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HomeMy Public PortalAbout09) 7H DECENTRALIZED PURCHASEAGENDA ITEM 7.H. ADMINISTRATIVE SERVICES DEPARTMENT DATE: December 18, 2012 TO: The Honorable City Council MEMORANDUM FROM: Jose E. Pulido, City Manager By: Tracey L. Hause, Administrative Services Director SUBJECT: DECENTRALIZED PURCHASING SYSTEM RECOMMENDATION: The City Council is requested to authorize the Purchasing Officer (i.e., Administrative Services Director) to provide documentation to allow the City Departments exemptions from centralized purchasing. BACKGROUND: 1. On September 7, 2010, the City Council adopted Ordinance No. 10-937 (Attachment "A") amending Chapter 5 (Purchasing System) of Title 2 (Administration) of the Temple City Municipal Code relating to the City's system for purchasing goods, services and equipment. 2. On April 17, 2012, the City Council received and filed the City's Financial Statements. A Letter of Comments to Management (i.e., Management Letter) dated February 1, 2012, from the City's independent financial auditors, Vasquez & Company (Attachment `B"), was also included. One of the recommendations contained in the Management Letter was that the City implement a centralized procurement and purchasing system in accordance with the current Ordinance, or amend the current Ordinance implementing a decentralized system, which would be consistent with the current practice. ANALYSIS: When Ordinance No. 10-937 was adopted in September 2010, the Financial Services Department, which has since became part of the Administrative Services Department, had a part-time position dedicated to a centralized purchasing function. Upon retirement of that incumbent, the decision was made to not fill that position. Due to the limited staff in the area of Administrative Services Department, resources to maintain a centralized purchasing system in accordance with the current Ordinance are not City Council December 18, 2012 Page 2 available, nor would it make fiscal sense to have a full time position dedicated to purchasing function. Rather, it is more feasible that other staff members in the City's department to incorporate this responsibly into their existing job duties. This will distribute the workload to each Departments and require them to be accountable in their purchasing practices. The Ordinance does allow for the Purchasing Officer (i.e., Administrative Services Director) with approval of the City Council, to authorize Departments to purchase and contract for their own supplies, services and equipment without having to amend the existing Ordinance. To implement a centralized purchasing system, of which additional staffing would be required, is not recommended at this time. An alternative action to consider is a de- centralized purchasing procedure and revised Ordinance. Revising the Ordinance now would be a time consuming project and due to the current workload, this could not be addressed in the near future. CONCLUSION: The current Ordinance does provide a vehicle to administratively authorize de- centralized purchasing and staff feels this is the most efficient way to proceed at this time. The current code can be addressed in the future if purchasing activities or staff needs and resources are re -prioritized in the future. FISCAL IMPACT: There is no fiscal impact to the Fiscal Year (i.e., FY) 2012-13 City Budget with this action. ATTACHMENTS: A. Ordinance No. 10-937 B. Letter of Comments to Management Attachment "A" ORDINANCE NO. 10-937 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TEMPLE CITY, CALIFORNIA, AMENDING CHAPTER 5 [PURCHASING SYSTEM] OF TITLE 2 [ADMINISTRATION] OF THE TEMPLE CITY MUNICIPAL CODE RELATING TO THE CITY'S SYSTEM FOR PURCHASING GOODS, SERVICES, AND EQUIPMENT. WHEREAS, paragraph C of Section 607 of the City Charter requires the City Council to provide, by ordinance, for the acquisition of equipment, materials or supplies; and, WHEREAS, the City Council has provided for such acquisition through Chapter 5 [Purchasing System] of Title 2 (Administration] of the Municipal Code; and, WHEREAS, the City has identified two areas of Chapter 5 that must be brought into conformity with the City Charter and with State law; and, WHEREAS, in the course of amending the purchasing system to address the two areas of inconsistency the City undertook a thorough review of the entire Purchasing System and has identified additional Sections of the System that can be improved to create cost savings and efficiencies for the City; and, WHEREAS, the City Council wishes to adopt these improvements to streamline the acquisition procedures where such streamlining would be beneficial to the City while at the same time maintaining control over large purchases. THE CITY COUNCIL OF THE CITY OF TEMPLE CITY