STAFF REPORT
Meeting Date: May 10, 2022
To: Honorable Mayor & City Council
From: Jeff S. Muir, Director of Finance
Tatiana Szerwinski, Assistant Director of Finance
Anthony Rodstein, Purchasing Services Manager
Subject: Progress Report on Implementation of Management Partners Recommendations Related to Citywide Procurement Process Attachments: 1. Staff Report from March 2, 2021 City Council Study Session Meeting
2. Summary of Management Partners Report Recommendations and Staff Actions
INTRODUCTION
In the summer of 2019, staff engaged the consultant Management Partners (hereby referred to as “MP”) to conduct a review of the Citywide procurement process, which is largely decentralized. Following interviews and roundtable discussions with representatives from each department and key stakeholders in the City’s procurement process, MP drafted and delivered a report (“Optimizing the City’s Purchasing Processes”) to the City. The report contained findings and recommendations pertaining to the City’s purchasing and contracting processes for the City to consider implementing in order to improve operations and efficiencies in Citywide procurement.
Staff presented the MP report to the Audit and Finance Committee on November 2, 2020 to obtain recommendations and feedback by the Committee. Staff then presented the report, combined with the Committee’s feedback to the City Council during the March 2, 2021 Study Session meeting. Attachment 1 of this Staff Report is a copy of the Staff Report for the March 2, 2021 City Council Study Session meeting containing the MP report. Based on a City Council request, this Staff Report serves as an update on staff’s progress in assessing the MP report and implementing its recommendations.
Meeting Date: May 10, 2022
DISCUSSION
Review - MP Report Recommendations
As previously presented to the City Council, the MP report consisted of five (5) major observations regarding the City’s procurement process. At the time of the report, the five major observations included:
Table A: Major Observations from MP Report
Observation Description
1 The City’s use of a decentralized purchasing model through which all tasks for bidding and sourcing procurements were performed by staff within operating departments.
2 The Finance Department’s then-current Purchasing staffing levels were insufficient to offer core purchasing services.
3 Best procurement management practices were not being used. 4 Operating department staff who perform purchasing functions relied on past practices (largely “oral history”) within their departments or what staff in other departments tell them are the purchasing procedures. 5 Thresholds requiring Council approval on contracts were low compared with peer jurisdictions, and those contracts took longer to process.
Based on these summary observations, MP derived 34 recommendations which were presented to the City. Staff grouped the recommendations into nine major and three minor categories, summarized in Table B below. The recommendation numbers below correspond to those numbered in the MP report (included in Attachment 1) and reflect feedback from the Audit and Finance Committee following its November 2, 2020 meeting.
Table B: Categories of Recommendations from MP Report
Major Categories Recommendation Numbers
(from MP Report)
Status
Municipal Code/Resolution Updates 21,22,23,24 Completed Purchasing Partnership 1,2,4,5 Completed1
Staffing 3 Completed
Accountability and Performance 12,13,14 In Progress
Contracts 25,26,27,30 Completed
Insurance Reviews 31,32,33 In Progress
Trainings, Meetings, Manual 6,8,10,11,15 In Progress
Purchase Card Policy & Practices 16,17,18,19 In Progress RFP, RFQ, Bid Consistency 20,34 In Progress
1 The framework of the Purchasing Partnership model has been established and centralized services are being provided to some departments. Onboarding of additional departments will continue on a requested and as-needed basis.
Table B: Categories of Recommendations from MP Report (continued) Minor Categories Recommendation Numbers
(from MP Report)
Status
Survey and Needs Assessment 7,9 Completed
Munis Workflows 29 Completed
Docketing 28 In Progress
Meeting Date: May 10, 2022
Key Process Improvements
The following recommendation categories are items of note and represent key process improvements that have resulted from implementing certain MP report findings, or major improvements for which significant progress has been made. The titles for each section below correspond with those from the Major Categories found in Tables B and C:
Purchasing Partnership
The City continues to operate a decentralized purchasing model in which individual departments carry out procurement functions such as bidding and contract development.
However, the Purchasing team (hereby referred to as “Purchasing”) with the addition of the Purchasing Services Manager is now better situated to assist departments with these functions when requested. Departments regularly request Purchasing’s review of upcoming bid solicitations for specification development and compliance with City, local, state, and federal purchasing policies. Purchasing has also assumed administrative ownership of the online bidding platform, PlanetBids, for the purpose of posting and administering bid solicitations on behalf of many departments. The effort on the part of departments to involve Purchasing on the front end of procurement efforts has led to an increased understanding by Purchasing of Citywide materials and service needs. In some cases, Purchasing has been able to identify duplicative bid efforts that would normally be conducted by departments and increase efficiency by consolidating this bidding into one joint effort, reducing the administrative resources required by all involved. Purchasing’s early involvement can also reduce delays related to award and contracting processes, as there will be proactive and constant monitoring for adherence to the proper procurement policies and procedures.
The fostering of a Purchasing Partnership addresses recommendations 1, 2, 4 and 5 from the MP report. Purchasing has started to assume responsibility for centralized functions such as proactive purchase order and contract reporting, bid management and contract development for some departments. As the Purchasing Partnership efforts continue to evolve, Purchasing will explore opportunities where it is appropriate to provide these services to other departments.
Training, Meetings, Manual
Purchasing now meets with department liaisons (known as “Purchasing Coordinators”) to troubleshoot purchasing-related issues and discuss process improvements. Most recently, the Purchasing Coordinators were consulted for feedback on specific areas of the Purchasing Manual they would like to see improved, clarified or addressed. This unified effort will result in meaningful changes that make sense from a policy and operational standpoint.
Purchasing has also conducted procurement training for new employees of various departments and purchasing refresher training for current staff. A training program is in development that will offer recurring new and refresher training throughout the year, as well as in-depth training on specific procurement topics that may affect departments, such as changes to state and federal legislation or procedural changes involving the City’s enterprise resource planning (ERP) system, Munis. Purchasing is exploring conducting these training sessions across various forms of media, including prerecorded videos, live webinars, in-person sessions and downloadable guides.
Purchasing’s involvement in advancing training, meetings and updates of purchasingrelated policies and procedures addresses recommendations 6, 8, 10, 11 and 15 from the MP report.
Meeting Date: May 10, 2022
Accountability and Performance
Purchasing tracks certain key performance indicators related to the procurement process, such as the time purchase requisitions and change order entries spend in each department’s respective electronic workflow queues. This analysis has been provided to departments on a quarterly basis and in some cases has resulted in departments making adjustments to their workflow protocol in an effort to decrease delays.
On a monthly basis, Purchasing also provides departments with reporting related to their respective purchase orders and contracts. These reports assist departments by proactively indicating when contracts are set to expire or if there is incongruity between contract appropriations and encumbrances.
Purchasing will expand performance tracking to include reports related to instances and trends of non-compliance in areas such as adherence to purchasing policies and City purchasing card transactions. These efforts to report to departments and enforce accountability address recommendations 12, 13 and 14 from the MP report.
Status of Recommendations
The current status of the recommendation categories are summarized in the table below.
Table C: Current Status of Recommendations
Summary of Recommendations from
MP Report
Comments Presented to
Council on 3/2/21
Current Status
Municipal Code Updates
Four recommendations involving
changes to the Beverly Hills Municipal
Code (“BHMC”), increasing approval
authority for Department Heads, the
Director of Finance and the City
Manager.
The increase in approval
authority will increase
efficiency and reduce delays
in the procurement process.
Completed. At its March 2, 2021
meeting, the City Council
adopted the proposed changes
to the BHMC.
Meeting Date: May 10, 2022
Summary of Recommendations from
MP Report
Comments Presented to
Council on 3/2/21
Current Status
Purchasing Partnership
Four recommendations summarize
the need for Finance to play a larger
role in citywide procurements,
including moving toward more of a
partnership approach, moving
Finance involvement/reviews to the
start of the process (rather than at
the end where things currently
reside), allowing Finance
procurement team members to help
evaluate strategic procurement
opportunities and as needed
procurement functions.
Per request and currently on
a limited basis, Finance
provides additional
procurement support using
existing resources. To
reevaluate and plan after
recruitment of Purchasing
Manager position.
Completed and ongoing. Refer
to narrative above.
Staffing
Recommendation to hire a
Purchasing Manager position to allow
for greater purchasing involvement
and partnerships with other
departments. Finance converted an
existing position with additional salary
savings to fund this position and has
worked with HR to develop the new
job classification and salary, which
has been approved by Council.
Job classification created
and salary approved by
Council.
Completed. Purchasing
Services Manager was hired
in May 2021.
Accountability and Performance
Three recommendations including
evaluating cycle times, establishing
performance measures and
benchmark cycle times for the
procurement process, and
implementing accountability and
training measures.
Cycle times to be evaluated/
proposed upon hiring of
Purchasing Manager.
Training to continue
annually at department levels,
with a formal program to be
developed.
In progress. Refer to narrative
above.
Meeting Date: May 10, 2022
Summary of Recommendations
from MP Report
Comments Presented to
Council on 3/2/21
Current Status
Contracts
Ensure templates are updated,
maximize the use of electronic
signatures, establish a dollar
threshold for written
agreements for services, and
reevaluate the necessity for
multiple contract signatories.
City will continue to require all
service agreements to have
contracts regardless of
threshold and maintain contract
signatories.
Electronic signatures now
used for all agreements
(COVID development).
Contract templates most
recently updated to include
required Federal procurement
language. Will establish
annual review process and
ensure all go to new source
documents.
Completed. Contract templates are
regularly updated by CAO and are
made available for use by
departments. Purchasing now
posts bid solicitations for
departments and part of that
process involves reviewing the draft
contract associated with the bid to
ensure that the most updated
contract version is being used.
Contract multiple signatory
requirements align with California
Corporations Code.
Insurance Reviews
Establishing insurance tracking
as a risk management function,
create example scenarios or
list of vendors detailing
insurance requirements to help
expedite the contract process.
Will continue to be
evaluated by the Risk
Management division of
HR in conjunction with
the Purchasing division.
In Progress. The City is exploring
system solutions for insurance
tracking to help automate the
tracking and approval process
(RFP to be published in May
2022).
Trainings, Meetings, Manual
Departments to designate
purchasing liaisons, purchasing
to establish solution based
meetings/schedule,
conduct citywide and
department specific trainings
for purchasing and Finance
division roles to increase
understanding of other
functions, seek input for
updating the purchasing
policy/materials.
In progress pending
recruitment of Purchasing
Manager. Purchasing
trainings occur at
department level currently
and input meetings are held
for the annual blanket
purchase order process to
review citywide deadlines
and questions regarding the
process.
In progress and ongoing. Refer to
narrative above.
Meeting Date: May 10, 2022
Summary of Recommendations
from MP Report
Comments Presented to
Council on 3/2/21
Current Status
Purchase Card Policy & Practices
Evaluate opportunities to
maximize value of purchase
card program, accountability
and control mechanisms to
evaluate purchase card
program, establish guidelines
identifying when purchase
orders are not needed and
when purchase cards can be
used. Increase purchase card
monitoring and audits.
Will be revising the Purchase
Card Administrative
Regulation. Will conduct a
comprehensive review of
purchase card use and make
recommendations to
Department Heads regarding
their use and number of cards
issued. Will develop regular
reviews of citywide purchase
card activity.
In Progress. Purchasing Card
Administrative Regulation is
currently under review. Finance
is in the process of analyzing
purchasing card activity to
identify areas of policy
improvement, and to make
recommendations on the size of
the purchasing card program.
RFP, RFQ, Bid Consistency
Establish a consistent approach
for conducting and evaluating
RFP/RFQ responses, include the
use of a conflict of interest form,
and evaluate current bid protest
practices.
Pending hiring of Purchasing
Manager for full development.
Standardized RFP/RFQ
format in development by
purchasing specialists.
In Progress. Standardized
templates are currently being
developed. Centralized posting
and training will follow to ensure
that departments have access to
templates and the correct
templates are used based on
solicitation type.
Survey and Needs Assessment
Survey departments on topics
pertaining to customer service
provided by Purchasing and
potential areas of the purchasing
policy that need to be revisited.
Purchasing will conduct
surveying of departments,
focusing on service levels and
policy improvements.
Completed. Departments have
been surveyed and feedback is
being incorporated into
purchasing manual updates.
Feedback regarding customer
service is being used for training
and process improvement
efforts.
Munis Workflows
Explore opportunities to reduce
workflow approvals in the Munis
system.
Workflow items for Purchasingrelated processes will be reviewed for efficiency.
Completed. Workflow metrics
are regularly reviewed and
provided to departments. This
has directly resulted in workflow
steps being removed or added,
as needed by each department.
Meeting Date: May 10, 2022
Summary of Recommendations
from MP Report
Comments Presented to
Council on 3/2/21
Current Status
Docketing
Review the contract docketing
(approval) process.
Reevaluate the docketing
requirements to increase
efficiency in contract approval
routing.
In Progress. Since the MP report,
the City has adopted the use of
Docusign for electronic signature
routing, which has improved
efficiency in the signing of
contracts. Efficiencies to be
explored in the contract
numbering process.
Ongoing and Future Implementation
Attachment 2 contains all 34 recommendations from the MP report and actions taken to date for each item. Each recommendation is noted as completed, or in progress with an estimated completion date. Where appropriate, a partner department has been designated for functions or processes that involve the procurement process, but heavily involve another department or process. In these instances, assessing and implementing the recommendations for these items cannot be done without collaboration with or reliance upon the partner departments listed. For example, the Insurance Reviews category pertains to contracts but Human Resources is listed as a partner department since the process of insurance certificate review is under the direction of the Risk Management division of Human Resources.
Staff will continue finalize the implementation of the remaining 13 in-progress recommendations during Fiscal Year 2022-23.
FISCAL IMPACT
There is no direct fiscal impact of this item.
RECOMMENDATION
This report is for information only.
Jeff S. Muir,
Director of Finance
Tatiana Szerwinski,
Assistant Director of Finance
Approved By Approved By
Attachment 1
STAFF REPORT
Meeting Date: March 2, 2021
To: Honorable Mayor and City Council
From: Jeff S. Muir, Director of Finance
Tatiana Szerwinski, Assistant Director of Finance
Subject: Citywide Procurement Review and Proposed Updates to the Procurement Section of the Municipal Code and Restatement of Associated Resolution
Attachments: 1. Management Partners Report - Optimizing the City’s Purchasing Processes
2. Draft Ordinance
3. Draft Resolution
INTRODUCTION
In the summer of 2019, staff engaged Management Partners (referred to subsequently as MP) to conduct a review of citywide procurement, which is largely decentralized.
Initial interviews were held with representatives from each departments’ executive level staff to assess the current challenges of the City’s procurement processes to understand and propose value added recommendations. Roundtable meetings were held with each respective departments’ staff with procurement duties to obtain additional feedback. A peer review was also conducted comparing the City of Beverly Hills to six other comparable municipalities. Meetings were also held with the Finance department’s procurement team and management. Lastly, process mapping meetings were held with many City stakeholders to assess the current time and processes in place for executing a request for proposal, vendor selection, contract preparation, including taking the item to Council for approval, docketing, and entry into the City’s financial system, Munis. All of this information was compiled, reviewed against industry benchmarks, and City management was presented with a report of recommendations to improve citywide procurement. In light of the COVID-19 pandemic that subsequently occurred and the financial challenges this has created for the City resulting in significant staffing reductions, achieving more administrative efficiencies (while maintaining sufficient controls) is critical. Staff met with the Audit and Finance Committee on November 2, 2020 to review these recommendations and obtain feedback.
FISCAL IMPACT
There are no direct fiscal impacts and no staff additions proposed as part of the recommendations. The addition of a Purchasing Manager to the Finance Department’s Purchasing Division was funded using an existing Finance vacancy and permanent downgrade of a second position to achieve the salary savings necessary to fund the position at no additional cost.
DISCUSSION
After having collected information on the City’s procurement processes from a wide variety of stakeholders from executive management to staff with procurement responsibilities, Management Partners prepared a report which included five major observations and 34 recommendations.
The five major observations include:
1. The City utilizes a decentralized purchasing model through which all tasks for bidding and sourcing procurements are performed by staff within operating departments.
2. The Finance Department’s current purchasing staffing levels are insufficient to offer core purchasing services.
3. Best procurement management practices are not being used.
4. Operating department staff who perform purchasing functions rely on past practices (largely “oral history”) within their departments or what staff in other departments tell them are the purchasing procedures.
5. Thresholds requiring Council approval on contracts are low compared with peer jurisdictions, and those contracts take longer to process.
Based on these summary observations, MP presented the City with 34 recommendations, which staff then grouped into nine major and three minor categories, summarized below. The recommendation numbers below correspond to those numbered in the MP report (Attachment 1). Staff presented the recommendations below to the Audit and Finance Committee on November 2, 2020 and has included updates based on feedback received in the respective sections below.
Major Categories Recommendation Numbers
Municipal Code/Resolution Updates 21,22,23,24
“Purchasing Partnership” 1,2,4,5
Staffing 3
Accountability and Performance 12,13,14
Contracts 25,26,27,30
Insurance Reviews 31,32,33
Trainings, Meetings, Manual 6,8,10,11,15
Purchase Card Policy & Practices 16,17,18,19
RFP, RFQ, Bid Consistency 20,34
Minor Categories Recommendation Numbers
Survey and Needs Assessment 7,9
Munis Workflows 29
Docketing 28
Municipal Code/Resolution Updates
There are four recommendations pertaining to Municipal Code/Resolution updates obtained from Management Partners. The first (Recommendation 21) is to amend the purchasing resolution to remove the reference to the purchasing limits and instead to incorporate the increased purchasing approval thresholds changes directly into the Municipal Code. The current and proposed levels are listed in the chart below:
Levels Contracting
Officer
Position
Current
Limit
Proposed
Limit
Current Bid
Requirements
Proposed Bid
Requirements
1 Department
Head
Up to
$7,500
Up to
$10,000
No bids
required
No bids required
2 Director of
Finance
Up to
$25,000
Up to
$50,000
Informal oral
quotes/bids
Informal written
quotes/bids
solicited/received
by electronic
bidding platform
or alternative
method
3 City
Manager
Up to
$50,000
Up to
$100,000
Formal written
bids
Formal written
bids solicited
/received by
electronic
bidding platform
or alternative
method
4 City
Council
Over
$50,000
Over
$100,000
Formal written,
sealed bids
Formal written
bids solicited
/received by
electronic
bidding platform
or alternative
method
In addition, it is recommended that the existing municipal code provision allowing the City Manager two-times his/her authority for urgent purchases, be increased from $100,000 (two-times the current $50,000 limit) to $200,000 (two-times the proposed $100,000 limit). This provision authorizes the City Manager to exercise this authority if:
(a) there is an urgent need to enter into a purchase order or contract; and (b) the equipment, supplies or services is a budgeted expense as set forth in the city adopted budget.
Approval levels in Beverly Hills were last increased fifteen years ago in 2006. The relatively low current City Council threshold results in additional agenda items for many routine contracts or purchases, requiring significant staff and City Council time. Beverly Hills has a well-deserved reputation for providing outstanding and responsive services and additional administrative authority for the Department and the City Manager will allow operating departments to respond and react more nimbly. As part of MP’s review, approval thresholds were obtained for six comparable municipalities, including Burbank, Culver City, Fremont, Mountain View, Santa Monica, and Sunnyvale. Of these, five have substantially higher City Manager thresholds when compared to Beverly Hills.
Culver City, which currently has the same City Manager threshold as Beverly Hills, has a General Fund budget approximately half the size of Beverly Hills. See the chart below (Table 5 from the report) summarizing contract award authority:
The MP report found that periodic adjustments are necessary to keep pace with inflation and to allow for procurement and workload efficiency. Additionally, establishing the Level 1 threshold at $10,000 sets it equal to the limit at which competitive bidding can be dispensed when making purchases with federal grant funds.
Due to the staffing reductions and reorganization currently underway resulting from the COVID-19 financial impacts, increasing the purchasing thresholds will enable City management to better prioritize staff time currently spent preparing and reviewing agenda reports, while maintaining existing procurement controls, and allowing for increased purchasing authority at the department head, Director of Finance, and City Manager levels. On an annual basis from fiscal year 2014 through 2020, there were an average of 1,365 contracts and purchase orders issued citywide. Of these, 84% (1,148 on average) were under $50,000 (current levels one through three) and average $12,912. 6% of contracts and purchase orders (77 on average) were between $50,000 and $100,000 (currently part of level 4), and average $75,664. 10% of contracts and purchase orders (141 on average) were over $100,000 (remainder of current level 4), and average $808,695. By allowing the City Manager to approve contracts and purchase orders up to $100,000, 6% of the average number and 8% of the average value of contracts and purchase would no longer require City Council reports and approvals (see summary chart below).
Type $50K & Below $50 - 100 K $100K & Over Total
Average Number 1,148 77 141 1,365
Percentage 84% 6% 10% 100%
Average Dollar Value $12,912 $75,664 $808,695 $897,271
Percentage 1% 8% 90% 100%
Average Contracts and Purchase Orders Summary (FY2014-2020) Staff estimates that an average of 193 (2.5 hours/report x 77 reports) hours are spent preparing and 231 hours (3 hours x 77 reports) reviewing such agenda reports, which could save 424 or more hours on an annual basis. This time can be reprioritized to other critical projects during the current reorganization.
Since presentation to the Audit and Finance Committee, staff continued to review updates to citywide procurement practices and changes due to the ongoing pandemic.
Due to the implementation of online purchasing platforms (currently PlanetBids and GovSpend, two bidding software platforms), bids are now obtained and submitted electronically and are no longer submitted to the City Clerk’s office via paper submission for formal opening and reading. When obtaining bids using PlanetBids, staff establishes a designated window and deadline for bid submissions and cannot open or view submissions until this deadline has passed. While staff often utilizes the electronic bidding platforms, staff also continues to use alternative methods such as posting the notices inviting bids and bid packages on the City’s website and use of emails. As a result, the language in the code (Levels 2-4) was modified to include the a definition of electronic bidding platform as well as continuing to authorize alternative methods which will be detailed in the Director of Finance’s written policies. The code continues to require that when utilizing alternative bidding methods, bids must be in writing and a minimum of three bids must be obtained. With respect to public works projects, those requirements are outlined in the Public Contract Code as well as the Municipal Code.
