THE UNIVERSITY OF TEXAS BULLETIN 

No. 3528: July 22, 1935 
Un1Tersi~~ 0, ~G~ ,_;, t" 11' , ,.. :ton~ 
A PURCHASING MANUAL FOR TEXAS CITIES 
By 
LYNDON E. ABBOTT 

Assistant in the Bureau of Municipal Research 
Bureau of Research in the Social Sciences 
Study No. 13 

Municipal Studies, No. 4 


PUBLISHED BY 
THE UNIVERSITY OF TEXAS 
AUSTIN 

Additional copies of this publication may he procured free of charge 
from the University Publications, The University of Texas, 
Austin, Texas 



THE UNIVERSITY OF TEXAS BULLETIN 

No. 3528: July 22, 1935 
A PURCHASING MANUAL FOR TEXAS CITIES 
By 
LYNDON E. ABBOTT 
Assistant in the Bureau of Municipal Research 
Bureau of Research in the Social Sciences 
Study No. 13 
Municipal Studies, No. 4 

PUBLISHED BY THE UNIVERSITY FOUR TIMES A MONTH AND ENTERED AS 
SECOND•CLASS MATTER AT THE POSTOFFICE AT AUSTIN, TEXAS, 
UNDER THE ACT OF AUGUST 24, 1912 

The benefits of education and of useful knowledge, generally diffused through a community, are essential to the preservation of a free govern­ment. 
Sam Houston 
Cultivated mind ia the guardian reniua of Democracy, and while guided and controlled by virtue, the noblest attribute of man. It ia the only dictator that freemen acknowledge, and the only security which freemen desire. 
Mirabeau B. Lamar 
Municipal Studies of The University of Texas 

Number 4 
BUREAU OF MUNICIPAL RESEARCH 
A PURCHASING MANUAL FOR TEXAS CITIES 
By 
LYNDON E. ABBOTT 
Asaiatant in the Bureau of Municipal Research 

Bureau of Research in the Social Sciences 
Study No. 13 


PREFACE 
Previous monographs published by the Bureau of Munic­ipal Research have dealt with budgeting, tax collection, and the problem of revenues. The present study, A Purchasing Manual for Texas Cities, treats of a subject whose impor­tance, though generally recognized by students of municipal government, is frequently minimized or ignored by the administrator. It gives statement to certain fundamental principles of organization and procedure which, if used, will bring material advantages to the city in the field of purchasing. 
As in the case of the preceding manuals, 10 per cent of the cities of Texas were selected as a sample for intensive study. Information from these was sought by questionnaire and by personal visit to such effect that more than fifty municipalities participated in the survey. In method of treatment this study resembles closely those which have gone before. As the title will indicate, it is intended that the monograph shall serve primarily as a manual for the use of municipal officials. 
In collecting the material and preparing the manuscript the Bureau has continued to receive the hearty cooperation of the officers of the League of Texas Municipalities and the Texas Chapter of the Municipal Finance Officers' Associa­tion. In particular should be mentioned a committee of the latter organization composed of Mr. Raymond Edmonds, City Clerk and Purchasing Agent of Beaumont, Mr. Grover 
L. Cline, Purchasing Agent of Fort Worth, and Mr. E. V. Spence, Manager of Big Spring, who read the manuscript carefully and offered many suggestions which were of very great value. It should be noted also that Mr. Joseph W. Nicholson, Purchasing Agent of Milwaukee, read the manu­script and offered criticisms which proved of material bene­fit. As before, the financial support of the Bureau of Research in the Social Sciences of The University of Texas made possible the undertaking and the completion of the study. 
ROSCOE C. MARTIN, 
Director of the Bureau of Municipal Research. 
Austin, Texas. 

TABLE OF CONTENTS 
CHAPTER PAGE 

I. The Case for Centralized Purchasing ____________________ 9 
II. The Organization for Purchasing____________________________ 18 
III. The Determination of Purchase Requirements______ 32 
IV. Purchase Negotiations --------------------------------------------43 
V. Orders and Contracts ----------------------------------------------54 
VI. 	Inspections, Tests, Invoices, and Payment of Bills ------------------------------------------------------------------------69 
VII. Storage and Stock Control________________________________________ 81 
VIII. 	Sumary and Conclusion --------------------------------------------96 Appendix I. Recommended Charter Provisions Concerning Purchasing ________________________________________ l 03 Appendix II. Recommended Ordinance Con­cerning Purchasing __________________________________________ __
_l 06 Index __________________________________________________________________________ 113 
LIST OF EXHIBITS PAGE 
A. Source of Supply Card Used in Austin ____________________________________________ 27 
B. Requisition for Supplies, City of Dallas___________________________________ 35 
C. Quotation Sheet on which Vendors Submit Bids, City of Dallas 46 
D. Purchase Order, City of Brownsville___________________________________________ 61 
E. Receiving Sheet, City of Port Arthur____________________________________________ 71 
F. Invoice, City of Amarillo__________________________________________________________________ 76 
G. Stores Requisition, City of Tyler____________________________________________________ 86 
H. 	Requisition Used in Houston for Obtaining Supplies from the Stationery Storeroom -----------------------------------·-------------------------88 
I. 	Receipt for Gasoline and Oil Secured from Central Storeroom, City of Sherman -------------------------------------------------------------------89 
J. Stock Record Form Used in Lubbock_____________________________________________ 90 
K. 	Daily Warehouse Report of Gasoline and Oil Stores, City of Galveston ------------------------------------------------------------------------------------91 
L. 	Record of Supplies Taken from and Returned to Storeroom, City of Sherman_
______________________________________________ _
__________________________ 93 
CHAPTER I 
THE CASE FOR CENTRALIZED PURCHASING 
The matter of purchasing supplies, materials, and equip­ment for city governments has in recent years been ob­scured by more pressing problems of municipal finance, particularly that of securing sufficient revenues to continue the necessary activities of the city. While it is essential to organize and administer the tax department in a sound manner, it is no less important that the monies collected be spent in a way designed to secure the greatest amount of goods of as high a quality as possible. Certain items of expense to a municipality cannot easily be reduced. For example, it is difficult if not impossible to lower the charges for funded debt retirement without recourse to refunding. Again, salaries may be pared to the minimum. but once they are set, become a liability on the city for the whole year. The bulk of the current funds which do not go for salaries and wages is spent on purchases. It is here that the opportunity is present for a city to save money and either buy more goods for the sums allowed in the budget or bring expenditures below budget anticipations. 
It has been estimated that between 20 and 30 per cent of the "average" city's current operating expenditures goes for purchases. In the Texas cities furnishing information on this point in the present survey the average figure is 33 per cent; the range is from as low as 10 per cent to well over 50. While these figures are no more than approxima­tions, because of the impossibility of determining accurately the total amount spent for purchases in every city, they are not thought to be extreme; and in any event, they indicate that purchases do claim a large portion of the current operating expenses of the ordinary city. Moreover, oppor­tunities for waste and graft are present whenever public funds are spent, and a close check upon the manner in which and the purposes for which expenditures are made may have a direct influence upon the tax rate. It is impor• tant, therefore, that those responsible for city government consider seriously this aspect of municipal finance. 
The economic slump of recent years has had two serious though conflicting effects on purchasing. First, it has reduced the income of the cities, through lower property values, reduced tax rates, and increased tax delinquencies, to the point that operations have been cut to the minimum and cities have had depleted financial resources with which to buy. Second, the depression was accompanied in its later phases by the National Recovery Act, which raised the prices of commodities just at the time that the cities were least able to meet the increased costs, and which encour­aged price fixing, which in turn eliminated competitive bidding. Under such conditions, a study devoted to a description and comparison of present purchasing practices in Texas cities and to methods for improving the usual pro­cedure seems to be particularly timely. 
Municipal purchasing includes the buying of materials, supplies, and equipment; broadly speaking, it also embraces contractual services for printing, telephone, lighting, and the like. Moreover, the inspection and storage care of supplies after they are delivered is properly considered a part of the general problem. The function of contracting for public works is not included under the term "purchas­ing" since this ordinarily involves financing by bonds and supervision by the council. It will, therefore, be considered only incidentally in this manual to indicate the limits of the purchasing function. 
In many of its aspects, purchasing in government bears a close resemblance to purchasing in private business, and certain cardinal principles are equally applicable to both. Yet, the problems of the public and the private purchaser are to some extent unlike. Thus in public purchasing the requirements of quality and quantity in goods remain more nearly the same year after year and advance needs can usually be determined with greater ease and accuracy. Further, large cities purchase practically every commodity manufactured, while private businesses may be interested in a comparatively small number. Further still, the public purchaser is faced with certain special problems, among which is the preparation of specifications which encourage full and open competition; private businesses may buy on closed specifications. Notwithstanding these dissimilari­ties, it is patent that public purchasing can profit much from the experience in purchasing of private enterprise. 
The plan of this manual is to state a principle or an essential step in purchasing, following it with an explana­tion of the proposition and a description of the practice in the Texas cities studied. It should be mentioned at the out­set that in many cities it was difficult to obtain data on purchasing as complete as was desired. This is due partly to the infrequency and small quantity of purchases in the smaller cities and the resultant lack of definite plans for purchasing. This is not to charge that the purchasing there is not done in an acceptable manner, but merely to observe that frequently no set practices prevail. Attention will be called throughout to the aspects in which the organization and procedure in large and small cities should differ.1 The basic principles will be found to be alike in all cities regardless of size but the organization will be more ex­tensive and elaborate in the larger municipalities. 
It is of primary importance that a city make provision for a centralized purchasing system. 2 Inasmuch as the dis­cussion which follows rests heavily on this point, it cannot be overemphasized here. Centralized purchasing has been defined by Dr. Russell Forbes, a leading authority on the subject, as "the delegation, to one office, of the authority to buy the supplies, materials, and equipment needed by all the operating branches of an organization."3 All depart­ments of a city's government need to have various supplies purchased and the nature of this work makes its perform­ance easily cared for by a single agency. Centralized pur­chasing is part of the movement for the integration in one department of all functions which are logically related. 
1rt should be understood that the term city as used herein applies to all incorporated cities, towns, and villages. 
2The word "centralized" is not employed here in a technically accurate sense, though its wide-spread association with purchasing and its meaning in the popular mind justify its use in a handbook such as this. 
aGovernmental Purchasing (New York, 1929), p. 1. 
Ex-governor Ritchie of Maryland stated in 1929 that "centralized purchasing has, over a period of more than twenty-five years, and in all sections of the country, demon­strated that it is a practical, economical, and efficient method of procurement of supplies for public agencies, with resulting benefits to the taxpayer."4 Where centralized purchasing has been introduced and given a fair trial, it has worked successfully. Such a system is not a recent innovation for it has been practiced in Texas cities for over twenty-five years.5 Furthermore, it has been adopted in thirty-six states and over 200 cities. Forbes has listed the following as advantages of centralized purchasing :6 
1. 	
Reduction in overhead cost through reduction in per­sonnel. 

2. 
Lower unit costs and better delivery service. 

3. 
Reduction in the volume of "paper work." 

4. 	
Standardization and the adoption of standard specifica­tions. 

5. 
Central supervision over: 

(a) 
Inspection of deliveries; 

(b) 
Storage and distribution of stock; and 

(c) 	
Interdepartmental transfers and sales of surplus stock. 



6. 
Closer accounting control over expenditures. 

7. 	
Savings of discounts through prompt payment of invoices. 

8. 
Employment of full-time purchasing staff: 

(a) 
Improves buying technique; and 

(b) 
Tends to eliminate graft and favoritism. 



9. 
Simplification of the vendor's problem through: 

(a) 	
Solicitation of business from one purchasing office; 

(b) 	
Reduction in the number of orders and deliveries; and 

(c) 	
Reduction in account-keeping with the govern­ment. 




•
Quoted by Forbes in Centralized Purchasing (New York, 1931), 

p. 	
40. 0Henry Bruere in The New City Government (New York, 1912), mentions Ft. Worth and Houston as having done much to establish 


an 	efficient supply system. 
aaovernmental Purchasing, p. 10. 

It is true that cities may realize certain of these advan­tages without centralized purchasing and that the inaugura­tion of a centralized system may not effect any considerable improvement where the decentralized scheme has been ad­ministered in a competent manner. For example, there may be just as close accounting control over expenditures, as prompt payment of bills, and as extensive competition with sealed bids under a departmental purchasing organization as under a centralized one. Furthermore, there may be no reduction in personnel when centralized purchasing is started except in the larger cities. Nevertheless, it seems that centralized supervision over expenditures will facili­tate the maintenance of accounting control, the securing of cash discounts, and the avoidance of duplicate payment of bills. 
Certainly, definite responsibility for the purchasing func­tion can be fixed. Moreover, by standardizing and con­solidating the various needs of all departments, it is possible to buy in large quantities and thereby secure lower prices and flexible purchasing agreements which would be unattainable if each department purchased separately. By vesting one agent with the authority to make all purchases, complete and accurate records of consumption can be main­tained. Better public relations will result from centralized purchasing because suspicion of waste and graft will be removed. 
The economies which centralized purchasing is able to effect are worthy of mention. Stamford, Connecticut, a city of less than 50,000 population, saved $29,000 the first year its centralized purchasing organization was established.7 Chlorine, gasoline, and tile pipe cost 43.1, 40.9, and 15 per cent less than previously. It was estimated that Dayton, Ohio, saved $83,000 the first year its centralized purchasing­system operated.8 It was estimated that centralized pur­chasing in Milwaukee saved the taxpayers $1.50 apiece in 1933.9 Like examples are available from the experience of 
7Forbes, Centralized Purchasing, pp. 16-17. 
BForbes, Governmental Purchasing, p. 14. 
9"Saving By Centralized Purchasing," in The Toledo City Journal, November 3, 1934, p. 410. 
numerous cities, counties, and states. A saving of 5 per cent of the total cost of the purchases is a very conservative estimate of the economy of centralized purchasing; Joseph 
W. Nicholson, purchasing agent of Milwaukee, estimates the saving to be about 15 per cent.10 A recent report on county government in Ohio makes a significant statement bearing on this point :11 
A complete system of centralized purchasing should be established . . . Experience indicates that centralized pur­chasing, reasonably operated, saves from ten to twenty per cent on expenditures for commodities and much more than pays for itself. 
An indirect saving made by centralization is in the reduc­tion of overhead costs through elimination of duplication of work and reduction in paper work. A survey of the pur­chasing organization of the County of Los Angeles revealed that the clerical and paper work involved in purchasing for one year amounted to $2.52 for each order.12 This over­head cost is the same for a carload of cement or for a dozen brooms. If a number of orders are combined into one, as they can be with centralized purchasing, it is obvious that there will be a saving in overhead costs since the routine work will thereby be minimized. 
There are certain apparent disadvantages to centralized purchasing. These, however, are not inherent in the sys­tem and will not occur in a well planned and administered organization. First, there is the chance that the quality or type of goods purchased will not be suited to the require­ments of the operating departments, but cooperation be­tween the purchaser and the requisitioner should minimize this danger. Centralized purchasing does not mean that the purchasing agent will buy without consulting the persons 
lOfbid. 
11Report of the Governor's Commission on County Government, The Reorganization of C<JUnty Government in Ohio (December, 1934), p. 8. 
12The Bureau of Efficiency of the County of Los Angeles, Survey of the Purchasing and Stores Department of the County of Los Angeles, abstracted by Albert H. Hall, the Municipal Administration Service ( 1930) , p. 5. 
who will use the materials. Second, unnecessarily large stocks may be accumulated through purchases made at unusually low prices; but this will not happen if an intelli­gent and far-sighted person is in charge of purchasing. Third, there may be delay in obtaining delivery of goods; a superabundance of "red tape" may tie up the whole pur­chasing procedure. This more than anything else will con­tribute to the failure of centralized purchasing if not carefully guarded against, and will lead to an excessive number of emergency purchases. This defect is not insepar­able from a centralized system for in one which is properly organized, the procedure will be definite, swift, and certain, designed only to see that the expenditures made are proper. Furthermore, emergency needs which inevitably arise can be met in a speedy manner to assure quick delivery. It is clear that the apparent disadvantages of centralized pur­chasing can be avoided, and that they are not such as to render the system impractical. 
The alternative to centralized purchasing is departmental or "decentralized" purchasing. Such a system prevailed in almost every city twenty-five years ago, and it is still used in many cities today. It has been characterized by careless and inexpert purchasing methods, lack of careful specifica­tions, inadequate records, and absence of integrated control over expenditures. Prices are higher and discounts may be unknown. When each department buys for itself, there is usually an endless and bewildering variety of goods bought for the same purpose and consolidated orders are rare. Responsibility is seldom fixed for buying, inspection, or storage control. Waste and extravagance are apt to creep in, while those interested in dishonest practices need have little fear of detection. Those who purchase under the old methods may be just as honest and sincere in their desire to buy economically as anyone, but their success may be limited because they are working with an inferior system, and being pressed with other duties, have not had the opportunity to devise a new one. The city which does not want to lag behind in the contemporary movement for bet­ter city government has but one choice as regards purchas­
ing: it must provide for a centralized system along the lines which experience has demonstrated are most practical. 
A majority of Texas cities have what can be called cen­tralized purchasing in the sense that one officer is respon­sible for the purchase of most or all current supplies. The distribution of centralized and departmental purchasing systems among cities above and those below 5,000 in popu­lation is shown in Table I. 
TABLE I 
DISTRIBUTION OF FIFTY TEXAS CITIES BY TYPE OF 
PURCHASING SYSTEM IN 1935 

Total Centralized Departmental Answering Number Per cent Number Per cent Above 5,000__________ 35 23 66 12 34 5,000______
_ 15
Below 7 47 8 53 
Total, all cities____ 50 30 60 20 40 