HEREBY ORDAINS AS FOLLOWS: SECTION 1: Chapter 5 [Purchasing System] of Title 2 [Administration] of the Municipal Code of the City of Temple City is hereby amended to read in its entirely as follows: 2500: Adoption of Purchasing System In order to establish efficient procedures for the purchase of supplies, services and equipment, to secure for the city supplies, services and equipment at the lowest possible cost commensurate with 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 purchasing system is hereby adopted. All purchases or services or supplies for "public projects° as defined in Section 20161 of the Public Contract Code (or any successor to that Section) shall be made in accordance with the Public Contract Code and with sections 2515 and 2517, as applicable, of this Chapter. All other purchases of supplies, services and equipment shall be made in accordance with this Chapter. 2501: Centralized Purchasing Department There is hereby created a centralized purchasing department in which is vested authority for the purchase of supplies, services and equipment. -I- la #4837-8141-8246 v1 2502: Purchasing Officer There is hereby created the office of purchasing officer, who shall be appointed by the city manager. The purchasing officer shall be the head and have general supervision of the purchasing department. The purchasing officer shall have authority to: A. Purchase or contract for supplies, service and equipment required by any using 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 department and such other rules and regulations as shall be prescribed by the city council; B. Negotiate and recommend execution of contracts for the purchase of supplies, services and equipment; C. Act to procure for the city the needed quality in supplies, services and equipment at least expense to the city; D. Discourage uniform bidding 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 reasonably 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 agency or which have become unsuitable city use; and K. Maintain a bidder's list, vendor's catalog file and records needed for the efficient operation of the purchasing department. 2503: Estimates Of Requirements All departments using the purchasing department shall file detailed estimates of their requirements in supplies, service and equipment in such manner, at such time, and for such future periods as the purchasing officer shall prescribe. 2504: Encumbrance of Funds Except in cases of emergency, the purchasing officer shall not issue any purchase order for supplies, services or equipment unless there exists an unencumbered appropriation in the fund account against which said purchase is to be charged, LA #48.17.81.11.8246 V I 2505: Requisitions Using departments shall submit requests for supplies, services and equipment to the purchasing officer by standard requisition forms. 2506: Purchase Orders Purchases of supplies, services and equipment shall be made only by purchase order or, where appropriate, by formal written contract. 2507: Exemptions from Centralized Purchasing The purchasing officer, with approval of the city council, may authorize in writing any department 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 agency on the purchases and contracts made under such written authorization. 2508: Cooperative Purchasing Agreements (a) Without complying with the requirements of sections 2510 and 2511, the purchasing officer may participate in a cooperative purchasing agreement for the procurement of any supplies or equipment with any federal, state, county or local government agency when that agency has made their purchases in a competitive manner. The purchasing officer may participate in a cooperative purchasing agreement when the city can obtain supplies or equipment at a purchase price lower than that which the city can obtain through its normal purchasing procedures. In those instances where it is determined that purchasing through the federal, state, county or local government agencies will result in savings to the city, the purchasing officer is authorized to make such purchases. (b) The purchasing officer may also buy directly from a vendor at a price established by competitive bidding by another federal, state, county or local government agency in substantial compliance with sections 2510 and 2511 even if the city has not joined with that public agency in a cooperative purchase agreement. 2509: Open Market Procedure Purchases of supplies, equipment, or services and sales of personal property of an estimated value in an amount more than five thousand dollars ($5,000) but less than twenty five thousand dollars ($25,000.00) may be made by the purchasing officer in the open market without observing the procedure prescribed in section 2511 of this chapter. Purchase orders shall, whenever possible, be based on at least three informal quotes. 