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HomeMy WebLinkAbout2003-02-04 City CouncilTO:HONORABLE CITY COUNCIL ATTN:FINANCE COMMITTEE FROM:CITY MANAGER DEPARTMENT: ADMINISTRATIVE SERVICES DATE:FEBRUARY 4, 2003 CMR: 124:03 .APPROVAL OF THE RECOMMENDATIONS SUBJECT:CONTRACT STREAMLINING RECOMMENDATION Staff recommends that Council approve the following contract streamlining reconamendations and direct the City Attorney to prepare Municipal Code amendments to: o Increase the Purchasing Manager s contract approval authority from $25,000 to O ~$65,000; and increase the Purchasing Manager s authority to delegate to the Contract Managers and Buyers contract authority from $10,000 to $25,000 and $5,000 to $10,000, respectively. Increase the City Manager’s contract approval authorization from $65,000 to $250,000 for construction contracts only. BACKGROUND Infrastructure has been one of the City Council’s "Top 5" priorities for several years. The adopted work plan for the "Top 5" priority in FY 2001-02 included streamlining the construction contracting processes and professional services a~-eements in order to expedite the completion of critical infrastructure projects. Many construction contracts and professional services agreements take longer to get through the approval process than in other cities. A Contract Streamlining Subcommittee (CSS) was formed to focus on issues related to the process, and to make recommendations to improve and shorten the process. The CSS is compiised of staff from Public Works, Utilities, Community Services, Planning, and Administrative Services Departments, the City Auditor and City Attorney’s Offices. To assist the Subcommittee’s work, the City Auditor conducted a 9 ~Pagel of 6CMR: 1_4:03 contract processing analysis, which included measuring the length of time it took for contracts to be approved. The Auditor determined that the median length of time to process infrastructure contracts was 137 days or nearly 20 weeks and concluded that opportunities existed for efficiencies to be realized. DISCUSSION The CSS focused on construction contracts to adhere to Council’s "Top 5" Infrastructure priority. The CSS analyzed over 100 suggestions made by its members. As a result, the CSS identified several core areas where changes could be made to streamline the contract process including: contract forms and templates, standardized contract routing forms, staff reviews and approvals, the number of required signatures, training, procedures manuals, authorization levels, and Municipal Code purchasing and contracting requirements. Staff has made or is in the process of making several changes to the contract process that are within the City Manager’s authority. Recommendations Requiring Council Approval Staff recommends revisions to the Municipal Code that will simplify and streamline the infrastructure and overall contract process: 1)Increase staff dollar authority limit to expedite the review and approval of contracts - The review and approval of lower level transactions can be expedited by increasing the Purchasing Manager’s contract approval authority from $25,000 to $65,000; and increasing the Purchasing Manager’s authority to delegate to the Contract Managers’ and Buyers’ contract authority from $10,000 to $25,000 and from $5,000 to $10,000, respectively. Currently, the City Manager or Assistant City Manager approves transactions between $25,000 and $65,000. Many of these transactions are routine and recurring such as software maintenance and smaller facilities maintenance projects. An increase in the Purchasing Office’s authority will eliminate a step in the process for routine contracts that are of relatively low risk. Approval of this recommendation is expected to save at least one week in the contract approval process. 2)Increase the City Manager’s authorization f’om $65,000 to $250,000 for construction contracts only- Currently, the approval of construction contracts is a two-step process. -First, Council reviews and approves the funding for such contracts during the Capital Improvement Program (CIP) budget process. During this process, Council reviews the scope and purpose of the project and its costs, in the second step, all contracts over $65,000 are presented individually in a CMR to Council for review and approval. Staff believes that these processes are overlapping and repetitive in nature and can be improved upon under the following conditions. CMR: 124:03 Page 2 of 6 It is important to note that for all construction contracts over $65,000, staff follows a standardized bid process that solicits contractors by issuing an IFB (Invitation for Bids). Staff has little discretion in selecting a construction contractor since the lowest responsible bidder must be selected according to the City Charter, Municipal Code and Public Contract Code unless issues arise such as the bidder is non-responsive in some manner or lacks the licenses to perform the job. The lowest responsible bid requirement should provide assurance to the public and Council that staff has adhered to straightforward and strict requirements even if the threshold of the City Manager’s authority has been raised from $65,000 to $250,000. Again, staff is recommending increasing the threshold from $65,000 to $250,000 for construction contracts only. In addition, staff proposes to provide Council with more detailed information in the project scopes presented during the CIP budget process. This increased level of detail in project descriptions will provide Council with an opportunity to review and raise questions early on in a proposed construction project. Once Council approves the scope of a project, staff cannot change that scope unless it returns to Council for approval to do so. The proposed CIP undergoes si~onificant review as it is presented to the Planning and Transportation Commission (in relation to Comprehensive Plan compliance) and Utilities Advisory Commission, the Finance Committee and the full Council as part of the budget process. To ensure additional Council oversight of the proposed contracting recommendation, a semi- annual report will be produced that lists awarded construction contracts between $65,000 and $250,000. This list also will include the project name and short description, the contractor selected, the number of bids mailed, the number of bids received and rejected, a summary of amounts, and protest determinations, if any. The table below displays the number and dollar amount of construction contracts awarded during 2001-02: Construction Contracts FY 2001-02 Dollar Amount Number of Contracts $25,000-$65,000 !6 $65,001-$150,000 $150,001-$250,000 18 $250,001-$350,000 I ! $350,001-$450,00 >$450,001 14 TOTAL 131 CMR: 124:03 Page 3 of 6 The table shows a total of 31 construction contracts awarded during 2001-02, of which 19 would have fallen within the City Manager’s proposed, new authority. The recommended change in authority would result in faster processing because it has already gone through the Council approval process and earlier commencement for a significant majority (25 out of 31) of the City’s construction contracts. If Council approves the recommendations, staff would return to Council with revised