Farmersville City Council
June 13, 2022

15 including fixed-income securities and money market instruments.

N
National Association Of Securities Dealers (NASD): A self-regulatory organization (SRO) of brokers and dealers in the over the counter securities business. Its regulatory mandate includes authority over firms that distribute mutual fund shares as well as other securities.

16 Nationally Recognized Statistical Rating Organizations (NSROs): Credit rating agencies whose ratings are permitted to be used for regulatory purposes such as Securities and Exchange Commission.

Negotiable Certificate Of Deposit (NCD): A large denomination certificate of deposit which can be sold in the open market prior to maturity. Generally, it is a short-term debt instrument that usually pays interest and is issued by a bank, savings or federal association, state or federal credit union, or state- licensed branch of a foreign bank. The majority of negotiable cds mature within six months, while the average maturity is two weeks. Negotiable cds are traded in a secondary market and are payable upon order to the bearer or initial depositor (investor). These instruments are supported only by the strength of the institution issuing them.

Net Asset Value (NAV): A term used in the mutual fund industry to determine the average price per share of a pool or mutual fund. How this measure varies over time provides information on whether the pool is stable or variable. NAV is the market value of all securities in a mutual fund, less the value of the fund’s liabilities, divided by the number of shares in the fund outstanding. Shares of mutual funds are purchased at the fund’s offered NAV.

Net Present Value: An amount that equates future cash flows with their value in the present terms.

Non-Negotiable Certificates Of Deposit: Funds deposited in nationally or state chartered bank or state or federal association for a specified period of time at a specified rate of interest. The first $250,000 is guaranteed by the Federal Deposit Insurance Corporation (FDIC) for banks, the Federal Savings and Loan Insurance Corporation (FSLIC) for savings and loan associations and the National Credit Union Share Insurance Fund (NCUSIF) for credit unions. CDs with a face value in excess of $250,000 must be collateralized at 110% of market value with pledged securities of the bank.

Note: A written promise to pay a specified amount to a certain entity on demand or on a specified date.

Usually bearing a short-term maturity of a year or less (though longer maturities are issued—see “Medium-Term Note”).

O
Offer: The price asked by a seller of securities. When you are buying securities, you ask for an offer. See Asked and Bid.

Open Market Operations: Purchases and sales of government and certain other securities in the open market by the New York Federal Reserve Bank as directed by the FOMC in order to influence the volume of money and credit in the economy. Purchases inject reserves into the bank system and stimulate growth of money and credit; sales have the opposite effect. Open market operations are the Federal Reserve’s most important and most flexible monetary policy tool.

Options: A contract that gives the buyer the right to buy or sell an obligation at a specified price for a specified time. Exchange Traded Options are standardized option contracts that are actively traded on the Chicago Board of Exchange on a daily basis, whereas over the counter options are traded directly between the buyer and seller at agreed upon prices and conditions (the former type of option is therefore more liquid than the latter).

17 P-Q
Par Amount Or Par Value: The principal amount of a note or bond which must be paid at maturity. Par, also referred to as the “face amount” of a security, is the principal value stated on the face of the security. A par bond is one sold at a price of 100 percent of its principal amount.

Portfolio: Collection of securities held by an investor.

Premium: The amount by which the price paid for a security exceeds the security’s par value. Investors pay a premium to purchase a security when the return to the investor (yield) is lower than the stated coupon (interest rate) on the investment.

Price: Price is the amount of monetary consideration required by a willing seller and a willing buyer to sell an investment on a particular date.

Primary Dealer: A group of government securities dealers who submit daily reports of market activity and positions and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary dealers include the Securities and Exchange Commission (SEC), registered securities broker-dealers and banks.

Principal: The face value or par value of a debt instrument, or the amount of capital invested in a given security.

Prospectus: A legal document that must be provided to any prospective purchaser of a new securities offering registered with the SEC that typically includes information on the issuer, the issuer’s business, the proposed use of proceeds, the experience of the issuer’s management, and certain certified financial statements (also known as an “official statement”).

Prudent Person Rule: An investment standard. In some states the law requires that a fiduciary, such as a trustee, may invest money only in a list of securities selected by the custody state, the so-called legal list.

In other states the trustee may invest in a security if it is one which would be bought by a prudent person of discretion and intelligence who is seeking an income and preservation of capital.

Qualified Public Depositories: A financial institution which does not claim exemption from the payment of any sales or compensating use or ad valorem taxes under the laws of this state, which has segregated for the benefit of the commission eligible collateral having a value of not less than its maximum liability and which has been approved by the Public Deposit Protection Commission to hold public deposits.

R
Rate Of Return: The yield obtainable on a security based on its purchase price or its current market price.

This may be the amortized yield to maturity, on a bond it is the current income return.

Reverse Repurchase Agreements: An agreement of one party (for example, a financial institution) to purchase securities at a specified price from a second party (such as a public agency) and a simultaneous agreement by the first party to resell the securities at a specified price to the second party on demand or at a specified date.

18 Repurchase Agreement (RP OR REPO): A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. The security “buyer” in effect lends the “seller” money for the period of the agreement, and the terms of the agreement are structured to compensate him for this. Dealers use RP extensively to finance their positions. One exception is when the Federal Reserve is said to be doing RP, it is lending money that is increasing bank reserves.

Risk: The uncertainty of maintaining the principal or interest associated with an investment due to a variety of factors.

Rule G-37 Of The Municipal Securities Rulemaking Board: Federal regulations to sever any connection between the making of political contributions and the awarding of municipal securities.

S
Safekeeping: A service to customers rendered by banks for a fee, whereby securities and valuables of all types and descriptions are held in the bank’s vaults for protection.

Safety: In the context of investing public funds, safety relates to preserving the principal of an investment in an investment portfolio; local agencies address the concerns of safety by controlling exposure to risks.

Secondary Market: A market made for the purchase and sale of outstanding issues following the initial distribution.

Securities & Exchange Commission: Agency created by Congress to protect investors in securities transactions by administering securities legislation.

SEC Rule 15C3-1: See Uniform Net Capital Rule.

Settlement Date: The date when a trade is cleared by delivery of securities against funds Structured Notes: Notes issued by Government Sponsored Enterprises (FHLB, FNMA, FHLB, etc.) and Corporations, which have imbedded options (e.g., call features, step-up coupons, floating rate coupons, and derivative based returns) into their debt structure. Their market performance is impacted by the fluctuation of interest rates, the volatility of the imbedded options and shifts in the shape of the yield curve.

Swap: A swap is any financial transaction that involves the simultaneous purchase of a security and the sale of another for the purpose of enhancing an investor’s portfolio. Swap transactions of interest to California public investors include portfolio swaps and interest rate swaps.

T
Tax And Revenue Anticipation Notes (TRANS): Notes issued in anticipation of receiving tax proceeds or other revenues at a future date.

Time Deposits: Issued by depository institutions against funds deposited for a specified length of time. Time deposits include instruments such as deposit notes. They are distinct from certificates of deposit (CDs) in that interest payments on time deposits are calculated in a manner similar to that of corporate bonds, whereas interest payments on CDs are calculated similar to that of money market instruments.

19 Treasury Bills: A non-interest bearing discount security issued by the U.S. Treasury to finance the national debt. Most bills are issued to mature in three months to one year.

Treasury Bonds: Long-term coupon-bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities of more than 10 years.

Treasury Notes: Medium-term coupon-bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities from two to 10 years.

Trustee: A financial institution with powers to act in a fiduciary capacity for the benefit of the bondholders in enforcing the terms of the bond contract.

U
Underwriter: A dealer that purchases a new issue of municipal securities for resale.

Uniform Net Capital Rule: Securities and Exchange Commission requirement that member firms as well as nonmember broker-dealers in securities maintain a maximum ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all money owed to a firm, including margin loans and commitments to purchase securities, one reason new public issues are spread among members of underwriting syndicates. Liquid capital includes cash and assets easily converted to cash.

U.S. Treasury Obligations: These are debt obligations of the U.S. Government sold by the Treasury Department in the forms of bills, notes, and bonds, for which the full faith and credit of the United States are pledged for the payment of principal and interest. Bills are short-term obligations that mature in one year or less and are sold at a discount. Notes are obligations that mature between one year and ten years. Bonds are long-term obligations that generally mature in ten years or more.

W-Z
Weighted Average Maturity (WAM): The average maturity of all the securities that comprise a portfolio that is typically expressed in days or years
Yield (Yield to Maturity, Yield to Call or Yield to Worst): The rate of annual income return on an investment, expressed as a percentage. Income yield is obtained by dividing the current dollar income by the current market price for the security. Net Yield or Yield to Maturity is the current income yield minus any premium above par or plus any discount from par in purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond.

Yield Curve: A graphical representation of the yield on bonds, notes or bills of the same type and credit risk at a specific date for maturities up to thirty years.

Zero Coupon Security: A security that is issued at a discount and makes no periodic interest payments. The rate of return consists of an accretion of the principal and is payable at par upon maturity.

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City of Farmersville
Minimum Fund Balance and Budgetary
Uncertainty Fund Policy
City of Farmersville

City of Farmersville: Financial Policies
Minimum Fund Balance and Budgetary Uncertainty Fund Policy The City will avoid the appropriation of fund balance for recurring operating expenditures (deficit spending). If at any time the utilization of a fund balance to pay for operating expenditures is necessary to maintain the quality or level of current services, and explanation of the circumstances of the utilization of fund balance and the strategy to arrest the future use of fund balance will be included in the annual budget message.

Therefore, the City will strive to maintain a General Fund Operating Cash Balance of unassigned cash balance equal to approximately 25% of the three-year moving average of the General Fund actual revenue received. This minimum fund balance is necessary to ensure the ongoing ability of the City to maintain the City’s needed credit ratings, meet unanticipated revenue shortfalls, short-term economic downturns, local disaster expenses, and shall remain exclusive of all other reserve funds. If the balance drops below the target amount the City will strive to replenish the fund as soon as possible.

The City shall also establish a General Fund Budgetary Uncertainty Fund to provide for contingency funding during extreme situations that threaten the ongoing operational abilities of the City. In order for the City to access and use this fund a Fiscal Emergency must be declared by the City Council. The City Council may then use the balance of the fund at its discretion to:
 Provide resources to make up for temporary decreased revenues, such as State subventions.  Provide temporary resources in the event of an economic downturn while expenditure reductions are also implemented.
 Provide resources to meet emergency expenditures in the case of flood, fire, earthquake, landslides, or other disaster(s).

The target for the Budgetary Uncertainty Fund shall be approximately 15% of a three-year moving average of actual General Fund revenues received (average two months of revenue). The initial funding of this fund shall be approximately 5% of the three-year moving average of actual General Fund revenues received.

Once some or all of the fund is used, the amount must be repaid to the fund as soon as possible within five years to the level set forth by this policy.

Unassigned cash balances in excess of the General Fund Operating Cash Balance and any potential annual adjustments to the Budgetary Uncertainty Fund will be appropriately budgeted through the Capital Budget of the City of Farmersville on an annual basis.

The balances and required levels of these funds will be examined annually and reported to City Council.

At that time any adjustments needed will be made and the policy will be evaluated and adjusted appropriately as well.

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City of Farmersville
Procurement Policy
City of Farmersville

CITY OF FARMERSVILLE
Procurement Policy
City of Farmersville
909 W. Visalia Road Farmersville, CA 93223
Phone 559.747.0458
Fax 559.747.6724
Updated February 2020

Table of Contents

CH A P TE R TITL E CH A P TE R OBJECTIVES
1 Introduction and Resolution
An Overview of Procurement … Introduce Farmersville procurement services, objectives, and ethical standards.
2 Overview of City Policies that… Overview of bidding, insurance, exceptions, and other policies affecting the procurement of goods and
services.
3 Procurement Methods Review of methods used in the acquisition of products and services.
4 Purchase Orders Familiarize the user with the purpose and usage of purchase orders and change orders.
5 Vendor Issues Provide information about contacting vendors, making purchase commitments, adding vendors to the
suppliers list, filing complaints about vendors, accepting vendor deliveries, and making payments to vendors.
6 Glossary of Procurement Terms Definition of common procurement terms.

Risk Matrix and Insurance Language
Approval Memo Form
Purchase Order Form
Appendix A
Appendix B
Appendix C
Appendix D
Appendix E
CUCCAC Manual
Purchasing Thresholds Matrixes

Introduction
This Procurement Policy document is intended to serve as a reference tool for City staff and departments. It details the policies and procedures of the City’s purchasing authority. It outlines all phases of the procurement process and clarifies the responsibilities of individual departments and staff, and explains the legal requirements affecting the City.

This guide will help City personnel familiarize themselves with procurement processes and enable them to timely and efficiently obtain the goods and services they need.

Quick Reference
Chapter 1 – An Overview of the Procurement System
Topic Page
What is Procurement 2
The City’s Procurement System 2
Procurement Authority 3
Objectives & Standards 3
Conflict of Interest Statement 4

An Overview of the Procurement System
Chapter Objective: This chapter is an introduction to City of Farmersville purchasing process − its service processes, objectives, and ethical standards.

What isProcurement?
Procurement is the process through which purchases are planned, solicitations issued, vendors selected, purchase orders issued, and goods or services are received.

The City of Farmersville desires to be both effective and efficient in purchasing with the goal of integrity woven throughout the process. Ethically purchasing goods and services with an emphasis is on the best value for the City’s dollar.

This is accomplished by ensuring that goods and services are of high quality, available when needed, not overpriced, and that taxpayers know that public funds are being spent wisely on its behalf and not for the personal benefit of government employees, officials, or their friends.

The City’s Procurement System
The City of Farmersville has adopted a decentralized procurement system, which is under the authority of the City Manager or his/her designee(s) as the City Purchasing Agent (PA) established by the Purchases section of the City’s Municipal Code. The decentralized purchasing is necessary due to the small amount of administrative staff and is functional because of the small size of the City. This means that the PA is ultimately responsible for procurement in general, but delegates his/her authority in limited measure to Department Heads within the City. The PA (or designee) therefore establishes leasing agreements; coordinates surplus sales; and most importantly, procures all commodities under $75,000 and services under $100,000 and certain construction services under $200,000.

The City of Farmersville therefore does not run a centralized Internal Service Fund (ISF) but purchases are made directly by each department, as applicable, while payment and oversight of purchases are maintained through a centralized accounts payable process in the Finance Department.
1

Procurement Authority
The City derives its authority from two sources: local and state laws. Local law encompasses City Councils’ resolutions and directives. The two main sources giving authority to Procurement Services to purchase goods and services on behalf of the City are the Purchases Ordinance and the California Government Code.

Purchasing Ordinance. The City’s Municipal Code Chapter 3.16, "Purchases" was established by Ordinance 278 (passed and adopted in 1984), to govern the activities of the City. In general, it established that the PA shall have the duties and powers prescribed by the laws of the State of California relating to City Purchasing Agents, Public Contract Code, and Government Code. A full copy of the Code Section is available on the City’s website.

State and Federal Laws. State laws that are applicable to various City procurement activities can be found in the Government Code, the Civil Code, and the Public Contract Code (including the California Uniform Public Construction Cost Accounting Act; CUPCCAA).

Where pertinent, specific code sections are referenced throughout this policy. Federal law is applicable to City procurement activities any time federal funds are used for particular procurements, but specifically listed in Chapter 2 of this Policy.

Procurement Objectives & Standards of Conduct
The City’s procurement policy objectives and standards are applied to all transactions through the following values:
• Establish the legal authority of the procurement function within the City • Simplify, clarify, and reflect the laws governing procurement • Enable uniform procurement policies throughout the City • Build public confidence in public procurement
• Ensure the fair and equitable treatment of everyone who deals with the procurement system
• Provide for increased efficiency, economy, and flexibility in public procurement activities and maximize to the fullest extent the purchasing power of the City • Foster effective broad-based competition from all segments of the supplier community • Safeguard the integrity of the procurement system and protect against corruption, waste, fraud, and abuse
• Ensure appropriate public access to contracting information • Foster equal employment opportunities that are in line with legal requirements, in the policies and practices of suppliers and subcontractors wishing to do business with the City
The following ethics statements are applicable to all City employees who participate in the procurement process.
• City employees shall not obligate the City of Farmersville, financially or otherwise, by any means, including but not limited to purchase orders and contracts, when the employee has a personal, material, financial, or other interest in the obligation.

• Employees are prohibited from directly or indirectly soliciting or accepting any rebate, kickback, gift, gratuity, or favor for personal gain from any individual, corporation, or group.
• The City’s employees, directors, appointed or elected officials, volunteers, agents or contacts shall neither solicit nor accept gratuities, favors, gifts, consulting fees, trips, or anything having a monetary value in excess of fifty dollars ($50.00) from a vendor, potential vendor, family or employees of a vendor, contractor or parties to subcontractors.
• City employees, when purchasing an item(s) for personal use, must avoid the appearance of City representation. The employee shall pay all such purchases with his or her personal funds. When personal purchases are made under these circumstances, separate invoices or sales receipts must be issued by the supplier.

Such invoices must bear the employee's name, home address, and phone number and may not be delivered to the City. Employees may not solicit, or accept, discounts, reduced prices, or other benefits from suppliers because of employees’ position with the City.

Procurement Process Conflicts of Interest
There will be uniform and equitable application of the Standards of Conduct of the City of Farmersville involving all activities associated with the procurement of goods and services.

This section also defines responsibility to identify and prevent real or apparent Conflicts of Interest.

Prior to the issuance of a procurement solicitation, informational and research contacts with prospective vendors may be made for the purpose of gathering data. However, in making such contacts, employees, officers, Council Members, and agents shall avoid any commitment or implication of a possible future award.

Accordingly, no request for complimentary services or supplies, which may imply an obligation on the part of the City, shall be made. Requests for testing services, product samples, or demonstrations, and free trips to examine vendor products are to be avoided.

Whenever procurement is in process (e.g., during the solicitation, evaluation, negotiation, and award phases) all contacts with potential contractors or vendors shall be made through the Purchasing Agent or designee(s).

Employees, officers, directors, and agents of the City are also subject to the laws of the City and State of California concerning conflicts of interest. Monetary penalties and, in some cases, criminal penalties are imposed by California law for violations. In addition, City employees are subject to discipline for a violation that could lead to or result in termination of employment in addition to consequences relative to the California Fair Political Practices Commission (FPPC).

Gratuities and Kickbacks
No member of the groups listed above will neither solicit nor accept gratuities, favors or

anything of monetary value from contractors, potential contractors, or parties to subagreements. Anyone failing to adhere to the above will be subject to any disciplinary proceeding deemed appropriate by the City of Farmersville.

Personal Conflicts of Interest
No City employee, officer, Council member, agent or contact shall participate in the selection, award or administration of a third party contract or other agreement if a real or apparent conflict of interest would be involved. Such a conflict of interest arises, whether real or apparent, when any of the following has a financial or other interest in the firm(s) considered or selected for award:
a) An employee, officer, board member, or agent of the City; b) Any member of their immediate family, including but not limited to, husband, wife, father, mother, brother, sister, son, daughter, father-in-law, mother-in-law, son-in-law, and daughter-in-law;
c) Their partner or business associate; or
d) A company or organization which is about to employ any of the above.

Apparent or Appearance of Conflict is based on a reasonableness standard i.e. would a reasonable person with knowledge of all material facts believe there appears to be a conflict?
Organizational Conflict of Interest
An organizational conflict of interest may be real or apparent and arises where, because of other activities, financial interests, relationships, or contracts – a contractor is unable, or potentially unable, to render impartial assistance or advice to the City. Such a conflict exists in circumstances where the contractor’s objectivity is or might be impaired or where the contractor has an unfair competitive advantage.

Organizational conflicts lead to two (2) distinct problems - bias or an unfair competitive advantage.
a) Bias is a situation where an advisor is placed in a position that creates an incentive to distort advice or decision making.
b) Unfair competitive advantage occurs when one contractor has information not available to other contractors in the normal course of business. For example, an unfair competitive advantage would occur when a contractor developing specifications or work statements has access to information that the City has paid the contractor to develop, or information which the City has furnished to the contractor for its work, when that information has not been made available to the public and to other offerors. Because this information enhances the contractor’s competitive position in the procurement process, it represents an unfair competitive advantage over other offerors.

The City’s procurement activities shall be structured to ensure full and open competition and to eliminate or minimize any unfair competitive advantage in circumstances where an organizational conflict, real or apparent, is presented. Appropriate structural steps are dependent upon the particular circumstances surrounding the procurement and might include: prohibiting the contractor from participating in the procurement, the bid process or in evaluation of bids, fully disclosing all information to all prospective offerors for a reasonable amount of time, adjustment of specifications to address any potential advantage, among others.

Confidential Information
No member of the groups listed above shall furnish advice or services to a firm which is bidding on or planning to bid on a contract with the City, or which is doing business presently with the City. No member shall use confidential information for his or her actual or anticipated personal gain, or the actual or anticipated personal gain of any other person related to them by blood, marriage, or by common commercial or financial interest.

Anyone failing to adhere to the above will be subject to any disciplinary proceeding deemed appropriate by the City of Farmersville.

Quick Reference
Chapter 2 – Overview of County Policies Affecting Procurement Topic Page
Bidding Policies 8
Exceptions to Bidding 18
Unauthorized Purchases 21
Written Contracts 21
Insurance Requirements 21
Prevailing Wages 22
Surety and Performance Bonds 22
Settlements and Other Agreements 23
Outside Legal Services 23

City Policies that Affect Procurement
Chapter Objective: Provide an overview of City policies affecting the procurement of goods and services and provide instructions for compliance.

Bidding Policies
It is the City’s policy to develop maximum competition for all purchases and to make awards based on the lowest responsive and responsible bid received. A responsive bidder is one who responds to all of the significant requirements outlined in the solicitation. A responsible bidder is one who is deemed to be capable of supplying the goods or services requested.

The City’s goal through purchasing is to achieve the best overall value by securing goods and services at the lowest cost possible commensurate with quality and other relevant requirements.

Commodities (Materials & Equipment)
$1 to $10,000 – Administrative Process
Competitive bidding is not required. At the Buyer’s discretion, the purchase can be made with the vendor recommended by the department. Many purchases can be made with purchase cards by the department staff members with the approval of the Department Head.
$10,001 to $25,000 – Administrative Process
Competitive bidding is not required, but approval by the PA is required by memo. After approval is granted, the purchase can be made with the vendor recommended by the department.
$25,001 to $75,000 − Written Quotes
Competitive bidding is required. The respective department acquires approval from the PA and then issues a written Request for Quotation. The number of vendors contacted varies, depending on the dollar amount of the purchase and the time available, but three is preferred. Award is made to the lowest responsive and responsible bidder. In 2

the case of capital (defined as an asset anticipated to have a useful life of over 1 year and a purchase cost over $5,000) the item must be on the adopted Capital Budget for the year.

Over $75,000 − Formal Bids and RFPs / RFQs
Competitive bidding is required. Staff must acquire approval to go to bid or RFP / RFQ from City Council before issuing either a formal sealed Invitation for Bids (IFB) or Request for Proposals (RFP), depending on the type of procurement. The number of vendors contacted will vary depending on the dollar amount of the purchase and the time available, but three is preferred. A purchase order (PO) is required.

Award is made to the lowest responsive and responsible bidder, in the case of IFBs.

In the case of RFPs, award is made in accordance with the evaluation criteria, terms, and conditions stated therein.

Typically, commodity items are procured using a bid process where an award is made to the lowest responsive and responsible bidder. However, in some instances an RFP may be used. The PA must gain authorization from City Council to approve the PO.

Services (Non-Construction)
$1 to $10,000 – Administrative Process
Competitive bidding is not required. At the Buyer’s discretion, the purchase can be made with the vendor recommended by the department. Many purchases can be made with purchase cards by the department staff members with the approval of the Department Head.
$10,001 to $25,000 – Administrative Process
Competitive bidding is not required, but approval by the PA is required by memo.

After approval is granted, the purchase can be made with the vendor recommended by the department.
$25,001 to $50,000 − Written Quotes
Competitive bidding is required. The respective department acquires approval from the PA and then issues a written Request for Quotation. The number of vendors contacted varies, depending on the dollar amount of the purchase and the time available, but three is preferred. Award is made to the lowest responsive and responsible bidder.

Over $50,000 – Formal Bids or RFPs / RFQs (and contract) Competitive bidding is required. Staff must acquire approval to go to bid or RFP / RFQ from City Council before issuing either a formal sealed Invitation for Bids (IFB) or Request for Proposals (RFP), depending on the type of procurement. Typically, the RFP process is used for services. The number of vendors contacted will vary depending on the dollar amount of the purchase and the time available, but three is preferred. Award is made to the lowest responsive and responsible bidder in the case of IFBs. In the case of RFPs, the award is Contract
requirements
shallnotbe
artificially divided
to avoid bidding
requirements.

made in accordance with the evaluation criteria, terms, and conditions stated therein.

Services above $100,000 require City Councils’ approval When a service contract is utilized by multiple City departments, staff will be responsible for tracking encumbrances and obtaining Council approval as needed.

Services (Construction)
$1 to $10,000 – Administrative Process
Competitive bidding is not required. At the Buyer’s discretion, the purchase can be made with the vendor recommended by the department. Many purchases can be made with purchase cards by the department staff members with the approval of the Department Head.
$10,001 to $25,000 – Administrative Process
Competitive bidding is not required, but approval by the PA is required by memo. After approval is granted, the purchase can be made with the vendor recommended by the department.
$25,001 to $60,000 − Written Quotes
Competitive bidding is required. The respective department issues a written Request for Quotation. The number of vendors contacted will vary, depending on the dollar amount of the purchase and the time available. Award is made to the lowest responsive and responsible bidder and approved by the PA.
$60,001 to $200,000 − Informal Bid
Informal bids will be solicited in accordance with the California Uniform Public Construction Cost Accounting Procedures (CUPCCAP) alternative bidding procedures.

The award is approved by the City Council.

Services above $200,000 require City Councils’ approval Competitive bidding is required. Staff must acquire approval to go to bid or RFP / RFQ from City Council before issuing either a formal sealed Invitation for Bids (IFB) or Request for Proposals (RFP), depending on the type of procurement. Typically, the RFP process is used for services. The number of vendors contacted will vary depending on the dollar amount of the purchase and the time available, but three is preferred. Award is made to the lowest responsive and responsible bidder in the case of IFBs. In the case of RFPs, the award is made in accordance with the evaluation criteria, terms, and conditions stated therein.

Federally Funded Projects / Grants Procurement (2 CFR 200) Council on Financial Assistance Reform Priorities (COFAR) goal is to reduce risk of waste, fraud, and abuse while reducing administrative burdens through the establishment of a Uniform Administrative Requirement, Cost Principles, and Audit Requirement for Federal Awards (2 CFR 200). The City of Farmersville’s policy related to Federally-funded projects and/or grant is established to reflect this goal and be in compliance with 2 CFR 200.