2510: Bidding Purchases of supplies, services, or equipment and the sale of personal property of an estimated value in excess of twenty five thousand dollars ($25,000.00) shall be by bid procedures pursuant to sections 2510 and 2511 of this chapter. Bidding shall be dispensed with only when an emergency requires that an order be placed with the nearest available source of supply, when the city council by a four-fifths (4/5) majority determines after opening of bids that rejection of all bids and purchase on the open market will best serve the city, or when the commodity can be obtained from only one vendor. IA #4837.8141-8246 V 2511: Formal Contract Procedure Except as otherwise provided herein, purchases and contracts for supplies, services, equipment and the sale of personal property of estimated value greater than twenty five thousand dollars ($25,000.00) shall be by purchase order or written contract with the lowest (or for purposes of Section 2516 of this Chapter, highest) responsible bidder, as the case may be, pursuant to the procedure prescribed; herein: A. Notice Inviting Bids: Notices inviting bids shall include a general description of the articles to be purchased or sold, shall stale where bid blanks and specifications may be secured and the time and place for opening bids. 1. Published Notice: Notice inviting bids shall be published at least ten (10) 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 (3) public places in the city that have been designated by ordinance as the places for posting notices. 2. Bidder's List: The purchasing officer shall also solicit sealed bids from all responsible prospective suppliers whose names are on the bidder's list or who have requested their names to be added thereto. 3. Bulletin Board: The purchasing officer shall also advertise pending purchases or sales by a notice posted on a public bulletin board in the city hall; B. Bidder's Security: When deemed necessary by the purchasing officer, bidder's security may be prescribed in the public notices inviting bids. Bidders shall be entitled to return of bid security; provided that a successful bidder shall forfeit his bid security upon refusal or failure to execute the contract within ten (10) 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. 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; C. 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 public notices. A tabulation of all bids received shall be opened for public inspection during regular business hours for a period of not less than thirty (30) calendar days after the bid opening; D. Rejechon Of Bids: In its discretion, the city council may reject any and all bids presented and readvertise for bids; E. Award Of Contracts: Contracts shall be awarded by the city council to the lowest responsible bidder who meets the quality requirements. The decision of the city council shall be final. For purchases of supplies and equipment, determination of the "lowest responsible bidder" may include the adjustment of the bid price of a qualifying local vendor (as defined in subsection 2517(B)(1) below) according to the local vendor preference procedures described in subsection 2517(8)(3) below. For purposes of this section, a responsible bidder means a bidder who has demonstrated the quality, fitness, capacity, and experience to satisfactorily perform the particular requirements of the city.) F. Tie Bids: If two (2) or more bids received are for the same total amount or unit price, quality and service being equal and if the public interest will not permit the delay of readvertising for bids, LA #4837.8141.8240 vl the city council may accept the one it chooses or accept the lowest bid made by negotiation with the tie bidders at the time of the bid opening; G. Performance Bonds: The city council shall have authority to require a performance bond before entering into a contract in such amount as it shall find reasonably necessary 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 notice inviting bids. 2512: Inspection and Testing The purchasing officer shall inspect 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 sample submitted with bids and samples of deliveries which are necessary to determine their quality and conformance with specifications. 2513: Professional services. The city manager shall sign all professional service contracts on behalf of the city. Professional services contracts will be prepared in accordance with the city's standard Consultants Services Agreement The process for securing professional services will be through negotiation or through request for proposal subject to the contract value limitations of sections 2509 and 2510 of this chapter. 