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HomeMy WebLinkAboutItem 6.2 Revise Purch Ordinanceor 19 82 /ii � 111 DATE: TO: FROM: SUBJECT STAFF REPORT CITY COUNCIL July 17, 2012 Honorable Mayor and City Councilmembers Joni Pattillo City Manager""' CITY CLERK File #380 -10 Adoption of Revised Purchasing Ordinance Chapter 2.36 Dublin Municipal Code Prepared by Erin Steffen, Administrative Analyst EXECUTIVE SUMMARY: City Staff conducted a comprehensive review of the City's "Purchasing" regulations as outlined in Chapter 2.36 of the Dublin Municipal Code. Included in the recommended revisions are increased thresholds for purchases that can be handled administratively. The organization of the code was also reformatted to eliminate redundancies and clarification of City restrictions. The proposed revision also incorporates the Uniform Public Construction Cost Accounting Act procedures for work defined under State Law as "public projects." FINANCIAL IMPACT: There may be administrative savings as a result of a streamlined procurement process, reducing the number of purchases that require a staff report and City Council approval. RECOMMENDATION: Staff recommends that the City Council conduct the public hearing, deliberate, waive the reading and introduce an Ordinance Revising Section 2.36 of the Municipal Code for the City of Dublin and Providing for Informal Bidding Procedures Under the Uniform Public Construction Cost Account Act (Section 22000, et seq. of the Public Contract Code). Submitted By Reviewed By Administrative Services Director Assistant City Manager DESCRIPTION: The current purchasing system is defined in Chapter 2.36 of the Dublin Municipal Code, and it was last revised in February 2000 (Attachment 1). City Staff has conducted a comprehensive review of the City's "Purchasing" guidelines to: 1) Validate whether the current limits required updating; 2) Examine options for local purchase preferences; and 3) Identify opportunities to streamline the existing procurement process. Page 1 of 5 ITEM NO. 6.2 City Staff conducted the review by undertaking the following tasks- 1 . Staff worked with the City Attorney and City departments specifically impacted by the proposed alterations to the "Purchasing" guidelines to examine areas for improvement; 2. Staff reviewed State Accounting Standards and options under State Law to revise thresholds for fortmal bidding; 3. Staff compared the City's existing "Purchasing" guidelines with the procurement policies of nearby cities. Because of the comprehensive nature of the amendments, it is difficult to present a word for word tracking of the changes. To improve the administration of the purchasing function, sections were moved and new sections were also added. The Staff report will highlight the substanatative changes compared to the current ordinance and purchasing practices. The proposed Ordinace as Attachment 2. Upon final adoption, this ordinance will fully replace the current language in Chapter 2.36 of the Dublin Municipal Code. BASIC PURCHASE THRESHOLDS FOR BIDDING & AUTHORITY TO PURCHASE The table below is a comparison of current purchase value thresholds between the City of Dublin and nearby cities. COMPARISON OF SURROUNDING AGENCY PURCHASE LIMITS ** The City of San Ramon is a Charter City and purchasing is governed by provisions of their Charter. Based on the comparison of nearby cities and staff feedback, City staff proposes that the purchase value thresholds be amended. Special provisions will apply to public projects and will be discussed later in this report. The following apply to general purchases of goods and services: 1. The purchase value limit associated with purchases allowed to be purchased from the nearest source without a required review of pricing would increase from $1,000 to $5,000. The ordinance and staff procedures encourage solicitation of competitive pricing; however, it is not a requirement. Page 2 of 5 Dublin San Pleasanton Livermore Danville Ramon ** City Manager Up to Up to Up to Up to Up to Authority $ 19,999 $ 50,000 $ 100,000 $ 100,000 $ 25,000 Price Quotations Exceeding Exceeding Exceeding Exceeding Exceeding Required $ 999 $ 10,000 $ 5,000 $ 5,000 $ 2,500 Formal Bid (Excludes Exceeding Exceeding Exceeding Exceeding Exeeding Public $ 19,999 $ 500,000 $ 100,000 $ 50,000 $ 15,000 Projects) Formal Bid - Public Exceeding Exceeding Exceeding Exceeding Exceeding Projects $5,000 $500,000 $100,000 $5,000 $5,000 ** The City of San Ramon is a Charter City and purchasing is governed by provisions of their Charter. Based on the comparison of nearby cities and staff feedback, City staff proposes that the purchase value thresholds be amended. Special provisions will apply to public projects and will be discussed later in this report. The following apply to general purchases of goods and services: 1. The purchase value limit associated with purchases allowed to be purchased from the nearest source without a required review of pricing would increase from $1,000 to $5,000. The ordinance and staff procedures encourage solicitation of competitive pricing; however, it is not a requirement. Page 2 of 5 2. The purchase value range associated with informal pricing would be applicable to purchases "greater than or equal to $5,000 and less than $45,000." (Currently this applies to purchases between $1,000 and $19,999). 3. Currently City Council approval is required for purchases of $20,000 and greater. The proposed revision will increase the authority of the City Manager to approve purchases less than $45,000. (As discussed later for Public Projects the City Manager will have a higher limit). 4. Currently a formal sealed bid process is used for purchases in excess of $20,000. The revision will increase the threshold to purchases of $45,000 or greater. REORGANIZATION OF PURCHASING ORDINANCE -ADMINISTRATION The proposed revisions to Chapter 2.36 of the Dublin Municipal Code include three additional sections: 2.36.020 Definitions, 2.36.030 City Council Authority, and 2.36.050 Purchasing Agent Authority for Purchases Less than $45,000. The City has a decentralized purchasing system meaning that Staff throughout the organization are responsible for adhering to the requirements. Section 2.36020 (Definitions) will aid in consistent interpretation of the terms used within the chapter and assist purchasers in determining the classification of their purchase. Sections 2.36.030 (City Council Authority) and 2.36.050 (Purchasing Agent Authority for Purchases Less than $45,000) will detail the conditions under which the Purchasing Agent is authorized to contract for services. Other recommended revisions to Chapter 2.36 of the Dublin Municipal Code include a re- ordering of the sections in order to allow users to move through the document and be able to easily determine which sections apply to their procurement. Purchasing categories will appear in an uninterrupted sequence that allows the user to readily identify the applicable section. Exceptions and general considerations sections are re- ordered to follow the purchasing categories. Section 2.36.150 related to surplus supplies and equipment was also revised to allow for these activities to be handled administratively. Currently Staff presents a recommendation to the City Council to dispose of surplus items. The revised ordinance will allow Staff to handle these transactions and record them in the City's financial records. INCORPORATION OF UPCCAA PROCEDURES FOR PUBLIC PROJECTS Under the City's existing municipal code, which follows State Law (DMC Section 2.36.120), all "public projects" (non- maintenance building, street, or sewer work) over $5,000 are formally bid and let to the lowest responsible bidder, per Public Contract Code 20161 and 20162. The $5,000 limit under State law has not changed since the City was incorporated in 1982. The Uniform Public Construction Cost Accounting Act ( UPCCAA) program offers an alternative threshold provided that the agency follows certain requirements and adopts a special resolution. Local agencies that have adopted the UPCCAA include the City of Pleasanton and the Dublin Unified School District. Under the UPCCAA program, enacted in 1983, local accounting procedures. Attachment 3 is a publication provides an overview of the Act. The State Program thresholds for "public projects ": Page 3 of 5 agencies must follow specific cost issued by the State Controller that allows agencies to use the following • Project work of up to $45,000 by negotiated contract or purchase order in accordance with local rules. • Projects defined as "public work" costing between $45,000 and $175,000 may be let to contract under informal procedures specified in the UPCCAA Policies and Procedures Manual. • All projects over $175,000 must be bid in accordance with formal bidding requirements. Implementation of the Uniform Public Construction Cost Accounting Act ( UPCCAA) program would establish an opportunity to increase thresholds for formal public bidding administratively, using policies that