HomeMy WebLinkAbout12. Consider alternative option for developing a formalized local vendor preference policyPage 1 of 24
Item 12.
Central Contra Costa Sanitary District
December 7, 2017
TO: HONORABLE BOARD OF DIRECTORS
FROM: STEPHANIE KING, PURCHASING AND MATERIALS MANAGER
REVIEWED BY: PHILIP R. LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION
ANN SASAKI, DEPUTY GENERAL MANAGER
ROGER S. BAILEY GENERAL MANAGER
SUBJECT: CONSIDER ALTERNATIVE OPTION FOR DEVELOPING A FORMALIZED
LOCALVENDOR PREFERENCE POLICY. REVIEWED BYFINANCE
COMMITTEE.
Current Practice and History of Local Preference
Central San's current purchasing policy does not provide for preferences to be given to local businesses
within the service area. On February 19, 2015, staff presented options to the Board on a local vendor
preference policy (Attachment 1), and at that time, the Board was not in favor of adopting such a policy.
On March 31, 2015, staff followed up with a report to the Administration Committee on the current
practices that help encourage local vendor participation in District business (Attachment 2).
At the August 29, 2017 Finance Committee meeting, staff was directed to evaluate options the District
may have in creating a local vendor preference policy. On September 26, 2017, staff brought two options
to the Finance Committee for consideration (Attachment 3). The Committee did not support either option
presented; however, it directed staff to explore an alternative that involved small -dollar purchases. The
Committee members were split on the alternative, so it is being brought to the full Board for consideration.
New Alternative Local Preference Policy for Consideration
The alternative for consideration is whether the Board would like to adopt a policy encouraging staff to use
locally owned businesses for small -dollar purchases when competitive quotations are not required, as long
as the local businesses are able to provide useful and acceptable quality of services or materials at
reasonable prices. Currently, District procurement of goods and services below $3,500 does not require
bidding or more than one quote. Under this proposal, staff would be encouraged to select a local vendor
for such procurements, unless this is deemed uneconomic to the District.
The Committee also suggested increasing the current $3,500 limit to $5,000. This increase would require
a subsequent revision of purchasing policies and consideration of the impact on the District's maximum
credit card purchase limit. The maximum single purchase limit on District credit cards is tied to the
competitive quote threshold of $3,500. Purchasing delegates authority to staff to select vendors and
make these purchases via the District credit card since multiple quotations are not required. If the
December 7, 2017 Regular Board Meeting Agenda Packet - Page 196 of 240
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competitive quote threshold were raised to $5,000, the Board would need to decide if increasing the
single purchase limit on District credit cards from $3,500 to $5,000 would be of interest as well.
Advantages
Since these low -dollar purchases are not subject to competitive quotes, and authority is already delegated
to staff to select the vendors, some of the concerns about the options presented to the Finance
Committee on August 29, 2017 would be eliminated. There would be no need to assign a preference
percentage (i.e. "local vendors," as defined, would be eligible to receive a 5% bid preference) or allow
for possible match options for bidders, and the protest concerns would be minimized.
Disadvantages
Since purchasing authority is delegated to staff at all levels of the organization for these low -dollar
purchases, clear expectations should be established regarding the policy to ensure it is being applied
consistently throughout the organization.
Low -dollar purchases are currently designed to be streamlined, simple, and efficient for staff. Adding
requirements to these purchases may create additional processes, verifications, and paperwork, making
these low -dollar purchases take more staff time than usual. Also, the validation process (for
what constitutes a "local vendor") may pose a challenge since these purchases are not handled centrally.
With the emergence of online retailers offering simple and efficient ordering processes with expedited
delivery services, staff is utilizing these companies more frequently for low -dollar purchases because it
saves them time and a trip to the store. Many of these companies are not small businesses, nor are they
local.
Additional Input Required for Local Vendor Preference Policy
If the Board is interested in staff bringing forth such a policy, staff will need further input and direction, as
outlined below, and could subsequently bring a policy back to the Administration Committee or directly to
the Board.
Definition of "Local"
Cities and counties utilize their city and county boundaries to determine locality. Since the District's
boundaries intersect cities, a decision would need to be made on the boundaries that would be enforced
to determine locality. For example, many businesses in Martinez are customers of Mt. View Sanitary
District;would these businesses meet our definition of "local"?