In a decentralized system, the customary practice is for the heads of the using departments to make their own purchases. Other combinations for purchasing, when no one person is responsible, are secretary and mayor, mayor and two councilmen who constitute a purchasing committee, and the council or board of commissioners. In one city the department heads may purchase on their own responsibility up to $5.00 while over that amount the order must be signed by the mayor or any of the commissioners. In two instances it was discovered that a charter provision for centralized purchasing is not being followed. In one case the charter gives the finance commissioner the authority to make all purchases, while in practice each commissioner handles those of his own department. In the other, the manager, whom the charter makes responsible for all purchasing, buys the large items, but permits the department heads to purchase all others. Another (a manager) city allows the department heads to carry on purchase negotiations and decide on the vendor, though they must secure an order number from the manager's office, a requirement which fur­nishes him an opportunity to check the expenditure. 
Every city in Texas, regardless of its size, should make its purchases through one office. There is no disagreement among those who speak with authority on municipal pur­chasing with the proposition that centralized purchasing is necessary if the financial system is to be considered properly organized, the affairs of the city well managed, and the taxpayers' money economically spent. Municipal purchas­ing, intelligently administered, depends upon proper organ­ization, and to this fundamental aspect we may now turn. 
CHAPTER II 
THE ORGANIZATION FOR PURCHASING 
It is essential that the organization for purchasing be placed on a sound legal basis. Provisions relating to pur­chasing may be found in state statutes, city charters, munic­ipal ordinances, and administrative rules and orders. The laws of the State of Texas touch only indirectly on munici­pal purchasing. Article 2368a of the Revised Civil Statutes provides that all cities and counties must obtain competitive bids on public works projects costing $2,000 or more. This is the only state law relating to the general subject of pur­chasing. Article 1002 provides that the council of general law cities shall have the power to require officers to perform duties other than those mentioned specifically in the stat­utes. This would seem to give sufficient power to a general law city to delegate the function of purchasing to a particu­lar official. Home rule cities have the power to set up their purchasing organizations as they wish, either by charter or by ordinance.1 Thus, Texas cities are free to organize their purchasing procedure as they think best. This is an oppor­tunity which cities should seize to secure a modern, business-like method of purchasing. 
A municipal purchasing system should rest on both char­ter and ordinance. The subject of purchasing is of suffi­cient importance to demand recognition of a home rule city. The charter should deal only with fundamental mat­ters, including the requirement of centralized purchasing; the place of the purchasing agent in the city's government; the method of choosing the purchasing officer, his tenure of office, and his powers and duties; the basic requirements for purchase negotiations, including contract procedure and provisions for the standardization of supplies; and finally, a prohibition on any city official's having any financial inter­est in contracts and purchases made by the city.2 The char­
tHome rule cities in Texas must have a population of 5,000 or more. 2For model charter provisions see Appendix I. 
ter provision should then be supplemented by ordinances which describe in greater detail the organization and pro­cedure of the purchasing system.3 The more minute partic­ulars can be cared for by administrative rules and orders. This allows for adjustments to fit new conditions. 
Of the cities of home rule size which replied to a ques­tion concerning the legal basis of their purchasing systems, 53 per cent indicated that they have provisions on purchas­ing in the charter only, 20 per cent in ordinances only, and 18 per cent in both charter and ordinances; 9 per cent ap­parently have no legal provisions of any variety relating to purchasing. Wichita Falls' purchasing regulations are found entirely in its administrative code, which has been adopted as an ordinance. Dallas supplements its charter and ordinances with a set of executive orders, which have been printed and circulated among the departments. An examination of the charters reveals that in only a few cases are they satisfactory in their purchasing provisions. In three instances the only section relating to purchasing is one prohibiting any municipal official from having any financial interest in contracts and purchases of the city. Home rule cities should amend their charters to establish a purchasing organization along the lines which experience has proved to be most satisfactory. 
In cities of less than 5,000, 39 per cent reported having an ordinance bearing on purchasing. While the state law places no hindrance in the way of allowing cities to organ­ize their purchasing procedure, it would be well if the state legislature would pass a statute definitely authorizing general law cities to establish a purchasing system; indeed the law might go further and make such a step mandatory. It is important that the legal basis of purchasing provide a substantial foundation for the details of the structure, which will next be taken up. 
In the larger cities the purchasing agent should be a full-time officer, devoting all his attention to the work of purchasing and becoming a specialist in that field. The essence of centralized purchasing, as previously stated, is 
aFor a model ordinance see Appendix II. 
the performance of the work by one person, and in cities of some size the amount of purchasing warrants the employ­ment of a full-time man. The question arises whether the purchasing agency should be a separate department, a bureau within a department, or a subordinate division of the chief executive's office. The answer is largely depend­ent upon the general organization of the government. 
Where a city has undertaken to integrate all financial functions in a single department, the purchasing office should be a part of that department. Fiscal affairs are sufficiently similar to warrant integrating them all under the direction of one person, who might be called the direc­tor of finance. The finance department should be divided into a Bureau of Control and Accounts, a Treasury Bureau for collecting, holding, and disbursing all funds, perhaps a Bureau of Taxation in charge of assessments, and finally a Purchasing Bureau.4 The close relation which the pur­chasing function bears to accounting control necessitates its being placed along with other fiscal matters in the finance department. The Purchasing Bureau should be headed by the purchasing agent, who should be appointed by the chief executive upon the recommendation of the finance director. 
In the cities where an integrated financial organization has not been established, the purchasing agent may be found heading a division of some operating department or a semi-independent office responsible to the chief executive. The latter arrangement is preferable and is the one more commonly found, although the lines of responsibility and control and the degrees of independence vary widely. 
Still another system (infrequently found), calls for a non-political purchasing board or committee, to which the purchasing agent is responsible. This body determines the policy to be followed in purchasing, decides when requisi­tions are to be denied, awards contracts and orders on large purchases, and hears complaints from vendors. Such 
4 For discussions of the organization of a munici9al finance depart­ment, see A Budget Manual for Texa.s Cities, Chap. IV, and A Manual of Tax Collection Procedure for Texas Cities, Chap. I. These manuals were published by the Bureau of Municipal Research, The University of Texas. 
an agency relieves the council of all such matters. It may be composed of the chief executive, department heads, and a representative of each independent board for which the purchasing agent buys. 5 Such a board would avoid having one person solely responsible for spending large sums of money and at the same time minimize the possibility of politics playing a part in purchasing, which it is more likely to do if the council makes the awards. Vendors, too, are likely to be better satisfied if they can present their case to several men instead of one; moreover, such a pro­cedure clears up misunderstandings which might otherwise be taken privately to the councilmen. 
Of the thirty cities in the survey having centralized pur­chasing, 23 per cent have a full-time purchasing officer. This group is composed of the five largest cities plus Gal­veston and Austin. The purchasing agent of Dallas is di­rectly responsible to the director of finance. In Austin and Ft. Worth the responsibility is to the manager; in Houston, San Antonio, and El Paso, to the mayor; and in Galveston, to the finance commissioner. 
The cost of a central purchasing agency is so small that it will average less than 2 per cent of the value of the orders placed by the purchaser. Analysis of the data which Russell Forbes gathered in 1929 shows that in fourteen cities be­tween 30,000 and 300,000 in population, the cost of the centralized purchasing office averaged 1.69 per cent of the total expenditures made by the purchasing officer.6 A later study of purchasing methods in New York municipalities disclosed that operating costs in terms of percentage of purchases made averaged 1.42 per cent.1 Texas cities com­pare favorably with those of other states. During 1934, 
sThe Central Board of Purchases of Milwaukee is composed of the Mayor, the Public Works Commissioner, the Public Museum Director, the city Librarian, the Water Department Superintendent, the Secre­tary of the Board of Estimates, and the Secretary of the Board of Park Commissioners. 
6The Organization and Administration of a Governmental Pi,,r­chasing Office (New York, 1932), p. 31. 7Joel Gordon, Purchasing Methods of New York State Municipa,l­ities (Albany, 1931), p. 19. 
the purchasing department of Austin cost 1.54 per cent of the total amount of purchase orders handled, that of San Antonio cost 1.67 per cent, and that of El Paso, 2.2 per cent. The operating cost of the purchasing office of Dallas during the fiscal year from 1933-1934 was 1.63 per cent of the value of the purchase orders handled, while during the preceding year, it was .81 per cent.8 The purchasing agent of Ft. Worth reports that at present his departmental cost amounts to about 1 per cent of the orders, while a few years ago when more expenditures were made, the ratio was around .6 per cent. These percentages demonstrate that a full-time purchasing agent is not a luxury in the larger cities, but a necessity in caring for an everyday but important function of government. 
Purchasing should be· the part-time function of some one official in the smaller cities.9 It is often claimed that since small cities make comparatively few purchases, they do not need a full-time purchasing agent nor even centralized purchasing. While the first contention is readily justified, the second assuredly is not. The principle of centralized purchasing can be applied by giving one person control over purchasing and requiring this work to be performed along with other duties. The very fact that small cities do have fewer purchases makes it all the more important that the supply requirements be combined and competition kept at a maximum. Such items as fuel oil, gasoline, and office supplies are needs common to many departments and can be bought in quantities with savings. In every city it is necessary to check orders and contracts, to have proper fiscal control, to inspect and test deliveries, and to prevent losses in storage. The arrangement usually found in cities with centralized purchasing but without a full-time pur­chasing agent calls for the manager to handle the work in the city manager cities and the city secretary in the others. 
BThe purchase orders for 1932-1933 were more than twice as large as those of 1933-1934 because the city purchasing agent bought for the relief committee. See Progress, An Official Report of Municipal Achievement in Dallas (1935), p. 9. 
DSee Russell Forbes, Purchasing for Small Cities, Municipal Ad­ministration Service (New York, 1932). 
In 23 per cent of such cities the manager is the purchaser, in 30 per cent the secretary, and in 10 per cent the mayor. The managers and secretaries are responsible to the council, the mayors to the electorate. In some cities one member of the council acts as purchaser, while more frequently the waterworks superintendent is responsible. The office of purchasing agent has been combined with that of tax col­lector in Port Arthur, that of auditorium manager in Wichita Falls, that of auditor in Brownsville, and that of comptroller-auditor in Waco (by charter provision). Since the function of the auditor is primarily that of checking upon the operating departments and auditing accounts, it would seem not desirable that he be given the additional function of purchasing. 
It is difficult to set definitely the line of demarcation between the city which could advantageously employ a full­time purchaser and the one which could best combine pur­chasing functions with other duties. The criterion is the amount of money spent for materials, supplies, and equip­ment rather than the population of the city. Probably a total of $200,000 annually for purchases would warrant the use of a full-time man. Such an expenditure would bear without strain a budget for purchasing of between $2,000 and $4,000. It must be remembered that in smaller cities the overhead costs for a central purchasing agency are low, the salary being the chief item in the budget. Finally, it should be noted that where purchasing is conducted on a part-time basis in conjunction with other duties, a city should not expect the benefits to be as full as if buying were the sole responsibility of one particular official. 
The officer who is responsible for purchasing should be appointed and should be allowed to hold office as long as he effectively performs his duties. There is of course no reason why an official who is not concerned with the formu­lation of governmental policy should be popularly elected. It is detrimental to good government to place the authority for spending money in the hands of a person who depends upon popular vote for his office, because of the temptation to reward political supporters and friends with orders. 
This fact is generally recognized in Texas cities for in every one, excepting where the mayor personally controls pur­chasing, the purchaser is appointed. 
The value of the indefinite term of office lies in its per­mitting the official to become familiar with his duties, and well acquainted with the salesmen and others with whom he deals. It also gives him the opportunity to specialize in his work and become more proficient in its execution. In 28 per cent of the cities with centralized purchasing, the purchasing officer holds his office for two years ; in the remaining 72 per cent tenure is indefinite.10 The purchasing officer of one Texas city has served in his present capacity for twelve years. 
It is imperative that the officer who buys furnish a surety bond commensurate with the responsibilities of the office. 
It is hardly necessary to go into an explanation of the desirability of requiring bond of this official, since it seems reasonably evident that the interests of the city would be served by this form of protection. 
The purchasing agent should be qualified by training and experience to execute efficiently the duties of his position. 
He should have some knowledge of the goods which he buys, since it is the variety as well as the quantity of pur­chases which demands expertness in buying. He must keep in touch with sources of supply, and with market conditions and trends. His personality must be such as will allow him to work harmoniously with the department heads and to create good will among the salesmen and secure their cooperation in obtaining good prices and prompt deliveries. Good judgment, business acumen, tact, and above all honesty and trustworthiness are primary qualities of mind and character. 
In addition to these traits, previous experience in public purchasing is a desirable qualification. It was possible to 
10The present discussion relates only indirectly to the problem of personnel, yet it may be noted in passing that it is doubtful whether the purchasing officer can legally serve for longer than two years, in view of the constitutional inhibition on terms for public offices which exceed that limit (Art. XVI, Sec. 30 of the Constitution of Texas). 
secure information on the positions held by the seven full­time purchasing agents in Texas prior to their appointment to their present places. At the time of appointment, two had experience in the purchasing departments of private businesses, and one had forty years of experience as buyer and seller for wholesale hardware companies. Another was previously connected with a railroad and one was a cotton buyer. In two instances, the purchaser had previously served the city in another capacity. 
The San Antonio charter is the only one which establishes definite qualifications for the purchasing agent. It provides that he must be a qualified voter of San Antonio at least thirty years in age, and that he must have resided in the city not less than one year before" his appointment. Aside from the question of whether or not these particular qualifi­cations are desirable, it would seem that the place for such matters would be in an ordinance rather than in the charter, so that adjustments could more easily be made to fit changed conditions. If a city has advanced far enough to have a merit civil service system, the duties and qualifica­tions of the purchasing agent will be set forth in the job classification code.11 
It is clear that in the small cities where purchasing is a part-time function, the manager or secretary cannot be selected with an eye to his purchasing duties alone, since buying is only one of a number of tasks of varied nature which will fall upon him. It must be remembered by the council or commission in appointing this officer that he will be required to make purchases, assess and collect taxes, keep accounts, and perform numerous other functions. Such a post obviously calls for a man with broad training and considerable ability. 
The salary paiil the purchasing agent must be adequate to attract a person of high caliber to the office. The city can hardly expect to secure a skilled buyer for a salary far below that offered for like work in private business. If a 
11For specifications for the position of purchasing agent prepared for use in Baltimore see Forbes, Governmental Purchasing, p. 328. 
municipality is limited in the amount it may pay for pur­chasing personnel, it would do better to make buying the part-time work of some official than to employ an unquali­fied person. One Texas city which adopted centralized pur­chasing was forced to abandon it because an incompetent person had been put in charge. The average yearly salary at present for full-time purchasing agents in seven Texas cities is $2300, ranging from $1650 to $2760. The salaries paid in Texas are slightly lower than those paid in cities of comparable size in other states, and considerably under those paid to purchasers in large private enterprises. 
The salary of the purchaser should not be set in the charter but should be determined from year to year in the budget. The charter of San Antonio fixes the salary of the purchasing agent at $200 per month. In order to evade this provision and lower the salary of the purchaser, an "acting" purchasing agent was appointed. This demon­strates the undesirability of setting salaries in the charter. 
The subordinate staff should be selected without refer­ence to political allegiance and for an indefinite tenure. If the city is operating under the merit system, the require­ments for training and experience will be prescribed in the classification code. The purchasing staffs of Texas cities are small and simple in organization when compared with the thirteen purchasing employees of Cincinnati, the forty of Detroit, the fourteen of Pittsburgh, and the ten of St. Paul.12 Galveston and El Paso are two cities which have no subordinate staff assisting the full-time purchasing agent. Houston has two stenographer-clerk assistants, and Dallas maintains a staff assisting the full-time purchasing agent. San Antonio provides for two assistants to the buyer; Fort Worth employs one full-time and one part-time secretary in the purchasing department; and Austin's purchaser is assisted by a secretary-stenographer. Storekeepers have not been included here as a part of the subordinate staff. 
The purchasing agent should maintain complete records pertaining to all phases of purchasing and supplies control. 
i 2Cincinnati Municipal Reference Bureau, Municipal Purchasing Methods and Procedure (1933), pp. 5-7. 
A Purc'hasing Manual for Texas Cities 
Records are extremely important, constituting as they do the only tangible evidence that the purchasing work has been correctly carried through to the end. Records must be accurate, reliable, and up to date. They are valuable also as a groundwork for future purchasing, which may benefit materially from a study of past performance. The records should also show market conditions and trends, changes in prices and vendors, substitutes adopted, savings effected, and similar data. The number of records and their form and extensiveness will vary. Descriptions of most of the essential records will be found scattered throughout this handbook at places which seem appropriate. At this point, those concerning sources of supply may be taken up briefly. 
The source of supply record is designed to show, by article or commodity, what each merchant or vendor is able to furnish. A source of supply card from Austin is shown as Exhibit A; this card is filed alphabetically by commodity. 
EXHIBIT A* 
SOURCE OF SUPPLY CARD USED IN AUSTIN 

BIDS 0 N ··············------------------------------------·····-------------------·· ··----­FIRM: NAME -------------------········-------------------------------------····· ADDRESS ------------------------------------------------------------------····------­PHONE NO. ------------------------------········----------·----·-----­REMARKS -------------------········------------····-----------­
•Reproduced throu2h the courtesy of Mr. Guiton Morgan, City Manager of Austin, Texas. 
A supplementary record which is seldom used is a vendor's record, which furnishes such data as the name and address of the vendor, principal officers of the company, financial 
rating, time required for delivery, usual terms, and the principal commodities purchased from him. This should also include a record of purchases actually made from him, with the date, amount of the purchase, the order number, and the voucher number of each purchase. 
Besides these, the purchasing officer will need copies of such directories of supply sources as Thomas' Purchase Record and the Municipal Index and Atlas.13 Catalogues of individual vendors should be kept on file. Much helpful material on purchasing will be found in current magazines devoted to that subject. Furthermore, membership in the National Association of Purchasing Agents will prove extremely valuable. The Association has a special division devoted to public buyers, and it has been influential in bringing about standardization in office forms and other worthwhile reforms. Membership brings with it the weekly Bulletin which includes information on market trends and conditions.14 The Executive Purchaser is a monthly maga­zine designed primarily for purchasers in private enterprise but containing articles of interest to public buyers.15 The Southwestern Purchaser, a regional publication of a similar nature, embraces items of special interest to this section.16 
One of the important duties of the purchasing agent is to observe market conditions so that purchases may be made at favorable· times. In this respect, purchasing procedure becomes specialized and so clearly demands expertness in administration. By delaying purchases in a time of falling prices, or by buying larger quantities in advance when the market is rising, the purchaser may reduce the unit cost of 
t3The latter is published by the American City Magazine Corpora­tion, 470 Fourth Ave., New York City. 
14The Association previously published Purchasing, the successor to The Purchasing Agent. The offices of the Association are located at 11 Park Place, New York City; Mr. George A. Renard is the Secre­tary. 
15This periodical is available for free circulation to officials whose primary duty is the purchase of materials and supplies. Mr. Stuart 
F. Heinritz is its editor; the editorial offices are located at 623 East 
St. 	Glair Ave., Cleveland, Ohio. I6The address of the editor, Mr. J. Richard Brown, is Dallas, Texas. 
materials. Larger quantities may be bought by means of long-term contracts. Some cities prepare their own charts of market conditions for commodities which they buy in large amounts. It is more advisable to subscribe to market reporting services which will furnish information on price trends. 
The purchasing agent should have the authority to pur­chase supplies, materials, and equipment for all municipal services. Ordinarily he does not make the purchase for all public enterprises of his municipality but is limited to cer­tain departments and/ or to purchases below a designated amount. Usually the purchaser buys for all the operating departments under the control of the city council. On the other hand, in all the cities surveyed the purchases for the school system were handled by the school board. Likewise, when a separate board administers the waterworks, the function of the purchasing for that utility may be removed from the hands of the regular purchasing agent, as in Waco. The buyer for Dallas and Austin makes purchases for the hospital, and during 1932-1933 the Dallas buyer purchased for the relief committee. The Brownsville pur­chasing agent includes the Chamber of Commerce in his jurisdiction. As a rule, library boards make their own purchases, though Austin, where all library purchases are handled by the city purchasing agent, is an exception. The Dallas charter allows the Park Board to buy items under $50 in cost, and a similar provision in the Fort Worth charter applies to the Department of Public Recreation. 
There appears to be no justification for exempting from the purchasing agent's jurisdiction such public services as schools, hospitals, libraries, and utilities. Specialized ar­ticles, such as laboratory equipment, surgical instruments, drugs, and textbooks rightly should be selected by the agency using them, though a record of such items ought to be kept by the purchaser in the interest of maintaining complete data. But assuming that the office of purchasing agent is properly organized and staffed by competent per­sonnel, there seems to be no logical reason why it should 
not handle the purchasing of standard commodities com­monly used by these public enterprises. It may be neces­sary to exempt certain classes of articles from its jurisdiction, but the commodity itself and not the using agency should be the basis for such exemption.11 If it is not considered feasible to have the purchaser act as an independent authority, he could at least serve in an ad­visory capacity. 
The jurisdiction of the purchasing agent should allow him to buy all supplies and materials and to let minor con­tracts, the council or board of purchases reserving the authority to let public works contracts and those involving large sums. Consequently, the purchasing agent should be and generally is free to handle negotiations as he sees fit in "open-market" purchases, that is, purchases the bids for which do not have to be solicited by newspaper advertising. As a rule, the charter designates an amount over which written, competitive, sealed bids are required and the council awards the contract.18 
In addition to the power to purchase for all public agen­cies up to a specified amount, a few special items being excepted, the purchasing agent should have certain other functions which should be clearly laid down in ordinances or in administrative orders. Chief among these may be listed the powers and duties to: 
Prepare specifications for all purchases, in cooperation 
with the using departments. 
Advise revision or refusal of requisitions. 
Obtain competitive bids on all items, using his own discre­
tion as to the method of securing competition. 
Reject bids. 
Determine when and in what amount surety shall be 
required with a bid. 
Make advance purchases and agreements or contracts with 
indefinite time limits and/or indefinite amounts of goods. 
17Cincinnati has unified purchasing for the city, Hamilton County, the School Board, and the University of Cincinnati. Charles 
E. Lex, Jr., "Public Purchasing Coordinated," in The Comptroller, May, 1933, pp. 21-22. 
18For a discussion of the amount separating "open-market" orders from others, see Chapter V. 
Supervise inspection and testing, and reject inferior goods. 
Supervise storerooms and warehouses, maintaining a per­
petual inventory of stock. 
Check all invoices against the orders. 
Control interdepartmental transfers of supplies. 
Maintain records of all bids, deliveries, and stock in hand. 
Make rules and orders for the conduct of the purchasing 
procedure, subject to the approval of his immediate superior. 
Supervise sale of obsolete and used materials, and such 
other property as may be placed on the market. 
In regard to the next-to-last item listed, 60 per cent of the centralized purchasing cities replied that the purchas­ing agent has the authority to make and amend rules relating to buying procedure. The auditor in Galveston supervises the forms and the manager of Wichita Falls has the same authority. 
If the purchasing function is to be carried on as it should be, the buyer must have substantial authority and discre­tion. The charter must not be so constructed as to hamper him in the proper execution of his duties. Nor must public opinion demand favors or concessions which he cannot conscientiously grant. The purchaser commands a unique central clearing agency for studying the operating costs of equipment and the comparative value of various types of commodities. From his vantage point he gathers informa­tion nowhere else to be had. He must, therefore, have the power to buy judiciously, not merely to write orders. As the Executive Regulations Governing Purchasing in Dallas states concerning the purchasing agent's division: "The Purchasing Office is not a clerical agency for other depart­ments but exercises authority and control independently of them.... the office is a source of helpfulness to all de­partments and will assist them in every proper manner in accomplishing their separate objectives." 
CHAPTER III 


THE DETERMINATION OF PURCHASE 
REQUIREMENTS 

The first step in the work of the purchasing agent is to determine the needs of the operating departments. There are several means by which he may do this. Among these are requisitions from the departments for a definite ad­vance period, requisitions for an immediate need, budget estimates, and stock records. The last may be controlled by the purchasing agent himself; as regards the other three he must rely largely upon the action of some other official. The purchasing agent will want to know three things about the departmental supply needs. He will want to ascertain the kind of articles needed, the total amount of each required, and the frequency of the need and the quantity desired at each delivery. 
All this information is necessary not only in determining what things to buy, but also in deciding how to buy them, that is, whether to buy in large quantities and store the materials or to order for periodic delivery. The ad­vantages of lower unit prices and prompt deliveries are realized to the fullest extent only when the needs of the various departments are combined and when the purchases are made for an advance period of some length. Should either or both of these elements be missing, opportunity for the most economical buying will not exist. 
The most important method of ascertaining purchase requirements is the requisition. Requisitions furnish defi­nite and specific information to the purchaser, while other methods at best provide general estimates. Requisi­tions are commonly used ; they should form a part of every purchasing system. They may be of two types. One is pre­pared by the operating department head or some authorized subordinate whenever there is an immediate demand for some article; the other, likewise prepared by the using department but at the request of the purchasing agent, gives the need for some advance period determined by the purchaser. The requisition forms the basis for the pur­chase order or contract, and no purchase should be made without a proper requisition and order. The purchasing agent need not depend entirely upon the written requisi­tion; it would be valuable if he would hold informal confer­ences with the department head prior to submission of the requisition to discuss the supply needs and cooperate in deciding upon the quality and amount to buy. 
The use of requisitions for a definite advance period is essential if the purchaser is to combine departmental needs and so buy in quantity lots. One-third of the centralized purchasing cities of Texas make use of this type of re­quisition. In 50 per cent of these cities, however, the pur­chasing agent may call for estimates of needs at such times and for such advance periods as he may designate. In actual practice such advance estimates are not usually called for. In large purchasing organizations, a schedule is sometimes prepared according to which certain commodities are bought on definite dates. Probably so formal an arrangement is unnecessary in any city in Texas. The value of advance requisitions is coming to be recognized more and more, and every purchasing agent should have and exercise the authority to call for them. 
The most common means for determining the purchase requirements is the requisition for an actual immediate need, which may be, though seldom is, used in Texas cities in addition to the requisition for a long-term need. Such a request should be made on a separate printed requisition form. Unfortunately, only 47 per cent of the cities with centralized purchasing have prepared such forms, and one of these uses them only for out-of-town purchases. In the other cities, the requisitioning is done either by means of an order blank or by oral communication through telephone or personal call on the buyer. San Antonio uses only the order form, originating from the operating departments, which serves as the requisitioning medium. Five cities have "requisitions" which in reality are purchase orders, as the terms are used here. In these, as in four other cities, requisitioning is done by word of mouth. It should be men­tioned that 20 per cent of the centralized purchasing cities employ all the various methods described above to ascertain the supply needs: it is highly desirable that every practice mentioned be utilized. 
The evidence that less than half of the centralized pur­chasing cities use a separate printed requisition indicates a defect which should be corrected. The requisition serves as a permanent record of what articles are called for, and acts as a check against the purchase order. Oral requisi­tioning is particularly to be avoided for the buyer may misunderstand or forget the request, and if there is any discrepancy between the request and the order it is impos­sible to locate the responsibility for the error. In a small city there is less reason to employ a requisition form in addition to the order form, but if the first be eliminated, the latter must be designed to serve in a double capacity. 
The printed requisition used in Dallas is reproduced as Exhibit B. The requisition should be numbered serially by departments, and should show the date, the name of the requisitioning department, a description of the article wanted, the quantity required, the date by which delivery is desired, the delivery point, the fund or account to be charged, the signature of the requisitioner, and the signa­ture of the other officers who must approve it. In addition, it may well contain a space for a statement of what the article is to be used for, a statement of the amount on hand, places for the order number, where it may be obtained if a special trade named article, and perhaps a statement that it is not an order for goods (to prevent misuse of the form). 
Two copies of the printed requisition are employed in all but two cities, which use only one. The purchasing agent of course receives one copy, usually the original, and the other is retained by the requisitioning department. In all cities the signature of the requisitioning officer is neces­sary, though if this may be a subordinate, as in Houston and Tyler, the head of the department must also sign. In Ft. Worth and Wichita Falls, the city manager also ap­proves the requisitions. In the latter case the requisition actually goes through the hands of the manager prior to the order, while in Ft. Worth the order may be placed before the manager fixes his signature. The practice in 
EXHIBIT B* 
REQUISITION FOR SUPPLIES 

CITY OF DALLAS 
Requisition No.
Account No. 
DEPARTMENTAL REQUISITION To Purchasing Agent: 
Please furnish the following to Department of _  _ ·--­Date  
At  When ----------·  Date Received by P. A.  
(Pl<'usc Civ<' Strcrt nnd NumbN or Room Number}  

-
-

Terms: .... _ ____ ·----------_____ .... ----· ·------_-------· F.0.B.___________________ .... __ 
:i:... 
?

