City Council
Report
City Council Meeting: October 10, 2023
Agenda Item: 10.B
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To: Mayor and City Council
From: Rick Valte, Public Works Director, Public Works, Architecture Services Subject: Introduction and First Reading of Ordinance Amending Santa Monica Municipal Code Section 2.24.110 and 2.24.220(g)(Master Services Agreements)
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of no possibility of significant effects pursuant to Section 15061(b)(3) of the California Environmental Quality Act (CEQA) Guidelines
2. Introduce for first reading a proposed ordinance amending Santa Monica Municipal Code Sections 2.24.110 and 2.24.220(g) related to Master Services Agreements.
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Summary
The City of Santa Monica’s adopted Master Services Agreement (MSA) solicitation process has aided staff in expediting the work of roughly $16.1 million of small to medium sized CIP projects since inception in September of 2018. Through its use, staff has identified further improvements which can be realized through changes to sections
2.24.110 and 2.24.220(g) of the Santa Monica Municipal Code (SMMC). The first recommended change is to allow the Director of Public Works to delegate the authority to issue task orders to a designee. This change would allow Public Works to accelerate the commencement of small, relatively simple public works projects. The second recommendation would address ongoing construction cost escalation by having the task order and MSA thresholds, previously established in 2018, adjust automatically every year to the current California Construction Cost Index (CCCI). Finally, staff recommends transitioning the agreements from being referred to as Master Services Agreements to As-Needed Services Agreements (ASA).
Discussion
At its meeting on September 11, 2018, the City Council introduced for first reading an ordinance modifying Section 2.24.220 of the Santa Monica Municipal Code to authorize as-needed Master Services agreements for Public Works projects. The second reading followed on October 9, 2018, and City Council adopted the modified ordinance.
MSAs are an alternate contracting/procurement approach developed in coordination with the Finance Department, the City Attorney’s Office, and the Public Works Department which allows the Public Works Department to expedite the procurement and completion of projects. The first step of this process is to solicit and pre-qualify contractors to provide general construction services on various public works projects for categories such as, but not limited to: interior remodels/tenant improvements, exterior building renovations, parks/playgrounds/site work, general engineering, and pier work.
From this pre-qualified list, approved by the City Council, zero-dollar MSAs are entered into with the best qualified contractors for on-call services. Once agreements are executed, and as projects arise, staff solicits bids from at least three MSA contractors.
Once the best bidder has been identified, the Director of Public Works may issue a task 3 of 5
order in accordance with the terms and conditions of the MSA. Individual task orders shall not exceed $1,000,000 and the cumulative amount of task orders under each MSA shall not exceed $5,000,000. Contractors are not guaranteed work, and all funding is contingent on approval by Council within each fiscal year’s adopted budget. The process ensures competitive pricing by qualified contractors, while at the same time substantially reducing procurement time on individual projects because a MSA is already executed.
Although the process has worked well to expedite the commencement of work, staff has identified areas where the process could be improved. The first area identified by staff relates to the Director of Public Work’s ability to delegate task order approvals.
Currently, all task orders must be authorized by the Director prior to being executed.
Authorizing the Director of Public Works to delegate this authority would allow Public Works to be more efficient in its approval of lower cost projects. Such task orders would include small, relatively simple projects, such as painting a facility, the placement of slurry, or the reconfiguring of a small interior space. If this proposed ordinance amendment is approved, the Public Works Department, with consultation from Finance, would update the current Procurement Administrative Instruction to establish the conditions for delegating authority. This change would further streamline the process and allow the Director of Public Works to focus on the review and approval of more complicated and higher dollar value projects.
The second proposed process improvement would allow the thresholds of the Master Service Agreement and Task Order to increase every five years, or at time of council approval of new MSAs, according to changes in the CCCI. The CCCI is developed based upon the Building Cost Index average for San Francisco and Los Angeles and would be obtained by staff through California’s Department of General Services’ publications of the CCCI. This change would allow the MSA process to continue to be utilized for small to medium projects with thresholds that are aligned with construction price increases and eliminate the need for periodic future municipal code changes. To provide some context, the average of awarded MSA task orders in 2019 was $250,500.
When accounting for inflation, through the use of the referenced CCCI, a project of this 4 of 5
size today would cost roughly $342,985. Although the number of MSA projects awarded each year has roughly stayed the same, with the exception of FY 2020-21, over time escalation in construction will diminish the amount of projects which can utilize the MSA process. To maintain the effectiveness of the MSA process, staff recommends allowing for the current MSA and task order thresholds to adjust accordingly to the CCCI every year.
The final change that staff recommends is transitioning these agreements from being referred to as Master Services Agreements to being known as As-Needed Services Agreements. The purpose of this process has always been to not only obtain talented and experienced contractors for the best price, but to do so in a manner which is equitable and inclusive. Staff believes that eliminating “Master” from the current name would eliminate any potential negative connotations and allow the process to be seen as the effective procurement method that it is.
Past Council Actions
Meeting Date Description
09/11/18 (Attachment B) Ordinance Amending SMMC 2.24.071 (PW Contracts) Authorizing Master Services Agreements
10/09/18 (Attachment C) Second Reading Ordinance Authorizing As-Needed Services Agreements for PW Projects
Environmental Review
The ordinance amendments are exempt from CEQA pursuant to Section 15061(b)(3) (common sense exemption) of the CEQA Guidelines, which states that CEQA does not apply, “where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment.” The amendments will modify the administration of the MSA process (e.g., creating delegating authority and allowing increase of thresholds every five years). Therefore, it can be seen with certainty that these administrative amendments would not result in adverse physical impacts on the environment, and as such, is exempt from CEQA. 5 of 5
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of recommended action. Staff will return to Council if specific budget actions are required in the future.
Prepared By: Phillip Ticun, CIP Project Manager
Approved Forwarded to Council
Attachments:
A. Ordinance Amending SMMC 2.24.071 (PW Contracts) Authorizing Master Services Agreements - Staff Report
B. Second Reading Ordinance Authorizing As-Needed Services Agreements for PW Projects - Staff Report
C. MSA Amendment Ordinance