Loading...
HomeMy WebLinkAbout2014-02-11 - AGENDA REPORTS - PURCHASING POLICY UPDATE (2)Agenda Item: 4 CITY OF SANTA CLARITA AGENDA REPORT CONSENT CALENDAR City Manager Approval: Item to be presented by: Joseph Oerum DATE: February 11, 2014 SUBJECT: PURCHASING POLICY UPDATE DEPARTMENT: City Manager's Office RECOMMENDED ACTION Approve updates to the City of Santa Clarita's current Purchasing Policy in an effort to streamline the process and provide greater opportunities for the City to "Shop Local." BACKGROUND In an ongoing effort to streamline processes and to provide greater opportunities for the City to "Shop Local," staff has reviewed the Purchasing Policy of the Municipal Code and are recommending changes to that Code. These changes are primarily in three different categories, 1) Administrative clean-up of language, 2) updates to remain consistent with State of California policies, and 3) updates to streamline the purchasing process and encourage more local spending, while continuing to obtain the best price for goods and services. The current Purchasing Policy was adopted by the City Council on April 24, 2012. None of the recommended changes will affect the dollar thresholds that are required to be approved by City Council, that threshold will remain $50,000 for standard purchases, and $175,000 for Public Works projects, as required by the State. Administrative Clean -Up Updates With organizational changes that have moved the Purchasing Office into the City Manager's Office, there is a need to update the language to reflect the current organizational structure. Other administrative changes to the Purchasing Policy include simplified protest procedures and minor clarifications to the Solicitation Process Administration section which include sales and use taxes, bid corrections and non-responsive bids. These changes provide specifics to remove any potential ambiguity of previous language. A P P R00 V F 0 State of California Code Updates The State Public Contract Code mandates changes for Public Works projects and the City is required to follow suit. In accordance with recently updated State Public Contract Code Section 22032, the quote threshold for Public Projects has been amended and has been raised to amounts between $3,000 for Purchase Orders and $45,000 for quotes, per State mandates. Public Projects over $45,000 are subject to the informal bid process, and Public Projects over $175,000 remain formally bid. Formal bids have additional publishing requirements including use of local papers, plan rooms (clearing houses for Public Projects) and the number of times advertised. These updates conform to the new State code. Streamlining Process and Increasing Shopping Local The proposed updates to the Purchasing Policy will provide more opportunities for the City to shop locally for both goods and services by allowing staff to receive quotes from local vendors for purchases up to $40,000 as opposed to the current formal Bid process which can be more complicated, takes longer, involves more staff time, and too often results in purchases being awarded to non -local businesses. The Purchasing Policy continues to provide the structure to insure that the City is a good steward of public monies and obtains the most competitive prices. Specific threshold changes include an increase in the Purchase Order requirement from $2,000 to $3,000, with the Quote threshold raised from $20,000 to $40,000. Examples of items the City routinely purchases that fall in the range between $20,000 and $40,000 include shirts/jerseys for youth sports programs and cars/trucks for the City vehicle fleet. The documentation requirements will not change. Staff reviewed purchasing policies at the ten benchmark cities. At this time, the City's current thresholds are significantly below the thresholds of those Cities. Most benchmark Cities use a Purchase Order requirement for purchases up to $5,000 and a Quote requirement for purchases between $5,001, and up to $50,000, while the threshold for formal Bids fall anywhere between $30,000 to $125,000. These suggested updates will bring Santa Clarita limits into the low end of the range of the ten benchmark Cities. ALTERNATIVE ACTIONS Other action as determined by the City Council. FISCAL IMPACT None by this action. ATTACHMENTS Purchasing Policy (red line version 8) available in the City Clerk's Reading File Jt ya♦ fq f, j9City of Santa Clarita Purchasing POLICY TABLE OF CONTENTS SECTION DESCRIPTION PAGE INTRODUCTION 1 SECTION 1.0 GENERAL PROVISIONS 2 SECTION 2.0 SOLICITATION PROCESSES 4 SECTION 3.0 SUPPLIES/SERVICES/EQUIPMENT 4415 SECTION 4.0 PROFESSIONAL SERVICES 4-718 SECTION 5.0 PUBLIC PROJECTS 4920 SECTION 6.0 PURCHASE ORDER CHANGES 2223 SECTION 7.0 SUPPLIER RELATIONS 2425 SECTION 8.0 POLICY EXCEPTIONS 2728 SECTION 9.0 GRATUITIES 2930 SECTION 10.0 SURPLUS/TRANSFER OF PROPERTY 3931 SECTION 11.0 PURCHASING WITH SPECIAL FUNDS 3432 SECTION 12.0 SUSTAINABLE PURCHASING 3233 APPENDIX A PURCHASING STANDARDS OF CONDUCT APPENDIX B SUMMARY OF RESOLUTIONS AFFECTING PROCUREMENT APPENDIX C RECYCLED PRODUCT PROCUREMENT POLICY RESOLUTION 93-09 APPENDIX D PROTECTION OF TROPICAL TIMBER RESOLUTION 91-91 APPENDIX E STATE OF CALIFORNIA CO-OPERATIVE PURCHASING RESOLUTION 89-95 APPENDIX F CITY COUNCIL AGENDA ACTION AUTHORIZING CO-OPERATIVE AND "PIGGY BACK" PURCHASING JULY 11, 1995 APPENDIX G SUPPORT OF SANTA CLARITA BUSINESS ORDINANCE 04-12 AND ORDINANCE 09-6 APPENDIX H ENVIRONMENTALLY PREFERABLE PURCHASING (EPP) PROGRAM RESOLUTION 05-103 INTRODUCTION Purchasing has prepared two documents to assist customers with procurement issues. The first is the Purchasing Policy Manual. The policy manual is designed for use by managers and supervisors directing or approving purchases. Derived from the municipal code, policy provides the processes to be used in making purchases to ensure compliance with the code. In the policy manual you will find a summary of the requirements of the code and the steps necessary to satisfy those requirements. The last document is a quick reference guide to the requirements for establishing a purchase order. This does not take the place of a good understanding of purchasing procedures but will help serve as a good starting point. In addition to these printed documents there are several references available online through Rnet. You are encouraged to review this site periodically for more detailed information. Purchasing Policy I %NOVRFRh§ f January 20123 Change 78 Page 2 SECTION 1.0 GENERAL PROVISIONS SCOPE All provisions listed here apply to all purchases in general. As used in this policy, unless the purchase order or contract specifically indicates otherwise: 9-.A. "Purchasing Agent" shall mean the person responsible for the day to day operations of the City's procurement program. f, CB. Any purchase order or contract contrary to the provisions of this policy shall be null and void. II. PROCUREMENT AUTHORITY A. All purchases of $23,000 and over, require a purchase order processed by Purchasing as stated in this policy, before an order is placed, unless otherwise authorized by City Council. A purchase order is not required for professional services up to $23,000; however, a written contract is required. B. The City Manager may waive this policy as necessary by recommendation to, and approval from, the City Council with the exception of those provisions applying to public works. III. PROCUREMENT RESPONSIBILITY It shall be the responsibility of the Purchasing Agent to: A. Procure quality supplies and services at the least expense to the City in a timely fashion; B. Ensure full and open competition