otherwise directed by
the Chief Financial Officer.
b. Materials Management Scrap Bin(s): The Purchasing Manager shall ensure that
all scrap with value (metal, wire, etc.) shall be disposed of with existing scrap
metal/refuse contracts or as otherwise directed by the Chief Financial Officer.
Materials Management shall provide scrap bins in strategic locations within the
City, and shall be responsible for coordination of pick-up, delivery, and any
repositioning of the bins. Materials Management shall ensure accurate accounting
of all scrap proceeds has been accomplished and report all sales proceeds to the
Finance Department. All City employees shall ensure the proper disposal of scrap
material in the identified location, and City-owned materials shall not be
converted for private use or personal use.
7. Returned for Credit - Excess or obsolete City-owned property may be returned, if
possible, to the vendor from which the property was originally purchased. Prior to
such return, department staff, directors, and officers shall coordinate this action with
the Purchasing Manager, to ensure credit has been fully received, documented, and
reported to the Finance Department.
8. Lost or Stolen Property - City-owned property that has been lost or stolen and that
has been properly recorded with a police report, and deemed unrecoverable, will be
retired.
SECTION 2. DISPOSAL OF ABANDONED PROPERTY
Disposition of abandoned or unclaimed property seized by a government entity, officers, or
employees must be conducted in accordance with Denton City Ordinance 2008-113, Denton City
Administrative Directive 407.07, Article 18.17, Texas Code of Criminal Procedure, and in
compliance with Texas Transportation Code, Chapter 683. Equipment deemed appropriate for
retention will be in accordance with State law (i.e., confiscated equipment by the Denton Police
Department).
SECTION 3. PURCHASE BY OFFICERS AND EMPLOYEES
An officer or employee of the City, who recommends and/or authorizes the sale of materials and
equipment for their department, shall not, directly or indirectly, submit a bid for, purchase or
acquire ownership of that department’s property. An officer or employee of the city shall not,
directly or indirectly, submit a bid, purchase, or acquire ownership of “impounded property” as
detailed within the Code of Ordinances Section 2.107.
57
CHAPTER 12 DISPOSAL OF CITY-OWNED PERSONAL PROPERTY, MATERIALS,
AND EQUIPMENT
SECTION 4. DISPOSITION OF FEDERAL AND GRANT FUNDED ASSETS
No disposition of federal or grant funded assets will be initiated unless it is allowable in
accordance with the guidelines outlined in the Office of Management and Budget (OMB)
Circular A-102 (revised) and the Uniform Requirements for Grants and Cooperative Agreements
with State and Local Governments, subject to the specific guidelines of the grantor agency.
Additionally, no disposition of federal or grant funded assets will be initiated unless the City’s
grant program administrator as applicable and the department director of the grantee department
have recommended such disposition. If proceeds result from the disposition through sale of grant
funded property, the City’s Purchasing Manager, working with the department director and grant
program administrator as applicable, will ensure that proper notifications are provided to and
instructions and approvals obtained from the grantor agency concerning how proceeds are to be
handled. Depending upon the grantor agency or source involved and the dollar level of the
proceeds, funds may or may not need to be returned or credited to the grantor agency or source.
In all instances where proceeds have been gained by the City, the Purchasing Manager shall
provide a full accounting of such proceeds to the City’s Chief Financial Officer. Where possible
and allowable upon the closing of a grant, the City will seek to transfer the property to another
allowable grant in lieu of sale or other disposition method.
SECTION 5. DISPOSITION OF ITEMS FUNDED WITH BONDS
The disposition of bond funded assets will be communicated to the City Finance Department. If
proceeds result from the disposition of bond funded assets, the City’s Purchasing Manager, shall
provide a full accounting of such proceeds to the City’s Finance Department.
SECTION 6. COMMON PERSONAL PROPERTY TERMS
A. Excess - Personal property that which is no longer needed (in excess of the department’s
requirements) but are still serviceable or useable.
B. Obsolete - Personal property that no longer meet department specifications or
requirements but is still serviceable or useable.
C. Worn - Personal property that may still be operable but require excessive maintenance or
repair (cost, manpower) to remain in an operable condition.
D. Damaged or Destroyed - Personal property that is not operable due to damage or accident
and would require excessive repair (cost and/or manpower) to return the asset to
serviceable condition.
E. Scrap - Personal property that no longer functions, is unserviceable and has no market
value, except for the basic material content, which can be recycled through appropriate
means.
58
CHAPTER 12 DISPOSAL OF CITY-OWNED PERSONAL PROPERTY, MATERIALS,
AND EQUIPMENT
F. Lost or Stolen - Personal property that is assigned to or acquired by a department but has
been lost or stolen and deemed unrecoverable. Stolen City-owned property shall be
properly documented with a police report.
G. Abandoned Property - Personal property which has been left unattended as defined by
Texas Property Code 72, Texas Property Code 75, and Texas Transportation Code,
Chapter 683.
H. Donation - Personal property which has been donated to a charitable organization, as
allowed within Denton City Ordinance 2008-113.
I. Trade-in - Personal property which has been traded, for similar new property, and the
transaction has been recorded within the purchase order.
59
GLOSSARY OF TERMS
GLOSSARY OF TERMS
Advertisement (Notice Requirement) – To make a public announcement of the intention to
procure goods or services. The Local Government Code requires certain expenditures be
published in newspaper published in the municipality. (LOCAL GOVERNMENT CODE
252.041)
Award – The act of accepting a bid, proposal, or offer; thereby resulting in a contract between
the state and a vendor.
Best Value – The lowest total price at the highest quality.
Best and Final Offer (BAFO) – A negotiation technique in which an opportunity is extended to
respondents in the Request for Proposal Process to review their proposals and provide a best and
final offer to the City. A BAFO may best sent to all firms, the top firms or the highest ranked
firm depending on the procurement.
Bid – An offer to contract with an entity, submitted in response to an Invitation for Bid (IFB) or
informal quote.
Bid, Best Value – See Invitation for Bid, Best Value
Bid, Formal – (IFB or RFP) A bid that must be submitted in a sealed envelope and in
conformance with a prescribed format, to be received and opened on a specific date and at a
specified time. Formal bids must be used for purchases greater than $50,000 that are not
specifically exempt.
Bid, Informal – An unsealed competitive offer conveyed by letter, telephone, email, or other
means and under conditions different from those required for formal bidding. Informal bids may
be used for purchases less than $50,000.
Bid, Sealed – A bid which has been submitted in a sealed envelope, to prevent its contents from
being revealed or known before the deadline for the submission of all bids. Bids are opened in
public at a designated time and place.
Bidder – One who submits a response to an invitation for bid or informal quote.
Bidder, Lowest Responsible – The bidder submitting the lowest initial price and capable of
performing the proposed contract as the “lowest and responsible” bid.
Bidder, Responsible – A bidder who has the capability in all respects to perform fully the
contract requirements, and the experience, integrity, perseverance, reliability, capacity, facilities,
equipment and credit which will also assure good faith performance.
Bidder, Responsive – A bidder who has submitted a bid that fully conforms in all material
respects to the IFB and all of its requirements, including all form and substance.
Bidder, Non-resident – A person who is not a resident of the state.
60
GLOSSARY OF TERMS
Bidder, Resident – A person whose principal place of business is in this state, including a
contractor whose ultimate parent company or majority owner has its principal place of business
in this state.
Bond – Written instrument executed by a bidder or contractor and a second party to assure
fulfillment of their obligations to the City.
Bond, Maintenance – Guarantees defects in workmanship and/or materials for a specific time
period.
Bond, Payment – Secures the performance and fulfillment of all the undertakings, covenants,
terms, conditions and agreements contained in the contract and specifications
Bond, Performance – Protects beneficiaries who supply materials or labor to the public works
project and have a direct contractual relationship with the contractor. A payment bond is required
because materials suppliers and laborers do not enjoy the same lien rights on public projects as
they do on private projects. The payment bond requirements essentially replace the protections
afforded by lien rights with protections guaranteed by a surety.
Bond, Bid – A bid bond is submitted with a bid and is a guarantee that the bidder will proceed
with the contract and will replace the bid bond with a performance and payment bonds. The bid
bond is an instrument used to stop low bidders from underbidding and then withdrawing their
bid. A bid bond is not statutorily required, but is generally used by the City on public works
contracts
Cash on Delivery (COD) – A requirement for full payment for good or services at the time of
receipt. The City of Denton does not accept or pay COD charges.
Centralized Master Bidder’s List (CMBL) – A mailing list, maintained by the Texas
Comptroller of Public Accounts, of vendors who have expressed interest and registered to
receive notice of bid or proposal opportunities based on the products or services they provide.
Change Order – A change in plans or specifications after the performance of a contract is
begun, or if it is necessary to increase the quantity of work to be performed or of materials,
equipment, or supplies to be furnished.
Critical Business Need – A purchase made without following the normal purchasing procedures
in order to obtain goods or services to meet an urgent and unexpected requirement.
Commodity – A tangible item that can be offered for trade
Competitive sealed bids – See Invitation for Bids
Competitive sealed proposal – See Request for Proposal
Component purchases – Purchases of the component parts of an item that in normal purchasing
practices would be purchased in one purchase.
61
GLOSSARY OF TERMS
Cooperative Buying Agreement (Cooperative Contracts, COOPs or “Piggy back”
Agreements) – Competitively awarded contracts in accordance with State of Texas statues,
rules, policies, and procedures, have been extended for the use of other state agencies and active
CO-OP members. A cooperative buying agreement satisfies any state law requiring a local
government to seek competitive bids.
Emergency Procurement – A situation requiring a department to make a purchase more
quickly in order to prevent hazard to life, health, safety, welfare, or property or to avoid undue
additional costs.
Evaluation of Bids and Proposals – The process of examining a bid after opening to determine
the bidder’s responsibility, responsiveness to requirements, and to ascertain other characteristics
of the bid that relate to determination of the successful bidder and will meet the needs of the
requesting and using department.
Free on Board (F.O.B) – This term is used to designate the physical point to which title of the
materials transfers from the supplier to the purchaser.
F.O.B Destination – The supplier maintains responsibility (title) until the merchandise reaches
its destination as noted on the PO. The cost of shipping and the risk of loss are borne by the
supplier. This is the preferred method to reduce risk and liability for the City of Denton.
F.O.B. Destination, Freight Collect – Title passes at destination, and the City pays the freight.
F.O.B. Destination, Freight Collect and Allowed – Title passes at destination, and the City
pays the freight and deducts it from the supplier’s invoice.
F.O.B. Destination, Freight Prepaid – Title passes at destination, and supplier pays the freight.
F.O.B. Origin – The responsibility/title is transferred from the supplier to the City at the origin
of the shipment. The City owns the goods in transit and files any claims. The City has total
responsibility. The payment of the freight charges is determined by contract terms. Materials
Management does not recommend this method as it imposes the greatest risk and liability on the
City.
F.O.B. Origin, Freight Collect – Title passes at origin, and the City pays the freight.
F.O.B. Origin, Freight Prepaid and Added – Title passes at origin, and supplier pays the
freight and then collects the charges from the City by adding them to the invoice. This shipping
term is commonly seen on suppliers’ quotes.
F.O.B. Origin, Freight Prepaid and Charged Back – Title passes at origin, supplier pays the
freight and adds it on to the supplier’s invoice.
Freight – Compensation paid for the transportation of goods.
62
GLOSSARY OF TERMS
Historically Underutilized Business (HUB) – “Is at least 51% owned by an Asian Pacific
American, Black American, Hispanic American, Native American and/or American woman, is a
for-profit entity that has not exceeded the size standards prescribed by 34 TAC §20.23, and has
its principal place of business in Texas, and has an owner residing in Texas with a proportionate
interest that actively participates in the control, operations and management of the entity's
affairs”.
HUB – See Historically Underutilized Business
Invitation for Bid (IFB) – A solicitation requesting submittal of a bid in response to the
required specifications. IFBs are awarded to the lowest responsible bidder meeting the
specifications.
