TO: HONORABLE MAYOR
AND CITY COUNCIL
FROM: Matt Loesch
SUBJECT: See Below DATE: July 28, 2025
Approved
Date:
8/6/25
COUNCIL DISTRICT: Citywide
SUBJECT: Amendments to Title 27 of the San José Municipal Code to Streamline Procurement Processes
RECOMMENDATION
Approve an ordinance to amend the following sections of Title 27 of the San José Municipal Code:
(a) Section 27.06.050 to streamline the informal Request for Quotes process; (b) Section 27.06.070 to clarify the process for procuring an on-call contract; (c) Section 27.06.080 to raise the micro contract threshold; (d) Sections 27.10.260, 27.10.370, and Section 27.10.380 to streamline the protest process;
(e) Section 27.10.450 to correct a clerical error;
(f) Section 27.10.560 to increase the Director’s signature authority and correct a clerical error;
(g) Section 27.14.040 to add another process for procuring design-build contracts to reflect a change to the California Public Contract Code; and (h) Chapter 27.14 to specify that the City may conduct confidential meetings during the design-build procurement process.
SUMMARY AND OUTCOME
The proposed ordinance would implement changes to Title 27 of the San José Municipal Code that further modernize, streamline, and clarify public works procurement requirements. In particular, the ordinance would expedite existing procurement processes and make available a second method of procuring design-build contracts.
COUNCIL AGENDA: 8/19/25
FILE: 25-828
ITEM: 2.13
HONORABLE MAYOR AND CITY COUNCIL
July 28, 2025
Subject: Amendments to Title 27 of the San José Municipal Code to Streamline Procurement Processes
The ordinance would also expedite the public works contract award/ and execution process by increasing the Public Works Director’s1 signature authority.
BACKGROUND
On September 10, 2019, the City Council replaced the portions of Title 14 of the San José Municipal Code relating to the procurement of public works contracts with a new Title 27. The primary purpose of Title 27 was to modernize, streamline, and update the requirements applicable to the procurement of public works projects. Since that time, Public Works Department staff has asked the City Council to approve three clean-up ordinances to further improve the public works contracting process.
This fourth clean-up ordinance is intended to continue the process of modernizing, streamlining, and clarifying the public works procurement process by:
1) Simplifying the informal Request for Quotes process; 2) Allowing for multiple on-call contracts to be awarded from a single solicitation; 3) Raising the non-competitive threshold;
4) Shortening the protest process;
5) Increasing the Director of Public Works’ contract award authority; 6) Adding a newly available procurement method to the City’s procurement toolbox; 7) Clarifying that confidential meetings are permitted as part of the design-build procurement process; and
8) Cleaning up clerical errors in Title 27.
ANALYSIS
This section provides explanations for the recommendations made in this memorandum. Each subheading indicates the code section it would modify in parentheses after the title.
1. Request for Quotes (Section 27.06.050)
While major public works contracts (those currently valued at more than $730,000) must be procured using a formal Request for Bids process, Section 27.06.050 of the San José Municipal Code authorizes the City to use an informal Request for Quotes process for the procurement of minor public works contracts (those currently valued at $730,000
1 Section 27.02.050 of the San José Municipal Code defines “Director” as the Director of Public Works for all public works contracts, the Director of the Department of Transportation as to minor public works contracts involving public works projects under the Department’s jurisdiction, and the Director of the Environmental Services Department as to all public works contracts involving public works projects under the Department’s jurisdiction.
HONORABLE MAYOR AND CITY COUNCIL
July 28, 2025
Subject: Amendments to Title 27 of the San José Municipal Code to Streamline Procurement Processes
or less). The Request for Quotes process permits the City to invite a small group of contractors to provide quotes, does not require a minimum advertisement period, and allows for the application of local and small business enterprise preference. It is intended to be a simple and more efficient way of procuring a contractor for smaller (minor) projects.
However, when utilizing the Request for Quotes process, Section 27.06.050 requires the City to obtain written quotes from at least three contractors unless doing so is not practicable. This three-contractor threshold is difficult to meet unless the contract is procured using formal public bidding over several weeks of advertisement, which defeats the purpose of an informal Request for Quotes process. The proposed ordinance would change Section 27.06.050 to require that the City “solicit” written quotes from at least three contractors instead of “obtain” written quotes from at least three contractors. The proposed language aligns with the practices of many local public agencies and should result in a shorter procurement cycle for smaller projects.
