City of Culver City, California
Agenda Item Report
Meeting Date: 07/26/2010 Item Number: A-5
CITY COUNCIL AGENDA ITEM: Introduction of an Ordinance Amending Chapter
3.07, Finance and Revenue, of the Culver City Municipal Code, by Repealing
Sections 3.07.005 through 3.07.090, Purchasing System, and Replacing those
Sections with New Sections 3.07.005 through 3.07.095, Relating to the City’s
Purchasing Policies for Supplies, Equipment and Services and the Bid Process for
Public Works Projects.
Contact Person/Dept.: Jeff Muir/Finance Phone Number: (310) 253-5865
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Public Hearing: [] Action Item: [X] Attachments: [X]
Commission Action Required: Yes [] No [X] Date: _______________
Public Notification: (E-Mail) Meetings and Agendas – City Council (07/21/10)
Department Approval:
Jeff Muir (06/30/10)
City Attorney Approval:
Carol Schwab (by H. Baker) (07/21/10)
Chief Financial Officer Approval:
Jeff Muir (06/30/10)
City Manager Approval:
P. Lamont Ewell (07/22/10)
RECOMMENDATION
Staff recommends the City Council introduce an Ordinance amending Chapter 3.07,
Finance and Revenue, of the Culver City Municipal Code, by repealing Sections
3.07.005 through 3.07.090, Purchasing System, and Replacing those Sections with
new Sections 3.07.005 through 3.07.095, relating to the City’s purchasing policies
for supplies, equipment and services and the bid process for public works projects.
BACKGROUND
Prior to the hiring of a Chief Financial Officer (CFO), the City Manager’s Office had
been examining the current practices and procedures of the City as they related to
purchasing, bids and Requests for Proposals. With the hiring of a CFO in December
2007, the City Manager delegated to the CFO the task of performing a
comprehensive review of the City’s purchasing policies and procedures, including a
comparison with other similar cities, and bringing back a comprehensive
recommendation for City Council consideration.
The goal of the City's Finance Department-Purchasing Division is to obtain
appropriate supplies, equipment and services for the City, at the best value, and in a
timely manner, while maintaining fairness to vendors, and abiding by applicable
laws.
City of Culver City, California
Agenda Item Report
City Charter Section 1605 provides: “The City Council shall establish procedures for
the purchasing, storing and distribution of all supplies, materials and equipment
required by any City department. The City Manager shall direct the implementation
of such procedures for all City departments.” These procedures are established
primarily through Culver City Municipal Code (CCMC) Sections 3.07.005 – 3.07.090.
These provisions of the CCMC regarding purchasing policies and requirements have
not been substantially changed in over twenty years. The dollar limit requirements
before items must be approved by City Council have not been adjusted since 1987,
during which time the Consumer Price Index has risen over 90%.
In addition, City Charter Section 1604 provides: “The City Council shall, from time
to time, establish, by ordinance, procedures to ensure the integrity of awarding all
contracts for the construction or improvement of public works, buildings, streets,
drains, sewers, utilities, parks and playgrounds.”
Significant staff time is spent in purchasing needed supplies and services (including
public works contracts). A good percentage of this time is spent preparing City
Council agenda items for routine purchases or contracts. The City is experiencing
difficult financial times, as well as fewer employees to carry out routine work
assignments. For these reasons, we are examining opportunities to work smarter
and more efficiently. Given the recent changes in the structure of the City, such as
moving to a City Council – City Manager form of government, and the creation of the
position of Chief Financial Officer to lead a restructured Finance Department, it is
recommended that the City Council consider modernization to the CCMC as it
relates to purchasing and the bid process for public works projects.
DISCUSSION
Staff has researched purchasing guidelines from a number of California cities,
including our Westside neighbors. Through a survey, we find that Culver City’s
dollar thresholds that require City Council action are well below most cities. For
Santa Monica, the City Manager has authority for the purchase of materials or
services up to $100,000, while in Beverly Hills that amount is $50,000. In Culver
City, the City Manager can sign contracts for services up to $10,000 and purchase
materials up to $20,000. This requires purchases of goods or services considered
routine in other cities which have already been approved by the City Council through
the budget process to come back before City Council. This can add weeks or
months to the process.
