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HomeMy WebLinkAbout19 DISCUSSION OF PROPOSED PURCHASING POLICY AMENDMENTS(AES.RL.09.09.24)Docusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6 MEETING DATE TO: FROM: SUBJECT: SUMMARY: Agenda Item 19 Initial AGENDA REPORT Reviewed: Qfs City Manager Finance Director SEPTEMBER 17, 2024 ALDO E. SCHINDLER, CITY MANAGER JENNIFER KING, FINANCE DIRECTOR/CITY TREASURER DISCUSSION OF PROPOSED PURCHASING POLICY AMENDMENTS This report presents options for potential amendments to the City's Purchasing Policy and Procedures, as outlined in the Tustin Municipal Code section 1621-1630. It seeks City Council's direction on proposed changes to be considered at a future meeting. RECOMMENDATION: Provide direction regarding potential changes to the Purchasing Policy and Procedures, and direct staff to present a draft ordinance for the Council's consideration at a future meeting. FISCAL IMPACT: There is no direct fiscal impact associated with this item. CORRELATION TO THE STRATEGIC PLAN: The recommendation correlates to the strategic plan by implementing Goal E, organizational excellence and customer service. Specifically, periodic review and update to policy and procedures allow the City to adjust to changes in requirements and current best practices, and continue to deliver excellent public services in an efficient manner. BACKGROUND AND DISCUSSION: It is considered industry best practice to periodically review procurement policies to stay current with federal, state, and local laws and requirements. The City's Purchasing Ordinance was last updated in 2014. On September 19, 2023, the City Council unanimously approved a request from Council Member Gallagher and Mayor Lumbard to direct staff to review the current procurement policies and recommend updates aimed at improving clarity and transparency, particularly Docusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6 City Council Agenda Report Proposed Purchasing Policy Amendment Discussion September 17, 2024 Page 2 related to competitive bidding, contract approval, and reporting. On October 17, 2023, the Council approved a tentative process and timeline for updating the purchasing policy. However, this project was delayed for several months due to the Navy's North Hangar Fire on November 7, 2023, which required staff to redirect focus to manage this unprecedented event and subsequent clean-up efforts. On June 18, 2024, the Council approved a new timeline for the purchasing policy update project. This report represents the second step of the project under the revised timeline. Proposed Changes Bidding Options: The City's current thresholds for informal and formal bidding of non-public project contracts are set at $1,000 and $10,000 respectively. These limits are among the lowest compared to 20 other Orange County agencies surveyed by staff (attachment 4). Due to increased costs for goods and services, the efficiency and effectiveness of these thresholds have been significantly diminished. Therefore, staff is proposing an increase in the bidding thresholds. 2. The current policy does not require competitive bidding for any service contracts. However, it is in the City's best interest as well as recommended by California Association of Public Procurement Officials (CAPPO) to conduct competitive bidding for general service contracts over a certain dollar amount. For professional service contracts, a qualification -based selection process is recommended. Section 1622 of the Tustin Municipal Code defines professional services as "any type of professional services that may be lawfully rendered including the services of architects, attorneys, consultants, engineers, physicians, accountants, information technology professionals, or other individuals or organizations professing a high degree of professional or technical expertise, but does not include public projects." General service contracts are for any service that is not a professional service as defined in Section 1622. Examples of general services are janitorial, security, maintenance, and printing services. A summary of the proposed changes are as follows: Docusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6 City Council Agenda Report Proposed Purchasing Policy Amendment Discussion September 17, 2024 Page 3 NON-PUBLIC PROJECT CONTRACTS Bidding Current Proposed Bidding required goods, materials, equipment goods, materials, equipment, and all services No bidding $1,000 $40,000 Informal quotes $1,000 - $10,000 $40,000-$65,000 goods, material, equipment $40,000-$100,000 general services Formal bids more than $10,000 more than $65,000 goods, material, equipment more than $100,000 general services Professional services RFP/quote when practical one quote requested when less than $65,000; three quotes/bids requested when over $65,000; exempt from cost -based competitive bidding; qualification -based selection at reasonable price; selection process documented and retained. NO CHANGE TO BIDDING OF PUBLIC PROJECT CONTRACTS * * Public project' means any of the following to which the Uniform Public Construction Cost Accounting Act (California Public Contract Code section 22000 et seq.) applies: a. Construction, reconstruction, erection, alteration, renovation, improvement, demolition and repair work involving any publicly owned, leased or operated facility; or b. Painting or repainting of any publicly owned, leased or operated facility. Contract Approval Options: Apart from public project contracts, the current policy only requires City Council approval for vehicles and heavy equipment exceeding $25,000. All other contracts and purchases are approved through the budgeting process. This approach is not unique among Orange County public agencies, as it offers a high level of efficiency. However, it also has drawbacks, such as limited transparency and contract information not always being readily accessible to the public. Most Orange County agencies use a different method, requiring Council or Board approval for contracts over a certain threshold on an individual basis. While this method enhances transparency, it is time consuming and often leads to delays in project execution due to the need for additional planning, meeting scheduling, and agenda report preparation. To improve transparency, staff proposes the following options: Continue to Approve Contracts with the Budget: Include a summary of contracts within the budget document, listing details such as contractor, service description, and contract amount for review. Docusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6 City Council Agenda Report Proposed Purchasing Policy Amendment Discussion September 17, 2024 Page 4 If a contract is not included as part of the budget document and is over a certain threshold, City Council's approval is required. If under a certain threshold, City Manager's approval is required. 