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2010

Susan Combs Texas Comptroller of Public Accounts

Model Purchasing Manual

for exas Cities and Counties 2010

Tis valuable resource is designed to help you develop smart

procurement practices that go beyond price,

securing the best value in goods and services

for your community. Use this manual to

understand the competitive bidding process

and how to evaluate bidder qualications. Learn how to

stretch your dollars with cooperative purchasing

opportunities, electronic procurement and reverse

auctions. While reducing costs, these practices will

also increase purchasing transparency, giving

taxpayers a clear picture of where their money goes.


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November 22, 2010

Dear Public Ofcial:

I am pleased to present the newModel Purchasing Manual for Texas Cities andCounties your best reerence or local government purchasers. is revisededition will serve as a resource or cities, counties and local government entities

that make purchasing decisions every day.

eModel Purchasing Manual for Texas Cities and Counties 2010contains changesmade to purchasing law through the 81st Texas Legislature. is edition alsoincludes a separate section covering construction purchases.

I you have any questions about the manual or need assistance with purchasingissues, please call our Local Government Assistance Division at (800) 531-5441,extension 3-4679.

Sincerely,

Susan CombsTexas Comptroller


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Model Purchasing Manual for Texas Cities and Counties (November 2010) ii

Acknowledgements

The Comptrollers oice extends its appreciation to themany individuals who contributed their proessionalknowledge and time to review the2010 Model PurchasingManual for Texas Cities and Counties. The Comptrollerhas a statutory obligation under the Local GovernmentCode (112.003) and the Government Code (403.01)to provide assistance and guidance to local governmentsin the purchasing process.

This manual was developed to help Texas local govern-ments establish or improve purchasing operations. Local

governments may establish the type o system that bestsuits their unique needs.

The manual covers purchasing principles and types opurchases, purchasing ethics, the requisition process,speciications, competitive bidding, negotiated purchases,accounting practices, auditing, electronic procurementand purchasing law updated through 2009. The manualincludes model procedures that may be adopted or modi-ied to accommodate the needs o each local government.

A single manual may not describe all possible situationsand some o the materials included may not apply toevery local government. Each entity should check themanuals procedures and interpretations with its localgovernment attorney, and rely on that advice. For anyareas not covered, the Comptrollers Local GovernmentAssistance sta may help provide guidance through itstoll ree telephone assistance number: (800) 531-5441.

Special thanks go to the ollowing individuals who par-ticipated in the development o this publication.

Project Team (Local Government Assistance and

Economic Development)

Ginger Lowry, Senior Research Analyst andProject Manager

Ron Gipson, Economic Development AnalystMichael Lewis, Program Specialist

Subject Area Specialist Reviewers and Editors

Lara Bell, Special Projects Coordinator, TexasProcurement and Support Services (TPASS),Comptrollers oice.

Billy Cannon, Senior Auditor, Internal Audit,Comptrollers oice.

Ty Elliot, City Internal Auditor, College Station, Texas.Beth Fleming, Director o Purchasing, Denton County,

Texas.Cyd Grimes, Purchasing Agent, Travis County, Texas.Ron Pigott, Director, Texas Procurement and Support

Services (TPASS) Comptrollers oice.

Charlene Rendon, Program Coordinator, CooperativePurchasing Program, Comptrollers oice.Cheryl Turney, Director o Purchasing, College Station,

Texas.Michael Villanueva, Inormation Specialist, Document

Processing, Comptrollers oice.Public Outreach and Strategies Division, Editorial/

Graphics Sta, Comptrollers oice.


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Table of Contents

Chapter 1: Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Purchasing Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Purchasing Department . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Types of Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Non-Stocked Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Stocked or Warehoused Items . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Emergency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Sole-Source Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Publications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Memberships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Purchasing Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Basic Elements of a Purchasing Code of Ethics . . . . . . . . . . . . . . . . . . . 5Statement o Purchasing Policy . . . . . . . . . . . . . . . . . . . . . . . . . . 5

General Ethical Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Chapter 2: Requisition Process . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Types of Requisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Routine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Expedited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Emergency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Preparing the Requisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Routing the Requisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Routine Requisitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Expedited Requisitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Priority ree Requisition Procedures . . . . . . . . . . . . . . . . . . . . . . . 10Priority Two Requisition Procedures . . . . . . . . . . . . . . . . . . . . . . . . 10

Emergency Requisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Priority One Requisition Procedures . . . . . . . . . . . . . . . . . . . . . . . . 11

Types of Purchase Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Chapter 3: Specifcations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Denition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Preparing Specications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Where to Obtain Specications . . . . . . . . . . . . . . . . . . . . . . . . . . 13


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Types of Specications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Design Specications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Perormance Specications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Combination Specications . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Brand-Name Specications . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Brand-Name or Equal Specications . . . . . . . . . . . . . . . . . . . . . . . . 15Qualied Products List Specications . . . . . . . . . . . . . . . . . . . . . . . 15Standard Specications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Numbering System for Specications . . . . . . . . . . . . . . . . . . . . . . . . 15

Writing Specications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Denition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Benets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Developing Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Chapter 4: Competitive Bidding . . . . . . . . . . . . . . . . . . . . . . . . . 19Competitive Bidding and Municipalities . . . . . . . . . . . . . . . . . . . . . . 19

Bonding Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Competitive Bidding Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Formal Competitive Bidding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Reverse Auctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

General Procedures for Competitive Bidding. . . . . . . . . . . . . . . . . . . . 21

Formal Sealed Bids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Formal Competitive Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Procurement of High Technology Goods and Services . . . . . . . . . . . . . . . 22

Competitive Proposals and Requests for Proposal (RFP) . . . . . . . . . . . . . . 23

Other Considerations in the Competitive Bidding Process . . . . . . . . . . . . . 23

Purchase Requisition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Notice of Proposed Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

RFP Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Amending the Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Competitive Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Invitations for Bid (IFB)/Requests for Proposals (RFP) . . . . . . . . . . . . . . 25Standard Terms and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . 26Special Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Specication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Invitation or Bid (IFB) or Request or Proposals (RFP) Solicitation. . . . . . . . 26


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Acceptance of Bids by Fax or Electronic Media. . . . . . . . . . . . . . . . . . . 27

Additional Criteria for Qualications of Potential Bidders

(Laws for Municipalities) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Pre-Bid Proposal Conference . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Receiving the Bid/Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Disqualication of Bids/Proposals . . . . . . . . . . . . . . . . . . . . . . . . . 28

Tabulating and Evaluating the Bid/Proposal Results . . . . . . . . . . . . . . . . 28

Evaluation of Bids Using Alternate Methods . . . . . . . . . . . . . . . . . . . . 29Lie Cycle or Total Cost Purchasing . . . . . . . . . . . . . . . . . . . . . . . . 29Modied Lie Cycle Costing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31Energy Efciency/Economical Perormance . . . . . . . . . . . . . . . . . . . . 32Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32Discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32Evaluation or Other Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32Awarding the Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Receiving and Opening the Proposal . . . . . . . . . . . . . . . . . . . . . . . . 34Tabulating and Evaluating the Proposal . . . . . . . . . . . . . . . . . . . . . . 34Weighted Factors or Evaluating the Proposal . . . . . . . . . . . . . . . . . . . 35

Factors Used to Evaluate Proposals . . . . . . . . . . . . . . . . . . . . . . . . . 35Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35Experience o Sta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35Financial Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35Service Capability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36Service Response Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36Insurance Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36Negotiating the Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Chapter 5: Negotiated or Non-bid Purchases . . . . . . . . . . . . . . . . . . 39

