HomeMy WebLinkAboutPurchasing - Policy 5.45.pdf - 1 -
POLICY STATEMENT
District of Maple Ridge
Title: Purchasing
Policy No : 5.45
Supersedes: Amended
Authority: Council
Approval: November 9, 2004
Effective Date:
November 10, 2004
Policy Statement:
This policy applies to all employees or elected representatives of the District of Maple Ridge
who may be required to use corporate funds for goods or services.
Purpose:
1. PRIMARY OBJECTIVE
As part of the duties assigned to it in the Local Government Act, the Corporation of the
District of Maple Ridge must engage in the procurement of goods and services. The
primary objective of the Purchasing Division is to assist all internal customers to achieve
best value for dollars expended by the District. Lowest price can be best value, but
lowest price is not always best value. We look at the total cost of ownership, which
may include but not be limited to:
1. acquisition cost
2. quality required
3. residual value
4. disposal cost
5. training cost
6. maintenance cost
7. delivery and shipping terms
8. warranties
9. payment terms
10. performance
11. environmental impact
The Purchasing Section is committed to conducting business with fairness, probity, and
respect for all parties involved.
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2. SERVICES PROVIDED BY THE PURCHASING TEAM
Purchased products and services account for a significant portion of total operating cost.
This provides a continuous opportunity for cost reduction and control. The Purchasing
Team provides support to ensure an uninterrupted supply of goods and services of
acceptable quality and best value. This support includes the following:
1. Procurement: various degrees of involvement based on complexity, risk and dollar value.
Consultation with the Purchasing team is required if the purchase is beyond the specific
dollar limits of the user’s purchasing card.
2. Management of surplus and scrap: reuse or disposal for best value
3. Sourcing: new products, services or vendors or technology.
4. Research
5. Contract management: various degrees of involvement based on complexity, risk and
dollar value. All supply transactions have contractual implications.
6. Resolution of Supply disputes.
7. Standardization: products and services
8. Sponsorship: process development and contract management
9. Inventory management
10. Central Stores
11. Vendor relations and development
12. Record keeping
13. Training, coaching and monitoring on procurement and other supply issues.
PURPOSE: To summarize the responsibilities of the Purchasing Team.
3. AUTHORITY & RESPONSIBILITY
3.1 CHIEF ADMINISTRATIVE OFFICER
The Chief Administrative Officer as directed by Council delegates Purchasing authority
throughout the organization, as outlined in Schedule “A”.
3.2 GENERAL MANAGERS
The General Managers are responsible for ensuring Purchasing Policy is followed within
their areas of control.
PURPOSE:
• To ensure that expenditures comply with the District business plans.
• To ensure that sufficient analysis and discussion has taken place.
• To ensure the risk of fraud, embezzlement and error is minimized.
4. SERVICE CONTRACTS
Services procurement is subject to the same policy as materials, equipment or supplies
procurement. The annual value of a service contract determines the authorization
required.
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EXAMPLES OF SERVICE CONTRACTS:
1. Professional or Consulting Services
• Legal
• Banking
• Engineering
• Architectural
• Planning
2. Facilities and Equipment
• Janitorial
• Equipment Maintenance
• Security
3. Labour and Construction
• Plumbing
• Clean Up
• Inspection
5. PROCESS OR TOOLS
PRINCIPAL PROCUREMENT TOOLS (subject to dollar thresholds in Schedule A)
1. Invitation to Tender: A formal request for sealed bids for the supply of specific goods
or services in response to an advertised invitation. It may be opened in public. The
Tendering process itself forms complex legal obligations.
PURCHASING MUST BE INVOLVED AND NOTIFIED WHEN THE TENDER IS
FIRST BEING DEVELOPED.
2. Request for Proposals: A formal request for sealed submissions. It is not as specific as
an Invitation to Tender. It describes an opportunity or problem and asks for solutions and
costs for those specific opportunities or problems. The RFP process itself forms complex
legal obligations.
PURCHASING MUST BE INVOLVED AND NOTIFIED WHEN THE RFP IS FIRST
IS FIRST BEING DEVELOPED.
3. Prequalification: An attempt to identify in advance of an actual Tender or RFP suppliers
that are capable of successfully accomplishing what is required in that Tender or RFP.
Usually, this is used in complex procurements only. The Prequalification process itself
may form legal obligations.
