REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Al Zelinka, City Manager
VIA: Dahle Bulosan, Chief Financial Officer
PREPARED BY: Serena Bubenheim, Finance Manager - Budget
Subject:
title
Approve the Finance Department’s plan to conduct a comprehensive review of the City’s procurement policies
body
Statement of Issue:
During the July 19, 2022 City Council Meeting, Mayor Pro Tem Posey requested a comprehensive review of the City’s procurement policies to promote transparency and adherence to best practices. The Finance Department, under the City Manager’s direction, has prepared a formal review plan for City Council’s consideration.
Financial Impact:
Staff will perform the procurement policy review with the support of an on-call consulting firm that will be selected via a Request for Proposal (RFP) process, which is currently underway. A contract with the selected firm will be presented to the City Council for consideration on September 20, 2022.
Recommended Action:
recommendation
Approve the plan to review the City’s procurement policies as outlined in this report.
end
Alternative Action(s):
Do not approve the recommended action, and direct staff accordingly.
Analysis:
Background:
Municipal procurement policies are integral in procuring the necessary goods and services consistent with the quality that is required to meet the operational needs of City departments, while ensuring taxpayers receive the maximum value for each dollar spent. These policies ensure there is no conflict of interest related to any awarded contracts and provides all vendors and service providers a fair and equal opportunity to participate.
The City’s existing procurement policies work towards the aforementioned goals, advancing its strategic objectives and promoting greater public trust. The City’s Charter, Municipal Code, and Administrative Regulations along with federal and state laws provide the authoritative guidance for the City’s procurement policies, which have varying requirements and levels of approval based on the type of contract awarded (i.e. professional service, legal expert services, goods, maintenance and clerical support, leases, and Public Works construction).
Overview of Existing Purchasing Policies
The City’s requirements and levels of approving authority vary based on the type of contract that is being procured. Each individual procurement policy is detailed below:
|
Goods & Services |
|
|
ØPurchases of supplies and services (other than professional services) |
|
City Charter Section 613, Municipal Code 3.02 |
|
Amount |
Method |
Authority |
|
$0 - $30,000 |
Informal Bid |
Department Head, Finance |
|
$30,000 or more |
Competitive Bid |
City Council - through the budget process |
|
Professional Services |
|
|
ØConsultants, architects, engineers |
|
|
City Charter Section 613, Municipal Code 3.03, AR 228 |
|
Amount |
Method |
Authority |
|
$30,000 or less |
Informal Bid |
Department Head |
|
$30,000 to $50,000 |
Competitive Bid |
Department Head, Finance |
|
$50,000 to $100,000 |
Competitive Bid |
Department Head, Finance, City Manager |
|
$100,000 or more |
Competitive Bid |
City Council |
|
Public Works Construction |
|
|
ØPhysical construction and improvements of any City infrastructure |
|
City Charter Section 614, AR 119 |
|
Amount |
Method |
Authority |
|
$25,000 or less |
Informal Bid |
Department Head, City Manager |
|
$25,000 or more |
Competitive Bid |
City Council |
|
Signature Authority Levels |
|
|
Amount |
Contract Type |
Authority |
|
Unlimited |
Goods |
Department Head & City Manager (subject to bidding requirements set forth in Muni Code 3.02 & City Council budget approval) |
|
Unlimited |
Services |
Department Head & City Manager (subject to bidding requirements set forth in Muni Code 3.02 & City Council budget approval) |
|
$0 - $50,000 |
Professional Services |
Department Head |
|
$50,000 - $100,000 |
Professional Services |
City Manager |
|
Over $100,000 |
Professional Services |
City Council |
|
$0 - $100,000 |
Expert Services |
City Attorney |
|
Over $100,000 |
Expert Services |
City Council |
|
$0 - $25,000 |
Public Works |
Department Head & City Manager |
|
Over $25,000 |
Public Works |
City Council |
As part of its review, staff performed a preliminary survey of neighboring cities’ procurement policies to gain a comparative understanding of Huntington Beach’s policies. This effort may highlight certain policies that may appear to be outliers and warrant additional analysis during the formal review process. The formal review process may also include the identification and comparison to other cities not listed in the preliminary survey tables below.
