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Item 2AGENDA ITEM NO. 2 AGENDA STAFF REPORT City of West Covina I Office of the City Manager DATE: June 21, 2022 TO: Mayor and City Council FROM: David Carmany City Manager SUBJECT: CONSIDERATION OF AN ORDINANCE ADOPTING NEW PURCHASING PROCEDURES RECOMMENDATION: It is recommended that the City Council adopt the following: ORDINANCE NO. 2498 - AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA, REPEALING AND REPLACING DIVISION 1 (GENERALLY) AND DIVISION 2 (PURCHASING SYSTEM) AND AMENDING DIVISION 3 (CONTRACTING FOR PUBLIC PROJECTS) OF ARTICLE VII (PURCHASES AND SALES) OF CHAPTER 2 (ADMINISTRATION) OF THE WEST COVINA MUNICIPAL CODE RESOLUTION NO. 2022-64 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA, ESTABLISHING THE THRESHOLDS FOR SMALL, INFORMAL AND FORMAL PROCUREMENTS IN ACCORDANCE WITH SECTION 2-328 (PURCHASING AUTHORITY; PURCHASE ORDER AND CONTRACT APPROVAL REQUIREMENTS) OF DIVISION 1 (GENERALLY) OF ARTICLE VII (PURCHASES AND SALES) OF CHAPTER 2 (ADMINISTRATION) OF THE WEST COVINA MUNICIPAL CODE BACKGROUND: The City of West Covina originally adopted a Purchasing Ordinance (Ordinance No. 576) in 1958, which was subsequently amended by Ordinance No. 2070 in 2001, Ordinance No. 2172 in 2008, Ordinance No. 2276 in 2015 and Ordinance No. 2337 in 2018. In 2018, the Purchasing Policy was amended and updated. The update to the Purchasing Policy was a compilation of efforts by City staff and a financial consultant, Lance, Soll and Lunghard, LLP, to review the City's Municipal Code and Purchasing Policy to facilitate bringing them into compliance with Federal and State guidelines. In 2020, the California State Auditor reviewed the City's Procurement Policy. The State Auditor recommended (Objective number 9) that the City improve internal purchasing processes/enforcement to reduce susceptibility to waste and fraud. In the City's Financial Recovery Plan, action steps included adopting revised purchasing policies and adopting an ordinance enacting the California Uniform Public Construction Cost Accounting Act. In May 2021, the City Council adopted Ordinance No. 2477, enacting the provisions of the California Uniform Public Construction Cost Accounting Act. The Ordinance, codified in Division 3 (Contracting for Public Projects) of Article VI (Purchases and Sales) of Chapter 2 (Administration) of the West Covina Municipal Code (WCMC), established the following dollar thresholds, order for the purchase of any supplies, materials, services or equipment not subject to formal procurement procedures, provided that the expenditure is within the approved budget and the contract is in a form approved by the city attorney. (d) City council authorization shall be required for the purchase of any supplies, materials, services or equipment subject to formal procurement procedures. (e) All written contracts and agreements shall be approved as to form by the city attorney or his or her authorized representative prior to execution. (f) In accordance with Section 40602 of the California Government Code, all written contracts and agreements shall be signed by either the mayor or the city manager. Except as to the purchasing officer's authority to issue and approve purchase orders pursuant to subsection (b) of this section, no other city officer or employee shall have authority to bind the city by contract or agreement. Sec. 2-329. - Contract amendments. (a) Amendments to purchase orders and/or contracts may be approved as follows: (1) If the contract or purchase order was initially approved by the city manager, the city manager shall have the authority to approve amendments to such contracts and purchase orders that result in a total contract price that does not exceed the city manager's contract authority as set forth in section 2-328(c) of this division. (2) If the contract or purchase order was initially approved by the city council, the city manager shall have the authority to approve any amendment that results in a total contract price that does not exceed twenty-five percent (25%) of the original contract price, or such greater amount as may be authorized by the city council at the time it approves the contract or purchase order. (3) If an amendment or the aggregate sum of all amendments will exceed twenty-five percent (25%) of the original contract price or such amount as was authorized by the city council at the time the city council approved the contract or purchase order, city council approval shall be required. (b) All change orders and contract amendments approved by the city manager pursuant to subsection (a)(1) and (2) of this section shall be reported to the city council in the semi- annual report required pursuant to section 2-337 of this division. Sec. 2-330. - Maximum contract term. Unless otherwise approved by the city council, the maximum length of any contract for goods and/or services shall be no more than five (5) years, and the maximum length for any lease agreement shall be no more than thirty (30) years. Sec. 2-331. - Micro procurement procedures. Purchases of supplies, materials, services and equipment with a value of up to five thousand dollars ($5,000) may be made without obtaining bids or quotes, subject, however, to fair, just and equitable terms and conditions of purchase. Department heads are authorized to approve purchases made pursuant to this section, provided that the expenditure is within the approved budget. Notwithstanding the foregoing, department heads shall have no authority to execute contracts or agreements on behalf of the city. Sec. 2-332. - Small procurement procedures. Purchases of supplies, materials, services and equipment with an estimated value less than the limit set by city council resolution pursuant to section 2-328(a) of this division for small procurements may be performed by employees of the city by force account, by negotiated contract or by purchase order after obtaining three written quotes. Sec. 2-333. - Informal procurement procedures. Purchases of supplies, materials, services and equipment with an estimated value less than the limit set by city council resolution pursuant to section 2-328(a) of this division for informal procurements may be made in accordance with the following informal bidding procedures: (a) Notice inviting bids — posting. All notices to vendors and consultants pursuant