DECEMBER 6, 2005 PROPOSED REVISIONS TO THE PURCHASING ORDINANCE DECEMBER 6, 2005 PROPOSED REVISIONS TO THE PURCHASING ORDINANCE DECEMBER 6, 2005 PROPOSED REVISIONS TO THE PURCHASING ORDINANCE



TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL

FROM: DIRECTOR OF FINANCE AND INFORMATION TECHNOLOGY

DATE: DECEMBER 6, 2005

SUBJECT: PROPOSED REVISIONS TO THE PURCHASING ORDINANCE

Staff Coordinator: Kathryn Downs, Deputy Director of Finance and Information Technology

RECOMMENDATION

Introduce Ordinance No.____ AN ORDINANCE OF THE CITY OF RANCHO PALOS VERDES AMENDING CHAPTER 2.44 GOVERNING THE PURCHASE OF SERVICES, SUPPLIES AND EQUIPMENT AND AMENDING THE RANCHO PALOS VERDES MUNICIPAL CODE.

EXECUTIVE SUMMARY

Staff proposes several changes to the City’s purchasing system of procedures and controls, as defined in section 2.44 of the City’s Municipal Code. The City’s Purchasing Ordinance applies to the purchase of services, supplies and equipment; and does not apply to contracts for "public projects" (e.g. storm drain and street overlay projects) as defined in the California Public Contract Code. If the City Council approves the proposed revision, Staff recommends introducing the attached ordinance during this December 6, 2005 meeting and adopting the attached ordinance during the December 20, 2005 meeting. The proposed modifications, as summarized in Table 1 below, may reduce the potential liability when the City’s contractors are working on private property and save staff time.

Table 1

Subsection

Current Policy

Proposed

Formal Bids Required

2.44.030

$10,000 +

> $25,000

Informal Bids Required

2.44.040

> $2,000

> $5,000

Contract Required for Services, Supplies & Equipment

2.44.025 & 2.44.030

$10,000 +

> $25,000

Insurance Certificate and/or Contract

2.44.025

N/A

< $25,000 at the discretion of the City Manager or the Department Director

Contract Required for Work on Private Property

2.44.025

N/A

All Amounts

Blanket Purchase Order

2.44.070B

Individual purchases $200 or less. Cumulative Purchase Order $1,000 or less per fiscal year.

Individual purchases $3,000 or less. Cumulative Purchase Order $15,000 or less per fiscal year.

Exceptions To Purchasing Ordinance

2.44.140

A) City Manager finds that services or supplies are unique and available from only one source. B) City Manager finds that exigent circumstances require immediate purchase. C) City Council finds that bidding is not likely to result in lowest price.

D) City Council or City Manager finds that due to unique circumstances the purchase of services or supplies from a source is in the best interest of the City.

Exceptions to Bid Procedures

2.44.060

Attorneys, Architects, Engineers, Auditors, Financial Advisors, Election Service, Public Relations, Negotiations for or Acquisition of Land, Insurance, Bonds

Add Technology Services, Geologists, Surveyors, and Other Similarly Licensed Professionals

Credit Card Use

2.44.070A3

$500 maximum purchase

In accordance with written Administrative Instruction

Routing and Approval of Vendor Invoices

2.44.100

Finance Director

Initially routed to purchasing department director or designee, then routed to Finance Director for approval and payment.

Petty Cash Fund

2.44.110

$1,000

$2,500

Staff proposes revisions to the Purchasing Ordinance summarized above for the following reasons:

  1. Other than the current informal bid threshold of $2,000 adopted by City Council in August 2002, the current purchasing thresholds were originally adopted in 1974. Using the inflation conversion multiplier provided by the US Bureau of Labor Statistics, comparable supplies and services purchased in the year 1974 cost 4 times more in 2005.
  2. Staff believes that projects could begin sooner by streamlining contractual and bid processes.
  3. Staff believes that formal bids rarely yield additional cost savings, compared with the informal bid process.
  4. Staff believes that increasing the purchasing threshold that requires the execution of a contract between the City and the vendor from $10,000 to $25,000 will save a substantial amount of time without significantly increasing risk or cost.

