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DISCUSSION:
The City frequently enters into contracts with all manner of consultants in carrying out City services or projects and for the purchase of supplies and equipment to effectively run the City and its operations. Establishing a clear threshold whereby the City Manager can execute a contract facilitates City business.
The cost of goods and services has substantially increased since the Purchasing Ordinance was last amended. Accordingly, Staff recommends that the Council increase the City Manager's purchasing authority from $25,000 to $50,000, and to increase the floor for the requirements of competitive bidding from $2,500 to $5,000 (ten percent of the City Manager's authority). Again, for the City Manager to execute a contract, the budget must be available for the goods or services. To the extent that the cost of the goods or services exceeds the recommended $50,000 threshold, or if funds were not available, and in those situations where the project has not been previously approved by the City Council, Staff would present the item to the City Council for approval.
CEQA COMPLIANCE STATEMENT:
The adoption of this ordinance is not subject to CEQA pursuant to Section 15060(c)(2) and 15060(c)(3) of the State CEQA Guidelines, because it will not result in a direct or reasonably foreseeable indirect physical change in the environment and is not a “project,” as defined in Section 15378 of the CEQA Guidelines.
FISCAL IMPACT:
The introduction and adoption of the ordinance has no significant impact on the budget.
It is anticipated that there may be savings in Staff time with a more efficient and streamlined procurement process as proposed.
WORK PLAN: N/A
OPTIONS:
• Approve Staff recommendation.
• Approve Staff recommendation with alternative amendments / modifications. • Take no action.
October 11, 2023
Ordinance 532-SBMC Chapter 3.08
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DEPARTMENT RECOMMENDATION:
Staff recommends that the City Council adopt Ordinance 532 amending Solana Beach Municipal Code (SBMC) Chapter 3.08 to increase the City Manager's purchasing authority from $25,000 to $50,000, and to revise the thresholds for the procurement process.
CITY MANAGER’S RECOMMENDATION:
Approve Department Recommendation
_________________________
Gregory Wade, City Manager
Attachments:
1. Ordinance 532
ORDINANCE 532
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
SOLANA BEACH, CALIFORNIA, AMENDING TITLE 3,
CHAPTER 3.08 OF THE SOLANA BEACH MUNICIPAL
CODE REGARDING PURCHASING
WHEREAS, California Government Code section 54202 provides that every city “shall adopt policies and procedures, including bidding regulations, governing purchases of supplies and equipment” and that “[p]urchases of supplies and equipment by the [city] shall be in accordance with said duly adopted policies and in accordance with all provisions of law governing same;” and
WHEREAS, Chapter 3.08 of the Solana Beach Municipal Code contains procurement procedures for the purchase of goods, services, and equipment; and WHEREAS, there have been significant increases to the San Diego regional consumer price index-urban consumers (CPI) since the City’s last revision to its purchasing regulations; and
WHEREAS, the impacts of the pandemic have further hampered the City’s ability to procure goods, equipment, and services in a timely manner due to lingering delays within supply chains; and
WHEREAS, it is recommended that the Council increase the City Manager’s purchasing authority from $25,000 to $50,000, and to increase the floor for the requirements of competitive bidding from $2,500 to $5,000 (ten percent of the City Manager's authority); and
WHEREAS, the authority vested in the City Manager for the approval of small to medium size purchases ensures that the procurement process does not become overly cumbersome by creating undue delays in the approval process for small to medium size purchases; and
WHEREAS, the proposed changes to Municipal Code Chapter 3.08 will provide greater flexibility, administrative efficiencies, reduced costs, and enhanced ability to acquire goods and services in a timely manner.
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The City Council of the City of Solana Beach, California, DOES HEREBY ORDAIN as follows:
SECTION 1. All of the above recitals are true and correct and are incorporated herein.
SECTION 2. The adoption of the ordinance is not subject to CEQA pursuant to Section 15060(c)(2) and 15060(c)(3) of the State CEQA Guidelines, because it will not result in a direct or reasonably foreseeable indirect physical change in the environment and is not a “project,” as defined in Section 15378 of the CEQA Guidelines.
SECTION 3. Sections 3.08.030, 3.08.050, 3.08.060, 3.08.070, 3.08.080,
3.08.085, 3.08.095, 3.08.100, and 3.08.140 of the Solana Beach Municipal Code are hereby amended to read as follows (underlines are additions and strikeouts are deletions)::
3.08.030 Duties and authority of the purchasing officer.
The purchasing officer shall have the authority to:
A. Negotiate, process the purchase of, and contract for all supplies, services and equipment needed by any city department or agency which derives its support wholly or in part from the city; provided however, that any single expenditure or contract in excess of $25,000 $50,000 shall require city council approval.