as required in this policy and discourage uniform or collusive bidding; C. Examine each estimate and requisition and revise it as necessary to meet statutes and policy; D. Prepare and maintain vendor files; E. Delegate the responsibilities of the Purchasing Agent as deemed necessary. Purchasing Policy duaeDlevewl;er January 20123 Change 78 Page 3 IV. GENERAL A. All purchases must be authorized by the Director (or designee) of the requesting department. B. Splitting of purchases to circumvent thresholds is prohibited. C. All listed thresholds include taxes, packing, shipping and handling. D. Competition is required for all purchases of $23,000 or more. E. Council approval is required for all expenditures over $50,000 except public projects where Council approval is required when the amount exceeds $175,000. Purchasing Policy ' nANeuembea January 20123 Change 7b Page 4 SECTION 2.0 SOLICITATION PROCESSES SCOPE An appropriate competitive procurement process is required for all purchases of $23,000 and over. This section will cover the various solicitation processes and their use as well as requests for information. Public project procurement is governed by State Codes and is discussed separately. Although not mandatory, Purchasing will make available sample templates for the various types of solicitations for use by staff. Recommendations for the administration of the solicitation process are also provided. It. SOLICITATIONS A solicitation is the document by which the City's procurement needs and the format for responding is conveyed to vendors. The intended result of a solicitation is a procurement contract (including purchase orders and written contracts) and the solicitation must contain a process for determining the elements of a contract. There are various types of solicitations to cover different procurement situations. The most commonly used City forms are: Request for Quote (RFQ), Invitation for Bid (IFB) and Request for Proposal (RFP). Some professional services are required by law to use a Quality Based Selection (QBS) process. For these services a Request for Qualifications may be used or a RFP template may be used with the elimination of the cost section. The type of solicitation does NOT determine the method of successful vendor selection. With the exception of public projects, quotes and bids may be awarded on a basis other than lowest cost and for other than true professional services, RFPs may be awarded based on the lowest cost. The method of successful vendor selection needs to be specified in the solicitation. There are four types of solicitations authorized for use by this Purchasing Policy: A. Request for Quote — The RFQ_process is used for the procurement of material, equipment and general services costing $2340,000 or less where the needs of the City may be adequately defined. B. Invitation for Bid — The IFB process is used for the procurement of material, equipment and general services costing over $2340,000 where the needs of the City may be adequately defined. Purchasing Policy daaeNevepAheF January 20123 Change $8 Page 5 C. Request for Proposal — The RFP process is used for the procurement of professional services ^• mate al, equipment and general services where the City seeks proposed solutions from the marketplace to achieve goals and objectives stated in the RFP. D. Request for Qualifications — The Request for Qualification process is used for the procurement of certain professional services required by law to be solely based on qualifications. These are architecture, landscape architecture, engineering, environmental services, land surveying, or construction project management. These are also commonly referred to as "A&E" services. III. REQUEST FOR QUOTE A Request for Quote (RFQ) is a simplified solicitation that can be as short as one page or more than 100 pages. The format is dependent on the circumstances of the procurement and the needs of the user. A. The RFQ must be in writing as well as any response. The records must be retained for 2 years, longer if federally funded. B. The response rate for RFQs varies, but is usually less than 25%. RFQs should be sent to as many businesses as possible to ensure a minimum of three good quotes are received. The process for distributing solicitations should document when and to whom notices are sent. The process should have adequate controls to allow staff to respond intelligently to public inquiries. C. While not required, users are encouraged to allow sufficient time to permit advertisement on the City's website. D. Normally, 2-3 weeks should be allowed for a response to a quote. Simple and emergency quotes may be done as quickly as vendors can respond. E. If the RFQ is for services it must contain a sample of the contract document. F. The successful contractor is selected in accordance with the Municipal Code. IV. INVITATION FOR BID An Invitation for Bid (IFB) is a more structured solicitation reflecting the dollar value and complexity of the procurement. Purchasing Policy daaelhlever be January 20123 Change 78 Page 6 A. The IFB will contain detailed instructions and the City's terms and conditions. B. Notices of the IFB should be sent to all businesses that have provided information to the City as well as any known by the users to be interested in the opportunity. The process for distributing solicitations should document when and to whom notices are sent. The process should have adequate controls to allow staff to respond intelligently to public inquiries. C. IFBs may be advertised in the local newspaper as well as posted on the City's website. D. Normally, IFBs should be advertised at least 30 days before the responses are due. Slightly shorter response timeframes may be permitted for simple bids for off-the-shelf commercial items. Slightly longer timeframes may be needed to support questions or pre-bid meetings/site visits. E. The IFB and notice will state a time, date and place for submission of sealed responses and will be opened and read in public. F. If the IFB is for services it must contain a sample of the contract document. G. The successful contractor is selected in accordance with the Municipal Code. V. REQUEST FOR PROPOSAL GENERAL. A Request for Proposal (RFP) solicitation is normally used for professional services or where detailed specifications are not available and the City seeks solutions in the form of proposals from experienced firms. RFP solicitations are very specific to the situation. As the template from Purchasing must serve a variety of purposes it is intended to be modified for each situation. If procurement of architecture, landscape architecture, engineering, environmental services, land surveying, or construction project management will be conducted using the RFP process, the cost section must be deleted. A&E services (Architectural & Engineering) may also be procured using the Request for Qualification process described later. A. The RFP will contain detailed instructions and the City's terms and conditions. Contact Purchasing for retention requirements. Purchasing Policy deaeNeverbeF January 20123 Change 78 Page 7 B. Notices of the RFP should be sent to all businesses that have provided information to the City as well as any known by the users to be interested in the opportunity. The process for distributing solicitations should document when and to whom notices are sent. The process should have adequate controls to allow staff to respond intelligently to public inquiries. C. RFPs should be advertised at least twice in the local newspaper as well as posted on the City's website. D. Normally, RFPs should