Options for consideration:
• Business headquarters or branch is within Central San service area only
• Business headquarters or branch is within a city that Central San services (preferred)
• Business owner resides in defined service area but location of business is outside the local area as
defined
• Must be a small business or a national retailer with a branch in the service area
• Must have a local presence for at least six months (not necessary given the minor nature of the
procurements involved. Cities sometimes establish this requirement to prevent a non -local vendor
from establishing a minimal presence to qualify specifically for a major procurement opportunity.)
• Must be in good standing (current on taxes, business license, etc.)
Validation Process to Confirm Business Qualifies As "Local"
Options for consideration:
• Self -certification or affidavit by company
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• Validate as a small business through the State
• Certification process set up by staff
• Do not validate at all; leave it to staff to determine whether a business appears to be "local."
Practice at Other Agencies
Based on a survey from 2015 when this issue was last reviewed, Central San did not find local preference
programs at its sister agencies, including Delta Diablo, East Bay Municipal Utility District, Union Sanitary
District, Dublin San Ramon Services District, Contra Costa Water District, and West County Wastewater
District. San Francisco Public Utilities Commission had a local preference policy that only applied to their
public works procurements.
Some California local government agencies provide local preference programs. A presentation by one
locality considering such a program (City of Huntington Beach) cited 35 California cities that have a form of
a local vendor preference program. District Counsel has explained that cities are in a better position to
justify local vendor preference policies because, unlike special districts, they receive sales tax revenues.
A survey from 2015 listing the status of other agencies with local vendor preference programs is included
in Attachment 1.
Recommendation
Staff would like Board input to determine the level of interest in adopting a local vendor preference policy.
Upon receiving Board feedback, staff can further refine and advance a local vendor preference policy for
Administration Committee review and possible Board adoption.
ATTACHMENTS:
1. Local Vendor Preference Options to Board 02-19-15
2. Practices to Encourage Local Vendor Participation to Administration Committee 03-31-15
3. Local Preference Options to Finance Committee 09-26-17
4. PowerPoint Presentation
December 7, 2017 Regular Board Meeting Agenda Packet - Page 198 of 240
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.Q.y
Central Contra Costa Sanitary District
February 19, 2015
TO: HONORABLE BOARD OF DIRECTORS
VIA: ROGER S. BAILEY, GENERAL MANAGER ab�
FROM: DAVID HEATH, DIRECTOR OF ADMINISTRATION
STEPHANIE KING, PURCHASING & MATERIALS MANAGER
SUBJECT: LOCAL VENDOR PREFERENCE POLICY INFORMATION
The Board has directed staff to evaluate options the District may have in creating a local
vendor preference policy to support local businesses. The attached summary breaks
down the various options of a local vendor preference policy based on research of other
public agencies' policies. Also included is a table which lists various public
organizations' respective attributes of their policies for comparative purposes.
District Counsel, Kent Alm, will be present to discuss legal concerns and restrictions to
keep in mind regarding a local preference policy.
The Administration Committee reviewed this matter at its January 13, 2015 meeting and
recommended this information be presented at an upcoming Board meeting.
This matter was agendized for the February 5, 2015 Board meeting but was continued
to this meeting. Staff is seeking Board input and direction.
December 7, 2017 Regular Board Meeting Agenda Packet - Page 199 of 240
LOCAL PROCUREMENT PREFERENCE
SUMMARY — RESEARCH FINDINGS
OVERVIEW
Page 5 of 24
Local preference policies give local vendors an advantage in public contracting.
Currently, the District includes and encourages local businesses to participate in
solicitations whenever possible; however, the District does not have a policy in place to
give any type of preference or advantage to local businesses.
For the most part, the reasons many public sector entities adopt local preference
policies is to stimulate the local economy, support the local business community and
constituents, and possibly create new jobs and/or protect existing jobs. The general
concerns of these policies tend to be related to the possibility of reducing competition if
the non -local vendors decline to bid due to the preference, which in turn may potentially
increase prices over time. The legal permissibility of certain approaches also can be a
concern.
Numerous cities and counties throughout the State of California have local preference
policies. It appears to be less common in water and wastewater districts in the Bay
Area to have this type of a policy.
The information in this paper is based on researching other public entities and their local
preference policies. The data includes some specifics of these other entities for
comparative purposes.