are in keeping with State Accounting standards. This process is expected to expedite the time required to arrange for eligible projects to get underway and it will reduce paperwork relative to advertising and filing of staff reports. Actions required of the agency include formal election to become subject of the act and adoption of alternate bidding procedures. If the UPCCAA program is adopted by the City, required actions include advertisement of projects to a list of qualified bidders maintained by the City; additionally, each public project's estimated and actual costs must be tracked under a unique project code number. The existing project accounting system in EDEN is able to track the necessary project costs. The State accounting requirements focus on costs of work performed by City forces. Since the City contracts applicable work already, the accounting should not be a significant burden. Section 2.36.160 of the revised Dublin Municipal Code (Attachment 2) includes language outlining the purchasing requirements under UPCCAA. At this time, Staff has proposed to have the City use a formal process for all projects over $100,000, in lieu of the $175,000 limit allowed under UPCCAA. This means that the City Council will formally award all contracts in excess of $100,000. For "public projects" between $45,000 and $100,000, Staff is proposing that the City Manager (Purchasing Agent) be authorized to award contracts. This is consistent with the informal bid procedures set forth in Section 2.36.160 of the proposed ordinance and in Section 22034 of the Public Contract Code. A resolution will be required to adopt the UPCCAA provisions. Since this will need to be effective with the new ordinance, this will be presented as part of the Staff Report at the time of the second reading of the ordinance. LOCAL VENDOR PURCHASING OPTIONS At the request of the City Council, the City Attorney reviewed options to include a purchase preference for local businesses. In researching the item, it was noted that this topic was previously researched by the City Attorney in 1999 and a report was presented to the City Council on May 5, 1999 (Attachment 4). The recommendation at that time was to not offer a local preference as it could be subject to a legal challenge. The City Attorney examined current legal opinions and laws and determined that their 1999 recommendation remained unchanged. Staff are encouraged to seek participation from local vendors. The current ordinance also allows the preference to a local vendor in the event of a tie. NOTICING REQUIREMENTS /PUBLIC OUTREACH: None Page 4 of 5 ATTACHMENTS: 1. Current Chapter 2.36 of the Dublin Municipal Code — Purchasing 2. Proposed Ordinance Revising Section 2.36 of the Municipal Code for the City of Dublin and Providing Informal Bidding Procedures Under the Uniform Public Construction Cost Account Act (Section 22000, et seq. of the Public Contract Code) 3. California State Controller FAQ - Uniform Public Construction Cost Account Act 4. May 5, 1999 City Council staff report (including City Attorney analysis) regarding Local Purchase Preferences Page 5 of 5 Chapter 2.36 PURCHASING Chapter 2.36 PURCHASING Sections: 2.36.010 Adoption of a purchasing system. 2.36.020 Purchasing Agent designated. 2.36.030 Purchases by City Council- Competitive bidding. 2.36.040 Purchasing award — Factors to be considered. Page 1 of 6 2.36.010 Adoption of a purchasing system. A purchasing system is adopted 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 level of quality required, to exercise financial control over purchases, and to clearly define authority for the purchasing function. (Ord. 16 -83 § 1) 2.36.020 Purchasing Agent designated. The City Manager is designated as Purchasing Agent. The City Manager may delegate all or a portion of the purchasing duties to any city staff member. The Purchasing Agent shall have the authority to: A. Purchase or contract for supplies, services and equipment required by the city, in accordance with purchasing procedures outlined in this chapter; B. Negotiate and recommend execution of contracts for the purchase of supplies, services and equipment; C. Act to procure for the city the necessary quality in supplies, services, and equipment at the lowest cost to the city; D. Prepare and recommend to the City Council revisions and amendments to the purchasing rules; E. Establish and maintain such forms as reasonably necessary to the operation of purchasing guidelines; F. Supervise the inspection of all supplies, services, and equipment purchased to insure conformance with specifications; http: / /www. codepublishing. com /ca/Dublin/Dublin02/Dublin023 6.html 7/6/2012 Chapter 2.36 PURCHASING Page 2 of 6 G. Recommend the sale or disposal of all supplies and equipment which cannot be used by the city, or which have become unsuitable for city use; H. Maintain a bidder's list and other records necessary for the efficient acquisition of goods and services. (Ord. 16 -83 § 2) 2.36.030 Purchases by City Council— Competitive bidding. When the amount or value involved is at least twenty thousand dollars ($20,000), the purchase or disposal shall be made by the City Council through competitive bid as outlined below. Bids should be obtained from one or more vendors located within the city of Dublin whenever possible. A. Notice inviting bids shall include a general description of the services and /or articles to be purchased or sold, where bid blanks and specifications may be obtained, the time and place for bid openings, and whether bid deposit or bond and faithful performance bond will be required. B. Notice inviting bids shall be posted in at least three (3) public places in the city that have been designated by ordinance as the place for posting public notices, at least ten (10) days before the date of opening the bids. C. The Purchasing Agent shall also solicit sealed bids from all responsible prospective suppliers whose names are on the bidder's list and may advertise the notice inviting bids in applicable publications and websites readily accessible to the public. D. When deemed necessary by the Purchasing Agent or City Council, any bidder may be required to submit a bid deposit or bond in an amount determined by the Purchasing Agent or City Council. A successful bidder (and his surety, if a bond is furnished) shall be liable for any damages upon the bidder's failure to enter into a contract with the city or upon the bidder's failure to perform in accordance with the tenor of his bid. E. When deemed necessary by the Purchasing Agent or City Council, any person or entity entering into a contract with the city may be required to furnish a faithful performance deposit or bond in an amount determined by the Purchasing Agent or Council. F. Bids shall be opened in public at the time and place stated in the public notices. A tabulation of all bids received shall be open for public inspection during regular business hours for a period of not less than thirty (30) calendar days after the bid opening. G. At its discretion, the City Council may reject all bids presented and readvertise for bids. H. Contracts shall be awarded by the City Council to the lowest responsible bidder, except as otherwise provided herein. I. If two or more bids received from responsible bidders are for the same total amount or unit price, quality and service being equal, preference shall be given to the local vendor, or the City Council may accept the lowest bid made by negotiation with the tie http: / /www. codepublishing. com /ca/Dublin/Dublin02/Dublin023 6.html 7/6/2012 Chapter 2.36 PURCHASING Page 3 of 6 bidders and the Purchasing Agent at the time of the bid opening. (Ord. 4 -00 § 1; Ord. 16- 83 § 3) 2.36.040 Purchasing award — Factors to be considered. Purchases shall be awarded after consideration of the following factors: A. The amount of bid price; B. The ability, capacity and skill of the bidder to perform the contract or provide the service required; C. The ability of the bidder to perform the contract or provide the service promptly, or within the time specified, without delay or interference; D. The reputation and experience of the bidder; E. The previous experience of the city with the bidder; F. The previous and existing compliance by the bidder with the laws and ordinances; G. The sufficiency of the financial resources and ability of the bidder to perform the contract or provide the service; H. The quality, availability, and adaptability of the supplies or contractual services to the particular use required; I. The ability of the bidder to provide future maintenance and service for the use of the subject of the contract; J. The number and scope of conditions attached to the bid; K. The purchase of products, whenever feasible, containing the highest amount of postconsumer and recovered materials practicable. In all cases, these products must meet reasonable performance standards, and be readily available at a competitive price. In addition, all equipment bought, leased or rented