HomeMy WebLinkAbout11 Purchase and Contracting Procedures Agenda Item # 11
DONNER
Public Utility District
WORKSHOP
To: Board of Directors
From: Mary Chapman
Date: April 15, 2009
Subject: Discussion about Purchase and Contracting Procedures
1. WHY THIS MATTER IS BEFORE THE BOARD
This is a workshop item to review the District's purchasing procedures with the Board.
2. HISTORY
The District is required to follow provisions of the California Public Contract Code, the
California Government Code and the Public Utilities Code when it purchases goods
and services including professional and consulting services. In addition, the District
has established internal procedures and guidelines to meet these purchasing
requirements, to standardize purchasing procedures and to provide for levels of
purchase authority.
The District's purchasing policy is part of Title 3 of the District Code. In 2008, the
Board held workshops on March 19, April 2, May 7 and May 21 to review proposed
changes to Title 3 including Chapter 3.08 Purchasing. On July 2, 2008 the Board
approved revisions to Title 3. On February 18, 2009 a workshop was held to discuss
additional changes to Chapter 3.08 Purchasing. On March 4, 2009 the recommended
changes were approved.
3. NEW INFORMATION
Attached are two documents. The first document is a summary of the purchasing
procedures taken from Chapter 3.08 of the District Code. The second document is a
copy of Chapter 3.08 Purchasing.
4. FISCAL IMPACT
There is no fiscal impact with this workshop item.
5. RECOMMENDATION
Review this report and provide comment.
CJ
Mary Cha an �Mae . Holley
Administrative Services Manager General Manager
ATTACHMENT 1
SUMMARY OF CHAPTER 3.08 PURCHASING
Levels of purchase authority: 3 Tiers
• All purchases greater than $15,000 must be approved by the Board of Directors.
• Purchases greater than $10,000 and less than $15,000 must be approved by the General Manager
• Purchases less than $10,000 must be approved by Department Heads
General Guidelines:
• Staff notification to Board of going to bid or issuing a request for proposal
• Bid items and requests for proposals will at a minimum be published in a local newspaper of general
circulation and will be posted on the District's website
• Bids are publicly opened and read at the date, time and location specified in the public notice
Types of purchases:
• Commodities or Equipment
■ Staff follows Public Contract Code for purchases greater than $15,000
■ Competitive bid procedures for purchases greater than $15,000 require Board approval;
specifications will be prepared
■ Purchases greater than $10,000 and less than $15,000—staff obtains 3 informal telephone
quotes in writing and presents to General Manager for approval
■ Purchases less than $10,000— staff must consider price, terms and delivery when authorizing
these purchases
■ Market basket approach for multiple small priced items; if greater than $15,000, purchase
requires Board approval
■ Sole source purchases for goods & equipment that are proprietary in nature; if greater than
$15,000, purchase requires Board approval
• Service contracts
■ Competitive bid procedures for charges greater than $15,000 require Board approval; plans
and/or specifications are prepared
■ Charges less than $15,000—staff obtains 3 informal telephone quotes in writing and presents
to General Manager for approval
■ Sole source charges for services that are proprietary in nature; if greater than $15,000,
authorization requires Board approval
■ General manager may renegotiate and/or renew contracts upon their expiration
• Agreements for special services
■ Can include professional services,payroll services or administrative services
■ Charges greater than $15,000 require Board approval
■ Charges less than $15,000 require General Manager approval
■ A plan for the special service to be performed is developed for review
■ If formal proposals are recommended, staff will follow the District's Request for Proposal
(RFP)process
1
ATTACHMENT 1 Cont'd
• Joint purchasing with the State of California or other Public Agency
■ District may purchase materials, equipment, supplies, information technology products and
services through the State of California procurement program and jointly with other public
agencies
■ Public Contract Code Section 10324 provides the guidelines that must by followed
■ The District must approve the specifications
■ If the cost is greater than $15,000, the purchase must be approved by the Board of Directors
■ State or public agency must have solicited or advertised for bids in a manner that complies
with the District's competitive bidding requirements
■ The price must be lower than the District could obtain through its bidding process
■ The District can purchase items less than $15,000 if it is in its best interest
• Agreements for consulting services
■ Request for Proposal (RFP) is created which includes the scope of work, a general
description of evaluation criteria to be used in reviewing the proposals.