ELEMENTS TO BE CONSIDERED WHEN DESIGNING A POLICY
1. What type of local preference?
• Match/Percentage bids - when the local bidder's bid is within a certain
percentage of that of the lowest bid by a non -local bidder; the local bidder
may be awarded the bid; or the local bidder is given the opportunity to match
the non -local bidder's price. (Most common)
• Tie -bids - when the bid of a local bidder is the same amount of that of a non -
local bid; preference goes to the local bidder
• Absolute - requires jurisdiction to purchase certain commodities within
designated area
2. How will a local preference be applied?
• If the low bid is not a local vendor, any responsive local vendor who submitted
a bid within x% of the lowest responsive bid shall have the option of
submitting a new bid within x hours/days. The new bid must be in an amount
Board Meeting, Feb. 5, 2015
Local Vendor Preference Policy Information
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less than or equal to the lowest responsive bid for award. (Contra Costa
County's model, 5%)
• In some jurisdictions, the bid preference percentage is applied to local bids
only for the purpose of evaluating whether the local bidder is the lowest
responsible bidder. When the local vendor is within x% of the low bidder,
they will be awarded the contract, but at their original price, so the agency will
pay a higher price.
3. What types of procurements will the local preference apply to (types and dollar
ranges)?
• Supplies, equipment, materials, non-professional service, professional
services (consulting), construction.
• Minimum dollar threshold / maximum dollar threshold considerations
• Example: Contra Costa County's local preference policy applies only to
supplies, equipment and materials that are over $25k.
• Example: City of Concord's local preference policy applies to supplies,
equipment, and services (except professional or consultant) with a $100k
maximum limit.
4. How does a business qualify as a "local business?"
• Virtually all jurisdictions require that the business have a place of business
within the jurisdiction; some attach time limitations (i.e. that the business has
been doing business in the jurisdiction for a certain period of time prior to
seeking the preference). Most jurisdictions also require that the business
have a business license issued by either the jurisdiction or, in the case of
most counties, a jurisdiction within the county. Some jurisdictions also have
requirements regarding employees (i.e. that a certain number of employees
reside in the jurisdiction), and some jurisdictions also give local bid
preferences to companies offering products made within the jurisdiction.
• Example: Contra Costa County Requirements: 1) Business which has its
headquarters, distribution point or locally -owned franchise located in or
having a street address within CCC for at least 6 months before the bid
opportunity 2) Holds any required business license by a jurisdiction located
in CCC, and 3) Employs at least one full-time or two part-time employees
whose primary residence is located within CCC, or if the business has no
employees, shall be at least 50% owned by one or more persons whose
primary residence(s) is located within CCC.
• Some jurisdictions only give preference to local businesses if they qualify as a
small business as well. Some jurisdictions give a percentage preference for
local businesses and an additional percentage preference if they are small
and emerging local businesses (Alameda County).
• Typically cities/counties use their city/county boundaries to determine locality.
Since CCCSD boundaries are not confined to similar borders, a decision will
need to be made on the boundaries that will be enforced to determine locality.
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Local Vendor Preference Policy Information
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If the District were to include areas outside of the District (i.e. Concord,
Clayton, parts of San Ramon, and parts of Martinez), it may be more
challenging to establish the benefit to the District and the intention of the
policy.
5. How does a business demonstrate that it is a local business?
• Alameda County certifies businesses as small and/or local.
• LA County requires that businesses be certified as small by the State.
• Nevada County requires that businesses seeking a preference must submit
materials demonstrating that they qualify with their bid documents.
• Contra Costa County requires that vendors seeking a local bid preference
submit a certification in writing along with their bid, and reserves the right to
impose a penalty (ineligibility to transact business with the County for 3-24
months) for any business falsely claiming to be local.
6. Measuring the impact of the policy
• Identify any additional requirements/reports to measure success of program.
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Local Vendor Preference Policy Information
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LOCAL PREFERENCE POLICY BENCHMARKS
Bay Area Cities and Counties
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Local Vendor Preference Policy Information
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December 7, 2017 Regular Board Meeting Agenda Packet - Page 203 of 240
Local
Preference
Agency
%
Notes
Supplies, equipment, and services (except
professional or consultant). 5% is for evaluation
purposes, will pay the higher price if within 5%.
City of Concord
5%
$100k max.
Only commodities (supplies, material, equipment) >
$25k. Local vendor within 5% of non -local low
bidder may submit new bid within 48 hours (not
including weekends and holidays). If the new bid is
less than or equal to the low bid, award goes to the
local vendor. No additional cost to the County with
County of Contra Costa
5%
this method.
