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Home My WebLink About2004-05-17 City Council (4)City of Palo Alto City Manager’s Report TO:HONORABLE CITY COUNCIL@ 8 FROM:CITY MANAGER DEPARTMENT: ADMINISTRATIVE SERVICES DATE:MAY 17, 2004 CMR: 259:04 SUBJECT:FINANCE COMMITTEE APPROVAL OF NEW ORDINANCE RECOMMENDATION CONTRACTING AND REGARDING PURCHASING RECOMMENDATION The Finance Committee and staff recommend that the Council: Approve an ordinance amending and replacing Chapter 2.30 of the Palo Alto Municipal Code in its entirety to establish revised contracting and purchasing procedures (Attachment 1). o Repeal City Policy and Procedure 1-10 covering Selection Procedures for Professional Consultants, incorporating relevant elements into the Purchasing Manual (Attachment !). o 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 (Attachment 1). Approve a new administrative policy and procedure covering Contracts for the Provision of Municipal Services to Other Public Entities (Exhibit E). COMMITTEE REVIEW AND RECOMMENDATIONS On February 4, 2003, the Finance Committee approved the staff’s contract streamlining recommendations (3-1) and directed staff to return to Council with the associated amendments to the contracting and purchasing section of the Municipal Code. In addition to making the changes directed by the Finance Committee, staff identified the need to rewrite this section of the Municipal Code in its entirety to improve its organization, clarity and content. CMR:259:04 Page 1 of 10 On March 16, 2004, the Finance Committee approved (3-1) the new contracting and purchasing ordinance (Attachment 1). The Finance Committee requested staff to provide supplemental information when it returned to the Council for approval of the new ordinance. The information below responds to the Finance Committee request: 1) Provide an executive summary of the purchasing process. The City has established a centralized purchasing function within the Administrative Services Department. The responsibility for procurement procedures, oversight and training resides with this goup. The fundamental objective of this function is to provide operating departments with the goods and services needed in the right quality and quantity, in a timely manner, at the lowest overall cost while ensuring a fair and open process. The procurement process is initiated when a City employee prepares a purchase request (PR). There are three levels of PR approval authority established: 1) up to $5,000 (supervisors and selected administrative staff); 2) up to $65,000 (middle managers); and 3) unlimited (senior management). After the PR is properly approved, it is assigned to the responsible buyer or contract manager in Purchasing for action. The buyers/contract managers in Purchasing are assigned particular departments and commodities. This allows them to become familiar with the products and sen;ices available and the sources of supply.To prevent repeated use of particular vendors, commodities are periodically rotated. For each purchase, buyers/contract managers take active steps to ensure the City receives as many bids/proposals as possible. They use a number of techniques to develop vendor lists. These techniques include: 1) obtaining suggestions from the operating department; 2) consulting with California Association of Public Purchasing Officer (CAPPO) colleagues; 3) reviewing the list of vendors registered on the City’s website for the type of good or service needed; 4) reviewing prior vendor activity reports; 5) consulting trade journals; and 6) obtaining vendor information from the Internet. In addition, Purchasing posts solicitations on its website and with various builders’ exchanges so that vendors can review outstanding bids and proposals. Buyers/contract managers seek (solicit) a minimum of three bids or proposals for all purchases over $5,000. (See number 4 below for information on purchases under $5,000). Generally, the more bids/proposals received by the City, the lower the purchase price. In every solicitation over $5,000, competition is sought unless there are compelling arguments for a sole source. All sole source awards require written justification and City Manager approval. The City utilizes two primary solicitation methods, bids or proposals. Bids are typically used for public works, goods, and general service purchases. Bids include a standard form CMR:259:04 Page 2 of 10 on which vendors respond by filling out their bid - their offer to provide the requested items for a flat price or fixed unit cost. All bids are evaluated strictly on price, with the award made to the responsive and responsible bidder whose price is the lowest. A responsive bidder is one who responds to all of the significant requirements in the bid and a responsible bidder is one who is deemed to be capable of supplying the goods or services requested. Proposals are typically used for professional services. This method is necessary when the scope of services cannot be made sufficiently precise to make a selection solely on price. Proposals are evaluated based upon price and other factors. In the interest of fairness, evaluation criteria are disclosed in the proposal. Both the scope of services and the price proposed by the vendor are subject to negotiation. Solicitations follow an abbreviated or a formal process (Exhibit A). The abbreviated process provides for solicitation by mail, fax, e-mail, phone and posting on the City’s web site. The formal process requires advertising (posting at the civic center or in a newspaper of general circulation and on the City’s web site) and the submittal of sealed bids or proposals. Purchasing staff opens all sealed bids at a specified date and time (typically on Tuesday at 3:00 p.m.). Flow charts detailing the steps involved in the formal bid and proposal processes are included in Exhibit.s B and C. Buyers/contract managers utilize Purchasing Control Checklists (Exhibit D) to ensure they follow the required steps for each purchase. After selecting a vendor, the buyer is responsible for turning the PR into a purchase order (PO) and executing all of the associated contract documents. Currently PO’s over $10,000 (propose an increase to $25,000) are electronically routed to the Purchasing Manager for approval and PO’s over $25,000 are electronically routed to the Assistant City Manager for approval (propose an increase to $85,000). When approving PO’s, the Purchasing Manager and Assistant City Manager also approve the associated Purchasing Control Checklist. Among other things, the Purchasing Control Checklist will indicate whether an adequate number of bids were solicited, whether there is adequate justification for the award decision, and whether there is justification for sole source purchases. All purchases over $65,000 require Council approval (propose an increase to $250,000 for public works and goods contracts and $85,000 for all other contracts). After the required PO approvals are complete, the PO is electronically routed to Purchasing, which reviews the PO and the Purchasing Control Checklist for accuracy prior to printing the PO, mailing it to the vendor, filing and internally distributing the PO copies. 