HomeMy WebLinkAbout05-01-2018 Item 14 Proposed Purchasing Policy Changes Related to the Motion Project
Meeting Date: 5/1/2018
FROM: Derek Johnson, City Manager/ Acting Finance Director
Prepared By: Kristin Eriksson, Purchasing Analyst
SUBJECT: CHANGES TO PURCHASING POLICIES FOR ERP IMPLEMENTATION
RECOMMENDATION
Adopt a resolution to amend purchasing guidelines related to the implementation of the City’s
new Enterprise Resource Planning (ERP) financial system and to revise purchasing authority
thresholds.
REPORT-IN-BRIEF
Several purchasing policy updates are recommended as part of the Motion project and the design
of the Enterprise Resource Planning (ERP) system being implemented by the City. The changes,
discussed below, must be approved by the Council by resolution (Attachment A).
DISCUSSION
Background
In 2015, the City contracted with the Government Financial Officers Association (GFOA) to
conduct an assessment of the Finance Department. In their key recommendations, GFOA
identified “ripple effects” often with negative impacts on other parts of the organization due to
outdated systems and business process. The “ripple” effect created redundant process and
additional work required in other departments. It identified the use of inadequate systems driving
an over-reliance on manual or “side” systems, complicated business processes, and confusion
around assignment of duties, as responsibilities and expectations expanded, without additional
staff (e.g. new or additional work is given to a person because of availability not skill set or work
flow) and a lack of processes and tools to effectively communicate with the public.
The following recommendations were made by GFOA:
1) Immediately address the lack of a complete financial system
2) Align a chart of accounts with business requirements and system capabilities
3) Streamline ineffective business policy and process
4) Clarify roles and responsibilities and implement service level agreements for all central
functions.
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GFOA concluded that these core issues represent the most significant problems faced by the
City’s Finance function and cause ripple effects throughout all City departments. In other words,
over time, the Finance Department has blurred lines of responsibility as staffing levels have
decreased and responsibilities have increased. This combined with an outdated financial system
inhibits the department’s ability to improve efficiency and effectiveness even with temporary
resources.
The GFOA report was presented to Council on April 19, 2016 with the above four
recommendations and the Council approved the implementation of an Enterprise Resource
Planning (ERP) software system in th e 2016-17 Supplemental Budget as part of the
Organizational Effectiveness and Efficiency Initiative. The Motion project team selected Oracle
Cloud as the new ERP software which will, in addition to facilitating integration of processes in
the Finance and Human Resources, will provide a workflow mechanism that will enable the
creation of functional role and responsibility tiers with approval limits.
As part of the Motion project discussed above, the Purchasing Division (Purchasing) developed a
high-level purchasing policy and procedure plan. The plan was designed with input from GFOA,
the City’s Motion Project Core Team, the City Fiscal Officers and other City department staff to
provide for a purchasing system that is in line with best practices for municipalities, legal
requirements and Generally Accepted Accounting Principles (“GAAP”) compliance. The plan
was also designed to work in the context of the City’s new financial system, which is planned to
“go-live” in October of 2018. The following proposed policy changes are in line with that plan
and recommendations from the City’s consultants from Sierra-Cedar who are implementing the
new ERP system.
Purchasing Requisition Process (New Section 202 of the Financial Manual)
Prior to the creation of the City’s new Purchasing Division, departments managed all purchasing
activity and created their own Purchase Orders (POs). Since the development of the Purchasing
Division, departments submit POs in an interim approval workflow, in which budget and
purchasing approvals are applied. While this development has created greater oversight for City
purchasing and more consistent enforcement of City purchasing rules, including solicitation
requirements and approval requirements, current policy does not include a requisition process
and allows for all purchases of $7,500 or less to be made without any Purchasing involvement.
This means that smaller purchases, under the $7,500 threshold, are made by departments without
prior approval from Finance and that there is no allocation of funds in the City’s existing
financial system until invoices are received for payment. Therefore, commitments to vendors are
made without ensuring that funds exist to support those commitments
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Under the proposed updates to the City’s purchasing guidelines (Attachment B, Recommended
Purchasing Guidelines Update, Sections 202 and 204), City staff will only be authorized to make
purchases by submitting a Purchase Requisition (PR) into the City’s financial system; by using a
City Purchasing Card for low value, permitted purchase types; or by making an emergency
purchase, as defined by Section 3.24.060(B) of the Municipal Code. This process is a best
practice for public purchasing and is recommended by GFOA and other national public
purchasing organizations. This process is also utilized by federal and state entities, most of the
City’s benchmark cities and is in compliance with the CA Public Contracting Code.
PRs will be approved within the system, according to defined tiers (Attachment B,
Recommended Purchasing Guidelines Update, Exhibit 202-A). This will ensure that funding is
allocated or pre-encumbered in the system for accurate and transparent accounting.
Additionally, by making sure that most purchases are recorded in the financial system, City staff
will be able to timely and accurately report on purchasing volume by purchase type, in order to
achieve cost savings through blanket agreements for commonly purchased items.
An approved PR will then be converted into a PO by the Purchasing Di vision after all required
competitive bidding and contracting processes are completed. The issuance of the PO will create
a final encumbrance of the funds underlying the purchase. POs will also serve as the contract
with vendors if no formal agreement is required, insuring that most City transactions are
governed by the City’s general terms and conditions.
Purchasing Approval Structure and Thresholds
1. New Purchasing Types (Amended Section 201 of the Financial Manual)
The City currently has three categories of purchases which determine the approval limits and
purchasing processes that must be followed: General Purchases, Public Projects and Consultant
Services. Staff is recommending that the City expand these categories to allow for greater
flexibility in setting certain approval thresholds. The proposed categories are General Goods,
General Services, Public Projects, Consultant Services and IT Systems purchases. (Attachment
B, Recommended Purchasing Guidelines Update, Section 201).
Staff is recommending the addition of a general goods category with more lenient approval
thresholds. General goods purchases are lower risk than other purchases and, therefore, require
less oversight. The selection and evaluation of tangible goods is generally rather simple. Unlike
services, which involve possible risk factors related to risk management and intangible activities,
goods purchases are a basic delivery of a tangible product.
Staff is also recommending the addition of an IT systems category with more stringent approval
thresholds than general services. An IT system is a combination of hardware, software,
infrastructure and, in some cases, implementation services. Purchases of such systems require
greater oversight than general services because selection of an IT system may have city-wide
effects (such as the selection of the City’s new ERP system) and often have long term
implications.
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2. New Purchasing Approval Process (New Section 202 of the Financial Manual)
Currently, the City has several mechanisms for approvals of purchases, including Council
Agenda Reports, City Manager Reports, and the interim SharePoint PO workflow. Because
approvals are made through various processes in multiple locations (i.e.: Accela, network drives,
SharePoint), the audit trail of the process can be difficult to track. Additionally, staff time is
often ineffectively used in authoring lengthy memoranda in order to obtain authorization for
relatively routine purchases.
The City’s new ERP system is designed to process all purchasing approval workflows through
the system. This will provide greater efficiency in seeking approvals and will ensure all
necessary documentation and approval actions will be maintained in one place and will be easily
accessible. City staff is proposing that all approvals, other than Council approvals, be
administered in the ERP system, following a workflow that is determined by purchase type and
the level of required approvals or tiers. (Attachment B, Recommended Purchasing Guidelines
Update, Exhibit 202-A). The tier structure will govern PR approvals, which will include
approval of RFPs, specifications, budget and appropriateness of the purchase and PO approvals,
which will include approval of the purchasing process and contract awards.
3. New Purchasing Approval Thresholds (New Exhibit 201-A of the Financial Manual)
The Council established the existing purchasing approval structure in 2015. (Attachment C).
Several factors have changed since that time including basic inflation of the cost of goods and
services; the development of a City Purchasing Division, which provides additional oversight of
and assistance with purchasing processes; the development of new purchasing policies which
increase transparency and accountability in city purchases; and the implementation of the City’s
new ERP financial system, which will provide systemic controls of purchasing activity (e.g.
budget controls will not allow unfunded purchase requests to process). These factors support
adjusting existing approval thresholds to allow for greater flexibility and efficiency in purchasing
while still maintaining appropriate controls.
The City uses a set of benchmark cities when comparing municipal operations: Monterey, Santa
Cruz, Palm Springs, Napa, Santa Maria, Davis, Paso Robles and Santa Barbara. Research was
conducted to compare purchasing policies and procedures. (Attachment D). City staff
determined that three of these cities; Santa Barbara, Santa Maria and Santa Cruz, are the most
similar to the City’s proposed purchasing structure. The thresholds for these cities are very close
to those City staff is recommending to the Council. (Attachment B).
The new thresholds will have some effect on competitive bidding requirements, allowing for an
informal quotation process for higher value purchases for general goods and public projects.
(Attachment E). However, these procedures are in line with those of the benchmark cities
discussed above (Attachment D).
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Solicitation Guidelines (New Section 203 of the Financial Manual)
The City’s competitive bidding requirements are set forth in Section 3.240.060 and Articles II
and III of Chapter 3.24 of the Municipal Code. City staff recommends adding Section 203 to the
City’s purchasing guidelines to provide staff with guidance in conducting solicitations for goods
or services purchases. (Attachment B).