Although the proposed Purchasing Ordinance revision is expected to improve the efficiency of the purchasing function, Staff does not anticipate that the revision will have any fiscal impact.

BACKGROUND AND DISCUSSION

Bid And Contract Requirements

The City’s Purchasing Ordinance currently requires obtaining formal bids and the execution of a contract for all cumulative purchases of $10,000 or more per fiscal year and obtaining at least three informal bids for all cumulative purchases in excess of $2,000 per fiscal year. Finance and Information Technology Staff recently obtained survey information from the California Society of Municipal Finance Officers (CSMFO) regarding bid and contract thresholds from various California cities. The results of that survey are as follows:

Table 2

City

Informal Bids

Formal Bids

Contract Required

Albany

5,000

15,000

15,000

Arcadia

2,500

30,000

15,000

City of Manhattan Beach

20,000

20,000

20,000

City of Murrieta

1,000

10,000

25,000

Coldwater Canyon

2,000

5,000

100,000

Costa Mesa

5,000

25,000

25,000

Downey

2,500

25,000

10,000

Dublin

1,000

10,000

50,000

El Segundo

7,500

10,000

10,000

Glendora

1,000

25,000

25,000

Indio

1,000

25,000

25,000

La Habra

2,500

10,000

10,000

Lake Elsinore

5,000

25,000

25,000

Lake Forest

10,000

25,000

25,000

Mammoth Lakes

1,000

125,000

5,000

Monterey Park

25,000

25,000

25,000

Morgan Hill

500

5,000

20,000

Oroville

5,000

5,000

5,000

Oxnard

25,000

100,000

100,000

Palm Springs

5,000

25,000

25,000

Paso Robles

2,500

5,000

10,000

Rancho Cucamonga

1,500

20,000

20,000

San Clemente

5,000

5,000

25,000

Santa Clarita

1,000

10,000

50,000

Santa Cruz

5,000

50,000

50,000

Santa Monica

5,000

100,000

55,000

Tracy

3,000

N/A

50,000

Whittier

5,000

50,000

25,000

Median

4,000

25,000

25,000

Mean

5,554

29,074

30,179

RPV Current Policy

2,000

10,000

10,000

RPV Proposed

5,000

25,000

25,000

The survey was not scientific and was limited to the 28 cities that provided a response. However, the calculated median and mean for each purchasing requirement indicates that other California cities maintain higher purchasing thresholds than current City policy. The proposed modifications would increase the purchasing thresholds to amounts similar to the mean and median thresholds of cities that replied to the survey summarized in Table 2 above. Other than the current informal bid threshold of $2,000 adopted by City Council in August 2002, the current purchasing thresholds were originally adopted in 1974. Using the inflation conversion multiplier provided by the US Bureau of Labor Statistics, comparable supplies and services purchased in the year 1974 cost 4 times more in 2005.

Formal And Informal Bid Requirements

The proposed modifications to subsections 2.44.030 and 2.44.040 would increase the formal bid threshold from $10,000 to $25,000 and the informal bid threshold from $2,000 to $5,000. The intent of the proposed revision is to improve Staff’s purchasing efficiency, yet maintain internal controls to ensure services and supplies are secured at the lowest possible cost commensurate with quality.

The formal bid process includes a public notice inviting vendor bids and City Council action. If the City Council elects to increase the formal bid threshold from $10,000 to $25,000, approximately one-half of the purchases currently conducted as formal bids could be conducted informally without public notice or City Council action. This would enable approximately 10-20 purchases annually to be conducted via informal bids, rather than the formal bid process. Using the informal bid process, staff directly solicits bids by telephone, mail or fax from identified qualified vendors. Staff selects the prevailing bid based on a combination of price, service and quality. The bid information and basis for vendor selection is documented within the purchase order.

