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City CouncilJune 24, 2025CENTRAL STORES ANNUAL PURCHASE ORDERSFINANCE DEPARTMENT RiversideCA.gov2
BOARD RECOMMENDATIONS1. Approve the expenditure for 20 Fiscal Year 2025-26 Annual Purchase Orders for Central Stores for orders benefiting Electric and Water operations, with an estimated amount of $23,768,660;2. Approve a not to exceed 20% allowance for Producer Price Index (PPI) increases for 20 Fiscal Year 2025-26 Annual Purchase Orders for Central Stores for orders benefiting Electric and Water operations; and3. Approve a potential impact of 30% tariff-related contingency for the 2025/26 fiscal year.Board Action -Board of Public Utilities (BPU) approved recommendations with the exception of #3 1 2
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BACKGROUND•City Charter 1202(b) – BPU approval of expenditures greater than $50,000•Purchasing Resolution 24101, Section 404 – Utilities Exception–Certain supplies and materials are “peculiar to the needs” of City’s Public Utilities Department (i.e., chemicals, meters, utility poles, road and backfill materials, transformers)–May be acquired through open market procurement–Expenditures must be approved by BPU RiversideCA.gov4
ANNUAL PURCHASE ORDERS•Central Stores is critical to maintaining inventory and distributing materials largely used by Electric and Water operations•Issues annual purchase orders for RPU via competitive bid process, formal or informal–Informal applies to goods and services of $50,000 or less and any amount under Purchasing Resolution 24101, Section 404 “Utilities Exception”–Formal applies to all other purchases over $50,000–Competitive bidding may be waived: Sole source, “piggy-backing”, best Interest of the City, other reasons defined in City’s purchasing rules•Fiscal Year 2025-26 annual POs estimated at $23,768,660 3 4
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POTENTIAL TARIFF IMPACTS•In volatile global trade and tariff environment, 20% contingency may be exceeded potentially delaying timely restocking–Delays may affect City’s ability to perform routine maintenance or respond quickly to unplanned service interruptions, posing a risk to the reliability of Electric and Water operations–With tariff volatility impacting procurement, it may be prudent to review whether standard contingency is sufficient to support timely operations–Insufficient contingency will require Purchasing to obtain approval from BPU and City Council, resulting in delays and impacts to operational readiness•Maintaining sufficient contingency helps avoid delays in approvals that can reduce vendor flexibility RiversideCA.gov6
PRACTICES TO MITIGATE TARIFF VOLATILITY•Purchasing Division utilizes the following strategies to mitigate tariff pricing volatility:–Tariff Documentation: Vendors must provide supporting documentation to validate any cost increase requests–Proactive Vendor Engagement: Staff work with vendors to adjust delivery schedules, quantities, or alternate sourcing options–Flexible Sourcing Strategies: Central Stores explores cooperative contracts and regional supplier pools to maintain a stable supply chain•Staff engage in assertive, documented negotiations to manage tariff-related pricing impacts 5 6
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STRATEGIC PLAN ALIGNMENT
STRATEGIC PRIORITY 5 - HIGH PERFORMING GOVERNMENTCROSS-CUTTING THREADS Equity
Innovation
Community Trust
Fiscal Responsibility
Sustainability and Resiliency
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RECOMMENDATIONSThat the City Council:1. Approve Central Stores Annual Purchase Orders for an estimated total of $23,768,660 for FY 2025/26; 2. Approve a not to exceed 20% allowance for Producer Price Index (PPI) increases for the FY 2025/26 Annual Purchase Orders for Central Stores;3. Authorize the City Manager, or his designee, to award the purchase orders for such procurements for the items designated. 7 8