No Bid Purchasing (New Section 204 of the Financial Manual)
Emergency and sole source purchases, as well as utilization of cooperative purchase agreements
are permitted under Section 3.24.060 of the Municipal Code. City staff recommends adding
Section 204 to the City’s purchasing guidelines to set forth the procedure staff should follow in
making these types of purchases. (Attachment B).
Updates to the City’s Business License Requirement for Transacting with the City (New
Section 215 of the Financial Manual)
1. Setting Forth the Requirement
The City requires most entities who transact with the City to obtain a Business License, pursuant
to Chapter 5.01 of the Municipal Code. However, many staff members were not aware of this
requirement and/or did not inform vendors of the requirement before entering into a contract or
transacting with the vendor. City staff recommends adding Section 215 to the Financial Manual
to to provide clear guidelines for the business license requirement and consistency for vendors
transacting with the City.
2. Waiver for Specified Purchases
Under Chapter 5.01, there are three exceptions to the business license requirement for businesses
that are owned and operated solely by minors under the age of 18; charitable, religious and
nonprofit organizations; and any businesses for which requiring a business license would violate
Federal or State laws or contractual agreements. Under Section 5.01.501, the Finance Director is
granted adjustment powers to reduce or waive the business license requirement.
Organization-wide feedback has indicated that the business license requirement can lead to
problems in making purchases in some cases and cause a great deal of delay and staff t ime when
vendors refuse to comply with the requirement. That feedback has also indicated that three
purchase types are the most problematic in complying with the business license requirement:
purchases with out-of-state vendors; online purchases; and low value purchases. Several out-of-
state companies were concerned about the state and local tax implications of obtaining a business
license when they otherwise do not do business within City limits. Some of those companies,
including sole source providers, refused to do business with the City if the requirement was not
waived. Further, the cost of obtaining a business license often exceeded any possible financial
benefit for vendors entering into low cost, one-time transactions with the City, resulting in
vendors increasing their fees to cover the cost, thus negating the benefit of obtaining the fee.
Finally, when making online purchasing with businesses outside of the City, it is nearly
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impossible for City staff to enforce the business license requirement. Attempting to do so would
require significant staff time and could greatly reduce online purchasing opportunities.
Based on this feedback, City staff recommended that the Interim Finance Director waive the
business license requirement for out-of-state and online purchases and to allow for the
Purchasing Division to allow case-by-case waivers for low value (less than $5,000) purchases
with entities that have a limited nexus with the City. The vast majority of City purchases and all
purchases with vendors within the City will continue to be subject to the City’s business license
requirement. City staff recommends adding New Section 215 to memorialize these waivers.
(Attachment B).
Updated Purchasing Guidelines Summary (Amended Section 295 or the Financial Manual)
City staff recommends amending Section 295 of the Financial Manual, which summarizes
purchasing approvals and solicitation requirements to be consistent with other policy changes
made by the proposed resolution. (Attachment B).
CONCURRENCES
Staff conducted several brainstorming and process mapping sessions throughout the past year
with GFOA, Fiscal Officers, Motion Project leads, and subject matter experts in various City
departments which focused on examining existing processes and designing the City’s future
purchasing policies and procedures after the implementation of the ERP system and with a focus
on process improvement. Staff has also worked with consultants from Sierra-Cedar, the
implementer of the ERP system, to design the recommended policies in line with the best
practices for that system.
FISCAL IMPACT
There is no direct fiscal impact to this policy change, however, t he policy changes being
recommended streamline purchasing procedures, saving staff time. The policies also allow for
greater transparency and control in purchasing activities, allowing for cost savings associated
with setting up blanket purchasing contracts when appropriate.
ALTERNATIVES
1. Do not change City Purchasing Guidelines. This is not recommended because t he updated
policies are necessary for effective use of the City’s new ERP system. Further, the City’s
goal to enhance productivity and efficiency through purchasing process improvement will
not be met.
2. Recommend different policy updates and approval thresholds. This is not recommended
because City staff has spent the past year designing these policy changes and recommended
thresholds are justified by benchmark analysis and the implementation of the new ERP
system.
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Attachments:
a - Draft Resolution
b - Recommended Purchasing Guidelines Update
c- Resolution 10621 (2015 Series)
d - Benchmark Cities Comparison
e - SLO Threshold Comparison
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R ______
RESOLUTION NO. _____ (2018 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, UPDATING THE CITY’S PURCHASING
POLICY GUIDELINES
WHEREAS, in the course of conducting City operations it is necessary to purchase a broad
range of goods and services; and
WHEREAS, in addition to the requirements of the City’s Charter, the Council has adopted
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
solicitations, award contracts or approve Job Order Contract Task Orders; and
WHEREAS, the Council adopted Resolution No. 16021 (2015 Series) which set forth
existing purchasing guidelines and authority levels; and
WHEREAS, on December 16, 2014, the City Council amended the Productivity section
of the City budget policies to include, “Maintaining City purchasing policies and procedures that
are as efficient and effective as possible;” and
WHEREAS, the City has contracted to implement a new Oracle Cloud Enterprise
Resource Planning (ERP) financial system by October of 2018, which will greatly increase
transparency and accountability in City purchasing activities; and
WHEREAS, the subject changes to the Purchasing Guidelines will streamline purchasing
processes, while maintaining appropriate checks and balances; and
WHEREAS, Council desires to update existing guidelines to reflect current conditions and
implement improved procedures, including implementing a purchase requisition process, adjusting
approvals procedures and thresholds and adding guidance on procedures for solicitations, sole
source purchasing, emergency purchasing and business license compliance related to purchases.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
that:
SECTION 1. The City’s Financial Manual purchasing guidelines are hereby amended as
set forth in Exhibit A which shall be implemented upon the official go-live date for the Oracle
ERP System in October of 2018.
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Resolution No. _____ (2018 Series) Page 2
R ______
SECTION 2. Resolution Number 10621 (2015 Series) is hereby amended and superseded
to the extent inconsistent herewith.
Upon motion of _______________________, seconded by _______________________, and on
the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2018.
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
_____________________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, this ______ day of ______________, _________.
____________________________________
Teresa Purrington
Interim City Clerk
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Financial Management Manual
Purchasing Policy Update – October 2018
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201-1
Section 201
OVERVIEW
The purpose of this chapter is to guide staff members in purchasing goods and services on behalf
of the City by establishing responsibilities and authorization levels, outlining statutory
requirements, and setting forth the policies and procedures that govern purchasing activities.
These guidelines are not intended to address every issue, exception or contingency that may arise
in the course of purchasing activities. Accordingly, the basic standard that should always prevail
is to exercise good judgment in the use and stewardship of City resources. Any questions about
purchasing activities or proper purchasing process should be referred to the City’s Purchasing
Division.
PURCHASING SYSTEM OBJECTIVES
Along with three other key policy documents— the City Charter, purchasing ordinance (Chapter
3.24 of the Municipal Code) and purchasing resolution—the policies and procedures set forth in
this chapter form the City's purchasing system. This system has been developed in order to
achieve the following objectives:
■ Secure goods and services at the lowest cost possible commensurate with quality
requirements and the City’s needs.
■ Establish authority, responsibility and accountability for purchasing activities conducted on
behalf of the City.
■ Ensure appropriate levels of competition and provide an equal opportunity for all qualified
vendors to do business with the City.
■ Ensure compliance with purchasing policies and procedures.
■ Standardize procedures where appropriate to ensure that organization-wide policies and goals
are achieved.
■ Implement simple yet effective internal control procedures that appropriately support
planning, maximize productive use of public funds and protect City assets from unauthorized
use.
■ Coordinate organization-wide purchasing activities for commonly used items.
INTRODUCTION
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Introduction
PURCHASING AUTHORITY
The City's purchasing ordinance delegates purchasing authority to the City Manager as well as
any other representatives designated by her or him:
■ Developing and prescribing such administrative policies, forms and files as may be
reasonably necessary for the internal management and operation of City purchasing policies
and procedures.
■ Purchasing or contracting for supplies, equipment, services and construction projects as
required by the operating departments in accordance with City purchasing policies and
procedures.
■ Negotiating and recommending execution of contracts.
■ Ensuring appropriate levels of competitive bidding for all purchases.
■ Ensuring compliance with purchasing policies and procedures.
PURCHASING FUNCTION
The City’s purchasing functions is centralized within the Finance Department, Purchasing
Division, that coordinates purchasing processes and monitors compliance with the policies
contained in this manual. The Purchasing Division is managed by the City’s Purchasing Analyst
under direction of Finance Director.
The Purchasing Division shall be independent from other departments and the independent
exercise of procurement authority is an important piece of the City’s overall system of internal
controls.
To provide effective purchasing services throughout the City, the Purchasing Analyst shall be
tasked with:
• Be aware of the needs of City departments and acquainted with sources and availability of
supplies, equipment, and certain services which will best fulfill these needs. This requires
an ongoing dialog with City departments in which their needs are discussed and during
which Purchasing indicates information required and lead-times necessary to complete
procurement transactions.
• Arrange interviews between suppliers and representatives of the various City divisions to
discuss specific needs.
• Coordinate bidding processes in compliance with these Policies.
• Purchase all items at pricing and terms most advantageous to satisfy the normal needs of the
City for a reasonable length of time.
• Process purchasing requests as expeditiously as possible, in a manner consistent with these
Policies.
General responsibilities for setting and implementing purchasing system policies and procedures
201-2
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are summarized in Exhibit 201-A.