2) Summarize the checks and balances that are part of the purchasing process. Provided is a table summarizing the checks and balances that are part of the City’s purchasing process. These controls help to ensure that Purchasing achieves its objectives in the expenditure of public funds and that all legal and other requirements are met. These CMR:259:04 Page 3 of 10 controls also prevent abuse that can result from the corrupt practices of employees or vendors. Type of Control How .Maintained At Least One-Over-One Review of All SAP Systemic Control Purchases Separation of Procurement Duties SAP Systemic Control Only Authorized Individuals Add New SAP Systemic Control Vendors PR’s Require Specific Levels of Approval SAP Systemic Control PO’s Require Specific Levels of Approval SAP Systemic Contro! Only Buyers Can Generate PO’s SAP Systemic Control Only Purchasing Administrative Staff Can SAP Systemic Control Print PO’s Buyers Cannot Receive Goods or Services SAP Systemic Control Buyer Commodity Assignments Are Purchasing Manager Periodically Rotated Oversight of Three Bid Requirement Purchasing Control Checklist Documentation of Award Decisions Purchasing Control Checklist Exemptions from Competitive Bidding Requires Written Justification Form with City Manager Approval as part of the Purchasing Control Checklist Generation and Review of Management Purchasing Manager Reports Purchasing Control Checklist Requires Purchasing Manager!City Manager Specific Levels of Approval Review for Compliance with City Policies,Department Approver/Purchasing Staff Procedures, and Municipal Code Three Way Match Required (PO, Invoice,SAP Systemic Control Receiving Report) Prior to Payment Contract Approval as to Form City Attorney/Purchasing Staff 3) Chart the historical and proposed purchasing timelines. In 2002, the City Auditor completed a study of contract processing times. The study determined that the City’s average time for processing formal bids was 145 days and formal proposals were 189 days. These numbers were compared to a benchmarking study of municipal government contract cycle times conducted by the Center for Advanced Purchasing Studies. The benchmark averages indicate that there are significant CMR:259:04 Page 4 of 10 opportunities for improvement. The changes proposed in the new ordinance, combined with other contract streamlining efforts, will assist staff in reducing the City’s contract processing timeline. Based on the recommendations in this report, staff has set a cycle time reduction goal of 42 days. Before this goal can be achieved, staff must implement the changes proposed in this CMR and conduct training for all staff involved in the contracting process. Type of Solicitation Formal Bids Formal Proposals CPA Historical Cycle Time Average 145 days 189 days CPA Cycle Time Goal 103 days 147 days Benchmark Cycle Time Average 43 days 60 days Benchmark Cycle Time Maximum 124 days 180 days 4) Provide the costs of processing and bidding low dollar (under $5,000) orders. According to a study conducted by the Center for Advanced Purchasing Studies, the need to reduce the time and effort required to process low values purchases remains one of the key challenges facing purchasing organizations today. These purchases consume staff time and effort that could be deployed toward higher value-added activities. Although estimates vary, the total cost of processing small dollar purchases can reach $300, with an average of about $150. Each year, the City processes over 5,000 purchase orders valued under $5,000. Although this represents over 70 percent of total orders processed, it accounts for less than 6 percent of the City’s total dollar volume of $60 million. Like most organizations, the City spends a disproportionate amount of time and effort toward the purchase of these low value items. This takes away from the time available to procure the goods and services that represent the largest portion of the City’s total purchase dollars. During an audit of purchasing conducted in 1998, the City Auditor estimated that it costs over $200,000 per year in buyers’ time (or about $40 per purchase order) to identi~; potential vendors and obtain the required quotations for small dollar purchases. The City Auditor recommended that Purchasing eliminate the requirement to obtain three quotes for small dollar purchases. In 2001-02, staff implemented the audit recommendation and eliminated the three-quote requirement for purchases under $5,000. Staff estimates that this change reduced the cost of processing these orders from an average of $150 to about $110. To t~arther reduce the effort involved in processing low dollar purchases, staff also implemented a procurement credit card pro~am. This tool streamlines the purchasing and payment process for small dollar purchases. Procurement cards differ substantially from credit cards in that they have exceptional control and reporting features not found in conventional credit cards. The procurement cards are issued to authorized City employees with predetermined per-transaction and monthly spending limits. Only specified CMR:259:04 Page 5 of 10 categories of purchases are authorized on each card. Each transaction is electronically reviewed and authorized or rejected at the point of purchase, using the spending limits and categories of purchase specified. The cards have management reporting capabilities that provide for tracking and analysis of vendor activity, individual cardholder activity, and attempted violations. Staff is currently transitioning from its existing procurement cards to the State of California procurement credit card program (CAL-Card Program). This change is being made to automate the procurement card process in SAP. With this transition, staff plans to expand the use of this highly effective program. The new ordinance provides for the decentralization of low- dollar purchases (purchases under $5,000) at some point in the future. The decentralization of low value purchases will not be implemented until the necessary safeguards, controls, procedures and training are in place. 5) Include a-table comparing the contract award levels in other cities. The table below provides a comparison of the proposed Palo Alto formal solicitation and council award thresholds to those in fourteen surrounding jurisdictions. The table shows that nearly half of the cities have adopted formal solicitation and/or council approval thresholds of $100,000 for certain purchases. Several jurisdictions have delegated unlimited contract approval authority to the City Manager for goods and/or general service purchases. The City of Oakland has received preliminary council approval to increase its council approval threshold from $50,000 to $250,000 for public works projects, goods and general sel-vices and from $15,000 to $150,000 for professional services. The City of Mountain View increases its levels annually based upon changes in CPI. Jurisdiction Formal Solicitation Thresholds Council Award Thresholds Palo Alto Proposed o $25,000 (Goods, Gen Svc)o S85, 000 (Gen Svc, Prof Svc) o S65, 000 (Public Works, ProfSvc)o $250, 000 (Public Works, Goods) San Jose o $100,000 o $100,000 San Mateo o $100,000 o $100,000 Santa Clara County o $100,000 o $100,000 o Not Required (Goods) Santa Clara o $50,000 (Public Works, All Svc)o $50,000 (Public Works, All Svc) o $100,000 (Goods)o Not Required (Goods) Fremont o $25,000 (Goods)o $100,000 o $100,000 (Public Works, All Svc) So. San Francisco o $25,000 (Goods, All Svc)o . $25,000 (Goods, All Svc) o $100,000 (Public Works)o $100,000 (Public Works) CMR:259:04 Page 6 of 10 Jurisdiction Formal Solicitation Thresholds Council Award Thresholds Sunns~’ale o $50,000 o $50,000 Santa Cruz o $50,000 o $50,000 Redwood City"o $20,000 (Public Works)o $10,000 (Public Works) o $60,000 (Goods, All Svc)o $60,000 (Goods, All Svc) Oakland o $15,000(ProfSvc)o $15,000(ProfSvc) o $50,000 (Goods, Gen Svc, Public o $50,000 (Goods, Gen Svc, Public Works)Works) Mountain View o $45,000 o $45,000 (Public Works, ProfSvc) o Not Required (Goods, Gen Svc) Menlo Park o $25,000 o $25,000 Milpitas o $10,000 o $10,000 Concord o $5,000 (Public Works)o All (Public Works) o $I0,000 (Goods, Gen Svc)o $20,000 (All Svc) o Not Required (ProfSvc)o Not Required (Goods) The table illustrates that the staff proposed formal solicitation and contract approval levels are in the same range as those found in the su~*ey of surrounding jurisdictions, with