Currently, notices inviting written bids to at least three prospective bidders are required at Level 3 (currently between $25,000 and $50,000) and notices inviting written, sealed bids disseminated to at least three prospective bidders is currently required at Level 4 (currently greater than $50,000). With the proposed change to the limits, MP recommended that bidding requirements remain set at the same dollar levels in spite of the increase to the purchasing thresholds. Given the pandemic and changes to City practices, this further necessitates a change to the bidding referenced in the code, and staff is now proposing requiring the solicitation and receipt of written bids at both new Level 3 (proposed $50,000) and Level 4 (proposed $100,000) by electronic bidding platform or an alternative method. This would maintain the current requirements and expectations for ensuring the City is obtaining the best value for spending taxpayer funds.
The second recommendation in this category (Recommendation 23) states that the City should amend the code to require that all informal bids be obtained in writing. The current code indicates that informal oral bids/quotes are acceptable for Level 2 purchases (between $7,500.01 and $25,000). While the City’s Procurement Manual/Administrative Regulation does require that informal bids be obtained in writing, it is suggested to update the Municipal Code as well, which is considered a best practice and allows the City to best substantiate informal bids/quotes received to compare and award based on the lowest prices offered. Staff has proposed language edits to effectuate this recommendation and is now also proposing the additional language that bids can be solicited/received by electronic bidding platform or alternative methods.
The third recommendation (Recommendation 24) indicates that the City should amend the Municipal Code to clarify the intent and use of competitive bidding exceptions. The current language states that the bidding requirements of the code “shall not be required in the following circumstances” and lists the nine general areas for bidding exceptions.
Rather than amend the Municipal Code, staff recommends that the purchasing administrative regulation be updated to include recommendations for evaluating professional services and other exceptions as there may be instances where it is in the best interest of the City to pursue requests for qualifications, proposals, or formal quotes to ensure the City is receiving the best value and pricing for the goods or services it procures.
The Audit and Finance Committee was agreeable to the three recommendations presented above. A fourth recommendation (Recommendation 22) to include a designee for the City Manager is no longer needed due to its presence in another area of the Municipal Code.
Staff Municipal Code recommendations
In addition to the above, Staff is also recommending additional edits to the Municipal Code including changes to the multiyear contracts clause, updates for information technology specific purchases and litigation legal services, and other changes detailed below.
Multiyear contracts
The current multiyear contracts clause of the municipal code states that “the appropriate contracting officer may approve a multiyear contract, provided that the cumulative value of the multiyear contract does not exceed the contracting officer's purchasing authority.” This means that a department head, currently with Level 1 purchasing authority up to $7,500, could not enter into a multiyear agreement for five years for $2,000 per year, as the combined contract value needs to be evaluated against the purchasing authority. In this example, the contract would become a Level 2 contract, valued at $10,000 (5 years * $2,000), which would require the approval of the Director of Finance. The same general example could be made which would apply to the Level 2, assuming a five year contract at $10,000 annually ($50,000 aggregate value – requiring City Manager approval) or for Level 3, assuming a five year contract at $15,000 annually ($75,000 aggregate value – requiring Council approval). This ultimately results in many routine, annual contracts for relatively small amounts requiring City Council approval, resulting in significant staff effort and time to prepare, review, and place items on the agenda. It was initially recommended that the annual value of a contract be considered when applying the purchasing authority limits. In a City where demands are high for new projects and services, this would assist departments in being able to enter into these contracts more quickly, but with the same level of compliance required on an annual basis for obtaining quotes/formal bids, respectively based on the annual purchasing thresholds.
The Audit and Finance Committee expressed interest in considering a limitation of this provision and also wanted more information on best practices for multiyear contracts pertaining to aggregating authority. As a result, staff reevaluated the recommendation and is recommending that the Municipal Code state that the appropriate contracting officer may approve a multiyear contract, provided that the potential cumulative annual value of the multiyear contract as potentially extended does not exceed three times the contracting officer's purchasing authority. As examples, this would limit department heads, the Director of Finance, and City Manager to enter into multiyear contracts cumulatively valued at $30,000, $150,000, and $300,000, respectively.
Also within this section of the code, staff had initially recommended adding additional language requiring the appropriate contracting officer to conduct the applicable bidding procedures in the event the same vendor has been utilized for a period of five consecutive years. Staff has reconsidered this language addition as this is already current practice to revisit vendors which have provided services for five years and will rely on further clarification in the purchasing policy/administrative regulations regarding this practice.
Technology contracts
Staff initially recommended including a provision allowing the Chief Information Officer/Director of Information Technology to authorize the purchase of computer software, hardware and related equipment, licenses and subscriptions (“computer software/hardware”) the following criteria are met:
a. The annual cost of the purchase, installation, and maintenance of the computer software/hardware is less than the Level 4 purchase limit, b. The contract contains an automatic renewal,
c. The terms of the contract are provided to the City by the selected contractor, and d. The City cannot negotiate the terms of the contract.
After reviewing this topic with the Audit and Finance Committee and revisiting the values of these agreements with the Chief Information Officer, and given the proposal to increase the purchasing limits, this recommendation is being removed from consideration.
Litigation services
Staff also recommends that an additional provision be added such that legal litigation services contracts may be exempted from the requirement to issue a purchase order due to the confidential nature of the fees anticipated. This would allow for the purchase order requirement to be waived and litigation services paid from a Council approved legal services contract, provided the responsible department does so within its appropriated budget. If additional funding should be required, an appropriation request will be brought before the City Council. The City Attorney’s Office and the Audit and Finance Committee were agreeable to this recommendation.
Additional proposals
There are some additional changes proposed including the following, to which the Audit and Finance Committee did not object:
1. Change Level 3 and 4 from disseminating bids to three bidders to also including open solicitation of bids. This helps ensure the City seeks additional and new bidders and does not just obtain bids from past competitors, and technology makes this much easier to accomplish now.
2. The change from quarterly to annual reporting of level 2 and 3 awarded purchases and contracts at the conclusion of the fiscal year.
3. Changes to the exception section 3-3-112 to include:
a. Expanded exception A to include additional examples (utility or communications services; insurance, postage, freight and courier service; education and training expenses; subscriptions).
b. Added exception when the needed equipment, supplies or services are proprietary items of original equipment manufacturers and/or their authorized exclusive distributors.
c. Added exception when the equipment is a component for equipment or a system of equipment previously acquired by the City, and is necessary to repair, maintain or improve the City’s current utilization of the equipment. d. Added additional clause for entire section. “Nothing in this Section prohibits the purchasing agent, or relevant contracting officer from requiring more stringent bidding requirements for a purchase that falls under one of the exceptions listed above.”
e. Sole source section moved from 3-3-108 to exception section 3-3-112 as it is an exception and makes sense to move the definition into the exception itself. This section was also changed from City Manager approving all sole source vendors to the purchasing agent (i.e. Director of Finance).
New additions subsequent to the Audit and Finance Committee presentation include the following:
1. Added definition of electronic bidding platform to add that solicitation and receipt of bids may be through a computing or digital software platform.
2. Updated 3-3-112 exception A to expand exceptions and removed qualifying language “when competition does not exist.”
3. Other minor grammatical changes and reference updates (e.g. capitalizing City, Director, City Manager, Purchasing Agent, and removal of duplicative references within levels 2, 3, 4 to the exception section 3-3-112).
4. Removal of “welfare” from the definition of an emergency situation in 3-3-206.
5. Added requirement that urgent purchases must also be reported to the City Council along with emergency purchases (3-3-206 B).
Additional Management Partners Recommendations
In addition to the municipal code recommendations from MP and staff detailed above, there are an additional 30 recommendations included in the report, falling into eight additional major categories and three minor categories, which are summarized below:
Major Categories Summary of Recommendations Comments
Purchasing
Partnership
Four recommendations summarize
the need for Finance to play a larger
role in citywide procurements,
including moving toward more of a
partnership approach, moving
Finance involvement/reviews to the
start of the process (rather than at the
end where things currently reside),
allowing Finance procurement team
members to help evaluate strategic
procurement opportunities and as
needed procurement functions.
Per request and currently
on a limited basis, Finance
provides additional
procurement support using
existing resources. To
reevaluate and plan after
recruitment of Purchasing
Manager position.
Staffing Recommendation to hire a
Purchasing Manager position to allow
for greater purchasing involvement
and partnerships with other
departments. Finance converted an
existing position with additional salary
savings to fund this position and has
worked with HR to develop the new
job classification and salary, which
has been approved by Council.
Job classification created
and salary approved by
Council.
Accountability
and Performance
Three recommendations including
evaluating cycle times, establishing
performance measures and
benchmark cycle times for the
procurement process, and
implementing accountability and
training measures.
Cycle times to be
evaluated/proposed upon
hiring of Purchasing
Manager.
Training to continue
annually at department
levels, with a formal
program to be developed.
Contracts Ensure templates are updated,
maximize the use of electronic
signatures, establish a dollar
threshold for written agreements for
services, and reevaluate the
necessity for multiple contract
signatories.
City will continue to require
all service agreements to
have contracts regardless
of threshold (CAO) and
maintain contract
signatories.
Electronic signatures now
used for all agreements
(COVID development).
Contract templates most
recently updated to include
required Federal
procurement language.
Will establish annual review
process and ensure all go
to new source documents.
Insurance
Reviews
Establishing insurance tracking as a
risk management function, create
example scenarios or list of vendors
detailing insurance requirements to
help expedite the contract process,
establish review by exception in
conjunction with other workflow
approvals.
Will continue to be
evaluated by the Risk
Management division of HR
in conjunction with the
Purchasing division.
Training,
Meetings,
Manuals
Departments to designate purchasing
liaisons, purchasing to establish
solution based meetings/schedule,
conduct citywide and department
specific trainings for purchasing and
Finance division roles to increase
understanding of other functions,
seek input for updating the
purchasing policy/materials.
In progress pending
recruitment of Purchasing
Manager.
Purchasing trainings occur
at department level
currently and input
meetings are held for the
annual blanket purchase
order process to review
citywide deadlines and
questions regarding the
process.
Purchase Card
Policy and
Practices
Evaluate opportunities to maximize
value of purchase card program,
accountability and control
mechanisms to evaluate purchase
card program, establish guidelines
identifying when purchase orders are
not needed and when purchase cards
can be used. Increase purchase card
monitoring and periodic audits.
Will be revising the
Purchase Card
Administrative Regulation.
Will conduct a
comprehensive review of
purchase card use and
make recommendations to
Department Heads
regarding their use and
number of cards issued.
Will develop regular
reviews of citywide
purchase card activity.
RFP, RFQ, Bid
Consistency
Establish a consistent approach for
conducting and evaluating RFP/RFQ
responses, include the use of a
conflict of interest form, and evaluate
current bid protest practices.
Pending hiring of
Purchasing Manager for full
development.
Standardized RFP/RFQ
format in development by
purchasing specialists.
Minor Categories Summary of Recommendations Comments
Survey and
Needs
Assessment
Conduct periodic internal customer
service surveys, utilize feedback, and
conduct needs assessment for
procurement training.
Pending hiring of
Purchasing Manager to
oversee.
Munis Workflows Explore opportunities to reduce
workflow approvals in the Munis
system.
Subject to Department
preference with Finance
input.
Docketing Reevaluate the docketing
requirements to increase efficiency in
contract approval routing by
establishing service level
expectations and working toward
achieving targeted goals.
Subject to City Clerk’s
office review.
The implementation of the above recommendations is contingent upon additional staffing added to the purchasing division (i.e. the recruitment of the Purchasing Manager position). Upon the hiring of a Purchasing Manager, the recommendations will be evaluated again along with the development of a formal timeline.
RECOMMENDATION
Finance staff recommends and seeks approval on the following summary of recommendations, including amending the municipal code and inclusion of purchasing limits and update to the associated resolution to no longer include reference to purchasing limits. Contingent upon Council approval to move forward, a companion item is on the evening formal session for the first reading of the ordinance (including purchasing limits) and approval of the updated resolution (removing reference to purchasing limits).
1. Update the purchasing limits:
Levels Contracting Officer
Position
Proposed Limit Proposed Bid Requirements
1 Department Head Up to $10,000 No bids required
2 Director of Finance Up to $50,000 Informal written quotes/bids solicited/received by
electronic bidding platform
or alternative method
3 City Manager Up to $100,000 Formal written bids
solicited/received by
electronic bidding platform
or alternative method
4 City Council Over $100,000 Formal written bids
solicited/received by
electronic bidding platform
or alternative method
2. Clarify that quotes/bids must be submitted in writing and through the use of electronic bidding platform or alternative method, including for public contracts.
3. Allow contracting officers the ability to enter into multiyear agreements where the annual amount does not exceed their three year purchasing authority.
4. Include additional legal litigation services clause exempting them from the requirement to issue a purchase order provided the spending does not exceed the respective department’s appropriated budget.
5. Change Level 3 and 4 from disseminating bids to three bidders to including open solicitation of bids. This helps ensure the City seeks additional and new bidders and does not just obtain bids from past competitors.
6. The change from quarterly to annual reporting of level 2 and 3 awarded purchases and contracts at the conclusion of the fiscal year.
7. Changes to the exception section 3-3-112 to include:
a. In exception A, where competition does not exist, added additional examples (utility or communications services; insurance, postage, freight and courier service; education and training expenses; subscriptions). b. Added exception when the needed equipment, supplies or services are proprietary items of original equipment manufacturers and/or their authorized exclusive distributors.
c. Added exception when the equipment is a component for equipment or a system of equipment previously acquired by the City, and is necessary to repair, maintain or improve the City’s current utilization of the equipment. d. Added additional clause for entire section. “Nothing in this Section prohibits the purchasing agent, or relevant contracting officer from requiring more stringent bidding requirements for a purchase that falls under one of the exceptions listed above.”
e. Sole source section moved from 3-3-108 to exception section 3-3-112 as it is an exception and makes sense to move the definition into the exception itself and approval authority changed from City Manager to Director of Finance.
8. Added definition of electronic bidding platform to add that solicitation and receipt of bids may be through a computing or digital software platform.
9. Updated 3-3-112 exception A to expand exceptions and removed qualifying language “when competition does not exist.”
10. Other minor grammatical changes and reference updates (e.g. capitalizing City, Director, City Manager, Purchasing Agent, and removal of duplicative references within levels 2, 3, 4 to the exception section 3-3-112).
11. Removal of “welfare” from the definition of an emergency situation in 3-3-206.
12. Added requirement that urgent purchases must also be reported to the City Council along with emergency purchases (3-3-206 B).
Tatiana Szerwinski
Assistant Director of Finance
Jeff S. Muir
Director of Finance
Approved By Approved By
Attachment 1
December 2019
City of Beverly Hills, California
Optimizing the City’s Purchasing Processes
1730 MADISON ROAD • CINCINNATI, OH 45206 • 513 861 5400 • FAX 513 861 3480 MANAGEMENTPARTNERS.COM 2107 NORTH FIRST STREET, SUITE 470 • SAN JOSE, CALIFORNIA 95131 • 408 437 5400 • FAX 408 453 6191 3152 RED HILL AVENUE, SUITE 210 • COSTA MESA, CALIFORNIA 92626 • 949 222 1082 • FAX 408 453 6191 December 30, 2019
Mr. Jeff Muir
Finance Director
City of Beverly Hills
455 North Rexford
Beverly Hills, CA 90210
Dear Mr. Muir:
Management Partners is pleased to transmit this report containing recommendations for optimizing the City of Beverly Hills’ purchasing processes. We were engaged to review the level of decentralization and identify ways to improve processes, staffing and organization structure, as well as policies and procedures.
We are proposing a partnership approach to purchasing that engages Finance purchasing staff in new ways along with operating departments. We believe that the recommendations will improve the procurement experience for staff and meet policy objectives pertaining to purchasing.
As part of our review, we conducted interviews with City staff throughout the organization, gathered comparative information on peer cities, reviewed City policies and procedures, and created process maps. We have provided 34 recommendations that include increasing Purchasing Division staffing to enhance customer service and assistance, streamlining steps in the purchasing process, and changing a variety of practices that will result in a more efficient process.
Thank you for the opportunity to be of assistance to the City of Beverly Hills.
Sincerely,
Jerry Newfarmer
President and CEO
Optimizing the City’s Purchasing Processes
Table of Contents Management Partners
i
Table of Contents
Executive Summary .................................................................................................................................. 1 Major Observations.......................................................................................................................... 2 Recommendations............................................................................................................................ 3 Compliance with Uniform Guidance Requirements................................................................... 3 Organization of the Report ............................................................................................................. 4 Background and Project Approach........................................................................................................ 5 Summary of Approach .................................................................................................................... 5 Interviews.......................................................................................................................................... 5 Major Interview Themes............................................................................................................. 6 Focus Group...................................................................................................................................... 7 Focus Group Themes................................................................................................................... 7 Comparative Information ............................................................................................................... 8 Document Review............................................................................................................................ 9 Process Mapping .............................................................................................................................. 9 Key Observations........................................................................................................................ 9 Process Maps Created............................................................................................................... 11 Existing and Proposed Purchasing Models........................................................................................ 12 Centralized and Decentralized Purchasing Systems................................................................. 12 National Trends........................................................................................................................ 12 Beverly Hills Decentralized Purchasing Model......................................................................... 14 Purchasing Resource Allocation and Utilization....................................................................... 15 Current Finance Department Purchasing Function ................................................................ 15 Peer Agency Staffing Comparisons .......................................................................................... 17 Proposed Finance Department Purchasing Function............................................................... 18 Benefits of Proposed Purchasing Restructuring....................................................................... 19 Departmental Purchasing Functions ....................................................................................... 21 Communication, Collaboration and Training............................................................................ 22 Lengthy Bidding Processes ........................................................................................................... 23 Lack of Established Turnaround Times or Systematic Tracking .............................................. 26 Optimizing the City’s Purchasing Processes
Table of Contents Management Partners
ii
After-the-Fact Approvals .............................................................................................................. 27 Purchasing Policies and Procedures.................................................................................................... 28 Internal Policies and Procedures.................................................................................................. 28 Purchasing Card Program........................................................................................................ 29 Inconsistent RFP/RFQ Processes............................................................................................. 32 Municipal Code and Purchasing Approval Levels ................................................................... 32 Professional Services Procurements ......................................................................................... 34 Streamlining Written Agreements............................................................................................... 35 Risk Management and Tolerance................................................................................................. 37 Other Business System Considerations.............................................................................................. 40 Bid Protest Procedures .................................................................................................................. 40 Areas Noted for Further Review.................................................................................................. 40 Inventory Management ............................................................................................................ 40 Form 700 Filer Status............................................................................................................... 40 Council Agenda/Report Management...................................................................................... 41 Conclusion................................................................................................................................................ 42 Attachment A – List of Recommendations......................................................................................... 43 Attachment B – Formal Competitive Request for Proposals Process Maps................................. 45 Attachment C – Peer Comparisons ...................................................................................................... 46 Benchmarking and Peer Agency Framework ............................................................................ 46 Identifying Comparable Peers................................................................................................... 46 Peer Agency and Benchmarking Information............................................................................ 47 Centralized or Decentralized Purchasing Systems................................................................... 48 Purchasing Division Staffing Levels........................................................................................ 49 Bidding Thresholds and Contract Award Authorities.............................................................. 49 Procurement Cycle Times......................................................................................................... 50 Procurement Negotiations........................................................................................................ 51 Purchase Orders and Change Orders....................................................................................... 52 Purchasing Card Program Utilization ..................................................................................... 52 Conclusion....................................................................................................................................... 54 Optimizing the City’s Purchasing Processes
Table of Contents Management Partners
iii
Tables
Table 1. City Staff Interviewed by Management Partners................................................................ 6 Table 2. Peer City Staffing and Expenditures.................................................................................... 18 Table 3. Current and Proposed Cycle Times for RFP Process Phases........................................... 26 Table 4. Purchasing Card Program Benchmark Statistics ............................................................... 30 Table 5. Peer Agency Comparison of Contract Award Authority ................................................. 33 Table 6. Summary of Peer Cities .......................................................................................................... 47 Table 7. Peer City Staffing and Expenditures.................................................................................... 49 Table 8. Bidding Thresholds and Contract Award Authority........................................................ 50 Table 9. City of Beverly Hills Purchasing Card Benchmark Statistics ......................................... 53 Table 10. Percentage of Transactions Completed using P-card Programs ................................... 53 Table 11. Beverly Hills Purchasing Card Expenditures and Transactions Breakdown for FY 2018-19........................................................................................................................................... 54 Table 12. Beverly Hills Annual Purchasing Card Expenditures and Transactions .................... 54 Figures
Figure 1. Breakdown of Most Common Purchasing Organization Structures............................ 13 Figure 2. Organization Chart for the Current Finance Department Purchasing Function........ 16 Figure 3. Proposed Finance Department Functional Organization Chart.................................... 19 Figure 4. Cycle Times for Small Purchases and Competitive Bids/Proposals............................. 24 Figure 5. Request for Proposals: Involvement by Procuring Department and Process Approvers ................................................................................................................................................. 25 Figure 6. Comparison of Monthly Purchasing Card Spending and Number of Transactions. 31 Figure 7. Standard Risk Tolerance Matrix.......................................................................................... 38 Figure 8. Breakdown of Most Common Purchasing Organization Structures............................ 48 Figure 9. Cycle Times for Small Purchases and Competitive Bids/Proposals............................. 51 Figure 10. Percentage of Surveyed Cities Where Procurement Is Involved in Negotiations ... 51 Figure 11. Percent of Total Purchase Orders that are Change Orders........................................... 52 Optimizing the City’s Purchasing Processes
Executive Summary Management Partners
1 Executive Summary
Management Partners was engaged to review the City’s decentralized purchasing system and provide recommendations to improve processes, staffing and organization structure, policies and procedures, and identify opportunities to employ modern purchasing tools and practices.
The objective was to improve the overall efficiency of the procurement process, identify ways that the City can ensure compliance with purchasing policies and other regulatory procedures while ensuring that operations department staff have the goods and services needed to deliver valued services.
City leaders identified several issues as the impetus for this project:
• Purchasing processes frequently take too long to complete, (especially formal competitive bidding) and the manual execution of written agreements causes delays.
• The purchasing card program may not be operating optimally. • Management oversight of purchasing functions throughout the decentralized system may not be commensurate with the level of purchasing activity.
• The procurement function may not be appropriately staffed. • Federal laws have recently changed regarding purchases that utilize grant funding.
Through our analysis we found that the role of Finance purchasing staff is a “back-end” compliance work unit rather than as an internal service partner that can assist operating departments in achieving their objectives of obtaining goods and services in a timely manner, while complying with various laws, policies and ethical practices.
