HomeMy WebLinkAbout04.c. Review draft Position Paper to consider adopting proposed revisions to Section 11. Contracts for Goods and Services of Board Policy No. BP 037 - General Manager Delegation of AuthorityItem 4.c.
BOARD OF DI RECTORS
POSIT ION PA PER
DRAFT
M E E T ING D AT E:MAY 4, 2021
S UB J E C T: R E V I E W D R A F T P O S I T I O N PA P E R TO C O NS I D E R A D O P T I NG
P R O P O S E D R E V I S I O NS TO S E C T I O N 11. C O NT R A C T S F O R G O O D S A ND
S E RV I C E S O F B O A R D P O L I C Y NO. B P 037 - GENERAL MANAGER
DEL EGAT ION OF AUT HORITY
S UB M I T T E D B Y:
S T E P HA NI E K I NG, P UR C HA S I NG A ND
MAT E R I A L S S E RV I C E S D I V I S I O N MA NA G E R
P HI L I P L E I B E R, D I R E C TO R O F F I NA NC E A ND
A D MI NI S T R AT I O N
I NI T I AT I NG D E PART M E NT:
A D MI NI S T R AT I O N-P UR C HA S I NG A ND
MAT E R I A L S S E RV I C E S
RE V IE WE D B Y:R O G E R S. B A I L E Y, G E NE R A L MA NA G E R
IS S UE
R evisions to Board policies require B oard approval.
B AC K G RO UND
Board P olicy No. B P 035 – Purchasing was adopted in 2018. T his policy along with two other Board
policies: BP 036 – Informal Bi dding, and BP 037 – Del egati on of Authority to General Manager address
various protocols about how goods and services are procured at Central San.
Past and current policies have provided that the General Manager may procure goods and services without
specific dollar limitations, except that such procurements may not result in spending exceeding the O&M or
capital budgets. "Goods and services" does not include professional services, which have a $200,000 limit per
contract without requiring Board approval, and B P 037 (as well as BP 036) also provides for limitations of
$200,000 for public works informal bidding in accordance with the Uniform Public Construction Cost Accounting
Act (U PCCAA). As such, District Projects above $200,000 require formal bidding and approval by the Board of
Directors.
T he language in the B P 037 related to goods and services procurements currently reads:
11. Contracts for Goods and Services
a. Limited by Annual Operati ng Budget. T he General Manager and Purchasing and Materials
Manager are authorized to award and enter into contracts and purchase orders for goods and
services that are not “professional services” or “public works contracts,” such as utilities,
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maintenance services, equipment, chemicals and supplies so long as overall spending does not
exceed the Board’s annual adopted operating budget, provided purchasing policy and procedures
are adhered to.
T his provision merits consideration and, potentially, modification. I n the experience of District Counsel,
and the Director of F inance and Administration, this provision appears to be somewhat of an outlier in
special district and municipal practice.
T hat said, this policy, while not widespread, is considered a best practice by the National P rocurement
I nstitute (NP I ) and the National I nstitute of Governmental Purchasing (NI G P ). T he NP I established the
Achievement of Excellence in Procurement (A E P ) Award as a national program to benchmark
organizational excellence in procurement. C entral San has received this award f or the past 10 consecutive
years. T he Purchasing Manager contacted the NP I to obtain inf ormation about how widespread this
practice is. Attachment 1, entitled “Criterion 17 A E P Stats,” details the required authority for the Chief
Procurement Of f icial to qualify as well as a list of all agencies who met this criterion. T his list includes 36
agencies (19%) out of 188 agencies that received the award. Ten (24%) of these agencies were in
C alif ornia out of 42 agencies in C alif ornia that received the award.
I n light of these f acts, potential options to provide more Board involvement or oversight over goods and
services procurements are summarized below, listed in order of "most restrictive" to "least restrictive:"
1. Contracting for goods and services above $200,000 would require Board approv al. T his would align
the procurement practice for goods and services with current delegated authority for Professional Services and
District Projects, where contracts above $200,000 require Board approval.
Pros:
F uller transparency of all procurements taking place at C entral San.
More comparable practice to peer agencies.
C ons:
Additional volume of procurements would require B oard approval, with impacts on staf f and
Board. A dditional staf f workload in preparing position papers. Additional B oard review of
position papers and potentially longer board meetings may result.
Would need to specif y how the $200,000 limit is enforced. Options for triggering Board
approval include:
a. A ny individual P O and contract above $200,000 for the term of the contract.
b. Any individual P O and contract above $200,000 f or a given year.
c. Cumulative purchase orders and contracts to a particular vendor above $200,000 in a given
year.
