TO: ADAM PIRRIE, CITY MANAGER
FROM: JEREMY STARKEY, FINANCE DIRECTOR
DATE: APRIL 9, 2024
Reviewed by:
City Manager: AP
SUBJECT:
Title
ORDINANCE AMENDING CHAPTER 3.15 OF THE CLAREMONT MUNICIPAL CODE REGARDING PURCHASING AND BIDDING REGULATIONS AND THE CITY MANAGER’S PURCHASING AUTHORITY
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SUMMARY
The City’s bidding and purchasing regulations contained in Chapter 3.15 of the Claremont Municipal Code (CMC) allow the City Manager to enter into contracts for purchases up to $25,000. The CMC also requires the use of the Direct Competitive Purchasing Procedure for purchases between $2,500 and $25,000.
Staff recommends that the City Council introduce the attached proposed Ordinance to amend the City’s purchasing and bidding regulations to require the Claremont Direct Competitive Purchasing Procedure for purchases between $5,000 and $25,000 and to increase the City Manager’s purchasing authority to $50,000.
Staff recommends these amendments to the CMC to be more consistent with other local municipalities and their purchasing procedures, and to reduce the staff time associated with the performance of purchasing procedures.
RECOMMENDATION
Recommended Action
Staff recommends the City Council introduce for first reading, and that reading be by title only, AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CLAREMONT, CALIFORNIA, AMENDING CHAPTER 3.15 OF THE CLAREMONT MUNICIPAL CODE REGARDING PURCHASING AND BIDDING REGULATIONS AND THE CITY MANAGER’S PURCHASING AUTHORITY.
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ALTERNATIVES TO RECOMMENDATION
In addition to the recommendation, there are the following alternatives:
A. Request additional information.
B. Do not adopt the proposed Ordinance, which would keep the existing thresholds for the City Manager’s purchasing authority and the Direct Competitive Purchasing Procedure.
FINANCIAL REVIEW
The staff cost to prepare this report is estimated at $1,758 and is included in the operating budget of the Financial Services Department.
ANALYSIS
Staff has prepared the attached proposed Ordinance, which would amend Sections 3.15.050 and 3.15.060 of Chapter 3.15 of the Claremont Municipal Code (CMC). The proposed amendments to CMC Section 3.15.050 would allow the City Manager to enter into contracts for purchases up to $50,000 (increase from current authority of $25,000). The proposed amendments to CMC Section 3.15.060 would require the Direct Competitive Purchasing Procedure for purchases between $5,000 (increase from current $2,500 threshold) and $25,000. The current Direct Competitive Purchasing Procedure requires staff to obtain three quotes for goods and services with a cost of $2,500 or more.
City Manager Authority
On December 13, 2011, the City Council introduced and approved an Ordinance amending Section 3.15.050 of the CMC, which set the City Manager’s purchasing authority at $25,000 to be consistent with the contracting authority for Department Heads.
Since 2011, the cost of goods and services have increased, as have labor costs. As the cost of goods and services increases, the number of items which must come to the City Council for approval will increase. This will require additional staff time to prepare staff reports to the City Council for items that may not have required Council approval in the past. To effectively maximize staff time, and to respond to the increasing costs to which the City is subject, staff recommends increasing the City manager’s purchasing authority to $50,000.
Since January 2021, 41 agenda items were prepared for City Council approval for expenditures between $25,000 and $50,000. The preparation and review of staff reports requires a significant investment of staff time. Department staff, the Finance Director, City Attorney, Assistant City Manager, and City Manager all take a role in the drafting, review and approval of staff reports for such items. Administrative staff and the City Clerk’s Office also have a role in reviewing each report and preparing reports to be published in City Council agendas.
For reference, many of the City’s routine consulting contract costs are included in the City’s operating budget adopted by the City Council, but exceed the City Manager’s purchasing authority and require staff to prepare reports to be considered by the City Council. Some of these contracts include services related to: economic development consulting; grant research; professional engineering consulting; and special legal services, to name a few.