A partnership approach between operating departments and Finance purchasing staff that maximizes procurement expertise and increases procurement facilitation options would reflect best practices in public procurement and enhance accountability and foster interdepartmental collaboration. The recommendations in this report are all focused on creating a meaningful partnership between operating departments and Optimizing the City’s Purchasing Processes
Executive Summary Management Partners
2 Finance purchasing staff to carry out important service delivery objectives of the City.
Major Observations
The following are major observations that informed this report and the recommendations.
• The City utilizes a decentralized purchasing model through which all tasks for bidding and sourcing procurements are performed by staff within operating departments. There is essentially no involvement of Finance Department purchasing staff until the very end of a procurement, when Finance must determine
whether the operating department has complied with City policies. Putting Finance at the end of the process has naturally led to frustrations on the part of operating departments and is an inefficient use of professional purchasing staff.
• The Finance Department’s current purchasing staffing levels are insufficient to offer core purchasing services. Services should include providing helpful customer service and procurement process facilitation to departments, conducting competitive bidding and negotiating, and ensuring compliance with City policies and procedures.
• Best procurement management practices are not being used.
Incorporating new practices would support timely, customeroriented or strategic processes that would also ensure the best overall value for public funds spent.
• Operating department staff who perform purchasing functions rely on past practices (largely “oral history”) within their departments or what staff in other departments tell them are the purchasing procedures. They do this rather than consult with Finance Purchasing Division staff or read the City’s purchasing policy manual (which is lengthy and regarded as not easy to use). • Thresholds requiring Council approval on contracts are low compared with peer jurisdictions, and those contracts take longer to process. Thresholds have not been increased since 2006 and our process mapping shows the delays involved in processing contracts above the City Manager level.
Optimizing the City’s Purchasing Processes
Executive Summary Management Partners
3 Recommendations
We have identified 34 recommendations to improve and streamline the purchasing function. A full list of recommendations is provided in Attachment A. The process maps are provided in Attachment B, and benchmarking/peer cities’ comparison information is provided in Attachment C.
Major Recommendations. Major recommendations follow:
• Move from the current decentralized system to a partnership purchasing system that maximizes and effectively utilizes procurement expertise throughout the organization. The focus should be on a combination of customer service, efficiency, and compliance with City policies.
• Augment and restructure staffing in the Purchasing Division to add a full-time purchasing services manager. Consider either upgrading, retitling or amending job duties of existing positions to ensure functions of buying, customer service and related purchasing duties are included.
• Formally designate one or more purchasing liaisons in each operating department to carry out purchasing activities with full knowledge of City purchasing policies and procedures. These liaisons will serve as an extension of purchasing, which will help ensure policy compliance and enhance interdepartmental
collaboration.
• Reorganize and revise the purchasing manual so it is easier to use as a key tool for purchasing liaisons and Finance staff. • Amend the purchasing resolution to increase the purchasing approval thresholds for the City Manager, Finance Director and department heads to $100,000, $50,000 and $10,000, respectively, and provide updated training on the new thresholds.
Implementation. Implementing the recommendations contained in this report will require collaboration between the operating departments, Finance Department managers and the City Manager’s Office, and an effective strategy to facilitate changes in a measured way to maximize value and ensure success.
Compliance with Uniform Guidance Requirements
As the project progressed, it became apparent that policies had not been revised to reflect updated requirements for making purchases with federal grant funding. These new Uniform Guidance requirements are established in the Code of Federal Regulations (2CFR 200.318 to 200.326).
Additional sections impacting local governments include audit Optimizing the City’s Purchasing Processes
Executive Summary Management Partners
4 requirements, cost principles, financial management, internal controls and performance measurement.
The requirements became law in 2015 but the deadline for local government compliance was extended to June 30, 2018. Finance management staff have been working with the City Attorney’s office and Human Resources staff to finalize required policy updates.
Organization of the Report
This report is divided into the following areas:
• Background and Project Approach
• Existing and Proposed Purchasing Models
• Purchasing Policies and Procedures
• Other Business System Considerations
• Conclusion
Optimizing the City’s Purchasing Processes
Background and Project Approach Management Partners
5 Background and Project Approach
Beverly Hills is a full service, general law city in Los Angeles County with a residential population of approximately 35,000 and a land area of nearly six square miles. The FY 2019-20 operating budget is approximately $439.7 million (with a General Fund of $246.2 million). The organization consists of 12 departments and 825 full-time employees, as well as more than 200 part-time employees.
In FY 2019-20 the City budgeted approximately $18 million for materials and supplies and $77 million for contractual services. Purchasing is a significant undertaking for the City of Beverly Hills. As such, it needs to meet policy and legal guidelines for local governments and be organized in a way that is efficient for operating departments that need goods and services.
Finance Department purchasing staff consist of 2.5 full-time equivalent employees (FTE). These are two full-time purchasing specialist positions (2.0 FTE) with oversight and management by both the assistant director (0.2 FTE) and accounting manager (0.3 FTE).
Summary of Approach
The project began with a meeting with the Assistant City Manager and Finance Director where components of the review were discussed, a draft schedule was provided, and questions were answered. Following this, Management Partners’ team members conducted interviews, reviewed relevant documents, facilitated one focus group, gathered comparative information about peer cities, and developed two purchasing process maps. The analysis, general observations and recommendations presented in this project report were informed by the information gathered as part of these activities.
Interviews
Following the kickoff meeting and during the next few weeks, Management Partners conducted interviews with Beverly Hills’ staff in the Finance Department and department heads. The purpose of the interviews was to learn about the City’s purchasing system and processes Optimizing the City’s Purchasing Processes
Background and Project Approach Management Partners
6 as well as what is working well and what could be improved. In addition to the initial interviews, we conducted many follow-up discussions throughout the project. Individual and group interviews were conducted with the following staff:
Table 1. City Staff Interviewed by Management Partners
Interviewees
• City Manager • Assistant Director of Public Works (2) • Assistant City Manager • Library Services Manager
• City Auditor • Assistant Director of Community Services • City Attorney • Interim Director of Community Services • Director of Finance • Chief of Police
• Assistant Director of Finance • Assistant Chief of Police • Accounting Manager • Lieutenant
• Budget and Revenue Officer • City Clerk
• Purchasing Specialist (2) • Fire Chief
• Executive Assistant, Finance • Assistant Fire Chief
• Finance Planning and Research Analyst • Fire Administrator • Director of Human Resources • Chief Information Officer • Director of Community Development • Assistant Chief Information Officer • Director of Public Works
Major Interview Themes
The interview process provided an opportunity for City staff to share candid thoughts about policies, procedures, workflows and interpersonal interactions to help Management Partners’ team members assess what is working well and where processes can be improved.
Interviewees expressed the following themes:
• Getting things done quickly is highly valued in the organization which can mean that policy compliance and competitive
procurement processes are viewed as secondary priorities. • Interviewees largely regard the purchasing function as a roadblock to completing purchases rather than a collaborative process.
• Interviewees see the purchasing function within the Finance Department as a payment facilitation task.
• City staff regard purchasing approval thresholds as low. • Interviewees said that their staff “learn purchasing by doing” when someone is assigned purchasing tasks, rather than through formalized training.
• Interviewees perceive that customer needs are not always considered when policy and procedure changes are made and that Optimizing the City’s Purchasing Processes
Background and Project Approach Management Partners
7 the Finance Department could improve its customer service orientation.
• Most interviewees indicated that some procurement centralization is needed but are unsure if positive change will result.
Focus Group
After the kickoff meeting and preliminary interviews, we held a focus group with management analysts and other employees from each department to understand more detail about some of the issues that surfaced during the interviews. Twelve employees including both finance staff and purchasing liaisons from various departments participated in a facilitated session.
The focus group included management analysts and/or support staff from each department responsible for the purchasing function who interact directly with the finance department on procurement. The participants provided insights on what is working well and where processes can be improved.
Focus Group Themes
The major themes that emerged from the staffs’ comments in the focus group include:
• Some department staff expressed a strong interest in improving communication with Finance staff to increase understanding and improve outcomes, and noted mutual efforts to do so.
• The purchasing manual is seen as too long and cumbersome and not user friendly. Also, focus group participants perceive that updates to the manual are not always adequately communicated to department staff.1
• Department staff tend to rely on past practices in departments or ask employees in other departments rather than reviewing the policy manual or consulting with Finance purchasing staff. • The Tyler Technologies Munis Financial System (Munis) process and workflows are seen as time consuming and are not intuitive. 1 Finance Department management staff noted that updates to administrative policies are emailed to all employees by the City Clerk’s Office and the latest purchasing policy updates were emailed to department staff involved in purchasing processes in December 2017. However, training on procedural changes was not conducted when the policy updates were sent out.
Optimizing the City’s Purchasing Processes
Background and Project Approach Management Partners
8 Additional training on how to effectively use the software is desired by staff, as expressed by focus group participants. • Staff expressed strong interest in training about specific purchasing policies and procedures for department and Finance staff (where appropriate), especially during the onboarding process. • Focus group participants from operating departments expressed uncertainty about where they can get procurement-related questions answered, as they believe there is no purchasing “expert” in Finance. As noted above, users consider the purchasing manual confusing, and rather than consulting either the manual or Finance staff, staff in operating departments typically go to their colleagues who have institutional knowledge to find out how to handle purchases.
• Focus group participants from operating departments said they are confused about the use of purchasing cards and want more clarity. They suggested that improvements can be made through greater collaboration between Finance staff and high-volume purchasers.
Comparative Information
Management Partners worked with Finance Department staff to identify peer agencies for comparison purposes. In addition to cities with comparable services and staffing levels, Management Partners included cities that have received the National Procurement Institute’s Achievement of Excellence in Procurement (AEP) award to ensure the identification of best practices.
The six cities identified as comparative agencies are Burbank, Culver City, Fremont, Mountain View, Santa Monica, and Sunnyvale. A summary of the peer information is provided later in this report.
Additionally, Management Partners utilized two national local government purchasing benchmarking studies to provide context and data for comparison purposes.
• NIGP: The Institute for Public Procurement’s2 2017 Public Procurement Benchmark Survey Report is a report on the results 2In 2011, the National Institute of Governmental Purchasing (NIGP) rebranded as “NIGP:
The Institute for Public Procurement.” NIGP continues to be the acronym most often associated with the organization. The “National Institute of Governmental Purchasing” is the legal name of the entity but is reserved principally for legal documents and formal business communications.
Optimizing the City’s Purchasing Processes
Background and Project Approach Management Partners
9 of a standardized survey that gathered public sector procurement data. The survey focused on specific operating practices and processes and is used in this project report to help provide benchmarks and context for Beverly Hills’ purchasing function. • RPMG Research Corporation’s 2017 Purchasing Card Benchmark Survey provides purchasing card benchmark data for local agencies across the U.S. and Canada based on 3,500 surveyed governments.
Document Review
Management Partners’ team reviewed a variety of relevant documents, including budget documents, organization charts, administrative policies and procedures, procurement card usage data, list of cooperative purchasing agreements, and other related information.
Process Mapping
Management Partners worked with City staff to identify two processes to map that document step-by-step details and staff roles. The two processes selected for mapping are:
• The formal request for proposals (RFP) process for purchases greater than $50,000, and
• The process by which contracts are prepared, approved and executed.
The maps include the estimated timeframes for the current processes and identified improvements.
To develop the maps, Management Partners conducted two half-day mapping workshops with staff who are involved in the various processes.
This group included management analysts and other department employees involved in RFPs and contract processing, as well as the purchasing team. The step-by-step mapping of interdepartmental workflow processes is an important project component to:
• Validate information shared during the interviews,
• Gain a complete understanding of existing practices,
• Discuss process inconsistencies and pain/pinch points, and • Identify opportunities for improvement.
Key Observations
The mapping sessions were critical in helping Management Partners understand the actual processes used by department staff and by Finance Optimizing the City’s Purchasing Processes
Background and Project Approach Management Partners
10 purchasing staff to complete the procurement cycle from bidding to purchase order issuance. Key observations include:
• Beverly Hills currently utilizes a completely decentralized purchasing model through which department end-users are responsible for conducting their own procurement processes; and the role provided by purchasing/finance staff is to review completed process steps for policy compliance.
• Purchasing staff within the Finance Department do not perform any core purchasing process functions and review the formal bidding and approval processes following department completion of five main stages (RFP scoping, competitive bidding, evaluating, negotiating, and awarding a contract). This lack of procurement facilitation/involvement is neither typical for cities nor a best practice. • Finance purchasing staffs’ sole function is to conduct compliance checks that often result in “holds” on purchase order approvals and cause frustration for staff anticipating a quick turnaround. (Final approvals in the financial system workflow consist of Finance, Purchasing and the City Manager’s Office.) Having the professional purchasing staff involved at this late point understandably creates friction and works against good customer service.
• The processes used by departments to conduct RFPs and obtain contract approval appear to take substantially longer than best practice standards. We note that staff are not currently measuring cycle times so timeframes for process phases were estimated based on a “moderately complex RFP.”
Optimizing the City’s Purchasing Processes
Background and Project Approach Management Partners
11 Process Maps Created
The initial planned deliverables for our engagement included two maps based on the desired state for each process. The sessions revealed considerable overlap between the two processes and several areas where inefficiencies are occurring, as well as opportunities for improvement through strategic purchasing assistance or automation.
Therefore, the following process maps were created:
• A consolidated map highlighting the inefficiencies of each process and noting opportunity areas for improvement, and
• An updated version with recommended process changes and associated time savings.
Portraying the maps in this fashion is more effective in understanding the changes needed for meaningful improvements.
Each version of the process map is provided in Attachment B.
Optimizing the City’s Purchasing Processes
Existing and Proposed Purchasing Models Management Partners 12 Existing and Proposed Purchasing Models
This section provides Management Partners’ observations and recommendations in the following areas:
• Centralized and Decentralized Purchasing Systems,
• Beverly Hills Decentralized Purchasing Model,
• Purchasing Resource Allocation and Utilization,
• Communication, Collaboration and Training,
• Lengthy Bidding Processes, and
• After-the-Fact Approvals.
Centralized and Decentralized Purchasing Systems
Depending on several factors such as governance structure, organizational culture and risk tolerance, cities’ purchasing operations are either centralized, decentralized or a combination of both. • A centralized system is one in which the policy basis and responsibility for conducting all procurement processes and obtaining appropriate approvals resides with finance purchasing staff.
• A decentralized system is where the responsibility for purchasing (regardless of whether it is based in policy), resides with the user department. In decentralized environments, finance/purchasing staff are responsible for verifying user department compliance with policies and procedures and approving purchase orders (generally viewed as perfunctory roles by user departments). • A combination of both is where the policy basis/responsibility is typically centralized but varying levels of procurement authority are delegated to user departments for operational reasons.
National Trends
According to the NIGP: The Institute for Public Procurement’s 2017 Public Procurement Benchmark Survey Report (2017 NIGP survey report), 74% of respondents indicated that their agencies use some form of centralized purchasing, with 50% responding that they use a centralized purchasing system with delegated authority and 24% indicating that purchasing Optimizing the City’s Purchasing Processes
Existing and Proposed Purchasing Models Management Partners 13 authority rests with a centralized procurement division (see Figure 1). As the figure shows, nearly three-fourths of respondents utilize a form of centralized purchasing as opposed to using a decentralized system (23%).
Figure 1. Breakdown of Most Common Purchasing Organization Structures1 .
Source: NIGP 2017 Public Procurement Benchmark Survey Report. 1The breakdown is based on 125 survey respondents as follows: 29 agencies reported a decentralized system; 30 agencies reported a centralized system; and 62 entities reported a centralized system with some delegated authority (the remaining 4 respondents indicated “other” as explained in the note below). 2Almost all procurement is performed through a central procurement function. 3Most procurement is performed through a central procurement function, with some procurement delegated to departments.
Note: The final 3% of survey participants selected “Other,” indicating either that their procurement department did not fall within the two categories or that they were unsure how to answer the question.
Additionally, five of the six peer agencies have some form of centralized purchasing (Burbank, Culver City, Mountain View, Santa Monica and Sunnyvale), while the City of Fremont utilizes a decentralized system.
Based on the relatively low number of survey respondents from Figure 1 (and available benchmarking data), it is challenging to scale the distribution of centralized or decentralized entities according to agency size. That said, NIGP includes this best practice statement in its 2014 position paper on procurement authority in public entities:
To achieve a procurement process that delivers the most strategic, effective, ethical and economical expenditure of public funds, it is important to establish an independent professional procurement function led by a Chief Procurement Officer who is granted procurement authority and is allowed to delegate responsibilities to trained procurement staff within a centralized purchasing division. This approach maintains the benefits of best procurement practices conducted 23% 50%3
24%2
0 10
20 30
40 50
60 70
80 Decentralized with central review Centralized
Optimizing the City’s Purchasing Processes
Existing and Proposed Purchasing Models Management Partners 14 in a professional manner and thereby preserves the transparency and accountability of practice necessary for effective organizational management and thereby affirms the public’s trust.
By contrast, a decentralized procurement process, under the supervision of many people independently exercising divided procurement authority (especially by those who are not procurement professionals), is less likely to achieve the strategic procurement objectives of the organization while increasing its exposure to financial, legal and reputational risks.3 Beverly Hills Decentralized Purchasing Model
In Beverly Hills, the purchasing function was completely decentralized at least 20 years ago, with staff in operating departments functioning as their own purchasing agents and purchasing staff in the Finance Department performing policy compliance checks and approving purchase orders. Within the decentralized system the processes for bidding and sourcing procurements are performed by department staff with virtually no involvement of Finance purchasing staff.
City leaders are interested in evaluating the operational effectiveness of the existing decentralized model to ensure that:
• All procurements are conducted efficiently and are policy compliant,
• The procurement function is appropriately resourced,
• Management oversight throughout the system is commensurate with the level of purchasing activity.
Finance Purchasing Staff Members’ Role. As mentioned previously, the primary role of Finance purchasing staff is to perform back-end “compliance checks” of documentation provided by end-user departments. This does not position them to work collaboratively with department staff since they are coming into the process when users just want to issue a purchase order. In addition to Finance
management/purchasing and City Manager’s Office, staff also have a role in the compliance checks.
The compliance checks often result in questions by Finance purchasing (or other approving) staff regarding missing, incorrect or incomplete 3 Procurement Authority in Public Entities: A position paper from NIGP: The Institute for Public Procurement on the Meaning of Procurement Authority and the Importance of its Effective Delegation and Use, 2014.
Optimizing the City’s Purchasing Processes
Existing and Proposed Purchasing Models Management Partners 15 documentation (e.g., insurance compliance not verified, insufficient documentation to justify selection, incorrect contract values, etc.). This frustrates Finance purchasing staff because of the perceived indifference to policy requirements (a concern shared by City leaders), as well as requesting departments because of delays in approving purchase orders (sometimes incorrectly attributed to Finance purchasing staff).
Partnership System Needed. Reframing the purpose of the Finance purchasing function from a back-end compliance work unit to an internal service partner that approaches procurements from a critical path perspective to reduce total cycle time would improve the relationship with department staff as well as achieve better outcomes. The focus would be on a combination of customer service, efficiency and compliance with City policies.
Recommendation 1. Transition the current
decentralized purchasing system to a partnership system that maximizes and effectively utilizes procurement
expertise early in the procurement process.
Recommendation 2. Provide opportunities for Finance
purchasing staff to be engaged in all procurement
phases. Departments can opt to conduct their own
procurements but would have additional flexibility to
request assistance from Finance purchasing staff as needed or necessary.
Purchasing Resource Allocation and Utilization
With fundamentally decentralized systems, it is important and necessary to effectively allocate and utilize purchasing expertise throughout the organization so policies are consistently followed and efficiencies maximized. The City’s current model of “back-end” purchasing compliance is unbalanced and does not meet this standard.
Current Finance Department Purchasing Function
The FY 2018-19 Adopted Budget includes a 2.5 FTE allocation for the purchasing function within the Finance Department as follows:
• 0.2 FTE allocated to the assistant finance director,
• 0.3 FTE allocated to the accounting manager,
• 1.0 FTE for a purchasing analyst, and
• 1.0 FTE for a budget/financial analyst.
Optimizing the City’s Purchasing Processes
Existing and Proposed Purchasing Models Management Partners 16 The allocation of 2.5 FTE associated with purchasing represents the addition of 1.0 FTE over historical levels as Finance has begun shifting priorities to dedicate more resources to procurement.
The analyst positions are included in the FY 2019-20 Operating Budget but have been underfilled with two new purchasing specialists following the departure of two purchasing analysts through retirement and relocation. The analyst positions were underfilled to grow the purchasing team and provide promotional opportunities within the purchasing division for longer term business continuity. Underfilling these positions was augmented by adding management analysts to some departments to cover purchasing duties in the decentralized system. The current resource allocation4 of the purchasing function in the Finance Department is shown in Figure 2.
Figure 2. Organization Chart for the Current Finance Department Purchasing Function Assistant Director of
Finance
(0.2 FTE)
Purchasing Specialist
(2.0 FTE)
Accounting Manager
(0.3 FTE)
Functions
Review department
requisitions for policy and
procedure compliance
Approve financial system
contract and purchase order
requisitions
Provide policy and procedural
guidance when requested
Functions
Purchasing staff oversight
Policy compliance and
guidance
Functions
Purchasing staff oversight
Policy compliance and
guidance
Purchasing training
4The list of functions included in Figure 2 is based on descriptions provided by Finance management and purchasing staff.
Optimizing the City’s Purchasing Processes
Existing and Proposed Purchasing Models Management Partners 17 As Figure 2 illustrates, purchasing oversight is distributed to two management positions, the Assistant Director of Finance and Accounting Manager. They devote a small portion of their time to procurement given their responsibilities managing the other core finance functions of accounting, accounts payable and receivable and treasury management.
We have the following observations:
• The purchasing specialists do not perform core or typical procurement functions such as conducting/facilitating competitive bidding or competitive negotiation processes or evaluating best value opportunities. Their principal role is to ensure “after-thefact” compliance with the City’s Municipal Code and purchasing rules/policies, and assist departments with monitoring functions, but do not engage in purchasing/buying for City departments. • The absence of a full time, hands-on purchasing manager, combined with not fully leveraging existing purchasing staff within the Finance Department, impedes the City’s ability to perform the core governmental purchasing function, to assist City departments in meeting their purchasing needs, and to collaborate with line departments in complex purchasing matters.
