Receipts is a weekly spotlight on how the city of Houston and Harris County spend your tax money, with a focus on the everyday things most residents may take for granted. Got something you want us to look at? Email José at jose@houstonlanding.org.
“It takes money to make money,” the saying goes.
And when it comes to local government, it takes money to spend money.
The city of Houston spent $180 million out of its general fund buying goods and services during the fiscal year that ended last June 30, according to City Hall’s publicly available checkbook register.
And it spent another $9.5 million to make those purchases happen.
That’s how much it cost to run the Strategic Procurement Division of the Finance Department, which is tasked with overseeing purchasing across city government, in fiscal 2024.
Unlike the citizens it serves, the city cannot simply go online and buy a $36,576 forklift or head to a hardware store for $992,260 worth of replacement parts for the Public Works Department’s sludge plant. Most of the time, city officials have to go through stringent procurement and competitive bidding processes required by state law and municipal rules.
“It’s the point at which you take public dollars and then it meets private industry. And so, obviously, it’s heavily regulated because it’s where those two converge. And so the system is designed to be very methodical,” said Jedediah Greenfield, the city’s chief procurement officer.
The city must adhere to more than a dozen purchasing policies that vary by the amount and type of materials and services it is seeking. For example, there are separate policies related to high-tech procurement, bid solicitations, exceptions to competitive bidding rules, requests for proposals and emergency purchases.
The purchasing staff is divided into teams.
The small purchases team, for example, works on transactions between $3,000 and $50,000. Any purchases above $50,000 must be approved by city council, under state law. The team collects purchase requests from city departments, seeks vendors and creates purchase orders.
For purchases above $50,000, a separate team creates formal bid solicitations, answers vendor questions, meets with departments looking to buy materials and works with the city legal department to draft purchasing contracts.
A separate internal controls group monitors the process to make sure the law and city policies are followed.
Of the estimated $9.5 million cost to run the department in fiscal 2024, 95 percent of that paid for staff salaries and benefits. Less than half a percent was spent on supplies, while the remainder – about $457,000 – went to other services, such as management consulting, advertising, banking, education, training, travel and professional fees.
“Sometimes you’ll hear across the industry, ‘Hey, the procurement people are the no people. No, you can’t do that,’” Greenfield said. “And what I always tell my people is, ‘We’re not the no people. We’re the We can still meet your needs, but we’re going to do it slightly different, that is going to be compliant, that’s going to be best practice.’”
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