Rancho Palos Verdes City Council
   

DECEMBER 20, 2005 REVISIONS TO THE PURCHASING ORDINANCE DECEMBER 20, 2005 REVISIONS TO THE PURCHASING ORDINANCE DECEMBER 20, 2005 REVISIONS TO THE PURCHASING ORDINANCE

TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL

FROM: DIRECTOR OF FINANCE AND INFORMATION TECHNOLOGY

DATE: DECEMBER 20, 2005

SUBJECT: REVISIONS TO THE PURCHASING ORDINANCE

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

RECOMMENDATION

Adopt Ordinance No. 431 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.

BACKGROUND

Ordinance No. 431 is an amendment to the Rancho Palos Verdes Municipal Code that was introduced at the December 6, 2005 City Council meeting (see Attachment A). The City Council may now choose to adopt this ordinance.

Staff proposed 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. 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

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

Attachment: A – Ordinance No. 431

ORDINANCE NO. 431

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