PURCHASING SYSTEM OVERVIEW
Regardless of the type of item or service being acquired, virtually every purchase transaction
goes through seven distinct stages in varying degrees:
■ Assessing and determining resource needs.
■ Developing specifications.
■ Soliciting and evaluating quotations, bids or proposals.
■ Selecting the best proposal.
■ Awarding the contract or purchase order and authorizing work to proceed.
■ Receiving and inspecting goods or services to ensure they conform with specifications.
■ Paying the vendor when contract terms have been met.
The type of purchase as well as its estimated cost determine the formality with which each stage
is completed and documented. For this purpose, the City has identified five basic types of
purchases:
■ General Goods Purchases. Contracts and purchases for supplies and equipment, including
basic IT equipment.
■ General Services Purchases. Contracts and purchases for operating and maintenance
services, including basic IT maintenance services.
■ IT Systems Purchases. Contracts and purchases of large-scale IT systems.
■ Public Projects. Construction, reconstruction, erection, alteration, renovation, improvement,
demolition, painting, repainting, and repair work involving any publicly owned, leased, or
operated facility (Public Contract Code 22002c).
■ Consultant Services. Professional work provided to the City by specially trained and
experienced individuals or firms regarding economic, financial, engineering, planning,
architectural, environmental, legal or administrative matters.
Procedural categories, purchasing authority levels and features for each of these purchase types
are summarized in Exhibit 202-A.
201-3
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Purchasing System Responsibilities Exhibit 201-A
■ Approve City Charter
■ Adopt purchasing ordinance.
■ Adopt resolution setting purchasing guidelines.
■ Approve Requests for Bids (IFBs) and Requests for
Proposals (RFPs) documents for purchases specified in
Section 202.
■ Delegate authority to award contracts if they are within
budget to the City Manager.
■ Award contracts if they exceed the approved budget from
the RFB/RFP.
■ Implement purchasing policies.
■ Delegate purchasing authority.
■ Approve RFB’s/RFP’s for purchases specified in Section
202.
■ Award contracts as specified in Section 202.
■ Develop and implement purchasing guidelines.
■ Monitor and evaluate system performance.
■ Set payment schedule.
■ Approve Purchase Requests as specified in Section 202.
■ Develop and implement city-wide purchasing
procedures
■ Review and approve purchase orders and contracts for
proper authority and terms.
■ Route contracts for signature and maintain complete
database for all goods and services contracts.
■ Assist departments in development of solicitations (RFB,
RFP, RFQ, Quick Quote, etc.).
■ Create and manage master agreements and Blanket
Purchase Orders for centralized and aggregate
purchasing (e.g. office supplies; off-site copying,
scanning and document destruction).
■ Approve RFB Specifications for public projects.
■ Approve Job Order Contract (JOC) task orders for public
projects as specified in Section 202.
Voters
City Council
Purchasing Authority
(City Manager/Designee)
Finance Director/Budget
Manager
Purchasing Analyst
City Engineer
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■ Develop and implement departmental purchasing
procedures.
■ Delegate departmental purchasing authority.
■ Approve departmental Purchase Requests and award
departmental contracts as specified in Section 202.
■ Purchase, receive and pay for goods and services in
accordance with City and departmental guidelines. ■ Approve invoices or payment requests for departmental
purchases. ■ Notify potential vendors/contractors of City Business
License requirement
■ Maintain required purchasing records.
■ Manage departmental inventories.
Department Heads
Authorized Employees
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Section 202
PERMITTED PURCHASING METHODS
There are three methods for departments to use to acquire goods and services:
1) Purchase Requisition/Purchase Order
2) City Credit Card (Purchasing or P-Card)
3) Emergency Purchases
For small or recurring purchases, the City encourages authorized employees the use of the City P-
Card (See Section 275). Exceptions to this rule may be set forth by Accounting Procedures Section
of the Financial Manual allowing the City Finance Department and/or Fiscal Officers payment with
credit card for specific purchases. For all other purchases, departments must use the requisition
process defined below:
Purchase Type Dollar Threshold Requirements
Purchase Requisition $0 – Unlimited Must obtain all approvals
required in this Section
below
P-Card $0 – $5,000* Not Permitted for large
purchases, purchases for
services, Capital Items
Emergency Purchase NA ONLY if there is an
immediate and serious
need for equipment,
supplies, or services that
cannot be met through
normal purchasing
procedures and where the
lack of such equipment,
supplies or services would
seriously threaten the
functioning of City
government, the
preservation of property,
or the health or safety of
any person;
* Limit can be raised with Department Head approval.
PURCHASE REQUISITIONS AND PURCHASE ORDERS
Purchase Requisitions
All Purchase Requisitions, with the exception of purchases with a P-Card or Emergency Purchases,
must be done through a Purchase Requisition. A Purchase Requisition is an internal document
PURCHASING PROCESSPURCHASING PROCESS
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(electronic form) created in the City’s financial system that:
• Initiates an order by one or more departments;
• Identifies the equipment, materials, supplies, goods or services required
• Identifies the specific funds (account codes) that will be used to pay for the order
• If known, identifies recommended or potential vendors, or leaves vendor selection up
to Purchasing
• Is approved by appropriate City representatives to grant budget authority to make the
purchase
• Upon approval, allocates or pre-encumbers funds to support the purchase.
All purchase requisitions will be entered into the financial system by the purchase requestor. The
requestor will be responsible for entering and validating the accuracy of the following:
1) Item/services description
2) Quantity
3) Price, or if price is not known, budgeted or estimated amount*
4) Commodity Code
5) Account code
6) Vendor (if known)
7) List all other required information
8) Attached Supporting Documents (attach all applicable):
a. Quotes/Proposals
b. Quote Summaries/Comparisons
c. Agreement (Standard Agreement, On-Call Agreement, Cooperative
Agreement)
d. JOC Task Order
e. RFP/RFB package
f. Sole Source Approvals
g. Council Action Report for Council approval
Purchase Requisition Process
Departments must submit requisitions in the ERP system. Purchase Request approval levels are
determined by which tier a specific purchase falls into, which is determined by the purchase type
and value. See Exhibit 202-A for purchase tier thresholds.
202-2
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Purchase Requisition Approvals & Solicitation Requirements
Tier Solicitation
Required
Level 1
Approver
Level 2
Approver
Level 3
Approver
Level 4
Approver
Purchasing
Involvement
1 None Fiscal Officer
None None None None
2 Informal Quotes* Fiscal Officer
Department
Head
None None Assist with Quotes
when requested
3 Formal Bidding* Fiscal Officer Department
Head
None None Assist with
RFP/RFB package
when requested
4 Formal Bidding* Fiscal Officer Department
Head
Budget
Manager
City Manager Assist with
RFP/RFB package
when requested
5 Formal Bidding* Fiscal
Officer**
None None None Assist with
RFP/RFB package
when requested
* Note: Quotes and bidding processes are not required for purchases made pursuant to Sections X of this Manual.
** All other approvals will be applied in the external Council Agenda Report process.
Purchase Orders
A purchase order is a document used to encumber funds and formalize a purchase transaction with a
vendor. It sets forth the vendor’s obligations as well as the City’s responsibilities and requirements.
Purchase Orders allow the City to clearly and explicitly communicate their intentions to vendors.
Purchase orders may include:
1) Price
2) Description of the requested item(s) or services
3) Delivery terms and transportation mode
4) Terms and conditions, and all other agreements pertinent to the purchase and its
execution by the vendor
5) Attached Supporting Documents
a. Incorporated Agreements (City Agreements, Cooperative Agreements)
b. Incorporated Quotes/Proposals
c. Council Action Report (if Council approval is required for award of a
contract/purchase order)
A vendor’s acceptance of a Purchase Order constitutes a contract. Purchase Orders shall be issued by
the Purchasing Division after all required procedures for selection are met.
There are three types of Purchase Orders:
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1) Regular Purchase Order - a nonrecurring order, written to a specific vendor for a definite
quantity of identified item(s). It is the most appropriate method used for purchase of supplies
and services.
2) Blanket Purchase Order – a Purchase order which authorizes repetitive purchases of goods and
services from a specific vendor up to a maximum, not-to-exceed dollar amount. It is valid from
date of issuance until the end of a fiscal year or specific date (unless funds are depleted sooner).
3) Contract Purchase Order – a Purchase order with an underlying Agreement that is set up for
encumbrance purposes only. This is used when all work descriptions, costs and terms are
incorporated in a City Agreement and the Contract PO is not distributed to the contractor.
202-4
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Purchase Order Process
Upon approval of a PR and after any competitive bidding is completed, the Purchasing Division will
create a Purchase Order. Purchase Order approval levels are determined by which tier a specific
purchase falls into, which is determined by the purchase type and value. See Exhibit 2 02-A for
purchase tier thresholds.