be advertised more than 30 days before the responses are due. More complex RFPs and those expected to generate a large number of questions should be advertised 45 days prior to the date responses are due. E. The RFP must contain a sample of the contract document. F. Users can and should tailor the Scope of Work section to match their needs. Particular attention should be paid to the cost and evaluation portions. EVALUATION. The evaluation of RFP responses and selection of successful contractor will be in accordance with the procedures identified in the RFP. It is very important this process be clear and unbiased. The process should be carefully thought through and incorporated into the RFP. To facilitate the process a few general principles should be followed: A. The evaluation criteria should be listed in the order of their importance. B. The weight for each criterion should be determined and entered onto the evaluation score sheet form. The form should be prepared when the RFP is prepared, but NOT included with the RFP. C. Pricing should be requested as a separate, detachable section. The pricing format should be set up to provide all of the pricing information needed to provide a clear picture of costs including potential changes. D. When conducting RFP evaluations, a single individual should conduct reference checks and that score included on the score sheets. If pricing is included, the scoring for all other criteria should be completed before opening and including the pricing. Purchasing Policy deaeNeveF4ec January 2012L3 Change 78 Page 8 E. Contract negotiations should begin with the highest ranked firm. Should an agreement not be reached, negotiations should be terminated with that firm and begin with the second ranked firm. The process should continue until an agreement is reached with a satisfactory firm. VI. REQUEST FOR QUALIFICATIONS The Request for Qualifications may use a streamlined RFP format tailored to the specific needs and calling for qualifications in lieu of a "proposal". Most of the administrative process will be similar to that for the RFP with the exception of cost data. While pricing may not be considered in evaluating A&E services, a competitive process is still required by the state Government Code. A. The evaluation criteria should be listed in the order of their importance. B. The weight for each criterion should be determined and entered onto the evaluation score sheet form. The form should be prepared when the Request for Qualifications is prepared, but NOT published with the document. C. When conducting Request for Qualification evaluations, a single individual should conduct reference checks and that score included on the score sheets. D. Contract negotiations should begin with the highest ranked firm. Should an agreement not be reached, negotiations should be terminated with that firm and begin with the second ranked firm. The process should continue until an agreement is reached with a satisfactory firm. VII. PUBLIC PROJECTS The City's public project solicitation process is governed by the State Public Contract Code (PCC). Additionally, the City has elected to become subject to the uniform construction cost accounting procedures. Public projects are defined at Public Contract Code Section 22002. The procedures allow for an alternative bidding process. These alternative bidding procedures are found in PCC 22030-22050 and supplement the requirements of PCC 20100-20104.70 and PCC 20160-20189. The successful contractor will be selected in accordance with the Public Contract Code. Purchasing P01icy daaePleverabec Januar 20123 Change 78 Page 9 Public project solicitations are also guided by other State Codes as well as Federal Codes when any Federal funding is involved. The dollar thresholds that follow are set by PCC 22032, which takes precedence over these figures if different. Due to the complexities involved, staff is encouraged to contact Purchasing about their specific project. A. The alternative bidding procedure provides thresholds for the public project procurement process. For projects under $3945,000 the procedure provides for the award of projects by Purchase Order other than by bidding. For staff this means that for projects between $23,000 and $3945,000, the solicitation process may be by a request for quote. Projects over $3945,000 must be bid by either the informal (projects from $3945,000 to $175,000) or formal (projects over $175,000) solicitation. The PCC provides for simplified and shortened notification procedures for informal bids. B. Request for Quote — The public project request for quote will follow the normal City request for quote process with the exception of the format of and the award of the solicitation. The solicitation format will be modified to meet the needs of the using department and the public project. The contract will be awarded to the lowest responsible bidder and may be awarded by the City Manager or designee. C. Invitation for Bid — Informal Public projects over $3045,000 but less than $175,000 will follow the City's normal bid process with the changes permitted by the informal bid process cited in the Public Contract Code (PCC). (1) The notice inviting bids must be sent to the trade journals or all firms on Purchasing's contractor list or both at least 10 days before the bids are due to the City. The notice is not required to be published in the newspaper. (2) A bid bond in an amount equal to at least 10% of the amount of the bid is required. (3) A payment bond in an amount equal to 100% of the contract value is required for all public projects over $2545,000. Performance bonds may also be required. (4) The sealed bids will be opened and read in public. Purchasing Policy jwReNevembeF January 20123 Change 78 Page 10 (5) The successful bidder will be the lowest responsible bidder and the contract may be awarded by the City Manager or designee. Plans and specifications do not require the approval of the City Council. D. Invitation for Bid — Formal Public projects over $175,000 will follow the City's normal bid process with the additional requirements of the Public Contract Code (PCC). (1) The notice inviting bids must be sent to the trade journals at least 30 days before and to the local newspaper at least 14 days before the bids are due to the City. (2) The plans, specifications and contract award must be approved by the Council. (3) A bid bond in an amount equal to at least 10% of the amount of the bid is required. (4) A payment bond in an amount equal to 100% of the contract value is required. Performance bonds may also be required. (5) The sealed bids will be opened and read in public. (6) The successful bidder will be the lowest responsible bidder and the contract will be awarded by the City Council. E. Acceptance of Public Works Projects, Execution and Recording of Notice of Completion and Release of Bonds (1) The City Manager is hereby authorized to accept public works projects as complete upon satisfactory completion of the project. (2) Pursuant to Civil Code Section 3086, a public works project is deemed complete on the date of acceptance of the project or when there has been a cessation of labor on the project for a continuous period of 30 (thirty) days, whichever date is earlier ("Completion Date."). Within 10 (ten) days of the Completion Date, the City Manager is hereby authorized to Purchasing Policy I ReNevepAheF January 20123 Change 7-8 Page 11 sign and cause to be recorded with the County Recorder's Office a Notice of Completion. (3) Pursuant to Civil Code Section 3185, within 10 (ten) days of recording a Notice of