to this section shall be posted at least ten (10) calendar days before bids or proposals are due on the city's website or official web -based vendor registration and bid management system as designated by the finance director. (b) Notice inviting bids or proposals — contents. The notice inviting bids or proposals shall describe the materials or services in general terms and how to obtain more detailed information about the materials or services and state the time and place for the submission of bids or proposals. (c) Rejection of bids; bid irregularities. The city manager may, in his/her sole discretion, reject any or all bids or proposals presented and waive any minor irregularity or informality in such bids or proposals. (d) Award of contract. Contracts shall be awarded to the lowest responsible bidder. The city manager is authorized to award and execute contracts informally bid in accordance with this section, provided that the expenditure is within the approved budget and the contract is in a form approved by the city attorney. Sec. 2-334. - Formal procurement procedures. Purchases of supplies, materials, services and equipment with an estimated value that exceeds the threshold set by city council resolution pursuant to section 2-328(a) of this division for formal procurements shall be made in accordance with the following formal bidding procedures: (a) Advertising; contents. The notice inviting formal bids shall state the time and place for the receiving and opening of sealed bids and distinctly describe the supplies, materials, service or equipment required. The notice shall be posted at least fourteen (14) calendar days before the date of opening the bids on the city's website or official web -based vendor registration and bid management system designated by the finance director. The city may also give such other notice as it deems proper. (b) Sealed bids and proposals. All bids or proposals shall be presented under sealed cover to the department identified in the invitation for bids or proposals. (c) Rejection of bids or proposals; bid or proposal irregularities. The city council, in its discretion, may reject any and all bids or proposals presented and waive any minor irregularity or informality in such bids or proposals. (d) Award of contract. Contracts shall be awarded to the lowest responsible bidder. Sec. 2-335. - Exemptions from competitive bidding. The following are exempt from the informal and formal competitive procurement requirements of this division. The purchases permitted under this section shall be subject to fair, just and equitable contract conditions. (a) A procurement for professional services. (b) A procurement for the performance of temporary work or services. (c) A procurement of items that are available from only one source, or only one source is able to supply a commodity or service within the timeframe or under terms and conditions which meet the needs of the city. (d) Personal property sold: (1) at an auction by a state licensed auctioneer; (2) at a going out of business sale; (3) by a political subdivision of this state, a state agency of this state, or an entity of the federal government; or (4) under an interlocal contract for cooperative purchasing. (e) Purchases of goods that will be offered for retail sale by the city. (f) Purchases made through a cooperative purchasing agreement or program, including, but not limited to, the California Multiple Award Schedules Program (CMAS), the U.S. General Services Administration (GSA) Multiple Award Schedules Program, Sourcewell, and the U.S. Communities Government Purchasing Alliance, provided that the following requirements are met: (1) The purchasing officer determines the purchase is in the best interest of the city; (2) The purchasing officer determines the purchase is to the city's economic advantage; and (3) The agreement was competitively awarded using a process that complies with policies, rules, and regulations as approved by the purchasing officer. (g) Purchases made using another governmental or public agency's contract or substantially the same terms, provided: (1) The other agency used a solicitation method substantially similar to the method required by this division; and (2) The purchasing officer determines that the city will realize overall value by utilizing the other agency's contract or contract terms compared to the city performing its own procurement; (h) Purchases of goods and/or services obtained from or through an agreement with any governmental, public or quasi -public entity. (i) Procurements funded by grants, donations or gifts when the special conditions attached to the grants, donations or gifts require the procurement of particular goods and/or services. (j) When the city council determines, by minute action or resolution, that compliance with the bidding requirements and procedures is inefficient, impractical or not in the best interest of the city, based on specifically identified conditions set forth on the record. (k) In the event of an emergency, as defined herein, the city manager may authorize the suspension of normal bidding or purchasing and procurement requirements for projects and services related to abatement of the impacts or effects of such emergency. With respect to contracts subject to formal bidding requirements, the city council shall, if possible, ratify such emergency suspension of procedures at the next properly noticed city council meeting following the emergency procurement and consider whether further suspension of procedures is required to abate the impacts of the emergency. An emergency shall be deemed to exist if (1) There is a public calamity such as fire, flood, earthquake, storm or similar disaster that poses a serious threat to the public safety or city property; or (2) There is an immediate need to prepare for or provide national or local defense; or (3) There is a breakdown in machinery, equipment, property or an essential service which requires the immediate purchase of supplies or services to protect the public health, welfare or safety; or (4) An essential operation or city service affecting the public health, welfare or safety would be greatly hampered if adherence to the prescribed purchasing procedures would cause undue delay in procurement of the needed item or service. Sec. 2-336. - Surplus equipment and supplies. (a) Each department shall submit