As a result, the City will operate with the following regulation for the procurement of property or services stemming from federal aid. This section shall apply to the awarding of sub-grants and contracts by the City stemming from federal grants to the City. This section shall have the same application on the awarding of sub-grants and contracts by the City stemming from state, county or other non-federal government entity grants originating as federal grants.

A. Determination of Federal Awards Requirements for Pass-thru Agencies, Subrecipients, and Contractors (200.330 & 200.331)

1. The City may concurrently receive Federal awards as a recipient, a subrecipient, and a contractor, depending on the substance of its agreements with Federal awarding agencies and pass-through entities.

Therefore, the City will make a case-by-case determination for each agreement it makes for the disbursement of Federal program funds that the party receiving the funds in the role of a subrecipient or a contractor.

The City will comply with any additional guidance to support these determinations from the awarding agency provided such guidance does not conflict with this section.

1. A subaward is for the purpose of carrying out a portion of a Federal award and creates a Federal assistance relationship with the subrecipient. For purposes of making a determination as a subrecipient the City will consider the following characteristics of a Federal assistance relationship:
a. Determines who is eligible to receive what Federal assistance; b. Has its performance measured in relation to whether objectives of a Federal program were met;
c. Has responsibility for programmatic decision making; d. Is responsible for adherence to applicable Federal program requirements specified in the Federal award; and
e. In accordance with its agreement, uses the Federal funds to carry out a program for a public purpose specified in authorizing statute, as opposed to providing goods or services for the benefit of the pass-through entity.

2. A contract is for the purpose of obtaining goods and services for the City’s own use and creates a procurement relationship with the contractor. For purposes of making a determination as a contractor the City will consider the following characteristics of a procurement relationship:

a. Provides the goods and services within normal business operations;
b. Provides similar goods or services to many different purchasers; c. Normally operates in a competitive environment;
d. Provides goods or services that are ancillary to the operation of the Federal program; and
e. Is not subject to compliance requirements of the Federal program as a result of the agreement, though similar requirements may apply for other reasons.

3. The Purchasing Agent, or designee, will use their judgement in classifying each agreement as a subaward (Federal assistance relationship) or a procurement contract (procurement relationship). The substance of the relationship is more important than the form of the agreement in making the determination.

2. Every subaward will be clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. If some of the information is not available, the City will provide the best information available to it.

1. Federal Award Identification data as listed in Section 200.331 (1-4) and appropriate terms and conditions concerning closeout of the subaward.

3. Every subrecipient will be subject to evaluation and monitoring by the City as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include:

1. Reviewing financial and performance reports required by the pass-through entity.

2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means.

3. Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521 Management decision.

4. Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in 200.331(b), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals:
a. Providing subrecipients with training and technical assistance on program-related matters; and

b. Performing on-site reviews of the subrecipient's program operations;
c. Arranging for agreed-upon-procedures engagements as described in § 200.425 Audit services.

5. The City will verify that every subrecipient is audited as required by Subpart F - Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501 Audit requirements.

6. The City will consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records.

7. The City will consider taking enforcement action against noncompliant subrecipients as described in § 200.338.

B. Procurement Standards.

1. The City shall maintain a contract administration system which ensures contractors perform in accordance with the terms, conditions and specifications of their contracts or purchase orders.

2. The City shall maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. No employee, officer or agent of the City shall participate in selection, or in the award or administration of a contract supported by federal funds if a conflict of interest, real or apparent, would be involved. Such a conflict would arise when:
a. The employee, officer or agent;
b. Any member of his or her immediate family;
c. His or her partner; or
d. An organization which employs, or is about to employ, any of the above, has a financial or other interest in or a tangible personal benefit from a firm considered for award.

3. The City’s officers, employees or agents will neither solicit nor accept gratuities, favors or anything of monetary value from contractors, potential contractors, or parties to sub-agreements. Such a conflict will not arise where the financial interest is not substantial or the gift is an unsolicited item of nominal intrinsic value ($50 or less). The City’s standards of conduct provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the City.

4. The City shall not enter into a contract with a non-Federal entity has a parent, affiliate, or subsidiary organization that is not a state, local government or Indian tribe, unless the non-Federal entity maintains written standards of conduct covering organizational conflicts of interest. Organizational conflicts of interest mean due to relationships with a parent company, affiliate, or subsidiary organization, the nonFederal entity is unable or appears to be unable to be impartial in conducting a procurement action involving a related organization.

5. The City shall avoid acquisition of unnecessary or duplicative items. Consideration will be given to consolidating or breaking out procurements to obtain a more economic purchase. Where appropriate, an analysis will be made of lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach.

6. The City shall consider entering into state and local intergovernmental agreements or inter-entity agreements where appropriate for procurement or use of common or shared goods and services.

7. The City shall consider using Federal excess and surplus property in lieu of purchasing new equipment and property whenever such use is feasible and reduces project costs.

8. The City shall consider using value engineering clauses in contracts for construction projects of sufficient size to offer reasonable opportunities for cost reductions. Value engineering is a systematic and creative analysis of each contract item or task to ensure its essential function is provided at the overall lower cost.

9. The City shall make awards only to responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement.

Consideration will be given to such matters as contractor integrity, compliance with public policy, record of past performance and financial and technical resources.

10. The City shall maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection and the basis for the contract price.

11. The City shall use time and material type contracts only:
a. After a determination is made that no other contract is suitable; and b. If the contract includes a ceiling price the contractor exceeds at their own risk.

12. The City alone shall be responsible, in accordance with good administrative practice and sound business judgment, for the settlement of all contractual and administrative issues arising out of procurements. These issues include, but are not limited to, source evaluation, protests, disputes and claims. These standards do not relieve the City of any contractual responsibilities under its contracts.

C. Competition.

1. The City will conduct procurement transactions in a manner providing full and open competition. To ensure objective contractor performance and eliminate unfair competitive advantage, contractors developing or drafting specifications, requirements, statements of work, or invitations for bids or requests for proposals shall be excluded from competing for such procurements.

2. The City shall conduct procurements in a manner prohibiting the use of statutorily or administratively imposed in-state or local geographical preferences in the evaluation of bids or proposals, except in those cases where applicable Federal statutes

expressly mandate or encourage geographic preference. When contracting for architectural and engineering (A/E) services, geographic location may be a selection criteria provided its application leaves an appropriate number of qualified firms, given the nature and size of the project, to compete for the contract.

3. The City shall have written procedures for procurement transactions. These procedures will ensure that all solicitations:
a. Incorporate a clear and accurate description of the technical requirements for the material, product or service to be procured. Such description shall not, in competitive procurements, contain features which unduly restrict competition.

The description may include a statement of the qualitative nature of the material, product or service to be procured, and when necessary, shall set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Detailed product specifications should be avoided.

When it is impractical or uneconomical to make a clear and accurate description of the technical requirements, a brand name or equal description may be used to define the performance or other salient requirements of procurement. The specific features of the named brand which must be met by offerors shall be clearly stated; and
b. Identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals.

4. The City shall ensure prequalified lists of persons, firms or products that are used in acquiring goods and services are current and include enough qualified sources to ensure maximum open and free competition. The City shall not preclude potential bidders from qualifying during the solicitation period.

D. Methods of Procurement to be Followed
The City shall use one of the following methods of procurement:

1. Procurement by Micro-Purchases. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold as set by the Federal Acquisition Regulation at 48 CFR Subpart 2.1 (Definitions) and adjusted periodically for inflation. As of the date of this ordinance, the micro-purchase threshold is $10,000.

2. Procurement by Small Purchase Procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies or other property that do not cost more than the simplified acquisition threshold as set by the Federal Acquisition Regulation at 48 CFR Subpart 2.1 (Definitions) and in accordance with 41 U.S.C. 1908 and periodically adjusted for inflation. If small purchase procedures are used, price or rate quotations shall be obtained from an adequate number of qualified sources. As of the date of this ordinance, the simplified acquisition threshold is $250,000.

3. Procurement by Sealed Bids (Formal Advertising). Bids are publicly solicited and a firm-fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming to all the material terms and conditions of the invitation for bids, is the lowest in price.

a. For sealed bidding to be feasible, the following conditions should be present:
(1) A complete, adequate, and realistic specification or purchase description is available;
(2) Two or more responsible bidders are willing and able to compete effectively for the business; and
(3) The procurement lends itself to a firm-fixed-price contract and the selection of the successful bidder can be made principally based on price. b. If sealed bids are used, the following requirements apply:
(1) The invitation for bids will be publicly advertised and bids shall be solicited from an adequate number of known suppliers, providing them sufficient time prior to the date set for opening the bids;
(2) The invitation for bids, which will include any specifications and pertinent attachments, shall define the items or services for the bidder to properly respond;
(3) All bids will be publicly opened at the time and place prescribed in the invitation for bids;
(4) A firm-fixed-price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost and life cycle costs shall be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and
(5) If there is a sound documented reason, any or all bids may be rejected.

4. Procurement by Competitive Proposals. The technique of competitive proposals is normally conducted with more than one source submitting an offer, and either a fixed-price or cost-reimbursement type contract is awarded. It is generally used when conditions are not appropriate for the use of sealed bids. If this method is used, the following requirements apply:
a. Requests for proposals shall be publicized and identify all evaluation factors including relative importance. Any response to publicized requests for proposals shall be honored to the maximum extent practical;
b. Proposals will be solicited from an adequate number of qualified sources; c. The City shall conduct technical evaluations of the proposal received and for selecting awardees;
d. Awards will be made to the responsible firm whose proposal is most advantageous to the program, with price and other factors considered; and e. The City may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby competitors’ qualifications are evaluated and the most qualified competitor is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms are a potential source to perform the proposed effort.

5. Procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when one or more of the following circumstances applies:

a. The item is available only from a single source;
b. The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation;
c. The Federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals in a written request from the City; or d. After solicitation of multiple sources, competition is determined inadequate.

6. Contracting with Small and Minority Businesses, Women’s Business Enterprises and Labor Surplus Area Firms.
a. The City shall take all necessary affirmative steps to assure that minority businesses, women’s business enterprises and labor surplus area firms are used when possible.
b. Affirmative steps include:
(1) Placing qualified small and minority businesses and women’s business enterprises on solicitation lists;
(2) Assuring that small and minority businesses and women’s business enterprises are solicited whenever they are potential sources; (3) Dividing total requirements, when economically feasible, into smaller tasks or quantities to permit maximum participation by small and minority businesses and women’s business enterprises;
(4) Establishing delivery schedules, where the requirement permits, which encourage participation by small and minority businesses and women’s business enterprises;
(5) Using the services and assistance, as appropriate, of such organizations as the Small Business Administration and the Minority Business Development Agency of the Department of Commerce; and
(6) Requiring the prime contractor, if subcontracts are to be let, to take the affirmative steps listed in subsections 6.b.(1) through (6) of this section.

7. Contracts Cost and Price.
a. The City shall perform a cost or price analysis in every procurement action exceeding the simplified acquisition threshold including contract modifications.

The method and degree of analysis will be dependent on the facts surrounding each procurement situation. As a starting point, the City shall make independent estimates before receiving bids or proposals.
b. Costs or prices based on estimated costs for contracts under the Federal award will be allowable only to the extent that costs incurred or cost estimates included in negotiated prices would be allowable for the City under Subpart E – Cost Principles of Title 2, Subtitle A, Part 200 (Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards). c. The cost plus a percentage of cost and percentage of construction cost methods of contracting shall not be used.

8. Federal Awarding Agency or Pass-Through Entity Review. a. The City shall make available, upon request of the Federal awarding agency or pass-through entity, technical specifications on proposed procurements where the Federal awarding agency or pass-through entity believes such review is

needed to ensure that the item or service specified is the one being proposed for purchase.
b. The City shall make available upon request, for the Federal awarding agency or pass-through entity pre-procurement review, procurement documents, such as requests for proposal or invitations for bids, or independent cost estimates when:
(1) The City’s procurement procedures or operation fails to comply with the procurement standards of Title 2, Subtitle A, Part 200, Subsection 200.324; (2) The procurement is expected to exceed the simplified acquisition threshold and is to be awarded without competition or only one bid or offer is received in response to a solicitation;
(3) The procurement, which is expected to exceed the simplified acquisition threshold, specifies a “brand name” product;
(4) The proposed contract is more than the simplified acquisition threshold and is to be awarded to other than the apparent low bidder under a sealed bid procurement; or
(5) A proposed modification changes the scope of a contract or increases the contract amount by more than the simplified acquisition threshold. c. The City may be exempted from the pre-procurement review in subsection 8.b. above if the Federal awarding agency or pass-through entity determines that its procurement systems comply with the standards set forth in Title 2, Subtitle A, Part 200, or the City self-certifies compliance with such standards if selfcertification is permitted by the Federal awarding agency or pass-through entity.

9. Bonding Requirements. For public projects, the City shall require bid guarantees, performance bonds, and payment bonds consistent with Title 2, Part 200, Section 200.325 of the Code of Federal Regulations.

10. Contract Provisions. The City’s contracts shall contain the provisions in Appendix II to Title 2, Subtitle A, Part 200 – Contract Provisions for non-Federal Entity Contracts Under Federal Awards, as applicable.

E. Suspended or Debarred Parties
A. City employees shall not enter into covered transactions with parties that are suspended or debarred or otherwise excluded from or ineligible for participation in Federal assistance programs and activities (2 CFR 200.213; 2 CFR 180).

Exceptions to Bidding (Government Code 10300-10334)
Sole Source/Brand Procurement
An exception may be granted based on two premises:
• Only a single company or organization can supply the needed product or service. As in the case of proprietary software maintenance, only the licensor of the product can provide support.

• Only a single “brand/model” will meet the department’s technical/functional requirements. For example, only the Brand X equipment is compatible with existing system requirements. Brand X is available through several distributors. Brand X would be considered a “sole brand” but not a “sole source” since it is available from many sources (distributors).

Sole source requests should not be made unless the department is confident that the request is reasonable, appropriately justified to meet the City’s requirements, and can withstand a possible audit. Sole source/brand purchasing minimizes or eliminates competition and should be avoided whenever possible.

If a department believes that only a specific make and model will meet its needs, it should include an objectively written explanation that details the unique features of the sole source/brand item, which states why these features are required. If other brands or models have been tested or used previously, the department should specify the brands or models tested or used, the dates they were tested or used, and why they are not acceptable.

A written justification, signed by the department head must be submitted for the PA’s review/approval. Department should provide the written justification in a standard memo format to the PA.

Use of Existing Agreement
An exception may be granted if the product/service is available through the utilization of another public entity’s contract (includes city, county, state, federal, school district, League of California Cities, California Communities Program, Federal GSA). The contract must have been competitively bid, be current within the last year, and be for the same product or service. It must also meet all City policies.

Standardization
When supplies, equipment, or services are uniformly adopted or otherwise standardized, or when an item is designated to match others in use by the City, the purchase may be exempt from bidding requirements or be made with limited competition to distributors of the manufacturer of the standardized item. Compatibility issues between differing technologies will also be considered for exception.

Emergencies
The item(s) purchased are immediately necessary for:
• The continued operation of the office or department involved; or • Are immediately necessary for the preservation of life or property.

Technically, an emergency need is one that could not have been foreseen. Failure to submit a proper documentation on time does NOT constitute a valid emergency.

Contracted City Staff
The City of Farmersville is a small municipality that is dependent upon contracted professional staff to fill staff positions normally performed by in-house staff in larger agencies, such as City Engineer or City Planner. Therefore, an exception to the normal bidding process may apply when using contracted professional staff in their role as the City representative, in their respective field, under their existing contract. The task order will still be subject to the authorization and approval process and thresholds laid out in Chapter 2 of this document.

Pre-Qualified List of Contractors
The City of Farmersville wants to promote fairness and equality in bidding but also guard public funds from waste by avoiding awards to unqualified or under-qualified contractors that may respond with a lowest bid on a public project. Given the rural nature of the City, the bidding pool of contractors may be insufficient to meet quality standards of certain City projects. By establishing a pre-qualified list of contractors for construction projects the City can manage this risk for appropriate projects. A contractor may be added to the list after going through a vetting process established by the PA or designee. Pre-qualified contractors will be added to a list maintained by the PA or designee(s) for a period of one year. When a project becomes available, and not subject to other bidding requirements from State or Federal funding sources, a contractor from the pre-qualified list may be selected from the list, subject to the authorization and approval process and thresholds laid out in Chapter 2 of this document.

Miscellaneous
• Formal competition has failed
• A procurement made from another unit of government
• Procurement of used item is advantageous
• Public utilities (Gov Code 4217)
• Legal services
• Medical services

Local Preference
Purchasing goods and services from local vendors is desired because it stimulates the Farmersville economy and recognizes that local vendors are valued members of our community. City staff, exercising good judgement by considering factors such as quality, previous performance, availability, and potential tax revenues to the City will, when practicable, give preference to purchasing locally. All other portions of this policy relative to normal competitive bidding will apply.

A local advantage cannot be considered for Federal funded contracts. For more information see Uniform Guidance 2 CFR Ch. II §200.319 (7)(b).

A local advantage cannot be considered for State funded contracts due to increasingly strict State requirements mirroring Federal standards (e.g. CalTrans funded programs).

Unauthorized Purchases
Except for emergencies or other authorized exceptions, no purchases can be made or are authorized until funds have been encumbered by the Finance Department.

Usually, an unauthorized purchase is discovered when a department submits a documentation to cover a purchase (goods or services) that has already been delivered. Should a department make an unauthorized purchase, the department is issued a warning.

If a second violation occurs, a memorandum is sent stating that the Finance department will process the payment, after receipt of a written explanation.

If a third violation occurs, a memorandum is sent stating that the Finance department will not process the request / invoice. The department is advised approval must be sought from the City Council, or the employee can be personally responsible for the charges.

Written Contracts
City staff will typically require a written contract when the cost of the services, and in some cases goods, exceeds $50,000. New construction contracts are needed for projects exceeding $100,000.

The City of Farmersville prefers to use a Standard Services Contract and will provide it to departments upon request. The standard contract has been approved by the City Attorney and Risk Management. Use of any contract other than the standard contract, or making material changes to the standard contract, will require City Attorney approval.

Insurance Requirements
The City requires that contractors have, and maintain, certain types of insurance coverage when they enter into contractual agreements to perform services.

Insurance requirements vary depending on the type/scope of services provided. In certain cases, the contractor will need to provide insurance coverage, whether or not the contract requires the vendor to enter City property.

A Recommended Insurance Coverage Matrix has been developed to assist with the determination by Risk Management and is attached to this policy for reference.

Proof of insurance must be provided prior to the start of any work.

The following are the most commonly required types of coverage.

• Commercial General Liability: The City should be added, by endorsement, as an “additional insured.”
• Automobile Liability: Is required if driving or traveling is required in providing the contracted services If the vendor/contractor has employees but no vehicles registered to the business (non-owned and hired automobile liability coverage should be provided).
• Workers’ Compensation: Contractors working on City property must first provide proof of Workers’ Compensation for all employees working on the job site.

Requirement may be waived if the vendor is a sole proprietor/partner/corporate officer with no employees.
• Professional Liability (Errors and Omissions): Is required for certain services − including but not limited to − appraisers, notaries, software programmers, auditors, lawyers, insurance agents, surveyors, dentists, doctors, nurses, counselors, engineers, etc.

Prevailing Wages
In accordance with Labor Code Sections 1770-1773, prevailing wages must be paid to all workers on a “public works” project (see Glossary for definition) when the project is over $1,000.

When bidding on public works projects that exceed $1,000, under the law, all bidders are expected to use the same wage rates. The California Department of Industrial Relations determines the prevailing rate of wages for specific geographic areas. Additional information is available at www.dir.ca.gov/dlsr/pwd/index.htm.

Surety and Performance Bonds
Bid Bonds
The bid bond guarantees the City that the bidder will enter into the contract if it is awarded. Bid security shall be required for all construction work bids when the cost is estimated to exceed $25,000. Bids must be accompanied by a Bid Security in the amount of not less than 10% of the amount bid in one of the following forms:
• Cash
• A cashier's check made payable to the City of Farmersville • A certified check made payable to the City of Farmersville • A bidder's bond executed by an admitted surety insurer, made payable to the City of Farmersville
Upon an award to the lowest responsive and responsible bidder, the security of an unsuccessful bidder shall be returned in a reasonable period, but in no event shall that security be held by the City beyond 60 days from the time the award is made.

A bid received and not accompanied by cash, cashier's check, certified check, or

approved bond will result in return of the bid without consideration.

Bid security is optional for other bids or proposals.

Performance and Payment Bonds
The performance bond guarantees that the contractor will perform the duties assumed by entering the contract. The payment bond guarantees that the contractor will pay all suppliers and subcontractors who assist in the performance of the work.

One hundred percent (100%) performance and payment bonds are required on all public works projects awarded in excess of $25,000.

Performance and payment bonds are optional for other bids or proposals. In most instances, bonds are not necessary if a contractor has been selected after a thorough review of references, qualifications, and financial stability.

Settlements and Other Agreements
$1 to $25,000 – Administrative Process
The City Manager must act on behalf of the City with regard to settlements and other legal agreements where expeditious action would be of great benefit to the City. Because the City is largely self-insured through the Central San Joaquin Valley Risk Management Authority (CSJVRMA) with self-insured retention (SIR) limits of $25,000 or more, the City Manager can act to settle disputes and other agreements up to the $25,000 limit. The City Manager shall report the action to the Mayor at their earliest convenience and to the Council as a whole by the next regular Council Meeting available.

Over $25,000 − City Councils’ Approval
All other claims and disputes related to liability, property, or workers’ compensation are taken over by the CSJVRMA at the point that the cost surpasses the SIR limit of the City. In cases where the Memorandum of Coverage (MOC) through the CSJVRMA does not apply, and the cost exceeds $25,000 the City Manager must gain approval from the City Council to make settlement.

Outside Legal Services
Where it is necessary, as in the case where the City Attorney has a conflict of interest, or when it is deemed desirable because specialized legal expertise is required from the private sector, outside legal counsel may be retained by contract, subject to the following limitations:
• All contracts for outside legal services in excess of fifty thousand dollars ($50,000) shall be approved by the City Council.
• Contracts for such services, which do not exceed fifty thousand dollars

($50,000), are within the Purchasing Agent's authority, but are subject to prior written approval of the City Attorney.

Compliance is provided by way of a memo from the City Attorney annually.

Quick Reference
Chapter 3 – Procurement Methods
Topic Page
Council Approval 26
Procurement Credit Card 26
Accounts Payable Process 26

Procurement Methods
Chapter Objective: Review of methods used in the acquisition of products and services.

CouncilApproval
As stated earlier in this guide, the City Council, through the Purchases Ordinance, delegates contracting authority to the City Purchasing Agent. That authority is limited to $100,000 when contracting for services ($200,000 for construction services). Therefore, departments have the option to obtain Councils’ approval for certain large-dollar contracts. The Mayor signs the contract on behalf of the City. Any required encumbrance or appropriation is setup, by the Finance Department.

Procurement Credit Cards
The Procurement Bank Card eliminates the many steps in the procurement process and facilitates one payment to the bank on a monthly basis, instead of individual payments to a large number of vendors.

This procurement method is typically to be used for low-dollar purchases (under $10,000) and must be approved by the City Manager or Department Head, with complete documentation of the completed transaction, reconciled monthly by the Finance Department.

Procurement cards have unique controls that ensure purchases made are within program specifications for product and dollar limits. In addition, each cardholder requires certification of all purchases with verification performed by the approving official, before payment is made.

Cardholders must sign a participation agreement accepting the terms and conditions placed on card usage.

Accounts Payable Process
The most common procedure for processing payments for the City of Farmersville is through decentralized purchasing authority granted by the Purchasing Agent to department heads and then payment to the vendor is made through the centralized Accounts Payable process in the Finance Department.

Most payments are still made by check to make reconciliation and request for reimbursement through grants and other funding sources the clearest to all invested parties. Some 3

reoccurring payments are made by ACH by the Accounts Payable clerk.

Invoices and Pay Estimates
As purchases are made by authorized designees, it is their responsibility to receive a copy of the invoice or receipt of purchase and forward this to the Department Head for account coding and approval or directly to Accounts Payable clerk, as appropriate. Accounts Payable will not pay from statements or work orders – only invoices and pay estimates (for large construction projects).

Many invoices are reoccurring in nature and may come directly to the Finance Department or the Accounts Payable Clerk. In these situations, the invoices will be routed back to each purchasing authority (Department Head) for coding and payment approval.

Coding and Approval
All invoices must have appropriate coding and approval from the purchasing department head or City Manager before payment will be processed. Certain exceptions for common, reoccurring payments as indicated in the municipal code, are permitted.

Submission for Payment
Invoices need to be submitted to the Finance Department on a timely basis so that payment can be effective and efficient. Sufficient back-up needs to be included prior to submission including invoices, estimates, GSA per diem calculations and other supporting documentation to prove authority to purchase as well as proof of purchase and/or receipt of goods and/or services.

Accounts Payable Process
Invoices and Pay Estimates are received by the Finance department daily by mail, email, courier, FAX, in-person, from other departments, and internally. These documents are sorted, routed, and received back with budgetary coding and approvals as appropriate. All other issues are returned or routed to the City Manager depending upon the issue, frequency, or severity of the issue.

Once gathered together the Accounts Payable clerk assembles the invoices together and creates cover sheets for uniform coding and organization of the batch. This batch is provided to the Finance Director who reviews the invoices and approves or denies them for payment.

The approved invoices are then entered into the system to create a batch for payment. This is put through the distribution process and checks are created. Checks are then matched up with the supporting invoices and documents, compared to the batch reported and signed by the Finance Director and the Mayor or Mayor Pro Tem. The invoice batch, cover sheets and checks are scanned and saved for record keeping and audit purposes.

Exceptions to Check Writing
Some reoccurring payments (utility bills and ancillary payroll benefits) are paid through websites or electronically by admin staff as part of the payroll or typically monthly accounts payable process. These transactions are approved and submitted to Accounts Payable clerk to enter into the system in an “ACH batch” to record the transaction. The payments are reconciled monthly with the bank reconciliation process.

Quick Reference
Chapter 4 –Purchase Orders
Topic Page
What is a Purchase Order? 29
One-Time Purchase Orders 29

Purchase Orders
Chapter Objective: Review of purchase order nomenclature, and the process for using and approving POs.

What is a Purchase Order?
A purchase order authorizes the vendor to deliver materials or services in accordance with the terms and conditions specified thereon (or incorporated from a bid or other document by reference). It also acknowledges the obligation of the City to pay for the goods or services ordered, upon their receipt and proper invoice. Unless a separate contract document is executed, the purchase order establishes the contractual relationship between the City and the vendor. A purchase order is a legally binding contract.