Staff believes that formal bids rarely yield additional cost savings, compared with the informal bid process. The use of the informal bid process enables Staff to efficiently select a vendor with the lowest cost to the City, who has experience performing services or serving the City’s supply needs. Because staff directly solicits bids from qualified vendors, the use of the informal bid process minimizes the possibility of selecting a successful bidder that may not satisfy the bid requirements and the needs of the City (e.g. a computer cable installer who is unfamiliar with the City’s network backbone).

A formal bid process requires 20-100 hours of Staff time over 2 or more weeks, including time to prepare presentation of formal bid documents to the City Council, conducting vendor pre-bid meetings and vendor phone inquiries, publishing public notices, review of bid documents by the City Attorney, conducting a formal bid opening and providing written communication of the results of a formal bid. Staff believes that projects could begin sooner with the use of an informal bid process compared with a formal bid process.

Staff believes that any potential savings derived from obtaining informal bids between $2,000 and $5,000 is de minimus. Approximately one-third of the purchases that are currently conducted as informal formal bids could be made from the vendor of choice if the City Council elects to increase the informal formal bid threshold from $2,000 to $5,000. This would enable approximately 10-50 purchases to be conducted annually without the informal bid process. The informal bid process generally requires approximately 0.5-3.0 hours of Staff time over 1-5 days to complete. Staff believes that projects could begin sooner with the proposed streamlining of the informal bid process.

Staff wishes to remind the City Council that the City has entered into "on-call" contracts with a number of engineering firms. These contracts are approved annually by City Council. Staff is able to rely on these contractors to perform small-scale or urgently needed projects, without following prescribed bid procedures. The City Council has limited each contract to $60,000 per fiscal year and $25,000 per project. Staff does not propose any changes to these City Council approved contracts at this time.

Contract Requirements

Staff believes that increasing the threshold that requires the execution of a contract between the City and the vendor from $10,000 to $25,000 will save a substantial amount of time without significantly increasing risk or cost.

The preparation and execution of a agreement with a vendor requires 10-20 hours of Staff time over 2 or more weeks, including time to prepare the agreement and staff report for presentation to the City Council, conducting contract negotiations with business and legal personnel for the vendor, review by the City Attorney, execution and archival and compliance monitoring. Staff believes that projects could begin sooner with streamlining the requirements for a contract with vendors.

Approximately one-quarter of the purchases that are currently conducted with the execution of a contract with the vendor could be streamlined if the City Council elects to increase the contract threshold from $10,000 to $25,000. This would enable approximately 10-15 purchases annually to be conducted without a contract.

In the event that the City Manager or Department Director, or their designee believe the City should be provided with liability protection for services with costs of less than $25,000, the City Manager would determine if a standard indemnification agreement and/or a certificate of insurance coverage from the vendor is required per proposed subsection 2.44.052B2. For example, sewer spill clean-up services with a cost of less than $25,000 would require the use of a standard indemnification agreement and/or a certificate of insurance coverage per proposed subsection 2.44.025B2.

Staff and the City Attorney propose subsection 2.44.025B1 of the Purchasing Ordinance to require the execution of a contract with every vendor performing work on private property. The contract would include a standard indemnification provision and require a certificate of insurance coverage from the vendor. The contract would also include necessary terms and conditions for dispute resolution. Staff believes that this proposed revision to the Purchasing Ordinance will minimize the City’s risk when contractors are performing work on private property (e.g. maintenance of the Abalone Cove sewer system).

Blanket Purchase Order

Subsection 2.44.070B governs the use of a single purchase order for multiple individual purchases made during a given fiscal year (referred to as a "blanket" purchase order). Currently, individual purchases may not exceed $200 and cumulative purchases may not exceed $1,000 per fiscal year. Blanket purchase orders are ideally used for purchases such as minor plumbing repairs, roadway signs and locksmith services that cannot be anticipated; but occur routinely with time sensitive expectations.