sections of the Municipal Code. Updated internal policies, procedures and Purchasing Manual will also be prepared. These recommendations could shorten the construction contract processing time by approximately four to six weeks. Recommendations That Do Not Require Council Approval The following recommendations made by the CSS have been implemented or are in the process of being implemented. Changes are described here to inform Council and to emphasize staff’s commitment to contract streamlining. a) Documented the step-by-step process for b~vitation for Bids (IFBs) and Requests for Proposals (RFPs) - The CSS discovered inconsistencies in processing IFBs and RFPs. In addition, not all processes were documented with written guidelines. Staff is developing step-by-step processes for IFBs and RFPs through contract completion that will be documented in the purchasing and construction contracting manuals and included in employee training progams. This should result in more consistent submittals and expedite the preparation and review process. b) Pre-qualify and maintain a list of contractual services for recurring pr@ssional services - Staff found a number of instances where certain types of professional service providers such as real estate appraisers, landscape design architects, and environmental, traffic and utility engineers were used for services more than once during the same time period. In other words, staff repeated the selection process each time the services of a traffic engineer was required. The new process calls for staff to issue a Request for Qualifications (RFQ) for a particular type of service, review the submitted qualifications and establish a list of approved firnas available to perform that service for a t~vo-year period. In essence, master a~’eements will be entered into so that a "pool" of potential vendors can be available to perform a service. By establishing a list of professionals to utilize for recurring services, multiple and repeated transactions will be eliminated. This could potentially save approximately four to six weeks in the selection process. Professional services contracts over $65,000 will continue to need Council approval. c) Develop new contract forms, templates and instructions for services and construction projects -New standardized forms and instructions are being developed to accommodate service contracts under $65,000 and for situations where no modifications are made to the City’s standard terms and conditions. Legal review will not be required, provided the CMR: 124:03 Page 4 of 6 terms and conditions are not modified. Also, unique templates are being developed for IFBs with specific services such as architectural and engineering services. The legal review process will be expedited due to the standardization of the forms, elimination of previous outdated versions, and a new step in the process where staff will highlight areas not conforming to the new template. These changes could save approximately one to three weeks in the process. d) Provide staff the Jlexibility to increase the time bidders must hold their bids open fi’om 60 days to 90 days when needed - Currently, the City requires bidders to hold bids open for 60 days. For ~ following fiscal year projects, staff typically bids in the May/June timeframe, and then awards the contract in July after the budget is adopted. The City is at a disadvantage by waiting until May/June to bid summer work, as many contractors have already filled their schedules. Increasing the time bidders must hold their bids open from 60 days to 90 days will allow staff to better manage the workload related to summer bids, possibly expand competitiveness and potentially reduce project costs. In addition, staff would have more time to address last minute budget issues, start the process up to 30 days earlier, and avoid having to re-bid or negotiate change orders with contractors. e) Standardized the format for routing cono’acts for internal signatures - Staff identified delays in processing due to the lack of a contract signature standard. A standard routing slip with a sequential checklist of required signatures has been implemented, as well as the routing of contracts in an easily identifiable folder flagging them as a high priority. The implementation included training for staff involved in the process. Staff estimates saving approximately one week in the process by having a standardized process. f) Developed an electronic o’acking system on the City’s intranet with a. user’s guide, allowing staff access to the status and location of contracts during the process - To address the amount of time lost tracking contracts as they make their way though the process, the CSS and Information Technology staff created an electronic tracking system on the City’s intranet. The new system allows users to track contracts from beginning to end. The system is formatted to follow the sequential order of contract processing, so each user can see the location and status of the contract. Staff will also review the possibility of using the new Enterprise Resource Planning (ERP) system being implemented as part of project RAFTS (Resources and Financial Tracking System) to track contracts, or at least connect the intranet tracking system to the ERP. The estimated time saved by these improvements can range from one to two weeks. g) Design a new standardized table containing project i~formation in each CMR submitted to Council for approval - Staff identified the need to provide a more consistent format to Council in CMRs requesting contract approvals. The new table would include information such as a brief project description, contract amount, firm or company selected, project schedule, number of bids, etc. The new format will simplif), and standardize staff and Council review of contract awards and provide a summary of pertinent information needed by decision-makers. CMR: 124:03 Page 5 of 6 Estimated Time Savings Staff worked with the City Auditor and City Attorney to maintain reasonable controls in the new processes and estimates that the recommended changes can reduce approximately two to eight weeks from the contract process. NEXT STEPS Staff will implement the approved recommendations by updating the Purchasing Manuals, Policy and Procedures, developing training and certification programs, and establishing accountability guidelines for all staff involved in contract processing. Another area currently under review is the number of City signatures required on contracts. Staff is examining the number of signatures required to ensure appropriate controls. In addition, staff will continue to explore options available in the new ERP system to add or revise the contract process during the system implementation. RESOURCE IMPACT There would not be an expense impact to department budgets or the Budget Stabilization Reserve as a result of adopting any of these recommendations. POLICY IMPLICATIONS The recommendations included are consistent with existing City policies. PREPARED BY: LALO PEREZ Chair, Contract Streamlining Subcolnmittee DEPARTMENT HEAD APPROVAL: CAR~ YE/TS Director ~’Administrative Setwices CITY MANAGER APPROVAL" HARRISON Assistant City Manager CMR: 124:03 Page 6 of 6