Completion, a copy of the Notice of Completion shall be mailed by the City by registered or certified mail to any stop notice claimant who has paid to the City the sum of two dollars ($2) at the time of filing of the stop notice. (4) The City Manager is hereby authorized to release bonds relating to public works projects upon the recommendation of the City Engineer as follows: (a) The Performance Bond shall not be released until there has been satisfactory completion of the project (b) The Labor and Material Bond (also known as the "Payment Bond") shall not be released until the date of either the final disposition of all stop notices lawsuits or the date the statutory limitation period for filing a stop notice lawsuit has expired without the filing of any stop notice lawsuits, whichever is later (c) Warranty Bonds shall not be released until the warranty period has expired. (d) Maintenance Bonds shall not be released until the maintenance period has expired. VIII. SOLICITATION PROCESS ADMINISTRATION must be clear, open, and consistent and provide a fair opportunity to enter the bidding process. City staff is responsible for ensuring solicitation processes are properly carried out or seek the assistance of Purchasing. vendors indicate they are not including/collecting/or paving the use tax or fail to reflect the amount of use tax, staff will determine the amount of use tax. This will be included in the vendor's cost for comparison purposes. ! Purchasing P011cy d6iaePlewerab8F January 20123 Change 7-8 Page 12 B. Solicitation Responses — The City acknowledges the possibility of an imperfect solicitation response. The City believes in the concept of "substantial" compliance and reserves the right to waive or not, minor irregularities. The City ^'G^Fesep.,es the . ^ht-tO nteFlgFet a make airithmek ntiA uhe.a them of the I h take ntevt with the whole th e„n;-�s-slea;T„�; e-sf�e�erse. (1) Late sealed bids may not be accepted and shall be returned unopened in accordance with Government Code Section 53068. 2) The absence of a sianature except those on the bonds or of the notary may be waived if the balance of the response contains those signatures to constitute a valid contract or convey convincing evidence of the intent to enter into a contract. (3) City staff will be consistent in the application of these sections. 4) Purchasino Aaent or desianee will have the authoritv to accept or reiect a request by a bidder to withdraw its bid under Public Contract Code Section 5100 et.seq. Any obiections to the decision by the Purchasing Agent must follow the Bid Protest procedures. (5) Purchasing Agent or designee will have the authority to reiect a bid as non-responsive. Any objections to the decision by the Purchasing Agent must follow the Bid Protest procedures. (6) Purchasing Agent or designee will have the authority to reiect all bids as permitted by the Public Contract Code. 7) The Purchasina Aaent or desianee shall have the authorit to find a bidder is not a responsible bidder as defined in Public Contract Code Section 1103. Any such finding must be in writing to the bidder and include: (1) All information in support of the finding that the bidder is not responsible; (2) A statement that if the bidder obiects to the finding of the Purchasing Agent, then the bidder must follow the Bid Purchasing Policy JdReNGVGMb8 January 2012.3 Change;8 Page 13 Protest procedures and (3) As part of the City Manager's review of the protest, the bidder may meet with the City Manager to present its position on the finding. C. Bid Correction Rules — In the case of mathematical discrepancy or discrepancies in the bid submitted, the City shall apply the following Rules to correct the bid amount: (1) Unit prices shall govern over extended item prices. (2) The total of the extended item pricing, if corrected by Rule #1, will govern over the Total Amount of the Bid. 3) If the Total Amount of the Bid, as submitted by the bidder has a discrepancy between the number amount and the amount written in words, then words shall govern. This rule shall not apply if the City has corrected the Total Amount of the Bid pursuant to Rule #1 and/or Rule #2. DG. Protest Procedures - Any person or entity may present a formal protest to the City with respect to solicitations being conducted by staff. (1) Definitions. "Bidder" means any person or firm providing a timely, written response to the City solicitation. 'Bid Protest' means any protest with regard to the response submitted by another bidder. "Response" means the written response to the City solicitation provided by a person or firm. "Solicitation Protest" means a statement of protest, dispute, challenge, disagreement, disapproval or other objection regarding documents determinations or actions taken or contemplated by the City with respect to a solicitation. "Solicitation" means the document by which the City identifies goods, equipment services or public construction projects for which it seeks a response. (2) Format. Purchasing Policy deaeNeverbeF January 20123 Change 78 Page 14 The protest must be in writing and include the following information at a minimum: (a) The name, address and phone number of the protester, or the authorized representative of the protester; (b) The signature of the protester or authorized representative of the protester; (c) The solicitation number and title under which the protest is submitted; d) A detailed description of the legal and/or factual grounds for the protest and all supporting documentation. For protests containing elements not based on publicly released information the protest must contain documentation clearly showing the date on which the protester received the information; and (e) The form of relief requested. (3) Solicitation Protests be received by the City's Purchasing Agent not more than five calendar days after the last day for questions or the last addendum is issued, whichever is later. The decision by the Purchasing Agent on any solicitation protest shall be final. (4) Bid -Protest and Review. a. �—The protest, in the Format specified above, must be submitted to the City Manager by email or by personal delivery or overnight mail (to City Hall, 23920 Valencia Boulevard, Suite 120, Santa Clarita, CA 91355) so that it is received by the City no later than seven calendar days after the bid opening. (b) 2---A copy of the protest must be served upon the bidder subject to the protest in the same manner by which the protest was submitted to the City Manager. Failure to serve the protest upon the bidder subject to Purchasing Policy duaeNevembef January 20123 Change 78 Page 15 the protest is grounds upon which the City may deny the protest. cl 3--A bidder whose bid has been protested b another bidder may submit to the City Manager a written response to the protest by email or by personal delivery or overnight mail (to City Hall, 23920 Valencia Boulevard, Suite 120, Santa Clarita, CA 91355) so that it is received by the City no later than seven calendar days after the protest has been served by the protesting bidder. (d) 4—The City Manager or designee shall have up to ten calendar days to decide whether to approve or refect the protest. The written decision of the City Manager or designee on the protest shall be served upon the protesting bidder and any bidder subject to the protest within 14 calendar days of receipt of the bid protest. The City Manager or designee may extend the 10 calendar days if necessary to review additional information requested from any bidder. (e) The decision of the City Manager or designee on the bid protest shall be final with no further