AMENDMENTS TO TITLE 4 OF SAN JOSÉ MUNICIPAL CODE
RELATED TO PROCUREMENT OF GOODS AND SERVICES
STATUS REPORT
Public Safety, Finance and
Strategic Support Committee
JULIA H. COOPER, DIRECTOR OF FINANCE
LUZ COFRESÍ-HOWE, ASSISTANT DIRECTOR OF FINANCE
COMMITTEE AGENDA: FEBRUARY 16, 2023
ITEM: (d) 4
FILE: CC 23-022
BACKGROUND
• City Decentralized Procurement Model
▪ Public Works – Public Works projects, construction, improvement, or demolition of structures
▪ City Departments – Department consulting services
▪ Finance Department Purchasing Program (Purchasing)
* All other goods and services
* City Procurement Card (P-Card) Program management
• Procurement Improvement and Readiness Program (Procurement Improvement) Launched
2 PROCUREMENT IMPROVEMENT TIMELINE
3 February 2019
Procurement
Improvement
and Readiness
Program
Launched
February 2020
Guidehouse Inc.
Engaged to
Perform Citywide
Procurement
Improvement
Study
March 17, 2020
Shelter in Place
Study on Hold
October 2021
Restart Citywide
Procurement
Improvement
Study
May 10, 2022
Procurement
Current State
Assessment
Report and
Procurement
Future State
Vision Report
Published
March 2021: Added to City Roadmap
PROCUREMENT CHALLENGES –
PROCUREMENT CURRENT STATE ASSESSMENT REPORT
4 PROCUREMENT OPPORTUNITIES –
PROCUREMENT FUTURE STATEVISION REPORT
5 WHAT HAVEWE DONE SO FAR?
CITY INVESTMENTS STAFFING
PROCUREMENT
CONSISTENCY
PROCUREMENT
STREAMLINING TRAINING TECHNOLOGY
Procurement Prioritization Board formed
September 2019
✓ ✓
Reorganize Purchasing workgroups into “work
teams” and enhance cross-training
✓ ✓
FY2019-20: Add one permanent Senior
Analyst position
✓
FY2020-21: Add one Overstrength Analyst
position
✓
FY2022-23: Add two Analyst I/II and one
Senior Analyst positions
✓
FY2022-23: One-time non-personal/equipment
funding of $61,000, and ongoing non-personal/
equipment funding of $50,000 for technology
enhancements
✓
6 WHAT IS BEING CONSIDERED TODAY?
• Procurement Thresholds
▪ Competitive – City purchases with annual spend >$10,000 must be competed ▪ Informal – City purchases >$140,000 require a formal procedure process • Ability to Leverage Other Public Entity Procurements
▪ City can only leverage other public entity procurements when designated in the respective competitive procurement process
7 CURRENT SAN JOSÉ MUNI CODES
MUNICIPAL
CODE SECTION SECTION TITLE DESCRIPTION CURRENT
4.04.080(A) Quarterly Reports
Minimum Contract Value for
“Sunshine” Reports $140,000
4.12.210(A)
Selection of
Procurement Method
Competitive Procurement
Method Not Required <$10,000
4.12.210(B)
Selection of
Procurement Method Request for Quotes $10,000 – $140,000
4.12.210(C, D)
Selection of
Procurement Method
Request for Proposals
Formal Bids >$140,000
4.12.350(B1, B2) Rejection of Responses
Rejection of Bids and
Proposals $140,000
4.12.415
Formal and Informal
Protest Procedures
Formal and Informal Protest
Procedures $140,000
4.12.420 Notice of Decision Notice of Intended Award $140,000
4.12.225 (B)3
Public agencies
purchases
Utilizing Other Public
Agencies Procurement
Requires City to be a third-party
beneficiary of the procurement process
8 PEER MUNICIPALITIES
SIMILAR
POPULATION
LARGETECHNOLOGY
SECTOR
IN
CALIFORNIA
CITY OF SAN JOSÉ
RECOMMENDATION
San Diego, CA ✓ ✓
San Francisco, CA ✓ ✓
Santa Clara County, CA ✓ ✓ ✓
Oakland, CA ✓ ✓
Sacramento, CA ✓ ✓
Dallas, TX ✓ ✓ ✓
San Antonio, TX ✓ ✓
Austin, TX ✓ ✓
9 COMPETITIVE PROCUREMENT THRESHOLD
PEER MUNICIPALITIES BENCHMARKING
COMPETITIVE PROCUREMENT THRESHOLD
ESTIMATED REDUCTION IN COMPETITIVE PROCUREMENTS
CPT Increase New CPT Range
Annual Reduction in New
Competitive Procurements
% Reduction in New Competitive
Procurements
$0 $0.01 to $10,000 0 0.0%
$2,000 $0.01 to $12,0001 127 (+127 from prior step) 4.7% $5,000 $0.01 to $15,000 134 (+7 from prior step) 5.0%
$10,000 $0.01 to $20,000 146 (+12 from prior step) 5.4% $15,000 $0.01 to $25,000 158 (+12) from prior step) 5.9% $20,000 $0.01 to $30,000 175 (+17 from prior step) 6.5% 10 1 Procurement Future State Vision Report Recommendation CITY OF SAN JOSÉ PROCUREMENT THRESHOLDS
