TO:
Honorable Mayor and Members of the City Council
THROUGH:
Bruce Moe, City Manager
FROM:
Steve S. Charelian, Finance Director
Julie Bondarchuk, Financial Controller
Mario Hernandez, Purchasing Supervisor
SUBJECT:Title
Consideration of Introducing an Ordinance Amending Chapters 2.36 (Purchasing) of the Manhattan Beach Municipal Code to Modify the Purchasing Authority Limits (Finance Director Charelian).
INTRODUCE ORDINANCE NO. 23-0009
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Recommended Action
RECOMMENDATION:
Staff recommends that the City Council introduce Ordinance No. 23-0009 amending Chapters 2.36 (Purchasing) of the Manhattan Beach Municipal Code to modify the purchasing authority limits.
FISCAL IMPLICATIONS:
The recommended action has no direct budget implication.
DISCUSSION:
Staff periodically reviews the City’s purchasing processes and procedures in order to evaluate efficiency and ensure policies are updated over the course of time. As a part of this evaluation, staff is proposing an update to the Municipal Code language to reflect current day processes, increase the City’s Informal Bid Limit to $10,000 (which, if adopted, would cap the Department’s purchasing authority at $10,000) and the Formal Bid Limit to $75,000 (which, if adopted, would cap the City Manager’s purchasing authority at $75,000). Items in excess of $75,000 would need Council approval.
The proposal to change the bid limits was introduced to the Finance Subcommittee on June 26, 2023. Finance Subcommittee recommended to move the proposal on for City Council consideration.
For comparison purposes, staff surveyed other cities’ formal bid limits. Below is a chart with the results. This proposed change will result in two significant modifications to Chapter 2.36 of the Municipal Code (Purchasing) to the informal and formal bid limits.
|
City |
Population Size |
City Size |
Formal Bid Limit |
General Law or |
|
|
|
(Square Miles) |
|
Charter |
|
Redondo Beach |
66,748 |
6.35 |
$35,000 |
Charter |
|
El Segundo |
16,898 |
10.88 |
$50,000 |
General Law |
|
Manhattan Beach |
34,668 |
3.88 mi2 |
$50,000 |
General Law |
|
West Hollywood |
34,938 |
1.9 |
$75,000 |
General Law |
|
Santa Monica |
93,000 |
8.42 |
$95,000 |
Charter |
|
Beverly Hills |
35,000 |
5.71 |
$100,000 |
General Law |
|
Huntington Beach |
198,039 |
28.33 |
$100,000 |
Charter |
|
Torrance |
146,860 |
20.53 |
$100,000 |
Charter |
|
Newport Beach |
86,738 |
52.92 |
$120,000 |
Charter |
Increase in Informal Bid Limit
Departments currently have the ability to purchase services, supplies, and equipment up to $5,000 in value independently from Purchasing (Purchasing and Finance review after the fact). This allows departments to easily and quickly obtain the needed materials and services without processing a request through the Purchasing Division which takes time. The $5,000 limit was established because the high volume of purchases under $5,000 has limited opportunity to generate significant savings by going through the bid process and therefore is not an efficient use of staff time. In Fiscal Year 2022-2023, there were 62 purchases between $5,000 - $10,000. The $5,000 limit was last reviewed and set in 2015.
Today, low-value expenditures ($5,000 or less) make up a considerable portion of the work produced by staff but comprise only a small portion of dollars actually spent. Staff recommends raising the informal bidding limit from $5,000 to $10,000, thereby eliminating the need to bid small purchases where the potential savings may not justify the staff time to bid. This will allow Purchasing staff to focus on higher dollar purchases and contracts where potential savings are most significant. Purchasing will continue to review all department purchases.
Increase in Formal Bid Limit (City Manager’s Authority)
Purchasing staff currently solicits formal bids for all single purchases, contracts and multi-year contracts with a cumulative amount valued at $50,000 or more. Each formal bid requires additional steps beyond informal bids, such as preparing staff reports and City Council approval. From a timeline perspective, the formal bid process can take as long as three months to complete, especially for more complex projects. Therefore, staff recommends raising the formal bidding limit (City Manager’s authority) from $50,000 to $75,000. Since there have been only four staff reports between $50,000 - $75,000 going to City Council in the past twelve months, staff anticipates that this change will have minimal effect to current practices.
Other Minor Changes
• Added a preference to purchase locally whenever feasible, reasonable, and in the City’s best interest.
• Change in title for Purchasing Manager to Purchasing Agent.
• Update “Informal Contract Procedure,” “Change Orders” and “Emergency Procurement” sections to be in line with these recommendations.
• Change the Finance Director authority from $20,000 to $25,000 in section 2.36.080.
• Removed references to written submittals and physical postings of proposals.
CONCLUSION:
These proposed changes (summarized below) to the existing Purchasing code will streamline the processes involved while maintaining review and controls.
1. Increasing the informal bid limit from $5,000 to $10,000;
2. Increasing the formal bid limit (City Manger’s authority) from $50,000 to $75,000;
3. Changing the language throughout to reflect these changes.
ENVIRONMENTAL REVIEW:
The City has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary.
LEGAL REVIEW:
The City Attorney has approved Ordinance No. 23-0009 as to legal form.
ATTACHMENT:
1. Draft Ordinance No. 23-0009