In practice, Staff is currently unable to utilize the blanket purchase order provision in the Municipal Code as most of these types of purchases exceed the established thresholds. Staff must open individual purchase orders for each occurrence. Opening multiple purchase orders for a single vendor increases the possibility of recording errors and makes it difficult for staff to ensure that the combination of purchase order amounts does not exceed formal bid or contract thresholds during a given fiscal year. Staff requests that blanket purchase order limits be increased to $3,000 for individual purchases and $15,000 for cumulative purchases per fiscal year. The blanket purchase order would be subject to the proposed informal bid threshold of $5,000.

Exceptions To The Purchasing Ordinance

Subsection 2.44.140 provides the following exceptions to the Purchasing Ordinance:

  1. "The city manager finds that such services, supplies or equipment are unique because of the quality, durability, availability, or fitness for a particular use and are available from only one source;
  2. The city manager finds that exigent circumstances require the immediate purchase of such services, supplies or equipment;
  3. That services, supplies or equipment are provided by an independent contractor pursuant to an agreement with the city for the furnishing of labor and materials for other than the construction of a public works project; and
  4. The city council finds that due to the nature of the services, supplies or equipment, bidding is not likely to result in the lowest price."

The proposed modification to subsection 2.44.140 will replace exception "C" as follows:

"The city manager or the city council, as appropriate, determines that, due to unique circumstances or unusual factors, the award for the purchase of services, supplies or equipment from a source is in the best interest of the city."

On occasion, the City obtains services from vendors with an intimate knowledge of the City’s unique requirements. For example, Staff believes it is in the City’s best interest to utilize the vendor that installed the City’s phone system to make subsequent upgrades to the system. The basis for the decision to utilize this exception will be documented within the purchase order.

Exceptions To Bid Procedures

Subsection 2.44.060 identifies vendor exceptions to the bid procedures established in subsections 2.44.030 and 2.44.040. Vendor exceptions include attorneys, architects, engineers, auditors, financial advisors, election service providers, public information consultants, and negotiators for acquisition of land, insurance and bonds. Staff proposes to include geologists, surveyors and other similarly licensed professionals. Staff believes it is in the City’s best interest to select professional vendors that are independent, well respected in their profession and provide the highest quality of service.

Staff wishes to remind the City Council that subsection 2.44.080 allows an exception to bid procedures for emergency circumstances, such as the sinkhole on Western Avenue. The City Manager or, in his/her absence, the Assistant City Manager must provide approval prior to commencement of work. Staff does not propose any changes to this exception at this time.

Other Proposed Revisions to the Purchasing Ordinance

Credit Card Use

The Purchasing Ordinance currently limits use of a City credit card to $500 for individual purchases. There are numerous routine events that require use of a City credit card for purchase amounts more than $500, including City Council travel, recreation supplies from vendors who do not bill for purchases or accept checks and certain on-line purchases that enable cost savings (e.g. computer equipment). The proposed modification to subsection 2.44.070A3 of the Purchasing Ordinance will require use of a City credit card to be in accordance with an Administration Instruction (written policy).

Proposed Administrative Instruction Number 3-03 for City credit card use would serve as the written policy referenced in subsection 2.44.070A3 (see Attachment B). The purpose of the Instruction is to establish guidelines for issuance and use of designated City credit cards, including individual purchase limits of $2,500 for goods and services and travel and conference expenses.

Initial Routing And Approval Of Vendor Invoices

Finance Staff believes that invoice processing time is reduced when the vendor invoice is routed directly to the purchasing department for initial approval. The Purchasing Ordinance currently dictates that vendor invoices are first routed to the Director of Finance. Finance staff must then distribute vendor invoices to the purchasing departments for review and approval. The proposed modification to subsection 2.44.100 of the Purchasing Ordinance will require vendor invoices to be sent directly to the purchasing department Director or his/her designee for approval prior to Finance Department approval and processing.

