HomeMy WebLinkAboutRESOLUTION 1996-16Suggested By: Finance Department .
City of Kenai
A RESOLUTION OF'THE COUNCIL oF THE.CITY OF KE. NAi' ALASKA'..
APP. ROVING THE'APPLICATION BY Ti~ cITy FOR A CREDIT CARD TOBE. '.-
USED STRICTLY FOR PROCUREMENT pURPosES.' '" '" . '.'/", '
WitEREAS, th.e. City of Kenai currently procures goOds and Services from onlY. those'
vendOrs'who will accept a purchase order and prOvide such goods and Service~ on credit;
and
WHEREAS, Department Heads working for the City of Kenai have consistently
encountered vendors who will not accept purchase orders, thereby eli .minating a
potentially low cost source of goods and services from being utilized; and
WHEREAS, many of these vendors who won't accept purchase orders will, instead,
accept a bank credit card in payment; and
WHEREAS, use.ofCredit cards bydties to procure goOds and services is not.unC°mmon
and can be effectively nmnased with tight internal controls. ~ ' "' :"'" ' '
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF
KENAI, ALASKA, that:
~ The City of Kenai be authorized tO apply for and maintain a standard
business credit card and that the City-Clerk is authorized to sign and affix the City of'
Kenai seal tO a business credit card application.
~ The business credit card shall be issued in either the name of the City
of Kenai, or if that cannot be accomplished, in the name' of the current Finance Director.
li~ The bUsiness credit card will be used only by Finance Department staff
in assistin8 other departments in makin~ procurements, that the physic.~! .card will be
maintained in the Finance Department vault at all times and will not be carried' by.any .
employee or representative ofthe City of Kenai for any purpose, 'that the actual. Credit card
number will be known to Finance Department staff members only,, and that any aCtUal
procurements made using the card will be physically made or coordinated by Finance.
Department employees.
Resolution No.' 96.16',
Page Two
-, ~ The.~:m..~D!['_,e~t..0r. shalldevelop written start.' ,dardOperatinl~ ...' ·.,
proceaures covenng creci~t card'utdization; , : ,-~:: - '..,,:'..',' ·'-~--.:,, =,.' ' ~ ': :'.
PASSED BY THE COUNCIL OFTHE CITY OF' KENAi;: this 7th.dayOfFebruary,
1996. ' ' ' ~'''' ',' ...,.., '....::'" .' ,....:.,.::.'..: .,.'...," .' .- .' · .. -. ,. .. ":: .'
Attest:
Carol L. Freas, City Clerk
.VICE. MAYOR
Approved By Finnnce: ~~__..., .."
(2/1/96)~ ..:.
CITY OF KENA!
%'~ TELEPHONE 807-283-76,15
-- FAX 907-283-3014
210 FIDALGO AVE. SUITE E00 KENAI, ALASKA 99611-7794
MEMORANDUM
DATE: February 1, 1996
THRU: Tom Manninen, City Manager'~" '
TO: Mayor and Council Members, Kenai City Council
FROM: Jay Sweeney, Finance Dir~t~or~
SUBJECT: City Of Kenai Credit Card
I. I would like to request that the City of Kenai apply for, and maintain, a standard bank credit
card to be used strictly for procurement purposes.
2. Several employees who frequently make purchases on behalf of the city have expressed
frustration with me over our existing procurement rules. One ofthe concerns they expressed is
that some vendors they would like to procure from will not accept a City of Kenai purchase order.
As a result, the City of Kenai is not always procuring goods and services at the lowest possible
price.
3. In addressing these employees' concerns, I feel that the acquisition and use cfa City of Kenai
business credit card could help to resolve the non-acceptance of purchase orders issue. The credit
card would be subject to tight internal controls and would be used strictly for procurement
actions. The following internal controls, rules, and restrictions would apply to such a card:
o The card will be issued in the name of the City of Kenai or, if'that is not possible, in the
name of the current Finance Director.
o The physical card would be maintained in the Finance Department vault at all times.
employee would be allowed to personally carry it for any reason.
o The credit card number would be tightly controlled. Only Finance Department
employees would have access to it.
No
o The.card wouldbe used to purchase goods or-'services which are in the best interest of
'.the City of Kenai' but for Which the vendor will not '.accept a purChase'order.
. 0 Departments oremPl°yees desiring to ~e a Pr0CUrementuS'm8 the'card WbUld'still'be'/':.
required.to prepare a purchase order mt. he.~e manner ~ they currently do. ".The purchase.....
'order,w0uld.be annotat ..¢~1,' however,, wi .ththe wOrdS '-'credit card" hilClited on. it., Upon. receipt.of",'
· such a purchase order,".Finance Department' employees:. will personally tall'the vendor and' supplY.'
.'it With the credit card nt!- -m-her tocOmpletethe .procurement.'
0 FinanCe DePartment empl0yees'Will be respOnsible for'traCking the credit limit'on the
Card to ensure that.it is not eXceede&
41 Credit card usein Procurement 'is not uncomm°n in other municipal gOvernment organizations.
In acquiring a credit Card, we are not really changing~what we basically do as an organization:
buy on credit. When we use a purchase order, the vendor sells to us on credit whereas if we used
a credit card, the act of eXtending, credit would be shifted from the vendor to a bank. Credit card
use does require tighter controls to prevent abuse, but use of such cards is not fundamentally
different from the way we procure .right now.
5. I would ask that you consider and approve the attached resolution authorizing the application
for a bank credit card. IfaPproved, I will embark on a pilot prolp'am with one department, the
Building Maintenance DePartment, to test and see hOW: weHsUch usage-works, .We will'review
the results of the pilot program and, if we feel it.has been sucCeSsful, write, standard operating:
procedures for city wide utilization.' ffwe think that there'are just too many inherent problems in
credit card use, We will- :"ki!_l" the card and'! will inform'the COUncil ofthe decision to do so.