DATE: December 2, 2024
TO: Mayor and Members of City Council
VIA: Stefan Chatwin, City Manager
FROM: Andrew Brozyna, Public Works Director
Waqas Hassan, Assistant Finance Director
DEPARTMENT: Public Works
Finance
SUBJECT: AMENDING THE PURCHASING POLICY UPDATING SECTION 5 – DOLLAR LIMITS, PUBLIC CONTRACT CODE SECTION AND
SECTION 9 – PROCUREMENT OF RECYCLED-CONTENT
PAPER PRODUCTS
RECOMMENDATION
It is recommended that the City Council adopt the attached resolution amending the City’s Purchasing Policy to:
1. Update Section 5 to reflect changes to the California Uniform Public Construction Cost Accounting Act as amended under Assembly Bill 2192, raising thresholds for solicitation; and
2. Update Section 9 related to SB 1383 implementation to simplify language and reflect actual practice.
EXECUTIVE SUMMARY
The City’s Purchasing Ordinance and Policy establish the procurement system that all Departments use in soliciting public construction contracts, executing professional services agreements, and purchasing supplies, services, and equipment. The procurement system is intended to ensure goods and services are purchased for the lowest cost commensurate with quality, and that financial controls meet both legal requirements and good accounting principles.
The proposed amendments to the Purchasing Policy are two-fold. First, staff recommends amending Section 5 to adjust the threshold purchasing authority limits for
budgeted expenditures that can be approved administratively. Under Assembly Bill 2192, which was signed by the governor and will go into effect as of January 1, 2025, public projects valued at $75,000 or less may be performed by the City and public projects valued at $220,000 or less can be contracted using informal bidding procedures. Only public projects valued at over $220,000 will require formal bidding procedures under Assembly Bill 2192. With adoption of this amendment, the City will be in adherence with State law and Public Contracts Code. Further, language in the Policy has been added to allow all levels to automatically follow the limits allowed under state law for all thresholds.
Second, amending Section 9 will simplify the language and reflect the City’s current process related to documentation of recycled-content paper purchases made under SB 1383 regulations. The updated Purchasing Policy will be effective January 1, 2025.
BACKGROUND
As the official Purchasing Authority for the City, the City Manager is responsible for overseeing the procurement of goods and services for the City. The purchasing procedures are governed by the California Public Contracts Code, including the provisions of the California Uniform Public Construction Cost Accounting Act (CUPCCAA), the Foster City Municipal Code, Chapter 3.04, Purchasing System, and the City’s adopted Purchasing Policy. When used together, the ordinance and policy establish the procurement system which authorizes the City Manager to procure public contracts, supplies, services, equipment, and professional services up to set limits, when funds have been approved for the expenditure as part of an approved budget. At the City Manager’s discretion, he may delegate limited purchasing authority to Department Heads for budgeted expenditures. Expenditures above the City Manager’s purchasing limit authority are subject to City Council approval.
ANALYSIS
Purchasing Policy Amendments to Purchasing Limits (Section 5) The CUPCCAA has been amended by the Legislature to increase its solicitation thresholds. On September 29, 2024, the Governor signed AB 2192, which increased the CUPCCAA limits for Public Works of Improvement effective January 1, 2025. The CUPCCAA applies to agencies, including cities, whose governing boards have elected, by resolution, to become subject to uniform construction cost accounting procedures located at Public Contracts Code Section 22030 et seq.
The City/District elected to follow the provisions of Public Contracts Code Section 22030, with the adoption of City Resolution No. 99-15 and EMID Resolution No. 2650 on February 16, 1999. Since that time, staff has periodically brought to City Council recommended updates as necessary.
The CUPCCAA previously authorized public projects of $60,000 or less to be performed by the employees of a public agency; authorized public projects of $200,000 or less to be let to contract by informal bidding procedures; and required public projects of more than $200,000 to be let to contract by formal bidding procedures. These limits were adopted by the City Council, via Resolution No. 2019-51, on June 3, 2019.
With enaction of AB 2192, the CUPCCAA has been amended to increase the thresholds for public projects of $75,000 or less to be performed by the employees of a public agency; authorizes public projects of $220,000 or less to be let to contract by informal bidding procedures; and requires public projects of more than $220,000 to be let to contract by formal bidding procedures. In the event that all bids received for the performance of a public project are in excess of $220,000, the governing body of a public agency may award the contract at $235,000 or less to the lowest responsible bidder if it determines the cost estimate of the public agency was reasonable. Nothing in the recommended amendment to the Purchasing Policy would preclude the City Council from choosing to engage in a full formal bid process for any project The proposed amendments to the Purchasing Policy shown in Attachment 3 will raise the purchasing limits to help streamline the procurement process for the City organization in recognition of the recent significant increases in the cost of materials and services, while maintaining an appropriate level of transparency and accountability. Further, language has been added to allow all purchasing levels to automatically follow the limits allowed under state law for all thresholds.
Purchasing Policy Amendments to Requirements for Procurement of Recycled- Content Paper Products (Section 9)
SB 1383 contains a number of requirements for cities related to the purchase of recycled- content products and the documentation of those purchases. Prior to the regulations going into effect in 2022, the City revised the Purchasing Policy to reflect the general requirements of the regulations. Now that the implementation has been fully undertaken, some of the processes for maintaining Foster City’s documentation have been more fully developed and refined. Section 9 language is proposed to be simplified and updated to better reflect actual City practices based on Foster City’s Implementation Record process.
Attachment 3 shows all proposed changes to both Sections 5 and 9 of the Purchasing Policy. The updated Purchased Policy will be effective January 1, 2025. The EMID Code adopts the City’s Purchasing System by reference, therefore, the proposed updates to the Purchasing Policy will be additionally applied to EMID.
City Staff continually reviews and evaluates the various Citywide policies and processes to ensure that all laws and regulations are followed and that City services can be provided efficiently and effectively. Staff anticipates the need to do a comprehensive review of the Purchasing Policy and Purchasing Ordinance in 2025, which will be brought back to the City Council for approval at a future meeting.
CALIFORNIA ENVIRONMENTAL QUALITY ACT
This item is not subject to review under the California Environmental Quality Act (CEQA) pursuant to Public Resources Code Section 21000, et seq. and the CEQA Guidelines (14 Cal. Code Regs. §§ 15000 et. seq.), including without limitation, Public Resources Code section 21065 and California Code of Regulations 15378 as this is not a “project” that may cause a direct, or reasonably foreseeable indirect, physical change in the environment.
FISCAL IMPACT
There is no fiscal impact associated with these amendments to the City’s Purchasing Policy. Adoption of the proposed amendments will ensure the City is consistent with State law and Public Contracts Code. In addition, it will help the City achieve better operational efficiency under current economic conditions while still maintaining a high level of accountability and transparency in the City's procurement process.
CITY COUNCIL VISION, MISSION, AND VALUE/PRIORITY AREA
Staff Empowerment and Operational Excellence
ATTACHMENTS:
Attachment 1 – Resolution
Attachment 2 – "Clean" Version of the Foster City Purchasing Policy Attachment 3 – "Red-Lined" Version of the Foster City Purchasing Policy