Goods, services, and professional services > $25k.
Local Business - having fixed offices and having a
street address within the County for at least six (6)
months prior to the issue date of any RFP/Q being
responded to; and which holds a valid business
license issued by the County or a city within the
County. Also applies to Alameda County products
defined as products that are grown, mined,
fabricated, manufactured, processed or produced
within the County. Small Local and Emerging
Business (SLEB) - A small business is defined by the
United States Small Business Administration (SBA)
as having no more than the number of employees
or average annual gross receipts over the last 3
years required per SBA standards based on the
small business's appropriate North American
Industry Classification System (NAICS) code. An
emerging business is defined by the County as
having either annual gross receipts of less than
one-half (1/2) that of a small business OR having
less than one-half (1/2) the number of employees
5% Local,
AND that has been in business less than five (5)
County of Alameda
5% Small
years.
10% preference: Must be small and local Applies
10%
to construction and professional service contracts
2% (slightly
under $10 million.
larger local
2% preference: May be slightly larger than small
City and County of San Francisco
businesses)
businesses and must be local.
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Local Vendor Preference Policy Information
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Other California Public Agencies
Local
Applies to supplies, materials, equipment,
Preference
nonprofessional services. 10% is applied and the
Agency
%
local vendor has the opportunity to reduce their
bid in an amount equal to the amount of the lowest
responsible bid (non -local). Allow 5 business days
City of Milpitas
10%
for local to lower bid.
Construction, commodities and service bids. 5
5% Local,
Preference points for local participation on
City of Oakland
5% Small
professional services
Other California Public Agencies
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Local Vendor Preference Policy Information
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December 7, 2017 Regular Board Meeting Agenda Packet - Page 204 of 240
Local
Preference
Agency
%
Notes
Goods, Services, and Consultant Contracts. Goods and
Services Contracts >$50k: 2% discount off the bid price
for Small Local Business Enterprise or Emerging Local
Business Enterprise prime contractors; or 2% discount
off the bid price for prime contractors achieving the
voluntary goal of 20% for SLBE or ELBE subcontractor
participation set forth. Discount does not apply if an
award to the discounted bidder would result in a total
contract cost of $10k in excess of the low, non -
discounted bidder. Consultant Contracts: For proposals
ranking as qualified or acceptable, apply a maximum of
12 additional points for SLBE or ELBE participation (20%
participation=5 points, 25% participation=10 points,
City of San Diego
2%
SLBE or ELBE as prime contractor=12 points.
Must be local and must be certified by the federal Small
Business Administration (SBA) or are registered as small
on the federal System for Award Management (SAM)
data base. Applies to goods and services. Preferene is
for evaluation purposes but does not change the bid
amount of the contract award. Preference not to exceed
$50k for any one bid/proposal.
They also have an ordinance establishing an 8%
County of Los Angeles
8%
preference for Disabled Veteran Business Enterprises.
City of EI Centro
10%
Public Works Projects; Max discount $10k
City of Lancastero
Only goods and services under formal bid limit, N/A to
5/o
construction
City of Redding
5%
Only taxable goods - not services
City of Santa Ana
7%
small, local --1% if not small but only local
City of Santa Cruz
local w/1 employee within city limits, additional 4% for
2%
locally owned
City of South Gate
5%
City of Thousand Oaks
5%
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Local Vendor Preference Policy Information
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County of Imperial
10%
County of Inyo
8%
County of Sacramento
5%
Notes
County of Santa Clara
5%
does not apply to Public Works
County of Tehama
5%
South Tahoe Public Utility
District
1.50%
Water/Wastewater Agencies in Bay Area
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December 7, 2017 Regular Board Meeting Agenda Packet - Page 205 of 240
Local
Preference
Agency
%
Notes
Union San
None
Dublin San Ramon
None
CCWD
None
Delta Diablo
None
West County San
None
—Contract Equity Program and Equal Employment
Opportunity requires bidders to conduct outreach to all
potential subcontractors to ensure that opportunities to
participate in contracts are publicized as widely as possible.
This is not a preference, but a requirement to bid.
—5% SBE Preference (not to exceed $250k) for materials,
supplies, general services, and construction contracts.
None
—Encouragement of local businesses' participation, but no
EBMUD
(see Notes)
preference applied.