one exception. The proposal to increase the Council approval threshold for public works contracts from $65,000 to $250,000 is higher than the survey levels. Staff is proposing such a significant increase for the following reasons. First, Palo Alto’s public works contract volume is higher than many of the cities surveyed due to its utilities. Second, the Council already has a unique role in overseeing all public works projects over $65,000. The Council reviews and approves the funding, the detailed scope of services, and the purpose of these projects as part of the Capital Improvement progam. Third, these projects follow a standardized Invitation for Bid (IFB) process dictated by the Municipal Code. Under the IFB process, staff must select the lowest responsive and responsible bidder, leaving minimal discretion in contractor selection. Finally, the individual contract information is presented to Counci! in a quarterly; purchasing report. With a higher public works contract volume, the unique Council involvement in these projects and the strict selection requirements inherent in the public works contracting process, staff believes there is sound justification for the proposed increase. Moreover, this change is critical to reducing the cycle times for processing infrastructure contracts recommended in the City Auditor’s study of contract processing times. 6)Prepare a list of the policies and procedures that must be written prior to implementing the new Ordinance. The following three procedures must be in place prior to implementing certain changes proposed by the new ordinance: 1) contracts for the provision of municipal services to other public entities; 2) pre-qualification of professional selwice providers; and 3) CMR:259:04 Page 7 of 10 decentralization of purchases under $5,000. The procedure for the provision of municipal services to other public entities requires Council approval. Staff recommends that Council approve the procedure, Exhibit E. The procedure for pre-qualifying and maintaining a list of professional service providers needs to be developed. Staff will bring this procedure to Council in an informational report prior to implementing this process. Staff anticipates that the prequalification process would be used on a limited basis when the City has a recurring need for a certain type of professional service provider (e.g., environmental consultants, landscape design architects, real estate appraisers, traffic and utility engineers, etc.). The pre-qualification process will call for the issuance of a Request for Qualifications for the particular type of professional service needed, a review of qualification submittals and the selection of firms that meet the qualification requirements specified. Staff would then establish a ranked list of those firms available to perform the professional service. Selection from the list would be based on criteria that may include: 1) the firm at the top of the list; 2) the firm that best meets the unique project needs; and 3) small firms for small projects and large firms for large projects. Purchasing would maintain a log of the firms receiving contracts during the period the list is active. Prior to developing the process to decentralize low value purchases, staff is rolling out an expanded procurement credit card pro~am. After the roll out is complete, staff will turn its attention to developing the procedures that are needed to delegate authority for purchases under $5,000 to operating departments. Staff plans to work closely with the City Auditor’s Office to ensure the procedures contain adequate oversight and effective controls. 7) Provide information regarding the establishment of a local preference pro~am. The Finance Committee directed staff to consider the establishment of a local vendor preference pro~am in order to recognize and support the contributions that local businesses provide to the community. As a first step, staff conducted a survey of the local preference progams that have been established in cities belonging to the California Society of Municipal Finance Officers (CSMFO). The California Association of Public Purchasing Officers (CAPPO) conducted a similar survey amongst its members. The table below summarizes the results. Local Preference CSMFO Surve.v (34 cities)CAPPO Survey (33 cities) 1% preference 42 %55 % No local preference 35 %20 % Preference greater than 1%23 %25 % The survey results indicate that most cities have established a 1 percent local preference progam. Under such a progam, a vendor having a physical place of business within city limits would get the city’s business when its price is up to 1 percent more than a vendor CMR:259:04 Page 8 of 10 located outside of city limits. The additional cost of 1 percent would be directly offset by sales tax revenue received by the city from the State. (Cities get 1 percent of the 8.25 percent sales tax collected by the State from sales that occur within city limits.) The 1 percent approach has been adopted by most cities because there is no fiscal impact and it minimizes any issues that could be raised regarding a gift of public funds. Staff has drafted a local preference pro~am utilizing the 1 percent approach and is working with the City Attorney’s Office to make the required findings that support the need to gant the local preference. 8) Provide a table with the number of contracts by dollar gouping. The table below displays the total number of public works, goods and service contracts awarded in 2001-02 and 2002-03 by dollar ~ouping. Although the data related to professional and general service contracts has been combined, staff estimates that approximately 35 percent of these contracts are in the general service category. Dollar Groupings $25,000- $65,000 $65,001- $150,000 $150,001 -$250,000 > $250,000 Total Number Public Works 2001-02 2002-03 6 11 11 6 8 4 6 19 31 40 Goods 2001-02 2002-03 ~57 12 14 2 7 4 4 51 82 All Sel~’ices 2001-02 2002-03 66 55 27 16 7 6 7 6 107 83 9) Provide historical and future Consumer Price Index (CPI) information. Staff recommends an increase in the contract approval authority of the Purchasing Manager and the City Manager from $65,000 to $85,000, to reflect actual and anticipated increases in CPI. The table below displays the impact of CPI increases on the current approval level of $65,000. The table provides a history of CPI increases since 1997, the year the City’s contract approval levels were last adjusted. During this time period (1997- 2003), the CPI ~ox~h averaged 3.4 percent. This is consistent with historical CPI gowth, which has averaged 3 percent per year. Staff used 3.4 percent for CPI ~ov~h for 2004 and 2005. CMR:259:04 Page 9 of 10 CPI Record- All Urban Consumers San Francisco Bay Area Year CPI Percent Change .... impact on Approval Levels 1997 Actual 160.6 $65,000 1998 Actual 165.8 3.2% $67,070 1999 Actual 172.8 4.2% $69,910 2000 Actual 180.6 4.5% $73,073 2001 Actual 190.2 5.3% $76,964 2002 Actual 193.1 1.5% $78,131 2003 Actual 196.5 1.8% $79,527 2004 Estimate 3.4% $82,253 2005 Estimate 3.4% $85,075 EXHIBITS Exhibit A: Solicitation Requirements Exhibit B: Exhibit C: Exhibit D: Exhibit E: Exhibit F: Invitation for Bid Flow Chart Request for Proposal Flow Chart Purchasing Checklist Procedure Regarding Contracts for the Provision of Municipa! Services to Other Public Entities Revised Contract Approval Levels ATTACHMENTS Attachment I’CMR 179:04, including ~osed contracting and purchasing ordinance PREPARED BY: LALO PEREZ Chair, Contract Streamlining Committee DEPARTMENT HEAD APPROVAL: CITY MANAGER APPROVAL: DC ireA~ctor,~d~n]ni strativ e Services EMILY HARRISON Assistant City Manager CMR:259:04 Page 10 of 10 EXHIBIT A Solicitation Process Public Works Projects Bid Amounts $5,001-$25,000 $25,001-$65,000 $65,001 + Existing Ordinance Abbreviated Formal