review. (5) State or Federal Funding If the subject matter of the solicitation or project is receiving any State or Federal funds which requires a protest procedure different than the procedures stated above, then that protest procedure shall control. (6) Mandatory Procedure. This administrative procedure and the time limits set forth herein are mandatory. Failure to comply with these mandatory procedures shall constitute a waiver of any right to pursue the bid protest, including filing a Government Code claim or any legal proceedings or actions. Purchasing Policy JaneNeveMbec January 20123 Change 78 Page 16 Purchasing Policy daaeNeveaR§er Januar-y-20123 Change 7-8 Page 17 Purchasing Policy January 20123 Change *8 Page 18 Purchasing Policy dugelslevembe January 20123 Change 7-8 Page 19 Purchasing Policy daaeMeveraf3ec January 20123 Change 7-8 Page 20 SECTION 3.0 SUPPLIES/SERVICES/EQUIPMENT SCOPE This section, in conjunction with Section 1, provides the requirements for the procurement of all supplies, services (other than professional), and equipment. II. DEFINITIONS A. Supplies - Essential materials required for the effective operation of the City. Includes things such as, office supplies, tools and repair materials. B. Services - A service vendor (other than professional) generally provides maintenance and/or intangible goods, and does not typically require a license, certification or other professional criteria to perform the work. This includes services such as equipment maintenance, janitorial, printing, landscaping and refuse disposal. C. Equipment - Essential hardware required for the effective operation of the City. Includes things such as vehicles, fax machines, computers and copiers. D. D.D.P — Delivery Duty Paid is a shipping term outlining who is responsible for arranging shipping and the material while it is in transit. D.D.P. destination means the seller arranges shipping and is responsible for the material until it is delivered to the destination and is recommended on all purchases. E. Piggyback - Piggyback is a descriptive term referring to an activity where a third party, not part of the original contract, is allowed to place orders against the contract. III. REQUIREMENTS A. PURCHASES UNDER $23,000 (1) Coded invoice - determination of price reasonableness is recommended. (4)(ZLEvidence of a Contract - (services only) Contract number or copy of completed contract route sheet is acceptable. LA County is covered under a master agreement for most services. Purchasing Policy duneWevea+§er January20123 Change 7-8 Page 21 B. PURCHASES FROM $23,000 TO $2340,000 (1) Product/service description/specifications (2) A minimum of three (3) written quotes (3) Evidence of a Contract - (services only) Contract number or copy of completed contract route sheet is acceptable. LA County is covered under a master agreement for most services. (4) Purchase order C. PURCHASES OVER $2340,000 (1) Product/service specifications (2) Formal bid process (See Purchasing) (3) Evidence of a Contract - (services only) Contract number or copy of completed contract route sheet is acceptable. LA County is covered under a master agreement for most services. (4) City Council approval over $50,000 (Cite date of Council meeting and agenda item number) (5) Purchase order D. "SHOP LOCAL" INITIATIVE (1) All bids and quotes, not using a multi -criteria award designation are now required to be reviewed on a local preference basis. Local refers to any business having a working address within the City limits. For any bid that would have been awarded to a non- local vendor, where a local vendor has come within 10% of the non -local bid, you must now contact the local vendor and offer them a chance to meet the low bid. If the closest local vendor (within 10%) is not able to meet the bid, the next lowest, local bid, within the 10% threshold will be contacted, and so on, and so on. This will continue until a local bidder has accepted the chance to meet the low bid or, all local bidders within the 10% threshold has been contacted and none could meet the Purchasing Policy duneNeveabeF January 20123 Change 7-S Page 22 low bid. Then, and only then, will the non -local bidder be awarded the bid. IV. GENERAL A. All purchases of supplies/services/equipment over $50,000 require Council approval, including cumulative and cooperative "piggyback" purchases. B. All purchases that are delivered must be Delivered Duty Paid to the City of Santa Clarita receiving dock. C. A Purchase Order serves as a City contract for supplies and equipment. A formal service contract, including all applicable insurance and bonds, is required for all services. The contract number or copy of completed contract route sheet is acceptable evidence of a contract. LA County is covered under a master agreement for most services. D. For purchase orders of $50,000 or less, including those awarded by a formal bid process; the City Manager (or designee) may approve the purchase order. All purchase orders over $50,000 must have Council approval evidenced by the approved agenda report or the date of the council meeting and agenda item number. E. If you have a requisition that includes Section 3 items (supplies, services and equipment) and Section 4 items (professional services), it will be processed as a Section 3 requisition unless directed otherwise by the City Manager (or designee). Purchasing Policy daaeNeve<ab January 20123 Change 78 Page 23 SECTION 4.0 PROFESSIONAL SERVICES SCOPE This section, in conjunction with Sections 1 and 2, provides the requirements for the procurement of professional services. II. DEFINITIONS Professional service - A professional service contractor provides expert or professional advice and generally requires special licensing, certification, education or professional designation to perform such services. Professional services consist of the following; accounting, architectural, auditing, consulting, engineering, environmental, legal, surveying, or training. III. REQUIREMENTS A. PURCHASES UNDER $23,000 (1) Coded invoice (2) Evidence of a Contract —Contract number or copy of completed contract route sheet is acceptable. LA County is covered under a master agreement for most services. B. PURCHASES FROM $23,000 TO $5340,000 (1) Evidence of a Contract -Contract number or copy of completed contract route sheet is acceptable. LA County is covered under a master agreement for most services. (2) Purchase Order C. PURCHASES OVER $50,000 (1) Evidence of a Contract - Contract number or copy of completed contract route sheet is acceptable. LA County is covered under a master agreement for most services. (2) City Council approval (note date of meeting and agenda item number) (3) Purchase Order Purchasing Policy daaeNeverabeF January 20123 Change 78 Page 24 IV. GENERAL A. Formal bids are not required on professional services as they must be selected based on qualifications first, cost second. However, a selection process is required and quotations or proposals are recommended from a minimum of three qualified individuals or firms to ensure adequate comparison and fair pricing occur. Should negotiations prove unsuccessful with the primary professional service provider, written notice must be given to formally terminate negotiations and negotiations shall commence with the second most -qualified firm. B. A copy of the contract or indemnity clauses must be included in all solicitations. C. A contract or letter of agreement specifying all necessary insurance and bonding requirements is required for services under this section. The contract number or copy of completed contract route