HomeMy WebLinkAboutAgenda Report - August 17, 2005 K-03StO
AGENDA ITEM K40
• Crry of LODI
COUNCIL COMMUNICATION
TNA
AGENDA TITLE: Introduce Ordinance Amending Lodi Municipal Code, Title 2, Administration and
Personnel, by Repealing and Reenacting Chapter 2.12.060(T) relating to the
Contract Authority of the City Manager, and Tide 3, Revenue and Finance, by
Repealing and Reenacting Chapter 3.20 relating to the Purchasing System (FIN)
MEETING DATE: August 17, 2005
PREPA ED BY: James R. Krieger, Finance Director
RECOMMENDED ACTION: That the City Council introduce an Ordinance amending Lodi
Municipal Code Tide 2, Administration and Personnel, by repealing
and reenacting chapter 2.12.060M relating to the contract authority
of the City Manager, and Title 3, Revenue and Finance, Chapter
3.20 by repealing in its entirety and reenacting a revised Chapter
3.20 relating to the City's Purchasing System.
BACKGROUND INFORMATION: On March 8, 2005, the City Council received a briefing by the City
Manager and staff regarding the City's purchasing policy and
procedures.
The basis for the City's purchasing system is Chapter 3.20 of the Municipal Code. Much of the chapter Is
based on Ordinance 630, which dates to December 3, 1958. At that time, competitive quotes were
required on purchase amounts over $100, while the formal bidding process applied to purchases greater
than $2,000.
In April, 1967, Ordinance 839 increased to $4,000 the minimum dollar amount required for formal
bidding, while the informal quote minimum remained at $100. Ordinance 1333, adopted in August,
1984, provided for change in the formal bidding threshold to $5,000, and it has remained at that level for
the past 21 years. The $100 informal quote minimum has remained unchanged since 1958.
Staff is recommending a significant revision of Chapter 3.20 of the Lodi Municipal Code, not only to
update the bidding thresholds but also to incorporate language that reflects more current trends.
Examples include provisions for purchase and use of computer hardware and software, greater use of
established supply or service agreements made by larger California public agencies (sometimes known
as `piggybacking'), and addition of certain definitions, restrictions, and contract guidelines set forth in the
California Government, Commercial, and Public Contract Codes.
The most significant change in the ordinance is the designation of purchasing authority to the City
Manager of up to $20,000 and Department Heads up to $5,000. These changes were approved with a
straw vote taken by the Council at the March 8, 2005 shirtsleeve meeting.
A purchasing procedures and practices manual, which incorporates the changes to be implemented with
this ordinance, will be distributed to City staff and additional training will be provided to ensure
appropriate staff are fully aware of how to comply with this ordinance.
APPROVED:
Blair KW4, ity Manager
FISCAL IMPACT: Indeterminate. Costs on some lower value items (below $500) may
increase, but should be offset by improved staff efficiencies_ The
changes would also plane greater fiscal responsibility on department
heads to manage department purchases.
FUNDING: None required. ,
6wives. R. Krueger, Finance Director
Attachment: Proposed Revised Chapters 2.12.060(T) and 3.20, Lodi Municipal Code
Prepared by Joel Harris, Purchasing Offk;er
cc: City Attorney
ORDINANCE NO. 64p,
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF LODI AMENDING 41111`
LODI MUNICIPAL CODE TITLE 2 - ADMINISTRATION AND PERSONNEL, •
CHAPTER 2.12 "CITY MANAGER" BY REPEALING AND REENACTING
SECTION 2.12.060(T) RELATING TO CONTRACT AUTHORITY OF THE CITY
MANAGER; AND FURTHER AMENDING LODI MUNICIPAL CODE, TITLE 3 —
REVENUE AND FINANCE BY REPEALING AND REENACTING CHAPTER 3.20
IN ITS ENTIRETY RELATING TO THE PURCHASING SYSTEM
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LODI AS FOLLOWS:
Sec ' n 1. Lodi Municipal Code Title 2 "Administration and Personnel" Chapter 2.12 "City
Manager" is hereby amended by repealing and reenacting Section 2.12.060(T) — relating to contract
authority of the City Manager, and shall read as follows:
2.12.060 (T) Contracts: To execute on behalf of the City, without City Council approval, contracts,
as defined in Lodi Municipal Code 2.20.015, in the amount of twenty thousand dollars or less, and
to delegate authority to subordinate officers and employees to execute contracts without city council
or city manager approval contracts in the amount of five thousand dollars or less. Nothing in this
section shall allow departure from the other purchasing requirements of Chapter 3.20 of this Code.