2514: Emergency Purchases During times of emergency, as concurred in by the city council or the city manager, mayor and city attorney, purchases necessary to meet such emergency may be made without compliance with this chapter. 2515: Design/Build Contracts Whenever the city seeks to construct any public work, other than transportation facilities, with design and construction costs in excess of one million dollars ($1,000,000.00), the city council may proceed to contract therefor as a design/build project in compliance with California Public Contracts Code Section 20175.2, as amended, or any later enacted statute regulating designibuild contracts. 2516: Surplus Supplies and Equipment All using agencies shall submit to the purchasing officer at such times and in such form as he shall prescribe, reports showing all supplies and equipment which are no longer used or which have become obsolete or worn out. The purchasing officer shall have authority to sell all supplies and equipment which cannot be used by any agency or which have become unsuitable for city use, or to exchange the same for, or trade in the same on, new supplies and equipment. Such sales shall be made pursuant to sections 2509, 2510 and 2511 of this chapter, as applicable. 2517. Local vendor preference program. A. The city has established a local vendor preference program to be applied in the procurement of supplies and equipment under Section 2511 of this chapter. B. The adjustment to bids provided for under the local vendor preference program shall be implemented according to the following: LA #4837.8141.8246 vl 1. Qualification for local vendor preference. In the procurement of supplies and equipment for the city's requirements, preference shall be given to those vendors who (i) qualify as a local vendor ("qualifying local vendor') under this subdivision and (ii) submit a written statement in their bid package requesting to be considered a qualifying local vendor. In order to qualify as a local vendor, the bidder must certify the following information as part of the bid package: a. It has fixed facilities with employees located within the city limits; b. It has a business street address (post office box or residential a address shall not suffice to establish a local presence); c. All sales tax returns for the goods purchased must be reported to the state through a business within the geographic boundaries of the city; and d. It has a city business license. 2. False certifications. False certifications shall be immediate grounds for rejection of any bid or if the bid is awarded, grounds for voiding the bid, terminating any agreement, and seeking damages thereto. Failure to certify the above information shall result in the bid being considered by the city without any adjustment for a local vendor as described in subsection 2511(H)(c) below. 3. Application of local vendor preference. The bid of a qualifying local vendor shall be adjusted according to the following procedures: a. In the tabulation of bids to determine the lowest responsible bidder, the bid of each qualifying local vendor shall be reduced by five percent. b. The reduced bid price of the qualifying local vendor will then be compared to the other bids received by the city to determine the lowest responsible bidder under section 2511. Notwithstanding this reduction for purposes of determining the lowest responsible bidder, the contract amount with the lowest responsible bidder shall be at the bid price. SECTION 2: The City Council hereby declares that, should any provision, section, subsection, paragraph, sentence, clause, phrase, or word of this Ordinance or any part thereof, be rendered or declared invalid or unconstitutional by any final court action in a court of competent jurisdiction or by reason of any preemptive legislation, such decision or action shall not affect the validity of the remaining section or portions of the Ordinance or part thereof. The City Council hereby declares that it would have independently adopted the remaining provisions, sections, subsections, paragraphs, sentences, clauses, phrases, or words of this Ordinance irrespective of the fact that any one or more provisions, sections, subsections, paragraphs, sentences, clauses, phrases, or words may be declared invalid or unconstitutional. SECTION 3: The City Clerk shall certify to the passage and adoption of this Ordinance and to its approval by the Mayor and shall cause the same to be published according to law. LA #4837.8141-8298 vl PASSED, APPROVED, AND ADOPTED this 7" day of September 2010. M MAYOR ATTEST: APPROVED AS TO FORM: rnf Ciry� tog ty CI Ci A rn 1, Mary Flandrick, City Clerk of the City of Temple City, hereby certify that the foregoing Ordinance No. 10-937 was introduced at the regular meeting of the City Council of the City of Temple City held on