Formal Proposed Ordinance Abbreviated Abbreviated Formal Goods, General Service,, Bid Amounts Existing Ordinance Proposed Ordinance $5,001-$25,000 Abbreviated Abbreviated $25,001 +Formal Formal Professional Services Proposal Amounts Existing Ordinance Proposed Ordinance $5,000 - $25,000 Not Required Not Required $25,001 - $65,000 Not Required *Abbreviated $65,001 +Not Required *Formal *Policy and Procedure 1-10 required solicitation for certain professional services over $25,000 EXHIBIT B EXHIBIT C \ / 0 ©~D EXHIBIT D FORM C PURCHASING CHECKLIST PROCUREMENTS OXrER $25,000 PURCHASE ORDER NUMBER BUYER!CM PURCHASE REQUISITION NUMBER PR DATE (Release to Purchasing Date) Was PR Reassi~ed? Yes or No (Circle One) [~ If Yes, Date Reassigned Transmittal Form Provided? Yes or No (Circle One) [~ If Yes, Transmittal Fon-n Received (Date) [~ If Service, Converted to Framework PR Exempt From Competitive Bidding? Yes or No (Circle One) If Yes, Provide Explanation and Municipal Code Reference: 1 WEEK Sole Source? Yes or No (Circle One) [~ If Yes, Sole Source Approved by City Manager’s Office and ATTACHED If No Sole Source and No Exemption From Competitive Bidding, Bid Process Determination: RFQ, IFB or RFP (Circle One) [] Prepare Draft Bid Package Attorney Review of Bid Package Submitted (Date) Returned (Date) [--] Departmental Preliminary Review of Bid Package Submitted (Date) Returned (Date) Comments Incorporated into Bid Package Departmental Final Review of Bid Package Submit-ted (Date) Returned (Date) (Date) 3 WEEKS Revision Date: November l, 2003 FORM C Bid Package Provided to Administration for Issuance and PR Header Note Updated Opening Date Number of Bids Mailed Number of Bids Received Number of’°No Bids" Received Number of Addenda Issued [~] Pre-Bid Conference (Date) Mandatory? Yes or No (Circle One) 3-6 WEEKS [~ Quote Tabulation Sheet, Bid Tabulation Sheet or Proposal Evaluation Matrix (Circle One) ATTACHED [~] Tentative Recommendation (RFQ/D’B) to Project Manager [~ Proposal Evaluation Intecview(s)/Meeting(s). [~ Final Award Deten-nined (Date) [~] Award Made to Total Award Amount (Date) (Dates) Contingency Amount Award Basis: Lowest Responsible Quote/Bid or Other (Circle One) If Other, Provide Explanation: [~]Prepared Sample Contract (IFB) [~Contract Prepared by Attorney (RFP) [~Supplier Signature Obtained on Contract (Date) (Date) (Date) & ATTACHED [~] Insurance Required? Yes or No (Circle One) Insurance Certificate Requested Insurance Certificate Received (Date) (Date) Payment and Performance Bonds Required? Yes or No (Circle One) Requested (Date) Received (Date) Revision Date: November 1, 2003 FORM C Direct Contact with Minor? Yes or No (Circle One) [~ If Yes, TB Test Vehfication Received [~] If Yes, Fingerprinting Verification Received [--] If Yes, Declaration of Employee Safety Received (Date) (Date) (Date) Council Approval Required (Over $65,000)? Yes or No (Circle One) [--] If Yes, Council Date [--] If Yes, Blue Tip CMR Received and ATTACHED Supplier in System? Yes or No (Circle One) [] If No, W-9 Requested on [~] W-9 Received on (Date) [--] Requested Administration to Add Supplier on (Date) Material Group Assigned/Verified [~] Nondiscrimination Form Received (Date) (Number) Remaining PR Encumbrance? Yes or No (Circle One) [~ If Yes, Remaining PR Encumbrance Closed Buyer/Contract Manager Contract Manager Release (Purchases From $5,000-$10,000) Purchasing Manager Release (Purchases from $10,001-$25,000) City Manager’s Office Release (Purchases from $25,001 -$65,000) (Signature) (Signature) (Signature) (Signature) Date Date Date Date PO Printed Bid Bonds Returned Request to Administration Date Returned (Date) (Date) (Date) Revision Date: November 1, 2003 EXHIBIT E Contracts for the Provision of Municipal Services to Other Public Entities Policy Statement The City provides a wide variety of services to other public agencies to generate revenue for the General Fund. This revenue subsidizes the cost of providing basic services to the Palo Alto community. These services include information technology, training, fire, animal control, and emergency 911 dispatch services. In 2001-02, the City created a new Enterprise Fund, the External Service Fund (ESF), to account for information technology and training services to neighboring nmnicipalities and other community organizations. This new Enterprise Fund is self-funded through contracts with other agencies. Procedure The City Manager may award and sign individual contracts to provide municipal functions and services to other public agencies with revenue amounts that do not exceed $85,000 per year for up to three years, subject to the following: 1)The contract must recover 100 percent of direct costs associated with the delivery of services. 2)The contract must recover all of or a portion of the related overhead costs associated with providing the service to another public agency. 3) Anticipated contract expenditures nmst not exceed the ESF or the General Fund departmental expense budget. 4) All hiring of permanent emp!oyees associated with the contract must have been approved by the Council during the annual budget process, the Midyear Budget Review, or through a budget amendment ordinance. 5) The municipal services and functions in the contract must be those that are already provided by the City at the time the contract is made. 6) ESF contract revenues must not exceed the ESF revenue budget. Each fiscal year, the ESF revenue budget will be allocated by category of seIwice provision (IT serndces and training services). The contract revenue amount must not exceed its specific category of budgeted ESF revenues. Individual contracts that do not comply with all of the criteria listed above, that are for revenue amounts in excess of $85,000 per year or that exceed three years require the approval of the City Council. The originating department will be responsible for maintaining the original contract file. The City Manager will issue periodic reports to Council with the financial results of the City’s municipal service revenue contracts. Exhibit F Revised Contract Approval Levels Existing Proposed Ordinance Ordinance Type of Purchasing City Purchasing City Purchase Manager*Manager Manager*Manager Public $25,000 $65,000 $85,000 $250,000 Works Goods $25,000 Unlimited $85,000 $250,000 Capital $25,000 $65,000 $85,000 $250,000 Equipment General $25,000 $65,000 $85,000 0 Services Professional $25,000 $65,000 $85,000 0 Services Wholesale 0 $65,000 0 $250,000 Utility Commodities *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 1 City of PMo A to City Manager’s Report TO: ATTN: FROM: HONO~LE CITY COUNCIL FINANCE COMMITTEE CITY MANAGER DEPARTMENT: ADMINISTRATIVE SERVICES DATE: SUBJECT: MARCH 16, 2004 APPROVAL OF ORDINANCE CMR: 179:04 NEW CONTRACTING AND PURCHASING RECOMMENDATION ~aff recommends that Council: Approve an ordinance amendina~ and replacing Chapter "9"_.:0 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 ClvlR: 179:04 Page 1 of 8 CSS reconmaendations have been in\Nemented 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 selaTice providers; an electronic tracking system for contracts; developing training and certification progams; and streamlining the contract signature process. A few of the CSS recormnendations 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 fi’om $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 reconmaendations and directed the City Attorney to return to the Council with the associated Municipa! 