shall, wherever feasible, be compatible with the use of recycled products purchased by the city. (Ord. 4 -00 § 2; Ord. 16 -83 § 4) 2.36.050 Exceptions to competitive bidding requirements. A. The provisions of this chapter requiring competitive bidding shall not apply to the following: 1. Contracts involving the acquisition of professional or specialized services, such as, but not limited to, services rendered by architects, attorneys, engineers, and other specialized consultants; 2. Where the city's requirements can be met solely by a single patented article or process; 3. To situations where no bids have been received following bid announcements under other provisions of this chapter; http: / /www. codepublishing. com /ca/Dublin/Dublin02/Dublin023 6.html 7/6/2012 Chapter 2.36 PURCHASING Page 4 of 6 4. When the amount involved is less than one thousand dollars ($1,000); 5. When an emergency requires that an order be placed with the nearest source of supply; 6. When a purchase involves goods of a technical nature, where it would be difficult for a vendor to bid on a standard set of specifications, the Purchasing Agent shall undertake a thorough review of known products and a comparison of features which would most closely meet the city's needs at the least cost; 7. For janitorial services for city buildings and facilities; 8. For maintenance and repair of buildings and facilities; 9. For maintenance and repair of public streets, including street sweeping; 10. When another public agency has administered a competitive bidding process within the past two years for the same or substantially similar supplies, services or equipment; 11. When the City Council specifically waives the competitive bid process and authorizes staff to negotiate the purchase of vehicles by a four - fifths vote. B. When the procurement falls into any of the categories listed above, the Purchasing Agent may authorize contracts made by negotiation; provided, that the amount does not exceed twenty thousand dollars ($20,000). When the amount exceeds twenty thousand dollars ($20,000), the action must be authorized by the City Council. C. Any request for an exception under this section shall include the nature of the contract, amount of the contract, and the reasons why competitive bidding is not feasible. (Ord. 4 -00 § 3; Ord. 21 -97 § 1; Ord. 5 -91 § 1: Ord. 16 -83 § 5) 2.36.060 Purchases of less than twenty thousand dollars ($20,000)— Procedure. Where the amount or value involved is more than one thousand dollars ($1,000), but less than twenty thousand dollars ($20,000), the purchase or disposal may be made by the Purchasing Agent, without written bid, and by informal price checking through telephone or mail inquiry, comparison of prices on file or otherwise. Every attempt shall be made to receive at least three (3) price quotations. At the discretion of the Purchasing Agent, the acquisition of goods and services where the value is at least one thousand dollars ($1,000) but less than twenty thousand dollars ($20,000), the formal competitive bid process may be used. (Ord. 4 -00 § 4: Ord. 16 -83 § 6) 2.36.070 Purchase orders. All purchases shall be documented by a purchase order prepared by the Purchasing Agent. The original copy shall be directed to the vendor and one (1) copy shall be retained for the purchase order file. The final copy shall be directed to the department for whose benefit the purchase is being made to be used as a receiving report. (Ord. 16 -83 § 7) 2.36.080 Availability of sufficient funds. http: / /www. codepublishing. com /ca/Dublin/Dublin02/Dublin023 6.html 7/6/2012 Chapter 2.36 PURCHASING Page 5 of 6 No purchase order shall be issued until it has been ascertained that there is to the credit of the department of the city for whose benefit such purchase is to be made, a sufficient unappropriated balance in excess of all unpaid obligations to defray the amount of such order. (Ord. 16 -83 § 8) 2.36.090 Inspection and review. The Purchasing Agent shall require the inspection of supplies and equipment delivered, and contractual services performed, to determine their conformance with the specifications and requirements set forth in the order or contract. (Ord. 16 -83 § 9) 2.36.100 Surplus supplies and equipment. At such times as determined by the Purchasing Agent, reports shall be prepared showing all supplies and equipment which are no longer used or which have become obsolete or worn out. The Purchasing Agent shall have the authority to sell, trade or exchange all said supplies and equipment. Such sales will be made pursuant to Section 2.36.030 or Section 2.36.060 of this chapter, whichever is applicable. (Ord. 16 -83 § 10) 2.36.110 Splitting orders prohibited. It is unlawful to split or separate into smaller orders the purchase of supplies, materials, equipment or services for the purpose of evading the competitive bidding provisions of this chapter. (Ord. 16 -83 § 11) 2.36.120 Exceptions — Public projects. This chapter is expressly made inapplicable to bids for public projects as defined by Public Contracts Code Section 20161 and where the expenditure required for the public project exceeds the limit set by Public Contracts Code Section 20162. The provisions contained in Public Contracts Code Section 20161 et seq., establish contract procedures the city shall follow regarding public projects. (Ord. 5 -91 § 2: Ord. 16 -83 § 12) 2.36.130 Exceptions— Contracting for emergency cleanup of hazardous materials. When, in the discretion of the Public Works Director /City Engineer or his or her designee, it is determined that a hazardous spill has occurred and that immediate cleanup is required to prevent the spill from entering the city storm drain system or any watercourse, the City Manager, or his or her designee, may contract for the clean up of the spill. Any such contract in the amount of twenty thousand dollars ($20,000) or under may be entered into on behalf of the city by the City Manager, or his or her designee, without prior City Council approval; however, no such contract exceeding twenty thousand dollars ($20,000) in amount shall be executed without prior approval of the City Council. (Ord. 4- 00 § 5; Ord. 9 -92 § 3) http: / /www. codepublishing. com /ca/Dublin/Dublin02/Dublin023 6.html 7/6/2012 Chapter 2.36 PURCHASING Page 6 of 6 This page of the Dublin Municipal Code is current through City Website: http: / /www.ci.dublin.ca.us/ Ordinance 9 -12, passed June 19, 2012. (http: / /www.ci.dublin.ca.us /) Disclaimer: The City Clerk's Office has the official version of the City Telephone: (925) 833 -6600 Dublin Municipal Code. Users should contact the City Clerk's Code Publishing Company Office for ordinances passed subsequent to the ordinance cited ( http: / /www.codepublishing.com /) above. eLibrary (http: // www. codepublishing .com /elibrary.html) http: / /www. codepublishing. com /ca/Dublin/Dublin02/DublinO23 6.html 7/6/2012 ORDINANCE NO. xx — 12 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DUBLIN * * * * * * * * * * * * ** REVISING SECTION 2.36 TO THE MUNICIPAL CODE OF THE CITY OF DUBLIN AND PROVIDING INFORMAL BIDDING PROCEDURES UNDER THE UNIFORM PUBLIC CONSTRUCTION COST ACCOUNT ACT (Section 22000, et seq. of the Public Contract Code) WHEREAS, Chapter 2.36 ( "Purchasing" guidelines) of the Dublin Municipal Code was last reviewed in February 2000; and WHEREAS, at the request of the City Council, Staff has reviewed the Purchasing Ordinance to streamline the existing procurement process and to reduce the number of purchases that require a staff report and City Council approval; and WHEREAS, implementation of the Uniform Public Construction Cost Accounting Act (UPCCAA) program would establish an opportunity to increase the new thresholds for formal and informal public bidding, using policies that are in keeping with State Accounting standards; and WHEREAS, Staff has identified proposed amendments to the Dublin Purchasing Ordinance; and WHEREAS, the exact text amendments are shown in Section 2 of this Ordinance. NOW, THEREFORE, the City Council of the City of Dublin does ordain as follows- SECTION 1: Chapter 2.36 of the Dublin Municipal Code is hereby deleted in its entirety. SECTION 2: A new Chapter 2.36 is hereby added to the Dublin Municipal Code to read as fol lows: Chapter 2.36 Contracts and Purchasing 2.36.010 Adoption of a purchasing system. 2.36.020 Definitions. 2.36.030 City Council approval of contracts and purchases. ATTACHMENT 2 2.36.040 Purchasing Agent designated. 2.36.050 Purchasing Agent authority for contracts and purchases —less than $45,000. 2.36.060 Purchasing Award — Factors to be considered for Responsiveness and Responsibility. 2.36.070 Contracts and Purchases of general services, supplies and equipment —less than $5,000. 2.36.080 Contracts and purchases of general services, supplies and equipment —more than or equal to $5,000 and less than $45,000. 2.36.090 City Council Authority for contracts and purchases— greater than or equal to $45,000 - Competitive Bidding. 