;;:s< 
~ ~· 
~ -~ s 
~ 
~ 
"'"3 
~ 
~ 

~ 
CJ
.,...
<"+­
.,.._ 
I hereby certify that the above articles or services are necesssary for use in this department. 
?}l 
Approved for Purchase: Head of Department. Budget Clerk ___ __ 
_ 
*Reproduced through the courtesy of Mr. Hal Moseley, City Manager of Dallas, Texas. C.:l 
Amarillo is for the manager to receive the requisition and approve it, whereupon any responsible person in the finance department is authorized to write out an order. To assure the purchasing agent that the request is within the monthly budget allotment, the requisitions in Dallas must receive the signature of the budget officer before the order is finally placed. This is to be distinguished from the comp­troller's certification that there are total appropriations sufficient to care for the purchase. 
How extensive the authority of the purchasing agent should be in revising and denying requisitions is open to question. It seems desirable that his authority extend to increasing or decreasing the quantity requisitioned (though in consultation with the requisitioner) as he thinks proper on the basis of his knowledge of market conditions, stock supplies, and general operations of the administration. The purchaser in 57 per cent of the centralized purchasing cities has such power. The right to refuse a requisition should reside in the chief executive, the board of purchases when such exists, or the city council, with the purchaser retain­ing the power to recommend such action. 
The operating departments should cooperate with the purchaser by submitting requisitions at least a week before delivery is desired. At times unavoidable emergencies will require that a requisition be filled immediately but that does not warrant delay until the last article is used, with a con­sequent demand for speedy action. Last minute requisitions often force the buyer to procure goods without obtaining competitive bids, which may raise the cost of the article. It is imperative that the purchasing agent have sufficient time to employ the devices which will secure lower prices and at the same time a good quality of merchandise. Here is one aspect of purchasing where it is vital that the operating departments and the purchaser be in agreement. To prevent the damaging effects of late requisitions, and to circumvent the plea that departments cannot anticipate their requirements early enough to prevent these emergency demands for goods, the purchasing agent can let contracts 
for indefinite amounts, based on the previous year's pur­chases, against which the late or emergency requisitions can be applied. 
The purchasing agent has available one or two other means for determining pur.chasing requirem,ents. The budget estimates will furnish him with a general idea of the types and quantities of purchases, particularly those of equipment, which he will be called upon to make during the ensuing fiscal year. Of the Texas cities with a central­ized purchasing system, 4 7 per cent use the budget in esti­mating future needs. 
Commodity cards or stock records,. which constitute one of the most essential records of the purchasing office, will serve as a basis for estimating the demands of the various operating departments for a coming period. In addition, they will reveal when it is time to replenish the stock. These records, discussed fully under the subject of storage and stock control, ought to contain complete data on every order issued, especially the quantity and price of the par­ticular item. Not only should proper steps be taken to ascer­tain accurately the quantities needed, but also the quality and type of merchandise to be purchased. This introduces the subject of standardization of goods. 
The standardization of commodities is indispensable if purchasing is to be done on a scientific basis. Standardiza­tion has been defined as "the setting up of standards by which extent, quantity, quality, value, performance, or service may be judged or determined."1 Few cities appre­ciate the purpose and value of standardizing commodities, which is a fundamental aspect of public buying. Standard­ization involves two things, first, a reduction in the types of commodities to the smallest number of varieties on which the government can operate, and second, a description of each article in "specifications." In the absence of such standardization, each operating agency can demand its favorite brand or type of goods and thus make it impossible 
lNorman F. Harriman, Standards and Standardization (New York, 1928) , p. 78. 
to consolidate the needs of the departments and secure lower prices through bulk orders. 
The experience of cities demonstrates that important economies can be effected through standardizing and buying supplies according to specifications generally recognized by industries. In Los Angeles County, carbon paper was reduced from one hundred different kinds to seven, with a saving of $3,000 annually through a year's contract. A saving of $6,000 a year was made by standardizing pencils to twelve grades.2 Milwaukee reduced cleaning powders from several different kinds costing from $0.12 to $0.17 a pound to one type which purchased in large quantities was secured at from $0.035 to $0.04 a pound.8 The same city has compiled specifications on such unusual items as fire­works and a short-wave transmitting system, with the con­sequence of obtaining better quality. 
It would be impractical, of course, to try to standardize every article which may happen to be purchased by the city. Some are used so infrequently or in such small quan­tities that it would be a waste of time to make out specifi­cations. There are, however, many commodities which are used in large amounts and in several departments ; am:mg such items are fuel, stationery, office supplies, furniture, gasoline, and cleaning materials. Other commodities, as cement, chemicals, and paving materials, can be purchased economically by standardizing them to fit products which are universally used and therefore produced at lower cost. 
Standardization has other beneficial results besides lower 
prices. It leads to the retention of the articles best adapted 
to the uses of the municipality and the elimination of those 
of inferior quality. The amount of stock to be carried in 
the storeroom is reduced because of the smaller variety of 
items. The waste which occurs when a new department 
head refuses to use the brand of his predecessor is p.re­
vented. Better delivery service can be obtained with large 
2Survey of the Purchasing and Stores Department of the County of Los Angeles, p. 3. sJoseph W. Nicholson, "Why Centralized Purchasing," in Municipal Finance, November, 1934, pp. 20-22. 
orders, and this in turn reduces the stock which has to be carried. Opportunities for collusion between vendors and users, and for graft and corruption, are minimized. Compe­tition is made wider and fairer, since the vendors are assured that all will have to meet the same standards of quality and performance. The task of testing and inspect­ing is greatly facilitated. Materials can be transferred from one department to another. Finally, the work of accounting is greatly simplified. 
Specifications are not only an inherent part of standard­ization but should be used with every purchase. A distinc­tion may be made between "standard specifications" and "specifications." The former are the written descriptions of the articles which have been selected for standardizing. The latter are complete and accurate statements of what the buyer wants the vendor to furnish, and should be used with all orders, whether the article is standard or not. Extensive specifications are employed in construction proj­ects, but here the purpose is to consider only the com­modity specifications. The specification should describe the article clearly and briefly in terms of physical or chemical construction, prescribing the tests with which it must comply and any peculiarities in performance which are desired.4 
Specifications make possible exactness and definiteness in what the purchaser wishes to buy, allow all bids to be made on the same basis, and thus permit of widening the field of competition. Brand buying or its "equivalent" is to be avoided unless it is supported by specifications or unless a sample is available for the bidders to see. 
The initiative in adopting specifications and standards should be taken by the purchasing agent, though he will hardly be qualified to assume full responsibility for them. Rather they should be the objects of cooperative enterprise among the purchasing agent, the chief executive, the chem­ist, and the department heads, who could form an ex officio committee on standardization and specifications with the 
4Charles E. Lex, Jr., "Buying According to Specifications," in The Purchasing Agent, August, 1931, pp. 757 ff. 
purchasing agent as chairman.5 In small cities the manager or secretary, along with the technical officers, should be responsible for this work. The specifications should be broad enough to include articles sold by a number of deal­ers, and should have the approval of a majority of the using department heads. The purchasing agent might select for standardization those articles most commonly used, adopt tentative specifications with the advice of the users, and give them a trial before definite adoption. Specifications should not be too technical or too rigid. Finally, the pur­chasing agent will find advice from the manufacturers and trade associations of assistance in deciding upon proper standards to erect. 
The cities may take advantage of specifications compiled by the national government. The Federal Specifications Board has prepared numerous commodity specifications which may be obtained for a nominal sum. It likewise pub­lishes an index of federal specifications. The United States Bureau of Standards issues a National Directory of Com­modity Spe-cifications (Miscellaneous Publication No. 130, 1932), which tells where specifications on every standard· article may be found. Of more detailed nature giving defi­nite specifications on certain items are such bulletins of t':1e Bureau of Standards as Standards and Specifications for Metals and Metal Products (Miscellaneous Publication No. 120, 1933). The same bureau publishes the Standards Year­book which describes the progress made in this field by governmental and commercial agencies. Finally, the bureau has ruled that technical information in its possession will be released to cities, and it will approve or condemn com­mercial products by name, giving comparative perform­
ances.6 
5The administrative code of Wichita Falls provides that the pur­
chasing agent shall prepare standard specifications for the supplies 
and materials needed. The Dallas executive orders gives to the 
purchasing office the duty of preparing specifications except in the 
case of a technical or scientific item, in which instance the head of 
the requisitioning department submits specifications. If there is dis­
agreement, the manager settles the matter. 
6Stuart Chase aud F. J. Schlink, Your Money's Worth (New York, 
1927), Chapter IX. 
A Purchasing Manual for Texas Cities 
The American Society for Testing Materials, which includes in its membership many municipalities and gov­ernment officials, has done much in the way of promoting standard specifications. By 1927 it had standards on over 500 separate articles, including steel, wire, cement, paints, road materials, and rubber products. These specifications can either be adopted verbatim or revised and modified to meet the needs of the city. The State Highway Depart­ment of Texas can furnish aid in drawing up specifications on street materials. The department is continually revising specifications after testing various articles in actual _use. Continued experimentation will lead to the compilation and publication of specifications which will be of definite value to Texas cities, since they will be designed to meet the peculiar climatic conditions of the state. The Highway Department will provide city engineers with information and advice on the type of materials suitable for use in street construction. Likewise the Bureau of Engineering 
Research of The University of Texas will aid cities in com­piling specifications for paving and building materials. 
On the whole, Texas cities have not standardized the com­modities which they buy or taken advantage of the specifi­cations which are already prepared. Some 34 per cent answered a question on standardization affirmatively and 36 per cent negatively, but discussion with officials indicated that very few articles have been standardized. Specifica­tions for purchases are employed more extensively, being used in some cities for construction projects, and for cur­rent buying of asphalt, cement, gasoline, fire hose, and a few other items. Brand buying appears to be a general practice. Only 9 per cent of the fifty-three cities reported the use of specifications prepared by the federal govern­ment; 17 per cent make some use of those compiled by trade associations; and 28 per cent prepare their own specifica­tions. City officials do not seem to be acquainted with the federal specifications but are better informed of the work of the American Society for Testing Materials. The field of standardization and specifications is one in which Texas 
cities can very definitely improve their purchasing proced­ure. Standardization is a primary requisite for reducing the number of orders and increasing their size. Specifica­tions are necessary if buying is to be scientific, if the city wishes to be certain that it gets what it wants, and if inspection and testing are to be done accurately. 
CHAPTER IV 
PURCHASE NEGOTIATIONS 
The essence of good municipal purchasing is the securing of competitive bids on all purchases. Centralized purchas­ing, standardization and specifications, and consolidations of purchase needs are all designed to permit the broadest and most effective competition. It is hardly necessary to dwell at length upon the value of competition in purchasing. It is here that the opportunity exists for the city to secure the lowest price for the quality of merchandise needed. Certain factors which will assist in obtaining the widest competition should be kept in mind by the purchasing agent. Mr. A. G. Thomas summarizes these as follows :1 
1. 
Specifications sufficiently broad to admit of competition on all adequate articles for each need. 

2. 
Invitations for bids containing complete information as to requirements. 

3. 
The elimination of the speculative element in bidding to the largest possible extent. 

4. 
A high trading reputation of the purchaser among vendors. 

5. 
The elimination of red tape to the largest possible extent. 

6. 
Attractiveness of quantities and delivery conditions called for. 


There are several methods by which the purchaser may inform the bidders of the supplies needed, and stimulate competitive bidding among the vendors. Newspaper adver­tisements, bulletin board notices, and direct solicitations are the mediums generally utilized. These will be dis­cussed in the order named. 
Newspaper advertisernents as a means of publicity for purchase requirements have a place when the order is large and the need is not urgent. Newspaper advertising as a publicity medium is designed to prevent dishonesty and to prohibit the limitation of bidding to persons favored by 
iPrinciples of Government Purchasing (New York, 1919), pp. 113-114. 
the purchasing agent for personal or political reasons. As a method of publicizing purchase demands, it is open to serious objections. Specifications may be omitted in order to economize, the requirements being stated in very general terms. Broad competition is not gained since the out-of­town dealers will not have the local papers available. More­over, the method is expensive and tends to retard the purchasing process. It is generally required that advertis­ing be in a local paper and the number of times a notice is run varies from once in 7 per cent of the cities on which this information was obtained to ten times in 25 per cent. Some cities have no definite legal requirements as to the number or frequency of the advertisements, while others must observe detailed charter (or ordinance) provisions. 
Newspaper advertisements should be used on all public works contracts and on all purchases over a stipulated amount. To assure uniformity of practice and to fix respon­sibility, this sum should be named in the charter or in an ordinance. The minimum amount which will justify news­paper advertising should never be placed at less than $500 and experience has shown that it is more desirable to set it at $1,000 in larger cities. Under this minimum figure, the purchasing agent should be allowed to buy on the open market, using his own discretion as to the means by which he secures the fullest and most open competition practi­cable. It is likely that he will advertise in some instances involving less than the minimum amount, but it is better to allow him a choice than to set too low a figure. 
The charter provisions and the practice in Texas cities regarding newspaper advertisements are so varied as to defy summary. The charter may call for advertising on "contracts" or on "purchases." A survey of the methods required or used shows that in one city all "contracts" must be advertised while in five there is no minimum amount fixed. The minimum purchase which requires such advertis­ing ranges from $50 in one city to $1,000 in three, with $500 being the sum fixed in half the cities. All printing contracts must be advertised for in five cities. In practice, advertising is not employed as frequently as the charter provisions would lead one to believe. For example, one 
A Purchasing Manual for Texas Cities 
charter demands advertising for every purchase, but in practice $500 is the minimum. In another city the charter minimum is $500, but the purchasing agent reports that only public works contracts are advertised for. There is no doubt, however, that the minimum limits for newspaper advertising are too low in Texas cities. This reduces the legitimate jurisdiction of the purchasing office, entails extra expense, and leads to the splitting of orders to avoid the legal restrictions. 
The bulletin board on which is posted a list of the pend­ing purchases is an inexpensive method of soliciting bids. 
Specifications may be placed on the bulletin board or made available in the office. The main defect of this device is that it is available only to local dealers and to such salesmen as may happen to visit the city hall, which obviously limits competition. The cities of Texas appear to be neglecting the advantages to be gained from this system. Dallas posts on a bulletin board all pending purchases of $50 or more. No other cities appear to employ this device, which in view of the fact that local merchants obtain most of the orders, is an oversight that can hardly be justified. 
The most advantageous method for securing competition, as well as the one most widely used, is direct solicitation. 
Such solicitation may be by letter, telephone call, or per­sonal interview. To make effective use of these methods, the purchaser must maintain a list of local and out-of-town dealers, and the articles which they are able to furnish. When a supply need arises, the vendors should be notified of the pending purchase and given the chance to enter a price or bid. 
The letter method or written request for quotations is the most desirable means of direct solicitation. In the first place, it furnishes a definite and permanent record of the negotiations. Furthermore, it is the most feasible way of contacting out-of-town dealers, though by no means are the benefits limited to them. The purchasing agent should pre­pare a printed or typed form for use in requesting quota­tations. The Dallas quotation sheet is reproduced as Exhibit C. The terms and conditions of purchase and deliv­ery should be stated clearly to avoid misunderstandings. 
EXHIBIT C* QUOTATION SIIEET ON WHICH VENDORS SUBMIT Ems City of Dallas DEPARTMENT OF PURCHASE Municipal Buildine-QUOTATION 
CITY OF DALLAS, 
Date______ ---------------------------------------------------------------------------------­
City Purchasing Agent: In response to your request Kindly enter our quotation as follows · 
BIDS WILL BE RE ::::EIVED UNTIL 12:00 NOON_________________________________ -----------------------------______ --·--------------------··-----------__ Prices quoted m ust include all delivery charges to po ints of delivery indicated hereon. If you are not pre­pared to bid ret 1rn this sheet and state the reason, otherwise your name may be removed from our mailing list. CASH DISCOUNT. The City of Dallas will pay within thirty days, after due and proper delivery, accompanied by invoice for all goods ordered under this proposal, invoices so paid will be subject to a cash discount of two per cent unless prices are marked net hereon. 
(For Vendor's Use Only) 
Quantity  Description  Price  Per  Total  
PRICES  MUST  BE  EXTENDED  
~~  