Purchase Order Approvals
Tier Level 1 Approver Level 2 Approver Level 3 Approver Purchasing Involvement
1 Purchasing Assistant
None None Create PO and issue
2 Purchasing Assistant
Purchasing Analyst None Assist with obtaining quotes
when requested; Review quote
summary; Create PO and issue
3 Purchasing Assistant
City Attorney (for
contract review only)
Purchasing Analyst None Coordinate RFP/RFB process;
Coordinate contract routing
and execution; Create PO and
issue
4 Purchasing Assistant
City Attorney (for
contract review only)
City Manager Purchasing Analyst Coordinate RFP/RFB process;
Coordinate contract routing
and execution; Create PO and
issue
5 Purchasing Assistant
City Attorney (for
contract review only)
City Manager* Purchasing Analyst Coordinate RFP/RFB process;
Coordinate contract routing
and execution; Create PO and
issue
* City Manager approval is only required if the contract/PO award was delegated by Council. If a Council Action Report
approving the contract/PO is attached, City Manager approval is not required
PURCHASE CARD/CITY CREDIT CARD PURCHASES
Credit Card purchases are discussed in Section 275 of this manual.
EMERGENCY PURCHASES
Emergency Purchases are discussed in Section 220 of this manual.
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Purchasing Thresholds Exhibit 202-A
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Purchasing Thresholds Exhibit 202-A
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Section 203
For purchases exceeding the City’s thresholds listed in Exhibit 202-A which do not fall within the
exceptions listed in Section 220 of this Manual, City staff must engage in competitive bidding in
some form, as required by the Municipal Code. Departments should work with the Purchasing
Division for competitive bidding processes.
TYPES OF SOLICITATIONS
Requests for Bids (RFB)
An RFB is a request to vendors to submit an offer or quote for specific, defined goods or products.
An RFB should be used when seeking a fixed price for goods with known specifications (e.g. Dell
XPS 13 laptops). RFBs are used for Construction of Public Project and when setting up a Job Order
Contract (discussed in Section 250 of this Manual). RFBs must be posted on the City’s designated
solicitation site.
Requests for Proposals (RFP)
An RFP is a request to vendors to submit a proposal for goods or services for which the exact
specifications or methodology of providing the desired goods or services is not defined. An RFP is
generally used for more complex goods or services purchases. RFPs allow for consideration of factors
other than price, including the qualifications of the vendor and the vendor’s ability to perform. RFPs
must be posted on the City’s designated solicitation site.
Requests for Qualifications (RFQ)
An RFQ is a request for a statement of qualifications for a certain class of vendors or consultants.
RFQs are used to develop On-call or Master Agreements. RFQs must be posted on the City’s
designated solicitation site.
Informal Quotes/Quick Quotes
When formal bidding is not required by the City’s purchasing policy (see Section 202 of this Manual),
staff may seek informal quotes either by posting a Quick Quote request on the City’s online solicitation
program or by seeking quotes by verbal or written request. An informal or quick quote is a simple
request for pricing on simple, low-cost goods or services. If quotes are sought by verbal or written
request, staff must create a quote summary to record the quotations received.
BIDDING PROCESS
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BIDDING CRITERIA
RFB RFPs RFQ Quick Quotes
Formal Solicitation Yes Yes Yes No
Goal Lowest Price Lowest Responsible
Bidder
Most Qualified Bidder Lowest Price
Public Opening
Requirements
Opened publicly and
read aloud
Opened publicly and
pricing read aloud
Not opened publicly -
List of vendors who
submit Qualifications
made publicly
available
Not opened publicly
Response Evaluated By Department with
Purchasing assistance
Department project
team
Formal Evaluation
Committee with
numerous
participants
Department with
Purchasing
assistance
Specific Evaluation
Process
Determine whether
Bid is responsive,
then select lowest
responsive Bid. No
scoring of
specification
response is involved.
Responses reviewed
to determine
responsibility of
proposals.
Responsible
proposals are
reviewed for factors
listed in Section
3.24.210 of the
Municipal Code
Statement of
qualifications
evaluated and a score
assigned. Some
specification
responses can be
pass/fail only with no
associated score.
Determine whether
Quote is responsive,
then select lowest
responsive Quote.
No scoring of
specification
response is involved.
Cost Evaluation Process Costs for responsive
bids are compared to
each other to identify
lowest cost
Cost for responsible
bids are compared to
each other to identify
lowest cost
If applicable, costs of
labor or services are
scored
Costs for responsive
quotes are
compared to each
other to identify
lowest cost
Negotiation Allowed
after Selection
No, unless all bidders
are asked for a Best
and Final Offer
(BAFO)
Yes Yes No, unless all
bidders are asked
for a Best and Final
Offer (BAFO)
Award Basis Lowest responsible
bidder wins
Lowest responsible
proposal wins
Evaluation Committee
Recommendation
Lowest responsive
quote wins
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BIDDING PROCESSES
RFB Process
The following process shall be employed when releasing an RFB:
RFB Package
The City’s template “RFB Package” must be used to create the RFB document provided to prospective
vendors (See Section 250 of this Manual). When posting the RFB, the following should also be
included:
1) A precise description of the desired goods;
2) The time and place of public opening of sealed Bids;
3) The location and deadline for submission of Bids;
4) The deadline for submission of questions (if applicable).
RFB Submission and Opening
All RFB submissions (bids) must be sealed (whether in a sealed, unopened envelope for paper bids or
with electronic encryption for electronic bids) and must be opened publicly at a designated location,
date and time.
Bids or proposals which are received after the date and time specified or in a different format than that
requested in the solicitation may not be considered.
RFB Evaluation/Bid Tabulation
Departments, in cooperation with Purchasing, must determine if the submitted bids are responsive
(i.e.: did the bid provide quotes for the specified goods, as requested). Then, the lowest responsive
bid must be selected for award.
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RFB Award
Bidders should be notified when a bid has been selected for award and that award has been approved
(see procedure for approval of contracts/Purchase Orders in Section 202 of this Manual). If the City
is unable to agree to contract terms with the selected vendor after a good faith effort, the award may
be given to the next lowest, responsive bid.
Non-Construction RFP Process
The following process shall be employed when releasing an RFP:
Non-Construction RFP Package
The City’s template “Regular RFP Package” must be used to create the RFP document provided to
prospective vendors (See Section X of this Manual). When posting the RFP, the following should
also be included:
1) A general description of the desired goods or services to be purchased;
2) The desired qualifications of proposers;
3) The information or documentation required for submission of proposals;
4) The date, time and location of public opening of sealed Proposals;
5) The location and deadline for submission of Proposals;
6) The deadline for submission of questions (if applicable);
7) The date, time and location of the pre-bid conference (if applicable).
Non-Construction RFP Submission and Opening
All RFP submissions (proposals) must be sealed (whether in a sealed, unopened envelope for paper
bids or with electronic encryption for electronic bids) and must be opened publicly at a designated
location, date and time.
Proposals which are received after the date and time specified or in a different format than that
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requested in the solicitation may not be considered.
Non-Construction RFP Evaluation/Bid Tabulation
The department in cooperation with Purchasing will first determine whether proposals are responsive
to the RFP. Then, a designated evaluation team (subject matter experts, department stakeholders) will
review responsive proposals using the criteria listed in Section 3.24.210 of the Municipal Code. The
lowest responsible proposal will then be recommended for award.
For professional services related to project management, construction management, design,
engineering, surveying, mapping, landscape architecture, or architectural related services are to be
evaluated based on demonstrated competence and qualifications for the type of professional services
desired. As such, price shall not be used as a criterion in the evaluation and ranking/selection of the
most highly qualified firm.
Non-Construction RFP Award
Proposers should be notified when a proposal has been selected for award and that award has been
approved (see procedure for approval of contracts/Purchase Orders in Section 202 of this Manual). If
the City is unable to agree to contract terms with the selected vendor after a good faith effort, the award
may be given to the next highest scored, responsive bid.
Construction/Public Project RFB
The following process should be employed when releasing an RFP related to construction or public
projects:
Public Project RFB Package
The City’s template “Public Project RFB Package” must be used to create the RFB document provided
to prospective bidders (See Section X of this Manual). When posting the RFB, the following should
also be included:
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1) A general description of the desired work, goods, or services to be purchased;
2) The desired qualifications of proposers, including licensing requirements;
3) The information or documentation required for submission of proposals, including bid bonds
requirements;
4) Information regarding applicable prevailing wage laws;
5) The date, time and location of public opening of sealed Proposals;
6) The location and deadline for submission of Proposals;
7) The deadline for submission of questions (if applicable);
8) The date, time and location of the pre-bid conference (if applicable).
Public Project RFB Submission and Opening
All RFB submissions (bids) must be sealed (whether in a sealed, unopened envelope for paper bids or
with electronic encryption for electronic bids) and must be opened publicly at a designated location,
date and time.
Bidders which are received after the date and time specified or in a different format than that requested
in the solicitation may not be considered.
Public Project RFB Evaluation/Bid Tabulation
The department will first determine whether proposals are responsive to the RFB. All responsive bids
will be tabulate and bid pricing compared. The lowest cost responsive bid will then be recommended
for award.
Public Project RFB Award
Bidders should be notified when a bid is recommended for award and that award has been approved
(see procedure for approval of contracts/Purchase Orders in Section 202 of this Manual).
RFQ Process
The following process shall be employed when releasing an RFQ for On-Call or Master Agreements:
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RFQ Package
The City’s template “RFQ Package” must be used to create the RFQ document provided to prospective
vendors (See Section 250 of this Manual). When posting the RFQ, the following should also be
included:
1) A general description of the type of services to be included in the On-Call Contract or Master
Agreement;
2) The desired qualifications of proposers;
3) The information or documentation required for submission of qualifications;
4) The date, time and location of public opening of sealed Qualifications;
5) The location and deadline for submission of Qualifications;
6) The deadline for submission of questions (if applicable).