• It is difficult for the City to verify that it is obtaining best value for its dollars or if current practices leave the City vulnerable to procurement risk due to the lack of coordinated oversight, the current distributed supervisory role within Finance, and various levels of purchasing focus and oversight throughout departments.
In summary, this means there is not an overall or coordinated focus on procurement management led by a purchasing professional, which is unusual for a city the size of Beverly Hills.
Peer Agency Staffing Comparisons
Our analysis of peer agency staffing resulted in the following observations:
• All jurisdictions dedicate more resources to the procurement function than Beverly Hills and have at least one full-time professional buyer.
• All peer agencies except Mountain View have full-time purchasing managers and four of the agencies have procurement analysts on staff.
• It is also noteworthy that Beverly Hills has more authorized fulltime equivalent employees than four of its peers but has the lowest number of procurement staff. A summary of this
Optimizing the City’s Purchasing Processes
Existing and Proposed Purchasing Models Management Partners 18 information is provided in Table 2 and with more detailed comparative information in Attachment C.
Table 2. Peer City Staffing and Expenditures
Peers
Authorized FullTime Equivalent
Employees
(FTE)1
Purchasing
Division
Authorized FullTime Positions Purchasing Division Positions Beverly Hills 1,034 2.5 Purchasing Specialist (2), Assistant Director (0.2), Accounting Manager (0.3)
Burbank 1,430 6.0 Purchasing Manager (1), Buyer I (2), Buyer II (1), Clerk (2) Culver City 717 8.0
Associate Analyst (1), Buyer (1), Procurement and
Financial Services Manager (1), Warehouse Manager (1),
Warehouse Worker/Stores Specialists (4)
Fremont 953 3.0 Purchasing Services Manager (1), Buyer (2) Mountain View 648 6.02
Purchasing and Support Services Manager (0.5), Senior
Management Analyst (2), Supervising Buyer (1),
Assistant Buyer/Buyer (2), Warehouse Worker (0.5)
Santa Monica 2,298 7.0
Procurement Manager (1), Senior Procurement Analyst
(1), Senior Buyer (2), Contracts Coordinator (1), Buyer (1), Staff Assistant III (1)
Sunnyvale 921 9.02
Purchasing Officer (1), Management Analyst (1),
Principal Buyer (1), Senior Buyer (2), Buyer I/II (1),
Storekeeper/Buyer (1), Storekeeper I/II (2)
Source: City budgets FY 2019-20; includes other functions such as central warehousing for some jurisdictions. 1Includes both full-time and part-time FTEs. 2One additional purchasing FTE proposed for FY 2019-20; two positions (a senior buyer and buyer I/II) are term-limited to backfill for staff supporting implementation of a new financial system.
Proposed Finance Department Purchasing Function
Restructuring the purchasing function within the Finance Department around the delivery of core procurement services and allocating resources appropriately can:
• Build capacity to conduct procurements more efficiently, • Facilitate a greater level of procurement oversight throughout the organization,
• Foster interdepartmental collaboration, and
• Improve customer focus.
A proposed structure is shown in Figure 3 and consists of the following:
• Adding a purchasing services manager (essentially a “working manager” position that can provide more oversight than currently provided, and conduct procurements and perform other core procurement functions); and
Optimizing the City’s Purchasing Processes
Existing and Proposed Purchasing Models Management Partners 19 • Consider either upgrading, retitling or amending job duties of existing positions to endure functions of buying, customer service and related purchasing duties are included.
Figure 3. Proposed Finance Department Functional Organization Chart Assistant Director of
Finance
(0.2 FTE)
Purchasing Services
Manager
(1.0 FTE)
Functions
Purchasing function oversight
Policy compliance and guidance
Purchasing training
Functions
Manage purchasing function
Conduct and facilitate
procurements as-needed
Provide policy and procedural
guidance
Perform compliance reviews
(approve requisitions)
Coordinate, conduct training
and liaison meetings
Interface with management to
resolve compliance issues
Evaluate, recommend and
implement strategic
procurements
Draft policies and procedures
Buyer
(1.0 FTE)
Customer Service
Specialist
(1.0 FTE)
Functions
Provide policy and
procedural guidance
when requested
Prepare bidding
documents
Conduct/facilitate
procurements asneeded
Functions
Provide first contact
resolution for customer
questions
Coordinate process
logistics
Prepare bidding
documents and
correspondence
Policy compliance and
guidance
Benefits of Proposed Purchasing Restructuring
High-performing agencies view the procurement function from a strategic management perspective. This is done to achieve several objectives, including:
• Ensuring best value,
• Maximizing the use of cooperative purchasing programs and other procurement tools,
• Establishing master on-call agreements for ready use by staff, and • Conducting spending and supplier analyses to identify savings opportunities and align policy goals.
Optimizing the City’s Purchasing Processes
Existing and Proposed Purchasing Models Management Partners 20 Structuring the purchasing division as a partnership arrangement with a combination of a more robust Finance purchasing role, combined with continued responsibilities at the operating department level, will help ensure a needed strategic focus within the City. It will enable concerns expressed by City leaders to be addressed, facilitate efficient and effective procurement, and improve customer focus by:
• Establishing a front-line presence with a customer service orientation to focus on “first contact resolution” for questions and provide procurement facilitation support,
• Adding professional public purchasing capacity to conduct or facilitate procurements and approach citywide procurement from a strategic management perspective,
• Eliminating the current need for management oversight by both the assistant director and accounting manager,
• Increasing procurement knowledge of staff who perform purchasing functions in City departments.
This recommended structure is intended to augment, but not replace, the current decentralized system.
• The recommended structure will provide greater procurement flexibility and choice for department staff who may need assistance completing their procurements.
• It will also enhance communication and collaboration throughout the various procurement cycle phases to minimize delays occurring at the end during compliance reviews.
Recommendation 3. Augment and restructure staffing
in the Purchasing Division to add a full-time purchasing services manager, and consider either upgrading,
retitling or amending job duties of existing positions to ensure function of buying, customer services and related purchasing duties are included.
Recommendation 4. Provide opportunities for the
purchasing specialists to perform core procurement
functions on a request or as-needed basis. Purchasing
involvement in facilitating competitive bids will ensure “front-end” compliance and significantly reduce the need to delay completion of a procurement after it is awarded.
Recommendation 5. Task Finance purchasing staff with
evaluating strategic procurement opportunities to
maximize value and help achieve policy goals.
Optimizing the City’s Purchasing Processes
Existing and Proposed Purchasing Models Management Partners 21 Departmental Purchasing Functions
Within City departments, purchasing functions are distributed and managed to varying degrees among project managers, analysts and support staff. We have the following observations:
• Departments with higher levels of purchasing activity such as Community Services, Public Works and Fire tend to dedicate more resources to procurement than other departments.
• Department staff who perform purchasing functions also “wear many hats” and must balance procurements with core business tasks. Some department directors expressed concerns that time spent on procurement is impacting operational effectiveness. • The lack of a cohesive procurement focus by some departments results in process inconsistencies and inefficiencies.
Whether in a centralized or decentralized purchasing environment, efficiency and cohesion is typically obtained by assigning as many procurement tasks as practical through single coordination points within departments or divisions.
Formally assigning staff in departments to coordinate procurements (and providing ongoing training to ensure their effectiveness) is a best practice and can be especially helpful for decentralized purchasing environments.
The Community Services Department has established central, dedicated resources to facilitate procurements that can serve as a model for other departments.
Recommendation 6. Formally designate one or more
purchasing liaisons in each department to fulfill
purchasing duties and responsibilities. The liaisons
would be trained by Finance, City Attorney and Risk
Management staff and meet periodically as a group to
discuss process improvements and troubleshoot issues.
With knowledge of and ongoing training in City
purchasing policies and procedures, the liaisons should help ensure policy compliance and enhance
interdepartmental collaboration.
Optimizing the City’s Purchasing Processes
Existing and Proposed Purchasing Models Management Partners 22 Communication, Collaboration and Training
Two key themes emerged during interviews with department staff that relate to communication, collaboration and training.
• The culture of the organizations tends toward “learning by doing” rather than formalized training when assigning purchasing tasks for new hires and for staff performing new purchasing related roles. This concern was also expressed in relation to training on functionality of the new financial system.
• The Finance Department could continue improving its customer service orientation and interdepartmental collaboration, especially with respect to changes in policies and procedures.
As a best practice, conducting regular formal and informal training sessions is essential for increasing awareness of policies and procedures, informing staff about policy changes and ensuring consistent communication.
Equally important is offering all staff performing purchasing tasks regular avenues for providing feedback, i.e., an opportunity to be heard.
Recommendation 7. Conduct periodic internal customer
service surveys and utilize the feedback to address areas of concern. This should include training to develop
communication/customer service skills.
Recommendation 8. Establish a schedule for periodic,
solutions-based meetings with purchasing liaisons to
discuss and resolve issues and identify opportunities
and improvements to purchasing processes. This task
should initially be performed by purchasing specialists and then subsequently taken over by the procurement
services manager (if hired).
Recommendation 9. Conduct a needs assessment to
determine and prioritize procurement-related training
requirements. This assessment can be coordinated in
collaboration with the purchasing liaisons and should be periodically reevaluated.
Recommendation 10. Conduct citywide and departmentspecific training sessions on a regular basis to review purchasing policies and discuss roles and
responsibilities.
Optimizing the City’s Purchasing Processes
Existing and Proposed Purchasing Models Management Partners 23 Overall, user departments believe they are doing too much of “Finance’s work” relative to buying and paying for needed goods and services. This is coupled with frustration when purchasing or other Finance staff question purchasing practices at the end of the procurement process or when payments are requested. This disconnect appears to stem from the following:
• The recent financial system conversion to the Munis system solution changed business processes that require more data entry and approval workflows on the part of user departments. • Confusion or unclear delineation of compliance roles performed by purchasing, accounts payable and administration.
Recommendation 11. Incorporate Finance Division roles
into annual purchasing training to increase awareness of and explain differences between purchasing and
accounts payable.
Lengthy Bidding Processes
During the process mapping session for formal competitive bidding, department staff were asked to estimate the average duration of successive procurement phases including:
• Preparing the scope of work,
• Conducting the competitive bid process (a moderately complex request for proposals [RFP]),
• Evaluating RFP responses,
• Conducting interviews,
• Negotiating a contract,
• Awarding the contract,
• Executing the contract, and
• Obtaining appropriate contract and purchase order approvals in the Munis financial system.
Estimated times for RFP processes (as estimated by City staff) are:
• Preparing the scope of work for a moderately complex RFP takes departments approximately 3.5 months on average.
• The estimated time taken to conduct the RFP process through purchase order approval averages more than seven months.
The timeframes to scope the work and complete the RFP process were estimated because the cycle times are not being measured, which is inconsistent with best practices.
Optimizing the City’s Purchasing Processes
Existing and Proposed Purchasing Models Management Partners 24 As Figure 4 shows, the national benchmark average for completing a request for proposal is 73 days.
Without cycle time data from City departments it is difficult to draw direct comparisons. However, based on the information learned during the process mapping sessions, it is apparent that Beverly Hills takes substantially longer on average to complete an RFP.
Figure 4. Cycle Times for Small Purchases and Competitive Bids/Proposals Source: National Institute of Governmental Purchasing 2017 Public Procurement Benchmark Survey Report.
As discussed throughout this report, involvement of Finance purchasing staff does not occur until the final phase of obtaining appropriate financial system contract and purchase order approvals.
As discussed previously in this report, Finance purchasing staffs’ compliance reviews do result in delays approving purchase orders and contracts in the Munis System, but in many cases documentation from operating departments that are handling the procurements is incomplete or missing, causing the compliance component to be delayed.
Contract/Purchase Order Process Timeframe. The contract/purchase order approval process through Munis, for which actual data are available, takes nearly 26 days on average.
• Of that time, approximately 11 days are attributable to workflow approvals on the department side;
• Nearly four days are taken by the City Manager’s Office; and • The purchasing/finance approval portion takes approximately 11 days, which often includes a holding period of one week when notes and supporting documentation are incomplete and can be updated by department staff without rejecting the transaction (which would require a new approval workflow by the
department).
8 73
51 5
60 45
0 10
20 30
40 50
60 70
80 Small Purchases Formal requests for proposals Formal bids Average Median
Optimizing the City’s Purchasing Processes
Existing and Proposed Purchasing Models Management Partners 25 Understanding the Timeframes. Approximately seven months or 210 days is the estimated time required to cycle through a moderately complex RFP process (not including scoping). Of this:
• Department involvement occurs over 195 days (about 93%), and • Compliance reviews by the “process approvers” (including Purchasing, Finance and the City Manager’s Office) occur over 15 days (7%).
These percentages are portrayed in Figure 5.
Figure 5. Request for Proposals: Involvement by Procuring Department and Process Approvers Source: Beverly Hills Purchasing Function Assessment – Current/Proposed Workflow Processes (Attachment B) The perception by most departments is that time delays are occurring during the compliance review process performed by Finance purchasing staff. The data indicate this is not the case, although improvements can be made with the changes in roles we are proposing.
Many of the staff in operating departments who perform purchasingrelated functions have other duties, which stretches individual staffing capacity and limits the time they can devote to procurement.
After conducting a lengthy process and obtaining approvals, department staff are understandably confused and frustrated when Finance purchasing staff, other Finance or City Manager’s Office staff ask clarifying questions during the purchase order approval process.
Nonetheless, such questions are necessary for fiduciary purposes.
Optimizing the City’s Purchasing Processes
Existing and Proposed Purchasing Models Management Partners 26 As noted previously, moving to a partnership-based purchasing system will reduce the frustration that is occurring by allowing purchasing involvement and visibility at earlier stages in the procurement cycle.
Lack of Established Turnaround Times or Systematic Tracking During our data gathering, concerns were expressed by virtually all interviewees and focus group participants that procurements are taking more time than necessary and impacting operational service delivery. As with other processes, the City could establish turnaround (cycle) times for various purchasing process phases based on national benchmarking standards. This would require determining the expected cycle times for each procurement phase.
The process maps in Attachment B indicate what the process flow should be to improve efficiency and effectiveness. Current and proposed cycle times associated with the major RFP process phases (included in the process maps) are shown in Table 3. A significant reduction in average RFP cycle time is possible, but this would require tracking to determine whether the established turnaround times are being met.
Table 3. Current and Proposed Cycle Times for RFP Process Phases RFP Process Phase Current Cycle Time1 Target Cycle Time2 Competitive bidding 4 weeks 4 weeks
Evaluation of submittals and vendor selection 4 weeks 2 weeks Contract negotiation 10 weeks 3 weeks
City Council approval and contract review 6 weeks 3 weeks Contract execution and purchase order approval 4 to 6 weeks 2 weeks Total Cycle Time 28 to 30 weeks or
7 to 7.5 months 14 weeks or 3.5 months
Source: Beverly Hills Purchasing Function Assessment – Current/Proposed Workflow Processes (Attachment B) 1Current average cycle times for a moderately complex RFP as estimated by City staff. 2Proposed cycle time targets based on best practices using a critical path management approach.
Recommendation 12. Establish performance measures for
formal and informal procurement cycle times to work
toward best practice benchmarks.
Recommendation 13. Evaluate cycle times for formal
procurement process phases to determine where the most
significant delays are occurring. Insight will help allocate resources effectively and reduce cycle times.
Optimizing the City’s Purchasing Processes
Existing and Proposed Purchasing Models Management Partners 27 After-the-Fact Approvals
A key interview theme shared by staff is that the City’s organizational culture places a high value on moving things along and getting things done. While this is understandable when departments have services to deliver in a timely manner, real or perceived delays in the purchasing process can be used by staff as a justification for non-compliance with purchasing policies and can sometimes result in purchases that are not authorized pursuant to Municipal Code requirements.
The City’s municipal code makes it unlawful for an employee to commit the City to a purchase in violation of purchasing policies and explicitly states that such a purchase is not legally binding. However, the policy provisions are not always enforced.
When an unauthorized purchase occurs, department staff are required to obtain price quotes or provide memoranda to explain sourcing methods “after the fact” so that suitable justification documentation for the procurement is kept on file.
Recommendation 14. Implement accountability and
training measures to reduce purchases not in full
compliance with purchasing policies and procedures.
Accountability measures must be consistent with existing personnel policies.
Optimizing the City’s Purchasing Processes
Purchasing Policies and Procedures Management Partners
28 Purchasing Policies and Procedures
This section provides Management Partners’ observations and recommendations in the following areas:
• Internal Policies and Procedures,
• Municipal Code and Purchasing Approval Levels,
• Streamlining Written Agreements, and
• Risk Management and Tolerance.
Internal Policies and Procedures
The Finance Department has prepared a detailed purchasing policy manual which can be accessed via the City’s intranet. It also includes visual aids such as flowcharts, links to the Municipal Code, screenshots of financial system approvals, procurement process checklists, and reference material.
However, based on interviews and focus group feedback, the document appears to be used infrequently. Rather, operating department staff who perform purchasing functions reportedly rely on “oral history” or past practice (even if it is wrong) from each other as to how to procure goods or services, rather than consulting with Finance purchasing staff or reviewing the purchasing policy manual.
The result of this approach is that it reinforces perceptions that Finance purchasing staff are not there to assist, and that purchasing policies and procedures are difficult. Additionally, the City’s purchasing policy manual is a 173-page document in total with considerable detail, which is not considered user-friendly by line staff. The underlying policy provisions are contained in 40 pages, with detailed reference materials making up the difference, creating the perception that the document is too long and detailed, and hard to follow.
However, efforts to include more detail in the policy document were related to feedback received by Finance from departments about needing more policy clarity. Finance purchasing staff can collaborate with the purchasing liaisons (see Recommendation 6) to discuss and recommend Optimizing the City’s Purchasing Processes
Purchasing Policies and Procedures Management Partners
29 ways to structure the policy document and associated reference materials for maximum benefit.
Recommendation 15. Conduct collaborative problemsolving meetings with purchasing liaison meetings to determine the most helpful approach to organizing
purchasing policy and procedural materials.
Recommendations can be jointly presented to upper
management by purchasing staff and liaisons to enhance
the collaborative process.
Purchasing Card Program
Like many local agencies, Beverly Hills has established a purchasing card program. The Government Finance Officers Association (GFOA) and other leading finance/procurement entities consider purchasing card programs to be a best practice when they are optimally balanced between efficiency and control and used in strategic context with other procurement best practices.
In 2018, the Finance Department implemented a policy change regarding purchasing card use that has resulted in confusion and frustration by staff. The change was meant to enforce a provision in the Municipal Code that requires a purchase order to be in place before goods or services are provided by vendors.5 The change required that purchasing cards only be used in conjunction with purchase orders, with Finance staff clarifying that purchasing cards were an “alternate payment method” and not an “alternate procurement method.”
Current practice does allow exceptions for making certain purchases such as postage, memberships, training, travel, etc., with purchasing cards without the necessity of a purchase order.
The changes have not been well received by staff and are viewed by user departments as confusing and inefficient.
Management Partners notes this is not typical in government agencies with purchasing card programs. The typical practice is for cards to be 5 Article 1, Section 3-3-103 of the Municipal Code requires the issuance of purchase orders for goods and services purchases and specifically states that “any vendor or contracting party” is not authorized to perform work or supply goods without first receiving a purchase order. However, this section also includes flexibility for the City Manager to approve alternative administrative regulations.
Optimizing the City’s Purchasing Processes
Purchasing Policies and Procedures Management Partners
30 utilized for buying commonly used goods so that purchase orders need not be established. In Beverly Hills, however, concerns about accountability and internal control preclude this application. City leaders must evaluate the desired need for efficiency by user departments in context with concerns about accountability and control before the current policy and practice are modified.
Recommendation 16. Evaluate current accountability and
control mechanisms to determine if there are
opportunities to expand the use of purchasing cards as
an efficient alternative to issuing purchase orders.
Recommendation 17. Establish guidelines that identify
specific instances where purchase orders are not needed and allow the use of purchasing cards in those instances.
Beverly Hills is Under-utilizing its Purchasing Cards. In researching national information on local government purchasing card usage, recent survey data suggest that the City is underutilizing its purchasing card program. For example, as shown in Table 4, according to the 2017 RPMG survey report, Beverly Hills was lower than the benchmarks in the following areas:
• Average monthly total purchasing card spending,
• Monthly spending per purchasing card,
• Monthly spending per purchasing card transaction,
• Monthly transaction per purchasing card, and
• Percentage of active cards in a typical month.6
Table 4. Purchasing Card Program Benchmark Statistics
Small1 Mid-Size2 Large-Size3 Beverly Hills
Organizational Statistics
Number of Employees 78 484 3,665 995.9
Program Performance Measures
Number of Plastic Purchasing Cards 24 146 475 182
Card-to-Employee Ratio 31.50% 30.10% 12.80% 18.27%
6Benchmark agencies are cities and counties categorized as small, mid-size or large as determined by operating budget and number of employees. Beverly Hills fits the category of large-size in terms of its operating budget, but mid-size relative to the number of employees.
Optimizing the City’s Purchasing Processes
Purchasing Policies and Procedures Management Partners
31 Small1 Mid-Size2 Large-Size3 Beverly Hills
Average Monthly P-Card Spending $20,586 $216,505 $888,166 $205,461 Median Monthly P-Card Spending $12,000 $135,000 $560,000 $199,859 Monthly Spending per Employee $265 $447 $242 $206
Cardholder Activity Measures
Monthly Spending per Card $840 $1,484 $1,890 $1,129
Monthly Transactions per Card 3.92 4.40 5.30 3.56
Spending per Transaction $215 $337 $357 $318
Percentage of Active Cards in a Typical Month 71% 72% 75% 48.6% Sources: RPMG 2017 Purchasing Card Benchmark Survey Results; P-Card spending data for July 2018 through June 2019 provided by the City of Beverly Hills.
1Small-size cities and counties are defined as those with annual budgets below $25 million. 2Mid-size cities and counties are defined as those with annual budgets over $25 million with fewer than 1,000 employees. 3Large-size cities and counties are defined as those with annual budgets over $25 million with more than 1,000 employees.
Figure 6 compares Beverly Hills to mid-size and large agencies in terms of average monthly spending per purchasing card and average monthly transactions per card. Beverly Hills lags benchmark agencies in both areas. In addition, as Table 4 shows, Beverly Hills staff use their card less frequently than their benchmark counterparts (49% utilization rate as opposed to 72% and 75% for mid-size and large cities), i.e., half of all employees who have cards are not using them.
