HomeMy WebLinkAbout06/19/2007, C10 - ASPHALT PURCHASING PROCEDURES - n
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CITY OF SAN LUIS OBISPO
FROM: Jay Walter, Public Works Director
Prepared By: Dave Smith, Public Works Administrative Services Manager
SUBJECT: ASPHALT PURCHASING PROCEDURES
CAO RECOMMENDATION
Adopt a Resolution authorizing Public Works to buy asphalt in volumes valued up to $25,000 per
job using "over-the-counter" purchasing procedures and in volumes valued between $25,000 and
$100,000 using "open-market" purchasing procedures as described in Section 295 of the City's
Financial Management Manual.
DISCUSSION
Background
Since adoption of the 1998 Pavement Management Plan, the scope and scale of paving work
performed by City crews has grown significantly. The paving crew now spends about 70 percent of
its time performing street reconstruction and resurfacing. This work ranges from "grind-and-pave"
activity (grinding out damaged areas of the street surface and then patching it back with asphalt) all
the way up to full reconstruction (removing the entire street structure down to native soil and then
installing new base and surface material). One measure of the productivity growth for the paving
crew is annual tons of asphalt placed, which have increased from about 1,500 tons to about 6,200
tons. With this increased paving, the frequency and scope of asphalt purchases have grown
substantially. Overall, Public Works now purchases $250,000 to $325,000 worth of asphalt each
year.
Local Vendors—Job Proximity Results in Better Value
There are two firms that operate local asphalt batch plants in the county: Hanson Aggregates with a
plant in Santa Margarita and Union Asphalt with a plant in Paso Robles. Because the cost of
asphalt is so closely tied to the cost of petroleum, the difference in price-per-ton between these two
vendors is usually less than one percent on any given day. But when the cost of transportation is
factored in, the overall price from Union Asphalt becomes three to seven percent higher, for the
simple reason that the round-trip distance from San Luis Obispo to Paso Robles is 26 miles farther
than the distance from San Luis Obispo to Santa Margarita. For this reason, the Public Works buys
virtually all its asphalt from Hanson, with overall savings ranging from $8,000 to $23,000 each
year.
Council Authorization to Modify Purchasing Requirements for Asphalt in Specific Instances
On about 15 jobs per year, the cost of asphalt exceeds $5,000. In these instances the City's
purchasing ordinance would require open market purchasing procedures:. soliciting three written
quotations and then awarding a purchase order to the vendor with the lowest price. These
Cio
Asphalt Purchasing.Procedures Page 2
procedures, because of the reasons stated above, are unnecessary because there is really only one
preferred vendor. It also makes asphalt purchases unusually cumbersome because the quantities
needed are often difficult to estimate accurately and prices fluctuate from day-to-day. For these
reasons, Public Works is requesting authorization to buy asphalt up to a value of$25,000 per job
using "over-the-counter" purchasing procedures. Such procedures will allow Public Works to
purchase asphalt by payment voucher (rather than purchase order after three bids) from the vendor
with the best overall price on the day the material is needed. Most of the time that vendor will be
Hanson Aggregates, unless for some reason the Santa Margarita plant is closed or Union Asphalt
offers an extraordinarily low price-per-ton on the date needed.
For purchases in the range of$25,000 to $100,000 staff is seeking Council authorization to allow
"open market" purchases by soliciting three quotes (which may be written or verbal) as described in
Section 295 of the City's Financial Management Manual. The asphalt will be purchased via a
Finance Department issued purchase order. This type of purchase is presently not anticipated to
occur with any frequency because at the current market price, the quantity would be unusually large
for the City's purposes...
FISCAL IMPACT
There is no fiscal impact associated with the proposed policy modification.
ATTACHMENTS
1. Resolution
2. Section 295 of the Financial Management Manual
G:\Staff-Reports-Agendas-Minutes\-CAR\2007\Street Maintenance\CAR Over-the-Counter Asphalt Purchasing.doc
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ATTACHMENT 1
RESOLUTION NO. (2007 Series)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
MODIFYING PURCHASING PROCEDURES
FOR PROCUREMENT OF ASPHALT
WHEREAS, the City purchases over $250,000 for asphalt annually through the Street
Maintenance operating program; and
WHEREAS, the cost per job for asphalt regularly exceeds.$5,000;and
WHEREAS, there are currently only two companies — Union Asphalt and Hanson
Aggregates — operating asphalt batch plants in the county within 30 miles of San Luis Obispo;
and
WHEREAS, the Union Asphalt batch plant in Paso Robles is about 13 miles farther
away from San Luis Obispo than the Hanson Aggregates batch plant in Santa Margarita; and
WHEREAS, the cost of delivery makes the cost of asphalt from Union Asphalt
invariably more expensive than the cost of asphalt from Hanson Aggregates; and
WHEREAS, open market purchasing procedures requiring written price quotations and
purchase orders — as described in Section 295 of the City's Financial Management Manual —
serve no useful purpose when there is only one feasible vendor:
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis
Obispo that Public Works Department be authorized to buy asphalt in volumes valued up to
$25,000 per job using over-the-counter purchasing procedures and in volumes valued between
$25,000 and $100,000 using open market purchasing procedures as described in Section 295 of
the City' Financial Management Manual.
