HomeMy WebLinkAbout2004-03-16 City CouncilCity of Palo Alto
City Manager’s Report
TO:
ATTN:
HONORABLE CITY COUNCIL
FINANCE COMMITTEE
FROM:CITY MANAGER DEPARTMENT: ADMINISTRATIVE
SERVICES
DATE:
SUBJECT:
MARCH 16, 2004
APPROVAL OF
ORDINANCE
CMR: 179:04
NEW CONTRACTING AND PURCHASING
RECOMMENDATION
Staff recommends that Council:
Approve an ordinance amending and replacing Chapter 2.30 of the Palo Alto
Municipal Code in its entirety to establish new contracting and purchasing
procedures.
Repeal City Policy and Procedure 1-10 covering Selection Procedures for
Professional Consultants, incorporating relevant elements into the Purchasing
Manual.
Approve an increase in the contract approval authority of the Purchasing Manager
and City Manager, from $65,000 to $85,000, to reflect increases in the Consumer
Price Index (CPI).
BACKGROUND
Infrastructure has been one of the Council’s Top 5 priorities for several years. The 2001-
02 work plan for this priority included streamlining the construction and professional
services contracting processes in order to expedite the completion of critical
infrastructure projects. A Contract Streamlining Subcommittee (CSS), comprised of staff
from the Public Works, Utilities, Community Services, Planning, and Administrative
Services departments, the City Attorney and the City Auditor’s offices, was formed to
develop a plan to streamline key contracting processes. In February 2003, the CSS
presented its recommendations to the Finance Committee (CMR:124:03). Many of the
CMR: 179:04 Page 1 of 8
CSS recommendations have been implemented or are in the process of being
implemented. The process changes which have been implemented include: the utilization
of step-by-step checklists for the Request for Quote, Invitation for Bid, and Request for
Proposal processes; standardization of the format for routing contracts for internal
signatures; and updating the contract CMR template with a new standardized table
containing project information. The recommendations in the process of being
implemented include: standardizing forms and templates; pre-qualifying professional
service providers; an electronic tracking system for contracts; developing training and
certification programs; and streamlining the contract signature process. A few of the CSS
recommendations require Council approval and modification of the Municipal Code.
These include:
1)An increase in the Purchasing Manager’s contract approval authority from
$25,000 to $65,000; and an increase in the Purchasing Manager’s authority to
delegate to the Contract Managers and Buyers from $10,000 to $25,000 and
$5,000 to $10,000, respectively.
2)An increase in the City Manager’s contract approval authorization for public
works construction contracts from $65,000 to $250,000.
In February 2003, the Finance Committee approved these recommendations and directed
the City Attorney to return to the Council with the associated Municipal Code
amendments for its approval. However, after evaluation of the City’s existing Contracts
and Purchasing Ordinance, the City Attorney’s Office in conjunction with the
Administrative Services Department identified the need to rewrite this section of the
Municipal Code in its entirety to improve its organization, clarity and content. This
report presents the new Contracting and Purchasing Ordinance (Ordinance) to the
Council for its review and approval.
DISCUSSION
The proposed Municipal Code rewrite implements the contract streamlining
recommendations approved by the Finance Committee and makes the Ordinance
significantly easier to use and understand. The Ordinance changes fall into three primary
categories: 1) incorporation of contract streamlining measures; 2) clarifications; and 3)
new provisions. A discussion of each of these categories is provided below.
Contract Streamlining Measures
The changes that were necessary to implement the contract streamlining measures are as
follows:
A.A new section giving the City Attorney the authority to approve as to form all
contracts, purchase orders, documents and other agreements on a general or an
CMR: 179:04 Page 2 of 8
individual basis. This section supports the implementation of standard contract
forms and agreements developed by the CSS by providing a control system for
their creation and use.
B.An increase in the Purchasing Manager’s contract award authority from $25,000
to $65,000 per year for contracts up to three years.
An increase in the Purchasing Manager’s delegation of authority to Contract
Managers from $10,000 to $25,000 per year for contracts up to three years and to
Buyers from $5,000 to $10,000 per year for contracts up to three years.
An increase in the City Manager’s contract award authority for public works
projects from $65,000 to $250,000. In addition, for consistency purposes, the
City Manager’s overall authority to contract for goods was capped at $250,000
per year for contracts up to three years (amount currently unlimited) and the limit
on the purchase of capital equipment of $65,000 was eliminated
Along with the proposed increase in the City Manager’s contract award authority
for public works projects, staff is proposing increasing the formal bid amount for
public works projects from $25,000 to $65,000. This increase is. consistent with
the increase in contract award authority and reflects the escalation in construction
costs since this amount was first established in the 1970s. (From mid-1970
through 2003, the construction cost index has increased by over 300 percent.) It
is important to note that the City’s charter only requires formal bidding for public
works projects funded by bonds or property assessments. Staff believes the
formal bid process adds value for higher dollar value construction work regardless
of the funding source. Public works projects under $65,000 would adhere to an
abbreviated bid process, requiring at least three bids. The abbreviated process
provides for bid solicitation by mail, fax, e-mail, phone, and posting on the City’s
web site and eases the advertising and bid opening requirements. Staff estimates
that less than 10 public works projects would be impacted each year by the formal
bid amount increase from $25,000 to $65,000. Although it impacts a limited
number of projects, this change would save the City over 100 hours in staff time
(valued at about $10,000) during the year. It would also shave approximately
four to six weeks from the bid processing timeline. This staff time could be
redirected to the timely completion of infrastructure projects.
A provision providing for a decentralized purchasing process (purchases made by
qualified departmental staff instead of the Purchasing Division) for smaller dollar
items under $5,000. This provision is consistent with the City Auditor’s Office
recommendation provided to the Council in her Audit Status Report dated
October 9, 2003. The decentralization of lower dollar value purchases is known
CMR: 179:04 Page 3 of 8
to reduce procurement cycle times and would free up Purchasing staff to focus on
higher dollar value purchases. Prior to decentralizing the City’s smaller dollar
purchases, staff will work with the City Auditor’s Office to develop procedures to
properly monitor and control these purchases.
G.A provision giving the Purchasing Manager the ability to create and maintain a
list of qualified professionals to satisfy recurring professional service
requirements.
Clarifications
The new ordinance has been reorganized, detailed explanations have been provided, and
ambiguous language has been eliminated. As a result, users are provided with a better
"roadmap" to the City’s contracting and purchasing procedures. More specifically, the
key changes in this category include:
A. A definition of each type of contract that the City solicits.
Enhancement of the definition of professional service contracts. In addition, the
professional services exemption from competitive solicitation has been capped at
$25,000. With this change, professional services from $25,000 to $65,000 would
adhere to an abbreviated proposal process, requiring at least three proposals.
Professional services of $65,000 and above would follow the City’s formal request
for proposal process. At the present time, there is a conflict between the
Municipal Code which provides an unlimited exemption from competitive
solicitation requirements for professional services and Policy and Procedure 1-10
(Selection Procedures for Professional Consultants) which requires competitive
solicitation for certain professional consultants over $25,000. In addition to
proposing a cap on the professional services exemption at $25,000, staff
recommends that the Council repeal City Policy and Procedure 1-10. The portion
of this Policy dealing with the Council Committee review of proposed scopes of
service has already been incorporated into the annual budget process and the
portion dealing with the competitive solicitation process is being rewritten to
include the CSS contract streamlining recommendations and added to the
Purchasing Manual.
The addition of detailed descriptions of the competitive solicitation requirements
for each contract type and the addition of the factors that should be considered in
making contract award decisions. The definition of both responsive and
responsible bidder has been improved.
CMR: 179:04 Page 4 of 8
Do Each level of contract award authority (City Council, City Manager, Purchasing
Manager, and City Attorney) has been clarified by both dollar amount and contract
duration.
E.The City Manager’s authority to rent, lease, acquire or purchase interests in real
property has been limited to 7 years (currently unlimited term).
Fo The authority to modify contracts, including those awarded by Council, has been
better defined. The City Manager may only authorize minor modifications to
contracts awarded by Council. These modifications include extending the contract
term up to six months, and making minor scope, schedule, or clerical corrections.
Go The section on exemptions from competitive bidding has been expanded to
provide more specificity and examples. The City Manager is the decision maker
as to whether an exemption applies. At the present time, this responsibility is
shared between the City Manager and the Purchasing Manager.
H°An improved definition of the bid security, bond, insurance and certification of
nondiscrimination requirements and when they must be included in a contract. In
addition, the bid security requirement for formal public works project bids has
been increased from 5 to 10 percent of the bid to be consistent with State Public
Contract Code.
The reporting requirements related to public works contracts awarded by the
Purchasing Manager or City Manager have been changed to make them consistent
with the changes in approval levels for public works contracts (reporting would be
required when a public works contract exceeds $65,000 instead of $25,000). In
addition, the regular reports would be delivered on a biannual instead of a
quarterly basis.
New Concepts
Several new sections have been added to the ordinance. These new provisions include:
No A section permitting the Council to adopt by resolution policies that relate to
contracting procedures and requirements (e.g., local preference policy, local
boycotts, price preferences for use of recycled products, etc.). This will allow the
City to approve and implement these policies on a more efficient and flexible
basis. Staff is currently working through the legal steps required to justify the
establishment of a local preference policy. As part of both the "Enhancing the
City’s Economic Base" and the Council Sustainability Policy, staff plans to return
to Council with a local preference policy recommendation that can be easily
implemented by Council resolution as a result of this section.
CMR: 179:04 Page 5 of 8
No A provision permitting the Council to determine by resolution that a particular
public works project should be solicited and contracted for using an altemative
project delivery method (e.g., competitive negotiation, design build, construction
manager at risk, etc.).
A provision giving the City Manager the authority to execute contracts to provide
municipal services to other public agencies in any amount for terms not exceeding
three years. Authority to add permanent employee positions is specifically
excluded. Staff is currently developing policies and procedures covering these
contracts for Council approval. This provision will be carried out in accordance
with the Council-approved policies and procedures.