Deliver to The city reserve the right to award either by class or item. We prefer that your prices be submitted on this form. Any changes made in the wording or conditions of this proposal may cause its rejection. All bids submitted must be itemized. 
Delivery to be made within -----------·-·--------------------days from receipt of order. 
F.O.B. ...... ... Terms _ 
-----------· -----·-----------------------------· -·-------------------------­
Acct. No. __________________ 
Firm 
-------·--·------------------··---------------------------Req. No. ·-------------------. -----------·----·----------------------------------­
Representative Checked 
---------------------· -··-------------------------------------------------­
•Reproduced through the courtesy of Mr. Hal Moseley, City Manager of Dallas, Texas. 
.i;:.. 
~ 
""3 
~ 
(I> 
~ 
;;· 
~ 
~ 
~ 
~ 
""3 
(I> 
~ 
~ 
~ 
~ 
.,... 
~­
A Purchasing Manual for Texas Cities 
The Austin quotation sheet states that the city reserves the right to reject any or all bids. Galveston mails its forms in duplicate, the vendor retaining one copy. Some 59 per cent of the Texas cities studied report that they use written communications to solicit bids, though few of these use printed forms. Temple follows the commendable practice of supplementing newspaper advertisements with written communications. 
The telephone call, generally confined to local vendors, is the most commonly used device and accounts for the bulk of the number of orders. It is inexpensive and quick. Its chief disadvantage is that its very simplicity will lead to its extensive use, with a resulting reduction of contacts with out-of-town merchants. It also encourages hasty buy­ing. Furthermore, few purchasers maintain a record of quotations secured by telephone, which they assuredly should do. It may be, however, that the purchasing agent will not have sufficient clerical help to prepare written requests for bids on many items, and under such circum­stances it is far better to use the telephone to contact the dealers than not to do so at all. Over 62 per cent of the cities replied that they make use of the telephone. A com­mendable practice would be to require all telephone quota­tions be confirmed by the vendors in writing. 
Both the written and the verbal requests for prices are utilized for the open market type of purchase, that is, up to the amount which requires newspaper advertisements. Consequently, the most common maximum for them is $500. Dallas, an exception to this rule, uses the telephone for purchases under $50, and written solicitation for both local and out-of-town vendors for those between $50 and $500. On the other hand, 9 per cent of the cities claim to have no limitation on the use of direct solicitation. Galves­ton and Pampa are the only cities indicating that letters are used more frequently than the telephone. Austin uses the telephone for 90 per cent, Fort Worth for 75 to 90 per cent, and Tyler for some 65 per cent of all orders. The general practice is to make the telephone the means of contact with the local dealers, the purchases in such cases usually being small. The letter or form requesting bids is 
The University of Texas Bulletin 
sent when a large order is pending or when the goods are unobtainable at home, and thus is used for out-of-town much more extensively than for local dealers. 
Personal interview is another method which is employed to a limited extent. The purchasing agent may visit the local merchant personally, checking the quality of goods before placing the order. Salesmen and representatives of vendors also serve as a means for circulating the supply needs of the city. 
In addition to the means of soliciting bids, there are sev­eral topics relating to bidding which merit mention or dis­cussion. These are group versus item bids, alternate bids, sealed bids, surety, making bids public, retention of bids, exceptions to competition, rejection of bids, and the exten­siveness of competition in Texas. These will be discussed in the order named. 
It is good practice to ask for bids upon separate items with the city reserving the right to award the bid either on items or on the entire group. If the city is planning to buy several articles all of which can be furnished by one dealer, it may split the order and purchase each item from the one who bids lowest on it, or it may decide the vendor on the basis of the price quoted on all articles in the group. If the latter method is followed to the exclusion of the former, the merchant is able to quote lower prices since his delivery charges and overhead expense will be much the same whether he sells one or a dozen articles. From the stand­point of the buyer, group or class purchase will simplify the inspection problem, avoid the trouble of several deliv­eries, and minimize the clerical work of issuing orders and paying the bills. If the alternative of making separate item awards is not offered, however, the person who bids low on some one particular item is likely to be dissatisfied. It is clear that it is necessary to have proper classification of the items so that bids on the entire group can be made by each vendor. The practice in Texas cities is to favor the award of the bid on the item rather than the group basis; 26 per cent of the cities replying to this question generally ask for group bids, 53 per cent seldom, and 21 per cent never do so. 
Alternate bids are sought when the purchaser is in doubt as to the best method of purchasing or as to the relative desirability of two or more items. Thus, the purchaser may ask for a price on goods for immediate delivery and for delivery at intervals. Again, he may be undecided as to the best article to buy for the purposes of the city. In these cases, it may be a saving of time to ask for alternate bids, as some Texas cities frequently do. These should not be used so often, however, as to give the impression that the purchaser is unable to decide on his purchase requirements. 
One characteristic of public purchasing is the practice of asking for sealed bids. Sealed bids are seldom requested in private business but the suspicion of dishonesty in public administration has caused this to become a part, in varying degrees, of every public purchasing system. A sealed bid must of course be a written bid which is submitted by the vendor, all the bids being opened at a designated time and place.2 It may be requested by any type of solicitation discussed above; newspaper advertisements almost invari­ably call for sealed bids, and letters and requests for quota­tions frequently do. Sealed bids are limited to public works contracts in 6 per cent of the cities.3 
The advantages of sealed bids may be listed as follows : 
They prevent charges of favoritism. 
They reduce the necessity of salesmen calls, and so permit lower prices. 
Out-of-town bidders are put on a par with local dealers and are therefore encouraged to bid. This widens the basis of competition. 
They save the time of the purchasing agent, since each bidder submits one price without sa1es talk or revision. The disadvantages are : 
They delay the purchasing procedure. 
2rt is possible to have written bids which are not sealed though this is not general. 
aPurchasing agents favor or at least accept the continued use of sealed bids. See "Sealed Bids, the Public Buyer's Viewpoint," in The Purchasing Agent, January, 1932, pp. 30-34. 
They prevent the buyer from taking advantage of special prices or suddenly changed market conditions. 
Chief emphasis is on price which may result in the pur­chase of faulty materials if specifications are incomplete or inspection lax. 
Sealed bids should be required when the bid is solicited through the newspaper, but in all other cases the purchas­ing agent should have the authority to decide when to demand sealed bids. In actual practice, such bids are used infrequently in Texas. One city of over 25,000 population reported that only once in the last two years have they been required, and that was for the purchase of fire hose. In larger cities they are more common, being used for the larger purchases, carload lots, contracts, when competition is close, or when there is an element of distrust. Dallas re­quires that all bids over $50 be sealed. 
In some cities the requirement for sealed bids may be waived. This is true in 50 per cent of the cities answering a question on the point. In a majority of these, the com­mission is the agency which has the right to waive, and in others it is the purchasing agent who has that option. 
A practice sometimes followed in public bidding requires the bidder in formal purchases to submit surety with the bid as a guarantee that he will enter into the contract if he obtains the bid. While this may be necessary in some cases to protect the buyer, it is not likely to be needed except in large orders and on construction projects. It complicates the procedure, and thereby reduces competition. It also increases the price of the purchase, for the cost of prepar­ing and submitting the surety will be included in the bid. Here again the purchasing agent should have the power to decide when surety will be required, and in what amount. Of the cities replying to the inquiry as to whether or not they require surety, 13 per cent never, 30 per cent seldom, 37 per cent generally, and 20 per cent always do. The amount of surety asked is usually 5 per cent of the amount of the bid, though in a few cases it is 10 to 15 per cent. It is better that a sufficient fiat amount be set by the pur­chasing agent, for if stipulated in percentages of the bids 
A Purchasing Manual for Texas Cities 
submitted, the amounts can be disclosed by the surety company. 
Another practice which differentiates public from private purchasing is that of making bids public. All cities make public the bids received. The rule of publicity is intended to serve as a bulwark against dishonesty and graft, and while it may not be overly effective in accomplishing that end, it appears to be worth retaining. The purchasing agent should prepare a form on which to tabulate the name of the bidder and the details of his bid, such as unit prices, dis­counts, delivery terms, and other facts to permit compar­ison or prices. It is valuable to have such a form mimeo­graphed for use in recording prices which are secured by telephone, as do San Antonio and Austin. It is recom­mended that all telephone bids be posted on the bulletin board. 
Regardless of whether the bids are published, the city files should be open to inspection. This raises the question of how long bids should be kept. As other governmental records, all bids and quotations should be made a matter of permanent record, and preserved indefinitely. Of the cities furnishing data on this point, 85 per cent keep bids indefinitely, though in some cities they are recorded only in the minutes of the council meeting. One city files only the important bids, another keeps them until the contract is fulfilled, and two retain them less than one month. Finally, mention should be made that the practice of notify­ing the unsuccessful bidders by letter or card is a com­mendable one which creates good will between the city and the vendors. 
The purchasing agent should have the power to reject all bids. This authority should be exercised when the bids are too high, when there is suspicion of collusion, when there is a question as to the fairness or accuracy of the specifications, or when the city changes its mind about purchasing the article bid upon. When bids are rejected, the purchaser may readvertise for bids, or buy upon the open market. Two cities indicate that bids may be rejected for any reason or condition. As a general rule, the bidders 
The University of Texas Bulletin 
are notified when solicited for a bid that the city reserves the right to reject it. 
While it is the duty of the purchasing agent always to secure competitive bids, certain circumstance·s justify non­observance of this principle. Competition is important but it may not always be practicable to secure competitive prices. This is true when an emergency arises, when the article needed is a patented or proprietary one and therefore ob­tainable from only one source, or when the amount involved in the purchase is trivial. In the first instance if the emergency is real, for example, if it involves the replace­ment of a part on a machine in current operation, it would be more costly to wait for bids than to buy without com­petition. Again, where the purchase is petty the saving through competitive prices would be so small as not to warrant the purchaser's taking his time to secure bids. Thirty-one cities furnished data concerning the purchases on which they do not get competitive bids; 74 per cent of them except emergency purchases, 58 per cent patented articles, and 87 per cent purchases costing small sums. While there can be no fixed rule regarding the maximum amount for purchases without competition, it is suggested that $25 is a practical limit to observe in this respect. 
How extensive is competitive bidding in Texas cities? As mentioned above, it is used when bids are solicited by means of newspaper advertisements. In addition, the city charters of Houston, Galveston, Waco, Palestine, and Uvalde require competition whenever practicable in the pur­chase of all supplies, and the ordinances of Dallas require sealed, competitive bids on all purchases over $50. Aside from these legal provisions, it is the general practice in the larger cities to obtain two or more bids on all purchases except in the cases discussed above as exceptions. In a few large cities where purchasing is not centralized, or where the department heads have the authority to obtain com­petitive bids whether or not they write the order, the prin­ciple of competition is not observed to such a great extent. This is to be expected since the department heads are sel­dom qualified to obtain or particularly interested in get­ting comparative prices. In the smaller cities, one finds less 
A Purchasing Manual for Texas Cities 
competition. This is explained by the fact that local mer­chants are favored whenever possible, and it is impossible to secure real competition where there are one or at most two dealers handling any particular commodity. This sit­uation also arises from the practice of not contacting out­of-town dealers except for large or unusual orders. 
The cardinal points to be observed in purchase negotia­tions can now be summarized. Centralized purchasing is particularly well adapted to securing widespread competi­tion on purchases since the purchasing agent can readily keep a list of sources of supply, has available clerical assist­ance to aid him, and has or can develop expert knowledge of the technique of buying. Competition can be secured for all purchases, the only exceptions being for emergency purchases, those of patented articles, and those of small value. The amount of competition should be determined by the size of the order, but good purchasing procedure would demand not less than three quotations on the smaller items; the more it is practicable to obtain on the larger ones the better. 
The purchasing agent should have the authority to decide how many bids to secure, the method of solicitation, whether group or item bids shall be requested, whether surety is to be required, and if so in what amount, if bids should be rejected, and similar questions. The newspaper advertisement should be used regularly only for public works contracts and for large orders; the written, direct solicitation should be employed more frequently than at present and indeed should become the usual method ; and telephone quotation (subsequently confirmed in writing) should be utilized on small orders, especially when haste is necessary. The purchasing agent must avoid limiting his solicitation for bids to local dealers or favored vendors, and must give opportunity for competition to all who are interested and reliable. Having obtained bids from various dealers, the purchasing agent is ready to determine who shall be awarded the contract or order. The problem in­volved in this decision will be the subject of the following chapter. 
CHAPTER V 
ORDERS AND CONTRACTS 
Once the bids have been solicited and secured, it remains to award the order or contract. Consideration of this step involves attention to such matters as the basis upon which the decision is made, tie bids, local dealers preference, the order forms and the procedure through which they go, and emergency orders. 
The order should be awarded to the lowest and best, or to the lowest responsible bidder. Either of these standards is more desirable than the requirement that the lowest bidder must be given the order, for the lowest bid is not necessarily the best one. There should be allowed a wide range of discretion for the consideration of such factors as quality of merchandise, delivery terms, and the service reputation of the dealer. Of the cities which supplied infor­mation on this point, 5 per cent give the order to the lowest bidder, 49 per cent to the lowest responsible bidder, and 46 per cent to the lowest and best bidder. The charter in some cities calls for the selection of the "most advantageous bid," and in others for the "lowest secure" bid. 
The purchasing agent should have the authority to decide the person to receive the order in all open market pur­chases, or those where newspaper advertising for bids is not required. As noted before, the maximum figure for open market purchases should be not less than $500 and in cities of considerable size should be $1000. Over this amount the city council, or the board of purchases if one exists, should open the bids and make the award, as is the customary practice.1 Deviations from the practice of abid­ing by a set figure are found where the council makes the 
1The recommended charter and ordinance, prepared by Russell Forbes and printed as Appendices I and II of this handbook, set this figure at $2,000. This is practical if the purchasing organization is experienced and trusted, and if the annual purchases of the city total well over $200,000. It is to be understood, therefore, that this figure is flexible and should be adjusted to the budget of each city. 
The recommended ordinance fails to provide for council award of purchases over $2,000. 
award on public works contracts, as in Austin and Big Spring; on all contracts, as in Tyler and Brownsville; and on large purchases, as in Uvalde, Trinity, Sinton, and Lib­erty. When the council or purchasing board must make the award, a written recommendation from the purchasing agent should be attached to the bids for that body's infor­mation. 
The practice of giving preference to local dealers in soliciting bids and awarding orders should not be· followed at the expense of good purchasing procedure. Not only is it the common practice to solicit bids from local dealers only, unless the item is unattainable at home or the order large, but even when outside bids are secured, local mer­chants are inclined to insist that they be given preference over an outside dealer. It is argued that they perform a distinct service to the city in carrying in stock the various supplies and commodities which the city uses, and further­more, since they are taxpayers on real and personal prop­erty, that they should be given the trade of the city and allowed a legitimate profit thereon. Admitting that there is some justification for this point of view, its acceptance in­volves distinct disadvantages from the standpoint of the city as a whole. Local merchants may secure the agency for some commodities which are entirely foreign to their principal business, thus making the decision on awards embarrassing to the purchaser. Agreement among the man­ufacturers to submit their bids to the city directly is appar­ently the only solution for this situation. There is the further fact that if solicitation is limited to the local mer­chants, they may through some means of informal agree­ment charge higher prices than otherwise would be paid. Some city purchasing agents, realizing this, find that they are able effectively to reduce high local prices by giving an order to an out-of-town dealer, or merely by soliciting out­
side bids. When it comes to awarding the order, there is certainly no reason why the local dealer should not secure the busi­ness if his bid is low and he is a responsible vendor. He should not, however, be given the order if his price is appreciably above that of an outsider, or if the taxpaying 
public would suffer from his securing it. Every Texas city studied gives preference to local dealers in awarding orders and contracts. Most cities qualify this by requiring that the local dealers be "in line" as regards quality and price, though some give the order to them even if they are some­what higher. Two cities were honest enough to state that they give preference to political friends; they are to be congratulated more upon the candor of their officials than upon their judgment or civic honesty. 
The purchasing agent will normally find himself limited by a charter provision prohibiting any officer of the city from having a financial interest in any contract or order awarded by the city. One view of the matter would con­demn this arrangement, for with officials of integrity in office, there would be no need for such a provision to pre­vent dishonesty; moreover, it is apt to bar the purchase of certain commodities within the city and may be carried to unreasonable extremes in application. Nevertheless, it is probably well to include such a prohibition in the charter to prevent the dishonesty which in its absence would occur if unscrupulous men should obtain office, and to allay the suspicion which naturally would arise if it were omitted. A total of 31 per cent of the Texas cities have such a section in their charters applying to all officials and employees of the city; 14 per cent apply the prohibition only to the com­missioners, the manager, and the department heads. 
The matter of taxpaying frequently enters into city purchasing. The purchasing agent may prorate the orders, seeking to distribute the business so that the larger tax­payers will get a larger proportion of the city's business than the smaller. Provided that the bids are very similar, this practice appears consistent with the policy of giving preference to local dealers because they are taxpayers. Four cities report that they favor the larger taxpayers or try to prorate the orders. The question then arises of how to treat the delinquent taxpayer; it does not seem just to continue to give him the business of the city when he does not pay his tax bill. On the other hand, the city may de­mand that the order which is given to the delinquent be applied on his delinquent tax bill; 17 per cent of the Texas cities do this. This practice might become an incentive to delinquency, particularly if the city gives preference to delinquents. It is suggested that one of two things might be done in regard to tax-delinquent bidders. First, the city could refuse to give orders to any delinquent business or person, which would seem reasonable and fair. Second, the order might be given without regard to tax payments, and then if a delinquent gets the order, the check applied to his tax bill, though with his consent. 
The N.R.A. was instrumental in creating tie bids and price agreements. 2 The seriousness of this problem in­creased during the last two years. Uniform prices which were encouraged and in some cases established by the National Recovery Administration virtually destroyed competitive bidding. Uniform prices had the appearance of collusive price fixing, which was in direct disagreement with the accepted practice of awarding the order to the lowest bidder, and precluded the possibility of fair compe­tition. A survey made in March, 1934, disclosed that the materials and supplies purchased by thirty cities over 100,­000 in population during the preceding eight months had increased in price an average of 20.4 per cent; cities from 30,000 to 100,000 averaged 18.5 per cent increase, and cities below 10,000, 14 per cent increase.3 
Milwaukee asked for bids on street lighting cable; twelve bids were identical and in these the specifications had been changed by the bidders, the changes made being identical.4 A survey conducted by the United States Conference of Mayors revealed that price fixing and seeming collusion were prevalent. Mr. Paul V. Betters, executive director of the conference, stated: "The worst feature of the codes is the apparent collusive bidding now going on. Practically 
2when this manual was prepared it was too early to know what effect the ruling of the United States Supreme Court in the Schechter case (May 27, 1935), in which the N.R.A. codes were declared unconstitutional, would have on municipal purchasing. 
S"Supplies and the Cost of Living," in Public Management, April, 1934, pp. 110-112. 4"Jmportant Letter on Price Fixing and Public Buying," in Michi­gan Municipal Review, April, 1934, p. 51. 
every time a city calls for bids on materials or supplies, uniform bids are received. Competitive bidding, required by law, has become a thing of the past."5 Nor did the situ­ation improve in the past year. Dr. Russell Forbes, Com­missioner of Purchase of New York City, reported after identical bids on fire hose had been received eight consecu­tive times: "N.R.A. codes have resulted in fixed or uniform prices in many lines. Political competition then is substi­tuted for price competition ... Some of the N.R.A. codes are thin disguises for collusion and price-fixing."6 
Some 80 per cent of the Texas cities which answered the question pertaining to their experience with the N.R.A. replied that there had been clear evidence of price fixing under the codes. The frequency of tie bids varied; one city reported receipt of such bids for "everything," while a few claimed that the prices of only certain articles were the same. Printing bids were frequently identical; fire hose, lumber, tires, pipe, cement, and chemicals were other com­modities on which it was difficult to obtain competitive bids. Moreover, shipping conditions, terms of payment, and other factors varied from code to code, all of which created misunderstanding and confusion. 
Public purchasing involves certain factors which justi­fied special consideration under the N.R.A. Free and open competition has served to protect taxpayers from fraud and to insure fair prices. Furthermore, cities purchase in large quantities, vendors undergo little risk, long term con­tracts level out production, and finally, there is little sales cost in selling to cities. After repeated protests from the cities throughout the country, national executive orders in June, 1934, placed governmental agencies in the same class as wholesalers so far as prices and terms of sale for quan­tity deliveries are concerned; provided that quotations to 
0Quoted by· Joseph W. Nicholson in "Municipal Purchasing Under 
N.R.A. Codes," in Michigan Municipal Review, July, 1934, pp, 89-90. For other articles on the effect of the N.R.A. see Sherwood L. Reeder, "How N.R.A. Affects the Cities," in Seattle Municipal News, October 13, 1934; B. P. Dysart, "Do Competitive Bids Reflect Competition?" in Texas Municipalities, April, 1934, p. 70. 
GThe United States Municipal News, April 1, 1935. 
cities might be made f.o.b either point of origin or of delivery ; allowed governmental agencies to make contracts for future deliveries at fixed prices, not subject to readjust­ment in case of changing price levels; and of most import­ance (Order 6767) permitted bidders to quote prices to governmental agencies as much as 15 per cent below the prices filed with the N.R.A. code authorities. A surpris­ingly large number of Texas city officials professed ignor­ance of the 15 per cent discount allowance, and the few who knew of it had made no effort to check the vendors on this point. Many dealers gave no discounts at all, and others allowed only a small per cent for cash payment. 7 
Texas cities confronted with tie bids have used a variety of means to decide who should get the order. Some cities draw lots to determine the vendor, others divide the order among the bidders, and still others award the contract to a person or firm which has not had an order recently. A few municipalities make the vendors themselves decide, some go into the question of the quality of merchandise, and a few choose the vendor who has been low on previous occa­sions. Drawing lots relieves the purchaser of the task of making the decision, but is of doubtful legality. Certainly the quality of goods should be considered, and that factor being uniform, distribution of the business appears to be a fair way out of the dilemma which faces the city with tie bids. 
It is imperative that every city prepare and utilize some 
form of purchase order. The importance of giving orders 
in written form which will avoid misunderstandings and 
furnish a permanent record of the transaction is obvious. 
Vendors should be informed that no bills will be paid unless 
the regular purchasing procedure has been followed and an 
7This is in accord with the report of the N.R.A. Research and Planning Division which found that Order 6767 secured only a small fraction of the nossible savings to governmental units which the 15 per cent disco~nt was intended to achieve; that tie bids increased; that the order did not loosen the hold of strongly organized industries upon prices; and that all industries apparently took advantage of the suspension of the anti-trust laws. The United States Municipal News, May 15, 1935. 
order issued for the goods. Likewise, department heads must be educated to the importance of observing the re­quired procedure. In spite of the apparent indispensability of order forms, a few of the cities replying to a question on this point do not employ such forms. It is logical to assume that most if not all of the cities which failed to answer this question do not have them. 
The purchase order of Brownsville is reproduced as Exhibit D. This form has all essential data, exeepting the number of the requisition which preceded it, and the terms of the purchase. Some of the instructions and condi­tions which appear on the order forms of other cities are: 
On All Freight Shipments, Bills of Lading Showing 
Weights and Rates Must be Forwarded to the Purchasing 
Agent. 
El Paso 
If prices are higher than specified, do not ship. Advise us. Austin 
Municipal Discount of 2 per cent will be taken unless Net is specified. Galveston 
The right is reserved to cancel all or any part if not shipped as specified. Houston 
When goods are called for, DELIVERY RECEIPT must accompany invoices. Dallas 
No purchases are valid unless covered by this form signed by the City Manager. Big Spring 
The number of copies necessary will vary with the size of the city. Cities of medium or large size will find they cannot well operate without four copies (one an original), and the small city will need two at the very least. One copy goes to the vendor as authorization to deliver the goods and bill the city for them; one is retained by the purchaser for reference and for use in checking the invoice; a third copy is sent to the comptroller or auditor to facilitate a 
EXHIBIT D*  
CITY OF BROWNSVILLE, TEXAS  Order No.  
Office of the Purchasing Agent  Date Issued  
FIRST COPY  Date Wanted  
PURCHASE ORDER  Requi si ii oner  
THIS COPY TO VENDOR  Delivery  Instructions  
To  SEND TO  
ATTENTION OF  
VIA  

~antit y
Code
Description 
v 
and 	Unit 
All Invoices Must Ile Mnil<'d lo Purclrn ~i ng Agent's Office 
Amounl 
Price 
or Estimate 
CONDITIONS-READ CAREFULLY 
1. 	
Please acknowledge recei9t of this order by return 6. Charges for boxing and cartage will not be allowed mail. unless previously agreed upon. 

2. 	
All goods charged to City of Brownsville, Texas. 7. If the price is stated in the order, material must 

3. 	
Each shipment should be covered by a separate not be billed at a higher price. invoice. 8. Acceptance of this order includes acceptance of all 

4. 	
The right is reserved to cancel this order if it is terms, prices, delivery instructions, specifications, not filled within the contract time. and conditions stated. 

5. 	
The conditions of this order are not to be modified 9. IMPORTANT: Invoices and packages must bear by any verbal understanding. this Order Number. 


Purchnging Agent 
*Reproduced through the courtesy of Mr. Z. A. Rosenthal, City Ma nager of Brownsville, Texas. 
;i:.. 
? 

<:"'> 
...... 
~ ~· 
~ ~ ~ 
...... 
~ 
"'i 
""3 
(I:> 
H 
~ 
CJ
....
.,...
.... 
(I:> 
Cf.> 
~ 
....... 

check of the invoice; and the fourth is sent to the requisi­tioning department. A fifth copy may be utilized as an "advice of goods received." Of the cities which employ or­der forms, 34 per cent use two copies, 31 per cent three; and. 22 per cent four; Houston employs six and Dallas seven. One city makes only one copy, which goes to the vendor, its sole record of the order being a stub from the order form. 
The order of course must be approved by the purchasing agent and must receive his signature. If it involves an expenditure of major proportions, the mayor or manager should approve it. Austin and Wichita Falls have the man­ager approve all orders in addition to the purchasing agent, and in Dallas the manager's approval is required on pur­chases over $500. In two cities the mayor must sign besides. some other officer, and in several small cities the council must approve orders. These additional checks are not harmful but in general they would seem to be superfluous .. 
It is essential that the order be approved by the comp­troller or auditor before being placed. The significance of this step, which is fundamental in an adequate budget sys­tem, must not be minimized.8 Under this plan the appro­priations for various accounts are "encumbered" or earmarked in the amount necessary to pay for the order. This gives assurance that each department will stay within its budget appropriations for supplies and materials, and also prevents the accumulation of invoices at the end of the year in excess of the appropriations. If the practice in question is not followed, the comptroller has no means of knowing what obligations are being incurred until the invoices come in, while on his part the purchaser cannot know whether the city can afford the additional expendi­tures called for by requisitions. 
The signature of the comptroller may appear only on the copy of the order which remains in the purchasing agent's office, as in the Dallas system. In Houston, on the other hand, the comptroller signs the copies which are sent to 
8The charters of Galveston and Port Arthur require certification that there is an available balance to pay for the supplies before the order is issued. 
the vendor, and on the Austin order a printed statement assures the vendor that there is a balance to meet the expenditure covered by the purchase. The auditor in Brownsville is part-time purchasing agent; he is able thus to make his own inquiry into the availability of funds. 
At this point it is advisable to describe in some detail the procedure which certain cities follow in the issuance of purchases orders. The cities selected illustrate some varie­ties and types of procedure. San Antonio employs one form made out in quadruplicate, which serves as both requisition and order. It is signed in succession by the chief clerk and the commissioner of the requisitioning department, the mayor, the purchasing agent, and finally the party receiving the delivered goods. The purchasing agent of Dallas, Beaumont, and Houston retain two copies of the order, one of which is filed alphabetically by vendor and the other by order number. 
Wichita Falls, Port Arthur, and Sherman use a slightly 
different procedure in local and in other purchases. Port 
Arthur employs a "Purchase Memo" for local purchases, 
and a "Purchase Order" for others. These two forms are 
similar and each is numbered serially. Wichita Falls, 
which maintains a separate order book for each depart­
ment, does not send the vendor's copy to the local merchants 
but only to out-of-town dealers. Sherman makes out three 
copies of the order for outside purchases, one copy going 
to the vendor and the other two remaining with the 
manager. For local orders, the vendor's copy is dispensed 
with. 
Houston, Amarillo, and Navasota send two copies of the 
order to the vendor ; one he retains, the other he returns 
with the invoice. Five cities send only one copy of the 
order to the vendor, which must be returned with the 
invoice. It is desirable that the city prepare sufficient 
copies to allow one to be retained by the merchant for his 
files. 
The orders which have been described thus far are 
ordinary or "regular" orders, which are issued by the pur­
chasing agent after requisitions have been properly filed 
and approved. Sometimes an occasion will arise in which 
an emergency purchase must be made, as when a repair part on machinery is needed or material for a job must be had at once if the work is not to be delayed. In such an event there will be no time for requisitions to be put through in regular form. If it occurs during business hours the purchasing department should place the order. Often it will be impossible for the purchaser to be con­tacted, however, and the department head or some sub­ordinate must make the purchase immediately. Regard­less of who handles the emergency purchase, it must be made at once, without competitive bids, and as the exper­ience of Dallas proves, with resulting higher prices. For this reason, emergency purchases should be kept at a minimum, else the operating departments will abuse the privilege of making such purchases, and the advantages of centralized purchasing will be nullified. Every Texas city in the sample permits emergency purchases to be made, and 27 per cent indicate that persons other than the purchasing agent may make them. It is advisable to limit emergency purchases made directly by departments to those below a certain amount; Forbes suggests a limit of $25.9 Texas cities either have no limit, or else a figure so high as to be worthless. 
In any event, the regular procedure of requisitioning should be followed, even after the order is made, and if the transaction is handled by telephone, a follow-up order should by all means be sent. Most cities follow this practice. Austin and Fort Worth mark the written order "confirma­tion," and Waco indicates that it is an emergency order. Both of these devices are commendable. 
Dallas and Houston have a somewhat different proced­ure in emergency purchases. Houston employs a separate form which is issued by the department heads, and checked by the purchasing agent but not by the comptroller. Dallas has two different forms, an "Emergency Order" and l'\n "Emergency Repair Garage Order." The first may be used 
9Governmental Purchasing, p. 209. Such a monetary limit should be placed in the purchasing ordinance, although this is omitted in the ordinance printed as Appendix II. 
for emergency purchases under $5.00 but "only in cases where property, life, or equipment is in danger of loss through unexpected circumstances" ; this form is seldom used. The emergency repair order is employed more fre­quently. It is prepared in triplicate with a copy for the dealer, the purchasing agent, and the operating depart­ment. Of 15,781 orders in Dallas in 1934, 1.8 per cent were emergency or emergency repair orders. 
The definition of an emergency purchase order varies from city to city, so that in some cases the term is used in a broad and in others in a narrow sense. If defined to mean those where a requisition is made on the purchaser for im­mediate delivery of goods, or even where the goods are delivered before the orders pass through the regular office routine, emergency orders will amount to 30 to 40 per cent of the total number of orders issued. If the term applies only to those purchases made directly by the operating de­partments, the number will be reduced considerably; thus, Austin reports that ordinarily 3 per cent of its orders are emergency in character, Ft. Worth 5 per cent, and El Paso .5 per cent. San Antonio stamps all requisition-orders "Contract Approved" if they are on an existing contract, while all others, about 75 per cent of the total, are stamped "Emergency Purchase." 
The number of emergency orders, speaking in the broad use of the term, can be reduced somewhat by educating the requisitioners to recognize their disadvantages. Further­more, their injurious effects can be avoided by making long­term contracts for indefinite amounts on the basis of previous consumption, and issuing emergency orders against these contracts. 
In conclusion it may be mentioned that the total number of purchase orders apparently has no relation to the size of the city, which may indicate that consolidations are not being effected. The validity of this statement is attested by Table II. 
TABLE II 
POPULATION AND NUMBER OF PURCHASE ORDERS IN 1934 FOR 
CERTAIN TEXAS CITIES 

