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HomeMy WebLinkAbout1998-01-26 City CouncilCity Cityof Palo Alto Manager’s Report TO:HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT: ADMINISTRATIVE SERVICES DATE:JANUARY 26, 1998 CMR:105:98 SUBJECT:PROPOSED GUIDELINES FOR STAFF IMPLEMENTATION OF BURMA PURCHASING RESTRICTIONS REPORT IN BRIEF The purpose of this staff report is to obtain Council approval of a set of implementation guidelines that staffis proposing to comply with the resolution that the City Council passed on October 20, 1997. That resolution requires the City of Palo Alto to change its purchasing practices in order to "prohibit contracts by the City for goods and services with those who do business in Burma". The resolution was submitted directly to the Council by former Council Member Andersen after discussions with the Human Relations Commission and with staff. At the October 20 Council meeting, Council asked staff to prepare a set of implementation guidelines for th~ resolution that would be needed in order to clarify certain potential ambiguities in the resolution. CMR:105:98 Page 1 of 4 RECOMMENDATION Staff recommends that Council approve a set of Implementation Guidelines (Attachment 1), which staff will utilize in administering the Burma purchasin, g restrictions- adopted by Council on October 20, 1997. BACKGROUND In response to concern from the community and from the Human Relations Commission regarding human rights abuses by the regime in Burma, the City Council passed a resolution on .October 20, 1997, prohibiting "contracts by the City for goods and services with those who do business in Burma and prohibiting the purchase of any goods produced in Burma." At that Council meeting, staff and the City Attorney raised concerns about some potentially ambiguous language in the resolution. As a result, Council directed staff to prepare a set of implementation guidelines which would be used in interpreting and in administering the provisions of the resolution. DISCUSSION The potentially ambiguous points in the resolution are as follows: The effective date of the restrictions; The establishment of clear measures to be used in determining when the restrictions may be lifted; The precise meaning of the prohibition of contracts by the City for goods and services "with those who do business in Burma"; and o The point at which additional costs incurred by the City in going with an alternative vendor become "substantial." Staff proposes a set of Implementation Guidelines in Attachment 1 which clarifies these areas of ambiguity and provides clear direction to staff for implementation of the purchasing restrictions against Burma. The clarifications proposed by staff in the Implementation Guidelines are discussed below. Effective Date: This resolution shall take effect March 1, 1998. Existing contracts are not affected, nor are succeeding years of existing multi-year contracts that are in place prior to March 1, 1998. CMR:105:98 Page 2 of 4 .,,Measures to be used in determining when the restrictions may be lifted: a)The purchasing restrictions against Burma will be terminated on the effective date that the President rescinds his Executive Order of April 22, 1997, that placed restrictions on U.S. investments in "the development of resources" in Burma; or b)If by December 31, 1999, no action has been taken by the President, the City Manager may report back to Council on her recommendation for either continuing or ending the restrictions. Definition of "those who do business in Burma" A national, Washington D.C.-based organization, the Investor Responsibility Research Center (IRRC), monitors both the human rights situation in Burma, and businesses with employees and!or investments in Burma. The IRRC was founded in 1972 as. an independent, not-for-profit corporation governed by a 21-member board of directors. It is financed primarily from annual subscription fees paid-by more than 500 investing institutions, corporations, trade associations, law firms, and consulting firms. Staff will subscribe to its quarterly report in order to monitor firms that do business in Burma. Section 1 of the report lists U. S. companies with investments or employees in Burma. Staff will use this list to define "those who do business in Burma" and will not purchase goods or services from any company listed in this section of the report. Companies on this list include: Arco, Texaco, United Parcel Service (UPS), and several large oil equipment manufacturers. The City of Palo Alto does not make purchases from any of these companies. It does not have a contract with LIPS, and it buys fuel from a broker, not directly from any oil company. If the IRRC modifies its report content or structure in the future, staffwill use judgment in applying these guidelines to the new report format. The IRRC has stated that it "has put a priority on developing that portion (Section 1) of the list ....", so staffdoes not anticipate this section of the report to change. Definition of"substantial additional cost" While the resolution authorizes the City Manager to use judgment in making a finding that "no comparable product is available either from another supplier or without incurring substantial additional cost," staff believes that a definition of"substantial additional cost" would be helpful. Staff believes a useful definition would be: If the goods or services are unavailable from an alternative supplier or vendor; o If the goods or services from an alternative supplier or vendor would cost an additional $5,000 or an additional 20 percent, whichever is less; CMR: 105:98 Page 3 of 4 If there is a projected delay in receiving the full delivery of the goods or services by the alternative supplier or vendor of at least 45 days. The City Manager would still be authorized to waive the requirements if "the particular goods or services to be supplied are necessary for the efficient operation of the City or for the health, safety and welfare of the public." RESOURCE IMPACT Staff will report back to Council in approximately six months with information on the costs of implementing this ordinance, and the impacts, if any, on goods and services purchased