Applies only to public works/construction services,
construction materials supplies, construction equipment
rental and/or trucking. Requirements are based not only on
businesses' location, but they also must be small/micro as
determined by a cap on average gross receipts from prior (3)
years, as follows:
Public Works/Construction Contractors (A & B license) $14
million $7 million
SFPUC
Specialty Construction Contractors $7 million $3.5 million
Goods, Materials and Equipment Suppliers $7 million $3.5
million
General Services $7 million $3.5 million
Trucking $3.5 million $1.75 million
Certification process ranges from 14 to 30 business days,
which includes a site visit and interview employees/owner at
10%
site.
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Local Vendor Preference Policy Information
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Central Contra Costa Sanitary District
March 31, 2015
TO: ADMINISTRATION COMMITTEE
VIA: DAVID HEATH, DIRECTOR OF ADMINISTRATION
FROM: STEPHANIE KING, PURCHASING MANAGER 'S K
SUBJECT: LOCAL VENDOR PRACTICES
The Board had previously directed staff to evaluate options the District may have in
creating a local vendor preference policy. Staff brought this information to the
Administration Committee on January, 13, 2015. The Administration Committee
directed staff to bring this issue to the full Board to see if there was an interest in
pursuing a policy to allow preference to local vendors. Staff presented this information
to the Board of Directors on February 19, 2015 and the majority of the Board was not in
favor of pursuing a policy. The Board was, however, interested in staff bringing back
information to the Administration Committee related to the informal District practices that
help to encourage local vendor participation in District business.
There are a variety ways to help encourage local businesses to participate in District
business, all of which we currently practice at the District when applicable:
• Depending on the cost of the purchase, we can limit the number of vendors
submitting quotes to local vendors only, as long as there are enough local
vendors that supply the particular product/service requested.
• Some national government contracts allow credit to be given to local distributers.
• We may include the cost for freight, delivery, or other transportation costs in the
evaluation to determine low bid. This benefits local companies.
• Response time requirements for service contracts often give an advantage to
local companies.
• Our online bidding system allows us the ability to limit the solicitations to a
specified geographical area when applicable.
• Local companies are more likely to attend job walks, giving them a better
understanding of the job and may also allow them to propose alternative plans at
a lower cost for confined space entry jobs.
December 7, 2017 Regular Board Meeting Agenda Packet - Page 206 of 240
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Utilization of procurement cards allows for low dollar purchases to be awarded to
local companies by District staff due to convenience..
• To the extent available, award lower dollar purchases not subject to the
competitive quotations requirements, to local companies.
• We may give consideration to local consultants when awarding agreements for
professional consulting services.
December 7, 2017 Regular Board Meeting Agenda Packet - Page 207 of 240
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ATTACHMENT 3
S
Central Contra Costa Sanitary District
September 26, 2017
TO: FINANCE COMMITTEE
FROM: PHILIP LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION
REVIEWED BY: ANN SASAKI, DEPUTY GENERAL MANAGER
SUBJECT: FOLLOW-UP DISCUSSION TO AUGUST 29, 2017 MEETING ON
DEVELOPMENT OF A LOCAL VENDOR PREFERENCE PROGRAM
Central San's current purchasing policy does not provide for specific bid preferences for local vendors. I n
2015, the Board considered, but did not approve such a program.
On August 29, 2017, during the routine expenditure review, the Finance Committee requested staff to
bring forward for further consideration a local vendor preference program. This memorandum is in
response to that request. The alternatives contained here are for further discussion, and to obtain an initial
sense of the Committee as to whether they should be further developed, different alternatives selected, or
not considered at all. Review of program terms for agencies that have implemented local preference
programs shows that it is important to address several parameters including: (1) which vendors are
considered "local" or other "good standing" type requirements; (2) the nature of the preference;
(3) which procurements are eligible for and excluded from the local preference program; and (4)
provisions regarding administration of the program.
Alternative Proposals
Staff understood the initial request from the Finance Committee for a local vendor preference program
that:
• is simple and not overly complex
• provides for a degree of discretion by the General Manager
Two alternative proposals (Attachment 1), aim to achieve this by:
Option 1A: "5% Preference for Cost Based Bids'
• Provides that the General Manager can award a cost based bid to local vendors (as defined) if the
price difference between the local vendor and the lowest bid, does not exceed 5% (and not to
exceed $10,000), and the General Manager concludes that factors exist that would benefit Central
San in selecting the local vendor, which are listed as either direct benefits to Central San in terms of
cost savings, or indirect benefits such as local economic development.