Figure 6. Comparison of Monthly Purchasing Card Spending and Number of Transactions Source: RPMG 2017 Purchasing Card Benchmark Survey Results 0 1
2 3
4 5
6 7
8 0
200
400
600
800
1000
1200
1400
1600
1800
2000
Mid-Size Large Beverly Hills
Number of Transactions
Dollars
Spending per Card Transactions per Card
Optimizing the City’s Purchasing Processes
Purchasing Policies and Procedures Management Partners
32 The benchmark agencies also take advantage of card-less electronic accounts payable (EAP) methods that the City does not currently utilize due to fraud concerns. Use of electronic methods, appropriately controlled, is recommended to reduce paper invoicing and increase automation.
Recommendation 18. Evaluate opportunities to maximize
the value of the purchasing card program. One example
includes the use of purchasing cards by the Accounts
Payable division to pay for global purchases associated with citywide card-less accounts.
Although purchasing cards can be an efficient procurement method, effective internal controls must be in place to ensure appropriate usage.
Recommended best practices include monthly statement monitoring by Finance staff independent of purchasing to maintain separation of duties and periodic third-party auditing.
Recommendation 19. Monitor purchasing card
statements on a monthly basis and engage a third party
to conduct periodic audits.
Inconsistent RFP/RFQ Processes
During the interviews and process mapping sessions, it became apparent that departments use different approaches to evaluate request for proposal and request for qualification (RFQ) responses. To ensure process integrity, a consistent approach to conducting and evaluating submittals should be developed with the assistance of Finance purchasing staff to be used throughout the organization. As a best practice, such an approach should include the use of a conflict of interest disclosure form and a confidentiality agreement.
Recommendation 20. Establish a consistent approach for
conducting and evaluating RFP/RFQ responses and
include the use of a confidentiality/conflict of interest form.
Municipal Code and Purchasing Approval Levels
Input from interviews indicated that managers are interested in increasing the thresholds for city manager, finance director and department director approval to streamline processes and increase efficiency. Approval limits in Beverly Hills were last increased in 2006.
Optimizing the City’s Purchasing Processes
Purchasing Policies and Procedures Management Partners
33 As part of the peer comparisons, Management Partners obtained information on approval thresholds, which confirmed that Beverly Hills has low thresholds.
• Five of the six peer agencies have substantially higher city manager contract award authority thresholds than the Beverly Hills level of $50,000 (Table 5).
• Only Culver City has a similar amount to Beverly Hills.
It is a prudent and accepted best practice to periodically adjust purchasing approval limits (for the city manager and designated staff) to account for changes in economic conditions and maintain efficiency.
Table 5. Peer Agency Comparison of Contract Award Authority Peers
Contract Award Authority1
City Manager City Council
Beverly Hills $50,000 Greater than $50,000
Burbank* $100,000 Greater than $100,000
Culver City* to $50,000 Greater than $50,000
Fremont $100,000 Greater than $100,000
Mountain View* Greater than $100,000 Greater than $100,000 Santa Monica* $250,000 Greater than $250,000
Sunnyvale* $100,000 Greater than $100,000
Sources: City budgets FY 2019-20, municipal codes, city charters, and city websites. *Indicates Charter cities.
1 For goods and general services; approvals may include professional services and/or public works projects but some jurisdictions have varied limits for these categories. The full comparison is contained in Attachment C.
The City has four purchasing approval levels, established by resolution as follows:
• Department heads – Level 1, up to $7,500;
• Finance director – Level 2, up to $25,000;
• City manager or finance director – Level 3, up to $50,000; and • City council – Level 4, greater than $50,000.
Level 1 purchases do not require a competitive bid process.
Periodic adjustments are necessary to keep pace with increases in the Consumer Price Index (CPI) and ensure procurement/workload efficiency. Additionally, it is unclear whether the Municipal Code allows the City Manager to delegate purchasing authority.
Recommendation 21. Amend the purchasing resolution
to increase the purchasing approval thresholds for the
Optimizing the City’s Purchasing Processes
Purchasing Policies and Procedures Management Partners
34 city manager, finance director and department heads to $100,000, $50,000 and $10,000, respectively. It is also recommended that the Purchasing Administrative
Regulations be updated to increase the Level 1 threshold requirement for competitive bidding to $10,0007.
Recommendation 22. Clarify the authority of the city
manager to delegate purchasing approval authority.
Recommendations 21 and 22 would not impact the $50,000 threshold to solicit formal sealed bids or the quarterly council reporting requirements for Level 2 and 3 purchases.
The Municipal Code requires the solicitation of oral bids for Level 2 purchases and allows oral bids to be received without articulating whether written bids must be received, which is not a best practice. On the other hand, bids associated with Levels 3 and 4 must be submitted in writing. The allowance of verbal bids without requiring written documentation provided by a vendor increases confusion and invites disagreements on pricing. Additionally, the absence of written documentation from a vendor to substantiate verbally communicated bid pricing would result in a deficiency finding if audited.
Recommendation 23. Amend the Municipal Code to
clarify that quotes can be requested by phone but must
be submitted in writing.
Professional Services Procurements
The Beverly Hills Municipal Code states that competitive bidding requirements shall not apply to the procurement of professional services, and it is not uncommon for local governments to exempt professional or highly specialized services from competitive bidding requirements.
However, a best practice is to conduct qualifications-based competitive processes whenever possible. Additionally, some state laws and federal regulations require competitive processes for professional services, and 7 During the interview process, several departments commented on the need to substantially increase the department head approval threshold. Given current accountability/compliance concerns and the decentralized nature of the City’s purchasing system, $10,000 is recommended. This threshold is also equal to the limit at which competitive bidding can be dispensed when making purchases with federal grant funds.
The limit can be revisited as system improvements are made and accountability concerns addressed.
Optimizing the City’s Purchasing Processes
Purchasing Policies and Procedures Management Partners
35 some City departments do conduct competitive processes for such services.
As a best practice, competitive selection processes should be undertaken when possible and the use of bidding exceptions minimized to the extent possible. For professional services such as civil engineers, broad-based request for qualifications (RFQ) processes can be periodically conducted to establish prequalified lists of consultants and/or on-call contracts in different service categories.
To help ensure consistency with other government requirements and to emphasize the importance of fair/open procurements, the Municipal Code can be modified to state that such purchases may be exempt from bidding and that bidding should be conducted whenever possible.
Recommendation 24. Amend the Municipal Code to
clarify the intent and use of competitive bidding
exceptions.
Streamlining Written Agreements
It is a best practice to use written, duly executed agreements for procuring services, but this requirement can and should be balanced with factors such as dollar value, efficiency and procurement risk, i.e., procurements can be completed using a purchase order with standard terms and conditions.
Currently, written agreements are required for services of any amount.
This is inefficient and adds unnecessary layers and time delays to contracts for services. These agreements are signed by multiple staff members including subject matter experts, project managers, department heads, the risk manager, finance director, city attorney and city manager.
Additionally, the current practice requires multiple staff members to sign service agreements, which is an unnecessary requirement that leads to time delays.
Recommendation 25. Establish a dollar threshold at
which written agreements are required for services.
Lower value service contracts can be issued on purchase orders with terms and conditions unless the level of risk dictates the use of a written agreement.
Use of DocuSign. The City implemented a contract electronic signature solution (DocuSign), which is a best practice, but is only utilizing the system for contracts up to $50,000. Electronic signature systems are much more efficient and customer-friendly than pen and ink signatures, have Optimizing the City’s Purchasing Processes
Purchasing Policies and Procedures Management Partners
36 been broadly used in the private sector for many years, and are becoming mainstream for local governments.
City Clerk Docketing System. Whether pen/ink or electronic signatures are employed, after all signature approvals are obtained, the city clerk must docket the contract and upload it to a central database before it is provided to staff, who then must complete two steps in the financial system (one for the contract and one for a purchase order). The manual nature and timing of the docketing process, and the number of workflow approvals (and associated delays) are inefficient and can be evaluated to reduce routing times and eliminate redundancies.
The process maps in Attachment B identify opportunities for reducing time delays.
Recommendation 26. Maximize the use of electronic
signatures for written agreements.
Recommendation 27. Reevaluate the necessity for
multiple contract signatories. Contracts need only be
signed by the city attorney, who approves the form, and the city manager or designee, i.e., the person who is
authorized to legally bind the City.
Recommendation 28. Reevaluate the docketing
requirements to increase efficiency in contract approval routing by establishing service level expectations and
working toward achieving targeted goals.
Recommendation 29. Explore opportunities to reduce
workflow approvals in the Munis system.
Contract Templates. City staff do not always use the most current contract templates accessed from the shared intranet website, which results in delays and the need to redo contracts. Often, contracts that were used in previous procurements are reused to prepare new agreements. Since contract templates are updated to reflect changes in the law or to enhance protection from liability, it is essential that upto-date templates be used.
Recommendation 30. Ensure that the most current
contract templates are used for all procurements that
require written agreements. This requirement also applies to standard terms and conditions used with purchase
orders.
Optimizing the City’s Purchasing Processes
Purchasing Policies and Procedures Management Partners
37 Risk Management and Tolerance
Current practice requires the risk manager or designee to review every required Certificate of Insurance (COI) to determine whether the insurance requirements have been met. This is not typical and is unnecessary if purchasing staff members (including purchasing liaisons) are sufficiently trained to review the COIs to ensure that all requirements are met.
Best Practice. A more typical arrangement is to request risk management clarification or review on an as-needed basis during the procurement life cycle, if there is a question about insurance compliance. Basic review of submitted COIs for insurance compliance can be performed by Finance purchasing staff or purchasing liaisons.
Additionally, all staff involved in purchasing and risk management processes can be trained to conduct risk assessments in accordance with a standard risk tolerance matrix that evaluates procurement risk in terms of the “likelihood of occurrence” and “seriousness of impact” (Figure 7).
As indicated in Figure 7, there are only a few instances that represent areas of high risk, i.e., where a high likelihood of occurrence intersects with an occurrence that could have a significant impact. Procurements can be evaluated with this concept in mind to assess risk levels and help determine when risk management review is needed.
This approach would not impact the waiver or coverage modification requests that must be considered by risk management. The matrix will be useful in evaluating these considerations as well.8
8 Any risk assessment presumes at the outset of a procurement process that contractors must comply with city insurance requirements as a basic contracting requirement.
Inquiries by staff or contractors regarding coverage modifications during any point of procurement processes must be reviewed and approved by designated risk management staff unless otherwise delegated to staff performing purchasing functions.
Optimizing the City’s Purchasing Processes
Purchasing Policies and Procedures Management Partners
38 Figure 7. Standard Risk Tolerance Matrix Likelihood of Occurrence Very Likely Acceptable Risk
Medium
Unacceptable Risk
High
Unacceptable Risk
High
Likely Acceptable Risk
Low
Acceptable Risk
Medium
Unacceptable Risk
High
Unlikely Acceptable Risk
Low
Acceptable Risk
Low
Acceptable Risk
Medium
Minor Moderate Major
Seriousness of Impact
Recommendation 31. Establish the practice of risk
management review of Certificates of Insurance by
exception in conjunction with contract execution and/or purchase order approval workflows. This can be
accomplished by having the risk manager train additional risk staff, purchasing staff, including liaisons, on
evaluating the submitted COIs for compliance, as well as the importance of minimizing liability.
It is also helpful to enumerate what circumstances absolutely require insurance coverage at or beyond the limits established, when limits can be modified, instances where insurance coverage can be reduced or waived, and situations where insurance is not required. Examples include:
• Material and supply purchases and offsite services (insurance not required);
• Onsite trainers, presenters or performers (depending on duration and other risk factors (like artists who perform for or work with children or seniors), insurance can be reduced or waived); and • Large projects or work with a high consequence of error (increased insurance coverage required).
Optimizing the City’s Purchasing Processes
Purchasing Policies and Procedures Management Partners
39 Recommendation 32. Create example scenarios and/or
lists of vendors for which insurance must be provided,
can be modified/waived, or is unnecessary.
A centralized approach to ensuring that COIs are current and compliant is not used. One challenge for managing insurance compliance is that any given contract term or duration rarely coincides with insurance coverage timeframes, which requires focused attention to monitor renewal periods.
Many cities choose to contract with third-party compliance administrators or establish a monitoring function in-house that is conducted independently from contract renewals.
Recommendation 33. Establish insurance certificate
tracking as a risk management compliance function that
focuses on expiring insurance coverage.
Optimizing the City’s Purchasing Processes
Other Business System Considerations Management Partners 40 Other Business System Considerations
This section includes other areas that require further research based on our initial observations. The focus of our study was on the decentralized purchasing function, staffing levels and system oversight. However, throughout the project we became aware of other considerations that impact operational effectiveness or represent areas of potential risk.
Bid Protest Procedures
During the interviews and process mapping sessions, staff members were unclear about whether there was a formal bid protest policy or established procedures for handling protests. Establishing formal protest procedures is a best practice and provides important due process steps for prospective bidders.
Recommendation 34. Evaluate current bid protest
practices and establish formal procedures as necessary.
Areas Noted for Further Review
During the interviews and process mapping sessions, the following areas were noted that warrant further review:
• Inventory management,
• Determination of Form 700 filer status for consultants, and • Council agenda/report management.
Inventory Management
It was noted during the interviews that the City does not have an inventory management system. Public Works staff are in the process of implementing a work order system and are evaluating its inventory tracking capabilities.
Form 700 Filer Status
State law requires that consulting contracts be evaluated in conjunction with a jurisdiction’s conflict of interest code to determine whether consultants must file the Form 700 statement of economic interests. This responsibility current resides with the City Clerk, but several staff Optimizing the City’s Purchasing Processes
Other Business System Considerations Management Partners 41 members indicated throughout the course of the project that the required test to determine filing status is not being consistently applied. In some centralized purchasing agencies, this review is performed by the chief procurement official.
Council Agenda/Report Management
As part of the process mapping, inefficiencies were noted regarding the review of procurement contracts that require Council approval, including:
• Council reports are routed via email, with or without draft contracts attached, and the approval process takes one and a half months on average.
• The draft contracts are not consistently reviewed prior to Council approval, and on occasion inconsistencies in contracts are discovered after Council approval that require corrective action. • The executive staff members reviewing the Council reports must also review the contracts when they are submitted for signature approval (another process that takes several weeks to complete on average).
Improvements associated with this area have been incorporated into the process map (Attachment B), and the city clerk is evaluating options for a streamlined agenda management system.
Optimizing the City’s Purchasing Processes
Conclusion Management Partners
42 Conclusion
The City of Beverly Hills’ decentralized purchasing system, while providing considerable latitude and flexibility for departments to conduct their own procurements, has resulted in inconsistent practices and policy application, significant procurement delays, and the underutilization of purchasing staff and oversight within the Finance Department and throughout the City organization. Additionally, the back-end compliance approach currently employed by the Finance Department causes confusion and frustration, limits information flow and does not foster interdepartmental collaboration.
Using a partnership approach by engaging Finance purchasing staff on the front end and focusing on customer service as well as compliance, the procurement experience will be improved. A more focused and strategic approach to procurement, including improved efforts by the Finance Department and its purchasing staff to educate staff on procurement policies and procedures, will maximize best overall value, reduce risk, and increase interdepartmental cooperation.
Formalizing the roles and responsibilities of department purchasing liaisons in close collaboration with Finance purchasing staff will be a vital step to maximize operational improvements to the decentralized system.
We are pleased to be part of this important effort and trust that City leaders will guide and support staff in making meaningful improvements.
Optimizing the City’s Purchasing Processes
Attachment A – List of Recommendations Management Partners 43 Attachment A – List of Recommendations
Recommendation 1. Transition the current decentralized purchasing system to a partnership system that maximizes and effectively utilizes procurement expertise early in the procurement process.
Recommendation 2. Provide opportunities for Finance purchasing staff to be engaged in all procurement phases.
Recommendation 3. Augment and restructure staffing in the Purchasing Division to add a full-time purchasing services manager, and consider either upgrading, retitling or amending job duties of existing positions to ensure function of buying, customer services and related purchasing duties are included.
Recommendation 4. Provide opportunities for the purchasing specialists to perform core procurement functions on a request or as-needed basis.
Recommendation 5. Task Finance purchasing staff with evaluating strategic procurement opportunities to maximize value and help achieve policy goals.
Recommendation 6. Formally designate one or more purchasing liaisons in each department to fulfill purchasing duties and responsibilities.
Recommendation 7. Conduct periodic internal customer service surveys and utilize the feedback to address areas of concern.
Recommendation 8. Establish a schedule for periodic, solutions-based meetings with purchasing liaisons to discuss and resolve issues and identify opportunities and improvements to purchasing processes.
Recommendation 9. Conduct a needs assessment to determine and prioritize procurementrelated training requirements.
Recommendation 10. Conduct citywide and department-specific training sessions on a regular basis to review purchasing policies and discuss roles and responsibilities.
Recommendation 11. Incorporate Finance Division roles into annual purchasing training to increase awareness of and explain differences between purchasing and accounts payable.
Recommendation 12. Establish performance measures for formal and informal procurement cycle times to work toward best practice benchmarks.
Recommendation 13. Evaluate cycle times for formal procurement process phases to determine where the most significant delays are occurring.
Recommendation 14. Implement accountability and training measures to reduce purchases not in full compliance with purchasing policies and procedures.
Recommendation 15. Conduct collaborative problem-solving meetings with purchasing liaison meetings to determine the most helpful approach to organizing purchasing policy and procedural materials.
Recommendation 16. Evaluate current accountability and control mechanisms to determine if there are opportunities to expand the use of purchasing cards as an efficient alternative to issuing purchase orders.
Optimizing the City’s Purchasing Processes
Attachment A – List of Recommendations Management Partners 44 Recommendation 17. Establish guidelines that identify specific instances where purchase orders are not needed and allow the use of purchasing cards in those instances.
Recommendation 18. Evaluate opportunities to maximize the value of the purchasing card program.
Recommendation 19. Monitor purchasing card statements on a monthly basis and engage a third party to conduct periodic audits.
Recommendation 20. Establish a consistent approach for conducting and evaluating RFP/RFQ responses and include the use of a confidentiality/conflict of interest form.
Recommendation 21. Amend the purchasing resolution to increase the purchasing approval thresholds for the city manager, finance director and department heads to $100,000, $50,000 and $10,000, respectively.
Recommendation 22. Clarify the authority of the city manager to delegate purchasing approval authority.
Recommendation 23. Amend the Municipal Code to clarify that quotes can be requested by phone but must be submitted in writing.
Recommendation 24. Amend the Municipal Code to clarify the intent and use of competitive bidding exceptions.
Recommendation 25. Establish a dollar threshold at which written agreements are required for services.
Recommendation 26. Maximize the use of electronic signatures for written agreements.
Recommendation 27. Reevaluate the necessity for multiple contract signatories.
Recommendation 28. Reevaluate the docketing requirements to increase efficiency in contract approval routing by establishing service level expectations and working toward achieving targeted goals.
Recommendation 29. Explore opportunities to reduce workflow approvals in the Munis system.
Recommendation 30. Ensure that the most current contract templates are used for all procurements that require written agreements.
Recommendation 31. Establish the practice of risk management review of Certificates of Insurance by exception in conjunction with contract execution and/or purchase order approval workflows.
Recommendation 32. Create example scenarios and/or lists of vendors for which insurance must be provided, can be modified/waived, or is unnecessary.
Recommendation 33. Establish insurance certificate tracking as a risk management compliance function that focuses on expiring insurance coverage.
Recommendation 34. Evaluate current bid protest practices and establish formal procedures as necessary.
Optimizing the City’s Purchasing Processes
Attachment B – Formal Competitive Request for Proposals Process Maps Management Partners 45 Attachment B – Formal Competitive Request for Proposals Process Maps
Formal Competitive Request for Proposals (Greater than $50,000) (Page 1 of 4) City Clerk Requesting Department Bidding Document Preparation and Posting
Beverly Hills Purchasing Function Assessment – Current and Proposed Workflow Processes September 12, 2019
Notes
1 Process starts following department approval to move forward with a request for proposals (RFP) process. 2During this phase, departments coordinate with the City Attorney’s Office and risk management as necessary. Process timeframes are based on staff estimates to conduct a moderately complex RFP. 3 The current process of assigning bid numbers results in different naming conventions and can be centralized for uniformity and ease of tracking. 4 RFPs are posted to PlanetBids, City website, and other subject-matter specific websites, i.e., American Planning Association (APA) but posting practices by departments are inconsistent.
Identify need1
Develop specifications/
scope of work
Incorporate scope of
work into bidding
documents and assign bid
number3
Receive requests for
information (RFIs) and
provide to project
manager
Review RFIs and draft
responses to questions
To Page 2
Legend
• indicate process steps currently being conducted by departments that can be facilitated by purchasing staff or purchasing liaisons as determined by department head or as requested/required. • indicates process to prepare specifications, requirements or scope of work. • indicate segments of the competitive bidding process occurring without purchasing involvement. • indicate estimated elapsed time to complete the competitive bidding process (not including scoping). • indicate purchasing staff’s entry into the procurement process.
Blue Boxes
Is the procurement
exempt from
bidding?
To Page 3
Coordinate with project
manager to establish
evaluation team,
estimate process
timelines
Advertise bidding
opportunity4
Yes
Format addendum for
project manager review
Review addendum and
revise as necessary
Issue addendum (post
to website and send to
distribution list)
Is there a preproposal conference?
Coordinate logistics for
pre-bid/proposal
conference
Receive, log and open
RFP/Q responses
No
Yes
No
Green Container
Gray Containers
Orange Containers
Purple Containers
Formal Competitive Request for Proposals (Greater than $50,000) (Page 2 of 4) City Clerk Requesting Department Evaluation of Submittals and Vendor Selection Phases
Beverly Hills Purchasing Function Assessment – Current and Proposed Workflow Processes September 12, 2019
From Page 1
Notify non-responsive
vendor(s) that their
proposal(s) will not be
considered
Independently evaluate
submittals and send
evaluation sheets to
purchasing staff
To Page 3
Evaluate proposals for
responsiveness and
notify project manager1
Provide bid/proposal
packages to project
manager
Is there concurrence
on non-responsive
proposals?
