CHAPTER 7 – SURPLUS PROPERTY
PURCHASING MANUAL
2/12/2016
CHAPTER 7 -- SURPLUS PROPERTY
Any and all equipment purchased with public funds must be accounted for and disposed of
in the most profitable way for the government entity. The Purchasing Officer is responsible
for the transfer and disposition of surplus property/equipment and supplies herein after
referred to as surplus property. Operating departments shall periodically review their
equipment, material, and inventory, and shall promptly notify purchasing of any surplus
property. A Surplus Property Form shall be completed and submitted for each surplus
property item. Surplus Property Forms are available from the Finance Department,
Purchasing Division. Once it is determined that a piece of equipment is no longer needed
or useable by the holding department the following must occur:
CHAPTER 7, SECTION 1. Under $5,000
Items that were under the dollar value of $5000 at the time they were purchased should
be handled as follows:
7.1.1 Notify Finance Department Maintenance Division of desire to remove equipment.
Provide a surplus property form to accompany the equipment.
7.1.2 Maintenance staff will alert other departments of the availability of the equipment. If
another City department can use the equipment it will be transferred to the other
department. If the equipment cannot be used elsewhere in the City, maintenance
staff will consult the Purchasing Officer concerning usefulness of the equipment.
7.1.3 The Purchasing Officer will be determine whether the equipment has value and the
appropriate disposal method of the equipment (donate to charitable organization
such as Goodwill, dispose through trash, or transfer to the surplus holding area
awaiting auction or surplus sale).
7.1.4 Generally, equipment under the $5,000 threshold, that is no longer needed by the
City, will be donated to other governmental agencies or to a charitable organization
such as Goodwill.
7.1.5 Maintenance will finalize the surplus document indicating disposal determination.
7.1.6 Purchasing will maintain a record of all disposed equipment.
7.1.7 Surplus computer equipment should be forwarded to the I. T. division for disposal;
generally computers are donated to Goodwill.
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CHAPTER 7, SECTION 2. $5,000 and Over
Items that have a dollar value $5,000 and over and have an asset number will be handled
as follows:
7-2.1 Complete a surplus property form and forward to Purchasing.
7-2.2 Purchasing will forward the surplus property form to Accounting who will release the
asset funds to be used for equipment replacement.
7-2.3 Purchasing will forward the surplus property form to Accounting (AMII) staff who will
record the equipment as surplus.
7-2.4 Purchasing will determine the appropriate disposal of equipment. If the department
has a vendor interested in purchasing the equipment, either through negotiated
sale or equipment trade-in, the department needs to alert Purchasing of this
opportunity. Dollars gained from disposal cannot be used to offset the cost of
the new equipment. All dollars gained from disposal of the equipment will be
returned to the appropriate fund balance (Enterprise Fund, General Fund), not to
the asset equipment reserve account.
7-2.5 Equipment (that is not being traded-in or purchased by a vendor), may be
transferred to the surplus property holding area and will be disposed of at a later
date in the most profitable way to the City as determined by the Purchasing Officer.
If the equipment is listed on the on-line auction site, the equipment will remain at the
department until disposal/sale as been determined.
CHAPTER 7, SECTION 3. Methods of Disposition
The Purchasing Officer shall determine which of the following methods of disposition is
most appropriate and in the best interest of the City.
7-3.1 Transfer to Another Department: Surplus property may be transferred between
operating departments. Departments wishing to transfer surplus property to or from
another department shall complete the surplus property form and submit it to
purchasing for review and approval. If property is transferred between General
Fund and Enterprise Funds, the financial transaction is handled by Finance. Asset
replacement funds are transferred with the equipment to the new department.
7-3.2 Trade-In: Property declared as surplus may be offered as a trade-in; however, it
may not be used to offset funding toward the acquisition of the new property.
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Revenue from the sale of surplus property shall be returned to the appropriate
revenue fund as determined by Finance Department. All trade-in offers will be
submitted for the review and approval of purchasing.
7-3.3 Return to Manufacturer: Surplus property may, when possible, be returned to the
manufacturer for buy-back or credit toward the purchase of new property. When
budgeting for such an action, the department must budget for the full purchase price
of the equipment and must have asset replacement funding for the full cost of the
new equipment. The dollar value of the buy-back will be credited into the fund
balance, not used to offset the purchase of the equipment.