The purchase order is the City’s commitment for the value of the material or service ordered. It is a legal document. When a purchase order is issued as an acceptance of a bid, quotation, or offer, a contractual relationship is established.

One-Time Purchase Orders
The City of Farmersville utilizes “One-time” purchase orders that are generally issued for a finite quantity of products, or services; i.e., large equipment purchases, and one-time projects. Encumbered funds may, with certain restrictions, be carried forward into the next fiscal year.

Purchase orders will be required in the following situations:
• Commodities (Materials & Equipment) over $75,000
Purchase orders will not be required in the case that contracts are in place. Typically, contracts are used in procurement of services at the following thresholds:
• Services (Non-Construction) will be completed by contract over $100,000 • Services (Construction) will be completed by contract over $200,000 4

Quick Reference
Chapter 5 – Vendor Issues
Topic Page
Contact with Vendors 31
Making Commitments to Purchase 31
Vendor/Supplier Mailing List 31
Accepting Deliveries from Vendors 31
Making Payments to Vendors 33

Vendor Issues
Chapter Objective: Provide guidelines for dealing with vendors and vendor-related issues.

Making Contact with Vendors
Vendors sometimes call on City departments and divisions. Although they may offer helpful information, they may also subject City employees to high-pressure sales pitches. Please direct vendors to the City Clerk. The Clerk will gather information about their products and services and give them applications for inclusion in the City’s Supplier Mailing List.

Making Commitments to Purchase
Because the City, like all public agencies, buys goods on an open competitive basis, employees / Commissioners / Council Members must not promise any vendor future business.

Vendor / Supplier Mailing List
The City Clerk maintains a list of suppliers for all classes of commodities and services that are regularly purchased by the City. Departments should refer all new suppliers to the City Clerk to be added to the list.

Accepting Deliveries from Vendors
Deliveries are usually made as follows:

City Hall: Packages delivered to City Hall are inspected for visible external damage, such as dents or punctures in packaging, water damage, etc. If such damage is discovered, it is noted on the delivering carrier’s bill of lading, and the department is notified. All other inspections are the responsibility of the ordering department.

Received at User Location: When goods are received directly by the department, the following procedures should be observed:
• Avoid accepting delivery of any merchandise until adequate identification from the 5

packaging or delivery documents (carrier’s receipt) is obtained. A packing slip or other suitable identification indicating the merchandise should be delivered to the department must be in evidence before the shipment is accepted. • Sign only for the number of boxes or parcels which are received from that carrier, and are listed on the delivery documents that accompany the delivery. • The receiver is not signing as to the condition of the merchandise inside the box or parcel. However, the receiver should note any exterior damage, including unsealed packaging, on the delivery documents before signing. The receiver should not refuse a shipment because of apparent damage. This may result in storage fees being charged to the City.
• In cases of known damage (apparent at time of delivery):
⇒ Note on both copies of delivery documents “case damaged in shipment” and, if the item is visible and the damage is visible, also include “item visibly damaged”
⇒ Obtain signature from carrier on both copies of delivery documents before signing for receipt
⇒ Return one copy of receipt to carrier
⇒ Contact the vendor immediately
Inspection: Thorough inspection of goods is the responsibility of the ordering department. This includes inspection for conformance to specifications and ordered quantity, as well as inspection for damage. The department has the ultimate responsibility for determining whether the items have been received in good order.
• Goods received should be checked promptly against the packing slip and the purchase order. Partial deliveries should be noted.
• If goods are damaged, the vendor should be notified immediately. Do not destroy or discard any damaged items or packing materials.
• Departments receiving incorrect shipments or damaged goods may wish to complete a Vendor Complaint form detailing the problem and return the form to Procurement Services or download the form from the GSA Procurement Services’ intranet website.
• The ordering department is obligated to accept delivery of any goods that have been ordered. If there is a change regarding need for the items, the department should immediately contact Procurement Services to make other arrangements.

Only Procurement Services has the authority to cancel purchase orders. It should be realized that there might be a restocking charge if items must be returned through no fault of the vendor. The City’s failure to accept and pay for ordered goods is a breach of contract.

Making Payment to Vendors
Payments should be made within the terms of the purchase order or agreement.

Customary payment terms for the City are Net 30 Days, from receipt of invoice, for goods/services received. Advance payments should be avoided. Invoices should be reviewed carefully, signed by the appropriate department authority, coded with the correct account code, and forwarded to Accounts Payable.

Some vendors offer discounts if their invoices are paid promptly. To take advantage of these early-payment discounts and to maintain good vendor relations, it is important that all invoices, packing slips, and receiving reports be forwarded to the Finance Department as soon as possible.

Questions regarding payment of invoices should be addressed to the Finance Department.

Quick Reference
Chapter 6 – Glossary
Topic Page
Glossary 35

Glossary of Procurement Terms
• Brand Name Or Equal Specifications. A specification limited to one or more items by manufacturers’ names or catalog numbers to describe the standard of quality, performance, and other salient characteristics needed to meet City requirements, and which provides for the submission of equivalent products. • Brand Name Specifications. A specification limited to one or more items by manufacturers’ names or catalog numbers.
• Business. Any corporation, partnership, individual, sole proprietorship, joint stock company, joint venture, or any other private legal entity. • Business, Local. Any corporation, partnership, individual, sole proprietorship, joint stock company, joint venture, or any other private legal entity, which maintains a physical working office within the geographic boundaries of the City of Farmersville. • Buyer. A professionally trained person employed by Procurement Services to obtain materials and services for City departments, in accordance with all state and local laws and internal City policies and procedures.
• Change Order. A written order signed and issued by the Purchasing Agent, or his designee, directing the supplier or contractor to make changes or modifications to an order. The change order may make written alteration to the specifications, delivery point, rate of delivery, period of performance, price, quality, quantity, or other provisions of the contract.
• Contract. Any authorized City agreement, regardless of what it is called (purchase order, contract, etc.), for the procurement of supplies, equipment, services, or construction.
• Contractor. Any person having a contract with the City. • Construction. The erection or assembly of large structures. The term construction is, to a significant degree, synonymous with building, but in common usage it most often is applied to such major works as buildings, ships, aircraft, and public works such as roads, dams, and bridges.
6

• Cost Analysis. The evaluation of cost data for arriving at costs actually incurred or estimates of costs to be incurred, prices to be paid, and costs to be reimbursed. • Cost Data. Factual information concerning the cost of labor, material, overhead, and other cost elements that are expected to be incurred, or which have been actually incurred, by the contractor in performing the contract; or that are expected to be incurred by the City in the use of the equipment or material to be purchased. • Cost Reimbursement Contract. A contract under which a contractor is reimbursed for costs which are allowable and allocable in accordance with the contract terms and the provisions, and a fee or profit, if any.
• Emergency Purchase Order. An emergency purchase order results when a situation arises in which compliance with normal procurement practice is impracticable or contrary to the public interest.
• Employee. An individual drawing a salary or wages from the City, whether elected or not; any non-compensated individual performing personal services for the City or any department, agency, commission, council, board, or any other entity established by the executive or legislative branch of the City; and any non-compensated individual serving as an elected official of the City.
• Fixed Asset. All City equipment and other assets with a purchase price of $5,000 or more, including tax and delivery, and relatively permanent. • Formal Bids. Formal bids are those that are obtained by written solicitation. The bids are received in writing by a set date and time. The bids are publicly opened by Procurement Services. The written bids and the bid summary are maintained by Procurement Services.
• Gratuity. A payment, loan, subscription, advance, deposit of money, service, or anything of more than nominal value, present or promised, unless consideration of substantially equal or greater value is received
• Immediate Family. A spouse, children, parents, brothers, and sisters. • Informal Quotes. Informal quotes are offers made by vendors. The quotes may be verbal, electronic, or written. The Buyer maintains a summary of the quotes received. • Invitation for Bids. All documents, whether attached or incorporated by reference utilized for soliciting sealed bids. Invitations for Bids (IFB) are awarded to the lowest responsive and responsible bidder(s).
• Local Business. (See Business, Local).
• Personal Services Contract. An accepted means for providing specialized tasks, which cannot be as effectively accomplished by the regular work force. • Prevailing Wage. In accordance with Labor Code Sections 1770-1773 prevailing wages must be paid to all workers on a “public works” project when the project is over $1,000.

• Price Analysis. The evaluation of price data, without analysis of the separate cost components and profit as in cost analysis, which may assist in arriving at prices to be paid and costs to be reimbursed.
• Pricing Data. Information concerning prices for items substantially similar to those being procured. Prices in this definition refer to offered or proposed selling prices, historical selling prices and current selling prices. The definition refers to data relevant to both prime and sub-contract prices.
• Procurement. The buying, purchasing, renting, leasing, trading, or otherwise acquiring of any supplies, equipment, services, or construction. It also includes all functions that pertain to the obtaining of any supplies, equipment, services, or construction, including descriptions of requirements, selection and solicitation of sources, preparation and award of contracts, and all phases of contract administration.
• Procurement Policy. Procurement governing document approved by resolution by the City Council of Farmersville.
• Public Works Project. As defined in Public Contract Code § 20150.2, "public project" means: a project for the erection, improvement, and repair of public buildings and works.
• Purchase Order. City’s commitment for the value of the material or service ordered. It is a legal document.
• Request for Proposals. All documents, whether attached or incorporated by reference, utilized for soliciting proposals. Requests for Proposals (RFP) are generally awarded based on several evaluation factors, including price. • Requesting Department. Any department, commission, board, or agency requiring supplies, equipment, services, or construction.
• Responsible Bidder or Offeror. A person who has the capability in all respects to perform fully the contract requirements, and the tenacity, perseverance, experience, integrity, reliability, capacity, facilities, equipment, and credit which will assure good faith performance, and who has submitted a bid that conforms in all material respects to the requirements set forth in the solicitation.
• Services. The furnishing of labor, time, or effort by a contractor, not involving delivery of a specific product other than reports which are merely incidental to the required performance.
• Specification Any description or scope of work of the physical or functional characteristics or of the nature of supplies, equipment, service, or construction. It may include a description of any requirement for inspection, testing or delivery of supplies, equipment, services, or construction.
• Supplier List. A list of potential bidders, listed by commodity codes for materials and services furnished.

Appendix A:

Risk Matrix

RISK MATRIX
&

INSURANCE

LANGUAGE

YORK RISK SERVICES
Revised July 2019

Table of Contents

Exhibit 1: Risk Matrix Definitions.................................................................................................... 1 Exhibit 2: Risk Matrix ..................................................................................................................... 2 Category 1 “Low Risk”..................................................................................................................... 3 Category 2 “Intermediate Risk” ...................................................................................................... 4 Category 3 “High Risk”.................................................................................................................... 6 Exhibit 3: Ancillary Coverage Requirements.................................................................................. 9

Exhibit 1
Risk Matrix Definitions
(Determine Risk Category by evaluating all factors that could increase the agency’s liability for that particular project. Once Risk Category is determined, utilize Exhibit 2 to select insurance terms.)

Risk Category Risk Level Examples
1 Low • Vending machine providers
• Facilities use
• Special events
• Some professional service providers
• General contracts
2 Intermediate • Construction contracts
• Some professional service providers
• Technology consultants
• Facilities use
• Special events
3 High • Major construction contracts
• Garbage haulers
• Some professional service providers
Other Undefined • The risk is unique
• Custom insurance requirements needed

Exhibit 2
Risk Matrix
(“+” = Limits may need to increase for Risk Categories 2 & 3, depending on the project.) Risk
Category Workers’ Compensation General Liability Auto Liability 1 Statutory
Employer’s Liability $1,000,000
$2,000,000 per occurrence
(may accept $1,000,000 per
occurrence for lower risks)
$4,000,000
general aggregate
$1,000,000
products/completed
operations aggregate
$2,000,000
Combined Single Limit
(may accept $1,000,000 for
lower risks)
2 Statutory
Employer’s Liability $1,000,000
$2,000,000+
per occurrence
$4,000,000+
general aggregate
$2,000,000+
products/completed
operations aggregate
$2,000,000+
Combined Single Limit
3 Statutory
Employer’s Liability $1,000,000
$5,000,000+
per occurrence
$10,000,000+
general aggregate
$5,000,000+
products/completed
operations aggregate
$5,000,000+
Combined Single Limit
Other
Consult with
Risk Management
Professionals
Consult with
Risk Management
Professionals
Consult with
Risk Management
Professionals

Language Templates for Risk Categories 1-3

1. Category 1 “Low Risk”
Insurance Requirements
i. Commercial General Liability
a. Vendor shall maintain commercial general liability insurance with coverage at least as broad as Insurance Services Office form CG 00 01, in an amount not less than two million dollars ($2,000,000) per occurrence for bodily injury, personal injury, and property damage, including without limitation, blanket contractual liability. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit. Vendor’s general liability policies shall be primary and shall not seek contribution from the City’s coverage, and be endorsed using Insurance Services Office form CG 20 10 (or equivalent) to provide that City and its officers, officials, employees, and agents shall be additional insureds under such policies. For construction projects, an endorsement providing completed operations coverage for the additional insured, ISO form CG 20 37 (or equivalent), is also required. b. Any failure to comply with reporting provisions of the policies by Vendor shall not affect coverage provided the City.
c. Coverage shall state that Vendor insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability.
d. Coverage shall contain a waiver of subrogation in favor of the City. ii. Business Automobile Liability
a. Vendor shall provide auto liability coverage for owned, non-owned, and hired autos using ISO Business Auto Coverage form CA 00 01 (or equivalent) with a limit of no less than two million dollars ($2,000,000) per accident. iii. Workers’ Compensation and Employers’ Liability

a. Vendor shall maintain Workers’ Compensation Insurance and Employer’s Liability Insurance with limits of at least one million dollars ($1,000,000). Vendor shall submit to City, along with the certificate of insurance, a waiver of subrogation endorsement in favor of City, its officers, agents, employees, and volunteers. iv. All Coverages
a. Each insurance policy required by the agreement shall be endorsed to state that coverage shall not be suspended, voided, cancelled, or reduced in limits except after thirty (30) days' prior written notice has been given to the City, except that ten (10) days’ prior written notice shall apply in the event of cancellation for nonpayment of premium.
b. All self-insurance, self-insured retentions, and deductibles must be declared and approved by the City.
c. Evidence of Insurance - Prior to commencement of work, the Vendor shall furnish the City with certificates, additional insured endorsements, and waivers of subrogation evidencing compliance with the insurance requirements above.

The Vendor must agree to provide complete, certified copies of all required insurance policies if requested by the City.
d. Acceptability of Insurers - Insurance shall be placed with insurers admitted in the State of California and with an AM Best rating of A- VII or higher.

2. Category 2 “Intermediate Risk”
Insurance Requirements
i. Commercial General Liability
a. Vendor shall maintain commercial general liability insurance with coverage at least as broad as Insurance Services Office form CG 00 01, in an amount not less than two million dollars ($2,000,000) per occurrence for bodily injury, personal injury, and property damage, including without limitation, blanket contractual liability. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall

be twice the required occurrence limit. Vendor’s general liability policies shall be primary and shall not seek contribution from the City’s coverage, and be endorsed using Insurance Services Office form CG 20 10 (or equivalent) to provide that City and its officers, officials, employees, and agents shall be additional insureds under such policies. For construction projects, an endorsement providing completed operations coverage for the additional insured, ISO form CG 20 37 (or equivalent), is also required. b. Any failure to comply with reporting provisions of the policies by Vendor shall not affect coverage provided the City.
c. Coverage shall state that Vendor insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability.
d. Coverage shall contain a waiver of subrogation in favor of the City. ii. Business Automobile Liability
a. Vendor shall provide auto liability coverage for owned, non-owned, and hired autos using ISO Business Auto Coverage form CA 00 01 (or equivalent) with a limit of no less than two million dollars ($2,000,000) per accident. iii. Workers’ Compensation and Employers’ Liability
a. Vendor shall maintain Workers’ Compensation Insurance and Employer’s Liability Insurance with limits of at least one million dollars ($1,000,000). Vendor shall submit to City, along with the certificate of insurance, a waiver of subrogation endorsement in favor of City, its officers, agents, employees, and volunteers. iv. All Coverages
a. Each insurance policy required by the agreement shall be endorsed to state that coverage shall not be suspended, voided, cancelled, or reduced in limits except after thirty (30) days' prior written notice has been given to the City, except that ten (10) days’ prior written notice shall apply in the event of cancellation for nonpayment of premium.

b. All self-insurance, self-insured retentions, and deductibles must be declared and approved by the City.
c. Evidence of Insurance - Prior to commencement of work, the Vendor shall furnish the City with certificates, additional insured endorsements, and waivers of subrogation evidencing compliance with the insurance requirements above.

The Vendor must agree to provide complete, certified copies of all required insurance policies if requested by the City.
d. Acceptability of Insurers - Insurance shall be placed with insurers admitted in the State of California and with an AM Best rating of A- VII or higher. e. Subcontractors and Consultants - A category of risk and the applicable insurance requirements will be determined on a “per subcontractor” or “per consultant” basis, considering the particular work to be done by the subcontractor or consultant and the interrelationship of that work to other work being conducted by the Vendor.

3. Category 3 “High Risk”
Insurance Requirements
i. Commercial General Liability
a. Vendor shall maintain commercial general liability insurance with coverage at least as broad as Insurance Services Office form CG 00 01, in an amount not less than five million dollars ($5,000,000) per occurrence for bodily injury, personal injury, and property damage, including without limitation, blanket contractual liability. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit. Vendor’s general liability policies shall be primary and shall not seek contribution from the City’s coverage, and be endorsed using Insurance Services Office form CG 20 10 (or equivalent) to provide that City and its officers, officials, employees, and agents shall be additional insureds under such policies. For construction projects, an endorsement providing completed operations coverage for the additional insured, ISO form CG 20 37 (or equivalent), is also required.

b. Any failure to comply with reporting provisions of the policies by Vendor shall not affect coverage provided the City.
c. Coverage shall state that Vendor insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability.
d. Coverage shall contain a waiver of subrogation in favor of the City. ii. Business Automobile Liability
a. Vendor shall provide auto liability coverage for owned, non-owned, and hired autos using ISO Business Auto Coverage form CA 00 01 (or equivalent) with a limit of no less than five million dollars ($5,000,000) per accident. iii. Workers’ Compensation and Employers’ Liability
a. Vendor shall maintain Workers’ Compensation Insurance and Employer’s Liability Insurance with limits of at least one million dollars ($1,000,000). Vendor shall submit to City, along with the certificate of insurance, a waiver of subrogation endorsement in favor of City, its officers, agents, employees, and volunteers. iv. All Coverages
f. Each insurance policy required by the agreement shall be endorsed to state that coverage shall not be suspended, voided, cancelled, or reduced in limits except after thirty (30) days' prior written notice has been given to the City, except that ten (10) days’ prior written notice shall apply in the event of cancellation for nonpayment of premium.
g. All self-insurance, self-insured retentions, and deductibles must be declared and approved by the City.
h. Evidence of Insurance - Prior to commencement of work, the Vendor shall furnish the City with certificates, additional insured endorsements, and waivers of subrogation evidencing compliance with the insurance requirements above.

The Vendor must agree to provide complete, certified copies of all required insurance policies if requested by the City.

i. Acceptability of Insurers - Insurance shall be placed with insurers admitted in the State of California and with an A.M. Best rating of A- VII or higher. j. Subcontractors and Consultants - A category of risk and the applicable insurance requirements will be determined on a “per subcontractor” or “per consultant” basis, considering the particular work to be done by the subcontractor or consultant and the interrelationship of that work to other work being conducted by the Vendor.

Exhibit 3
Ancillary Coverage Requirements
Contract Activity Involved
Professional
Liability
Pollution
Liability
Builders
Risk
Aircraft
Liability
Cyber
Liability
Installation
Floater
Construction or
Remodeling Projects -
Construction or
remodeling projects
X X X
Hazardous or Waste
Materials - Removal of
asbestos or lead-based
paint; or the use,
application, transport,
removal, cleanup, or
disposal of hazardous
material in quantities of
100 gallons or more; or the
disposal, treatment,
transport, or storage of
waste.

X
Installation of Equipment X
Professional Service
Provider - Services from an
accountant, architect,
attorney, claims
administration firm,
consultant, insurance
broker, engineer, financial
advisor, medical
professional, or other
person who maintains a
professional license.

X
Technology Vendor X X
Use of Aircraft or
Helicopter X

1. The following are suggested insurance language if Ancillary Coverages are recommended. Please consult with the Risk Manager for customized limits and language for specific circumstances.
a. Aircraft Liability Insurance
i. Aircraft liability insurance coverage shall provide limits of $5,000,000 - $10,000,000 per accident.
ii. The policy shall be endorsed to include the City, its officers, employees, and agents as additional insureds.
b. Builders Risk Insurance
i. Contractor shall obtain and maintain Builders Risk/Course of Construction insurance. Policy shall be provided for replacement value on an "all-risk" basis, including earthquake and flood. The City shall be named as Loss Payee on the policy and there shall be no coinsurance penalty provision in any such policy.

Policy must include: (1) coverage for removal of debris, and insuring the buildings, structures, machinery, equipment, materials, facilities, fixtures, and all other properties constituting a part of the project; (2) “Installation Floater” coverage with limits sufficient to insure the full replacement value of any property or equipment stored either on or off the project site. Such insurance shall be on a form acceptable to City to ensure adequacy of terms and limits.

Contractor shall not be required to maintain property insurance for any portion of the Project following transfer of control thereof to City. c. Cyber Liability Insurance
i. Cyber Liability Insurance with limits not less than $1,000,000 per claim. ii. Coverage shall be sufficiently broad to respond to the duties and obligations as is undertaken by Vendor in this agreement and shall include, but not be limited to, claims involving infringement of intellectual property, including but not limited to infringement of copyright, trademark, trade dress, invasion of privacy violations, information theft, damage to or destruction of electronic information, release of private information, alteration of electronic information, extortion, and network security.

iii. The policy shall provide coverage for breach response costs as well as regulatory fines and penalties, and credit monitoring expenses with limits sufficient to respond to these obligations.
d. Pollution Liability Insurance
i. Pollution Coverage shall be provided for liability arising out of sudden, accidental and gradual pollution and remediation. The policy limit shall be no less than two million dollars ($2,000,000) per claim. All activities contemplated in this agreement shall be specifically scheduled on the policy as “covered operations.” The policy shall provide coverage for the hauling of waste from the project site to the final disposal location, including non-owned disposal sites. ii. The policy shall be endorsed to include the City, its officers, employees, and agents as insureds.
e. Professional Liability Insurance
i. Contractor shall maintain professional liability insurance that insures against professional errors and omissions that may be made in performing the Services to be rendered in connection with this Agreement, in the minimum amount of two million dollars ($2,000,000) per claim and in the aggregate. Any policy inception date, continuity date, or retroactive date must be before the effective date of this agreement, and Contractor agrees to maintain continuous coverage through a period no less than three years after completion of the services required by this agreement.

Appendix B:

Approval Memo

PURCHASE APPROVAL MEMO
TO:

FROM:

DATE:

SUBJECT: REQUEST FOR PURCHASE APPROVAL
Please accept this memo for formal approval for purchase of the following item(s):

Description
Vendor
Capital Budget ID#
Budgeted Amount
Total Cost
Account Code
REQUEST STATUS: APPROVED ( ) DENIED ( )
SIGNED:

DATE:

FINANCE CHECK:

This memo to be attached to Accounts Payable back-up for each payment.

Appendix C:

Purchase Order

DATE:

P.O. #

DATE ORDERED DATE REQUIRED
ITEM # QTY UNIT PRICE TOTAL
[42] SUBTOTAL
TAX
S & H
OTHER
TOTAL
Authorized by Date
Other Comments or Special Instructions

DESCRIPTION

VENDOR NUMBER SHIPPING TERMS
Phone: 559‐747‐0458

VENDOR SHIP TO

PURCHASE ORDER
909 WEST VISALIA ROAD
FARMERSVILLE, CA 93223

Appendix D:

CUCCAC Manual

State of California

Cost Accounting Policies and
Procedures Manual

2019 Edition

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FOREWORD
The Uniform Public Construction Cost Accounting Act (Act), enacted in 1983 under Public Contract Code section 22000 et seq., allows local agencies to perform public project work of up to $60,000 with their own workforces if the agencies elect to follow the cost accounting procedures set forth in the Cost Accounting Policies and Procedures Manual by the California Uniform Construction Cost Accounting Commission.

Every five years, the California Uniform Construction Cost Accounting Commission reviews the informal bid limits for inflation and other factors to determine whether adjustments should be made. If an adjustment is made, the State Controller notifies the affected public agencies. The adjustment may become effective before it appears as a formal change in the Public Contract Code pursuant to Public Contract Code section 22020. The most recently posted bid limits can be found at www.sco.ca.gov/ard_cuccac.html titled under New Informal Bid Limit Increase (Pursuant to PCC 22032)
Any local agency can voluntarily elect to become a participating agency of the Act. Local agencies include cities, counties, redevelopment agencies, special districts, school districts, and community college districts.

Participating agencies benefit from the raised force account limit and the informal bidding procedures. More projects are completed in a timely manner as a result of the streamlines awards process and the reduction in paperwork related to advertising and report filing.