■ The weighting of the specific evaluation criteria is included in the RFP
■ The RFP requires a separate Technical Proposal and a Cost Proposal in separate envelopes
■ Advertising of RFP includes a local newspaper, the District website, known consultants who
perform the required services and if appropriate the A/E Consultants Information Network
■ A staff committee is created to review the proposals; the makeup of the committee is
determined by the General Manager and the Department Manager seeking the consulting
services
■ The staff committee meet to review the technical proposals and then the cost proposals; they
will then develop a short list of consultants to be interviewed; if a particular consultant is
clearly superior, the committee may recommend to the General Manager that interviews are
not necessary
■ The staff committee develops a proposed outline and a list of any questions to be posed to the
short listed consultants
■ After the interviews, the staff committee prepares a recommendation of a consultant to the
Board for approval
■ The committee's recommendation is based upon the individual consultant's weighted scoring
and their overall proposed cost
Other purchasing policy provisions:
• Change orders
■ Change orders are due to a change in the plans and specifications or the scope of work that
are not anticipated or planned during the design and specification phase of the project and
occur after a contract is signed
■ Change orders greater than $15,000 are approved by the Board
■ Generally change orders are approved at regular or special Board meetings although there are
provisions for the General Manager's approval in certain circumstances that are later
approved by the Board
■ In the event the Board pre-approves a change order, the General Manager will follow a
specified procedure to inform the Board and subsequently obtain the Board's approval
2
ATTACHMENT 1 Cont'd
• Contractor insurance requirements
■ Contractors and service providers performing work for the District must maintain appropriate
insurance naming the District as an additional insured
■ The insurance requirement must include comprehensive general liability including coverage
for bodily injury, property damage,products-completed operations and may include
automobile liability, workers compensation and errors and omissions coverage where
applicable
■ The minimum amount of insurance shall be $2,000,000 per occurrence and $4,000,000 in the
aggregate
■ The General Manager shall consult with the insurance broker of record or independent risk
manager on insurance requirements for contracts that exceed $10,000 or contracts that
warrant more than the minimum insurance
■ On contracts that require Board approval, the General Manager will recommend insurance
requirements to the Board
• Procurement authorization during an emergency
■ District policy includes a provision defining the General Managers responsibility to take
immediate action to protect employees, customers and District property during an emergency
■ The policy requires the General Manager to report any and all actions taken to deal with the
emergency to the Board within 48 hours
■ The policy provides for a procedure to follow in the event the General Manager takes any
action that would have otherwise required competitive bidding
3
Attachment 2
CHAPTER 3.08 (3/4/09, Res 2009-10)
PURCHASING
Sections:
3.08.000 Notification to Board of Directors
3.08.010 Bid Procedure for Purchase of Commodities or Equipment Over
$15,000
3.08.020 Procedure for Purchase of Commodities or Equipment Under
$15,000
3.08.030 Bid Procedure for Issuance of Service Contracts Over$15,000
3.08.040 Procedure of Issuance of Service Contracts Under $15,000
3.08.050 Procedure for Entering into an Agreement for Special Services
3.08.060 Joint Purchasing with the State and Other Public Agencies
3.08.070 Process and Procedure for Retention of Consulting Services
3.08.080 Change Orders
3.08.090 Contractor Insurance Requirements
3.08.100 Procurement Authorization During an Emergency
3.08.000 Notification to Board — Prior to or concurrent with going to bid or issuing an RFP,
staff will notify the Board of Directors.
3.08.010 Bid Procedure for Purchase of Commodities or Equipment Over$15,000 -Prior
to issuing a purchase order for the purchase of any commodity or equipment, the dollar value
of which is fifteen thousand dollars ($15,000) or greater, the provisions of the Public Contract
Code shall be followed, as more fully described in the following sections.
3.08.010.1 When a Department Manager or the authorized Buyer/Clerk determines that there
is a need to issue a purchase order, the amount of which is fifteen thousand dollars($15,000)
or greater, he/she shall notify the General Manager by memorandum which states the purpose
of the purchase, the budget or work order account numberto be charged and the specification
of the item or items to be purchased.