For contracts of not less than $5,000 nor greater than $20,000, the City Manager shall quarterly
prepare for the city council a report which includes a list of the contracts into which the city has
entered during the previous three months. No contract shall be split into smaller segments to avoid
the provisions of this subsection. (Gov't Code § 4526, Public Contract Code § 10359)
Section 2_. Lodi Municipal Code Title 3 "Revenue and Finance" Chapter 3.20 "Purchasing
System" is hereby repealed and reenacted in its entirety, and shall read as follows:
Sections:
3.20.010
Purpose
3.20.015
Definitions
3.20.020
Purchasing Officer - Established
3.20.030
Purchasing Officer - Powers
3.20.040
Exemptions from centralized purchasing
3.20.045
State and Local Agency Contracts
3.20.060
Requisitions
3.20.670
Bidding
3.20.075
Professionat/Technical Services Contracts
3.20.076
Contract Authority
3.20.077
Electronic Hardware and Software
3,20.080
Purchase Orders
3.20.090
Use of unencumbered funds required
3.20.095
State and Federal Grants
3.20.100
Formal contract procedure
3.20.105
Public Projects
3.20.110
Open market procedure
3.20.115
Split Transactions
3.20.120
Inspection and testing of purchases
3.20.130
Vehicle Purchases and Disposition Exemption
3.20.140
Restrictions
3.20.150
Penalty for violation
3.20.010 Purpose
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 quality needed, to exercise
positive financial control over purchases, to clearly define authority for the
purchasing function and to assure the quality of purchases, a centralized
purchasing system is adopted. (Prior Code §2-55)
Except as specified in Section 3.20.040 herein, there shall be no exemption from
centralized purchasing, and no agency or department shall be authorized to
purchase, or contract for the purchase of supplies, materials, services or
equipment independently of the purchasing system.
3.20.015 Definitions
As used in this chapter the following terms shall have the following respective
meanings:
A. "Best Value" is associated with determining the greatest worth and benefit
to the City based on a number of factors, including
1) Cost;
2) Quality of the product or service;
3) Delivery lead time;
4) Ability of the manufacturer or contractor to provide services, supplies, or
equipment as required, and parts, repairs, maintenance and support
after the sale;
5) The character, integrity, reputation, judgment, and experience of the
manufacturer, contractor, or supplier.
B. "Bid" may mean a competitive sealed (formal) bid processed in accordance
with §3.20.100, or an informal bid processed in accordance with §3.20.110
herein.
C. "Contract' means a written or oral agreement to expend money on a
product or service including but not limited to purchase orders, formal
contracts, invoices and oral orders.
D. "Department' or "using department' means any of the departments of the
city government.
E. "Emergency" shall mean an unforeseen circumstance or combination of
circumstances calling for immediate action to procure materials, supplies,
equipment, or services in order to make repairs, safeguard lives or property,
or maintain public health or welfare, as a result of extraordinary conditions
created by war, disease, weather, fire, or other catastrophic or unforeseen
occurrence, or imminent or actual failure of any plant, equipment, structure,
street or public work.
F. "Equipment" shall mean items of property which are maintained on
inventory as fixed assets. These items are durable and have a fixed,
predetermined life expectancy.