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California Uniform Construction Cost Accounting Commission Cost Accounting Policies and Procedures Manual
Table of Contents
CHAPTER 1 INFORMATION FOR ADOPTION AND IMPLEMENTATION OF THE CALIFORNIA UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING ACT................................................................................................5 CHAPTER 2 THE UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING ACT ....................................................... 35 CHAPTER 3 UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING POLICIES AND PROCEDURES........................ 42 CHAPTER 4 IDENTIFICATION, REPORTING, AND COMPUTATION OF PERSONNEL COSTS....................................... 52 CHAPTER 5 IDENTIFICATION, REPORTING, AND COSTING OF MATERIALS, SUPPLIES, AND SUBCONTRACTS ........ 60 CHAPTER 6 IDENTIFICATION, REPORTING, AND COSTING EQUIPMENT ................................................................. 64 CHAPTER 7 IDENTIFICATION, RATE DEVELOPMENT, AND ALLOCATION OF OVERHEAD ........................................ 70 APPENDIX A COST PRINCIPLES FOR STATE, LOCAL, AND INDIAN TRIBAL GOVERNMENTS..................................... 74 APPENDIX B OVERHEAD DETERMINATION AND ALLOCATION PERCENTAGE OF DIRECT LABOR COSTS METHOD 78

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CHAPTER 1 INFORMATION FOR ADOPTION AND IMPLEMENTATION OF THE

CALIFORNIA UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING ACT Table of Contents
Instructions for Adoption and Implementation of the Uniform Construction Cost Accounting Procedures……….7

1.01 Instructions for Adoption and Implementation of the Uniform Public Construction Cost Accounting Act (ACT) by Local Agencies...................................................................................................................7

1.02 Sample Election Resolution – Model.....................................................................................................8

1.03 Sample Informal Bidding Ordinance .....................................................................................................9 Procedure for Establishment and Maintenance of List of Registered Contractors……………………………………………10

1.04 Procedure for Establishment and Maintenance of List of Registered Contractors Per Section 22034 of the Public Contract Code ............................................................................................................... 10

1.05 County-by-County List of Construction Trade Journals...................................................................... 11

1.06 Sample Information for Mailed Notice .............................................................................................. 13

1.07 List of Construction Trade Journals.................................................................................................... 13 Accounting Procedures Review Process……………………………………………….…….……….……………………………..…………..20

1.08 Accounting Procedures Review.......................................................................................................... 19 Uniform Public Construction Cost Accounting Act………………………………………………………………………………….……….23

1.09 California Public Contract Code.......................................................................................................... 23

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CHAPTER 1 Information for Adoption and Implementation of the California Uniform Public Construction Cost Accounting Act
Instructions for Adoption and Implementation of the Uniform Construction Cost Accounting Procedures

1.01 Instructions for Adoption and Implementation of the Uniform Public Construction Cost Accounting Act (ACT) by Local Agencies
1) The Governing Board must elect by resolution to become subject to the uniform construction cost accounting procedures promulgated by the State Controller pursuant to the Public Contract Code section 22019. The resolution shall specify that the local agency will meet the requirements prescribed in the California Uniform Construction Cost Accounting Commission’s Cost Accounting Policies and Procedures Manual and state the effective date the agency will implement the accounting and bidding procedures.
2) The local agency must notify the State Controller in writing of the election to become subject to the uniform construction cost accounting procedures along with a copy of the resolution mailed to the following address:

Office of the State Controller
Local Government Programs and Services Division
Local Government Policy Section
P.O. Box 942850
Sacramento CA 94250
3) When a local agency elects to become subject to the uniform construction cost accounting procedures, the entire entity is considered subject to the Act and no departments will be exempt. However, Special Districts which are governed by a board of supervisors or city council are subject only if a separate election is made.
4) An informal bidding ordinance, or a board adopted policy equivalent to such as required by the participating agency, shall be enacted pursuant to Public Contract Code section 22034. 5) Once opting into the Act, participating agencies must always adhere to the terms of the Act until such time the agency formally opts out by resolution of its governing board. Having opted in, selective adherence to the terms of the Act is a violation.
6) The governing board may discontinue the agency’s participation under the uniform public construction cost accounting procedures by adopting a resolution stating this fact. A copy of the resolution shall be filed with the State Controller.
7) The State Controller shall notify the California Uniform Construction Cost Accounting Commission (Commission) of all local agencies electing to become subject to the uniform public construction cost accounting procedures. In addition, the Commission shall also be notified of local agencies electing to discontinue participation under these procedures.

SAMPLE

1.02 Sample Election Resolution – Model
This sample Election Resolution may be used by any public agency’s governing body.

RESOLUTION OF THE __________________________, STATE OF CALIFORNIA IN THE MATTER OF

UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING PROCEDURES
Resolution No. _____________
WHEREAS, prior to the passage of Assembly Bill No. 1666, Chapter 1054, Statutes of 1983, which added Chapter 2, commencing with Section 22000, to Part 3 of Division 2 of the Public Contract Code, existing law did not provide a uniform cost accounting standard for construction work performed or contracted by local public agencies; and WHEREAS, Public Contract Code section 22000 et seq., the Uniform Public Construction Cost Accounting Act, establishes such a uniform cost accounting standard;
WHEREAS, the Commission established under the Act has developed uniform public construction cost accounting procedures for implementation by local public agencies in the performance of or in the contracting for construction of public projects; and NOW, THEREFORE, BE IT RESOLVED that the ________________ of _________________, California, hereby elects under Public Contract Code section 22030 to become subject to the uniform public construction cost accounting procedures set forth in the Act and to the Commission's policies and procedures manual and cost accounting review procedures, as they may each from time to time be amended, and directs that the __________________- notify the State Controller forthwith of this election.

This Resolution shall take effect upon its adoption.

PASSED AND ADOPTED this ____ day of ___________________, _____ by the following vote; AYES:

NOES:

ABSENT:

Insert Seal if Applicable
________________________, _______________
Signature Title
City of __________________ County of _____________________

SAMPLE

1.03 Sample Informal Bidding Ordinance
(This SAMPLE INFORMAL BIDDING ORDINANCE or POLICY indicates action by a county board of supervisors.

However, the sample format shall be modified to conform to your governing agency’s rules).

ORDINANCE NO. _____________
AN ORDINANCE OF THE BOARD OF SUPERVISORS OF THE COUNTY OF _____________ ADDING SECTION _________ TO THE ORDINANCE CODE OF THE COUNTY OF ____________

TO PROVIDE INFORMAL BIDDING PROCEDURES UNDER THE UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING ACT (Section 22000, et seq. of the Public Contract Code) The Board of Supervisors of the County of ____________________do ordain as follows:

SECTION 1
Section _______ is hereby added to the County Code of the County of_____________ to provide as follows:

Section ____________. Informal Bid Procedures. Public projects, as defined by the Act and in accordance with the limits listed in Section 22032 of the Public Contract Code, may be let to contract by informal procedures as set forth in Section 22032, et seq., of the Public Contract Code.

Section ____________. Contractors List. The agency shall comply with the requirements of Public Contract Code Section 22034.

Section ____________. Notice Inviting Informal Bids. Where a public project is to be performed which is subject to the provisions of this Ordinance, a notice inviting informal bids shall be circulated using one or both of the following alternatives:

1. Notices inviting informal bids may be mailed, faxes, or emailed to all contractors for the category of work to be bid, as shown on the list developed in accordance with Section_________,

2. Notices inviting informal bids may be mailed to all construction trade journals as specified by the California Uniform Construction Cost Accounting Commission in accordance with section 22036 of the Public Contract Code. Additional contractors and/or construction trade journals may be notified at the discretion of the department/agency soliciting bids, provided however:
(1) If the product or service is proprietary in nature such that it can be obtained only from a certain contractor or contractors, the notice inviting informal bids may be sent exclusively to such contractor or contractors.

Section _____________. Award of Contracts
The County Purchasing Agent and the Director of Public Works are each authorized to award informal contracts pursuant to this Section.

SECTION 2
This Ordinance shall take effect and be in force thirty (30) days from the date of its passage, and before the expiration of fifteen (15) days after its passage, it or a summary of it, shall be published once, with the names of the members of the Board of Supervisors voting for and against the same in the _____________, a newspaper of general circulation published in the County of ___________________.

PASSED, APPROVED and ADOPTED by the Board of Supervisors of the County of _________________, State of California, this____ day of __________,_____, by the following vote:

AYES:

NOES:

ABSENT:

Procedure for Establishment and Maintenance of List of Registered Contractors

1.04 Procedure for Establishment and Maintenance of List of Registered Contractors Per Section 22034 of the Public Contract Code
Section 22034 of the Public Contract Code specifies the requirements for mailing, faxing, or emailing notices to contractors for work to be bid under the Act. As specified therein, an agency shall provide notices by electing a), b) or both methods listed as follows:
a) In lieu of a contractors list, mailing, faxing, or emailing notices to all construction trade journals specified in section 22036
b) Mailing, faxing, or emailing notices to all contractors on the list established by the agency for the work being paid
c) Both (a) and (b) pursuant to section 22034(a)(1)
In the event an agency elects to provide notice by mailing, faxing, or emailing notices to all contractors on the list established by the agency for the work being bid, the agency shall utilize the following procedure to establish and maintain the list of registered contractors outlined in section 22034 (a)(1):
a) Notice to contractors shall be provided in accordance with either paragraph (1) or (2), or both. 1) The public agency shall maintain a list of qualified contractors, identified according to categories of work. Minimum criteria for development and maintenance of the contractors list shall be determined by the commission. All contractors on the list for the category of work being bid shall be mailed, faxed, or emailed a notice inviting informal bids unless the product or service is proprietary. All mailing of notices to contractors pursuant to this subdivision shall be completed not less than 10 calendar days before bids are due.
2) The public agency may elect to mail, fax, or email a notice inviting informal bids to all construction trade journals specified in section 22036.
b) The notice inviting informal bids shall describe the project in general terms and how to obtain more detailed information about the project, and state the time and place for the submission of bids. c) The governing body of the public agency may delegate the authority to award informal contracts to the public works director, general manager, purchasing agent, or other appropriate person. d) If all bids received are in excess of two hundred thousand dollars ($200,000), the governing body of the public agency may, by adoption of a resolution by a four-fifths vote, award the contract, at two hundred twelve thousand, five hundred dollars ($212,500) or less, to the lowest responsible bidder, if it determines the cost estimate of the public agency was reasonable. (Amended by Stats. 2015, Ch. 269, Sec. 29. Effective January 1, 2016.)

1.04.01 Minimum Criteria for Development and Maintenance of the Contractors List Determined by the Commission, pursuant to Public Contract Code section 22034(a)(1)

1. At least once per calendar year, each public agency that has elected to become subject to the Uniform Public Construction Cost Accounting Act and intends to utilize the notice provisions outlined in section 22034(a) shall establish a new list or update its existing list of qualified contractors by mailing, faxing, or emailing written notice to all construction trade journals

designated for that Agency under Section 22036. The notice shall invite all licensed contractors to submit the name of their firm to the Agency for inclusion on the Agency's list of qualified bidders.

2. The notice shall require that the contractor provide:
 The name and address to which a Notice to Contractors or Proposal should be mailed, faxed, or emailed;
 A phone number at which the contractor may be reached;  The type of work in which the contractor is interested and currently licensed to do (earthwork, pipelines, electrical, painting, general building, etc.);  The class of contractor's license(s) held; and
 The contractor license number(s).

3. Agencies may include any contractor names they so desire on the lists, but lists must include, at minimum, all contractors who have properly provided the Agencies with the information required under #2 above in response to the written notice.

The Commission recommends that Agencies automatically include in their contractors lists the names of all contractors who submitted one or more valid bids to the Agencies.

4. A contractor may have his or her firm added to an Agency's contractors list at any time by providing the required information.

1.05 County-by-County List of Construction Trade Journals The Commission shall determine, on a county-by-county basis, the appropriate construction trade journals which shall receive mailed, faxed, or emailed notice of all informal and formal construction contracts being bid for work within the specified county per section 22036 of the Public Contract Code.

Per Public Contract Code section 22037, notices inviting formal bids must be published at least 14 calendar days before the date of opening the bids in a newspaper of general circulation, printed and published in the jurisdiction of the public agency. In addition, the Commission has determined that all public agencies that adopt and contract under the Act shall be required to mail, email, or fax a notice to the following specified construction trade publications of all formal construction contracts being bid and all invitations to join an agency’s qualified bidders list (i.e. the informal bidding list) within the specified county (as provided in sections 22034 and 22037 of the Public Contract Code). The numbers following the name of each county refer to the corresponding numbered trade journals listed starting on page 14.

Users will note that the notification of the trade journals listed in Column B for their county is required.

Additionally, the user will have to notify at least two of the trade journals listed in Column C, unless there is only one listed, in which case notification of that trade journal is sufficient. The Commission urges each public agency to select additional publications from its geographical area and include them on its list of publications to be notified. Sample information to be included in the mailed notice to trade journals is listed on page 13.

Note: Users are not required to mail a notice to a trade journal if the trade journal listed under their county is now charging for its services, or is out of business. Instead, the Commission requests that users find some other method of notifying potential contractors of published jobs and how to be added to their informal bidding lists (e.g. internet – county’s web page).

COUNTY NAME
(A)

TRADE JOURNALS REQUIRED

TO BE NOTIFIED
(B)

NOTIFY TWO OF THE

TRADE JOURNALS

LISTED BELOW
(C)
ALAMEDA 2, 3 8, 11, 14, 15, 16, 17, 18, 19
ALPINE 2, 3 11
AMADOR 2, 3 11, 13, 20
BUTTE 2, 3 5, 6, 11, 12
CALAVERAS 2, 3 11, 19, 20, 23
COLUSA 2, 3 5, 6, 11
CONTRA COSTA 2, 3 8, 11, 15, 16, 17, 19
DEL NORTE 2, 3 4, 5, 11
EL DORADO 2, 3 10, 11, 12, 13, 16
FRESNO 2, 3 11, 19, 21, 23, 24, 25
GLENN 2, 3 5, 6, 11, 12
HUMBOLDT 2, 3 4, 5, 11
IMPERIAL 2, 3 29, 31
INYO 2, 3 25
KERN 2, 3 21, 23, 24, 25, 26, 31
KINGS 2, 3 21, 23, 24, 25
LAKE 2, 3 4, 5, 7, 8, 11, 16
LASSEN 2, 3 5, 11, 12
LOS ANGELES 2, 3 8, 29, 31, 36
MADERA 2, 3 11, 19, 21, 23
MARIN 2, 3 7, 8
MARIPOSA 2, 3 11, 21, 23
MENDOCINO 2, 3 4, 7, 8, 11, 16
MERCED 2, 3 11, 19, 20, 21, 23
MODOC 2, 3 5, 11
MONO 2, 3 11
MONTEREY 2, 3 11, 18, 22, 26
NAPA 2, 3 7, 8, 9, 11, 16
NEVADA 2, 3 10, 11, 12, 13
ORANGE 2, 3 29, 31, 35
PLACER 2, 3 10, 11, 12, 13, 16
PLUMAS 2, 3 5, 6, 11, 12
RIVERSIDE 2, 3 29, 31, 35
SACRAMENTO 2, 3 5, 8, 10, 11, 12, 13, 16, 19
SAN BENITO 2, 3 11, 22
SAN BERNARDINO 2, 3 29, 31, 35
SAN DIEGO 2, 3 29, 31, 35
SAN FRANCISCO 2, 3 8, 11, 14, 15, 16, 17, 18
SAN JOAQUIN 2, 3 8, 11, 19, 20, 21, 23
SAN LUIS OBISPO 2, 3 22, 25, 26, 27, 31, 36, 37
SAN MATEO 2, 3 8, 14, 15, 17, 18
SANTA BARBARA 2, 3 26, 27, 28, 31, 36, 37
SANTA CLARA 2, 3 8, 11, 14, 15, 16, 17, 18

COUNTY NAME
(A)

TRADE JOURNALS REQUIRED

TO BE NOTIFIED
(B)

NOTIFY TWO OF THE

TRADE JOURNALS

LISTED BELOW
(C)
SANTA CRUZ 2, 3 18, 22
SHASTA 2, 3 4, 5, 11
SIERRA 2, 3 11, 12
SISKIYOU 2, 3 5, 11
SOLANO 2, 3 8, 9, 10, 11, 16, 19
SONOMA 2, 3 7, 8, 11, 16
STANISLAUS 2, 3 11, 19, 20, 21, 23
SUTTER 2, 3 6, 10, 11, 12
TEHAMA 2, 3 5, 11, 12
TRINITY 2, 3 4, 5, 11
TULARE 2, 3 23, 24, 25
TUOLUMNE 2, 3 11, 20, 23
VENTURA 2, 3 27, 31, 36, 37
YOLO 2, 3 8, 10, 11, 13
YUBA 2, 3 6, 10, 11, 12

1.06 Sample Information for Mailed Notice
Following provides the type of information that could be included in the mailed notice to the construction trade journals. This list should be used only as a guide.
 Project title and contract number, if any
 Cost range
 Site location
 Who is taking bids/date and time due
 Owner's address and phone number
 Architect's address and phone number
 Brief description of work to be done
 Where plans may be obtained/deposit required/whether or not refundable  Percentage of bid bond/percentage of performance bond/percentage of payment bond

1.07 List of Construction Trade Journals
The following organizations have indicated to the Commission that they:
a) Publish a newsletter or trade journal, on a weekly or more frequent basis, that contains a section listing projects being bid; or provide a telephone notice service to their members. b) Do not charge for publishing or otherwise disseminating a Notice to Contractors.

These organizations have indicated to the Commission that they serve subscribers or members in the counties listed to the right of each organization.

Organizations that meet criteria (a) and (b) above may be added to the list, or changes or corrections can be made to the list by contacting:

Office of the State Controller
Local Government Programs and Services Division
Local Government Policy Section
P. O. Box 942850
Sacramento, CA 94250

ORGANIZATION

AREAS OF MEMBERS OR SUBSCRIBERS

BY COUNTY
1 CMD (Construction Market Data)
Document Processing Center
30 Technology Parkway South, Suite 100
Norcross, GA 30092-2912
Phone: 800-424-3996
Email: [email protected]
Website www.cmdgroup.com
California
2 Construction Bidboard (Ebidboard)
11622 El Camino Real, #100
San Diego, CA 92130
Phone: 800-479-5314
Email: [email protected]
Website: www.ebidboard.com
California
3 Dodge Data & Analytics
830 Third Avenue, 6th Floor
New York, NY 10022
Phone: 877-784-9556
Email: [email protected]
Website: www.construction.com
California
4 Humboldt Builders’ Exchange, Inc.
1213 5th Street
Eureka, California 95501
Phone: 707-442-3708
Website: www.humbx.com
Del Norte, Humboldt, Lake, Mendocino, Shasta, and
Trinity
5 Shasta Builders’ Exchange
5800 Airport Road
Redding, CA 96002
Phone: 530-221-5556
Email: [email protected]
Website: www.shastabe.com
Butte, Colusa, Del Norte, Glenn, Humboldt, Lake,
Lassen, Modoc, Plumas, Sacramento, Shasta,
Siskiyou, Tehama, and Trinity

ORGANIZATION

AREAS OF MEMBERS OR SUBSCRIBERS

BY COUNTY
6 Valley Contractors Exchange, Inc.
951 East Eighth Street
Chico, CA 95928
Phone: 530-343-1981
Email: [email protected]
Website: www.vceonline.com
Butte, Colusa, Glenn, Plumas, Sutter, and Yuba
7 North Coast Builders Exchange
1030 Apollo Way
Santa Rosa, CA 95407
Phone: 707-542-9502
Fax: 707-542-2027
Website: www.ncbeonline.com
Lake, Marin, Mendocino, Napa, and Sonoma
8 Marin Builders Association
660 Las Gallinas Avenue
San Rafael, CA 94903
Phone: 415-462-1220
Fax: 415-462-1225
Email: [email protected]
Website: www.marinba.org
Alameda, Contra Costa, Lake, Los Angeles, Marin,
Mendocino, Napa, Sacramento, San Francisco, San
Joaquin, San Mateo, Santa Clara, Solano, Sonoma,
and Yolo
9 Solano-Napa Builders Exchange
135 Camino Dorado
Napa, CA 94558
Phone: 707-255-2515
Fax: 707-255-2749
Email: [email protected]
Website: http://snbe.org
Napa and Solano
10 Sacramento Regional Builders’ Exchange
1331 T Street
Sacramento, CA 95811
Phone: 916-442-8991
Fax: 916-446-3117
Email: [email protected]
Website: www.srbx.org
El Dorado, Nevada, Placer, Sacramento, Solano,
Sutter, Yolo, and Yuba
11 Placer County Contractors Association &
Builders Exchange
10656 Industrial Avenue, Suite 160
Roseville, CA 95678
Phone: 916-771-7229
Fax: 916-771-0556
Website: www.pccamembers.com
Alameda, Alpine, Amador, Butte, Calaveras, Colusa,
Contra Costa, Del Norte, El Dorado, Fresno, Glenn,
Humboldt, Lake, Lassen, Madera, Mariposa,
Mendocino, Merced, Modoc, Mono, Monterey,
Napa, Nevada, Placer, Plumas, Sacramento, San
Benito, San Francisco, San Joaquin, Santa Clara,

ORGANIZATION

AREAS OF MEMBERS OR SUBSCRIBERS

BY COUNTY
Shasta, Sierra, Siskiyou, Stanislaus, Solano, Sonoma,
Sutter, Tehama, Trinity, Tuolumne, Yolo, and Yuba
12 Nevada County Contractors’ Association
149 Crown Point Court
Grass Valley, CA 95945
Phone: 530-274-1919
Email: [email protected]
Website: www.nccabuildingpros.com
Butte, El Dorado, Glenn, Lassen, Nevada, Placer,
Plumas, Sacramento, Sierra, Sutter, Tehama, and
Yuba
13 El Dorado Builders’ Exchange
3430 Robin Lane, Suite 7
Shingle Springs, CA 95682
Phone: 530-672-2955
Amador, El Dorado, Nevada, Placer, Sacramento,
and Yolo
14 The San Francisco Builders Exchange
850 South Van Ness Avenue
San Francisco, CA 94110-1911
Phone: 415-282-8220
Email: [email protected]
Website: www.bxofsf.com
Alameda, San Francisco, San Mateo, and Santa Clara
15 Bay Area Builders Exchange
3055 Alvarado Street
San Leandro, CA 94577
Phone: 510-483-8880
Email: [email protected]
Website: www.bayareabx.com
Alameda, Contra Costa, San Francisco, San Mateo,
and Santa Clara
16 Bay Area Builders Exchange
2440 Stanwell Drive, Suite B
Concord, CA 94520
Phone: 925-685-8630
Website: www.bayareabx.com
Alameda, Contra Costa, El Dorado, Lake, Mendocino,
Napa, Placer, Sacramento, San Francisco, Santa
Clara, Solano, and Sonoma
17 Peninsula Builders Exchange
735 Industrial Road
San Carlos, CA 94070
Phone: 650-591-4486
Website: www.safetystar.org/safetystar
Alameda, Contra Costa, San Francisco, San Mateo,
and Santa Clara

ORGANIZATION

AREAS OF MEMBERS OR SUBSCRIBERS

BY COUNTY
18 Builders’ Exchange of Santa Clara County
400 Reed Street
Santa Clara, CA 95050
Phone: 408-727-4000
Fax: 408-727-2779
Website: www.bxscco.com
Alameda, Monterey, San Francisco, San Mateo,
Santa Clara, and Santa Cruz
19 Builders’ Exchange of Stockton
7500 West Lane
Stockton, CA 95210
Phone: 209-478-1000
Email: [email protected]
Website: www.besonline.com
Alameda, Calaveras, Contra Costa, Fresno, Madera,
Merced, Sacramento, San Joaquin, Solano, and
Stanislaus
20 Valley Builders Exchange, Inc.
1118 Kansas Avenue
Modesto, CA 95351
Phone: 209-522-9031
Email: [email protected]
Website: www.valleybx.com
Amador, Calaveras, Merced, San Joaquin, Stanislaus,
and Tuolumne
21 Builders Exchange of Merced & Mariposa
646 CA-HWY 59
Merced, CA 95341
Phone: 209-722-3612
Website: www.bxmm.org
Fresno, Kern, Kings, Madera, Mariposa, Merced, San
Joaquin, and Stanislaus
22 Central Coast Builders Association
242 East Romie Lane
Salinas, CA 93907
Phone: 831-758-1624
Email: [email protected]
Website: www.ccbabuilds.com
Monterey, San Benito, San Luis Obispo, and Santa
Cruz
23 Central California Builders Exchange
1244 N. Mariposa Street
Fresno, CA 93703
Phone: 559-237-1831
Email: [email protected]
Website: http://cencalbx.com/
Calaveras, Fresno, Kern, Kings, Madera, Mariposa,
Merced, San Joaquin, Stanislaus, Tulare, and
Tuolumne

ORGANIZATION

AREAS OF MEMBERS OR SUBSCRIBERS

BY COUNTY
24 Tulare & Kings Counties Builders Exchange
1223 S. Lovers Lane
Visalia, CA 93292
Phone: 559-732-4568
Email: [email protected]
Website: www.tkcbe.com
Fresno, Kern, Kings, and Tulare
25 Kern County Builders’ Exchange, Inc.
4310 Ardmore Avenue, Ste. 100
Bakersfield, CA 93309
Phone: 661-324-4921
Website: www.kcbex.com
Kern
26 San Luis Obispo County Builders Exchange
153 Cross Street, #130
San Luis Obispo, CA 93401
Phone: 805-543-7330
Email: [email protected]
Website: www.slocbe.com
Kern, Monterey, San Luis Obispo, and Santa Barbara
28 Ventura County Contractors Association
1830 Lockwood Street, No. 110
Oxnard, CA 93036
Phone: 805-981-8088
Email: [email protected]
Website: www.vccainc.com
Santa Barbara and Ventura
29 Southern California Builders Association
732 N. Diamond Bar Blvd. #224
Diamond Bar, CA 91765
Phone: 909-396-1451
Email: [email protected]
Website: www.socalbuilders.org
Imperial, Los Angeles, Orange, Riverside, San
Bernardino, and San Diego
30 Construction Data Company
2001 9th Avenue, 2nd Floor
Vero Beach, FL 32960
Phone: 800-800-652-0008
Email: [email protected]
Website: www.cdcnews.com
Southern California-Imperial, Kern , Los Angeles,
Orange, Riverside, San Bernardino, San Diego, San
Luis Obispo, Santa Barbara, and Ventura
31 BidAmerica
41085 Elm Street
Murrieta, CA 92562
Phone: 951-677-4819
Email: [email protected]
Website: www.BidAmerica.com
California

ORGANIZATION

AREAS OF MEMBERS OR SUBSCRIBERS

BY COUNTY
32 Construction Bid Source Interactive
6265 HWY 9
Felton, CA 95018
Phone: 888-786-9450
Website: www.constructionbidsource.com
California
33 Demandstar – Onvia Supplier Services
509 Olive Way, Suite 400
Seattle, WA 98101
Phone: 800-575-1736
Website: www.demandstar.com or
Website: www.onvia.com
California
34 Challenge News
1276 Lincoln Avenue, Suite 203
San Jose, CA 95125
Phone: 408-998-2534
Email: [email protected]
California
35 Associated General Contractors of America
San Diego Chapter, Inc.
6212 Ferris Square
San Diego, CA 92121
Phone: 858-558-7444
Email: [email protected]
Website: www.agcsd.org
Orange, Riverside, San Bernardino, and San Diego
36 Builders Notebook
P.O. Box 4883
Santa Barbara, CA 93140
Phone: 877-776-5436
Email: [email protected]
Website: www.buildersnotebook.com
Los Angeles, San Luis Obispo, Santa Barbara, and
Ventura
37 Tri-Co Reprographics
513 Laguna Street
Santa Barbara, CA 93101
Phone: 805-966-1701
Email: [email protected]
Website: www.tricoblue.com
Santa Barbara, Ventura, and San Luis Obispo
Accounting Procedures Review Process

1.08 Accounting Procedures Review
A. Pursuant to the provisions of Public Contract Code (PCC) §22042, the Commission has adopted the following procedures for conducting an Accounting Procedures Review, where an interested party presents evidence that work undertaken by a public agency falls within any of the following categories:

1. It was performed by a public agency after rejection of all bids, claiming work can be done less expensively by the public agency.

