HomeMy WebLinkAboutA011 - Resolution approving revisions to Purchasing Policies and Procedures effective September 23, 2025ITEM #:14
DATE:09-23-25
DEPT:FIN
SUBJECT:REVISIONS TO PURCHASING POLICIES AND PROCEDURES
COUNCIL ACTION FORM
BACKGROUND:
The objectives of the Purchasing Division include recommending policies and procedures that
comply with applicable laws and regulations, protecting the interests of the City, and enabling
City programs to provide cost-effective services to the public. The division maintains a
Purchasing Policies and Procedures Manual to assist in achieving these goals.
Revisions to the Purchasing Policies and Procedures Manual are proposed to account for
recent changes in the public improvement bid thresholds and retainage requirements.
Additionally, staff recommends amending the capital purchase thresholds. A summary of
proposed revisions is attached. Two sections of the Purchasing Policies and Procedures
Manual contain proposed revisions:
Section 6: Bids, Quotations, and Proposals:
The Code of Iowa Section 314.1B establishes horizontal and vertical bid threshold
subcommittees that meet every other year to establish the bid and quotation thresholds for city
and county public improvement projects. Typically, the City then adopts the same limits and
includes them in the Purchasing Policy and Procedures Manual. The last modification to these
limits took place on June 11, 2019. At that time, the City Council approved revising the City's
purchasing policy to follow the statutory limits set by these subcommittees.
The City’s thresholds are currently:
Year Effective Threshold
Horizontal
Infrastructure
Cities > 50,000
population
Vertical
Infrastructure
Cities > 50,000
population
2019 Competitive Bid $93,000 $196,000
2019 Competitive Quote N/A $109,000
The State’s subcommittees have met and changed the bid and quote thresholds to the
following:
Year Effective Threshold
Horizontal
Infrastructure
Cities > 50,000
population
Vertical
Infrastructure
Cities > 50,000
population
2025 Competitive Bid $89,000 $206,000
2025 Competitive Quote N/A $114,000
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The threshold established by the State subcommittees for horizontal infrastructure bids
has been decreased by $4,000, to $89,000. The threshold for vertical infrastructure bids
has been increased by $10,000, to $206,000. The threshold for vertical infrastructure
quotes has been increased by $5,000, to $114,000.
In order to remain in compliance with the Iowa Code Section 314.1B, staff recommends
amending the Purchasing Policies and Procedures Manual to match the State's revised
thresholds.
Section 18 Specification Guidelines & Procedures:
Effective July 1, 2025, Senate File 574 amended Iowa Code Chapter 573 by reducing the
maximum amount of retainage that may be withheld from a contractor ’s monthly payments.
The retainage limit has been reduced from 5% to 3%. This change applies both to the
amounts a governmental body may withhold from a principal contractor and to the amounts a
contractor may withhold from subcontractors, which are now limited to 3% or the retainage
percentage specified in the subcontract, whichever is less.
Other Changes:
The City currently defines capital assets for financial reporting and policy purposes as
purchases exceeding $5,000. However, guidance issued by the Federal Office of
Management and Budget (OMB), effective October 1, 2024, raised the minimum capitalization
threshold for equipment acquired with federal funds to $10,000. By aligning with this new
federal standard, the City can streamline internal processes, reduce the administrative
workload associated with tracking lower-value assets, and ensure consistency with best
practices in financial management.
Implementing this change requires updating the City’s Purchasing Policies and Procedures
Manual to reflect the new $10,000 capitalization threshold. In addition, the detailed account
codes used to categorize purchase types will need to be revised to align with the updated
capitalization policy. This coordinated effort will ensure consistency across all financial and
purchasing documentation and will result in a more efficient and compliant asset management
system.
ALTERNATIVES:
1. Approve revisions to the purchasing policies and procedures to become effective
September 23, 2025.
2. Do not approve revisions to the purchasing policies and procedures.
CITY MANAGER'S RECOMMENDED ACTION:
The proposed revisions to the purchasing policies and procedures reflect new statutory limits
and industry best practices. These revisions will improve the efficiency of the City's
procurement process and administration of construction projects, and improve control and
reporting for the Purchasing Division. Therefore, it is the recommendation of the City Manager
that the City Council adopt Alternative No. 1.
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ATTACHMENT(S):
Summary 2025 Policy Changes.pdf
Summary of Changes 2025 Purchasing Procedures.pdf
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SUMMARY OF 2025 CHANGES TO PURCHASING POLICIES
Section 1: Organization, Purpose, and General Guidelines: No additional changes
Section 2: Requisitions for Purchase Order:
Section Subject Description of Change Comments
Capital items are $10,000 in value or more
fuel oil and 4060 to Maintenance Agreements on
office equipment and minor equipment; change
payments for photocopier leases and rentals from
radios, portable telephones, etc
Reflect changes in element object numbers
Section 3: Fleet Vehicles and Equipment: No additional changes
Section 4: Technology and Communications Purchases: No additional changes
Section 5: Specifications and Descriptions/Statements of Work: No additional changes
Section 6: Bids, Quotations, and Proposals
6.04 A1 A2,
& C Amounts for
Bids/Quotations and
Reflects statutory bid threshold limits raised by
subcommittee for public improvements
6.05 A Types of
Solicitations
Change footnote to the current bid threshold limits
Section 7: Purchase Order-Receiving Report: No additional changes
Section 8: Emergency & Rapid Need Purchases: No additional changes
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Section 9: Travel, Conference, & Training Expense: No additional changes
Section 10: Reserved
Section 11: Central Office Supply Store & Inventory Management: No additional changes
Section 12: Disposal of Surplus Property: No additional changes
Section 13: Conflict of Interest Policies and Code of Ethics: No additional changes
Section 14: Procurement Card Program: No additional charges
Rev. 9/23/25
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SUMMARY OF 2025 CHANGES TO PURCHASING PROCEDURES
Section 15: Procedures for Requisitions or Purchase Order: No additional changes
Section 16: Procedures for the Purchase of Fleet Equipment: No additional changes
Section 17: Procedures for the Purchase of Technology & Communication Equipment: No additional changes
Section 18: Specification Guidelines & Procedures:
18.04
B
Retainage Change maximum retainage amount
Section 19: Procedures for Bids, Quotations, and Proposals:
19.01
B & C Competitive
Solicitation is
Reflects statutory bid threshold limits
raised by subcommittee for public
improvements
19.04
D & F Requirements and
Reflects statutory bid threshold limits
raised by subcommittee for public
Section 20: Procedures for Purchase Order Receiving Report: No additional changes
Section 21: Procedures for Emergency & Rapid-Need Purchases: No additional changes
Section 22: Procedures for Travel, Conference, & Training Expenses: No additional changes
Section 23: Section not used
Section 24: Procedures for Central Stores & Catalogued Inventory Management: No additional changes
Section 25: Procedures Relating to Conflict of Interest & Code of Ethics: No additional changes
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Section 26: Procurement Card Program Procedures: No additional changes
Rev. 9/23/2025
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