Staff surveyed local cities to inquire about their City Manager purchasing authority. The table below illustrates the current purchasing authorities of City Managers in the area:
|
City |
City Manager Purchasing Authority |
|
Chino Hills |
$50,000 |
|
Covina |
$25,000 |
|
Diamond Bar |
$45,000 |
|
Glendora |
$50,000 |
|
La Verne |
$75,000 |
|
Montclair |
$15,000 |
|
Ontario |
$150,000 |
|
Pomona |
$150,000 |
|
Rancho Cucamonga |
$50,000 |
|
San Dimas |
$50,000 |
|
Upland |
$50,000 |
|
Walnut |
$30,000 |
The proposed Ordinance will bring the Claremont City Manager’s purchasing authority to a level consistent with surrounding cities. The proposed Ordinance will not affect existing contracts that have been awarded prior to the effective date of the Ordinance, which will be 30 days after the second reading of the Ordinance.
Claremont Direct Competitive Purchasing Procedure
On February 6, 2008, the City Council amended CMC Section 3.15.060 to increase the minimum dollar amount to conduct the City’s direct competitive purchasing procedure from $1,000 to $2,500. That recommendation was made by staff due to labor impacts, as well as the length of time and amount of paperwork associated with soliciting competitive bids and preparing the necessary paperwork to execute contracts with vendors.
The current process for purchases between $2,500 and $25,000, with associated staff time, entails:
• Obtaining at least three informal quotes (1 hour)
• Completing a pricing quote sheet (15 minutes)
• Preparing agreement and obtain necessary agreement signatures (1 hour)
• Verifying/obtaining W-9 and valid business license (15 minutes)
• Obtaining insurance certificates/professional licenses from vendor, if applicable, and review (30 minutes)
The average time to complete these agreements, as detailed above, is approximately three hours. Some agreements may take longer, depending on the responsiveness and availability of vendors. Additionally, several vendors have shared that they often decline to provide quotes for services below the $5,000 threshold due to the investment of time and resources for the limited return.
While it is difficult to project the staff hours that will be saved by increasing the minimum dollar amount required to conduct the direct competitive purchasing procedure, staff is confident doing so will reduce time spent obtaining quotes and will result in more vendors being willing to provide quotes and bids on smaller projects.
Staff surveyed local cities to inquire about their competitive purchasing procedures. The table below summarizes the thresholds for direct competitive purchasing for cities in the area:
|
City |
Direct Competitive Purchasing Threshold |
|
Chino Hills |
$10,000 |
|
Covina |
$10,000 |
|
Diamond Bar |
$5,000 |
|
Glendora |
$2,500 |
|
La Verne |
$5,000 |
|
Montclair |
$2,500 |
|
Ontario |
$5,000 |
|
Pomona |
$5,000 |
|
Rancho Cucamonga |
$5,000 |
|
San Dimas |
$2,500 |
|
Upland |
$2,500 |
|
Walnut |
$1,000 |
Staff proposes to use the existing Direct Competitive Purchasing Procedure and apply the current process to purchases between $5,000 and $25,000.
In the interest of efficiently using limited staffing resources, it is important that purchasing thresholds and authorities are carefully considered. Should the City Council adopt the proposed Ordinance to increase the City Manager’s purchasing authority and the direct competitive purchasing threshold, staff recommends that these guidelines be reviewed periodically for potential future amendments to maximize the efficiency of our staff.
LEGAL REVIEW
The attached proposed Ordinance has been reviewed and approved by the City Attorney.
RELATIONSHIP TO CITY PLANNING DOCUMENTS
Staff has evaluated the agenda item in relationship to the City’s strategic and visioning documents and finds that it applies to the following City Planning Documents: Economic Sustainability Plan, General Plan, City Council Priorities and the 2022-24 Budget.
CEQA REVIEW
This item is not subject to environmental review under the California Environmental Quality Act (CEQA).
PUBLIC NOTICE PROCESS
The agenda and staff report for this item have been posted on the City website and distributed to interested parties. If you desire a copy, please contact the City Clerk’s Office.
Submitted by:
Jeremy Starkey
Finance Director
Attachment:
Proposed Ordinance