The proposed Ordinance reorganizes the CCMC’s purchasing provisions so it is
more understandable for staff and the public. Further, it is proposed to add new
provisions that provide for efficiency in purchasing or reflect current City practice. In
addition, the proposed Ordinance establishes a uniform level of authority for the City
Manager of $30,000 in approving contracts or purchasing supplies/equipment. City of Culver City, California
Agenda Item Report
Based on agenda items during Fiscal Year 2008/2009, there were approximately 45
items that would not have required secondary City Council approval under the
proposed level of authority for the City Manager.
In addition, as part of the implementation of the new City Charter, the proposed
Ordinance adds procedures for the bid process for public works projects that had
previously been contained in the old Charter, prior to the new Charter being
approved by the voters in 2006.
This item was discussed with the Budget & Finance Subcommittee on August 10,
2009 and September 14, 2009, with both members recommending consideration of
staff’s recommendation by the full City Council. With the transition that has gone on
with the City Manager position and the brief vacancy of the Chief Financial Officer
position, the item was delayed for several months.
Proposed Ordinance
For a number of months, the Finance Department has been analyzing ways to
streamline the purchasing and contracting process. As part of this effort, staff
critically reviewed the CCMC’s current purchasing provisions, which were last
substantively amended in 1987. Staff found that the purchasing sections of the
CCMC could be better organized to provide a clearer roadmap for staff members
who work with the purchasing procedures on a frequent basis as well as those
persons and entities interested in providing services and goods to the City.
The proposed ordinance reorganizes the CCMC so that there is one article that sets
forth the general provisions, one article that describes the purchasing procedures for
supplies, equipment and services, one article that describes the bid process for
public works projects, and one that deals with the disposition of surplus property. In
addition, staff reviewed areas in which the purchasing sections could be
strengthened to allow for greater efficiency and effectiveness in the purchase of
goods and services.
Several new provisions were added to reduce costs, save time, and increase
efficiency, while maintaining the core principles of competitive bidding and obtaining
products at the lowest possible price. The recommended changes are summarized
below:
Purchases of supplies, materials, equipment or services
• Formal contract procedures have been defined to include the purchase of
supplies, materials, equipment and services over $30,000. These items would
require formal sealed written competitive bids submitted to the City Clerk’s Office,
which bids would be presented to the City Council for consideration of award of
contract.
City of Culver City, California
Agenda Item Report
• Informal contract procedures are established for purchases of $30,000 and under
as described, which contracts may be approved by the City Manager. If the
proposed Ordinance is adopted, the City Manager shall issue an administrative
policy, as authorized by the proposed Ordinance, which will provide: 1) purchases
of $2,500 and under may be approved by Department Heads with oral or written
quotations encouraged; 2) purchases between $2,500 and $7,500 may be approved
by the Purchasing Officer, with either verbal or written quotations being acceptable;
and 3) purchases between $7,500 and $30,000 must be approved by the City
Manager, also with either verbal or written quotations being acceptable.
• Similar to the existing CCMC provisions, the proposed Ordinance provides for
exceptions to the bidding process in cases where the purchase of goods or services
does not lend itself to competitive bidding. For example, but not limited to, (i) the
purchase of memberships in professional organizations, to attend professional
meetings and conventions; (ii) the purchase of supplies or services that are
proprietary items of the original equipment manufacturer (sole source); (iii) for the
purchase of supplies, equipment or services from another governmental entity; (iv) in
an emergency situation; (v) if the item is intended for resale by the City; or (vii)
contracts for professional and personal services (including, but not limited to,
attorneys, architects, engineers, computer consultants, janitorial services etc.) As
required by the proposed Ordinance, competitive quotations for professional and
personal services will still be sought whenever practical, as determined by the City
Manager.
• A modernized provision is proposed to clarify the City’s ability to take advantage
of the pricing provided to other public entities or City departments who have already
utilized a competitive bid process. In such cases, the City could obtain the goods for
the same or better price and not have to expend the time and cost to go through its
own bid process.
• From time to time, there will be change orders on a particular purchase or
contract. In such cases, the change order needs to be acted upon in a quick
manner to avoid delay in the project and/or to take advantage of favorable pricing.