Do A number of provisions covering contract approval and competitive solicitation
requirements for wholesale utility commodities. These provisions give the City
Manager the authority to approve these contracts where the contract price does
not exceed $250,000 and the term does not exceed three years. These purchases
would be subject to an abbreviated solicitation process from $25,000 to $65,000
and a formal solicitation process over $65,000. The provisions also provide
CPAU with the ability to transact business utilizing electricity and gas master
agreements in compliance with the City’s Energy Risk Management Policies and
Procedures. Distinct requirements are provided for contracts with public (i.e.
governmental) counterparties and for contracts with private sector counterparties.
Overall these new provisions provide CPAU with both the flexibility and the
oversight necessary to effectively carry out these purchases.
Added ethics in contracting provisions, including the prohibition against the
acceptance of gratuities and the withdrawal from participation in the procurement
process when there is a conflict of interest.
F.A section that precludes parties that assist the City in preparation of bid or
proposal documents from submitting a bid or proposal.
G.A section to address the correction or withdrawal of bids, the handling of tie bids,
the cancellation of solicitations, and the rejection of bids.
No A provision allowing the City Manager to determine that standardization of
equipment, materials and supplies is necessary so that the City does not need to
allow vendors to submit "or equal alternatives." The factors used by the City
Manager in making a standardization determination are included.
CMR: 179:04 Page 6 of 8
Additional Change
In addition to the proposed ordinance changes, staff is recommending a one-time 30
percent increase in the contract approval levels of Purchasing Manager and the City
Manager, from $65,000 to $85,000, to recognize actual and anticipated increases in CPI.
The San Francisco Bay Area CPI has increased by an average of 3.4 percent each year
(with an overall increase of approximately 23 percent) since late 1997, the year the City’s
contract approval levels were last adjusted. Using this 3.4 percent annual average, CPI
would increase another 6.8 percent over the next two years. This brings the total of the
actual CPI increases since 1997 and the anticipated increase over the next two years to
about 30 percent. With these year-to-year inflationary increases, the purchasing power of
the dollar declines and the number of contracts presented to Council steadily increases.
As a result, staff proposes a one-time $20,000, or 30 percent, adjustment to contract
approval levels. Staff plans to return to Council periodically (approximately every 5
years) to propose similar approval level increases to account for CPI. Following Finance
Committee approval of this proposed recommendation, staff will incorporate this increase
into the pertinent sections of the new Contracting and Purchasing Ordinance (Section
2.30.200 Purchasing Manager Contract Award Authority and Section 2.30.210 City
Manager Contract Award Authority) prior to returning to Council for approval.
The proposed changes in contract approval levels and solicitation requirements are
detailed in Attachments B and C.
RESOURCE IMPACT
There is no expense impact to department budgets or the Budget Stabilization Reserve as
a result of adopting these changes.
POLICY IMPLICATIONS
These recommendations are consistent with existing City policies.
TIMELINE
Following the approval of the proposed Ordinance by Council, staff will implement the
necessary changes to the City’s Purchasing Manual, internal policies and procedures,
finalize contract training and certification progams, and establish accountability
guidelines for all staff involved in the contracting process.
ATTACHMENTS
Attachment A: Proposed Contracting and Purchasing Ordinance
Attachment B: Proposed Contract Approval Levels
Attachment C: Proposed Solicitation Requirements
Attachment D: Contract Streamlining Staff Report (CMR: 124:03)
Attachment E: Existing Contracting and Purchasing Ordinance (available online)
CMR: 179:04 Page 7 of 8
PREPARED BY:
LALO PEREZ
Chair, Contract Streamlining SubCommittee
NELLIE ANCEL
Senior Assistant City Attorney
APPROVED BY:
CITY MANAGER APPROVAL:
Assistant City Manager
CMR: 179:04 Page 8 of 8
NOT YET APPROVED
ORDINANCE NO
ORDINANCE OF .THE COUNCIL OF THE CITY OF PALO
ALTO AMENDING AND RESTATING CHAPTER 2.30 OF THE
PALO ALTO MUNICIPAL CODE IN ITS ENTIRETY
[ CONTRACTS AND PURCHASING PROCEDURES ]TO
ESTABLISH NEW CONTRACTING AND PURCHASING
PROCEDURES AND TO DEFINE THE CONTRACT AUTHORITY
OF CITY OFFICERS AND EMPLOYEES
ATTACHMENT
The Council of the City of Palo Alto does ORDAIN as
follows:
SECTION i. Chapter 2.30 of the Palo Alto Municipal Code
is hereby amended in its entirety to read as follows:
PART 1 GENERAL
2.30.010 Purposes.
This chapter defines the contract procurement procedures and
requirements for public works construction, general services,
professional services, wholesale utility commodities and goods.
This chapter establishes the contracting authority of the
manager of purchasing and contract administration ("purchasing
manager"), designated employees, the city manager, the city
attorney and the council. The purpose of this chapter is to
foster and encourage the use of best management practices in
contracting, to ensure quality and efficiency while obtaining
goods, services, equipment, materials and supplies at the lowest
cost commensurate with the quality needed; to provide for a fair
and equitable procurement process utilizing standardized
solicitation procedures; and to maintain honesty and integrity
within the procurement process.
2.30.020 Scope.
(a) Contracting Authority.Part three of this chapter
establishes the authority of certain officers and employees of
the city to award and sign contracts.
(I) The city manager, purchasing manager, and their
authorized delegates and certain designated employees may
award and sign contracts within the limits of their
authority for: public works construction, general
services, professional services, wholesale utility
commodities and other energy and energy-related contracts,
and contracts or purchase orders for goods, materials,
equipment and supplies.
040309 nm 0100164
NOT YET APPROVED
(2) The city attorney and authorized delegates may enter
into and sign contracts with the limits of their authority
for legal services.
(3) The city manager may also award or approve, and sign,
contracts within the limits of his or her authority to:
rent, lease, license, acquire or purchase interests in real
property from other parties; rent, lease or license city
property; provide municipal services to other public
entities; provide for indemnity or risk of loss; and any
other contract involving city expenditure of an amount of
$65,000 or less.
(b) Solicitation and Award Procedures and Requirements.
Contracts for public works construction, general services and
professional services, wholesale utility commodities and other
energy and energy-related contracts, and contracts or purchase
orders for goods, materials, equipment and supplies shall be
awarded pursuant to the procedures contained in this chapter.
The solicitation and award procedures and requirements contained
in this chapter shall not apply to the following:
(i) Subdivision agreements, improvement agreements,
deferred parking agreements, development agreements and
other land use contracts entered into between the city and
property owners or developers pursuant to other parts of
this code;
(2) Franchises and franchise agreements;
(3) Contracts between the city and other public entities
for city provision of services to the other entities;
(4) Transactions involving the acquisition and disposal of
real property; and
(5) Agreements to provide funds pursuant to the human
services resource allocation process or community
development block grant program.
2.30.030 Council contract policies adopted by resolution.
The council may from time to time adopt by resolution policies
related to contract solicitation and award procedures and
requirements. The policies may include, but shall not be
limited to, policies addressing local boycotts, protest
procedures, and price preferences for use of recycled or
sustainable goods and for local businesses. The policies shall
040309 nra 0100164 2
NOT YET APPROVED
not conflict with, but may be in addition to, any provisions of
this chapter. All council policies shall be considered and
implemented in the solicitation and award of contracts.
2.30.040 Centralized purchasing.
Purchasing to be centralized. All purchases shall be made
through the purchasing manager, except:
(a) Purchases made from petty cash funds pursuant to control
procedures approved by the city manager and contained in the
administrative policies and procedures manual maintained by the
city manager;
(b) Emergency purchases made in conformance with control
procedures approved by the city manager and contained in the
purchasing manual;
(c)Contracts for legal services;
(d) Purchases by city credit card, made in conformance with
control procedures approved by the city manager and contained in
the purchasing manual;
(e) Purchases, where the total expenditure by the ci~ty does not
exceed $5,000, made in conformance with control procedures
approved by the city manager and contained in the purchasing
manual; and
(f) Transactions under master contracts for wholesale utility
commodities as defined in section 2.30.140 made in conformance
with section 2.30.340.
2.30.050 Purchasing manual.
The purchasing manager shall prepare a written purchasing manual
that implements the requirements of this chapter. The
purchasing manual shall establish and describe in detail the
contract solicitation and award procedures and requirements that
must be followed in making purchases on behalf of the city. The
purchasing manual shall include, among other things, control
procedures established under the authority of this chapter. The
city manager shall approve the purchasing manualand any
modifications made to the manual from time to time.
2.30.060 Validity of contracts and purchase orders.
The city shall not be and is not bound by any contract, purchase
order, document, or any other agreement unless it is in a
writing which is.both:
040309 nm 0100164 3
NOT YET APPROVED
(a) Approved by the council and signed by the mayor, vice mayor
or other duly authorized officer or employee on behalf of the
city as provided in this chapter; and
(b) Approved as to form by the city attorney as provided in
section 2.30.070.
The foregoing requirements shall
purchases with a city credit card.
not apply to authorized
2.30.070 Approval as to form by the city attorney.
The city attorney shall approve as to form all contracts,
purchase orders, documents and other agreements. The city
attorney approval as to form may be performed on a general basis
(standardized form contract) or on an individual basis. No
city office or department other than the city attorney is
authorized to create, modify or approve for use standardized
form contracts.
Each contract, purchase order, document or other agreement that
is subject to individual review and approval shall be signed by
the city attorney to signify that it is approved as to form. A
standardized form contract that has been approved by the city
attorney for general use may be used without further approval or
signature by the city attorney so long as the form is not
modified.
The purchasing manager in consultation with the city attorney
and the city auditor shall be responsible for creating a control
system for the creation and use of standard form contracts,
purchase orders, documents and other agreements to be included
in the purchasing manual.
2.30.080 Interpretive authority.
The city attorney shall have the sole authority to interpret the
provisions of this chapter and to issue rulings or opinions
concerning the meaning and application of the provisions of this
chapter.
2.30.90 No conflicting policies or procedures.
NO city department, commission or other division or body may
adopt or create an internal policy or procedure that conflicts
with or is not consistent with any provision of this chapter.
//
040309 nra 0100164 4
NOT YET APPROVED
PART 2 CONTRACT TYPES
2.30.100 Public works contract.
A public works contract is a contract for the construction,
alteration, repair, improvement, reconstruction or demolition of
any public building, street, sidewalk, utility, park or open
space improvement, or other public improvement.