G. "Professional services", as used in this section, shall mean all services
which (1) are of an advisory nature, (2) provide a recommended course of
action or personal expertise, or (3) have an end product which is basically a
transmittal of information either written or verbal and which is related to the
governmental functions of city administration and management and city
program management or innovation, and which are obtained by awarding a
services contract, a grant, or any other payment of funds for services of the
above type. In general, "Professional services' are provided by qualified
professionals in such disciplines as accounting, architectural, engineering,
environmental, financial, legal, and medical fields.
H. "Public Project" shall mean a project for the erection, improvement, painting
or repair of public buildings and works; work in or about streams, rivers,
lakes, or embankments for protection against overflow; street, sewer, water
and electrical distribution system work except maintenance or repair;
furnishing supplies or materials for any such project, including maintenance
or repair of streets or sewers. (Public Contract Code § 20161)
I. "Purchases" shall mean legal transactions (including lease and rental) by
which the city acquires supplies, equipment, materials and contractual
services.
J. "Purchasing authority" shall mean any department head authorized to
purchase or otherwise enter into contracts for the City under provisions of
Part 3.20.040 herein.
K. "Responsible bid" shall mean an offer, submitted by a responsible bidderto
furnish supplies, equipment, materials, or services in conformitywith the bid
instructions, specifications, delivery terms and conditions, and other
requirements contained in the Invitation for Bids.
L. "Responsible bidder" shall mean a bidder who is financially responsible and
has the resources, judgment, skill, ability, capacity, integrity, and reliability
required and necessary to perform the requirements set forth in the bids,
and which will assure good faith performance.
M. "Responsive bid" is a bid that conforms in all material respects to the
Invitation for Bids.
N. "Services" shall mean the furnishing of labor, time, or effort performed by
specially trained and experienced persons, firms, or corporations rendering
professional work and advice in such disciplines as the maintenance or
repair of buildings or grounds, equipment or machinery, or other city -owned
or operated property. Such term shall not include services rendered by city
officers or employees, nor professional or technical services as defined
elsewhere in this section.
O. "Shall" denotes the imperative.
P. "Supplies" shall mean property, including but not limited to materials,
required to perform a department's routine functions.
Q. "Technical services" shall mean design, installation, diagnostic or repair
services for electrical, electronic, data/telecommunications, mechanical,
and/or control systems and their components. These services are
distinguished from general repair and maintenance services by their
requirements for technical training and/or professional certification.
3.20.020 Purchasing Officer — Established
There is established the position of purchasing officer. The purchasing
officer shall be appointed by the city manager, and shall be the head and have
general supervision of the purchasing division of the Finance Department. The
duties of the purchasing officer may be combined with those of any other office
or position. (Prior Code § 2-56)
3.20.030 Purchasing Officer - Powers
The Purchasing Officer shall have the responsibility and authority to:
A. Purchase or contract for supplies, services and equipment required by any
city department in accordance with purchasing procedures prescribed by this
chapter, such administrative regulations as the purchasing officer shall adopt for
the internal management and operation of the purchasing division and such
other rules and regulations as shall be prescribed by the city council or city
manager;
B. Negotiate and recommend execution of contracts for the purchase of
supplies, services and equipment;
C. Act to procure for the city the needed quantity and quality in supplies,
services and equipment at least expense to the city;
D. Discourage uniform bidding (wherein bidders conspire to submit the same
cost for a given job or tangible item), and endeavor to obtain as full and open
competition as possible on all purchases;
E. Prepare and recommend to the city council rules governing the purchase of
supplies, services and equipment for the city;
F. Prepare and recommend to the city council revisions and amendments to the
purchasing rules;
G. Keep informed of current developments in the field of purchasing, prices,
market conditions and new products;
H. Prescribe and maintain such forms as reasonable necessary to the operation
of this chapter and other rules and regulations;
I. Supervise the inspection of all supplies, services and equipment purchased to
insure conformance with specifications;
J. Recommend the transfer of surplus or unused supplies and equipment
between departments as needed and the sale of all supplies and equipment
which cannot be used by any department or which may become unsuitable for
city use;
K. Maintain a bidders' list, vendors catalog file and records needed for the
efficient operation of the purchasing division. (Prior Code § 2-57)