Price
may
not
be
altered
or
negotiated.
Invitation for Bid, Best Value (IFB-BV) – A solicitation requesting submittal of a bid in
response to the required specifications. A best value IFB is awarded to the bidder that meets the
specifications and provides the best value to the City. Published evaluation criteria are utilized
to determine the best value; which may not be the lowest cost. Price may not be altered or
negotiated.
Life Cycle Cost – The total cost associated with buying, owning, and using a physical product or
service.
National Institute of Governmental Purchasing (NIGP) Commodity/Service Codes –
Standardized national classification codes that identify goods and services.
Negotiations – A consensual bargaining process in which multiple parties attempt to reach an
agreement on a disputed, or potentially disputed, matter.
Notice Requirement – See Advertisement
Offer – A response to a solicitation that if accepted, would bind the Offeror to perform the
resulting contract.
Offeror – A person on entity who submits a response to a solicitation.
Offeror, Responsible – An offeror who has the capability in all respects to perform fully the
contract requirements, and the experience, integrity, perseverance, reliability, capacity, facilities,
equipment and credit which will also assure good faith performance.
Offeror, Responsive – An offeror who has submitted a proposal that fully conforms in all
material respects to the RFP and all of its requirements, including all form and substance.
Personal Property – Tangible or intangible property, other than real property.
property subject to ownership, with exchangeable value.
Moveable
Personal Services – Services other than professional services as defined by Government Code
2254. Personal services may be exempt from the competitive bid process.
63
GLOSSARY OF TERMS
Piggyback Contracts – See Cooperative Buying Agreements
Planning Services – Services primarily intended to guide governmental policy to ensure the
orderly and coordinated development of the state or of municipal, county, metropolitan, or
regional land areas.
Professional Services – (GC 2254) Services within the scope of the practice, as defined by state
law, of: accounting, architecture, landscape architecture, land surveying, medicine, optometry,
professional engineering, real estate appraising; or professional nursing; or services provided
in connection with the professional employment or practice of a person who is licensed or
registered as: a certified public accountant, an architect, a landscape architect, a land surveyor, a
physician, including a surgeon, an optometrist, a professional engineer, state certified or state
licensed real estate appraiser, or a registered nurse.
Proposal – An offer submitted by a supplier in response to a Request for Proposal (RFP)
intended to be used as a basis to negotiate a contract.
Public Works (GC 2253) – A contract for constructing, altering, or repairing a public building
or carrying out or completing any public work.
Purchase Order – A signed written acceptance of an offer from a supplier. A purchase order
may serve as the legal and binding contract between parties. Only the Materials Management
Division may issue purchase orders.
Qualified Products List – An approved list of supplies, services or construction items described
by model or catalog numbers, which prior to competitive solicitation, the requesting City of
Denton department has determined will meet the applicable specification requirements.
Reciprocity (in bid evaluation) – If a nonresident bidder’s home state grants a preference to its
resident bidders, an equal penalty is added to the nonresident bidder’s proposal when bidding in
Texas. The action is opposite; a preference becomes a penalty, but the amount is equal.
Request for Information (RFI) – An information gathering tool used when a purchaser cannot
clearly identify product requirements/specifications.
Request for Proposal (RFP) – A solicitation requesting submittal of a proposal in response to
the required scope of services that usually includes some form of a cost proposal. An RFP
requires published evaluation criteria. Price may be negotiated with firms to ensure the best
value for the organization.
Request for Qualifications (RFQ) – The RFQ is used to allow firms and individuals the
opportunity to propose demonstrated competence and qualifications for the type of professional
services to be performed at fair and reasonable prices. The RFQ process gives the City of
Denton the opportunity to select the firm that best meets the using department needs without
price being the deciding factor in the initial phase of the process.
Requisition – An internal document the end user completes to request goods or services.
64
GLOSSARY OF TERMS
Respondent – A person or entity which submits a response to a solicitation.
Responsible – See Bidder, Responsible or Offeror, Responsible
Responsive – See Bidder, Responsive or Offeror, Responsive
Retainage – Part of a public works contract payment withheld by the City to secure performance
of the contract.
Reverse Auctions – A real-time bidding procedure that is conducted at a pre-scheduled time and
Internet location in which multiple suppliers, anonymous to each other, submit bids for
designated goods and services.
Schedule – A list of multiple award contracts from which agencies may purchase goods and
services.
Scheduled Purchase – A purchasing method used for ordering goods in bulk.
Scope of Work (SOW) – A written description of the contractual requirements for materials or
services contained within a Request for Proposal. The SOW can be compared to specifications
within an Invitation for Bid. SOW should establish a clear understanding of what is needed,
encourage competition, satisfy the departmental need, and provide the best value for the citizens.
Separate purchases – Purchases, made separately, of items that in normal purchasing practices
would be purchased in one purchase.
Sequential purchases – Purchases made over a period, of items that in normal purchasing
practices would be purchased in one purchase.
Single Source – A procurement in which there are other products that perform the same
function, but a single source is necessary for a particular justifiable reason. Usually, multiple
distributors can provide competitive quotes for the single sourced product. For example, there
are numerous brands of computers; however the Panasonic Toughbook may be a single source
due to a particular function that is not offered by competitors. A single source will require
written justification as to the business need for the single source. Experience is not an
acceptable justification.
Sole Source – A good or service available from one source. The procurement is usually
protected by patents, copyrights, secret processes or natural monopolies.
Solicitation – The process of notifying prospective vendors of an opportunity to provide goods
or services to the state. Solicitations may be conducted via telephone, fax, mail, e-mail, or in
person.
Specification – Any description of the physical, functional, or performance characteristics, or of
the nature of a supply, service or construction item. A specification includes, as appropriate,
requirement for inspecting, testing, or preparing a supply, service or construction item for
delivery.
65
GLOSSARY OF TERMS
Statement of Work – A statement outlining the specific services a contractor is expected to
perform, generally indicating the type, level and quality of service, as well as the time schedule
required.
Supplier (Vendor) – A seller of commodities and/or services.
Surplus Property – A designation that applies to property no longer needed and is designated
for disposal.
Term Contracts – Competitively bid contracts for a specific time period and of indefinite
quantity.
Texas Multiple Award Schedule Contracts (TXMAS) – Contract developed from contracts
that have been competitively awarded by the federal government or any other governmental
entity of any state. TXMAS contracts offer access to multiple vendors with preferred State of
Texas customer pricing.
TPASS – Texas Procurement and Support Services, a division of the Texas Comptroller of
Public Accounts.
Vendor (Supplier) – A seller of commodities and/or services.
Sources: NIGP Public Procurement Dictionary of Terms (Revised for 2010), Institute of Supply
Management Glossary of Key Supply Management Terms, and Texas Comptroller of Public
Accounts website (www.window.state.tx.us)
66
APPENDICES
67
APPENDIX A: Purchasing Process Flow Charts
City of Denton
Purchasing Diagram
(Excluding Professional Services)
Need for Goods or
Services
Yes
Is Total Amount
Greater than
$100,000?
Yes
Get Sealed Bids
UTILITY ONLY
Recommend for
Approval by PUB
Get Council
Approval
No
Is Amount
Between
$50,000 and
$100,000?
Yes
Get City Manager
Approval
Get Sealed Bids
Purchase
Order
Can Be
Issued
No
Is Amount
Between $3,000
and $50,000?
Yes
Attempt to Get 3
Quotes + HUB
Requirement
Yes
Attempt to get 3
Quotes
No
Is Amount Less
than $3,000?
No
Updated: April 16, 2009
1 of 10
APPENDIX A: Purchasing Process Flow Charts
Change Orders Process
for
Professional Services Contracts
Is the
CHANGE
needed for a
similar scope?
No
Prepare for a New
Contract to cover
needed
Requirement
Yes
Get Purchasing
Agent Approval
Yes
Get City Manager
Approval
Yes
Recommend for
Approval by PUB
(If Applicable)
Issue a
New
Contract
Yes
Is the
CHANGE
< $50,000?
No
Is the
CHANGE
>$50,000, but
<$100,000?
REVISED
Purchase
Order
Issued
No
Is the
CHANGE
>$100,000?
2 of 10
Get Council
Approval
APPENDIX A: Purchasing Process Flow Charts
Change Orders Process
for
Excluding Professional Services Contracts
Is there a CHANGE in
plans/specs, or
increase/decrease in
Quantity of work,
materials or equipment?
No
Issue a
New
Contract
Prepare a new bid
(See Bid Process)
Yes
Does the
CHANGE
increase the
original contract
amount by
>25%?
Yes
No
Does the
CHANGE
decrease the
original contract
amount by
>25%?
Yes
Seek Consent
from the
Contractor
No
Is the
CHANGE an
increase/decrease
LESS than
$50,000?
Yes
Get Purchasing
Agent Approval
REVISED
Purchase
Order
Issued
No
Yes
Is the
CHANGE an
increase of >
$50,000?
Recommend for
Approval by PUB
(If Applicable)
Get Council
Approval
Recommend for
Approval by PUB
(If Applicable)
Get Council
Approval
No
Yes
Is the
CHANGE an
decrease of >
$50,000?
Seek Consent
from the
Contractor
3 of 10
APPENDIX A: Purchasing Process Flow Charts
DME Commodity/Service Purchase
Diagram
Excluding Professional Services
Is purchase for
electric production,
distribution,
transmission, or
station systems?
Notify Mayor and
PUB Chair
Get City Manager
Approval
Go to
Page 2
Yes
Is the Item a
Critical Business
Need?
Yes
No
No
Is Total
Greater than
$500,000?
Yes
Get Sealed Bids
Recommend for
Approval by PUB
Get Sealed Bids
Recommend for
Approval by PUB
or Council if >
$250,000
No
No
Is Total Amount
Between
$100,000 and
$500,000?
Yes
No
PO is Issued
Is Amount
Between $3,000
and $100,000?
Report to
PUB
Get Council
Approval
Yes
Attempt to get 3
Quotes + HUB
Requirement
Yes
Attempt to get 3
Quotes
Get City Manager
Approval
Purchase
Order
Can Be
Issued
No
Is Amount Less
than $3,000?
Report to
Council
4 of 10
Page 1
APPENDIX A: Purchasing Process Flow Charts
From
Page 1
Is purchase for
electric production,
distribution,
transmission, or
station systems?
Yes
Back to
Page 1
No
Is Total Amount
Greater than
$100,000?
Yes
Get Sealed Bids
Recommend for
Approval by PUB
Get Council
Approval
No
Is Amount
Between
$50,000 and
$100,000
Yes
Get City Manager
Approval
Get Sealed Bids
Purchase
Order
Can Be
Issued
No
Is Amount
Between $3,000
and $50,000?
Yes
Attempt to Get 3
Quotes + HUB
Requirement
Yes
Attempt to get 3
Quotes
No
Is Amount Less
than $3,000?
No
5 of 10
Page 2
APPENDIX A: Purchasing Process Flow Charts
Purchase Order (PO) Process
Department enters request (OR, OJ, or OD) in JD Edwards (JDE).
OR
OJ
OD
After budget check, OD goes to Purchasing for PO print.
(220/280)
After budget check, OJ goes to Purchasing for review.
(100/120)
After budget check, OR goes through Workflow for department approval.
(100/110)
Batch OD print performed daily by Purchasing staff.
Assigned approver receives e‐mail approval request. Reviews requisition in JDE & approve or reject.
Buyer reviews printed PO and signs if g
approved.
Approved OR goes to Purchasing for review.
(110/120)
Signed PO is forwarded to vendor.
A buyer number is assigned to all OR/OJs at 120 status by Purchasing staff.
ff
Vendor receives PO and fulfill the order.
Purchasing Review
Competitive sealed bidding
bidding required?
NO
NO
Buyer performs the following:
1. Verifies prices (quotes or current contract).
2.