PURCHASING MUST BE INVOLVED AND NOTIFIED WHEN THE
PREQUALIFICATION IS FIRST BEING DEVELOPED.
4. Request for Information: A request for written information. It may or may not develop
into a supply contract. This does not have the legal obligations of an Invitation to
Tender, Request for Proposals or a Prequalification.
PURCHASING MAY BE INVOLVED IN A CONSULTATIVE ROLE AT THE
DISCRETION OF THE END USER.
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5. Purchasing Card: The Purchasing Card is a corporate credit card issued to specific
employees for purchases within clearly defined parameters. Purchasing will determine
who shall participate in the card program and the spending limits of each card user.
Every card user will have a designated supervisor or manager for authorization.
PURCHASING MAY BE INVOLVED IN A CONSULTATIVE ROLE AT THE
DISCRETION OF THE END USER.
6. CHOOSING THE BEST PROCESS OR TOOL
The Purchasing Team, after consultation with their customer will select the most suitable
procurement tool or process.
1) Time: When are the goods and/or services required?
2) Complexity: Are there specifications, alternate solutions, sub-contractors to be
considered?
3) Risk: Is there low, moderate or high risk regarding public liability, danger to our
property, failure to perform?
4) Cost: Generally, the higher the cost, the more complex the appropriate process.
7. PROHIBITIONS
The following activities are prohibited:
1) The division of contracts to avoid using the tools and practices as described in the
Purchasing Policy.
2) Purchase by the District from any member of Council, appointed officers, employees
of the District or their immediate families or from any other source that would result
in a conflict of interest.
3) Purchase by the District of any goods or services for personal use by or on behalf of
any member of Council appointed officers, employees of the District or their
immediate families.
4) The use of a purchasing card by anyone other than the person to whom the card was
issued.
5) The release of a Suppliers written or oral information. This practice is unethical and
may be illegal as well as damaging to the District’s competitive position. Requests of
this nature are to be managed through Purchasing.
8. CO-OPERATIVE VENTURES
The District may participate with other government agencies, public authorities or
private organizations in co-operative acquisition ventures where it is in the best
interest of the taxpayer to do so and may follow the procedures set out by the group
responsible for the venture.
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9. PREFERENCE TO LOCAL SUPPLIERS
We support local merchants by encouraging the use of local suppliers and by purchasing
locally, where all things are equal.
The following priorities will be given where all things are equal, (i.e. after giving due
consideration to determining overall Best Value)
• Firstly - Locally
• Secondly - Within the Province
• Thirdly - Within Canada
• Fourthly - Outside Canada
No percentage differences or dollar preferences will be given to purchasing locally as that
would represent a direct grant to local suppliers, however, full consideration will be given to
potential future costs or savings that may be experienced by using a local.
10. ITEMS NOT REQUIRING THE INVOLVEMENT OF PURCHASING
Although subject to all other District Policies and Procedures the involvement of Purchasing
Staff is not required for the following items:
Cash
• Petty Cash
Professional and Training Activities
• Training and Education
• Conference Fees
• Convention Fees
• Courses
• Magazines
• Meeting Expense
• Memberships
• Periodicals
• Seminars
• Staff Development
• Staff Training
• Staff Workshops
• Subscription
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Refundable Employee Benefits
• Cash Advances
• Entertainment
• Hotel Accommodation
• Meal Allowances
• Mileage Allowance – Vehicle
• Miscellaneous Travel Expense (e.g. Airport Fees)
Employer’s General Expenses
• Debt Payments
• Grants to Agencies
• Licenses (vehicle, elevators, radios, etc.)
• Medical and Dental Expenses
• Payment of Damages
• Payroll Deduction Remittances
• Petty Cash Replenishments
11. PURCHASING CARDS
Although subject to all other District Policies and Procedures, including Purchasing Policy –
Tools and Processes, the involvement of Purchasing Staff is not required. Purchasing may
be utilized in a consultative capacity on any Purchasing Card transaction, e.g. recommend
vendors.
12. CONTINGENCY AND SCOPE CHANGES
Contingency allowances provide Project Manager’s with discretion to meet a requirement,
which is not perfectly defined.
Unit price contracts are valued according to a process established in the contract
documents. Quantities may vary. As a result, the bid is not a fixed sum or ceiling, but,
rather, a common basis for comparison among bidders. These contracts may require a
contingency as the final quantities may be more or less than the original estimate.
Contingency options must be outlined in Reports to Council when an award is
recommended.