Petty Cash

In 1990, the City’s total combined petty cash fund was established at $1,000. The following City locations operate a cash drawer and share the $1,000 fund:

Staff uses petty cash to make change for cash receipts, and pay petty cash requests for mileage reimbursement and other de minimus expense reimbursements. Staff is only able to replenish the petty cash fund twice each month with the Register of Demands presented to City Council. Staff has found it difficult to maintain adequate petty cash with the small fund amount. Petty cash requests are routinely turned away until the fund is replenished. In addition, Staff anticipates the need for petty cash will increase with the opening of PVIC and the gift shop. The proposed modification to subsection 2.44.110 of the Purchasing Ordinance will increase the total combined petty cash fund to $2,500.

FISCAL IMPACT

Although the proposed Purchasing Ordinance revision is expected to improve the efficiency of the purchasing function, Staff does not anticipate that the revision will have any fiscal impact.

Respectfully submitted,

Dennis McLean

Director of Finance and Information Technology

Reviewed,

Les Evans

City Manager

Attachments: A – Proposed Purchasing Ordinance Revision

B – Proposed Administrative Instruction Number 3-03

ORDINANCE NO. ___

AN ORDINANCE OF THE CITY OF RANCHO PALOS VERDES AMENDING CHAPTER 2.44 GOVERNING THE PURCHASE OF SERVICES, SUPPLIES AND EQUIPMENT AND AMENDING THE RANCHO PALOS VERDES MUNICIPAL CODE

THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES DOES HEREBY ORDAIN AS FOLLOWS:

Section 1. Title 2 of the Rancho Palos Verdes Municipal Code is hereby amended by adding new Section 2.44.015 to Chapter 2.44 to read as follows:

"Section 2.44.015 Applicability.

The procedures set forth in this chapter shall not apply to contracts for ‘public projects,’ as defined in Section 22002 of the California Public Contract Code or any successor statute, which are governed by the procedures set forth in the California Public Contract Code."

Section 2. Title 2 of the Rancho Palos Verdes Municipal Code is hereby amended by adding new Section 2.44.025 to Chapter 2.44 to read as follows:

"Section 2.44.025 Written contract requirements for services.

A. Written contract required. The provision of services of an estimated value greater than twenty-five thousand dollars shall be by written contract awarded in accordance with the procedures set forth in this chapter.

B. Special procedures. The following special procedures shall apply to the provision of services:

(1) Performance of services on private property. Notwithstanding the provisions of subsection A of this Section, where the provision of services requires the service provider to perform work on private property, regardless of the dollar amount of the proposed work, such services shall be by written contract – which shall include, but not be limited to, insurance and indemnity requirements satisfactory to the city attorney – awarded in accordance with the procedures set forth in this chapter.

(2) Protection of City. Notwithstanding the provisions of subsection A of this Section, a written contract shall be required for the provision of services, regardless of the dollar amount of the proposed services, if, in the opinion of the city manager or department director, a written contract is necessary to protect the City from increased liability that could arise from the performance of said services. Any written contract required pursuant to this subsection shall include, but not be limited to, insurance and indemnity requirements satisfactory to the city attorney."

Section 3. Title 2 of the Rancho Palos Verdes Municipal Code is hereby amended by amending Section 2.44.030 of Chapter 2.44 to read as follows:

"Section 2.44.030 Formal contract procedure.

A. Purchases of supplies and equipment and provision of services of an estimated value greater than twenty-five thousand dollars shall be by written contract with the bidder who, after notice, offers the city, as determined by the city council in its sole discretion, the best combination of price and quality. For the purposes of this chapter ‘notice’ shall mean a notice inviting formal written competitive bids in accordance with the provisions of this Section 2.44.030.

B. Any notice required by this section shall be published in a newspaper of general circulation printed and published in the city, or if there is none then in a newspaper serving the area. The city manager shall also mail a copy of such notice to anyone who has requested to be so notified.

C. All notices required by this section shall be published, not less than ten (10) days prior to the date specified for the opening of the bids.

D. When deemed necessary by the city manager, bidder’s security may be prescribed in the public notices inviting bids. Bidders shall be entitled to the return of bid security provided that a successful bidder shall forfeit its bid security upon refusal or failure to execute the contract within ten (10) days after the notice of award of contract has been mailed. The time to sign the agreement before forfeiting the bidder’ s security shall be extended for delay caused by the city.