Approximate Population Number of Purchase Cit)< (1930 Census) Orders, 1934. 
Dallas ----------------------------------------260,475 15,800 
Fort Worth ---------------------------------164,447 8,000 
El Paso ----------------------------------------102,421 3,000 
Austin ----------------------------------------------53,120 7,000 
Galveston ----------------------------------------52,938 2,500 
Waco -------------------------------------------52,848 3,500 
Port Arthur ----------------------------------50,092 1,800 
Wichita Falls ----------------------------------43,690 5,000 
Brownsville -----------------------------------22,021 2,500 
Tyler ------------------------------------17 ,113 5,200 
Sherman ------------------------------------15,713 2,300 
Pampa ----------------------------------------10,470 800 
Victoria ----------------------------------------7,421 1,200 
McKinney --------------------------------7 ,307 1,500 
Mercedes ----------------------------------------6,608 250 
Navasota --------------------------------------5,128 1,100 

When a large amount is involved or when the purchase transaction extends over a long period of time, a formal contract should be employed. Many times the charter or an ordi:.~ance specifies a figure, usually that amount requiring newspaper advertisements for bids and council award, over which contracts must be employed.10 Below this set amount the type of purchase rather than the sum involved deter­mines whether a contract or an order is used. 
Contracts may be definite or indefinite as concerns qual­ity, quantity, or price. Generally the price and quality are stated, though the quantity is sometimes left indefinite. Austin, Dallas, and Galveston contract annually for ice at a 
definite price, but for an indefinite quantity. Examples of contracts in which delivery is made as needed are those 
iosection 69 of A Model City Charter, published by the National Municipal League, provides that all expenditures over $1,000 be made on written contract (Revised edition, 1933). The recommended char­ter and ordinance printed as appendices require contracts when amounts over $2,000 are involved. 
for the purchase of mud shell by Galveston, and for rock by San Antonio. Another device practiced by some Texas cities is to have goods delivered at off seasons to reduce delivery charges. 
Cities find that contract purchases for advance periods offer the best opportunity to secure reductions in unit prices of goods.11 Cities which buy in quantities to last for a month or more generally find they are able to effect dis­tinct savings. The purchasing agent of San Antonio reports that a much better price can be secured on electric light bulbs if a purchase of a few hundred dollars is guaranteed. The purchasing agent of El Paso writes : "We buy gasoline in tank cars and motor oil in large quantities which is a great saving of expense to the City."12 Table III, which compares the methods of purchasing gasoline in certain Texas cities during 1934 and the prices paid, will serve to illustrate the savings made possible by long-term contracts. Light bulbs are purchased on yearly contracts in a few municipalities and semi-annually in some. Food products are purchased on contracts running up to a year. Other items contracted for on a long term basis or in quantities sufficient to last several months are chlorine, coal and fuel oil, lubricating oil, paving materials, lime, fire hose, and janitor supplies. Austin and Fort Worth make most of their contracts for a year, while Dallas and San Antonio make many of theirs for two-, three-, or six-month periods. It should be noted that when long-term contracts and quan­tity purchases do not reduce unit prices, it is better to purchase in small quantities, since this policy makes pos­sible greater diversification of purchases among dealers. Beaumont uses its own standard contract form for certain commodities rather than the one furnished by the dealer, which sometimes contains clauses prejudicial to the city's 
interest. 
nFour of the cities surveyed are limited by their charters to ninety day contracts for purchase of supplies and materials. 12Letter from Mr. G. B. Davis to the Bureau of Municipal Research, February 20, 1935. 
TABLE III 
GALLONS BOUGHT, METHODS OF PURCHASE, AND PRICES OF GASOLINE OF CERTAIN TEXAS CITIES IN 1934 
Average Price Total Number of Method and Per Gallon, Gallons Bought Conditions of City Including Tax in 1934 Purchase 
A f0.07795 395, 723 	Annual contract; de­livered in tank cars. 
B 	$0.05 under 300,000 Monthly contracts; retail price 10,000 gallons mini­'(0.12) mum. 
c $0.0675 149,667 	Carload lots. 
D 	$0.04 under 140,000 Bi-monthly contracts; retail price 10,000 gallons mini­($0.13) mum. 
E $0.09655 131,000 	Monthly contracts for carload lots of 8,000 gallons. 
F $0.16 22,918 	As needed, retail. 
G $0.13 15,000 	Monthly contracts. 
H $0.11 4,112 	Monthly contracts. 
I $0.19 1,500 	As needed, retail. 
The award of the order or contract might well be con­sidered as the heart of purchasing. The solicitation of bids is preliminary to deciding on the vendor who will furnish the supplies, materials, or equipment to the city at the lowest price. The N.R.A. complicated this step in pur­chasing procedure, though it is to be expected that this problem will shortly be solved to the satisfaction of the municipalities. Every city should prepare proper order forms, and make a practice of using them in every pur­chase. Emergency purchases must be discouraged, and limited to real emergency situations. Finally, it is incum­bent upon a city to make contracts for such periods and 
such quantities as will secure the lowest unit price on the supplies purchased. 
CHAPTER VI 

INSPECTIONS, TESTS, INVOICES, AND 
PAYMENT OF BILLS 

The purchasing function does not end with the award of the order or contract, but must be followed by proper inspection, of which testing is an integral part. Not only will inspection prevent loss to the city on a particular de­livery; it will establish the reputation that the city will not accept inferior goods, which in turn will guarantee deferential treatment and consideration on the part of the vendors. The important relation which specifications bear to this phase of purchasing is self-evident, for they consti­tute the only definite standards to which the materials may be held. Purchases are always inspected in 72 per cent and generally in the rest of the Texas cities answering a question on this point. 
The purchasing agent, whether full-time or part-time, shoul,d be held responsible for seeing that proper inspecting is done. Alternatives to this arrangement are for either the operating departments or an officer of the finance department other than the purchaser to assume this respon­sibility. It is hardly consistent with accepted principles of good municipal administration to divide the responsibility for this work among the several operating departments, and indeed to end the authority of the purchasing agent with the delivery of the goods would be materially to weaken a purchasing system. It is desirable to delegate this func­tion to a member of the finance department other than the purchasing agent only if it is deemed advantageous to set up a check on the work of that official. 
If the authority for inspecting resides in the purchaser, it is possible to arrange for an inspectiag service which will be practical in any size city or under any conditions. Thus, the purchasing agent may make all inspections him­self, he may have a member of his staff act as inspector, or he may arrange for the agency receiving the goods, be it an operating department or the storeroom, to inspect the delivery. If a city has adequate finances, it is best to em­ploy a full-time inspector; at present no Texas city does so. On the other hand, the purchasing agent may care for all inspections in the smaller cities, where purchases are few and deliveries frequently made to the city hall, but in others he would be able to make only infrequent inspections. All things considered, it appears that the wisest arrange­ment is for the agency receiving the goods to make the actual inspection, being supervised by and responsible to the purchasing agent. 
Texas cities generally follow the procedure last sug­gested above. In the first place, goods are always sent directly to the using departments in 34 per cent of the cities giving information on this point, generally so in 40 per cent, seldom in 18 per cent, and never in 8 per cent. When not sent to the using departments, they go either to the storeroom or to the purchasing agent. This indicates that while the purchasing agent may be ultimately respon­sible for inspections, the using departments perform the bulk of this work. In 61 per cent of the cities the using departments alone handle the inspection service; in 14 per cent the work is divided between the departments and the storekeeper, in 11 per cent between the departments and the purchaser; in 11 per cent the purchaser alone in­spects ; and in one city all three of these agencies participate in inspecting. 
The purchasing agent should provide an "advice of goods received" form which is to be filled out and sent to him after every delivery. When some person other than the purchaser receives and inspects the goods, it is esf'.en­tial that the purchaser be informed of the receipt of the goods or equipment, and of the results of the inspection. In case of discrepan.cy between the order and the articles re­ceived, it is his duty to make adjustments, hence the impor­tance of careful inspections and of adequate certification to the purchaser. A separate form or receiving slip, such as is 
employed by Austin, Tyler, and Seguin, is highly desirable 
A Purchasing Manual for Texas Cities 
as a receiving record. The receiving sheet of Port Arthur is shown as Exhibit E. This is filled out by the person 
EXHIBIT E * 
RECEIVING SHEET 
CITY OF PORT ARTHUR, TEXAS 
_______________________________ _______________ 193______ 
Received From ------------------------------------------------------------------­Via ---------------------------------------------------------------------------------------------­
Remarks ----------------------------------------------------------------------­
THE FOLLOWING ITEMS IN GOOD ORDER: 
Quantity  1---------­IT_E_M_s_________  

 


 


 


 


 


Department Signed 
•Reproduced throueh the courtesy of Mr. R. L. Cooper, City Manager of Port Arthur, Tens. 
receiving the goods, and forwarded to the purchasing agent. Another device employed to check deliveries is to have the storekeeper or department head approve the invoice; this is done in 33 per cent of the cities in which the purchaser is informed of the delivery. 
Still another method is to utilize one of the copies of the purchase order for this purpose, which the operating department or storekeeper checks against the goods re­ceived, signs if they are satisfactory or notes improper delivery, and returns to the purchasing agent or the comp­troller. This is the method followed in Houston, San An­tonio, Ft. Worth, Beaumont, Brownsville, and Lubbock. The disadvantage of this plan is that it tolerates lax inspec­tion methods. To prevent this, Dallas prepares two copies of the receiving record simultaneously with the purchase order, but leaves blank the columns pertaining to price and quantity. These data are written in by the receiving de­partment, which retains one of the copies and sends the other to the purchaser who in turn forwards it to the auditor. For careful inspection methods, the Dallas plan or the separate receiving slip is preferable. Finally, it is desirable that the purchasing agent himself make occasional inspections to check on this phase of the work and ascer­tain if specifications are being met. 
Chemical and physical tests should be made when the quality of goods cannot be judged by other means. Forbes states the matter succinctly :1 
Chemical and physical tests are essential to an efficient inspection system. The most skillful inspector often cannot determine the niceties of quality without the assistance of a testing laboratory. The mere counting and weighing of many commodities is a farcical inspection, unless supple­mented by chemical or physical tests. 
Some 23 per cent of the Texas cities included in the sample reported that they generally test materials, while 13 per cent do so infrequently or on only one or two com­modities. It appears that cities are not testing purchases 
•Governmental Purchasing, pp. 240-241. 
A Purchasing Manual for Texas Cities 
to the extent that they should. Gasoline, brick, cement, oil, and chemicals are tested by several cities, while lum­ber, coal, soap, paper, steel, gas, and asphalt are tested by only a few. 
Cities may utilize a number of different services in the work of testing. Those which maintain their own labora­tories should equip them to perform the more common test­ing services. The laboratories in the eight cities which use them for testing are limited chiefly to making chemical analyses. The United States Bureau of Standards will conduct tests for cities at a nominal charge, as will other agencies of the national government. Texas cities have overlooked this service completely, for none send materials to Washington for testing. 
Texas municipalities have available in their own state certain university and commercial testing agencies, which will be found listed in a Directory of Commercial Testing and College Research Laboratories.2 Some cities have uti­lized the testing services of The University of Texas, Texas 
A. and M. College, Texas Technological College, and South­ern Methodist University. At The University of Texas, the Bureau of Industrial Chemistry will furnish advice on the quality of oil and industrial waters. Tlie Textile and Clothing Division of the Department of Home Economics will make free tests of textile materials for cities on request. 
The Bureau of Engineering Research of the University makes a limited number of tests of paving and building ma­terials for cities without charge, though materials used on 
P.W.A. projects will not be tested. Concrete, reinforcement steel, cement, asphalt, caliche, brick, and tile are among the articles which the Bureau is prepared to test. The Bureau is particularly interested in serving the smaller cities which cannot afford the expense of private labora­tories. A considerable number of municipalities have taken advantage of this service. It would be extremely valuable 
2united States Bureau of Standards, Miscellaneous Publication No. 90 (2nd edition, 1928). 
if a state testing laboratory could be established in Austin with facilities to make both chemical and physical tests. This would supplement the laboratories of the State High­way Department and the State Board of Health. It would be of primary service to the State Board of Control and other state departments, but should extend its services to the cities of the state. 
Besides the universities, there are several private or commercial laboratories located in the larger cities with facilities to test cement, lumber, asphalt, creosote materials, paint, and various types of pipe. In some cases the labora­tories will furnish free specifications with the understand­ing that they be given the testing work. A few cities make use of these commercial laboratories; the cost involved is offset largely, if not entirely, by the assurance that the city obtains what its specifications call for. Finally, the city may demand that the goods be tested by the manufacturer if they are not up to specifications; this method saves de­livery charges, but it does not provide an independent check on the materials. 
The purchaser should have the authority to submit ma­terials to testing whenever he thinks advisable, and suffi­cient funds should be provided for this purpose. Adequate reports of th~ results of the tests must be made to him, payment being held up until the goods delivered have been certified by the testing agency. Inspecting and testing should receive more careful consideration from the cities than at present. Even though the purchaser performs his duties expertly and conscientiously, centralized purchasing will fall short of its potential benefits if inspection and testing are not adequately managed. The indirect effects of close inspections are to reduce the possibilities of dealers delivering inferior products, and to increase their respect for the city as a customer. 
The next step in purchasing procedure is the approval of invoices and the payment of bills. Here is a matter which is handled by the secretary alone in the majority of the smaller cities, but which calls for close cooperation between the purchasing agent and the accounting office in the larger ones. Proper accounting control is intended to 
A Purchasing Manual for Texas Cities 
prevent the expenditure of money over appropriations, to see that nothing is paid for which has not been received, and to pay bills promptly enough to secure cash discounts. The first objective (discussed earlier) is attained when it is required that the comptroller certify that there are suffi­cient funds to pay for every order before it is issued. 
All invoices which a city receives should be checked to determine whether the prices and terms are correct ; whether extensions and totals are right; whether the order, the merchandise delivered, and the invoice are in agree­ment; and whether the bill has been paid previously or not. This part of the procedure must be done punctually if the records are to be kept up to date and the cash discounts secured. 
The practice in nearly all cities is to permit the vendor to use his own invoice forms. Amarillo is an exception to this. The form which it furnishes the vendor is reproduced as Exhibit F. This is the same size as the requisition and order forms, which makes for convenience in filing. Such a practice is apt to be inconvenient to the vendor, and for this reason it is suggested that the city permit the mer­chant to use his own invoice, providing a place for proper checks and signatures. 
The responsibility for checking invoice extensions and totals should reside with the purchasing agent. The sim­plest arrangement is for that official to receive the invoices. He first checks these against the delivery and inspection reports from the receiving agency; he then compares the invoice with the original order which he has in his files to ascertain if terms and unit prices are correct; and finally he checks the extensions and totals of the invoice. The invoice is then sent to the comptroller or finance officer, who again approves the extensions and totals, and prepares the voucher, after determining from his records that the bill has not already been paid. 
Some cities require that the invoice be delivered with the goods. This is to be avoided for several reasons. It is not the usual practice in private business, and the ordinary routine of larger merchants is to have the invoice prepared 
EXHIBIT F* 
INVOICE • 
To  THE C'ITY OF AMARILLO, AMARILLO, TEXAS  PURCHASE ORDER No.____________________  
Address Delivered to  At.________________________________________  REQUISITION No.____________________  
Our bid  Terms___________________________________ F .O.B.____________________________________ I IDate DISTRIBUTION  

Description of Articles or Service Unit Price
Quantit y 
Total 
Seller must sign invoice in trip­licate and for­ward to city auditor on the same day goods a r e dClivercd, or services ren­dered. 
I have on file in my office Requisition and Purchase 
Above goods or services rendered to City of Amarillo Order supporting this Invoice. 
---------------------------------------------------------------City Auditor 
By -------------------------------------------·­Above goods received for City of Amarillo in good
Approved for payment $_______________________ 
condition ______ City Manager 

