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045-1995 DM CITY OF MIAMI BEACH --- MEMORANDUM DATE: August 29,1995 Departmental Memo 45-1995 TO: All Department Heads SUBJECT: PURCHASING STREAMLININ FROM: Jose Garcia-Pedrosa, City Manager Please find attached a revised Routing and Approval procedure for all purchase requisitions, Change Orders, and Direct Payments. This procedure will become effective September 1, 1995 and should have a significant and positive impact on the City's purchasing and payment processes. This recommendation has been presented to and favorably considered by the City's Audit Committee. Citywide training will be conducted by Purchasing, OMB, and Finance during the month of September 1995, before the second phase (Payment Documents) of this streamlining procedure becomes effective on October 1, 1995. r- Successful implementation of these changes requires cooperation at every level throughout the organization, and a clear understanding of how the system works. Each department head will be responsible for ensuring that all personnel, including back-up personnel, who are involved in purchasing and/or payment activities, are scheduled for training. Any questions regarding purchasing procedures or the training scheduling should be directed to the Purchasing office at 673-7490. JGP:jf Attachment cc: Murray H. Dubbin, Interim City Attorney Sergio Rodriguez, Deputy City Manager Dean R. Mielke, Asst. City Manager/Labor Relations Mayra Diaz-Buttacavoli, Asst. City Manager Joseph Pinon, Asst. City Manager Harry Mavrogrenes, Asst. City Manager Peter Liu, Executive Asst. to the City Manager Margaret Arculeo, General/Unclassified Pension Administrator Celia Borenstein Locke, PolicelFire Pension Administrator Finance Staff OMB Staff Purchasing Staff r- - r r fURCHASING STREAMLINING TRAINING This form must be completed and returned to Purchasing by Thursday, September 7,1995 so that training sessions can be scheduled during the month of September. All departments/divisions should have one primary employee responsible for processing of purchasing documents, FMSPO input, and payment processing, as well as at least one back-up employee. DEPARTMENT: DATE: DEPARTMENT HEAD SIGNATURE: DIVISION PRIMARY EMPLOYEE'S BACK-UP EMPLOYEE'S NAMEIPHONE NUMBER NAMEIPHONE NUMBER -- ROUTING AND APPROVAL OF PURCHASE REQUISITIONS, CHANGE ORDERS AND DIRECT PAYMENTS POLICY It is the responsibility of all Departments/Divisions to ensure that City Purchase Requisitions, Change Orders, and Direct Payments are properly routed and approved. This policy supersedes and replaces any conflicting parts of previously issued administrative policies on this subject. PROCEDURE Purchase Requisitions 1. All Purchase Requisitions under $1,000.00, after being approved (signed) by the originating Department Director or authorized designee, are routed to the Purchasing Division for review, approval and processing, except that requisitions for capital related or otherwise unbudgeted products or services are first routed through OMB for approval. Purchase Requisitions will not be used for balance sheet accounts including trust fund accounts. 2. All Purchase Requisitions of $1,000.00 or more, after being approved (signed) by the originating Department Director or authorized designee are first routed to Management and Budget for review and approval. After approval, Purchase Requisitions less than $5,000.00 are forwarded to the Purchasing Division for processing. ,-- 2a. All Purchase Requisitions of $5,000.00 or more are then routed to the City Manager/Asst. City Manager for review and approval. After approval, these Purchase Requisitions are forwarded to the Purchasing Division for processing. 2b. All Purchase Requisitions of $10,000.00 or more for items which are not on contract will continue to be bid, and then approved by the City Commission via Commission Memorandums prior to final processing. Note: Computers and Communications will originate all Purchase Requisitions for computer and communications hardware or software. Change Orders 1. All Change Orders of $10.00 or less require only a Department Director signature on a Change Order Request attached to the invoice in order to authorize the Finance Department to pay up to $10.00 more than the original document amount. (This will expedite and simplify the payment process where there are srnalllegitimate differences i.e. freight, etc.). r (Rev 8/95) 7.1.00 1 Routing and Approval of Purchase Requisitions, Change Orders, and Direct Payments. . . ,--. 2. All Change Orders over $10.00 but under $100.00, after being approved (signed) by the Department Director or authorized designee are routed to the Purchasing Division for review, approval and processing. 