Purchases Under the Bid Limit . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Normal Non-bid Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Obtaining Price Quotations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40Purchases Between $3,000 and the Bid Limit. . . . . . . . . . . . . . . . . . . . 40Purchases o Less an $3,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Selecting the Vendor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Making the Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Conrmation Purchase Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Blanket Purchase Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42Procedures or Making Blanket Purchasing Agreements . . . . . . . . . . . . . . 42

Emergency and Exempt Purchases. . . . . . . . . . . . . . . . . . . . . . . . . . 44Emergency Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44


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Procedure or Making Emergency Purchases . . . . . . . . . . . . . . . . . . . . 44Exempt Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Personal and Professional Services. . . . . . . . . . . . . . . . . . . . . . . . . . 45Day Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47Other Exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Sole Source Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48Procedure or Sole Source Purchases . . . . . . . . . . . . . . . . . . . . . . . . 48

Chapter 6: Cooperative Purchasing . . . . . . . . . . . . . . . . . . . . . . . . 51

Introduction to Cooperative Purchasing . . . . . . . . . . . . . . . . . . . . . . 51State o Texas CO-OP Program . . . . . . . . . . . . . . . . . . . . . . . . . . 51

State of Texas Cooperative Purchasing. . . . . . . . . . . . . . . . . . . . . . . . 51

Texas Multiple Award Schedule (TXMAS) . . . . . . . . . . . . . . . . . . . . . 51

State Term Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Authorized Local Government Purchasers . . . . . . . . . . . . . . . . . . . . . 52

Cooperative Purchasing Agreements . . . . . . . . . . . . . . . . . . . . . . . . 52State o Texas CO-OP Program Membership . . . . . . . . . . . . . . . . . . . 52State o Texas CO-OP Benets. . . . . . . . . . . . . . . . . . . . . . . . . . . 53Advantages o Cooperative Purchasing or Local Governments . . . . . . . . . . 53

Considerations for Interlocal Agreements

Between Two or More Local Government Entities . . . . . . . . . . . . . . . . . 54Piggy-Backing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54Joint Purchases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54Buying rom State Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Legal Constraints. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54Dierent Statutes or Dierent Types o Government . . . . . . . . . . . . . . . 55Most Strict Statute Applies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55Other Legal Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

General Cooperative Purchasing Procedures . . . . . . . . . . . . . . . . . . . . 56Establish Interest in Local Cooperative Purchasing. . . . . . . . . . . . . . . . . 56Establish a Purchasing Committee . . . . . . . . . . . . . . . . . . . . . . . . . 56Dene Types o Cooperative Purchasing to be Undertaken . . . . . . . . . . . . 56

Chapter 7: Construction Procurement . . . . . . . . . . . . . . . . . . . . . . 57

Chapter 8: Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Chart of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Accounts Used to Record Purchasing Transactions . . . . . . . . . . . . . . . . . 61Asset Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61Liability Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62Other Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63Department Codes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63


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Object of Expenditure Codes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

General Journal Recording the Budget . . . . . . . . . . . . . . . . . . . . . . 66Opening Entries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Purchase Order/Encumbrance Register . . . . . . . . . . . . . . . . . . . . . . . 67Posting the Purchase Order/Encumbrance Journal. . . . . . . . . . . . . . . . . 68

Closing the Purchase Order/Encumbrance Journal . . . . . . . . . . . . . . . . 69Appropriations/Expenditures Ledger . . . . . . . . . . . . . . . . . . . . . . . . 69

Cash Disbursements Journal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

General Fixed-Asset Account Group . . . . . . . . . . . . . . . . . . . . . . . . . 70

General LedgerClosing the Subsidiaries . . . . . . . . . . . . . . . . . . . . . 74

Posting Entries from the General and Special Journals to the General Ledger . . . . 75

Posting Journal Totals to the General Ledger . . . . . . . . . . . . . . . . . . . . 75

General JournalClosing the Budgetary Accounts . . . . . . . . . . . . . . . . . 76

Closing Entries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77Closing Budgetary AccountsExample Entries . . . . . . . . . . . . . . . . . . 78

Chapter 9: Auditing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

Types of Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80Financial Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80Sel Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81Internal Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

General Auditing Guidelines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82Get to Know the Ofce and Its Internal Control. . . . . . . . . . . . . . . . . . 83Document Everything . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84Decide on Audit Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84Audit Procedures to Achieve the Objectives . . . . . . . . . . . . . . . . . . . . 84Determine the Acceptable Level o Errors . . . . . . . . . . . . . . . . . . . . . 86Determine the Extent o Testing Required . . . . . . . . . . . . . . . . . . . . . 86Perorm the Audit Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87Evaluate Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87Make Reports and Recommendations . . . . . . . . . . . . . . . . . . . . . . . 88Follow-Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

Chapter 10: Electronic Procurement . . . . . . . . . . . . . . . . . . . . . . . 89

Cost Reduction and Increased Transparency . . . . . . . . . . . . . . . . . . . . 89State of Texas Online Electronic Purchasing Services. . . . . . . . . . . . . . . . 89

Electronic State Business Daily (ESBD) . . . . . . . . . . . . . . . . . . . . . . 89Centralized Master Bidders List (CMBL) . . . . . . . . . . . . . . . . . . . . . 89Legislative Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90Texas Smart Buy (TSB) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90Reverse Auctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90


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Chapter 11: Purchasing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

Municipal Purchasing Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

County Purchasing Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

Purchasing Laws Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

Construction of Public Works Wage Rates . . . . . . . . . . . . . . . . . . . . 94Government Code, Chapter 2258 Prevailing Wage Rates . . . . . . . . . . . . 94

State Highways Awarding Certain Contracts . . . . . . . . . . . . . . . . . . . 95Transportation Code, 223.047 Preerence or Rubberized AsphaltPaving Made rom Scrap Tires . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

County Road Department System Competitive Procurement . . . . . . . . . . 96Transportation Code, 252.312 . . . . . . . . . . . . . . . . . . . . . . . . . . 96

Local Government Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96Chapter 140 Miscellaneous Financial Provisions AectingMunicipalities, Counties and Other Local Governments. . . . . . . . . . . . . . 96

Least Cost Review Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97Chapter 171: Regulation o Conicts o Interest o Ofcers oMunicipalities, Counties and Certain Other Local Governments . . . . . . . . . 97

Local Government Code, 171.001 . . . . . . . . . . . . . . . . . . . . . . 97Local Government Code, 171.002 . . . . . . . . . . . . . . . . . . . . . . 98Local Government Code, 171.003 . . . . . . . . . . . . . . . . . . . . . . 98Local Government Code, 171.004 . . . . . . . . . . . . . . . . . . . . . . 98Local Government Code, 171.005 . . . . . . . . . . . . . . . . . . . . . . 98Local Government Code, 171.006 . . . . . . . . . . . . . . . . . . . . . . 99Local Government Code, 171.007 . . . . . . . . . . . . . . . . . . . . . . 99

Purchasing and Contracting Authority of Municipalities. . . . . . . . . . . . . . 99

Local Government Code, Chapter 252 Purchasing andContracting Authority o Municipalities . . . . . . . . . . . . . . . . . . . . . . 99Subchapter A General Provisions. . . . . . . . . . . . . . . . . . . . . . . . . 99Subchapter B Competitive Bidding or Competitive Proposals Required . . . . . 99Competitive Bid or Proposal Requirements . . . . . . . . . . . . . . . . . . . . 100

Alternative Competitive Proposals or High Technology Items . . . . . . . . . 100Exemptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100Exemption rom Reerendum Provisions . . . . . . . . . . . . . . . . . . . . 101Insurance Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

Subchapter C Procedures Notice o Competitive Procurement. . . . . . . . . . 101Opening o Bids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102Awarding o the Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . . 102Saety Record. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102Contractors Perormance Bond. . . . . . . . . . . . . . . . . . . . . . . . . 103Reerendum on Time Warrants . . . . . . . . . . . . . . . . . . . . . . . . . 103Change Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103