-.:r 
0) 
~ 
(I:> 
~ 
~· 
~ 
.... 
~ 
~ 
~ 
(I:> 
~ 
~ 

b::I 
~ 
..... 
(I:> 
~ 
~· 
•Reproduced here through the courtesy of Mr. H. R. Smith, City Mana2er of Amarillo, Texas. 
A Purchasing Manual for Texas Cities 
after the shipment and by an office other than the shipping 
division. Consequently, it is not convenient to the dealers 
to deliver the invoice with the goods, and they will there­
fore be lax in complying with the rule. Furthermore, this 
procedure is unnecessary even though the receiving depart­
ment must approve the invoice. It is axiomatic, of course, 
that the vendor should not delay in preparing and mailing 
the invoice. 
Another practice sometimes followed is to require that one copy of the purchase order be returned by the vendor. There seem to be three reasons for this. First, the returned order may serve as an invoice in itself; second, it can be used as a check against the goods received ; and third, it is a device employed to prevent duplicate payment of the in­voice. These reasons are not sufficient to make such a requirement indispensable. It is preferable to have the vendor submit a separate invoice, to make sure his records and those of the city correspond; again, extra copies of 
the order or a receiving slip offer a better way to check 
the delivery; yet again, submitting an invoice with an order 
is cumbersome and not as desirable as keeping a copy of the 
order in the purchaser's or comptroller's office with which 
to compare the invoice in order to prevent duplicate pay­
ment of bills. 
There is a variety of practices followed in approving the invoice. In some cities, as Lubbock, the auditor is respon­sible for comparing the delivery report, the order, and the invoice. In a city where purchasing is the part-time func­tion of some official, it is not unwise to give the auditor the responsibility for checking invoices. This assumes, of course, that one copy of the purchase order is prepared for his files. In all Texas cities which have a comptroller or auditor, this officer must approve the invoices. 
In over 50 per cent of the cities, the invoice is approved by the agency which receives the goods, this usually being the operating department. In several cities the approval of the invoice serves as the delivery report. This has cer­tain advantages and should not be dispensed with lightly. 
It seems, however, that the disadvantages outweigh the good points. In the first place, the invoice should be sent to the purchaser or finance officer instead of to the receiving agency. This will mean that the invoice must then be sent to the receiver for his signature, or else he must visit the purchaser's office for this purpose, either one of which will retard the procedure. Again, either the receiving slip or the duplicate copy of the order is a better means of report­ing deliveries. In small cities, where the secretary pur­chases and also prepares the vouchers, a check by a depart­ment head on the invoice may not be amiss. 
In all cities with centralized purchasing, the purchaser must approve the invoice, be he full-or part-time purchas­ing agent, or manager, comptroller, secretary, or some other officer performing this function. In a few cities the ap­proval of the manager, the mayor, or the secretary is also required. Finally, it was found that in over half the cities the council must add its approval while in a few the signa­ture of a member of the commission is required. It should be noted here that the requirement of approval by the council is very likely to cause unnecessary delay in pay­ment, with a resulting loss to the city in sacrificing dis­counts for early payment, although council approval can be better defended in small cities than in large ones. 
One copy of the invoice is requested in 62 per cent of the cities, two in 35 per cent, and three in Houston, where the purchaser, the comptroller, and the using department each files one. Several cities use a rubber stamp in check­ing the invoices. Tyler has one which furnishes a space for the voucher number, the date on which the invoice was received, by whom it was received, and the page in the invoice register. Port Arthur's stamp indicates that the extensions have been checked and the price found correct. 
The auditor of Lubbock maintains a very serviceable card file, alphabetized by merchants, giving the voucher number, the date, and the amount of every purchase made. This is useful as a cross reference to all invoices and vouchers. 
Definite and undelayed procedure in the approval of invoices makes possible the payment of bills promptly 
enough to secure a cash discount. This is not directly a 
responsibility of the purchaser, but his interest in securing 
savings and his position as a central agent make it impera­
tive that he be vigilant in this matter and that he cooperate 
with the accounting department to attain this end. The 
cash discount which a city may secure will amount to a 
considerable sum. In 1934, Austin saved $2,169 in cash 
discounts, El Paso $1,566, Pampa $855, and Uvalde $600. 
Rochester, New York, saved $15,000 in cash discounts in 
1930,3 and Milwaukee's saving totaled $53,000 in 1931.4 
There are three ways by which cash discounts may be secured. They may be taken automatically, as the quotation sheet of Dallas and the purchase order of Galveston state they will be unless net is specified on the bid sheet or in­voice. Again, the city may request cash discount terms with all quotations, and take advantage of them whenever possible. Finally, initiative in giving discounts may be left up to the dealer. The second plan is preferable, for in the first the discount may be added to the regular price and nothing gained, and in the third, few discounts will be realized. Discount terms stated unequivocally by the ven­dor can be figured accurately and taken into consideration in awarding the order. The purchasing agent of Mil­waukee writes, ". . . a comparison of prices with, and without, cash discounts will prove to anyone that cash dis­counts are seldom added [to the price]," but in fact are "an extra reduction extended to the city as an inducement for the prompt payment of bills."5 
If a municipality speeds the invoice through the routine channels, and pays those bills offering cash discounts in ten days, taking thirty days to pay those without a discount, vendors will be induced to offer discounts and the city will enhance its credit reputation which in turn will bring wider competition for its business. A city must do two things to 
3Gordon, Purchasing Methods of New York State Municipalities, 
p. 	68. 
•Joseph W. Nicholson, "Why Centralized Purchasing," in Municipal 
Finance, 	November, 1934, pp. 20-22. 5lbid. 
effect the savings possible through prompt payments. First, it must make an effort to stimulate the granting of cash discounts; second, it must take advantage of those offered. The auditing and accounting system must be designed to facilitate the realization of the goal sought. Some 95 per cent of Texas cities declare that they follow the practice of paying bills early enough to secure cash discounts, but it is safe to conclude that the savings here are not as great as could be had. One large city reports that it takes cash discounts on half the orders, which amount to about one­fourth of the total value. Again, many smaller cities claim that local dealers do not give cash discounts. 
Centralized purchasing is an important factor in accel­erating the routine process of approving invoices and pay­ing bills, because these steps will not be left to the initiative of the several operating departments whose primary inter­ests lie in other directions than looking for discrepancies between orders and invoices, and saving money through cash discounts. This part of the procedure indicates the close connection which purchasing bears to accounting con­trol, and supports the contention that the purchasing bureau or division should be included in the finance depart­ment. 
CHAPTER VII 
STORAGE AND STOCK CONTROL 
The final phase of purchasing is the storage of the goods bought and their care in stock. This aspect of the problem will be discussed in the present chapter. The subjects which command attention are central as against departmental storerooms, supply records, interdepartmental transfers of supplies, and sale of obsolete and discarded materials. Every city has a storage problem, whether it be for a few office and water department supplies, or for large quantities and innumerable items. Waste of materials, unaccountable losses, and over-requisitioning may come from lax and im­proper methods of stock control, which will minimize and perhaps offset the savings made through centralized pur­chasing. 
A central storage system is not a necessary adjunct to a centralized purchasing system. The question of organizing the stores division is one which should be decided on grounds of economy and convenience. The advantages of central storage facilities are that overhead costs are cut because of reduction in space and personnel; there is a cen­tral point for deliveries and inspections; the total stock may be reduced since duplications may be avoided; there is sufficient space to store bulk purchases; and more speedy delivery of goods to the using departments is possible than if each requisition required an order to the vendor. On the other hand, too large quantities may be bought, with a con­sequent loss through the accumulation of unused materials or through changing prices. Furthermore, absence of cen­tral storage does not necessarily make it impossible to effect some of the benefits such a system is designed to secure. 
In storage control, then, a city has the option of adopting one of several methods. It may establish one central store­house for all supplies; it may provide for storage of all materials by the operating departments which use them; or it may adopt an arrangement between these two extremes whereby certain articles are stored by the using depart­ments and others commonly used are kept by a central agency. Among the factors to be taken into consideration in deciding upon the economic feasibility of a central stor­age system are proximity of the using departments, over­head costs, accessibility of the storeroom to transportation facilities, and (of great importance) location of the city with reference to the sources of supply. If delivery by the vendor can be made directly on short notice, the storage problem will not prove especially difficult. 
The tendency is to abolish storerooms, and make long­term agreements with merchants whereby orders are made in bulk at low unit prices, with deliveries being made as needed. Writing in 1932, Forbes stated :1 
The maintenance of large warehouses and storerooms is becoming less common among governments. Under prevail­ing market conditions, it is possible to buy most articles in large quantities and to secure the benefits of bulk orders, although delivery is made by the vendor in small lots as needed. The vendor will be the storekeeper and the govern­ment needs to keep on hand only those quantities large enough to meet current requirements to prevent cessation of service through shortage of supply. 
Dallas formerly maintained a central warehouse but abandoned it because it entailed unnecessary expense. El Paso has made the same change. Mr. G. B. Davis, pur­chasing agent of that city writes :2 
The City of El Paso at one time utilized a central ware­house ... but found that because of overhead expense, deterioration of supplies, and . . . supplies that become obsolete, it was to our advantage to discontinue this feature. 
The purchasers of cities which still operate central store­rooms advise caution in their establishment and mainte­nance. Mr. Joseph W. Nicholson, purchasing agent of Milwaukee, recently wrote that the central warehouse "saves money if the inventory is kept low and is confined 
lThe Organization and Administration of a Government Purchas­ing Office, pp. 40-41. 2Letter to the Bureau of Municipal Research, February 20, 1935. 
A Purchasing Manual for Texas Cities 
to articles which turn over rapidly, preferably not less than four times per year."3 
A recent survey contributes some enlightening data on the subject of central storerooms.4 Twelve cities over 100,000 in population, distributed throughout the United States, which have central storerooms were questioned con­cerning their operation. Eleven cities answered that the contral storeroom made it possible to make savings in 1934, but Fort Worth stated the savings were small because of price advances, the codes, and the expense of placing small orders. Houston said that no savings were made because prices did not justify quantity purchases and warehousing expense. Furthermore, the same eleven cities believed that the central storage system made it convenient for the de­partments to secure goods without delay. Houston differed from them on this score. It is significant that as a result of their central stores both Fort Worth and Houston accumulated supplies which became obsolete and they also lost money during the years that prices were declining. The other ten cities professed to have avoided these pitfalls. Finally, all the cities but Houston would recommend the establishment of a central stores system, if administered competently and non-politically. Thus, Houston definitely advises against a central storehouse on the basis of its experience, while Fort Worth's storage system does not appear to be a successful project at present. 
Since storage of goods is closely related to purchasing, the responsibility for this function should be placed on the purchasing agent. This principle is valid whether or not a central stores system is established. To be sure, if pur­chasing is centralized, the purchaser will be solely respon­
sBureau · of Governmental Research, Indianapolis Chamber of Commerce, Shall the City of Indianapolis Establish a Central Store­room? Report No. 8, February, 1935, pp. 11-12. 
4Jbid. The conclusion of this study was (p. 16) "... it is apparent that the tendency is away from a large central warehouse and the substitution of a system where it is possible to buy articles in large quantities and secure the benefits of bulk orders although delivery is made by the vendor in small lots as needed." 
sible while if it is departmentized, some of the responsi­bility must be entrusted to the operating departments. In the latter situation, the purchasing agent will assume super­visory control, with proper reports being made to inform him of the stock in hand and the turnover of goods, in order that he may plan future orders wisely, prevent over­requisitioning, and salvage obsolete stock. 
A review of the various systems which Texas cities use in storing their supplies would include almost every possible variety. Of the cities below 5,000 in population, 60 per cent store supplies in the operating departments, and the re­mainder keep them in the city hall, which thus serves in a sense as a central storeroom. Of the cities in the home rule group which supplied data on this phase of purchas­ing, 46 per cent have what can be termed departmental storage organizations ; among these are Dallas, San An­tonio, El Paso, Wichita Falls, Amarillo, Laredo, and Abi­lene. The other 54 per cent have centralized storage, but this does not necessarily mean that only one central storage place is maintained. In fact, four of the larger cities have more than one such storage place. Fort Worth has two, one for the waterworks and another for garage and elec­trical equipment. Beaumont has a central garage, and besides keeps all electrical materials in the Signal Division of the Fire Department. Austin also maintains two ware­houses, one for the street department and another for the electric and water utilities. Waco has two garages, one for the fire department and a second for all other departments. While Galveston has a warehouse, about sixty different items are carried in a storeroom attached to the purchasing agent's office, including janitorial supplies and automotive supplies. It is interesting to note that in nearly 70 per cent of the Texas cities over 30,000 in population, a central sup­ply room is maintained at the city hall for stationery and office supplies. This arrangement appears to be worthy of consideration by other cities. 
The usual and most acceptable arrangement is for the storehouses to be supervised by a storekeeper who is re­sponsible to the purchasing agent. There is some variation from this plan, however, for in Fort Worth the two store­
A Purchasing Manual for Texas Cities 
rooms are supervised by two different departments; in Beaumont the Electrical and Mechanical Superintendent is in charge of both storerooms; and the storekeeper of Port Arthur is responsible to the chief fiscal officer. Other arrangements call for the city engineer, the street superin­tendent, or the city marshal to be in charge of stores. 
Complete records of stock are a paramount feature of any storage system however it may be organized. These are intended to show primarily the quantity of goods used and yet in stock, and the distribution of charges to departments, all of which are vital to planned purchasing and proper accounting control. The main records which should be maintained are requisitions on the stores, a storage record of each item, inventories, and distribution or consumption records of the departments. While these are interdepen­dent, each will be considered in turn, with some attention given to the records actually used in Texas cities. 
A requisition should be made out whenever supp!ies are drawn from the stores, to serve as a certificate of their proper withdrawal. Exhibit G is a reproduction of the stores requisition used in Tyler. This is made in duplicate, one copy remaining with the storekeeper and one going to the purchasing agent. This form might also include places for noting the use to which the supplies are to be put and the number of the stock card to which the item is posted. Only two cities require the approval of the purchasing agent on stores requisitions: in Austin the requisitions on electric and water utilities must go through the purchaser's hands, while in Navasota no requisition can be issued without a written order from the purchaser (manager). While this step affords an additional check, it might well be dispensed with since it tends to retard the acquiring of stores ma­terials, and since the purchaser may find out through other records whether materials are being properly used. Whether or not the department head should sign the stores requisition (as some cities require) is questionable. Such a signature certifies that the demand is authentic, but time and energy are consumed in obtaining it. Moreover, the department head is likely to find it inconvenient to sign all the stores requisitions. It would appear advisable to give 
EXHIBIT G* STORES REQUISITION CITY OF TYLER No. 7333 Date________________________________________ Dept.______________________________________ _ 

Issue to____________________________________________________ Dept. Head__________________________ 

Issued by________________________________________ Received by________________________________________ 
________Storekeper ________
-e,__
•Reproduced here through the courtesy of Mr. A. H. Balch, City Manager of Tyler, Texas. 
the storekeeper the authority to call upon the department head for his approval in any case which involves a large sum or an unusual request, or one which the storekeeper believes to be unnecessary or unwarranted. 
Of the Texas cities which utilize stores requisition forms of one type or another, 20 per cent make one copy, 73 per cent two, and Fort Worth three (for stationery supplies). 
A Purchasing Manual for Texas Cities 
The persons or agencies who may receive a copy are the using departments, the storekeeper, the purchaser, and the comptroller. The combinations are so varied as to defy summary. In 33 per cent of the cities the comptroller ob­tains one copy for accounting purposes. It would seem practical and wise to prepare three copies, one for the requisitioner, one for either the storekeeper or the pur­chaser, and one for the comptroller. 
As mentioned before, several cities have centralized sta­tionery stores, and where this is the case special requisition forms are employed. The stationery supply room of Houston is separate from the purchaser's office, an arrange­ment which differs from that found in most of the other cities. Besides office supplies, this unit handles all out­going mail, stamping city mail with a meter. Daily reports of postage charges are made to the comptroller, while dupli­cate copies of the requisitions for other items are sent every three months to him for distribution of charges among the departments. The storekeeper maintains a daily ledger which acts as a perpetual inventory of supplies. Exhibit H reproduces the stationery requisition used in Houston. 
Another type of central storage quite common in the larger cities is for gasoline and oil. Some municipalities have provided a special requisition or receipt form for gasoline stores. A receipt form from Sherman is shown as Exhibit I. It is required that every time a receipt is made out, the speedometer reading of the car and the tire pressure be noted under "remarks." The gasoline and oil requisition of Port Arthur provides for several signatures and also a stock report on the gasoline and oil pumps. 
A stock record or commodity card for each item is an indispensable feature of any stores system. The form used at Lubbock for this purpose is reproduced as Exhibit J. The auditor of that city keeps this form, making proper entries from the purchase orders and the stores requisi­tions, though the storekeeper may be responsible for it, as in Tyler. The term "minimum" on this record refers to the quantity below which the stores must be restocked. It 
EXHIBIT H*  
REQUISITION  USED  IN  HOUSTON FOR OBTAINING STATIONERY STOREROOM  SUPPLIES  FROM  THE  
STATIONER: Please deliver  Date_______________________________ to____________________________________________________ __ _________ ___ _
__________Dept.  
------------------------­-----------------­---------------(Signed) Head of Dept_  


Received by__________________________________________________________ 
*Reproduced through the courtesy of the Hon. Oscar F . Holcombe, Mayor, City of Houston, Texas. 
would be well to add a place for the numbers of the requisi­tion and the purehase order. The value of this record is apparent; it shows the consumption trends and totals, which aids the purchaser in planning his ordets. It also serves as a perpetual inventory, showing the quantity of stock on hand at any particular time. Texas cities on the whole do not appreciate the significance of the stock record. Some 26 per cent .claim to maintain a record of all goods in storage, while 9 per cent do so for only a limited number of 
EXHIBIT I* 
RECEIPT FOR GASOLINE AND OIL SECURED FROM CENTRAL STOREROOM 
No __________________________ CITY OF SHERMAN ----------------------------------------__________193________ Received from Storehouse for Car No. ·----------·--------------__ _____________________ gallons of gasoline 
__________________ gallons lubricating oil ____________ __ gallons kerosene 
______ ___________ pounds cup grease ___________ pounds transmission lubricant ------·---___ pounds steering gear grease 
-----------------pounds roller grease Remarks ______________ -------------------------------------------------------------------------·-----_ 
Signature __ 
Division of ---------------------------------------·-···· __ ----··· .... ----------,-·­
ote-These receipts to be sent to the City Manager's office the ______f_ol_lo_w_i_n"'"g morning after being issued. 
•Reproduced through the courtes y of Mr. W . Morgan Manager of Sherman, Texas.  Works, City  
items.  Only 9 per cent of the cities report  a  perpetual  

inventory on all items. It is so evident as to require no emphasis that a ledger of supplies received and delivered should be maintained by the person in charge of the store­room, be it a central or a departmental warehouse. 
Complete inventories of all supplies, regardless of the type of storage organization, should be made periodically. These may be used to check the stock records, and to deter­mine if any stock unaccounted for is on hand. It is better to have the inventory taken by the auditor's office wherever possible to furnish an independent check upon the store­keeper. The inventory assumes greater importance in the 
EXHIBIT J* 
STOCK RECORD FORM USED IN LUBBOCK 

Sheet No. ----------------------­UNIT 
MINIMUM LOCATION RECEIVED 
I 
Uuit
Date From (Name) Quantity 
Amount
19___ 
Cost
I I 
C'atalogue or 
Article No.______________________ ---------·-­
ARTICLE 
DISBURSED 
BALANCE ON HAND 
Dato I No. 
Quunlity Amount 
Quantity Amount 
19 ---­
I
I 

*Reproduced through the courtesy of Mr. W. H. Rodirers, City :Manairer of Lubbock, Texas. 
(,0 
"-3
.,.. 
~ 
~ 
~· 
~ ~ 
~ 
"-3 
~ 
~ ~ 
..... 
~ 
<"+. 
~· 
cities which do not maintain stock records. Of the cities supplying information on inventories, 53 per cent make annual, 7 per cent monthly, and one city quarterly in­ventories; 30 per cent report that no inventories whatso­ever are made, while 7 per cent inventory only centrally stored supplies. Galveston utilizes a daily warehouse re­port which serves as a perpetual inventory of gasoline and oil supplies. The form employed is reproduced as Exhibit 
K. This report is checked monthly by the purchaser against 
EXHIBIT K* 
DAILY WAREHOUSE REPORT OF GASOLINE AND OIL STORES 
CITY OF GALVESTON 
. 
Date_______________________________________________ 
--Gasoline  Kerosene  Lube Oil SAE 30  Lube Oil SAE 40  I Lube Oil SAE 50  Lube Oil SAE 60 - Remarks  
On Hand Received  I ! I  
Total  
Dispensed  
Balance On Hand  

*Reproduced through the courtesy of Mr. F. A. Quin, Auditor of Galveston, Texas. 
the receipts which are signed whenever supplies are with­drawn. The purchasing agent then makes a monthly report to the auditor showing the number of gallons of gasoline, oil, and alcohol on hand, the value of the stock in dollars, and the budget account number. Such a monthly report is a valuable supplementary record, and might well be ex­panded to show the amounts received and dispensed, and the total quantity and value of the commodities on hand at the beginning and the end of the month. 
Another type of stores record worthy of mention is shown as Exhibit L. It is extremely useful in checking those items which are returned to the storeroom after use, such as shovels, lanterns, and repair tools. This report is sent to the manager daily. A receiving slip is a substitute for this form, and should show what account to credit for the returned materials. Such checks as these on all articles are necessary to prevent loss and waste. 
Some cities maintain a revolving fund for their central stores system. This involves the setting aside of a certain appropriation which is used only to buy supplies and ma­terials. When a using department withdraws supplies from the central storage quarters, it is charged with them and the stores revolving fund is reimbursed from the appropria­tions made for the operating departments. The revolving fund can be visualized as a separate fund of money which is alternately drawn upon to buy materials, and refilled from other appropriations. The disadvantages of the re­volving fund are that it is cumbersome if there are more than one storeroom, it may tend to confuse rather than to clarify accounting control, and it may be charged with losses in stores inventories which should be allocated to the operating departments. Houston carries a revolving fund of $300,000 for its central stores, Dallas one of $27,000 for its stationery stores, and Fort Worth one of $60,000 for its stationery and garage stores. Galveston, Port Arthur, Wichita Falls, Amarillo, and Lubbock have revolving funds for some or all items. 
Another accounting method is to pay for purchases from the general fund and then make the proper charge to the departments monthly, as do Austin, Beaumont, and Tyler. Finally, the city may charge some particular department with the supplies when they are first bought, and if they are used by another department, make the proper debit and credit entries to assess the cost of the supplies to the department which actually uses them. An accounting pro­cedure similar to this is employed in Big Spring. 
It is apparent that some record must be kept of the dis­tribution of the supplies from the central stores to the 11arious departments in order that the proper accounts may 
EXHIBIT L* 
R!cCORD 01" SUPPLIES TAirnN FROM AND RlcTURNED TO STOREROOM 
Number Date CITY OF SHERMAN STOREROOM AND SUPPLY DEPARTMENT RECEIVED FROM STOREKEEPER : (Storekeeper must personally check all Tools, Equirmcnt and Materials) 
Quan tity ll1·<·civ1·d  Time Rect•ivt'd  

__ 
_ __  __r__  

\Tools, 

-1




---r -­
____ j-I _ 
-·--1-------­
---~-~ 

No. Si~mtlttl't' 1Jf 01w I 
r.frr1 llcct·iving Tools or Tools 

Tim (' I V 
on J ob Mnteriuls Rr·iurncd 

Mat('riul~ 
H.l'lurned 
Rl'lurncd
= I
--· _ 
1 =-1
_ r 
._. 
_ 
_ _ i _J__ _I_ __ 

-1--' -­

I 

--: I , r--f­


1 
I I 
I I I 

I 

~ 
;p 
t

~ 
i ~ 
~ 
""I 
~ 
~ 
C"'.l 
~ 
.... 
~ 
~ 

CJ:)
•Reproduced through the courtesy of Mr. W. Morgan Works, City Manager of Sherman, Texas. 
Cl:) 
be charged. To care for this step, the storekeeper at Tyler prepares a detailed monthly distribution statement, with recapitulations, and sends it to the chief accounting officer, who in turn makes the proper entries. In Seguin, the person responsible for the stores sends a "materials and supplies requisition,'' on which are listed the materials he used in performing some particular job, to the city hall, where the various accounts are charged with them. Re­pairs on cars in Waco are authorized by a special order form, which passes through the hands of the comptroller, who makes the correct charges to the departmental accounts. Of course, supplies going directly to the using departments for their use are always charged directly to them. 
The purchasing agent should have the authority to super­vise interdepartmental transfers of supplies and the sale of obsolete and used materials. When supplies are stored in departmental storerooms, it is quite possible for one department to become overstocked with certain items which can be used by another. The purpose of interdepartmental transfers of supplies is to reduce the total amount invested in stock, and to eliminate the likelihood of some supplies deteriorating or becoming obsolete. In some instances they may obviate ordering from a vendor on an emergency requi­sition. The purchaser occupies a strategic position which makes it much more logical that he supervise interdepart­mental transfers than that they be handled through the department heads. Of the cities replying to an inquiry on this point, 56 per cent make interdepartmental transfers of supplies. In some cities the purchasing agent super­vises such transfers, while in a few the secretary, the department head, or the auditor performs this function. Dallas, Fort Worth, and Wichita Falls have special transfer forms. Fort Worth uses three copies, which are made out at the storeroom and sent to the auditor, who checks them, retains one copy, and sends one to each of the operat­ing departments involved. 
A city should sell supplies on which it is overstocked, or which are obsolete, of no further use, or in danger of de­terioration In 1934, Dallas, Fort Worth, San Antonio, and Longview secured $1,000 or more from this source, and Beaumont and Austin about $800 each. Pampa averages $500 a year from sale of materials. The purchasing agent, through his knowledge of the city's wants and needs, the supplies on hand, and the market, is the most logical official to salvage materials. Sale should be made after advertising for bids, though informal negotiations are permissible if the amount is small. Approval of the council should be secured if the property has considerable value. Some 80 per cent of Texas municipalities make a practice of selling used or obsolete materials. In the smaller cities, the coun­cil commonly supervises the sale, while the usual arrange­ment in the larger is for the purchaser to handle this work. In some, however, the manager also has a part in the transaction. The secretary or department heads are respon­sible for sales in a few, and in several the council must agree to the sale. 
The purchasing agent of Omaha gives a clear and concise statement of the principles which should guide the opera­tion of a central storage system. He writes :5 
First, it must be removed from political control as far as possible. Second, it must be in charge of an experienced purchasing agent and storekeeper. Third, they must not attempt to carry everything, but only those items which move rapidly and on which a savings can be made in quantity purchases. Fourth, proper stock and cost records must be maintained. Fifth, old or obsolete materials must not be allowed to accumulate. 
In these terms may be summarized the major conclusions of this chapter. 
sshall the City of Indianapolis Establish a Central Storeroom? 
p. 15. 
CHAPTER VIII 
SUMMARY AND CONCLUSION 

