City Council
Report
City Council Meeting: February 24, 2026
Agenda Item: 4.H
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To: Mayor and City Council
From: Oscar Santiago, Director, Finance Department
Subject: Introduction and First Reading of an Ordinance to Amend Santa Monica Municipal Code Chapter 2.24, Purchasing System, to Modernize the City's Policies, Practices and Procedures
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines.
2. Introduce for first reading the attached Ordinance amending Santa Monica Municipal Code Chapter 2.24, Purchasing System, to update the City’s procurement policies, practices, and procedures; and
3. Direct the City Manager to take necessary steps to establish a modernized procurement system.
Summary
The City’s procurement system has not been comprehensively updated in several decades. As a result, the system requires modernization to address fragmented processes, and limited flexibility that slows project delivery and leads to inconsistent practices across departments. The legacy policies, complex workflows, and inconsistent processes can hinder timely contracting, and increase internal administrative burdens. Combined, these existing challenges hinder the City’s ability to act swiftly, collectively limit the organization’s capacity to adapt to the inflationary environment affecting the cost of goods and services, and impacts our ability to effectively support operational needs.
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To streamline processes and build flexibility to adjust procurement guidelines and thresholds over time, staff has been working on advancing a three-part procurement modernization framework consisting of:
1. A new Procurement Ordinance establishing the centralized purchasing system and defining the roles and responsibilities of City officials.
2. A revised Procurement Policy, adopted annually by Council as part of the City’s Fiscal Policies, that establishes the procurement award thresholds and other requirements.
3. A comprehensive Administrative Instruction (AI) that operationalizes and provides guidance on day-to-day procurement activities for staff.
This framework would create a clearer hierarchy of authority, improve efficiency and ensure the City can adapt procurement practices and thresholds as the organization and economic conditions evolve, while maintaining fairness and transparency in the procurement process.
To begin the process, staff now recommends that Council introduce for first reading the ordinance that updates Municipal Code Chapter 2.24 - Purchasing System, to establish modernized procurement policies, practices and procedures. The proposed ordinance allows for the establishment of an updated purchasing framework.
If approved, the ordinance would then allow staff the ability to bring forward for annual City Council review and adoption a recommended procurement policy, which would be added as part of the City’s Fiscal Policies. This review is envisioned to occur during the City’s annual budget review process.
Finally, once the City Council adopts the procurement policy, implementation of the policy would be governed by a set of updated Administrative Instructions that details how the procurement process is to be implemented by staff on a day-to-day basis.
Background
The City’s current procurement provisions are dispersed across sections of the Municipal Code, administrative instructions, and manuals. This fragmentation has resulted in inconsistent application of procurement rules, delays in the acquisition of 3 of 6
goods and services critical to program and service delivery, delays in contract execution, and limited flexibility to adjust thresholds without amending the Municipal Code.
To address these challenges, Finance has engaged with departments to gather feedback on major challenges with the current system. This feedback will be used to inform revisions to policies and procedures that modernize the City’s procurement system while maintaining appropriate contemporary standards for public-sector purchasing, including oversight, clear delegation of authority, and structured policy updates.
Discussion
The modernized Purchasing system will consist of three elements:
1. Procurement Ordinance
Under the proposed ordinance, and consistent with the City Charter, the City Manager would establish and oversee a centralized purchasing system for all City departments. The ordinance would update Municipal Code Chapter 2.24 - Purchasing System, to define the following:
• Powers and duties of the City Council, City Manager, Purchasing Agent, City Attorney, Emergency Services Manager, Director of Public Works, and Director of Human Resources as they relate to procurement, contract execution, and compliance.
• Procurement award and protest procedures to ensure fairness, transparency, and due process for vendors participating in City solicitations.
2. Procurement Policy
The Procurement Policy would serve as the City’s primary operational policy document for procurement and would be incorporated into the City’s Fiscal Policies, adopted annually by the City Council. Key components include:
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• Procurement Award Thresholds: Establishes dollar thresholds for City Manager and City Council approval, with flexibility to adjust thresholds periodically to reflect inflation and market conditions. Rightsizing the thresholds is expected to reduce consent-agenda items and administrative burden by bringing outdated limits into alignment with current inflationary conditions.
• Competitive Bidding and Source Selection: Defines when formal bids, informal quotes, or sole-source justifications are required, and outlines procedures for Invitations for Bids (IFBs), Requests for Proposals (RFPs), Request for Qualifications (RFQs), cooperative purchasing, and emergency procurement.
• Ethics and Vendor Communications: Codifies expectations for impartiality, conflict-of-interest avoidance, and responsible stewardship of public funds, while establishing clear rules governing vendor communications during active solicitations.
This policy framework would allow the City to adjust procurement thresholds and practices without requiring Municipal Code amendments, improving responsiveness and administrative efficiency while maintaining transparency.
3. Administrative Instructions
The City currently has an AI governing procurement procedures; however, it has not been comprehensively updated since 2020. As a result, the document no longer reflects current organizational structure, modern procurement systems in place, or the City’s evolving operational needs. Staff and departmental users have noted that the existing instruction is difficult to navigate and the policies are implemented inconsistently across departments.
The proposed modernization effort provides an opportunity to replace the outdated instruction with a clear, streamlined set of rules that:
• Align with the new Procurement Ordinance and Procurement Policy • Clarify staff roles, responsibilities, and approval pathways • Provide consistent templates, checklists, and procedural guidance 5 of 6
• Support training and compliance monitoring
• Reflect current technology, including the City’s modernized purchasing system
By replacing the 2020 Administrative Instruction with updated regulations, the City will ensure that staff have practical, accessible, and current guidance for day-to-day procurement activities and will ensure consistent application of procurement rules across the organization.
Environmental Review
The ordinance on modernizing the City’s procurement process is exempt from CEQA pursuant to Section 15061(b)(3) 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 ordinance is administrative in nature. Therefore, it can be seen with certainty that the agreement would not result in adverse physical impacts on the environment, and as such, is exempt from CEQA.
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the recommended actions. The proposed modernization is expected to improve administrative efficiency and reduce staff time spent on low-value procurement tasks.
Any future adjustments to procurement thresholds will be presented to Council as part of the annual budget and fiscal policy adoption process. 6 of 6
Prepared By: Oscar Santiago, Director
Approved Forwarded to Council
Attachments:
A. ORD--Updates to Chapter 2.24 Purchasing System 02.24.26