Under current procedures, if the original contract was approved by the City Council,
the change order must also be approved by the City Council. In order to provide
efficiency in handling change orders, the proposed ordinance allows the City
Manager to approve a change order as long as the amount of the change order does
not exceed his/her purchasing authority. For example, if the City Council approves a
$300,000 contract, the City Manager can approve a change order in an amount not
to exceed $30,000. This amendment would then be included on the next quarterly
report to City Council for items approved over $7,500.
• For multi-year agreements, the City Manager may approve those in which the
annual value (by fiscal year) does not exceed the City Manager’s purchasing
authority. If the same supplier, contractor or consultant has been used for five City of Culver City, California
Agenda Item Report
years, bidding shall be undertaken as required under the formal or informal contract
procedures, depending on the annual value of the contract or purchase.
• The proposed Ordinance still contains a provision to provide a preference to local
businesses when the difference in bids is between zero (tie bids) and the amount of
the current sales tax benefit the City would receive from the local sales tax, providing
certain conditions are met.
Public Works Contracts
• Public Works Projects of $30,000 or less may utilize the informal contract
procedures.
• Public Works Projects of more than $30,000 but less than $75,000, shall utilize
the formal contract procedures (requiring competitive sealed bidding). Bid plans and
working details are approved by the Public Works Director/City Engineer, and
contracts are approved by the City Manager. Projects not included in the adopted
budget must be approved by City Council prior to any bid solicitations.
• Public Works Projects in excess of $75,000 shall have bid plans and working
details adopted by the City Council prior to the formal solicitation of competitive
sealed bids.
Should the City Council introduce and ultimately adopt these proposals, staff will
make a presentation during the budget process next year regarding our experiences
with the new system.
FISCAL IMPACT
Implementation of these proposals is expected to result in significant savings in staff
time and increased efficiency. The exact amount of these savings is difficult to
quantify at this time.
ATTACHMENTS:
1. Proposed Ordinance
2. Current CCMC Sections 3.07.005 through 3.07.090
MOTION:
That the City Council:
City of Culver City, California
Agenda Item Report
Introduce an Ordinance amending Chapter 3.07, Finance and Revenue, of the
Culver City Municipal Code, by repealing Sections 3.07.005 through 3.07.090,
Purchasing System, and Replacing those Sections with new Sections 3.07.005
through 3.07.095, relating to the City’s purchasing policies for supplies,
equipment and services and the bid process for public works projects.
MEETING DATE: July 26, 2010
AGENDA ITEM : Introduction of an Ordinance Amending Chapter 3.07,
Finance and Revenue, of the Culver City Municipal
Code, by Repealing Sections 3.07.005 through 3.07.090,
Purchasing System, and Replacing those Sections with
New Sections 3.07.005 through 3.07.095, Relating to the
City’s Purchasing Policies for Supplies, Equipment and
Services and the Bid Process for Public Works
Projects.
ATTACHMENTS
Pages
1. Proposed Ordinance
2. Current CCMC Sections 3.07.005 through 3.07.090
1 – 17
18 - 25
Page 1 of 25Page 2 of 25Page 3 of 25Page 4 of 25Page 5 of 25Page 6 of 25Page 7 of 25Page 8 of 25Page 9 of 25Page 10 of 25Page 11 of 25Page 12 of 25Page 13 of 25Page 14 of 25Page 15 of 25Page 16 of 25Page 17 of 25CHAPTER 3.07: FINANCE AND
REVENUE
Section
Purchasing System
3.07.005 Purchasing officer; duties
3.07.010 Purchase order; encumbrance of funds
3.07.015 Formal bidding procedure
3.07.020 Soliciting bids
3.07.025 Bidder's security and performance bonds
3.07.030 Bid opening
3.07.035 Rejection or waiver of bid requirements; rejection of bids
3.07.040 Award of bids
3.07.045 Equal bids
3.07.050 Awards of contracts to businesses located in the city
3.07.055 Open market procedures
3.07.060 Emergency purchases
3.07.065 Exemption from formal competitive bidding
3.07.070 Personal and professional services excluded
3.07.075 Authority of City Manager
3.07.080 Compliance with federal regulations
3.07.085 Disposal of supplies and equipment
3.07.090 Employee interest prohibited
Cross-reference:
Page 18 of 25 Benefit assessment district, see Ch. 15.01
Claim procedures, see §§ 3.10.005 et seq.