PEER MUNICIPALITIES BENCHMARKING
Peer Municipalities1
Competitive
Threshold8Informal Bid Threshold9
Chief Executive Officer Signature
Authority
San José $10,000 $140,000 $350,0002 or $1,430,0003
San Diego, CA $25,000 $150,000 $3,000,0002,3 or $250,0004 San Francisco, CA $10,000 $129,0005 or $706,0006 $100,000 Santa Clara County, CA $5,000 $100,0002,3 or $300,0004 $200,000 Oakland, CA $15,000 $50,000 $250,000
Sacramento, CA $5,000 $25,000 $250,000
Dallas, TX $3,000 $50,000 $100,000
San Antonio, TX $3,000 $50,000 Less than the budgeted amount Austin, TX $3,000 $50,000 $66,0007
Federal Entities
(Uniform Guidance) $10,000 $250,000 Not Applicable
11 1 For Peer Municipalities and Federal Entities, as of May 10, 2022 2 For Goods
3 For Services
4 For Professional Services
5 For Commodities and Professional Services
6 For General Services
7 Threshold is adjusted yearly based on CPI.
8 Known as the Federal Micro-Purchase Threshold
9 Known as the Federal Simplified Acquisition Threshold
RECOMMENDED CHANGE
• Staff recommends the City maintain its current Competitive Procurement Threshold at $10,000 and remain aligned with Federal Uniform Guidance (Federal Micro-Purchase Threshold) in the future.
Staff also proposes the P-Card services threshold remain at $1,000 to control and mitigate risk.
• Staff recommends the City increase its current Informal Procurement Threshold to $250,000 and remain aligned with Federal Uniform Guidance (Federal Simplified Acquisition Threshold) in the future. 12 LEVERAGING OTHER PUBLIC ENTITY
PROCUREMENTS
• Current San José Municipal Code Section 4.12.225 (B)3 requires other public entity documents name City of San José as a third-party beneficiary of the competitive procurement process
• Most other public entities simply require the executed contract to include language allowing other entities to use said contract 13 RECOMMENDED CHANGE
• Staff recommends the San José Municipal Code be modified to allow City procurements to leverage other public entities procurement processes which substantially comply with City procurement procedure by simply requiring the executed contract resulting from the procurement to include language allowing other entities to use said contract.
14 RECOMMENDED CHANGES TO MUNI CODE
15 MUNICIPAL
CODE SECTION SECTION TITLE DESCRIPTION CURRENT PROPOSED CHANGE1
4.04.080(A) Quarterly Reports Minimum Contract Value for “Sunshine” Reports $140,000 $250,000
4.12.210(A) Selection of Procurement
Method
Competitive Procurement
Method Not Required <$10,000 No Change
4.12.210(B) Selection of Procurement
Method Request for Quotes $10,000 – $140,000 $10,000 – $250,000
4.12.210(C, D) Selection of Procurement
Method
Request for Proposals
Formal Bids >$140,000 >$250,000
4.12.350(B1, B2) Rejection of Responses Rejection of Bids and Proposals $140,000 $250,000
4.12.415 Formal and Informal
Protest Procedures
Formal and Informal Protest
Procedures $140,000 $250,000
4.12.420 Notice of Decision Notice of Intended Award $140,000 $250,000
4.12.225 (B)3 Public agencies purchases Utilizing Other Public Agencies Procurement
Requires City to be a
third-party beneficiary of
the procurement process
Require executed contract to
include language allowing other
entities to use said contract
1 And remain aligned with Federal Uniform Guidance
15 RECOMMENDATION
1. Accept the status report on amendments to Title 4 of the San José Municipal Code Chapter 4.04 Contract Authority and Chapter 4.12 Procurements of Goods and Services to help streamline the City’s procurement process for goods and services; and
2. Refer and cross-reference the status report on amendments to Title 4 of the San José Municipal Code Chapter 4.04 Contract Authority and Chapter 4.12 Procurements of Goods and Services to help streamline the City’s procurement process for goods and services to the March 21, 2023, City Council Meeting for acceptance of the report. 16