South Coast Air Quality Management District

Revise Procurement Policy and Procedure

SYNOPSIS:

Staff recommends that the Procurement Policy and Procedure be revised to raise the dollar threshold for total acquisition cost of a fixed asset from $2,500 to $5,000. This change is requested to help simplify new financial reporting requirements for state and local governments and is consistent with the dollar threshold for fixed assets used by the counties within the South Coast Basin.

COMMITTEE:

Administrative, January 12, 2001, Recommended for Approval

RECOMMENDED ACTION:

Adopt the revised Procurement Policy and Procedure.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

In June 1999, the Government Accounting Standards Board (GASB) issued Statement 34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments. The statement established a new financial reporting model for state and local governments and made major changes in public sector accounting. One change resulting from GASB 34 is the requirement to report the value of capital assets net of depreciation. Previously, government agencies were not required to depreciate capital accounts. In order to simplify the new reporting requirements under GASB 34, many government agencies have increased the dollar threshold for total acquisition cost of a fixed asset to $5,000. All four counties in the South Coast Air Basin have adopted the $5,000 threshold for classification of fixed assets. In addition, the District’s outside consultant for AQMD’s finance and accounting system has recommended the adoption of this threshold in conjunction with the upgrade of our system to accommodate the new reporting format.

Attachment

Section IV, C of the Revised Procurement Policy and Procedure

SECTION IV, C cont....

3. Telephone Bid - Telephone bids may be utilized by the Manager of the Procurement Section or his or her designee when the best interests of the AQMD may be served due to the need for immediate delivery or for other valid reasons. A written confirmation of the bid will be required in order to document the file.
   
   
4. Sole or Single Source - An award may be made without a formal bid when the item or service to be purchased may be obtained from only one source and the item or service is one which does not lend itself to substitution. Said bids must be confirmed in writing and justified in accordance with the provisions of Section VIII(B).
   
   
5. Prior Bid, Last Price - After confirming the validity of a prior price, an award may be made on the basis of a prior bid or on the basis of a last price, if the conditions of a previous purchase are similar.
   
   
6. Request for Quotation - A written request describing materials, equipment, fixed assets, supplies or services sought which may contain certain plans and specifications. Quotations may be solicited through either formal or informal bid procedures.
   
   
7. Formal bidding shall be used when economies of scale can be achieved, when there are equal and competitive products, or when discounts are applicable.

3. Fixed Assets purchases shall be defined as purchases of assets that have a life of at least three years and a total acquisition cost of $2,500 $5,000 or more. Purchases of fixed assets are governed by the following:

1. The Manager of the Procurement Section shall be the responsible officer authorized to approve the purchase of budgeted fixed assets up to the amount of $10,000 upon the request of the appropriate Deputy or Assistant Deputy Executive Officer.
   
   
2. The Executive Officer may approve purchases of budgeted fixed assets from $10,000 to $50,000 and unbudgeted fixed assets up to $10,000, or in case of an emergency or interruption of AQMD operations, up to $50,000.
   
   
3. Purchases of budgeted fixed assets over $50,000 and unbudgeted fixed assets over $10,000, except as provided in paragraph two above, require Board approval.
   
   
4. All purchases requiring Board approval that result in additional appropriation(s) or reappropriation(s) require a 30-day Public Notice in newspapers of general circulation prior to consideration by the Board for approval.

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