the 1710 day of August 2010, and was duly passed, approved and adopted by said Council at the regular meeting held on September 7, 2010 by the following vote: AYES: Councilmember-Blum, Sternquist, NOES: Councilmember-None ABSENT: Councilmember-None ABSTAIN: Councilmember-None fAJU t �. .l tL 7CJ t if City C�Zk I.A #.1837.81.11.8146 vi Yu, Chavez, Vizcarra Attachment "B" Letter of Comments to Management City of Temple City Year ended June 30, 2011 To the Members of the City Council City of Temple City Los Angeles, California In planning and performing our audit of the financial statements of the City of Temple y City (the City) as of and for the year ended June 30, 2011, in accordance with auditing standards generally accepted in the United States of America, we considered the City's a+ internal control over financial reporting (internal control) as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of City's internal control. Accordingly, we do not express an opinion on the effectiveness of City's internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control that might be deficiencies, significant deficiencies or material weaknesses. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies in internal control, that there is a reasonable possibility that a material misstatement of the City's financial statements will not be prevented or detected and corrected on a timely basis. We did not identify any material weakness during the course of our audit. However, during our audit, we became aware of certain matters that we believe represent opportunity for the City to further strengthen its internal controls and accounting practices. These matters do not represent significant deficiencies, material weakness in internal control, or material instances of noncompliance. This communication is intended to give our observations and suggestions about operational or administrative efficiencies, and other items that we perceive of benefit to the City that go beyond internal control related matters and are communicated only as information for the benefit of management. It includes items noted during the course of our audits, which in our judgment, are not considered significant deficiencies but are presented for management's consideration. 0 2 Q 4 ip w. ,1 The following summarize our comments and suggestions regarding those matters. 1. Government Procurement Comments: Procurement is a critical area in the operation of a government agency. Procurement activities are generally the subject of public scrutiny hence, most agencies ensure that its procurement objectives, policies and procedures: a) Are clearly communicated to stakeholders b) Address accountability and transparency c) Include controls to ensure compliance with the legal requirements During our walk-through and testing of the City of Temple City's procurement process and transactions, we noted exceptions in the City's implementation of the policies. Recommendation: We recommend that the City implement a centralized procurement and purchasing system that would allow the: 1) Receipt and monitoring of all procurement requests 2) Provision of guidance and interpretation of the procurement policies to different departments 3) Initiation of the purchase transaction upon approval 4) Review and reconciliation of the purchasing documents to the invoices from the vendors 5) Vendor registration process 6) Contract processing 2. Review of the Existing Intemal Controls over Cash Receipts and Payroll Comments: During our evaluation of the existing internal controls on cash receipts and payroll processing, we noted the absence of proper segregation of duties and supervisory controls over transactions, such as: • Daily review of cash deposit transactions • Equipment intended for use in the receipt and protection of cash and valuable items are not fully utilized • Log -in information on the cash receipt system is shared among users • Only one person is authorized to process payroll and modify employee and salary information in the payroll system 3 V 41 �4 Recommendation: We recommend that the new Finance Services Director review these areas and determine, based on the benefits to be derived, the most economical means and the most effective process of implementing new or improving controls over cash receipts and payroll process. 