E. The city council shall award all bids under this section. On refusal or failure of the successful bidder to execute the contract, the council may award the bid to another bidder based upon the appropriate criteria provided in subsection A of this section. If for that reason the council awards the contract to another bidder, the amount of the first awardee’ s security shall be applied by the city to the difference in the amount of the bid between the first awardee and the second awardee, and the surplus, if any, shall be returned to the first awardee.

F. Bids shall be submitted to the city manager and shall be so identified on the envelope. Bids shall be submitted in writing and must be received prior to the bid closing date to be considered. Bids shall be opened at the time and place specified in the notice inviting sealed bids. The city clerk shall retain copies of all bids received by the city manager and shall make said bids available for public inspection during regular business hours for not less than two (2) years following the bid opening. Notwithstanding the foregoing, bidder proprietary information shall not be available for public inspection.

G. The council may reject any and all bids, waive any irregularity in any bid, or re-advertise for bids.

H. If two or more bids received for supplies and equipment are for the same total amount or unit price, the council may accept the bid it considers best meets the needs of the city."

Section 4. Title 2 of the Rancho Palos Verdes Municipal Code is hereby amended by amending Section 2.44.040 of Chapter 2.44 to read as follows:

"Section 2.44.040 Open market procedure.

Provision of services or purchase of supplies and equipment of an estimated value of twenty-five thousand dollars or less may be made by the city manager in the open market without observing the formal bid procedure prescribed by Section 2.44.030, in accordance with the following procedures:

A. The city manager may purchase services, supplies, and equipment of an estimated value of twenty-five thousand dollars or less in the open market, provided however:

(1) Purchases in excess of five thousand dollars but less than or equal to twenty-five thousand dollars shall be based on at least three informal bids solicited annually and shall be awarded as follows:

(i) Bids for the purchase of supplies and equipment shall be awarded to the lowest responsible and responsive bidder as reflected in the informal bids. The city manager may reject any and all bids, waive any irregularity in any bid, or re-solicit bids.

(ii) Bids for services shall be awarded to the bidder who, after the informal bid process, offers the city, as determined by the city manager in his or her sole discretion, the best combination of price and quality.

(2) The provision of maintenance services of an estimated value of twenty-five thousand dollars or less shall be by purchase order issued in accordance with the procedures set forth in this chapter.

B. Informal Bid Defined. For the purposes of this chapter, ‘informal bid’ shall mean bids solicited by the city manager or his or her designee either by direct mail request or orally by telephone. If a bidder provides a bid orally, the city manager or his or her designee shall maintain written notes or documentation confirming the receipt and content of such oral bids and shall require the bidder to provide a facsimile transmission or other written documentation confirming the substance of the oral bid. Copies of all written proposals received and the city manager’s or his or her designee’s written documentation or notes confirming oral bids and the confirming documentation provided by the bidder(s) shall be retained for public inspection during regular business hours for not less than two (2) years after receipt. Notwithstanding the foregoing, vendor proprietary data shall not be open for public inspection."

Section 5. Title 2 of the Rancho Palos Verdes Municipal Code is hereby amended by amending Section 2.44.060 of Chapter 2.44 to read as follows:

"Section 2.44.060 Exceptions to bid procedures.

The procurement of specific professional services such as contracts with attorneys, architects, engineers, auditors, financial advisors, technology professionals, geotechnical engineers, surveyors, geologists, or any other similar licensed professional, or when the services contracted for deal with election service, public relations and related activities; negotiations for or acquisition of land; insurance; bonds, negotiations for or acquisition of land; insurance; bonds; or other services of a similar nature to those listed may be made by the city council without following bid procedures."

Section 6. Title 2 of the Rancho Palos Verdes Municipal Code is hereby amended by amending Section 2.44.070 of Chapter 2.44 to read as follows:

"Section 2.44.070 Purchase orders.

A. All purchases of materials, supplies and services shall be by serially numbered purchase orders authorized by the signature of the ordering department head and the city manager or his or her designee. The following exceptions are allowed:

1. All purchases of less than five hundred dollars that are processed by the presentation of an invoice acceptable to and approved by the finance department.