to the purchasing officer, at such times and in such form prescribed by the purchasing officer, reports listing all supplies and equipment which are no longer used or which have become obsolete or worn out. (b) The purchasing officer may cause the sale, exchange, disposal or donation of all equipment, goods, materials and supplies that are not or cannot be used by any department. Any such sale, exchange, disposal or donation shall be in accordance with approval requirements established by city council by resolution. (c) City employees shall only be eligible to bid on and/or purchase items in accordance with the purchasing manual. (d) Any surplus supplies or equipment originally purchased with federal funds shall be disposed of in accordance with the federal requirements for the disposal of that particular supply or equipment. Additionally, the proceeds from the sale or trade-in of surplus supplies or equipment originally purchased with federal funds shall be used to offset the cost of replacing said supplies or equipment. Sec. 2-337. - Reporting requirements. On a semi-annual basis, the purchasing officer shall present to the city council during an open meeting a report listing all contracts and purchase orders that have been awarded by the city manager pursuant to the city manager's authority pursuant to this division during the preceding six months. Such reports shall include, at minimum, a description of the materials or services performed, the name of the party or parties with whom the city contracted, and the total amount of the expenditure associated with the contract (including any amendments). Sec. 2-338. - Ethics. (a) Statement of policy. City employees shall discharge their duties impartially so as to ensure fair competitive access to city procurement opportunities by responsible contractors. Moreover, they shall conduct themselves in such a manner as to foster public confidence in the integrity of city procurement activities. (b) Gratuities. No person shall offer, give or agree to give any city employee any gratuity or offer of employment in connection with a procurement by the city. The purchasing officer and every officer and employee of the city are expressly prohibited from soliciting, demanding, accepting, directly or indirectly, or agreeing to accept, from any person, company, firm or corporation to which any purchase order or contract is, or might be awarded, any gratuity, offer of employment or anything of value whatsoever as set forth in the city's conflict of interest policy in connection with a procurement by the city. SECTION 2. Amendment to Division 3 of Article V1I of Chanter 2. Sections 2-351 (Definitions), 2-352 (Adoption of Plans, Specifications, and Working Details), 2-353 (Small Project Procurement Procedure), 2-354 (Informal Bidding Procedures), 2-355 (Formal Bidding Procedures), 2-356 (Reporting Requirements) and 2-358 (Change Orders for Contracts of Public Projects) of Division 3 (Contracting for Public Projects) of Article VII (Purchases and Sales) of Chapter 2 (Administration) of the West Covina Municipal Code are hereby amended to read as follows: Sec. 2-351. - Definitions. The following words, terms and phrases when used in this division shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning: Act means the California Uniform Public Construction Cost Accounting Act, Public Contract Code section 22000 et seq. Emergency has the meaning set forth in Public Contract Code section 1102. Facility has the meaning set forth in Public Contract Code section 22002. Public Contract Code means the Public Contract Code of the State of California. Public project has the meaning set forth in Public Contract Code section 22002. Sec. 2-352. - Adoption of plans, specifications, and working details. The city council delegates to the public services director and the city engineer the authority to approve and/or adopt the plans, specifications, and working details for all public projects, including public projects exceeding the amount specified in Public Contract Code section 22032(c). Sec. 2-353. - Small project procurement procedures. Public projects in the amount set forth in Public Contract Code section 22032(a), as amended from time to time, or less may be performed by employees of the city by force account, by negotiated contract or by purchase order without competitive bidding. The city manager is authorized to approve and execute contracts or purchase orders issued pursuant to this section, provided that the expenditure is within the approved budget. Sec. 2-354. - hiformal bidding procedures. Public projects in the amount set forth in section 22032(b) of the Public Contract Code, as amended from time to time, or less may be let to contract by informal procedures as set forth in the Act, including the following procedures: (a) Contractors list. The city shall comply with the requirements of Public Contract Code section 22034 regarding maintaining a list of qualified contractors identified according to categories of work. (b) Notice inviting informal bids —Circulation. Where a public project is to be performed which is subject to the provisions of this section, a notice inviting informal bids shall be circulated using one or both of the following alternatives: (1) Notices inviting informal bids may be mailed, faxed, or emailed to all contractors for the category of work to be bid, as shown on the list developed in accordance with subsection (a) above. (2) Notices inviting informal bids may be mailed, faxed, or emailed to all construction trade journals as specified by the California Uniform Construction Cost Accounting Commission in accordance with section 22036 of the Public Contract Code. Additional contractors and/or construction trade journals may be notified at the discretion of the public services director or designee. (c) Notice inviting informal bids —Proprietary products and services. Notwithstanding the foregoing requirements, if the product or service is proprietary in nature such that it can be obtained only from a certain contractor or contractors, the notice inviting informal bids may be sent exclusively to such contractor or contractors. (d) Notice inviting informal bids —Mailing. All mailing of notices to contractors and construction trade journals pursuant to this section shall be completed at least ten (10) calendar days before bids are due. (e) Notice