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HomeMy WebLinkAbout09/04/2007, C5 - PURCHASING GUIDELINES UPDATE council 9-04-07 j acEnaa nEpom CITY OF SAN LUIS OBISPO FROM: Bill Statler, Director of Finance & Information Technology Carolyn Dominguez, Finance Manager Debbie Malicoat,Accounting Supervisor SUBJECT: PURCHASING GUIDELINES UPDATE CAO RECOMMENDATION Adopt a resolution updating the City's purchasing guidelines by approving an increase in Department Head purchasing authority from$5,000 to $7,500. DISCUSSION Background Since 1983, the City's purchasing policies have authorized Department Heads to approve "over- the-counter" purchases of less than $5,000. As described below, purchases of$5,000 or more are approved by the Council, City Administrative Officer (CAO) or Director of Finance & Information Technology depending on the amount and type of purchase. While we have made changes in other levels of purchasing authority since 1983 (most recently in 2003), we have not changed the level of Department Head authority in almost twenty-five years. Due to inflationary increases in the cost of goods and services, Department Head purchasing authority has diminished significantly since it was last revised in 1983. Adjusted for inflation based on increases in the consumer price index (CPI) since 1983, the comparable limit today would be $10,700 — more than double. We do not recommend increasing Department Head purchasing authority to this level;but rather, a modest increase to $7,500. Current and Proposed Purchasing Procedures As set forth in Municipal Code Section 3.24 and the City's Purchasing Guidelines (most recently updated via Resolution No. 9444 in 2003), there are three basic purchasing procedures for supplies, equipment, operation and maintenance services and construction projects (General Purchases), with similar guidelines for consultant services: 1. Formal Bidding Procedures. Purchases greater than $25,000 require the use of formal bids or requests for proposals (RFP). The CAO can award contracts up to $100,000. Council approval of bid and RFP documents and authorization to invite bids or proposals is required for purchases greater than $100,000, with contract award authority typically delegated by the Council to the CAO. For consultant services, the CAO's authority is limited to $25,000. No changes in this category are recommended. - n Purchasing Guidelines Update Page 2 2. Open Market Procedures. Purchases between $5,000 and $25,000 require soliciting at least three bids or proposals, with contract award (typically via purchase order) by the Director of Finance & Information Technology. For consultant services, purchases in this range require CAO approval. We recommend that this level be changed to between$7,500 and $25,000. 3. Over-the-Counter. Purchases of less than $5,000 (including consultant services) may be approved by the Department Head, While there are no specific purchasing requirements are established for this level of purchase, competitive bidding should be used whenever practical. We recommend that this category be changed to $7,500. Provided in Attachment 1 is an overview of the City's purchasing system showing current authorization levels and proposed changes. As reflected in this overview, only the Department Head level of purchasing authority is recommended for change. FISCAL IMPACT There are no significant fiscal impacts associated with this update. Purchases in excess of the proposed "over-the-counter" limit of $7,500 will still subject to approval by Council, CAO or Director of Finance & Information Technology, as appropriate. The modest increase in the "over-the-counter" limit will allow operating departments with a little more purchasing flexibility, consistent with changes in the CPI since this limit was last updated almost twenty-five years ago. ALTERNATIVE Do not update Department Head purchasing authority. Given changes in relative purchasing authority since this limit was last updated almost twenty-five years ago, we do not recommend this alternative. ATTACHMENTS 1. Overview of the City's Purchasing System: Current and Proposed 2. Resolution Updating Purchasing Guidelines T 4 'v, 77 G:ManualstFinancial Management ManuaVPurchasing/Updates/2007/Purchasing Guidelines Update,CAR,94-07 city of san tins osis o Attachment 1 PURCHASING SYSTEM OVERVIEW T-- Cat o -. Features Over-the-Counter ® No specific requirements;competitive bidding to be used whenever practical. Less Than ■ Bid award by Department via Voucher or $7.50 $5,006 Purchase Order. ■ Job Order Contract(JOC)Task Orders by the City Engineer. Open Market in Department solicits at least 3 proposals; $7,500$5,000 to (may be verbal with written quotes). $25,000 ■ Bid award by Finance via Purchase Order or Contract(or JOC Task Order bv the City Engineer). GENERAL PURCHASES Formal ■ Formal Bid or RFP documents. ■ Advertising for sealed bids or proposals. Includes supplies, Greater Than' (Mailed notice in the case of construction projects.) equipment,operating or $25,000 ■ CAO approves soliciting for bids or maintenance services _ _ proposals and awards the contract and construction projects. (or approves JOC Task Order) ■ Same as above except the Council approves Bid/RFP documents and soliciting Greater Than for proposals;contract award generally $100,000 delegated by Council to the CAO. ■ CAO authorized to approve all JOC Task Orders, not to exceed Council-approved annual limits. ■ No specific requirements; Less Than proposals to be solicited whenever practical. JZ&N$5,000 ■ Proposal award by Department via voucher or purchase order. ■ Proposals solicited whenever practical. CONSULTANT $7,500$5,009 to ■ Contract negotiated by Department. SERVICES $25,000 ■ Contract award by CAO via purchase order or contract. Includes advisory Formal services from professionals ■ Formal RFP document. such as engineers, Greater Than ■ Council authorizes staff to request architects,attorneys and $25,000 proposals and generally delegates contract other specialized award to the CAO. consultants. Note. These are general guidelines the evaluation and selection process for consultant services may vary on a case-by-case basis. Formal Bid or Proposal Process & Attachment 2 RESOLUTION NO. (2007 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO UPDATING PURCHASING GUIDELINES WHEREAS, in the course of conducting City operations it is necessary to purchase a broad range of goods and services and WHEREAS, the Council has adopted purchasing policies and procedures as set forth in Chapter 3.24 of the Municipal Code that require the Council to specify by resolution the dollar amount of purchases and contracts requiring the use of either open market or formal bidding procedures, and the level of authority required to authorize invitations for bids (or requests for proposals), award contracts or approve Job Order Contract Task Orders; and WHEREAS, the Council desires to update existing guidelines for Department Head purchasing authority to reflect current conditions. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo that Resolution No. 9444 (2003 Series) is hereby rescinded and the updated purchasing guidelines set forth in Exhibit A are hereby adopted. On motion of seconded by , and on the following roll call vote: AYES: NOES: ABSENT: the foregoing resolution was adopted on September 4,2007. David F. Romero, Mayor ATTEST: Audrey Hooper, City Clerk APPROVED AS TO FORM: '01- Jon than . well, City Attorney city of san luis osis o Exhibit A 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 $7,500 $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 wheneverpractical. B. Open Market. Purchases between $7,500 $5,009 and $25,000 may be authorized by the Director of Finance & Information Technology (or designee) pursuant to the open market bidding procedures established in Chapter 3.24 (Article II) of the municipal code. C. Foramal 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 consultant services will be awarded pursuant to the following guidelines.. (7,1 Purchasing Guidelines ✓✓✓ Exhibit A A. Contracts for consultant services estimated to cost less than $7,5001 5,009 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 JLLOQ $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 It. 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. C' ''-