'M This communication is intended solely for the information and use of the management and members of the City Council of the City of Temple City and others within the entity, and is not intended to be and should not be used by anyone other than these specified parties. Los Angeles, California February 1, 2012 Sterling Codifiers, Inc. Chapter 5 PURCHASING SYSTEM® 2500: ADOPTION OF PURCHASING SYSTEM: 2501: CENTRALIZED PURCHASING DEPARTMENT: 2502: PURCHASING OFFICER: 2503: ESTIMATES OF REQUIREMENTS: 2504: ENCUMBRANCE OF FUNDS: 2505: REQUISITIONS: 2506: PURCHASE ORDERS: 2507: EXEMPTIONS FROM CENTRALIZED PURCHASING: 2508: COOPERATIVE PURCHASING AGREEMENTS: 2509: OPEN MARKET PROCEDURE: 2510: BIDDING: 2511: FORMAL CONTRACT PROCEDURE: 2512: INSPECTION AND TESTING: 2513: PROFESSIONAL SERVICES: 2514: EMERGENCY PURCHASES: 2515: DESIGN/BUILD CONTRACTS: 2516: SURPLUS SUPPLIES AND EQUIPMENT: 2517: LOCAL VENDOR PREFERENCE PROGRAM: 2500: ADOPTION OF PURCHASING SYSTEM:® Page 1 of 7 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 purchasing system is hereby adopted. All purchases or services or supplies for "public projects" as defined in section 20161 of the Public Contract Code (or any successor to that section) shall be made in accordance with the Public Contract Code and with sections 2515 and 2517, as applicable, of this chapter. All other purchases of supplies, services and equipment shall be made in accordance with this chapter. (Ord. 10-937) 2501: CENTRALIZED PURCHASING DEPARTMENT:® There is hereby created a centralized purchasing department in which is vested authority for the purchase of supplies, services and equipment. (Ord. 10-937) 2502: PURCHASING OFFICER:® There is hereby created the office of purchasing officer, who shall be appointed by the city manager. The http://www.sterlingcodifiers.com/codebook/getBookData.php?id—&chapter_id-70722&k... 11/19/2012 W Sterling Codifiers, Inc. Page 2 of 7 purchasing officer shall be the head and have general supervision of the purchasing department. The purchasing officer shall have authority to: A. Purchase or contract for supplies, service and equipment required by any using department in a 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 department and such other rules and regulations as shall be prescribed by the city council; Negotiate and recommend execution of contracts for the purchase of supplies, services and equipment; C. Act to procure for the city the needed quality in supplies, services and equipment at least expense to the city; D. Discourage uniform bidding 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 reasonably necessary to the operation of this chapter and other rules and regulations; I. Supervise the inspection of all supplies, services and equipment purchased to ensure 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 ' have become unsuitable city use; and K. Maintain a bidder's list, vendor's catalog file and records needed for the efficient operation of the purchasing department. (Ord. 10-937) X http://www.sterlingeodifiers.com/codebook/getBookData.php?id=&chapter_id=70722&k... 11/19/2012 Sterling Codifiers, Inc. Page 3 of 7 2503: ESTIMATES OF REQUIREMENTS:® ,e All departments using the purchasing department shall file detailed estimates of their requirements in supplies, service and equipment in such manner, at such time, and for such future periods as the purchasing officer shall prescribe. (Ord. 10-937) 2504: ENCUMBRANCE OF FUNDS:® Except in cases of emergency, the purchasing officer shall not issue any purchase order for supplies, services or equipment unless there exists an unencumbered appropriation in the fund account against which said purchase is to be charged. (Ord. 10-937) 2505: REQUISITIONS:© Using departments shall submit requests for supplies, services and equipment to the purchasing officer by standard requisition forms. (Ord. 10-937) 2506: PURCHASE ORDERS:® Purchases of supplies, services and equipment shall be made only by purchase order or, where appropriate, by formal written contract. (Ord. 10-937) 2507: EXEMPTIONS FROM CENTRALIZED PURCHASING& The purchasing officer, with approval of the city council, may authorize in writing any department 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. (Ord. 10-937) 2508: COOPERATIVE PURCHASING AGREEMENTS:® A' A. Without complying with the requirements of sections 2510 and 2511 of this chapter, the purchasing officer may participate in a cooperative purchasing agreement for the procurement of any supplies or equipment with any federal, state, county or local government agency when that agency has made their purchases in a competitive manner. The purchasing officer may participate in a cooperative purchasing agreement when the city can obtain supplies or equipment at a purchase price lower than http://www. sterlingcodifiers.com/codebook/getBookData.php?id=&chapter_id=70722&k... 11/19/2012 Sterling Codifiers, Inc. Page 4 of 7 40 that which the city can obtain through its normal purchasing procedures. In those instances where it is determined that purchasing through the federal, state, county or local government agencies will result in savings to the city, the purchasing officer is authorized to make such purchases. B. The purchasing officer may also buy