2. It exceeded the force account limit.

3. It was improperly classified as maintenance.

B. As used in the Accounting Procedures Review, "interested party" shall mean: a licensed contractor eligible to bid on the public project involved in the review; a labor organization whose members would be eligible to perform work on the public project if it were performed under contract; an association of licensed contractors and/or labor organizations; or a taxpayer of the public agency cited in the account review request.

C. Request for Accounting Procedures Review

1. Pursuant to PCC §22043(a)(b), in those circumstances as set forth in PCC §22042(a)(b)(c), a request for Commission review shall be in writing. The request shall be sent via certified or registered postal mail, and received by the Commission and/or State Controller’s Office (SCO) staff. It should be postmarked no later than eight business days from the date on which the public agency rejected all bids (PCC §22042(a)) or from the date on which an interested party formally complains in writing to the public agency (PCC §22042(b)(c)).

2. The address for purposes of requesting Commission review is:

CALIFORNIA UNIFORM CONSTRUCTION COST ACCOUNTING COMMISSION Office of the State Controller
Local Government Programs and Services Division
Local Government Policy Section
P.O. Box 942850
Sacramento, CA 94250

3. Such written notice from an interested party shall include the following information:
(a) The name, address, phone number, and contact person for the interested party. (b) An indication that work undertaken by the public agency falls within one of the following categories:
(i) It was performed by a public agency after rejection of all bids, claiming work can be done less expensively by the public agency.
(ii) It exceeded the force account limits.
(iii) It was improperly classified as maintenance.
(c) The name, address, and phone number of the public agency involved. (d) The project name and location, and/or project identification number. (e) The bid date and rejection date, if applicable.
(f) The low bid dollar amount, if applicable.
(g) The agency estimate, if available.
(h) Other documentation supporting the request. If the requestor is unable to obtain information from the participating agency, the request should note the fact and include an explanation of the circumstances.

4. When the request is transmitted to the Commission for review, the interested party shall mail a copy of the request by first class mail, postage prepaid, to the public agency involved.

D. The Commission shall approve and designate in writing the consultants available to perform the Accounting Procedures Review, if needed. Such consultants shall be prequalified as follows:

1. They shall submit resumes including experience to the Commission for prequalification.

2. Each applicant shall have at least five years’ experience with, and be knowledgeable of, public works construction or accounting under contracts let by public agencies.

3. They shall submit their schedule of fees required to perform such service.

E. Immediately upon receipt of a request for Accounting Procedures Review, SCO staff will forward all documentation to the Chairperson. The Chairperson shall assign the request to a working group consisting of two or more Commissioners, not to constitute a quorum. Each working group must have both private and public representations. Any correspondence received by SCO staff during the review will be immediately forwarded to the Chairperson and the members of the working group.

1. The working group may contact either the interested party or the signatory agency involved for additional information. They may also request a statement of the public agency’s position regarding the claim being set forth. Participating agencies are required to cooperate with any account reviews pursuant to this Act. Agencies failing to cooperate fully, through either unwillingness or inability, may be found to be non-compliant.

2. If the work group deems it necessary, it may use SCO Audit Division staff or a consultant deemed qualified for the purpose of this review. The auditor or consultant will conduct a thorough review of the facts surrounding the claim. This review may include any fieldwork deemed necessary by the auditor or consultant. The auditor or consultant shall interview the public agency involved, and submit as a part of the findings a complete statement of the public agency’s position regarding the review being conducted.

3. The auditor or consultant, if involved, shall prepare written findings and a recommended decision within the timeframes established in PCC §22043.

4. The statutory limit to complete the account review begins on the day that the request is received by SCO. Incomplete review requests may affect the ability of the Commission to render a timely decision.

Pursuant to PCC §22043(c), the commission review shall commence immediately and conclude within the following number of days from the receipt of the request for commission review:
(a) Forty-five days for a review that falls within subdivision (a) of §22042; and (b) Ninety days for a review that falls within subdivision (b) or (c) of §22042.

During the review of a project that falls within PCC §22042(a), the agency shall not proceed with the project until the final decision is received by the Commission.

F. The review will be added as an agenda item to be discussed by the Commission at a public meeting held within the timeframe established in PCC §22043. All documentation and correspondence received related to the review will be included. Any documentation and correspondence received after the agenda has been posted to the SCO website will immediately be forwarded to each Commission member and available for public review at the meeting.

G. The Commission shall review the findings of the work group and, if applicable, the auditor or consultant’s report, and render its final decision within the timeframes established in PCC §22043. Within the timeframes established in PCC §22044, a copy of the decision shall be mailed by first class mail, postage prepaid, by SCO staff to the interested party and the public agency involved. A copy shall also be provided to each Commission member and included for information as part of the subsequent Commission meeting agenda.

H. Decisions on Accounting Procedures Reviews shall be collected and maintained by SCO staff, and shall be available for public inspection during regular working hours. Such decisions may be cited and relied upon by interested parties and public agencies in subsequent reviews.

I. If the Commission makes findings in accordance with PCC §22043, that the work undertaken by a public agency falls within any of the categories described in §22042, on three separate occasions within a 10-year term, the Commission shall notify the public agency of those findings in writing by certified mail. Public agencies that receive notice of findings on three separate occasions within a 10-year term shall not use the bidding procedures provided by this article for five years from the date of the Commission’s findings contained in the third notice within a 10-year term. For the purposes of these review procedures, one investigation resulting in a finding or findings shall equate to one occasion. These review procedures are based on current statutory law.

J. Changes to statutory law shall be reviewed and automatically adopted into these procedures as deemed appropriate.

Uniform Public Construction Cost Accounting Act

1.09 California Public Contract Code
Chapter 2 Bidding on Public Contracts (The following statute is current as of January 1, 2017) Article 1. Legislative Intent and Definitions.

Code Statute
22000
Name of the Act
This chapter shall be known and may be cited as the "Uniform Public Construction Cost Accounting Act."
22001
Legislative Findings
and Declaration
The Legislature finds and declares that there is a statewide need to promote uniformity of the cost accounting standards and bidding procedures on construction work performed or contracted by public entities in the state. This chapter provides for the development of cost accounting standards and an alternative method for the bidding of public works projects by public entities.
22001.5
Notice describing
chapter provisions
to public agencies
On or before January 1, 2009, the State Controller shall send a notice to all public agencies describing the provisions of this chapter and the benefits of using its provisions. This notice shall also be included in any notification issued by the State Controller pursuant to Section 22020.
22002
Definitions
a) "Public agency" for purposes of this chapter, means a city, county, city and county, including chartered cities and chartered counties, any special district, and any other agency of the state for the local performance of governmental or proprietary functions within limited boundaries. "Public agency" also includes a nonprofit transit corporation wholly owned by a public agency and formed to carry out the purposes of the public agency.
b) "Representatives of the construction industry" for purposes of this chapter, means a general contractor, subcontractor, or labor representative with experience in the field of public works construction.
c) "Public project" means any of the following:
1) Construction reconstruction, erection, alteration, renovation, improvement, demolition, and repair work involving any publicly owned, leased, or operated facility.
2) Painting or repainting of any publicly owned, leased, or operated facility. 3) In the case of a publicly owned utility system, “public project” shall include only the construction erection, improvement, or repair of dams, reservoirs, powerplants, and electrical transmission lines of 230,000 volts and higher. d) "Public project" does not include maintenance work. For purposes of this section, "maintenance work" includes all of the following:
1) Routine, recurring, and usual work for the preservation or protection of any publicly owned or publicly operated facility for its intended purposes. 2) Minor repainting.

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3) Resurfacing of streets and highways at less than one inch. 4) Landscape maintenance, including mowing, watering, trimming, pruning, planting, replacement of plants, and servicing of irrigation and sprinkler systems.
5) Work performed to keep, operate, and maintain publicly owned water, power, or waste disposal systems, including, but not limited to, dams, reservoirs, powerplants, and electrical transmission lines of 230,000 volts and higher. e) For purposes of this chapter, “facility” means any plant, building, structure, ground facility, utility system, subject to the limitation found in paragraph (3) of subdivision (c), real property, streets and highways, or other public work improvement. 22003
Public Agency
Subject to Uniform
Cost Accounting
Procedures,
Bidding Procedures
A public agency which has, by resolution, elected to become subject to the uniform construction cost accounting procedures set forth in Article 2 (commencing with Section 22010), may utilize the bidding procedures set forth in Article 3 (commencing with Section 22030) when contracting for "maintenance work," as defined in Section 22002, or when contracting for any other work which does not fall within the definition of "public project," as defined in Section 22002.

Article 2. California Uniform Construction Cost Accounting Commission Code Statute
22010
Creation;
Membership;
Appointment
There is hereby created the California Uniform Construction Cost Accounting Commission. The commission is comprised of 14 members.
a) Thirteen of the members shall be appointed by the State Controller as follows:
1) Two members who shall each have at least 10 years of experience with, or providing professional services to, a general contracting firm engaged, during that period, in public works construction in California. 2) Two members who shall each have at least 10 years of experience with, or providing professional services to, a firm or firms engaged, during that period, in subcontracting for public works construction in California. 3) Two members who shall each be a member in good standing of, or have provided professional services to, an organized labor union with at least 10 years of experience in public works construction in California. 4) Seven members who shall each be experienced in, and knowledgeable of, public works construction under contracts let by public agencies; two each representing cities, counties, respectively, and two members representing school districts, and one member representing a special district. At least one of the two county representatives shall be a county auditor or his or her designee.

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b) The member of the Contractors' State License Board who is a general engineering contractor as that term is defined in Section 7056 of the Business and Professions Code shall serve as an ex officio voting member.
(Amended by Stats. 2015, Ch. 269, Sec. 24. Effective January 1, 2016.) 22011
Appointment
Recommendations
The Controller, in an effort to select highly qualified commission members, shall solicit from organized representatives of the construction industry and public agencies recommendations for appointments to the commission.
22012
Members;
Accounting
Experience
At least one commission member of the seven representing the construction industry and at least one of the seven representing public agencies shall have previous accounting experience.
22013
Chairperson; Term
The commission members shall select a chairperson from among its membership. The chairperson shall serve as chair for a term of two years from the date of selection. In no event shall two consecutive chairpersons be appointees representing either the construction industry or public agencies.
22014
Members; Term;
Vacancies
a) The members of the commission shall hold office for terms of three years, and until their successors are appointed.
b) Members may be reappointed, by the Controller, for subsequent terms of three years.
c) The Controller may appoint a successor for any commissioner after his or her three-year term expires.
d) The Controller shall, within 120 days, appoint a replacement to fill any vacancy on the commission.
(Amended by Stats. 2015, Ch. 269, Sec. 25. Effective January 1, 2016.) 22015
Staff; Members’
Compensation;
Grants
a) The Controller shall make available for the conduct of the commission's business, such staff and other support as does not conflict with the accomplishment of the other business of the office of the Controller
b) Each member of the commission shall serve without compensation, but shall be reimbursed for travel and other expenses necessarily incurred in the performance of the member's duties. Reimbursement rates shall conform to the Controller’s travel guideline rates.
c) The commission may accept grants from federal, state, or local public agencies, or from private foundations or individuals, in order to assist it in carrying out its duties, functions, and powers under this chapter.
(Amended by Stats. 2015, Ch. 269, Sec. 26. Effective January 1, 2016.) 22016
Meetings
The commission shall meet not less than once each year, at a time and place chosen by its membership.

Code Statute
22017
The Commission’s
Four Principle
Duties
The commission shall do all of the following:
a) After due deliberation and study, recommend for adoption by the Controller, uniform construction cost accounting procedures for implementation by public agencies in the performance of, or in contracting for, construction on public projects. The procedures shall, to the extent deemed feasible and practicable by the commission, incorporate, or be consistent with construction cost accounting procedures and reporting requirements utilized by state and federal agencies on public projects, and be uniformly applicable to all public agencies that elect to utilize the uniform procedures. As part of its deliberations and review, the commission shall take into consideration relevant provisions of the Office of Management and Budget Circular A-76, as periodically revised. b) After due deliberation and study, recommend for adoption by the Controller cost accounting procedures designed especially for implementation by California cities with a population of less than 75,000. The procedures shall incorporate cost accounting and reporting requirements deemed practicable and applicable to all cities under 75,000 population which elect to utilize the uniform procedures. For the purpose of these cost accounting procedures, the following shall apply:
1) Cities with a population of less than 75,000 shall assume an overhead rate equal to 20 percent of the total costs of a public project, including the costs of material, equipment, and labor.
2) Cities with a population of more than 75,000 may either calculate an actual overhead rate or assume an overhead rate equal to 30 percent of the total costs of a public project, including the costs of material, equipment, and labor.
c) Recommend for adoption by the Controller, procedures and standards for the periodic evaluation and adjustment, as necessary, of the monetary limits specified in Section 22032.
d) The commission shall make an annual report to the Legislature with respect to its activities and operations, together with those recommendations as it deems necessary.
(Amended by Stats. 2015, Ch. 269, Sec. 27. Effective January 1, 2016.) 22018
Recommended
Procedure;
Controller’s Review
The Controller shall, upon receipt of the commission’s recommendations, review and evaluate the recommended procedures and either formally adopt or reject the recommended procedures within 90 days of submission by the commission. 22019
Adoption;
Promulgation of
Uniform Procedure
Upon determining that the recommended uniform construction cost accounting procedures will serve the best interest of the state and public agencies, and upon formal adoption by the Controller, the Controller shall promulgate the uniform procedure for all public agencies electing to participate, together with instructions for their adoption and implementation by any public agency.

Code Statute
22020
Five Year
Consideration;
Material Changes;
Adjustments
In accordance with procedures and standards adopted pursuant to Section 22017, every five years the commission shall consider whether there have been material changes in public construction costs and make recommendations to the Controller regarding adjustments in the monetary limits prescribed by Section 22032, but in no case shall the amount, as adjusted, be less than fifteen thousand dollars ($15,000).

The Controller shall notify all participating public agencies of the adjustment prior to the effective date. That notification shall also describe the provisions of this chapter and the benefits of using its provisions.

Article 3. Public Projects; Alternative Procedures
Code Statute
22030
Application of
Article
a) This article applies only to a public agency whose governing board has by resolution elected to become subject to the uniform construction cost accounting procedures set forth in Article 2 (commencing with Section 22010) and which has notified the Controller of that election. In the event of a conflict with any other provision of law relative to bidding procedures, this article shall apply to any public agency which has adopted a resolution and so notified the Controller. b) A county, whether general law or charter, containing a population of less than 500,000 may award individual annual contracts as provided in Section 20128.5. (Amended by Stats. 2015, Ch. 269, Sec 28. Effective January 1, 2016) 22031
Alternative
Procedures
a) Prior to January 1, 2013, this article shall not prohibit a board of supervisors or a county road commissioner from utilizing, as an alternative to the procedures set forth in this article, the procedures set forth in Article 25 (commencing with Section 20390) of Chapter 1.
b) On or after January 1, 2013, this article shall not prohibit a board of supervisors or a county road commissioner from utilizing, as an alternative to the procedures set forth in this article, the procedures set forth in Article 25 (commencing with Section 20390) of Chapter 1 for both of the following:
1) Maintenance and emergency work.
2) New road construction and road reconstruction as long as the total value of the new road construction and the road reconstruction performed under the procedures set forth in subdivision (c) of Section 20395 during a fiscal year does not exceed 30 percent of the total value of all work performed by force account other than maintenance as reported in the Controller’s Streets and Roads Annual Report as of March 1 of each year prior to the fiscal year. c) The value of force account work necessary to facilitate capital projects for the purpose of contracting to the private sector, including design, engineering, inspection, testing, and other force account work necessary to administer private contracts, shall be excluded from the 30-percent limit in subdivision (b).

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d) The value of force account work necessary to facilitate projects performed by county employees, including design, engineering, inspection, testing, and other force account work necessary to administer work performed under subdivision (b), shall apply to the 30-percent limit in subdivision (b). e) On or after January 1, 2013, for a county with a population of less than 50,000, this article shall not prohibit a board of supervisors or a county road commissioner from utilizing, as an alternative to the procedures set forth in this article, the procedures set forth in Article 25 (commencing with Section 20390) of Chapter 1. f) The requirements set forth in Section 22038 shall apply to any county subject to this section.
g) Any county board of supervisors or county road commissioner acting pursuant to the authority granted in paragraph (2) of subdivision (b) shall publicly declare its intention to use this authority prior to commencing work. The public declaration may be on a project-by-project basis, via a list of anticipated projects for the fiscal year, or via a list that may be included in the county’s annual budget. (Amended by Stats. 2014, Ch. 345, Sec. 3. Effective January 1, 2015.) 22032
Contracting
Procedures; Dollar
Amount
Limitations
a) Public projects of sixty thousand dollars ($60,000) or less may be performed by the employees of a public agency by force account, by negotiated contract, or by purchase order.
b) Public projects of two hundred thousand dollars ($200,000) or less may be let to contract by informal procedures as set forth in this article. c) Public projects of more than two hundred thousand dollars ($200,000) shall, except as otherwise provided in this article, be let to contract by formal bidding procedure. 76 Op. Atty. Gen. 126,7-14-93 = Job order contracts - General law county or general law city may not enter into a "job order contract" in excess of $50,000 for the performance of public projects involving minor construction, and the renovation, alteration, painting, and repair of existing facilities, except under narrowly defined statutory conditions applicable only to counties.
22033
Separation of Work
orders of Projects;
Evasion of
Provision of Article
It shall be unlawful to split or separate into smaller work orders or projects any project for the purpose of evading the provisions of this article requiring work to be done by contract after competitive bidding.
22034
Informal Bidding
Ordinance
Each public agency that elects to become subject to the uniform construction accounting procedures set forth in Article 2 (commencing with Section 22010) shall enact an informal bidding ordinance to govern the selection of contractors to perform public projects pursuant to subdivision (b) of Section 22032. The ordinance shall include all of the following:
a) Notice to contractors shall be provided in accordance with either paragraph (1) or (2), or both.

Code Statute
1) The public agency shall maintain a list of qualified contractors, identified according to categories of work. Minimum criteria for development and maintenance of the contractors list shall be determined by the commission.

All contractors on the list for the category of work being bid shall be mailed, faxed, or emailed a notice inviting informal bids unless the product or service is proprietary. All mailing of notices to contractors pursuant to this subdivision shall be completed not less than 10 calendar days before bids are due. 2) The public agency may elect to mail, fax, or email a notice inviting informal bids to all construction trade journals specified in Section 22036. b) The notice inviting informal bids shall describe the project in general terms and how to obtain more detailed information about the project, and state the time and place for the submission of bids.
c) The governing body of the public agency may delegate the authority to award informal contracts to the public works director, general manager, purchasing agent, or other appropriate person.
d) If all bids received are in excess of two hundred thousand dollars ($200,000), the governing body of the public agency may, by adoption of a resolution by a fourfifths vote, award the contract, at two hundred twelve thousand, five hundred dollars ($212,500) or less, to the lowest responsible bidder, if it determines the cost estimate of the public agency was reasonable.
(Amended by Stats. 2015, Ch. 269, Sec. 29. Effective January 1, 2016.) 22035
Emergencies
a) In cases of emergency when repair or replacements are necessary, the governing body may proceed at once to replace or repair any public facility without adopting plans, specifications, strain sheets, or working details, or giving notice for bids to let contracts. The work may be done by day labor under the direction of the governing body, by contractor, or by a combination of the two.
b) In case of an emergency, if notice for bids to let contracts will not be given, the public agency shall comply with Chapter 2.5 (commencing with Section 22050). 22035.5
Overcrowded
Justice Facilities;
Court Ordered
Relief; Application
of Section 22034
In counties that are under court order to relieve justice facility overcrowding, the procedures and restrictions specified in Section 20134 shall apply to all contracts issued under this chapter.
22036
Determination of
Construction Trade
Journals to Receive
Notice of Informal
and Formal
The commission shall determine, on a county-by-county basis, the appropriate construction trade journals which shall receive mailed, faxed, or emailed notice of all informal and formal construction contracts being bid for work within the specified county.

Code Statute
Construction
Contracts (Amended by Stats. 2015, Ch. 269, Sec. 30. Effective January 1, 2016.) 22037
Notice Inviting
Formal Bids;
Information;
Publication
Notice inviting formal bids shall state the time and place for the receiving and opening of sealed bids and distinctly describe the project. The notice shall be published at least 14 calendar days before the date of opening the bids in a newspaper of general circulation, printed and published in the jurisdiction of the public agency; or, if there is no newspaper printed and published within the jurisdiction of the public agency, in a newspaper of general circulation which is circulated within the jurisdiction of the public agency, or, if there is no newspaper which is circulated within the jurisdiction of the public agency, publication shall be by posting the notice in at least three places within the jurisdiction of the public agency as have been designated by ordinance or regulation of the public agency as places for the posting of its notices. The notice inviting formal bids shall also be sent electronically, if available, by either facsimile or electronic mail and mailed to all construction trade journals specified in Section 22036. The notice shall be sent at least 15 calendar days before the date of opening the bids. In addition to notice required by this section, the public agency may give such other notice as it deems proper.
22038
Rejection of Bids;
Failure to Receive
Bids; Options
a) In its discretion, the public agency may reject any bids presented, if the agency prior to rejecting all bids and declaring that the project can be more economically performed by employees of the agency, furnishes a written notice to an apparent low bidder. The notice shall inform the bidder of the agency's intention to reject the bid and shall be mailed at least two business days prior to the hearing at which the agency intends to reject the bid. If after the first invitation for bids all bids are rejected, after reevaluating its cost estimates of the project, the public agency shall have the option of either of the following:
1) Abandoning the project or readvertising for bids in the manner described by this article.
2) By passage of a resolution by a four-fifths vote of its governing body declaring that the project can be performed more economically by the employees of the public agency, may have the project done by force account without further complying with this article.
b) If a contract is awarded, it shall be awarded to the lowest responsible bidder. If two or more bids are the same and the lowest, the public agency may accept the one it chooses.
c) If no bids are received through the formal or informal procedure, the project may be performed by the employees of the public agency by force account, or negotiated contract without further complying with this article. (Amended by Stats. 2003, Ch. 296, Sec. 29. Effective January 1, 2004.)

Code Statute
22039
Adoption of Plans,
Specifications, and
Working Detail
The governing body of the participating public agency or its designated representative shall adopt plans, specifications, and working details for all public projects exceeding the amount specified in subdivision (c) of Section 22032. (Amended by Stats. 2015, Ch. 269, Sec. 31. Effective January 1, 2016.) 22040
Plans,
Specifications of
Working Details;
Examination
Any person may examine the plans, specifications, or working details, or all of these, adopted by the public agency for any project.
22041
Exemptions
This article does not apply to the construction of any public building used for facilities of juvenile forestry camps or juvenile homes, ranches, or camps established under Article 15 (commencing with Section 880) of Chapter 2 of Part 1 of Division 3 of the Welfare and Institutions Code, if a major portion of the construction work is to be performed by wards of the juvenile court assigned to those camps, ranches, or homes. 22042
Accounting
Procedures Review
The commission shall review the accounting procedures of any participating public agency where an interested party presents evidence that the work undertaken by the public agency falls within any of the following categories:
a) Is to be performed by a public agency after rejection of all bids, claiming work can be done less expensively by the public agency.
b) Exceeded the force account limits.
c) Has been improperly classified as maintenance.
22042.5
Informal Bidding
Procedures Review
The commission shall review practices of any participating public agency where an interested party presents evidence that the public agency is not in compliance with Section 22034.
(Added by Stats. 2015, Ch. 269, Sec. 32. Effective January 1, 2016.) 22043
Work Done by
Public Agency;
Commission
Review Request
a) In those circumstances set forth in subdivision (a) of Section 22042, a request for commission review shall be in writing, sent by certified or registered mail received by the commission postmarked not later than eight business days from the date the public agency has rejected all bids.
b) In those circumstances set forth in subdivision (b) or (c) of Section 22042, a request for commission review shall be by letter received by the commission not later than eight days from the date an interested party formally complains to the public agency.
c) The commission review shall commence immediately and conclude within the following number of days from the receipt of the request for commission review:
1) Forty-five days for a review that falls within subdivision (a) of Section 22042. 2) Ninety days for a review that falls within subdivision (b) or (c) of Section 22042.

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d) During the review of a project that falls within subdivision (a) of Section 22042, the agency shall not proceed on the project until a final decision is received by the commission.
e) A request for commission review pursuant to Section 22042.5 shall be in writing, sent by certified or registered mail, and received by the commission no later than eight days from the day an interested party formally complains to the public agency. The commission review shall commence immediately and conclude within 90 days from the receipt of the request for commission review. (Amended by Stats. 2015, Ch. 269, Sec. 33. Effective January 1, 2016.) 22044
Written Findings;
Failure to Comply
with Chapter;
Action
The commission shall prepare written findings, which shall be presented to the public agency within 30 calendar days of formal commission review. Should the commission find that the provisions of this chapter or of the uniform cost accounting procedures provided for in this chapter were not complied with by the public agency, the following steps shall be implemented by that agency:
a) On those projects set forth in subdivision (a) of section 22042, the public agency has the option of either (1) abandoning the project, or (2) awarding the project to the lowest responsible bidder.
b) On those projects set forth in subdivision (b) or (c) of section 22042, the public agency shall present the commission’s findings to its governing body within 30 calendar days of receipt of written notice of the findings and that governing body shall conduct a public hearing with regard to the commission’s findings within 60 calendar days of receipt of the findings.
c) 1) On findings of noncompliance pursuant to section 22042.5, the public agency shall notify its governing body of the commissioner’s findings within 60 calendar days of receipt of written notice of the findings from the commission. 2) The public agency shall notify the commission in writing, within 90 days of receipt of written notice of the findings, of the public agency’ best efforts to comply.
(Amended by Stats. 2015, Ch. 269, Sec. 34. Effective January 1, 2016.) 22044.5
Compliance;
Removal from Act
If the commission makes a finding, in accordance with section 22043, on three separate occasions within a 10-year period, that the work undertaken by a public agency falls within any of the categories described in section 22042, the commission shall notify the public agency of that finding in writing by certified mail and the public agency shall not use the bidding procedures provided by this article for five years from the date of the commission’s findings.
(Amended by Stats. 2015, Ch. 269, Sec. 34. Effective January 1, 2016.) 22045
Implementation of
Procedures
a) No later than January 1, 1985, the commission shall recommend, for adoption by the Controller, written procedures implementing the accounting procedures review provided for in this article.

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Review:

Commission
Recommendations
b) The Controller shall, upon receipt of the commission’s recommendation, review and evaluate the recommended procedures and either formally adopt or reject the recommended procedures within 90 days of submission of the commission.