2. Shift to Individual Contract Approval by the Council: Require Council approval on a contract -by -contract basis when over a certain threshold. As mentioned in earlier paragraph, this method will result in more lead time. 3. Hybrid Approach: Implement a combination of options 1 and 2. Contracts meeting certain criteria and over a threshold would require Council approval on a contract - by -contract basis. The Council has expressed interest in reviewing contracts related to real property transactions and capital improvement -related design and engineering services. If any option from 1 to 3 is desired, it is recommended that the Council provide direction regarding a threshold. Staff's recommendation of a threshold is $200,000. Finally, the Council may opt to retain the current policy without any changes. Reporting Options: The current policy includes limited requirements for reporting executed contracts to the Council. To enhance transparency, staff proposes the following reporting tools for the Council's consideration: A. Reporting via Memorandum from City Manager to City Council: Regularly report executed contracts over a specific threshold transmitted via email and available to the public upon request. B. Posting Contracts to City Website: Publish executed contracts over a certain threshold on the City's website at intervals specified by the Council (i.e. monthly, quarterly). C. City Council Meeting Agendized Staff Report: Consent item agenda report on executed contracts exceeding a threshold at intervals specified by the Council (i.e. monthly, quarterly). D. Include a Contract List with Budget Documents: Provide a comprehensive list of contracts with specific information during the budget preparation process and mid -year budget review. If any option from A to C is desired, it is recommended that the Council provide direction regarding a threshold. Staff's recommendation of a threshold is $200,000. Docusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6 City Council Agenda Report Proposed Purchasing Policy Amendment Discussion September 17, 2024 Page 5 If option D is desired, the contract list with budget documents will include all budgeted service contracts. Other Changes: 1. In addition to the proposed changes to bidding, approval, and reporting requirements, staff has identified certain revisions that will align the purchasing policy with current best practices, improve efficiency, and enhance encumbrance monitoring. These proposed changes are presented in attachment 3 to the agenda report. Based on the Council's direction, staff will prepare a proposed Purchasing Ordinance and resolution for the Council's consideration at a future meeting. A recap of the next steps are as follows: • First reading - City Council consideration of the ordinance amendments, tentatively scheduled for October 1, 2024. • Second reading - City Council consideration of the ordinance amendments, tentatively scheduled for October 15, 2024. • Effective date of the updated ordinance — 30 days after the second reading. Signed by: 4D86AFAFFF77473... Jennifer King Finance Director/City Treasurer Attachments: 1. City Council Member Request — September 19, 2023 2. Existing Ordinance 3. Summary of Proposed Changes Other than Bidding, Contract Approval, and Reporting 4. Survey of other Cities/Agencies Docusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6 r% I"IOL CI J VV 1 1211 Council Members have asked to be i & ST-1N placed on a Future Agenda City of Tustin, CA To: Matthew S. West, City Manager Requested By: Co -Signed By: Subject: Requested Meeting Date: (Please submit the request at least seven (7) days prior to a regularly scheduled City Council meeting.) Council Member Gallagher Mayor Lumbard Submitted On: Aug 25, 2023, 08:44AM PDT Agenda Item 9 Reviewed: DS City Manager 1 55W Procurement Transparency and Accountability September 19, 2023 Brief Summary of Narrative of Consider updating Tustin City Code section 1621-1630 which includes the Item's Intent: the City's purchasing policies and procedures. The objective of the updates would be to provide more transparent reporting on contracting, and establish contract thresholds requiring various levels of approval, including City Council. In addition, provide more clarity with regards to the required use of competitive and open solicitations. Signature Data First Name: RYAN Last Name: GALLAGHER Email Address: rgallagher@tustinca.org Signed at: August 25, 2023 8:43am America/Los_Angeles DocuSigned by: Co -Signed By: ``- E 61C141A Austin LUrn bard, Mayor Docusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6 Al21WM111:Z4113Il . ILIIle' Footnotes: --- (1) --- Editor's note— Sec. I of Ord. No. 1438, adopted Jan. 21, 2014, amended Part 2 of Chapter 6 of Article 1 in its entirety to read as herein set out. Former Part 2 consisted of sections 1621-1626, pertained to the same subject matter and derived from TCC-1; Ord. 277; Ord. 284; Ord. 871, adopted May 17, 1982; and Ord. No. 1287, adopted Aug. 16, 2004. 1621 -ADOPTION OF PURCHASING SYSTEM In order to establish efficient procedures for the purchase of supplies, services and equipment, to secure for the City supplies, services and equipment at the lowest possible cost commensurate with the quality needed, to exercise positive financial control over purchases, to clearly define authority for the purchasing function and to ensure the quality of purchases, a purchasing policy is hereby adopted. This Part shall be known as and may be cited as the "Purchasing System." (Ord. No. 1438, Sec. I, 1-21-14) 1622 - DEFINITIONS For the purpose of carrying out the intent of this chapter, the following words, phrases and terms shall have the meaning ascribed to them in this section: "Facility" means any plant, building, structure, ground facility, utility system, real property, streets and highways, or other public work improvement (subject to the limitation found in the definition for public project in this section). "Maintenance work" means work that includes all of the following: a. Routine, recurring and usual work for the preservation or protection of any publicly owned or publicly operated facility for