2.36.100 Exceptions to Competitive Bidding. 2.36.110 Splitting orders prohibited. 2.36.120 Purchase orders. 2.36.130 Availability of sufficient funds. 2.36.140 Inspection and review. 2.36.150 Surplus supplies and equipment. 2.36.160 Public Projects. 2.36.010 Adoption of a purchasing system. A purchasing system is hereby adopted in order to establish efficient procedures for the procurement of services, supplies and equipment at the lowest possible cost commensurate with the level of quality required, to exercise financial control over purchases, and to clearly define authority for the purchasing function WDRiMit IZ2iIii[i[6 t For the purposes of this Chapter, the words set out in this section shall have the following meanings: A. "Consultant or professional services" means the services rendered by architects, attorneys, engineers, doctors, financial consultants, planning or environmental consultants, investment advisors, bank or trustee officers, and other professional or specialized consultants. B. "Contract" means any agreement to do or not do a certain thing. For the purposes of this Chapter, "contract" and "agreement" are synonymous. The term "contract" includes, but is not limited to, a purchase order; a contract for services; an addendum or change order, which means a change or addendum to an executed contract; a letter agreement; and a memorandum of understanding. C. "Force Account" is a term used by the Uniform Construction Cost Accounting Procedures meaning an account which is used to account for work performed on public projects using internal resources, including but not limited to labor, equipment, materials, supplies, and subcontracts of the public agency. 2 D. "Emergency" means a sudden, unexpected occurrence that poses a clear and imminent danger, requiring immediate action to prevent or mitigate the loss or impairment of life, health, property, or essential public services. E. "General services" means and includes any work performed or services rendered by an independent contractor, with or without the furnishing of materials, including, but not limited to, the following- 1 . Maintenance or nonstructural repair of City buildings, structures or improvements which does not require engineering plans, specifications or design, including, but not limited to, unscheduled replacement of broken window panes, fire extinguisher maintenance, minor roof repairs, plumbing, elevator maintenance, custodial services and pest control; etc. 2. Repair, modification and maintenance of City equipment and software; 3. Cleaning, analysis, testing, moving, removal or disposal (other than by sale) of City supplies and equipment; 4. Replanting, care or maintenance of public grounds, including, but not limited to, maintenance of trees, shrubbery, flowers, lawns; 5. Providing temporary personnel services; 6. Providing other miscellaneous services to facilitate City operations; 7. Performing repair, demolition or other work required to abate nuisances under this Code; 8. Licensing software services; 9. Leasing or rental of equipment (personal property) for use by the City; 10. Maintenance of equipment owned or leased by the City. "General services" does not include consultant or professional services, or work associated with a public project. F. "Goods of a technical nature" means hardware, software, or communications equipment, or any item that is substantially similar to the foregoing as determined by the Purchasing Agent. G. "Public project" shall have the meaning given that term by California Public Contract Code Section 20161 and the Uniform Construction Cost Accounting Procedures ( "UCCAP ") set forth in the Uniform Public Construction Cost Account Act ( "The Act ") and referenced in Section 2.36.160 of the Dublin Municipal Code H. "Supplies and equipment" means and includes tangible goods, supplies, equipment, vehicles, printing, materials, and furniture and furnishings purchased on behalf of the City. 2.36.030 City Council approval of contracts and purchases. City Council approval is required for all contracts and purchases unless otherwise specified by this Chapter or Code, or by another provision of federal or state law. 2.36.040 Purchasing Agent designated. The City Manager is designated as Purchasing Agent. The Purchasing Agent may delegate all or a portion of the contracting or purchasing duties to any City staff member. The Purchasing Agent shall have the authority to: A. Contract for or procure consultant or professional services, general services, supplies and equipment required by the City, in accordance with purchasing procedures outlined in this Chapter; B. Negotiate and recommend execution of contracts for the purchase of consultant or professional services, general services, supplies and equipment; C. Act to procure for the City the necessary quality in consultant or professional services, general services, supplies and equipment at the lowest cost to the City; D. Prepare and recommend to the City Council revisions and amendments to the purchasing rules; E. Establish and maintain such forms as are reasonably necessary to the operation of this Chapter; F. Supervise the inspection of all consultant or professional services, general services, supplies and equipment purchased to insure conformance with specifications; G. Pursuant to Section 2.36.150, arrange the sale or disposal of all supplies and equipment which cannot be used by the City, or which have become unsuitable for City use; H. Maintain a bidder's list and other records necessary for the efficient acquisition of consultant or professional services, general services, and supplies and equipment; I. Join with other governmental agencies in joint purchasing endeavors where the purchasing procedures conform to the provisions of this Chapter and State law. 2.36.050 Purchasing Agent authority for contracts and purchases —less than $45,000. A. With the exception of public projects as defined in Section 2.36.020, the Purchasing Agent is authorized to enter into a contract on behalf of the City and approve a purchase by the City without the prior approval of the City Council, so long as the contract or purchase satisfies the following conditions: 1. The total cost is less than $45,000; 2. The monies have been appropriated; and 3. The contract or purchase is for consultant or professional services, general services, or supplies and equipment 11 B. In an emergency the Purchasing Agent may authorize the expenditure of any unencumbered monies in the emergency reserve fund, notwithstanding the fact that such moneys may not have been appropriated for such purpose, to the extent that said emergency funds have not been appropriated or are otherwise unavailable therefore. 2.36.060 Purchasing award — Factors to be considered for Responsiveness and Responsibility. The following factors shall be considered in determining the responsiveness of potential contracts and purchases and the responsibility of vendors and bidders in accordance with applicable law: A. The amount of the contract or the purchase price; B. The ability, capacity and skill of the bidder or vendor to perform the contract or provide the service required; C. The ability of the bidder or vendor to perform the contract or provide the service promptly, or within the time specified, without delay or interference; D. The reputation and experience of the bidder or vendor; E. The previous experience of the City with the bidder or vendor; F. The previous and existing compliance by the bidder or vendor with the laws and ordinances; G. The sufficiency of the bidder's or vendor's financial resources and ability to perform the contract or provide the service; H. The quality, availability, and adaptability of the supplies or contractual services to the particular use required; I. The ability of the bidder or vendor to provide future maintenance and service for the subject of the contract or purchase; J. The number and scope of conditions attached to the contract or purchase; K. The purchase of supplies, whenever feasible, containing the highest amount of postconsumer and recovered materials practicable. In all cases, these products must meet reasonable performance standards, and be readily available at a competitive price. In addition, all equipment bought, leased or rented shall, wherever feasible, be compatible with the use of other recycled products purchased by the City; L. Compliance with any administrative policies referencing "green fleet" purchasing procedures; M. In the event that two or more potential contracts or bids are received from responsible bidders or vendors for the same total amount or unit price, quality and service being equal, preference shall be given to the local vendor, or the City Council may accept the lowest bid made by negotiation with the tie bidders and the Purchasing Agent. 2.36.070 Contracts and purchases of general services, supplies and equipment —less than $5,000. For purchases of general services or supplies and equipment of less than $5,000, informal quotations should be obtained, but are not required. Comparative pricing is expected to secure the lowest price. Negotiated pricing is allowed and departments are strongly encouraged to solicit quotations from City- based businesses. 