inviting informal bids —Contents. The notice inviting informal bids shall describe the project in general terms and how to obtain more detailed information about the project, and state the time and place for the submission of bids. (f) Rejection of bids; bid irregularities. The city manager may, in his/her sole discretion, reject any or all bids presented and waive any minor irregularity or informality in such bids. (g) Award of contract. The city manager is authorized to award and execute contracts informally bid in accordance with this section, provided that the expenditure is within the approved budget and the contract is in a form approved by the city attorney. Such contracts shall be awarded to the lowest responsible bidder. (h) Tie bids; no bids received. If two (2) or more bids are the same and the lowest, the city manager may accept the one he/she chooses. If no bids are received through the informal procedures set forth in this section, the project may be performed by city employees, by force account or negotiated contract without further complying with this section. (i) Bids over informal bidding limit. If all bids received are in excess of the amount set forth in Public Contract Code section 22034(d), as amended from time to time, the city council may, by adoption of a resolution by a four -fifths (4/5) vote, award the contract, at the amount specified in Public Contract Code section 22034(d), as amended from time to time, or less, to the lowest responsible bidder, if it determines the cost estimate of the city was reasonable. (j) Acceptance of work. Upon the completion of work pursuant to a contract awarded pursuant to this section, the city manager may accept the work and may authorize the filing of the notice of completion, the release of funds retained upon such filing, and the release of any bonds upon the conclusion of their respective warranty periods. (k) Performance bonds. The city may require a performance bond before entering a contract awarded pursuant to this section in such amount as the public services director or his/her designee finds reasonably necessary to protect the best interests of the city. If the city requires a performance bond, the form and amount of the bond shall be described in the notice inviting bids. Sec. 2-355. - Formal bidding procedures. Public projects in the amount set forth in section 22032(c) of the Public Contract Code, as amended from time to time, or greater shall be let to contract in accordance with the procedures set forth in Public Contract Code section 22037 et seq., including the following procedures: (a) Advertising; contents. The notice inviting formal bids shall state the time and place for the receiving and opening of sealed bids and distinctly describe the project. The notice shall be published at least fourteen (14) calendar days before the date of opening the bids in a newspaper of general circulation, printed and published in the city; or, if there is no newspaper printed and published within the city, in a newspaper of general circulation which is circulated within the city, or, if there is no newspaper which is circulated within the city, publication shall be by posting the notice in at least three (3) places within the city as have been designated by ordinance or regulation of the city as places for the posting of its notices. The notice inviting formal bids shall also be sent electronically, if available, by either facsimile or electronic mail and mailed to all construction trade journals specified by the California Uniform Construction Cost Accounting Commission in accordance with section of the Public Contract Code. The notice shall be sent at least fifteen (15) calendar days before the date of opening the bids. In addition to notice required by this section, the city may give such other notice as it deems proper. (b) Sealed bids. All bids shall be presented under sealed cover to the department identified in the invitation for bids. Bids shall be opened in public at the time and place stated in the notice inviting bids. (c) Bidder's security. All bids presented shall be accompanied by bidder's security in the form and amount prescribed by Public Contract Code section 20170 et seq., which security shall be dealt with as described therein. The city council may, on refusal or failure of the successful bidder to execute the contract, award it to the next lowest responsible bidder. If the city council awards the contract to the second lowest bidder, the amount of the lowest bidder's security shall be applied by the city to the difference between the low bid and the second lowest bid, and the surplus, if any, shall be returned to the lowest bidder if cash or a check is used, or to the surety on the bidder's bond if a bond is used. This procedure shall be followed with the next lowest bidder in order upon any additional refusal or failure of the next lowest responsible bidder to execute the contract. (d) Rejection of bids; bid irregularities. The city council, in its discretion, may reject any and all bids presented in accordance with the requirements of Public Contract Code section 22038 and waive any minor irregularity or informality in such bids. If after the first invitation of bids all bids are rejected, after reevaluating its cost estimates of the project, the city shall have the option of either of the following: (1) Abandoning the project or readvertising for bids in the manner described by this division. (2) By passage of a resolution by a four -fifths (115) vote of the city council declaring that the project can be performed more economically by the employees of the city, the city may have the project done by force account without further complying with this division. (e) Award of contract. Contracts for public projects subject to formal bidding requirements shall be awarded by the city council. Such contracts shall be awarded to the lowest responsible bidder. (f) Tie bids; no bids received. If two (2) or more bids are the same and the lowest, the city council may accept the one it chooses. If no bids are received through the formal procedures set forth in this section, the project may be performed by employees of the city by force account, or negotiated contract, without further complying with this division. (g) Performance bonds. The city may require a performance bond before entering a contract awarded pursuant