2.30.110 Contract for goods.
A contract for goods is a contract for the purchase of supplies,
materials or equipment including, but not limited to, office
supplies,janitorial supplies, furnishings, machinery, tools,
vehicles,computer hardware and other personal property,
materials or goods. A contract for goods includes blanket
purchase order contracts where no particular quantity of units
to be purchased is established at the time the contract is
executed. A blanket purchase order contract must establish a
maximum dollar amount for the contract and set forth pricing
terms for the items to be purchased. A contract for goods may
include labor incidental to the purchase of goods, such as set-
up, installation, and testing.
2.30.120 General services contract.
A general services contract is a contract, with or without the
furnishing of supplies or equipment, for work, labor or services
including, but not limited to:
(a) Maintenance of public buildings,
playgrounds and other public improvements;
streets, parks and
(b)Repair, modification and maintenance of equipment;
(c) Licensing, installation and maintenance of computer
software;
(d) Janitorial services, uniform cleaning, tree trimming,
street sweeping, power washing and landscape maintenance; and
(e)Leasing of personal property for use by the city.
2.30.130 Professional services contract.
A professional services contract is a contract for services
which involve the exercise of professional discretion and
independent judgment based on specialized knowledge, expertise
or training. These services may include, but are not limited
to, those provided by accountants, auditors, appraisers,
040309 nra 0100164 5
NOT YET APPROVED
architects, attorneys, engineers, financial advisors,
information technology experts, instructors, and planners.
2.30.140 Contracts for wholesale utility commodities.
A contract for wholesale utility commodities is a contract with
a private or public supplier or counterparty (in the case of gas
or electricity) for the purchase or sale-incidental-to-purchase
of water,gas or electricity and all related supplemental or
ancillary services and any other energy or energy-related
contract.A contract for wholesale utility commodities
includes,but is not limited to, a master agreement containing
general terms and conditions that provide for the execution of
one or more purchase or sale-incidental-to-purchase transactions
under the terms of a standard form contract and any exhibit or
addendum thereto.
2.30.150 Contracts for dark fiber optics licensing services.
A contract for dark fiber optics licensing services is a
contract with a telecommunications or non-telecommunications
carrier for the licensing of city-owned, city-installed and
city-maintained dark fiber optics and related facilities, if
any, located in the public right-of-way and public utility
easements. A telecommunications carrier includes any person
subject to the Telecommunications Act of 1996, as amended. A
non-telecommunications carrier includes any person that is not a
telecommunications carrier.
PART 3 CONTRACTING AUTHORITY
2.30.200 Purchasing manager contract award authority.
The purchasing manager may award and sign the
contracts:
following
(a) Public works contracts. Public works contracts where the
contract price, plus any contingency established for change
orders, does not exceed $65,000.
(b) Contracts for goods. Contracts to purchase goods where the
term does not exceed three years, and the contract price, plus
any contingency established for change orders or additional
services, but excluding sales or use tax, does not exceed
$65,000 in the first year, and does not exceed $65,000, plus any
unexpended monies carried forward from a prior fiscal year, in
any subsequent contract year.
(c) General services contracts. General services contracts where
the term does not exceed three years, and the contract price,
040309 nra 0100164 6
NOT YET APPROVED
plus any contingency established for change orders or additional
services, but excluding sales or use tax, does not exceed
$65,000 in the first year, and does not exceed $65,000 plus any
unexpended monies carried forward from a prior year, in any
subsequent contract year.
(d) Professional services contracts. Professional services
contracts where the term does not exceed three years, and the
contract price, plus any contingency established for change
orders or additional services, but excluding sales or use tax,
does not exceed $65,000 in the first year, and does not exceed
$65,000, plus any unexpended monies carried forward from a prior
year, in any subsequent contract year.
(e) Software maintenance contracts. Notwithstanding subsection
2.30.200(c), the purchasing manager may award and sign contracts
for maintenance of licensed computer software for any period of
time during which the city maintains licenses for the software,
where the contract price, excluding sales or use tax, does not
exceed $65,000 per year in the first year and does not exceed
$65,000, plus any unexpended monies carried forward from a prior
year, in any subsequent contract year.
2.30.210 City manager contract award authority.
The city manager may award and sign the fo!lowing contracts:
(a) Public works contracts. Public works contracts where the
contract price, plus any contingency established for change
orders, is greater than $65,000, but does not exceed $250,000.
(b) Contracts for goods. Contracts to purchase goods where the
term does not exceed three years and the contract price, plus
any contingency established for change orders or additional
services, but excluding sales or use tax, is greater than
$65,000 but does not exceed $250,000 in the first year, and does
not exceed $250,000 plus any unexpended monies carried forward
from a prior year, in any subsequent contract year.
(c) General services contracts. Contracts to lease personal
property where the term is greater than three years but not more
than seven years, and the contract price does not exceed $65,000
in the first year, and does not exceed $65,000 plus any
unexpended monies carried forward from a prior year, in any
subsequent contract year.
(d) Contracts for studies and services related to private
development. Professional services contracts for: (i) the
040309 nra 0100164 7
NOT YET APPROVED
preparation of environmental assessments or other studies deemed
necessary by the director of planning and community environment
for the processing of applications for private development
projects, or (2) inspection and plan review services deemed
necessary by the director of planning and community environment
to evaluate conformity of private development projects with
applicable building codes, regardless of the cost or term
thereof, provided the applicant for the private development
project agrees to bear responsibility for the entire contract
cost, and the contract does not require the expenditure of city
funds in any amount.
(e) Rewards. The city manager may offer and pay rewards where
the amount of the reward does not exceed $25,000, in accordance
with the procedures of section 2.30.800.
(f) Emergency contracts. An emergency is an urgent unforeseen
situation that threatens life, property, or the general public
health, safety and welfare. In emergency situations the city
manager is authorized to expend city funds without limitation on
amount and without following the contract solicitation and award
procedures otherwise required by this chapter. The city manager
is authorized to conclude that an emergency exists without
further declaration by the council. Expenditures made during an
emergency must be reported to the council at the next regular
meeting if approval for such expenditures would otherwise have
been made by the council.
(g) Contracts to rent, lease, license, acquire or purchase
interests in real property from other parties. Contracts to
rent, lease, license, or purchase by installment interests in
real property from other parties for a term of seven years or
less, where the contract price does not exceed $65,000 per year.
The city manager may enter into and sign contracts to acquire or
purchases interests in real property where the contract price
does not exceed $65,000.
(h) Contracts to rent, lease, or license city property to other
parties. The authority granted under this section is distinct
from the authority of the director of community services to
grant individuals and groups permits for the exclusive use of
buildings, facilities and areas of city parks and open spaces
described in Chapter 22 of this code. The city manager may award
and sign contracts to rent, lease or license city property to
other parties regardless of the price for a term not exceeding
three years. Notwithstanding the preceding sentence, the city
manager may enter into and sign contracts to rent, lease or
040309 nra 0100164 8
NOT YET APPROVED
license property at the Cubberley site for terms up to five
years.
(i) Contracts to provide municipal services to other public
entities. Contracts to provide municipal services and functions
to any other local public agency in any amount for a term not
exceeding three years; provided the contract is in compliance
with the city council adopted policy covering such contracts.
The authority granted herein does not include the authority to
add permanent employee positions.
(j) Contracts providing for indemnity or risk of loss. The city
manager, with the concurrence and approval of the city attorney
and the risk manager, may enter into and sign contracts,
otherwise within the limits of his or her authority, that
provide for the city or its officers or employees to defend,
indemnify, or assume the risk of loss or liability for, any
other contracting party respecting claims, demands, actions,
losses or liabilities arising from the city’s performance under
the contract.
(k) Other contracts. All other types of contracts for which the
contract term does not exceed three years and the total
expenditure by the city does not exceed $65,000 in the first
year, and does not exceed $65,000, plus any unexpended monies
carried forward from a prior year, in any subsequent contract
year.
(i) Wholesale utility commodity contracts. Wholesale utility
commodity contracts where the term does not exceed three years
and the contract price does not exceed $250,000 in any year,
including but not limited to gas transportation contracts and
power transmission contracts with Pacific Gas and Electric
Company and any public agency contract as defined in section
2.30.340(d).
2.30.220 City attorney contract award authority.
The city attorney may award and sign contracts for legal
services, including outside counsel and experts for litigation
or other administrative and legal proceedings, to be provided to
the city for any time period, where the contract price, plus any
contingency established for change orders or additional
services, but excluding sales or use tax, does not exceed
$65,000 in the first year,and does not exceed $65,000, plus any
unexpended monies carried forward from a prior year, in any
subsequent contract year.The city attorney may sign contracts
where the contract price exceeds the amounts set forth above,
040309 nm 0100164 9
NOT YET APPROVED
provided the council has first approved the use of such
services.
2.30.225 Wholesale utility commodity transactions.
The city manager, director of utilities and designated employees
may enter into and execute transactions for wholesale utilities
commodities in accordance with the authority, limits and
procedures set forth in the Energy Risk Management Policies
Guidelines and Procedures Manual.
2.30.230 Designated employee purchases of $5,000 or less.
Employees authorized in writing by their department head may
award and sign contracts for goods and contracts for general
services where the contract price does not exceed $5,000 and the
term is one year or less. All such purchases shall be in
accordance with the contract procedures and requirements
contained in the purchasing manual. All department head written
authorizations shall be kept on file in the office of the
purchasing manager.
2.30.240 Designated employees use of petty cash and city credit
card.
Employees authorized in writing by their department head may
make purchases using petty cash or a city credit card. All such
purchases shall be in accordance with the contract procedures
and requirements contained in the purchasing manual. All
department head written authorizations shall be kept on file in
the office of the purchasing manager.
2.30.250 Council approval/award of contracts.
The council shall approve and/or award and the mayor or vice-
mayor shall sign all contracts for which no contracting or
signature authority has been established under this chapter,
except to the extent the council has previously authorized a
city officer or employee to negotiate and execute a contract on
the city’s behalf without the further approval of the council.
2.30.260 Contracts with terms exceeding one year -
appropriation.
Contracts with a term exceeding one year shall not be approved
by any person with contracting authority under this chapter or
the council, unless the total amount due and payable by the city
over the life of the contract is appropriated at the time the
city assumes the obligation to pay, or the total amount due and
payable during the first full or partial fiscal year of a multi-
fiscal year contract is appropriated and the contract is subject
to appropriation by the council of amounts to become due and
040309 nra 0100164 1 0
NOT YET APPROVED
payable in subsequent fiscal years. The requirements of this
section do not apply to contracts not subject to the debt limit
re~airements of Article XVI, section 18 of the California
Constitution as determined by the city attorney.