2.36.080 Contracts and purchases of general services, supplies, and equipment — greater than or equal to $5,000 and less than $45,000. A. Purchases of general services, supplies and equipment greater than or equal to $5,000 and less than $45,000 shall, whenever possible, be based on at least three quotations. For purchases greater than or equal to $5,000 and less than $10,000, the quotations may be verbal or written. For purchases greater than or equal to $10,000 and less than $45,000, the quotations shall in writing, which writings may include facsimile and electronic mail transmissions. Quotations with the required documentation shall be submitted to the Finance Department for approval by the Purchasing Agent. Negotiated pricing is allowed and departments are strongly encouraged to solicit quotations from City -based businesses. The purchase of any general services, supplies and equipment greater than or equal to $5,000 and less than $45,000 shall be consistent with the factors stated in 2.36.060 and shall be made from the vendor that submits the lowest total cost. B. At the discretion of the Purchasing Agent, the competitive bidding procedure set forth in section 2.36.090 may be used for any acquisition of general services, supplies and equipment, regardless of the value. 2.36.090 City Council authority for contracts and purchases— greater than or equal to $45,000— Competitive bidding. City Council approval shall be required to authorize the contract for or purchase of any consultant or professional services, general services or supplies and equipment with a cost greater than or equal to $45,000. City Council authorization for purchases of general services and supplies and equipment with a cost greater than or equal to $45,000 shall comply with the competitive bidding procedure set forth in this section, except as provided in Section 2.36.100. Bids should be obtained from one or more vendors located within the City whenever possible. A. Notices inviting bids shall include a general description of the services and /or articles to be purchased or sold, where bid blanks and specifications may be obtained, the time and place for bid openings, and whether a bid deposit or bond and a faithful performance bond will be required. B. Notices inviting bids shall be posted in at least three (3) public places in the City that have been designated by ordinance as the place for posting public notices, at least fourteen (14) calendar days before the date of opening the bids. C. The Purchasing Agent shall also solicit sealed bids from all responsible prospective suppliers whose names are on the bidder's list and may advertise the notice inviting bids in applicable publications and websites readily accessible to the public. D. When deemed necessary by the Purchasing Agent or City Council, any bidder may be required to submit a bid deposit or bond in an amount determined by the Purchasing Agent or City Council. A successful bidder (and his surety, if a bond is furnished) shall be liable for any damages upon the bidder's failure to enter into a contract with the City or upon the bidder's failure to perform in accordance with the tenor of his or her bid. E. When deemed necessary by the Purchasing Agent or City Council, any person or entity entering into a contract with the City may be required to furnish a faithful performance deposit or bond in an amount determined by the Purchasing Agent or City Council. F. Bids shall be opened in public at the time and place stated in the public notices. A tabulation of all bids received shall be open for public inspection during regular business hours for a period of not less than thirty (30) calendar days after the bid opening. G. At its discretion, the City Council may reject all bids presented and re- advertise for bids. H. Contracts shall be awarded by the City Council to the lowest responsive, responsible bidder, except as otherwise provided herein. I. If two or more bids received from responsible bidders are for the same total amount or unit price, quality and service being equal, preference shall be given to the local vendor, or the City Council may accept the lowest bid made by negotiation with the tie bidders and the Purchasing Agent at the time of the bid opening. 7 2.36.100 Exceptions to competitive bidding. A. Contracts or purchases involving the acquisition of consultant or professional services, are exempt from competitive bidding, however the procurement of such services shall be subject to the following- 1 . Contracts or purchases involving the acquisition of consultant or professional services greater than or equal to $45,000 will require City Council approval. 2. With respect to contracts for or procurement of professional services from private architectural, landscape architectural, engineering, environmental, land surveying, or construction project management firms, the Purchasing Agent shall establish administrative procedures to assure that such services are engaged on the basis of demonstrated competence and qualifications for the types of services to be performed and at fair and reasonable prices in compliance with Government Code Section 4526 or its successor. 3. The Purchasing Agent may utilize a Request for Quotation or Request for Proposal, to insure the services are matched with the needs of the City. B. Any request for an exception under this subsection 2.36.100.13 shall identify the nature of the contract or purchase, amount of the contract or purchase, and the reasons why competitive bidding is not feasible and shall be subject to City Council approval. The provisions of Sections 2.36.090 subject to City Council approval shall not apply to the following- 1 . Where the City's requirements can be met solely by a single patented article or process; 2. Situations where no bids have been received following bid announcements conducted pursuant to the provisions of this Chapter; 3. When an emergency requires that an order be placed with the nearest source of supply; 4. When a contract or purchase involves goods of a technical nature, where it would be difficult for a vendor to bid on a standard set of specifications, and the Purchasing Agent undertakes a thorough review of known products and a comparison of features which would most closely meet the City's needs at the lowest cost; 5. For janitorial services for city buildings and facilities; 6. For maintenance and repair of buildings and facilities; 7. For maintenance and repair of public streets, including street sweeping; 8. Public Projects, pursuant to Article V of this Chapter; 9. When another public agency has administered a competitive bidding process and has a current valid agreement for the same or substantially similar consultant or professional services, general services, supplies or equipment; 10. When the City Council specifically waives the competitive bid process and authorizes staff to negotiate the purchase of vehicles by a four -fifths vote. 2.36.110 Splitting orders prohibited. The purchasing dollar limits set forth in this Chapter are determined on a per order basis. It is unlawful to split or separate into smaller orders the contract or purchase of general services, supplies and equipment for the purpose of evading the competitive bidding provisions of this Chapter. 2.36.120 Purchase orders. Purchases greater than or equal to $5,000 shall be documented by purchase orders prepared by the Purchasing Agent in accordance with adopted administrative policies. 2.36.130 Availability of sufficient funds. No purchase shall be transacted until it has been ascertained that there is, to the credit of the department of the City for whose benefit such purchase is to be made, a sufficient appropriated balance in excess of all unpaid obligations to defray the amount of such purchase. 2.36.140 Inspection and review. The Purchasing Agent shall require the inspection of supplies and equipment delivered, and contractual services performed, to determine their conformance with the specifications and requirements set forth in the purchase order or contract. 2.36.150 Surplus supplies and equipment. The Purchasing Agent shall establish administrative procedures for City departments to report all supplies and equipment which are no longer used or which have become obsolete or worn out. The Purchasing Agent shall have the authority to sell, trade, exchange, dispose of, discard or destroy all said supplies and equipment. Such sales may be made by auction, negotiated sale, or otherwise, after receiving bids or proposals that provide the maximum return to the City, as determined by the Purchasing Agent. The Purchasing Agent shall have the authority to recommend to the City Council surplus supplies and equipment for donation, which donation shall be subject to City Council approval upon making the appropriate findings, including the requisite public purpose for such donation. At such times as determined by the Purchasing Agent, but at least annually, reports shall be prepared and submitted to the City Manager showing the disposition of surplus supplies and equipment. The report shall contain itemized information on the disposition of any item that had a purchase cost in excess of the capitalization threshold established by the City Manager or his or her designee for inclusion as an asset in the City financial records. 