Finance and Judiciary Committee, see § 3.01.020
Financial and fiscal matters, see Charter §§ 1600 et seq.
PURCHASING SYSTEM
§ 3.07.005 PURCHASING OFFICER; DUTIES.
A. For the purpose of this Subchapter, the term PURCHASING OFFICER shall include
the term “Purchasing Agent” as used in other parts of this Code.
('65 Code, § 2-53)
B. The City Manager, or his/her designee, shall serve as Purchasing Officer and have the
following duties:
1. To negotiate, purchase and contract for supplies, and equipment used by the City, in
accordance with City laws and regulations.
2. To develop and maintain a standardized system for the procurement of supplies,
services and equipment.
3. To encourage open competitive bidding.
4. To advise the City Council on all matters pertaining to purchasing.
5. To determine that bid specifications are adhered to in all respects.
('65 Code, § 2-54) (Ord. No. 87-007 § 2; Ord. No. 2006-009 § 14)
Cross-reference:
Purchasing, see Charter §§ 1604 and 1605
§ 3.07.010 PURCHASE ORDER; ENCUMBRANCE OF FUNDS.
Except in cases of emergency, or if excepted by authorization of the City Manager, all
purchases shall be made by purchase order issued by the Purchasing Officer after the City
Treasurer has certified that there is sufficient unencumbered appropriation balance.
Page 19 of 25('65 Code, § 2-55) (Ord. No. 87-007 § 2; Ord. No. 96-007 § 1 (part); Ord. No. 2006-009 § 22
(part))
§ 3.07.015 FORMAL BIDDING PROCEDURE.
A. Every purchase or contract involving the expenditure for supplies or equipment
exceeding Twenty Thousand Dollars ($20,000.00) shall be by award of formal bid, after giving
of a notice inviting sealed bids in the manner set forth in § 3.07.030.
B. Purchases shall not be divided or split in order to circumvent formal bidding
requirements.
('65 Code, § 2-56) (Ord. No. 87-007 § 2)
§ 3.07.020 SOLICITING BIDS.
A. One or more notices inviting sealed bids shall be published in a newspaper of general
circulation within the City at least ten (10) days prior to the date set for opening of the bids. In
addition, the Purchasing Officer shall solicit sealed bids from all prospective bidders including
those who have requested to be placed on the bidders list.
B. Notices of bids shall include a general description of the articles for which bids are
sought, details on filing bond requirements, and the time, date and location for submitting and
the opening of the bids.
('65 Code, § 2-57) (Ord. No. 87-007 § 2)
§ 3.07.025 BIDDER'S SECURITY AND PERFORMANCE BONDS.
A. A bidder's security may be required in an amount equal to ten percent (10%) of the bid
in the form of either cash, certified or cashier's check or surety bond, if the bond form is
approved by the City Attorney. Each bidder's security is refundable; provided that in the case of
a successful bidder, the bidder's security may be retained if the bidder fails to enter into the
contract resulting from the award of the bid within ten (10) days after notice of award has been
given.
B. A Faithful Performance Bond not exceeding the amount of one hundred percent (100%)
of the bid and a Labor and Materials Bond not exceeding the amount of fifty percent (50%) of
the bid may be required to be filed by a successful bidder prior to entering into any contract
resulting from the award of a bid.
('65 Code, § 2-58) (Ord. No. 87-007 § 2)
§ 3.07.030 BID OPENING.
Page 20 of 25 Sealed bids shall be submitted to the City Clerk and shall be opened in public at the time and
place stated in the notice inviting bids. All bids received shall be available for public inspection
at the time and place of opening, and thereafter, in the Office of the City Clerk.
('65 Code, § 2-59) (Ord. No. 87-007 § 2)
§ 3.07.035 REJECTION OR WAIVER OF BID REQUIREMENTS;
REJECTION OF BIDS.
A. The City Council may waive the formal bid requirement, or authorize the purchases or
contract in the open market if it finds any or all of the following circumstances exist:
1. The City's employees may produce the items better or more economically; or
2. The supplies or equipment are urgently required for the preservation of life, health or
property; or
3. The public interest would best be served by using the open market.
B. The City Council at its discretion may reject any and all bids submitted, or may order re-
bidding.