Reviews vendor’s terms & conditions.
3. Reviews & signs vendor agreement (if available).
4. Determines if contract (i.e. service, PSA, etc.) is needed.
5. Determines if insurance i
if i
certificates are required.
Cont’d next page
Additional quotes needed?
YES
Bid/RFP prepared for purchases greater than $50,000.
YES
Buyer prepares & sends RFQ to qualified HUB vendors/non‐HUB vendors.
Upon receipt of quotes, buyer determines lowest bidder who meets specifications. Buyer then performs these 5
then performs these 5 steps.
Cont’d next page
1
6 of 10
Upon bid/RFP opening, recommendation is U
bid/RFP
i
d ti i
made by dept./Purchasing.
Placed on consent agenda for PUB (if required) & City Council (> $100,000)
‐OR‐
Sent to City Manager for approval (<$100,000) Cont’d next page
APPENDIX A: Purchasing Process Flow Charts
Purchasing Review continued
Upon receipt of all required documents from vendor, buyer reviews documents. If approved, buyer issues PO.
(230/280)
Upon award by City Council or City Manager and receipt of signed
Manager and receipt of signed contract (if required), PO is issued.
(230/280)
All POs at 230/280 status are batch printed daily.
Buyer reviews & signs PO.
(280/400)
Signed PO forwarded to g
vendor with back up documents (if needed).
Vendor receives PO and fulfills the order.
2
7 of 10
APPENDIX A: Purchasing Process Flow Charts
Procurement Card Process
Dept. Director submits P‐card request to Purchasing Agent
Not Approved
Approved
1. EE is scheduled for next P‐
card training class.
2. Procurement Coord. sends new card request with approved limits to Bank.
Employee
Employee (EE) eligible for P‐card?
Purchasing
Each month, Purchasing receives P‐card statement for each EE who has transaction(s). Master statement is reviewed by Sr. Buyer before statement is sent to EE with due date.
EE receives card upon completion of training & signing COD/Bank User Agreement
EE monitors on‐line transaction log (posted weekly). Updates with acct. # & description.
Upon receipt of monthly Upon
receipt of monthly
statement, EE verifies statement & submits the following:
1. Signed transaction log
2.
Statement
3. Clarification explanation memo (if requested)
4. Receipts (if audited)
p (
)
to Purchasing by due date.
Notification of declined request sent to Dept. Director
Statement sent to EE with due date.
No
Random Audit selection made by Proc. Supv. Audit letter attached to statement. Sent to EE with due date.
Yes
Questionable expenditure?
Clarification letter prepared & attached to statement. Sent to EE with due date.
Process performed by Purchasing after receipt of signed transaction log with attachments.
p
y
g
p
g
g
Purchasing staff reviews each transaction log for signature, expenditure detail, & clarification explanation memo (if required).
No
Yes
If there’s a P‐card policy violation, a warning letter is sent to supervisor &/or Dept. Director. Otherwise, transaction log & statement is sent to Accounting. EE audited
?
Receipts, transaction log, & clarification (if req.) are reviewed by Sr. Buyer.
Random review performed by Internal Auditor.
P‐card policy violation?
No
8 of 10
Yes
Receipts are returned to EE with thank you letter.
Warning letter & receipts sent to supv. &/or Dept. Director.
Transaction log & statement sent to Accounting.
Transaction log & statement sent to Accounting.
APPENDIX A: Purchasing Process Flow Charts
Check Requisition Process
Department submits signed check requisition with supporting documentation to Purchasing.
documentation to Purchasing.
Purchasing Review
NO
Check requisition complete with signature, vendor number &
number, & adequate documentation?
Check requisition returned to department with request for more details.
NO
Check requisition returned to department with explanation.
9 of 10
YES
Check requisition falls within check req
check req. guidelines (see attached)?
YES
Purchasing Approval section is signed and check req. is forwarded to Accounts Payable for processing.
APPENDIX A: Purchasing Process Flow Charts
Staples Advantage Purchase Process
Department sends request for new Staples Advantage E‐Way account to Purchasing.
to Purchasing.
New account is set up by Purchasing staff. Instructions/guidelines are sent to new user.
Dept. user enters order on‐line using E‐Way.
Purchasing Review
NO
Amount of order or a product greater or equal to $500?
Order is submitted to Staples Advantage for fulfillment.
YES
Order is automatically sent to Purchasing for approval.
NO
Item(s) carried in COD warehouse?
‐OR‐
Item(s) can be purchased at better price?
Buyer approves the order.
Order is submitted to Corporate Express for fulfillment.
fulfillment
Process performed after products are delivered by Staples Advantage.
Department sends packing slip with complete account number & signature to b & i t
t
Purchasing.
Purchasing staff reviews packing slip & forwards approved slip to Accounts Payable.
10 of 10
YES
Buyer rejects the Buyer
rejects the
item(s) &/or obtains quote from other vendors.
APPENDIX B: Ordinance #2001-376
ORDINANCE NO.
a001 _0 7
AN ORDINANCE OF THE CITY OF DENTON, TEXAS, AMENDING CHAPTER 10,
ARTICLE II "PURCHASING" OF THE CODE OF ORDINANCES OF THE CITY OF
DENTON, TEXAS TO PROVIDE THAT
THE CITY OF DENTON MAY UTILIZE ANY
PURCHASING AND PROCUREMENT METHOD AUTHORIZED BY LAW; ALLOWING
ALTERNATIVE PROCUREMENT METHODS FOR DENTON MUNICIPAL ELECTRIC;
PROVIDING
A
SEVERABILITY
CLAUSE
AND
A
REPEALER
CLAUSE; AND
PROVIDING AN EFFECTIVE DATE.
Legislature revised Chapters 252 and 271 of the Local
municipalities the flexibility to utilize a number of alternative
procurement methods including,best value purchases, competitive sealed proposals, design-build
contracts, construction manager contracts, and job order contracts; and
WHEREAS, the 77th
Texas State
Government Code to allow
WHEREAS, Chapter 10, Article II of the Code of Ordinances of the City of Denton is
obsolete because it restricts City procurements to only those methods allowed by state law prior
to the recent legislative changes; and
WHEREAS, the City Council finds that it is in the public interest
to authorize any
procurement method that is authorized by law and it is in the public interest to allow alternative
procurement methods for Denton Municipal Electric as provided herein as these alternative
public purpose to allow Denton Municipal Electric to compete
municipally owned electric utilities; NOW,THEREFORE
equal basis with non-
procurement methods
more
serve a
on a
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
Chapter 10 Article II "Purchasing" of the Code of Ordinances of the City
is hereby amended in its entirety to read as follows:
of Denton, Texas ("
Chapter 10, Article II")
SECTION 1.
ARTICLE II.PURCHASING
Sec. 1026.
Purchasing
and Procurement Methods and Procedures.
a)The Purchasing Agent of the City of Denton (the "Purchasing Agent")shall make all
purchases and sales for the City in accordance with the provisions of state law,the Charter and in
accordance with this article. The City may utilize any purchasing or procurement method or
procedure authorized by law to purchase or contract for goods, services or public works. The
Purchasing Agent is authorized to determine which method of procurement provides the best
value to the City under Sections 271.113, 271.114, and d)
252.022( of the Texas Local
Government Code, as amended. As authorized by Subsection c)
252.022( of the Texas Local
Government Code the Purchasing Agent is hereby authorized to use any procurement procedure
S:\
Our
Documents\
01\
Ourchasing
P
rdinances\Proceduresldoc
APPENDIX B: Ordinance #2001-376
or
method for the construction
installation of any
or
that is authorized
public
work for Denton
Municipal Electric
Code, as
271 of the Texas Local Government
by Subchapter H, Chapter
amended, even if the public work is for the construction of a public work defined in Subsection
d)
252.
043(of the
Texas Local Government Code. This ordinance shall constitute
purposes of Subsection
a
resolution for
252.022(of the Texas Local Government Code.
c)
b) The Purchasing Agent shall have full authority to purchase or provide for the
purchase of all materials, supplies and equipment for the use of all departments, utilities,
commissions and boards comprising the city government.
Sec. 1027
The
Requisitions
for
Supplies
Purchasing Agent shall not furnish any supplies to any department unless there is to
department an available appropriation balance in excess of all unpaid
the credit of such
obligations
sufficient to pay such
Procedures for Purchases Based
Sec. 10-28
The
25,000
or
supplies.
on
Certain Values
City Manager or his designee, is authorized
city council approval.
to make
purchases of budgeted items
of
less without
City Council
Contracts with Former
Sec. 10-29
Members
shall not, within one hundred eighty (180)days after a council member leaves
a contract with any business entity as defined by Chapter 171 of the Texas
office,
Local Government Code ("
Chapter 171 in which the former council member has a substantial
The
City
enter into
interest
as
defined
1) A
by Chapter
171. This
required
sealed bids;
contract
prohibition
does not
apply to:
to be awarded to the lowest
responsible through competitive
2) A contract to purchase items that are available from only
Chapter 252 of the Texas Local Government Code;
3) A
contract
required to receive a city
general public;
service
or
participate
one source as
in
a
specified
city program
in
which is
available to the
4) A
contract that is necessary to preserve
citizens
or
because of
money to relieve the
the
or
protect the public health
that
public calamity
requires
of
the
necessity
city's residents
a
city; and
5) The purchase
of real estate
or an
interest in real estate.
Page 2
safety of the
appropriation of
preserve the property of
the immediate
or
to
or
APPENDIX B: Ordinance #2001-376
SECTION 2. All other
provisions
of
Chapter 10, Article
II
are
To the extent of any conflict between this ordinance and any other
Denton this ordinance shall supercede any such conflicting provision.
repealed in their entirety.
ordinance of the City of
provision of this ordinance or the application thereof to any person
by any court, such invalidity shall not affect the validity of other
applications, and to this end the provisions of this ordinance are severable.
SECTION 3. If any
or
circumstance is held invalid
provisions
or
SECTION 4. This ordinance shall become effective
immediately
upon its passage and
approval.
PASSED AND APPROVED this
theo_ -
day of
('
2001.