3.08.010.2 The General Manager shall review the memorandum and, if he/she approves the
request, shall cause a public notice to be published in a local newspaper of general circulation
requesting interested parties to submit sealed bids. The bids shall be publicly opened and read
at the date and time and in the place specified in the public notice. The notice will also be
posted on the District's website.
3.08.010.3 After the bids have been opened, the General Manager shall submit the matter to
the Board of Directors with a recommendation regarding award of the purchase contract.
3.08.010.4 When calling for bids on equipment available locally, the public notice shall be a
small display ad in a local newspaper of general circulation. The notice will also be posted on
the District's website.
3.08.010.5 The General Manager shall establish procedures to properly manage the process of
notifying bidders of the results of the purchase and to implement the decision of the Board.
Title 3 Page 1
3.08.010.6 Market Basket Purchase Approach—For vendors from whom multiple items are
most likely to be bought, a "market basket" approach may be used to select the most
competitive vendor. This approach compares the aggregate cost for anticipated quantities of
items among vendors; the basis for selection is the lowest market basket cost. Should the total
anticipated purchases exceed $15,000, approval will be obtained by the Board.
3.08.010.76 Sole Source Vendors — Certain vendors provide goods and equipment that are
proprietary in nature such as certain utilities. For purchases that exceed $15,000, approval will
be obtained by the Board.
3.08.020 Procedure for Purchase of Commodities or Equipment Under$15,000 - Prior to
issuing a purchase order for the purchase of any commodity or equipment, with a value which
exceeds ten thousand dollars($10,000), but is less than fifteen thousand dollars($15,000),the
following procedures shall be followed:
3.08.020.1 The General Manager, a Department Manager or the authorized Buyer/Clerk is
authorized to issue a purchase order as defined in Section 3.08.020 after having first secured
three informal telephone quotes recorded in writing. In securing the quotes, the vendors must
be asked to state any price discount and any payment discount terms that the vendor will offer
the District. In the event that three quotes cannot be obtained, the purchaser shall provide the
General Manager with a written explanation and receive the General Manager's approval prior
to issuing the purchase order.
3.08.020.2 The purchase order shall be issued to the lowest responsive vendor taking into
consideration price and payment discount terms and delivery schedule.
3.08.020.3 Purchase orders for the purchase of commodities or equipment, with a value of ten
thousand dollars ($10,000) or less, may be issued by the General Manager, any Department
Head or the authorized Buyer/Clerk from any approved vendor after considering price, terms
and delivery schedule.
3.08.020.4 Should overruns or change orders expect to exceed authority of the party issuing
the purchase order, the next higher level of authority shall be notified for their approval to
continue.
3.08.030 Bid Procedure for Issuance of Service Contracts Over$15,000- Prior to entering
into a contract for services, with a value exceeding fifteen thousand dollars ($15,000), the
following procedures shall be followed:
3.08.030.1 The term "services" includes, but is not limited to, construction, maintenance or
repair of District facilities, but does not include professional services such as legal, engineering,
architectural, landscape architecture, land surveying, construction project management,
accounting, financial, economic, energy advisory, information technology, environmental,
payroll services and administrative services as included within California Government Code
Sections 4525, 4526 and 53060.
3.08.030.2 When a Department Manager or the authorized Buyer/Clerk determines that there
is a need to issue a contract for a service to be performed the dollar amount of which is fifteen
Title 3 Page 2
thousand dollars ($15,000) or greater, he/she shall notify the General Manager by
memorandum which states the purpose of the service, the budget or work order account
number to be charged and the plan and/or specification of the service to be performed.
3.08.030.3 The General Manager shall review the memorandum and, subject to the provisions
of Section 3.08.030.4, if he/she approves of the service, shall cause a public notice to be
published in a local newspaper of general circulation requesting interested parties to submit
sealed bids. The bids shall be publicly opened and read at the date,time and location specified
in the public notice. The notice will also be posted on the District's website.
3.08.030.4 If the service is such that plans and/or specifications need to be prepared by a
consultant and the cost of the consulting service is fifteen thousand dollars ($15,000) or
greater, the General Manager shall submit the matter to the Board of Directors for approval
before authorizing the consultant to proceed.