3. All Change Orders of $100.00 or more, after being approved (signed) by the Department Director or authorized designee are first routed to OMB for review and approval. After approval, Change Orders less than $1,000.00 are forwarded to the Purchasing Division for processing. 4a. All Change Orders of $1,000.00 or more are then routed to the City Manager for review and approval. After approval, these Change Orders are forwarded to the Purchasing Division for processing. 4b. All Change Orders of $10,000.00 or more, or Change Orders of less than $10,000.00 requiring City Commission approval, will continue to be approved by the City Commission via Commission Memorandums prior to final processing. Note: Computers and Communications will originate all Change Orders for computer and communications hardware or software. Direct Payments ,--. 1. All requests for Direct Payments must comply with the City Administrative Policy No. 3.9.00, REQUEST FOR DIRECT PAYMENT and associated LIST OF ALLOWED CATEGORIES. 2. All Direct Payments under $1,000.00, after being approved (signed) by the Department Director or authorized designee, are routed to the Finance Department, Accounts Payable Section, for review, approval, and payment processing, except that Direct Payments for grant or confiscation fund, travel or unbudgeted items are first approved by OMB. Direct Payments for payroll related deductions, transfers, etc., utility deposit refunds, and Petty Cash reimbursements to the Central Cashier are prepared in and retained by the Finance Department for processing. 2a. All Direct Payments of $1,000.00 or more (except payroll related deductions, transfers, etc.) are first routed to Management and Budget for review and approval. After approval, Direct Payments less than $5,000.00 are forwarded to the Finance Department, Accounts Payable Section, for review, approval and payment processing. 2b. All Direct Payments of $5,000.00 or more are then routed to the City Manager for review and approval. After approval, these Direct Payments are forwarded to the Finance Department, Accounts Payable Section, for review, approval and payment processing. Note: All Confirmation Purchases (ordering and/or receiving of materials or services without the required prior City authorizations) is a violation of Chapter 3lA of the City Code. Violators may be subject to disciplinary action. All such violations will be routinely reported by the Purchasing Division or Finance Department to the Internal Auditor. The Internal Auditor will then investigate such violations aud issue a report of fmdings to the City Manager. - (Rev 8/95) 7.1.00 2 -- . . Routing and Approval of Purchase Requisitions, Change Orders, and Direct Payments. REFERENCE DOCUMENTS City Code, Chapter 31A, Purchasing Policy. City Manager Department Memorandum No. 56-1990 City Manager Department Memorandum No. 246 (Purchasing Manual, June 1989 revision, p. 21) City Manager Department Memorandum No-6-1990 CONTACT General Services Department Purchasing Division 2nd Floor, City Hall Miami Beach, Florida 33139 r PREPARED "rJ'7.. h,. ~ APPROVED B : . ~- DEPT. NAME: bSA / A,W.!.HliSIAJ& DATE: 1:Jdsl-?~, /'1fS- r' (Rev 8/95) 7.1.00 3 -- PURCHASING STREAMLINING September 1995 BACKGROUND: A City staffed committee made up of an Executive Assistant to the City Manager, Finance Director, General Services Director, Internal Auditor and Purchasing Agent was established to evaluate, and propose improvements to the City's current purchasing system. The committee identified opportunities to improve economy and efficiency, reduce unnecessary or redundant paperwork and associated administrative processing costs, while ensuring the integrity of the related internal controls. -- It is anticipated that these changes will have a significant and positive impact on the City's purchasing and payment processes, give departments more responsibility for smaller dollar transactions, and increase available staff time. It is further anticipated that this change will reduce the number of requisitions, Change Orders and Direct Payments being handled in the City Manager's office by approximately 87%, in the Office of Management and Budget by approximately 75%, and in the Purchasing Division by approximately 46%. The Purchasing Manual, which was revised in August 1995 and will be available at September 1995 training sessions, has been amended to include the new procedures which will be discussed today. This manual, which provides a general overview of purchasing procedures and detailed instructions for FMSPO input, will be distributed at all training sessions. Any questions regarding purchasing procedures or training scheduling should be directed to Judy Ford or Steve Greene in the Purchasing office at 673-7490. r 1 - WHAT HAS CHANGED? 