m~
xd_
EULINE BROCK, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY:
APPROVED AS TO LEGAL FORM:
HER
BY:
Page 3
APPENDIX C: Ordinance #2008-113
APPENDIX C: Ordinance #2008-113
APPENDIX D: Ordinance #2006-237
1 of 1
APPENDIX E: Ordinance #2009-034
1 of 1
APPENDIX F: Resolution #R2007-032
1 of 2
APPENDIX F: Resolution #R2007-032
2 of 2
APPENDIX G: Resolution #R2008-042
APPENDIX G: Resolution #R2008-042
APPENDIX H: Ordinance #2009-189
our
legal
departments
codad
documents
dme
09
ordinances procurement ordinance
doc
ORDINANCE NO
e
wq
q
AN ORDINANCE FINDING A PUBLIC PURPOSE AND ESTABLISHING PROCUREMENT
PROCEDURES FOR PURCHASES BY DENTON MUNICIPAL ELECTRIC
DME
FOR
ELECTRIC PRODUCTION TRANSMISSION DISTRIBUTION AND STATION SYSTEMS
IN ACCORDANCE WITH TEXAS LOCAL GOVERNMENT CODE 252
022c PROVIDING
A SEVERABILITY CLAUSE AND AN EFFECTIVE DATE
WHEREAS Chapter 252 of the Local Government Code exempts from the requirements
Chapter expenditures made by a municipally owned electric utility for any purchases
made by the municipally owned electric utility in accordance with procurement procedures
adopted by an ordinance of its governing body that sets out the public purpose to be achieved by
of such
those
procedures
and
rule municipal corporation in the State of
WHEREAS the City of Denton Texas a home
a
electric
and
utility Denton Municipal Electric and
Texas
operates municipal
owns
WHEREAS the Denton City Council desires to adopt this Ordinance in order
purchasing procedures for Denton Municipal Electric and
to
modify
WHEREAS the Denton City Council further finds that these purchasing procedures will
benefit the public purpose the citizens of Denton and the customers and ratepayers of Denton
Municipal Electric purchases to conform with all
state procurement
City Charter and this Ordinance while assuring
effective for Denton Municipal Electric and its
that procurements are both beneficial and cost
customers and fair and equitable to suppliers and
Municipal
applicable
Electric
for Denton
by providing
laws
as
well
as
the
WHEREAS Section 252
c of the Texas Local Government Code provides that the
022
of said Code to not apply to expenditures by a municipally owned
252
of
Chapter
requirements
electric
a
utility
municipally
in connection with any purchases by the municipally owned utility
owned utility made in accordance with procurement procedures
resolution of the
owned
utility
body
divisions of
adopted by a
the municipally
vested with
that sets out the
or
authority for management and operation of
public purpose to be achieved by those procedures NOW
THEREFORE
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS
The
City
utility
more
SECTION 1
municipally
owned
hereto and made
a
Council
hereby adopts the procurement procedures by a
particularly outlined in Exhibit A a copy of which is attached
part hereof for all purposes
SECTION 2
This Ordinance shall become effective
approval
Page 1 of 4
immediately
upon its passage and
i
APPENDIX H: Ordinance #2009-189
i
sAour dme
09
documents
ordinances procurement ordinance
doc
PASSED AND APPROVED this the
MARK
ATTEST
JENNIFER
WALTERS CITY SECRETARY
BY
APPRO
ED A
VkL
W
a
day of
TO LEGAL FORM
ANITA BURGESS CITY ATTORNEY
s
BY
Page 2 of 4
B
2009
HS MAYOR
APPENDIX H: Ordinance #2009-189
1 General Policy Purchases
services used
by
EXHIBIT A
Denton
Municipal
Electric of
equipment supplies materials
and
electric production transmission distribution and station systems including but not
limited to transformers cable
wire and poles shall be made in a manner that
a
on
Conforms with the substance of all applicable state procurement laws the
applicable City Ordinances
and this
b
Is beneficial and cost
effective for Denton
c
Is fair and
equitable
to
suppliers
City Charter
all
Resolution
Municipal
and service
Electric and its customers and
providers
Actions and procurements not addressed by this ordinance shall be
provisions of Chapter 252 of the Texas Local Government Code
governed by the applicable
2 Solicitation
Type The Purchasing Agent will determine the type of solicitation to be used in a
procurement taking into account both the fundamental requirements of fairness in selecting parties to
contract with Denton Municipal Electric as well as the competitive needs of Denton
Municipal
Electric Normally an Invitation for Bid will be used for standard commodity purchases and a Request
for Proposal will be used for procurement of services and for custom built and
or technical equipment
including but not limited to equipment that is related to the production transmission distribution or
of
electricity Procurement of professional services and public works construction not
governed by Chapter 252 of the Local Government Code will not be affected by this section
Procurements that meet the requirements of critical business need as set forth in Section 7 below
may
metering
follow the
procedures
established therein
3 Bids and
Proposals The general business practice will be for all responses to solicitations to be
submitted by mail courier electronically or by fax Electronic signatures will be acceptable However
this practice may be waived at the discretion of the Purchasing Agent if there is a business need to
either permit telephone responses or to require sealed responses Sealed responses will be
required for
solicitations over 100
000 unless the solicitation is for a Critical Business Need as set forth in
Section 7
4
Advertising Requirement Any solicitation estimated to be in excess of 100
000 will be advertised
a minimum of seven 7 days prior to the bid
on
the
internet or by such other means
opening
including newspaper publication as is determined necessary to reach a wide and diverse number of
potential bidders or proposers If the newspaper is used an advertisement will be run at least 7 days
prior to the bid opening date However if the Purchasing Agent determines and provides a written
justification that there is a business need a solicitation may be advertised for a lesser period of time or
for
in
a
different fashion
Change Orders If changes are necessary after the performance of the contract is begun the
municipality may approve change orders of similar or related items provided that
5
Additional money for increased costs is appropriated for that purpose from
or is provided for by the authorization of the issuance of time
a
available funds
warrants
b
If
a
change
Manager
c
or
order involves
the person
a
decrease
acting
on
or an
increase of
000
100 or less the City
change order
her behalf may approve the
his
The
original contract price may not be increased under this section by more than
25 percent The original contract price may not be decreased under this section
by
more than 25 percent without the consent of the contractor
Page 3 of 4
APPENDIX H: Ordinance #2009-189
6
Project Expenditure Approval The City Manager
000 provided that
purchases up to 500
is authorized to approve
individual
a
the
is
procurement
for
transmission distribution
b
c
the
is included in the
project
e
and
purchases
in
electric
project
of 250
000 that have been recommended for
approved by City Council whichever meets first and
standard
purchasing practices
of 000
100 will
excess
production
does not exceed the amount
project
excess
or
in
for
approved budget
CIP
the PUB
Expenditures
services
projects
the cumulative total of purchases for any
available for that
d
materials
and station
expenditures for
7 Critical Business Need The
approval by
have been followed
reported retroactively
to Council and
or PUB
forth in the above sections may be
changed or
her behalf on a case
by
City Manager or the person acting on his
case
basis as
by
necessary in order to meet a critical business need of Denton Municipal Electric for the purchases of
goods or services for electric production transmission distribution and station
The
modified
procedures
set
the
systems
expenditure
shall not exceed
000
500 Circumstances
which could
give
rise to
a
finding
of critical
business need include
a
emergency situation including procurements necessary to protect the
safety of in response to a public calamity
b
a
procurement necessary because of unforeseen
machinery
or
to
or
public equipment
other property
c
a
procurement for personal services
d
a
procurement of items that
e
a
procurement necessary
Municipal
damage
public health
to
are
or
technical services and
highly
available from
only
one
testing
source
protect the competitive interests
or
position
of Denton
Electric
A critical business need will be submitted in
the Critical Business Need Justification
writing using
form by the General Manager of Denton Municipal Electric reviewed by the Purchasing Agent and
or the Public Utility Board Chairperson shall be
approved by the City Manager The Mayor and
notified of the expenditure before approval by the City
Manager Once it has been determined that a
procurement is necessary
to meet a
critical business need of Denton
Agent will manage the procurement so as to
need while providing competition to the extent
Critical business needs shall be
City
assure
possible
reported retroactively
Municipal Electric the Purchasing
expeditiously meets the critical business
maintaining a fair process
that it
and
to the PUB and
Council
Page 4 of 4
retroactively accepted by the
APPENDIX I: City Facilities Construction and Renovation
1 of 2
APPENDIX I: City Facilities Construction and Renovation
2 of 2
APPENDIX J: Local Preference Consideration Application
Purchasing Department
901B Texas Street
Denton, TX 76209
940-349-7100
940-349-7302 (f)
[email protected]
APPLICATION FOR LOCAL BIDDER PREFERENCE CONSIDERATION
This “APPLICATION FOR LOCAL BIDDER PREFERENCE CONSIDERATION” does not
mean that the City of Denton is limiting responses to their competitive bids to only those businesses
located within the city limits. All bids are welcome.
Bidders who wish to request a LOCAL PREFERENCE must have their principal place of business
located within the City of Denton, city limits.
If your principal place of business is within the Denton city limits and you wish to apply for local
preference consideration, then you must meet the minimum requirements below for each bid:
a) Provide a Tax Certificate from the Denton County Tax Assessor showing the current
status of taxes, penalties, interest, and any known costs due on a property; and
b) Submit the completed application on the following page.
Local Preference may be considered in the following instances:
A. In purchasing any real property or personal property that is not affixed to real property, if a local
government receives one or more bids from a bidder whose principal place of business is in the
local government and whose bid is within three percent of the lowest bid price received by the
local government from a bidder who is not a resident of the local government, the local
government may enter into a contract with the bidder whose principal place of business is in the
local government. (Local Government Code 271.905)
B. In purchasing any real property, personal property that is not affixed to real property, or services,
if a municipality receives one or more competitive sealed bids from a bidder whose principal
place of business is in the municipality and whose bid is within five percent of the lowest bid
price received by the municipality from a bidder who is not a resident of the municipality, the
municipality may enter into a contract for construction services in an amount of less than
$100,000 or a contract for other purchases of less than $500,000 with the bidder whose principal
place of business is in the municipality. This section does not apply to the purchase of
telecommunications services or information services, as defined by 47 U.S.C. Section 153.
(Local Government Code 271.9051)
The City of Denton reserves the right to award to the lowest bidder or reject all bids.
The full text of the Local Government Code related to Purchasing and Contracting Authority of
Municipalities,
Counties,
and
certain
other
Governments
is
available
at
http://www.statutes.legis.state.tx.us/Docs/LG/htm/LG.271.htm#271. Detailed information related to local
bidders is found in Section §271.905 and §271.9051 “CONSIDERATION OF LOCATION OF
BIDDER’S PRINCIPAL PLACE OF BUSINESS.”
1 of 2
APPENDIX J: Local Preference Consideration Application
LOCAL PREFERENCE CONSIDERATION APPLICATION
For bidders whose business is located within the Denton city limits
____________________________________________________________________________________________
The City of Denton requires the following information for consideration in award of competitive bids:
1.
Location Eligibility:
Principal place of business is defined herein as any business which owns or leases a commercial building within the City
limits and uses the building for actual business operations. Is company’s principal place of business within the City Limits
of Denton, Texas?
a.
If yes, identify the following:
i. Business Name/DBA: _______________________________________________________
ii. Address: _____________________________________________________________
iii. Business Structure: ____________________________________________________
(sole proprietorship/partnership/corporation/other)
b.
Name and city of residence of owner(s)/partners/corporate officers, as applicable.
iv. Name/Title: __________________________________________________________
v. City of Residence: _____________________________________________________
If more than one owner/partner/corporate officer exists, attach a separate sheet of paper.
2.
Economic Development benefits that would result from award of this contract:
a.
b.
c.
d.
e.
f.
Total number of current employees who are residents of the City of Denton? __________
Will award of this contract result in the employment/retention of residents of the City of Denton? ___ Yes ___ No
Will subcontractors with principal places of business in the City of Denton be utilized? ___ Yes ___ No
Will award of this contract result in increased tax revenue to the City? ___ Yes ___ No
If yes, check types of taxes? ___ Property Taxes ___ Sales Taxes ___ Hotel Occupancy Taxes
Other economic development benefits deemed pertinent by applicant (attach separate sheet if necessary):
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
City Bid Number for which local preference is requested:______________________________
Certification of information:
The undersigned does hereby affirm that the information supplied in its bid and this application are true and correct as of the
date hereof, under penalty of perjury.
/
Company Name
Date
/
Signature
Print Name
Tax Certificate from Denton County Tax Assessor is attached
2 of 2
APPENDIX K: Petty Cash Form
1 of 1
APPENDIX L: Check Requisition Form
CHECK REQUISITION - VOUCHER
(MUST BE PRINTED ON PINK PAPER)
ALL CHECK REQUISITIONS MUST BE SUBMITTED TO PURCHASING FOR APPROVAL
PURCHASING WILL FORWARD TO ACCOUNTS PAYABLE FOR PAYMENT TO BE ISSUED
PAY TO:
December 15, 2008
VENDOR #:
NEW VENDOR
VENDOR NAME & REMITTANCE ADDRESS:
$0.00
DEPARTMENT
CHECK TO BE PICKED UP
RELEASE CHECK TO:
INVOICE DATE, NUMBER, AND/OR EXPLANATION
ACCT. NO.
TOTAL
NET INV. AMT.
$0.00
SPECIAL INSTRUCTIONS
THE ABOVE HAS BEEN REVIEWED AND RECOMMENDATION FOR BILLING IS MADE BY THE UNDERSIGNED.