to this section in such amount as the public services director or his/her designee finds reasonably necessary to protect the best interests of the city. If the city requires a performance bond, the form and amount of the bond shall be described in the notice inviting bids. Sec. 2-356. - Reporting requirements. On a semi-annual basis, the city manager shall present to the city council during an open meeting a report listing all contracts and purchase orders that have been awarded by the city manager pursuant to the city manager's authority pursuant to this division during the preceding six (6) months. Such reports shall include, at minimum, a description of the public project performed, the name of the party or parties with whom the city contracted, and the total amount of the expenditure associated with the contract (including any amendments or change orders). Sec. 2-358. - Change orders on contracts for public projects. (a) The city has, in section 19-1 of this Code, adopted the standard specifications for public works construction ("the Green Boole'), except to the extent those specifications conflict with any other provision of the city's municipal code or standard specifications. The city council intends to limit the use of change orders for public works contracts notwithstanding any contrary provision of the Green Book. (b) Following the award of a contract or purchase order awarded pursuant to this division, such contract or purchase order may be amended by the issuance of a change order or contract amendment, provided the change which is the subject of the change order or contract amendment is reasonably related to the scope of the original contract or purchase order. Notwithstanding any provision of this division to the contrary, unless a lower limit has been set by applicable law or the city council, the city manager is authorized to approve and execute the following change orders or contract amendments for contracts and purchase orders awarded pursuant to this division without city council approval, provided that the expenditure is in the approved budget: (1) For contracts or purchase orders issued pursuant to section 2-353 of this division, any change order or contract amendment which results in the total contract price of the amount set forth in Public Contract Code section 22032(a) or less; and (2) For contracts awarded pursuant to section 2-354 of this division, any change order or contract amendment which results in a total contract price of the amount set forth in Public Contract Code section 22032(b) or less. (3) For contracts awarded by the city council with an approved contingency, change orders within such contingency. (c) Any change order or contract amendment for any contract awarded pursuant to this division which results in a total contract price in excess of the amounts specified in subsection (b) of this section must be approved by the city council. (d) All change orders and contract amendments approved by the city manager pursuant to subsection (b) of this section shall be reported to the city council in the city manager's semi- annual report required pursuant to section 2-356 of this division. SECTION 3. Environmental Compliance. The City Council hereby finds that it can be seen with certainty that there is no possibility the adoption and implementation of this Ordinance may have a significant effect on the environment. The Ordinance is therefore exempt from the environmental review requirements of the California Environmental Quality Act pursuant to Section 15061(b)(3) of Title 14 of the California Code of Regulations. SECTION 4. Severability. If any section, subsection, sentence, clause, phrase, or portion of this Ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions which are updated periodically by the California Uniform Public Construction Cost Accounting Commission for public projects: (a) Public projects of $60,000 or less may be performed by the employees of the City by force account, by negotiated contract, or by purchase order. (b) Public projects of $200,000 or less may be let to contract by informal procedures. (c) Public projects of more than $200,000 must be let to contract by formal bidding procedures. DISCUSSION: Staff has reviewed the City's Purchasing Ordinance, codified in Division 2 (Purchasing System) of Article VII (Purchases and Sales) of Chapter 2 (Administration) of the WCMC and is proposing to update the Purchasing Ordinance to mirror the procedures for contracting for public projects, clarify discrepancies, streamline processes, and reduce administrative burden. For simplicity, staff recommends that the City Council adopt the proposed ordinance, which would repeal and replace Division 1 (Generally) and Division 2 (Purchasing System) of Article VII (Purchases and Sales) of Chapter 2 (Administration) of the West Covina Municipal Code. Additionally, the ordinance creates separation of the policy from procedures by authorizing the Purchasing Officer (Finance Director) to establish a Purchasing Manual, subject to the approval of the City Manager, to implement the policies as adopted by Council. The ordinance also makes certain clarifying changes to Division 3 (Contracting for Public Projects) of Article VII (Purchases and Sales) of Chapter 2 (Administration) of the West Covina Municipal Code. The threshold for three written quotes is proposed to raise from $2,000 to $5,000. Other thresholds are proposed to be consistent with Division 3 of the Municipal Code. These thresholds will be established by City Council resolution (Attachment No. 2). One quote or Invoice 3 Written Quotes Informal Procurement Procedures (Bidding or RFP) Formal Procurement Procedures (Bidding or RFP) Less than $2,500 Less than $5k Department Head $2,500-$20k $5k-$60k Finance Director $60k-$200k* City Manager $30k or more Over 200k* City Council Although Department Heads will be authorized to approve purchases of up to $5,000, the ordinance expressly states that Department Heads do not have authority to execute contracts or agreements on behalf of the City. The ordinance also expressly states that all contracts and agreements must be signed by either the Mayor or the City Manager and that, except for the Purchasing Officer's authority to issue and approve purchase orders of up to $60,000, no other City officer or employee has authority to bind the City by contract or