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Report regarding an ordinance amending Section 4.04.040 of Chapter 4.04 of the South San Francisco Municipal Code to permit utilization of cooperative purchasing processes between public agencies for public works projects (Eunejune Kim, Public Works Director)
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RECOMMENDATION
Recommendation
It is recommended that the City Council introduce an ordinance amending Chapter 4.04.040 of the South San Francisco Municipal Code relating to Cooperative and Inter-Governmental Agency Procurement Processes, and waive further reading.
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BACKGROUND/DISCUSSION
The City of South San Francisco (“City”) Municipal Code Chapter 4.04 governs the City’s purchasing processes and sets forth various procedures with which the City must comply to perform public works projects and to acquire goods and services.
In particular, Section 4.04.040 authorizes the City to “piggyback” on other governmental contracts, provided the agency uses a quote or bid process that substantially conforms to state law-mandated procedures and provisions of Chapter 4.04. This provision is derived from California Government Code section 6500 et. seq., which permits California and out-of-state public agencies to jointly exercise any power common to them, including their purchasing powers. However, Section 4.04.040 of the Municipal Code excludes “public projects” as defined by the Uniform Public Construction Cost Accounting Act (Public Contract Code section 22000 et seq.) (“Act”) from being able to piggyback on such contracts.
The Act provides an alternative means for municipalities to streamline public works contract procurements if they choose to adopt the accounting procedures set forth under the Act. The City has adopted these procedures and utilizes the Act’s alternative bidding procedures to perform public works projects under the most current applicable dollar thresholds set by the Act and as may be adjusted by inflation from time to time. The current Municipal Code has only two options of procuring ‘public project” contracts:
1. Projects under the current dollar threshold set by the Act, which is $200,000, can utilize the alternative informal bidding procedure, which requires posting of public notice and bid solicitation.
2. Projects exceeding the current $200,000 threshold are formally bid in compliance with the Public Contract Code, which generally requires public works projects to contain plans and specifications prepared by an engineer, be advertised, follow a formal bid process outlined in the Public Contract Code; with project awarded by Council to the lowest responsive and responsible bidder.
Staff recommends amending Section 4.04.040 to allow public projects to utilize a third option: “piggybacking” on a governmental contract that has been competitively bid utilizing the same or substantially same procedures as those required by the Public Contract Code and the South San Francisco Municipal Code.
In addition, amending the Municipal Code to allow piggybacking in public projects would allow the City to utilize Job Order Contracts (“JOC”) for routine and recurring public projects, increasing efficiency and reducing project costs.
The JOC process is a cooperative purchasing process that the City can utilize, if it is consistent with the requirements of both state and local competitive bidding law.
Sometimes referred to as indefinite delivery/indefinite quantity (IDIQ) purchases, the JOC process is a contract for a fixed term or maximum dollar value, whichever occurs first, in which a contractor is selected based on a competitive bid to perform various separate job orders in the future, during the life of the contract. JOCs are utilized for well-defined or repetitive work where streamlined execution is necessary and beneficial. JOC is not typically used for single-occurrence, large-scale projects. Like other public works project procurement, the JOC process must comply with the California Public Contract Code in order for the City to utilize.
Sourcewell (formerly known as the National Joint Powers Alliance (NJPA)) is a Minnesota public entity with authority to serve as a contracting agency for municipalities. Specifically, Sourcewell was created to provide cooperative services and programs to its members, which are public agencies located in Minnesota, California and numerous other states. Sourcewell is governed by a board of directors comprised of eight local elected officials including county commissioners, city council members, and school board members.
The City is a member agency of Sourcewell, and consistent with California Government Code section 6500 and pursuant to Minnesota law (Minn. Stat. § 471.59), public agencies that are members of Sourcewell are authorized to jointly exercise cooperative purchasing powers and piggyback on purchasing contracts utilized by each other. The City has previously utilized Sourcewell to purchase materials and equipment pursuant to state law authority permitting such exercise of joint purchasing powers.
Amending the Purchasing Procedures under the Municipal Code would permit the City to utilize the Sourcewell JOC process for public works projects. This would be efficient and economical for the City if it takes advantage of this national cooperative contract-purchasing program. Sourcewell contracts are formally, competitively bid by using pricing and construction data tailored to the local regions where the contracts would ultimately be awarded. This entity competitively bids construction tasks with pre-set unit prices and specifications for the underlying public work, including material, equipment, and labor costs. The bid submissions are then reviewed according to the specifications for Sourcewell to compile a list of competitive and qualified bidders.
In working with Sourcewell, the City would select from a list of prequalified bidders selected pursuant to the competitive bidding process for the type of project it intends to carry out. With Sourcewell’s assistance, the City would be able to piggyback on the competitively bid contracts plus additional local conditions. The City thus benefits from the reduced pricing and other competitive terms made possible by large volume regional contracts. Staff understands this competitive bid process is consistent with the noticing and bidding procedures required by the Public Contract Code. Even for projects that would otherwise qualify for the less stringent alternative, informal bidding process under the Act, or for projects that would not require bidding at all, the JOC process through Sourcewell would still formally bid such projects out to compile a list of qualified bidders. Thus, as the JOC prequalification process is more stringent than what the City would otherwise be required to carry out under informal bidding processes, the City would be permitted to utilize the cooperative purchasing process while still be able to comply with adopted rules and procedures for purchasing.
Examples of recurring, repetitive projects that would benefit from utilizing the JOC process include construction, installations, maintenance, repair and other work related to the following:
• Alarm / Security / Fire Alarm
• Air Conditioning and Heating
• Appliance, fence, windows, doors, and glass repair
• Concrete and paving
• Mechanical, plumbing and roofing
• Landscape maintenance and pest control
• Custodial work, floor care, cleaning and restoration work
Amending section 4.04.040 would allow the City to utilize the governmental cooperative purchasing process for public works projects if they comply with state and local competitive bidding requirements, and in particular would be able to utilize the JOC process for recurring and repetitive public projects to provide efficiency and cost savings in performing such work.
FISCAL IMPACT
Amending the Municipal Code and allowing the City to utilize “piggybacking” for Public Projects will streamline the procurement process; resulting in greater efficiencies and overall project savings resulting from reductions in staff time and administrative costs currently associated with the informal bid process.
RELATIONSHIP TO STRATEGIC PLAN
Amending section 4.04.040 of the Municipal Code supports Strategic Plan to improve Quality of Life by allowing staff to provide services to the community in an efficient, cost-effective manner.
CONCLUSION
It is recommended that the City Council introduce an ordinance amending Chapter 4.04 of the South San Francisco Municipal Code relating to Job-Order-Contract Procurement Process and waive reading.