Purchasing Approval
Requested By
A/P Check Off
Director's Approval if Over $5,000
Page 1 of 2
APPENDIX L: Check Requisition Form
Page 2 of 2
APPENDIX M: Payment Procedures
Payment Guidelines and Procedures The following procedures are used by the Finance Department to pay invoices, reimburse travel expenses, process refunds, or make any other payment disbursement from the City of Denton. Check Requisitions: 1. Check Requisitions are submitted by all city departments on pink paper and used to pay for items such as subscriptions, newspaper ads, UPS, Federal Express and freight bills, dues and memberships, seminar and hotel registration, postage, permit fees, towing invoices, legal filings including liens, and employment related services including Drug Testing, Background Investigations and Driver’s License Checks. Check Requisitions exceeding $5,000 must be signed by the Department Director. Appropriate documentation must be attached to the check requisition and be approved by the Department Director. Check Requisitions are forwarded to Purchasing for approval. A W9 is required for all vendors providing a service to the city in order to set them up in the system for IRS tax purposes. 2. Legal Requisitions are initiated by either Risk Management or Legal on orange paper and used to pay for legal claims. Appropriate documentation must be attached to requisition and be approved by the Accounting Department, Risk Management and Finance Director; however, they do not require approval by Purchasing. Any fees for outside legal services are required to be paid with a purchase order. 3. Payroll Requisitions are initiated by the Payroll Department on Yellow paper and used to pay for child support, employee life insurance payments and United Way contributions. Appropriate documentation must be attached to requisition and approved by Controller; however, they do not require approval by Purchasing. Purchase Orders: In order for a payment to be made using a purchase order, the purchase order must be set up and approved in JD Edwards. All invoices should be sent by the vendor to Accounts Payable. Once the item has been delivered or service has been completed, the department will enter a receiver into the system and notify the appropriate Accounts Payable representative by email. If the receiver matches the invoice, a voucher will be entered to pay the invoice. If the receiver does not match the invoice, an Accounts Payable Representative will then review the purchase order and work with the department in order to get invoice paid (i.e., freight, price difference, item not on Purchase Order, get credit, etc). Once this has been resolved, the invoice is then paid. Every effort is made by Accounts Payable Staff to get the invoice paid within 30 days of receipt in Accounts Payable as per the Prompt Payment Act. Page 1 of 13
APPENDIX M: Payment Procedures
Travel Advances & Expenses: 1. All City of Denton employees must adhere to Travel Policy #408.01 (Exhibit A). 2. Travels Advances must be submitted on the appropriate travel forms (Exhibit B) and list the dates of travel, destination city and purpose of travel. Travel Advances require the approval of the Department Director or Supervisor. A copy of the approved travel authorization must be attached. They should be turned in 10 days prior to the departure date. A check will be issued before the departure date. 3. Travel Expenses must be submitted within 20 working days of the return date of the trip or disciplinary action will be taken per Policy #408.01 (Exhibit A). The Travel Expense form must be approved by the Department Director or Supervisor. Receipts are required for every expense item listed (except meals). A Conference Agenda or Itinerary is also required if claiming per diem for meals. A check will be issued within one week of receiving the expense report unless there is missing documentation. Refunds (Court and Utility): 1. Court Bond Refunds are submitted weekly by Municipal Courts and interfaced into JDE. The backup consists of a requisition form and appropriate documentation showing name, address and amount of refund. Name, address and amount are verified by Accounts Payable prior to processing for payment. 2. Utility Refunds are submitted by Customer Service weekly. The backup consists of utility bill or screen‐print showing name, address and amount of refund. Name, address and amount are verified by Accounts Payable prior to processing for payment. Petty Cash: Petty Cash accounts are maintained in the Customer Service Division and at the Civic Center Administration Office. These accounts are overseen by Treasury. Petty Cash is reconciled weekly and submitted to Accounts Payable with a Petty Cash Summary Sheet and appropriate documentation showing charges. Accounts Payable verifies the above information prior to processing for payment. Procurement Cards (P‐Cards): P‐Cards are issued to departments for the purpose of paying for items such as subscriptions, newspaper ads, UPS, Federal Express and freight bills, dues and memberships, seminar and hotel registration, towing invoices, and many other small purchases. P‐Cards are overseen by Purchasing and reconciled a monthly basis by the Accounting Division. P‐Card expenses are paid to the bank on a monthly basis after being approved by Purchasing and the Director of Finance. Page 2 of 13
APPENDIX M: Payment Procedures
Check Processing Schedule: A weekly check run is processed on Thursday (with the exception of weeks with holidays). Requests for the issuance of an emergency check must be approved by the Controller or Director of Finance. ACH/Wire Payments: The Treasury Division receives requests for electronic payments from throughout the City. Automated Clearing House (ACH)/Wire transfers are routinely processed to pay various payroll expenses such as City and employee pension contributions, employee deferred compensation contributions, and federal income tax withholding to the Internal Revenue Service. Electronic wires allow for the same day transfer of funds. ACH transactions typically process the next business day. The Director of Finance is required to review and approve any wire transfer that exceeds $25,000. The department requesting the wire transfer is also required to approve the transaction. Wires under $25,000 require the approval of the Controller. Ideally fed wires should only be used when there are tight time constraints involved and/or large amounts of money. Since wires are more expensive than other forms of payment, the Finance Department strives to minimize the number of wires that are processed. In addition, the department intends to process more payments using the Automated Clearing House (ACH) process in the future to reduce the number of checks and wires that are generated. Document Retention: The retention period for Accounts Payable is the current year plus the three previous years. Documents outside of this retention period are destroyed on an annual basis. Page 3 of 13
APPENDIX M: Payment Procedures
Exhibit A
CITY OF DENTON
PAGE 1 OF 9
POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE
SECTION:
ACCOUNTING
REFERENCE NUMBER:
SUBJECT:
REIMBURSEMENT OF EMPLOYEE EXPENSES
INITIAL EFFECTIVE DATE:
TITLE:
TRAVEL EXPENSES
LAST REVISION DATE:
408.01
7/25/84
10/01/05
ADMINISTRATIVE PROCEDURES:
The City of Denton will pay reasonable expenses, which are incurred in the course of authorized City
travel. The City has two objectives when paying travel-related expenses. 1) To provide employees
sufficient funds to execute business on behalf of the City and 2) to safeguard City funds by paying only
reasonable and necessary expenses. This administrative directive outlines what constitutes a reasonable
and necessary expense.
Directors are ultimately responsible for insuring that travel expenditures comply with this administrative
directive and for the thorough review and approval of all documents necessary for the travel transaction.
Directors have the discretion to implement more restrictive procedures and/or guidelines for their
individual departments. The purpose of the required documentation is to provide sufficient evidence to
anyone, who reviews the travel transaction, that public funds were expended in compliance with this
administrative directive.
Employees traveling on behalf of the City of Denton are expected to utilize services and accommodations
appropriate for the business to be conducted. Employees are expected to travel and conduct business in
reasonable comfort and exercise good judgment in distinguishing between comfort and extravagance.
For purposes of this administrative directive, the term “Director” refers to the Department Director or
their designee.
I. Approval Required for Travel on City Business. The City will pay travel and registration fee
expenses required for City business or to enhance the knowledge of the individual for the benefit
of the City.
ACCT/POLICY/408.01
Page 4 of 13
APPENDIX M: Payment Procedures
PAGE 2 OF 9
POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE (Continued)
TITLE:
REFERENCE NUMBER:
TRAVEL EXPENSES
408.01
A. Travel Authorization Form: Employees must obtain prior approval for travel from their
Director by completing an electronic Travel Authorization Form, which is found on the City’s
intranet under: Links/Employee Travel Information/Travel Authorization Website. During an
extended absence, the Director must notify Accounts Payable and appoint a temporary
designee for travel authorization. In the event travel is conducted without prior approval, the
employee will be held responsible for all expenses incurred.
B. Travel Advance Request Form: An advance for estimated travel expenses may be requested.
The Travel Advance Request Form must be signed by both the requesting employee and the
Director. The form must include the purpose of the trip, the destination (city and state), and
the departure/return dates and times. Travel Advance Request Forms should not be submitted
sooner than two to three weeks prior to the trip. Following a trip, employees must account for
their travel advance by completing and submitting an Employee Expense Report to Accounts
Payable within twenty (20) working days of their return date. Failure to comply with this
administrative directive will result in: (1) disciplinary action for the first offense; and (2)
disciplinary action and denial of future travel advances for a second offense. Unused travel
advance money must be reimbursed to the City and supporting documentation (receipt)
attached to the Employee’s Expense Report. Travel out of the country will be allowed a
reasonable extension to allow for the correct exchange rate calculation on credit card
purchases.
C. Employee Expense Report Form: An Employee Expense Report must be completed for all
travel, even when a procurement card is used to pay for expenses. The form must include the
purpose of the trip, the destination (city and state), and the departure/return dates and times.
All receipts and supporting documents must be attached to the Employee Expense Report.
Receipts should be affixed in date order to an 8 ½ x 11 sheet of paper and attached to the
Employee Expense Report, and then forwarded to Accounts Payable after being reviewed and
signed by the Director. When a City of Denton procurement card is used, a copy of the
Employee Expense Report must be attached to the copy of the procurement card transaction
log retained by the employee for his/her file. The employee must maintain this for audit
purposes. Each employee traveling will be responsible for submitting his/her own receipts and
Employee Expense Report. All Employee Expense Reports must be submitted within the
timeframe as referenced in Section IB.
D. Procurement Card for Travel Expenses: Some employees may be issued City procurement
cards with travel privileges. These cards can be used for travel and other expenses that are
typically paid by the City, except travel related meals. Personal expenses are not to be placed
on a City procurement card. Misuse of the City’s procurement card or violation of this
administrative directive may result in card privileges being revoked or other disciplinary
action being taken, as deemed appropriate.
ACCT/POLICY/408.01
Page 5 of 13
APPENDIX M: Payment Procedures
PAGE 3 OF 9
POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE (Continued)
TITLE:
REFERENCE NUMBER:
TRAVEL EXPENSES
408.01
II. Reimbursable Expenses. The City will pay an employee’s actual expenses as authorized within
this administrative directive, except for meals and incidental expenses (M & IE). Meals and
incidental expenses will only be paid on a per diem basis and based on rates established by the
U.S. General Services Administration for the current fiscal year (www.gsa.gov). If neither the
city nor county is listed, the rate for meals and incidental expenses will be the standard CONUS
destination rate. Itemized receipts must be provided for all expenses, except meals and
incidental expenses. Receipts must be an itemized copy from the vendor and not just the
credit card slip/balance due. Failure to submit itemized receipts will render those expenses nonreimbursable. Employees should use the most economical means available when using City
funds.
A. Meals:
1. The City will pay for the cost of meals for over night travel on a per diem basis only. The
City’s per diem rate will be based on the current fiscal year rate as established by the U.S.
General Services Administration (reference Section II for URL Address to GSA per diem
rates). The per diem shall be adjusted for partial travel days.
Travel-related meals will be reimbursed if an overnight stay is required or if multiple trips
are required during two or more consecutive days.
2. The City will not pay for meals for individuals who are not employed by the City of
Denton except with the written approval of the Director stating the business purpose of the
meal. If an exception is granted, an itemized meal receipt with attendee names must be
attached to the Employee Expense Report.
3. The City will pay for meals at scheduled seminars, training sessions, and other meetings, but
will not reimburse for meals elsewhere if the meal cost was included in the conference fee. If
meals are included in the conference fee, the per diem rate will be prorated based on GSA per
diem guidelines. A conference itinerary/schedule must be included as supporting
documentation. The City will not pay for social or recreational conference functions that are
separate ticketed events not included in the base conference registration fee without prior
approval of the Director (to be noted on request for travel process).
4. Meal related tips are included in the per diem rate total.
5. With prior written approval from the City Manager, an increase to the per diem rate may be
granted on a case-by-case basis. In accordance with IRS regulations, any amount in
excess of the maximum federal per diem rate for the travel destination will be reported on
the employee’s W-2 Form and subject to employment taxes.