('65 Code, § 2-60) (Ord. No. 87-007 § 2)
§ 3.07.040 AWARD OF BIDS.
Except as otherwise provided, formal bids shall be awarded by the City Council to the
responsible bidder submitting the best bid.
('65 Code, § 2-61) (Ord. No. 87-007 § 2)
§ 3.07.045 EQUAL BIDS.
Whenever two (2) or more equivalent bids are received, the City Council may choose
whichever of the following options it deems to serve the best interest of the City:
A. Select one (1) bid, giving preference to a business located within Culver City;
B. Reject all bids and re-advertise for bids; or
C. Reject all bids and authorize negotiation of an agreement directly between the City and
one (1) of the equivalent bidders.
('65 Code, § 2-62) (Ord. No. 87-007 § 2)
Page 21 of 25§ 3.07.050 AWARDS OF CONTRACTS TO BUSINESSES LOCATED IN THE
CITY.
The City shall give preference to businesses located in the City (“local businesses”) when
awarding any contract for the purchase of goods when those contracts meet any of the following
criteria:
A. The difference between bids from Culver City businesses and those outside the City is
less than the current sales tax benefit the City would receive from the local sales tax; and
B. The local business will be able to provide goods which are equal in quality and meet all
bid specifications of the City and of other competing bidders; or
C. A reasonable condition of the contract performance is expeditious delivery of goods and
it is reasonably believed that the local business will be able to provide its goods more
expeditiously than a business located outside the City and which complies with Subsection B.
above; or
D. The use of a local business will help further the City's, Los Angeles County's and the
State's goals of improving air quality and relieving traffic congestion by reducing the required
travel distance of vehicles used by a local business, and which complies with Subsection B.
above.
E. Any other reason which would factually justify selection of local businesses based upon
criteria which does not illegally discriminate against outside businesses and which complies with
Subsection B. above.
('65 Code, § 2-62.1) (Ord. No. 92-015 § 1)
§ 3.07.055 OPEN MARKET PROCEDURES.
Any purchase or contracts for supplies or equipment involving an expenditure of Twenty
Thousand Dollars ($20,000.00) or less may be made in the open market without following
formal bidding procedures of this Subchapter. Open market purchases shall be based upon
competitive quotations whenever practical from not less than three (3) contractors. Open market
quotations shall be kept by the Purchasing Officer as a public record. The City Manager shall
develop written policies for purchases up to Twenty Thousand Dollars ($20,000.00).
('65 Code, § 2-63) (Ord. No. 87-007 § 2; Ord. No. 2006-009 § 22 (part))
§ 3.07.060 EMERGENCY PURCHASES.
A. In the event of an emergency seriously affecting the public welfare where the purchase
of essential supplies and equipment are urgently required for the preservation of life, health or
property, or for the immediate continuation of direct City services to the public, the City
Page 22 of 25Manager or Purchasing Officer may procure such items without following formal procedures of
this Subchapter; and
B. In the absence or unavailability of the Purchasing Officer, any department head shall
have like authority, but shall file a written report with the City Manager within ten (10) days
after such emergency purchase.
('65 Code, § 2-64) (Ord. No. 87-007 § 2; Ord. No. 2006-009 § 22 (part))
§ 3.07.065 EXEMPTION FROM FORMAL COMPETITIVE BIDDING.
The City Council may waive the formal competitive bidding procedures of this Subchapter
for the purchase of supplies or equipment which:
A. Can be obtained from only one (1) vendor;
B. Can be purchased through a cooperative purchasing agreement which has been
competitively bid, or through agreements executed with other governmental agencies;
C. Can be purchased by the City from a vendor, who within the past twelve (12) months,
has offered such equipment on the same terms and conditions to the City or another public
agency through the competitive bidding process; provided, that the benefits of such terms and
conditions are verified by informal bid confirmation; or
D. Is a component for equipment or a system of equipment previously acquired by the City,
and is necessary to repair, maintain or improve the City's utilization of the equipment.
('65 Code, § 2-65) (Ord. No. 87-007 § 2)
§ 3.07.070 PERSONAL AND PROFESSIONAL SERVICES EXCLUDED.
