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G-983 - 09/25/2012 - BOARD - Ordinances Supporting DocumentsITEM 9.A.3.A) ITEM 9.A.3.B) +catr✓' yn' go m AGENDA ITEM Regular Board of Trustees Meeting of September 25, 2012 SUBJECT: Award of Purchasing Card Services (P -Card) Agreement and Approval of Increase of Purchasing Authority FROM: Sharon Dangles, Finance Director and Blaine Wing, Assistant Village Manager BUDGET SOURCE/BUDGET IMPACT: RECOMMENDED MOTION: I move that the Village Board authorize the Village Manager to enter into a Purchasing Card Services (P -Card) Agreement with US Bank for five (5) years, with a one (1) year extension, by approving Resolution R-1204, "A Resolution Approving and Authorizing the Execution of an Agreement of an Agreement by and Between the Village o Oak Brook and US Bank for the Establishment of a "P- CARD" Purchasing System." Further, I move that the Village Board amend the Village's purchasing ordinance in order to increase the Manager's purchasing authority from $15,000 to $20,000 by approving Ordinance G -983, "An Ordinance Amending Chapter 7 of Title I of the Oak Brook Village Code Relating to the Purchasing Authority of the Village Manager." Backeround/Historv: Over the past year the Village's Finance Department and Purchasing Division have been reviewing purchasing card programs, policies, and procedures. Recently the Village issued a request for quotes (RFQ) and received responses from BMO, Chase, and US Bank. All three (3) banks have software that will integrate with the Village's current financial software (Mums), and will allow the Village to add some efficiency, streamline the Village's purchasing and procurement process, while generating approximately $25,000 or more annually in revenue. *Staff is recommending US Bank as it is offering the greatest rebate, a card that has greater overall acceptance (Visa), and has limited fees. IN One of the benefits of adding P -Cards to the Village's procurement tools permit authorized Village employees to make purchases for supplies, services, and travel expenditures with a P -Card instead of the various credit cards that departments may be using. The P- Card is also a tool that facilitates timely acquisition of materials and supplies, automates data flow for accounting purposes, and offers appropriate internal controls within each department (including the ability to set and control purchasing dollar limits). Each user will be required to sign an agreement and abide by the established rules and procedures. (See attached sample policy and procedure from American University.) It is both the recommendation of the Finance Director and Assistant Village Manager (who is overseeing the Purchasing Division), that after the P -Card program is established and tested, most of the Village's corporate credit cards will be cancelled and the appropriate department staff issued a P -Card. That way all transactions will be controlled and monitored through the Village's existing Purchase Orders (POs) process, P -Card process, or the limited use of the Village's VISA credit card (which use is authorized by the Village Manager). The Finance Department and Purchasing Division have agreed on the attached draft P -Card procedure and policy, and plan to beta test P -Cards with the Village's IT and HR Divisions, Sports Core and Police Departments during the last few months of 2012 and then roll out P -Cards to the other departments in 2013. While adding the P -Card to the Village's toolbox is important, staff is also recommending to increasing the Village Manager's purchasing authority by $5,000. This will give the Manager the ability to authorize the purchase of basic items, supplies, and services that are budgeted for and have a value of under than $20,000. Several communities, including nearby Elmhurst, Villa Park, Lombard, Oakbrook Terrace, and Bloomingdale currently have their purchasing authority at $20,000. Many communities are at this level because of using a baseline item (a computer server) and comparing what it cost in 1993, which was $10,000, and comparing it to 2012, which would cost $16,100. Even with the adjustment in purchasing authority, three (3) quotes will be required for most items, products and services, the money will have already been budgeted, and in many cases the Village will be able to earn 1.25% back by making the purchase with a P -Card. It is also important to note that purchases over the new requested authority of $20,000 can still be made, but only after the Board approves the purchase. For example, staff could bring a request to replace five (5) police vehicles at a cost of $160,000 and the vendor does allow P -Card payment. For paying via P- Card instead of a check, the Village would get 1.25% of the $160,000 or $2,000 back. As these expensive purchases are the exception, there will also be additional safety protocols, including having a special P- Card that will require first Board approval, then internally authorization from two of three positions (Village Manager and/or, Assistant Village Manager, and/or Finance Director) in order to be used. However, by increasing the Village's Manager's purchasing authority to $20,000 commonly budgeted purchases such as computer servers that can range in price between $12,000 to $18,000 will be able to be made, after the necessary quotes, approvals, and the Village P -Card and Purchasing policies are followed. Recommendation: Staff recommends that the Village Board authorize the Village Manager to enter into a Purchasing Card Service agreement with US Bank. Further, staff recommends increasing the Village Manager's purchasing authority by $5,000 in order to allow for budgeted items to be processed and purchased more efficiently. One of the benefits of adding P -Cards to the Village's procurement tools permit authorized Village employees to make purchases for supplies, services, and travel expenditures with a P -Card instead of the various credit cards that departments may be using. The P- Card is also a tool that facilitates timely acquisition of materials and supplies, automates data flow for accounting purposes, and offers appropriate internal controls within each department (including the ability to set and control purchasing dollar limits). Each user will be required to sign an agreement and abide by the established rules and procedures. (See attached sample policy and procedure from American University.) It is both the recommendation of the Finance Director and Assistant Village Manager (who is overseeing the Purchasing Division), that after the P -Card program is established and tested, most of the Village's corporate credit cards will be cancelled and the appropriate department staff issued a P -Card. That way all transactions will be controlled and monitored through the Village's existing Purchase Orders (POs) process, P -Card process, or the limited use of the Village's VISA credit card (which use is authorized by the Village Manager). The Finance Department and Purchasing Division have agreed on the attached draft P -Card procedure and policy, and plan to beta test P -Cards with the Village's IT and HR Divisions, Sports Core and Police Departments during the last few months of 2012 and then roll out P -Cards to the other departments in 2013. While adding the P -Card to the Village's toolbox is important, staff is also recommending to increasing the Village Manager's purchasing authority by $5,000. This will give the Manager the ability to authorize the purchase of basic items, supplies, and services that are budgeted for and have a value of under than $20,000. Several communities, including nearby Elmhurst, Villa Park, Lombard, Oakbrook Terrace, and Bloomingdale currently have their purchasing authority at $20,000. Many communities are at this level because of using a baseline item (a computer server) and comparing what it cost in 1993, which was $10,000, and comparing it to 2012, which would cost $16,100. Even with the adjustment in purchasing authority, three (3) quotes will be required for most items, products and services, the money will have already been budgeted, and in many cases the Village will be able to earn 1.25% back by making the purchase with a P -Card. It is also important to note that purchases over the new requested authority of $20,000 can still be made, but only after the Board approves the purchase. For example, staff could bring a request to replace five (5) police vehicles at a cost of $160,000 and the vendor does allow P -Card payment. For paying via P- Card instead of a check, the Village would get 1.25% of the $160,000 or $2,000 back. As these expensive purchases are the exception, there will also be additional safety protocols, including having a special P- Card that will require first Board approval, then internally authorization from two of three positions (Village Manager and/or, Assistant Village Manager, and/or Finance Director) in order to be used. However, by increasing the Village's Manager's purchasing authority to $20,000 commonly budgeted purchases such as computer servers that can range in price between $12,000 to $18,000 will be able to be made, after the necessary quotes, approvals, and the Village P -Card and Purchasing policies are followed. Recommendation: Staff recommends that the Village Board authorize the Village Manager to enter into a Purchasing Card Service agreement with US Bank. Further, staff recommends increasing the Village Manager's purchasing authority by $5,000 in order to allow for budgeted items to be processed and purchased more efficiently.