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 ilnprove 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 Cormnittee and makes the Ordinance significantly easier to use and understand. The Ordinance changes fall into three primary categories: 1) incorporation of contract streanalining measures; 2) clarifications; and 3) new provisions. A discussion of each of these categories is provided below. Contract Streamlinin~ 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 cnntracts, purchase orders, documents and other a~eemev_ts o,_~ a ge,~era! or a~ CMR: 179:04 Page 2 of 8 individual basis. This section supports the implementation of standard contract forms and a~eements 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 authorit3.~ to Contract Managers from $!0,000 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 Cib~ 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 $55,000. 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 propert3,~ assessments. Staff believes the forma! 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 pr@ects 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 do!lar 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 kn_own 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. 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 sela, ice contracts. In addition, the professional sela, ices 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 tlzree proposals. Professional sel"vices of $65,000 and above would follow the City’s formal request for proposal process. At the present time, there is a conflict betaYeen the Municipal Code which provides an unlimited exemption from competitive solicitation requirements for professional services and Policy and Procedure !- 10 (Selection Procedures for Professional Consultants) which requires competitive solicitation for certain professional consukants over $25,000. In addition to proposing a cap on the professional seIwices exemption at $25,000, staff recommends that the c~ -- ~,.,,-,-’~-.,.,oun,,.1, repeal Policy and Procedure ’ ~<’,-,v. The portion of this Policy dealing with the Council Commi~ee 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 n:aking contract award decisions. The definition of both responsive and responsible bidder has been improved. CMR: 179:04 Page 4 of 8 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). The authority to modify contracts, including those awarded by Council, has been better defined. The City Manager may only authorize n~nor modifications to contracts awarded by Council. These modifications include ex~ending the contract term up to six months, and making minor scope, schedule, or clerical corrections. 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. 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 thechanges 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: 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, staffplans to return to Council with a local preference policy reconznendation that can be easily implemented by Council resolution as a result of this sectio_n_~ 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 alternative project delivery method (e.g., competitive negotiation, design build, construction manager at risk, etc.). Co A provision giving the City Manager the authority to execute contracts to provide municipa! seiadces 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 ageements 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. go Added ethics in contracting provisions, including the prohibition against the acceptance of ~’atuities and the withdrawal from participation in the procurement process when there is a conflict of interest. F.A section that precludes palsies that assist the City in preparation of bid or proposal documents from submitting a bid or proposa!. G.A section to address the correction or withdrawal of bids, the handling of tie bids, the cancellatioh of solicitations, and the rejection of bids. 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 maNng a standardization determination are included. CMR: 179:04 Page 6 of 8 Additional Chan~e 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 Manager, from $65,000 to $85,000, to recognize actual and anticipated increases in CP~. 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 ?,ears. This brings the total of the actual CPI increases since 1997 and the anticipated increase over the next va, o ?,ears 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 ?,ears) to propose similar approval leve! increases to account for CPI. Following Finance Committee approval of this proposed reconm~endation, staffwill 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 g~aidelines for all staff invoh, ed 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 oniin_e) CMR: i79:04 Page 7 of 8 PREPARED BY: LALO PEREZ Chair, Contract Streamlining SubCommittee NELLIE ANCEL Senior Assistant City Attorney APPROVED BY: CITY M_ANAGER APPROVAL: CARL YE/~S Director, ~dmini.strati~ e Services WILL~B:"~YFIELD Acting Interim C.iQ.y Attorney EMILY Assistant City Manager CMR: 179:04 Page 8 of 8 ATTAC HI,lENT ANOT 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 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, genera! 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 emp!oyees, the city manager, the city attorney and the counci!. 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 !owest 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 6fficers and emp!oyees 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 nra 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 $85,000 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. A!l 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 manua!; (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 city does not exceed $5,000, made in conformance with control procedures approved by the city manager and contained in the purchasing manua!; 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 shal! approve the purchasing manual and 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 nra 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 al! 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 approva! 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 paid for in whole or in part out of public funds 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 persona! 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 $85,000. (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 $85,000 in the first year, and does not exceed $85,000, plus any unexpended monies carried forward from a prior fisca! 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 $85,000 in the first year, and does not exceed $85,000 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 $85,000 in the first year, and does not exceed $85,000, 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 $85,000 per year in the first year and does not exceed $85,000, 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 following contracts: (a) Public works contracts. Public works contracts where the contract price, plus any contingency established for change orders, is greater than $85,000, 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 $85,000 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 $85,000 in the first year, and does not exceed $85,000 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 $85,000 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 $85,000. (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 approva! 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, !osses 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 tota! expenditure by the city does not exceed $85,000 in the first year, and does not exceed $85,000, 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 nra 0100164 9 NOT YET APPROVED provided the council has first approved the useof 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. Al! 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 sha!l 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 shal! 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 ful! 