Kentucky cities provide a wide range of essential services to keep communities safe, vibrant, and growing. When cities purchase equipment, materials, or services, they must follow the state’s public procurement laws, which are designed to ensure that public funds are spent fairly, competitively, and transparently.  

Two Procurement Options for Cities  

Kentucky law provides two primary methods by which a city may purchase goods and services exceeding $40,000 in cost:  

The Role of the Finance and Administration Cabinet 

The Finance and Administration Cabinet serves as the central procurement and contracting agency for the Commonwealth. Under KRS 45A.045, the Finance and Administration Cabinet “shall recommend regulations, rules, and procedures and shall have supervision over all purchases by the various spending agencies, except as otherwise provided by law…[and] no purchase or contract shall be binding on the state or any agency thereof unless approved by the Finance and Administration Cabinet or made under general administrative regulations promulgated by the cabinet.” If a city adopts the Model Procurement Code, the Cabinet also has regulatory authority over that city’s procurement practices under KRS 45A.345–45A.460. This relationship provides cities with access to established procurement rules, guidance, and purchasing mechanisms. 

The Local Model Procurement Code (LMPC) 

A city may choose to adopt the Local Model Procurement Code (LMPC) for the procurement of goods and services. A city must adopt the Local Model Procurement Code by ordinance to participate, or it must follow the general bidding statute by default. Currently, only a quarter of cities have adopted the Local Model Procurement Code.  

Under this approach, nearly all contracts and purchases greater than $40,000 must be awarded by a sealed competitive bid, which may include the use of a reverse auction. The bid must be awarded to the responsive and responsible bidder whose bid is either the lowest bid price or the lowest evaluated bid price. Cities are also required under 45A.494 to grant preferences to residential bidders, those operating within the Commonwealth, prior to awarding the contract to the lowest bidder. Even if a city has not adopted the LMPC, a city may be required to comply with the code for specific types of purchases as a condition of eligibility to receive certain grants. 

 Following the General Bidding Statute 

Cities that have not passed an ordinance adopting the Local Model Procurement Code default to the procurement requirements in KRS 424.260, which requires formal advertising and competitive bids for most contracts exceeding $40,000.  

Purchases under $40,000 can generally be made by obtaining informal quotes or by direct purchase, depending on the city’s internal policies. Certain purchases are exempt from general bidding requirements: professional services (such as legal, engineering, accounting or architectural work); purchases made through the state price contract administered by the Finance and Administration Cabinet; property transferred between governmental agencies; or in the rare exception where an emergency makes the solicitation process impractical. 

State Purchase Contracts 

KRS 45A.050 permits cities to participate in state price contracting where they may purchase materials and supplies based upon contracts entered into by the Kentucky Finance and Administration Cabinet. There is no requirement for a city to bid the contract if the state contract was awarded by a competitive bid or if the vendor maintains a U.S. General Services Administration (GSA) price agreement as provided in KRS. 45A.045 (8).  

KLC’s Position 

While these statutes have provided a strong foundation for decades, some provisions have not kept pace with modern purchasing practices, creating opportunities to make the process more efficient and responsive without sacrificing accountability. 

KLC supports modernizing the procurement process to update statutory thresholds and procedures so that cities can purchase the goods and services they need in a timely and cost-effective manner. Among other updates, KLC supports raising the small purchase threshold to give cities greater flexibility for routine purchases without compromising competitive safeguards. 

KLC will continue to explore ways to streamline procurement processes to help cities save time, reduce administrative burdens, and better serve their communities.