1. New dollar approval limits for purchase requisitions, Change Orders and Direct Payments. The City's current purchasing process requires that ll!l requisitions, Change Orders and Direct Payments be routed to and approved by the originating department, Office of Management and Budget, City Manager and Purchasing Division. This process unnecessarily delays processing, increases transaction costs, and causes delays in City payments to vendors, contractors, etc. Effective September 1,1995, the following dollar approval limits will go into effect: -- N/A $100.00 to $1,000.00 to $10,000.00 $999.99 $9,999.99 and Higher N/A $1,000.00 to $5,000.00 to $10,000.00 $4,999.99 $9,999.99 and Higher All HIGHLIGHTS: *Direct Payments - no longer routed through Purchasing *Change Orders - increases under $10 routed directly to Finance-only requires Department Director signature; Change Order increases from $10.00 to $99.99 are routed directly to Purchasing *Requisitions - requisitions with estimated value under $1,000 routed directly to Purchasing r 2 ,"'- r- r 2. Payment Documents (Effective October 1, 1995) The current purchasing process requires that all original invoices be mailed directly by the vendor to the Finance Department, where it is matched with the Receiving Report that was entered into the FMSPO system by the originating department. If the two are in agreement, the invoice is paid, but discrepancies and unprocessed Receiving Reports are commonplace. Significant delays have been identified in the payment process and improved procedures for processing of Release Orders, Receiving Reports and matching of invoices should result in timely payments to vendors and allow the City to take advantage of prompt payment discounts. HIGHLIGHTS: *Invoices will be mailed directly to departments by vendors *Release Orders must be entered into FMSPO system within 24 hours of ordering material *Receiving Reports must be entered into FMSPO system within 24 hours of receipt of material * All these documents must be signed by Department Director, or authorized designee *Department must match invoice with Receiving Report number recorded, packing slip (and Release Order, if applicable) and send complete package to Finance for payment 3 r r r 3. Small Purchase Order System This system, which will enable departments to react quickly to minor operational needs that are not of a repetitive nature through a smaller, less complex purchasing method, will be available early in the next fiscal year. Sequentially numbered Small Purchase Order forms will be available from Purchasing for purchases of up to $500.00 to be made directly by departments. - These Small Purchase Orders are not to be used to purchase items stocked by Central Services or the Central Stores Warehouse; cannot be used in place of an existing City contract, Purchase Order or Standing Order; cannot be used to purchase computer or communication-related equipment, which must be approved by the Computers & Communication Department. Three telephone quotes will be obtained by the department, one from a minority vendor whenever possible, unless the purchase is documented as a "Sole Source"or is necessitated by an emergency repair. Award should be made to the lowest bidder meeting specifications. Copies of Srnall Purchase Orders will be sent to Purchasing and will be reviewed for compliance, abuse of procedures and a determination for a new contract. In cases where the use of Small Purchase Orders is being abused, Purchasing will have the authority to revoke such privileges until corrective action has been taken. 4 CITY OF MIAMI BEACH ,.- TO: All Department Hea~siO Robert w. spinney ~ Assistant Finance Dille r Ramon V. Duenas Financial Analyst II Date: August 30,1995 VIA: FROM: StJBJECT: tJPDATE SIGNATURE AtJTHORIZATIONS In a effort to update our current signature authorization files for persons authorized to approve Direct Payments (DP) and Receiving Reports (RR) for your department, please complete the attached form. Please return the completed forms to the Finance Department as soon as possible. If you have any questions, please feel free to call Ramon Duenas at Ext.#7405 Thank you for your prompt reply. .r r CITY OF MIAMI BEACH ,- TO: All Department Head~ DATE: Robert W. Spinney~ Assistant Finance Dir?;}ct Ramon V. Duenas r/ Financial Analyst II G August 30,1995 VIA: Prom: SUBJECT: SIGNATURE AUTHORIZATION FOR ALL PAYMENTS SIGNATURE AUTHORIZATION FOR THE PROCESSING OF (DP) DIRECT PAYMENTS Type Name / Title Signature Type Name / Title Signature Type Name / Title Signature r- Type Name / Title Signature SIGNATURE AUTHORIZATION FOR THE PROCESSING (RR) RECEIVING REPORTS ------------------------------------- Type Name / Title Signature Type Name / Title Signature Type Name / Title Signature ------------------------------------- Type Name / Title Signature r ------------------------------------- Authorized by Department Head Department #