B. Make procurements:
1. In accordance with the purchasing procedures prescribed by this chapter; and
2. In accordance with relevant administrative policies approved by the city manager for internal control and operations management.
C. Act to procure for the city the needed supplies, equipment and services with the necessary quality, capacity, safety, performance ability and overall cost, considering labor and maintenance costs and other applicable factors required to meet the service objectives of the using department or agency at the least expense to the city.
D. Discourage collusion in bidding and discourage vendor uniform bidding; endeavor to obtain the most open competition possible on all purchases.
E. Prepare and recommend administrative regulations, including revisions and amendments thereto, governing the purchase of supplies, services and equipment for the city; said regulations shall be effective upon approval by the city manager.
F. Remain informed of current developments in the field of purchasing, prices, market conditions and new products.
G. Prescribe and maintain such forms as are reasonably necessary for the operation of this chapter and other rules and regulations.
H. Transfer between departments any unused goods and supplies within any fiscal year.
I. Sell or exchange any and all equipment, materials, fixtures and other personal property of the city having a salvage value and which is obsolete or unserviceable, or is surplus to the city, or for which replacement is to be purchased. The purchasing officer or designee may sell the same for the best price obtainable in the open market or, when he/she deems it advisable, to the highest bidder at public sale, or he/she may exchange the same for other property or for credit on other property. In the event the purchasing officer determines that any such obsolete or surplus property has no salvage value, he/she may dispose of it as he/she deems advisable in accordance with Chapter 2.52 SBMC et seq. Any employees involved in declaring property surplus, or in the sale of said property, are excluded from acquiring the surplus property in any way.
J. Prescribe, design and issue forms needed for the operation of this chapter and other applicable rules and regulations.
K. Grant authority to any department director to purchase or contract for specified supplies and equipment; but shall require that such purchases or contracts be made in conformity with purchasing procedures established in this chapter. All fiduciary duties and responsibilities of the purchasing officer are incumbent upon the department directors when acting in the capacity of purchasing officer, particularly when negotiating contracts for professional services.
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L. Grant each department director authority to perform the duties and exercise the authority of the purchasing officer with a limit on purchases from the same vendor, purchased on the same day, to less than $2,500 $5,000 in value, except to the extent that the city manager reserves the duties and authority for himself/herself.
M. Grant a one percent advantage in the bid price to in-town vendors whenever supplies and equipment are subject to sales tax. Price alone shall not be the determining factor but shall be considered along with the other factors, including, but not limited to, the ability of the bidder to deliver, prior experience with the bidder and other factors relating to the particular needs of the city for the supplies and equipment to be purchased.
3.08.050 Use of purchase orders required and exceptions.
A. Purchase of supplies, services and equipment in excess of $2,500 $5,000 shall be made only by purchase order. Except as otherwise provided in this chapter, no purchase order shall be issued unless the prior approval of the purchasing officer has been obtained. SBMC 3.08.070 and 3.08.080 shall not apply to the purchase of supplies, services or equipment under the following circumstances:
1. Emergency purchases as provided in SBMC 3.08.060; or
2. Purchases from the same vendor, made on the same day, by each department, of an estimated value of less than $2,500 $5,000; or
3. Billing for utilities, and other similar payments, unless there exists maintenance or service agreements; or
4. Services provided only by another governmental agency where there exists a service agreement.
B. The purchasing officer may establish accounts with vendors for specified supplies, services and equipment. Open accounts shall be made pursuant to provisions of this chapter. The aggregate purchases under an open vendor account shall not exceed $2,500 $5,000 per transaction. The accounts shall be open at the discretion of the purchasing officer after considering risk and need.
C. Except in cases of emergency or in cases where specific authority has first been obtained from the city council, the purchasing officer shall not issue any purchase order for supplies, services and equipment unless there exists an unencumbered appropriation in the fund account against which such purchase is to be charged.
3.08.060 Emergency purchases.
The city manager or designee may make emergency purchases, not to exceed $25,000 $50,000, free of the provisions of this chapter upon a showing by any department that the purchase required is for the immediate protection of life, health, or property and there is a present, immediate and existing emergency which could not reasonably be foreseen, or to prevent or mitigate an emergency condition from occurring. Emergency purchases that exceed $25,000 $50,000 in response to conditions that endanger life, health or safety are free from the provisions of this chapter, but are required to be ratified by the city council at the soonest available regular city council meeting.
