The powerful panel that oversees Baltimore City Hall spending unanimously agreed Wednesday to give city agencies more leeway in making purchases, a change that officials believe will save the city money but that reduces oversight of some transactions.
Under the new policy, city agencies will have the authority to make purchases of up to $5,000 without formal approval from the finance department.
The previous limit was $1,000.
"It is a lot of paperwork to put a requisition in," Mayor Sheila Dixon said. "A lot of agencies were complaining about it."
Previously, city purchasing officials had to solicit quotes and create a purchase order for items costing more than $1,000.
According to a city analysis, the savings generated by getting multiple offers and producing paperwork was outweighed by the cost of processing requests.
Also, the process caused purchases to be "jammed" in the city's bureaucracy, said City Finance Director Edward J. Gallagher.
"It takes an awful long time to go through the process," he said.
Now, he said, city officials will be able to spend more time scrutinizing bigger purchases.
Gallagher said the new policy could save the city up to $175,000 a year.
The Board of Estimates last raised the threshold in 1998, from $300 to $1,000. The limit was $100 from 1979 until 1988.
Agency heads have chafed at the $1,000 limit.
The Baltimore Sun reported that the city Fire Department used a $250,000 off-the-books fund to make agency-related purchases without going through the city's Finance Department. Fire Chief William Goodwin denounced the practice, but he also said he wished his department had more "flexibility" in spending decisions.
In the next few weeks, Gallagher's office plans to release a new policy outlining how agencies should process the purchases, including who within an agency needs to approve them. Also, his department will audit the purchases.
Gallagher recommended the changes after reviewing a study by the Baltimore Efficiency and Economy Foundation, which analyzed the city's procurement processes and found them "sluggish." The group found that most of the surrounding counties, including Anne Arundel and Howard counties, allow government agencies to make purchases over $5,000 on their own. Baltimore County's limit is set at $1,000.
Gallagher said he also plans to revive a proposal that would allow the City Council to set the spending amounts that trigger broader Board of Estimates approval. Now, the limit is contained in the City Charter. Dixon introduced a similar measure in June 2007, in the midst of her mayoral election. The plan died with her then-opponent, Keiffer Mitchell, asking for more scrutiny of city purchases rather than less.
At the time, Mitchell pointed to an earlier incident in which an aide to Dixon, then City Council president, instructed a company to keep bills under $5,000 so the payments would not need Board of Estimates approval.
That company, Ultimate Network Integration, was run by Dixon's former campaign manager, who was doing the work without a contract and received $600,000 in city money.
Dixon disciplined two staff members in that case; the city's ethics board said it found no cause to pursue the matter.
CITY HALL SPENDING
* Number of requisitions between $1,000 and $5,000: 3,084
* Savings to city by supervising up to $5,000 (assumes city purchasing agents save 5 percent): $432,000
* Processing costs: $596,122
* Net loss to city: $164,122
Figures are based on projections from first quarter of FY2009.