2. Utility bills, rents and lease purchases.

3. Purchases made by credit cards authorized by the city council and issued to those employees approved by the city manager, provided such purchases conform to the written policy established by the city manager or his or her designee. The customer’ s copy of the invoice shall be delivered to the director of finance for approval for payment.

4. Purchases of supplies and equipment over twenty-five thousand dollars shall be by written contract in accordance with the provisions of Section 2.44.025.

5. Purchases of services also shall conform to the applicable procedures set forth in Section 2.44.025 of this chapter.

B. Multiple individual purchases not to exceed three thousand dollars each may be on a single open purchase order. The city manager may authorize open purchase orders for those vendors who are a convenient source of supply by reason of economy, proximity, delivery, or quality of services. Multiple purchases may be made by requisition on these purchase orders by any city department subject to the dollar restriction placed on single purchases and the maximum multiple limitation of fifteen thousand dollars per city fiscal year. Notwithstanding the foregoing, the city council may authorize purchase orders with a maximum multiple limitation in excess of fifteen thousand dollars. Purchases on an open monthly purchase order, or from central stores when and if established by the city, shall be made by the individual authorized to make such purchases utilizing a requisition form prescribed by the director of finance. The requisition form shall be dated and signed or electronically approved through the City’s electronic purchasing software by the department head or an authorized representative. The single purchase limitations set forth in this subparagraph (B) shall not apply to purchase orders issued for ongoing services where the city manager or the city council, as specified herein, have found that the use of a particular vendor to perform such services is in the best interests of the city as provided in subparagraph (D) of Section 2.44.140 of this chapter."

Section 7. Title 2 of the Rancho Palos Verdes Municipal Code is hereby amended by amending Section 2.44.080 of Chapter 2.44 to read as follows:

"Section 2.44.080 Confirming purchase orders.

Emergency purchases required due to natural disasters or other unforeseen circumstances may be made by a confirming purchase order if so noted on the purchase order form. Prior approval must be given by the city manager, if available, or by the assistant city manager if the city manager is absent."

Section 8. Title 2 of the Rancho Palos Verdes Municipal Code is hereby amended by amending Section 2.44.100 of Chapter 2.44 to read as follows:

"Section 2.44.100 Payment of invoices.

A. All invoices requiring a purchase order shall be submitted directly to the department head by the supplier of the equipment, supplies or services. Each invoice shall be dated and signed by the department head or his or her designee and submitted to the director of finance for payment.

B. Payment disputes will be resolved by the director of finance."

Section 9. Title 2 of the Rancho Palos Verdes Municipal Code is hereby amended by amending Section 2.44.110 of Chapter 2.44 to read as follows:

"Section 2.44.110 Petty cash.

There is established a petty cash fund in the amount of two thousand five hundred dollars administered under the supervision of the city manager, from which cash disbursements may be made in an amount not to exceed fifty dollars. Disbursements must be accompanied by an invoice in the amount of the request, signed by the originator and approved by the department head. An invoice is not required for auto mileage reimbursement, metered parking and any other requirement for which an invoice cannot be expected."

Section 10. Title 2 of the Rancho Palos Verdes Municipal Code is hereby amended by amending Section 2.44.140 of Chapter 2.44 to read as follows:

"Section 2.44.140 Exceptions.

Sections 2.44.030 and 2.44.040 shall not apply to the purchase of services, supplies and equipment under any of the following circumstances:

A. The city manager finds that such services, supplies or equipment are unique because of the quality, durability, availability, or fitness for a particular use and are available from only one source;

B. The city manager finds that exigent circumstances require the immediate purchase of such services, supplies or equipment;

C. The city council finds that due to the nature of the services, supplies or equipment, bidding is not likely to result in the lowest price; or

D. The city manager or the city council, as specified herein, determines that, due to unique circumstances or unusual factors, the award for the purchase of services, supplies or equipment from a source other than the lowest responsible bidder is in the best interest of the city."

