Reviewed Date: 01/29/2022
According to the 1983 Purchasing Law, municipal purchases, leases, and lease-purchases that cost between $1,000 and $2,500, must be based on at least three competitive bids (quotes). 
However, the municipality may, by ordinance, increase the $1,000 limit to a maximum of 40 percent of the amount established by the governing body as authorized by law for purchases requiring public advertisement and competitive bidding.
Purchases, leases, and lease-purchases totaling $2,500 or more during the fiscal year must be competitively bid. This also includes purchases, leases, and lease-purchases of like or related items usually acquired by two or more buys during the fiscal year. The amount may be lowered or increased up to $10,000 by the municipality's governing body. 
"Competitive sealed bids" generally include both sealed bids and sealed proposals. Sealed proposals should be used if the criteria for vendor selection can be clearly defined, the selection process will benefit the municipality, and the process is approved by the municipality. For more information see T.C.A. § 12-3-1207.
A city may exempt a purchase of perishable goods from competitive bidding requirements when the items are bought in the open market. The person or body authorizing the acquisition must prepare a record specifying the amount paid, the items purchased and the vendor. This purchase record must be reported at least monthly to the chief executive officer and governing body of the municipality.
Purchases of natural gas and propane for re-sale are exempt from competitive bidding.
 Cities with populations of not less than 40,000 nor more than 42,500 or populations over 150,000, according to the 2000 federal census or any subsequent census may increase the minimum dollar amount required for public advertisement and competitive bidding to $25,000, provided that purchases between $10,000 and $25,000 are based upon three competitive bids (quotes).