3.20.040 Exemptions from centralized purchasing.
The City Manager, with the approval of the city council, may authorize in
writing any department head (hereinafter "purchasing authority") to purchase or
contract for, or to delegate to qualified staff members the authority to purchase
or contract for specified supplies, services and equipment independently of the
purchasing department; but shall require that such purchases or contracts be
made in conformity with the procedures established by this chapter, and shall
further require periodic reports from the department on the purchases and
contracts made under such written authorization. (Prior Code § 2-58)
3.20.045 State and Local Agency Contracts
The bidding process described in this code may be waived when
advantageous for the City, and authorized by the City Manager for purchase of
supplies, equipment or contractual services awarded in accordance with formally
adopted bidding or negotiation procedures approved by the governing boards of
other California public agencies. Purchases or contracts in excess of $20,000
shall require the approval of the city council.
3.20.060 Requisitions
City departments shall submit requests for supplies, services and equipment
to the purchasing officer electronically or by standard requisition forms, for the
purposes and within the limits of funds appropriated therefor. (Prior code § 2-60)
3.20.070 Bidding
Purchases of supplies, services, equipment and the sale of personal property
shall be by bid procedures pursuant to Sections 3.20.100 and 3.20.110. Bidding
shall be dispensed with only (1) in cases of emergency as defined in this
chapter, and therefore requires that an order be placed with the best available
source of service or supply; (2) when the amount involved is less than five
hundred dollars (but competitive quotes shall be obtained if it is in the City's best
interest to do so), (3) when the commodity can be obtained from only one
vendor, due to (a) product standardization by resolution of the city council, or (b)
need for branded replacement parts or supplies for equipment of like brand; (4)
when professional or technical requirements preclude competitive bidding,
pursuant to Part 3.20.075 of this Section, or (5) when the city council determines
that the purchase or method of purchase would be in the best interests of the
city. (Ord. 1399 § 1, 1987: prior code § 2-61)
3.20.075 Professional/Technical Services Contracts
The following professional services contracts are specifically exempt from
the advertising and bidding requirements of section 3.20.070:
Contracts for
(1) legal defense, legal advice, or legal services;
(2) architectural and engineering services;
(3) accounting and financial services;
(4) real estate appraisals;
(5) transportation services consultants;
(6) safety, environmental or hazardous material consultants.
(7) workshops, seminars, and conferences.
Such contracts shall be awarded on the basis of professional qualifications and
experience, quality of service, past performance, and negotiated prices.
3.20.076 Contract Authority
The City Manager shall have the contracting authority set forth in Chapter
2.12.060(T) of this Code.
3.20.077 Electronic Hardware and Software
Acquisition of electronic hardware and software shall be by negotiation,
requests for proposal, or competitive bids, and award shall be based on `best
value' criteria as established by §3.20.15, under direction of the Information
Systems Manager, and set forth in the terms of the negotiation, Request for
Proposals, or bid. Alternatively, purchase of electronic hardware and
software may be made in accordance with §3.20.045.
3.20.080 Purchase orders.
Purchases of supplies, services and equipment in an amount of $500 or more
shall be made only by written contract or by purchase orders. (Prior code § 2-62)
(California Commercial Code § 2201)
3.20.090 Use of unencumbered funds required.
Except in cases of emergency, the purchasing officer or purchasing authority
shall not issue any purchase order or otherwise contract for supplies, services or
equipment unless there exists an unencumbered appropriation in the fund
account against which the purchase is to be charged. (Prior code § 2-63)
3.20.095 State and Federal Grants
Where a procurement involves the expenditure of state or federal grant funds
the procurement process shall comply with such state or federal laws and
authorized regulations which are mandatorily applicable and which are not
presently reflected in this code.