Upon motion of seconded by ,
and on the following vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this day of 2007.
Mayor David F. Romero
ATTEST: APPROVED AS TO FORM:
Audrey Hooper J ath . Lowell
City Clerk City Attorney
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ATTACHMENT 2
Section 295
PURCHASING GUIDELINES
In accordance with the policy framework set forth in Chapter 3.24 of the municipal code, City
purchases and contracts (including those for rentals and leases, but excluding those for real
property) will be made pursuant to these guidelines. Applicable competitive bidding categories;
authorization limits or contract award procedures will be based on unit cost, total purchase cost
for consolidated bid items or fiscal year aggregates in the case of blanket purchase orders or
similar ongoing purchasing arrangements. Staging of purchases in order to avoid these
competitive bidding procedures or authorization limits is prohibited.
GENERAL PURCHASES
Purchases and contracts for supplies, equipment, operating and maintenance services, and
construction projects will be made pursuant to the following guidelines.
A. Over-the-Counter. Purchases of less than $5,000 may be authorized by the Department
Head. Although no specific purchasing requirements are established for this level of
purchase, competitive bidding should be used whenever practical.
B. Open Market. Purchases between $5,000 and $25,000 may be authorized by the Director of
Finance (or designee) pursuant to the open market bidding procedures established in Chapter
3.24 (Article II) of the municipal code.
C. Formal Bids or Proposals. Purchases in excess of $25,000 will be made pursuant to the
formal bidding requirements established in Chapter 3.24 (Article III) of the municipal code.
Authority to approve specifications, invite bids or request proposals and award contracts will
be as follows:
1. For purchases with an approved budget and a cost estimate of$100,000 or less, the City
Administrative Officer is authorized to invite bids or request proposals, approve
specifications and award the contract.
2. For purchases in excess of $100,000, Council approval of the specifications and
authorization to invite bids or request proposals is required. The Council may authorize
the City Administrative Officer to award the contract if the selected bid or proposal is
less than or equal to the Council-approved cost estimate and there are no substantive
changes to the specifications. Otherwise, Council award of the contract is required.
D. Job Order Contracts: Construction Projects. Under the Job Order Contact provisions of
Chapter 3.24 (Article III) of the municipal code for maintenance-related construction
projects, individual Task Orders up to $25,000 may be approved by the City Engineer.
Individual Task Orders in excess of $25,000 require approval by the City Administrative
Officer.
CONSULTANT SERVICES
Contracts for consultantservices will be awarded pursuant to the following guidelines.
295-1 /!A:� ...1171
ATTACHMENT 2
Purchasing Guidelines
A. Contracts for consultant services estimated to cost less than $5,000 may be awarded by the
Department Head. Although no specific purchasing requirements are established for this
level of contract,proposals should be solicited whenever practical.
B. Contracts for consulting services estimated to cost between $5,000 and $25,000 may be
awarded by the City Administrative Officer. Proposals from at least three firms should be
solicited whenever practical.
C. Contracts for consultant services estimated to cost more than $25,000 will generally be
awarded pursuant to the following guidelines; however, it is recognized that the City's need
for consultant services will vary from situation to situation, and accordingly, flexibility will
be provided in determining the appropriate evaluation and selection process to be used in
each specific circumstance.
1. The Council should generally approve request for proposal (RFP) documents before they
are issued. The Council may authorize the City Administrative Officer to award the
contract if it is less than or equal to the Council-approved cost estimate and there are no
substantive changes to the approved workscope. Otherwise, Council award of the
contract is required.
2. In the event that the timely evaluation and selection of a consultant precludes Council
approval of the RFP before it is issued, the RFP may be approved and distributed by the
City Administrative Officer; however, award of the contract will be made by the Council.
3. Cost will not be the sole criterion in selecting the successful bidder. Consultant
proposals will be evaluated based on a combination of factors that result in the best value
to the City, including but not limited to:
a. Understanding of the work required by the City
b. Quality and responsiveness of the proposal
c. Demonstrated competence and professional qualifications necessary for satisfactory
performance of the work required by the City
d. Recent experience in successfully performing similar services
e. Proposed methodology for completing the work
f. References
g. Background and related experience of the specific individuals to be assigned to the
project
h. Proposed compensation
4. If it is determined that it is in the best interest of the City for services to be provided by a
specific consultant—with contract terms, workscope and compensation to be determined
based on direct negotiations—contract award will be made by the Council.
Approved by the Council on April 15, 2003, Resolution No. 9444(2003 Series)
295-2