its intended purposes; b. Minor repainting; c. Resurfacing of streets and highways at less than one (1) inch; d. Landscape maintenance, including mowing, watering, trimming, pruning, planting, replacement of plants, and servicing of irrigation and sprinkler systems. "Professional services" means, but is not limited to, any type of professional services that may be lawfully rendered including the services of architects, attorneys, consultants, engineers, physicians, accountants, information technology professionals, or other individuals or organizations professing a high degree of professional or technical expertise, but does not include public projects. Docusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6 "Public works contract" shall have the meaning set forth in California Public Contract Code 1101, as amended from time to time. "Public project" means any of the following to which the Uniform Public Construction Cost Accounting Act (California Public Contract Code section 22000 et seq.) applies: a. Construction, reconstruction, erection, alteration, renovation, improvement, demolition and repair work involving any publicly owned, leased or operated facility; or b. Painting or repainting of any publicly owned, leased or operated facility. "Purchase order" means a written authorization by the issuing party for the recipient to provide labor, materials or services for which the issuing party agrees to pay. "Responsible bid" means an offer, submitted by a responsible bidder in ink or typewritten form, to furnish supplies, materials, equipment or contractual services in conformity with specifications, delivery terms and conditions and other requirements included in the invitation for bids. "Responsible bidder" means a bidder who submits a responsible bid; who has furnished, when requested, information and data to prove that his financial resources, production or service facilities, service reputation and experience are adequate to make satisfactory delivery of the supplies, materials, equipment or contractual services on which the bids are made, and who has not violated, or attempted to violate, any provision of this Part. "Supplies, materials and equipment" mean any and all articles or things which shall be furnished to or used by any agency. (Ord. No. 1438, Sec. I, 1-21-14) i[:rcm19J:Zy:/_[.I1►[el► /_1►/_[e14V a. Creation of Position of Purchasing Manager There is hereby created the position of Purchasing Manager, who shall be the City Manager. The City Manager may delegate, subject to his control and direction, any of the powers and duties conferred upon him as Purchasing Manager to any other officer or employee of the City. b. Power and Duties 1. As Purchasing Manager, the City Manager directs and supervises the acquisition of all goods and services under the authority of TCC Section 1623a. 2. Purchasing Agents. In accordance with TCC Section 1623a the City Manager may delegate responsibility for administering purchasing policies and procedures to one or more department heads. A department head who has been delegated authority by the Purchasing Manager hereunder is referred to herein as a Purchasing Agent. Unless the Purchasing Manager directs otherwise, the authorized Purchasing Agents shall include: Docusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6 i. Deputy City Manager ii. Director of Finance iii. Director of Parks and Recreation Services iv. Director of Community Development v. Chief of Police vi. Director of Public Works 3. Purchasing Delegates. Additionally, the Purchasing Manager may delegate authority to the Purchasing Agents to delegate authority to additional individuals within their supervision who shall be authorized to make purchases. Individuals delegated purchasing authority hereunder are referred to as "Purchasing Delegates". Purchasing Delegates shall be designated in accordance with the following requirements: i. A written list of Purchasing Delegates must be submitted to the Finance Director and include the name and maximum dollar purchasing authority authorized for each individual. ii. A written list of Purchasing Delegates must be approved on an annual basis or upon changes in employment status, whichever is more frequent, by the Purchasing Manager, Finance Director, and the applicable Purchasing Agent. iii. The Finance Director must maintain a written record of all approved Purchasing Delegates. 4. The Purchasing Manager or the Finance Director are each authorized to approve all purchases regardless of dollar value if the following conditions are met: i. The purchase is for a purpose, and within an amount, appropriated by City Council; and ii. The purchase follows this ordinance with regards to use of purchase orders, contracts and bids or quotes. (Ord. No. 1438, Sec. I, 1-21-14) 1624 - PURCHASING PROCEDURE a. Availability of Funds. Except in emergencies as defined in Section 1625a, no notice of award of contract shall be issued, no contract shall be signed and no open market purchase order shall be issued unless the unexpended balance in the appropriation or appropriations concerned is sufficient to defray the amount of such contract or purchase order. b. Purchaser Responsibilities. It shall be the responsibility of the Purchasing Manager, Purchasing Agent or Purchasing Delegate handling a purchase: Docusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6 To reduce, to the maximum extent possible, the number of purchase transactions by combining into bulk orders and contracts the requirements of departments or City for common -use items or items repetitively purchased. 2. To obtain a completed IRS Form W-9 from any vendor not previously used for City purchases and submit it to the finance department. The finance department shall perform procedures to ensure the validity of all new vendors before any purchase can be made with the new vendor. 3. To ensure that the person that documents the receipt of the goods purchased is not the same individual that authorized the purchase and to follow the procedures of TCC Section 1629 for inspection of materials and equipment. 4. Except as otherwise authorized in this Part or by State or Federal law, to select the lowest responsible bidder when bids are solicited, whether formal or informal. If the lowest priced bid is not selected, then the decision process must be documented explaining why the lowest bid was not chosen. 