Convene pre-determined
evaluation process
briefing and provide
proposals to evaluating
team3
Schedule interviews as
necessary
No
Yes
Convene pre-determined
meeting to review initial
scoring summary and
rank proposals
Total elapsed time from bidding through vendor selection averages 2 months 2 Debrief after interviews
and select top-rated
proposer by consensus
Legend
• indicate process steps currently being conducted by departments that can be facilitated by purchasing staff or purchasing liaisons as determined by department head or as requested/required. • indicates process to prepare specifications, requirements or scope of work. • indicate segments of the competitive bidding process occurring without purchasing involvement. • indicate estimated elapsed time to complete the competitive bidding process (not including scoping). • indicate purchasing staff’s entry into the procurement process.
Blue Boxes
Green Container
Gray Containers
Orange Containers
Purple Containers
Notes
1 Purchasing Division staff or purchasing liaisons can perform the responsiveness check and consult with the City Attorney’s Office and department management as necessary for concurrence on non-responsive proposals.
2 Elapsed times are estimates provided by staff; cycle times are not currently tracked/reported. 3 Evaluation processes are inconsistent across departments. Consistency can be achieved by centralizing the coordination/facilitation of RFP evaluations through Finance purchasing staff and/or liaisons.
Conduct interviews
Formal Competitive Request for Proposals (Greater than $50,000) (Page 3 of 4) Finance Director Requesting Department City Clerk City Attorney City Manager Competitive Negotiation Process Contract Award and Execution Beverly Hills Purchasing Function Assessment – Current and Proposed Workflow Processes September 12, 2019
Has Council approved
the contract?
From Pages
1 and 2
Review and comment on
Council report
Process ends
(City may reissue RFP if
desired)
Begin contract execution
process3
Approve final work scope
and cost
Draft Council report
Review and comment on
Council report
Review and comment on
Council report
Issue notice of intent to
award
Address comments and
finalize Council report
Review and comment on
Council report
Address comments and
finalize Council report
To Page 4
No
Yes
Enter into scope and fee
negotiations with top-rated
service provider
Total elapsed time from bidding to Council approval
averages 6 months
Legend
• indicate process steps currently being conducted by departments that can be facilitated by purchasing staff or purchasing liaisons as determined by department head or as requested/required. • indicates process to prepare specifications, requirements or scope of work. • indicate segments of the competitive bidding process occurring without purchasing involvement. • indicate estimated elapsed time to complete the competitive bidding process (not including scoping). • indicate purchasing staff’s entry into the procurement process.
Blue Boxes
Green Container
Gray Containers
Orange Containers
Purple Containers
Notes
1 During this phase, selected evaluation team members consult with the City Manager’s Office, City Attorney’s Office and risk management to ensure to ensure contract terms are acceptable and requirements met. 2 Current process to review/approve Council reports is conducted via simultaneous and/or sequential emails with or without associated attachments and should be evaluated for efficiency improvements. 3 Contract execution begins by emailing contracts to vendor for signature and waiting for return via U.S. mail/courier; contrac ts $50,000 or less are handled more efficiently via electronic signature through DocuSign. At this point in the process, required information such as insurance certificates/appropriate endorsements, W-9 form, etc. should be consistently requested by staff.
To Page 4
Formal Competitive Request for Proposals (Page 4 of 4)
City Manager Requesting
Department
Finance/
Purchasing
City
Attorney City Clerk City Council Risk Mgmt
Contract Execution and Financial System Approvals
Total elapsed time to complete the procurement cycle from bidding to purchase order issuance can take more than 7 months Beverly Hills Purchasing Function Assessment – Current and Proposed Workflow Processes September 12, 2019
From Page 3
Post award information
to website and distribute
purchase order/contract
Process complete
Obtain manager and/
or department head
signature approval to
content
Review and approve
contract
Review and approve
contract to form
Review and approve
contract
Send W‐9 to accounts
payable so vendor
record can be created
in Munis system3
Conduct compliance
review and approve
purchasing order/
contract in Munis
Legend∙ indicate process steps currently being conducted by departments that can be facilitated by purchasing staff or purchasing liaisons as determined by department head or as requested/required. ∙ indicates process to prepare specifications, requirements or scope of work. ∙ indicate segments of the competitive bidding process occurring without purchasing involvement. ∙ indicate estimated elapsed time to complete the competitive bidding process (not including scoping).∙ indicate purchasing staff’s entry into the procurement process.
Blue Boxes
Green Container
Gray Containers
Orange Containers
Purple Containers
Assign docket number
and upload contract to
records management
database
Notes
1If vendor‐signed contract has been returned, approvals within this container begin during the Council report phase on page 3; review is not sequential between risk and the City Attorney and is based on availability; Risk Manager will approve whether or not insurance has been verified; Finance Director does not approve at this stage.2Assigning a docket number can happen earlier in the workflow so that approval workflow in Munis can commence once Council approves the contract.3This step can happen earlier in the process if document has been provided by vendor. This step can also include uploading the insurance certificate.4Finance and purchasing will place items on hold from approximately 1 week if clarification is required, documentation is missing or insurance requirements are not met. Including purchasing earlier in the process will reduce average approval time. Requisitions are held rather than rejected to preclude the need to restart department workflow approvals.
Obtain Mayor’s
signature approval
Review and attest
contract
From Page 3
Move through Munis
contract approvals
Conduct compliance
review and approve
Munis contract
Move through Munis
purchase order
approvals
Formal Competitive Request for Proposals (Greater than $50,000) (Page 1 of 4) City Clerk Requesting Department Bidding Document Preparation and Posting
Beverly Hills Purchasing Function Assessment – Proposed Workflow Processes September 27, 2019
Notes
1 Process starts following department approval to move forward with a request for proposals (RFP) process. 2During this phase, departments coordinate with the City Attorney’s Office and risk management as necessary. Process timeframe is based on reasonable target average to scope a moderately complex RFP. 3 This step should include the assigning of bid numbers with a consistent naming conventions for uniformity and ease of tracking. 4 RFPs are posted to PlanetBids, City website, and other subject-matter specific websites, i.e., American Planning Association (APA) and should be evaluated for consistency.
Identify need1
Develop specifications/
scope of work
Incorporate scope of
work into bidding
documents and assign bid
number3
Receive requests for
information (RFIs) and
provide to project
manager
Review RFIs and draft
responses to questions
To Page 2
Legend
• indicate process steps that can be facilitated by purchasing staff or purchasing liaisons as determined by department head or as requested/required.
• indicates process to prepare specifications, requirements or scope of work. • indicate areas of focus to reduce competitive bidding process cycle times. • indicate targeted timeframes to complete the competitive bidding process (not including scoping). • indicate compliance review processes by purchasing, finance and city manager’s office.
Blue Boxes
Is the procurement
exempt from
bidding?
To Page 3
Coordinate with project
manager to establish
evaluation team,
estimate process
timelines
Advertise bidding
opportunity4
Yes
Format addendum for
project manager review
Review addendum and
revise as necessary
Issue addendum (post
to website and send to
distribution list)
Is there a preproposal conference?
Coordinate logistics for
pre-bid/proposal
conference
Receive, log and open
RFP/Q responses
No
Yes
No
Green Container
Gray Containers
Orange Containers
Purple Containers
Formal Competitive Request for Proposals (Greater than $50,000) (Page 2 of 4) City Clerk Requesting Department Evaluation of Submittals and Vendor Selection Phases
Beverly Hills Purchasing Function Assessment – Proposed Workflow Processes September 27, 2019
From Page 1
Notify non-responsive
vendor(s) that their
proposal(s) will not be
considered
Independently evaluate
submittals and send
evaluation sheets to
purchasing staff
To Page 3
Evaluate proposals for
responsiveness and
notify project manager3
Provide bid/proposal
packages to project
manager
Is there concurrence
on non-responsive
proposals?
Convene pre-determined
evaluation process
briefing and provide
proposals to evaluating
team
Schedule interviews as
necessary
No
Yes
Convene pre-determined
meeting to review initial
scoring summary and
rank proposals
Total targeted elapsed time from bidding through vendor selection averages 1.5 months 2 Debrief after interviews
and select top-rated
proposer by consensus
Notes
1 Target can be achieved by predetermining due dates for evaluation phases and prescheduling briefings to kickoff evaluation, rank written responses, conduct interviews and debrief/select top-rated proposer. 2 Elapsed times and targets are based on best practices. Consistency is achieved and time saved by centralizing the coordination/facilitation of RFP evaluations through Finance purchasing staff or liaisons to project manage the process steps according to critical path timelines. 3 Purchasing Division staff or purchasing liaisons can perform the responsiveness check and consult with the City Attorney’s Office and department management as necessary for concurrence on non-responsive proposals.
Conduct interviews
Legend
• indicate process steps that can be facilitated by purchasing staff or purchasing liaisons as determined by department head or as requested/required.
• indicates process to prepare specifications, requirements or scope of work. • indicate areas of focus to reduce competitive bidding process cycle times. • indicate targeted timeframes to complete the competitive bidding process (not including scoping). • indicate compliance review processes by purchasing, finance and city manager’s office.
Blue Boxes
Green Container
Gray Containers
Orange Containers
Purple Containers
Formal Competitive Request for Proposals (Greater than $50,000) (Page 3 of 4) City Attorney Requesting Department/ Content Reviewers Finance City Manager City Clerk Competitive Negotiation Process Contract Award and Execution Beverly Hills Purchasing Function Assessment – Proposed Workflow Processes September 27, 2019
Has Council approved
the contract?
From Pages
1 and 2
Review Council report and
contract
Process ends
(City may reissue RFP if
desired)
Agree on final work scope
and cost, draft contract for
review and approval
Draft Council report and
attach contract
Review Council report and
contract
Review Council report and
contract
Finalize and post Council
report
Enter into scope and fee
negotiations with top-rated
service provider
Total targeted elapsed time from bidding to Council approval is 3 months Notes
1 During this phase, selected evaluation team members coordinate department content and risk management reviews as necessary to ensure requirements are met as contracts terms and conditions are negotiated. 2 Formal review of contract occurs during this phase so that the signature approval process is efficient and consistent with best practice. 3 Contract execution begins here by emailing contracts to vendor for signature and waiting for return via U.S. mail/courier; contracts $50,000 or less are handled more efficiently via electronic signature through DocuSign. At this point in the process, required information such as insurance certificates/appropriate endorsements, W-9 form, etc. should be consistently requested by staff. Once received, W-9s are sent to accounts payable so vendor record can be created in Munis; insurance certificates are uploaded if they have been received.
To Page 4
Are there issues that
need to be
addressed?
Are there issues that
need to be
addressed?
Yes
No
Are there issues that
need to be
addressed?
Yes
No
Process pauses to
address issues with
contract and/or report
Process pauses to
address issues with
contract and/or report
No
Obtain manager and/or
department head content
authorization for contract3
Issue notice of intent to
award
Provide contract
authorization
Is Council approval
required?
Review contract
Yes
No Yes
No
Yes
Council approval not required
Legend
• indicate process steps that can be facilitated by purchasing staff or purchasing liaisons as determined by department head or as requested/required.
• indicates process to prepare specifications, requirements or scope of work. • indicate areas of focus to reduce competitive bidding process cycle times. • indicate targeted timeframes to complete the competitive bidding process (not including scoping). • indicate compliance review processes by purchasing, finance and city manager’s office.
Blue Boxes
Green Container
Gray Containers
Orange Containers
Purple Containers
Coordinate content
review(s) if/as necessary
Formal Competitive Request for Proposals (Page 4 of 4)
City Council Requesting
Department
Finance/
Purchasing City Clerk City Attorney City Manager
Contract Execution and Financial System Approvals
Total target average to complete the RFP procurement cycle from bidding to purchase order issuance is 3.5 months
Beverly Hills Purchasing Function Assessment – Proposed Workflow Processes September 27, 2019
Post award information
to website and distribute
purchase order/contract
Process complete
Review and approve
contract to form
Conduct compliance
review and approve
purchasing order/
contract in Munis5
Upload contract to
records management
database
Notes
1Signature approval cannot commence until vendor has signed and returned contracts, which may lengthen the process.2Assigning a docket number at this stage saves time and signifies contract approval by Council. At this stage, Munis workflow approvals can commence based on need.3Verifying that all contracts signatures have been obtained is the last step in confirming validity of the contract. 4If documentation is missing or insurance requirements not met, finance and purchasing will place items on hold pending clarification or receipt of missing items which can lengthen the approval process.5Work cannot commence or city funds obligated until a purchase order is approved.
Obtain Mayor’s
signature approval as
necessary
From Page 3
Move through Munis
contract approvals
Conduct compliance
review and approve
Munis contract
Move through Munis
purchase order
approvals
Review and approve
contract
Assign docket number
to contract2
Review and attest
contract3
Legend∙ indicate process steps that can be facilitated by purchasing staff or purchasing liaisons as determined by department head or as requested/required.
∙ indicates process to prepare specifications, requirements or scope of work.∙ indicate areas of focus to reduce competitive bidding process cycle times. ∙ indicate targeted timeframes to complete the competitive bidding process (not including scoping). ∙ indicate compliance review processes by purchasing, finance and city manager’s office.
Blue Boxes
Green Container
Gray Containers
Orange Containers
Purple Containers
Optimizing the City’s Purchasing Processes
Attachment C – Peer Comparisons Management Partners
46 Attachment C – Peer Comparisons
The City of Beverly Hills retained Management Partners to conduct an assessment of the City’s decentralized purchasing system. Management Partners collected information from six peer cities and two benchmarking studies from the National Institute of Governmental Purchasing (NIGP): The Institute for Public Procurement and from RPMG Research Corporation to provide information in the following major topical areas:
• Bidding thresholds,
• Purchasing positions within each city’s finance department, and • Contract award threshold levels for the city manager and department heads.
Benchmarking and Peer Agency Framework
Management Partners used information from two national local government purchasing benchmarking studies to provide context and data for comparison purposes.
1. NIGP: The Institute for Public Procurement’s 2017 Public Procurement Benchmark Survey Report is a report on the results of a standardized survey that gathered public sector procurement data. The survey focused on specific operating practices and processes and is used in this memorandum to help provide benchmarks and context for Beverly Hills’ Purchasing Division.
2. RPMG Research Corporation’s 2017 Purchasing Card Benchmark Survey provides purchasing card benchmark data for local agencies across the U.S. and Canada based on 3,500 surveyed governments.
Identifying Comparable Peers
For this peer agency comparison, we placed a heavy emphasis on cities that are well regarded for their purchasing processes, measured by looking at the number of times a city has won the National Procurement Institute’s (NPI) Achievement of Excellence in Procurement (AEP) award. We used the following criteria in selecting cities for peer agency research:
1. Number of times a city has received AEP award since 1996,
2. Service obligations,
3. Total operating budget,
4. Total authorized full-time positions, and
5. City population.
Beverly Hills Peers
To begin this process, Management Partners reviewed all the cities in California that had received at least one AEP award since 1996. We narrowed the search to full-service cities that provide both police and fire services. We then compared the number of purchasing FTEs to the total number of city FTEs, where information was publicly available from FY 2018-19 budgets.
Optimizing the City’s Purchasing Processes
Attachment C – Peer Comparisons Management Partners
47 To account for the fact that most of the cities that received AEP awards have centralized purchasing, we also included Fremont which has a decentralized purchasing process, similar services (police and fire), and a similar number of purchasing division staff as Beverly Hills despite being larger in total FTEs, indicating high efficiency. Most of the excluded cities were disqualified because they do not have highly regarded purchasing processes or are not fullservice cities. Santa Monica was included per the request of Beverly Hills due to similarities in city demographics and a recent ordinance that, among other things, amended the threshold dollar limits for city manager authority to approve purchases. This ordinance amended the Santa Monica Municipal Code and was approved in April 2019.
The six peers selected by Management Partners and approved by the City of Beverly Hills are:
• Burbank,
• Culver City,
• Fremont,
• Mountain View,
• Santa Monica, and
• Sunnyvale.
Beverly Hills is one of the smallest of the peers and one of the only decentralized purchasing systems. Many cities that most frequently receive awards from AEP have centralized purchasing systems. Table 6 provides summary information about the six peers.
Table 6. Summary of Peer Cities
Peers County Population
Number of Times AEP
Award Received since
1996
Centralized/
Decentralized
Purchasing
Beverly Hills Los Angeles 34,504 0 Decentralized
Burbank* Los Angeles 107,149 6 Centralized
Culver City* Los Angeles 39,860 1 Centralized
Fremont Alameda 235,439 0 Decentralized
Mountain View* Santa Clara 81,527 13 Centralized by Charter Santa Monica* Los Angeles 92,416 1 Centralized by Charter Sunnyvale* Santa Clara 153,389 19 Centralized by Charter Sources: California Department of Finance 2018, city budgets FY 2019-20. *Indicates Charter city.
Peer Agency and Benchmarking Information
This section provides information obtained from either the benchmarking studies or peer agency research on the following major topical areas:
• Centralized/decentralized purchasing systems,
• Purchasing division staffing levels,
Optimizing the City’s Purchasing Processes
Attachment C – Peer Comparisons Management Partners
48 • Competitive bidding thresholds and contract award authorities, • Procurement cycle times,
• Procurement negotiations,
• Purchase orders and change orders, and
• Purchasing card program utilization.
Centralized or Decentralized Purchasing Systems
Figure 8 shows the responses to a survey question about the purchasing function structure in the 2017 NIGP Benchmarking Survey. A majority of the 125 participants in the survey indicated that their agencies use a centralized purchasing system, with 50% responding that they use a centralized purchasing system with delegated authority, defined as “most procurement is performed through a central procurement function, with some procurement delegated to departments.” An additional 24% responded that they use a centralized procurement system, defined as “almost all procurement is performed through a central procurement function.” Like Beverly Hills, 23% of the NIGP survey participants reported that they use a decentralized purchasing system, defined as “almost all procurement is performed by departments, but subject to review by central procurement.”
Figure 8. Breakdown of Most Common Purchasing Organization Structures1 .
Source: NIGP 2017 Public Procurement Benchmark Survey Report. 1The breakdown is based on 125 survey respondents as follows: 29 agencies reported a decentralized system; 30 agencies reported a centralized system; and 62 entities reported a centralized system with some delegated authority (the remaining 4 respondents indicated “other” as explained in the note below). 2Almost all procurement is performed through a central procurement function. 3Most procurement is performed through a central procurement function, with some procurement delegated to departments.
Note: The final 3% of survey participants selected “Other,” indicating either that their procurement department did not fall within the two categories or that they were unsure how to answer the question. 23% 50%3
24%2
0 10
20 30
40 50
60 70
80 Decentralized with central review Centralized
Optimizing the City’s Purchasing Processes
Attachment C – Peer Comparisons Management Partners
49 Purchasing Division Staffing Levels
Table 7 shows the staffing levels for each agency’s purchasing division. All peer agencies dedicate more resources to the procurement function than Beverly Hills. Specifically, every peer agency has at least one full-time professional buyer, and five of the six peers have more than one buyer. In addition, all peer agencies except for Mountain View have full-time purchasing managers who oversee their work units and four of the peer agencies have procurement analysts. Also of note is the fact that Beverly Hills has more full-time equivalent positions than four of the peer agencies but has the lowest number of procurement staff compared to its peers.
Table 7. Peer City Staffing and Expenditures
Peers
Authorized Full-Time
Equivalent
Employees (FTE)1
Purchasing
Division
Authorized FullTime Positions Purchasing Division Positions Beverly Hills 1,034 2.5 Purchasing Specialist (2), Assistant Director (0.2), Accounting Manager (0.3)
Burbank 1,430 6.0 Purchasing Manager (1), Buyer I (2), Buyer II (1), Clerk (2) Culver City 717 3.0 Associate Analyst (1), Buyer (1), Procurement and Financial Services Manager (1)
Fremont 953 3.0 Purchasing Services Manager (1), Buyer (2) Mountain View 648 6.02
Purchasing and Support Services Manager (0.5), Senior
Management Analyst (2), Supervising Buyer (1), Assistant Buyer/Buyer (2), Warehouse Worker (0.5)
Santa Monica 2,298 7.0
Procurement Manager (1), Senior Procurement Analyst (1), Senior Buyer (2), Contracts Coordinator (1), Buyer (1), Staff Assistant III (1)
Sunnyvale 921 9.02
Purchasing Officer (1), Management Analyst (1), Principal Buyer (1), Senior Buyer (2), Buyer I/II (1),
Storekeeper/Buyer (1), Storekeeper I/II (2)
Source: City budgets FY 2019-20; includes other functions such as central warehousing for some jurisdictions. 1Includes both full-time and part-time FTEs. 2One additional purchasing FTE proposed for FY 2019-20; two positions (a senior buyer and buyer I/II) are term-limited to backfill for staff supporting implementation of a new financial system.
Bidding Thresholds and Contract Award Authorities
Table 8 shows the bidding thresholds and contract award authority levels for the six peer cities and Beverly Hills. Relative to its peers, Beverly Hills has the same competitive bidding threshold for formal bids as Culver City and Sunnyvale, and a lower threshold than the other four peer cities. For contract award authority, only Culver City has the same $50,000 threshold Optimizing the City’s Purchasing Processes
Attachment C – Peer Comparisons Management Partners
50 as Beverly Hills, while all other peers have significantly higher contract award authority thresholds.
Table 8. Bidding Thresholds and Contract Award Authority Peers
Competitive Bidding Thresholds Contract Award Authority Informal Formal City Manager City Council
Beverly
Hills $7,501 to $50,000 Greater than $50,000 Up to $50,000 Greater than $50,000 Burbank* $5,000 to $100,0001 >$100,0001
Up to $75,000 for
professional
services;
Up to $100,000 for
goods, services and
public works
projects
Greater than $75,000
for professional
services;
Greater than $100,000
for goods, services and
public works projects
Culver
City* Up to $50,0002 Greater than $50,0002 Up to $50,000 Greater than $50,000 Fremont $5,001 to $100,0003 Greater than $100,0004 Up to $100,0005 Greater than $100,000 5 Mountain
View* $10,001 to $100,000 Greater than $100,000
Up to $100,000 for
professional
services and public
works projects
Greater than
$100,000 for goods
and general services
Greater than $100,000
for professional
services and public
works projects
Santa
Monica*
$25,001 to $250,000 5
$25,001 to $95,0006
Greater than $250,000 5
Greater than $95,0006
Up to $250,000 5
Up to $95,0006
Greater than $250,000 5
Greater than $95,0006
Sunnyvale* Up to $50,000 Greater than $50,000 Up to $100,000 5 Greater than $100,000 Source: City budgets FY 2019-20, municipal codes, city charters, and city websites. *Indicates Charter cities.
1For goods and general services; professional services bid levels are established administratively. 2Professional services require competitive quotes when practical. RFPs and RFQs for professional services require city council approval.