ACCT/POLICY/408.01
Page 6 of 13
APPENDIX M: Payment Procedures
PAGE 4 OF 9
POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE (Continued)
TITLE:
REFERENCE NUMBER:
TRAVEL EXPENSES
408.01
B. Entertainment: The City of Denton will not reimburse employees for entertainment unless it is
necessary for the purpose of the trip. Written approval from the Director stating the business
purpose must be attached to the Employee Expense Report.
C. Alcoholic Beverages:
Under no circumstances will the cost of alcoholic beverages be
reimbursed nor should they be charged on a City issued procurement card. Employees are
expected to pay for any alcoholic beverages separate from any eligible meal.
D. Transportation:
1. First-Class Accommodations: Employees may choose to travel first-class, but the City
will only pay coach or tourist class fares.
2. Commercial Airlines: The City of Denton will pay for coach roundtrip airfare. Employees
are expected to take advantage of discounts whenever possible. However, employees are
not required to fly at unusual times just to qualify for discounts. Employees may retain
frequent flyer miles and similar travel awards; however, he/she shall not pay a higher price
for the fare in order to obtain frequent flyer miles.
3. Private Air Carriers and Charters: Employees shall not use private airplanes or charters
without approval of the City Manager. Cost savings or emergency schedule requirements
must be shown and included with the City Manager’s written approval.
4. Vehicle Rental: The City will not assure payment for rental cars without the prior written
approval of the employee’s Director. When renting vehicles, the employee’s personal auto
insurance is the primary source of coverage in the event of an accident. Appendix A is
provided to help calculate the least expensive travel method, demonstrated need for the
vehicle and justification why other transportation option/means were not utilized. The
appropriate size of the rental vehicle should depend on such factors as the number of
passengers, and the amount of luggage and/or equipment being carried.
5. Taxi: The City will reimburse employees’ taxi fares for required transportation. When
possible, a receipt must be attached to the Employee Expense Report.
6. Personal Vehicles: With the approval of the department Director, employees may use their
personal vehicle for out-of-town travel. A mileage log or other supporting documentation
must be attached to the Employee Expense Report. The City of Denton will pay the
Internal Revenue Service mileage reimbursement rate in effect at the time of travel. When
an employee has approval to use his or her personal car on a trip and the destination is
more than 300 miles from the point of departure (one-way), the City will not reimburse the
employee for expenses, such as lodging, meals and incidentals, while in transit, which
exceed the cost of a 21-day advance round-trip coach airfare. Any travel time that is
ACCT/POLICY/408.01
Page 7 of 13
APPENDIX M: Payment Procedures
PAGE 5 OF 9
POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE (Continued)
TITLE:
REFERENCE NUMBER:
TRAVEL EXPENSES
408.01
greater than the time required to travel by scheduled airlines will be considered vacation
time. Normal travel time will not exceed one day.
a. Those employees receiving a car allowance will not be paid mileage reimbursement for
travel, which is within 50 miles (one way) of their office.
b. Personal car travel reimbursement is limited to the lesser of either the cost of making
the trip by 21-day advance coach airfare or mileage reimbursement. Appendix B is
provided to help calculate the least expensive travel method, which is the amount that
will be reimbursed.
c. The City will pay for any additional work related mileage at the destination. A mileage
log or other supporting documentation must be attached to the Employee Expense
Report.
d. The City will pay for parking expenses, including airport parking (at the general or
remote parking rate). For airport parking, supporting documentation must be attached
to the Employee Expense Report and can be obtained from the airport’s website.
Mileage reimbursement to the airport, will be calculated from the employee’s office
(workday destination) or from the employee’s home to the airport, whichever is less.
Appendix C is provided to help calculate the least expensive travel method.
e. If an employee is driving a personal vehicle outside of the City and has car failure, the
City will pay the expense of towing the vehicle to the nearest garage, over and above
the employee’s personal towing insurance coverage. The employee must pay for all
repairs. The towing invoice and insurance documentation, reflecting amount covered,
must be attached to the Employee Expense Report.
7. City Vehicles: City vehicles should be used when available or at the discretion of the
Director. Direct expenses associated with the use of a city vehicle, which are incurred by the
employee, such as gasoline and oil, will be reimbursed.
E. Accommodations: The City will pay actual expenses for hotels, motels, or other lodging.
Employees must request the reduced government rate or conference rate when making
reservations. Most hotels will not accept claims to a government rate after check-in. City
employees are not exempt from hotel taxes, and will be reimbursed for such taxes.
The City will pay no more than the cost of a single occupancy room. If an employee shares a
room with someone who is not an employee of the City or who is not traveling on City
business, and the room cost is higher than the single room rate, the bill must be adjusted for
the difference in cost.
ACCT/POLICY/408.01
Page 8 of 13
APPENDIX M: Payment Procedures
PAGE 6 OF 9
POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE (Continued)
TITLE:
REFERENCE NUMBER:
TRAVEL EXPENSES
408.01
Meals ordered through room service or consumed in the hotel restaurant will be covered
through the per diem rate and the bill must be adjusted for the difference in cost.
F. Telephone: The City realizes that while out-of-town on City business there are personal
matters that must be attended; therefore, the City will pay the cost of one personal phone call
each day (not to exceed 10 minutes). The City will reimburse employees for all business calls.
All phone calls must be documented as to whether personal or business in nature. It is
recommended that departments purchase prepaid calling cards, which are less expensive than
hotel long distance rates. Internet connection fees incurred for business purposes will be
reimbursed, if approved by the department Director.
G. Incidental Expenses: The City of Denton will not pay for dry cleaning, shoe shining, haircuts,
magazines and books, tickets to the theater, sports events, or other such incidental expenses.
Incidental expenses covered as part of the per diem rate for meals and incidental expenses
include: fees and tips given to porters, baggage carriers, bellhops, hotel maids, stewards or
stewardesses and others on ships, hotel servants in foreign countries, and transportation
between places of lodgings or business and places where meals are taken.
H. Travel on Behalf of Other Agencies: With the approval of the department Director, employees
may be granted travel time on behalf of other organizations. In unusual circumstances, the
City Manager or Assistant City Managers are authorized to approve an advance of City funds
for travel expenses incurred on such trips. The same guidelines outlined in this administrative
directive must be followed.
I. Travel Outside Normal Workday: Compensation, for travel required outside an employee’s
normal working hours (i.e. Saturday, Sunday, evening), will be calculated according to the
department requirements and consistent with the Fair Labor Standards Act and accompanying
regulations.
VI. Other Authorizations/Approvals. Authorization for Travel and Expense Report approval for
Directors and Assistant City Managers will be the next level of supervision as appropriate.
ACCT/POLICY/408.01
Page 9 of 13
APPENDIX M: Payment Procedures
PAGE 7 OF 9
POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE (Continued)
TITLE:
REFERENCE NUMBER:
TRAVEL EXPENSES
408.01
APPENDIX A
RENTAL VEHICLE
OTHER MODES OF TRANSPORTATION
Vehicle*
_______
Mode of Transportation
______
Fuel
_______
Cost of Transportation
______
Destination Parking
_______
Other:
______
Other:
_______
Other:
______
Total Cost
_______
Total Cost
______
Lesser of above columns is the maximum reimbursement when choosing to rent a vehicle versus other
modes of transportation.
* The appropriate size of the rental vehicle should depend on such factors as the number of passengers,
and the amount of luggage and/or equipment being carried. A brief explanation of these circumstances
must be provided below.
ACCT/POLICY/408.01
Page 10 of 13
APPENDIX M: Payment Procedures
PAGE 8 OF 9
POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE (Continued)
TITLE:
REFERENCE NUMBER:
TRAVEL EXPENSES
408.01
APPENDIX B
AIRLINES
PERSONAL VEHICLE
Airfare*
_______
_____miles @ _____cents = ______
Airport Parking
_______
Destination Parking
______
Transportation
To/From Airport
_______
Additional Lodging
______
Other
_______
Additional Meals
______
Total Cost
_______
Total Cost
______
Lesser of above columns is the maximum reimbursement when choosing to drive to a destination versus
flying.
*A 21-day advance shall be used for airfare cost unless there are extenuating circumstances. A brief
explanation of these circumstances must be provided below. A price quote must be attached to this form
in order to obtain reimbursement. This quote may be obtained via the Internet web page of the appropriate
major airline.
ACCT/POLICY/408.01
Page 11 of 13
APPENDIX M: Payment Procedures
PAGE 9 OF 9
POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE (Continued)
TITLE:
REFERENCE NUMBER:
TRAVEL EXPENSES
408.01
APPENDIX C
WORKDAY DESTINATION
EMPLOYEE’S HOME
_____miles @ _____cents = _______
_____miles @ _____cents =______
Other:
_______
Other:
______
Total Cost
_______
Total Cost
______
Lesser of above columns is the maximum reimbursement when drive to the airport from the employee’s
workday destination versus employee’s home.
*A brief explanation of extenuating circumstances must be provided below. A mileage log and/or map
quest print out(s) must be attached to this form in order to obtain reimbursement.
ACCT/POLICY/408.01
Page 12 of 13
APPENDIX M: Payment Procedures
Exhibit B
REQUEST FOR TRAVEL ADVANCE FORM
INSTRUCTIONS FOR PREPARATION OF FORM
This form must be completed for a travel advance.
After required approvals, forward original to the Accounts Payable Department.
Keep a copy to be submitted with completed Travel Expense Report form.
TRAVEL ADVANCE
Employee Name:
Employee No.:
Departure Date:
Return Date:
Purpose of Travel and Destination (City & State):
Business Unit Number:
Object Code: 7902
Type of Expense: (Estimated)
Registration Fee:
$0.00
Lodging: # of Days
0
@
$0.00
$0.00
Breakfast - # of Days
0
@
$0.00
$0.00
Lunch -
# of Days
0
@
$0.00
$0.00
Dinner -
# of Days
0
@
$0.00
$0.00
0
@
$3.00
$0.00
0
Miles @
$0.550
Meals Per Diem:
Incidental Expenses: # of Days
GSA Per Diem Rates
Transportation:
\Mile
$0.00
Other: (List items)
$0.00
$0.00
TOTAL
$0.00
Employee's signature below requests a travel advance and certifies that all expenditures will be made for the benefit of the City of
Denton and if this trip is shortened, all unused funds must be returned to the City of Denton. Additionally, the employee is
responsible for these funds issued to them and understands and authorizes that any travel expense not cleared within 20 working
days of completion of trip may result in disciplinary action.
Employee Signature
The above has been reviewed and recommendation for payment is made by the undersigned.
Director or Designee Approval
Accounting
Revised 5-28-09
Page 13 of 13
APPENDIX N: Insurance Requirements
INSURANCE REQUIREMENTS AND
WORKERS’ COMPENSENTATION REQUIREMENTS
Respondent’s attention is directed to the insurance requirements below.
It is highly
recommended that respondents confer with their respective insurance carriers or brokers to
determine in advance of Proposal/Bid submission the availability of insurance certificates and
endorsements as prescribed and provided herein. If an apparent low respondent fails to comply
strictly with the insurance requirements, that respondent may be disqualified from award of the
contract.
Upon contract award, all insurance requirements shall become contractual
obligations, which the successful contractor shall have a duty to maintain throughout the course
of this contract.
STANDARD PROVISIONS:
Without limiting any of the other obligations or liabilities of the Contractor, the
Contractor shall provide and maintain until the contracted work has been completed and
accepted by the City of Denton, Owner, the minimum insurance coverage as indicated
hereinafter.
As soon as practicable after notification of contract award, Contractor shall file with the
Purchasing Department satisfactory certificates of insurance including any applicable
addendum or endorsements, containing the contract number and title of the project.