by the City. POLICY IMPLICATIONS This recommendation is consistent with the resolution adopted by the Council on October 20, 1997 (attached), which placed restrictions on City purchases from those who do business in Burma and prohibited the purchase of any goods produced in Burma. ENVIRONMENTAL ASSESSMENT This is not a project as defined by the California Environmental Quality Act. ATTACHMENTS Attachment 1:Guidelines for Staffto Use in Complying with the Resolution Passed by Council October 20, 1977 Placing Restrictions on City Purchases Involving Burma Attachment 2:Resolution PREPARED BY: Jim Steele, Manager of Investments and Debt APPROVED BY: CITY MANAGER APPROVAL: Acting Director Administrative Services Assistant City Manager C: n/a CMR: 105:98 Page 4 of 4 Attachment 1 Guidelines for Staffto Use in Complying with the Resolution Passed by Council October 20, 1997 Placing Restrictions on City Purchases Involving Burma What is Covered These guidelines cover the purchase of all goods and services involving an expenditure of $5,000 or more per purchase order, except those items exempted below under "Exceptions that may be Authorized by City Manager." Effective Date: These guidelines shall take effect for purchases initiated by City departments on or after March 1, 1998. Contracts in effect prior to that date, contracts in the process of being completed administratively prior to that date, and succeeding years of existing multi-year contracts that are in place prior t9 March 1, 1998 are, not affected by these guidelines. Measures to be used in determining when the restrictions may be lifted: a)The purchasing restriction regarding Burma will be terminated on the effective date that the President rescinds his Executive Order of April 22, 1997, that placed restrictions on U.S. investments in "the development of resources" in Burma; or b) Sooner, if so directed by the City Council. Definition of"those who do business in Burma": Staffwill subscribe to the quarterly report published by the Investor Responsibility Research Center (IRRC) entitled "Companies Listed on U.S. Exchanges with Ties to Burma" (report). For purchase orders of $5,000 or more, staffwill refer to Section 1 of the report, which lists U. S. companies with investments or employees in Burma and will not purchase goods or services from companies contained in this section of the report. If the IRRC modifies its report content or structure in the future, staff will use judgment in applying these guidelines consistent with whatever new format the report might contain. Exceptions that may be Authorized by City. Manager The City Manager may approve recommendations from staffto exempt a particular purchase of $5,000 or more from these guidelines when: o no comparable product is available from another vendor; o the particular good and service is necessary for the efficient operation of the City, or for the health, safety and welfare of the public; or if no comparable product is available from another supplier without incurring "substantial additional cost." For the purposes of implementing these guidelines, "substantial additional cost" is defined as meeting either of the following criteria: a comparable product or service from an alternative vendor that is not listed in Section 1 of the IRRC report, "U. S. companies with investments or employees in Burma," would cost either an additional $5,000 or an additional 20 percent, whichever is less; a comparable product or service from an alternative vendor that is not listed in Section 1 of the IRRC report, "U. S. companies with investments or employees in Burma," would cause a projected delay in receiving the full delivery of the good or service of at least 45 days longer than if it were supplied by a company listed in Section 1. Attachment 2 ~ ~ RESOLUTION 7715 RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO BARRING PURCHASES FROM BUSINESSES IN BURMA (MYANMAR) AND FROM THOSE DOING BUSINESS WITH BURMA WHEREAS, the Government of Burma (Myanmar) has prevented political participation by its citizens by means of torture, rape, forcible relocation, forced labor and slavery; and WHEREAS, the Government of Burma has ignored the results of the 1990 elections in which many pro-democracy candidates were selected for seats in government; has imprisoned, killed or exiled many of the candidates who were elected; has failed to convene a constitutional convention as promised in 1990; and has imprisoned martial law barring freedom of the press, gatherings of more than five people, and labor and trade union organizing; and WHEREAS, the s~stem of oppression imposed by theexisting military government is illegal and contrary to international law; and WHEREAS, the City of Palo Alto wishes to sustain the United States Government’s policies with regard to Burma; and WHEREAS, the United States Government has barred new U.S. company investments in Burma; and THEREFORE, BE IT RESOLVED that the Palo Alto City Council hereby establishes a policy prohibiting contracts by the City for goods and services with those who do business in Burma and prohibiting the purchase of any goods produced in Burma; and be it further RESOLVED that this resolution shall not apply to purchases of less than $5,000; and be it further RESOLVED that in enforcing this resolution, City staff shall rely upon the list of U.S. Parent Companies and non-U.S. Parent Companies with Ties to Burma developed by the Investor Responsibility Research Center in its. publication entitled Multinational Business in Burma; and be it further RESOLVED that this resolution shall not apply if the City Manager makes a finding i) that the particular goods or services to be supplied are necessary for the efficient operation of the City or for the health, safety and welfare of the public; and 2) that no comparable product is available either from another supplier or without incurring s~bstantia! additional cost; and be it further RESOLVED that staff may prepare guidelines to implement this resolution as necessary. INTRODUCED A!~D PASSED: OCTOBER 20, 1997 AYES:ANDERSEN, EAKINS, FAZZIN0, MCCOWN, SCHNEIDERI WHEELER NOES :HUBER, ROSENBAUM ABSTENTIONS : ABSENT :KNISS Ci_ty ~ttor~ Cil Manager <