RFQ Submission and Opening
RFQ submissions (qualifications) do not need to be before opening. City Staff shall make the list of
vendors who submit Qualifications in response to an RFQ available to the public upon request.
Qualifications which are received after the date and time specified or in a different format than that
requested in the solicitation may not be considered.
RFQ Evaluation
The department will score the Qualifications submitted in response to the RFQ. The vendor(s) deemed
most qualified will then be recommended for award.
RFP Award
Vendors who submit Qualifications should be notified when an award has been approved (see
procedure for approval of contracts/Purchase Orders in Section 202 of this Manual). Resulting On -
Call Contracts and Master Agreements must be re-bid every 5 years.
Quick Quote (Informal Quote) Process
Tier 2 purchases may be made utilizing an informal quotation process. Staff should seek at least three
quotes either in writing, by phone or utilizing the City’s electronic solicitation system. Staff must then
select the lowest responsive quote.
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Section 204
LOW COST PURCHASING
Tier 1 purchases do not require a competitive bidding process (see Section X for amount thresholds
for Tier 1 purchases). However, City staff should seek cost comparisons whenever practical.
SOLE SOURCE PURCHASING
General Rules
Generally, it is the policy of the City to solicit quotations or bids for purchases of commodities or
services for specified dollar amounts and to select vendors on a competitive basis. However, pursuant
to San Luis Obispo Municipal Code Chapter 3.24.060 (C), certain acquisitions in which the products
or services may only be obtained from a single source may be purchased without engaging in bidding
procedures.
A “sole source” purchase may be entered into without a competitive process because only one known
source for the desired goods or services exists, only a single provider can fulfill the requiremen ts to
meet the City’s needs, or the purchase constitutes an upgrade to an existing system adopted by the
City. In such circumstances, competition is not feasible and, therefore, the competitive process is
waived.
Some examples of legitimate sole source purchases include the following:
Purchases in which only one known source exists for the goods or services as determined by
documented research
Purchases in which there is no reasonable alternative source that meets the City’s needs
Purchases in which only one source meets the City’s business needs (e.g., compatibility with
existing systems, unique features that serve the desired goals of the City, etc.).
Purchases of proprietary items which only the manufacturer, owner, or designated re-seller is
permitted sell (this includes purchases in which purchasing from a non-designated seller
would result in nullification of manufacturer warranties)
Upgrades to existing systems where purchasing a different solution or product would result in
significant additional costs (e.g., data conversion, re-training of staff, new system
implementation costs)
Purchases of services from a contractor with specific and unique knowledge of existing City
systems, procedures or historical data that is critical to the project or city goals where use of
another contractor would result in significant costs or project delays due to lack of such
knowledge.
Some examples of non-legitimate sole source purchases include the following:
Purchases of proprietary goods or services that may be sold by more than one source (i.e.,
multiple resellers may sell one proprietary piece of software)
Brand name preferences
o Exception: If a specific line of products was previously chosen through a proper
process and has been adopted citywide (e.g.: Dell computer products)
Preferred vendors (i.e., vendors with whom the purchaser has a prior relationship)
NO-BID PURCHASING
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204-2
Procedure
Sole Source purchases must be justified in sufficient detail to explain the basis for suspending the
usual competitive procurement process and approved by the approving authority before such a
purchase is made. The City’s Sole Source Justification form (located in the Purchasing SharePoint
page) must be submitted to and approved by the Purchasing Analyst prior to any sole source purchase.
Approved Sole Source Justifications should be attached to Purchase Orders when submitted for a sole
source purchase.
Once approved, a sole source is effective for one-year (so, multiple purchases may be made under
one sole source approval if a department makes multiple purchases of the same products or services
throughout the year). The Purchasing Analyst shall maintain copies of approved sole sources.
EMERGENCY PURCHASING
General Rules
Generally, it is the policy of the City to solicit quotations or bids for purchases of commodities or
services for specified dollar amounts and to select vendors on a competitive basis. However, pursuant
to San Luis Obispo Municipal Code Chapter 3.24.060 (B), purchases that address an immediate and
serious need for equipment, supplies or services may be purchased without engaging in bidding
procedures, if:
1) The City’s need for the equipment, goods or services cannot be met through the time
constraints of the normal purchasing procedures; and
2) The lack of the equipment, goods or services would seriously threaten the functioning of City
government, the preservation of property, or the health or safety of any person.
City staff must not use the emergency purchase process to circumvent general purchasing policy or
vendor licensing requirements. City staff should seek quotes and determine reasonableness of pricing
when making an emergency purchase whenever possible. Contracts for frequent as -needed
emergency services should be established with competitive bidding procedures.
Procedure
Emergency purchases must be justified in sufficient detail to explain the basis for suspending the
usual competitive procurement process. Whenever possible, City staff in need of an emergency
purchase should receive prior approval from the Purchasin g Division by submitting the City’s
Emergency Purchase Justification Form (located in the Purchasing SharePoint page).
If prior approval is not feasible, City staff should submit the Emergency Purchase Justification Form
to the Purchasing Analyst as soon as possible and at least within 24 hours after the purchase has been
made.
Unless a City credit card is used for the purchase, City staff must enter a Purchasing Requisition for
the emergency purchase as soon as possible and should attach the Emergency Purchase Justification
Form to the requisition.
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204-3
COOPERATIVE AGREEMENT PURCHASING
City staff may use established cooperative agreements for purchases without a competitive bidding
process, if those cooperative agreements were competitively bid. City staff is responsible for
researching cooperative agreements to insure the bidding process complies with City competitive
bidding rules.
City staff should research the pricing for the goods or services being sought and compare the pricing
set forth in the cooperative agreement is reasonable. If the pricing set forth in a cooperative agreement
is not reasonable, City staff should initiate a competitive bidding process rather than leveraging the
cooperative agreement.
Local Dealers
If a local dealer within City limits can provide the same brand, model and configuration of any item
in a cooperative purchase agreement at or below the cooperative agreement vendor’s cost with the
same terms and conditions, City staff may use the local dealer without initiating a separate
competitive bidding process.
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215-1
561
Section 215
BUSINESS LICENSES
The City requires most entities doing business within or transacting with the City to obtain a business
license, pursuant to Chapter 5.01 of the Municipal Code. Therefore, for most purchases, City staff
must notify the vendor of the requirement and/or ensure that the vendor has a business license before
making the purchase. No purchases may be made from any vendor that does not have a valid business
license, unless specifically exempted from that requirement, as specified below.
Businesses that have a place of business within City limits must have a business license. City staff
may not transact with such businesses who have failed to maintain a business license.
Whenever possible, City staff should direct purchases to vendors who already have a valid business
license. A current listing of businesses who have valid business licenses is located in the Purchasing
SharePoint page.
EXCEPTIONS
The following types of vendors are exempt from the business license requirement:
• Business that are owned and operated solely by minors under the age of 18;
• Charitable, religious and nonprofit organizations;
• Any business for which requiring a business license would violated Federal or State laws or
contractual agreements;
• Out-of-state businesses (exempted by the Finance Director, pursuant to the adjustment powers
set forth in Section 5.01.501);
• Businesses which are not located in the City and for which the only transaction or business with
the City is an online purchase initiated by the City (exempted by the Finance Director, pursuant
to the adjustment powers set forth in Section 5.01.501).
POSSIBLE EXEMPTIONS (CASE-BY-CASE DETERMINATION)
Businesses who do not have a place of business within the City and do limited, low -cost (less than
$5,000) and/or one-time transactions with the City may not be subject to the business license
requirement. This is determined on a case-by-case basis by the Purchasing Analyst, as the Finance
Director’s designee, after a determination of whether the business has a sufficient nexus with the City.
City staff should contact Purchasing prior to making a purchase if there is any uncertainty as to
whether a business license is required.
BUSINESS LICENSE REQUIREMENT
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Section 295
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.
Purchases and contracts for supplies, equipment, operating or maintenance services will be made
pursuant to the following guidelines (see Tier Structure in Section 202 of this Manual and Approval
Dollar Thresholds in Exhibit 202-A of this Manual):
A. Over-the-Counter. Purchase Requisition with cumulative costs which fall into the Tier 1
approval structure may be authorized by the Fiscal Officer. Purchase Orders for these
purchases may be authorized by the Purchasing Assistant. Although no specific solicitation
requirements are established for this level of purchase, competitive bidding should be used
whenever practical and City staff should ensure that pricing is reasonable.
B. Open Market. Purchase Requisitions with cumulative costs which fall into the Tier 2
approval structure must be approved by the Fiscal Officer and Department Head. Purchase
Orders for these purchases must be approved by the Purchasing Assistant and Purchasing
Analyst.
C. Formal Bids or Proposals. Purchases which fall into the Tier 3, Tier 4 or Tier 5 approval
structure 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. Purchase Requisitions with cumulative costs which fall within the Tier 3 approval structure
must be approved by the Fiscal Officer and Department Head. Purchase Orders for these
purchases must be approved by the Purchasing Assistant and Purchasing Analyst.
2. Purchase Requisitions with cumulative costs which fall within the Tier 4 approval structure
must be approved by the Fiscal Officer, the Department Head, the Budget Manager and the
City Manager. Purchase Orders for these purchases must be approved by the Purchasing
Assistant, the Purchasing Analyst and the City Manager. Th e City Attorney will also
review specified Purchase Orders by request of the Purchasing Analyst when contract
review is required.