directly from a vendor at a price established by competitive bidding by another federal, state, county or local government agency in substantial compliance with sections 2510 and 2511 of this chapter even if the city has not joined with that public agency in a cooperative purchase agreement. (Ord. 10-937) 2509: OPEN MARKET PROCEDURE:® Purchases of supplies, equipment, or services and sales of personal property of an estimated value in an amount more than five thousand dollars ($5,000.00) but less than twenty five thousand dollars ($25,000.00) may be made by the purchasing officer in the open market without observing the procedure prescribed in section 2511 of this chapter. Purchase orders shall, whenever possible, be based on at least three (3) informal quotes. (Ord. 10-937) 2510: BIDDING:® Purchases of supplies, services, or equipment and the sale of personal property of an estimated value in excess of twenty five thousand dollars ($25,000.00) shall be by bid procedures pursuant to this section and section 2511 of this chapter. Bidding shall be dispensed with only when an emergency requires that an order be placed with the nearest available source of supply, when the city council by a four-fifths (4 /5) "E majority determines after opening of bids that rejection of all bids and purchase on the open market will best serve the city, or when the commodity can be obtained from only one vendor. (Ord. 10-937) 2511: FORMAL CONTRACT PROCEDURE:® Except as otherwise provided herein, purchases and contracts for supplies, services, equipment and the sale of personal property of estimated value greater than twenty five thousand dollars ($25,000.00) shall be by purchase order or written contract with the lowest (or for purposes of section 2516 of this chapter, highest) responsible bidder, as the case may be, pursuant to the procedure prescribed; herein: r' A. Notice Inviting Bids: Notices inviting bids shall include a general description of the articles to be purchased or sold, shall state where bid blanks and specifications may be secured and the time and place for opening bids. 1. Published Notice: Notice inviting bids shall be published at least ten (10) 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 (3) public places in the city that have been designated by ordinance as the places for posting notices. N 1b http://www.sterlingeodifiers.com/codebook/getBookData.php?id=&chapter_id=70722&k... 11/19/2012 M W Sterling Codifiers, Inc. Page 5 of 7 2. Bidder's List: The purchasing officer shall also solicit sealed bids from all responsible prospective suppliers whose names are on the bidder's list or who have requested their names to be added thereto. 3. Bulletin Board: The purchasing officer shall also advertise pending purchases or sales by a notice posted on a public bulletin board in the city hall; B. Bidder's Security: When deemed necessary by the purchasing officer, bidder's security may be prescribed in the public notices inviting bids. Bidders shall be entitled to return of bid security; provided that a successful bidder shall forfeit his bid security upon refusal or failure to execute the contract within ten (10) 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. 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; C. 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 public notices. A tabulation of all bids received shall be opened for public inspection during regular business hours for a period of not less than thirty (30) calendar days after the bid opening; D. Rejection Of Bids: In its discretion, the city council may reject any and all bids presented and readvertise for bids; E. Award Of Contracts: Contracts shall be awarded by the city council to the lowest responsible bidder who meets the quality requirements. The decision of the city council shall be final. For purchases of supplies and equipment, determination of the "lowest responsible bidder" may include the adjustment of the bid price of a qualifying local vendor (as defined in subsection 251761 of this chapter) according to the local vendor preference procedures described in subsection 2517B3 of this chapter. For purposes of this section, a "responsible bidder" means a bidder who has demonstrated the quality, fitness, capacity, and experience to satisfactorily perform the particular requirements of the city; ro F. Tie Bids: If two (2) or more bids received are for the same total amount or unit price, quality and service being equal and if the public interest will not permit the delay of readvertising for bids, the city council may accept the one it chooses or accept the lowest bid made by negotiation with the tie bidders at the time of the bid opening; 40 G. Performance Bonds: The city council shall have authority to require a performance bond before entering