TO: Mayor and City Councilmembers
FROM: Paul Young, Finance Director
SUBJECT:
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Review of City’s Purchasing Policy
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RECOMMENDED COUNCIL ACTION:
...recommendation
Provide direction to staff on any changes to City Code or City Administrative policy.
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SUMMARY:
City policy requires all purchases over $2,000 to be reported to the City Council in the monthly open market purchases report. Council preapproval is also required for unbudgeted purchases and purchases exceeding $200,000. These thresholds are intended to balance operational efficiency and administrative costs with compliance and transparency. Staff is seeking Council direction on any proposed changes to the City Code or administrative policy.
PREVIOUS COUNCIL ACTION:
The City Council modified Chapter 2, Article VI: Purchasing and Sales Policy of the City Code of Ordinances on April 18, 2023, to change the threshold from $10,000 to $200,000 for any budgeted item to be approved by the Purchasing Officer.
The City Council last modified Administrative Policy & Procedures 12-1 Purchasing - General Provisions Policy on February 20, 2024.
The City Council last modified Chapter 2, Article VI: Purchasing and Sales Policy of the City Code of Ordinances on March 5, 2024.
On October 20, 2026, the City Council asked staff to bring back an agenda item to review the city’s policies related to the threshold of how items are brought before the City Council.
DISCUSSION:
Current purchasing system policy threshold for council approval
The City has two policies that affect how city staff conduct purchases: the City Code of Ordinances and the City’s Administrative Policy & Procedures 12-1. Under these policies, the City utilizes a Council review or preapproval process for all purchases over $2,000.
Items needing approval by Council are determined by the City Code of Ordinances § 2.68-6 BIDS and Administrative Policy & Procedures 12-1, section 1.06, Contracting Authority. Any contract greater than $200,000 requires Council approval. In addition, if any contract is without a budget, it would also require approval from Council.
All purchases over $2,000 are itemized monthly for Council pursuant to the City of Red Bluff’s Code, Section 2.67-2. Council receives a list of all Purchase orders from the prior month. Council members may request additional information on purchases in advance or at the City Council meeting. By Consensus of the Council, they may elect to bring back a purchase at a future agenda date to take additional action.
Impact of purchasing policies on city administration
Every purchase the city makes, whether a five-dollar purchase of lumber at Home Depot or a 5-million-dollar construction contract to improve a city street, is a contract. Due to the number of purchases the city enters into every year, the city has different levels of compliance needed based on purchase price. If budgeted, department heads have discretion to enter into contracts up to $60,000, and the city manager has discretion to enter into contracts up to $200,000. Governments generally establish purchasing thresholds to balance operational efficiency and administrative costs with compliance and transparency. The purchasing thresholds established in other cities’ ordinances are summarized below:
• City of Anderson - $25,000 3.20.110 through 3.20.140
• City of Redding - $125,000 for one-time purchases $125,000 annually for multi-year purchases require council bid approval 4.20.090 if formal bid not required $200,000 or one-time purchases $200,000 annually for multi-year purchases require council award 4.20.120 (H)(3)
• City of Chico - generally If formal bidding required all public works projects in excess of $75,000 go to council 3.20.015 all other contracts approved by purchasing officer. Chapter 3.20
Operational efficiency would suffer if Council approval were required whenever a needed item was unavailable. Staff could face delays of one to three weeks while awaiting placement on an agenda and Council action. An approval threshold set too low could stall projects over minor, low-cost items or leave public safety personnel without essential tools. Purchasing thresholds are therefore generally set to allow routine city operations to continue without unnecessary disruption.
To prepare a contract for Council approval, a department head will draft the agenda item and attach the necessary documents. It is then reviewed by finance, city manager, legal, and the city clerk. It is then included in the Agenda report for that Council meeting. Although one small agenda report may only take two hours of staff time, when done for every invoice or PO, the amount of hours and related administrative cost will become material.
In fiscal year 2025-2026 the city paid 4,035 invoices. In the same fiscal year, 316 purchase orders for purchases were over $2,000. In City Council agendas for fiscal year 2025-2026 five contracts were brought to the City Council for approval.
Staff suggested options.
The City Council may consider the following policy options to change the number and types of purchases that require its approval:
1) Lower the general purchasing threshold, requiring more purchases and contracts to receive City Council approval before execution.
2) Establish separate approval thresholds by purchase type, such as information technology, consulting services, equipment, or materials, based on the cost, complexity, or risk of each category.
3) Establish department-specific approval thresholds that reflect differences in operational responsibilities, purchasing volume, and procurement needs.
4) Establish separate approval thresholds by fund to account for differing funding restrictions, oversight requirements, or permitted uses.
CITY FISCAL IMPACT:
There is no fiscal impact associated with receiving this informational report.
ATTACHMENTS:
1. City Code of Ordinances Chapter 2, Article VI: Purchasing and Sales Policy Attachment
2. Administrative policy & Procedures 12-1 Purchasing - General Provisions Policy