• For qualification based bids, two options are offered:
December 7, 2017 Regular Board Meeting Agenda Packet - Page 208 of 240
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• Soft -language that indicates an evaluation panel shall consider the benefits of selecting a local
company. No explicit point preference is specified.
• Firm -Central San shall award 5% of the points for an RFP to local companies.
A definition for local companies is provided. It allows for companies with headquarters or a branch in
any town/city in the Central San service territory. A company majority owned by an individual residing
within Central San service territory would also qualify. The local company would need to have a
presence for a least six months prior to the publication of the call for bids. Some jurisdictions that
have a local business preference policy also require the business to be certified as a "small
business"; this would be an option for this policy.
Option 1 B: "Local Firm can match low bidder"
• An alternative proposal, previously considered in 2015, would allow a local bidder to match the low
bid of a non -local bidder.
Considerations
1. Which vendors are considered local: Significant variations are possible here. The key issue is the
degree of presence required to be considered local. Some localities also require the business to be
a small business, as defined. Some localities (particularly cities or counties) also require that the
bidder be in "good standing", which includes being current on taxes.
2. Nature of the preference: Many agencies offer an explicit 5% preference; that is what is proposed in
Option 1 A, subject to a cap of $10,000 per procurement. Option 1 B offers a local vendor the
opportunity to match a low bid. This could be limited to the offer to match if the local vendor's bid is
within a specified percentage of the low bid.
3. Scope: Which purchases are eligible for, and excluded from the proposal has been drafted to
include:
• Services (including professional services/consulting)
• Goods
It would exclude:
• Goods or services procured under a cooperative purchasing agreement (piggyback contract), or
other qualified exemption from the competitive process (example: some vehicles are bought on a
piggyback contract. Based on this exclusion, this would continue, when applicable).
• Public Works or sealed bid procurements.
• Procurements that are explicitly excluded when announced.
4. Administration concerns: Important goals would be (a) clarity of what procurements it applies to, and
how it applies; (b) minimizing additional steps in the procurement process; and (c) avoiding or
minimizing disputes over the operation of the program.
Option 1 A presents some potential for concerns in some of these areas. As the proposal provides for
discretion by the General Manager to consider the benefits of a local vendor, additional time and the
potential for disputes exists.
Option 1 B is likely preferable in terms of administration, in that it provides for less subjectivity, potential for
disputes, and need to involve the General Manager.
Advantages and Disadvantages of Proposals
The following are potential advantages and disadvantages of local vendor preference programs as
proposed.
December 7, 2017 Regular Board Meeting Agenda Packet - Page 209 of 240
Advantages
Option 1A: 5% Preference for
Cost Based Bids
Recognition that Central San is
supportive of and has taken steps
within its ability, to enhance the local
economy
As Central San receives a portion of
overall funding from ad valorem
taxes a strong local economy can
mean higher property values, a
stronger tax base, and higher funding
to support Central San's mission.
Disadvantages
Option 1 B: Local Firm can match
lower bidder, if Local firm's bid is
within 5% of lowest bidder
• Same
Option 1A: 5% Preference for Cost
Based Bids
• Same
Additional explicit cost to Central San
procurement if a higher cost local vendor is
selected. Difficult to quantify up front as
amount may vary. Could be tracked
subsequently, at additional administrative
cost. In the alternative proposal where a
local vendor would be given the opportunity
to match the lowest cost bid, this would be
avoided.
Cost of staff time in administering program,
including:
(1) additional steps required by Purchasing
Division staff;
(2) For the General Manager consideration
of factors that may warrant award to the
local vendor proposal, there would be the
cost of General Manager time for this
consideration;
(3) staff time related to analysis of bids,
resolution of the winning bidder, interfacing
with non -selected vendors, and reporting
out on the program.
Page 15 of 24
Option 1 B: Local Firm can match lower
bidder, if Local firm's bid is within 5% of
lowest bidder
• No incremental cost to Central San
• Also present
• Eliminated
Also present (More time would be
needed to explain that there is a local
firm that has "X" days to match the low
bid, then if award is made to the local
firm, we need to explain to the low
bidder why they weren't awarded the
contract
December 7, 2017 Regular Board Meeting Agenda Packet - Page 210 of 240
(4) Potential for increased bid protests
based on real or perceived legality
concerns.