2.30.270 Delegations of authority to contract.
This section establishes the exclusive source of authority to
delegate any authority to contract granted by this chapter. The
authority to delegate contracting authority shall not be implied
from any other provision in this code.
(a) Purchasing Manager delegations. The purchasing manager may
delegate the authority granted under section 2.30.200 as
follows: Persons holding the position of contract manager may be
authorized to award and sign contracts in an amount of $25,000
or less per year with a term not to exceed three years; persons
holding the position of buyer may be authorized to award and
sign contracts in an amount 6f $i0,000 or less per year with a
term not to exceed three years.
(b) City Manager delegations. The city manager may delegate
any authority to contract granted to the city manager by this
chapter to the assistant city manager and to the director of
administrative services, and, as to wholesale utility
commodities contracts and transactions issued thereto and other
utility related transaction, to the director of utilities. If
the assistant city manager, the director of administrative
services, or the director of utilities is unable to exercise the
authority delegated to him or her due to legal or physical
incapacity, constraint or unavailability, the city manager may,
with the prior concurrence of the city attorney, delegate
authority to another person.
(c) City Attorney delegations. The city attorney may delegate
any authority to contract granted to the city attorney by this
chapter to a person holding the position of senior assistant
city attorney.
(d) Delegations to be written. All delegations of authority
shall be in writing, dated and describe the limits of the
authority delegated, including but not limited to the type,
dollar amount, quantity of goods or services, and duration of
the contracts that may be executed under the delegation. All
delegations of authority shall be kept on file in the office of
the purchasing manager.
040309 nra 0100164 1 1
NOT YET APPROVED
2.30.280 Authority to modify and terminate contracts not
approved or awarded by the council.
Each person with contracting authority under this chapter may
authorize and sign amendments or change orders to contracts they
have awarded under the authority granted in this chapter subject
to the following:
(a) All modifications to contracts, including, but not limited
to, changes to the scope of work, quantity of goods, price or
term shall be made in writing, and accomplished in accordance
with the terms of the original contract; and
(b) The amendment or change orders to a contract shall not
cause the contract as modified to exceed the monetary or term
limits of that person’s authority as defined in this chapter.
Each person with authority granted under this chapter to award
and sign a contract also has the authority to terminate the
contract in accordance with the contract terms and conditions.
2.30.290 Authority to modify contracts awarded by the council.
(a) The council, at the time it awards a contract or authorizes
a city official or employee to award a contract, may also
authorize the city official or employee to execute an amendment
or change order to a contract in an amount exceeding the
monetary and/or term limits of the official’s or employee’s
contract authority set forth in this chapter. Amendments or
change orders made under authority granted by the council shall
be in writing, accomplished in accordance with the terms of the
original contract and shall not cause the contract as modified
to exceed the limits of the authority granted by the council
(b) The city manager is authorized to enter into and execute for
and on behalf of the city, without the prior approval of the
council, any amendment or change order to a contract previously
approved by the counci! that does not increase the compensation
for the contract to accomplish the following:
(i) To extend the term of the contract for a period not to
exceed six consecutive months from the last council-approved
expiration date; or
(2) To make minor revisions to the scope of services or
schedule; or
(3) To make clerical corrections.
040309 nra 0100164 12
NOT YET APPROVED
In addition, the city manager may approve and sign assignments of
contracts previously approved by the council when he or she has
determined that the proposed assignee has the ability, capacity,
experience and skill and is otherwise qualified to perform the
contract.
2.30.295 Limitations on contract authority; authority o~herwise
conferred.
(a) This chapter does not authorize a city officer or employee
to award or sign any contract which such officer or employee is
otherwise prohibited from awarding or signing under the
provisions of the city charter, this municipal code, or any other
applicable law, or by any ordinance, resolution, minute order or
other official action of the council.
(b) Nothing is this chapter shall limit any authority conferred
by the city council through a resolution delegating authority to
a city officer or employee to negotiate and execute contracts on
the city council’s behalf without the further approval of the
city council.
PART 4 COMPETITIVE SOLICITATION REQUIREMENTS
2.30.300 Public works contracts.
Public Works Contracts not exempt from these competitive
solicitation requirements under section 2.30.360 or by
resolution of the City Council shall be solicited as follows:
(a) Public works contracts providing for an estimated
expenditure of $65,000 or less, and not otherwise required to be
formally bid by the charter, shall be solicited by informal bid
in accordance with the provisions of section 2.30.400.
(b) Public works contracts providing for an estimated
expenditure exceeding $65,000 shall be solicited by formal bid
in accordance with the provisions of section 2.30.420.
(c Article VII, Sec. 6 of the city charter requires formal
bidding only for public works contracts funded by bonded
indebtedness of the city or by assessment against particular
property in the city. However, the intent of this section
2.30.300 is to require formal bidding for all public works
contracts exceeding $65,000, unless exempt as provided in
section 2.30.360 or by resolution of the council as provided in
this section 2.30.300. The council may determine by resolution
that a particular public works project may be solicited and
contracted for. using alternate project delivery methods,
040309 nm 0100164 13
NOT YET APPROVED
including but not limited to design build, construction manager
at risk, or competitive negotiation. Any such resolution shall
set forth the reasons supporting the use of the alternate
project delivery method for the project and describe the
solicitation method to be used and the criteria for determining
the party to whom the contract should be awarded.
2.30.310 Contracts for goods.
Contracts for goods not exempt from competitive solicitation
requirements under section 2.30.360 shall be solicited as
follows:
(a) Contracts for goods providing for an estimated expenditure
by the city of $25,000 or less shall be solicited by informal
bid in accordance with the provisions of section 2.30.400; and
(b) Contracts for goods providing for an estimated expenditure
by the city exceeding $25,000 shall be solicited by formal bid
in accordance with the provision of section 2.30.420.
2.30.320 General services contracts.
General services contracts not
solicitation requirements under
solicited as follows:
exempt from competitive
section 2.30.360 shall be
(a) General services contracts providing for an estimated
expenditure by the city of $25,000 or less shall be solicited
by informal bid or informal proposal in accordance with the
provisions of section 2.30.400.
(b) General services contracts providing for an estimated
expenditure by the city exceeding $25,000 shall be solicited by
formal bid in accordance with the provisions of section 2.30.420
or by formal request for proposal in accordance with the
provisions of section 2.30.410.
(c) It is expected that most general services contracts will be
solicited using the informal or formal bid procedures. However,
where the city has defined a situation for which it seeks a
solution, or the circumstances require that a contract award be
based on significant factors in addition to price, the
purchasing manager may determine that a request for formal or
informal proposals shall be used to solicit the contract.
//
//
NOT YET APPROVED
2.30.330 Professional services contracts.
Professional services contracts not exempt from competitive
solicitation requirements under section 2.30.360 shall be
solicited as follows:
(a) Professional services contracts providing for an estimated
expenditure by the city greater than $25,000 and up to and
including $65,000 shal! be solicited by informal request for
proposal in accordance with section 2.30.400.
(b) Professional services contracts providing for an estimated
expenditure by the city exceeding $65,000 shall be solicited by
formal request for proposal in accordance with the provisions of
section 2.30.410.
(c) In lieu of the solicitation requirements set forth in
subsections (a) and (b), professional services contracts in any
amount may be awarded from a list of qualified professionals to
be created and maintained by the Purchasing Manager, so long as
the list is created and the award of contract to an entity on
the list is in compliance with procedures contained in the
purchasing manual.
2.30.340 Contracts for wholesale utility commodities.
(a) Solicitation of Contracts
(i) Contracts for purchase or sale-incidental-to-purchase
of wholesale utility commodities providing for an estimated
expenditure of $65,000 or less shall be solicited by
informal bid or informal request for proposal in accordance
with the provisions of section 2.30.400. Contracts for a
purchase or sale-incidental-to-purchase of wholesale
utility commodities providing for an estimated expenditure
of $65,000 or more shall be solicited by formal bid, formal
request for proposal or combination thereof, in accordance
with the provisions of sections 2.30.410,2.30.420 or
2.30.430.
(2) Master contracts containing general terms and
conditions for wholesale utility commoditiesthat provide
for the execution of one or more individual water, gas or
electricity purchase and sale-incidental-to-purchase
transactions under the terms of the master contract, shall
be solicited by formal bid, formal request for proposals,
or combination thereof, in accordance with the provisions
of sections 2.30.420, 2.30.430 or 2.30.440.
NOT YET APPROVED
It is expected that the city will enter into several master
contracts with different counterparties for the purchase
and sale-incidental-to-purchase of gas and electricity
utility commodities at wholesale. Whenever the city desires
to execute an individual purchase or sale incidental to
purchase transaction for gas or electricity commodities at
wholesale, any counter party who executes a master contract
with the city and who is otherwise eligible to bid for or
propose in regard to the particular transaction in
accordance with the city’s Energy Risk Management Policies
Guidelines and Procedures Manual shall be solicited, in
writing (by mail, facsimile or electronic mail), and shall
be eligible to tender a bid or proposal on the transaction.
The counterparty offering the price for wholesale utility
commodities deemed to be the most advantageous to the city
shall be eligible for award of a contract for the
transaction.
(b) Basic terms and conditions. For contracts not otherwise
within the city manager’s authority to award, the council may by
resolution authorize the city manager to award and sign a
contract with a qualified, eligible counter party for the
purchase and incidental sale of wholesale utility commodities.
The resolution shall specify the limits of the authority
delegated, including the maximum dollar amount of the authority
and the duration of the contracts and/or transactions that may
be executed under the delegation of authority.
Any resolution delegating authority to the city manager to
contract for electricity shall specify generally at least the
following terms and conditions: quantity and the description of
energy and energy services to be procured, including, but not
limited to, on-peak and off-peak energy and ancillary services;
term, specifying a not-to-exceed period of time; period of
delivery denoted in years or months or years and months; and
point of delivery or the locus on the interstate transmission
system at which transfer of title is made.