3.20.100 Formal contract procedure.
Purchases of supplies, equipment, contractual services, public projects, and
sales of personal property of an estimated value greater than $20,000 shall
follow the formal contract procedure:
A. Specifications and plans shall be subject to review and approval by the City
Council prior to the solicitation of bids.
B. The advertisement for bids will be conducted as provided for in the
Government Code.
C. Notice Inviting Bids. Notice inviting bids shall include a general description of
the articles to be purchased or sold, or work to be performed, and shall state
where bid forms and specifications may be secured and the time and place for
opening of bias.
1. Published Notice. Notice inviting bids shall be published at least ten
calendar days before the date of opening of the bids. Notice shall be published
at least once in a newspaper of general circulation, printed and published in the
city, or if there is none, it shall be posted in at least three public places in the city
that have been designated by ordinance as the places for posting public notices.
2. Bidders' List. The purchasing officer shall also solicit sealed bids from all
responsible prospective suppliers whose names are on the bidders' list.
3. Internet Posting. The purchasing officer may also advertise pending bids
for purchases or sales on the city's web page.
D. Bidder's Security. When required by law or deemed necessary by the
purchasing officer, bidder's security may be prescribed in the notice inviting bids.
Bidders shall be entitled to the return of their bid security; except that a
successful bidder shall forfeit all or part of his or her bid security upon refusal or
failure to execute the contract within ten days after the notice of award of
contract has been mailed, unless the city is responsible for the delay. The city
council may, on refusal or failure of the successful bidder to execute the
contract, award it to the next lowest responsible bidder. Thereafter, if the city
council awards the contract to the next lowest bidder, the amount of the lowest
bidder's security shall be applied by the city to the difference between the low bid
and the second lowest bid, and the surplus, if any, shall be returned to the lowest
bidder_
E. Bid Opening Procedure. Sealed bids shall be submitted to the purchasing
officer and shall be identified as bids on the envelope. Bids shall be opened in
public at the time and place stated in the notice inviting bids. A tabulation of all
bids received shall be available for public inspection during regular business
hours for a period of not less than thirty calendar days after the bid opening.
F. Rejection of Bids. In its discretion, the city council may reject any and all bids
presented and, if it is in the city's best interest to do so, readvertise for bids.
G. Award of Contracts. After evaluation of bids, contract shall be awarded by
the city council to the lowest responsible bidder except as otherwise provided in
this chapter. In determining the lowest responsible bid, considerations shall
include but not be limited to such factors as (1) whether any portion of the state
sales tax payable on the article which is the subject of the bid will be rebated to
the city by reason of awarding such contract to a person or firm domiciled within
the city, (2) total life -cycle costs, and/or (3) residual value.
H. Tie Bids. If two or more bids received are for the same total amount or unit
price, with quality, service and factors considered in Paragraph 3.20.100 (E),
above, being equal and if the public interest will not permit the delay of
readvertising for bids, the city council may accept the lowest bid determined by
toss of a coin performed at a time as soon after the bid opening as is possible.
I. Performance Bond. The city council shall have authority to require a
performance bond before entering a contract in such amount as it shall find
reasonably necessity to protect the best interests of the city. If the city council
requires a performance bond, the form and amount of the bond shall be
described in the bidding documents. (Ord. 1333 § 1(3)(A,D), 1984; prior code §
2-64)
3.20.105 Public Projects
Public projects shall be subject to provisions of the Public Contract Code.
When the expenditure required for a public project exceeds $20,000 approval
of the city council is required before advertising for and awarding of bids.
3.20.110 Open market procedure
Purchases of supplies, equipment, contractual services and sales of personal
property of an estimated value in the amount of $20,000 or less may be made in
the open market without observing the Formal Contract procedure prescribed by
Section 3.20.100.