A. Except for the provisions of §§ 3.07.075 and 3.07.080, the City may award purchase
orders and contracts in any amount for personal or professional services without complying with
the provisions of this Subchapter; provided that, the purchase order or contract shall be based
upon competitive quotations, whenever practical, as determined by the City Manager from not
less than three (3) vendor contractors.
B. For purposes of this Section, personal services shall include:
1. Any communication, gas, water, electric light and power service or similar utility
service;
2. Insurance, postage, freight and courier service;
3. Travel/hotel accommodations, education and training expense;
Page 23 of 25 4. Subscriptions and memberships;
5. Repair or maintenance service for equipment, machinery or other City-owned
personal property; and
6. Repair and maintenance service for City-owned or occupied real property and
buildings;
7. Rental of real property or equipment and other personal property; and
8. Such other services as the City Council may, by Resolution, specifically direct.
C. For purposes of this Section, professional services shall include:
1. Services of engineers, architects, accountants, attorneys, doctors, and similar
professionals when the City is contracting for the skill, integrity, judgment, and/or special
technical ability of the professional.
2. Such other services as the City Council may, by Resolution, specifically direct.
('65 Code, § 2-66) (Ord. No. 87-007 § 2; Ord. No. 2006-009 § 22 (part))
§ 3.07.075 AUTHORITY OF CITY MANAGER.
A. The City Manager is authorized to approve and execute, on behalf of the City, any
contract in an amount not to exceed Ten Thousand Dollars ($10,000.00) for the services
described in Subsections 3.07.070 B. and C., subject to the provisions of § 3.07.070.
B. The City Manager is authorized to approve and execute on behalf of the City any three
(3) party contract for services described in Subsection A. if the total cost for such services is paid
by a third party, subject to the provisions of § 3.07.070.
('65 Code, § 2-67) (Ord. No. 87-007 § 2; Ord. No. 91-020 § 1; Ord. No. 2006-009 § 22 (part))
§ 3.07.080 COMPLIANCE WITH FEDERAL REGULATIONS.
Notwithstanding any other provision of this Subchapter, for any contract totally or partially
funded by the Federal Government:
A. All applicable Federal Procurement Standards shall be followed; and
B. The following protest procedures shall apply:
1. Any actual or prospective bidder, offeror or contractor may protest any phase of the
solicitation or award of the contract by filing, in writing, within ten (10) days before the bid
opening or within five (5) days after the bid opening, a statement indicating the name and
Page 24 of 25address of the protestor, appropriate identification of the procurement and if the contract has
been awarded, its bid number, a detailed statement of the reasons of the protest and supporting
information to substantiate any protest.
2. Such protest shall be reviewed by the Purchasing Officer, in consultation with the
City Attorney's office, and a recommendation thereon shall be made to the person or body within
the City responsible for making the decision to award the contract.
3. If the decision-maker on the contract is the City Council, the protestor may address
the Council during a public meeting at which the recommendation on the protest is submitted to
the Council for decision.
4. A decision on the protest shall be made by the applicable decision-maker as
expeditiously as possible.
5. A protest not filed in writing within the period set forth in paragraph 1. above, shall
not be considered.
('65 Code, § 2-68) (Ord. No. 89-006 § 1)
§ 3.07.085 DISPOSAL OF SUPPLIES AND EQUIPMENT.
The Purchasing Officer shall have the authority to sell or trade any obsolete, worn out or
surplus items of supplies or equipment which are no longer suitable for City use, in any manner
determined by him/her, except in the following circumstances:
A. When the City Council directs otherwise;
B. If the estimated value of any such item or lot exceeds Five Thousand Dollars
($5,000.00), then the equipment or supplies shall be sold or traded using a bidding procedure
similar to the Formal Bidding procedure set forth in this Subchapter.
('65 Code, § 2-69) (Ord. No. 87-007 § 2)
§ 3.07.090 EMPLOYEE INTEREST PROHIBITED.
No employee of the City shall be financially interested, directly or indirectly, in any purchase
order or contract for furnishing services, supplies or equipment within the purview of this
Subchapter.
('65 Code, § 2-70) (Ord. No. 87-007 § 2)
Page 25 of 25