5. If the item(s) to be purchased is only available through one vendor and or sole source provider, back up verifying that the vendor is the sole source provider must be provided. c. The Purchasing Manager is authorized to prescribe the use of various types of contracts and orders, including, but not limited to, the following: 1. Use of petty cash is authorized for single purchases of seventy-five dollars ($75.00) or less. Petty cash reimbursements must be supported by a receipt and approved by the employee's supervisor. The Finance Department will review the receipts and approvals attached to the request for petty cash replenishment from each department to verify purchases made are approved and legitimate. 2. Purchase orders shall be used for all purchases of goods, materials and equipment in accordance with the following: i. Any single item or aggregate purchase with an estimated value of one thousand dollars ($1,000.00) or greater. ii. When the Purchasing Manager, Purchasing Agent, or Purchasing Delegate expects to make multiple purchases with a single vendor and purchases are expected to exceed five thousand dollars ($5,000.00) annually for a single project, he or she should utilize an open purchase order. Open purchase orders must be approved by the Purchasing Manager or Purchasing Agent and renewed at least annually. d. With the exception of emergencies (as defined in TCC Section 1625a) and the other exceptions noted in TCC Sections 1625b and 1625c, the Purchasing Manager, Purchasing Agent and Purchasing Delegate shall follow the following procedures with regards to purchases of goods, materials and equipment: 1. Docusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6 For any single item or aggregate purchase with an estimated value of one thousand dollars ($1,000.00) up to ten thousand dollars ($10,000.00) the Purchasing Manager, Purchasing Agent or Purchasing Delegate shall solicit three (3) informal bids or quotes. i. Bids or quotes may be obtained from the vendors in verbal or written format. ii. The Purchasing Manager, Purchasing Agent or Purchasing Delegate must submit written documentation of the bids and quotes with the purchase order. 2. For any single item or aggregate purchase with an estimated value in excess of ten thousand dollars ($10,000.00) the Purchasing Manager, Purchasing Agent or Purchasing Delegate shall solicit three (3) formal bids. i. Bids must be obtained in writing from the vendors. ii. The Purchasing Manager, Purchasing Agent or Purchasing Delegate must submit written documentation of the bids with the purchase order. 3. Any single item or aggregate purchase of vehicles and heavy-duty equipment and machinery or maintenance with an estimated value of twenty-five thousand dollars ($25,000.00) or greater must be approved by City Council. e. Professional development and training costs do not require purchase orders. Any travel related costs should also be in accordance with the City's Travel Policy. f. Purchases by credit card of goods, material, and equipment must follow the following procedures: 1. Credit cards maybe provided to employees as determined appropriate by the Finance Director, in consultation with the employee's immediate supervisor. 2. The Finance Director and in his/her absence the City Manager is responsible for the issuance of credit cards, accounting, monitoring, and generally overseeing compliance with these procedures. 3. Credit card limits will be determined by the Finance Director and in his/her absence the City Manager. There shall be no cash access feature (cash advance) on the credit cards. The Finance Director shall establish policies for the safekeeping of credit cards and procedures in the event a credit card is lost, stolen or destroyed. 4. Credit cards must only be used by City employees for proper City business purposes. Use of credit cards for personal purchases is prohibited. 5. Employees using credit cards must retain detailed credit card receipts, attach them to the credit card statements and present this documentation to their immediate supervisor for approval. In the case of meals and business travel expenses, each receipt must include the names of all persons involved in the purchase, and a brief description of the business purpose. Receipts shall be reconciled to the monthly credit card statement by the Finance Docusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6 Department. An employee who fails to provide credit card receipts to the Finance Department within three (3) days of when the charges were made may be required, at the Finance Director's discretion, to reimburse the City for the charges, and at the Finance Director's discretion, may have his or her credit card privileges revoked. 6. Each credit card issued in the name of the City of Tustin will be kept in a safe place and released for use only under the authority of the Finance Director. Credit cards are the property of the City and shall be returned to the employee's supervisor upon demand or upon termination of employment with the City, whichever occurs first. 7. Before being issued a credit card, employees must complete and sign the acknowledgement form stating that they understand and will comply with the City's credit card policy. 8. Examples of allowable uses of credit cards include, but are not limited to: i. Conferences/training/seminars (registration, airline/car rental, hotel accommodations, meals and fuel). ii. Business lunch with representatives from other government agencies or consultant under contract to the City, furnishing lunch for interview panels and/or evaluation review boards. iii. Publications/manuals. iv. Providing meals, equipment and material to work crews in cases of emergency. v. Should the credit card be used to purchase goods, materials or services, the purchase must be made in a manner consistent with Section 1624c. (Ord. No. 1438, Sec. I, 1-21-14) 1625 - EXCEPTIONS TO PURCHASING PROCEDURE a. Emergency Purchases. The emergency procedure applies to purchases made necessary from an emergency situation that poses an immediate threat to public health, welfare or safety as determined by the Purchasing Manager for which no time exists to seek Council action or approval, if such action or approval were otherwise required. 1. An emergency situation is defined as follows: i. A public disaster; ii. An immediate need to prepare for national or local defense; and iii. A breakdown of machinery or an essential service immediately affecting public health, safety, or welfare. 