3.08.070 Informal purchasing procedures.
The purchasing officer may make purchases of supplies, equipment or services with a value of less than $25,000 $50,000 by following the informal bid procedures provided in this section:
A. Purchases of supplies, services and equipment of an estimated value of less than $25,000 $50,000 may be made by the purchasing officer in accordance with the procedures set forth in this section. The purchasing officer shall solicit informal competitive bids for all such purchases; provided, however, informal competitive bidding shall not be required for any purchase that has an estimated value of less than $2,500 $5,000.
B. Except where competitive bidding is not required, informal bids shall be solicited for purchases of supplies, services or equipment and awarded to the lowest responsible bidder, as follows:
1. The informal bids may be oral or written;
2. Whenever possible, at least three informal bids or quotations shall be obtained, and the award be given to the lowest responsible bidder;
3. The purchasing officer shall solicit informal bids or quotations from prospective responsible vendors by written request, by telephone, by public notice posted on a bulletin board in City Hall and/or by adjudicated newspaper publication;
4. The informal bid purchase shall not require city council approval; the city manager, or designee, is authorized to execute the contract for any such purchase.
3.08.080 Formal contract procedure.
Except as otherwise specifically provided in this section or in other sections of this chapter, purchases of supplies, services and equipment of an estimated value of $25,000 $50,000 or more shall be by formal sealed written competitive bids. Awards of such contracts shall be made by the city council to the lowest responsible bidder in accordance with the following provisions:
A. Notices Inviting Bids. Notices inviting bids shall include a general description of the supplies, services or equipment to be purchased. Notices shall also state where bid forms and specifications may be secured as well as the time and place for opening bids.
Notices inviting bids must be given by publication in a newspaper of general circulation throughout the city at least 10 calendar days before the date of opening the bids. The notice shall be published twice, not less than five days apart per Public Contract Code Subsection 20164 of the State of California. The notice shall specify that the award shall be made to the lowest responsible bidder in accordance with SBMC 3.08.080.
B. Bidders’ Security. When considered necessary by the purchasing officer, bidders’ security may be prescribed in the notices inviting bids. Bidders shall not be entitled to the return of bid securities. The city council, on the refusal or failure of the successful bidder to execute the contract, may award the contract to the next lowest responsible bidder.
C. Confidentiality of Bids. Any bid received pursuant to the provisions of this chapter shall not be disclosed directly or indirectly to any other bidder until the bidding is closed and further bidding is excluded.
D. Bid Opening Procedure. Sealed bids shall be submitted to the city clerk or designee and shall be identified as bids on the sealed envelope. All bids submitted by the deadline shall be opened at the time and place stated in the public notice. All bids received shall be open for public inspection in the city clerk’s office during business hours for 30 days after the bid opening. Bids will be destroyed in accordance with the city’s adopted records retention schedule. The city reserves the right to confirm mathematical accuracy of the bids prior to award of the contract.
E. Rejection of Bids. The city council may, at its discretion, reject any and all bids presented and readvertise for bids.
F. Tie Bids. If two or more bids are received for the same total amount, quality and service being equal, and if public interest will not permit the delay of readvertising for bids, the city council may accept the one it chooses or accept the lowest bid made by negotiation with the tie bidders.
G. Contracts Exceeding Bid Amount. Change orders for contracts for the purchase of supplies, services or equipment may not exceed the bid amount by more than 25 percent.
H. Performance Bonds. The purchasing officer shall have the authority to require a performance bond before entering into a contract. The bond will be in an amount reasonably necessary to protect the best interest of the city. If a performance bond is required, the form and amount shall be described in the notice inviting bids.
I. Splitting or Separating Purchases or Contract. Contracts for the purchase of supplies, equipment or services may not be split or separated into smaller work orders for the express purpose of circumventing purchasing procedures.
J. Returning Retention Withholdings. The purchasing officer shall be required to return the required 10 percent retention withholdings in accordance with the original signed contract, or 60 calendar days after a notice of completion has been signed by the authorized department director and the authorized project coordinator, provided there are no outstanding stop orders or mechanics liens.
3.08.085 Purchase of used equipment.
If opportunities arise to purchase used equipment, such equipment may be purchased without competitive bidding, provided all the following conditions are met:
A. The equipment being sold is warranted or, in the case of an “as-is, where-is” purchase, there is an inspection by a qualified party who certifies that the condition of the item is acceptable and adequate for efficient city use.