This manual has described in some detail the organization and procedure to be followed if a city would be assured of having its purchasing function administered on a sound, workable basis. And every municipality, the large and the small alike, may well give more thought and attention to the satisfactory discharge of this function. Inexperience, mismanagement, and favoritism in purchasing are certain roads to the squandering of the taxpayers' money. Those responsible for city government should turn their attention to this phase of the finance problem and make a con­scientious effort to correct the defects which will be dis­closed by a critical survey of the typical existing set-up. City officials must be disposed to exert the initiative neces­sary to eliminate unbusinesslike and obsolete methods; inertia and apathy on the part of either administrative officials or council cannot be tolerated by any city which would have itself thought well governed. 
Purchasing is primarily an executive function and should be treated as such. Recognition of this fact, however, does not always bring in its wake an adequate purchasing sys­tem, for authority and responsibility for buying may be devolved upon several officials. Where this situation ob­tains, a city is said to have departmental purchasing. De­partmental purchasing does not of necessity mean unsatis­factory purchasing, for in an occasional city in which the department heads have the responsibility of buying, this duty will be discharged with reasonable adequacy. In gen­eral, however, departmental (or decentralized) purchasing is characterized by small quantity, retail price, and brand buying, narrow competition, lack of essential records, and other features inherent in an unscientific purchasing system. 
An alternative to buying by department heads is found in centralized purchasing. Here one person is made respon­sible for all, or substantially all, municipal purchasing and 
is given authority commensurate with his responsibility. Centralized purchasing does not of itself remedy the evils which so frequently characterize departmental purchasing; for many problems, solution of which is prerequisite to the establishment of a satisfactory purchasing system, are inherent in purchasing, irrespective of the organization employed. Moreover, unless an able, trained, honest, and conscientious official is named purchasing agent under a centralized system, it may be that no apparent advantages will flow from its substitution for departmental purchasing. 
It is true nevertheless that, if the implications of cen­tralized purchasing be accepted in their entirety, this set-up enjoys certain advantages over departmental purchasing. For one thing, it is much simpler and more logical in organization. For another, it effects certain material sav­ings. Among the economies of centralized purchasing may be mentioned, first, the reduction of clerical work for order­ing, inspecting, and invoicing (made possible by fewer or­ders); second, the standardization of specifications which reduce the variety of types demanded and contribute sub­stantially to the consolidation of orders; third, quantity purchases with lower price units made possible by combin­ing purchase requirements and by long-term contracts; fourth, close inspection and accurate testing of deliveries; and fifth, the prompt approval of invoices and payment of bills so as to obtain discounts. 
A problem which is inseparable from the purchasing set-up involves storage. Too frequently in the past a city has established a central storeroom without having first considered carefully all the factors which affect the opera­tion of such a system. It must be borne in mind, for example, that the stock in the storeroom must turn over rapidly and that the total amount invested must not be great. Some cities have coped quite successfully with the storeroom problem by planning their needs for an extended period in advance and entering into a long-term contract with the vendors to make deliveries as needed. Such an arrangement will not be found equally applicable in all situations or to all commodities, but its possibilities should be investigated by every city. It goes without saying that the purchasing agent must have full supervision of what­ever stock may be on hand. 
Another problem worthy of mention at this point has to do with the matter of records, an adequate system of which is necessary in every purchasing office. Stock records of every item ; source of supply, vendors', and distribution records ; and inventories are among those which will be found most useful. The purchaser should so organize his files that all data pertaining to every pur­chase from requisition to delivery slip are available in one place. Furthermore, he should keep an account of the operating cost of his division and of the savings effected by it. 
Other considerations relate to long-term buying and the basis of competition. It will be clear that the full ad­vantages of bulk or quantity buying cannot be realized so long as commodities are bought only as the need arises. As regards competition, it may be observed that competitive bidding frequently is not sufficiently extensive because of immediate demands for goods and the consequent seeming necessity for "emergency" purchases, and because of lim­ited out-of-city solicitation. The idea that local merchants must be favored in purchasing negotiations solely because they are taxpayers and voters prevails all too frequently. Moreover, the line of least resistance is to place the order with the local merchant rather than to contact outside deal­ers. In general, it may be said that the longer the term of the purchase contract and the broader the basis of bidding the more satisfactory the purchasing procedure. 
It will not be out of order to recapitulate the major steps in municipal purchasing at this point. First, the purchas­ing agent receives a requisition from an operating depart­ment of a supply need, either immediate or for some definite advance period. He then solicits bids from both local and outside dealers, suiting the methods of securing them and the number of solicitations to the amount involved and the time allowed. In any event, definite specifications must be given. After determining which vendor has submitted the lowest and best bid, he prepares the purchase order in quadruplicate, which is certified by the comptroller as to availability of funds. In small cities, fewer copies of the order will suffice, and the certification step will be omitted where the office of comptroller does not exist. The vendor ships the goods to the storeroom or to the using department, which agency inspects the goods and reports the delivery to the purchaser by means of a receiving slip or one copy of the order. The purchasing agent then compares the delivery report, the order, and the invoice to ascertain if the three are in agreement, approves the invoice extensions and footings, and forwards it to the comptroller. That official in turn checks the invoice with his records and pro­ceeds to pay the bill. 
The city whose public officials are honest and conscien­tious and whose supplies are bought in substantial accord­ance with the procedure here outlined need have little fear that the purchasing function is being improperly dis­charged. Where the goods which must be purchased for a municipality are bought for the lowest price consistent with the quality required, that city may be said to have an adequate purchasing system. The principles examined in the preceding chapters are designed to secure such a system to any city which will endeavor conscientiously to place them in operation. 
In conclusion it is advisable to consider a development in public purchasing which is likely to become of increasing importance in the future. The contention is frequently made that the small city cannot hope to secure low unit prices because it must buy in small quantities. Since small cities predominate in Texas (only thirteen were over 30,000 in population in 1930), it is important that some device be found which will minimize the handicap placed on the small municipalities. One solution of the problem lies in cooperative purchasing, by which two or more cities con­solidate their purchase requirements to make an order suffi­ciently large to secure unit prices comparable with those obtained by large cities, and thereby effect considerable savings. 
Such a scheme involves certain problems the solution of which is prerequisite to its successful operatfon. The pro­rating of charges, such as for freight or testing, is one such problem encountered by Austin in a city-county consolidated purchase. This should not prove difficult to solve, as the cooperative purchasing arrangement in Cincinnati testifies. Again each city might desire a slightly different type or quality of merchandise; this dufficulty again is not insur­mountable. 
While it is possible for cities to inaugurate and handle a cooperative purchasing program by dealing directly with the vendors, a central agency can perform invaluable serv­ices in coordinating and combining the purchase needs, and in placing the orders. The agency best qualified to act in this capacity in this state is the League of Texas Munici­palities, whose executive secretary is at the command of cities which wish to engage in cooperative purchasing. The experience of the Michigan Municipal League indicates the savings which may be realized through cooperative buying. 
In 1930 the Michigan League supervised the purchase of 5,200 feet of fire hose for six cities at a cost of $.64 per foot. This was about one-half the average cost of fire hose in Michigan at that time, and the aggregate saved the cities was some $3,000. The specifications adopted were those of the National Board of Fire Underwriters, which agency aided in the inspection of the hose prior to its leav­ing the factory. The inspections and tests showed it to be 40 to 50 per cent above pressure and tensile specifications. Another cooperative purchase of 7,300 feet of fire hose was made for a dozen cities at a cost of $.61 per foot. These low prices were the result of the absence of trade-mark buying, of quantity orders with concurrent lower unit prices, and of the omission of usual sales costs. In fact, "all of the costs of distribution are and can be practically eliminated with the exception of the freight from the factory to the con­sumer."1 This will reduce the cost of fire hose from $.20 to $.40 per foot. The Wisconsin League of Municipalities likewise has served the cities of that state in initiating and supervising cooperative purchasing. 
tffarold Smith director of the Michigan Municipal League, in Pro­ceedings of the Michigan Municipal League, 1930, pp. 102-103. 
The objection that the needs of the cities will differ is answered by the fact that it is not necessary to have com­plete agreement among the cities in every detail in order to have cooperative purchasing. The vendor can bid a differ­ent price on each variety in type or specification, and still give wholesale prices to cities for retail quantities.2 The League of Municipalities can be relieved of bookkeeping responsibilities by having the manufacturer bill each city as if the order had been made directly. The plan of coopera­tive purchasing is expedient and has demonstrated its value. Of course it must be limited to staple commodities. The opinion of city officials throughout Texas seems to be about evenly divided for and against cooperative buying. 
Another service which a central agency such as a munici­pal league can perform for its members is the collecting and issuing of comparative information on purchasing. This has been done for some time by the New York State Con­ference of Mayors and the Municipal League of Virginia. The Virginia monthly bulletin for September, 1934, listed nearly fifty different commodities, with the names of the city or cities purchasing each, the trade name, the quantity, the quality or specifications, the unit prices, and the dis­counts allowed on each item. The League of Texas Munici­palities recently inaugurated a comparative purchasing information service through its news letters, designed to keep city purchasing officials in the state conversant with the unit prices paid for basic commodities in various cities so they may check their own prices and learn of more economical and satisfactory sources of supply. Every city will find that it is to its advantage to cooperate in furnish­ing such data when requested and to make a practice of reading these comparative reports. 
The future undoubtedly will see the present spirit of localism replaced by a broader perspective on the part of the purchasing agents. There will be more extensive con­tacts with outside vendors than are now known ; materials will be sent to government, university, and commercial 
2Russell Forbes, "Cooperative Buying for Municipalities," in The Purchasing Agent, February, 1931, pp. 149 ff. 
testing bureaus; greater reliance will be placed on the standard specifications prepared by government and private agencies ; cooperation will be extended not only to making purchases but also to uniting against unfair trade practices and detrimental regulations; and finally, there will be a comparison of the practices of one city with those of others in an effort to improve purchasing administration. When, and only when, these prospects have been translated into realities may the problem of municipal purchasing be said to have been solved to the satisfaction of the cities. 
APPENDIX I 
RECOMMENDED CHARTER PROVISIONS 
CONCERNING PURCHASING~ 

SECTION 1. Bureau of Purchases; Organization and 
Powers. There shall be established in the department 
of__________________a bureau of purchases, the head of which 
shall be the city purchasing agent.1 The city purchasing 
The purchasing agent shall make all purchases of sup­
plies, materials, equipment, and contractual services, in 
the manner provided by ordinance, for all departments, 
agent shall be appointed by the_________
_________
____ 2 according to 
civil service regulations,s and shall receive such salary and 
give such bond as may be fixed by ordinance. 
*Taken from Russell Forbes, Purchasing Laws for State, County, 
and City Governments (New York, 1931), pp. 24-26, and used with 
the permission of the author and of The National Association of 
Purchasing Agents. Certain footnotes have been omitted in whole 
or in part. 
1If the purchasing agency is to be a separate department, this sentence should read: "There shall be established a department of purchases, etc." In small cities, it is sometimes desirable to have some official serve also as purchasing agent. In some municipalities, the city manager serves as purchasing agent. In such cases, this sentence should be changed to: "The city manager shall serve also as city purchasing agent, and shall be the head of the department (or bureau) of purchases." 
2The power of appointment usually depends upon the form of government. The appointing power may be vested in the mayor, the council, the head of the department (if the purchasing office is a bureau), or the manager. Many charters contain a blanket provision covering all appointments; in such case, this part of the sentence can be omitted entirely in this section of the charter. 
3If the city does not have a civil service system, the purchasing agent should have security and indefiniteness of tenure. This sen­tence should be revised in that case, as follows: "The city purchasing agent shall be appointed by the ... and shall hold office until his successor shall have been appointed and qualified, or until his resig­na'tion or removal for cause. He shall receive such salary, etc." 
offices, boards, institutions and other agencies of the city government. The purchasing agent shall sell all supplies, materials and equipment not needed for public use or that may become unsuitable for use, and shall have authority to transfer between departments, offices, boards, institutions and other agencies of the city government any supplies, materials and equipment not needed by one but necessary to the conduct of another or others. He shall also have charge of all general storerooms and warehouses and shall inspect or supervise the inspection of all deliveries of supplies, materials and equipment to such storerooms and ware-. houses or to the departments, offices, boards, institutions, and other agencies of the city government, to determine quantity and quality and conformance with specifications. 
SEC. 2. Competition Required; Encumbrance. Before making any purchase or sale, the purchasing agent shall be required to secure bids under such rules and regulations, and with such exceptions, as the council may by ordinance prescribe. Except in emergency, the purchasing agent shall not issue any order for delivery on a contract or any open market order for any supplies, materials, equipment 
or contractual services, unless and until the ____
__________________• certifies that there is to the credit of each of the depart­ments, offices, boards, instituti'>ns or other agencies con­cerned a sufficient appropriation balance, in excess of all unpaid obligations, to defray the cost of such supplies, materials, equipment, or contractual services.5 SEC. 3. Contract Procedure. All expenditures for sup­plies, materials, equipment, or contractual services involv­ing more than two thousand dollars shall be made on written contract. All such contracts shall be awarded to the lowest and best bidder, after public advertisement and competition as may be prescribed by ordinance. 
•Insert title of the official in charge of fiscal control; for example auditor, comptroller, or director or commissioner of finance. ' 
5Elsewhere in the charter there may be a provision requiring pre­audit of all expenditures; if so, this sentence need not be included here. 
A Purchasing Manual for Texas Cities 105 
SEC. 4. Board of Standardization. The mayor, purchas­ing agent, and commissioner of public works, 6 personally or by deputy, shall constitute the board of standardization, whose duty it shall be to classify and standardize, and to prepare and adopt written specifications for, all supplies, materials, and equipment used by the city.7 
6These officials constitute one of many possible combinations for the personnel of the board of standardization. The most important consideration is that the chief administrator, the purchasing official, and the using agencies should be represented on any standardizing body and should have equal voice in determining the conclusions-and results. The manager might be substituted for the mayor in city manager governments; for the commissioner of public works may be substituted some other official or officials representing the using agencies. 
TElsewhere in the charter there should be a section prohibiting financial interest in any contract or order of the city by the purcha,.s­ing agent or any other municipal employee and official, and prescrib­ing the proper penalty for violation thereof. 
APPENDIX II 
RECOMMENDED ORDINANCE CONCERNING 
PURCHASING~ 
SECTION 1. Organization of Purchasing Bureau. There is hereby established in the department of______
_________________the 
bureau of purchases, the head of which shall be the city purchasing agent. The city purchasing agent shall be ap­pointed by the__
____________________ 
subject to civil service regula­
tioiis,1 and shall receive an annual salary of $-----------------------· He shall give an official bond, to be approved by the 
2 
________________________ in the sum of $------------------------·s The city purchasing agent shall have had, prior to his appointment, at least two years' experience in a purchasing office of a public or private corporation in an executive capacity. He shall have power to appoint and remove his subordinates, subject to civil service regulations,4 to fix their salaries within the limits of the appropriation therefor, and to prescribe their duties. 
SEC. 2. Scope of Purchasing Authority. The city pur­chasing agent shall have the power, and it shall be his duty, to purchase or contract for all supplies, materials, equip­ment, and contractual services needed by any and all de­partments, institutions, boards, commissions and other agencies which derive their support from public funds and which are hereinafter referred to as the using agencies. 
This section shall not apply to the purchase of______
_________
_____.5 
*Taken from Russell Forbes, Purchasing Laws for State, County, and City Governments, pp. 27-32, and used with the permission of the author and The National Association of Purchasing Agents. Certain footnotes have been omitted in whole or in part. 
1The provisions of this section must conform to the charter provi­sions, and the blank spaces above should be filled in accordingly. 
2city attorney or corporation counsel. 
SThe amount of the bond should be at least equal to the value of the cash and materiel of which he has custody. 4Qmit this clause if the city does not have a civil service system. 5Jnsert the names of any class or classes of articles, such as books 
for the public library, which are to be purchased directly by the using agencies. 
SEC. 3. Requisitions and Estimates. All using agencies of the city shall file detailed estimates of their requirements in supplies, materials, equipment and contractual services in such manner, at such times, and for such future periods as the city purchasing agent shall prescribe. This shall in nowise prevent any using agency from filing with the city purchasing agent at any time a requisition for any supplies, materials, equipment, or contractual services, the need for which was not foreseen when the detailed esti­mates were filed. 
SEC. 4. Contract Procedure. All expenditures for sup­plies, materials, equipment or contractual services, the esti­mated cost of which is over two thousand dollars ($2,000) shall be awarded on written contracts. Notices inviting sealed competitive bids shall be published at least once in the official newspaper or journal and at least five calendar days must intervene between the date of last publication and the final date for submitting the bids. Such notices shall give the specifications of the articles to be purchased, shall state the amount of surety to be submitted with the bid and the surety to be given with the contract, shall state the time and place for opening of bids, and shall give in general terms the conditions of award of the contract. The city purchasing agent shall, in addition, solicit sealed bids from all prospective suppliers who have requested their names to be added to the supply list, by sending them a copy of such newspaper notice or such other notice as will acquaint them with the proposed award. All pending con­tracts shall also be advertised by a notice posted on a public bulletin board in the purchasing agent's office. 
All bids shall be submitted sealed to the city purchasing agent and shall be accompanied by surety in the form of certified check, cash, or bond in such amount as the city purchasing agent shall prescribe in the public notice invit­ing bids. The bids shall be opened in public at the time and place stated in the newspaper notices. Any and all bids with alterations and erasures therein may be rejected. After examination by, and tabulation by the city purchas­ing agent, all bids may be inspected by the competing bidders. The city purchasing agent may, with the approval 
of the________________________,6 reject any or all bids, or the bid for any one or more commodities included in the proposed con­tract, when the public interest will be served thereby. 
When all bids received are for the same total amount or unit price, and when the public interest will not permit the delay of re-advertising for bids, the city purchasing agent may purchase the commodities in the open market, provided the price paid in the open market shall not exceed any bid price submitted for the same commodity. Other­wise the contract shall be awarded to the lowest and best bidder; quality offered with bid, delivery terms, and service reputation of the vendor may be taken into consideration in determining the sucessful bidder. 
Before any contract is executed, the successful bidder shall file with the city purchasing agent a surety in the form of certified check, cash or bond in an amount to be determined by the city purchasing agent. All surety bonds and contracts shall be approved as to form by the --------------------------·' If the successful bidder shall not within ten days after the award enter into contract and file the required surety, he shall forfeit the surety which accom­panied his bid. A copy of each long-term contract shall be 
filed with the_____________
__________ .8 SEC. 5. Open Market Orders. All expenditures for sup­plies, materials, equipment or contractual services the esti­mated cost of which is less than two thousand dollars ($2,000) shall be made in the open market, without news­paper advertisement and the procedure prescribed by sec­tion 4 for the award of contracts. In case of an emergency which requires immediate purchase of supplies, materials or equipment, the________________________ may authorize the city pur­
9 
chasing agent to secure in the open market at the lowest obtainable price any supplies, materials, equipment, or con­tractual services regardless of the amount of the expendi­
sFm in name of appointing official or body. 
1City attorney or corporation counsel. 
Blnsert title of the official in charge of fiscal control. 
Dlnsert title of chief executive officer-mayor or manager. 

ture; provided, however, that a full explanation of the cir­cumstances of such emergency shall be entered in the minutes of the council and shall be open to public inspection. 
All open market purchases shall, wherever possible, be based on at least three competitive bids, and shall be awarded to the lowest and most responsible bidder. The city purchasing agent shall solicit bids by direct mail re­quest to prospective vendors, by telephone, and by public notice on a bulletin board in his office. The city purchasing agent shall keep a record of all open market orders and the bids submitted in competition thereon, and such records shall also be open to public inspection. 
SEC. 6. Encumbrance of Funds. Except in cases of emergency, the city purchasing agent shall not issue any order for delivery on a contract or any open market order unless and until the _______________________1° certifies that there is to the credit of each of the using agencies concerned a suffi~ cient appropriation balance, in excess of all unpaid obliga­tions, to defray the cost of such supplies, materials, equip­ment or contractual services. 
SEC. 7. Emergency Purchases. In case of emergency and with the consent of the city purchasing agent, any or all using agencies may purchase directly any supplies, ma­terials or equipment whose immediate procurement is essen­tial to the continuance of the work of the using agency concerned. The head of such using agency shall send to the city purchasing agent a copy of such emergency purchase, together with a full explanation of the circumstances of the emergency, which shall be filed by the city purchasing agent as a permanent and public record of the purchase. The city purchasing agent shall by rules and regulations prescribe the procedure under which such purchases may be made. 
SEC. 8. Inspection. The city purchasing agent shall in­spect, or supervise the inspection of all deliveries of sup­plies, materials, equipment or contractual services to deter­mine their conformance with the specifications set forth in the order or contract. Any department having the staff 
ioJnsert title of the official in charge of fiscal control. 
and facilities for adequate inspection may be authorized by the city purchasing agent to inspect all deliveries made to such using agencies under rules and regulations which the city purchasing agent shall establish. The city purchasing agent shall have authority to prescribe chemical and physical tests of samples submitted with bids and samples of deliveries to determine their quality and conformance with the city's specifications. In the performance of such tests, the city purchasing agent shall have authority to make use of laboratory facilities of any agency of the city government. The cost of such tests shall be charged to the appropriation of the using agency in whose behalf the test is made. 
SEC. 9. Surplus Stock. All using agencies shall submit to the city purchasing agent, at such times and in such form as he shall prescribe, reports showing stocks of supplies, materials, and equipment on hand awaiting use. When any stock is surplus or no longer of use to any using agency, the city purchasing agent may transfer it to another or other agencies which have need for it. The city purchasing agent shall also have power to sell all supplies, materials and equipment not needed for public use or that may have become unsuitable for public use. Any such sale shall be based on competitive bids and conducted in accordance with regulations to be prescribed by the city council. 
SEC. 10. Storerooms and Warehouses. The city purchas­ing agent shall supervise any and all storerooms and ware­houses which may hereafter be established and placed under his control. The city council shall provide a stores revolv­ing fund of sufficient amount to finance the purchase and storage of supplies, materials and equipment which are used in large quantities and which may be purchased and stored advantageously, and shall prescribe by ordinance the operation and custody of such fund.11 
SEC. 11. Board of Standardization. The mayor, pur­chasing agent, and commissioner of public works, per­
uif the city already has established one or more central storerooms or warehouses and/or a revolving stores fund, this section should provide that these shall thereafter be under the control and super­vision of the city purchasing agent. 
A Purchasing Manual for Texas Cities 111 
sonally or by deputy, shall constitute the board of standard­izatioB. The members of this board shall serve without additional compensation. It shall be the duty of this board to classify all the supplies, materials and equipment used by the various branches of the city government; to adopt as standards the minimum number of qualities, sizes, and varieties of commodities consistent with the successful operation of the city government; and to prepare, adopt, promulgate, and enforce written specifications of all such standard commodities which are used in common by two or more city agencies. The board of standardization shall have power to make use of the laboratory and engineering facilities of the city and the technical staffs thereof in con­nection with its work of preparing and adopting standards and written specifications. The board shall also freely consult with the heads and other officials of the using agencies to determine their precise requirements, and shall endeavor to prescribe those standards which meet the needs of the majority of such agencies. After its adoption, each standard specification shall, until revised or rescinded, apply alike in terms and effect to every future purchase and contract for the commodity described in such specifica­tion; provided, however, that the city purchasing agent, with the approval of the city council, may exempt any using agency of the city from use of the commodity described in such standard specification. 
SEC. 12. Rules and Regulations. The city purchasing agent shall establish, and from time to time amend, all rules and regulations authorized by this ordinance and any others necessary to its operation; such rules and regulations and amendments thereto shall be subject to the approval 
of the _______________________.12 The city purchasing agent shall also submit to the _______________________ 12 an annual report on the work of his office as conducted in accordance with the pr<->Visions of this ordinance, and may submit from time to time recom­mendations for changes which he deems necessary. 
SEC. 13. Date of Taking Effect. This ordinance shall be in effect on and after_______________________________________ 
. 
121nsert name of appointing official or body. 

