PROCUREMENT SYSTEM
This fiscal policy (“Policy”) is prepared pursuant to Santa Monica Municipal Code Section 2.24.030.
Ethics in Procurement
General Code of Ethics for City Staff
City of Santa Monica staff should always strive for the highest ethical standards.
To strengthen the City’s commitment to the highest standards of good governance, Santa Monica City Council adopted a values-based Code of Ethics for all City staff on November 24, 2015. It is based on the principles of fairness, transparency, accountability, and integrity.
Procurement Staff Code of Ethics
In addition to the General Code of Ethics, the Procurement Division will abide by the following additional principles:
Strive to obtain the maximum for each public dollar expenditure. Decline personal gifts or gratuities.
Provide all competitive suppliers equal consideration insofar as state or federal statute and City policy permit.
Conduct business with potential and current suppliers in an atmosphere of good faith, devoid of intentional misrepresentation. Require honesty in sales representation whether offered through the medium of a verbal or written statement, an advertisement, or a sample of the product.
Request and obtain consent of originator of proprietary ideas and designs before using them for competitive purchasing purposes. Make every reasonable effort to negotiate an equitable and mutually agreeable settlement of any controversy with a supplier. Communicate with all who offer to provide legitimate business to the City of Santa Monica.
Collaborate with trade, industrial, and professional associations and with governmental and private agencies for the purposes of promoting and developing sound business methods.
Foster fair, ethical, and legal trade practices
Conflicts of Interest Not Allowed
No employee or agent of the City is allowed to participate in the selection, award, or administration of a contract if he or she has a real or apparent conflict of interest. Such a conflict of interest would arise when the employee or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract. The employee or agent of the City must neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. Notwithstanding the foregoing, it is not a violation of this Procedure to accept an unsolicited gift of nominal value. Any violations of these requirements shall subject the employee or agent to disciplinary actions.
Questions regarding potential conflicts of interest may be directed to the Purchasing Agent, who shall seek final determination from the City Attorney as appropriate.
Communications During Competitive Solicitation Period
Once a solicitation is open (posted to the online bid system), no employee or agent of the City, excluding Procurement staff, shall discuss or otherwise communicate with any firm or the public specific information related to a competitive solicitation, such as Invitation for Bid (IFB) or Request for Proposals (RFP) process prior to award with the following exceptions:
For questions or requests for clarification received prior to question and answer (Q&A) period and in accordance with the solicitation documents, questions will be answered and posted to the online bid system by Procurement staff. This process makes certain that all potential bidders/proposers receive the same information at the same time, which ensures no person(s)/firm(s) benefits from an unfair advantage, which could be gained by way of a direct communication with a City employee or agent.
After the close of the Q&A period and prior to the award, only Procurement staff is permitted to communicate with employees, agents, firms, and the public. This strict communication requirement is but one aspect to maintain the integrity of the solicitation process.
If City staff or agents are contacted by person(s)/firm(s) or the public during a solicitation process, he/she shall forward the call and/or written communication to Procurement staff.
Reporting Suspected Impropriety, Gross Waste, Fraud and Other Acts Any City official, employee, and/or vendor who suspects any type of impropriety relating to procurement or contracting activities, or gross waste, fraud, or abuse of City funds or resources, a gross abuse of authority, a specified and substantial danger to public health or safety due to any act or omission of any City official, employee, or vendor, or the use of a City office or position or of City resources for personal gain, should report the act by calling the City’s Integrity Line at (866) 428-1509. All such reports shall remain anonymous if desired by the reporting party.
Methods of Competitive Procurement
When initiating the procurement process, staff shall determine the procedure to be used based on the item being purchased and the dollar amount of the purchase. Items are categorized as goods, contractual services, technology services, and professional services.
The following definitions are guidelines for use of these terms:
Goods: physical items
Contractual services: services for routine, non-professional functions that are predominantly physical, manual or routine. For example: custodial services, temporary agency services, security services, and trades services (plumbers, electricians, painters, etc.).
Technology services: agreements primarily for software, software-as-aservice, cloud-based platforms, hosted services, software licenses, subscriptions, implementation, maintenance, support, and other technology-related services.