Any resolution delegating authority to contract for gas shall
specify generally at least the following terms and conditions:
quantity and the description of gas services to be procured,
including, but not limited to, scheduled gas and gas
transportation services; term, specifying a not-to-exceed period
of time); period of delivery denoted in years or months or years
and months; and point of delivery of the locus on the interstate
transmission system at which transfer of title is made.
040309 nra 0100164 16
NOT YET APPROVED
(c) Required contract terms for gas and electric procurement
contracts. The city shall use standardized form contracts for
the procurement of gas and electricity, as practicable,
including, but not limited to, form contracts created and
copyrighted by the Edison Electric Institute, the Western States
Power Pool, and the North American Energy Standards Board, Inc.
Unless waived by resolution of the city council, a contract for
procurement of gas or electricity and any amendment to the
contract shal! not be awarded by the city and executed by the
duly authorized representatives of the city, unless the
following terms and conditions are required: (i) governing law
shall be the laws of the state of California; (2) choice of
venue shall be the county of Santa Clara; and (3) a counterparty
shall obtain and maintain during the term of the contract the
minimum credit rating established as of the date of award of
contract of not less than a BBB- credit rating established by
Standard & Poors and a Baa3 credit rating established by Moody’s
Investors Services.
(d) Public agency contracts. The City may procure and make
sales-incidental-to-purchase of wholesale utility commodities
from energy counter parties through public agencies, including
but not limited to the Northern California Power Agency and the
federal Western Area Power Administration. The City may engage
the public agency to act as the agent of the City to procure
wholesale utility commodities, provided that the public agency
conducts a competitive selection process and awards one or more
contracts in substantial compliance with the contract
procurement procedures and requirements of this chapter. The
city attorney shall determine whether the contract procurement
process substantially complies with the provisions of this
chapter. For the purposes of this Section 2.30.340, the public
agency process shall be deemed to substantially comply if the
public agency (i) conducts a formal or an informal bidding or
proposal process to solicit bids or proposals for the provision
of wholesale utility commodities, (2) executes a standardized
form contract, including a form contract created and copyrighted
by the Edison Electric Institute and the Western States Power
Poo!, or equivalent, as determined by the city attorney, and (3)
unless waived by resolution of the city council,the
standardized form contract requires or specifies (a)the
governing law shall be the laws of the state of California,(b)
the choice of venue shall be identified according to eitherthe
county in which such public agency does business orthe
preference for federal or sate court jurisdiction overthe
public agency and the energy counter party and the contract,and
(c) the energy counter party shall obtain a~d maintain during
040309 nra 0100164 17
NOT YET APPROVED
the term of the contract the minimum credit rating established
as of the date of award of contract of not less than a BBB-
credit rating established by Standard & Poors and a Baa3 credit
rating established by Moody’s Investors Services.
(e) Risk Management Policies, Guidelines and Procedures Manual.
All procurement of gas and electricity by contract for wholesale
utility commodities, shall conform to the requirements of the
Energy Risk Management Policies, Guidelines and Procedures
Manual.
2.30.350 Contract splitting prohibited.
It is unlawful to split or separate into smaller portions, work
orders, projects, purchases, contracts, or public works projects
for the purpose of evading the competitive solicitation
requirements or contract authority limitations of this chapter,
including the splitting of work or services between or among
departments or divisions or other organizational units of the
city.
2.30.360 Exemptions from competitive solicitation requirements.
The following are exemptions from the informal and formal
competitive solicitation requirements of this chapter. It is
expected that the exemptions will be narrowly applied. The
department requesting an exemption shall provide all relevant
information supporting the application of the exemption to the
purchasing manager. Based on this information, the purchasing
manager shall make a recommendation to the city manager and the
city manager shall determine whether an exemption from
competitive solicitation requirements applies. Nothing herein
is intended to preclude use of competitive solicitations where
possible.
(a) Emergency Contracts as defined in section 2.30.210(f).
(b) Situations where solicitations of bids or proposals would
for any reason be impractical, unavailing or impossible prowided
that in the case of a public works project, the project is not
otherwise required by the charter to be formally bid. These
situations are those where solicitations of bids or proposals
would not be useful or produce any advantage for the city.
Situations where solicitations of bids or proposals would be
impractical, unavailing or impossible, include, but are not
limited to, the following:
(i) Specifications cannot be drawn in a way that would
enable more than one vendor or contractor to meet them;
040309 nra 0100164 18
NOT YET APPROVED
(2) Due to circumstances beyond the control of the city,
the time necessary to use the competitive solicitation
process procedures and requirements would result in a
substantial economic loss to the city, or the substantial
interference with a required city operation; and
(3)Special conditions attached to a grant, donation or
gift requires the use of particular goods and/or services.
All requests for exemptions under this subsection shall be
supported by written documentation (facsimile or electronic mail
may be used), approved by the department head and forwarded to
purchasing.
(c) Where competitive bids or requests for proposals have been
solicited and no bid or proposal has been received or no bid or
proposal meeting the requirements of the invitation to bid or
request for proposal has been received, provided that, in the
case of a public works project, the project is not otherwise
required by the charter to be formally bid.
(d) Contracts for goods, wholesale commodities and related
services, general services or professional services available
from only one source where there is no adequate substitute or
equivalent provider. Examples of acceptable sole source
purchases are: equipment for which there is no comparable
competitive product, proprietary products sold directly from the
manufacturer, a component or replacement part for which there is
no commercially available substitute and which can be obtained
only from the manufacturer, items where there is only one
authorized distributor in the area, and items where
compatibility with items in use by the city is an overriding
consideration. All requests for sole source purchases shall be
supported by written documentation (facsimile or electronic mail
may be used), approved by the office or department head and
forwarded to purchasing.
(e)Contracts for goods where, pursuant to section 2.30.900, the
city manager has determined that standardization of the
supplies, materials or equipment is permissible.
(f)Placement of insurance coverage and bonds.
(g) Legal services contracts, including outside counsel and
experts for litigation or other legal proceedings.
o4o3o9 ~a o~oo~64 19
NOT YET APPROVED
(h) Professional services contracts for private development
related studies and services when funded wholly by private
developers.
(i) Professional services contracts where the estimated total
expenditure by the city, regardless of term, does not exceed
$25,O0O.
(j) Contracts with any public agency or governmental body to
obtain goods and/or services that meet either of the following
criteria:
(i) Cooperative purchases where the city participates with
one or more other governmental or public agencies in a
cooperative agreement, provided at least one of the
agencies has used solicitation process methods
substantially similar to those required by this chapter; or
(2) The use of another governmental or public agency’s
contract provided the original parties to the contract
agree, the contract was awarded within twelve months of the
date the city contracts for the goods and/or services, and
the contract resulted from solicitation methods similar to
those required by this chapter.
(k) Contracts with Northern California Power Agency,
Transmission Agency of Northern California, and Western Area
Power Administration to procure wholesale utility commodities
and related services that meet the requirements of section
2.30.340(d).
(i) Contracts with Pacific Gas and Electric Company and the
California Independent Service Operator Corporation for energy
transmission services to the extent necessary and expedient to
provide for the general health, safety and welfare of its
citizens.
(m) Contracts with any public agency or governmental body to
construct a public work where the public agency or governmental
body has used methods similar to those required by this chapter
to contract for the work.
(n) Contracts with any public utility holding a certificate of
public convenience and necessity or any entity holding a cable
communications system franchise pursuant to chapter 2.10 to
construct a public work where such work involves property of
such public utility or cable communications system franchisee
040309 nm 0100164 2 0
NOT YET APPROVED
and is otherwise of direct concern to both the city and such
public utility or cable communications system franchisee,
provided that the project is not otherwise required by the
charter to be formally bid.
(o) Contracts with private developers to construct public
improvements in connection with their development project even
if the city contributes funds to the improvement project,
provided that the project is not otherwise required by the
charter to be formally bid.
(p)Projects where the public work is performed by the city with
its own employees.
(q) Contracts where the estimated total expenditure by the City
does not exceed $5,000.
PART 5 COMPETITIVE SOLICITATION PROCEDURES
2.30.400 Informal bids or proposals.
(a) Informal bids or proposals may be solicited by any
reasonable means including, but not limited to, mail, telephone,
fax, e-mail or posting to the city’s web site. Where
practicable, quotations shall be solicited from a minimum of
three bidders or proposers. The purchasing manager shall
maintain a record of all informal bids and informal proposals
received by the city for a period of time in compliance with
state law and the city’s records retention schedule.
(b) Informal bids shall be awarded to the lowest responsive and
responsible bidder as defined in section 2.30.440.
(c) Informal proposals shall be awarded on the basis of proposal
deemed most advantageous to the city. The proposal deemed
most advantageous to the city shall be determined based on the
factors set forth in section 2.30.410(e).
(d) If a contract or purchase order is made or awarded to other
than the contractor submitting the lowest price in its quotation
or proposal, written reasons for the award decision shall be
prepared and shall be kept as part of the record of the
transaction.
2.30.410 Formal request for proposals.
(a) Advertising. Contracts, that may be solicited by formal
request for proposals shall be solicited by posting at the civic
center or by advertising at least once in a daily newspaper of
040309 nra 0100164 2 1
NOT YET APPROVED
general circulation in the city, not less than five days prior
to the date set for receiving proposals. In addition to posting
or advertising, contracts may be solicited by posting on the
city web site. Where practicable, proposals shall be solicited
from a minimum of three proposers.
(b) The request for proposals shall specify the date, time and
place for submitting proposals and describe the scope and time
frame for the delivery of what is requested, the information to
be submitted by the proposer, and the criteria for evaluating
the proposal.
(c) Proposals received after the specified date and time shall
not be accepted and shall be returned unopened unless opening is
necessary for identification purposes.
(d) The contract shall be made or awarded on the basis of the
proposal deemed most advantageous to the city.
(e) The following factors shall be considered in determining
the proposal deemed most advantageous to the city:
(i) Quality of the proposal;
(2) Quality, performance and effectiveness of the solution,
goods and/or services to be provided by the contractor;
(3) Contractor’s experience, including the experience of
staff to be assigned to the project, with engagements of
similar scope and complexity;
(4) Cost to the city;
(5) Contractor’s financial stability;
(6) Contractor’s ability to perform the contract within the
time specified;
(7) Contractor’s prior record of performance with city or
others;
(8) Contractor’s ability to provide future maintenance,
repairs parts and/or services;
(9) Contractor’s compliance with applicable laws,
regulations, policies (including city council policies),
040309 nra 0100164 2 2
NOT YET APPROVED
guidelines and orders governing prior or existing contracts
performed by the contractor; and
(i0) Any other factor the city deems relevant as specified
in the request for proposals.