agreement. Reporting requirements and policies for amendments are also proposed to remain similar to the provisions of Division 3. The ordinance also sets forth the maximum length of contracts for goods and/or services as five (5) years, and the maximum length for lease agreements as thirty (30) years, unless otherwise approved by of this Ordinance. The City Council of the City of West Covina hereby declares that it would have adopted this Ordinance and each section, subsection, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases, orportions be declared invalid or unconstitutional. SECTION 5. Effective Date. This Ordinance shall take effect thirty (30) days after its final passage. SECTION 6. Certification. The City Clerk shall certify to the passage and adoption of this Ordinance and shall cause the same to be published or posted in the manner required by law. PASSED, APPROVED AND ADOPTED this 21sy day of June, 2022. Dario Castellanos Mayor APPROVED AS TO FORM ATTEST Thomas P. Duarte Lisa Sherrick City Attorney Assistant City Clerk I, LISA SHERRICK, Assistant City Clerk of the City of West Covina, California, do hereby certify that the foregoing Ordinance No. 2498 was introduced at a regular meeting of the City Council held on the 7th day of June, 2022, and adopted at a regular meeting of the City Council on the 21 st day of June, 2022 by the following vote of the City Council: AYES: NOES: ABSENT: ABSTAIN: Lisa Sherrick Assistant City Clerk ATTACHMENT NO.2 RESOLUTION NO. 2022-64 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA, ESTABLISHING THE THRESHOLDS FOR SMALL, INFORMAL AND FORMAL PROCUREMENTS IN ACCORDANCE WITH SECTION 2- 328 (PURCHASING AUTHORITY; PURCHASE ORDER AND CONTRACT APPROVAL REQUIREMENTS) OF DIVISION 1 (GENERALLY) OF ARTICLE VII (PURCHASES AND SALES) OF CHAPTER 2 (ADMINISTRATION) OF THE WEST COVINA MUNICIPAL CODE WHEREAS, on June 21, 2022, the City Council adopted Ordinance No. 2498, which repealed and replaced Division 1 (Generally) and Division 2 (Purchasing System) and amended Division 3 (Contracting for Public Projects) of Article VII (Purchases of Sales) of Chapter 2 (Administration) of the West Covina Municipal Code ("Revised Purchasing Ordinance"); and WHEREAS, the Revised Purchasing Ordinance will take effect on July 22, 2022; and WHEREAS, pursuant to subsection (a) of Section 2-328 (Purchasing Authority; Purchase Order and Contract Approval Requirements) of Division 1 (Generally) of Article VII (Purchases and Sales) of Chapter 2 (Administration) of the Revised Purchasing Ordinance, the City Council shall, by resolution, establish the thresholds for small, informal and formal procurements; and WHEREAS, the City Council desires to establish the thresholds for small, informal and formal procurements in accordance with Section 2-328(a); and WHEREAS, in establishing such thresholds, the City desires to provide consistency between Division 2 (Purchasing System) and Division 3 (Contracting for Public Projects) of Article VII (Purchases and Sales) of Chapter 2 (Administration) of the West Covina Municipal Code by providing similar purchasing thresholds. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. The City Council hereby approves the following purchasing thresholds: Type of Procurement Threshold Small $5,000.00-$59,999.99 Informal $60,000.00-$199,999.99 Formal $200,000.00 or greater SECTION 2. The purchasing thresholds set forth in this resolution shall take effect on the date Ordinance No. 2498 goes into effect. SECTION 3. The City Clerk shall certify to the adoption of this resolution and shall enter the same in the book of original resolutions. APPROVED AND ADOPTED this 21st day of June, 2022. APPROVED AS TO FORM Thomas P. Duarte City Attorney Dario Castellanos Mayor ATTEST Lisa Sherrick Assistant City Clerk I, LISA SHERRICK, ASSISTANT CITY CLERK of the City of West Covina, California, do hereby certify that the foregoing Resolution No. 2022-64 was duly adopted by the City Council of the City of West Covina, California, at a regular meeting thereof held on the 21 st day of June, 2022, by the following vote of the City Council: AYES: NOES: ABSENT: ABSTAIN: Lisa Sherrick Assistant City Clerk the City Council. These limits were previously established by the City's Contract Term Policy, an Administrative Policy adopted by the City Manager and Finance Director in April 2017. By codifying these limitations, staff intends to repeal the Contract Term Policy. To streamline processes and increased efficiencies, the following exemptions from competitive bidding are proposed for purchases: 1. A procurement for professional services; 2. A procurement for the performance of temporary work or services; 3. A procurement of items that are available from only one source, or only one source is able to supply a commodity or service within the timeframe or under terms and conditions which meet the needs of the city; 4. Personal property sold: (a) at an auction by a state licensed auctioneer; (b) at a going out of business sale; (c) by a political subdivision of this state, a state agency of this state, or an entity of the federal government; or (d) under an interlocal contract for cooperative purchasing; 5. Purchases of goods that will be offered for retail sale by the city; 6. Purchases made through a cooperative purchasing agreement or program, including, but not limited to, the California Multiple Award Schedules Program (CMAS), the U.S. General Services Administration (GSA) Multiple Award Schedules Program, Sourcewell, and the U.S. Communities Government Purchasing Alliance, provided that certain requirements are met; 7. Purchases made using another governmental or public agency's contract or substantially the same terms, provided certain requirements are met; 8. Purchases of goods and/or services obtained from or through an agreement with any governmental, public or quasi -public entity; 9. Procurements funded by grants, donations or gifts when the special conditions attached to the grants, donations or gifts require the procurement of particular goods and/or services; 10. When the city council determines, by minute action or resolution, that compliance with the bidding requirements and procedures is inefficient, impractical or not in the best interest of the city, based on specifically identified conditions set forth on the record; 11. In the event of an emergency, which