Professional services: services that require specialized expertise: training in a professional field, or other developed skills or training. This includes any work performed by a professional: for example, an auditor, attorney, doctor, architect, engineer, land surveyor, construction project manager, appraiser, systems analyst or software designer, expert, or consultant.
Services provided by vendors with a National/State license or certification are generally considered professional services. Vendors providing services that do not require a National/State license may also qualify as professional services, consult the Procurement Division for guidance Public works projects: the construction, alteration, repair, maintenance, improvement, reconstruction, rehabilitation, or demolition of any public building, facility, infrastructure, street, sidewalk, utility, park, cemetery, irrigation system, open space improvement, or other public improvement (collectively “Public Works Projects”). Public Works Projects include the full project-development lifecycle, including pre-project, pre-design, design, preconstruction, construction, construction management, inspection, closeout, and related post-construction services performed in connection with an existing, proposed, planned, or potential public improvement.
Related services for such Public Works Projects may include feasibility studies, needs assessments, site investigations, surveys, geotechnical and hazardous-materials testing, CEQA and environmental review, programming, concept development, master planning, architectural and engineering design, permitting, cost estimating, value engineering, constructability review, scheduling, bid document preparation, construction management, and preconstruction services associated with a Construction Manager at Risk (CMAR), design-build, progressive design- build, job order contracting, or similar delivery methods. This definition is based on and intended to be consistent with the California Department of Industrial Relations (DIR) definition of “public works” for purposes of prevailing wage requirements under California Labor Code Section 1720 et seq. This definition is intended to identify the category of procurements and contracts administered as Public Works Projects under this Policy.
Applicable state-law requirements, including prevailing wage and outsourcing requirements, will be determined based on the scope of work and applicable law. With the exception of Public Works Projects, the Public Works Department is still subject to the ordinary procurement process.
Procurement rules for goods and contractual services are often the same. Some procurements may not clearly fall into one of the categories defined above, particularly mixed procurements involving technology, training, implementation, consulting, or support services. Departments unsure of the category for a particular procurement shall consult with procurement staff prior to commencing the procurement process.
Amendments, Change Orders, Renewals, and Extensions
For purposes of applying this Policy, the value of a contract is cumulative and includes the original contract amount together with any amendments, change orders, renewals, extensions, or other modifications. Departments should consider the total contract value when determining the applicable approval authority and procurement requirements.
Departments should not divide contracts or related modifications for the purpose of avoiding approval thresholds or competitive procurement requirements.
Additional procedures for amendments, change orders, renewals, extensions, and other modifications may be established by administrative instructions.
Competitive Bidding Requirements
Informal procedures ($100,001 - $250,000 for goods, contractual and technology services / $100,001 - $125,000 professional services)
Informal solicitations shall be subject to the following procedures, as conducted by the Purchasing Agent or Designee:
a) Issue a notice inviting bids or request for proposals and solicit not less than three bids or proposals via City's online vendor portal website, electronic mail request, direct mail, or by telephone. The Purchasing Agent may require additional notice as the Purchasing Agent deems appropriate. b) May reject any and all bids or proposals received whenever, in the opinion of the Purchasing Agent:
1. The bid(s) or proposal(s) received do not comply with the specifications of the notice inviting bids or request for proposals;
2. The proposed project or purchase should be abandoned or delayed;
3. The materials or services may be purchased more reasonably on the open market or the work done less expensively by City personnel;
4. The bids or proposals are higher than anticipated and a new solicitation would result in savings to the City; or
5. The best interests of the City would be served by a rejection of any or all bids or proposals.
c) Compile and tabulate all timely bids or proposals received and refer them to the appropriate City Department for evaluation. d) Provide notice of the recommended award to all bidders or proposers through the City's online vendor portal website or by other means as determined by the Purchasing Agent.
e) The City Manager or Designee shall award the contract after the protest period has expired or after a final determination of a denied protest has been made in accordance with Section 2.24.110.
The Purchasing Agent may establish procedures for disclosing bids or proposals after a recommended award has been identified, consistent with the Public Records Act. These procedures may include, for example, requiring bidders or proposers to submit proposed redacted copies of their submitted bids or proposals and to identify the legal basis for any requested redactions. The City retains final authority to determine what information is subject to disclosure under applicable law.