2.30.420 Formal bids - notice, submittal, opening.
(a) Advertisement. Contracts required to be solicited by
forma! bid shall be solicited by posting notices inviting bids
at the civic center or by advertising notices inviting bids at
least once in a daily newspaper of general circulation in the
city, not less than five days prior to the date set for
receiving bids. In addition to posting or advertising,
contracts may be solicited by posting on the city web site.
Where practicable, bids shall be solicited from a minimum of
three bidders.
(b) Notice. The notices inviting bids shall generally describe
the things or services to be purchased or the public work to be
constructed, identify the place where the bid proposal .form,
specifications and other contract documents may be obtained and
specify the date and time when and place where bids will be
opened.
(c) Bid submittal. All bids shall be sealed. All bids shall be
submitted at the place and at or before the date and time
specified in the notice inviting bids. Bids received after the
specified date and time shall not be accepted and shall be
returned to the bidder unopened unless opening is necessary for
identification purposes.
(d) Bid opening. Bids timely received shall be opened in
public, at the time and place specified in the notice inviting
bids, and the aggregate bid of each bidder declared.
2.30.430 Combined proposals and bids.
(a) Nothing in Part five of this chapter shall prohibit the
city from conducting a competitive solicitation process which
combines the elements of the request for proposals and
invitation for bids processes in a single process in order to
award a contract for wholesale utility commodities purchases and
sales.
2.30.440 Determination of lowest responsive/responsible bidder.
The awarding authority shall award contracts required to be
formally bid to the lowest responsive and responsible bidder. As
used in this chapter ~awarding authority" means the city officer
NOT YET APPROVED
or employee with authority to award and sign the particular
contract, as provided in part three of this chapter, or the
council.
(a) Low bid. The low bid shall be the bid offering the lowest
total cost to the city.
(i) The determination of lowest total cost shall be made
after applying relevant policies adopted by resolution of
the council that may provide for a price preference.
(2) Where add alternates or deduct alternate items are
included in the specifications the determination of lowest
total cost shall be made in accordance with the procedure
for considering the add alternate and deduct alternate
items as set forth in the bid specifications.
(3) The determination of lowest total cost may include
the effect of factors such as trade discounts, delivery
costs and life cycle costs when included in the
specifications.
(b) Responsive bidder. A responsive bidder is a bidder
determined by the awarding authority to have submitted a bid
that conforms in all material respects to the requirements of
the bid documents.
(c) Responsible bidder. A responsible bidder is a bidder
determined by the awarding authority:
(I) To have the ability, capacity, experience and skill to
perform the work, or provide the goods and/or services in
accordance with the bid specifications;
(2)To have the ability to perform the contract within the
time specified;
(3) To have the equipment, facilities and resources of
such capacity and location to enable the bidder to perform
the contract;
(4) To have the ability to provide, as required, future
maintenance, repair, parts and service for the use .of goods
purchased;
(5) To have a record of satisfactory or better performance
under prior contracts with the city or others; and
040309 nra 0100164 2 4
NOT YET APPROVED
(6) To have complied with applicable laws, regulations,
policies (including city council policies), guidelines and
orders governing prior or existing contracts performed by
the bidder.
2.30.450 Tie bids.
If an identical price is received from two or more responsive
and responsible bidders, the awarding authority may determine
the successful bidder by the casting of lots with the tie
bidders in public on and at a date, time and place set by the
awarding authority. The awarding authority shall notify the tie
bidders of the date, time and place for casting lots by e-mai!,
phone or facsimile.
2.30.460 Correction or withdrawal of bids or proposals.
(a) Before date and time for receipt of bids or proposals.
Bids or proposals that contain mistakes discovered by a bidder
or proposer before the date and time for receipt of bids or
proposals may be modified or withdrawn by written notice to the
person designated for receipt of bids or proposals received
prior to the deadline for receipt of bids or proposals. Any
modification shall be submitted under seal.
(b) After date and time for receipt of bids or proposals. A
bidder or proposer may not change its bid or proposal after the
date and time set for receipt of bids or proposals, except that
the bidder or proposer may seek the city’s consent to the
substitution of a subcontractor where the bidder can demonstrate
in accordance with applicable provisions of state law, that the
name of the a substituted subcontractor was listed as a result
of an inadvertent clerical error.
(c) Withdrawal of bids or proposals. A bidder or proposer
alleging a mistake in a bid may be permitted to withdraw its bid
or proposal only in conformance with applicable state law.
2.30.470 Cancellation of solicitations -Rejections of
bids/proposals.
(a) Cancellation of solicitations. The purchasing manager may
cancel solicitations for proposals or bids before the date and
time set for receipt of proposals or bids upon a written
determination that such action is in the city’s best interest
for reasons, including, but not limited to, any of the
following:
040309 are 0t00164 2 5
NOT YET APPROVED
(i) The city no longer requires the public works project,
goods and/or services;
(2) The city no longer can reasonably expect to fund the
public works project, goods and/or services; or
(3)Proposed amendments to the solicitation would be of
such magnitude that a new solicitation is desirable.
(b) Rejection of bids. The awarding authority may reject any
or all bids or proposals. If all bids or proposals are
rejected, the awarding authority has the discretion to resolicit
for bids or proposals. In the case of a bid, if the awarding
body is the city council and all bids are to be rejected due to
excessive cost, the purchasing manager shall have the discretion
to reject all bids and to resolicit bids.
2.30.480 Waiver of minor irregularities, defects and
informalities.
The awarding authority may exercise its discretion to waive,
minor irregularities, defects or informalities in the bids or
proposals, so long as the waiver would not affect the amount of
the bid or proposal or give the bidder or proposer an advantage
over others.
PART 6 CONTRACT TERMS AND CONDITIONS
2.30.500 Bid security, bonds and insurance.
(a) When required. The purchasing manager shall have the
authority to require bid security, payment (labor and materials)
and performance bonds as well as specific types and amounts of
insurance coverage in connection with contracts for public
works, goods, general services, professional services, and
wholesale utility commodities to the extent required by state or
federal law, or this chapter, or upon a determination that it is
in the best interest of the city to do so.
(b) Bid security. Bid security shall be submitted with the bid
and shall be in the form of a certified check, cashier’s check
or surety bond. Any surety bond shall be issued by an admitted
surety authorized to conduct business in the state of California
and shall be in a form acceptable to the city attorney and as
specified in the solicitation for bids. If a bidder fails to
submit the required bid security with the bid, the bid shall be
deemed nonresponsive. After bids are opened, bid security is
irrevocable for the period specified in the invitation for bids.
If the successful bidder fails to execute the contract within
040309 nra 0100164 2 6
NOT YET APPROVED
the time specified, the total amount of the bid security shall
be forfeited to the city. The bid security of an unsuccessful
bidder shall be returned to the bidder no later than sixty
calendar days from the date of contract award. Bids for public
works projects greater than sixty-five thousand dollars shall
require the submission of bid security in an amount equal to at
least ten percent of the bid. On public works projects less
than or equal to sixty-five thousand dollars, and all other
procurements of goods and services the purchasing officer is
authorized to determine if bid security is needed on a project-
by-project basis.
(c) Payment and performance security. Payment and performance
security shall be in the form of bonds acceptable to the city
attorney and issued by an admitted surety authorized to conduct
business in the state of California. Invitations for bids for
public works projects greater than twenty-five thousand dollars
shall require the submission of payment and performance bonds,
each in an amount equal to one hundred percent of the contract
price at the time the contract is executed. Where the contract
is with a governmental agency or a public utility the
requirement for performance and payment security may be waived
in writing by the purchasing manager if the contracting
governmental agency or public utility agrees that, to the extent
all work is not to be done by its own employees, it will require
any and all contractors it awards contracts for the performance
of any of the work to provide, before commencement of the work,
payment and performance bonds, satisfactory to the city and
complying with the provisions of the California Civil Code.
Payment and performance bonds for public works projects shall be
extended in the full amount of the contract for a one-year
warranty period beyond the date of acceptance of the work by the
city. On public work projects less than or equal to twenty-five
thousand dollars, and on all acquisitions of goods and services
the purchasing manager is authorized to determine if payment and
performance security is needed on a case-by-case basis.
(d) Form of bonds. The only bonds acceptable to the city shall
be those executed on forms approved by the city attorney and as
specified in the solicitation for bids or proposals.
(e) Insurance. The risk manager shall determine insurance
requirements. The successful bidder or proposer shall submit
certificates of insurance and endorsement forms, as applicable,
as evidence that it has the type and amount of insurance
coverage required by the bid or proposal documents. Such
evidence shall be submitted to the purchasing manager promptly
040309 nra 0100164 2 7
NOT YET APPROVED
upon request and shall be issued by an admitted insurer
authorized to operate in the state of California and acceptable
to the city. The risk manager may waive the insurance
requirement when the contract is an intergovernmental contract
or a city-public utility contract, and the governmental, public
or quasi-public agency or the public utility to whom the
contract is awarded agrees that it wil! have all the work
obtain and provide evidence of the required insurance before
commencement of the work naming the city, its officers, agents
and employees as additional insureds to such policy.
2.30.510 Nondiscrimination.
All contracts in excess of $5,000 shall include a certification
that in the performance of the contract, the contractor will not
discriminate in the employment of any person because of race,
skin color, gender, age, religion, disability, national origin,
ancestry, sexual orientation, housing status, marital status,
familial status, weight or height of such person.
Any contractor~ who is found in violation of the
nondiscrimination provisions of the State of California Fair
Employment Practices Act or similar provisions of federal law or
executive order in the performance of any contract with the
city, thereby shall be found in material breach of such contract
and thereupon the city shall have the power to cancel or suspend
the contract, in whole or in part, or to deduct from the amount
payable to such contractor the sum of $25 for each person for
each calendar day during which such person was discriminated
against, as damages for said breach of contract, or both. 0nly
a finding of the State of California Fair Employment Practices
Commission or the equivalent federal agency or officer shall
constitute evidence of a violation of contract under this
section.