Subchapter D Enorcement Injunction . . . . . . . . . . . . . . . . . . . . . 103Criminal Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103Removal and Ineligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104


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Local Government Code, Chapter 253: Sale or Lease of Property

by Municipalities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104Sale o Park Land, Municipal Building Site or Abandoned Roadway. . . . . . . . 104Transactions Concerning an Island, Flat or Submerged Land . . . . . . . . . . . 104Purchase and Sale o Federal Property . . . . . . . . . . . . . . . . . . . . . . . 104Grant or Lease o Property or Juvenile Board . . . . . . . . . . . . . . . . . . . 104Lease o Oil, Gas or Mineral Land . . . . . . . . . . . . . . . . . . . . . . . . . 104Lease o Municipal Hospital or Swimming Pool . . . . . . . . . . . . . . . . . . 105Sale o Real Property by Public Auction . . . . . . . . . . . . . . . . . . . . . . 105Sale or Lease o Computer Sotware by Certain Municipalities. . . . . . . . . . . 105

Local Government Code, Chapter 262: Purchasing and Contracting

Authority of Counties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105Subchapter A General Provisions. . . . . . . . . . . . . . . . . . . . . . . . . 106Subchapter B Purchasing Agents . . . . . . . . . . . . . . . . . . . . . . . . . 106Subchapter C Competitive Bidding . . . . . . . . . . . . . . . . . . . . . . . 107Exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

Notice o Competitive Procurement . . . . . . . . . . . . . . . . . . . . . . . . 109Additional Notice or Heavy Equipment Bids . . . . . . . . . . . . . . . . . . . 109Opening o Bids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109Awarding o the Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109Time Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110Alternative Multi-step Competitive Proposal. . . . . . . . . . . . . . . . . . . . 110Alternative Competitive Proposals or Insurance and High Technology Items . . . 111Modications and Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111Bid or Perormance Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111Criminal Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112

Local Government Code, Chapter 263: Sale or Lease of Property by Counties . . 112Subchapter A General Provisions or Real Property . . . . . . . . . . . . . . . 112Subchapter B Disposition o Certain Real or Personal Property . . . . . . . . . 112Subchapter C Lease or Sale o Real Property or Privately Owned Hotel . . . . . 113Subchapter D Disposition o Salvage or Surplus Property . . . . . . . . . . . . 113Subchapter E Conveyance o Real Property rom County to United States . . . 113

Local Government Code, Chapter 271: Purchasing and Contracting Authority

of Municipalities, Counties and Certain Other Local Governments 113

Subchapter A Public Property Finance Act. . . . . . . . . . . . . . . . . . . . 114Authority to Contract or Personal Property . . . . . . . . . . . . . . . . . . 114Compliance with Other Requirements . . . . . . . . . . . . . . . . . . . . . 115

Approved and Registered Contract . . . . . . . . . . . . . . . . . . . . . . . 115Authorized Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115Term o Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115

Subchapter B Competitive Bidding on Certain Public Works Contracts . . . . . 115Exempt Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115Requirements or Competitive Bidding under this Subchapter . . . . . . . . . 116


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Subchapter C Certicate o Obligation Act . . . . . . . . . . . . . . . . . . . 116Purpose or Which Certicates may be Authorized. . . . . . . . . . . . . . . 117Authorization o Certicates . . . . . . . . . . . . . . . . . . . . . . . . . . 117Claims and Accounts; Funding Projects or Exchanging Certicates or Claims. . 117Notice o Intention to Issue Certicates: Petition and Election . . . . . . . . . 117Sale o Certicates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118Certicates as Investments or as Security or Deposits . . . . . . . . . . . . . 118Certicates Payable rom and Secured by Other Revenues . . . . . . . . . . . 118Certicates as Debt or Security . . . . . . . . . . . . . . . . . . . . . . . . . 118Competitive Bidding Requirement . . . . . . . . . . . . . . . . . . . . . . . 118Notice to Bidders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118Exemptions rom Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119Awarding the Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119Criminal Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119

Subchapter D State Cooperation in Local Purchasing Programs . . . . . . . . . 120Local Government Participation . . . . . . . . . . . . . . . . . . . . . . . . 120

Subchapter H Alternative Project Delivery Methods or Certain Projects . . . . 120Subchapter Z Miscellaneous Provisions - Procedure or AwardingContract i Municipality or District Receives Identical Bids. . . . . . . . . . . . . 120

Prohibition o Conict o Interest in Purchases. . . . . . . . . . . . . . . . . 121Commitment o Current Revenues . . . . . . . . . . . . . . . . . . . . . . . 121

Local Government Code, Chapter 325: Sports Facility District

Established by County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121County Public Saety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121Municipal Management Districts . . . . . . . . . . . . . . . . . . . . . . . . . 122

Human Resources Code, Chapter 122: Texas Council on

Purchasing from People With Disabilities. . . . . . . . . . . . . . . . . . . . . . 123

Code of Criminal Procedures, Article 1817: Disposition of Abandoned or

Unclaimed Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123

Code of Criminal Procedures Article 5906: Disposition of Forfeited Property . . . 124

Government Code Agencies and Political Subdivisions . . . . . . . . . . . . . . 125Government Code, 497.024 Duties to Purchase . . . . . . . . . . . . . . . . 125Government Code, Chapter 573: Degrees o Relationship; NepotismProhibitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

Government Code, Chapter 791: Interlocal Cooperation Act . . . . . . . . . . . 126

Government Code, Chapter 2251: Payment for Goods and Services . . . . . . . . 128

Government Code, Chapter 2252: Contracts with Government Entities . . . . . . 130Subchapter A Nonresident Bidders. . . . . . . . . . . . . . . . . . . . . . . . 130Subchapter B Interest on Retained Public Works Contract Payments . . . . . . 130

Government Code, Chapter 2253: Public Work Performance and

Payment Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131

Government Code, Chapter 2254, Subchapter A: Professional and

Consulting Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131


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Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

Exhibit 1: Requisition for Materials or Supplies . . . . . . . . . . . . . . . . . . 135

Exhibit 2: Purchase Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136

Exhibit 3: Standard Terms and Conditions . . . . . . . . . . . . . . . . . . . . . 137

Exhibit 4: Sources of Specications Information (Federal GovernmentSources and Standards Writing Organizations) . . . . . . . . . . . . . . . . . . . 142

Federal Government Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142Standards Writing Organizations. . . . . . . . . . . . . . . . . . . . . . . . . . 142Other Sources o Specications Inormation . . . . . . . . . . . . . . . . . . . . 143

Exhibit 5: Standards of Specications Information and

Standard Units of Measure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147

Exhibit 6: Sample Specication Format. . . . . . . . . . . . . . . . . . . . . . . 148

Exhibit 7: Invitation for Bid (Sample). . . . . . . . . . . . . . . . . . . . . . . . 149

Exhibit 8: Request for Proposals (Sample) . . . . . . . . . . . . . . . . . . . . . 157

Exhibit 9: Bid Proposal Envelope (Sample) . . . . . . . . . . . . . . . . . . . . . 172

Exhibit 10: Blanket Purchase Agreement (Sample) . . . . . . . . . . . . . . . . . 173

Exhibit 11: BPA Monthly Purchase Log (Sample) . . . . . . . . . . . . . . . . . 175

Exhibit 12: Letter of Agreement (Sample for Interlocal Government Agreements) . 176

Exhibit 13: Contract (Sample ) . . . . . . . . . . . . . . . . . . . . . . . . . . . 178