7-3.4 Sales: Surplus property may be offered for sale by the Purchasing officer. All
surplus property is for sale is "as is" and "where is," with no warranty, guarantee, or
representation of any kind, expressed or implied, as to the condition, utility or
usability or the property offered for sale. Appropriate methods of sale are as
follows:
7-3.4.1
Public Auction - Surplus property may be sold at a public auction. Public
Auctions may be conducted by City staff, or the City may contract with a
professional auctioneer.
7-3.4.2
On-line Auction - Surplus property may be listed on an on-line auction
company’s web site and sold to the highest responsible bidder.
7-3.4.3
Sealed Bids - Sealed bids may be solicited for the sale of surplus
property. Surplus property disposed of in this manner shall be sold to
the highest responsible bidder.
7-3.4.4
Selling for Scrap - Surplus property may be sold as scrap if the
Purchasing Officer deems that the value of the raw material exceeds the
value of the property as a whole.
7-3.4.5
Negotiated Sale - Surplus property may be sold outright if the
Purchasing Officer determines that only one known buyer is available or
interested in acquiring the property.
7-3.4.6
Disposal as Junk - When the cost of locating a buyer exceeds the
estimated sale price of surplus property, the Purchasing Officer may
destroy or dispose of the item as junk.
7-3.4.7
Gifts - Surplus property may be given to any fraternal, benevolent,
patriotic, charitable or religious organization not organized for profit, or to
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any other public agency. City Council approval of this policy authorizes
the Purchasing Officer authority to determination items to be donated.
7-3.4.8
Proceeds - Revenue from the sale of surplus property shall be returned
to the appropriate revenue fund balance (general fund, enterprise fund);
not to the cost centers asset replacement, retired equipment reserve.
CHAPTER 7, SECTION 4. Purchase of Vehicles
7-4.1 Departments shall determine vehicle replacement needs during the budget cycle. A
budget must be established in the expenditure account element/object 8400 and in
element/object 8900 (use of asset replacement).
7-4.2 Following budget approval, the department must contact Larry McKinney, Fleet
Manager, to schedule purchase of the vehicle type needed. The Fleet Manager is
responsible for preparation of bid specifications, and obtaining award approval. In
addition, he will assist in the planning stages by providing a listing of available
options for the specific vehicle needed. The City generally bids vehicles during the
first and second quarter of the Fiscal Year. Please be clear on vehicle type and
options needed on the vehicle prior to bid specification development.
7-4.3 Replacement of a vehicle should be a similar model and vehicle type as the vehicle
being replaced; vehicle upgrades should be addressed in budget documents or
approved by Council prior to scheduling the purchase with the Fleet Manager.
7-4.4 Asset replacement funds must be used to offset the vehicle purchase; if asset
replacement funding is not adequate, additional funding should have been
appropriated during the budget cycle or will need to be obtained from Council prior
to scheduling the purchase with the Fleet Manager.
7-4.5 As in all surplus property, the value of the vehicle being replaced (surplus property)
may not be used to offset the purchase of the new vehicle. Surplus property will be
disposed of in the most profitable way to the City and dollars gained from disposal
will be returned to the appropriate fund balance (enterprise fund, general fund) not
to the asset replacement reserve or to the department cost center.
7-4.6 Preparing the Purchase Requisition
To properly encumber the purchase price of the equipment and at the same time transfer
asset replacement funds, line-entries on the purchase requisition should be as follows:
Line one the vehicle price plus tax should be charged as follows:
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PURCHASING MANUAL
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Enterprise Fund example: 611-5650-685-8400 $20,000.00
611-5650-685-8900 ($20,000.00)
619-0000-101-0000 $20,000.00
On the first two account numbers, the fund number and cost center should reflect
the fund and cost center that the equipment will be charged against and was
budgeted in. The third line fund account number will be as indicated for all general
fund and enterprise funds, cost center number should be the same number used in
the other two lines of the account numbers.
General Fund example:
001-3570-612-8400 $20,000.00
001-3570-612-8900 ($20,000.00)
731-3570-612-8900 $20,000.00
Line two trade-in vehicle should be charged as follows:
Enterprise Fund example: 611-9910-685-7700 ($2,000)
General Fund example:
001-9910-612-7700 ($2,000)
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