into a contract in such amount as it shall find reasonably necessary 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 notice inviting bids. (Ord. 10-937) http://www.sterlingeodifiers.com/codebook/getBookData.php?id=&chapter_id=70722&k... 11/19/2012 to Sterling Codifiers, Inc. Page 6 of 7 2512: INSPECTION AND TESTING: The purchasing officer shall inspect 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 sample submitted with bids and samples of deliveries which are necessary to determine their quality and conformance with specifications. (Ord. 10-937) 2513: PROFESSIONAL SERVICES:® The city manager shall sign all professional service contracts on behalf of the city. Professional services contracts will be prepared in accordance with the city's standard consultants services agreement. The process for securing professional services will be through negotiation or through request for proposal subject to the contract value limitations of sections 2509 and 2510 of this chapter. (Ord. 10-937) 2514: EMERGENCY PURCHASES:® During times of emergency, as concurred in by the city council or the city manager, mayor and city attorney, purchases necessary to meet such emergency may be made without compliance with this chapter. (Ord. 10-937) 2515: DESIGN/BUILD CONTRACTSICI Whenever the city seeks to construct any public work, other than transportation facilities, with design and �+ construction costs in excess of one million dollars ($1,000,000.00), the city council may proceed to contract therefor as a design/build project in compliance with California Public Contract Code section 20175.2, as amended, or any later enacted statute regulating design/build contracts. (Ord. 10-937) 2516: SURPLUS SUPPLIES AND EQUIPMENT: All using departments shall submit to the purchasing officer at such times and in such form as he shall lop prescribe, reports showing all supplies and equipment which are no longer used or which have become obsolete or worn out. The purchasing officer shall have authority to sell all supplies and equipment which y� cannot be used by any department or which have become unsuitable for city use, or to exchange the same for, or trade in the same on, new supplies and equipment. Such sales shall be made pursuant to sections 2509, 2510 and 2511 of this chapter, as applicable. (Ord. 10-937) 2517: LOCAL VENDOR PREFERENCE PROGRAM:® http://www. sterlingcodifiers. comlcodebooklgetB ookData.php?id=&chapter_id=70722&k... 11/19/2012 Sterling Codifiers, Inc. Page 7 of 7 + A. The city has established a local vendor preference program to be applied in the procurement of supplies and equipment under section 2511 of this chapter. B. The adjustment to bids provided for under the local vendor preference program shall be implemented according to the following: 1. Qualification For Local Vendor Preference: In the procurement of supplies and equipment for the city's requirements, preference shall be given to those vendors who: a) qualify as a local vendor ("qualifying local vendor") under this subsection and b) submit a written statement in their bid package requesting to be considered a qualifying local vendor. In order to qualify as a local vendor, the bidder must certify the following information as part of the bid package: a. It has fixed facilities with employees located within the city limits; d!k b. It has a business street address (post office box or residential address shall not suffice to establish a local presence); J►s c. All sales tax returns for the goods purchased must be reported to the state through a business within the geographic boundaries of the city; and d. It has a city business license. 2. False Certifications: False certifications shall be immediate grounds for rejection of any bid or if the bid is awarded, grounds for voiding the bid, terminating any agreement, and seeking damages thereto. Failure to certify the above information shall result in the bid being considered by the city without any adjustment for a local vendor as described in subsection B3 of this section. 3. Application Of Local Vendor Preference: The bid of a qualifying local vendor shall be adjusted according to the following procedures: a. In the tabulation of bids to determine the lowest responsible bidder, the bid of each qualifying local vendor shall be reduced by five percent (5%). b. The reduced bid price of the qualifying local vendor will then be compared to the other bids received by the city to determine the lowest responsible bidder under section 2511 of this chapter. Notwithstanding this reduction for purposes of determining the lowest responsible bidder, the contract amount with the lowest responsible bidder shall be at the bid price. (Ord. 10-937) 4 : http://www. sterlingcodifrers.com/codebook/getBookData.php?id=&chapter_id=70722&k... 11/19/2012