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12. CONTINGENCY AND SCOPE CHANGES (Cont’d)
During the course of a project, additional works may arise that could not be anticipated
during the project planning process. A contractor already engaged in works for the District
may be able to better respond to this related work as they have already very recently met
District requirements. For example, other potential bidders may not be able to obtain
requisite insurance and bonding in a timely and/or cost effective manner.
As a result, the contractor engaged in the principal works may be asked for a quotation for
additional works. This offer may be accepted, provided it is reasonable, and good value in
the opinion of the Project Manager and the Manager of Procurement. Funds must be
available for Scope changes as for any other activity of this nature.
13. SOLE SOURCE PROCUREMENT
There are occasions when products/services must be purchased from one specific source or
manufacturer. Personal preference for certain brands or products does not justify limiting
competition. Whenever possible competition should be encouraged and developed.
Products or services purchased on a sole source basis must meet at least one of the criteria
shown below.
Compatibility with existing equipment
The products or services are being purchased to directly interface with or attach to
equipment of the same manufacture, and no other manufacturers products will correctly and
effectively interface with existing equipment.
Compatibility for instructional purposes
The products are being purchased to supplement existing equipment for use and operation.
The product must exactly match the existing equipment and is being purchased to provide
uniformity for instructional purposes. Uniformity should provide a significant instructional
benefit.
Compatibility for Research
If the main purpose for acquiring equipment, supplies or services is to replicate specific
outcomes, using the exact products that produced the original results may be necessary.
Only one supplier can be identified to supply a product or service
In rare cases, only one supplier may exist to provide a particular product or service.
Specifying patented products or processes, when not necessary to meet functional
requirements, is not acceptable as a sole source justification
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Emergency Purchasing
When quick or immediate acquisition of goods or services is determined to be necessary to
restore or maintain minimum acceptable levels of community service, or prevent serious
delays or injury.
In an emergency the preparation, documentation and analysis aspects of the usual
purchasing procedures as described in the Procedure section of Schedule “A” Acquisition
Dollar Amount Approval Thresholds may not be possible. Oral authorization will be
acceptable as described in the Approval Required section of Schedule “A’ Acquisition
Dollar Amount Approval Thresholds.
All normal purchasing documentation and reporting, complete with signed authorizations
as required is to be completed as soon as possible after the emergency.
Sole Source Justification Report
A written explanation, commonly referred to as a Sole Source Justification, must be
provided to the Manager of Procurement to support sole source purchases over $20,000.
The Chief Administrative Officer will give final authorization.
Your Sole Source Justification Report will be filed as part of the official procurement
documents and may be subject to review or audit by interested parties.
e.g. Freedom Of Information and Privacy Requests.
14. CONSULTING AND PROFESSIONAL SERVICES CONTRACTS
Consulting and professional services contracts will be awarded on the basis of
demonstrated competence and qualifications for the type of professional services to be
rendered.
Any professional services or consulting contract less than $20,000 may be awarded directly
at the discretion of the appropriate General Manager or his/her designate.
Any professional services contract expected to be worth more than $20,000. annually shall
be bid competitively as described in Schedule “A” Acquisition Dollar Amount Approval
Thresholds or Sole Source Justification shall be required.
The appropriate General Manager will conduct reviews of significant contracted consulting
or professional services with the Manager of Procurement on a rotational basis so that there
will be at least one review each year. All significant consulting or professional services
contracts will be subject to review at least once every three years.
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SCHEDULE “A”
This schedule refers to the approvals required for the various dollar values of procurement. Other
than in emergencies, budget approval is required before Procurement begins.
ACQUISITION DOLLAR AMOUNT APPROVAL THRESHOLDS
Once Municipal Council through the Business Plan and Budget process has approved funds for
your purchase, the following thresholds apply:
Estimated
Value of
Purchase/
Contract*
Procedure
Approval Required*
Greater than
$150,000.
Have the Procurement division work with end
users to obtain sealed Tenders, Proposals or
Prequalifications. A combination of local,
regional and national newspaper advertising will
be used to locate interested parties. Opportunities
will also be posted on the Municipal website and
at electronic procurement sites such as BC Bid
and MERX.
Recommendation to
award to be approved
by Council.
Greater than
$100,000.
but less than
$150,000.