Exhibit 14: Resolution (Sample). . . . . . . . . . . . . . . . . . . . . . . . . . . 181

Exhibit 15: Contract Purchase Requisition (Sample) . . . . . . . . . . . . . . . . 184

Exhibit 16: General Journal Fiscal 20XX (Sample) . . . . . . . . . . . . . . . . . 185

Exhibit 17: Purchase Order/Encumbrance Journal (Sample Entries). . . . . . . . 186Exhibit 18: Appropriations Expenditures Ledger (Sample). . . . . . . . . . . . . 188

Closing the Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188Posting the Appropriations-Expenditures Ledger. . . . . . . . . . . . . . . . . . 188Monthly Totals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190Reconciliation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191

Exhibit 19: Cash Disbursements Journal . . . . . . . . . . . . . . . . . . . . . . 192Posting Transactions to the Cash Disbursements Journal. . . . . . . . . . . . . . 192Closing the Cash Disbursements Journal . . . . . . . . . . . . . . . . . . . . . 193

Exhibit 20: Closing Budgetary Accounts (Sample Entries) . . . . . . . . . . . . . 194Exhibit 21: General Journal (Sample Entries) . . . . . . . . . . . . . . . . . . . . 202

Exhibit 22: General Fixed Assets Account Group (Sample Entries) . . . . . . . . 204

Exhibit 23: Purchase Order/Encumbrance Journal (Sample Entries). . . . . . . . 205

Exhibit 24: Appropriations/Expenditures Ledger (Sample Entries) . . . . . . . . 206

Exhibit 25: Cash Disbursement Journal (Sample Entries) . . . . . . . . . . . . . 209


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Exhibit 26: Purchasing Audit Checklist (Sample). . . . . . . . . . . . . . . . . . 210Part 1 - General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210

Administrative Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210Procedural Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211Legal Review-General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212

Part 2 - Standards and Specications. . . . . . . . . . . . . . . . . . . . . . . 213Part 3 - Competitive Bidding and Proposals . . . . . . . . . . . . . . . . . . . 214

Part 4 - Cooperative Purchasing . . . . . . . . . . . . . . . . . . . . . . . . . 217Local Cooperative Purchasing . . . . . . . . . . . . . . . . . . . . . . . . . 217Cooperative Purchasing with the State . . . . . . . . . . . . . . . . . . . . . 218

Part 5 - Internal Controls. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218

Part 6 - General Legal Requirements . . . . . . . . . . . . . . . . . . . . . . . 221VTCA Government Code, 2157.061 Catalogue Purchase Method . . . . . 221VTCA Government Code, Chapter 2258 Prevailing Wage Rates . . . . . . . 221Transportation Code, Chapter 223 Bids and Contracts or Highway Projects . 221VTCA Local Government Code, Chapter 140 Specialized Local Entities. . . 221

VTCA Local Government Code, Chapter 171 Conicts o Interest . . . . . 222VTCA Code o Criminal Procedures, Chapter 18, Article 18.17 Disposition o Abandoned or Unclaimed Property . . . . . . . . . . . . . . . 222VTCA Code o Criminal Procedures, Chapter 59, Article 59.06 Disposition o Foreited Property . . . . . . . . . . . . . . . . . . . . . . . . 222VTCA Government Code, Chapter 497, 497.024 Agencies andPolitical Subdivisions-Duty to Purchase . . . . . . . . . . . . . . . . . . . . 222VTCA Government Code, Chapter 573 Degrees o Relationship;Nepotism Prohibitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223VTCA Government Code, Chapter 791 e Interlocal Cooperation Act . . . 223VTCA Government Code, Chapter 2251 Payment or Goods and Services . . 224

VTCA Government Code, Chapter 2252, Subchapter A Nonresident Bidders 225VTCA Government Code, Chapter 2252, Subchapter B Interest onRetained Public Works Contracts. . . . . . . . . . . . . . . . . . . . . . . . 225VTCA Government Code, Chapter 2253 Public Works Perormanceand Payment Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225VTCA Government Code, Chapter 2254, Subchapter A Proessionaland Consulting Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225VTCA Human Resources Code, Chapter 122 Texas Council onPurchasing rom People with Disabilities . . . . . . . . . . . . . . . . . . . . 226Workers Compensation Agency Rule 110.110 . . . . . . . . . . . . . . . . . 226

Part 7 - Legal Requirements for Cities . . . . . . . . . . . . . . . . . . . . . . 226VTCA Local Government Code Chapter 252 Purchasing andContracting Authority o Municipalities . . . . . . . . . . . . . . . . . . . . 226

Part 8 - Legal Requirements for Counties . . . . . . . . . . . . . . . . . . . . 228VTCA Local Government Code, Chapter 262, Subchapter B Purchasing Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228VTCA Local Government Code, Chapter 262, Subchapter C Competitive Bidding or Counties . . . . . . . . . . . . . . . . . . . . . . . 228


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VTCA Local Government Code, Chapter 263, Subchapter D Disposition o Salvage or Surplus Property . . . . . . . . . . . . . . . . . . . 231Transportation Code 252.312 County Road Department System;Competitive Bidding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232

Part 9 - Legal Requirements for Cities and Counties . . . . . . . . . . . . . . 232

VTCA Local Government Code, Chapter 271, Subchapter A PublicProperty Finance Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232VTCA Local Government Code, Chapter 271, Subchapter B Competitive Bidding on Certain Public Works Contracts . . . . . . . . . . . 233VTCA Local Government Code, Chapter 271, Subchapter C Certicate o Obligations Act . . . . . . . . . . . . . . . . . . . . . . . . . 234VTCA Local Government Code, Chapter 271, Subchapter D State Cooperation in Local Government Purchasing Programs . . . . . . . . . 234VTCA Local Government Code, Chapter 271, Subchapter Z 271.901 Procedures or Awarding Contract i Municipality or District ReceivesIdentical Bids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235

VTCA Local Government Code, Chapter 271, Subchapter Z 271.902 Prohibition o Conicts o Interest in Purchases . . . . . . . . . . . . . . . . 235VTCA Local Government Code, Chapter 271, Subchapter Z 271.903 Commitment o Current Revenues . . . . . . . . . . . . . . . . . . . . . . . 235

Part 10 - Constitutional Requirements. . . . . . . . . . . . . . . . . . . . . . 236

Appendices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237

Appendix 1: Index of Attorney Generals Opinions Listed by Date. . . . . . . . . 239

Appendix 2: Index of Attorney Generals Opinions by Topic . . . . . . . . . . . . 245

Appendix 3: Index of Open Records Decisions . . . . . . . . . . . . . . . . . . . 252

Appendix 4: Texas County and Municipal Procurement Laws . . . . . . . . . . . 253

Catalog Purchase Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . 253Government Code, Chapter 2157 . . . . . . . . . . . . . . . . . . . . . . . 253

Construction of Public Works Wage Rates . . . . . . . . . . . . . . . . . . . 254Government Code, Chapter 2258 Prevailing Wage Rates. . . . . . . . . . . 254

State Highways Awarding Certain Contracts . . . . . . . . . . . . . . . . . 256Transportation Code, 223.047 Preerence or Rubberized AsphaltPaving Made From Scrap Tires . . . . . . . . . . . . . . . . . . . . . . . . . 256

County Road Department System Competitive Procurement. . . . . . . . . 256Transportation Code, 252.312 . . . . . . . . . . . . . . . . . . . . . . . . 256

Local Government Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256

Chapter 140 Miscellaneous Financial Provisions AectingMunicipalities, Counties and Other Local Governments . . . . . . . . . . . . 256Chapter 171 Regulation o Conicts o Interest o Ofcers oMunicipalities, Counties and Certain Other Local Governments. . . . . . . . 257

