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Home My WebLink About0351.091• , i I I ! \ • ~ . . . . . ';_ .. ,\, .. - July 3, 1991 Honorable City council Palo Alto, California 7 laspons, to Grand Jury', Report. on Cities' Proeediures tor Awarding contracts Members of the Council: Attached is a self-explanatory letter from the Foreman of the Grand JUry. I recommend that you authorize transmission of the attached letter. 'J-~_"litted, CHR:351:91 ~! tl n M , .1 :1 > '.·1 .j ; j I I C'r'CE 0" ,.'"~ ~.~o'" ''''~ :!"Shi.3S" CHy of }'010 '}lIto .1".0 a.:." 1C-'<"!50 ~,"L.O ..... T·::', CA. 90430.3 The Honorable Daniel E. Creed Presiding Judqe Santa Clara County Superior Court 191 North First Street San Jose, California 95113 Dear Judge Creed: 'l'1,e City Council of the City of Palo Alto has reviewed the co~ents of the Grand Jury regarding procedures ~or awarding contracts. The Council finds the Grand Juryls narrative to be generally consistent vi~~ ~imilar provisions of our nlunicipal code. In additioM 1 the council believes that the city's municipal code and charter provide both legal protection and financial accountability to the citizens of Palo Alto. Thank you for the opportunity to C01M'lent on this matter. JSjWZ/cf Sincerely, JACK SUTORIUS Mayor • -----~~-.. --...... -~ .•.. .. . " -.. ~' --- June 21, 1991 Hon~ Jack Sutorius, Mayor and city Council c/o city Clerk city of Palo Alto P.O. Box 102~0 Palo Alto, CA 94303 Dear Mayor sutC'rius and City Council: Acting under Penal Code section 925a, the 1990-91 Santa Clara County Grand Jury is transmitting its final report on Review of Cities' procedures for Awarding Contracts for Services to you. Penal Code Section 933 requires that the governing body of the public agency which has been the subject of a Grand JUry final report shall comment wi thin 90 days to the Presiding Judge of the Superior Court on the findings pertaining to matters under control of the governing body. Your comments are due in the office of the Honorable Daniel E~ Creed, presiding Judge, sarita Clara County Superior CO"..lrt, 191 North First street, San Jose, CA 95113, on or before September 30, .l99L Copies of all responses shall be placed on file with the clerk of the public agency and the office of the county Clerk. AA:bh 1~90'1"n Aeon," A • ..:, .--".' IJ f,'",,,, RJ","(RJ~': f·,,\!~.·.r,. T'\ ' ... '.~._.l.·>l C,,,," _~,.-,,--'. 51 .",-.1'."",., H ,,",-, " " I';,!" l_,',\.1 G iA'!_"" sincerely, C;{L~ 14~<~?f= /. Albert Augu~ne, Jr.~ Foreman "'" " C ' •• , R _';' R ' \! '. "!l' ,-' ... '< \~ ~, ,,' --: ,Il \" • , ~ 1 i ! I I I REVIEW OF C1TrES I PROCEDURES FOR AWARDING CONTRACTS FOR SERVICES The Grand Jury revie~ed the procedures used by cities in awarding contracts tor services to ascertain whether the process is fair I open and conta.ins adequate safeguards to prevent abuse. NARRATIVE Th~ Grand JUry conducted interviews with the city managers of representative cities, both large and small, in Santa Clara County. The city manager ~as selected to intervie"W because he/she is the appointed official ..... ith the responsibility fer administering and ensuring compliance ~ith all requirements governing contracting and purchasing. Cities contract for a "",ride variety of services such as: garbage c:oll~ction, trash disposal, street sweeping, legal and other professional consultation, equipment/vehicle maintenance, cable TV franchising, recreation leadership, police firing range simulation, rodent control and public works !constn.l.ctinn, demolition, excavation, renovation). Except for one city, the la~gest dollar service contract ~~s for garbage collection and disposal~ ~hich can range annually into millions of dollars. The Grand Jury ... ·as told by the city managers of the interviewed cities that they are required by their respective city ordinances to submit contracts above a specified dollar amOlJ.nt to the city council for approval ~ Depending on the city, this amount rar.ges from $4~OOO to $2a.oOO~ Only one type of contract is governed by state of Califor1"ia law; namely, public 'Works. This law, dating from t.he 193D's, mandates that all public 'Works costing more than $10,000 must be publicly bid and aW'arded to the lowest. responsible bidder. All other contracting and purchasing regardless of the amount of money involved is governed by city ordinances, ... hich may permit ga.r:baye contracts to be reneW'ed or awarded \r{ithout public bidding. The Grand Jury was told that the "highly political" nature of this particular service has the potential to embroil communities in strife and aqitation~ Two types of contracting process are used in the cities surveyed: the competitive bid process and the request for proposal (RFPJ process. The competitive bid process is generally used when: a) the requestor knows the precise item or service required; b) it is readily available from a n~~er of qualified bid by SOl2rces. In this case the lowest a L'esponsible bidder capable of deliv~rir.g on the contract is the overriding selection criterion~ Even after the vendor has been selected, further negotiation can take place to arrive at a final price and terms. _ The RFP process is used when the required service can initially be identified or described in only general terms. • I I 1 .;""J Through public notice and from existing lists, interested providers are offered the opportunity to submit their detailad proposal tor supplying the ne~ded service or product. An example might be an RFP to provide city "XIII .'ith the desig!'1, installation and training ~or the ha!'dware and software systems needed to maintain the inventory for the city's motor pool, spare parts inventory and repair shop. After the publishad deadline~ all RFPs received are reviewed by a panel comprised of city staff familiar vith the service or product to narr-o'W the field to three to five candidates. The narro\o'ed field of proposers is invited to personal interviews 'Where details, specifications and "best" prices are discussed and negotiated The city manager in all the surveyed cities is required by ordinance to submit all contracts to the city council for approval if the amount is above a certain fig'Ll..re4 Approval of the contract must take place in open session of the council. Contracts for amounts belew the specified sums may be approv~d by the city manager, although in some citie~ even small contracts are routinely sent to the city cQuncil for approval "because it is good policY"4 When the dollar value of the contract is below the obligatory figure, city managers in larger cities can and co delegate authority to approve contracts and purchase orders to department heads _and/or the purchasing department. This delegat)'Jn is seldom made in smaller citie.s 4 SITMKA.H.Y The Grand Jury found a similarity among the citi8s surveyed in the ordinances ..... hich have l::een enacted and the procedures developed for advertising, receiving; reviewing, verifying and awarding contracts for services. In all cities,. the intent is to prcvi~e the community with its required needs by lCeans of a fair, competi t.ive and open procedure. Although monetary consideration is generally paramount 'When selecting a provider,. the procedures do not preclude selection based upon the ability of the provider to deliver a better service when its price might not be the lowest. The Grand Jury I 5 review indicatas that structural safeguards exist to prevent abuse or circumve.nt-ion cf the contracting and purchasing system. Failure of vigilant supervision by city manaqe-rnent leads to costly abuses when procedures are not meticulously follo ..... ed and supervised. I PASSED AN!:> AOO?TED by the Grand Jury of santa Clara County this sixth day of June, 1991. {2a~1 J:ibert Auqusti Foreman ? ... ~9-'-~ Rose Crimi Foreman Pro Tem ~Ll Jr. ~ _{t.{4' <> ~ ,ex. willa J. le secretary I