|
Goods & Services |
|
|
|
|
|
|
|
City |
Formal Bid Threshold |
City Council Approval Threshold |
|
Newport Beach |
Over $25,000 |
Over $120,000 |
|
Santa Ana |
Over $25,000 |
Over $50,000 |
|
Huntington Beach |
Over $30,000 |
Approved through budget |
|
Irvine |
Over $45,000 |
Over $1,000,000 |
|
Anaheim |
Over $50,000 |
Over $200,000 |
|
Costa Mesa |
Over $50,000 |
Over $50,000 |
|
Professional Services |
|
|
|
|
|
|
|
City |
Formal Bid Threshold |
City Council Approval Threshold |
|
Newport Beach |
Over $25,000 |
Over $120,000 |
|
Huntington Beach |
Over $30,000 |
Over $100,000 |
|
Irvine |
Over $45,000 |
Over $1,000,000 |
|
Anaheim |
Over $50,000 |
Over $200,000 |
|
Costa Mesa |
pending |
pending |
|
Santa Ana |
pending |
Over $25,000 |
|
Public Works Construction |
|
|
|
|
|
City |
Formal Bid Threshold |
City Council Approval Threshold |
|
Anaheim |
Over $15,000 |
Over $400,000 |
|
Huntington Beach |
Over $25,000 |
Over $25,000 |
|
Santa Ana |
Over $25,000 |
Over $250,000 |
|
Newport Beach |
Over $120,000 |
Over $120,000 |
|
Costa Mesa |
Over $200,000 * |
Over $200,000 |
|
Irvine |
Over $200,000 * |
pending |
* Per Public Contract Code section 22032 (c), which is set by the State of California
Proposed Review Plan:
Like any policy, the City should conduct periodic reviews of its purchasing policies to ensure they are up to date with the latest regulations while continuing to facilitate ongoing operations in an efficient and cost effective manner. Staff has developed a review plan per Mayor Pro Tem Posey’s request during the July 19, 2022 City Council Study Session. As part of the review, the Finance Department will review Department Directors’ spending limits, bidding requirements, best practices, and other policies to promote transparency to the public and proper oversight by City Council.
The plan includes the following actions:
1. Review Huntington Beach procurement policies (including City Manager/Department Directors’ spending limits and bidding requirements) to determine opportunities for updates and clarifications and to assess compliance with State, Federal, local, and other pertinent laws and regulations;
2. Interview City department heads, management, and/or staff to identify opportunities for improvements in the purchasing processes;
3. Review various procurement best practices such as those recommended by the California Association of Public Procurement Officials (CAPPO);
4. Review the procurement policies of comparable cities;
5. Review emergency procurement policies for compliance with Federal Emergency Management Agency (FEMA) requirements;
6. Present findings and recommended changes to City Council for feedback at a future Study Session; and
7. Based on feedback from City Council, present final recommended changes to City Council for consideration.
The League of California Cities presented best practices on public procurement as part of their January 22, 2021 Academy on Financial Responsibilities and City Revenues for Mayors and Council Members. In sum: 1) public procurement is not designed to achieve speed, but rather to provide a fair and competitive process; 2) locally adopted ordinances or policies provide the framework for purchases of supplies and services; and 3) state law lays out Public Works project requirements. These best practices will provide the framework for this review and any policy modifications that are proposed.
Lastly, the City Manager’s Office and Finance Department issued a request for proposal on August 3, 2022 to secure on-call consulting services to assist in the procurement review if City Council decides to move forward with the plan. The selected consultant should have a strong understanding of the best practices and help update any policies to meet those standards. The consultant will also assist in the implementation of any changes approved by City Council.
Environmental Status:
Not applicable
Strategic Plan Goal:
Financial Sustainability, Public Safety or Other
Attachment(s):
None