Purchasing and Contracting Authority of Municipalities . . . . . . . . . . . . 259Local Government Code, Chapter 252 Purchasing and ContractingAuthority o Municipalities. . . . . . . . . . . . . . . . . . . . . . . . . . . 259

Subchapter A General Provisions . . . . . . . . . . . . . . . . . . . . . 259


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Subchapter B Competitive Bidding or CompetitiveProposals Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260Subchapter C Procedures . . . . . . . . . . . . . . . . . . . . . . . . . 262Subchapter D Enorcement . . . . . . . . . . . . . . . . . . . . . . . . 263

Local Government Code, Chapter 253 Sale or Lease o Property byMunicipalities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264

Sale o Park Land, Municipal Building Site or Abandoned Roadway . . . . 264Transactions Concerning an Island, Flat or Submerged Land . . . . . . . . 264Purchase and Sale o Federal Property. . . . . . . . . . . . . . . . . . . . 264Grant or Lease o Property or Juvenile Board. . . . . . . . . . . . . . . . 264Lease o Oil, Gas or Mineral Land . . . . . . . . . . . . . . . . . . . . . 264Lease o Municipal Hospital or Swimming Pool. . . . . . . . . . . . . . . 265Sale o Real Property by Public Auction. . . . . . . . . . . . . . . . . . . 265Sale or Lease o Computer Sotware by Certain Municipalities . . . . . . . 265

Local Government Code, Chapter 262 Purchasing and ContractingAuthority o Counties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265

Subchapter A General Provisions . . . . . . . . . . . . . . . . . . . . . 266Subchapter B Purchasing Agents . . . . . . . . . . . . . . . . . . . . . 266Subchapter C Competitive Bidding. . . . . . . . . . . . . . . . . . . . 267

Local Government Code, Chapter 263: Sale or Lease o Propertyby Counties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272

Subchapter A General Provisions or Real Property . . . . . . . . . . . . 272Subchapter B Disposition o Certain Real or Personal Property . . . . . . 272Subchapter C Lease or Sale o Real Property or Privately Owned Hotel . 272Subchapter D Disposition o Salvage or Surplus Property . . . . . . . . . 272Subchapter E Conveyance o Real Property rom County to United States . 273

Local Government Code, Chapter 271: Purchasing and Contracting Authority

o Municipalities, Counties and Certain Other Local Governments . . . . . . 273Subchapter A Public Property Finance Act . . . . . . . . . . . . . . . . 273Subchapter B Competitive Bidding on Certain Public Works Contracts . 275Subchapter C Certicate o Obligation Act . . . . . . . . . . . . . . . . 276Subchapter D State Cooperation in Local Purchasing Programs. . . . . . 279Subchapter H Alternative Project Delivery Methods or Certain Projects . . 280Subchapter Z Miscellaneous Provisions . . . . . . . . . . . . . . . . . . 280

Local Government Code, Chapter 325: Sports Facility DistrictEstablished by County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280

County Public Saety . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281Municipal Management Districts . . . . . . . . . . . . . . . . . . . . . . . . 282

Human Resources Code, Chapter 122: Texas Council on Purchasing romPeople With Disabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282Code o Criminal Procedures, Article 18.17: Disposition o Abandoned orUnclaimed Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283Code o Criminal Procedures Article 59.06: Disposition o Foreited Property . 284


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TableofConten

Model Purchasing Manual for Texas Cities and Counties (November 2010) xvi

Government Code Agencies and Political Subdivisions . . . . . . . . . . . . . . 284Government Code, 497.024 Duties to Purchase . . . . . . . . . . . . . . . . 284Government Code, Chapter 573: Degrees o Relationship; NepotismProhibitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285Government Code, Chapter 791: Interlocal Cooperation Act . . . . . . . . . . . 285Government Code, Chapter 2251: Payment or Goods and Services. . . . . . . . 288Government Code, Chapter 2252: Contracts with Government Entities . . . . . 289

Subchapter A Nonresident Bidders . . . . . . . . . . . . . . . . . . . . . . 289Subchapter B Interest on Retained Public Works Contract Payments. . . . . 290

Government Code, Chapter 2253: Public Work Perormance and Payment Bonds . 290Government Code, Chapter 2254, Subchapter A: Proessional andConsulting Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291

Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293


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xviii Texas Comptroller of Public Accounts


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Model Purchasing Manual for Texas Cities and Counties (November 2010) 1

Chapter 1

Introduction

This purchasing manual represents an update to the2003 Model Purchasing Manual forCities and Countiesrom the Texas Comptroller o Public Accounts. Divided into 11chapters, the manual describes general purchasing principles, the requisition process andpreparation o purchase orders, speciications, competitive bidding and negotiated pur-chases, cooperative purchasing through the State o Texas, accounting, auditing and pur-chasing laws. This updated manual includes new chapters on construction and electronicprocurement. Examples o purchase orders, requisitions, speciications, invitation or bidand blanket purchase agreement sample ormats are included at the back o the manualollowed by the Appendices o Attorney General Opinions and Open Records Decisions.

Purchasing is the process o acquiring goods and services necessary or a government

entity to provide the public with certain services.

Private sector purchasings goals are to: Purchase the proper good or service to meet the needs o the business; Get the best possible price or the good or service; Have the good or service available where and when it is needed; Ensure a continuing supply o needed goods and services and Guard against any misappropriation o the business assets procured by

purchasing.

Public purchasing has the same goals as the private sector and these additional goals:

Responsible bidders are allowed a air opportunity to compete or the govern-ments business, through statutory requirements or competitive bids and propos-als combined with the governments purchasing procedures.

Public unds are protected. While the purchasing ofce does not usually designatethe types o purchases to be made, it should attempt to receive the best value orpublic dollars expended.

Public spending is not used to enrich elected ofcials or government employees orto provide avors to preerred constituents.

Historically underutilized businesses (HUBs) have an equal opportunity in thecontract awards process.

A programs eectiveness depends on good and sound management principles.Recognized purchasing principles can be applied to any purchasing program to make itoperate to the best advantage. This manual deines some o these recognized principlesand gives examples or incorporating them into each local governments purchasingprogram.


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2 Texas Comptroller of Public Accounts

Chapter1:Introduction

Purchasing Principles

Texas has thousands o local governmental units. There are 254 counties, more than1,200 incorporated cities and thousands o other independent school districts, commu-nity college districts, municipal utility districts and other governmental entities.

All city and county governmental units in Texas make purchases, ranging rom smallto large. While no standard purchasing ormat can be applied to all o them, certainpurchasing principles may apply to increase the eiciency and eectiveness o city andcounty government purchasing.

The ollowing principles are recommended or purchasing oices in local governmentsin Texas:

Centralize the purchasing authority. Create and recommend or adoption by the governing body written purchasing

policies and procedures Establish the purchasing unction at a high level in the organization to ensure its

independence rom control by any department or division. Form an oversight committee to develop overall goals and strategies, and to ensurethat purchasing practices are consistent with those goals and strategies.

Set up a committee to standardize specications or commonly used items to in-crease efciency and ensure that purchases are made based on actual requirementsand not on individual brand preerence.

Consolidate purchases o similar items to take advantage o volume discountswhenever possible.

Track all emergency purchases and require them to be ully justied to ensuretransparency and to help make system abuses detectable. As oten as possible,eliminate so-called emergency purchases or non-emergency situations.

Implement procedures to require requisitions and authorizations o all purchaseso goods or services.

The remainder o the manual explains methods or establishing these basic purchasingprinciples.