District Counsel noted that Central San historically had several contracts that cumulatively
amounted to relatively large amounts and the periodic competitive procurements were not as
frequent as good practice would have commended. However, the Purchasing Division has
prioritized and made significant progress this past year in bidding contracts that exceeded five
years through extensions, leaving only two contracts that need to be bid (both have an
approximate spend of $30,000 per year).
Should define and provide for exceptions in the event of critical procurements that cannot wait until
the next Board meeting.
a. T he General Manager may issue purchase orders for goods and services in excess of
the above thresholds in such situations where a delay would represent a significant threat
to operations, health and saf ety, or f inances of Central S an. I n such a situation, the
General Manager will timely report such procurements at a subsequent B oard meeting.
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Would need to consider when Board approval would be required for amendments, change
orders or renewals to these purchase orders and contracts.
Language to effectuate such a change is shown below (with additions underlined):
11. Contracts for Goods and Services
a. Goods and Services Li mi t. T he General Manager and Purchasing and Materials
Manager are authorized to award and enter into contracts and purchase orders for goods and
services that are not “professional services” or “public works contracts,” such as utilities,
maintenance services, equipment, chemicals and supplies that do not exceed $200,000.
T he General Manager may also issue purchase orders and contracts for goods and services
in excess of the above threshold in such situations where, in the General Manager's written
opinion, a delay would represent a significant threat to operations, health and safety, or
finances of Central San. In such a situation, the General Manager will timely report such
procurements at a subsequent Board meeting.
2. Continue current practice while tightening budgetary control around specific Budgetary
C ontrol L evels (B C L s). T he General Manager and P urchasing and Materials Manager would retain
contracting authority for procurements that are not D istrict Projects or Prof essional and C onsulting
Services "as long as the anticipated annual expenditure does not result in an anticipated overage in the
relevant budgetary control levels (B C L s)". Such B C L s could be set at the f ollowing level of granularity,
which are the categories used for non-labor related costs in the Operating and Maintenance B udget:
1. P urchased Property Services (R epairs and Maintenance, Hauling and Disposal, Security,
Rentals, C leaning)
2. Other Services (Prof essional, Technical, Other)
3. S upplies and Materials (Utilities and F uel, C hemicals, General S upplies)
4. Other Expenses (I nsurance, Memberships, Training and Meetings, Miscellaneous/Other)
As a variation, the B C L levels could be set instead as the D epartments (A dministration, Operations, and
Engineering and Technical Services).
Pro:
Would provide some additional level of Board oversight/approval if expenditures were
anticipated to exceed the overall levels specified in the B C L .
C ons:
C ould potentially delay procurement of important goods and services.
Some additional staf f work needed for Board communication.
L anguage to effectuate such a change is shown below (with additions underlined):
11. Contracts for Goods and S ervices
a. Limited by Annual Operati ng Budget. T he General Manager and Purchasing and
Materials Manager are authorized to award and enter into contracts and purchase orders for
goods and services that are not “professional services” or “public works contracts,” such as
utilities, maintenance services, equipment, chemicals and supplies so long as purchasing
policy and procedures are adhered to, and overall spending does not exceed the Board’s
annual adopted operating budget and annual budgetary limits by major expense type
category (Purchased Property Services, Other Services, Supplies & Materials, Other
Expenses) are not exceeded.
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3. Status quo with additional afte r-the-fact re porting to the Board on transactions. Authority remains for
the General Manager and Purchasing and Materials Manager to procure goods and services within the overall
budget, but the Board would receive an after-the-fact report on items that exceed certain limits, such as:
a. Any individual purchase order, contract or change order that exceeds the General Manager authority
limit ($200,000).
b. Cumulative contracted amount above the General Manager authority limit.
Pros:
Would provide transparency of purchases of goods and services above $200,000. T he
specific f ormat of the report is yet to be determined, but staf f would work with the Oracle E R P
system implementer to develop a suitable report if this option is selected.
Would not delay procurements due to the need for Board pre-approval.
C ontinued maintenance of a "best practice" per NP I and NI G P.
C on:
To the extent the B oard wanted to approve in advance such procurements and potentially
decline to approve or modif y such procurements, this option would not f acilitate that. T he
Board could still inquire about the transaction from the periodic reporting, and direct changes in
subsequent procurements.
L anguage to effectuate such a change is shown below (with additions underlined):
11. Contracts for Goods and S ervices
a. Limited by Annual Operating Budget. T he General Manager and P urchasing and
Materials Manager are authorized to award and enter into contracts and purchase orders
for goods and services that are not “professional services” or “public works contracts,”
such as utilities, maintenance services, equipment, chemicals and supplies so long as
overall spending does not exceed the B oard’s annual adopted operating budget,
provided purchasing policy and procedures are adhered to. T he Board shall be
provided with a quarterly announcement of procurements of goods and services in
excess of $200,000. T he report will specify the criteria used to define transactions above
this limit.