3.08.030.5 If the service to be contracted is of a nature that will likely attract bids from local
service providers, the public notice shall be in small display ad form in a local newspaper of
general circulation. In addition, advertisements or notices may be made in appropriate trade
journals and depending on the scope of the project, copies of bid documents will be sent to
local plan room libraries. If the project is not likely to attract local bidders, the ad is to be placed
only in the public notice section of the newspaper and in appropriate trade journals. In either
case, the notice will be posted on the District's website.
3.08.030.6 After the bids have been opened, the General Manager shall submit the matter to
the Board of Directors for approval with a recommendation regarding award of the service
contract. This recommendation will include the bid award amount and a not to exceed amount
for change orders to be authorized by the General Manager.
3.08.030.7 The General Manager shall establish procedures to properly manage the process of
notifying bidders of the results of the award and to implement the decision of the Board.
3.08.030.8 Sole Source Vendors — Certain vendors provide services that are proprietary in
nature such as utilities. For purchases that exceed $15,000, approval will be obtained by the
Board.
3.08.040 Procedure for Issuance of Service Contracts Under$15,000-Priorto issuance of
a contract for a service with a value less than fifteen thousand dollars ($15,000), the following
steps shall be followed:
3.08.040.1 The General Manager shall cause plans and/or specifications to be prepared.
3.08.040.2 Three informal telephone quotes shall be secured in writing. In securing quotes,the
contractor shall be asked to state any price or payment discounts and a completion date.
3.08.040.3 The contract shall be awarded by the General Manager to the lowest responsive
service provider taking into consideration price and completion date.
3.08.040.4 The General Manager may renegotiate and/or renew contracts upon their
Title 3 Page 3
expiration.
3.08.040.5 Should overruns or change orders expect to cause the service contract to become
$15,000 or greater, the General Manager shall notify the Board of Directors for its approval to
continue.
3.08.050 Procedure for Entering into an Agreement for Special Services-Priorto entering
into an agreement for special services, the following procedures shall be followed:
3.08.050.1 The term "special services" includes, but is not limited to professional services, such
as legal, engineering, architectural, landscape architecture, land surveying, construction project
management, accounting, financial, economic, energy advisory, information technology,
environmental, payroll services and administrative services, as included within California
Government Code Sections 4525, 4526 and 53060.
3.08.050.2 When a Department Manager determines that there is a need to issue an
agreement for special services to be performed, he/she shall notify the General Manager by
memorandum which states the purpose of the special services, the budget or work order
account number to be charged and the plan of the special services to be performed.
3.08.050.3 The General Manager shall review the memorandum and if he/she approves the
special services, shall determine whether to enter into the agreement for special services with
or without seeking proposals from potential special service providers.
3.08.050.4 If the General Manager determines that no proposals are necessary, then he/she
may enter into an agreement for the special services up to his/her Board authorized spending
limit. Should the amount exceed the General Manager's spending limit, approval to enter into
an agreement will be brought to the Board of Directors for their consideration.
3.08.050.5 If the General Manager determines that proposals are necessary,then he/she shall
follow the procedures set forth in 3.08.070.3 through 3.08.070.13 for preparing and issuing a
Request for Proposals (RFP) and reviewing proposals.
3.08.060 Joint Purchasing with the State of California and Other Public Agencies - The
District may purchase materials, equipment, supplies, information technology products and
services through the State of California procurement program and jointly with other public
agencies in accordance with the following procedures.
3.08.060.1 Notwithstanding any other provision of this Chapter, the District may purchase
materials, equipment or supplies, other than printed material, from the State of California
through its procurement program under Public Contract Code Section 10324 and jointly with
other public agencies, provided that:
3.08.060.1(A)The District approves specifications for any purchase of materials, equipment or
supplies, information technology products and services;
3.08.060.1(B) The cost of such items is fifteen thousand dollars ($15,000) or more and the
purchase is approved by the Board of Directors;
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3.08.060.1(C)The State or public agency has solicited or advertised forbids in a mannerwhich
complies with the competitive bidding requirements applicable to the District; and
3.08.060.1(D)The State or public agency purchases such items at a price reasonably expected
to be lower than the District can obtain through its purchasing procedures.