Purchasing Department

The purchasing oice organization will vary according to the size o its government. In asmall county or city, a single person may coordinate the governments purchases. A largermunicipality may include a ull-scale purchasing oice and a materials management op-eration with a warehouse. The principles included in this manual are adaptable to both.

A centralized purchasing oice is essential to eicient purchasing because: it allows consolidating smaller purchases by individual departments into larger

volume purchases or the entire government. vendors and the business community have a single point o government contact. the purchasing ofce and its personnel accumulate a solid oundation o knowl-

edge and experience about purchasing, marketing trends, prices and vendors. atsaves the government money and provides a more efcient purchasing process.


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The purchasing oicer should report to a high-level government oicial, but not the di-rector o an operating department. The purchasing unction should not be subordinatedto any particular government divisions operations and must maintain independence toserve the entire government airly and impartially. I central purchasing rests with anindividual, that individual requires suicient authority and responsibility to achieve the

purposes o eicient, independent purchasing.The purchasing department should be included in all stages o acquisition, rom plan-ning to order placement to receiving the purchases. This will enable the purchasing de-partment to take ull advantage o the departments knowledge and expertise o purchas-ing techniques and products.

Whether purchasing is a department with a director and sta or a single individual, pur-chasing must eectively coordinate with other departments and prevent political consid-erations or special interests rom inluencing purchasing decisions.

Types o Purchases

There are several dierent types o purchases that will require dierent approaches.Non-routine categories o purchases requently will take longer to process and should beminimized.

Non-Stocked Items

These items are not stocked or warehoused by the government. They may or may not bea standardized item, but they are not in such constant demand to be considered a supplyor other stocked item. These items are procured by either bids or negotiated price quotes,according to the statutory or local requirement.

Stocked or Warehoused Items

These items are used constantly by the government and are stocked routinely. They areusually purchased on annual contracts with provisions to replenish stocks as needed.These items should be standardized to the maximum extent possible so that they aresimilar in quality, orm, etc.

Emergency

Emergency purchases are made to meet a critical, unoreseen government need. Becausethe governments ability to serve the public would be impaired i purchases are not madeimmediately, emergency purchases are exempt rom standard purchasing procedures. Thegovernment may be required to grant the exemption by vote o the governing body.

Sole-Source PurchasesSole-source purchases are goods and services available rom only one supplier. Theremay be just one vendor because o patents or copyrights or simply because the vendoris the only one which supplies the good or service. These purchases are exempt rom thestandard bidding requirement. The government may be required to certiy that only onesupplier is available.


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Registrations

Registration or conerences, seminars and conventions or government employees maybe handled by purchasing and are subject to local procedures.

Publications

In order to maintain control and eliminate duplication, the purchasing oice shouldprocure all books, magazines, periodicals and newspapers. Books may be subject to spe-cial purchasing rules.

Memberships

Memberships in trade or proessional organizations should be processed through the pur-chasing oice. The applications should be justiied by the governments needs and shouldrequire special authorization.

Services

The purchasing oice will procure government service contracts by bid or without bids,depending on the situation. Proessional services may need to be procured under special

rules described in a later section.

Purchasing Ethics

The statutes governing local government purchasing impose criminal penalties orviolating the provisions o the various acts o the Legislature to oversee purchasing. Inaddition, many local governments impose sanctions or violation o local ordinances onpurchasing.

Any misuse o a local governments purchasing power carries consequences, and manysuch misuses arise rom a lack o clear guidelines about what constitutes an abuse ooice. This section o the purchasing manual suggests the implementation o a Code oEthics or local government purchasing oices.

Establishing a Code o Ethics should be implemented in three stages: Develop and ormally adopt the Code. Train all the government employees in the provisions o the Code by posting the

Code in a prominent place in the purchasing ofce and elsewhere in the govern-ment ofces; instructing purchasing personnel on the provisions o the Code; and,requiring all persons directly engaged in purchasing or contracting in any depart-ment to periodically certiy by signature that they have read and understand theCode that they will abide by its provision. is requirement should be included intheir work contract, and a copy o the signed certication should be included ineach persons employment le;

Establish regular internal and external audit programs to detect non-compliancewith the Code.

The ollowing pages outline the basic elements o an ethics code. The governing bodyshould use these elements to ormulate a code or its own purchasing unction.


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Local governments should require ethical conduct rom those with whom they con-duct business. Contracts should contain a clause stating that any eort to inluence anemployee to violate the standards o the Code is grounds to void the contract. Also, localgovernments should require vendors to certiy that they will not attempt to inluence anyemployee to violate the Code.

Basic Elements o a Purchasing Code o Ethics

Statement of Purchasing Policy

The code should contain a broad statement o policy on purchasing. The statement recom-mended by theModel Procurement Code for State and Local Governmentsreads as ollows:

Public employment is a public trust. It is the policy o (local government name)to promote and balance the objective o protecting government integrity and theobjective o acilitating the recruitment and retention o personnel needed by(local government name). Such policy is implemented by prescribing essentialstandards o ethical conduct without creating unnecessary obstacles to entering

public service.

Public employees must discharge their duties impartially so as to assure aircompetitive access to governmental procurement by responsible contractors.Moreover, they should conduct themselves in such a manner as to oster pub-lic conidence in the integrity o the (local government name) procurementorganization.

To achieve the purpose o this Article, it is essential that those doing businesswith the (local government name) also observe the ethical standards prescribedherein.1

General Ethical Standards

There are certain common standards o ethics that should be included in the Codeo Ethics. The ollowing are rom the Model Procurement Code or State and LocalGovernments:

1. Personal Gain It shall be a breach o ethics to attempt to realize personal gainthrough public employment with (local government name) by any conduct incon-sistent with the proper discharge o the employees duties.

2. Inuence It shall be a breach o ethics to attempt to inuence any public em-ployee o (local government name) to breach the standards o ethical conduct setorth in this code.

3. Conicts of Interest It shall be a breach o ethics or any employee o (localgovernment name) to participate directly or indirectly in procurement when theemployee knows that:

a. the employee or any member o the employees immediate amily has anancial interest pertaining to the procurement;

b. a business or organization in which the employee, or any member o theemployees immediate amily, has a nancial interest pertaining to the pro-curement; and


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c. any other person, business or organization with which the employee orany member o the employees immediate amily is negotiating or has anarrangement concerning prospective employment is involved in the procure-ment.

4. Gratuities It shall be a breach o ethics to oer, give or agree to give any employee

or ormer employee o (local government name), or or any employee or ormeremployee o (local government name) to solicit, demand, accept or agree to acceptrom another person, a gratuity or an oer o employment in connection withany decision, approval, disapproval, recommendation, preparation o any part o aprogram requirement or purchase request, inuencing the content o any specica-tion or procurement standard, rendering o advice, investigation, auditing or inany other advisory capacity in any proceeding or application, request or ruling,determination, claim or controversy, or other particular matter pertaining to anyprogram requirement or a contract or subcontract or to any solicitation or pro-posal thereore pending beore this local government.

5. Kickbacks It shall be a breach o ethics or any payment, gratuity or oer o

employment to be made by or on behal o a subcontractor under a contract to theprime contractor or higher tier subcontractor or any contract or (local govern-ment name), or any person associated therewith, as an inducement or the awardo a subcontract or order.

6. Contract Clause e prohibition against gratuities and kickbacks prescribedabove shall be conspicuously set orth in every contract and solicitation thereore.

7. Condential Information It shall be a breach o ethics or any employee or or-mer employee o (local government name) knowingly to use condential inorma-tion or actual or anticipated personal gain, or or the actual or anticipated gain oany person.