Contractor may, upon written request to the Purchasing Department, ask for clarification
of any insurance requirements at any time; however, Contractors are strongly advised to
make such requests prior to proposal/bid opening, since the insurance requirements
may not be modified or waived after proposal/bid opening unless a written exception has
been submitted with the proposal/bid. Contractor shall not commence any work or
deliver any material until he or she receives notification that the contract has been
accepted, approved, and signed by the City of Denton.
All insurance policies proposed or obtained in satisfaction of these requirements shall
comply with the following general specifications, and shall be maintained in compliance
with these general specifications throughout the duration of the Contract, or longer, if so
noted:
Each policy shall be issued by a company authorized to do business in the State of
Texas with an A.M. Best Company rating of at least A- VII or better.
Any deductibles or self-insured retentions shall be declared in the proposal. If requested
by the City, the insurer shall reduce or eliminate such deductibles or self-insured
retentions with respect to the City, its officials, agents, employees and volunteers; or, the
contractor shall procure a bond guaranteeing payment of losses and related
investigations, claim administration and defense expenses.
Liability policies shall be endorsed to provide the following:

Name as Additional Insured the City of Denton, its Officials, Agents, Employees
and volunteers.

That such insurance is primary to any other insurance available to the Additional
_
1 of 7
APPENDIX N: Insurance Requirements
Insured with respect to claims covered under the policy and that this insurance
applies separately to each insured against whom claim is made or suit is brought.
The inclusion of more than one insured shall not operate to increase the insurer's
limit of liability.
Cancellation: City requires 30 day written notice should any of the policies
described on the certificate be cancelled or materially changed before the
expiration date.
Should any of the required insurance be provided under a claims made form, Contractor
shall maintain such coverage continuously throughout the term of this contract and,
without lapse, for a period of three years beyond the contract expiration, such that
occurrences arising during the contract term which give rise to claims made after
expiration of the contract shall be covered.
Should any of the required insurance be provided under a form of coverage that includes
a general annual aggregate limit providing for claims investigation or legal defense costs
to be included in the general annual aggregate limit, the Contractor shall either double
the occurrence limits or obtain Owners and Contractors Protective Liability Insurance.
Should any required insurance lapse during the contract term, requests for payments
originating after such lapse shall not be processed until the City receives satisfactory
evidence of reinstated coverage as required by this contract, effective as of the lapse
date. If insurance is not reinstated, City may, at its sole option, terminate this agreement
effective on the date of the lapse.
SPECIFIC ADDITIONAL INSURANCE REQUIREMENTS:
All insurance policies proposed or obtained in satisfaction of this Contract shall
additionally comply with the following marked specifications, and shall be maintained in
compliance with these additional specifications throughout the duration of the Contract,
or longer, if so noted:
[X]
A.
General Liability Insurance:
General Liability insurance with combined single limits of not less than
$1,000,000.00 shall be provided and maintained by the Contractor. The policy shall
be written on an occurrence basis either in a single policy or in a combination of
underlying and umbrella or excess policies.
If the Commercial General Liability form (ISO Form CG 0001 current edition) is
used:
Coverage A shall include premises, operations, products, and completed
operations, independent contractors, contractual liability covering this
contract and broad form property damage coverage.
Coverage B shall include personal injury.
Coverage C, medical payments, is not required.
If the Comprehensive General Liability form (ISO Form GL 0002 Current Edition
_
2 of 7
APPENDIX N: Insurance Requirements
and ISO Form GL 0404) is used, it shall include at least:
Bodily injury and Property Damage Liability for premises, operations,
products and completed operations, independent contractors and property
damage resulting from explosion, collapse or underground (XCU) exposures.
Broad form contractual liability (preferably by endorsement) covering this
contract, personal injury liability and broad form property damage liability.
[X]
Automobile Liability Insurance:
Contractor shall provide Commercial Automobile Liability insurance with Combined
Single Limits (CSL) of not less than $500,000 either in a single policy or in a combination
of basic and umbrella or excess policies. The policy will include bodily injury and
property damage liability arising out of the operation, maintenance and use of all
automobiles and mobile equipment used in conjunction with this contract.
Satisfaction of the above requirement shall be in the form of a policy
endorsement for:
any auto, or
all owned hired and non-owned autos.
[X]
Workers’ Compensation Insurance
Contractor shall purchase and maintain Workers’ Compensation insurance which, in
addition to meeting the minimum statutory requirements for issuance of such insurance,
has Employer's Liability limits of at least $100,000 for each accident, $100,000 per each
employee, and a $500,000 policy limit for occupational disease. The City need not be
named as an "Additional Insured" but the insurer shall agree to waive all rights of
subrogation against the City, its officials, agents, employees and volunteers for any work
performed for the City by the Named Insured. For building or construction projects, the
Contractor shall comply with the provisions of Attachment 1 in accordance with §406.096
of the Texas Labor Code and rule 28TAC 110.110 of the Texas Workers’ Compensation
Commission (TWCC).
[]
Owner's and Contractor's Protective Liability Insurance
The Contractor shall obtain, pay for and maintain at all times during the prosecution of
the work under this contract, an Owner's and Contractor's Protective Liability insurance
policy naming the City as insured for property damage and bodily injury which may arise
in the prosecution of the work or Contractor's operations under this contract. Coverage
shall be on an “occurrence" basis and the policy shall be issued by the same insurance
company that carries the Contractor's liability insurance. Policy limits will be at least
$500,000.00 combined bodily injury and property damage per occurrence with a
$1,000,000.00 aggregate.
[]
Fire Damage Legal Liability Insurance
Coverage is required if Broad form General Liability is not provided or is unavailable to
the contractor or if a contractor leases or rents a portion of a City building. Limits of not
less than
each occurrence are required.
_
3 of 7
APPENDIX N: Insurance Requirements
[]
Professional Liability Insurance
Professional liability insurance with limits not less than $1,000,000.00 per claim with
respect to negligent acts, errors or omissions in connection with professional services is
required under this Agreement.
[]
Builders' Risk Insurance
Builders' Risk Insurance, on an All-Risk form for 100% of the completed value shall be
provided. Such policy shall include as "Named Insured" the City of Denton and all
subcontractors as their interests may appear.
[]
Commercial Crime
Provides coverage for the theft or disappearance of cash or checks, robbery
inside/outside the premises, burglary of the premises, and employee fidelity. The
employee fidelity portion of this coverage should be written on a “blanket” basis to cover
all employees, including new hires. This type insurance should be required if the
each
contractor has access to City funds. Limits of not less than $
occurrence are required.
[]
Additional Insurance
Other insurance may be required on an individual basis for extra hazardous contracts
and specific service agreements. If such additional insurance is required for a specific
contract, that requirement will be described in the "Specific Conditions" of the contract
specifications.
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APPENDIX N: Insurance Requirements
ATTACHMENT 1
[X]
Workers’ Compensation Coverage for Building or Construction Projects for
Governmental Entities
A. Definitions:
Certificate of coverage ("certificate")-A copy of a certificate of insurance, a
certificate of authority to self-insure issued by the commission, or a coverage
agreement (TWCC-81, TWCC-82, TWCC-83, or TWCC-84), showing statutory
workers' compensation insurance coverage for the person's or entity's employees
providing services on a project, for the duration of the project.
Duration of the project - includes the time from the beginning of the work on the
project until the contractor's/person's work on the project has been completed and
accepted by the governmental entity.
Persons providing services on the project ("subcontractor" in §406.096) - includes all
persons or entities performing all or part of the services the contractor has
undertaken to perform on the project, regardless of whether that person contracted
directly with the contractor and regardless of whether that person has employees.
This includes, without limitation, independent contractors, subcontractors, leasing
companies, motor carriers, owner-operators, employees of any such entity, or
employees of any entity which furnishes persons to provide services on the project.
"Services" include, without limitation, providing, hauling, or delivering equipment or
materials, or providing labor, transportation, or other service related to a project.
"Services" does not include activities unrelated to the project, such as food/beverage
vendors, office supply deliveries, and delivery of portable toilets.
B. The contractor shall provide coverage, based on proper reporting of classification
codes and payroll amounts and filing of any overage agreements, which meets the
statutory requirements of Texas Labor Code, Section 401.011(44) for all employees
of the Contractor providing services on the project, for the duration of the project.
C. The Contractor must provide a certificate of coverage to the governmental entity
prior to being awarded the contract.
D. If the coverage period shown on the contractor's current certificate of coverage ends
during the duration of the project, the contractor must, prior to the end of the
coverage period, file a new certificate of coverage with the governmental entity
showing that coverage has been extended.
E. The contractor shall obtain from each person providing services on a project, and
provide to the governmental entity:
1. a certificate of coverage, prior to that person beginning work on the project, so
the governmental entity will have on file certificates of coverage showing
coverage for all persons providing services on the project; and
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APPENDIX N: Insurance Requirements
2. no later than seven days after receipt by the contractor, a new certificate of
coverage showing extension of coverage, if the coverage period shown on the
current certificate of coverage ends during the duration of the project.
F. The contractor shall retain all required certificates of coverage for the duration of the
project and for one year thereafter.
G. The contractor shall notify the governmental entity in writing by certified mail or
personal delivery, within 10 days after the contractor knew or should have known, of
any change that materially affects the provision of coverage of any person providing
services on the project.
H. The contractor shall post on each project site a notice, in the text, form and manner
prescribed by the Texas Workers' Compensation Commission, informing all persons
providing services on the project that they are required to be covered, and stating
how a person may verify coverage and report lack of coverage.
I. The contractor shall contractually require each person with whom it contracts to
provide services on a project, to:
1. provide coverage, based on proper reporting of classification codes and payroll
amounts and filing of any coverage agreements, which meets the statutory
requirements of Texas Labor Code, Section 401.011(44) for all of its employees
providing services on the project, for the duration of the project;
2. provide to the contractor, prior to that person beginning work on the project, a
certificate of coverage showing that coverage is being provided for all employees
of the person providing services on the project, for the duration of the project;
3. provide the contractor, prior to the end of the coverage period, a new certificate of
coverage showing extension of coverage, if the coverage period shown on the
current certificate of coverage ends during the duration of the project;
4. obtain from each other person with whom it contracts, and provide to the
contractor:
a. a certificate of coverage, prior to the other person beginning work on the
project; and
b. a new certificate of coverage showing extension of coverage, prior to the end
of the coverage period, if the coverage period shown on the current certificate
of coverage ends during the duration of the project;
5. retain all required certificates of coverage on file for the duration of the project
and for one year thereafter;
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APPENDIX N: Insurance Requirements
6. notify the governmental entity in writing by certified mail or personal delivery,
within 10 days after the person knew or should have known, of any change that
materially affects the provision of coverage of any person providing services on
the project; and
7. Contractually require each person with whom it contracts, to perform as required
by paragraphs (1) - (7), with the certificates of coverage to be provided to the
person for whom they are providing services.
J. By signing this contract or providing or causing to be provided a certificate of
coverage, the contractor is representing to the governmental entity that all employees
of the contractor who will provide services on the project will be covered by
workers' compensation coverage for the duration of the project, that the coverage
will be based on proper reporting of classification codes and payroll amounts, and
that all coverage agreements will be filed with the appropriate insurance carrier or, in
the case of a self-insured, with the commission's Division of Self-Insurance
Regulation. Providing false or misleading information may subject the contractor to
administrative penalties, criminal penalties, civil penalties, or other civil actions.
K. The contractor’s failure to comply with any of these provisions is a breach of
contract by the contractor which entitles the governmental entity to declare the
contract void if the contractor does not remedy the breach within ten days after
receipt of notice of breach from the governmental entity.
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APPENDIX O: Purchasing Agent Signature Authority
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APPENDIX O: Purchasing Agent Signature Authority
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APPENDIX P: Printing Services
215 E. MCKINNEY DENTON, TEXAS 76201 • (940) 349-8200 • FAX (940) 349-8596
CITY MANAGER’S OFFICE
MEMORANDUM
DATE:
December 15, 2008
TO:
Distribution List I, II, III
FROM:
George C. Campbell, City Manager
SUBJECT:
Reprographics Managed Services Implementation
Following an extensive evaluation of the Reprographics operation, the division is
positioned to move forward to the next phase of establishing a “managed services” model
for all City of Denton print management activities. The focus is to establish print related
procurement practices and policies that drive and sustain value across the organization
and provide competitive advantages to the organization. This will be achieved by
adopting a strategic approach to print procurement and policy development.
