The final step in the procurement cycle is disposition of an
item or items when they are no longer useful to the City. The timely
identification of surplus and obsolete material(s) is essential to
an effective disposition program. Delayed identification ties up capital,
resulting in higher maintenance and salvage costs and further deterioration
of items.
(Res. 04-12 (§ 19.1), 1-16-12)
The Purchasing Manager is authorized to conduct and monitor
the City’s surplus property program. The following are the City’s
general policies for disposition of surplus:
(a) The Purchasing Manager may require Division Managers to provide periodic
departmental reports of all supplies which are no longer used or which
have become obsolete, worn out or unusable.
(b) The Purchasing Manager shall have authority to transfer stock or
other surplus inventory items or surplus equipment that has become
unsuitable for public use.
(c) All sales shall be made to be in the best interest of the City.
(d) The Purchasing Manager has authority to forgo an auction or sealed
bid process when the surplus material(s), supply(ies) and equipment
can be donated or sold to other governmental entities or nonprofit
organizations as is in the best interest of the City.
(Res. 04-12 (§ 19.2), 1-16-12)
When items become excess, obsolete or surplus, the using department
must report them to the Purchasing Division. In cases of disposal
of items with an original purchase cost of $10,000 or more, the Accounting
Division shall be notified in order to update the department’s
fixed asset accounts. The following are the methods of disposition
that may be used for the items:
(a) Transfer.
Transferring to another department with a
use for the item is the best method of disposition. A department wishing
to accept an item available for transfer shall notify Purchasing and
receive approval for the transfer. Both the transferring and receiving
departments must update their inventory records to document the disposition
of the item. The surplus transfer form can be found on the intranet
under Forms – Purchasing.
(b) Sale.
There are several methods of selling excess and
surplus items.
(1) Auctions.
The City contracts with auctioning services
to sell items to the highest bidder at advertised public auctions.
(2) Sealed Bids.
The Purchasing Manager may determine that
items shall be sold at sealed bid sale. Public notice of the sale
is made and solicitations are mailed to prospective bidders. This
method assures reaching a large number of prospective bidders and
allows potential purchasers from outside the immediate geographic
area to participate in the bidding.
(3) Commercial Markets.
The Purchasing Manager may determine
that items may be offered for sale to established commercial markets.
Candidates for this method of sale include antiques, art and specialized
equipment.
(4) Sale of Scrap.
Many items that are no longer usable
may have a residual value. The Purchasing Division may arrange for
the sale of scrap items with the money returned to City’s general
fund.
(5) Posted Prices.
From time to time, where there is no
regular market and demand is erratic, an item may be marked with a
pre-established price and sold to the public on a first-come basis.
(c) Trade-In.
The Purchasing Manager may determine that
it is advantageous to the City to seek bids on replacement items with
the bidders allowing/offering trade allowance and no trade allowance
pricing. Award may be made in the manner that is most advantageous
to the City.
(d) Cannibalization.
Disassembling an item to use its components
for repair or maintenance of a similar item is authorized only if
cannibalization has more value and benefit than disposal or trade-in
of the item. The Purchasing Manager must grant approval before an
item is cannibalized and removed from the Department’s property
list.
(e) Donation.
Only the City Council may dispose of an item
by donation to a party outside of City government if the item has
a value in excess of $50,000. Items valued at less than $50,000 shall
be approved by the City Manager.
(f) Waste Disposal Hazardous Materials.
There are strict
federal and State laws regarding the disposal of hazardous materials.
Departments that generate hazardous materials shall use City contracts
for the proper disposal of these materials. Disposal of hazardous
materials shall be directed by the City’s Fire Chief or environmental
specialist. Departments shall contact the Fire Chief or environmental
specialist before moving, transferring or selling any hazardous materials.
(Res. 04-12 (§ 19.3), 1-16-12)
Unless otherwise directed by the City Council or required by
a grant, the proceeds from the disposition of surplus or excess property
shall be deposited in the City’s general fund.
(Res. 04-12 (§ 19.4), 1-16-12)
To avoid any appearances of impropriety in the disposition program,
employees of the City may not purchase items unless the sale is to
the highest bidder at a public auction or by sealed bid after appropriate
public notification of the sale.
(Res. 04-12 (§ 19.5), 1-16-12)
The surplus items form is used to report a surplus or excess
item to the Purchasing Division. This form is required to report the
transfer or disposition of an excess item. The form can be found on
the intranet under Forms – Purchasing.
(Res. 04-12 (§ 19.6), 1-16-12)
When equipment was purchased using funds from State or federal
grant funds, the provisions of the grant must be followed during disposal.
It is the disposing department’s responsibility to notify Purchasing
at the time of the surplus property report of any grant provisions
that must be followed. If required by the grant provisions, proceeds
from disposal may be returned to the grant-funding agency.
(Res. 04-12 (§ 19.7), 1-16-12)