Formal procedures (Above $250,000 for goods, contractual and technology services / above $125,000 professional services)
Formal solicitations shall be subject to the following procedures, as conducted by the Purchasing Agent or Designee:
a) Issue a formal notice inviting bids or request for proposals and shall solicit bids and proposals by:
1. Posting on the City's online vendor portal website.
2. For Public Works Projects - Advertising in a newspaper of general circulation in the City of Santa Monica;
3. Issue an additional notice, if determined to be in the best interest of the City; and
b) At the time specified in the notice inviting bids or request for proposals, all timely bids or proposals received shall be opened and declared publicly, either in person or through the City's online vendor portal website. c) May reject any and all bids or proposals received whenever, in the opinion of the Purchasing Agent:
a. The bid(s) or proposal(s) received do not comply with the specifications of the notice inviting bids or request for proposals; b. The proposed project or purchase should be abandoned or delayed;
c. The materials or services may be purchased more reasonably on the open market or the work done less expensively by City personnel;
d. The bids or proposals are higher than anticipated and a new solicitation would result in savings to the City; or
e. The best interests of the City would be served by a rejection of any or all bids or proposals.
d) Compile and tabulate all bids or proposals timely received and refer them to the appropriate City Department for evaluation.
e) Provide notice of the recommended award to all bidders or proposers through the City's online vendor portal website or by other means as determined by the Purchasing Agent.
f) If above $500,000 for goods, contractual services and technology services or above $125,000 professional services:
a. Formal procedures shall apply and the City Manager shall present the recommendation to City Council for award after the protest period has expired or after a final determination on a denied protest has been made in accordance with Section 2.24.110.
Under these formal procedures, the Purchasing Agent may establish procedures for disclosing bids or proposals after a recommended award has been identified, consistent with the Public Records Act. These procedures may include, for example, requiring bidders or proposers to submit proposed redacted copies of their submitted bids or proposals and to identify the legal basis for any requested redactions. The City retains final authority to determine what information is subject to disclosure under applicable law.
As-Needed Services Agreements for Public Works Projects (Section 2.24.090) Pursuant to Section 2.24.090(c), the Director of Public Works, the City Engineer or the Capital Improvement Manager, is authorized to issue task orders for as-needed master services agreements. Construction, maintenance or repair services pursuant to such asneeded services agreements in accordance with the following terms and procedures:
a) The City shall solicit, review and evaluate the qualifications of prospective contractors for as-needed services agreements in accordance with rules and regulations established by the Director of Public Works; b) The Director of Public Works shall pre-qualify contractors for as-needed service agreements;
c) The City Council may award as-needed services agreements to prequalified contractors, in amounts not to exceed five million dollars and with terms of no more than five years;
d) When the need arises for the performance of specific tasks within the scope of as-needed service agreements, the Director of Public Works, or designee, shall seek bids from at least three prequalified contractors and, using the evaluation criteria set forth under Section 2.24.100, issue a task order to the best bidder in an amount not to exceed one million dollars for a specifically defined scope of work.
e) If the Director of Public Works, or designee, seeks but is unable to obtain three bids, the Director may issue a task order to the best bidder of the bids submitted; f) The Director of Public Works, or designee, may reject any and all bids received in accordance with the standards set forth in the formal procedures subsection (c), above;
g) Prequalified contractors performing task orders under as-needed services agreements shall file payment and performance bonds in conjunction with each task order awarded as required by the Director of Public Works or applicable law; and
h) The Director of Public Works shall submit a report to the City Council on an annual basis containing information about the implementation of this subsection, including a listing of task orders issued pursuant to this subsection.