3. Purchases with cumulative costs which fall within the Tier 5 approval structure must have
prior approval of the City Council attached (the Council Agenda Report process will be
used to obtain Council approval). Purchase Requisitions for these purchases must be
approved by the Fiscal Officer. Purchase Orders for these purchases must be approved by
the Purchasing Assistant and the Purchasing Analyst. Purchase Orders for which the
award was delegated to the City Manager by Council will additionally be approved by the
City Manager. The City Attorney will also review specified Purchase Orders by request
of the Purchasing Analyst when contract review is required.
PURCHASING GUIDELINES
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Item 14
PUBLIC PROJECTS
Contracts for public projects are governed by the Public Contract Code including the Uniform
Public Construction Cost Accounting Act (Section 22000), which allows alternative bidding
procedures and job order contracting (Council Ord. 1435, 2003).
Job Order Contracts. Under the Job Order Contact provisions of Chapter 3.24.145 of the
municipal code for maintenance-related construction projects, individual Task Orders may be
approved as follows:
1. Purchase Requisitions for Job Order Contract Task Orders under $45,000 must be approved
by the City Engineer. Purchase Orders for these Task Orders must be approved by the
Purchasing Assistant and Purchasing Analyst.
2. Purchase Requisitions for Job Order Contract Task Orders between $45,000 and $174,999
must be approved by the City Engineer and the Budget Manager. Purchase Orders for these
Task Orders must be approved by the Purchasing Assistant.
3. Purchase Requisitions for Job Order Contract Task Orders with a cost of $175,000 or more
must be approved by the City Engineer, the Budget Manager and the City Manager if the
purchase is within the annual limit. Purchase Orders for these Task Orders must be
approved by the Purchasing Assistant and Purchasing Analyst.
4. If the Task Order cost is $175,00 or more and in excess of the annual limit must have prior
approval of the City Council attached (the Council Agenda Report process will be used to
obtain Council approval). Purchase Requisitions for these purchases must be approved by the
City Engineer. Purchase Orders for these purchases must be approved by the Purchasing
Assistant and the Purchasing Analyst.
Adopted by the Council on September 4, 2007, Resolution No. 9926, and amended by Council on May 1, 2018, Resolution No. X.
295-2 Packet Page 192
Item 14
RESOLUTION NO. 10621 (2015 Series)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, 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 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 (requests for
proposals), award contracts or approve Job Order Contract Task Orders; and
WHEREAS, the Council adopted Resolution No. 9444 (2003 Series) and Ordinance No.
1435 (2003 Series) electing to become subject to the Public Contract Code and Uniform Public
Construction Cost Accounting Act, which allows alternative bidding procedures and job order
contracting; and
WHEREAS, adopted budget policies in the Productivity section call for analyzing
system and procedures to identify and remove unnecessary review requirements; and
WHEREAS, on December 16, 2014 Council amended the Productivity section of the
City budget policies to include "Maintaining City purchasing policies and procedures that are as
efficient and effective as possible "; and
WHEREAS, the subject changes to the Purchasing Guidelines will streamline the
purchasing process for public projects and consultant services — while maintaining appropriate
checks and balances — thereby making delivery of services to the community more expedient and
efficient; and
WHEREAS, the City analyzed several benchmark cities' purchasing procedures, and the
subject changes are consistent and keep pace with the current market.
NOW, THEREFORE, BE IT RESOLVED by the San Luis Obispo City Council that:
1. Resolution No. 9444 (2003) is hereby rescinded and the updated purchasing guidelines
set forth in Exhibit A are hereby adopted.
2. The updated Construction Change Order policy set forth in Exhibit B is hereby adopted.
R 10621
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Item 14
Resolution No. 10621 (2015 Series)
Page 2
Upon motion of Vice Mayor Ashbaugh, seconded by Council Member Christianson, and on the
following roll call vote:
AYES: Council Members Carpenter, Christianson and Rivoire,
Vice Mayor Ashbaugh and Mayor Marx
NOES: None
ABSENT: None
The foregoing resolution was adopted this 2" d day of June 2015.
a o Jan Marx
ATTEST:
APPROVED AS TO FORM:
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, this 16-1 " - day of
thony J.
City Clerk
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Item 14
Resolution No. 10621 (2015 Series)
Page 3
Section 295
Exhibit A
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 or maintenance services will be made
pursuant to the following guidelines:
A. Over - the - Counter. Purchases with cumulative costs of less than $7,500 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 with cumulative costs between $7,500 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. A bid summary shall be submitted to the Finance Department.
C. Formal Bids or Proposals. Purchases with cumulative costs 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 cumulative cost estimate of $100,000 or
less, the Purchasing Authority (City Manager /Designee) is authorized to invite bids or
request proposals, approve specifications and award the contract.
2. For purchases with cumulative costs 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 Purchasing Authority 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.
PUBLIC PROJECTS
Contracts for public projects are governed by the Public Contract Code including the
Uniform Public Construction Cost Accounting Act (Section 22000), which allows alternative
bidding procedures and job order contracting (Council Ord. 1435, 2003).
A. Over - the - Counter. Public projects with cumulative costs of less than $7,500 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.
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Item 14
Resolution No. 10621 (2015 Series)
Page 4 Exhibit A
Purchasing Guidelines
B. Open Market. Public projects with cumulative costs of $45,000 or less 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 11) of the municipal code. A
bid summary shall be submitted to the Finance Department.
C. Informal Bidding. .Public projects with cumulative costs of $100,000 or less may be let to
contract by the Purchasing Authority pursuant to informal bidding procedures as set forth in
the Public Contract Code and Chapter 3.24.150.132 of the municipal code.
D. Formal Bids or Proposals. Public projects with cumulative costs of more than $100,000
shall be let to contract by the Council pursuant to formal bidding procedure as set forth in the
Public Contract Code and Chapter 3.24.150.B3 of the municipal code.
Job Order Contracts. Under the Job Order Contact provisions of Chapter 3.24.145 of the
municipal code for maintenance- related construction projects, individual Task Orders with
cumulative costs up to $45,000 may be approved by the City Engineer. Individual Task Orders
with cumulative costs in excess of $45,000 require approval by the Purchasing Authority.
CONSULTANT SERVICES
Contracts for consultant services will be awarded pursuant to the following guidelines.
A. Contracts for consultant services estimated to cost less than $7,500 cumulatively 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 $7,500 and $50,000 cumulatively
may be awarded by the Purchasing Authority. Proposals from at least three consultants shall
be solicited and a summary submitted.
C. Contracts for consultant services estimated to cost more than $50,000 cumulatively 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.
The Council should generally approve request for proposal (RFP) documents before they
are issued. The Council may authorize the Purchasing Authority 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
Purchasing Authority; 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:
295 -2 Packet Page 196
Item 14
Resolution No. 10621 (2015 Series)
Page 5
Purchasing Guidelines
Exhibit A
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 detennined
based on direct negotiations— contract award will be made by the Council.
Adopted by the Council on September 4, 2007, Resolution No. 9926, and untended by Council on June 2, 2015, Resolution
No. 10621.
295 -3 Packet Page 197
Item 14
Resolution No. 10621 (2015 Series)
Page 6 Exhibit B
Section 225
CONSTRUCTION CONTRACT ORDERS
OVERVIEW
When the City awards a construction contract, the need for contract change orders (CCO's) is not
unusual. CCO's are required whenever the scope of work changes from that in the original
contract or an unknown condition of the site requires a change in the scope of work. Usually a
contingency amount is established when the project budget is finalized upon contract award to
accommodate limited CCO's. The purpose of this policy is to establish limits of authority for
approving construction project CCO's.
GOALS
1. Ensure appropriate authority and accountability in the approval of change orders.
2. Minimize the time needed to approve a CCO in order to avoid project delays.
3. Establish a system under which the organizational level at which approval is given is
commensurate with the size of CCO and size of project.
4. Eliminate the potential for approval of a CCO when contingency funds are insufficient.
POLICIES
Conditions for Approval of CCO's by Staff
1. Sufficient contingency funds are budgeted and available in order for the Public Works
Director or City Manager (approved designees) to approve a CCO.
2. The nature of work in the CCO is not significantly different from that in the contract.
3. Authorization limits are based on an individual CCO amount, not the aggregate amount of all
CCO's.
4. Authorization limits apply to CCO's for increases in contract amounts only.
5. When the aggregate amount of CCO's reaches 75% of the contingency, the awarding
authority shall be informed of the status of the project and the sufficiency of funding to
complete the project.
6. Work will not be broken up into multiple CCO's in order to circumvent this policy.
7. All CCO's must be in writing and approved by the appropriate contract parties consistent
with the authorized limits established in this policy.
225 -1 Packet Page 198
Item 14
Resolution No. 10621 (2015 Series)
Page 7 Exhibit B
Construction Change Orders
8. A copy of each approved CCO will be transmitted promptly to the Finance Division.
9. The Purchasing Authority may grant approval of CCO's in excess of $100,000 under the
following circumstances (all three factors must be present):
a. Immediate approval of the CCO is necessary to avoid delay.
b. The CCO is an integral and mandatory component of the project.
c. The costs associated with delay of the project would be excessive.