3Minor project process, informal bidding/negotiated contracts. 4Public works formal and informal purchasing follows California Uniform Public Construction Cost Accounting Act (CUPCCAA). 5 For goods, services, and public works.
6 For professional services.
Procurement Cycle Times
Figure 9 depicts the average and median cycle times (by number of days) for purchases as reported by 102 participants in the 2017 NIGP Benchmarking Survey, grouped by small purchases utilizing informal bidding methods, and formal (sealed) competitive bidding for requests for proposals (RFPs) and invitations for bids. Beverly Hills is not currently measuring Optimizing the City’s Purchasing Processes
Attachment C – Peer Comparisons Management Partners
51 its cycle times, but staff estimate that the average cycle time for a moderately complex RFP is seven months.
While it is difficult to draw a comparison between measured cycle times for formal bidding from the benchmark survey and staffs’ estimates provided by Beverly Hills associated with conducting RFPs, it is apparent that the City is taking longer on average to complete such procurements.
Figure 9. Cycle Times for Small Purchases and Competitive Bids/Proposals Source: National Institute of Governmental Purchasing 2017 Public Procurement Benchmark Survey Report.
Procurement Negotiations
Figure 10 shows the percentage of cities and counties surveyed by the 2017 NIGP Benchmark Survey whose procurement function is involved with varying levels of negotiations. Of the agencies surveyed, over 80% indicated that their procurement function has at least some involvement in the negotiation process. In Beverly Hills, the procurement division currently does not have any involvement in the negotiation process, which is unusual relative to the benchmarking peers.
Figure 10. Percentage of Surveyed Cities Where Procurement Is Involved in Negotiations Source: National Institute of Governmental Purchasing 2017 Public Procurement Benchmark Survey Report.
Note: The final 1% of survey participants selected “Other,” indicating either that their procurement department did not fall within the two categories or that they were unsure how to answer the question. 8 73
51 5
60 45
0 10
20 30
40 50
60 70
80 Small Purchases Formal requests for proposals Formal bids Average Median
6%
12%
31%
50%
0%
10%
20%
30%
40%
50%
60%
No involvement at all Very little involvement Some involvement High involvement Optimizing the City’s Purchasing Processes
Attachment C – Peer Comparisons Management Partners
52 Purchase Orders and Change Orders
Figure 11 shows the average percentage of change orders relative to the total number of annual purchase orders issued as reported by participants in the 2017 NIGP report. A change order is a modification, addition or deletion to a purchase order or contract, but the application/definition can vary from agency to agency. On average, survey participants reported issuing an average of 6,001 purchasing orders per year with 595 change orders, or approximately 10%.
Based on several years of data extracted from the Beverly Hills’ financial system, the change order percentage for purchase orders is more than three times that of the benchmark agencies (36%). Additionally, when analyzing change orders associated with contracts, the number of contract change orders is nearly 173% higher than the number of contracts issued (13,104 to 7,623).
While these percentages indicate a substantial imbalance relative to the norm, a more detailed analysis is necessary to determine how the City defines change orders before any meaningful conclusion can be drawn. However, such high levels of change orders should be cause for concern as careful scoping and contract management tend to limit the frequency of change orders.
Figure 11. Percent of Total Purchase Orders that are Change Orders .
Source: National Institute of Governmental Purchasing 2017 Public Procurement Benchmark Survey Report.
Purchasing Card Program Utilization
Table 9 contains key benchmarking statistics for the City of Beverly Hills alongside data from RPMG’s 2017 Purchasing Card Benchmark Survey. Beverly Hills falls between the mid-size and large-size agency definitions based on the RPMG criteria of number of employees and size of annual operating budget.
On average, city employees spend less per month using p-cards than comparable mid-size to large-size agencies. Overall, Beverly Hills spends less than small-sized jurisdictions when 10%
36%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Benchmarking Peers Beverly Hills
Optimizing the City’s Purchasing Processes
Attachment C – Peer Comparisons Management Partners
53 comparing average amount spent per employee; and the City is below all agency categories in the amount of monthly transactions per purchasing card. It should also be noted that Beverly Hills has a lower percentage of cards that are being used in a typical month. These factors are all suggestive of a need to reevaluate utilization of the City’s purchasing card program.
Table 9. City of Beverly Hills Purchasing Card Benchmark Statistics Small1 Mid-Size2
LargeSize3 Beverly Hills
Organizational Statistics
Number of Employees 78 484 3,665 995.9
Program Performance Measures
Number of Plastic Purchasing Cards 24 146 475 182
Card-to-Employee Ratio 31.50% 30.10% 12.80% 18.27%
Average Monthly P-Card Spending $20,586 $216,505 $888,166 $205,461 Median Monthly P-Card Spending $12,000 $135,000 $560,000 $199,859 Monthly Spending per Employee $265 $447 $242 $206
Cardholder Activity Measures
Monthly Spending per Card $840 $1,484 $1,890 $1,129
Monthly Transactions per Card 3.92 4.40 5.30 3.56
Spending per Transaction $215 $337 $357 $318
Percentage of Active Cards in a Typical Month 71% 72% 75% 48.6% Sources: RPMG 2017 Purchasing Card Benchmark Survey Results; P-Card spending data for July 2018 through June 2019 provided by the City of Beverly Hills.
1Small-size cities and counties are defined as those with annual budgets below $25 million. 2Mid-size cities and counties are defined as those with annual budgets over $25 million with fewer than 1,000 employees. 3Large-size cities and counties are defined as those with annual budgets over $25 million with more than 1,000 employees.
Table 10 shows data from the 2017 RPMG Study that highlight the average percentage of all transactions completed by participating agencies using plastic cards, card-less systems, ghost cards, or electronic accounts payable (EAP) systems (collectively referred to as “p-card” in the Study). Most jurisdictions with modernized purchasing programs use an array of electronic payment options, with appropriate controls, to reduce paper invoicing and facilitate ease of use for employees and vendors. Beverly Hills currently uses only plastic credit cards and does not utilize electronic invoicing due to concerns about the occurrence of fraud.
Table 10. Percentage of Transactions Completed using P-card Programs Transaction size Small-Size Mid-Size Large-Size
Transactions $2,500 or less paid by p-card 36% 50% 55%
Transactions $2,501 to $10,000 paid by p-card 16% 28% 31% Transactions $10,001 to $100,000 paid by p-card 5% 8% 10% Source: RPMG 2017 Purchasing Card Benchmark Survey Results Optimizing the City’s Purchasing Processes
Attachment C – Peer Comparisons Management Partners
54 As can be seen in Table 10, mid-size and large-size jurisdictions utilize p-cards for a considerable number of purchases under $10,000 (78% for mid-size and 86% for large-size agencies). As Table 11 below indicates, Beverly Hills uses purchasing cards almost exclusively for purchases under $500. Based on the benchmark data, this suggests an underutilization of the program.
Table 11. Beverly Hills Purchasing Card Expenditures and Transactions Breakdown for FY 2018-19 Total Expenditures
Percent of Total
Expenditures
Number of
Transactions
Percent of Total
Transactions
Under $500 $724,847 29.53% 6,464 83.32%
$500 to $1,000 $546,651 22.00% 769 9.91%
$1,000 to $2,500 $568,761 23.17% 370 4.77%
$2,500 to $5,000 $402,723 16.41% 123 1.59%
$5,000 to $7,500 $172,647 7.03% 28 0.36%
$7,500 to $10,000 $26,379 1.07% 3 0.04%
Over $10,000 $12,766 0.52% 1 0.01%
Total in FY 2018-19 $2,454,773 100.00% 7,758 100.00%
Source: P-card spending data provided by the City of Beverly Hills.
Table 12 shows the annual purchasing card expenditures and transactions for Beverly Hills for the past three fiscal years. The data indicate there has not been a significant increase over time in p-card expenditures and transactions. Purchasing card usage increased from FY 2016-17 to FY 2017-18 but decreased the following year. The decrease may be attributable to the requirement of having a purchase order in place to use a purchasing card.
Table 12. Beverly Hills Annual Purchasing Card Expenditures and Transactions Year Total Expenditures Number of Transactions Average Expenditure per Transaction FY 2016-17 $2,232,723 7,332 $305
FY 2017-18 $2,776,980 8,513 $326
FY 2018-19 $2,454,773 7,769 $316
Source: P-card spending data for July 2016 through July 2019 provided by the City of Beverly Hills.
Conclusion
Compared with peer agencies and national benchmark surveys, the City of Beverly Hills is out of the norm in several procurement-related areas including use of a completely decentralized system, lower number of central staffing resources dedicated to procurement facilitation and management, lower bidding and contract award thresholds, higher than average cycle times, higher frequency of change orders, and underutilization of its purchasing card program.
The peer comparisons and benchmarking information can provide useful context for evaluating our recommendations and making meaningful organizational changes to improve the purchasing system.
Attachment 2
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B0785-0001\2302818v11.doc
ORDINANCE NO. 21-O-_______
AN ORDINANCE OF THE CITY OF BEVERLY HILLS
AMENDING THE BEVERLY HILLS MUNICIPAL CODE
REGARDING PURCHASING OF SUPPLIES, EQUIPMENT
AND SERVICES
THE CITY COUNCIL OF THE CITY OF BEVERLY HILLS HEREBY ORDAINS AS FOLLOWS:
Section 1. Articles 1, 2 and 3 of Chapter 3 of Title 3 of the Beverly Hills Municipal Code shall be amended as follows:
CHAPTER 3. PURCHASING, PUBLIC WORKS CONTRACTS AND
DISPOSITION OF PROPERTY
ARTICLE 1. GENERAL PROVISIONS
3-3-101: INTENT
The intent of this chapter is to establish purchasing procedures for the purchase of equipment, supplies and services, to conform to the California Uniform Construction Cost Accounting Act (Public Contract Code section 22000 et seq.) and to establish procedures for the disposition of property. Nothing in this chapter is intended to require the City to solicit bids for equipment, supplies or services or accept the lowest bid to provide equipment, supplies or services, except as required by State law.
3-3-102: DEFINITIONS
Unless the context otherwise requires, the following definitions shall govern the construction of this chapter:
CHANGE ORDER: Change Order means a written authorization from the City directing an addition, deletion, or revision to an awarded purchase order or contract.
CONTRACTING OFFICER: Contracting Officer means the designated City employee authorized by section 3-3-107 of this article to engage in level 1, level 2 and level 3 purchasing transactions.
DIRECTOR OR PURCHASING AGENT: Director of Purchasing Agent means the Director of Finance, or his or her designee.
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B0785-0001\2302818v11.doc
ELECTRONIC BIDDING PLATFORM: Electronic Bidding Platform means one or more computing or digital software platforms selected by City to solicit and receive written bids.
PUBLIC PROJECT: Public Project means that term as defined in section 22002 of the California Public Contract Code, or the successor statute thereto. 3-3-103: PURCHASES AND CONTRACTS REQUIRE ISSUANCE OF PURCHASE ORDER
A. In order to more efficiently manage all purchases and other contracts, the City shall issue a purchase order to each vendor who agrees to provide goods or supplies to the City and the City shall issue a purchase order to accompany every contract for the performance of services or public projects unless otherwise authorized by an administrative regulation signed by the city manager or authorized by the rules and regulations adopted by the Director pursuant to this chapter. Except as otherwise provided herein, no contract shall be deemed to be an authorization to proceed with work unless accompanied by a purchase order authorized and executed pursuant to this section, nor shall any vendor or contracting party be authorized to perform any service, perform any public project, or provide any supplies or equipment without first receiving a purchase order authorized and executed pursuant to this section.
B. Notwithstanding the above, litigation service contracts shall be exempted from the requirement to issue a purchase order due to the confidential nature of the fees anticipated.
Litigation services shall be paid with a contract in place and the responsible department shall not pay more than the appropriated budget. If additional funding is required, an additional appropriation must be approved by the city council.
3-3-104: UNAUTHORIZED PURCHASES AND CONTRACTS
It shall be unlawful for any officer, employee, or agent of the City to order the purchase of supplies or equipment, or to contract for services or contract for the performance of public projects, or otherwise make any contract in violation of this chapter. Any order, purchase, or contract made contrary to the provisions of this chapter shall not be binding on the City, and the City shall not be obligated thereunder.
3-3-105: PROHIBITION AGAINST SPLITTING PURCHASES
Purchases of supplies, equipment, and services, and the performance of public projects shall not be divided or staged for the purpose of circumventing the requirements of this chapter. 3-3-106: SPECIALIZED CONTRACTING PROCEDURES
Nothing in this chapter shall prohibit the City from using specialized contracting procedures when authorized by state law. If state law authorizes such procedures, they need not also be specifically authorized by this chapter. Such specialized procedures may include, without limitation, prequalification of general contractors or subcontractors and design/build contracting procedures.
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B0785-0001\2302818v11.doc
3-3-107: PURCHASING LEVELS AND APPROVAL AUTHORITY
Purchasing and contract procedures are categorized into four (4) different levels as set forth in sections 3-3-200 et seq. of this chapter. Each level shall govern purchase orders and contracts of different values. Level 1 shall govern the least expensive purchase orders and contracts and level 4 shall govern the most expensive purchase orders and contracts.
Level 1 purchases may be awarded in the maximum amount of ten thousand dollars ($10,000) by the head of the City department or his/her authorized designee for which the purchase is made; Level 2 purchases may be awarded in the maximum amount of fifty thousand dollars ($50,000) by the Purchasing Agent or his/her authorized designee; Level 3 purchases may be awarded in the maximum amount of one hundred thousand dollars ($100,000) by the city manager or his/her authorized designee; and Level 4 purchases exceed one hundred thousand dollars ($100,000) and shall be awarded by the city council. The city manager’s purchasing authority is increased to two hundred thousand dollars ($200,000) if the city manager determines: (a) there is an urgent need to enter into a purchase order or contract; and (b) the equipment, supplies or services is a budgeted expense as set forth in the City adopted budget. In such case, the purchase and/or contract shall be governed by the regulations applicable to Level 3 purchases and contracts. 3-3-108: BID SECURITY
Bid security shall be required as a condition of submitting a written bid unless deemed unnecessary in writing by the Purchasing Agent. Bid security shall be in the form of a cashier's check or surety bond and shall be no less than ten percent (10%) of the bid amount or such other amount as determined by the Purchasing Agent.
A successful bidder shall forfeit his bid security upon refusal or failure to execute a contract or purchase order with the City. On refusal or failure of the successful bidder to execute the contract or purchase order, the City may award the bid to the next lowest responsible bidder who is willing to execute the contract or purchase order. In such case, the amount of successful bidder's security shall be applied by the City to the purchase or contract price differential between the successful bidder and the next lowest responsible bidder. The remaining security, if any, shall be returned.
3-3-109: INTERPRETATION OF BID SPECIFICATIONS
Oral interpretation of written bid specifications shall not be made by the City to prospective bidders. If the prospective bidder discovers discrepancies or omissions in any specification, or if the bidder is in doubt as to the meaning of any specification, the bidder shall request a written interpretation or modification from the City. If interpretations or modifications are deemed necessary, the City will then issue a written addendum to all parties known to have received copies of the specifications.
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B0785-0001\2302818v11.doc
3-3-110: CHANGE ORDERS
A. Any alteration to, amendment of, or deviation from an awarded purchase order or contract as to scope, cost, time for completion, material, or equipment furnished as a part of the purchase order or contract, or any alteration to, amendment of, or deviation from the nature of work to be performed, shall require the completion and issuance of a Change Order or execution of a contract amendment. Additions to work cannot be combined with deletions to work to avoid the Change Order requirement.
B. The appropriate Contracting Officer may approve a Change Order as long as the combined amount of the original purchase order and the Change Order does not exceed the Contracting Officer's purchasing authority. If the original purchase order or contract was approved by the city council, a Change Order may be approved in an amount that does not exceed the Contracting Officer's purchasing authority. All other Change Orders shall be approved by the city council or the person, if any, designated in a contract approved by the city council. No Change Order shall be binding on the City until approved as provided herein.
Change orders shall not be issued unless:
a. The Change Order arises in good faith out of an unknown condition or unforeseen circumstance including, without limitation, unforeseen or unknown quantities of goods and/or services differing materially from the quantities of goods and/or services that were contemplated in the purchase order or contract, or, alternatively, the Change Order arises due to an error in the City's specifications that accompanied the bid solicitation; and b. The Change Order does not change the purpose of the purchase order or contract; and
c. With regard to a service contract or a contract for public project performance, the Change Order is reasonably related to the scope of work authorized under the original contract; and
d. With regard to the purchase of goods or supplies, the Change Order is required to allow the goods or supplies to fulfill the purpose for which they were intended.
C. Any Change Order for a public project shall be in accordance with the most current edition of the "Standard Specifications For Public Works Construction", adopted by the joint cooperative committee of the Southern California chapter of the American Public Works Association and the Southern California districts of the Associated General Contractors Of California.
3-3-111: ANNUAL REPORT
The Director shall make an annual report to the city council of the level 2 and level 3 awarded purchases and contracts.
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3-3-112: EXCEPTIONS TO BIDDING REQUIREMENT
Except with regard to public projects of more than sixty thousand dollars ($60,000.00), the bidding requirements of this chapter shall not apply in the following circumstances:
A. Where competition does not exist, such as: utility or communications services; , postage; education and training expenses; subscriptions and memberships in professional organizations; and attendance at meetings or conventions..
B. Where items to be purchased are for resale to the public.
C. When the needed equipment, supplies or services are proprietary items of original equipment manufacturers and/or their authorized exclusive distributors.
D. When the equipment is a component for equipment or a system of equipment previously acquired by the City, and is necessary to repair, maintain or improve the City’s utilization of the equipment.
E. Where items to be purchased are circulating library materials, including books, periodicals, films, and recordings; computer software, hardware maintenance services or software maintenance services; food, condiments and similar items; or art.
F. Any contract involving the purchase of supplies, equipment or services entered into with another governmental entity.
G. Any contract for professional services such as attorneys, physicians, architects, engineers, consultants, accountants, specialized printers or other individuals or organizations possessing a high degree of professional, unique, specialized or technical skill or expertise.
H. When the requesting department determines in writing, after conducting a good faith review of the available sources, that there is only one source for the required equipment, supplies or services or that a sole source procurement is necessary to ensure compatibility with existing City equipment. The department requesting sole source procurement shall provide written evidence to support a sole source determination. Such evidence shall be approved by the Purchasing Agent. The city manager may require that negotiations be conducted as to price, delivery and terms. The city manager may also require the submission of cost or pricing data in connection with an award under this section.
I. Emergency procurement as set forth in sections 3-3-206 and 3-3-303 of this chapter.
Nothing in this section prohibits the Purchasing Agent or appropriate Contracting Officer from requiring more stringent bidding requirements for a purchase that falls under one of the exceptions listed above.
3-3-113: MULTIYEAR CONTRACTS
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Unless otherwise limited by law, the term of a contract shall be as set forth in the contract, and may include extensions as authorized in the contract. The appropriate Contracting Officer may approve a multiyear contract, provided that the annual value of the multiyear contract does not exceed three times the Contracting Officer's purchasing authority over the entire term of the contract. Otherwise, multiyear contracts shall be approved by the person designated in section 3- 3-107.
3-3-114: RULES AND REGULATIONS
The Director is authorized, subject to approval by the city manager, to promulgate rules and regulations to implement the provisions of this article.
ARTICLE 2. PURCHASING OF SUPPLIES, EQUIPMENT AND SERVICES 3-3-200: SCOPE OF ARTICLE
This article shall govern the purchase and contracting of supplies and equipment and services. 3-3-201: DEPARTMENT HEAD PURCHASES; LEVEL 1
Level 1 purchases and contracts may be awarded by the head of the department for which the purchase is made and is authorized without competitive bidding. 3-3-202: PURCHASING AGENT/DIRECTOR OF FINANCE PURCHASES; LEVEL 2 A. Level 2 purchases and contracts may be awarded by the Purchasing Agent and shall require competitive written bidding. Bids shall be solicited and received in writing by Electronic Bidding Platform as set forth in the rules and regulations adopted by the Director pursuant to this chapter.
B. The Purchasing Agent shall award the purchase of supplies or equipment to the lowest responsible bidder, or shall reject all bids for the purchase, after the receipt of bids from those who respond to the solicitation, The Purchasing Agent may waive any irregularities or informalities in any bid or bidding.
C. The Purchasing Agent shall award contracts for services to the lowest responsible bidder after receipt of bids from those who respond to the solicitation. Purchasing Agent. The Purchasing Agent may reject all bids, or waive any irregularities or informalities in any bid or bidding.
D. The Purchasing Agent may waive the requirement to solicit written bids if the equipment or supplies are available from only one source as set forth in section 3-3-112(H) of this chapter and may solicit only two (2) bids if the equipment or supplies are available from only two (2) sources.
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E. Upon determining that conformance with the procedures set forth in this article would be contrary to the best interests of the City or upon determining that compliance with the procedures would be impractical, the Purchasing Agent may waive, in writing, any or all of the requirements of this section.
3-3-203: CITY MANAGER PURCHASES; LEVEL 3
A. Level 3 purchases and contracts may be awarded by the city manager. Purchases of supplies and equipment shall require competitive written bidding as follows:
1. Bid specifications shall be prepared and written notices soliciting written bids shall be disseminated by Electronic Bidding Platform Such notices shall include the closing date of the bid.
2. Bids shall be submitted by Electronic Bidding Platform in writing and must be received prior to the bid closing date and time for the bids to be considered and shall not be reviewed until the date and time designated in the bid specifications.
B. With regard to the purchase of supplies or equipment, the city manager shall award the purchase to the lowest responsible bidder, or shall reject all bids. . The Purchasing Agent may waive any irregularities or informalities in any bid or bidding.
C. With regard to contracts for services, the city manager shall award contracts for services to the lowest responsible bidder. . The city manager may reject all bids, or waive any irregularities or informalities in any bid or bidding.
D. The city manager may waive the requirement to solicit bids if the equipment or supplies are available from only one source as set forth in section 3-3-112(H) of this chapter and may solicit only two (2) bids if the equipment or supplies are available from only two (2) sources.
F. Upon determining that conformance with the procedures set forth in this article would be contrary to the best interests of the City or upon determining that compliance with the procedures would be impractical, the city manager may waive, in writing, any or all of the requirements of this section.
3-3-204: CITY COUNCIL APPROVAL; LEVEL 4 PURCHASES
A. Level 4 purchases shall be approved by the city council and shall require competitive written bidding as follows:
1. Bid specifications shall be prepared, and notices inviting written bids shall be disseminated by Electronic Bidding Platform.