7 2.36.160 Public Projects. Public projects as defined by Uniform Public Construction Cost Accounting Act ( §22000, et seq of the California Public Contract Code) shall follow the purchasing procedures as set forth in Section 22032 et seq. of the Public Contract Code. A. The purchase or contract for public projects less than $45,000 may be performed by the employees of a public agency by force account, by negotiated contract, or by purchase order. (Public Contract Code §22032) B. The purchase or contract for public projects less than $100,000 may be let to contract by informal procedures as set forth in Section 22032 et seq. of the Public Contract Code. 1. A list of contractors shall be developed and maintained in accordance with the provisions of Section 22034 of the Public Contract Code and criteria promulgated from time to time by the California Uniform Construction Cost Accounting Commission. 2. Where a public project is to be performed, a notice inviting informal bids shall be mailed to all contractors for the category of work to be bid, as shown on the list developed in accordance with this section, and to all construction trade journals as specified by the California Uniform Constructions Cost Accounting Commission in accordance with Section 22036 of the Public Contract Code. Additional contractors and /or construction trade journals may be notified; provided however: If there is no list of qualified contractors maintained by the City 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 California Uniform Construction Cost Accounting Commission. If the product or service is proprietary in nature such that it can be obtained only from a certain contractor or contractors, the notice inviting informal bids may be sent exclusively to such contractor or contractors. 3. All mailing of notices to contractors and construction journals pursuant to this Section shall be completed not less than fourteen (14) calendar days before bids are due. 4. The notice inviting informal bids shall describe the project in general terms, how to obtain more detailed information about the project, and shall state the time and place for the submission of bids. 5. The Purchasing Agent is authorized to award informal contracts pursuant to this Section. 10 C. The purchase or contract for public projects greater than or equal to $100,000 shall be authorized by City Council and shall comply with the competitive bidding procedures set forth in Section 2.36.090. SECTION 3: This Ordinance shall take effect and be in force thirty (30) days from and after the date of its final adoption. The City Clerk of the City of Dublin shall cause this Ordinance to be posted in at least three (3) public places in the City of Dublin in accordance with Section 36933 of the Government Code of California. PASSED, APPROVED, AND ADOPTED BY the City Council of the City of Dublin on this 17 day of July, 2012, by the following votes: AYES: NOES: ABSENT: ABSTAIN: ATTEST: City Clerk 11 Mayor Questions and Answers Concerning the Uniform Public Construction Cost Accounting Act Here are answers to questions frequently asked by agencies evaluating the value of options open to them through the Uniform Public Construction Cost Accounting Act (The Act). Aside from the economic benefits, the program provides added conveniences, such as greater freedom in expediting public works projects yet within the spirit of open accountability. 1. What is the Uniform Public Construction Cost Accounting Act? A program created in 1983 which allows local agencies to perform public project work up to $45,000 with its own work force if the agency elects to follow the cost accounting procedures set forth in the Cost Accounting Policies and Procedures Manual of the California Uniform Construction Cost Accounting Commission (Commission). The Act is enacted under Public Contracts Code Section 22000 through 22045 (hereafter abbreviated as PCC 22000 - 22045). In addition, the Act provides for alternative bidding procedures when an agency performs public project work by contract. (a) Public projects of $45,000 or less may be performed by negotiated contract or by purchase order (PCC 22032(a)). (b) Public projects of $175,000 or less may be let to contract by the informal procedures set forth in the Act (PCC 22032(b)). (c) Public projects of more than $175,000 shall be let to contract by formal bidding procedures (PCC 22032(c)). Every five years, the Commission shall consider whether there have been material changes in public construction costs and make recommendations to the State Controller regarding adjustments to the bidding procedure monetary limits (PCC 22020). Adjustments should be effective for the fiscal year that commences not less than 60 days following the State Controller's notification to all participating agencies. Questions and Answers Concerning the Uniform Public Construction Cost Accounting Act 2. What are the benefits of the program? The raised force account limit and informal bidding procedures are two benefits of this program. Many participants laud the program because it gives them more leeway in the execution of public works projects; has speeded up the awards process; has improved timeliness of the project completion; has eliminated considerable red tape and cumbersome paperwork relative to advertising and filing of reports; and has simplified administration. Many agencies have encountered only minimal problems with the accounting requirements and the overhead portion. Moreover, where required, the adjustment was relatively simple; most of the required procedures were already actually in place, so there was no noticeable change in the existing operations. For example, the California Schools Accounting Manual meets the requirements of the Act for school districts. 3. Is the Uniform Public Construction Cost Accounting Act mandatory for local agencies? No. The Act is a voluntary program. However, it is available to all local agencies and cities, both general law and charter. 4. How does a local agency become subject to the Act? The governing body must elect by resolution to become subject to the Act and file a copy of the resolution with the State Controller's Office (PCC 22030) 5. Can a local agency withdraw? An agency may withdraw by filing a resolution of this election with the State Controller's Office. 2 Questions and Answers Concerning the Uniform Public Construction Cost Accounting Act 6. What is the California Uniform Construction Cost Accounting Commission? A state commission created under the Act (PCC 22010). It consists of fourteen (14) members: thirteen (13) members are appointed by the State Controller and one is a designated member of the Contractors' State License Board. Seven members represent the public sector (counties, cities, school districts, and special districts). Seven members represent the private sector (public works contractors and unions). The Commission members receive no salary, but are eligible for reimbursement of their direct expenses related to the Commission. The Commission is responsible for administration of the Act. The State Controller provides limited staff and other support to the Commission (PCC 22015(a)). 7. What are the Uniform Public Construction Cost Accounting Procedures? These cost accounting procedures were developed by the Commission. They are to be used to estimate costs for determining if a public project is required to be bid out and to capture and record actual costs when a public project is performed by the agency's own work force. The procedures follow normal accounting in the industry and in many cases are not much different from those already in place at the agency. 8. Are the cost accounting policies and procedures applicable for agencies whose work force only performs maintenance tasks as defined in the Act and whose public projects are all contracted out? The cost accounting policies and procedures are only applicable for agencies that perform public project work by force account. This does not exclude from the program agencies whose public projects are all contracted out. In fact, they might want to review the benefits available and elect to participate now in the event conditions change at some time in the future. 9. Can a local agency disqualify or exclude certain contractors from the Qualified Contractors List required pursuant to PCC 22034(a)? Questions and Answers Concerning the Uniform Public Construction Cost Accounting Act Agencies may disqualify contractors from the Qualified Contractors List required pursuant to PCC 22034(a). 