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Chapter 2

Requisition Process

The requisition process reers to the creation o a ormal manual or online requestcalled a requisition. The requisition process must include a system o authorization andsaeguards so that improper or illegal purchasing is diicult to initiate and to conceal.Requisitions may be created manually or online.2

An online requisition is an electronic document, originated by the requester using a localgovernments accepted inancial controls and worklow rules. The requisition is convertedto a purchase order ater steps in the review and approval process have been completed.

Statute requires counties to use a requisitioning system.3 A county auditor may not auditor approve an account or the purchase o supplies or materials or the use o the county

or o a county oicer unless a requisition, signed by the oicer ordering the supplies ormaterials and approved by the county judge, is attached to the account. The requisitionrequirement is in addition to any other requirements o law. Where a county purchas-ing agent is appointed, such appointment does not eliminate the requirement that thecounty judge must approve the payment o all claims, bills and accounts.4

Manual requisitions should be drated, signed and approved in triplicate. Beore mak-ing the actual purchase, the original requisition should be delivered to the vendor. Theduplicate copy must be iled with the county auditor. The triplicate copy must remainwith the oicer requesting the purchase.

By written order, the commissioners court o a county that has the oice o countyauditor may waive the requirement o the county judges approval o requisitions.5 Thecommissioners court must record the order in the minutes. The commissioners court inopen court must approve all claims i the county judges approval is waived. The countyauditor has oversight o the inances o the county, but cannot require the auditor to signrequisitions or purchases at the time o purchase.6

Part o an organizations internal inancial controls, purchase requisitions should berequired or all purchases o goods or services, according to the policy o the government.For counties, there is no statutory requirement to use requisitions or services, but mayrequire a requisition by order o the commissioners court. The law requiring requisitionsapplies only to materials and supplies purchased on account and not to claims or labor,services, intangibles or other claims not involving supplies and materials.7

The purchase requisition originates in and receives approval rom the departmentrequesting to procure goods or services. The purchase requisition usually contains adescription o the goods or services to be purchased, the quantity, an account number,a required delivery date and the amount o money the purchasing department is autho-rized to expend or the described goods or services.


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Chapter2:RequisitionProcess

The purchase requisition is not a purchase order, but may be a separate orm or com-bined with a purchase order. The county auditor cannot reuse to issue a requisition ormto any county oicer upon request, even i the county oicer has already purchased thesupplies or materials. Also, an auditor may reuse to approve an account i the vendordid not receive the original copy o the requisition orm beore the purchase.8

I an electronic ordering system is used, personal authorization codes will be issued to a-ected employees. Sotware security saeguards must be designed to insure that unauthor-ized persons will not be able to initiate requisitions. The person who has the responsibilityto authorize purchases must protect his personal code to prevent improper requisitioning.

Types o Requisitions

Requisitions should be divided according to the type o action required on the purchase.The ollowing are the generally recognized types o requisitions.

Routine

Routine requisitions are or all normal purchasing transactions requiring a requisition.The purchasing department processes these requisitions using routine procedures. Theseare designated Priority Four.

Expedited

Expedited requisitions are or items needed sooner than i obtained through normalpurchasing process and should be expedited to prevent work stoppage or loss o the gov-ernments money. Expedited purchases do not qualiy as emergency purchases, however,and are subject to all applicable bidding requirements. There are two types o expeditedrequisitions:

1. Walk-through requisitions are or items needed within 10 working days to avoidwork interruption, loss o service or signicant added cost o operations. epurchasing department processes these requisitions using routine procedures andshould hand-carry the requisition and other documents through the purchasingprocess. ese are designated Priority ree.

2. Work-stoppagerequisitions are or items needed immediately to prevent work stop-page due to unanticipated requirements. e purchasing department processesthese requisitions using routine procedures, but they start the process right atertelephone notication. ese are designated Priority Two.

Emergency

Emergency requisitions apply to all requests brought on by an emergency condition. Thepurchasing department processes these requisitions using routine procedure. These aredesignated Priority One.

Preparing the Requisition

The requisition originates in the department requiring the good or service requested.Preparation should be made ar enough ahead o the date needed to allow purchasingand the vendor to do their jobs properly, including:

advertising or bids, i necessary;


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obtaining bids or price quotations; processing bids, placing purchase orders or concluding contracts; and allowing delivery o goods or service.

Most government entities use commodity codes provided by the National Institute oGovernmental Purchasing (NIGP) on their requisitions.9

The requisition should contain the ollowing inormation: Date o requisition (month, day, year). Name o department/section. Departmental contact and telephone number. Date required (use denite date, not Rush, Expedite or ASAP). Budget and contract codes and vendor identication (or an existing contract). Quantity required, including unit o issue. Description (Clearly describe the item needed including any technical require-

ments. I the department helps ormulate the specications, attach detailed techni-cal specications and other required inormation as a separate attachment).

Purpose (Describe the reason or the purchase). Authorization block with line or signature o authorizing ofcial (I a computer-

ized or electronic ordering system is in use, this block will require entry o thepersonal authorization code).

Budget certication (May be required or any local government to prove appro-priation o purchase money).

Estimated cost (For an existing contract, give the unit price per the contract andthe total price).

Delivery destination (Reers to the items delivery or service perormance location.I there is a central receiving area, it will receive most deliveries. Delivery may alsobe directly to the user, to a work site, or to another authorized location).

Routing the Requisition

Routine Requisitions

Ater preparing the requisition, route the requisition to the ollowing stations: Departmental authorization. For the signature o the authorizing ofcial. Additional authorization. For any urther authorization required by local ordi-

nance or state law. Forward the requisition to the Judges ofce in counties wherethe County Judges approval is required. e County Judge bases the approval onwhether the item has been included in the budget, and whether the line item hasa sufcient balance to cover the purchase. Within the limits o the budget, and as-

suming the legality o the purchase, elected county ofcials may decide the pur-chasing needs o their own ofces but may lack the authority to perorm the actualpurchasing transaction i the county has a purchasing agent.10

Accounts payable. For encumbrance o the proper und line item. is stationshould be skipped i an encumbrance system is not in place.

Purchasing. When completed, the requisition is orwarded to purchasing, whereit is processed.


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Expedited Requisitions

Requisitions or expedited purchases are handled dierently than routine purchases.There are two classes o expedited purchases. They are:

Priority ree. Purchases required within 10 days to prevent unacceptable workslow downs or service deciencies.

Priority Two. Purchases required immediately to prevent actual work stoppages orservice interruption.

Expedited purchases are not emergency purchases. They are or items needed quicklyto prevent costly delays, and thereore warrant the additional cost and eort caused bythe interruption o the normal work routine. However, they are not to be used unlessabsolutely required.

For all purchases required under Priority Two and Priority Three, a competitive biddingprocess must be conducted under normal circumstances; an emergency must be declaredin order to bypass the competitive bidding process.

Priority Three Requisition Procedures

1. e requisition is prepared according to established procedures or routine requisi-tions.

2. e requester should then notiy Purchasing by telephone, speciying that a Prior-ity ree requisition will be walked through and Purchasing should be given allavailable details.

3. e requisition is then walked to all required stations in accordance with estab-lished procedures. When the station has completed processing the requisition, it isthen carried to the next station.

4. e requisition is hand carried to Purchasing. Purchasing makes the purchase in

accordance with either Competitive Bidding or Non-Bid Purchases procedures.Priority Two Requisition Procedures

1. e requisition is prepared according to established procedures or routine requisi-tions.

2. e requester should then notiy Purchasing by telephone, speciying that a Prior-ity Two requisition will be walked through. Purchasing should be given all avail-able details.

3. e requisition is then processed as with a Priority ree requisition.4. Purchasing begins the purchase process on receiving the telephone call in Step 2,

and makes the purchase in accordance with either established procedures.