(5) Potential to discourage competition and
reduce the pool of competing bidders.
(6) Definition and application of "local"
could be subject to interpretation and
possible legal challenge.
Issues related to definition of "Local".
Example:
• Are national retailers going to receive
the 5% preference if they have a
branch is our jurisdiction (i.e. Home
Depot)? As written, yes.
• With respect to qualification if the
majority owner lives in the service
territory, there would be the issue of
verifying owner's personal residency
(we could rely on an attestation only).
Page 16 of 24
Practice at Other Agencies
Based on a survey from 2015 when this issue was last reviewed, Central San did not find local preference
programs at sister agencies including Delta Diablo, EBMUD, Union San, Dublin San Ramon, CCWD, and
West County San. SFPUC had a local preference policy that only applied to their public works
procurements.
Some California local government agencies provide local preference programs. A presentation by one
locality considering such a program (City of Huntington Beach) cited 35 California cities that have a form of
a local vendor preference program. A survey listing the status of other agencies with local vendor
preference programs is included in the memorandum presented two years ago on this issue (Attachment
2).
Recommendation
Staff has developed two proposals for additional discussion by the Finance and/or Administration
Committee. Staff will work further on the proposal after receiving direction from the Committee.
Strategc Plan Tie-ln
GOAL THREE: Be a Fiscally Sound and Effective Water Sector Utility
December 7, 2017 Regular Board Meeting Agenda Packet - Page 211 of 240
Page 17 of 24
Strategy 2 - Manage Costs
GOAL SIX. Embrace Technolo_W, Innovation and Environmental Sustainability
Strategy 2 - Evaluate Business Processes and Optimize Business Operations
ATTACHMENTS:
1. Local Vendor Preference Program Options
2. Previous 2015 Local Vendor Preference Options
December 7, 2017 Regular Board Meeting Agenda Packet - Page 212 of 240
Page 18 of 24
OPTION 1A
For cost -based bids:
If a bidder with a material service area presence (a "Local Company") submits a bid that is not more than
5% (not to exceed $10,000) higher than a bid submitted by a bidder that does not have a service area
presence, the GM may award the bid to the Local Company after consideration of factors (see list below)
that would accrue to Central San from selecting the Local Company.
Factors in Consideration of the Benefits of a Local Company:
1. The value of improved responsiveness of the Local Company
in addressing service, maintenance, warranty or other issues
that may arise with respect to the procured good or service.
2. The value of Central San staff time in interfacing with the
vendor in initial good or service delivery, or in addressing
future follow-up service, maintenance, or warranty issues.
While it is recognized that there may be general economic
development advantages that can accrue to local government
from spending within the local government's jurisdiction, this
factor alone is not considered sufficient to justify a local bid
preference.
For qualifications based procurements:
Alternative A: Implicit.
• In consideration of the ability of a vendor to best meet Central San's needs, the evaluation panel
shall consider the benefits of selecting a Local Company.
Alternative B: Explicit:
• In consideration of a vendors to provide goods or services in response to an RFP, Central San
shall explicitly allocate 5% of RFP's evaluation points to a Local Company based on the
consideration of factors that would accrue to Central San from selecting a such a Local
Company.
December 7, 2017 Regular Board Meeting Agenda Packet - Page 213 of 240
Page 19 of 24
OPTION 113
If a bidder with a material service area presence (a "Local Company") submits a bid for a Central San
procurement, and that bid that is not more than S% higher than a bid submitted by a bidder that does
not have a service area presence, then Central San will allow the Local Company the option to match the
bid of the lowest bidder and Central San may award the bid to that Local Company.
December 7, 2017 Regular Board Meeting Agenda Packet - Page 214 of 240
Page 20 of 24
Common Terms
(Applicable to Option 1A or Option 1B)
Definition of local
Material service area presence is defined as a bidder that meets either of the following criteria:
(a) is headquartered or has a branch or local office in a city or locality
in the Central San Service territory to include Lafayette, Moraga,
Orinda, Walnut Creek, Danville, Alamo, San Ramon, Concord,
Pacheco, Martinez, Concord, Clayton or other unincorporated areas
within Contra Costa County in the Central San service territory; or
(b) is majority owned by an individual residing in the cities or
locations noted above.