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 requirements 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 of $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 physica! 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 l ! 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 emp!oyee to award a contract, may also authorize the city officia! or employee to execute an amendment or change order to a contract in an amount exceeding the monetary and/or term limits of the officia!’s or emp!oyee’s contract authority set forth in this chapter.Amendments or change orders made under authority granted by the council shal! 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 counci! (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 council 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 O100164 ! 2 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 otherwise 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 so’licited 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 counci! 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 nra 01 O0164 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 informa! 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 shal! be solicited by informal bid or informal proposa! 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 forma! 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 shal! be used to solicit the contract. // // 040309 nra 0100164 1 4 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 shall 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), professiona! 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 manua!. 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-incidenta!-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 proposa! 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 commodities that 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. 040309 nra 0100164 15 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 NOT YET APPROVED (c) Required contract terms for gas and electric procurement contracts. The city shal! 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 Poo!, 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 shall not be awarded by the city and executed by the duly authorized representatives of the city, unless the fol!owing 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 shal! 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 federa! 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 substantia! 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 shal! 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 counci!,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 either the county in which such public agency does business or the preference for federal or sate court jurisdiction over the public agency and the energy counter party and the contract,and (c) the energy counter party shal! obtain and 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 who!esale utility commodities, shall conform to the requirements of the Energy Risk Management Policies, Guidelines and Procedures Manua!. 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 shal! 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 provided 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 circumstancesbeyond the control of the city, the time necessary to use the competitive solicitation process procedures and requirements would result in a substantial economic !oss 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. Al! requests for sole source purchases sha!l be supported by written documentation (facsimile or electronic mai! 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) Lega! services contracts, including outside counsel and experts for litigation or other legal proceedings. 040309 nra 0100164 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,OOO. (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 origina! 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). (1) 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 nra 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. Quotations shall be solicited from a minimum of three bidders or proposers; however, if quotations from three bidders or proposers cannot be obtained, quotations shall be solicited from as many under three as can be obtained. 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. // 040309 nra 0100164 2 1 NOT YET APPROVED 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 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 fo!lowing 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; 040309 nra 0100164 2 2 NOT YET APPROVED (9) Contractor’s compliance with applicable laws, regulations, policies (including city council policies), 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 formal 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 genera! 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. A!l 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 shal! 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. // 040309 nra 0100164 2 3 NOT YET APPROVED 2.30.440 Determination of lowest responsive/responsible bidder. The awarding authority shall award contracts required to be formally bid to the !owest responsive and responsible bidder. As used in this chapter "awarding authority" means the city officer 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 tota! cost to the city. (i) The determination of lowest total cost shall be made after applying relevant policies adopted by resolution of the counci! 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 materia! 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; 040309 nra 0100164 NOT YET APPROVED (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 (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 identica~ 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-mail, 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 040309 nra 0100164 2 5 NOT YET APPROVED 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: (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 Rejemtion 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 040309 nra 0100164 2 6 NOT YET APPROVED 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 successfu! bidder fails to execute the contract within the time specified, the total amount of the bid security shall be forfeited to the city. The bid security of an unsuccessful bidder shal! 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 equa! 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. 040309 nra 0100164 2 7 NOT YET APPROVED (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 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 will have all the work obtain and provide evidence of the required insurance before commencement of the work naming the city, its officers, agents and emp!oyees 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, nationa! 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. Only 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 040309 nra 0100164 2 8 NOT YET APPROVED 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: (i) The employee or any member of the employee’s immediate family has a financial interest pertaining to the contract; or (2) The emp!oyee or any member of the employee’s immediate family is negotiating or has an employment arrangement which is contingent upon or wil! be affected by the contract. (c) Withdrawal from participation. Upon discovery of an actual or potentia! 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 emp!oyee any +gratuity, discount or offer of emp!oyment 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 shal! 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 proposa! 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 040309 nra 0100164 2 9 NOT YET APPROVED 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 shal! be available for public inspection during norma! 