Emergency Requisitions

Requisitions or purchases deined as emergency purchases are handled similarly to thoseor expedited purchases with one major dierence: they must meet the qualiicationsor emergency purchases in the pertinent statutes. Emergency purchase requisitions arecoded Priority One.


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Priority One Requisition Procedures

1. e requisition is prepared according to established procedures or routine requisi-tions, coded Priority One.

2. e requester should notiy Purchasing by telephone, speciying that a PriorityOne requisition will be walked through. Purchasing is given all available details.

3. e requisition is walked to all required stations. When the station has completedprocessing the requisition, the requisition is carried to the next station.4. e requisition is hand carried to Purchasing. Purchasing initiates the purchase

immediately upon receiving the telephone call.

Types o Purchase Orders

A purchase order needs preparation when the completed requisition is received in thepurchasing oice. It will need to contain the ollowing inormation:

Requisition number. User department. Date o order.

Name and telephone number o contact person. Afdavit o necessity (sometimes used to attest that the purchase is proper andrequired or the activities o the department).

Certicate o availability o unds and budget authorization (sometimes requiredto prove that unds to cover the purchase were budgeted and a sufcient balanceremains to pay or the purchase).

Address to which invoice is mailed. Vendor codes. Destination or Ship To address. Description o item or service to be supplied. Quantity.

Standard unit o measure. Unit price. Total price. Standard terms and conditions o sale. Other special terms and conditions o this sale (as required). Other inormation required by the government.

The vendor is selected either by bidding or by another method o selection and thepurchase order is prepared and delivered. The Standard Terms and Conditions may be anattachment, or printed on the reverse o the purchase order.

In simple procurement, the purchase order serves as the single contract vehicle. In com-plex procurement, an additional detail document with speciications may be includedwith the purchase order.11


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Chapter 3

Specifications

Deinition

A speciication is a concise description o a good or service an entity seeks to buy and therequirements the vendor must meet in order to be considered or the award. A speciica-tion may include requirements or testing, inspection or preparing an item or delivery,or preparation or installation or use.

Purpose

The purpose o any speciication is to provide purchasing personnel with a clear guideo what to buy and to provide vendors with irm criteria o minimum product or serviceacceptability. A good speciication should:

Set the minimum acceptability of the good or service. e term minimum ac-ceptability is key, since the vendor must know the minimum standard to deter-mine what to provide. Too high a standard could mean wasted tax dollars. Too lowa standard, and the good or service may not meet the expectations o the user.

Promote competitive bidding. e maximum number o responsible vendorsshould be able to bid to the specication. Restrictive specications decreasecompetition.

Include provisions for reasonable tests and inspections for acceptability ofthe good or service. e methods and timing o testing and inspecting must beindicated in the specication. Tests should reer to nationally recognized practices

and standards whenever possible. Provide an equitable award to the lowest responsible bidder e buyer obtainsgoods or services that will perorm to expectations, and the vendor is able to pro-vide the goods or services at an equitable, agreed-upon price.

Preparing Specifications

The purchasing oice, the division that will use the item or service or an outside agencymay prepare the speciications. The inal acceptance o the speciications rests with thepurchasing oice. This ensures proper quality control and helps avoid the prolierationo conlicting speciications in dierent departments.

Where to Obtain Specifications

Each government may have to write its own speciications, but it is a good idea to irsttry to obtain existing speciications, at least to get a good idea what types o speciica-tions would help. Speciications may be obtained rom:

Other local governments. Contact cities, counties or other governmental entities.Purchasing agents rom other government agencies should be helpul.

e State of Texas. Access the State o Texas CO-OP Program website: http://www.window.state.tx.us/coop.


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Chapter3:Specifications

e federal government. Access the ederal procurement data system website:https://www.pds.gov/pdsng_cms/.

Trade associations and vendors. I using a vendors specications, try to removeany vendor bias, e.g. specications that t only one brand name.

Other public or private standards and specications writing associations.

Examples include Underwriters Laboratories and the American National StandardsInstitute); and Professional associations for procurement managers. Examples include

the National Purchasing Institute and National Institute or GovernmentalPurchasing.

A state agency may not accept a bid or award a contract rom anyone who received com-pensation rom the agency to participate in preparing the speciications or request orproposals on which the bid or contract is based. This may serve as a guide or local policyin this area.

Types o Speciications

The Comptrollers Texas Procurement and Support Services (TPASS) division developsormal standards and speciications or a number o commodities purchased in volumeby the State o Texas. These standards and speciications establish minimum qualityrequirements and are identiied by a standard/speciication number and an eectiveor revision date. Access the Texas Comptrollers TPASS Speciications Library online:http://www.window.state.tx.us/procurement/pub/speciications-library/.

Design Specifications

Design speciications are detailed descriptions o a good or service, including details oconstruction or production, dimensions, chemical composition, physical properties,

materials, ingredients and all other details needed to produce an item o minimum ac-ceptability. Design speciications are usually required or construction projects, custom-produced items and many services.

Performance Specifications

Perormance speciications have terms o required perormance that describe the goodsand/or services. They may include required power, strength o material, test methods,standards o acceptability and recommended practices.

Combination Specifications

Combination speciications contain elements o both design and perormance speciica-tions. Some eatures o each are included to allow a vendor some reedom in meeting theperormance needs o the government and to require certain necessary design characteris-tics. This is probably the most common type o speciication.

Brand-Name Specifications

Brand-name speciications list a good or service by brand name, model and other identi-ying speciications to limit the bidding to a single preerred product. This type o speci-ication discourages competition and should be avoided unless the item is the only onethat will satisy the governments requirement. It is useul or purchasing replacement


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Chapter3:Specifications


parts where only the brand name item will work. It should be noted that a local govern-ment might have to explain in a court o law why another brand will not work, so thistype o speciication should be used judiciously.

Brand-Name or Equal Specifications

Brand-name or equal speciications are similar to brand-name speciications, except thatequal products are acceptable in place o the named brand.

Qualified Products List Specifications

Qualiied products list speciications, also known as approved products list speciicationsare based on a list o products, identiied by manuacturers names and model numbers,and are the only acceptable items. These are used when quality is a critical actor andtesting other products would be too time consuming or expensive.

The list is prepared by testing products, either in the lab or in daily use. Vendors demon-strating their quality in comparison to those on the list may add items to the list.

Standard SpecificationsStandard speciications include a single speciication or one or more goods or servicesordered on a recurring basis with the same general purpose. The same speciication isused each time an order is placed or bids are advertised. Examples include oice supplies,paper, janitorial supplies and copier service contracts. Standardized speciications willusually be more detailed than one-time speciications.

Numbering System for Specifications

The purchasing oice should maintain a deined numbering system or its speciicationiles. Any system that suits the department is acceptable. One way is to use a standardcommodity classiication and item numbering system. Most counties use the National

Institute o Governmental Purchasing (NIGP) commodity code system.

The ollowing procedures describe one numbering system that allows considerableexpansion.

Step 1: The speciications are numbered using three sets o numbers and a designationalphabet letter, as ollows: Commodity class. A three-digit number that designates the general classi-

cation o the commodity (e.g., Class 005 - Abrasives). Item number. A two-digit number urther breaking down the main class

into subcategories (e.g. Item Number 42 - Abrasives, Solid: grind-wheels,

whetstones, etc.). Sequence number. A two (or more)-digit number indicating the specica-tion sequence number or that class and item number. e rst specicationwritten or that class and item number would be 01.

Revision designation. A revised specication should be designated by a let-ter (e.g., the specication or abrasives, solid, rst revision o the rst speci-cation written would be numbered 005-42-01A; the se

96-449 Model Purchasing Manual 11 10

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