2. The Purchasing Manager, a Purchasing Agent, or any Purchasing Delegate may purchase supplies, equipment, or services directly subject to parameters set forth in City Council resolution(s) or administrative guidelines. The Purchasing Agent or Purchasing Delegate will Docusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6 submit a report of the circumstances of the emergency to the Purchasing Manager as soon as possible. The report will be filed with the City Council and will be entered in the minutes of the Council at its next regular meeting. b. Bidding: Exceptions. 1. Purchases of supplies and equipment and contracts for Public Projects, except Public Works Contracts, shall be by bidding procedures pursuant to the provisions of Section 1624 and as described in sections 1626 and 1627 of this Part; 2. Bidding shall be dispensed with upon authorization of the Purchasing Manager or the Finance Director: i. Where bidding would be impossible or impractical; ii. Where the commodity or service can be obtained from only one (1) vendor. When there is only one (1) vendor that provides the product or service, the details must be documented and supported in order to dispense with bidding requirements; iii. Where the price of the commodity or service is controlled by law such that bidding would be unlikely to result in any cost savings; or iv. For Public Works Contracts that are subject to the provisions of the California Public Contract Code, in which case the Contract(s) shall be procured in conformity with the Public Contract Code. 3. For the purposes of this section: i. "Impossible" shall mean impossibility or extreme and unreasonable difficulty or expense; and ii. "Impractical" shall mean incapable of being performed by the bid procedure. 4. Whenever exceptions to bidding procedures are authorized, the Purchasing Manager shall prepare a report in detail to the City Council at the next regularly scheduled Council meeting. c. Other Exceptions. When in the opinion of the Purchasing Manager or Purchasing Agent supplies, materials or equipment can be more efficiently or more cheaply obtained if acquired on behalf of the City by the State Department of General Services or through the County of Orange Cooperative Purchasing Program, or other government purchasing program, the Purchasing Manager or Purchasing Agent shall so advise the City Council. Acquisition of any such supplies, materials or equipment by the State Department of General Services or through the County of Orange Cooperative Purchasing Program or other government purchasing program may be authorized by resolution of the City Council. (Ord. No. 1438, Sec. I, 1-21-14) 1626 - PROFESSIONAL SERVICES Docusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6 a. Use of Requests for Proposals. The Purchasing Manager, Purchasing Agent or Purchasing Delegate shall make use of the Request for Proposal (RFP) process and/or obtain quotes for Professional Services whenever practical. b. Guidelines for Selection. The Purchasing Manager, Purchasing Agent or Purchasing Delegate primarily responsible for the project for which Professional Services are required shall select firms or individuals based on their ability to perform the specific functions including, but not limited to, such factors as: 1. Overall professional experience, reliability, and continuity of the firm as related to the tasks described in the solicitation for proposals or bids; 2. Professional experience of the firm in executing contracts of a similar nature; 3. Adequacy of personnel numbers within specific disciplines required to complete the work required by the solicitation for proposals or bids; 4. Experience and training of key personnel as related to the work described in the solicitation for proposals or bids; 5. Adequacy of number of principal(s) which are intended to be assigned to the contract; 6. Knowledge of applicable regulations and technology associated with the contract; 7. Quality and timeliness of recently completed or nearly completed projects which were similar to the work described in the solicitation for proposals or bids; 8. Specialized qualifications for the services to be performed. Such factors shall be weighed by the Purchasing Manager, Purchasing Agent or Purchasing Delegate and by the City department primarily responsible for the project according to the nature of the contract, the needs of the City and complexity and special requirements of the specific contract for which the services will be provided. c. RFP Procedures. If a formal RFP is used, the Purchasing Manager, Purchasing Agent or Purchasing Delegate shall abide by the following procedures: 1. A Request for Proposal solicitation document shall be issued to potential individuals or firms. The solicitation document shall discuss the following: i. Scope of work or specification desired. ii. List any required qualifications. iii. List the evaluation criteria. iv. The date of submission for the response by the vendor. v. Only criteria disclosed in the solicitations may be used to evaluate the supplies or services proposed. 2. Docusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6 The solicitation document shall be made available to a minimum of three (3) qualified firms or individuals and shall be made available for no less than fourteen (14) calendar days. 3. Evaluation of proposals received will be conducted by either an individual or a review committee. Discussions may be conducted, at the discretion of the Purchasing Manager, Purchasing Agent or Purchasing Delegate, with one (1) or more responsible offerors who has submitted a proposal and is determined to be reasonably susceptible for being accepted for award. These discussions may be held for the purpose of clarification to assure full understanding of responsiveness to the solicitation requirements. 4. The Purchasing Manager, Purchasing Agent or Purchasing Delegate shall notify the selected contractor and obtain a written contract. (Ord. No. 1438, Sec. I, 1-21-14) 1627 - INFORMAL BIDDING PROCEDURE a. Informal Bidding Procedures. The following shall govern purchases of goods, services, equipment and the selection of contractors when a Public Project is anticipated to fall within the monetary limits on informal bids described in applicable laws and regulations, including, but not limited to, the limitations established pursuant to California Public Contract Code section 22032, as the same may be adjusted from time to time: 1. The City shall prepare a notice of the opportunity to bid which describes the project in general terms, states the time and place for the submission of bids and describes how to obtain more detailed information about the project. 