is deemed to exist if: . There is a public calamity such as fire, flood, earthquake, storm or similar disaster that poses a serious threat to the public safety or city property; or . There is an immediate need to prepare for or provide national or local defense; or . There is a breakdown in machinery, equipment, property or an essential service which requires the immediate purchase of supplies or services to protect the public health, welfare or safety; or . An essential operation or city service affecting the public health, welfare or safety would be greatly hampered if adherence to the prescribed purchasing procedures would cause undue delay in procurement of the needed item or service. City Council introduced the ordinance for first reading during the June 7, 2022 meeting. Staff is presenting the ordinance for second reading and adoption. The ordinance will be effective on the 31st day after adoption. Additionally, staff recommends Council adopt a resolution (Attachment No. 2) outlining the procurement thresholds set forth above, which will go into effect on the same date the ordinance goes into effect. LEGAL REVIEW: The City Attorney's Office has reviewed the ordinance and resolution and approved them as to form. Prepared by: Stephanie Sikkema, Finance Director Attachments Attachment No. 1 - Ordinance No. 2498 Attachment No. 2 - Resolution No. 2022-64 CITY COUNCIL GOALS & OBJECTIVES: Enhance City Image and Effectiveness Achieve Fiscal Sustainability and Financial Stability ATTACHMENT NO.1 ORDINANCE NO. 2498 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA, REPEALING AND REPLACING DIVISION 1 (GENERALLY) AND DIVISION 2 (PURCHASING SYSTEM) AND AMENDING DIVISION 3 (CONTRACTING FOR PUBLIC PROJECTS) OF ARTICLE VII (PURCHASES AND SALES) OF CHAPTER 2 (ADMINISTRATION) OF THE WEST COVINA MUNICIPAL CODE WHEREAS, pursuant to California Government Code sections 54201 through 54203, local agencies are required to adopt, by ordinance, policies and procedures, including bidding regulations, governing the purchases of supplies and equipment by the local agency; and WHEREAS, the City of West Covina ("City") has adopted such policies and procedures by ordinance. Said policies and procedures are codified in Division 2 (Purchasing System) of Article VII (Purchases and Sales) of Chapter 2 (Administration) of the West Covina Municipal Code; and WHEREAS, on May 4, 2021, the City Council adopted Ordinance No. 2477, which added Division 3 (Contracting for Public Projects) to Article VII (Purchases and Sales) of Chapter 2 (Administration) of the West Covina Municipal Code to establish procedures and requirements for contracting for public projects in accordance with the California Uniform Construction Cost Accounting Act and State law; and WHEREAS, Division 3 sets forth purchasing thresholds and purchasing authorities for contracting for public projects in accordance with the California Uniform Public Construction Cost Accounting Act and State law, including authorizing the City Manager to award and execute certain contracts awarded pursuant to such provisions, provided the expenditures are within the approved budget; and WHEREAS, the City desires to provide consistency between Division 2 (Purchasing System) and Division 3 (Contracting for Public Projects) of Article VII (Purchases and Sales) of Chapter 2 (Administration) of the West Covina Municipal Code by providing similar purchasing thresholds and purchasing authorities; and WHEREAS, Division 1 (Generally) of Article VII (Purchases and Sales) of Chapter 2 (Administration) of the West Covina Municipal Code sets forth requirements relating to the disposal of surplus supplies and equipment; and WHEREAS, City Council desires to repeal and replace Divisions 1 and 2 of Article VII of Chapter 2 of the West Covina Municipal Code in order to increase the bidding limits and make other changes as set forth herein; and WHEREAS, the City Council also desires to amend Division 3 (Contracting for Public Projects) to make clarifying changes as set forth herein; and WHEREAS, in amending Divisions 1, 2, and 3 of Article VII of Chapter 2 of the West Covina Municipal Code, the City Council desires to make clear that only the Mayor and the City Manager have the authority to execute contracts and agreements on behalf of the City, in accordance with Section 40602 of the California Government Code. WHEREAS, all legal prerequisites prior to the adoption of this Ordinance have occurred. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1. Amendment to Divisions 1 and 2 of Article VII of Chanter 2. Division 1 (Generally) and Division 2 (Purchasing System) of Article VII (Purchases and Sales) of Chapter 2 (Administration) of the West Covina Municipal Code are hereby repealed and replaced by as follows: DIVISION 1. - GENERALLY Sec. 2-316. - Establishment of purchasing system. A purchasing system is hereby established for the purpose of setting forth efficient policies for the purchase of supplies, services and equipment, at the lowest possible cost commensurate with quality needed, to exercise positive financial control over purchases and to clearly define authority for the purchasing function. Except as provided by this Code, no city officer or employee shall order the purchase of any supplies, equipment, materials, or services, or make any contract within the purview of this Code, other than in accordance with the provisions of this Code, the purchasing manual prepared by the purchasing officer and with the approval of the city manager. Sec. 2-317. - Centralized purchasing division created. A centralized purchasing division within the finance department is hereby created and authorized to purchase supplies, services and equipment for the city. Sec. 2-318. - Purchasing officer; duties. (a) The position of purchasing officer is hereby established. The director of finance shall serve as the purchasing officer and may delegate purchasing duties as necessary to carry out the duties set forth in this article. The purchasing officer shall be the head of and have general supervision of the purchasing division. (b) Subject to the supervision of the city manager, the purchasing officer shall have the following powers and duties: (1) Prepare a written purchasing manual, subject to approval of the city manager, that implements the requirements of this article. The purchasing manual shall