Have the Procurement division work with end
users to obtain sealed Tenders, Proposals or
Prequalifications. A combination of local,
regional and national newspaper advertising may
be used to locate interested parties. Opportunities
will also be posted on the Municipal website and
at electronic procurement sites such as BC Bid
and MERX.
Chief Administrative
Officer
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Greater than
$20,000.
But less than
$100,000
Have the Procurement division work with end
users to ensure fair competition. Telephone,
facsimile, e-mail or written quotes or proposals
will be acceptable unless stated otherwise.
Formal tendering or Request for Proposal
processes will not be used but competitiveness
will still be encouraged and all participants will
be treated fairly and equitably. A minimum of
three bids or offers will be sought whenever
possible.
General Manager or
his/her designate.
$1000 - $20,000
Use some degree of competition whenever
possible. Offers should be obtained from more
than one supplier when that is sensible and
prudent. Process cost and cost of time needs to
be balanced against due diligence to obtain best
value. An optimum number of offers for low
dollar simple procurements is three. Purchasing
may be contacted to advise 1) who may wish to
supply 2) who are reputable, experienced
vendors 3) whether a contract is in place for
what is required 4) whether a needed supply is in
inventory at Stores or should be in inventory at
Stores.
Director or his/her
designate.
less than $1000
Use your discretion; consult the Procurement
division if you would like assistance.
Director or his/her
designate will authorize
users.
*Although the value of most contracts can be defined as the cost to the District to acquire specific
goods or services, occasionally a more nuanced definition of value is appropriate. When rights or
privileges are embedded in a contract the net dollar cost to the District may not reflect it’s true
significance. e.g. bus bench advertising; towing services. In situations of this type the total value
of the contract to the successful supplier shall determine what process is used and what approval
is required.
Invitations for sealed tenders or proposals will be reviewed by the Purchasing Division for
consistency and legal compliance. The Purchasing Division will be the lead agency in issuing
invitations for sealed tenders or proposals at the request of the user department.
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Definitions:
Acquisition Method - the process by which goods or services are procured.
Best Value - obtained by determining the total cost of performing the intended function
over the lifetime of that function.
Bid – an offer or submission from a vendor, contractor, or consultant in response to a
tender or request. It may be subject to acceptance or rejection.
Bid Request – a formal request for bids or solicitation, which may be in the form of a
request for quotation, request for tender, request for information or request for proposal.
Cheque Request – a written request to pay for goods or services on an approved form,
not covered by a purchase order, contract or other direct methods.
Contract – an agreement that may be written or verbal comprising the
following components: (1) must be legal, (2) parties involved must have the
intellectual capacity to understand, (3) there is an offer, (4) there is acceptance,
(5) something of value changes hands (also known as consideration).
Electronic Requisition - an internal request in electronic format (to Purchasing)
for information, research or to procure goods and services.
Emergency – a situation where the immediate acquisition of goods or services is essential
to provide community service, prevent serious delays, injury, further damage or to restore
or maintain minimum service.
End User – the person or persons ultimately using or managing/supervising the use
of required goods, materials or services.
Prequalification – the procuring organization evaluates interested suppliers/vendors prior
to a Tender or RFP process. This identifies who may be capable of performing the
work. Typical criteria for this determination would be specialized necessary
expertise, resources, relevant experience and references.
Probity – adherence to the highest principles and ideals.
Procure – to acquire by purchase, rental, lease or trade.
Proprietary Specifications – Exclusivity that restricts the acceptable products or services
to one manufacturer or vendor. Some Proprietary items may be available from
several distributors affording a limited degree of competitiveness. Proprietary
specification should be avoided if possible as it limits or eliminates competition.
Purchasing Card – is a corporate credit card issued to specific employees for
purchases within clearly defined parameters.
Quotations – a formal request for bids for the supply of goods or services, from selected
sources of supply, not opened in public.
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Request – a formal request or solicitation, which may be in the form of a request
for quotation, request for tender, request for information, request for proposal or request
for offers.
Request for Offer – a request by the District for formal offers to purchase surplus, used
or obsolete materials, equipment or property.
Request for Proposal – a formal request for details on the supply of goods or the
provision of services which cannot be fully defined of specified.
Request for Tender – a formal request for sealed bids for the supply of goods or services
in response to an advertised invitation opened in public.
Services – useful labours that do not produce a tangible commodity.
Sole Source - When a product or service is practicably available from only one
source competitive procurement cannot be conducted. Obtaining best value can be
challenging in these circumstances