Cities have two options when making a contract, lease or other agreement for the purchase of materials, supplies, equipment or nonprofessional services in excess of $20,000. Unless the city otherwise designates, they are required by KRS 424.260 to advertise for bids pursuant to KRS 424.130. The statute includes advertising requirements and exceptions to the bidding requirements, including the exemption of many state purchase contracts.
As an alternative, a city may adopt the provisions of the Model Procurement Code (KRS 45A.343 - .460). The Model Procurement Code is designed to increase public confidence in public procurement; provide increased economy in procurement by fostering effective competition; provide safeguards and integrity in the procurment system; simplify, clarify and modernize the law governing purchasing; and permit continued development of purchasing policies and procedures. Cities are not required to adopt the Model Procurement Code used by the Commonwealth of Kentucky, but many use it because it provides guidance for development of purchasing policies and procedures. Around one-third of cities have adopted the Model Procurement Code, and they typically are larger cities with frequent purchases.
In 2010, the Kentucky General Assembly passed Senate Bill 45, which requires public agencies, including local governments, to provide a preference to Kentucky residents against a nonresident bidder from any state that gives or requires a preference to bidders from that state when awarding contracts. The preference must be equal to the preference given or required by the state of the nonresident bidder. The Kentucky Finance and Administration Cabinet is required under the law to maintain a list of states that require preference, including the details of the preference given to the bidder.