sheet is acceptable. LA County is covered under a master agreement for most services. Purchasing P011cy jWReNeVembeF January20123 Change 78 Page 25 SECTION 5.0 PUBLIC PROJECTS SCOPE This section, in conjunction with Sections 1 and 2, provides the requirements for procurement associated with all public projects and is derived from the State Public Contract Code. DEFINITIONS A. A Public Project (also known as Public Works Projects and includes Capital Improvement Projects) - is defined in the Public Contract Code as follows: "Public project" means any of the following: (1) Construction, reconstruction, erection, alteration, renovation, improvement, demolition and repair work involving any publicly owned, leased or operated facility; (2) Painting or repainting of any publicly owned, leased or operated facility; (3) In the case of a publicly owned utility system, "public project' shall include only the construction, erection, improvement, or repair of dams, reservoirs, and electrical transmission lines of 230,000 volts and higher. (4) "Public project' does not include maintenance work. However, maintenance work IS still covered under prevailing wage. B. Maintenance work - For the purpose of public projects, "maintenance work" includes all of the following: (1) Routine, recurring, and usual work for the preservation or protection of any publicly owned or operated facility for its intended purposes; (2) Minor repainting; (3) Resurfacing of streets and highways at less than one inch; Purchasing Policy 111RRNevembec January 20123 Change 7-8 Page 26 (4) Landscape maintenance, including mowing, watering, trimming, pruning, planting, replacement of plants, and service of irrigation and sprinkler systems; (5) Work performed to keep, operate, and maintain publicly owned water, power, or waste disposal systems, including, but not limited to, dams reservoirs, and electrical transmission lines of 230,000 volts and higher. C. Facility - For the purposes of a public project, "facility" means any plant, building, structure, ground facility, utility system subject to the limitation found in paragraph 3 of the public project definition previously stated, real property, streets, highways, or other public works improvement. Ill. REQUIREMENTS A. FOR PROFESSIONAL SERVICES ASSOCIATED WITH PUBLIC PROJECTS REFER TO SECTION 4.0 B. PROJECTS UNDER $23,000 (1) Coded invoice (2) Evidence of a Contract - Contract number or copy of completed contract route sheet is acceptable. LA County is covered under a master agreement for most services. C. PROJECTS FROM $23,000 TO $3045,000 (1) Product/service descriptions/specifications (2) A minimum of three (3) written quotes (3) Evidence of a Contract - Contract number or copy of completed contract route sheet is acceptable. LA County is covered under a master agreement for most services. (4) Purchase Order D. PROJECTS FROM $3845,001 TO $175,000 (1) Product/service descriptions/specifications (2) Informal bid process (See Section 2.VI) Purchasing Policy duneNevera§ec January 20123 Change 78 Page 27 (3) Evidence of a Contract - Contract number or copy of completed contract route sheet is acceptable. LA County is covered under a master agreement for most services. (4) Purchase Order E. PROJECTS OVER $175,000 (1) Product/servicedescriptions/specifications (2) Formal bid process (See Section 2.VI) (3) Evidence of a Contract - Contract number or copy of completed contract route sheet is acceptable. LA County is covered under a master agreement for most services. (4) City Council approval of plans and specifications as well as the award of contract and expenditure (Cite date of Council meeting and agenda item number) (5) Purchase Order IV. GENERAL A. Project specifications and a contract identifying all insurance and bonding requirements are required for work contracted under this section. The contract number, copy of the contract, completed route sheet or the Risk Manager's authorization by email or memo satisfies this requirement. B. The project manager is responsible for ensuring all requirements of the Uniform Public Construction Cost Accounting Commission Act are followed. Purchasing Policy duaeWeveabec January 20123 Change 7-8 Page 28 SECTION 6.0 PURCHASE ORDER CHANGES SCOPE This section provides guidelines for changing established purchase orders. If. DEFINITIONS A. Change Order - A request to change any entry on an approved purchase order. III. GUIDELINES A. Generally, any change to a purchase order not affecting any money values may be made by any person in the department trained to do change orders to purchase orders. See Purchasing for more details. B. Changes resulting in a reduction in the dollar value of a purchase order may be made by any person in the department trained to do change orders to purchase orders. See Purchasing for more details. C. Changes that result in a purchase order exceeding a quote, bid or City Council approval threshold will be required to comply with the requirements of the new threshold. City Council approval will be required to approve changes exceeding the threshold for City Council approval. D. For change orders to purchase orders originally requiring Council approval, the following guidelines apply: (1) Purchase orders may be established for the Council - approved contract amount, plus any Council -approved contingency amount or $175,000, whichever is less; (2) A change to a purchase order that results in a purchase order total dollar amount less than the Council -approved contract amount plus any Council- approved contingency can be approved by the department head or designee subject to number three below; (3) Cumulative changes greater than $175,000 to a contract that result in a purchase order total dollar amount less than the Council -approved contract amount plus any Council - Purchasing Policy duneWevembw January 20123 Change 78 Page 29 approved contingency must be approved by the City Manager and may require additional Council approval if deemed necessary by the City Manager; (4) A change to a purchase order that results in a purchase order total dollar amount greater than the contract amount plus any Council -approved contingency requires Council approval; (5) The maximum contingency is 15% unless otherwise approved by the City Manager; (6) The change order process and contingency amounts for all Council -approved items must be written into the recommendation in the agenda report to effect change orders stated in this policy without returning to Council for approval. Five specific things should be addressed in the recommendation paragraph answering who, how long, how much, contingency amount, and contract/change order signature authority. An example paragraph is as follows: Award contract to XYZ Company for $400,000, $100,000 per year for four years, and authorize a 15% contingency expenditure should any change orders to the contract become necessary. Authorize the City Manager or designee to approve all change orders relating to this contract. See Purchasing for additional wording for renewals. E. For changes to purchase orders not originally requiring Council approval the procedures are as follows: (1) A change to a purchase order that results in a purchase order total dollar amount less than the thresholds for Council approval, or, for supplies/service/equipment, a purchase order total under $2340,000 may be approved by the department head or designee; (2) A change to a purchase order for supplies/service/equipment that results in a purchase order total dollar amount from $2340,000 to $50,000 must be approved by the City Manager or designee; (3) A