Section 11. The City Council declares that, should any provision, section, paragraph, sentence, or word of this ordinance be rendered or declared invalid by any final action in a court of competent jurisdiction, or by reason of any preemptive legislation, the remaining provisions, sections, paragraphs, sentences and words of this ordinance shall remain in full force and effect.

Section 12. The City Clerk shall cause this Ordinance to be posted in three (3) public places in the City within fifteen (15) days after its passage, in accordance with the provisions of Section 36933 of the Government Code. The City Clerk shall further certify to the adoption and posting of this Ordinance, and shall cause this Ordinance and its certification, together with proof of posting, to be entered in the Book of Ordinances of the Council of this City.

Section 13. This Ordinance shall go into effect and be in full force and effect at 12:01 a.m. on the thirty-first (31st) day after its passage.

PASSED, APPROVED and ADOPTED this _______ day of _______________, 2005.

_____________________________

Mayor

ATTEST:

___________________________

City Clerk

CITY OF RANCHO PALOS VERDES

ADMINISTRATIVE INSTRUCTION

NUMBER 3-03

SUBJECT: CITY CREDIT CARDS

________________________________________________________________

Purpose

The purpose of this instruction is to establish procedures and conditions for issuance and the use of designated City credit cards.

The purpose of the City credit card program is to enable payment for goods or services that cannot be obtained with a City purchase order or payment by check in the normal course of business. Examples include, but are not limited to gasoline purchases for City vehicles, travel expenses, conference expenses, and purchases made via the Internet.

General

The use of a City credit card for any purpose other than that of the City of Rancho Palos Verdes is strictly prohibited.

Individual City credit cards shall be issued for City Manager and City Council Member use. Each cardholder is responsible for the custody, safekeeping and security of the card while in the cardholder’s possession.

Procedures For Bank Issued City Credit Cards

The following procedures shall be used to obtain a bank issued City credit card for purchases:

Obtain a request form from the Finance and Information Technology Department ("Finance").

Complete the request form, including purpose of use, anticipated amount of the charge, vendor, and expenditure account number.

The Department Director or his/her designee, and the City Manager or his/her designee must sign the request form.

Upon completion and approval of the request form, Finance will issue a card to the designated requestor.

The following procedures shall be used when making purchases with a bank issued City credit card:

All purchases made with a City credit card must comply with policies established by the City’s purchasing ordinance (Municipal Code Section 2.44), and the City’s adopted budget.

A purchase receipt shall be required to substantiate each purchase made using the card. The receipt must contain the purchase amount, date, vendor, and description. The card and receipt(s) shall be returned to Finance immediately after the purchase is completed.

A City credit card shall not be used to obtain a cash advance.

If the City credit card is used to make a reservation, a copy of the reservation confirmation must be submitted to Finance.

Individual purchases shall not exceed $2,500 for goods and services, or $2,500 for travel and conference expenses.

Procedures For Vendor Issued City Credit Cards

Vendor issued City credit cards include gasoline cards and cards issued by designated vendors previously approved by the City Manager (e.g. Smart & Final).

Finance will obtain and issue a vendor credit card to a Department Director or his/her designee. The Department Director is responsible for custody, safekeeping and security of the card.

Purchase procedures are as follows:

All purchases made with a City credit card must comply with policies established by the City’s purchasing ordinance (Municipal Code Section 2.44), and the City’s adopted budget.

A purchase receipt shall be required to substantiate each purchase made using the card. The receipt must contain the purchase amount, date, vendor, and description. The receipt(s) shall be returned to Finance immediately after the purchase is completed.

Individual purchases shall not exceed $1,500 for goods.

General Procedures

If a purchased item is returned, it is the cardholder’s responsibility to obtain a credit from the vendor. The cardholder must also immediately notify Finance of the return and submit the credit documentation to Finance.

Lost or stolen City credit cards must be immediately reported to Finance.

Each cardholder must immediately surrender the City credit card upon request of the City Manager or his/her designee.