Procedures for Emergency Needs
a) In the event of an emergency, the City Manager, the Emergency Services Manager, the Purchasing Agent or one of their designees pursuant to subsection (b) below is authorized to:
1) Shorten or waive all required notice periods and competitive solicitation procedures set forth in this Chapter;
2) Secure in the open market at the best reasonable price, contracts for public works projects, goods and services;
3) Negotiate or execute such contracts, agreements, applications or other documents with such other federal, state or local agencies or other groups and organizations as are necessary to provide or obtain emergency aid, assistance or services to the City of Santa Monica; and
4) Contract for the immediate expenditure of public funds to safeguard life, health or property.
b) The City Manager, the Emergency Services Manager, or the Purchasing Agent may delegate authority to make purchases and awards under this Section. All such delegations shall be in writing and dated and shall specify the limits of the authority delegated, including, without limitation, the type of purchase, dollar amount, and the terms of any contracts that will be executed under the delegation. All such delegations of authority shall be kept on file by the Purchasing Agent.
c) Within thirty days after any purchase or contract is made pursuant to this Section, the City Manager shall submit in writing to the City Council a full explanation of the emergency circumstances under which the purchase or contract was made. This writing shall be open to public inspection and, to the extent possible, presented as a Consent Item as part of a regular meeting of the City Council.
d) For purposes of this section, an emergency shall include:
1) A declared federal or state emergency;
2) A local emergency as declared by the City Council, the City Manager, or the Emergency Services Manager; or
3) An urgent, unforeseen event that threatens life, property, or the general public health, safety and welfare.
Exceptions to the competitive process
The competitive selection processes set forth in this Chapter do not apply when:
a) Funds are expended to secure membership or participation in professional organizations, meetings, or conventions;
b) Competition does not reasonably exist because only one vendor possesses the unique ability or capability to meet the particular requirements of the solicitation, such as when a good or service is copyrighted, patented or otherwise only available from one license holder, including, for example, proprietary goods of original equipment manufacturers and/or their authorized exclusive distributors; c) Competitive procedures were followed by a governmental agency, including a federal, state, county, city, joint powers agency, special district, or cooperative purchasing agency consisting of one or more such agencies, that are equivalent to the procedures set forth in this Chapter, and the goods or services are supplied to the City at the same or better price as the price obtained by that agency;
d) The items to be purchased are for resale to the public, such as, but not limited to, cemetery services or products;
e) The items to be purchased are circulating library materials, including books, periodicals, films and recordings;
f) Special conditions attach to a grant, donation, gift or other legal document that require the use of particular goods and/or services; g) A contract is entered into for specialty services related to fiscal and/or personnel related matters;
h) The individual or entity with authority to make a purchase or award determines and documents in writing in accordance with procedures set forth in administrative regulations that the time necessary to use the competitive solicitation processes set forth in this Chapter, due to circumstances outside of the control of the City, would result in a substantial economic loss to the City, substantially compromise a legal position, or substantially interfere with a required City operation; or i) A contract is entered pursuant to procedures adopted by the City Attorney to secure legal services, including, but not limited to, services provided by outside legal counsel, investigators, consultants or experts in conjunction with a claim against the City, pending or anticipated litigation, or an administrative or legal proceeding; or j) A solicitation is made under the emergency procedures set forth in this Policy.
k) A contract for utility services.
l) Other: Reasoning can include: Standardization; Temporary Procurement to allow for competitive solicitation process; Project completion shortfall of no more than 15% of overall project.
The exception for standardization is limited to purchases that are necessary to: (a) maintain compatibility with existing assets; (b) avoid loss or impairment of existing warranty or vendor support; or (c) avoid duplicate licensing or implementation costs.
Other Procurement Requirements
Surplus Property
Surplus property shall be disposed of according to the related Administrative Instruction. The Procurement Manager shall have the authority to make transfers between departments of any usable surplus supplies or equipment, to exchange or trade new supplies and equipment, or to sell all supplies and equipment which cannot be used by any department or which have become unsuitable for City use. Donations of surplus property may be made as described in Donation of goods section of this Policy.
Sale of goods
Goods that have been declared surplus, obsolete or unused by the Purchasing Agent shall be sold to the best bidder, applying the criteria in Section 2.24.100 of the Municipal Code, by bid, auction, negotiated sale, trade-in or exchange as follows:
(a) The sale of goods valued at twenty-five thousand dollars ($25,000) or less shall be sold according to procedures established by the Purchasing Agent. (b) The sale of goods valued over twenty-five thousand dollars ($25,000.01) or below two hundred fifty thousand dollars ($250,000) shall be subject to the informal solicitation procedures set forth in Competitive Bidding Requirements section.