change to a purchase order that results in a purchase order total dollar amount greater than the threshold limits requiring Council approval must be approved by Council. Purchasing Policy duaeNeveaber January 20123 Change 7-8 Page 30 SECTION 7.0 SUPPLIER RELATIONS SCOPE This section provides guidelines for employees participating in transactions on behalf of the City. See also the Purchasing Standards of Conduct Policy, Appendix A. 11. ANTI-TRUST LAWS Personnel performing a purchasing function shall not demand or negotiate a special pricing structure from a supplier that the supplier is not willing to offer to other customers under similar conditions and terms. Violations of the antitrust laws in any of the City's operations may have far- reaching effects, causing substantial injury to the City in lengthy and expensive litigation, significant damage liability and injunctions or orders affecting property and/or business. An employee who participates in a violation may be individually and personally subject to fine or imprisonment. III. CONFLICT OF INTEREST Employees engaged in the purchasing function are expected to be free of interests or relationships which are actually or potentially malicious or detrimental to the best interests of the City, and shall not engage or participate in any commercial transaction involving the City in which they have a significant undisclosed financial interest. Any employee engaged in purchasing who has assumed, or is about to assume, a financial or other outside business relationship that might involve a conflict of interest, must immediately inform the supervisor of the circumstances involved. This information is to be reviewed at an appropriate level for decision on whether a conflict of interest is present and, if so, what course of action is to be taken. Therefore, a conflict of interest exists where an employee: A. has an outside interest that materially encroaches on time or attention which should be devoted to the affairs of the City; B. has a direct or indirect interest in or relationship with a non- employee that is inherently unethical or that might be implied or construed to be unethical, or make possible personal gain due to the employee's ability to influence dealings; render the employee partial toward the outsider for personal reasons or otherwise inhibit Purchasing Policy duaeNevemlaeF Janua 20123 Change TS Page 31 the impartiality of the employee's business judgment; place the employee or the City in an ambiguous, embarrassing or ethically questionable position; or reflect on the integrity of the City; Purchasing Policy duaeM'Qvemhec January20123 Change .78 Page 32 C. takes personal advantage of an opportunity that properly belongs to the City. IV. SUPPLIER SAMPLES When suppliers offer samples for evaluation, they will be accepted only under the following conditions: A. The product is one that is of a type presently in use or is of potential use to the City. Samples of goods not likely to be purchased must not be accepted; B. The quantity or size of the sample is relatively small and of low value. The object of a sample is the examination of its fitness for our service - not to provide an inventory of the material; C. Any chemical offered as supplier samples shall not be accepted unless accompanied by an OSHA Material Safety Data Sheet; (must be kept on file with individual department accepting sample and a copy submitted to Technology Services for inclusion in the Fire Safety Manual); D. If supplier samples are accepted, they shall be promptly conveyed to the appropriate department for testing. Personal use of samples is prohibited. The supplier is entitled to a prompt evaluation of the given sample. In the event a sample is requested from a supplier to evaluate its applicability to a particular situation, such samples shall be purchased. V. SUPPLIER TRANSACTIONS It is our policy to maintain and practice the highest possible standards of business ethics, professional courtesy and competence in all of our dealings. At all times, applicable laws must be scrupulously observed. In this regard, the following should be observed when dealing with suppliers and their representatives: A. Accord prompt and courteous reception as well as fair and equal treatment to all suppliers and their representatives; B. Ensure vendors are not precluded from providing price and specification quotations; C. Ensure the confidentiality of all specifications and price quotations or bids made by suppliers until all quotations or bids are received and the contract is awarded; Purchasing P011cy daaeNav8F;;bG January 20123 Change 7-8 Page 33 D. Explain as clearly as possible to suppliers the reason for rejection of their quotations upon request; E. Remain scrupulously free from obligations to any Contractor; F. Ensure all vendors receive equal treatment and information. If one vendor receives information as a result of questions asked then all vendors must be given the same information unless such information is already contained in the solicitation. Any changes to or extensions of a solicitation should be made prior to the due date for the responses. Once the due date has arrived the process must be completed. Re -bidding should be restricted to substantive changes in the specifications. VI. SUPPLIER PERFORMANCE Most suppliers take great care to ensure their products and service meet our high standards. On occasion a product or service may not meet our expectations for one reason or another. We need to ensure we receive the quality we contract for. To this end, Purchasing has some basic steps to take if you encounter such a situation. A. The first step is to provide feedback to the company. This is a good idea whether there have been problems or not. C. For minor mistakes you should notify the supplier as soon as possible. Mistakes happen on occasion and most companies will correct the problem rapidly and at no cost if notified without delay. D. For more serious situations you will need to provide the notification by letter and in detail. The detail should include a request for remedy if appropriate. E. Always let Purchasing know as soon as you have any problems. If Purchasing assisted in the purchase, we used our forms which cover many common issues. If not, we can help you work through any problems with your vendor. Always provide copies of any documentation to Purchasing. The City has no debarment policy (this means you cannot prevent a company form responding to a solicitation) but our awards go to the lowest responsive, responsible contractor. Past performance, if well documented, can be included in the determination of whether a company is responsible. Do not hesitate to contact Purchasing if you have any questions. Purchasing Policy duneNevembeF 41aUarL,20123 Change 78 Page 34 SECTION 8.0 POLICY EXCEPTIONS �*i iQLZ This section provides information on exceptions to this policy such as sole source selection and emergency purchases. DEFINITION A. Sole Source — The services/products provided by the supplier are proprietary or unique in nature, such as patented or copyrighted material or an artist or performer's work; B. Single Source — (1) The supplier is the only source known to the City after (underlined for emphasis) a reasonable search for other suppliers has been conducted; -or- (2) The current work requirements are an extension of the original work and substantially rely on the experience gained during the original work. C. A Single/Sole Source form has been created by Purchasing and is required for all department directed Single/Sole Source requests. See Appendix I D. Emergency - A