2. On-Call Contracts (Section 27.06.070)
On-call contracts are retainer agreements that contemplate a general scope of services.
Specific maintenance or construction projects and the compensation for such work are specified in negotiated work orders issued pursuant to the contract on an as-needed basis. In certain circumstances, it would be beneficial to award multiple on-call contracts from a single solicitation, thereby allowing the City to issue work orders to the contractor providing the lowest quote or with the earliest availability. The proposed ordinance provides such flexibility by specifying that the City may make multiple awards of on-call contracts.
3. Micro Contract Threshold (Section 27.06.080)
Title 27 establishes a competitive procurement threshold for public works contracts.
Contracts valued below the competitive procurement threshold (called micro contracts) are not required to be procured according to a competitive process. The City can simply select a qualified contractor and enter into a contract without soliciting multiple quotes or bids. This non-competitive approach can be more efficient for simple procurements with a low dollar value.
The current micro contract threshold of $11,000 is so low that the Public Works Department has only awarded a single non-competitive micro contract since Title 27 was adopted in 2019. The proposed ordinance raises the micro contract threshold to $75,000 to align with the non-competitive threshold used by local agencies that are party to the California Uniform Construction Cost Accounting Act. The increased threshold will allow a modest increase in the number of public works contracts that can be procured without a competitive process (an estimated six additional projects would
HONORABLE MAYOR AND CITY COUNCIL
July 28, 2025
Subject: Amendments to Title 27 of the San José Municipal Code to Streamline Procurement Processes
have been subject to the micro contract threshold since 2019) thereby allowing such projects to be completed more quickly.
4. Protest Process (Section 27.10.260)
The protest process is an important part of formal public bidding, providing bidders with the opportunity to submit a written objection to the decisions made by a public entity in the solicitation or award of a contract.
The San José Municipal Code currently requires the City to observe a five-business-day protest period for major public works procurements. Other California agencies use a variety of protest periods for their public works procurements, with the University of California’s protest period set at three business days and the California Department of General Services’ protest period set at seven working days. The proposed ordinance decreases the protest period to three days, which will allow for a modest, but meaningful decrease in the contract award and execution cycle. The change is intended to balance the need to provide bidders with due process with the need to ensure that the process is as simple and swift as possible.
5. Public Works Director’s Award Authority (Section 27.10.560)
Title 27 codified a pilot program that authorized the Director to award public works contracts valued less than or equal to $1,000,000. In 2021, Title 27 was amended to annually adjust the Director’s $1,000,000 signature authority for inflation, “[allowing] more projects to go from bid to award at a faster rate
2.” In the intervening years, the
award authority amount has been adjusted up or down according to inflation five times and currently sits at $1,200,000. During the 2024-2025 Fiscal Year, the Director of Public Works awarded 23 contracts pursuant to the stated authority (another seven contracts were awarded by the Director of Public Works after receiving contract-specific authority from the City Council to do so).
5.a. Threshold Adjustment
The current $1,200,000 threshold is still fairly low when compared to the average value of the City’s major public works contracts. The proposed ordinance raises the Director’s award authority to $5,000,000, which will allow approximately 20 additional public works contracts a year to be executed more quickly. The Public Works Department estimates the time savings associated with Director awards to be approximately four to six weeks (or longer when taking into account the December holidays or July City City Council break) and expects additional staff costs to be saved.
2 The San José City Council approved Ordinance No. 30540 under item 3.3 at the March 2, 2021, City Council Meeting.
HONORABLE MAYOR AND CITY COUNCIL
July 28, 2025
Subject: Amendments to Title 27 of the San José Municipal Code to Streamline Procurement Processes
The City Council will still be required to approve certain public works contracts with values below $5,000,000, including those that require appropriation action, environmental mitigation measures, or a non- standard contingency.
It is important to note, per Section 27.50.020 of the San José Municipal Code, the Directors of Public Works, Environmental Services, and Transportation provide bi-annual reports to the City Manager detailing the names, scopes, and values of any public works contract that are awarded by the Directors pursuant to the authority granted them by Title 27. The City Manager distributes these reports as Information Memoranda, providing transparency and accountability to the City Council and the public.