Staff recommends Alternative 3 as an initial step toward increased transparency. If, after a period of time (i.e.,
one year), the Board would prefer to move toward a stricter control on contracting, then Alternative 1 or 2 could
be adopted.
ALT E RNAT I V E S /C O NS I D E RAT IO NS
I n addition to maintaining the status quo, three alternatives were specif ied above. S taff recommends the
third alternative, providing after-the-fact report regarding procurements exceeding $200,000.
T he B oard could choose not to adopt the proposed revisions to B P 037, select A lternative 1 or 2, or
provide some other direction to staff.
F I NANC IAL I M PAC T S
T here are no direct fiscal impacts anticipated from adopting the proposed revisions, apart from some
minor staf f time related to reporting. T his reporting will be generated by the Oracle E nterprise R esource
Planning (E R P ) system, and provided as part of the quarterly financial report. T he f irst such report would
cover the period of A pril - J une 2021.
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C O M M I T T E E RE C O M M E ND AT IO N
Staf f presented these proposed revisions to the A dministration C ommittee on May 4, 2021 and the
C ommittee recommended ______.
RE C O M M E ND E D B O ARD AC T I O N
C onsider adopting proposed revisions to S ection 11. C ontracts f or Goods and S ervices of B oard Policy
No. B P 037 - General Manager Delegation of Authority .
Strategic Plan Tie-I n
G O A L TH R EE: Fiscal R esponsibility
Strategy 2 – Ensure integrity and transparency in financial management
AT TAC HM E NT S :
D escription
1. Criterion 17 A E P Stats
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Criterion 17. Authority of the Chief Procurement Official to Solicit and Award Contracts
The purpose of this criterion is to demonstrate that an elected body cannot overturn the professional
judgment of the Chief Procurement Official.
The agency has enacted a procurement code, directive or policy to allow the Chief Procurement Official
to solicit and award all competitively bid contracts for goods and non-professional (non-
Architecture/Engineering) services without limits for items that have been approved in the adopted
budget, without agency governing body (e.g. Mayor and Council, Board of Supervisors, School Board,
etc.) approval for specific contract award (source selection). This criterion covers those procurements
that have competitive specifications, multiple sources and formal bidding processes. If it is not clearly
demonstrated in your submittal that your Chief Procurement Official has unlimited authority to award
contracts, you will not receive points for this criterion.
Below is a list of agencies that received credit for this criterion, California agencies highlighted in blue:
First
Name Last Name Email Agency
Boyd Donavon boyd.donavon@ventura.org Ventura County
Brian Cotham bcotham@csufresno.edu CSU Fresno
Carla Ozgunduz carla.ozgunduz@sdcounty.ca.gov San Diego County
Carrie Mathes Carrie.Mathes@ocfl.net
Chelseya Molner chelseya@mesc.org
Clara Vega clarav@iadb.org
Dan Howell howelld@emwd.org Eastern Municipal Water District
Daniel Garza daniel.garza@cityofconcord.org City of Concord
Diana Wilson diana.wilson@longmontcolorado.gov
Donna Ginter dginter@gwu.edu
Douglas McClement doug.mcclement@unlv.edu
Dru Zachmeyer dzachmey@calpoly.edu Cal Poly State University
Duane Tucker duane.tucker@cu.edu
Gerald Plummer gplummer@isd.lacounty.gov Los Angeles County
Gina Encallado EncalladoGL@co.monterey.ca.us County of Monterey
Heather Moore heather.moore@ogs.ny.gov
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Jackie Lee Macchiusi jackie.macchiusi@vaughan.ca
Jana Vargas jvargas@san.org San Diego County Regional Airport
Authority
Karen Frank kfrank@ufl.edu
Kim Austin kim.austin@njpacoop.org
laura jestings laura.jestings@tucsonaz.gov
Lori Peterson lpeterson@dsdmail.net
Lorie Sheppard lorie.sheppard@asu.edu
Mark Neihart mneihart@orovalleyaz.gov
Mike Sheets william.m.sheets@wv.gov
Nicole Brewer nbrewer@wmata.com
Priscilla Kung pkung@howardcountymd.gov
Ray Hooper rhooper@seminolecountyfl.gov
Rebecca Kee rkee@vbgov.com
Renee Funk renee-funk@uiowa.edu
Rosey Murton rmurton@fsu.edu
Roxann Parker Roxann.parker@state.de.us
Shari Powell shari@uoregon.edu
Stephanie King sking@centralsan.org Central Contra Costa Sanitary District
Susan Levey slevey@panynj.gov
Treasa McLean tmclean@floridapoly.edu
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