In conjunction with the implementation of the Enterprise Resources Planning (ERP) system currently being implemented, the Finance Department has been reviewing and updating its purchasing processes and procedures. The City’s current purchasing policy was last revised on September 27, 2005.  Since then, a few major changes had occurred impacting municipal procurement practices, including the Uniform Guidance Procurement Standards, and the California Uniform Public Construction Cost Accounting Act.  It has been determined that a revision to the current purchasing policy is necessary to improve efficiency.  On May 26, 2020, the City Council adopted an ordinance to amend Chapter 2.52 of the Municipal Code to conform to the State law.  The attached resolution will authorize the update of our purchasing policy within the thresholds established by the amended Code.

During the business process review with the City’s ERP consultant, it was identified that the current policy thresholds for the procurement of goods, services, and professional services do not promote efficiency and the procedures do not reflect best practices. The proposed changes to the existing purchasing policy will align the processes with the ERP functionality and will strengthen and clarify existing purchasing procedures.

Consistent with the updated Municipal Code and City Council resolutions delegating authority to the City Manager, the proposed changes implement the City Manager’s authority to delegate his or her authority under the purchasing policy, adding provisions to provide procedural guidance relating to federal awards, addition of purchasing procedures during a proclaimed emergency or disaster, and updating the informal bidding thresholds. There will be no changes to the City Manager’s authority of up to $50,000 for award of contracts nor to the City Council’s authority for all procurements that exceed $50,000.

Below is a summary of the proposed changes to the existing purchasing policy:

Add a provision to the Purchasing Policy that implements the City Manager authority to delegate authority.

Staff recommends adding a provision to the purchasing policy that implements the City Manager’s authority to delegate his or her authority under the purchasing policy. Council Resolution No. 9212-14 authorizes the City Manager, or the City Manager’s designee, to execute agreements up to the total sum of $50,000.  The existing purchasing policy does not currently refer to the authority of the City Manager to delegate to a designee.

Add provisions to the purchasing policy that address federal purchasing requirements and thresholds.

In December 2014, the Federal Office of Management and Budget (OMB) issued the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, commonly referred to as “Uniform Guidance” (2 CFR § 200), to streamline and consolidate government requirements for receiving and using Federal awards. The existing purchasing policy does not address federal thresholds and guidelines.

Add provisions to the purchasing policy to provide procedural guidance relating to federal awards, addition of purchasing procedures during a proclaimed emergency or disaster.

The revised policy modifies the City’s normal purchasing practices to assure that, in exigent circumstances caused by a proclaimed disaster or emergency, the City is able to acquire the goods and services required to address an immediate threat to life, public health, or safety or an immediate threat of significant damage to improved public and private property while still maintaining an effective purchasing process and complying with applicable local and state purchasing laws.  Where the City is included in a major disaster or emergency declared by the President of the United States, the revised policy also assures that City procurements comply with federal regulations applicable to FEMA disaster grant reimbursement. The current purchasing policy does not provide federal guidelines to follow during a proclaimed emergency or disaster.

Revised the threshold amounts for the procurement of materials and supplies, equipment and other commodities, and professional/consultant services.

The City’s current purchasing policy defines two types of competitive bidding procedures: Informal Bid Process for purchases up to $25,000 and Formal Bid Process for those that exceed $25,000. The Informal Bid Process requires the solicitation of quotes from at least three providers, whereas the Formal Bid Process requires an IFB (Invitation for Bid) or RFP (Request for Proposal) process.  The revised policy includes two changes to the Informal Bid Process. There are no changes to the Formal Bidding Process.

There is no fiscal impact associated with the adoption of the attached resolution approving the revised purchasing policy and procedure manual.

It is recommended that the City Council:

• Adopt the resolution approving the revised purchasing policy and procedures to reflect best practices and to ensure compliance with federal, state, and applicable laws and regulations; and

• Authorize the Finance Director or designee to make minor modifications to the purchasing policies and procedures to reflect best practices and compliance with applicable laws and regulations consistent with the Municipal Code and City Council resolutions.