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2. Bids shall be submitted in writing by Electronic Bidding Platform, must be received prior to the bid closing date and time for the bids to be considered and shall not be reviewed until the date and time designated in the bid specifications.
B. With regard to the purchase of supplies and equipment, the city council shall award the bid to the lowest responsible bidder, or shall reject all bids.. The city council may waive any irregularities or informalities in any bid or bidding.
C. With regard to contracts for services, the city council shall award contracts for services to the lowest responsible bidder or reject all bids. The city council may waive any irregularities or informalities in any bid or bidding.
D. The city council may waive the procedures required by this section if the city council determines that the equipment or supplies are available only from one source as set forth in section 3-3-113 of this chapter and may send a notice inviting bids to only two (2) prospective bidders if the city council determines that the equipment or supplies are available from only two (2) sources.
E. Upon determining that conformance with the procedures set forth in this article would be contrary to the best interests of the City or upon determining that compliance with the procedures would be impractical, the city council may waive, by motion or resolution, any or all of the requirements of this section.
3-3-205: ALTERNATIVE PURCHASING PROCEDURES
In lieu of the purchasing and bid procedures set forth in this article, the following alternative purchasing procedures may be used in the discretion of the Purchasing Agent for the purchase of supplies, equipment or services in excess of Level 1 department head purchases.
A. Purchases from the California department of general services, pursuant to California Government Code section 54205, or the successor statute thereto.
B. Purchases from any joint powers agency or any agency with which the City has entered into a joint powers agreement for purchase of equipment or supplies; provided that the city manager determines that the item can likely be obtained at a cost which is less than the City could likely obtain through the purchasing procedures set forth in this article.
C. Purchases of supplies, equipment or services where competitive bid procedures have already been utilized, such as purchases from federal, state or county governments, including, state of California agencies, counties, cities, joint power agencies, special districts, and nonprofit agencies whose main purpose is to assist cities or other public entities and the supplies or equipment are supplied to the City at the same or better price, as was obtained through the competitive bid procedures of that entity.
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3-3-206: EMERGENCIES
A. In case of a locally declared emergency or if the city manager determines there is an emergency situation, the director of emergency services), is authorized to expend City funds without limitation on amount and without following the purchasing or bidding procedures otherwise required by this article. An emergency purchase shall be limited to those supplies, equipment or services necessary to satisfy the emergency need.
B. Expenditures made during a locally declared emergency, an urgent situation as determined by the city manager pursuant to section 3-3-107, or in an emergency situation must be reported to the city council at the next regular council meeting if approval for such expenditures would otherwise have been made by the city council.
C. As used in this section, an "emergency situation" is defined as an urgent unforeseen situation that threatens life, property or the general public health, safety and welfare.
D. The Director shall, subject to approval by the city manager, promulgate rules and regulations to implement emergency purchasing practices that comply with state and federal law.
ARTICLE 3. PUBLIC WORKS CONTRACTS
3-3-301: CONTRACTS FOR PUBLIC PROJECTS:
The following procedures shall govern the award of contracts for public projects, whereas the limits referenced in section 3-3-107 shall indicate the threshold for approvals by the city council:
A. Public Projects Of Sixty Thousand Dollars Or Less: Public projects of sixty thousand dollars ($60,000.00) or less, may be performed by City employees, may be awarded by negotiated contract, or may be awarded by purchase order. A contract or purchase order shall require competitive written bidding as described in section 3-3-202 of this chapter unless the Purchasing Agent determines that a different competitive bidding procedure is in the best interest of the City. In such case, the Purchasing Agent may solicit written bids as provided in section 3- 3-203 of this chapter or solicit written bids as provided in section 3-3-204 of this chapter.
B. Public Projects Of More Than Sixty Thousand Dollars, But Less Than Or Equal To Two Hundred Thousand Dollars: Public projects of more than sixty thousand dollars ($60,000.00), but less than or equal to two hundred thousand dollars ($200,000.00), shall require competitive written bidding as described in this subsection.
1. Bid specifications shall be prepared and notices inviting bids shall be disseminated by the Electronic Bidding Platform as set forth in subsection B2 of this section.
2. All notices inviting bids through the Electronic Bidding Platform shall be sent to: a) the construction trade journals specified in California Public Contract Code section 22036, or b) a list of qualified contractors, identified according to categories of work and which has been developed in compliance with the criteria issued by the California Uniform -10-
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Construction Cost Accounting Commission, or c) both, unless the supplies, equipment or services are proprietary. Such notices shall be sent by the Electronic Bidding Platform not less than ten (10) calendar days before bids are due. The notices shall describe the project in general terms, how to obtain more detailed information regarding the project, and the time and place for the submission of bids.
If all bids received are in excess of two hundred thousand dollars ($200,000.00), the city council may, by passage of a resolution by a four-fifths (4/5) vote, award the contract at two hundred twelve thousand five hundred dollars ($212,500.00) or less, to the lowest responsible bidder, without complying with the bidding procedures set forth in subsection C of this section, provided that the city council determines that the cost estimate of the project was reasonable.
C. Public Projects Of More Than Two Hundred Thousand Dollars: Public projects of more than two hundred thousand dollars ($200,000.00) shall require competitive written bidding. A notice inviting bids by Electronic Bidding Platform shall be published and sent in compliance with the provisions of California Public Contract Code section 22037, or the successor statute thereto. In addition, bid plans and working details shall be adopted by the city council for all public projects exceeding two hundred thousand dollars ($200,000.00).
D. Bid Requirements: When written bids are requested, the bids shall be submitted by Electronic Bidding Platform and shall not be opened until the time and place designated in the bid specifications. Bids must be received prior to the bid deadline to be considered.
E. Award: When bids are solicited, the appropriate Contracting Officer or the city council shall award the bid to the lowest responsible bidder, or reject all bids pursuant to Public Contract Code section 22038, or its successor statute. The Contracting Officer or the city council may waive any irregularities or informalities in any bid or bidding. 3-3-302: CONTRACTING AUTHORITY FOR PUBLIC PROJECTS:
The City officials set forth in section 3-3-200 et seq. of Article 2 of this Chapter 3 shall have the authority to approve contracts for public projects in the amount that corresponds to their purchasing authority as set forth in those sections.
3-3-303: EMERGENCY PROCUREMENT:
In addition to any other exemption from bidding requirements set forth in this chapter or otherwise provided by law, in a situation determined by the city manager to constitute an emergency for a public project pursuant to Public Contract Code sections 22035 and 22050 or in a locally declared emergency city council delegates to the director of emergency services the power to order any action pursuant to Public Contract Code sections 22035 and 22050. The director of emergency services shall comply with the applicable provisions of section 22050. -11-
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Section 2. Severability. If any section, subsection, subdivision, sentence, clause, phrase, or portion of this Ordinance or the application thereof to any person or place, is for any reason held to be invalid or unconstitutional by the final decision of any court of competent jurisdiction, the remainder of this Ordinance shall be and remain in full force and effect.
Section 3. Publication. The City Clerk shall cause this Ordinance to be published at least once in a newspaper of general circulation published and circulated in the City within fifteen (15) days after its passage in accordance with Section 36933 of the Government Code, shall certify to the adoption of this Ordinance, and shall cause this Ordinance and her certification, together with proof of publication, to be entered in the Book of Ordinances of the Council of this City.
Section 4. Effective Date. 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.
Adopted:
Effective:
LESTER J. FRIEDMAN
Mayor of the City of
Beverly Hills, California
ATTEST:
HUMA AHMED
City Clerk
(SEAL)
APPROVED AS TO FORM: APPROVED AS TO CONTENT:
LAURENCE S. WIENER
City Attorney
GEORGE CHAVEZ
City Manager
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JEFF S. MUIR
Director of Finance
Attachment 3
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B0785-0001\2469592v7.doc
RESOLUTION NO. 21-R- __________
RESOLUTION OF THE COUNCIL OF THE CITY OF BEVERLY
HILLS RESTATING CITY’S ELECTION TO BECOME SUBJECT
TO THE UNIFORM COST ACCOUNTING ACT, DESIGNATION
OF A PURCHASING AGENT AND THE LIMITS FOR THE
SETTLEMENT OF CLAIMS AND LITIGATION BY CITY
OFFICIALS
The City Council of the City of Beverly Hills does resolve as follows:
Section 1. Resolution No. 94-R-9076, as amended by Resolution 04-R-11607 and Resolution 06-R-12198 adopted by the City Council, set forth the City's previous election to become subject to the uniform construction cost accounting procedures as set forth in the Public Contract Code, established the purchasing limits for City officials, and the authority of these City officials to settle claims and pending litigation. This resolution shall replace City of Beverly Hills City Council Resolution No. 94-R-9076, as amended by Resolution No. 04-R-11607 and Resolution No. 06-R-12198.
Section 2. Ordinance No. 21-O-_____ (the “Ordinance”) incorporates modified purchasing limits for City officials and such limits will no longer be modified by resolution.
Section 3. California Public Contracts Code section 22030 provides that any City that wishes to avail itself of the alternative procedures for bidding and contracting for public projects must elect, by resolution, to become subject to the uniform cost accounting procedures set forth in the Public Contracts Code. The City previously, by Resolution 94-R-9076, elected to avail itself of the uniform cost accounting procedures and notified the State Controller of its election. The City desires to continue to avail itself of the uniform cost accounting procedures with no gap in time.
Section 4. Pursuant to the authority in Government Code Section 935.4, the City Council hereby delegates to the following City officials the authority to settle claims and pending litigation in the following amounts:
Amount Requires Approval of All Listed City Officials
Up to $5,000 Risk Manager
$5,001-$9,999 Risk Manager, Director of Finance and City Manager $10,000-$19,999 Risk Manager, Director of Finance, City Manager and City Attorney These amounts remain unchanged.
Section 5. The City Council hereby restates and resolves that the Director of Finance shall also serve as the Purchasing Agent of the City.
Section 6. This resolution shall take effect on the effective date of the Ordinance. -2-
B0785-0001\2469592v7.doc
Section 7. The City Clerk shall certify to the adoption of this resolution and shall cause this resolution and her certification to be entered in the Book of Resolutions of the Council of this City on its effective date.
Adopted:
_______________________________
LESTER J. FRIEDMAN
Mayor of the City of
Beverly Hills, California
ATTEST:
___________________________(SEAL)
HUMA AHMED
City Clerk
APPROVED AS TO FORM: APPROVED AS TO CONTENT:
_________________________ ____________________
LAURENCE WIENER GEORGE CHAVEZ
City Attorney City Manager
__________________________
JEFF S. MUIR
Director of Finance
Attachment 2
Summary of Management Partners Report Recommendations and Staff Actions Category Final Recommendations Major /Minor Timing Purchasing Comments/Action Plan Complete Date/Target Completion Partner
Department(s), If
Applicable
Recommendation 21. Amend the purchasing resolution to
increase the purchasing approval thresholds for the city manager, finance director and department heads to
$100,000, $50,000 and $10,000, respectively.
Completed. Completed. Ordinance updated
effective April 2021.
Recommendation 22. Clarify the authority of the city
manager to delegate purchasing approval authority.
Completed. Completed. Ordinance updated
effective April 2021.
Recommendation 23. Amend the Municipal Code to clarify
that quotes can be requested by phone but must be
submitted in writing.
Completed. Completed. Ordinance updated
effective April 2021.
Recommendation 24. Amend the Municipal Code to clarify
the intent and use of competitive bidding exceptions. Completed. Completed. Ordinance updated effective April 2021.
Recommendation 1. Transition the current decentralized
purchasing system to a partnership system that maximizes and effectively utilizes procurement expertise early in the procurement process.
The proposed partnership model involves
Purchasing providing services found in centralized
procurement models, such as PO/contract expense
monitoring, conducting bidding for departments
and managing contract development. This interjects
Purchasing early in the procurement cycle.
Completed and on-going
Recommendation 2. Provide opportunities for Finance
purchasing staff to be engaged in all procurement phases.
Recommendation 4. Provide opportunities for the
purchasing specialists to perform core procurement
functions on a request or as-needed basis.
Recommendation 5. Task Finance purchasing staff with
evaluating strategic procurement opportunities to maximize value and help achieve policy goals.
Allowing Purchasing to interject early in the
procurement cycle will enable Purchasing staff to
proactively identify purchasing consolidation
opportunities and provide guidance to departments
before too much work has been completed.
Completed and on-going
3 Staffing
Recommendation 3. Augment and restructure staffing in the Purchasing Division to add a full-time purchasing services manager, and consider either upgrading, retitling or
amending job duties of existing positions to ensure function of buying, customer services and related purchasing duties are included.
Major Short-term Completed. Completed. Purchasing Manager position filled as of May 2021.
Recommendation 12. Establish performance measures for
formal and informal procurement cycle times to work
toward best practice benchmarks.
Performance measures to consider: (1) Formal bid
cycle time; (2) Cost Savings [awarded price vs.
budget]
Recommendation 13. Evaluate cycle times for formal
procurement process phases to determine where the most
significant delays are occurring.
Metric will be easier to track as we get more RFPs
managed by Finance within PlanetBids. Purchasing
can track times based on major milestones in the
RFP process and report accordingly.
Recommendation 14. Implement accountability and training measures to reduce purchases not in full compliance with purchasing policies and procedures.
Review Purchasing Card AR for opportunities to
implement accountability measures.
In Progress. Estimated
Completion: Fiscal Year 2022-23
(Purchasing Card AR is
currently being reviewed and
addition of accountability
measures will be included)
Recommendation 25. Establish a dollar threshold at which written agreements are required for services.
Explore low-dollar scenarios in which contracts may
not be required.
Completed. Contracting
processes have been reviewed
and it has been determined that
the practice of requiring
contracts for all services should
be maintained. The
simplification of contract
templates, signatures and
docketing have helped the
overall contracting process.
Recommendation 26. Maximize the use of electronic
signatures for written agreements. Explore use of electronic signatures for contracts.
Completed. Implementation of
DocuSign has vastly improved
efficiency of contract signature
process.
City Clerk's Office
Recommendation 27. Reevaluate the necessity for multiple contract signatories.
Explore and evaluate the need for multiple
signatories on City contracts.
Completed. Implementation of
DocuSign has vastly improved
efficiency of contract signature
process. The requirement for
multiple signatures is so that the
City can be in compliance with
the California Corporations
Code with regard to signatories
on contracts.
City Attorney's
Office, Policy &
Management
Recommendation 30. Ensure that the most current contract templates are used for all procurements that require written agreements.
Standardize contract templates for use in
procurements and educate departments on the
correct templates to use and where to access.
Completed. CAO has most
updated templates on the
intranet and standardized RFP
templates will contain
instructions on how to access
these contracts. Also, Purchasing
administering PlanetBids helps
ensure that all posted bids
utilize the correct contract
templates.
City Attorney's
Office
1 Municipal Code
Updates Major Short-term
4 5
Partnership opportunities have been identified with
certain departments. Partnership services have
commenced with the partnership program expected
to grow into next fiscal year.
Completed and on-going
In Progress. Estimated
Completion: Fiscal Year 2022-23
(coincides with wider rollout of
Purchasing Partnership model as
that will afford more
opportunities to track and
benchmark service levels
provided)
2 Contracts Major Short-term
Purchasing
Partnership Major Long-term
Accountability
and
Performance
Major Long-term
Summary of Management Partners Report Recommendations and Staff Actions Category Final Recommendations Major /Minor Timing Purchasing Comments/Action Plan Complete Date/Target Completion Partner
Department(s), If
Applicable
Recommendation 31. Establish the practice of risk
management review of Certificates of Insurance by
exception in conjunction with contract execution and/or purchase order approval workflows.
Recommendation 33. Establish insurance certificate tracking as a risk management compliance function that focuses on expiring insurance coverage.
Recommendation 32. Create example scenarios and/or lists of vendors for which insurance must be provided, can be modified/waived, or is unnecessary.
Working with Risk Management to compile this
listing, which is expected to be rare occurrences.
This listing will be attached to the new Purchasing
AR via reference and be uploaded to the intranet.
In Progress. Estimated
completion: Fiscal Year 2021-22. Human Resources
Recommendation 6. Formally designate one or more
purchasing liaisons in each department to fulfill purchasing duties and responsibilities.
Major
Formally establish the group of "Purchasing
Coordinators," similar to the existing group of
"Budget Coordinators," keeping in mind the overlap
that may exist. Meetings should be held regularly
with this group and training provided when
necessary. Department-by-department trainings
should still be held on a recurring cycle for all staff that is involved in Purchasing.
Completed and ongoing.
Purchasing Coordinators group
has been formally established
and regular communications
and meetings are conducted.
Recommendation 8. Establish a schedule for periodic,
solutions-based meetings with purchasing liaisons to
discuss and resolve issues and identify opportunities and improvements to purchasing processes.
Regular meetings and discussions conducted with
Purchasing Coordinators. Recurring meetings have
been established with some departments to discuss
pending and upcoming purchasing and payables
issues. These discussions have yielded some process
improvement ideas from departments.
Completed and ongoing.
Recommendation 10. Conduct citywide and departmentspecific training sessions on a regular basis to review purchasing policies and discuss roles and responsibilities.
Establish meeting with Purchasing Coordinators no
less than once a quarter to discuss training items
and review policies, roles and responsibilities.
In Progress and ongoing.
Purchasing Coordinators group
has been formally established.
Semi-annual Purchasing
refresher training to be provided
to all departments starting in
Fiscal Year 2022-23 and spottraining as needs arise.
Recommendation 11. Incorporate Finance Division roles
into annual purchasing training to increase awareness of and explain differences between purchasing and accounts payable.
A "REQ to Check" training manual has been
developed to delineate Purchasing and AP. Training
has been provided to Public Works staff as a pilot
and feedback from that training was used to
enhance the manual, which will be posted on the
intranet and used in a Citywide training for new
staff.
Completed and ongoing. Pilot
training has been completed and
recurring training will be
scheduled, starting in Fiscal Year
2022-23.
Recommendation 15. Conduct collaborative problemsolving meetings with purchasing liaison meetings to determine the most helpful approach to organizing
purchasing policy and procedural materials.
Department representatives were surveyed about
ideas regarding policy and procedure changes. Completed and ongoing.
Recommendation 16. Evaluate current accountability and
control mechanisms to determine if there are opportunities to expand the use of purchasing cards as an efficient
alternative to issuing purchase orders.
Per BHMC, Purchasing authority rests with the
Department Heads. The use of pCards as an
alternative to Purchase Orders conflicts with the
requirements set forth in BHMC. Finance is
assessing the overall roster of cardholders to
determine if the cardholder list needs to be
streamlined.
Completed.
Recommendation 17. Establish guidelines that identify
specific instances where purchase orders are not needed and allow the use of purchasing cards in those instances.
The City currently has a list of Request for Warrant
(RFW) - eligible expenses that can be paid via a
purchasing card without the need for a PO. This list
will be incorporated into AR revisions.
In Progress. Estimated
Completion: Fiscal Year 2021-22.
Draft AR revisions being
circulated will officially
incorporate RFW-eligible
expenses that can be paid
without a PO.
Recommendation 18. Evaluate opportunities to maximize
the value of the purchasing card program.
Inquire about the ability to liquidate Purchasing
Card transactions against a PO AND a contract. This
will strengthen internal controls on Purchasing Card
spending.
In Progress and ongoing. Per
Munis, this is an issue currently
in development. Purchasing will
continually check on progress
and lead efforts to get this
prioritized by Munis.
Recommendation 19. Monitor purchasing card statements
on a monthly basis and engage a third party to conduct
periodic audits.
Develop and provide an annual report to
Department Heads on card usage. Enhancing
visibility on transactions may enhance awareness on
the types of transactions being conducted at the
department level.
In Progress. Estimated
completion: Fiscal Year 2021-22.
First report to DHs due by the of
fiscal year. This will be an
opportunity to suggest accounts
that should be closed as well.
Recommendation 20. Establish a consistent approach for
conducting and evaluating RFP/RFQ responses and include the use of a confidentiality/conflict of interest form.
Purchasing Manager is developing standard
RFP/RFQ templates for most major purchases.
Templates will be presented to MA's and
Purchasing Coordinators for comment and review
prior to being implemented.
Recommendation 34. Evaluate current bid protest practices and establish formal procedures as necessary.
Bid protest procedures will be incorporated into
Purchasing Manual and new RFP/RFQ templates.
These proposed procedures will be brought forth to
MA's and Purchasing Coordinators as prescribed
above.
The City is now publishing an RFP for an insurance
certificate tracking system to gauge the marketplace
and explore options. RFP to be published May 2022.
In Progress. Estimated
completion: Fiscal Year 2022-23. Human Resources
8 Purchase Card
Policy &
Practices
Major Short-term
Major Long-term
Training,
Meetings,
Manual
Short-term
Major
7 9
6 In Progress. Estimated
completion: Fiscal Year 2021-22. Major Short-term RFP, RFQ, Bid Consistency
Insurance
Reviews
Summary of Management Partners Report Recommendations and Staff Actions Category Final Recommendations Major /Minor Timing Purchasing Comments/Action Plan Complete Date/Target Completion Partner
Department(s), If
Applicable
Recommendation 7. Conduct periodic internal customer
service surveys and utilize the feedback to address areas of concern.
Purchasing to develop and distribute surveys.
Recommendation 9. Conduct a needs assessment to
determine and prioritize procurement related training
requirements.
Needs assessment can be conducted via periodic
customer surveys, as well as quarterly Purchasing
Coordinator meetings.
11 Munis
Workflows
Recommendation 29. Explore opportunities to reduce
workflow approvals in the Munis system. Minor Short-term Workflow is continually being monitored for areas
of efficiency improvement. Metrics provided to
departments quarterly.
Completed. Continual review
ongoing.
Finance
12 Docketing
Recommendation 28. Reevaluate the docketing
requirements to increase efficiency in contract approval routing by establishing service level expectations and
working toward achieving targeted goals.
Minor Short-term
Review contract docketing requirements and
procedures with appropriate departments.
In Progress. Implementation of
DocuSign has vastly improved
efficiency of contract signature
process. Efficiencies in the
contract numbering process of
contract docketing to be
explored.
City Clerk's Office
Survey and
Needs
Assessment
Minor Short-term
Completed. Departments were
surveyed in December 2021
regarding customer service
provided by Purchasing as well
as input on policy changes.
Recurring future surveys will be
distributed.
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