describe in detail the operational procedures and processes for the procurement of materials, supplies, services, equipment, and public works contracts. (2) Purchase or contract for supplies, services and equipment required by any city department, within the limits of the current budget approved by the city council, and in accordance with the requirements of this article, the purchasing manual prepared pursuant to this division, such administrative regulations as the purchasing officer shall adopt for the internal management and operation of the purchasing division and such other rules and regulations as may be prescribed by the city council or city manager. (3) Negotiate and recommend execution of contracts for the purchase of supplies, services and equipment. (4) Act to procure for the city the needed quality in supplies, services and equipment at least expense to the city. (5) Discourage uniform bidding and endeavor to obtain as full and open competition as possible on all purchases. (6) Prepare and recommend to the city manager rules governing the purchase of supplies, services and equipment for the city and revisions and amendments to such purchasing rules. (7) Keep informed of current developments in the field of purchasing, prices, market conditions and new products. (8) Prescribe and maintain such forms as reasonably necessary to the purchasing operation. (9) Supervise the inspection of all supplies, services and equipment purchased to ensure conformance with specifications. (10) Supervise the transfer of surplus or unused supplies and equipment between departments as needed. (11) Sell, exchange or dispose of surplus supplies and equipment that cannot be used by the city. (12) Maintain a bidders' list, vendors' catalog file and such other records needed for the efficient operation of the purchasing division. (13) Such other powers as delegated by the city manager or established by resolutions of the city council. Sec. 2-319. - Exemptions from centralized purchasing. The following items are exempt from centralized purchasing and shall not require city council approval provided that an appropriation has been made therefor: (a) General expenses, including, but not limited to, payroll deductions, licenses, advertising, insurance premiums, damage claims, petty cash replenishment, tax remittances, refunds, postage, freight charges, debt service related payments, fuel and charges to or from other government agencies. (b) Utilities, including, but not limited to, the payment of water, electricity, natural gas, telecommunication, sewer and trash expenses. (c) Training and education, including, but not limited to, conferences, conventions, courses, seminars, memberships, staff workshops, certifications and subscriptions/publications. (d) Refundable employee expenses, including, but not limited to, advances, meal allowances, miscellaneous reimbursements and travel expenses. Sec. 2-320. - Business licenses. Any contractor, consultant or vendor from which the city purchases supplies, materials, services or equipment or to which the city awards a contract or purchase order pursuant to this article shall not be subject to the requirements of chapter 14, article H, division 1, section 14-18 of this Code. Secs. 2-320-2-325. Reserved. DIVISION 2. - PURCHASING PROCEDURES Sec. 2-326. - Applicability. Except as otherwise set forth herein, the provisions set forth in this division do not apply to public projects subject to the provisions of Division 3 (Contracting for Public Projects) of Article VII (Purchases and Sales) of Chapter 2 (Administration) of this Code. Sec. 2-327. - Definitions. The following words, terms and phrases when used in this division shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning: (a) "Lowest responsible bidder." In determining the "lowest responsible bidder", the following shall be considered: (1) Price; (2) The ability, capacity and skill of the bidder to perform the contract or provide the material or services; (3) Whether the bidder can perform the contract or provide the service promptly, or within the time specified, without delay or interference; (4) The sufficiency of the bidder's financial resources and the effect thereof on his/her/its ability to perform the contract or provide the material or services; (5) The character, integrity, reputation, judgment, experience and efficiency of the bidder; (6) The bidder's record of performance on previous orders or contracts for the city or other public entities; (7) The quality, availability and adaptability of the bidder's supplies, equipment or services to the particular use required; (8) The ability of the bidder to provide future maintenance and service where such maintenance and service is necessary; (9) The number and scope of conditions attached to the bid. The city shall have absolute discretion in determining the applicability and weight of the criteria listed above. The city is not required to select the bid with the lowest price. (b) "Professional services" means services that involve the exercise of professional discretion and independent judgment based on an advanced or specialized knowledge, expertise or training gained by formal studies or experience. Such services include, but are not limited to, those provided by accountants, appraisers, architects, attorneys, auditors, economic and financial advisors, election consultants, engineers, environmental consultants, information services consultants, instructors, insurance advisors, land use consultants, plan checkers, physicians, public relations consultants, surveyors and other specialized consultants. (c) "Purchases" refers to the purchases of supplies, equipment, personal property and services and includes leases or rentals and transactions by which the city acquires ownership. Sec. 2-328. - Purchasing authority; purchase order and contract approval requirements. (a) The city council shall, by resolution, establish the thresholds for small, informal and formal procurements. (b) The purchasing officer shall have the authority to issue and approve purchase orders for the purchases of any supplies, materials, services or equipment procured in accordance with section 2-331 or section 2-332 of this division, provided that the expenditure is within the approved budget. (c) The city manager shall have the authority to bind the city by written contract or purchase