Beginning in October 2008, we will begin implementation of the managed services
model for the Reprographics division and all printing, copying, finishing and print-related
materials on behalf of the City of Denton will be performed or purchased through the
city’s Reprographics division. The key elements of the managed services model include:
•
•
•
•
•
Outsourcing of utility billing and mailing
Identifying capacity/capability for in-house work
Consolidating external contracts for specialty work under central management
Creating a consortium of pre-qualified print vendors
Establishing Reprographics as the sole point of entry and exit for all printing
projects
The reprographics manager will work with customer service to coordinate the
outsourcing of utility billing and mailing and work with a committee to develop an RFP
document for any outsourced printing.
In conjunction with the City’s public communication office, Reprographics exists to
obtain the best printing, copying or finishing value available for the City of Denton’s
communication needs. Whether the print solution is in-house or outsourcing,
Reprographics will seek to find the best cost option for your department.
If you have any questions, please contact Betty Williams, Director of Administrative
Services at x8302 or Tonya Demerson, Reprographics Manager at x8129.
Thank you for your cooperation as we transition through this process.
“Dedicated to Quality Service”
www.cityofdenton.com
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APPENDIX Q: Purchasing Procedures for Warehouse Stock Items
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Morales Opinion No. DM-300
APPENDIX R: AG Opinion DM-300
Page 1 of 6
Office of the Attorney General
State of Texas
August 11, 1994
Mr. Alfred F. Hurley
Chancellor
University of North Texas
P.O. Box 13737
Denton, Texas 76203-6737
Opinion No. DM-300
Re: Whether there is a de minimis
exception to the requirement that
certain companies that enter into a
"building or construction contract"
under Labor Code section 406.096
with the state or a political
subdivision of the state must
provide workers' compensation
insurance for their employees, and
related questions (RQ-596)
Dear Mr. Hurley:
You ask us to determine what constitutes a "building or construction contract"
within section 406.096 of the Labor Code. Section 406.096 provides, in
pertinent part, as follows:
(a) A governmental entity that enters into a building or construction contract
shall require the contractor to certify in writing that the contractor provides
workers' compensation insurance coverage for each employee of the contractor
employed on the pub- lic project.
(b) Each subcontractor on the public project shall provide such a certificate
relating to coverage of the subcontractor's employees to the general contractor,
who shall provide the subcontractor's certifi- cate to the governmental entity.
....
(d) The employment of a maintenance employee by an employer who is not
engaging in building or construction as the employer's primary business does
not constitute engaging in building or construction.
(e) In this section:
(1) "Building or construction" includes:
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(A) erecting or preparing to erect a structure, including a building, bridge,
roadway, public utility facility, or related appurtenance;
(B) remodeling, extending, repairing, or demolishing a structure; or
(C) otherwise improving real property or an appurte- nance to real property
through similar activities.
(2) "Governmental entity" means this state or a political subdivision of this
state. The term includes a municipality.
In particular, you also ask whether section 406.096 applies to the following
types of jobs:
(1) the furnishing and installation of an item in a building (such as the
installation of carpeting for a single office, or a wall system to divide a room in
half, etc.); (2) the service or repair of a certain item (such as the replacement of
a glass window pane; the repair of a malfunctioning electronic door; resealing
seams and restretching a carpet, etc.); (3) small sheet metal projects; (4)
specialized pipe fitting work; or (5) annual service contracts for services such as
elevator maintenance and fire alarm maintenance.
We cannot answer this question because the determination in each case may
depend on a consideration of additional facts to determine whether the job
constitutes "building or construction" as defined in section 406.096(e)(1).
Resolution of questions of fact is not a function of the attorney general opinion
process. For this reason, we cannot amplify the statutory definition of "building
or construction" to provide a formula for determining whether or not these jobs
are "building or construction contracts."
On the assumption that such jobs are "building or construction contracts," you
ask whether section 406.096 of the Labor Code applies to them, no matter how
small the subject matter of the contract may be. We see in the statutory
language no indication of a legislative intent to except small contracts from the
coverage requirement of section 406.096. Furthermore, injuries at the work
place may occur during the performance of even minor tasks, so we can think of
no reason to interpret this section as applying only to large contracts.
You contend that if this provision applies to small jobs such as a $50 carpet
repair or a $150 plate glass replacement, then the University of North Texas
will not be able to hire for minor jobs many of the smaller and less expensive
independent contractors that do not provide workers' compensation coverage to
their employees. It is obvious that the maintenance of workers' compensation
coverage will entail costs that may be factored into the rates charged for
services provided by the covered contractor in a building or construction
contract. If the effect of section 406.096 is to place an added cost burden on a
governmental entity, we believe that the legislature anticipated this effect and
deter- mined that the added cost was justified by the benefits of requiring
coverage. We there- fore conclude that section 406.096 applies to all contracts
falling within its terms regard- less of the size of the subject matter.
You next ask whether a "governmental entity" as defined in section 406.096(e)
(2) may be a "hiring contractor" as defined in Labor Code section 406.141,
which begins subchapter G of chapter 406. Subchapter G establishes that in
certain construction contracts, see Labor Code § 406.142, an "independent
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Morales Opinion No. DM-300
APPENDIX R: AG Opinion DM-300
contractor" as defined in section 406.141(2), and not the "hiring contractor" as
defined in section 406.141(1), is responsible for the provision of any workers'
compensation to any of its employees, see id. § 406.143, unless the hiring
contractor and the independent contractor enter into an agreement making the
hiring contractor the employer of the independent contractor and its employees
for the purpose of providing workers' compensation coverage, see id. §
406.144.
Page 3 of 6
To answer this question we will need to consider the meaning of the phrase
hiring contractor as used in subchapter G. Section 406.141 defines hiring
contractor as follows:
In this subchapter:
(1) "Hiring contractor" means a general contractor or subcontractor who, in the
course of regular business, subcontracts all or part of the work to be performed
to other persons.
Section 406.121, in turn, defines general contractor and subcontractor as
follows:
In this subchapter:
(1) "General contractor" means a person who undertakes to procure the
performance of work or a service, either separately or through the use of
subcontractors. The term includes a "principal contractor," "original
contractor," "prime contractor," or other analogous term. The term does not
include a motor carrier that provides a transportation service through the use of
an owner operator.
....
(5) "Subcontractor" means a person who contracts with a general contractor to
perform all or part of the work or services that the general contractor has
undertaken to perform. The statutory definition of general contractor is
consistent, for the most part, with that found in Black's Law Dictionary:
One who contracts for the construction of an entire building or project, rather
than for a portion of the work. The general contractor hires subcontractors (e.g.
plumbing, electrical, etc.), coordinates all work, and is responsible for payment
to subcontractors. Also called "prime" contractor.
BLACK'S LAW DICTIONARY 683 (6th ed. 1990).
Although the foregoing Labor Code provisions do not define hiring contractor
or general contractor in terms expressly limiting the phrases to include a person
who is a "contractor," it is helpful to consider the meaning of the word
contractor in order better to understand the these phrases. Black's defines
contractor, in part, as:
One who contracts to do work for another. This term is strictly applicable to any
person who enters into a contract, but is commonly reserved to designate one
who, for a fixed price, undertakes to procure the performance of works or
services on a large scale, or the furnishing of goods in large quantities, whether
for the public or a company or individual.
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APPENDIX R: AG Opinion DM-300
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A contractor is a person who, in the pursuit of any independent business,
undertakes to do a specific piece of work for another or other persons.
Id. at 326 (emphasis added). We believe that a "hiring contractor" under section
406.141 and a "general contractor" under section 406.121 do not include the
entity that grants a prime contract--such entity not being a "contractor" in
common usage--but may include the entity that is granted the contract. See
Gov't Code § 312.002(b) ("If a word is connected with and used with reference
to a particular trade or subject matter or is used as a word of art, the word shall
have the meaning given by experts in the particular trade, subject matter, or
art").
The University of North Texas, in hiring a company to extend a campus
building, for example, does not act as a "hiring contractor" as that phrase is
defined in section 406.141 because it does not act even as a "contractor" as that
term is commonly understood. In regard to such a project, the university does
not undertake to provide goods or services for another. The company would be
the "contractor" because it undertakes to do the project for the university, and
not vice versa. Nor does the university, we assume, make a "business"--that is, a
"commercial activity engaged in for gain," BLACK'S LAW DICTIONARY
198--out of entering into contracts with companies to have its buildings
extended (such contracts being, rather, merely necessary to the pursuit of the
university's purposes as an educational and research institution); but the
company that it hires probably does pursue a "business" of entering into
contracts to extend buildings. Because your concern appears to be limited to
contracts to perform "building or construction" on buildings on the university's
campus, we do not need to engage here in speculation to determine whether any
"governmental entity" as defined in section 406.096(e)(2) may in some
situations be a "hiring contractor" as defined in Labor Code section 406.141. It
suffices to conclude that the University of North Texas is not a "hiring
contractor" as defined in Labor Code section 406.141(1) when it hires an
individual or a company to perform on campus buildings any activity that
constitutes "building or construction" for purposes of section 406.096.
You finally ask whether an agreement under Labor Code section 406.145
satisfies the requirements of a certificate of coverage under section 406.096,
subsections (a) and (b). Section 406.145, which is part of subchapter G,
provides that a joint agreement between the hiring contractor and an
independent contractor affirming that the independent contractor is not an
employee of the hiring contractor will establish as a matter of law that the
subcontractor "is an independent contractor and not an employee, and is not
entitled to workers' compensation insurance coverage through the hiring
contractor unless an agreement is entered into under Section 406.144 to provide
workers' compensation insurance coverage." Section 406.096 requires that the
contractor, see id. § 406.096(a), and any subcontractors, see § 406.096(b), in a
building or construction contract with a governmental entity certify in writing
that each employee of the contractor or subcontractor that is working on the
project is being provided workers' compensation insurance coverage. Because
an agreement under section 406.145 does not certify that the contractor and any
subcontractor are in fact providing workers' compensation coverage to its
employees, we conclude that such an agreement would not satisfy the certificate
requirements of section 406.096.
SUMMARY
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APPENDIX R: AG Opinion DM-300
Labor Code section 406.096 applies to every "building or construction contract"
entered into by the State or a political subdivision of the State, no matter how
small the subject matter of the contract may be. The University of North Texas
is not a "hiring contractor" as defined in Labor Code section 406.141(1) when it
hires an individual or a company to perform on campus buildings any activity
that constitutes "building or construction" for purposes of section 406.096. An
agreement under Labor Code section 406.145 between a hiring contractor and
an independent contractor affirming that the independent contractor is not an
employee of the hiring contractor does not certify that the contractor and any
subcontractor is in fact providing workers' compensation coverage to its
employees and therefore would not satisfy the certificate requirements of
section 406.096.
Page 5 of 6
Yours very truly,
DAN MORALES
Attorney General of Texas
JORGE VEGA
First Assistant Attorney General
DREW DURHAM
Deputy Attorney General for Criminal Justice
JAVIER AGUILAR
Special Assistant Attorney General
RENEA HICKS
State Solicitor
SARAH J. SHIRLEY
Chair, Opinion Committee
Prepared by James B. Pinson
Assistant Attorney General
Footnotes
1. Section 406.096 of the Labor Code was formerly codified as V.T.C.S. article
8308-3.23(c), (d) (1925), a provision of the 1989 Workers' Compensation Act
(the "act"). The Seventy-third Legislature repealed the act and re-enacted it,
without substantive revision, as title 5 of the Labor Code. Acts 1993, 73d Leg.,
ch. 269, § 1, at 1132.
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