PART 7 ETHICS IN CONTRACTING
2.30.600 Ethics.
(a) Statement of policy. City employees shall discharge their
duties impartially so as to assure fair competitive access to
city contracting opportunities by responsible contractors.
Moreover, they shall conduct themselves in a manner as will
foster public confidence in the integrity of city contracting
activities.
(b) Conflict of interest. No city employee shall participate
directly or indirectly in a city contract when the employee
knows that:
040309 nra 010016~2 8
NOT YET APPROVED
(i) The employee or any member of the employee’s immediate
family has a financia! interest pertaining to the contract;
or
(2) The employee or any member of the employee’s immediate
family is negotiating or has an employment arrangement
which is contingent upon or will be affected by the
contract.
(c) Withdrawal from participation. Upon discovery of an actual
or potential conflict of interest, an employee shall promptly
withdraw from further participation in the contract procurement
process.
(d) Gratuities. No person shall offer, give or agree to give any
city employee any gratuity, discount or offer of employment in
connection with the award of a contract by the city. No city
employee shall solicit, demand, accept or agree to accept from
any other person a gratuity, discount or an offer of employment
in connection with a city contract.
2.30.610 Preparation of bid or proposal documents.
Any person or entity with whom the city has contracted to
prepare or assist in the preparation of plans and specifications
that will be included as contract terms and conditions in bid or
proposal documents, is ineligible to submit a bid or proposal
for that contract. This shall not preclude the award of a
contract calling for design and construction of a public works
project.
PART 8 RECORDS AND REPORTS
2.30.700 Records, public inspection.
(a) Records maintenance. The purchasing manager shall maintain
records (in hard copy or electronic format) for each contract,
purchase order, document or other agreement awarded or entered
into by the city, which shall include, at a minimum: the request
from the department; the bid or proposal documents received for
the contract, if any; all bids or proposals received; the basis
on which the contract award was made; and a copy of any and all
contracts awarded..The purchasing manager shall maintain written
records of his or her determination to cancel solicitations and
of an awarding authority’s decision to reject bids or proposals.
Such records shall be maintained for a period of time in
compliance with state law and the city’s records retention
schedule and shall be available for public inspection during
040309 nra 0100164 2 9
NOT YET APPROVED
normal city business hours. The foregoing shall not apply to
records of wholesale utility commodity transactions under a
master contract which shall be maintained by the department of
utilities.
(b) Public inspection. Bids shall be available for public
inspection following the date and time set for receipt of bids.
Proposals shall be available for public inspection following
public announcement of the selection of a proposer for award of
contract award. This section shall not be construed to require
disclosure of records not otherwise required by law to be
disclosed.
2.30.710 City manager report.
Report to council. The city manager shall make a biannual
report to the council of all contracts awarded by the purchasing
manager or the city manager for general services and
professional services, the cost of which exceed $25,000, and of
all contracts awarded by the city manager for public works and
goods the cost of which exceed $65,000. The city manager shall
also make an annual report to the council of all leases and
rentals of city property with third parties approved by the city
manager.
PART 9 REWARDS
2.30.800 Rewards.
Rewards for information leading to the arrest and conviction of
criminals. Although the payment of rewards is not a purchase in
the strict sense of the definition, the authority to offer and
pay rewards is contained in this chapter because it involves the
expenditure of city funds in return for information.
(a) The city manager is authorized to offer and pay a reward of
up to $25,000 for information leading to the arrest and
conviction of any person or persons whose willful conduct causes
unlawful injury or death to another person, or whose willful
misconduct results in unlawful damage or destruction of personal
property. The city manager shall cause the reward offer to be
publicized and reported to the city council.
(b) A reward shall not be paid unless the information is
received by the Palo Alto Police Department within 90 days of
publication of the reward offer.
(c) Conviction of the person or persons responsible for the
crime shall be required for payment of a reward unless the city
040309 nra 0100164 3 0
NOT YET APPROVED
manager makes a written finding that the conviction was
impossible due to the death of the criminal.
(d) Reward claims shall be in writing and shall provide the
name, address and telephone number of the claimant. Unless
disclosure is authorized by the claimant, this information shall
be deemed confidential and protected from public disclosure to
the maximum extent permitted by law.
(e) Each reward offer shall be in writing and shall be valid
only if approved in advance as to form and compliance with this
section by the city attorney.
PART i0 STANDARDIZATION
2.30.900 Standardization. Where the city manager has determined
that it is required by the health, safety or welfare of the
people or employees of the city, or that significant costs
savings have been demonstrated, standardization of supplies,
materials or equipment, including information and communication
technology, for purchase or to be used in a public works project
is permitted and the specifications may specify a single brand or
trade name. Among the factors that may be considered in
determining to standardize on a single brand or trade name are
that:
(a)Repair and maintenance costs would be minimized;
(b)User personnel training would be facilitated thereby;
(c)Supplies or spare parts would be minimized;
(d)Modifications to existing equipment would not be necessary;
(e) Training of repair and maintenance personnel would be
minimized; and
(f) Matching existing supplies, materials or equipment
required for proper operation of a function or program.
//
is
//
//
//
NOT YET APPROVED
SECTION 2. The Council finds that this is not a project
under the California Environmental Quality Act and, therefore,
no environmental impact assessment is necessary.
SECTION 3. This ordinance shall be effective on the
thirty-first day after the date of its adoption.
INTRODUCED:
PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk Mayor
APPROVED AS TO FORM:APPROVED:
Sr. Assistant City Attorney City Manager
Director of Administrative
Services
Attachment B
Proposed Contract Approval Levels
Type of
Purchase
Public
Works
Goods
Capital
Equipment
General
Services
Professional
Services
Wholesale ......
Utility
Commodities
Existing
Ordinance
Purchasing
Manager *
$25,000
$25,000
$25,000
$25,000
$25,000
Io
Ci~
Manager
$65,000
Unlimited
$65,000
$65,000
$65,000
$65,000
Proposed
Ordinance
City
Manager
$250,000
$250,000
$250,000
$65,000
$65,000
$250,000
Purchasing
Manager*
$85,000
$85,ooo
$85,000
$65,000
$65,000
0
Purchas~g
Manager *
$65,000
$65,000
$65,000
$65,00O
$65,000
0
CPI
Increase
City
Manager
$250,O00
$25O,OOO
$250,000 ......
$85,ooo
$85,000
$250,000
*The Purchasing Manager’s delegation to Contract Managers increased from
$10,000 to $25,000 and to Buyers from $5,000 to $10,000.
Attachment C
Proposed Solicitation Requirements
Public Works Projects/Wholesale Utility Commodities
Bid Amounts Existing Ordinance Proposed Ordinance
0 - $5,000 Not Required Not Required
$5,001-$25,000 Abbreviated Abbreviated
$25,001-$65,000 Formal Abbreviated
$65,001 +Formal Formal
Professional Services
Proposal Amounts Existing Ordinance Proposed Ordinance
0 - $25,000 Not Required Not Required
$25,001 - $65,000 Not Required *Abbreviated
$65,001 +Not Required *Formal
*Policy and Procedure 1-10 requires solicitation for certain professional
services over $25,000
All Other Purchases (Goods, General Services)
Bid Amounts
0 - $5,000
$5,001-$25,000
$25,001 +
Existing Ordinance
Not Required
Abbreviated
Formal
Proposed Ordinance
Not Required
Abbreviated
Formal
ATTACHMENT D
Ci.ty of Palo Alto
City Manager’s Report
TO:HONORABLE CITY COUNCIL
ATTN:FINANCE COMMITTEE
FROM:CITY MANAGER DEPARTMENT: ADMINISTRATIVE
SERVICES
DATE:FEBRUARY 4, 2003 CMR: 124:03
SUBJECT:APPROVAL OF THE
RECOMMENDATIONS
CONTRACT STREAlVlLINING
RECOMMENDATION
Staff recommends that Council approve the following contract streamlining
recommendations and direct the City Attorney to prepare Municipal Code amendments
to:
Increase the Purchasing Manager’s contract approval authority from $25,000 to
$65,000; and increase the Purchasing Manager’s authority to delegate to the
Contract Managers and Buyers contract authority, from $10,000 to $25,000 and
$5,000 to $10,000, respectively.
Increase the City Manager’s contract approval authorization from $65,000 to
$250,000 for construction contracts only.
BACKGROUND
Infrastructure has been one of the City Council’s "Top 5" priorities for several years.
The adopted work plan for the "Top 5" priority in FY 2001-02 included streamlining the
construction contracting processes and professional services ageements in order to
expedite the completion of critical infrastructure projects. Many construction contracts
and professional services ageements take longer to get through the approval process than
in other cities. A Contract Streamlining Subcommittee (CSS) was formed to focus on
issues related to the process, and to make recommendations to improve and shorten the
process. The CSS is comprised of staff from Public Works, Utilities, Community
Services, Planning, and Administrative Services Departments, the City Auditor and City
Attorney’s Offices. To assist the Subcommittee’s work, the City Auditor conducted a
CMR:124:03 Page 1 of 6
contract processing analysis, which included measuring the length of time it took for
contracts to be approved. The Auditor determined that the median length of time to
process infrastructure contracts was 137 days or nearly 20 weeks and concluded that
opportunities-existed for efficiencies to be realized.
DISCUSSION
The CSS focused on construction contracts to adhere to Council’s "Top 5" Infrastructure
priority. The CSS analyzed over 100 suggestions made by its members. As a result, the
CSS identified several core areas where changes could be made to streamline the contract
process including: contract forms and templates, standardized contract routing forms,
staff reviews and approvals, the number of required signatures, training, procedures
manuals, authorization levels, and Municipal Code purchasing and contracting
requirements. Staff has made or is in the process of making several changes to the
contract process that are within the City Manager’s authority.
Recommendations Requiring CQuncil Approval
Staff recommends revisions to the Municipal Code that will simplify and streamline the
infrastructure and overall contract process:
!)Increase staff dollar authority limit to expedite the review and approval of
contracts - The review and approval of lower level transactions can be expedited
by increasing the Purchasing Manager’s contract approval authority from $25,000
to $65,000; and increasing the Purchasing Manager’s authority to delegate to the
Contract Managers’ and Buyers’ contract authority from $10,000 to $25,000 and
from $5,000 to $10,000, respectively. Currently, the City Manager or Assistant
City Manager approves transactions between $25,000 and $65,000. Many of these
transactions are routine and recurring such as software maintenance and smaller
facilities maintenance projects. An increase in the Purchasing Office’s authority
will eliminate a step in the process for routine contracts that are of relatively low
risk. Approval of this recommendation is expected to save at least one week in the
contract approval process.