10. Must a local agency: (1) Notify contractors pursuant to PCC 22034(b) if the contractor is believed not to have the skills, credentials, or experience to perform the work? (2) Consider bids submitted if the agency believes the contractor does not have the skills, credentials, or experience to perform the work? (1) If a contractor is on the Qualified Contractors List (PCC 22034(b)), the contractor must be notified by the agency of public projects for which he is licensed to perform. (2) All bids received from qualified contractors must be considered. 11. Does the Act allow flexibility in cases of great emergency and when repair or replacements are necessary to permit the continued conduct of the operations or services of a public agency? PCC 22035 provides that in cases of great emergency the governing body may, by majority vote, proceed without adopting plans and giving notice to bids to let contracts. In addition, this section provides that the governing body may delegate to the appropriate agency manager the power to declare an emergency and /or proceed with repairs or replacements without approval by the board. PCC 22050 provides contracting procedures without giving notice for bids to let contracts for these emergencies. 12. Do the alternative bidding procedures apply only to public projects as defined in PC 22002(c) or can they be used for the following types of items: (1) Maintenance work to be performed by contract? (2) Purchase of heavy equipment? (3) Purchase of materials? 4 Questions and Answers Concerning the Uniform Public Construction Cost Accounting Act (1) Pursuant to PCC 22003, a participating agency may use the alternative bidding procedures on maintenance work as defined in PC 22002(d), items 1 -5. PCC 22003 is permissive and agencies can continue to exclude maintenance from the alternative bidding procedures. However, if an agency misclassifies a project ($45,000 or more) as maintenance and therefore, does not uses the applicable bidding procedures, a review by the Commission may be conducted pursuant to PCC 22042(c). (2) No (3) Yes if consumed on a public contract subject to and defined by the policies and procedures manual. 13. What will membership in the Act cost my agency? At the present, no required membership fees or dues are assessed. However, the Commission has only received direct state funding for a short period of its history. The State has indicated that the participating agencies, contractors, and unions that benefit from the Commission should be responsible for its funding. Therefore, in November 2004, the Commission asked member agencies, contractor's associations, and construction related unions for voluntary donations to support the Commission. There may be additional requests for voluntary support. Any mandatory fees or dues would require legislation and would be for a nominal amount. An agency with no or antiquated cost accounting may need to invest in a system that will satisfy the relatively simple cost accounting procedures of the program. Considering the many benefits over the long run, the program deserves consideration. 14. What are the most common concerns? There are three leading areas of expressed concern and mostly all are quickly alleviated when addressed properly. These are: (1) Cost accounting policies and procedures; Questions and Answers Concerning the Uniform Public Construction Cost Accounting Act (2) Informal bidding procedures; (3) Accounting review procedures. The cost accounting requirements follow those common to the construction industry. The informal bidding up to $175,000 is seen by the agencies as an asset enhancing project completion. Maintenance of a Qualified Contractor Bid List is routine, since interested contractors make it a point to be included on the list. While a review could potentially hold up a project for 30 days pursuant to PCC 22043, formal complaints have been rare in the Commission's history. 15. Does an agency have to calculate an overhead rate in order to apply the accounting procedures? Cities with populations of less than 75,000 may use an overhead rate of 20% of all direct costs in lieu of the overhead rate calculation specified in Section VI of the Cost Accounting Policies and Procedures Manual. Cities with a population of more than 75,000, counties, special districts, and school districts may use an overhead rate of 30% of all direct costs, in lieu of a calculated rate. 16. When a local entity opts into the Act, does the Act supercede other contracting legal requirements such as statutory requirements for performance bonds, prevailing wages, and certificates of insurance, etc? The Act only supercedes the bidding procedures used once a public agency has adopted a resolution and notified the Controller. All other contracting requirements are applicable whether or not a public entity opts into the Act. The specific mention of bidding procedures emphasizes the omission of other statutory requirements (such as bond payments, prevailing wages, etc) and implies that their applicability is found in specific statutory provisions rather than the Act. 6 Questions and Answers Concerning the Uniform Public Construction Cost Accounting Act Therefore, the Act does not supercede other contracting requirements for performance bonds, prevailing wages, and certificates of insurance, etc. 17. Does an agency by opting into the Act automatically bring (1) All departments of the agency into the Act? (2) Districts under control of the governing board into the Act? (1) When a local agency elects to become subject to the uniform construction cost accounting procedures, the entire entity is considered subject to the Act and no departments will be exempt. (2) Special Districts, which are governed by a board of supervisors or city council, are only subject if a separate election is made. Additional inquiries and questions can be directed to: State Controller's Office Division of Accounting and Reporting County Policy Section 3301 C Street, Suite 740 Sacramento CA, 95816 Satveer Ark at (916) 322 -9105, sark @sco.ca.gov w SUBJECT: ATTACHMENTS: AGENDA STATEMENT CITY CLERK File # Elaga-0dr: CITY COUNCIL MEETING DATE: May 4, 1999 Purchase Preference For Local Vendors In the City Purchasing Ordinance '(Report Prepared by: Paul S. Rankin, Assistant City Manager) 1. City Attorney Memorandum dated November 20, 1998 Chapter 2.36 Dublin Municipal Code - Purchasing - RECOMMENDATION: Receive and file the report and make no changes to the current ordinance. FINANCIAL STATEMENT: Under a purchase preference program the City may incur higher costs as the purchase of goods would no longer be based solely on the lowest cost. Further, in the event of a legal challenge as to the constitutionality of the policy the City could incur legal defense costs, DESCRIPTION: The City Council requested that Staff review the City of Dublin purchasing procedures and provide information related to the possibility of providing a bid preference to Dublin businesses. The current City Ordinance establishes a system whereby purchases are typically made based solely upon the lowest price for comparable items. _City Attorney Analysis The City Attorney reviewed potential legal obstacles to implementing a purchase preference policy. (Attachment 1) The research found that although there are not any California statutes which would automatically preclude adoption of such an ordinance, the enactment could be subject to challenge under the United States Constitution. As is explained below, Staff also found that other public agencies do not offer preferences. Current Ordinance , The current ordinance establishes procedures based upon the amount of the purchase. (Attachment 2) For example, purchases of less than $200 are not subject to a required bid process. It should be noted that this does not preclude obtaining informal prices to assure that public monies are expended in a prudent manner. Purchases made between $200 and $5,000 are subject to an informal bid process. Staff may obtain prices through the mail, telephone inquiries.or other pricing information such as catalog pricing made available by vendors. Every attempt is made to obtain at least 3 price quotations. Once again, if it is deemed appropriate a formal bid process can be used. However, the formal bid process requires additional Staff time to prepare written specifications and administer the process. The formal process is used on all purchases over $5,000 unless the City Council grants an exception to the policy as allowed in Section 2.36.050 (Dublin Municipal Code). Surveys of surrounding cities found that most agencies have increased the limits requiring City Council approval to amounts well above $5,000, on purchases not defined as "Public Works Projects" under State Law. This helps to expedite the purchasing process and make it more efficient. The current City of Dublin policy does provide a local preference in the event that two or more bids are received from responsible