The Project Manager is responsible for carrying out this policy.
10. The Purchasing Authority is also authorized to approve CCO's in excess of $100,000 related
to Job Order Contract Task Orders.
Authorization Limits
1. Public Works Director/ Designee Not to exceed $45,000
2. Purchasing Authority (City Manager /Designee) Not to exceed $100,000
3. City Council* Greater than contract or $100,000
See circumstances above where the City Manager may approve CCO's in excess gf'$100,000,
Originally Approved by the Council on August 3, 1993; Revised by the Council on April 15, 2003 and June 2,
2015
225 -2 Packet Page 199
Item 14
Purchase TypeLimitApproverSolicitation RequirementSanta BarbaraMaterials and General ServicesUp to $7,500 Department StaffInformal QuotesMaterials and General Services$7,500‐75,000 Department StaffInformal QuotesMaterials and General Services$75,000+ Department StaffFormal RFPProfessional ServicesUp to $10,000 Department HeadNot Required Professional Services$10,000‐35,000 City ManagerNot Required Professional Services$35,000+ CouncilNot Required Public Works All Council (by Charter)Sole Source/Emergency Contracts$35,000+ CouncilPacket Page 200Item 14
Purchase TypeLimitApproverSolicitation RequirementSanta MariaAll Up to $1,000 None NoneGeneral (Supplies, Equipment, non‐Public Works Construction) $1,000‐10,000 Department DesignatesNoneGeneral (Supplies, Equipment, non‐Public Works Construction) $10,001‐74,999 Department HeadInformal QuotesGeneral (Supplies, Equipment, non‐Public Works Construction) $75,000+RFP ‐ City Manager ‐ delegated to Department HeadsAward ‐ Department Formal RFPMaintenance Repair & Services$1,000‐10,000 Department DesignatesNoneMaintenance Repair & Services$10,001‐74,999 Department HeadInformal QuotesMaintenance Repair & Services$75,000+RFP ‐ City Manager ‐ delegated to Department HeadsAward ‐ CouncilFormal RFPProfessional Services$1,000‐$10,000 Department DesignatesNoneProfessional Services$10,001‐74,999 Department DesignatesInformal QuotesProfessional Services$75,000+If not in specified account in the budget:RFP ‐ City Manager ‐ delegated to Department HeadsAward ‐ CouncilFormal RFPPublic Projects Up to $30,000Department staff within appropriations approved by CouncilNonePublic Projects $30,001‐175,000City Engineer, Director of Public Works or City ManagerInformal QuotesPublic Projects $175,000+ Council Formal RFPPacket Page 201Item 14
Purchase TypeLimitApproverSolicitation RequirementSanta CruzGeneral Goods/ServicesUp to $6,500 DepartmentInformal QuotesGeneral Goods/Services$6,501‐35,000 PurchasingInformal QuotesGeneral Goods/Services$35,000+ BoardFormal RFPPublic Projects Up to $4,000 PurchasingInformal QuotesPublic Projects $4,001‐9,999Unclear ‐ Purchasing?Informal QuotesPublic Projects $10,000+ Board approves SpecsIFBProfessional ServicesUp to $35,000 DepartmentInformal QuotesProfessional Services$35,000+BoardBoard also approves RFP if over $70,000+Informal Proposals if under $70,000Formal RFP if over $70,000Sole Source ContractsMore than $35,000 BoardFixed Asset Equipment$5,000 or moreBoard at budget process; Chief Administrative OfficeMontereyAllUnder $4,000 (increase by $500 every 5 years starting 2020) DepartmentNoneGeneral Goods/Services $4,000‐39,999City Manager or designeeInformal QuotesGeneral Goods/Services$40,000+ (increase low limit by $500 and upper limit by $5,000 every five years) CouncilFormal RFPVehicles$5,500‐60,000 (increase low limit by $500 and upper limit by $5,000 every five years) ‐ all other limits follow General Goods City Manager or designeeInformal QuotesPublic Projects $4,000‐100,000 (upper limit increased by $5,000 every 5 years) City Manager or designeeInformal QuotesPublic Projects $100,000+ (upper limit increased by $5,000 every 5 years)er limit increased by $5,000 every 5 years)City Manager or designee up to 10% over budgeted amount; Council if moreFormal BiddingDesign‐Build ProjectsUp to $1 million Council approves RFP/SpecsRFPJob Order ContractsUp to $1 millionCouncil may approve up to 4 Design‐build contractsRFPProfessional Services$4,000‐40,000 (increase by $500 every 5 years) City Manager or designeeInformal QuotesProfessional Services$40,000+ (increase upper limit by $5,000 every 5 years) CouncilFormal RFPPacket Page 202Item 14
Purchase TypeLimitApproverSolicitation RequirementPaso RoblesGeneral Goods/ServicesUp to $5,000 Department ManagerNone (also no PO)General Goods/Services$5,001‐20,000 City Manager or designeeInformal QuotesGeneral Goods/Services$20,000+ CouncilUp to $10,000 ‐ Informal Quotes$10,000+ ‐ Formal BidsPublic Projects Up to $5,000 Department ManagerNonePublic Projects $5,001‐20,000 City Manager of designeeNonePublic Projects $20,000+ Council$25,000‐75,000 0 Informal Bids$75,000+ ‐ Formal BidsProfessional ServicesUp to $20,000 City Manager or designeeInformal ProposalsProfessional Services$20,000+ CouncilFormal RFPPalm SpringsAll Goods/Services Up to $5,000Department Head ‐ some delegate up to $2,500 to Program ManagersInformal QuotesAll Goods/Services $5,000‐35,000 City Manager Informal QuotesAll Goods/Services $35,000+ Council Formal RFQ or RFPPacket Page 203Item 14
Purchase
Type Prior Threshold Prior Approver
Prior
Solicitation
Required
Proposed
Threshold Proposed Approver
Proposed
Solicitation
Required Comparisons
General
Goods Less than $7,500 Department None Less than $10,000
TIER 1
PR - Fiscal Officer
PO - Purchasing Assistant None
* Santa Barbara - Departments and Purchasing unlimited
approval
* Santa Maria - Department designee up to $10k;
Department Head up to $75k; No Council approval
* Santa Cruz - Department and Purchasing up to $35k,
then Board
$7,500-25,000
Quotes - Department
Award - Finance Director Informal Quotes $10,000-39,999
TIER 2
PR - Fiscal Officer; Department Head
PO - Purchasing Assistant; Purchasing Analyst Informal Quotes
$25,000-$100,000
RFP - City Manager
Award - City Manager RFP/RFB $40,000-69,999
TIER 3
PR - Fiscal Officer; Department Head
PO - Purchasing Assistant; Purchasing Analyst RFP/RFB
$100,000+
RFP - Council
Award - City Manager or Council
(depends on delegation)RFP/RFB $70,000-$199,999
TIER 4
PR - Fiscal Officer; DH; Budget Manager; City
Manager
PO - City Attorney (if applicable); City Manager;
Purchasing Analyst RFP/RFB
$200,000+
TIER 5
PR - Council; Fiscal Officer
PO - Council or City Manager; Purchasing
Analyst RFP/RFB
Approvals by Department Heads, City Attorney,
Finance/Budget Manager applied in external CAR process
Packet Page 204
Item 14
Purchase
Type Prior Threshold Prior Approver
Prior
Solicitation
Required
Proposed
Threshold Proposed Approver
Proposed
Solicitation
Required Comparisons
General
Services Less than $7,500 Department None Less than $7,500
TIER 1
PR - Fiscal Officer
PO - Purchasing Assistant None
* Santa Barbara - Departments and Purchasing unlimited
approval
* Santa Maria - Department designee up to $10k;
Department Head up to $75k; RFP - City Manager & Award
Council if Maintenance & Repair $75k+
* Santa Cruz - Department and Purchasing up to $35k,
then Board
$7,500-25,000
Quotes - Department
Award - Finance Director Informal Quotes $7,500-$24,999
TIER 2
PR - Fiscal Officer; Department Head
PO - Purchasing Assistant; Purchasing Analyst Informal Quotes
$25,000-$100,000
RFP - City Manager
Award - City Manager RFP/RFB $25,000-$49,999
TIER 3
PR - Fiscal Officer; Department Head
PO - Purchasing Assistant; Purchasing Analyst RFP/RFB
$100,000+
RFP - Council
Award - City Manager or Council
(depends on delegation)RFP/RFB $50,000-$149,000
TIER 4
PR - Fiscal Officer; DH; Budget Manager; City
Manager
PO - City Attorney (if applicable); City Manager;
Purchasing Analyst RFP/RFB
$150,000+
TIER 5
PR - Council; Fiscal Officer
PO - Council or City Manager; Purchasing
Analyst RFP/RFB
Approvals by Department Heads, City Attorney,
Finance/Budget Manager applied in external CAR process
Packet Page 205
Item 14
Purchase
Type Prior Threshold Prior Approver
Prior
Solicitation
Required
Proposed
Threshold Proposed Approver
Proposed
Solicitation
Required Comparisons
Public
Projects Less than $7,500 Department None Less than $7,500
TIER 1
PR - Fiscal Officer
PO - Purchasing Assistant None
* Santa Barbara - all by Council
* Santa Maria - Departments up to $30k; City Engineer,
Public Works Director or City Manager $30-175k; Council
$100k+
* Santa Cruz - Departments up to $10k; Board approves
Specs for $10k+
NOTE: Public Projects designation was part of the last
update - in line with Public Contracting Code.