2)Increase the City Manager’s authorization from $65,000 to $250,000 for
construction contracts only - Currently, the approval of construction contracts is a
two-step process. First, Council reviews and approves the funding for such
contracts during the Capital Improvement Progam (CIP) budget process. During
this process, Council reviews the scope and purpose of the project and its costs. In
the second step, all contracts over $65,000 are presented individually in a CMR to
Council for review and approval. Staff believes that these processes are
overlapping and repetitive in nature and can be improved upon under the
following conditions.
CMR:124:03 Page 2 of 6
It is important to note that for all construction contracts over $65,000, staff follows
a standardized bid process that solicits contractors by issuing an IFB (Invitation
for Bids). Staff has little discretion in selecting a construction contractor since the
lowest responsible bidder must be selected according to the City Charter,
Municipal Code and Public Contract Code unless issues arise such as the bidder is
non-responsive in some manner or lacks the licenses to perform the job. The
lowest responsible bid requirement should provide assurance to the public and
Council that staff has adhered to straightforward and strict requirements even if
the threshold of the City Manager’s authority has been raised from $65,000 to
$250,000. Again, staff is recommending increasing the threshold from $65,000 to
$250,000 for construction contracts only.
In addition, staff proposes to provide Council with more detailed information in
the project scopes presented during the CIP budget process. This increased level
of detail in project "~ ~-:-~:^-~" - - :’ue~.~lp~u~ will provide with anv.ou,cl,opportunity to review
and raise questions early on in a proposed construction project. Once Council
approves the scope of a project, staff cannot change that scope unless it returns to
Council for approval to do so. The proposed CIP undergoes significant review as
it is presented to the Planning and Transportation Commission (in relation to
Comprehensive Plan compliance) and Utilities Advisory Commission, the Finance
Committee and the full Council as part of the budget process. To ensure
additional Council oversight of the proposed contracting recommendation, a semi-
annual report will be produced that lists awarded construction contracts between
$65,000 and $250,000. This list also will include the project name and short
description, the contractor selected, the number of bids mailed, the number of bids
received and rejected, a summary, of amounts, and protest determinations, if any.
The table below displays the number and dollar amount of construction contracts
awarded during 2001-02:
Construction Contracts
FY 2001-02
Dollar Amount Number of Contracts
$25,000-$65,000 6
$65,001-$150,000 11
~ $I50,001-$250,000 8i $250,001-$350,000 1 ..
!$350,001-$450,00 1
~ >$450.001 a
’TOTAL 31
CMR. 124.0a Page 3 of 6
The table shows a total of 31 construction contracts awarded during 2001-02, of which 19
would have fallen within the City Manager’s proposed, new authority. The
recommended change in authority would result in faster processing because it has already
gone through the Council approval process and earlier commencement for a significant
majority (25 out of 3 i) of the City’s construction contracts.
If Council approves the recommendations, staff would return to Council with revised
sections of the Municipal Code. Updated intemal policies, procedures and Purchasing
Manual will also be prepared. These recommendations could shorten the construction
contract processing time by approximately four to six weeks.
Recommendations That Do Not Require Council Approval
The following recommendations made by the CSS have been implemented or are in the
process of being implemented. Changes are described here to inform Council and to
emphasize ~÷~*’~’ ~ ~ -- :~÷ "- ~--’:- :-~tal, ~ ,~o,mn~tme,lt to conh-act sueml,nzmg.
a) Documented the step-by-step process for Invitation for Bids (IFBs) and Requests for
Proposals (RFPs) - The CSS discovered inconsistencies in processing IFBs and RFPs.
In addition, not all processes were documented with written guidelines. Staff is
developing step-by-step processes for IFBs and RFPs through contract completion that
will be documented in the purchasing and construction contracting manuals and included
in employee training programs. This should result in more consistent submittals and
expedite the preparation and review process.
b) Pre-qualify and maintain a list of contT"actual services for recw’ring professional
services - Staff found a number of instances where certain types of professional service
providers such as real estate appraisers, landscape design architects, and environmental,
traffic and utility engineers were used for services more than once during the same time
period. In other words, staff repeated the selection process each time the services of a
traffic enNneer was requiredl
The new process calls for staff to issue a Request for Qualifications (RFQ) for a
particular type of service, review the submitted qualifications and establish a list of
approved fn’ms available to perform that service for a two-year period. In essence,
master agreements will be entered into so that a "pool" of potential vendors can be
available to perform a service. By establishing a list of professionals to utilize for
recurring services, multiple and repeated transactions will be eliminated. This could
potentially save approximately four to six weeks in the selection process. Professional
services contracts over $65,000 will continue to need Council approval.
c) Develop new contract forms, templates and instT’uctions for services and construction
projects - New" standardized forms and instructions are being developed to accommodate
service contracts under $65,000 and for situations where no modifications are made to the
City’s standard terms and conditions. Legal review will not be required, provided the
CMR: 124:03 Page 4 of 6
terms and conditions are not modified. Also, unique templates are being developed for
IFBs with specific services such as architectural and engineering services. The legal
review process will be expedited due to the standardization of the forms, elimination of
previous outdated versions, and a new step in the process where staff will highlight areas
not conforming to the new template. These changes could save approximately one to
three weeks in the process.
d) Provide staff the flexibility to increase the time bidders must hold their bids open from
60 days to 90 days when needed - Currently, the City requires bidders to hold bids open
for 60 days. For following fiscal year projects, staff typically bids in the May/June
timeframe, and then awards the contract in July after the budget is adopted. The City is at
a disadvantage by waiting until May/June to bid summer work, as many contractors have
already filled their schedules. Increasing the time bidders must hold their bids open from
60 days to 90 days will allow staff to better manage the workload related to summer bids,
possibly expand competitiveness and potentially reduce project costs. In addition, staff
would have more time to address last minute budget issues, start the process up to 30
days earlier, and avoid having to re-bid or negotiate change orders with contractors.
e) Standardized the format for routing contracts for internal signatures - Staff identified
delays in processing due to the lack of a contract signature standard. A standard routing
slip with a sequential checklist of required signatures has been implemented, as well as
the routing of contracts in an easily identifiable folder flagging them as a high priority.
The implementation included training for staff involved in the process. Staff estimates
saving approximately one week in the process by having a standardized process.
f) Developed an electronic tracking system on the City’s intranet with a .user’s guide,
allowing staff access to the status and location of contracts during the process - To
address the amount of time lost tracking contracts as they make their way though the
process, the CSS and Information Technology staff created an electronic tracking system
on the City’s intranet. The new system allows users to track contracts from beginning to
end. The system is formatted to follow the sequential order of contract processing, so
each user can see the location and status of the contract. Staff will also review the
possibility of using the new Enterprise Resource Planning (ERP) system being
implemented as part of project RAFTS (Resources and Financial Tracking System) to
track contracts, or at least connect the intranet tracking system to the ERP. The estimated
time saved by these improvements can range from one to two weeks.
g)Design a new standardized ruble containing project #formation in each CMR
submitted to Council for approval- Staff identified the need to provide a more consistent
format to Council in CMRs requesting contract approvals. The new table would include
information such as a brief pr~ect description, contract amount, firm or company
selected, project schedule, number of bids, etc. The new format will simplify and
standardize staff and Council review of contract awards and provide a summary of
pertinent information needed by decision-makers.
CMR:124:03 Page 5 of 6
Estimated Time Savings
Staff worked with the City Auditor and City Attorney to maintain reasonable controls in
the new processes and estimates that the recommended changes can reduce
approximately two to eight weeks from the contract process.
NEXTSTEPS
Staff will implement the approved recommendations by updating the Purchasing
Manuals, Policy and Procedures, developing training and certification programs, and
establishing accountability guidelines for all staff involved in contract processing.
Another area currently under review is the number of City signatures required on
contracts. Staff is examining the number of signatures required to ensure appropriate
controls. In addition, staff will continue to explore options available in the new ERP
s"°÷ .........~,,,. contract process during *~’~ system ; .....÷~*").~,.,,, to add ~,, ~,~ v is,~
RESOURCE IMPACT
There would not be an expense impact to department budgets or the Budget Stabilization
Reserve as a result of adopting any of these recommendations.
POLICY IMPLICATIONS
The recommendations included are consistent with existing City policies.
PREPARED BY: "-~~’/~~-
LAL6 PEREZ
Chair, Contract Streamlining Subcommittee
DEPARTMENT HEAD APPROVAL:
CITY IvIANAGER APPROVAL:
Y g’TS
Director ¢ Administrative Services
/
EMILY HARmSON
Assistant City Manager
CMR: 124:03 Page 6 of 6
Attachment E
Palo Alto Municipal Code
Sections:
2.30.010
,3U.U3U
2.30.040
2.30.050
2.30.060
2.30.070
2.30.075
projects.
2.30.076
2._~0.080
2.30.090
2.30.!00
installations.
2.30.110
2.30.!20
;.~,0.1~0
2.30.140
.~.D0.150
2.30.160
2.30.170
2.30.!80
2.30.!90
2.30.200
2.30.2 ! 0
2.30.220
2.30.230
Validity, of contracts and purchase orders.
Unauthorized purchases - Exceptions.
Definitions.
Real property contracts - Leases, rentals or purchases of real property,,.
Subdivision and demolition ageements.
Supplies.
Services or combination of services and supplies.
Contracts tbr special studies relating to applications for private deveiopment
Rewards for intbrmation leading to the an’est and conviction of criminals.
Approval of city, manager or desi_m’~ee, authority, of manager of purchasing.
Emergencies.
Continuing contracts: cooperative purchases; mutual aid and joint under~ound
Open market purchases.
Open purchase contracts.
Bid procedure.
Exceptions to competitive bidding.
Lowest responsible bidder.
Certificate of nondiscrimination.
Penalties for discrimination in employment.
Penalties for violation of affirmative action provisions.
Control procedures.
Avoidance of losses or liability..
Inspection and testing.
Contract splitting prohibited.
Purchasing manual.
cityofpaloalto.org/city departments/office of the city clerk/municipal code