Manager and Department Head Commissioner for a certain category of purchases. Staff recommends that category move from purchases between $20,001 - $30,000 up to $50,001 - $75,000 and eliminate the requirement for a Department Head Commissioner approval. The proposed changes are contained in their entirety as an exhibit to the policy.
Purchasing limits are set to allow for greater efficiency within the purchasing procedures. Ensuring that those limits keep pace with economic changes results in enhanced efficiency and allows us to effectively maintain infrastructure and operations and provide services to the community in a timely fashion. If the amounts are set too low, staff can encounter timing issues that prevent the timely purchase of goods, supplies and services, such as repairs, small professional services, or technology improvements.
When costs exceed the City Manager’s approval authority, staff is required to follow the formal requests for proposal process. This process requires that all requests be approved at a City Council meeting following a formal bid or RFP process. The formal process requires additional staff time and resources, can cause project delays, and ultimately, may not result in a lower cost – rather, it could cause the Town to lose the benefit of the economy of the original quote.
The Town’s purchasing policy provides that no purchases shall be allowed for any goods and supplies, equipment, materials, or services unless there exists an unencumbered appropriation in the adopted budget. Essentially, if the purchase or service was not accounted for within the current year’s budget, it cannot take place without prior City Council authorization and a budget appropriation.
When making a purchase there are three processes staff follows – open market, informal, and formal. The limits differ for “goods and supplies, equipment, and non-professional services” and “professional services.”
FISCAL IMPACT: There is no fiscal impact associated with this agenda item.
ENVIRONMENTAL ISSUES: California Environmental Quality Act (CEQA) Guidelines sections 15378(b)(2) and 15378(b)(5) provide that ongoing administrative activities and organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment do not constitute a “project” as defined by the State CEQA Guidelines (Cal. Code Regs., tit. 14, § 15000 et seq.) and are therefore exempt from CEQA and no further environmental review is required.
ATTACHMENT: Resolution and Exhibit A Policy 408: Purchasing PREPARED BY: Mandy Brown, Senior Management Analyst
RECOMMENDATION: Adopt the resolution approving amendments to Policy 408: Purchasing to Update purchasing limits, pursuant to CEQA Guideline 15378. -234-
RESOLUTION NO. 24-
RESOLUTION OF THE CITY COUNCIL OF THE TOWN OF HILLSBOROUGH APPROVING AMENDMENTS TO POLICY 408: PURCHASING TO UPDATE PURCHASING LIMITS, PURSUANT TO CEQA GUIDELINE 15378
WHEREAS, the Town of Hillsborough (“Town”) has a purchasing policy, Policy 408 (“Policy”), setting forth purchasing policies, procedures, and functions; and WHEREAS, the Policy establishes different procedures and processes for purchasing and procurement of goods and services based on dollar limits; and WHEREAS, establishment of the dollar limits for the various procedures and processes mentioned above are set forth in the Policy and may be updated by the City Council; and
WHEREAS, it is now appropriate to revise such dollar limits for current use.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the Town of Hillsborough hereby adopts the revised Purchasing Policy 408, as attached hereto as Exhibit A.
Mayor of the Town of Hillsborough
Attest: City Clerk
This resolution was adopted by the City Council of the Town of Hillsborough at its regular meeting held on the 13th day of May 2024, by the following vote of the members thereof:
AYES: Councilmembers
NOES: Councilmembers
ABSENT: Councilmembers
ABSTAIN: Councilmembers
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POLICY 408 1 PURCHASING
T O W N O F H I L L S B O R O U G H
P E R S O N N E L P O L I C Y
POLICY 408 DRAFT 5/13/2024
SUBJECT: PURCHASING
PURPOSE: This policy describes the processes used to procure materials, equipment, and services. It does not cover Public Works projects, which are covered under Hillsborough Municipal Code Section 3.10.030.
STATEMENT OF POLICY: Department Heads are responsible for procuring materials, equipment, supplies, and services for their departments. This activity should be conducted in the most cost-effective and efficient manner, consistent with Town requirements, schedules, and purchasing principles.