2. The City shall mail the notice to all contractors for the category of the work to be bid, as shown on the list of contractors developed and maintained by the Department of Public Works in accordance with criteria promulgated from time to time by the California Uniform Construction Cost Accounting Commission ("Commission"). 3. The City may also mail the notice to all construction trade journals specified by the Commission for the County of Orange. Additional contractors and/or construction trade journals may also be notified at the discretion of the purchasing agent; provided, however, (1) if the City has not prepared a list of qualified contractors for the particular category of work to be performed, the notice inviting bids shall be sent only to the construction trade journals specified by the Commission; and (2) if the product or service is proprietary in nature such that it can be legally obtained only from a certain contractor(s), the notice inviting informal bids may be sent exclusively to such contractor(s). 4. All mailings of notices to contractors and construction trade journals pursuant to this section shall be completed not less than ten (10) calendar days before bids are due. b. Bid Selection. Docusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6 1. Except as otherwise provided herein, purchases of goods, services, and equipment and public projects shall be awarded to the lowest responsible bidder. The determination of the "lowest responsible bidder" shall be determined by the Purchasing Manager, Purchasing Agent or Purchasing Delegate authorized to conduct the procurement. 2. Exceptions: Purchases of goods, services, equipment and Public Projects (other than Public Works Contracts) may be awarded to a bidder other than the lowest responsible bidder only upon a written finding, approved by the Purchasing Manager or Purchasing Agent, and supported with written documentation setting forth the reasons that greater overall value to the City will be achieved by awarding to the other bidder. Alternatively, the Purchasing Manager, Purchasing Agent or Purchasing Delegate may reject all bids and either halt the procurement or conduct the procurement again. Awards of Public Works Contracts and contracts for Public Projects shall be made in accordance with State law. (Ord. No. 1438, Sec. I, 1-21-14) 1628 - FORMAL BIDDING PROCEDURE a. Bid Solicitation Procedures. 1. The City Council shall approve plans and specifications for all Public Projects and Public Works Contracts which are required per applicable laws and regulations. 2. The Purchasing Manager, Purchasing Agent or Purchasing Delegate shall prepare and provide for advertisement a notice inviting formal bids, stating the time and place for the receiving and opening of sealed bids and distinctly describing the public project, commodity, or class of commodities. The Purchasing Manager, Purchasing Agent or Purchasing Delegate shall publish each and every notice inviting bids in accordance with the following requirements: i. The notice shall be published in accordance with the requirements of California Public Contracts Code section 20164, as that section may be modified. ii. Contracts for services for the painting, maintenance or repair of public buildings and works specifically governed by Government Code Sections 37901 and 37902 shall be subject to the solicited bid process in accordance with applicable laws. iii. The purchasing agent shall, in addition, solicit bids from prospective bidders for the class of commodities being purchased or sold as listed on the bidders list, by sending them copies of the newspaper notice or such other notice as will acquaint them with the proposed purchase or sale. All pending purchases or sales shall also, in all cases, be advertised by posting a copy of the contract bid form on a public bulletin board in or adjacent to the Purchasing Manager, Purchasing Agent or Purchasing Delegate's office or on a bulletin board in a prominent place in the City Hall. iv. Docusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6 In addition to notice required by this section, the Purchasing Manager, Purchasing Agent or Purchasing Delegate may give such other notice as he or she deems proper. 3. All bids shall be presented under sealed cover and accompanied by one (1) of the following forms of bidder's security: i. Cashier's check made payable to the City; ii. A certified check made payable to the City; or iii. A bidder's bond executed by an admitted surety insurer, made payable to the City. 4. The security shall be in an amount equal to at least ten (10) percent of the amount bid. A bid shall not be considered unless one (1) of the forms of responsible bidder's security is enclosed with it. If the bidder to whom the contract is awarded shall for ten (10) days after the award fail or neglect to enter into the contract and file the required securities, the City shall deposit in its treasury the bid security if the security is in the form of cash or its equivalent. 5. Provisions shall be included in any invitation for bid and in any contract documents for the furnishing of securities and/or the withholding of retentions earned to ensure performance under a contract in an amount and type as determined by the Director of Public Works, consistent with State law. Provisions shall be included in any invitation for bid and in any contract documents for insurance coverage in an amount, type and term as may be specified by the City. 6. When required by State law, the contractor shall not pay less than the general prevailing rates of wages, as determined by the Director of the Department of Industrial Relations, to all workers employed on a Public Project or Public Works Contract. b. Formal Bid Opening Procedure. Sealed bids shall be submitted to the City Clerk with the bid number written on the envelope where they will be date and time stamped. All bids must be received and date and time stamped by the City Clerk's clock on or before the date and time due; late bids (as determined by reference to the City Clerk's clock) will be returned unopened. The Purchasing Manager, or his or her designee, shall publicly open all bids at the time and place stated in the public notice. A tabulation of all bids shall be available for public inspection in the City Clerk's Office during regular business hours for a period of one (1) year after bid opening. c. Rejection of Formal Bids. In its discretion, the City Council may reject and all bids presented if the Purchasing