3.08.060.2 The District shall reimburse the State or other public agency for any charge made to
the District for purchasing services.
3.08.060.3 Notwithstanding any other provisions of this Chapter, the District may purchase
materials, equipment, supplies, information technology products, programs and services other
than printed material, from the State of California through its procurement program, or jointly
with other public agencies, when the cost of such items is less than fifteen thousand dollars
($15,000) when the District determines that it is in its best interests to do so.
3.08.070 Process and Procedure for Retention of Consulting Services
3.08.070.1 Department Manager determines need for outside consulting services.
3.08.070.2 Department Manager discusses need for consultant with the General Manager
(GM).
3.08.070.3 Upon the General Manager approval, the Department Manager and departmental
staff create a draft Request for Proposals (RFP)for review by the General Manager. The draft
RFP shall include a proposed scope of work and general description of evaluation criteria to be
used in reviewing the proposals. The weighting of the specific evaluation criteria shall be
included in the RFP. The RFP shall require a separate Technical Proposal and a Cost
Proposal sealed in separate envelopes.
3.08.070.4 The Contracts Administrative Clerk (CAC) shall begin advertising the RFP. A
notice of the RFP shall be mailed to consultants known to perform the required services and
when appropriate to the A/E Consultants Information Network. A notice of the RFP shall also
be published in a local newspaper of general circulation and shall be posted on the District's
website.
3.08.070.5 A staff committee shall be created to review the proposals. The committee shall
include staff from at least two separate Departments(Electric,Water,Administrative Services).
The exact makeup of the committee shall be determined by the GM and Department Manager
seeking the consulting services.
3.08.070.6 The GM and Department Manager shall finalize the proposal evaluation criteria and
the weighting to be given to each component.
3.08.070.7 After receiving proposals, they shall be held in the custody of the CAC. The CAC
shall distribute copies of all Technical Proposals to the staff committee members for individual
review.
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3.08.070.8 The staff committee shall then hold a meeting to discuss the various proposals and
to rank the consultants based upon demonstrated competence, professional qualifications and
technical merit using the approved evaluation criteria.
3.08.070.9 At the same meeting, after completion of the technical rankings, the Cost
Proposals shall be opened and reviewed by the staff committee members. This review shall
ensure that the man hours, hourly rates, services and indirect costs given in the Cost Proposal
correspond to the level of effort described in the Technical Proposal and to the level of effort
expected by the District to perform the anticipated work.
3.08.070.10 The staff committee shall meet to discuss both the Technical and Cost Proposals
and determine a short list of consultants to be interviewed by the staff committee.
3.08.070.11 After final review of the proposals, the staff committee may determine that a given
consultant is clearly superior to the other consultants and may recommend to the GM that
interviews are not necessary. The staff committee may also determine that the proposed scope
of work or the expected cost is such that conducting interviews will not yield significant
information for the staff committee to consider and similarly recommend to the GM that
interviews are not necessary.
3.08.070.12 When interviews are to be conducted, the CAC shall contact the short-listed
consultants and schedule interviews. The date, time and duration of the interviews shall be
determined by the Department Manager in conjunction with the staff committee. The staff
committee shall also create a proposed outline and list of any questions to be posed to the
short listed consultants.
3.08.070.13 After completion of the interviews, the staff committee shall determine a
recommended consultant for presentation to the Board of Directors. This recommendation
shall be based upon the individual consultant's weighted scoring and their overall proposed
cost.
3.08.070.14 The Department Manager shall prepare a memorandum and appropriate
documentation for presentation to the Board. The memorandum shall summarize the following:
• Work to be performed by the Consultant.
• Number of proposals received.
• Ranking of consultants on a technical basis.
• Recommended Consultant and expected cost thereof.
• If the recommended consultant is not the Number 1 ranked firm on technical merit, the
memorandum shall describe the rationale used to develop the recommendation.
3.08.080 Change Orders -The District cannot afford to maintain a large enough construction
crew or all types of service related skills to be able to undertake all projects and services in-
house. Therefore, it relies on contractors and service providers to perform work. These
contractors and service providers perform work in accordance with plans and specifications and
based on a fixed price contract.