Purchasing Procedures
General Purchases: This category includes supplies, equipment, and operating, maintenance, and consultant services.
Up to $10,000
There are no specific requirements for purchases under $10,000. $10,001 – $20,000
A purchase valued between $10,001 and $20,000 can be approved and executed by the Department Head. Departments must receive three informal quotes from vendors to ensure the Town is receiving the best pricing.
$20,001 – $50,000
A purchase valued between $20,001 and $50,000 can be approved and executed by the City Manager or, in the City Manager’s absence or unavailability, the Finance Director. At a minimum, the Department Head should provide documentation of three informal bids from vendors.
$50,001- $75,000
A purchase valued between $50,001 and $75,000 is subject to an informal bid, Request for Information (RFI), or Request for Proposal (RFP) process and can be approved and executed by the City Manager or, in the City Manager’s absence or unavailability, the Finance Director.
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EXHIBIT A
POLICY 408 2 PURCHASING
Over $75,000
A purchase valued at over $75,000 is subject to a formal bid or RFP process and must be approved by the City Council.
Exceptions
1. Cooperative purchasing, piggyback agreements, and central government purchasing programs: These programs will exempt a purchase from the competitive bidding process (i.e. from the informal quote, informal bid, RFI, or RFP requirements) detailed above. The City Manager is empowered and authorized to procure for the Town, supplies, services, equipment, and technology in conjunction with such voluntary cooperative purchasing agreements or programs that may be available and advantageous to the Town.
a. “Piggybacking" is an assignment of existing contract rights to purchase supplies, equipment, or services. Piggybacking is permissible when the solicitation document and resultant contract contain approval for other public entities to utilize the contract. Such agreements may include an assignability clause that assigns all or a portion of the specified deliverables as initially advertised, competed, evaluated, and awarded.
b. Cooperative Purchasing Programs. Purchases of supplies, materials, equipment, or services and sales of surplus property made under a cooperative purchasing program utilizing purchasing agreements maintained by a State, County, or other public agencies.
2. Sole and Single source purchases (Noncompetitive) - Purchases may be made without making use of the competitive bidding process (i.e. informal quote, informal bid, RFI, or RFP requirements) detailed above if there are limitations on the source of supply, necessary restrictions in specifications, necessary standardization, quality considerations, or other valid reasons for waiving competition., Approval of a waiver of competitive bidding shall be given by the City Manager acting within his/her procurement authority.
3. Utilities, personnel, and benefits expenditures (e.g., medical premiums, retirement payments, workers’ compensation insurance premiums, staff backfill, etc.). These types of purchases are not subject to the competitive bidding process (i.e. from the informal quote, informal bid, RFI, or RFP requirements) detailed above, but any purchase is still subject to approval by the individual or body noted above based on the monetary amount.
4. Emergency Purchases: The City Manager may approve and authorize emergency purchases without observing the competitive bidding process (i.e. informal quote, informal bid, RFI, or RFP requirements) detailed above upon a finding that such purchases are required to prevent or mitigate the loss or impairment of life, health, property, or essential public services and that there is sudden, unexpected occurrence that poses a clear and imminent danger. The City Manager must report -237-
POLICY 408 3 PURCHASING
such an emergency to the City Council no later than seven days after the action, or at the next regularly scheduled City Council meeting, provided it is no later than fourteen days after the emergency action was taken. The City Manager’s report must explain why the action was necessary to respond to the emergency and why the emergency did not permit a delay resulting from a competitive solicitation for bids.
The City Council shall review the emergency action and vote on whether such emergency action is still needed.
5. Passenger Vehicles: Notwithstanding the requirements above, all passenger vehicle purchases can be approved and executed by the Department Head so long as the Department Head has obtained three informal quotes from vendors to ensure the Town is obtaining the best pricing.
Purchase Orders
A purchase order should be created for any capital purchase or for any purchase greater than $10,000, with the following exceptions: contractual payments, subscriptions, memberships, internet purchases, credit card charges, travel and meeting expenses/food, customer refunds, utilities, and other routine services, pass-through payments, and employee reimbursements.
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