A. Minimum Number of Informal Bids or Quotations. Open market purchases
shall, wherever possible, be based on at least three informal bids or quotations,
and shall be awarded to the lowest responsible bidder.
B. Request for Quotations. The purchasing officer or purchasing authority shall
solicit informal written bids or quotations from prospective vendors by written
request, by telephone or by electronic data interchange. Quotations or informal
bids shall be in writing for amounts greater than $1000.
C. Quotations and written informal bids shall be submitted to the requestor, who
shall keep a record of all quotations, bids, and open market orders for a period of
one year after the submission of quotations or the placing of orders. This record,
while so kept, shall be open to public inspection. (Ord. 1549 § 1, 1992; Ord.
1333 § 1(3)(E), 1984; prior code § 2-65)
D. The Purchasing Officer or purchasing authority may reject any and all
informal bids, offers and quotations when, in his or her discretion, it shall be in
the best interest of the City to do so.
3.20.115 Split Transactions
No person shall willfully split a single transaction into two or more transactions
for the purposes of evading the bidding requirements of this section. (Public
Contract Code § 10329, 20163)
3.20.120 Inspection and testing of purchases.
The purchasing officer or purchasing authority shall assure the inspection of
supplies and equipment delivered, and contractual services performed, to
determine their conformance with the specifications set forth in the order or
contract. The purchasing officer shall have authority to require chemical and
physical tests of samples submitted with bids and samples of deliveries which
are necessary to determine their quality and conformance with specifications.
(Prior code § 2-66)
3.20.130 Vehicle purchases and disposition exemption.
The purchase and disposition of fleet vehicles and other specific equipment
governed by the City's Fleet Policies and Procedures, as adopted by resolution
of the city council, is exempt from the provisions of this chapter.(Ord. 1643 § 1,
1997)
3.20.140 Restrictions
If any department purchases or contracts for any supplies, equipment or
contractual services made contrary to the provisions of this chapter, the
purchase or contract shall be void and of no effect. The head of the department
making the purchase transaction shall be personally liable for the amount of the
purchase or contract, or, if already paid for out of city funds, the amount thereof
may be recovered in the name of the city in appropriate action therefor.
3.20.150 Penalty for violation
Any person who violates, or permits a violation of this chapter is guilty of an
infraction which may be punishable as provided in Chapter 1.08 of this code.
SeAgn 3 - No Mandatory Duty of Care. This ordinance is not intended to and shall not be
construed or given effect in a manner which imposes upon the City, or any officer or employee
thereof, a mandatory duty of care towards persons or property within the City or outside of the City
so as to provide a basis of civil liability for damages, except as otherwise imposed by law.
Section 4. All ordinances and parts of ordinances in conflict herewith are repealed insofar as such
conflict may exist.
Sec W n 5. This ordinance shall be published one time in the "Lodi News Sentinel," a daily
newspaper of general circulation printed and published in the City of Lodi and shall be in force and
take effect thirty days from and after its passage and approval.
Approved this day of , 2005.
Attest:
SUSAN J. BLACKSTON JOHN BECKMAN
City Clerk Mayor
State of California
County of San Joaquin, ss.
I, Susan J. Blackston, City Clerk of the City of Lodi, do hereby certify that Ordinance No. was
introduced at a regular meeting of the City Council of the City of Lodi held August 17, 2005, and was
thereafter passed, adopted, and ordered to print at a regular meeting of said Council held
2005, by the following vote:
AYES: COUNCIL MEMBERS —
NOES: COUNCIL MEMBERS —
ABSENT: COUNCIL MEMBERS —
ABSTAIN: COUNCIL MEMBERS —
I further certify that Ordinance No, was approved and signed by the Mayor of the date of its
passage and the same has been published pursuant to law.
SUSAN J. BLACKSTON
City Clerk
Approved as to Form:
D. STEPHEN SCHWABAUER
City Attorney