situation that threatens life or property. Time constraint is NOT an adequate justification for an emergency purchase. III. GENERAL A. No purchase orders are required for employee benefit payments. B. No quoting or bidding is required for purchases of products or services from a validated sole source. C. Grants made by the City are not considered purchases and are not subject to purchasing policy. An encumbrance may be established if desired. When the grant is disbursed, care must be taken to reference the encumbrance number (same as a purchase order number) to ensure the funds are disencumbered. Purchasing Policy duneWeveraber January 20123 Change 78 Page 35 D. The formal bid process is waived for the purchase of information technology goods or services which may be acquired through the quote procedures described in Sections 3.12.230 through 3.12.260 of the Municipal Code. E. Purchases for materials, equipment or services may be exempt from the requirement for competition by the City Manager in the event of an emergency. Council will ratify any such procurement that would normally have required Council approval at the next Council meeting. All policy exceptions and justifications must be noted in the comments or text field of the purchase requisition. G. For non-public project purchases, any exceptions other than those above require Council approval. H. For public projects, the only allowed exception is in cases of emergency. Purchasing Policy d6IF1ea6V8F;b8F January 20123 Change M Page 36 SECTION 9.0 GRATUITIES SCOPE This section provides guidelines on the acceptance of gratuities. II. DEFINITION Gratuity - a payment, loan, subscription, advanced deposit of money, service or anything of more than nominal value, present or promised, without expectation of substantial, equal, or greater consideration in return. III. GENERAL A. Employees may accept items such as coffee cups, pencil holders, pens etc. in the instance where: (1) the item is valued at less than $25; - and/or — (2) the name of the offering firm is clearly displayed on the item for purpose of advertisement and the item is not displayed in a conspicuous manner; (3) any edible item such as fruit or candy may be accepted but must be consumed by the department accepting the item. B. Any employee accepting gratuities over the amount specified in paragraph III.A.1 will be attended to in accordance with established personnel policies. Purchasing Policy duneWevemie Janna 20121 Change 78 Page 37 SECTION 10.0 SURPLUS/TRANSFER OF PROPERTY SCOPE This section provides the requirements for the transfer or sale of City - owned property. II. DEFINITION A. City -owned property - any supplies, materials or equipment purchased by or donated to the City for City use. B. Surplus - no longer in use for the purpose for which it was originally purchased. III. GENERAL A. The Administrative Services Director, or Designee, may, by direct sales or otherwise, sell or dispose of any property belonging to the City and approved by the City Manager for such disposal. B. No member of the Council and no employee shall be permitted to purchase any assets or supplies from the City except those items disposed of in an open public auction and only through participation in said auction. C. The City Council may authorize transfer of equipment, supplies, and/or materials for non -monetary consideration to public agencies, educational institutions or for other such uses deemed to be in the public's interest. D. The City Manager, or designee, shall have the authority to dispose of surplus or equipment by donation to local schools or non-profit organizations when the estimated value of such surplus is less than one thousand dollars ($1,000). Purchasing Policy duaeNevembec January 20123 Change 78 Page 38 SECTION 11.0 PURCHASING WITH SPECIAL FUNDS SCOPE This section provides the requirements for the use of special funds for purchasing supplies, equipment and services. II. DEFINITION A. Special funds - proceeds of specific revenue sources that are restricted to expenditure for specified purposes. B. Granting agency - The state, federal or other agency granting funds to the City for expenditure. III. GENERAL Special funds may come with restrictions on the expenditure of those funds. For example, some funds may only be used to support a specific program and funds from federal sources generally require the purchasing process to follow federal procurement guidelines as well as those of the granting agency. These requirements may be complex and time consuming and should be considered when planning expenditures. The restrictions supplement and take precedence over City procedures. It is the responsibility of the group making the purchase with special funds to ensure compliance with any requirements of the granting agency. These conditions on expenditure are usually included with the grant but may also be found in legislation or regulations associated with the source of the funds. The City group receiving such funds will ensure proper distribution of all information regarding the use of special funds received. Purchasing will assist in the determination of such regulations and their application at the request of the using department. Purchasing Policy AiReNeve beF January 20123 Change 78 Page 39 SECTION 12.0 SUSTAINABLE PURCHASING SCOPE This section provides the requirements in support of sustainable purchasing of supplies, equipment and services. The City has adopted an Environmentally Preferable Purchasing (EPP) Program included as Appendix H. This program provides general guidance towards improving the sustainable purchasing process. Additionally, the State Public Contract Code outlines some specific requirements for cities to follow. II. DEFINITION A. Recycled products — For the purpose of compliance with the State Public Contract Code recycled products means printing and writing paper, paper products, mulch -compost and related products, glass products, lubricating oils, plastic products, paint, antifreeze, tires, tire derived products and metal products. B -C. Businesses - includes bidders, contractors, and other interested parties that provide services to, or sell products to, the state. r, -D. Postconsumer material - means a finished material that would have been disposed of as a solid waste, having completed its life cycle as a consumer item, and does not include manufacturing wastes. III. GENERAL State Public Contract Code Section 22150 requires cities to purchase recycled products if fitness and quality are equal and the recycled items are available at the same or lesser total cost as non -recycled items. State Public Contract Code Section 22152 requires cities to require businesses to certify in writing the minimum, if not exact, percentage of postconsumer materials in the products, materials, goods, or supplies, offered or sold. All printing contracts shall require recycled content paper. Appendix H provides additional information to support the Council's goal of supporting sustainability. IV. REQUIRED ACTIONS Purchasing Policy duaeOlevemisec anua 20123 Change 7-8 Page 40 A. All City purchases will encourage businesses to identify potential recycled product candidates with postconsumer waste. They may be offered as alternatives to or equivalents for any products requested. B. All City purchases will require responding businesses to certify the postconsumer content of the products being offered even if that content is zero. C. All City contracts resulting in printed materials will require the printing to be on recycled paper. Purchasing Policy duneMe4embeF January 20123 Change $8 Page 41