Fiscally Ready Communities Best Practices
Purchasing and Procurement Policy Guide

The Fiscally Ready Communities Purchasing Policy Guide supplements the local government’s process of developing public purchasing guidelines. Purchasing policies are essential to reduce the risk of inefficiencies and fraud. Purchasing policies protect local units of government from paying excessive above market costs for services, conflicts of interest, and inappropriate and illegal transactions.

Fiscally Ready Communities

At a minimum the purchasing and procurement policy shall include the following:

• A local unit shall adopt, review, or update its purchasing policy, if the local unit does not have one, or it has not been updated in over a year.
  • The purchasing policy should include the date it was updated and that it has been approved for use by the local governing body.
  • The policy should include different procedures based on the total cost of the project (i.e. purchases under $2,000; purchases between $2,000-$9,999; purchases over $10,000, etc.) (Traverse City, 2016).
    • This should include competitive bidding for purchases over a specific dollar amount.
  • The purchasing policy should include a detailed plan of action if two or more bids are equivalent, including who makes the decision and how (Bay City, n.d.).
• A local unit shall adopt a conflict of interest policy to ensure purchases are responsible and ethical. This includes confirming that all supplies and equipment are purchased with the intent and outcome to ensure best price, quality, and value.
• A local unit shall adopt an equal access and non-discrimination purchasing policy (City of Charlevoix, n.d.).
  • This should include a process for reporting instances of noncompliance and evaluations of those noncompliance items (Boyne City Government, n.d.).
    • This could include group review of reports with the ability to make necessary changes and actions.
• A local unit shall adopt a detailed travel and expense reimbursement policy (Bay County, 2016).
  • This includes updating the mileage reimbursement rates yearly.
    • When employees use their own vehicle and request the full mileage rate, they should document why they did not use the municipality’s vehicle, as well as have their supervisor sign and date the document.
  • Communities should have a uniform submission process for all employees to fill out.
  • The travel and expense reimbursement policy should include:
    • Meals broken down by breakfast, lunch, and dinner.
    • Lodging expenses, including maximum reimbursement.
• A local unit shall adopt a section about being exempt from local, state, and federal excise tax and provide the necessary documents to any vendor upon request (Bay County, 2016).
• A local unit shall ensure that the authorized person who approves each invoice or request for payment has adequate knowledge and responsibility (e.g. educational background and/or professional certifications in purchasing and procurement).
• A local unit shall make contracts and the contracting process publicly available (City of Lansing, n.d.) (Traverse City, 2016).

Good purchasing policy examples can be found on MML’s website.

Purchasing Policy Review Table

Please use the table below to consider whether your purchasing policy needs an overhaul or refresh. This document has been built so you can track where you are in the process.