From: Ashburn, Melissa Ann
Sent: Wednesday, January 23, 2013 9:44 AM
Subject: Purchasing question
Your city administrator has asked about “piggy-backing” on a county contract for the
purchase of vehicles, and whether he may make payment directly to the vendor, or must
go through the county. Further questions raised concern the warrantee for the vehicle,
and any potential amendment to the purchasing contract, and how that may impact the
city’s ability to piggy-back. I have reviewed the law and discussed these issues with Sid
Hemsley and Ralph Cross and have reached some conclusions.
The city may only make payment to the vendor if the amount of the purchase is less than
$10,000. The law provides:
(c)(1) Any municipality, county, utility district, or other local governmental unit of
the state may purchase goods and equipment, where the individual unit price
does not exceed ten thousand dollars ($10,000), under the same terms of a legal
bid initiated by any other municipality, county, utility district, or other local
governmental unit of the state in Tennessee.
(2)(A) Any municipality, county, utility district, or other local governmental unit of
the state may purchase directly from a vendor the same goods and equipment,
where the individual unit price does not exceed ten thousand dollars ($10,000),
at the same price and under the same terms as provided in a contract for such
goods and equipment entered into by any other municipality, county, utility
district, or other local governmental unit of the state.
(B) Any municipality, county, utility district, or other local governmental unit of the
state which purchases goods and equipment under this subsection (c) shall
directly handle payment, refunds, returns, and any other communications or
requirements involved in the purchase of the goods and equipment without
involving the entity which originated the contract. The originating entity shall have
no liability or responsibility for any purchases made by another entity under a
contract that the originating entity negotiated and consummated.
Tenn. Code Ann. § 12-3-1004 (West)
So if the purchase price is less than $10,000, the city may deal directly with the vendor
and not involve the county. I am assuming the vehicle the city wants to purchase will
exceed $10,000, in which case all payments must rather be made through the
county. This means essentially the county will be purchasing the vehicle for the city,
with the city reimbursing the purchase price.
On the issue of warrantee of the vehicle, that is controlled by the contract
itself. Generally speaking, warrantees follow the title of the car, so the city should be
able to take the vehicle to any dealership and have the warrantee recognized. However,
the contract between the county and the dealership may have other provisions
concerning the warrantee, as the county certainly is paying something for those
warrantees. The city will be bound by whatever the purchasing contract provides, and
may have to go through the county for warrantee work on the vehicle if that is what the
contract states. I can’t give a yes or no answer to this question, as it is controlled by the
contract that we do not have and have not reviewed.
The county may amend the contract at any time without having any impact on the city’s
ability to piggy back on the contract, if their purchasing policy or procedure permits such
amendment and further if the contract itself anticipates amendment. This is due to the
language in the law stating that the purchasing policies or procedures of the “purchasing
entity,” which means the local government originating the contract, shall be followed. So
if the county purchasing procedures permit some amendments to contracts, then that
would be permitted for any municipality piggy backing on that contract. Of course, no
amendment that alters the contract to such an extent that competitive bids would be
required could be permitted once a contract has been executed.
I hope this information is helpful.
Let me know if you need more,
Melissa
Melissa A. Ashburn
Legal Consultant
University of Tennessee
Institute for Public Service
Municipal Technical Advisory Service
(865)974-0411