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There are occasionally circumstances encountered after a contractor or service provider has
begun work that requires a change in the plans and specifications or scope of work and result
in a change in the contract price. These changes are generally matters that could not be
anticipated nor planned during the design and specification phase of the project.
The contract change order is the procedure whereby plans and specifications or scope of work
and contract price can be changed after the contract is executed and work has commenced.
The Board of Directors authorizes the execution of contract change orders when the total cost
of the change orders will be $15,000 or greater.
Most contract change orders are such that their consideration by the Board can wait for a
regular Board meeting. However, under certain circumstances it is to the District's benefit to
permit the General Manager to authorize the Department Head to proceed with change order
work or to request a special board meeting to consider the matter.
Work can proceed on a contract change order prior to being reviewed by the Board of Directors
under the following circumstances:
3.08.080.1 When a delay in making the decision to change the contract would impose an
unreasonable financial burden on the District.
3.08.080.2 When the need for the change is so compelling that to proceed with the project as
originally planned is impossible or would be financially burdensome on the District.
3.08.080.3 When the amount of the change order price is less than 5% of the original
approved contract price.
3.08.080.4 At the time of award of a contract, the Board may pre-approve change order
contingencies up to a defined percentage of the contract or a defined dollar amount. Change
order contingency authority which has been approved by the Board,will be administered bythe
General Manager up to the pre-approved limit.
3.08.080.5 The exercise of this prerogative should be done with discretion and in the following
manner:
3.08.080.5(A) A memorandum should be prepared setting forth the precise circumstances
justifying the change in plans and specifications or scope of work and should justify the change
in contract price.
3.08.080.5(B) The memorandum should be signed by the Department Head and General
Manager and forwarded within 48 hours to each Director.
3.08.080.5(C) A contract change order should be prepared for consideration by the Board of
Directors at its next regular meeting or at a special meeting if one is called.
3.08.090 Contractor Insurance Requirements - It is the policy of the District to require
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contractors and service providers performing work for the District to maintain appropriate
insurance naming the District as an additional insured.
3.08.090.1 The form of insurance shall be broad form comprehensive general liability which
includes coverage for bodily injury, property damage, and products-completed operations;
automobile liability where applicable; workers compensation. Additionally, service providers
may be required to include errors and omissions coverage.
3.08.090.2 The minimum amount of insurance shall be $2,000,000 per occurrence and
$4,000,000 in the aggregate. The General Manager shall consult with the insurance broker of
record and/or an independent risk manager for advice on the insurance requirements for
contracts that exceed $10,000, or that pose risk that, in the judgment of the General Manager,
warrant more than the minimum insurance.
3.08.090.3 The General Manager shall, after consulting with the insurance broker of record
and/or an independent risk manager, specify insurance requirements in contracts he/she is
authorized to let; or, in the case of contracts that must be let by Board action, the General
Manager shall, after consulting with the insurance broker of record and/or an independent risk
manager, recommend insurance requirements to the Board of Directors.
3.08.100 Procurement Authorization During an Emergency
3.08.100.1 An "emergency" is a situation which poses an immediate risk to health, life,
property or environment. Most emergencies require urgent intervention to prevent worsening of
the situation. It is the General Manager's responsibility to take immediate action to protect
employees, customers and District property during an emergency.
3.08.100.2 During an emergency, the General Manager is authorized to repair or replace a
public facility, take any directly related and immediate action required by that emergency, and
procure the necessary equipment, services, and supplies for those purposes, without
immediate Board approval and without giving notice for bids to let contracts.
3.08.100.3 The General Manager will report to the Board of Directors within 48 hours any
and all actions taken to deal with the emergency.
3.08.100.4 If the General Manager takes any action to manage the emergency that would
otherwise require competitive bidding, the Board shall initially review the emergency action
taken not later than seven days after the action or, at its next regularly scheduled meeting if
that meeting will occur not later than 14 days after the action, and at least at every regularly
scheduled meeting thereafter until the action is terminated, to determine, by a four-fifths vote,
that there is a need to continue the action, unless the General Manager has terminated that
action prior to the Board reviewing the status of the emergency.
3.08.100.5 It is the District's intent to comply with all sections of the Public Contract Code
Section 22050 in managing emergency situations.
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