$7,500-45,000
Quotes - Department
Award - Finance Director Informal Quotes $7,500-$74,999
TIER 3
PR - Fiscal Officer; Department Head
PO - Purchasing Assistant; Purchasing Analyst RFP/RFB
$45,000-$100,000
RFP - Department
Award - City Manager RFP/RFB $75,000-$149,999
TIER 4
PR - Fiscal Officer; DH; Budget Manager; City
Manager
PO - City Attorney (if applicable); City Manager;
Purchasing Analyst RFP/RFB
$100,000+
RFP - Council
Award - City Manager or Council
(depends on delegation)RFP/RFB $150,000+
TIER 5
PR - Council; Fiscal Officer
PO - Council or City Manager; Purchasing
Analyst RFP/RFB
Approvals by Department Heads, City Attorney,
Finance/Budget Manager applied in external CAR process
Packet Page 206
Item 14
Purchase
Type Prior Threshold Prior Approver
Prior
Solicitation
Required
Proposed
Threshold Proposed Approver
Proposed
Solicitation
Required Comparisons
Consulting
Services Less than $7,500 Department None Less than $7,500
TIER 1
PR - Fiscal Officer
PO - Purchasing Assistant None
Professional Services
* Santa Barbara - DH up to $10k; CM up to $35k; Council
$35k+
* Santa Maria - Departments up to $75k; RFP - CM; Award -
Council $75k+
* Santa Cruz - Departments up to $35k; Board award
$35k+; Board approve RFP $70k+
NOTE: Last SLO purchasing update raised consulting
services threshold for CM 100% ($25k-$50k) in line with
general increases in consulting services
$7,500-$50,000
Written Proposals - Department
Award - City Manager Informal Quotes $7,500-14,999
TIER 2
PR - Fiscal Officer; Department Head
PO - Purchasing Assistant; Purchasing Analyst Informal Quotes
$50,000+
RFP - Council
Award - City Manager or Council
(depends on delegation)RFP/RFB $15,000-39,999
TIER 3
PR - Fiscal Officer; Department Head
PO - Purchasing Assistant; Purchasing Analyst RFP/RFB
$40,000-99,999
TIER 4
PR - Fiscal Officer; DH; Budget Manager; City
Manager
PO - City Attorney (if applicable); City Manager;
Purchasing Analyst RFP/RFB
$100,000+
TIER 5
PR - Council; Fiscal Officer
PO - Council or City Manager; Purchasing
Analyst RFP/RFB
Approvals by Department Heads, City Attorney,
Finance/Budget Manager applied in external CAR process
Packet Page 207
Item 14
Purchase
Type Prior Threshold Prior Approver
Prior
Solicitation
Required
Proposed
Threshold Proposed Approver
Proposed
Solicitation
Required Comparisons
IT Systems Less than $7,500 Department None Less than $7,500
TIER 1
PR - Fiscal Officer
PO - Purchasing Assistant None
Other cities don't separate, however it is common for
State entities - makes it easier to increase thresholds for
General Goods without fear of large systems purchases
not having oversight
$7,500-25,000
Quotes - Department
Award - Finance Director Informal Quotes $7,500-24,999
TIER 2
PR - Fiscal Officer; Department Head
PO - Purchasing Assistant; Purchasing Analyst Informal Quotes
$25,000-$100,000
RFP - City Manager
Award - City Manager RFP/RFB $25,000-44,999
TIER 3
PR - Fiscal Officer; Department Head
PO - Purchasing Assistant; Purchasing Analyst RFP/RFB
$100,000+
RFP - Council
Award - City Manager or Council
(depends on delegation)RFP/RFB $50,000-99,999
TIER 4
PR - Fiscal Officer; DH; Budget Manager; City
Manager
PO - City Attorney (if applicable); City Manager;
Purchasing Analyst RFP/RFB
$100,000+
TIER 5
PR - Council; Fiscal Officer
PO - Council or City Manager; Purchasing
Analyst RFP/RFB
Approvals by Department Heads, City Attorney,
Finance/Budget Manager applied in external CAR process
Job Order
Contract
Task
Orders Less than $45,000 City Engineer NA Less than $50,000
PR - Fiscal Officer; City Engineer
PO - Purchasing Assistant NA
Not often separated from Public Projects. Threshold
nearly the same as existing. These approval levels are
similar to existing, except that approvals for TOs between
$45,000 and $100,000 rests with the Budget Manager.
* Monterey - always Council approval - up to 4 contracts
up to $1 million each
$45,000-100,000 City Manager NA $50,000-$100,000
PR - Fiscal Officer; City Engineer; Budget
Manager
PO - Purchasing Analyst NA
$100,000+ within
JOC annual limits City Manger NA
$100,000+ within
JOC annual limits
PR - Fiscal Officer; City Engineer; City Manager
PO - Purchasing Analyst NA
$100,000+ over JOC
annual limits Council NA
$100,000+ over
JOC annual limits
PR - Fiscal Officer
PO - Purchasing Analyst NA
Approvals by Department Heads, City Attorney,
Finance/Budget Manager applied in external CAR process
Packet Page 208
Item 14
5/1/2018
1
1
Purchasing Policy Updates
Developing policies in line with the City’s new Enterprise Resource
Planning (ERP) system and goals
Recommendation
Adopt a resolution to amend purchasing guidelines related to the implementation of the City’s new
Enterprise Resource Planning (ERP) financial system and to revise purchasing authority
thresholds, effective upon the go-live date of the ERP system in October of 2018.
Staff Presentation - Item #14
5/1/2018
2
Purchasing Policy Through the Motion Project
April 19, 2016 – Government Financial Officers Association (GFOA)
recommendation to implement an updated Enterprise Resource Planning system
and to create a centralized Purchasing Division in the Finance Department
presented to Council
January 26, 2017 - Purchasing Analyst onboarded and Purchasing Division
created
April – July 2017 - Representatives from all departments engage in business
process review and develop a plan for purchasing policy updates
July 2017 - Purchasing policy updates reviewed by GFOA for best practices for
ERP systems
December 11, 2017 - Oracle Cloud ERP system selected as new ERP
March 2017 - Design of Purchasing module in Oracle Cloud begins with
consultation from Sierra-Cedar consultants for best practices in Oracle ERP
Goals for ERP System
Efficiency – streamline processes
Effectiveness – create a system that provides
controls, clear approval processes, more
accurate information, enhanced reporting
capabilities
Transparency – provide greater insight and
visibility into financial activity at the City
Staff Presentation - Item #14
5/1/2018
3
New Section 202:
3 Permitted Purchasing Mechanisms
All purchases must be made in one of 3 ways:
1) Purchase Requisition
2) Credit Card
3) Emergency Purchase
New Section 202: Purchasing Requisition
Process
Purchase Requisitions (PRs) required for ALL purchases that are
not made via credit card
Allows for allocation of funds prior to making commitment to vendors
Allows for budgetary control by the ERP system (no need for
manual tracking or budget checks)
Approvals of RFPs and contract awards streamlined in ERP
workflow through Purchase Requisition
Items requiring Council approval will follow the current process
Staff Presentation - Item #14
5/1/2018
4
New Section 202: Purchasing Approvals
Different $ Thresholds for Different Purchase Types:
1)General Goods (equipment, supplies) – Low-risk and simple
2)General Services (maintenance, operating services) –
variable risk and complexity
3)IT Systems (includes software, hardware and applications)–
greater risk, often city-wide effect; requires continued
maintenance and support; need for oversight/input at higher
levels
4)Consultant Services – variable risk and complexity,
specialized services/needs, greater need for oversight/input
at higher levels
5)Public Projects – higher risk, generally higher costs, often
wide-ranging effects, must follow UPCC
8
Staff Presentation - Item #14
5/1/2018
5
9
10
Staff Presentation - Item #14
5/1/2018
6
11
12
Staff Presentation - Item #14
5/1/2018
7
Additional Updates:
New Section 203: Provide guidance in conducting solicitations in
compliance with the City’s competitive bidding requirements set forth
in Articles II and III of Chapter 3.24 of the Municipal Code.
New Section 204: provide guidance in making Emergency and Sole
Source purchases, as well as purchases utilizing a cooperative
purchasing agreement, in compliance with Section 3.24.060 of the
Municipal Code.
New Section 215: provide guidance in applying the City’s business
license requirement for purchases/transactions with the City in
compliance with Section 5.01 of the Municipal Code.
Formally set up Finance Director waivers pursuant to Section 5.01.501
for 1) out-of-state entities with no presence in the City; 2) online
purchases with entity outside of the City; and 3) one-time, low cost
purchases
Recommendation
Adopt a resolution to amend purchasing guidelines related to the implementation of the City’s new
Enterprise Resource Planning (ERP) financial system and to revise purchasing authority
thresholds, effective upon the go-live date of the ERP system in October of 2018.
Staff Presentation - Item #14
5/1/2018
8
Current Purchasing Process
No Requisitions or pre-encumbrance/allocation
of funds for purchase
Purchases under $7,500 completed without
Purchase Order/Encumbrance (not marked in
financial system until invoice is entered)
For purchases over $7,500, many forms of
approvals are required to serve as purchasing
controls
Staff Presentation - Item #14