5.b. Project Labor Agreement
Section 1.9 of the Amended and Restated Project Labor Agreement (PLA) between the City of San José, the Santa Clara and San Benito Counties Building and Construction Trades Council applies the PLA to those projects with an Engineer’s Estimate equal to or higher than the Director’s award authority (currently set at $1,200,000). By increasing the Director’s award authority by the recommended actions and if left alone, projects would prospectively be delivered under the PLA. Under a separate action for City Council consideration will be an adjustment to the PLA that will redefine the PLA threshold that is negotiated and mutually acceptable to both the City and the Santa Clara and San Benito Counties Building and Construction Trades Council.
6. Progressive Design-Build (Section 27.14.040)
On October 8, 2023, the Governor signed Senate Bill 706, amending California Public Contract Code Section 22185 and providing authority for cities, counties, cities and counties, or special districts to use the progressive design-build process for up to 10 public works in excess of $5,000,000. Currently, the San José Municipal Code authorizes the City to procure, negotiate, and award design-build contracts in accordance with California Public Contract Code Sections 22162 through 22168. The proposed ordinance would allow the City to use both the current process (generally referred to as best value or traditional design-build) as well as the progressive design- build procurement process.
Progressive design-build, as defined in California Public Contract Code Section 22185 is a project delivery process in which both the design and construction of a project are procured from a single entity that is selected through a qualifications-based selection at the earliest feasible stage of the project. Unlike best value” or traditional design-build,
HONORABLE MAYOR AND CITY COUNCIL
July 28, 2025
Subject: Amendments to Title 27 of the San José Municipal Code to Streamline Procurement Processes
progressive design-build is procured without consideration of a technical proposal (i.e., design renderings, schedule, life cycle cost analysis, etc.) and can be completed in a single step. While best value or traditional design-build procurements can be structured to require a price proposal that covers the full value of the work contemplated, progressive design-build procurements may only include a preliminary cost estimate. A Guaranteed Maximum Price for the work is established after contract award.
The progressive design-build procurement process will not be suitable for every project and Public Works will continue to require a proactive and objective assessment of each project’s unique characteristics prior to the decision to use any form of design-build project delivery. However, when a project demonstrates the benefit of using progressive design-build, the proposed ordinance provides this additional tool that may help the City meet its Capital Improvement Program goals.
Before this new procurement method can be utilized, Public Works and the City Attorney’s Office will need to develop procurement and contract documents that are in compliant with the requirements found in California Public Contract Code Section 22185.
7. Confidential Meetings (Section 27.14.045)
During the design-build procurement process, it is standard industry practice to conduct confidential one-on-one meetings with shortlisted proposers prior to the submission of technical and price proposals to facilitate the open and candid exchange of concepts, concerns, and ideas. The City has utilized such meetings in the past; however, nothing in the San José Municipal Code – or the California Public Contract Code – specifically addresses confidential meetings. The proposed ordinance would expressly codify the practice.
Retroactive approval is required because the Public Works Department facilitated confidential meetings on June 4, 2025, as part of the design-build procurement for the Environmental Services Department’s Regional Wastewater Facility Additional Digesters Facility Upgrade project.
8. Clerical Errors (Section 27.10.450, Section 27.10.560)
The edits to Sections 27.10.450 and 27.10.560 are technical and non-substantive. The clean-up of Section 27.10.450 will correct a cross-reference to a section of Title 4 of the San José Municipal Code that was updated in 2022. The clean-up of Section 27.10.560 will correct an error made during the second clean-up of Title 27 in 2021.
HONORABLE MAYOR AND CITY COUNCIL
July 28, 2025
Subject: Amendments to Title 27 of the San José Municipal Code to Streamline Procurement Processes
EVALUATION AND FOLLOW-UP
No additional follow up action with the City Council is expected at this time.
COORDINATION
This memorandum has been coordinated with the City Attorney's Office, the City Manager’s Budget Office, the Environmental Services Department, the Planning, Building and Code Enforcement Department, and the Transportation Department.
PUBLIC OUTREACH
This memorandum will be posted on the City’s Council Agenda website for the August 19, 2025 City Council meeting.
COMMISSION RECOMMENDATION AND INPUT
No commission recommendation or input is associated with this action.
CEQA
Not a Project, File No. PP17-008, General Procedure and Policy Making resulting in no changes to the physical environment.
PUBLIC SUBSIDY REPORTING
This item does not include a public subsidy as defined in section 53083 or 53083.1 of the California Government Code or the City’s Open Government Resolution.
/s/
Matt Loesch
Director of Public Works
For questions, please contact J. Guevara, Deputy Director of Public Works, at [email protected] or (408) 535-8300.