INDEX 
Abilene, departmental storage, 84 Accounting control, 13 Advantages of centralized purchasing, 
12 "Advice of goods received" form, 70 Amarillo 
departmental storage, 84 invoice form of, 75, 76 purchase order procedure, 63 requisition approved by manager, 36 revolving fund, 92 
American City Magazine Corporation, 28n American Society for Testing Mate­
rials, 41 Auditor, approval of orders by, 62 Austin 
annual contracts, 67 annual ice contract, 66 assurance of balance on order, 63 cash discount saving, 79 city-county consolidated purchase, 
100 cost of purchasing department, 22 council award of contracts, 55 follow-up order, 64 full-time purchasing agent, 21 instructions on order forms, 60 monthly departmental charges, 92 Morgan, Guiton, manager of, 27n orders approved by manager, 62 partial central storage, 84 purchases for hospital, 29 purchasing for library, 29 purchasing staff, 26 quotation sheet of, 47 receiving slip, 70 responsibility of purchasing agent, 
21 sale of obsolete supplies, 95 source of supply card, 27 stores requisition, 85 tabulation of bids, 51 use of telephone in purchasing, 47 
Awarding orders and contracts, 54f 
Beaumont monthly departmental charges, 92 partial central storage, 84 purchase order procedure, 63 reception of goods, 72 sale of obsolete supplies, 95 standard contract form, 67 storekeeper, 85 
Betters, Paul V., 57 
Bids alternate, 49 competitive, 43£ non-competitive, 52 on separate items or groups, 48 publication of, 51 rejection of, 51 sealed, 48f surety with, 50 
Big Spring council award of contracts, 55 instructions on order forms, 60 interdepartmental transfer, 92 
Bills, payment of, 74f Brand buying, 39, 41 Brown, J., Richard, editor, The South­
western Purchaser, 28n 
Brownsville auditor as purchasing agent, 23, 63 council award of contracts, 55 purchase order of, 60, 61 purchasing for c h am be r of com­reception of goods, 72 
Bruere, Henry, The New City Govern­ment, 12n Budget estimates, 37 Budget Manual for Texas Cities, 20n 
Bureau of Efficiency of Los Angeles County, Survey of the Purchasing and Stores Department of the County of Los Angeles, 14n, 38n 
Bureau of Engineering Research, The University of Texas, 41, 73 
Bureau of Governmental Research, Indianapolis Chamber of Com­merce, "Shall the City of Indian­apolis Establish a Central Store­room?" 83n 
Bureau of Industrial Chemistry, The 
University of Texas, 73 Bureau of Standards, 40, 73, 73n Bulletin board, use in buying, 45 Bulletin of National Association of 
Purchasing Agents, 28 
"Buying According to Specifications," by Charles E. Lex, Jr., in The Purchasing Agent, 39n 
Card system for storage, 87 Cash discounts, 13, 78f Central Board of Purchases of Mil­
waukee, 2ln Central purchasing agency, cost of, 21 
Central storage system advantage of, 81 major principles of, 95 summary, 97 
Centralized gas and oil storage, 87 
Centralized purchasing advantages of, 12, 97 alternative to, 15 apparent disadvantages of, 14 definition of, 11 economies of, 13, 97 in Dayton, Ohio, 13 in Milwaukee, 13 in Stamford, Conn., 13 "Saving by Centralized Purchasing," 
The Toledo City Journal, 13n system, llf the case for, 9f 
Centralized Purchasing, Forbes, 12n, 
13n Centralized stationery stores, 87 Chase, Stuart, and F. J. Schlink, Your 
Money's Worth, 40n Chemical tests of goods, 72 Cincinnati 
cooperative purchasing, 100 
Municipal Reference Bureau, Mu­nicipal Purchasing Methods and Procedure, 26n 
purchasing staff, 26 
unified purchasing, 30n City secretary as purchasing agent, 22 Commissioners as purchasing agents, 
16 Commodity cards, 37 Commodity cards for storage, 87 Comparative information on purchas­
ing, 101 Comparative purchasing information 
service, 101 Competitive bidding, 10, 98 Comptroller, approval of orders by, 62 Comptroller, The, "Public Purchasing 
Coordinated," by Charles E. Lex, 
Jr., 30n Contracting for public works, 10 Cooper, R. L., ma n a g er of Port 
Arthur, 7ln 
"Cooperative Buying for Municipali­ties," by Russell Forbes, in The Purchasing Agent, lOln 
Cooperative purchasing, 99f 
County Government, The Reorganiza­tion of, in Ohio, 14n 
County of Los Angeles, Survey of Purchasing and Stores Depart­ment of, 14n, 38n 
Current operating expenditures, 9 
Dallas annual ice contract, 66 biennial contracts, 67 
cash discount procedure, 79 central warehouse, 82 comptroller's approval of ordeJs, 62 departmental storage, 84 emergency order percentage, 65 emergency purchase procedure, 64 executive orders on specifications, 
40n executive orders supplementing ordi­nances and charter, 19 
Executive Regulations Governing 
Purchasing, 31 instructions on order forms, 60, 62 manager's approval of orders, 62 park board purchasing, 29 
Progress, An Official Report of Mu­nicipal Achievement in Dallas, 
22n purchase order procedure, 63 purchasing agent of, 21 purchasing for hospital, 29 purchasing staff, 26 quotation sheet of, 45, 46 reception of goods, 72 requirement for sealed competitive 
bids, 50, 52 requisition for supplies, 34, 35 revolving fund, 92 sale of obsolete supplies, 94 special transfer forms, 94 use of bulletin board in buying, 45 use of telephone in purchasing, 47 
Davis, G. B., letter, 67n, 82n Dayton, Ohio, centralized purchasing 
in, 13 Debt retirement, charges for, 9 Decentralized purchasing 
alternative to centralized, 15 
characteristics of, 15 
customary practices of, 16 

Department of Home Economics, The 
University of Texas, tests by, 73 Departmental purchasing, 13, 16, 96 Detroit, purchasing staff of, 26 Direct solicitation to vendors 
letter method, 45 
personal interview, 48 
telephone call, 47 

Disadvantages of centralized purchas­
ing, apparent, 14 Distribution record of goods, 93£ Duplicate payment of bills, 13 Dysart, B. P., "Do Competitive Bids 
Reflect Competition?" Texas Mu­nicipalities, 58n 
Economies of centralized purchasing, 13 
El Paso cash discount saving, 79 central warehouse, 82 cost of purchasing department, 22 Davis, G. B., purchasing agent of, 
82 departmental storage, 84 emergency order percentage, 65 instructions on order forms, 60 purchasing staff, 26 quantity buying, 67 responsibility of purchasing agent, 
21 Emergency purchase order, definition, 
65 Emergency purchasing, 64, 98 Executive Purchaser, The, 28 Executive Regulations Governing Pur­
chasing, in Dallas, 31 Federal specifications hoard, 40 Finance commissioner as purchasing 
agent, 16 Finance, problems of municipal, 9 Forbes, Dr. Russell, 11, 12, 21, 54n, 58 
Centralized Purchasing, 12n, 13n 
"Cooperative Buying for Munici­palities," in The Purchasing Agent, lOln 
Governmental Purchasing, 25n, 64, 
72 Purchasing for Small Cities, 22n The Organization and Administra­
tion of a Government Purchasing 
Office, 82 Formal contract, use of, 66 Fort Worth 
annual contracts, 67 approval of requisitions by man­
ager, 34 central storage system, 83 cost of purchasing department, 22 department of public recreation pur­
chasing, 29 emergency order percentage, 65 follow-up order, 64 purchasing staff, 26 
reception of goods, 72 responsibility of purchasing agent, 
21 revolving fund, 92 sale of obsolete supplies, 94 special transfer forms, 94 storekeepers, 84 stores requisition, 86 use of telephone in purchasing, 47 
Funded debt retirement, charges for, 9 
Galveston annual contracts, 66, 67 cash discount procedure, 79 central warehouse, 84 certification of funds before order, 
62n competitive bids, 52 daily warehouse report on gas and 
oil, 91 
full-time purchasing agent, 21 
instructions on order forms, 60 
mailing of forms to vendors, 47 
purchasing forms, 31 
purchasing staff, 26 
revolving fund, 92 
use of letters in purchasing, 4 7 

Gas and oil centralized storage for, 87 Port Arthur requisition, 87 receipt form used in Sherman, 87, 
89 Gasoline, bought by Texas cities, table, 68 Gordon, Joel, Purchasing Methods of New York State Municipalities, 
2ln, 79n Governmental Purchasing, by Forbes, lln, 12n, 13n, 64n, 72n. Governor's Commission, Report of, on 
county government in Ohio, 14n Group bids, 48 Hall, Albert H., of the Municipal 
Administration Service, abstractor of Survey of the Purchasing and Stores Department of the County of Los Angeles, 14n, 38n 
Harriman, Norman F., Standards and Standardization, 37n Heinritz, Stuart F., editor, The Execu­
tive Purchaser, 28n Highway Department of Texas, 41 Holcombe, Oscar F., mayor of Hous­
ton, 88n 
Houston central storage system, 83 competitive bids, 52 comptroller's approval of orders, 62 emergency purchase procedure, 64 filing of invoices, 78 Holcombe, Oscar F., mayor of, 88n instructions on order forms, 60, 62 purchase order procedure, 63 purchasing staff, 26 reception of goods, 72 responsibility of purchasing agent, 
21 
revolving fund, 92 
signing or requisition, 34 
stationery requisition, 87, 88 
stationery supply room, 87 

"How N.R.A. Affects the Cities," By Sherwood L. Reeder, in Seattle Municipal News, 58n 
"Important Letter on Price Fixing and Public Buying," Michigan Municipal R eview, 57n 
Increased tax delinquencies, IO 
Indianapolis Chamber of Commerce, Bureau of Governmental Research, "Shall the City of Indianapolis Establish a Central Storeroom?" 83n 
Inspection full-time inspector, 70 part of purchasing function, 69 
Interdepartmental transfers of goods, 
94 
Inventories daily warehouse report, 91 periodical, 89 
Invoices approval of, 74f council approval of, 78 extensions and totals, checking of, 
75 
form of, in Amarillo, 75, 76 Item bids, 48 Laredo, departmental storage, 84 League of Texas Municipalities, 100, 
101 Legal basis for purchasing, 18f Letters to vendors, 45 Lex, Charles E., Jr. 
"Buying According to Specifica­tions," in The Purchasing Agent, 39n 
"Public Purchasing Coordinated," The Comptroller, 30n Liberty, council award of contracts, 
55 Limits of the purchasing function, 10 Local dealers, preference to, 55, 98 Longview, sale of obsolete supplies, 95 Los Angeles County 
Bureau of Efficiency of, Survey of the Purchasing and Stores De­partment, 14n, 38n 
results of standardization, 38 
Lubbock card file of merchants, 78 reception of goods, 72 revolving fund, 92 stock record form, 87, 90 system of approving invoices, 77 
Manual of Tax Collection Procedure 
for Texas Cities, 20n Mayor as purchasing agent, 16 Michigan Municipal League, 100 
Michigan Municipal Review "Important Letter on Price Fixing and Public Buying," 57n "Municipal Purchasing Under N.R. 
A. Codes," by Joseph W. Nichol­son, 58n 
Milwaukee cash discount saving, 79 central board of purchases of, 2ln centralized purchasing in, 13 Nicholson, Joseph W., purchasing agent of, 14, 82 results of standardization, 38 tie bids under N.R.A., 57 Model City Charter, A, National Mu· nicipal League, 66n Morgan Guiton, manager of .A:ustin, 27n Municipal Administration Service, Albert H. Hall, abstractor of Sur­vey of the Purchasing and Stores Department of the County of Los Angeles, 14n, 38n Municipal finance, problems of, 9 
Municipal Finance, 	"Why Centralized Purchasing," by Joseph W. Nich­olson, 38n, 79n 
Municipal Index and Atlas, 28 
Municipal League of Virginia, 101 Municipal purchasing, definition, 10 
Municipal Purchasing Methods and Procedure, Cincinnati Municipal Reference Bureau, 26n 
"Municipal Purchasing Under N.R.A. Codes," by Joseph W. Nicholson, in Michigan Municipal Review, 58n 
National Association of Purchasing Agents, 28 National Board of Fire Underwriters, 100 
National Directory of Commodity Specifications,. 40 National Municipal League, A Model 
City Charter, 66n 
National Recovery Act, 10, 57f 
Navasota purchase order procedure, 63 stores requisition, 85 New City Government, The, by Henry Bruere, 12n New York State Conforence of Mayors, 101 
Newspaper advertisement in purchas­ing, 43£ Nicholson, Joseph W. "Municipal Purchasing under N.R. 
A. Codes," Michigan Municipal Review, 58n purchasing agent of Milwaukee, 14, 82 "Why Centralized Purchasing," in Municipal Finance, 38n, 79n Ohio, The Reorganization of County Government in, 14n Omaha, purchasing agent of, 95 Orders and contracts, 54f 
Organization and Administration of a Governmental, Purchasing Office, 
by Forbes, 2ln, 82n Organization for purchasing, 18f Overhead costs, reduction of, 14 P.W.A., 73 Palestine, competitive bids, 52 Pampa cash discount saving, 79 sale of obsolete supplies, 95 use of letters in purchasing, 47 Periodical inventories, 89 Personal interview in purchasing, 48 Physical tests of goods, 72 Pittsburgh, purchasing staff of, 26 Port Arthur certification of funds before order, 62n Cooper, R. L, manager, 7ln gas and oil requisition, 87 purchase order procedure, 63 receiving sheet form, 71 revolving fund, 92 stamping of invoices,78 storekeeper, 85 tax collector as purchasing agent, 
23 
Preference to local dealers, 55 
Principles of Government Purchasing, 
by A. G. Thomas, 43 Printed requisition, 34£ Printed requisition for supplies, Dal­las, 34, 35 Private purchasing, compared w i th public, IO Problems of municipal finance, 9 
Proceedings of the Michigan Munici­pal League, lOOn Progress, An Official Report of Mu­nicipal Achievement in Dallas, 
22n Public Management, "Supplies and the Cost of Living," 57n 
"Public Purchasing Coordinated," in The Comptroller, by Charles E. Lex, Jr., 30n Public works, contracting for, 10 Publication of bids, 51 Purchase negotiations bulletin boards, 45 direct solicitation, 45 newspaper advertisements, 43f requests for bids, 48 sealed bids, 49 summary, 53 surety with bids, 50 Purchase order characteristics of, 59f in relation to population, table, 66 of Brownsville, 60, 61 procedure in issuance of, 63 Purchase Record, by Thomas, 28 Purchase requirements, determination of, 32f Purchasing agent appointment and length of tenure, 23, 24 as full-time officer, 19f authority to decide award, 54 authority to purchase, 29 character and qualifications, 18 duty of checking invoice extensions, 75 limitations on, 56 power to reject bids, 51 power to revise or deny requisitions, 36 power to sell obselete goods, 94 powers and duties, 30 qualifications · in San Antonio char­ter, 25 records, 26£ responsibility for storage, 83f responsibility in Texas cities, 21 responsible for inspection, 69 salary, adequate, 25 supervision of interdepartmental transfers, 94 surety bond, 24 timing of purchases, 28f training and experience, 24, 25 
Purchasing Agent, The 
"Buying According to Specifica­tions," by Charles E. Lex, Jr., 39n "Cooperative Buying for Munici· palities," by Russell Forbes, IOln "Sealed Bids, the Public Buyer's Viewpoint," 49n Purchasing agency a separate department, 20 central, cost of, 21 
Purchasing board, non-political, 20 Purchasing for Small Cities, Russell Forbes, 22n Purchasing function limits of the, 10 responsibility for, 13 Purchasing in smaller cities, 22 
Purchasing Methods of New York State Municipalities, by Joel Gor­don, 2ln, 79n 
Purchasing, municipal, definition, 10 Purchasing office, part of finance de­
partment, 20 Purchasing staff, subordinate, 26 Purchasing system 
centralized, definition of, 11 charter and ordinance as basis, 18 departmental, 13 distribution of Texas cities, table, 
16 
Quotation sheet of Austin, 47 of Dallas, 45, 46 
Receiving goods purchased, 70£ 
Receiving sheet, Port Arthur, 71 
Record card, vendor's, 27£ 
Records 

distribution records, 98 
of stock, 85, 98 
source of supply, 98 
vendor's, 98 

Reduction of overhead costs, 14 
Reeder, Sherwood L., "How N.R.A. Affects the Cities," Seattle Mu­nicipal News, 58n 
Renard, George A., Secretary, National Association of Purchasing Agents, 28n 
Reorganization of County Government in Ohio, 14 Report of the Governor's Commission on County Government in Ohio, 14n 
Requisitions for supplies, Dallas, 34, 35 for withdrawal of stock from stores, 
85 late or delayed, 36 power to revise or refuse, 36 to ascertain purchase needs, 32f 
Revised Civil Statutes of Texas, 18 Revolving fund, 92 Rit,,hie, ex-governor of Maryland, 12 R0<,hester, cash discount saving, 79 Sale of obsolete goods, 94 San Antonio 
biennial contracts, 67 charter provisions on purchasing agent, 25 
cost of purchasing department, 22 departmental storage, 84 order form requisition, 33 purchase order procedure, 63 purchasing staff, 26 quantity buying, 67 reception of goods, 72 responsibility of purchasing agent, 
21 rock contract, 67 sale of obsolete supplies, 94 stamp on emergency p u r ch a s e 
orders, 65 tabulation of bids, 51 "Saving by Centralized Purchasing,"­
The Toledo City Journal, 13n Schechter case, the, 57n Schlink, F. J., and Stuart Chase, 
Your Money's Worth, 40n 
Sealed bids advantages of, 49 description, 49 disadvantages of, 49£ 
"Sealed Bids, the Public Buyer's Viewpoint," in The Purchasing Agent, 49n 
Seattle Municipal News, "How N. R. 
A. Affects the Cities," by Sher­wood L. Reeder, 58n 
Seguin distribution statement, 94 receiving form, 70 
"Shall the City of Indianapolis Estab­lish a Central Storeroom?" Bureau of Governmental Research, In­dianapolis Chamber of Commerce, 83n, 95n 
Sherman 
gas and oil receipt form, 87, 89 
purchase order procedure, 63 
stores record form, 92, 93 

Sinton, council award of contracts, 55 Smith, Harold, director, Michigan Mu­
nicipal League, lOOn Source of Supply Card, Austin, 27 Southern Methodist University, tests 
by, 73 Southwestern Purchaser, The, 28 Special problems of public purchaser, 
10 Specifications aids in, by American Society for Testing Materials, 41 
aids in, by Bureau of Engineering Res e arch, The University of Texas, 41 
aids in, by 	State Highway Depart­ment, of Texas, 41 
A Purchasing Manual for Texas Cities 119 
as a part of standardization, 39 cooperation in adopting, 39 Dallas executive orders on, 40n Federal Specifications Board, 40 in small cities, 40 initiative in adopting, 39 
National Directory of Commodity Specifications, 40 preparation of, 10 
Standards and Specifications for Metals and Metal Products, 40 St. Paul, purchasing staff of, 26 Stamford, Conn., centralized purchas­ing in, 13 Standardization administrative code, Wichita Falls, 40n assistance from manufacturers and 
trade associations, 40 
beneficial results of, 38 
Bureau of Standards, 40 
in Los Angeles County, 38 
in Milwaukee, 38 
limits of, 38 
of goods, 37f 

Standards and Specifications for Metals and Metal Products, 40 Standards and Standardization, Nor­
man F. Harriman, 37n Standards, Yearbook, 40 Stationery requisition of Houston, 87 
88 
Stationery stores, centralized, 87 
Stock record 

for storage, 87 
form used in Lubbock, 87, 90 Stock records, 37, 85 Storage and stock control, 81£ Storekeeper, 84 Stores record form of Sherman, 92, 93 Stores requisition form 
Austin, 85 
Fort Worth, 86 
Navasota, 85 
Tyler, 85, 86 

Subordinate purchasing staff, 26 "Supplies and the Cost of Living,'' Public Management, 57n Surety with vendor's bids, 50 
Survey of the Purchasing and Stores Department of the County of Los Angeles, 14n, 38n 
Tax delinquencies, increased, 10 Taxpaying in city purchasing, 56 Telephone calls to vendors, 47 Temple, letters to vendors, 47 Testing, part of inspection, 69 Tests private commercial laboratories, 74 Southern Methodist University, 73 Texas A. and M. College, 73 Texas Technological College, 73 University of Texas, The, 73 
U. S. Bureau of Standards, 73 Texas A. and M. College, 73 Texas Cities, purchasing sys t em s, 
table, 16 Texas, Constitution of, 24n Texas Municipalities, "Do Competitive 
Bids Reflect Competition," by 
B. P. Dysart, 58n Texas Technological College, 73 Thomas, Purchase Record, 28 Thomas, A. G., Principles of Govern­
ment Purchasing, 43 Toledo City Journal, The, "Saving by 
Centralized Purchasing,'' 13n Trinity, council award of contracts, 55 Tyler 
council award of contracts, 55 distribution statement, 94 invoice approval, 78 monthly departmental charges, 92 reeciving form, 70 signing of requisition, 34 stores requisition, 85, 86 use of telephone in purchasing, 47 
United States Conference of Mayors, 57 United States Municipal News, 58n, 59n 
University of Texas, The Bureau of Engineering Research, 73 Bureau of Industrial Chemistry, 73 Textile and Clothing Division of 
Department of Home Economics, 73 
Uvalde cash discount saving, 79 competitive bids, 52 council award of contracts, 55 
Vendor's record card, 27f 
Waco central garages, 84 competitive bids, 52 comptroller-auditor as purchasing 
agent, 23 
distribution of car repair costs, 94 follow-up order, 64 purchasing for water works, 29 
Warehouse report, daily, Galveston, 91 Warehouses, 82 "Why Centralized Purchasing," by 
Joseph W. Nicholson in Mu­nicipal Finance, 38n, 79n Wichita Falls 
administrative code on standards, purchasing regulations, 19 40n purchasing rules by manager, 31 auditorium manager as purchasing revolving fund, 92 agent, 23 special transfer forms, 94 departmental storage, 84 Wisconsin League of Municipalities, manager approves orders, 62 100 manager approves requisitions, 34 Your Money's Worth, Stuart Chase purchase order procedure, 63 and F. J. Schlink, 40n 








Municipal Studies of The University of Texas 
Bureau of Municipal Research 
1. 
A Budget Manual for Texas Cities. 

2. 
A Manual of Tax Collection Procedure for Texas Cities. 

3. 
A Revenue System for Texas Cities. 

4. 
A Purchasing Manual for Texas Cities.