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 persona! property. The city manager shal! cause the reward offer to be publicized and reported to the city council. 040309 nra 0100164 3 0 NOT YET APPROVED (b) A reward shall not be paid unless the imformation 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 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 confidentia! and protected from public disc!osure 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 techno!ogy, 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 // 040309 nm 0100164 31 NOT YET APPROVED SECTION 2. The Council finds that this is not a project under the California Environmenta! 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 040309 nra 0100164 3 2 Attachment B Proposed Contract Approva! Levels I?,pe of Purckase Works Goods Capital Equipment Genera! Services Professional Services V~rholesale Utility Commodities Existing Ordinance city Manager Purchasing Manager* $25,000 $25,000 $25,000 $25,000 $25,000 Proposed Ordinance _Purchasing Manager * City Manager ANN Purchasing Manager* $85,000 $85,O00 $65,000 $65,000 0 CPI !nerease City Manager Unlimited $65,000 $250,000 $250,000 $65,000 $65,000 $250,000 $250,000 $65,000 $65,000 $65,000 $85,000 $65,000 $65,000 $65,000 $85,000 $65,000 0 $250,000 $250,000 ""The Purchasing Manager’s delegation to Contract Managers increased from $i0,000 to $25,000 and to Buyers from $5,000 to $10,000. Attachment C Proposed Solicitation Requirements Public Works Projects/~Vholesale Utili~ Commodities Bid Amounts Existing Ordinance Proposed Ordinance 0 - $5,000 Not Required Not Required $5,001 -$25,000 Abbreviated Abbreviated $25,00 i -$65,000 Formal Abbreviated $65,001 +Formal Fol-rnal Professional Services Proposal Amounts Exisring Ordinance t~roposed 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 Amounrs Existing Ordinance ]%oposed Ordinance 0 - $5,000 Not ~,~" Not v~,,~ $5,001 -$25,000 Abbreviated Abbreviated $25,001 +Fomaal Fonnai TO: ATTACHMENT D City of PMo Manager’s Report ATTN:FINANCE COMMITTEE FROM:DEPAR i M~_N ~ : A~DMINISTRA ~ _, V= SERV!~S DATE:FEBRUARY 4, 2003 CMR: i24:03 SUBJECT:APPROVA,_L OF a,w~ ~COMMENDATIONS CONTRACT STREAIviLE~-~qG RECOMMENDATION Staff recommends that Council approve the following contract streamlining recommendations and direct the City A:ttomey to prepare Municipal Code amendments to: Increase tlne 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 authoriw from $10,000 to $25,000 and $5,000 to $10,000, respectively. increase the City Manager’s contract approval authorization from_ $o.~,000 to $250,000 for construction contracts o_n_!ly~ BACKGROUND Infrastructure has been one of the CiD~ Council’s "Top 5" priorities for several years. ~ne adopted work plan for the "Top 5" prioriD~ in FY 2001-02 included streamlining the construction contracting processes and professional services agreements in order to expedite the completion of critical infrastructure projects. M~y construction contracts and professional services ageements take !onger 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 Drocess. The CSS is comprised of ~taff frc~m PubUc Wc~k~ TTt~llti~ ~c~rnrm,n~*x~ Services, Planning, and Administrative Services Departments, the Cit3, Auditor and City A~orne : s Offices. To assist the Subcommittee’s work, the City Auditor conducted a CMR: 124:03 Page ! 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 len~h of time to process in~astructure contracts was 137 days or hearty 20 weeks and concluded *that opportunities existed for efficiencies to be realized. DISCUSSION The CSS I%cused on construction contracts to adhere to Council’s "Top 5" Lnfrastrucmre prioriD~, The CSS analyzed over !00 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 fo_rms and templates, standardized contract routing forms, staff reviews and approvais._ _ . the number of required si_o-natures.~ ~ training=, prnae.ch~r~ manuals, authorization !evels. and Municipal Code purchasing and contracting requirements. Staff has made or is in the process of making several changes to the Recon~n~endations Re~uirin_~ Council ADDroval Staff recommends revisions to the Municipal Code that will simpii~, and streamline the hafrastmcture and overall contract process: !)]ncrease staff dollar authorit3~ limit to e~]oedite the revie~, a~d apprm~al of co~s’acts - The review and approval of !ower Ievel tr~sactions c~ be expedited by ~creasing the Purchas~g Manager’s comract approval au~ority ~om $25,000 to $65,000; and ~creasing the Purchasing Manager’s authoriD~ to delegate to Contact Managers’ mad Buyers’ contract authority ~om $!0,000 to $25,000 ~d ~om $5,000 to $!0,000, respectively. Cu~entiy, the CiD~ Manager or Assistant ~~z~,00u and ~o~,~ uu. M~y o~ theseCity Manaaer approves .......: transactions ~e routNe and recm~g such as so,rare maNtenance and smaller facilities ma~tenance projects. ~a ~crease i the Purchasing Office’s authori~ wi!! eiin~nate a step M the process for routme contracts f~at ~e of relatively low risk. Approval of this reco=~nendation is expected to save at 1east one week ~n the contract approval process. Jncrease the CiO, 3(anager’s az*.thorizatio~7 fi’o;n 265,000 to $250,000 for conszv-ucrio~, coryza-acts onIy- Cu=ent!y, the approvai of construction contracts is a a¥o-step process. F~s% Counci! reviews and approves the Nnding ~%r such contracts during Kne Capital Improvement ProN’am (C~) budget process. Dur~g _o~ ~ pr~ec~ and its costs.m~s process, ~ounc~ reviews *~e scone and pu~ose r - ~ the second svep, a!! contracts over $65,000 are presented individualIy ~ a Council ~ ~_ ~o, review and approval. Staff believes that these processes overiann~__ .and renetkive in:,_-=_~an’r=~ and can_ be _~.~=~..imn~mv~d. ~.~ upon 124:03 Page 2 of 6 It is important to note that for al! construction contracts over $65,000.~ staf£ x%ilows 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 ~e public and Council that staff has adhered to straightforward and strict requirements even if the threshold of the Cib~ Manager’s authorib~ has been raised from $6~,000 to $250,000. Again, staff is recommending increasing the threshold from $6fi,000 to $250,000 for construction contracts only. In aoomon, staff proposes to prm iae Council with more aetallea information in the project scopes presented during the CIP budget process. This increased level ~d raise questions early on in a proposed cons~ction project. Once Council ~ project, start cabot change that scope urfless it returns toapproves the scope o~ a ~ Council x%r approval to do so. ~e proposed CIP undergoes si~ificant review as it is presented to the Plamning ~d Transpo~ation Com~ssion (in relation to Comprehensive PI~ compliance) ~d Utilities Advisory Con-~ission, the Finance,~u~e~ ~rocess.Conmfi~ee and the mlI Council as pa~ of the" ’~ ~ .. To ensure additional Counci! oversight of the proposed contracting recon~nendation, a semi- a~nual re~m~ wi!! be ~roduc~e that iists awarded " ~ "_ .. ’consmact~on contracts benveen $65,000 and $250,000. This list aiso wi!! include the project name and sho~ description, ~he ~*" + -"’*cmmac~o~ seiected, the number of bids maned, the number of bids received an~ rected a sugary o~ amounts, mzd orotest ae~er~naUons. ~r any. cms~ruct~on contractsThe table below displays the number and doiiar amount of aw~ded during 2001-02: F¥ Dollar Amount Number of Contracts $25,000-$65,000 $65,00!-$150,000 $i50,00i-$250,000 $250,001-$;50.000 $350,00i-$450,00 >S450.00! YOIAL 6 1! 8 ! ! CHG1:124:03 ~a~e a of 6 The table shows a total of 3 ! construction contracts awarded during 200!