Chapter 2.5 Emergency Contracting Procedures
Code Statute
22050
Contract Without
Bids; Procedures
a) 1) In the case of an emergency, a public agency, pursuant to a four-fifths vote of its governing body, may repair or replace a public facility, take any directly related and immediate action required by that emergency, and procure the necessary equipment, services, and supplies for those purposes, without giving notice for bids to let contracts.
2) Before a governing body takes any action pursuant to paragraph (1), it shall make a finding, based on substantial evidence set forth in the minutes of its meeting, that the emergency will not permit a delay resulting from a competitive solicitation for bids, and that the action is necessary to respond to the emergency.
b) 1) The governing body, by a four-fifths vote, may delegate, by resolution or ordinance, to the appropriate county administrative officer, city manager, chief engineer, or other nonelected agency officer, the authority to order any action pursuant to paragraph (1) of subdivision (a).
2) If the public agency has no county administrative officer, city manager, chief engineer, or other nonelected agency officer, the governing body, by a fourfifths vote, may delegate to an elected officer the authority to order any action specified in paragraph (1) of subdivision (a).
3) If a person with authority delegated pursuant to paragraph (1) or (2) orders any action specified in paragraph (1) of subdivision (a), that person shall report to the governing body, at its next meeting required pursuant to this section, the reasons justifying why the emergency will not permit a delay resulting from a competitive solicitation for bids and why the action is necessary to respond to the emergency.
c) 1) If the governing body orders any action specified in subdivision (a), the governing body shall review the emergency action at its next regularly scheduled meeting and, except as specified below, at every regularly scheduled meeting thereafter until the action is terminated, to determine, by a four-fifths vote, that there is a need to continue the action. If the governing body meets weekly, it may review the emergency action in accordance with this paragraph every 14 days.
2) If a person with authority delegated pursuant to subdivision (b) orders any action specified in paragraph (1) of subdivision (a), the governing body shall initially review the emergency action not later than seven days after the action, or at its next regularly scheduled meeting if that meeting will occur not later than 14 days after the action, and at least at every regularly scheduled meeting

Code Statute
thereafter until the action is terminated, to determine, by a four-fifths vote, that there is a need to continue the action, unless a person with authority delegated pursuant to subdivision (b) has terminated that action prior to the governing body reviewing the emergency action and making a determination pursuant to this subdivision. If the governing body meets weekly, it may, after the initial review, review the emergency action in accordance with this paragraph every 14 days.
3) When the governing body reviews the emergency action pursuant to paragraph (1) or (2), it shall terminate the action at the earliest possible date that conditions warrant so that the remainder of the emergency action may be completed by giving notice for bids to let contracts.
d) As used in this section, “public agency” has the same meaning as defined in Section 22002.
e) A three-member governing body may take actions pursuant to subdivision (a), (b), or (c) by a two-thirds vote.
f) This section applies only to emergency action taken pursuant to Sections 20133, 20134, 20168, 20193, 20205.1, 20213, 20223, 20233, 20253, 20273, 20283, 20293, 20303, 20313, 20331, 20567, 20586, 20604, 20635, 20645, 20685, 20736, 20751.1, 20806, 20812, 20914, 20918, 20926, 20931, 20941, 20961, 20991, 21020.2, 21024, 21031, 21043, 21061, 21072, 21081, 21091, 21101, 21111, 21121, 21131, 21141, 21151, 21161, 21171, 21181, 21191, 21196, 21203, 21212, 21221, 21231, 21241, 21251, 21261, 21271, 21290, 21311, 21321, 21331, 21341, 21351, 21361, 21371, 21381, 21391, 21401, 21411, 21421, 21431, 21441, 21451, 21461, 21472, 21482, 21491, 21501, 21511, 21521, 21531, 21541, 21552, 21567, 21572, 21581, 21591, 21601, 21618, 21624, 21631, 21641, and 22035.

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CHAPTER 2 THE UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING ACT Table of Contents
The Uniform Public Construction Cost Accounting Act………………………………..………………………………………………….38

2.01 The Uniform Public Construction Cost Accounting Act...................................................................... 38

2.02 Public Agency ..................................................................................................................................... 38

2.03 Public Project...................................................................................................................................... 38

2.04 Exemptions......................................................................................................................................... 38

2.05 Bid Limitations.................................................................................................................................... 39

2.06 Award of Bid....................................................................................................................................... 39 California Uniform Construction Cost Accounting Commission…………………….………………………………..……………….40

2.07 California Uniform Construction Cost Accounting Commission ........................................................ 40

2.08 Implementation.................................................................................................................................. 40

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CHAPTER 2 THE UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING ACT Uniform Public Construction Cost Accounting Act

2.01 The Uniform Public Construction Cost Accounting Act As specified in the State of California Public Contract Code, all governmental jurisdictions are limited to the dollar amount of public project work that can be performed using internal resources. The jurisdictions are further required to follow various bidding procedures in undertaking construction work performed or contracted in the jurisdiction. The passage of Chapter 1054, Statues of 1983, Uniform Public Construction Cost Accounting Act (Act), and subsequent amendments provides for alternative bidding procedures by public agencies in undertaking public project work, provided they subscribe to uniform construction cost accounting policies and procedures developed in accordance with the law.

The purpose of this document is to give public agencies those construction cost accounting policies and procedures required in accordance with this above-mentioned legislation. To assist in understanding these policies and procedures, we have provided examples throughout the manual. These examples are for illustrative purposes only and, although they may be used, should not be considered required formats for public agencies operating under this program.

2.02 Public Agency
Public Contract Code section 22002(a) provides the definition of a public agency for the purposes of the Act.

Public agencies are cities, counties, a city and county, chartered cities and chartered counties, any special district and any other agency of the state responsible for the local performance of governmental or proprietary functions within limited boundaries. Public agency includes a nonprofit transit corporation wholly owned by a public agency and formed to carry out the purposes of the public agency.

2.03 Public Project
As defined in Public Contract Code section 22002(c), all public projects performed by public agencies may include:
 Construction, reconstruction, erection, alteration, renovation, improvement, demolition and repair work involving any publicly owned, leased or operated facility.  Painting or repainting of any publicly owned, leased or operated facility.  In the case of publicly owned utility system, construction, erection, improvement or repair of dams, reservoirs, power plants and electrical transmission lines of 230,000 volts and higher.

2.04 Exemptions
Construction of any public building used for facilities of juvenile forestry camps or juvenile homes, ranches, or camps established under Article 15 (commencing with section 880) of Chapter 2 of Part 1 of Division 2 of the Welfare and Institutions Code, if a major portion of the construction work is to be performed by wards of the juvenile court assigned to those camps, ranches or homes, is exempt from the provisions of the Act.

In addition, in cases of great emergency, as determined by the governing body of the public agency, including, but not limited to, states of emergency defined in Government Code section 8558. When repair or replacements are necessary to permit the continued conduct of the operation or services of a public agency or to avoid danger to life or property. The governing body by majority vote, may proceed at once to replace or repair any public facility without adopting plans, specifications, strain sheets, or working details, or giving notice for bids to let contracts. The work may be done by day labor under the direction of the governing body, by

contract, or by a combination of the two. The governing body, by majority vote, may delegate to the appropriate county administrative officer or city manager the power to declare a public emergency subject to confirmation by the governing body, by a four-fifths vote, at its next meeting.

2.05 Bid Limitations
For those agencies whose governing board has by resolution elected to become subject to the uniform construction cost accounting policies and procedures and which have notified the State Controller of that election, the following bid limitations will be in effect pursuant to Public Contract Code section 22032 and 22034(d):
 Public projects of $60,000 or less may be performed by the employees of a public agency by force account (for definition see page 39 section 2.2), by negotiated contract, or by purchase order.  Public projects of $200,000 or less may be let to contract by informal procedures as set forth in this legislation.
 Public projects of more than $200,000 shall, except as otherwise provided in this legislation, be let to contract by formal bidding procedures.
 If all bids received are in excess of $200,000, the governing body of the public agency may by adoption of a resolution by a four-fifths vote, award the contract, at $212,500 or less, to the lowest responsible bidder, if it determines the cost estimate of the public agency was reasonable.

2.06 Award of Bid
Public Contract Code section 22038 allows the public agency in its discretion to reject any bids presented. If the agency prior to rejecting all bids and declaring that the project can be more economically performed by employees of the agency provides a written notice to an apparent low bidder that:
 Informs the lowest responsible bidder of the agency’s intention to reject the bid.  Is mailed to at least two business days prior to the hearing at which the agency intends to reject the bid.

If after opening bids all bids are rejected, the public agency shall have the option, after reevaluating its cost estimates of the project, of one of the following:
 The public agency may abandon the project or re-advertise for bids in the manner described by this legislation; or
 By passage of a resolution by a four-fifths majority of its governing body declaring that its employees can perform the project more economically, the public agency may have the project done by force account without further complying with this legislation.

If a contract is awarded, it shall be awarded to the lowest bidder. If two or more bids are the same as the lowest, the public agency may accept the one it chooses.

If no bids are received, the project may be performed by employees of the public agency by force account or by informal bidding procedures set forth in section 22034 of the Public Contract Code.

California Uniform Construction Cost Accounting Commission

2.07 California Uniform Construction Cost Accounting Commission Chapter 1054, Statutes of 1983, created the California Uniform Construction Cost Accounting Commission (CUCCAC or the Commission). The Commission is comprised of 14 members, 13 members are appointed by the State Controller and one member of the Contractors’ State License Board pursuant to section 22010 of the Public Contract Code.
a) Thirteen of the members shall be appointed by the Controller as follows:
1) Two members who shall each have at least 10 years of experience with, or providing professional services to, a general contracting firm engaged, during that period, in public works construction in California.
2) Two members who shall each have at least 10 years of experience with, or providing professional services to, a firm or firms engaged, during that period, in subcontracting for public works construction in California.
3) Two members who shall each be a member in good standing of, or have provided professional services to, an organized labor union with at least 10 years of experience in public works construction in California.
4) Seven members who shall each be experienced in, and knowledgeable of, public works construction under contracts let by public agencies; two each representing cities, counties, respectively, and two members representing school districts, and one member representing a special district. At least one of the two county representatives shall be a county auditor or his or her designee. b) The member of the Contractors’ State License Board who is a general engineering contractor as that term is defined in Section 7056 of the Business and Professions Code shall serve as an ex officio voting member.

2.08 Implementation
The public agency must perform several administrative steps to comply and elect into the law. The major steps include:
 Adopting a resolution electing to become subject to the Act.  Adopting ordinances or regulations providing informal bidding procedures as required by the law.  Notifying the State Controller of the election.
 Complying with the cost accounting construction policies and procedures presented in this manual.

The Commission shall review the accounting procedures of any participating agency where an interested party presents evidence that the work undertaken by the public agency falls within any of the following categories stated in Public Contract Code section 22042:
 Is to be performed by a public agency after rejection of all bids, claiming work can be done less expensively by the public agency.
 Exceeded the force account limits.
 Has been improperly classified as maintenance.

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CHAPTER 3 UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING POLICIES

AND PROCEDURES
Table of Contents
Uniform Public Construction Cost Accounting Policies and Procedures ..............................................................44

3.01 CUCCAC Philosophy............................................................................................................................ 44

3.02 Applicable Projects............................................................................................................................. 44

3.03 Definitions.......................................................................................................................................... 45

3.04 Public Agency Organization Structure................................................................................................ 46

3.05 Classification of Costs......................................................................................................................... 46

3.06 Direct Costs ........................................................................................................................................ 47

3.07 Indirect Costs...................................................................................................................................... 49

3.08 Overhead Costs .................................................................................................................................. 49

3.09 Project Identification.......................................................................................................................... 50

3.10 Project Tracking.................................................................................................................................. 50

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CHAPTER 3 UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING POLICIES

AND PROCEDURES
Uniform Public Construction Cost Accounting Policies and Procedures The California Uniform Construction Cost Accounting Commission (CUCCAC) is responsible for reviewing and developing uniform public construction cost accounting policies and procedures to be followed by public agencies electing to participate in the program. This section of the manual discusses the Commission’s basic philosophy and intent in developing these cost accounting policies and procedures, the range of public construction projects that may be undertaken by public agencies using these cost accounting policies and procedures, and the support systems deemed necessary to comply with this program.

Inquiries regarding the program and/or the policies and procedures may be sent to the State Controller’s Office (SCO) Local Government Policy Section at [email protected]. Once an inquiry is received by SCO staff, it will be reviewed and a draft response will be sent to the Chair of the Commission. The Chair may appoint one or more Commissioners, not to constitute a quorum, from the public and/or private sectors to assist with responding to the inquiry in a timely manner. The Chair will provide feedback as necessary, and SCO staff will reply to the inquirer in a timely manner. A summary of inquiries is to be reviewed by the Commissioners at the next CUCCAC meeting, for incorporation into the Frequently Asked Questions as appropriate.

3.01 CUCCAC Philosophy
The policies and procedures, as dictated by Public Contract Code section 22017, shall, to the extent deemed feasible and practicable, incorporate or be consistent with construction cost accounting guidelines and standards and reporting requirements utilized by state and federal agencies on public projects and be uniformly applicable to all public agencies which elect to utilize the policies and procedures. The Commission recognizes the wide divergence in the size, capabilities and scope of operations of various public agencies operating under this legislation. Therefore, in developing this manual, the Commission wishes to present policies and procedures that are reasonable and do not demand extensive tracking of detail. The Commission feels that all cost elements, including personnel, materials, supplies and subcontracts, equipment, and overhead, associated with a project must be recorded and reported at the project level. Each of the cost elements is to be expressed in the initial bid/estimate process, captured and recorded during the construction period and compared to the initial estimate at the conclusion of the public project. This shall require the existence of a project tracking system, as discussed later in this section. The Commission refrains from dictating a specific system but requires a system to estimate for bidding purposes, and to capture the actual costs in a manner consistent with the bid estimate. In this manner, the policies and procedures are results-oriented. The Commission has determined that the Standardized Account Code Structures meets the requirements of the Act.

3.02 Applicable Projects
In keeping with the Commission's objective of providing cost accounting policies and procedures that are specific in concept yet broad enough to encompass all public agencies, regardless of size and scope of services, these policies and procedures should enable the public agencies to track all applicable construction-oriented public projects.

While allowing for the divergence of activities performed, these policies and procedures should parallel construction cost accounting practices as much as possible to allow for a comparability of private and public estimates and actual costs incurred in constructing public projects.

3.03 Definitions
The definitions listed below will assist users of the manual in interpreting and understanding the policies and procedures as stated in this manual. It is important to note that these definitions pertain only to the contents of this manual.

Cost Finding. A less formal method than project accounting of cost determination or estimation on an irregular basis. There may be no formal accounting entries during the year to record costs incurred in specific cost accounts. Instead, cost finding usually involves taking available fund financial accounting data and recording it and adjusting it to devise the cost data or estimate needed. This approach will be used in selected instances as defined in this manual.

Direct Costs. Direct costs represent economic resources that can be specifically identified with a particular construction activity or function. To the extent possible, such costs should be charged directly to the project for purposes of cost determination rather than being subjected to allocation procedures.

End Cost Objective. An end cost objective is a cost center or activity established for the accumulation of the direct costs of performing government services. All costs should be considered to indirectly support the performance of these services.

Equipment Usage Tracking System. An equipment usage tracking system allows for the identification, recording, accumulation and reporting of usage of a specific piece of equipment or type of equipment and the unit of usage, e.g., hours, days, mileage, to a particular activity.

Force Account. A force account accurate for work performed on public projects using internal resources, including but not limited to labor, equipment, materials, supplies, and subcontracts of the public agency.

Government-Wide Overhead. Government-wide overhead is defined to include all costs of a public agency not associated with organizational units performing services which support all end cost objectives of the government entity.

Materiality. It is the Commission’s position that, if the value of those goods obtained from inventory is material, the cost must be recorded to the public project code as a direct cost item. Materiality is defined for purposes of this manual to be any item that has a unit or aggregate value of $25 or more.

Materials, Supplies, and Subcontracts Tracking System. A materials, supplies, and subcontracts tracking system allows for the identification, recording, accumulation, and reporting of materials, supplies, and subcontracts used on a particular activity.

Object Cost. A cost center or activity (account code assigned to a department or project) established for the accumulation of the direct and indirect cost to arrive at a total cost of performing government services.

Overhead Costs. Overhead costs represent economic resources that are employed for common or joint purposes benefiting several projects or functions. As such, overhead costs are not as readily chargeable to individual projects and, therefore, generally require allocation based upon statistical relationships.

Personnel Tracking System. A personnel tracking system allows for the identification, recording, accumulation, and reporting of personnel working on a particular activity.

Project Accounting. Project accounting is the continuous process of analyzing, classifying, recording, and summarizing cost data within the confines and controls of a formal project accounting system and reporting them to users on a regular basis.

Project Tracking System. A project tracking system allows for the identification and establishment of cost (account) codes to particular activities. The system would be used to record, accumulate, and report personnel costs; equipment costs; material, supplies, and subcontracts costs; and allocated overhead to activities identified.

Public Project Unit. A public project unit (e.g. public works department) is an identifiable organizational unit of any size within a public agency whose primary goals include the undertaking and completion of public projects as defined in Public Contract Code section 22002. The Commission would, in general, consider a unit to be a public project unit when over 25% of the total unit's annual budget is expended on public projects. It is more common to have these organizational units in the larger public agencies - urban counties, cities, and school districts.

Subcontract. A subcontract provides for the use of an outside contractor with specialized skills and/or equipment needed to complete an element of work on the public project.

Unit Overhead. Unit overhead is defined as all costs incurred by an organizational unit, such as a public project unit, department, division or section, that are not directly attributable to any end cost objective, whether it be a public project or not. These costs include personnel costs, materials, supplies and subcontracts, and equipment costs not directly attributable to any end cost objective.

Work Order. A work order is written authorization for the performance of a particular project. It contains a description and location of the project and specifications for the work to be performed. Work orders are assigned an identification code and are used to record all costs both direct and indirect incurred in completing the project.

3.04 Public Agency Organization Structure
In general, public agencies will contract out design-and-build and heavy construction projects and perform only general building projects and specialty construction projects with internal resources. Frequently, this decision to undertake general building and specialty construction projects is made based on the agency's organization structure, current workload requirements, and available staffing resources.

Often, in large organizations, due to the ongoing workload, there are organizational units whose stated objective is to undertake and complete on an as-needed basis general building and specialty construction projects. These organizational units are project-oriented. Their end cost objectives primarily consists of the performance of public projects. Costs specifically incurred in connection with individual end cost objectives are considered to be direct costs. Costs not specifically incurred to support individual and cost objectives are considered to be overhead costs associated with the organizational units taken as a whole. To recognize all the costs associated with an end cost objective, these overhead costs must be allocated back to this end cost objective. Examples of end cost objectives include public projects, such as the construction of a warehouse, renovation of a lunch room, or street reconstruction and resurfacing over 1 inch. Smaller public agencies, which comprise the majority of public agencies in the state, usually do not have organizational units whose annual budgets represent more than 25% of public project work. Frequently, these employees perform general maintenance duties in addition to working on public projects. The public project costs incurred by these employees are more difficult to identify yet equally important.

3.05 Classification of Costs
It is the stated objective of the law and the Commission to have public agencies estimate the cost of public projects and track these project costs in a manner similar to private industry. Essential to achieving this

objective is the understanding and agreement by both parties as to the components of costs that are included in public projects.

The major classification of cost components for construction projects includes: direct, indirect, and overhead costs.

3.06 Direct Costs
Direct costs generally include these categories of costs: labor, bonds, permits, licensing fees (if any), equipment, permanent materials and supplies, subcontracts, nonpermanent materials and supplies. Components of each of these direct project cost categories are shown below and include costs applicable to the construction industry.

Labor
Hourly Pay/Salary
Payroll Taxes (Employer Contribution)
Worker’s Compensation Insurance (Allocation of Self Insurance) Group Health Insurance
Group Life Insurance
Retirement Plan (Employer Contribution)
Holiday Leave
Vacation
Sick Leave
Unassigned Time
Disability Insurance
Unemployment Insurance
Military Leave
Jury Duty Leave
Management Leave/Compensatory Leave
Uniform/Uniform Allowance
Tuition Reimbursement
Union Time Off
Time Off for Illness or Death of Family Member
Personal Liability Insurance
Administration/Employer Contribution of Deferred Compensation Program/401K Overtime Premium
Use employee’s productive hourly rate to calculate direct labor costs.

Equipment
Internal Equipment Rate
Depreciation
Insurance (Allocation of Self Insurance)
Initial Assembling and Dismantling Costs
Maintenance Costs
Repair Costs
Provision for Major Overhauls
Unassigned Time
Maintenance and Storage Yard Facilities Costs

Fuel and Oil
Tires and Grease
Or Use:

Caltrans Equipment Rental Rates and Labor Surcharge Book:
http://www.dot.ca.gov/hq/construc/equipmnt.html
External Equipment Rate (Leased or Rented from Commercial Dealer) which includes, if charged by the Lessor or are the responsibility of the agency, the following costs:

Rental Rate
Maintenance Costs
Assembling and Dismantling Costs
Insurance Costs
Fuel and Oil
Tires and Grease
Permanent Materials and Supplies
Cost of Permanent Materials and Supplies-Charged Directly to Job Permanent Materials and Supplies Cost
Sales/Use Tax
Freight
Discounts Taken
Cost of Permanent Materials and Supplies Costs
Substantiated by most recent Invoice
Handling
Warehouse and Transportation Costs
Subcontracts
Payments made to Subcontractors
Nonpermanent Materials and Supplies/Miscellaneous Costs Permits
Fees
Performance Bonds
Licenses

3.07 Indirect Costs
Indirect costs can be identified with a project but not with a specific job or unit of production within the project.

Indirect costs generally include two categories of costs: labor and other miscellaneous project site expenses.

Components of each of these indirect cost categories are shown below.

Labor
Quality Control and Inspection
Field Supervisors
Security Guards
Superintendent
Job Secretary
Other Project Expenses
Mobilization, Assembly, Move-Out Costs
Yarding and Hauling
Trailer
Utilities
Telephone
Warehouse Costs
Spoilage, Loss and Theft
Other Costs

3.08 Overhead Costs
Simplified Overhead Rate
Prior to January 1, 2004, the Commission allowed all agencies to use a 20% overhead rate applied to all direct costs in lieu of calculating their overhead rates. An amendment to Public Contract Code section 22017 provides that cities with a population of less than 75,000 can assume the 20% rate. Cities with a population of 75,000 or over can either assume a 30% overhead rate or calculate an actual overhead rate.

Calculated Overhead Rate
The Commission determined that counties, special districts, and school districts can use a 30% rate or calculate an actual overhead rate, which is the same rule that applies to cities with a population of over 75,000.

Agencies may elect to calculate their overhead rates by one of the three following methods:
1) Appendix A describes the federal government’s method of calculating overhead (2 CFR Part 220). 2) Appendix B describes a method of calculating overhead by allocating overhead costs as a percentage of direct labor costs.
3) Any method of calculating overhead is satisfactory with the Commission, provided that acceptable accounting procedures are used and all administrative costs are included.

Overhead costs should be applied on total project costs, including costs of material, equipment, and labor.

Overhead costs cannot be identified with or charged to jobs or units of production unless some more or less arbitrary allocation basis is used.

Components of overhead are shown below and include costs applicable to the construction industry, public agencies or both, e.g., public agencies do not have to pay surety bond premiums as does the construction industry to perform construction work, but both have costs incurred due to the processing of payroll.

Payroll
Personnel
Purchasing/Procurement
Bid/Estimate Expense
Advertising Expense
Legal Costs
General Government
General Accounting/Finance
Departmental Accounting/Finance
Facilities
Data Processing
Top Management
Management Expenses
Typically public agencies recognize only two classifications of costs: direct and overhead.

It is important to note that this does not suggest that public agencies exclude indirect costs but rather that they classify a majority of them as direct costs. For example, in the construction industry a foreman supervising employees working at the job site would have his personnel costs pooled and allocated to a job or unit of production. In a public agency, the foreman's labor cost would be charged directly to the appropriate public projects.

Regardless of the differences in how the various costs are classified, both the construction industry and public agencies recognize that the significant cost elements of any construction project include:
 Personnel
 Materials, supplies and subcontracts
 Equipment
 Overhead

3.09 Project Identification
Public projects, as defined in section 2.03, shall be identified and given specific project codes. These codes are generally referred to as project or work order numbers. These codes shall enable the public agency to segregate the cost elements discussed above, thereby allowing for the proper estimation, tracking, and comparison of estimated vs. actual cost elements incurred at the completion of a public project.

3.10 Project Tracking
The public agency shall have a manual or automated system that records, accumulates, and periodically reports the cost elements - personnel; materials, supplies and subcontracts; equipment; and overhead - incurred in completing all public projects. The public agency shall be required to account for the costs of the public project in a manner consistent with the way in which the project was bid/estimated. An audit trail of the accumulation of these cost elements shall be maintained. Source documents shall be retained identifying costs incurred on the project. These documents may include timesheets, equipment tracking records, requisitions of materials

and supplies used at the project site, and the documentation of the development of overhead rates. The project tracking system does not have to be a part of the public agency's fiscal system but should capture the major cost elements and comply with the other requirements stated in this manual. This may require the agency to establish a project tracking system or alter an existing cost accounting system.

Project Tracking Systems
Project tracking refers to the management of projects which includes but is not limited to measuring and reporting the status of milestones, tasks and activities required in achieving the pre-defined project results.

Project tracking can also refer to project management software which automates the tracking of tasks, assignments, event and activities related to the project.

Most counties and larger school districts, cities, and special districts have established automated cost accounting systems that can track all identified public projects. Other project tracking systems include work order systems and project ledger card systems.

Work orders are written authorizations for the performance of a particular project. They contain a description and location of the project and the specifications for the work to be performed. These authorizations, used extensively by public agencies, are assigned an identification code and are used to accumulate and report labor, materials and supplies, and other costs associated with the project. Work orders can be used to cost public project work, as well as maintenance work and other types of end cost objective work.

A project ledger card system establishes a single ledger card to be used in recording, in summary, all cost elements associated with a particular public project.