Manager, prior to rejecting all bids, furnishes a written notice to an apparent low bidder, informing the bidder of the City's intention to reject the bid at least two (2) business days prior to the hearing at which the City Council intends to reject the bid. If after the first invitation of bids all bids are rejected, after reevaluating its cost estimates of the project, the City Council may: (a) abandon the project; (b) re -advertise for bids in the manner prescribed by this chapter; or (c) perform the work with City employees, after passing a resolution by a four -fifths vote of the City Council declaring that the project can be performed more economically by City employees. Docusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6 d. Award of Formal Bid Contracts. All Public Works Contracts with a value exceeding the limitations established pursuant to California Public Contract Code section 22032, as the same may be adjusted from time to time, shall require the approval of the City Council and shall be executed by the Mayor and approved as to form by the City Attorney. Unless the agreement provides otherwise, the City Manager may approve dollar increases to contracts that have been approved by the City Council. The extent of the City Manager's authority to approve such increases shall be in the amount of ten thousand dollars ($10,000.00) or ten (10) percent, whichever is greater, or an amount specifically designated by City Council for the particular project. If a contract is awarded, it shall be awarded by the City Council to the lowest responsible bidder that submits a responsive bid. The determination of the "lowest responsible bidder" shall be at the discretion of the City Council pursuant to the findings and recommendations presented by the Purchasing Manager, Purchasing Agent or Purchasing Delegate at the time of award of contract. In determining the lowest responsible bidder, the following shall be considered by the City Council, in addition to price: 1. The ability, capacity and skill of the bidder to perform the contract or provide the services required; 2. Whether the bidder can perform the contract or provide the services promptly, or within the time specified, without delay or interference; 3. The sufficiency of the bidder's financial resources to perform the contract or provide the service; 4. The ability of the bidder to provide future maintenance and services where such maintenance and service is essential; 5. The quality and timeliness of the bidder's performance on previous contracts for the City; 6. Litigation by the bidder on previous contracts with the City; 7. The character, integrity, reputation, judgment, experience and efficiency of the bidder; 8. The bidder is licensed under the Contractors' State License Law (commencing with Section 7000 of the Business and Professions Code of the State of California, as the same may be amended from time to time) to perform the work for which it submitted a bid proposal. e. Tie Formal Bids. If two (2) or more formal bids received are for the same total amount or unit price, quality and service being equal, the City Council may, at its discretion, accept the one (1) it chooses or accept the lowest bid made by and after negotiation with the tie bidders. f. No Formal Bids. If no bids are received through the formal or informal procedure, the project may be performed by the employees of the City by force account or through a negotiated contract without further complying with this chapter. 9. Docusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6 Bid Selection. If a contract is awarded, it shall be to the lowest responsible bidder that submits a responsive bid. The determination of the "lowest responsible bidder" shall be made in accordance with subsection d, above. h. Nothing contained in this section is intended to be in conflict with applicable state law including Sections 37901 and 37902, and Sections 37931 through 37935, of the Government Code of the State of California. (Ord. No. 1438, Sec. I, 1-21-14) 1629 - INSPECTION OF MATERIALS, EQUIPMENT, ETC. a. The receiving departments shall inspect deliveries of supplies, materials and equipment or the furnishing of contractual services to insure their conformance with the specifications set forth in the purchase order or contract. b. Any department which has the necessary facilities and staff for adequate inspection may be authorized and directed by the City Council, on the recommendation of the Purchasing Manager, Purchasing Agent or Purchasing Delegate, to inspect deliveries made to other departments. c. The Purchasing Manager, Purchasing Agent or Purchasing Delegate shall have authority to require chemical and physical tests of samples submitted with bids and samples of deliveries to the extent necessary to determine their quality and conformance with the specifications. For such tests, the Purchasing Manager, Purchasing Agent or Purchasing Delegate shall have authority to make use of laboratory facilities of any department or to engage the services of any outside laboratory. (Ord. No. 1438, Sec. I, 1-21-14) 1630 - DISPOSITION OF PROPERTY a. Surplus or Obsolete Commodities. 1. All departments shall submit to the Purchasing Manager at such times and in such form as he or she shall prescribe, reports showing stocks of all supplies, materials and equipment which are no longer used or which have become obsolete, worn out or scrapped. The Purchasing Manager shall have authority to transfer any such commodities which are usable to another or other departments in of the same or similar articles. 2. The Purchasing Manager shall make a written estimate of the value of any surplus items not usable by any City department or not required for public use. The Purchasing Manager shall have the authority to sell all such supplies, materials and equipment which cannot be used by any department or which have been found by the City Council not to be required for public use or to exchange or trade in such articles in part or full payment for new supplies, materials or equipment of a similar nature. Any such sale, exchange or trade-in shall be made in Docusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6 accordance with Section 1626 or Section 1627, whichever is applicable. The Purchasing Manager shall report in detail, including the amount of revenue received upon any such sale, to the City Council within forty-five (45) days thereafter. b. Unclaimed Property in Possession of Police Department. 