(c) The sale of goods valued at more than two hundred fifty thousand dollars shall be subject to the formal solicitation procedures set forth in Section Competitive Bidding Requirements section.
Donation of goods
Goods that have been declared surplus, obsolete or unused by the Purchasing Agent may be donated as follows:
(a) Goods valued at twenty-five thousand dollars or less may be donated in accordance with procedures established by the Purchasing Agent. (b) Goods valued at more than twenty-five thousand dollars may be donated to the best bidder applying the criteria set forth in Competitive Bidding Requirements section in accordance with the formal solicitation procedures.
Federal and State Grant Awards and Agreements
All procurements must comply with the City’s policies and procedures. When federal and/or state grant funds are involved, procurements must also comply with federal and/or state law and Uniform Guidance provisions (CFR Title 2: Grants and Agreements, Subtitle A, Chapter II, §200).
In the event of a contradiction between City’s policy and procedures and federal and/or state requirements, the more restrictive method must be followed.
Sustainable Procurement
City employees will endeavor to procure products and services in a manner that integrates fiscal responsibility, social equity, environmental stewardship and community enhancement.
Sustainable Purchasing Objectives
The City’s sustainable purchasing objectives will include acquisitions that:
• Conserve natural resources
• Reduce the use of water and energy
• Minimize environmental impacts such as pollution and use of water and energy
• Eliminate or reduce toxics that create hazards to our workers and our community
• Support strong recycling efforts and utilize products where a high likelihood of recycling exists (e.g. steel and paper products) • Reduce materials that are placed in landfills
• Increase the use and availability of environmentally preferable products • Encourage vendors to reduce environmental impacts in their production and distribution systems
• All buyers shall consider short-term and long-term cost in comparing product alternatives when feasible. This includes evaluation of total cost expected during the time a product is owned, extended warranties, operation, supplies, maintenance, disposal cost and expected lifetime compared to other alternatives
Departments should use the Office of Sustainability and the Environment (OSE) Easy Guides, available on the City’s intranet under Employee Resources/ Sustainability, to assist with sustainable purchasing. The Easy Guides include an introduction to the good or service; how to get it in accordance with sustainability guidelines; required and preferred environmental performance specifications; relevant eco-labels; important notes; benefits; and more. When purchasing goods or services, Departments shall reference and comply with the requirements listed in the Easy Guides if one has been developed for the good or service. OSE staff will develop and revise Easy Guides alone or in conjunction with other Departments. For example, the Information Systems Department (ISD) could assist OSE staff with an Easy Guide for computers purchases. OSE staff provide training on the Easy Guides and any website tools. If an Easy Guide has not been developed, the Sustainable Procurement Advisor and Procurement Manager will provide direction on the best sustainable procurement practices.
Disadvantaged Business Enterprises (DBE):
The City must ensure opportunities for DBE’s to participate in acquisitions financed in whole or in part by federal and/or state funds. Steps include:
Assure qualified businesses are solicited when appropriate Efforts to divide total requirements, when feasible, into smaller tasks to permit use of qualified businesses
Use assistance from Small Business Administration (SBA) DOC, MBDA, et al. Require prime contractor, if subcontractors used, to make good faith efforts to find other DBEs to do the work.
Price Preference For Local Businesses
In determining the best bidder for solicitations of goods and services subject to the informal and formal procedures set forth in this Policy, the Purchasing Agent shall provide a price preference for local businesses as follows:
(a) The Purchasing Agent shall provide a two percent price preference to all City businesses submitting bids or proposals upon which will be levied a State of California sales tax. The Purchasing Agent shall administer the bidding preference so that bid amounts received from such City businesses are reduced by two percent to determine the rank order of the bids in the selection process. If, after the two percent preference is applied, a City business has submitted a bid which is equal to or lower than all other proposals, the City Council shall award the contract to the City business so long as it is otherwise the best bidder or best qualified person or firm.
(b) For purposes of this provision, a City business shall have its primary physical place of business within the City and be licensed by the City of Santa Monica to conduct business in the City.