Discussion of Example
An excel spreadsheet, is listed as a template named Sample Estimating Form and is available online at http://www.sco.ca.gov/ard_cuccac.html
The sample project ledger card has been established by the school district's accounting area to estimate the costs of remodeling the Main Street School. This sample can be used for estimating a project. The following data elements are included on the ledger card to establish the public project:
 Project code
 Start date
 End date
 Person responsible for work
 Name of project

Chapter 4 IDENTIFICATION, REPORTING, AND COMPUTATION OF PERSONNEL COSTS
Table of Contents
Identification, Reporting, and Computation of Personnel Costs..........................................................................54 Tracking Personnel Time.......................................................................................................................................54

4.01 Timekeeping System .......................................................................................................................... 54

4.02 Examples of Timekeeping Systems .................................................................................................... 54

4.03 Application of Timekeeping Systems ................................................................................................. 55

4.04 Recording Time to Public Projects...................................................................................................... 56 Computing Personnel Costs..................................................................................................................................56

4.05 Productive Hourly Rate ...................................................................................................................... 56

4.06 Unit Overhead Rate............................................................................................................................ 58

4.07 Government-Wide Overhead Rate .................................................................................................... 58

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CHAPTER 4 IDENTIFICATION, REPORTING, AND COMPUTATION OF

PERSONNEL COSTS
Identification, Reporting, and Computation of Personnel Costs The accurate estimating, tracking and costing of personnel costs is imperative to ensure accurate reporting and future estimating of these costs. Personnel costs are those costs associated with employing public agency personnel in the performance of a specific job. They include three elements:
1) Annual salary or wage paid by the public agency.
2) Benefits received by employees such as a public agency’s contribution to employee retirement programs, group health plans, and unemployment insurance. 3) Benefits paid to employee such as salaries or wages paid to employees who are on holidays, vacation leave, and sick leave.

This section of the manual describes the systems and methods used to track personnel time, determine the costs associated with personnel, and record these costs to a project tracking system.

Tracking Personnel Time
Critical to the public agency’s determination of personnel costs is the ability to identify time spent by employees performing work on all public projects.

4.01 Timekeeping System
A public agency shall have a timekeeping system that accumulates hours worked by employees and assigns these hours to all public project codes. Typically, this project code is assigned by the agency's accounting department and conveyed to the person responsible for the public project, generally the foreman or equivalent position. This system shall enable the agency to track hours worked on public projects to allow for the subsequent distribution of the appropriate personnel costs.

4.02 Examples of Timekeeping Systems
The simplest of timekeeping records is a foreman's time book. These books usually have 50 pages and the foreman records on a daily or weekly basis the employee and his daily time spent on a particular project. These books have heavy tagboard covers so they can remain at the job site and be carried in a foreman's pocket.

Typically, at the week's end, the foreman's time book is copied onto timesheets or timecards. This may be done at the central office by the foreman, timekeeper, payroll clerk or bookkeeper. This timekeeping system has the advantage of actual timekeeping being performed at the job site; but if the book is lost, the entire project's time record is lost.

Weekly timesheets or timecards and electronic timekeeping systems can also be used to record time. These documents should be completed by employees no later than at the end of the week showing the hours worked on each public project. For the employees to complete the cards or sheets, they must be informed of the appropriate project code to charge. This appears to be an insignificant issue; but without the establishment of a project code and the conveyance of that information to personnel working on the public project, the costs may never get recorded accurately. This decentralization of timekeeping presents the opportunity for possible inaccuracies in the recording of time spent on public projects. Therefore, this system may warrant additional review by management.

Work orders can be used to record time by the appropriate employee. As discussed in the project tracking requirements, work orders are written authorization for the performance of a particular job containing a project code, a description and location of the job, and specifications for the work to be performed. Work orders are the most frequent public project timekeeping systems used by public agencies. These are generally completed by the supervisor of the public project who records the employees’ time spent on a public project.

It is important to note that work performed on public projects, unlike timekeeping in the construction industry, requires close supervision by management to ensure that hours worked on end cost objectives as defined by this manual are recorded properly.

4.03 Application of Timekeeping Systems
As discussed earlier, there are two types of organizational units within public agencies that may perform public project work. These are (1) public project units and (2) other organizations that may, in addition to their primary duties, work on public projects.

Public Project Unit
A public project unit is an identifiable organizational unit of any size whose primary goals include the undertaking and completion of public projects. Typically, these units perform construction, reconstruction, erection, alteration, renovation, improvement, demolition, repair work, and painting of any publicly owned, leased, or operated facility. For example, a public works department may have a division/section comprised of employees who as defined by this bill are dedicated to the undertaking and completion of public projects such as road resurfacing, painting, landscaping and building/remodeling. The Commission would, in general, consider a unit to be a public project unit when over 25% of the total unit's annual budget is expended on public projects.

It is more common to have these organizational units in the larger public agencies--urban counties, cities and school projects.

Timekeeping Requirements
Employees who generally are considered direct labor and are assigned to a public project unit shall record their time on an hourly basis and record all hours of a full work day. This includes time spent on public projects as well as time spent on projects excluded from this program. Unassigned time by these employees will also be recorded and charged to an appropriate code.

Employees not performing labor on public projects, but who provide administrative support services to the employees of the public project unit, shall also record their time on an hourly basis and record all hours of a full work day. This time will be charged to an appropriate overhead account and will be used in the development of the organizational unit's overhead rate as discussed in Chapter 7.

Other Organizational Units Performing Work on Public Projects There are other organizational units that have employees who perform work on public projects but whose primary goal is the performance of routine maintenance work and/or other general government services.

Typically, these organizational units include: parks and recreation departments; divisions of public works agencies that have not been identified specifically as public project units, such as engineering; water and sewer; street maintenance; and routine maintenance.

a. Timekeeping Requirements
Employees of these organizational units shall report time worked on public projects. Although the Commission strongly believes that it is advisable for employees to record an eight-hour day to various end cost objectives, work performed outside of public projects is excluded from the scope of the program and is not required to be reported. All time worked on public projects by a public agency employee shall be posted to a project tracking system on a timely basis with an adequate audit trail maintained.
b. Discussion of Example
An employee of an organizational unit who performs work on a public project, but whose organization is not identified as a public project unit, must report his time. The employee has recorded only the time worked on a public project. Unit management, employees performing maintenance work, and unassigned employees need not record their time as do similar employees in a public project unit.

4.04 Recording Time to Public Projects
A public project’s direct labor time shall be recorded to a project code under the following circumstances:
 The employee worked on a public project.
 The employees were in transit to or from a project site.  The employee performed clean-up work on a public project, e.g., the employee returned to central headquarters to complete paperwork attributable to a public project.  The employee was assigned to work on a public project but was unable to work due to unforeseen circumstances, e.g., equipment breakdown or inclement weather, and was therefore idle.

Computing Personnel Costs
In determining personnel costs, three different rates must be determined and applied: the employee’s productive hourly rate, the department’s overhead rate, and the general government overhead rate.

4.05 Productive Hourly Rate
Personnel costs in many public projects represent the single largest cost of a public project. In calculating these costs it is important to include the three components of personnel costs:
1) Annual salary/wages
2) Benefits received
3) Benefits paid
The calculation of an hourly rate integrating these three costs components is commonly called a “productive hourly rate.”
A productive hourly rate shall be used to cost time reported to public projects. A productive hourly rate determines the full costs per hour of employing public agency personnel on a public project. A productive hourly rate is calculated by dividing annual personnel costs by an employee’s available hours for work assignment.

Annual Personnel Cost
The annual personnel costs of an employee or class of employees shall be determined by the public agency.

These costs shall include annual salary/wages and fringe benefits paid by the public agency.

Fringe benefits are generally calculated as a percentage of annual salary/wages or as an annual cost per employee.

If the productive hourly rate is calculated by employee class, members of each class should have reasonably comparable fringe benefits. Otherwise, further division of the employee class should be performed.

Fringe benefit calculations shall take into consideration, but not be limited to, the employer contribution portion of the following costs:
 Disability insurance
 Life insurance
 Retirement plan
 Unemployment insurance
 Worker’s compensation insurance
 Personal liability insurance
The fringe benefits calculation is not required to include accrued benefits, such as sick leave or vacation earned but not taken, as a component of personnel costs. It is recognized that these accrued benefits represent a significant future cost to the public agency. Yet, many public agencies do not account for these costs and would have difficulty in developing accurate figures. If further pronouncements concerning accrued benefits of public agencies are issued, the Commission will determine whether inclusions of these costs are appropriate.

Productive Hours
The public agency shall start with the assumption of 2,080 productive hours in a year if a 40-hour work week is the standard for the public agency. If a 40-hour work week is not the standard, the appropriate number of annual productive hours must be determined by the agency. The public agency shall then determine average annual nonproductive time either by employee, class of employee, or agency-wide. Nonproductive time is time when the employee is not available to work or assignment to work and includes but is not limited to:
 Vacation
 Sick leave
 Holidays
 Military leave
 Jury duty
 Training

4.06 Unit Overhead Rate
Public Project Unit
A unit overhead rate shall be developed for each public project unit. This unit overhead rate shall include all public project costs that are not direct costs. The overhead rate shall be developed and added to the productive hourly rate.

Organizational Unit Performing Public Project Work
A unit overhead rate shall be developed for each organizational unit performing work on public projects in addition to its primary duties. This unit overhead rate shall include all of the organizational unit’s costs that are not direct costs. The overhead rate should be developed and applied to the employee’s productive hourly rate.

4.07 Government-Wide Overhead Rate
A government-wide overhead rate shall be developed to include all costs of a public agency not associated with organizational units performing services that support all end cost objectives of the government entity. The government-wide rate shall be developed and applied to the productive hourly rate after unit overhead has been applied.

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CHAPTER 5 IDENTIFICATION, REPORTING, AND COSTING OF MATERIALS,

SUPPLIES, AND SUBCONTRACTS
Table of Contents
Identification, Reporting, and Costing of Materials, Supplies, and Subcontracts ................................................62 Materials and Supplies…………………………………………………………………………………………………………………………………….62

5.01 Tracking Materials and Supplies......................................................................................................... 62

5.02 Costing Materials and Supplies.......................................................................................................... 62

5.03 Handling/Carrying Cost ...................................................................................................................... 63

5.04 Subcontracts....................................................................................................................................... 63

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CHAPTER 5 IDENTIFICATION, REPORTING, AND COSTING MATERIALS,

SUPPLIES, AND SUBCONTRACTS
Identification, Reporting, and Costing of Materials, Supplies, and Subcontracts Materials, supplies, and subcontracts used on public projects are considered a cost element by the Commission and include such items as lumber, bricks, cement, doors, paint, asphalt, wire, sand, gravel, pipe, and work performed under a subcontract. Materials and supplies used on public projects shall be tracked and charged to project codes as discussed in Chapter 2 and can be accounted for either as direct purchase or inventory.

This section of the manual describes the systems and methods used to track materials, supplies, and subcontracts; determine their value, as well as the other costs associated with providing materials and supplies; and record these costs to a project tracking system.

Materials and Supplies
Critical to the public agency’s determination of personnel costs is the ability to identify time spent by employees performing work on all public projects.

5.01 Tracking Materials and Supplies
The Commission wishes to provide policies and procedures so that public agencies account for public projects in a manner similar to the construction industry. The nature of governmental procurement and inventory practices presents challenges to the public agency’s ability to meet the Commission’s objective of effectively measuring material and supply costs for public projects.

Direct Purchases
Materials and supplies are often purchased directly for use on a public project. The public agency can thus identify the associated dollar value of items purchased to the public project code, which should be identified on the purchase order when the procurement is initiated.

Inventory
It is more difficult to identify the associated costs of items obtained from the public agency’s inventory of materials and supplies, generally maintained at a warehouse or stockroom. The major challenge is identifying and recording the costs of material and supplies utilized for the public project which are obtained from the public agency’s inventory. It is the Commission’s position that, if the value of these goods obtained from inventory is material, the cost must be recorded to the public project code as a direct cost item. Materiality is defined for purposes of this manual to be any item that has a unit or aggregate value of $25 or more.

Items purchased and placed into inventory that would subsequently be used on public projects and which may exceed the $25 limit shall be issued to projects in a manner consistent with good accounting controls.

5.02 Costing Materials and Supplies
Direct Purchase
The total material and supplies costs are the invoiced amount. This amount should be posted to the project tracking system for direct purchases on a timely basis. This recorded amount should include the cost of the materials and supplies, freight, sales tax, use tax and any other appropriate costs.

Inventory
The public agency shall have a method to provide for the valuation of the inventory it releases to public projects.

Acceptable methods include:

First-In, First-Out (FIFO) – The earliest acquired stock is assumed to be used first, the latest acquired stock is assumed to be still on hand. Therefore, when inventory is issued, it is valued at the cost of the earliest acquired stock.

Last-In, First-Out (LIFO) – The earliest acquired stock is assumed to be still on hand, the latest acquired stock is assumed to have been used immediately. Therefore, when inventory is issued, it is valued at the cost of the most recently (latest) acquired stock.

Weighted Average – In this type of inventory valuation system, each purchase of stock is aggregated with the former inventory balances so that a new average unit price is used to price the subsequent issues of inventory.

Recent Costs – The most recent unit costs is applied to units consumed to yield total cost.

5.03 Handling/Carrying Cost
Personnel, equipment and facilities costs are incurred by the public agency to store and transport inventoried items. This is separate and distinct from the cost of procurement that is considered to be recaptured through general government overhead, as discussed in Chapter 4. (If warehousing and transportation costs are not provided by a central organization, it is assumed that these costs are recovered through the government-wide overhead rate).

5.04 Subcontracts
A public agency may wish to complete work on a public project by subcontracting, i.e., hiring an outside contractor to perform a portion of the work.

Subcontractors shall be accounted for in a manner similar to a direct purchase of materials and supplies.

Contracts or purchase orders should be coded with the appropriate project code and the subcontract costs recorded onto the project tracking system in a timely manner. The handling/carrying overhead rate shall be calculated to recover:
 Warehouse/storeroom personnel costs
 Facility costs of storeroom/warehouse
o Utilities
o Rent
o Insurance
 Transportation costs associated with the receipt/delivery of materials and supplies.

CHAPTER 6 IDENTIFICATION, REPORTING, AND COSTING EQUIPMENT Table of Contents
Identification, Reporting, and Costing Equipment................................................................................................66

6.01 Equipment Tracking Systems ............................................................................................................. 66

6.02 Equipment Tracking of Agency Owned/Operated Equipment........................................................... 66 Equipment Usage Rates........................................................................................................................................67

6.03 Internal Rates (Equipment Owned by Public Agency) ....................................................................... 67

6.04 Equipment Rate Books (Equipment Owned by Public Agency) ......................................................... 68

6.05 Rental or Lease Rates......................................................................................................................... 69

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CHAPTER 6 IDENTIFICATION, REPORTING, AND COSTING EQUIPMENT Identification, Reporting, and Costing Equipment
Usage of equipment on public projects is a cost element of performing those public projects. Equipment usage, excluding passenger riding sedans, must be tracked when a piece of equipment is assigned to a public project.

Equipment used on public projects shall be charged to a project cost code. This section describes the systems and methods used to track equipment usage, determine equipment costs, and record the costs to a projects tracking system.

6.01 Equipment Tracking Systems
The public agency shall have a manual or automated system that tracks the appropriate equipment by time, mileage or other usage factor to a public project. The system shall have the capability to track equipment usage to a public project:
 When it is in motion to/from a project site;
 When at a public project site (whether in use or not), if time is the means of equipment tracking and  When at public project site and in use, if mileage or some other mechanism is the means of equipment tracking.

Examples of Tracking Systems
One of the simplest forms for tracking equipment is a weekly timesheet for each piece of equipment that has been assigned to the public project and the time or mileage incurred by the public project. These sheets should be submitted weekly with labor timesheets or cards. They should then be sent to the accounting area and charged to a project tracking system.

6.02 Equipment Tracking of Agency Owned/Operated Equipment As will be seen in this chapter heading Equipment Usage Rates on page 68, the public agency can cost out equipment it owns and operates in one of two ways. The public agency can either utilize internally developed equipment rates or rates from industry equipment rate books.

Internal Rates
When an agency develops internal equipment rates for certain or all types of equipment, that agency must track the time that equipment was used on end cost objectives such as public projects, maintenance work, and unassigned time. This enables the public agency to determine what the equipment's history of productive hours has been. This enables a better forecast of projected productive hours to be made for rate development purposes.

Equipment Rate Book Rates
When an agency utilizes the calculated equipment rate from rate books, it must record the time or mileage the equipment is used on public projects. Since these equipment rates generally factor in idle time, a full tracking of the equipment as performed for "internal rate" equipment is not mandated.

Equipment Usage Rates
There are three acceptable means of determining equipment rates. They include rates developed internally for public agency owned and operated equipment, equipment rate books used by the construction industry and rental or lease rates charged by commercial vendors. Each of these methods attempts to recapture the costs associated with the equipment's purchase and operations, such as depreciation, fuel, maintenance, repair and insurance.

6.03 Internal Rates (Equipment Owned by Public Agency)
Public agencies shall utilize internally developed equipment usage rates that reflect the full cost of owning, operating and maintaining types of equipment. Rates should be developed for classes of equipment and should comply with the following guidelines:
 The internal equipment rate methodology shall be documented and an adequate audit trail provided.  The costs of depreciation, fuel and oil, equipment storage, and income are to be included in the internally developed rates.

Depreciation
Depreciation is the method used to spread the cost of equipment, capital lease, or replacement value less residual value, over a piece of equipment’s useful life. The public agency’s capitalization policy should be used to determine whether a piece of equipment should be depreciated. Generally, equipment that costs more than $1,000 and has a useful life of more than one year should be depreciated.

Depreciation should be calculated as follows:
1) Useful Life
Depreciation should be based on the average useful life for the piece of equipment in a particular operation.

Determination of useful life should be based on actual or planned retirement and replacement practices. 2) Residual Value
Residual value is the value at disposition (less costs of disposal) estimated at the time of acquisition. In many cases, the estimated residual value is so small and occurs so far in the future that it has no significant impact. As well, residual value may be almost or completely offset by removal and dismantling costs.

Normally, public agency equipment will be used through the end of its estimated useful life and the residual value may be carried at zero. In the event that it is known at the time of acquisition that the capital equipment will not be used for at least 75% of its scheduled useful life, residual value should be estimated. 3) Capital Improvements
Capital improvements are the costs of major overhauls and modifications that add value and prolong the life of a piece of equipment. These costs should be treated as capital expenditures and depreciated over the extended or remaining useful life of either the asset or improvement, whichever is less. 4) Straight Line Depreciation Method
The straight-line depreciation method charges an equal amount for each period of useful life (generally a year). This method is considered the most practical and reasonable method for determining equipment usage costs.

5) Calculation of Depreciation Method
For annual depreciation for capitalized equipment will be estimated as follows:

A. Start with the acquisition cost (purchase price) plus capital improvements, plus all other costs incurred to place the equipment in usage, e.g., transportation, installation. The public agency may choose to utilize replacement value for this calculation.

B. Determine the useful life of the equipment, utilizing applicable guides such as the IRS guide.

C. Compute annual depreciation by dividing the depreciable basis (acquisition cost plus capital improvements less residual value) by the useful life.

D. Maintenance and Repairs
These are costs (labor and parts) that are incurred for maintenance repairs to keep the equipment in normal operating condition. These costs do not include capital improvements that add value to equipment and are accounted for under depreciation. Tires and grease are included in this classification of cost. Typically, a ledger card for each piece of equipment will be necessary to record these costs.

E. Fuel and Oil
These costs include the labor and fuel costs of supplying the equipment with fuel of any type and oil.

F. Equipment Storage Costs
Equipment storage costs include the cost of facilities associated with the use of equipment. These costs include equipment yards, warehouse facilities, and the cost of guards and other security measures.

G. Insurance
These costs include the premiums paid by the public agency (whether self-insured or paid to an outside agency) for equipment insurance.

A good discussion of the calculation of internal equipment rates can be found in State Controller’s Office website, http://www.sco.ca.gov/pubs_guides.html Accounting Standards and Procedures for Counties in the Road Fund Accounting section.

6.04 Equipment Rate Books (Equipment Owned by Public Agency) Public agencies that own equipment used on public projects but do not calculate internal equipment rates shall utilize appropriate private industry equipment rate books. It is understood that industrial rates may include certain costs that are not incurred by public agencies, such as personal property taxes paid on the assessed value of the equipment and interest charges. However, these equipment usage rates in some cases do not include: the cost of fuel or other energy costs to operate a particular piece of equipment; the cost of preparatory work performed before a piece of equipment can be made operative; the costs of dies, blades or welding rods that are normally consumed in the operation of a piece of equipment; or the costs of extraordinary wear and tear. Therefore, the use of industrial rates is assumed to provide a reasonable approximation of internal rates.

Equipment rate books that are acceptable to the commission for use in lieu of internal rates include:
 Caltrans Labor Surcharge and Equipment Rental Rates
http://www.dot.ca.gov/hq/construc/equipmnt.html
 Mechanical Contractors Association Tool and Equipment Rental Guide  National Electrical Contractors Association Tool and Equipment Rental Schedule Use of other guides must first be reviewed and approved by the Commission.

These guides are maintained and updated on a periodic basis by the appropriate agency or association to accurately reflect current costs associated with equipment usage. If a piece of equipment or comparable piece of equipment is not included in an established guide, an internal rate shall be developed or a documented quote from an equipment leasing or rental agency may be utilized.

6.05 Rental or Lease Rates
Rented or leased equipment to be used partially or completely on public projects shall be tracked and have the appropriate amount charged to the public project. Additional costs associated with the leasing or renting of equipment used partially on a public project shall be charged on a pro rata basis, if appropriate to that project.

Costs related to renting or leasing equipment generally include, but are not limited to:
 Rates
 Moving, loading, and assembly costs
 Maintenance and repairs
 Insurance
 Fuel (under some rate schedules)

CHAPTER 7 IDENTIFICATION, RATE DEVELOPMENT, AND ALLOCATION OF

OVERHEAD
Table of Contents
Identification, Rate Development, and Allocation of Overhead...........................................................................72

7.01 Commission Adopted Simplified Overhead Rate ............................................................................... 72

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CHAPTER 7 IDENTIFICATION, RATE DEVELOPMENT, AND ALLOCATION OF

OVERHEAD
Identification, Rate Development, and Allocation of Overhead

7.01 Commission Adopted Simplified Overhead Rate
Prior to January 1, 2004, the Commission allowed all agencies to use a 20% overhead rate applied to all direct costs in lieu of calculating their overhead rates. Amendments to Public Contract Code section 22017 provides that cities with a population of less than 75,000 can assume the 20% rate. Cities with a population of 75,000 or over can either assume a 30% overhead rate or calculate an actual overhead rate.

The Commission determined that counties, special districts, and school districts can use a 30% rate or calculate an actual overhead rate, which is the same rule that applies to cities with a population of over 75,000.

Agencies may elect to calculate their overhead rates by one of three following methods:
1) Appendix A describes the federal government’s method of calculating overhead (2CFR Part 200). 2) Appendix B describes a method of calculating overhead by allocating overhead costs as a percentage of direct labor costs.
3) Any method of calculating overhead is satisfactory with the Commission, provided that acceptable accounting procedures are used and all administrative costs are included.

Chapter 3, Definitions, lists items that define overhead.

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APPENDIX A COST PRINCIPLES FOR STATE, LOCAL, AND INDIAN TRIBAL

GOVERNMENTS
Table of Contents
Cost Principles for State, Local, and Indian Tribal Governments..........................................................................76

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APPENDIX A Cost Principles for State, Local, and Indian Tribal Governments Cost Principles for State, Local, and Indian Tribal Governments

APPENDIX A COST PRINCIPLES FOR STATE, LOCAL AND INDIAN TRIBAL GOVERNMENTS 2 CFR Part 200
(OMB Circular A-87)
Please refer to:
www.ecfr.gov
Browse: Title 2 – Grants and Agreements
Volume 1, Chapter II, Part 200

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APPENDIX B OVERHEAD DETERMINATION AND ALLOCATION PERCENTAGE OF

DIRECT LABOR COSTS METHOD
Table of Contents
Identification, Rate Development, and Allocation of Overhead...........................................................................80 B.01 Identification, Rate Development, and Allocation of Overhead........................................................ 80 B.02 Unit Overhead .................................................................................................................................... 81 B.03 Government-Wide Overhead............................................................................................................. 82

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APPENDIX B OVERHEAD DETERMINATION AND ALLOCATION PERCENTAGE OF

DIRECT LABOR COSTS METHOD
Identification, Rate Development, and Allocation of Overhead B.01 Identification, Rate Development, and Allocation of Overhead Overhead is the one cost element most frequently misunderstood and absent from public agency costs. This section defines overhead costs and the various methods used to identify, track, and allocate these costs. The Commission believes that overhead is a significant factor and that it is essential that public agencies record and allocate their costs to fairly reflect the total cost of performing public projects. It is not intended that public agencies be required to recover all their overhead costs but that overhead costs reasonably borne by public projects be allocated to these projects.

Overhead includes all costs except:
 Labor performed at the site and directly charged to any end costs objective (including other than public projects) including a pro rata share of payroll taxes and related employee benefits, such as workers’ compensation, group insurance, holiday and sick leave, and similar “fringe benefits.” As discussed previously, an end cost objective is a pool, center, or activity established for the accumulation of the direct cost of performing fundamental government services. Labor charged to an end cost objective should be traceable to the finished goods or services performed.  Materials, supplies, and subcontracts actually consumed on and directly charged to any end cost objective, including related freight, sales or use tax, and handling/carrying charges if appropriate.

Materials and supplies charged to an end cost objective should be traceable to the finished goods or services provided.
 Equipment costs directly charged to any end cost objective. Equipment costs charged to an end cost objective should be traceable to the finished goods or services provided.

Overhead costs represent economic resources that are employed for common or joint purposes benefiting several end cost objectives and are not identifiable to an individual end cost objective. The challenge is to achieve an equitable allocation of overhead costs to these various end cost objectives of the public agency.

Public agencies shall calculate two overhead rates or use the simplified overhead rates noted in Chapter 7:
 Unit overhead rate
 Government-wide overhead rate
Unit overhead is defined as all costs incurred by an organizational unit, such as a public project unit, department, division or section, which are not directly attributable to any end cost objective whether it be a public project or not. These costs include personnel costs, materials, supplies and subcontracts and equipment costs not directly attributable to any end cost objective. As was discussed in Chapter 4, unit overhead must be developed for public project units and organization units performing public project work.

Government-wide overhead is defined to include all costs of a public agency not associated with organizational units performing services which support all end cost objectives of the government entity.

The unit and government-wide overhead rates must be developed on an annual basis. These rates should be developed prior to the fiscal year and applied to the productive hourly rate as discussed in Chapter 4.

B.02 Unit Overhead
Unit overhead is made up of personnel costs, materials, supplies and subcontracts, equipment usage and facilities costs that are not identified as direct costs. As was stated in Chapter 4, unit overhead rates shall be developed for public project units and any other organizational units whose employees may perform work on public projects.

Cost Components
Components which shall be included in the calculation of unit overhead include, but are not limited to, costs incurred within the organizational unit related to:
 Administration
 Accounting/finance
 Clerical assistance
 Facilities
o Rental costs (Depreciation of facilities purchased or constructed by a public agency is not required by the Commission).
o Utilities
o Insurance
 Data processing
 Direct labor not charged to direct activities
 Materials and supplies not charged to direct activities  Under-realization of labor and equipment rates
Unit overhead components shall not be included in the government-wide overhead.