1. Unclaimed Property Defined. "Unclaimed property" is all personal property, the title of which is not vested in the City of Tustin, which property has come into the possession of the City of Tustin as lost property, property which has been confiscated or impounded by the City as being in violation of law or any other personal property coming into possession of the City of Tustin which is not specifically provided for by any other provision of law. 2. Procedure. i. If the estimated value of the unclaimed property exceeds ten dollars ($10.00) the Police Department or the administrative official who obtained possession of the property shall, within ten (10) days of receipt of the property, notify the owner, if his identity is reasonably ascertainable, that it possesses the property, and where it may be obtained. The Police Department or the administrative official may require payment by the owner of a reasonable charge to defray costs of storage and care of the property. ii. If the owner appears within ninety (90) days of the notification given in subparagraph a. above, proves his ownership of the property, and pays all reasonable charges, the Police Department or the administrative official shall restore the property to him. iii. After retention of the property for four (4) months, the property may be: a) Sold at public auction to the highest bidder; b) Retained by the City of Tustin if it is determined that the property is needed for a public use, and after public notice has been made of the City's intention to retain the property; or c) Where the property is a bicycle or toy in the possession of the Police Department, the property may, at the discretion of the Chief of Police, be given to the Welfare Department of the County, or to any charitable or nonprofit organization authorized under its Articles of Incorporation to participate in a program or activity designed to prevent juvenile delinquency and which is exempt from income taxation under federal or state law, for use in any program or activity designed to prevent juvenile delinquency. 3. Public Sale or Retention of Property. i. When it is determined that unclaimed property, valued at fifty dollars ($50.00) or more, shall be retained or shall be sold at public auction, the Police Department or the administrative official, shall cause notice of such sale or retention to be published at least Docusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6 five (5) days before the time fixed therefore once in a newspaper of general circulation published in the county in which such property was found or confiscated, or otherwise in Orange County. ii. Such notice shall contain the time and the place of the sale. iii. Any property remaining unsold after being offered at such public auction may be destroyed or otherwise disposed of by the City. iv. Any revenue received from the disposition of public property shall be deposited and recorded in the appropriate City fund and general ledger account by the Finance Director in accordance with the approved budget. (Ord. No. 1438, Sec. I, 1-21-14) Docusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6 ATTACHMENT 3 SUMMARY OF PROPOSED CHANGES OTHER THAN BIDDING, CONTRACT APPROVAL, AND REPORTING New or Muni code section Proposed update Reasons 1622 Definitions fixed charges new applicable to one price contracts, no PO is needed (i.e. postage, training, utility, OCFA fire service contract) general services new service other than those professional in nature. General service contracts meeting a threshold require competitive bidding. expand from one vendor to vendors with unique products due to quality, sole source update durability, availability, and fitness for a particular use, consistent with current practice. 1623 Purchasing prohibitions new Manager specify prohibited activity as related to purchasing. 1624 Purchasing contract signing authority new Procedures delegated authority to the Purchasing Manager (City Manager) or designee. bid selection new if lowest bidder is not selected during a competitive bidding, the selection process must be documented and approved. contract terms new maximum contract term five years or longer if directed by Council. This allows for regular review of existing contracts to get the most benefit for the City. federal funding compliance new refer staff in charge of contracts with federal funding to resources and city policy. Current - PO for goods only when over $1,000; purchase order (PO) update Proposed - PO for goods and services when over $10,000. Improve efficiency and allowed for better budget monitoring and encumbrance control. formal bid selection update document on a prescribed form (Finance template) documentation 1626 Professional exempt from cost -based update most agencies use qualification -based selection process. Services competitive bidding one quote requested when less than $65,000; three quote/bids required when > $65,000; quote/bid requested new selection process be documented on a prescribed form (Finance template). Exceptions to quotes/bids subject to Purchasing Manager (City Manager) approval. 1628 Formal submission update update to reflect use of online bidding platform, consistent with current Bidding practice. Docusign Envelope ID: A378D9AB-B8A3-461D-8C58-E562DC6AAEA6 ATTACHMENT 4 SURVEY OF OTHER ORANGE COUNTY AGENCIES No quotes Informal quotes Formal bids City Council/Board Approval Tustin current 1k goods only 1k-10k goods only 10k goods only 25k vehicle/heavy equipment only 50k others; others 100k; Anaheim 10k 10k-50k 200k professional professional 200k Brea 7k 7k-50k 50k 50k Buena Park 30k 30k-100k 100k 80k Costa Mesa 25k 25k-50k 50k 100k Fountain Valley 3.5k 3.5k-50k 50k 50k Fullerton 5k 5k-50k 50k 50k service contracts approved with budget; Huntington Beach 30k n/a 30k > $100k if not approved with budget Irvine 60k 60k-200k 200k 1M La Habra 500 500-35k 35k 35k La Palma 1k 1k-25k 25k 25k Laguna Beach n/a 0-30k 30k 75k Mission Viejo 5k 5k-50k 50k 50k Newport Beach 3k 3k-75k 75k 120k Orange 5k 5k-30k 30k 30k Placentia 2.5k 2.5k-25k 25k 40k Santa Ana 15k 15k-50k 50k 50k Westminster 15k 15k-100k 200k 100k Yorba Linda 2.5k 2.5k-75k 75k 75k Orange County Fire n/a 0-50k 50k goods/supplies approved with budget; Authority services > 100k; maintenance > 200k 100k other; OC Sanitation District 25k 25k-100k 500k professional 250k Average (approx.)Aw 14k-66k 66k 25k Tustin proposed 40k 40k-65k goods 65k goods 65k vehicle/equip; other contracts approved with budget; 40k-100k gen. Svcs. 100k gen. Svcs. > $200,000 when not approved with budget