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HomeMy WebLinkAbout5/18/2005 - STAFF REPORTS (20) CITY COUNCIL MAY 18, 2005 LEGISLATIVE Subject: PROPOSED ORDINANCE MODIFYING THE PROCUREMENT AND CONTRACTING CHAPTER OF THE PALM SPRINGS MUNICIPAL CODE Initiated by: Procurement & Contracting Division SUMMARY: This ordinance will modify sections of the Procurement and Contracting Chapter relating to the form of agreement/contract for acquiring routine, low-risk services. RECOMMENDATION: 11) Waive the reading and text in its entirety and read by title only; and 2) Introduce on first reading Ordinance No. "AN ORDINANCE OF THE CITY OF PALM SPRINGS, CALIFORNIA, AMENDING SECTION 7.01.040 OF THE PALM SPRINGS MUNICIPAL CODE RELATING TO THE DEFINITION OF "CONTRACT" AND "PURCHASE ORDER" AS SUCH TERMS ARE USED IN THE CITY'S PROCUREMENT AND CONTRACTING CODE." STAFF ANALYSIS: In January of 2000, City Council adopted a new procurement ordinance. While portions of the new ordinance have resulted in improvements to acquisition and contracting processes (particularly in the public works arena), other portions of the ordinance have created difficulties that have resulted in a loss in efficiency of operations. Staff has asked the City Attorney to review the ordinance in order to identify opportunities for improvement. While the review is not complete, one modification recommended at this time would greatly benefit staff's ability to process certain types of work in a timely manner. This is especially important at this time as the volume of this work is heaviest at the beginning of the fiscal year. This modification, consisting of a change in how "contract" and "purchase order" are defined in the ordinance, would allow staff, when appropriate and with guidance from the City Attorney, to utilize purchase orders to acquire routine, low risk services. Portions of the ordinance imply that a purchase order might be an appropriate vehicle for acquisition of services. Section 7.06.020 of the Procurement Ordinance, entitled Contract Clauses, identifies types of clauses to be used on contracts and purchase orders for the acquisition of services and construction. The section of the ordinance in which terms are defined, however, precludes such use. For services that are routine Item No. I Be and involve little risk exposure to the City, the current ordinance imposes an enormous burden of paperwork upon staff and service providers/contractors for little gain. A formal city-standard contract is warranted for agreements that are either complex, of long duration, involve substantial expenditures, or contain considerable risk exposure to the City. These agreements would continue to be formulated utilizing a contract services agreement in a form approved by the City Attorney. For services that are routine and involve little risk exposure to the City, however, much time and effort of staff and the service provider's staff is consumed by trying to conform the arrangement to a city-standard agreement requiring (in many cases) notarized signatures of corporate officers on multiple copies of the document. In its Model Procurement Code, the American Bar Association defines a contract as all types of agreements, regardless of what they may be called for the procurement of supplies, services or construction. Under this definition, a purchase order would therefore be a contract. The City's ordinance runs counter to this definition and, in doing so, imposes a barrier to the efficient procurement of routine, low-risk services. Staff conducted an informal survey related how purchase orders are used to acquire services at other agencies. Most agencies, including nearly all cities in the Coachella Valley, allow at least some use of purchase orders for acquisition of services. A copy of the survey results is attached hereto. As previously identified, the current code seriously impairs the City's ability to procure routine, low-risk services. To illustrate this point the following examples are provided: • The City acquires software support services for a variety of programs utilized in City operations which allow City staff to call a help line when necessary, to receive patches for bugs discovered in the software code, and to receive updates. To the firms that provide these services, the form of these service arrangements are generally non-negotiable and many of the rights of the customer (the City) are already defined in the license agreement that City, either by default or by action, agreed to by utilizing the software. Currently, the procurement ordinance would require staff to try to negotiate a city-standard contract services agreement with the firm. • If the City required the repair of vertical blinds amounting to $700, the code would require a contract services agreement. If the proposed modifications are approved by Council, the City would issue a purchase order of sufficient detail to define the Contractor's responsibility, define who the Contractor should coordinate the work with and require evidence of insurance coverage meeting the City's insurance standards. This ordinance amends the definitions of "contract" and "purchase order" for the purpose of recognizing that a purchase order is a "contract" under the Code and that a ..purchase order" can be used to acquire services. Staff and the City Attorney recommend that City Council approve the ordinance modification. It should be noted that this modification will not affect the existing levels of expenditure authority in the ordinance, nor the level at which Council approval is required. FISCAL IMPACT: This ordinance modification will reduce the amount of staff resources required to process requisitions for routine, low-risk services, allowing staff to devote more effort to needs involving greater risk, greater complexity and higher priority. "ll-r6ce R. ohnson David H. Ready, City�A-1 ger Procurement & Contracting Manager Attachment: Proposed Ordinance Informal Survey Results ORDINANCE NO. AN ORDINANCE OF THE CITY OF PALM SPRINGS, CALIFORNIA, AMENDING SECTION 7.01.040 OF THE PALM SPRINGS MUNICIPAL CODE RELATING TO THE DEFINITION OF "CONTRACT" AND "PURCHASE ORDER" AS SUCH TERMS ARE USED IN THE CITY'S PROCUREMENT AND CONTRACTING CODE. Citv Attornev Summary The current provisions of the Palm Springs Municipal Code excludes purchase orders from the term "contract"and limits the use of purchase orders to the procurement of goods and supplies. This ordinance amends the definitions of"contract" and "purchase order" for the purpose of recognizing that a purchase order is a "contract" under the Code and that a "purchase order"can be used to acquire services. The City Council of the City of Palm Springs ordains: Section 1. The terms "Contract" and "Purchase Order" as defined in Section 7.01.030 of the Palm Springs Municipal Code are amended to read: "Contract" means all types of city agreements, regardless of what they may be called, for the procurement of goods, supplies, services, or construction. "Purchase order" means an agreement to procure goods, supplies, or services. Section 2. The Mayor shall sign and the City Clerk shall certify to the passage and adoption of this Ordinance and shall cause the same, or the summary thereof, to be published and posted pursuant to the provisions of law and this Ordinance shall take effect thirty (30) days after passage. PASSED AND ADOPTED THIS DAY OF 2005. AYES: NOES: ABSTAIN: ABSENT: RONALD ODEN, MAYOR POs for Services Survey (Conducted 5-11-05) Coachella Valley Cities NAME OF CITY POLICY -Cathedral City Allow purchase orders for services _ Services under $1500 are paid off an invoice; Services between -Coachella $1500 and $5000 are paid by PO with no contract attached. -Desert Hot Springs Under $5,000 just a purchase order; over $5,000 contract and PO Over $1,000 purchase order or contract, whichever deemed most Indian Wells appropriate; under $1,000 invoice only Indio Less than $1,000 via field PO; over $5,000 purchase order only _La Quinta Anything over$1,000 requires contract Palm Desert Up to $25,000 PO only $500 to $5000 purchase order only; Over$5,000 purchase order Rancho Mirage and contract Other Agencies in California (Reported via CAPPOLIST) NAME OF ENTITY POLICY Purchasing Agent has authority to issue a PO for services up to LA County $100,000. Above that amount requires a formal contract and Board approval. City of Mountain POs for non-professional services. Professional services (doctors, View lawyers, etc) and some specialty services are handled as contracts. _ City of Redding Use POs for services at Purchasing Officer's their discretion. County of Service POs for any amount as long as the labor portion stays below Sacramento $100,000. POS may be used for services up to $50,000. Contracts are used City & County of for services over $50,000. All professional services are written up on _San Francisco a contract Separate contract for all services. For services under $2,000 the _City of Santa Clarita separate contract is all that is required, no PO County of Santa POs used for services up to $15,000. Service agreements over Cruz $15,000 must be approved by Board of Supervisors Can't use POs for services. Only minor items allowable would be County of Shasta incidental services, like rebuilding an engine, where you are not purchasing the labor as a goal but are purchasing the rebuilt engine. POs used for non-professional services and simple maintenance City of Ventura service contracts.