bidders for the exact same amount or unit price. (Section 2.36.030) In this case COPIES TO: Chamber of Commerce ITEM NO. Glagen da/agpurch. doc -B44, C; the award may be made to the local vendor. This exception does not effectively grant a "price preference" since there is no additional cost to the City, as both bidders stated identical costs. It should be noted that the local ordinance can only regulate certain purchases. For example, State law has a requirement that all "Public Works Projects" must be bid based upon a sealed bid process and awarded to the lowest responsible bidder. The City Attorney has advised that the California Attorney General has previously determined, that in cases where the statute requires competitive bidding, a preference in favor of local vendors is plainly inconsistent and invalid. In addition, there is a State Law in the Public Contracts Code, which requires contracts for architectural, engineering, land surveying and construction management services, must be awarded based upon qualifications and other factors, provided that fair and reasonable prices are submitted. These are unique procurement transactions and Staff has relied on the requirements under State Law when recommending the award of contracts. Purpose of Current Bid Policy The purpose of the current policy is to have procedures in place which protect the local taxpayers from paying inflated prices for supplies and equipment used by the City. If a preference program is in place local vendors would potentially quote a higher price than the market conditions would dictate. The current policy also provides the widest possible exposure to making purchases. If a preference policy existed, it is possible that firms located outside the City will be discouraged from submitting bids, which would reduce competition for the City's business. Comparison to Other Agencies In reviewing the policies of other cities, Staff was advised that legal concerns have also been raised by other local agencies, which decided against the implementation of this type of policy. Staff contacted several cities in the area and responses were received from: Alameda, Albany, Danville, Hayward, Livermore, Newark, Piedmont, Pleasanton, San Ramon, and Walnut Creek. None of the ten agencies responding provide a purchase price preference except in the case of duplicate bids submitted for the same amount. The City of Hayward discontinued a prior policy of granting a local preference. Ci1y Administrative Polic - Inclusion of Sales Tax Revenue In Deten-nining Lowest Cost On large equipment purchases the City has typically qualified the methodology used to determine the lowest cost, including a calculation any local sales tax received by the City as a result of the transaction. The bid requests include language similar to the following: "...in making a determination of the lowest bidder, consideration will be given to the I% share of the local sales tax, which is returned to the City." This language has most frequently been used with the purchase of vehicles. For example, the amount of the credit which might be considered on a $25,000 police vehicle is $250, which is the 1 % local share of the sales tax. This administrative process would not be characterized as a "preference ". The price comparison would be similar to accounting for a manufacturer's rebate, or other discount when calculating the lowest cost to the City. The net cost to the City would be 1 % less if the purchase was made from a Dublin business. This process only applies to purchases subject to sales tax, and where the business reports the point of sale to the State Board of Equalization as occurring in the City of Dublin. All Staff have been informed by Finance to utilize this policy in the purchase of applicable items under the City ordinance. A change in the ordinance is not required as this policy is consistent with the intent of acquiring the item at the lowest cost to the public. Staff recommends that the City Council receive and file this report without taking any further action. The current policy is legally defensible and it protects the agency from expending more than is justified based upon the market. • MEYERS, NAVE, RZBACK, SILVER & WILSON A PROFESSIONAL LAW CORPORATION OF COUNSEL ANDREA J.SALTZMAN CERTIFIED APPELLATE SPECIALIST STEFANIE Y. GANDOLFI TO: Paul Rankin GATEWAY PLAZA 777 DAVIS STREET, SUITE 300 SAN LEANDRO, CALIFORNIA 94577 TELEPHONE: {510) 351 -4300 FACSIMILE. (510) 351 -4481 MEMORANDUM Administrative Services Director City of Dublin FROM: Elizabeth H. Silver City Attorney *j -1) RE: Local Bidding Preference Abbreviated Opinion /e 6 555 FIFTH STREET, SUITE 230 SANTA ROSA, CA 95401 TELEPHONE. {707) 545 -6009 FACSIMILE, 17071 545.6617 5250 CLAREMONT AVENUE } STOCKTONCdydA 95207 0 Fip9�9S1.3009 NOV 2 31995 FINANO DOT. RECEIVED DATE: November 20, 1998 The City Manager has asked for an abbreviated opinion regarding the possible amendment of its purchasing ordinance (Chapter 2.36, Dublin Municipal Code) to include a bidding preference for local businesses providing supplies or services. Based on nny analysis of statutory and case law, such a preference would be vulnerable to legal challenge under the United States Constitution, Apparently, the preference would not conflict directly'A ith state law. The Government Code provides cities with broad authority to tailor their purchasing ordinances to meet local needs,' and local business preferences are not explicitly prohibited. However, the preference would face a colorable legal challenge under the Equal Protection Clause of the United States Constitution. Under the Equal Protection Clause, the proposed classification between local and non -local vendors must bear some rational ' Gov. C. H 54201 ct serf. ATTACWgENT 1 MICHAEL R. NAVE STEVEN R. MEYERS ELMABETH H. SILVER MICHAEL S. RIBACK KENNETH A- WILSON DAVID W. SKINNER STEVEN T. MATTAS MICHAEL F. RODRIOUE2 CLIFFORD F. CAMPBELL KATHLEEN FAUMON. AICP RICK W. JARVIS ARNE B. SANDBERG BENJAMIN P. FAY DANIEL A. MULLER LIANE M, RANDOLP14 PATRICK WHITNELL KATHARINE G. WELLMAN JOHN W. TRUXAW GARYA. WATT JULIE L. HARRYMAN ADAM U. LINDGREN DIANE; B. ROLEN CLAIRE S. SARDOS • MEYERS, NAVE, RZBACK, SILVER & WILSON A PROFESSIONAL LAW CORPORATION OF COUNSEL ANDREA J.SALTZMAN CERTIFIED APPELLATE SPECIALIST STEFANIE Y. GANDOLFI TO: Paul Rankin GATEWAY PLAZA 777 DAVIS STREET, SUITE 300 SAN LEANDRO, CALIFORNIA 94577 TELEPHONE: {510) 351 -4300 FACSIMILE. (510) 351 -4481 MEMORANDUM Administrative Services Director City of Dublin FROM: Elizabeth H. Silver City Attorney *j -1) RE: Local Bidding Preference Abbreviated Opinion /e 6 555 FIFTH STREET, SUITE 230 SANTA ROSA, CA 95401 TELEPHONE. {707) 545 -6009 FACSIMILE, 17071 545.6617 5250 CLAREMONT AVENUE } STOCKTONCdydA 95207 0 Fip9�9S1.3009 NOV 2 31995 FINANO DOT. RECEIVED DATE: November 20, 1998 The City Manager has asked for an abbreviated opinion regarding the possible amendment of its purchasing ordinance (Chapter 2.36, Dublin Municipal Code) to include a bidding preference for local businesses providing supplies or services. Based on nny analysis of statutory and case law, such a preference would be vulnerable to legal challenge under the United States Constitution, Apparently, the preference would not conflict directly'A ith state law. The Government Code provides cities with broad authority to tailor their purchasing ordinances to meet local needs,' and local business preferences are not explicitly prohibited. However, the preference would face a colorable legal challenge under the Equal Protection Clause of the United States Constitution. Under the Equal Protection Clause, the proposed classification between local and non -local vendors must bear some rational ' Gov. C. H 54201 ct serf. ATTACWgENT 1 ti TO: 0 FROM: RE: DATE: PAGE: • Paul Rankin, Assistant City Manager/ Administrative Services Director Elizabeth H. Silver, City Attorney Local Bidding Preference November 20, 1998 2 relationship to a legitimate governmental purpose. On this issue, legal authority is split. The California Attorney General has opined, with minimal analysis, that a local business preference is rationally related to the legitimate governmental purpose of economic development.- On the other hand, the United States Court of Appeals, Ninth Circuit (a court with far greater authoritative weight on federal constitutional issues than the state Attorney General) has warned that local preferences do not easily satisfy constitutional analysis.' The Court expressed particular concern over preferences which have "no other function than to give domestic businesses an advantage over their foreign competitors."' In sum, if the City adopts a local business bidding preference, it should expect to defend a colorable legal challenge based on the United States Constitution. F:114 MAT AKWI 14113117PREF2.W61 2 72 Ops.Cal.Atty.Gen. 86,93 (1989). 3 Associated General Contractors of California, Inc, n. City and Couttty of San Francisco, 813 F.2d 922, 943 (9th Cir. 1987). 4 Id. at p. 942.