-02, of which i9 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 sig-nificant majority (25 out of 31) of the Cib"’s constraction contracts. !f Council approves the recommendations, staff would retrain to Council with revised sections of the Municipal Code. Updated interna! policies, procedures and Purchasing Manual will also be prepared. These reconm~endations couid sho~en the construction contract processing time by approximate!y four to six weeks. Recommendations That Do Not Require Council A~prova! The following recommendations inade by the CSS have been implem..ented or are in the process of being implemented. Changes are described here to inform Council and to a) Docmnented the s~kp-~-step process for im~itation ]St Bids ~rFBs) and Reqzcests for Proposals (RFPs) - The CSS discovered inconsistencies in processing IFBs-and RFPs. in addition, not ali processes were documented with written guidelines. Staff is developing step-by-step processes for IFBs and RFPs through contract completion that wi!! be documented in the purchasing and construction contracting manuals and included in employee training programs. This should result in more consistent submiVtais and expedite the preparation and review process. b)D ,r r ¯~~ re-qualo?’ and maintain a list of conmactual sem~ices for recurring pro]esszonm se;’wces - Staff found a number of instance; where certain ~,pes of professional service providers such as real estme appraisers, landscape desi=~ architects, and environmental, tra~Sc and utility en=~eers 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 waffic engineer was requh-ed. 71n_e new process calls for staff to issue a Request for QuaIifications (RFQ) for a particular type of service, review the subdued qualifications and estabIish a list of approved f~s avaiiable to perform that se~,ice for a ~o-voa~ -’ ’ master ageements wi11 be entered ~to so thin a "pool" of potentiai vendors can be avaiiffDie to perfo~ a sepdce. By eslabiish~g a list of wofessionais to utilize %r recu~ing sere,ices, multiple and repeated lransactions will be elii~ated. This couid potentially save appro55mateiy z%ur to six weeks ~ the seiecfion process. Pro~ssionaI s~,~scon, ae~s over ,,, ~ continue to need Cou~m~ approval. c) Dm,etop new contract f~rms, templates and i~structions for services and b~;no deveioped to accon~odate-~,~ew smne.armzee ionns arm instructions are ~: = se~,ice contracts under $65,000 and for situations where no modificatio_rts are made to the City’s standard terms and conditions. Legai review wi!! not be required, provided the CM-R:124:03 Page 4 of 6 terms and conditions are not modified. Also, unique templates are being developed for IFBs with specific serdces such as architectural and engineering services. The lena! review.Dr°ceSs- 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 conforrning to the new template. These changes could save approximately one to three weeks in the process. d) Provide staff the yTexibilio~ to inc:~ease the time bidders must kold their bids open fi’om 60 days to 90 days when needed - Cu~ently, the City requkes bidders to hold bids open for 60 days. For fo!low~g fiscal ye~ projects, staff k~pically bids in the May/June time~ame, ~qd then awards the contact in Ju!y a~er ~e budget is adopted. The CiD~ is a a disadv~tage by wait~g until May/June to bid sm~er work, as m~y con~actors have ah’eady filled the~ schedules. IncreasNg the time bidders must hold Neir bids open ~om 60 days to 90 days will allow staff to be~er m~age the wortdoad related to su~er bids, ~11~~bb!Ulv UIUJ~L ~UbLb. III ~U~ILIUII. bt~!l would have more time to address last ~uze " o~.’~uO=~t issues, st~ the process up to 30 days e~lier. ~d avoid hav~ to re-bid or n~_otmt~ change orders with conmactors. e) Standardized the fo;’mat for routing contracts for internal signatu:’es - Staff identified delays in processing due to the lack of a contract signature standard. A standard routing slip with a sequential checklist of required sig-natures has been Lmplemented, as we!! as the routing of contracts in an easily identifiable folder flagging them as a high priori~’. The implementation included trainin~ for staff invoh, ed in the process. Staff estimates saving approximately one week in the process by having a standardized process. ~_~’~ Developed an electronic macking system, on the Ci,~’s..inmanet wit]7 a-user’s guide, allowing " ~s~a~ access to tl~e sZat~ and ~ ~ "~~o~a~on of con~’acts during tl~e process - To address ~e amount of time lost trackNg contracts as they make the~ way Nough the process, the CSS ~d information Tec~olo~, staff created an etectro~c trac~g system on ~h~ City’s mtranet The new system ~" --" ~-a~o~,s users to ~ra& contacts fi’om be~g to clau. itic S}rSterfi-iuz~_att~fi--<q’ ~ tO !OIIOW the sequential oraer of conFact process , so each user can see the location and smras of the contract. Staff wil! also review possibilib~ of us~g the new Eme~rise Resource Pi~ing (E~) system bekng implemented as pa~ of project PJFTS (Resources and F~ciai Tracing System) track contracts, or at least co~ect the intranet traced system to the EP~P. ~e estimated .... ~ ...........~ can Fore one to ~,.,.~ weeks. g) Desz~ a new standardz2ed rabie ~o,Tmzn,no~ ," ; ~ _~rojecr z~fo,"-mmzon’in eaci7 c~-- submi~ed ~o Councillor approvai- ~-~" "~a~x identified the need to ~rovme a more conaistem format to Council ~ CIx~s requesting comract approvals. The new tg~le would include mIo~atioB sBGh aS a "’=~" ’~pro]~ description, con2ract amount, ~m or company ~cacct~a, c,~u~ct bc~i~ame, numoer of bids, etc. ine new fo~a~ Wl!i SI~plI~’ and standardize ~taff and ~noi~.~,~__~_~ review of contact awm’ds and provide _n snm~rv_ .... .~ n~ ~e!dnent m~o_mauon neeae~ m: decision-makers. Clv~R: 124:03 Page 5 of 6 Estimated Time Savin_~s Staff worked with the City Auditor and City A~omey to maintain reasonable controls in the new processes and estimates that the recommended changes can reduce approx_imatety ~,o to eight weeks from the contract process. N~-,v~ STEPS Staff wil! implement the approved reconm~endations by up,~aan~ the Purchasing Manuals, Policy a~d Procedures, developing training and certification pro~arns, and establishing accountability g-uidelines for al! staff invoh, ed 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 RESOURCE IMPACT There wouid not be an expense Lmpact to department budgets or the Budget Stabilization Reserve as a result of adopting a,~y of these recommendations. The recommendations inciuded are consistent with ...." ~ ~~.-ast~n~. City policies. _, R£PARED BY: ~ L~0 PEP,.EZ Chair. Contract - ~ ~" " o,St, e~mnmn~ Subcommi~ee DEPARTiV~NT ~AD APPROVAL: C_aaRL Y-EKTS Director 9g AdnRnistrative Sen,ices / Assistant Cib; Manager CMR.....0a Page 6 of 6 See~ons: 2.30.0i0 2.2,0.020 2.30.030 2.30.040 2.30.050 .~.. D kJ. UIJU 2.30.070 2.30.075 pr~j cots. 2.30.076 2.30.080 2.30.090 installations. 2.30.1i0 ~.~0.~0 2.30.i30 2.30.140 ~ ~,~ 1~0 ~.2U.~OU 2.30.iv0 2.30.!80 2.30.i90 2.30.200 2.30.2i0 2.30.220 2.30.230 Vaiidi>,- of corm’acts and purchase orders. Unauthorized purchases - Exceptions. Definitions. Real prope~ con~ac.:s - Leases, rentals or purchases of real prope~L Sgadi~dsion and demoiifion ageemen~s. Ser,,ices or combination of se~;ices and supplies. Contracts for s~ecia! s’oadies relating to appiicafions for p~vate deveionment Rewards z%r ~.~bn:m_.afion !eadin~ vo the an’esv and conviction of c~rp~nais. ~_ p ._~ "~ ’O~ ~ana~ oi o~rc~asLn~.~p~roval of ci>~ manager or aes~ee, aumofir,, ~ ....~ " ’ ~mergenc~es. Con~qu~ contracts: ....1~,’=’ ....~ aid and jolt underm:ound Open n >=÷_ mar ....purchases. C?en purchase con~:rac~s. mi., nroceaure. Excenfions to comnetifive bidding. Lowest ~ . "~ ~ bidder.z ~SDOBStD*~ CeNfica~e ......-o, nonmscmm~anou. Penalties for disc~Nation ha empioF,~ent renames ~or vioiation ofa~qna~ve actio~ provisions. Con~ol procedures. Avoidance of !osses or iiabiii>*. inspection ~d test~_g. Contrac~ sphnmg proNmtee. Purchas~g m~uai. cityofpaloalto.org/city departmentsioffice of the city cierid municipal code