Purchasing Policy Limits Updates
Council Goal-Setting Workshop -Agenda Item 03.A-5
By Nadia Feeser, Administrative Services Director
Meeting Date: February 16, 2024
Background
•City’s Purchasing Policy and Procedures updated periodically as needed:
•Purchasing Limits –last updated 2019
•Purchasing
•Travel & Meal Policy -last updated 2022
•Federal Procurement Policy –last updated 2019
•Invoices
•Purchase Orders
•Credit Card
•Budget Revisions/Transfers
•Fraud Prevention and Reporting Policy -last updated 2022 •Council Member Reimbursement Policy -last updated 2023
Purchasing for the City
Council Direction
and Budget
authority
Purchasing Policy
to ensure that
expenditure is
done fairly
Adds
administrative
step, but ensures
a fair and
competitive
process
CURRENT Purchasing Limits
Goods & Services
Purchase
Amount
$2,500 or less
$2,501 to $15,000
$15,001 to $50,000
Over $50,000
Solicitation
Process
No bid
3 written quotations
recommended
Informal quote. 3 written
quotations required
Formal Bid
Approval
Authority
Designated Employee or
Supervisor
Department Head;
Purchasing Officer
City Manager
City Council
Purchasing Limits –Public Projects
•construction, reconstruction, erection, alteration, restoration, improvement, demolition, and repair work involving any facility owned, leased, or operated by the City.
•painting or repainting any facility owned, leased or operated by the City. •construction, erection, improvement, or repair of dams, reservoirs, and electrical transmission lines of 230,000 volts and higher that are owned by the City
Public Project
definition:
•Solicitation Threshold Requirements
•Up to $60,000 –not required
•Up to $200,000 –informal bids required
•Over $200,000 –formal bids required
Public Projects –
City adopted the
California Uniform
Public Construction
Cost Accounting Act
(CUPCCAA) limits
CURRENT Purchasing Limits
Public Projects
Purchase
Amount
$5,000 to $15,000
$15,001 to $50,000
$50,001 to $200,000
Over $200,000
Solicitation
Process –based
on CUPCCAA
3 written quotations
recommended
3 written quotations
recommended
Informal bid. 3 written
quotations required
Formal Bid
Approval
Authority
Department Head;
Purchasing Officer
City Manager
City Council
City Council
Purchasing Limits Survey –Arroyo Grande 2023
Increasing Purchasing Limits
Efficiencies
•Faster implementation of purchases and projects
–reduction in waiting for quotations, RFP and
responses, and approvals
•Greater flexibility on time and purchase types
•Competitive Advantage
•Ability to move quickly to respond to issues
•Attract more vendors with less burden
•Reduction in Council staff reports, including staff
time to draft reports
•Reduction in administrative staff time to comply
with limits
•Currently not receiving multiple quotes from
vendors below $15,000 based on the cost and
time it takes to put together a quote
Oversight
•Reduction in review of smaller $ dollar
purchases
•Reduction in City Manager and Council review of
purchases less than $50,000
•Risk of fraud –however, each purchase is still
reviewed by Finance
•Existing governance structure in place to help
mitigate any issues
•Fraud Policy in Purchasing Policy
Example 1: Fencing for Public Safety Facility
Migration
•Secured Fencing behind 330 Main Street for Police access •Purchasing Policy: Under $50K, requires 3 written bids •Delayed p.o.issuance by 1 month seeking 3 written bids – ultimately $18K
•Delayed this step in the project by 1 month
Example 2: Fewer bids for projects under
$50K
•For purchases/projects/services under $50K where 3 bids are required, only 1 or 2 bids are being provided.
•Staff is still soliciting bids, but feedback from vendors who do not respond or bid: It isn’t worth the vendor’s time to put together a detailed quote for the contract amount.
PROPOSED Purchasing Limits
Goods & Services
Purchase
Amount
$10,000 or less
$10,001 to $50,000
$50,001 to $100,000
Over $100,000
Solicitation
Process
No bid
3 written quotations
recommended
Informal quote. 3 written
quotations required
Formal Bid
Approval
Authority
Designated Employee or
Supervisor
Department Head;
Purchasing Officer
City Manager
City Council
PROPOSED Purchasing Limits
Public Projects
Purchase
Amount
$5,000 to $60,000
$60,001 to $100,000
$100,001 to $200,000
Over $200,000
Solicitation
Process –based
on CUPCCAA
3 written quotations
recommended
3 written quotations
recommended
Informal bid. 3 written
quotations required
Formal Bid
Approval
Authority
Department Head;
Purchasing Officer
City Manager
City Council
City Council
Next Steps
•Council Direction
•Council Meeting to approve Resolution to update
Purchasing Policy limits