B. The dealer of the equipment is a bona fide and reputable dealer as verified through reference checks or the equipment is being purchased from another governmental entity.
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C. The selling price of the equipment is less than $25,000 $50,000, including tax, installation, freight, and any other additional acquisition costs.
D. If no bids are received from the formal bidding process for the purchase of used equipment with a selling price of over $25,000 $50,000, a written request to commence negotiation with a vendor(s) must be submitted to the city manager for approval.
Acceptance of the contract is subject to city council approval.
Justification for the sole source purchase of used equipment must be documented and maintained as part of the procurement file.
It is not allowable to purchase used equipment when procedures for the acquisition of new equipment have been circumvented to avoid the competitive bidding process.
3.08.095 Award and execution of contracts.
Except in emergency situations pursuant to SBMC 3.08.060, all contracts for supplies, services and equipment in an estimated amount of $25,000 $50,000, or more, shall be awarded by the city council. Contracts for supplies, services and equipment in an estimated amount of less than $25,000 $50,000shall be executed by the city manager or designee.
3.08.100 Change orders for contracts covering the purchase of supplies, services or equipment.
A. Change orders for contracts for the purchases of supplies, services and equipment may not exceed the original bid amount by more than 25 percent.
B. Change orders for an amount of less than $25,000 $50,000may be approved by the city manager if unencumbered funds are available.
C. Change orders for an amount of $25,000 $50,000or more shall require city council approval.
D. Any change order that results in the need for additional appropriation shall be approved by the city council.
3.08.140 Contracts for professional services.
Because of their unique nature, it is in the best interest of the public, as allowed by state law, that contracts for professional services such as attorneys, accountants, architects, planning consultants, computer consultants, engineers, auditors, financial advisors, public relations consultants, real estate agents and brokers, insurance and bond agents and brokers, or other professional or consultant services of a similar nature, or at the discretion of the purchasing officer, be selected on the basis of demonstrated competence and on the professional qualifications necessary for the satisfactory performance of the services required, negotiated between parties rather than on the basis of cost alone.
Therefore, the city manager is not limited to awarding professional services contracts to the lowest responsible bidder, but rather on the basis of demonstrated competence and qualifications for the types of service to be performed at a fair and reasonable price.
The procurement of professional services shall be as follows:
A. The city manager may exempt professional service contracts from the bid requirements of SBMC 3.08.070 for contracts less than $25,000 $50,000when it is necessary or convenient for the management of the city’s affairs.
B. The purchasing officer shall ascertain from informed sources the names of not less than three professionals qualified for the service desired who are professionally and financially qualified to undertake the proposed assignment. When three such professionals are not readily identifiable, the city manager may determine that a lesser number of professionals is adequate.
C. A request for proposal shall be provided to all potential candidates outlining the scope of services required, time frame for completion, pricing structure, liability insurance information and coverage and other pertinent information. Professionals must submit their responses in the specified format no later than the stated final due date for proposals.
The response must include liability insurance information and coverage.
D. The evaluation process will be based on the criteria stated in the request for proposal but will generally include the scope of services offered, the professional’s capabilities and previous experience in the field.
E. After the proposals are evaluated, the purchasing officer will negotiate an agreement with the selected professional. If an agreement is not reached within a reasonable time, the purchasing officer will terminate discussion with the first candidate and open negotiations with the second choice.
SECTION 4. If any section, subsection, sentence, clause, phrase, or portion of this Ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council of the City of Solana Beach hereby declares that it would have adopted this Ordinance and each section, subsection, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more section, subsection, sentence, clause, phrase, or portion may be declared invalid or unconstitutional.
SECTION 5. This ordinance shall be effective thirty (30) days after its adoption.
Within fifteen (15) days after its adoption, the City Clerk shall cause this ordinance to be published pursuant to state law.
INTRODUCED at a regular meeting of the City Council of the City of Solana Beach, California held on the 27th day of September 2023, and thereafter, PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Solana Beach, California, on the ___ day of ______, 2023, by the following vote:
AYES: Councilmembers –
NOES: Councilmembers –
ABSTAIN: Councilmembers –
ABSENT: Councilmembers –
____________________________
LESA HEEBNER, Mayor
APPROVED AS TO FORM: ATTEST:
_____________________________________ ___________________________________ JOHANNA N. CANLAS, City Attorney ANGELA IVEY, City Clerk .