Tracking of Unit Overhead
The tracking of overhead costs can be performed in two ways. Overhead can be determined through the utilization of a formal cost accounting system. This system allows for the identification of such costs as salaries and indirect materials and supplies as overhead costs, and records these costs to management overhead codes.

Alternatively, cost-finding studies can be performed. A cost finding study, a less precise method of overhead determination, is usually performed on an annual basis and generally involves taking available financial accounting data and determining the value of overhead pools through various estimation techniques. a. Public Project Unit
As discussed in Chapter 4, a public project unit's personnel shall record and account for a full workday.

This enables the public project unit to track and record time spent on overhead activities and unassigned time on an actual basis. As well, the public project shall record equipment usage costs, subcontractor costs, materials, supplies and subcontracts, and facilities costs to overhead codes when not identifiable to a specific project. Thus, the public project unit accounts for all of its costs, whether they are direct costs or overhead. The public project unit will use the resulting data to develop its unit overhead rate.

b. Organizational Unit Performing Public Project Work
Personnel working for an organizational unit whose primary goals include the performance of routine maintenance work and/or other general government work are not required to account for a full workday. However, these employees must record all hours of work performed on public projects. This organizational unit shall develop a unit overhead rate through an annual cost finding study which distinguishes direct costs for end cost objectives from indirect (overhead) costs.

B.03 Government-Wide Overhead
Government-wide overhead represents costs incurred by the support functions of the governmental entity, which are not associated with an organizational unit performing end cost objectives. As was stated in Chapter 4, government-wide overhead rates shall be determined by each public agency.

Internally Developed Government-Wide Overhead Rate
Public agencies shall utilize an internally developed government-wide overhead rate. The rate methodology shall be documented and an adequate audit trail provided. a. Cost Components
The government-wide overhead rate shall include but not be limited to costs associated with the functions shown below to the extent that they are not included in specific unit overhead rates:
 Payroll department
 Procurement/purchasing department
 Legal function
 Central administrative function
 Accounting/finance budget function
 Data processing
 Insurance (whether self-insured or premiums are paid to an agency)  Public Relations
 Vehicle Pool
The government-wide overhead rate may exclude the costs associated with the legislative and judicial branches of the public agency.
b. Rate Development
The public agency shall develop the government-wide overhead rate of the public agency using direct labor dollars to allocate these government-wide overhead costs in a manner similar to the allocation of unit overhead.

Government-Wide Overhead
Where a government-wide cost allocation plan has been prepared under the auspices of 2 CFR Part 200 or other government-wide rate methodologies, the public agency may utilize the overhead costs or rates developed in lieu of an internally developed government-wide overhead rate, as described in this manual. The Commission recognizes that public agencies may consider these rates imprecise or inappropriate. It is acknowledged that, in developing these rates, some costs are not included because they are considered "not allowable." Thus, the rate may not recover all costs associated with the program. In contrast, an argument could be made that the

rates are calculated to recover the costs of government-wide overhead, which would occur whether or not the specially funded program was undertaken. In this instance, the rate would be considered too high.

In acknowledging these arguments, the Commission wishes to identify the issues but still allow the use of these rates as a reasonable alternative for the calculation of government-wide overhead.

Overhead Allocation
The government-wide overhead rate shall be applied to the appropriate productive hourly rate after the unit overhead has been applied. See Chapter 4 for a more detailed discussion.

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State Controller’s Office
Local Government Programs and Services Division
Local Government Policy Section
www.sco.ca.gov
If you have any questions contact:

[email protected]
For additional copies:
http://www.sco.ca.gov/ard_cuccac.html

Appendix E:

Purchasing Threshold
Matrixes

City of Farmersville Purchasing Threshold Matrixes
Commodities (Materials & Equipment)
Amount Conditions Authorized Buyer Notes
$1 - $10,000 Administrative
Process
Department Head Capital Assets must
be listed on
Approved Capital
Budget
$10,001 - $25,000 Approval Memo from
the Purchasing Agent
Department Head
with Purchasing
Agent Approval
Capital Assets must
be listed on
Approved Capital
Budget
$25,001 - $75,000 Competitive bidding
required: informal
written quotes
Purchasing Agent Capital Assets must
be listed on
Approved Capital
Budget
Over $75,000 Competitive bidding
required: formal RFP
or IFB with approval
from City Council
Purchasing Agent
with Council Approval
Capital Assets must
be listed on
Approved Capital
Budget
Outside Legal Services
Amount Conditions Authorized Buyer Notes
$1 - $50,000 Written approval from
City Attorney
Purchasing Agent PA signs contract
Over $50,000 City Council Mayor signs contract
Settlements & Other Agreements
Amount Conditions Authorized Buyer Notes
$1 - $25,000 City Manager City Manager signs
agreement
Over $25,000 Outside of CSJVRMA
MOC coverage
City Council Mayor signs
agreement

Services (Non-Construction)
Amount Conditions Authorized Buyer Notes
$1 - $10,000 Administrative
Process
Department Head
$10,001 - $25,000 Approval Memo from
the Purchasing Agent
Department Head
with Purchasing
Agent Approval
$25,001 - $50,000 Competitive bidding
required: informal
written quotes
Department Head
with Purchasing
Agent Approval
Three bids preferred
Over $50,000 Competitive bidding
required: formal RFP
or IFB
Purchasing Agent Three bids preferred
& Contract required;
PA signs contract
Over $100,000 Competitive bidding
required: formal RFP
or IFB with approval
from City Council
City Council Three bids preferred
& Contract required;
Mayor signs contract
Services (Construction)
Amount Conditions Authorized Buyer Notes
$1 - $10,000 Administrative
Process
Department Head
$10,001 - $25,000 Approval Memo from
the Purchasing Agent
Department Head
with Purchasing
Agent Approval
$25,001 - $60,000 Competitive bidding
required: informal
written quotes
Department Head
with Purchasing
Agent Approval
Three bids preferred
$60,001 - $200,000 Competitive bidding
required: informal
bids comply with

CUPCCAP
City Council Three bids preferred
Over $200,000 Competitive bidding
required: formal RFP
or IFB with approval
from City Council
City Council Three bids preferred
& Contract required;
Mayor signs contract
All dollar amounts are rounded to the nearest dollar to fit into threshold ranges (i.e. total cost of $10,000.50 would fit into $10,001 - $25,000 range).

Federally Funded Projects / Grants Procurement
Amount Conditions Authorized Buyer Notes
$1 - $10,000
(Micro Purchases)
Administrative
Process
Department Head
$10,001 - $250,000
(Small Purchases)
Competitive bidding
required: informal
written quotes
Purchasing Agent More than one bid
required
Over $250,000 Competitive bidding
required: Formal
process

1. Sealed Bids
(if feasible)

2. Competitive
Proposals (if
feasible)

3. Sole Source
(if only option)
Purchasing Agent More than one bid
required

EXECUTIVE OFFICE OF THE PRESIDENT

OFFICE OF MANAGEMENT AND BUDGET

WASHINGTON, D.C. 20503

OFFICE OF FEDERAL
FINANCIAL MANAGEMENT June 20, 2018
M-18-18

MEMORANDUM FOR CHIEF FINANCIAL OFFICERS AND HEADS OF SMALL EXECUTIVE

AGENCIES
FROM: Tim
Deputy
Soltis
Controller, Office of
~
Federal Financial Management
SUBJECT: Implementing Statutory Changes to the Micro-Purchase and the Simplified Acquisition Thresholds for Financial Assistance
In accordance with recent statutory changes set forth in the National Defense Authorization Acts (NDAA) for Fiscal Years 2017 and 2018, this memorandum raises the threshold for micro-purchases under Federal financial assistance awards to $10,000, and raises the threshold for simplified acquisitions to $250,000 for all recipients. Further, it implements an approval process for certain institutions that want to request micro-purchase thresholds higher than $10,000. Agencies are required to implement these changes in the terms and conditions oftheir awards, and recipients ofexisting Federal financial assistance awards may implement them in their internal controls.

Background
This memorandum applies to all Federal agencies, as defined at 5 U.S.C. § 551(1), that award grants or cooperative agreements. It implements changes to the micro-purchase and simplified acquisition thresholds for financial assistance under the NDAAs for Fiscal Year (FY) 2017 and FY2018. The micropurchase threshold refers to purchases ofsupplies or services using simplified acquisition procedures, not to exceed an established amount pursuant to the Office of Management and Budget (OMB) Govemmentwide Guidance for Grants and Agreements ("Uniform Guidance") at 2 C.F.R. § 200.67 (Micro-purchase). The simplified acquisition threshold refers to purchases of property or services using small purchase methods not to exceed an established amount pursuant to 2 C.F.R. § 200.88 (Simplified acquisition threshold). For Federal financial assistance awards, these purchases are acquired for use by a Federal program. The NDAA for FY2017 increased the micro-purchase threshold from $3,500 to $10,000 for institutions of higher education, or related or affiliated nonprofit entities, nonprofit research organizations or independent research institutes ( 41 U .S.C. § 1908). The NOAA for FY2018 increases the micro-purchase threshold to $10,000 for all recipients and also increases the simplified acquisition threshold from $100,000 to $250,000 for all recipients.

Implementing the NDAA for FY2017
Section 2 l 7(b) ofthe NOAA for FY2017 raises the micro-purchase threshold to$ I 0,000 for procurements under grants and cooperative agreements for institutions ofhigher education, or related or affiliated nonprofit entities, nonprofit research organizations or independent research institutes. 1 1 Pub. L. No. 114-328 (codified at 41 U.S.C. § I902(a)(2)).

The NOAA for FY2017 also establishes an interim uniform process by which these recipients can request and Federal agencies can approve requests to apply a higher micro-purchase threshold. Specifically, the 2017 NOAA allows a threshold above $10,000 if approved by the head ofthe relevant executive agency.

For purposes ofthis approval, the institution's cognizant Federal agency for indirect cost rates will be the relevant executive agency as defined in 2 C.F.R. § 200.19 (Cognizant agency for indirect costs). To receive a higher threshold, the institution must either have "clean single audit findings" (i.e., in accordance with 2 C.F.R. § 200.520 - Criteria for a low-risk auditee), have an acceptable internal institutional risk assessment, or the higher threshold must be consistent with State law for public institutions.

Agencies should reflect this change through policy or terms and conditions in awards for those institutions. The effective date for this change was when the NOAA for FY2017 was signed into law on December 23, 2016. OMB intends to revise the Uniform Guidance to conform with the law. 2 Process for Requesting a Higher Threshold Under the NDAA for FY2017 Requests for approval should be submitted to the institution's cognizant Federal agency for indirect cost rates; however, institutions should contact the agency before sending the request to determine the correct point ofcontact. The cognizant Federal agency will assign review ofthe request to the appropriate office within the agency to determine whether to approve, and will maintain records and justification ofall approvals. The request should include the threshold level being requested and the justification(s) for it based on the criteria above per Section 2 I 7(b) ofthe NOAA for FY2017.

Implementing the NDAA for FY2018
This memorandum also implements provisions of the NOAA for FY 2018, Pub. L. No. 115-91, which became law on December 12, 2017. Specifically, section 806 raised the micro-purchase threshold from $3,500 to $10,000, and section 805 raised the simplified acquisition threshold from $I 00,000 to $250,000. Pursuant to 2 C.F.R. § 200.67 (Micro-purchase) and 2 C.F.R. § 200.88 (Simplified acquisition threshold), these higher thresholds are not effective until implemented in the Federal Acquisition Regulation (FAR) at 48 C.F .R. Subpart 2. 1 (Definitions). 3 In order to allow maximum flexibility for grant recipients in light of the changes to the NOAA for FY2018, OMB is granting an exception allowing recipients to use the higher threshold of$10,000 for micro-purchases and $250,000 for simplified acquisitions in advance ofrevisions to the FAR at 48 C.F.R.

Subpart 2.1 and the Uniform Guidance. Pursuant to 2 C.F.R. § 200.102 (Exceptions), OMB may allow exceptions to the Uniform Guidance when exceptions are not prohibited by statute. The exception takes effect upon the date of issuance ofthis memo. Agencies should apply this exception to all recipients.

Recipients should document any change based on this exception in accordance with 2 C.F.R. § 200.318 (General procurement standards).

Ifyou have any questions regarding this memorandum, please contact Mary Tutman at [email protected] or Gil Tran at Hai_M._ [email protected]. 2 The American Innovation and Competitiveness Act, Pub. L. No. 114-329, § 207{b) {2017) states that the Uniform Guidance shall be revised to conform with the requirements concerning the micro-purchase threshold. 3 Codified at 41 U.S.C. § I902{t).
2

City of Farmersville
Glossary
City of Farmersville

Accounting Standards – Generally accepted accounting principles (see GAAP) published by the Governmental Accounting Standards Board (GASB) that guide local and state agencies’ recording and reporting of financial information. The standards establish such guidelines as when transactions are recognized and annual financial report content.

Accounting System - The total set of records and procedures used to record, classify, and report information on the financial status and operations of an entity.

Accrual Accounting Method - An accounting method that recognizes economic events regardless of when cash transactions occur.

Ad Valorem Tax – A tax assessed based on the dollar value of an item or activity. Typical examples are property and sales taxes. Ad valorem taxes contrast with per-unit taxes, such as alcoholic beverage and cigarette taxes, which are assessed at a fixed dollar per unit purchased.

Adopted Budget - The budget document formally approved by the City Council.

Adverse Opinion – A finding issued by an independent auditor as part of the annual single audit requirement. This opinion finds that the auditee is not in compliance with all material aspects.

Allocated Costs – A method for allocating overhead time and other expenses to activities that provide direct services.

Allotments - Management allocation of appropriated funds subject to legal constraints.

Appropriation – A legal authorization granted by the City Council to make expenditures and to incur obligations for specific purposes. An appropriation is usually for a fixed amount and time limited and must be expended before the deadline.

Appropriation Spending Limitation (Gann Limit) – Article XIII B of the California Constitution establishes a spending limitation on government agencies within California. The spending limit is a mandated calculation of how much the City is allowed to expend in one fiscal year. The amounts of appropriations subject to the limit are budgeted proceeds of taxes. The total of these budgeted revenues cannot exceed the total appropriations limit. Annually, local governments may increase the appropriate limit by a factor comprised of the change in population combined with the California inflation rate as determined by the State Finance Department.

Arbitrage – A technique used to take advantage or price differences in separate markets. This is accomplished by either selling debt instruments at a low interest rate and investing the proceeds at a higher rate, or by purchasing securities, negotiable instruments or currencies in one market for immediate sale in another market a better price.

Assessed Valuation - A valuation set upon real estate or other property by the County Assessor and the State as a basis for levying taxes.

Assessment District – Not a separate governmental entity, but rather a defined area of land which will be benefited by the acquisition, construction or maintenance of a public improvement.

Authorized Positions - Positions approved by the City Council which may or may not have funding (see Budgeted Positions).

Asset Forfeiture Fund - This fund accounts for the proceeds from sale of assets seized primarily from illegal narcotics activities. Asset Forfeiture funds are used for law enforcement purposes.

Audit - an official inspection of an individual's or organization's accounts, typically by an independent body.

Balanced Budget - (particularly that of a government) is a budget in which revenues are equal to expenditures. Thus, neither a budget deficit nor a budget surplus exists (the accounts "balance"). More generally, it is a budget that has no budget deficit, but could possibly have a budget surplus.

Base Budget – Those resources necessary to meet an established and existing service level.

Basis of Budgeting - Basis of budgeting refers to the method used for recognizing revenues and expenditures in budget.

The City uses the modified accrual basis of accounting for budgetary purposes, which is in compliance with Generally Accepted Accounting Principles.

Beginning Fund Balance – The available fund balance in a fund from the end of the prior year for use in the following year.

Benefit Assessment – Charges levied on parcels to pay for public improvements or services provided within a predetermined district or area according to the benefit the parcel receives from the improvement or services.

Benefit Assessment Act of 1982 – The 1982 Act lets cities, counties and special districts finance a variety of improvements. The Act requires majority voter approval if the proposed assessment area has 12 or more registered voters. If less than 12, the owners of at least 60% of the land in the assessment area must give written consent to the assessment.

Bond - A City may raise capital funds by issuing a written promise to pay a specified sum of money, called the face value or principal amount; at a specified date or dates in the future, together with the periodic interest at a specified rate.

Bond Interest and Redemption - Payment of interest and principal on an obligation resulting from the issuance of bonds.

Budget - A planning and controlling document for financial operation with estimates of proposed expenditures and revenues for a given period, usually one year. A plan or action expressed in figures.

Budget Amendment – A request for an increase or decrease in an existing service level (over and above the base budget).

Budget Calendar - The schedule of key dates or milestones that a government follows in the preparation and adoption of the budget.

Budget Document - The official written statement prepared by the budget office and supporting staff.

Budget Message - A general written description summarizing the proposed budget. The budget message explains principal budget issues against the background of financial experience in recent years and presents recommendations made by the City Manager.

Budget Modification – A change of expenditure levels and corresponding resources needed to accomplish an existing service level or unanticipated service. All budget modifications are reflected in the current year budget and are approved by the City Council and/or City Manager as authorized by the Annual Budget Adoption Resolution.

Budgeted Positions - The number of full-time equivalent positions to be funded in the budget. Example: Funding of two half-time positions would equal one full-time equivalent position.

Business Improvement District - A public-private partnership in which businesses in a defined area pay special taxes, fees and/or assessments to fund public facility improvements and programs in the area.

Business License Tax - A type of excise tax imposed on businesses for the privilege of conducting business within the city. The tax is most commonly based on gross receipts or levied at a flat rate.

California State Board of Equalization (BOE) – California state agency responsible for the collection and administration of the state’s sales and use, alcohol, tobacco, and other taxes. In addition, the BOE determines the assessed value of certain properties and oversees property tax assessment practices of county assessors.

California State Controller – The Controller is the Chief Fiscal Officer of the state and is elected every four years. The Controller is responsible to: account and disburse all state funds; determine the legality and accuracy of claims against the state; pay the state’s bills; audit and process all personnel and state payroll transactions; audit various state and local government programs; administer the Unclaimed Property Law; and inform the public of financial transactions of city, county and district governments.

Capital Improvement Plan - A plan for capital expenditures and the means of financing them, to be incurred each year over a fixed period of years, to meet capital needs arising from long-term work program. Included are expenditures made for land, building, permanent public works projects, major reconstruction or renovation of structures, and major landscaping or park improvements.

Capital Outlay - Expenditures for the acquisition of capital assets.

Carry-Over Balance - Balance of funds brought forward from prior years.

Cash Basis Accounting - An accounting method that recognizes revenues and expenses at the time physical cash is actually received or paid out.

Central San Joaquin Valley Risk Management Authority (CSJVMRA) – The Central San Joaquin Valley Risk Management Authority is a joint powers authority of 54 cities, providing quality, cost-effective risk financing and risk control services. The City of Reedley is a member and participates in the self-funded programs for general liability, employment practices liability, property damage, and workers’ compensation coverage.

Certificates of Participation (C.O.P.) – Debt instrument, commonly called C.O.P., that provides long-term financing through a lease (with an option to purchase) or through an installment agreement.

Charter City – Charter cities have authority over “municipal affairs,” trumping state law governing the same topic. In contrast, general law city is a city that has not adopted a charter and is therefore bound by the state’s general laws, even with respect to municipal affairs. The City of Farmersville is a general law city.

Congestion Mitigation and Air Quality Improvement Program (CMAQ) - Jointly administered by the Federal Highway Administration (FHWA) and the Federal Transit Administration (FTA), the CMAQ program was reauthorized under the Transportation Equity Act for the 21st Century (TEA-21) in 1998. The CMAQ program was implemented to support surface transportation projects and other related efforts that contribute air quality improvements and provide congestion relief.

Community Development Block Grant (CDBG) - The Community Development Block Grant is a federal program for the development of housing and community projects within a pre-approved functional area. Funds are awarded to agencies on an annual basis to carry out these activities

Comprehensive Annual Financial Report (CAFR) - A set of government financial statements comprising the financial report of a state, municipal or other governmental entity that complies with the accounting requirements promulgated by the Governmental Accounting Standards Board (GASB).

Contingency - Funds appropriated by the City Council for unforeseen needs.

Consultants - Fees paid to outside individuals who provide advice or services.

Citizens Option for Public Safety (COPS) – A state subvention for local law enforcement initiated in 1996.

Community Facilities District (CFD) – See Mello-Roos Community Facilities District.

Construction / Development Tax – Excise tax imposed on the privilege or activity of development and/or the availability or use of municipal services.

Consumer Price Index (CPI) – A statistical description of price levels provided by the U.S. Department of Labor. The change in this index from year to year is used to measure the cost of living and economic inflation.

County Assessor – An elected official whose main duty is to set values on real property for the purpose of taxation within the county. The Assessor is responsible for the creation and maintenance of assessor parcels from final

subdivisions, parcel maps, lot line adjustments, record of survey, deeds and miscellaneous documents.

County Auditor-Controller – The chief accounting officer of the county established to provide various accounting and property tax administration services to the county and other local governments within the county. The Auditor Controller is responsible for budget control, disbursements and receipts, financial reporting, and for audits of certain agencies within the county. Auditor-Controllers are nonpartisan elected officials serving four-year terms, except in four counties with appointed officers: San Francisco, Santa Clara, Los Angeles, and San Diego.

County Treasurer-Tax Collector – Administers the billing, collection, and reporting of property tax revenues and conducts Tax Defaulted Property Sales for real property tax delinquencies remaining after five years. Treasurer-Tax Collectors are nonpartisan elected officials serving four-year terms except in three counties with appointed officers:

Los Angeles, Sacramento, and Santa Clara.

Countywide/Statewide Pools – A system used to allocate local sales and use tax payments that cannot be identified with a specific place of sale or use in California. Local tax reported to the pools is distributed to the local jurisdictions in proportion to taxable sales.

Current Refunding – When restructuring or retiring outstanding bonds, if bonds are paid off within 90 days of depositing either cash on hand or refunding bond proceeds, the refunding is a “current refunding”.

Debt Financing – Issuance of bonds and other debt instruments to finance municipal improvements and services.

Debt Instrument – Written pledge to repay debt such as bills, notes and bonds.

Debt Service – Payment of principal and interest on long-term indebtedness such as bond maturities, loans and revenue anticipation notes.

Defeasance - A provision that voids a bond or loan when the borrower sets aside cash or bonds sufficient to service the borrower's debt.

Deficit - The amount by which government spending exceeds government revenues. (Also see:
structural deficit)

Department - An organizational unit comprised of divisions or programs. It is possible for a department to be comprised of only one division.

Department Activity - A unit of budgetary accountability and control that encompasses specific and distinguishable lines of work performance for the purpose of accomplishing a function for which the City is responsible.

Description - Contains a list of the typical activities of programs.

Development Impact Fees (DIF) – Fees placed on the development of land or conditions required for the approval of a development project such as the dedication of certain lands to specific public uses. The fees are typically justified as an offset to the future impact that development will have on existing infrastructure.

Discretionary Revenue - Money that the City Council has the authority to allocate for any purpose. Often refers to the General Fund, as opposed to Special Funds.

Disclaimer of Opinion – A finding issued by an independent auditor as part of the annual single audit requirement. This means that the scope of the auditor’s work is insufficient to express any opinion on the auditee’s compliance.

D.I.V.C.A. – The Digital Infrastructure and Video Competition Act of 2006 effectively replaced locally issued franchise agreements for video service with a system of state-issued franchises subject to certain limited locally imposed conditions and requiring franchise fees to be paid to local agencies where services are provided.

Division - A functional grouping of related activities within a department. There are usually several activities within a division.

Earmarked Funds – Funds that have been tagged or “earmarked” for a specific purpose.

Employee (Fringe) Benefits - The cost to the City for contribution to employee retirement, social security, health and

workers' compensation programs.

Encumbrance - Funds not yet expended but which are delegated or set aside in anticipation of an expenditure in the form of a purchase order, contract, or other commitment, chargeable to an appropriation. These funds cease to be an encumbrance when paid.

Enterprise Fund - Established to finance and account for the operation and maintenance of facilities and services which are predominately self-supporting by user charges.

ERAF: Educational Revenue Augmentation Fund – Accounts established by the state Legislature to receive shifts of property tax revenues from cities, counties, special districts and redevelopment agencies. The additional ERAF property tax revenues to schools enable the state general fund to reduce support from the state general fund.

Excise Tax – Tax placed on a person for a voluntary act, making the tax avoidable. Includes sales and use tax, business license tax, transient occupancy tax, utility users’ tax, etc. Phrase “excise tax” is most commonly used to refer to a parcel tax.

Exemption – The exclusion from the tax base of certain types of transactions or objects. For example, federally owned land is exempted from property tax.

Expenditure – The actual payment for goods and services. A decrease in payee resources.

Fair Market Value - The value of a piece of real estate in the open market. Used to determine the assessed value of property for taxing purposes.

Fee – A charge to the consumer for the cost of providing a particular service. California government fees may not exceed the estimated reasonable cost of providing the service of facility for which the fee is charged, plus overhead.

Fiduciary Fund - Fiduciary funds are used to report assets held in a trustee or agency capacity for others and therefore cannot be used to support the government's own programs. Resources held in trust for the benefit of the agency's own programs.

Fines, Forfeitures and Penalties – Revenues received and/or bail monies forfeited upon conviction of a misdemeanor or municipal infraction.

Fiscal Year – The period designated by the City for the beginning and ending of financial transactions. The City of Reedley’s fiscal years begin on July 1 and end on June 30 of the following year.

Fiscal Year End (FYE) – This term means as of June 30th (end of the fiscal year).

Fiscal Year to Date (FYTD) – This term means as of a specific period, year-to-date, regarding the fiscal year ending June 30th.

Fixed Asset – A tangible item of a long-term character such as land, buildings, furniture, and other equipment with a unit cost in excess of $10,000.

Franchises – Fee paid to a municipality from a franchisee for “rental” or “toll” for the use of city streets and rights-ofway.

Fringe Benefits - Benefits to City employees, in addition to salaries, paid by the City. These benefits include social security, pensions, workers' compensation, unemployment compensation, life and health insurance.

Full Time Equivalency (FTE) - One employee position totals one full year of service or approximately 2080 hours a year. FTE are allocated to Department Expenditures based upon the work within that unit. As an example, the City Clerk Department may have 50% with the remaining 50% expensed out to the Administration Department, thus equaling 1 FTE Position.

Functional Revenue – Revenues that can be associated with and allocated to one or more expenditure function and which meet one of the following criteria: (1) the revenue is generated from direct services, such as revenues from fees or charges; (2) the revenue is associated with specific service by external requirements, such as grant conditions, bond sale agreements, or statutory or charter requirements.