The local company shall meet the requirements of clause (a) or (b) for at least six (6) months prior to
publication of the call for bids.
Bidders claiming Local Vendor Preference must submit an Affidavit of Eligibility with their bid or quote
response, unless an approved Affidavit is already on file.
Contracts Excluded
Local preference shall not apply to the following categories of contracts:
1. Goods or services provided under a cooperative purchasing
agreement or similar "piggyback" contract or other qualified
exemption from the competitive process."; and
2. Any bid announcement which specifically provides that the general
local preference policies set forth in this policy are suspended due to;
the unique nature of the goods or services sought, the existence of
either a local emergency as determined by the Board, or where such
suspension is, in the opinion of District Counsel, required by law.
3. Public works projects or sealed bid projects.
December 7, 2017 Regular Board Meeting Agenda Packet - Page 215 of 240
Page 21 of 24
Reference Materials
Example Policies:
Placer County: 5% not to exceed $5000
httus://www.placer.ca.gov/depa rtments/admin/procurement/localvendorpref
Huntington Beach: 5% not to exceed $5000 for commodities. 5% point preference for qualifications based/professional
services
htto://huntinstonbeachca.gov/announcements/attachments/Local%20Vendor%2OPreference%2OMav%202 %202011 pdf
Other General Resources:
https:/Iilsr.org/rule/local-purchasing-preferences/
December 7, 2017 Regular Board Meeting Agenda Packet - Page 216 of 240
Page 22 of 24
11/29/2017
..9
.� FURTHER CONSIDERATION
OF A
LOCAL VENDOR
PREFERENCE POLICY
PHILIP R. LEIBER
DIRECTOR OF FINANCE & ADMINISTRATION
DECEMBER 7, 2017
HISTORY AND CURRENT PRACTICE
• Central San's purchasing policy does not provide
specific preference for local vendors
• Local vendor preference was previously considered in
February 2015
• Finance Committee
• August 2017 - Requested that staff develop alternatives for a
local preference policy
• September 2017 - Two options were presented. The
Committee did not support either option. One Committee
Member requested further consideration of another alternative,
presented here today
• Context:
• Programs not uncommon in California Cities (justifiable with
nexus to tax collections)
• Not present at sister agencies (except SFPUC)
2 ARI
1
December 7, 2017 Regular Board Meeting Agenda Packet - Page 217 of 240
ALTERNATIVE FOR CONSIDERATION
• Adopt policy encouraging staff to use locally owned
businesses for smaller dollar purchases below the
competitive quotation threshold.
Limited time required for
central administration
No specific percentage
preference offered
Potential ambiguity in program
administration
Potentially higher costs
(purchase price and staff time)
No allowance for match options Potential inability to utilize
for bidders online retailers
No protests to administer
C1
GUIDANCE REQUESTED
F. Definition of Local -
Good Standing requirement
G. Definition of Local —
Validation requirements
Must be in good standing
(taxes, business license,
etc.)
Certification by company
Validate as small
business through State
Certification process
administered by
Purchasing
No specific requirement, but such
items could be considered, if known
Delegate to staff to determine local,
based on criteria defined above
4
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2
December 7, 2017 Regular Board Meeting Agenda Packet - Page 218 of 240
A.
Threshold for purchases not
$3,500
Raise to $5,000
requiring more than one quote
B.
Threshold for single purchase
$3,500
Raise to $5,000
on credit cards
C.
Definition of Local —
Business or headquarters in
Business or headquarters in city
Boundary
Central San service area
served by Central San
D.
Definition of Local —
Must be a small business,
Any business, regardless of size
Small Business
as defined
E.
Definition of Local —
Must have been in business
No specific business duration required
Duration
at least six months
F. Definition of Local -
Good Standing requirement
G. Definition of Local —
Validation requirements
Must be in good standing
(taxes, business license,
etc.)
Certification by company
Validate as small
business through State
Certification process
administered by
Purchasing
No specific requirement, but such
items could be considered, if known
Delegate to staff to determine local,
based on criteria defined above
4
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2
December 7, 2017 Regular Board Meeting Agenda Packet - Page 218 of 240
BOARD FEEDBACK REQUESTED
1>
QUESTIONS?
Page 24 of 24
11/29/2017
3
December 7, 2017 Regular Board Meeting Agenda Packet - Page 219 of 240