Title
An Ordinance to Repeal Chapter 14, Purchasing Contracting and Selling Procedure, of Title I of the Code of the City of Ann Arbor and Replace it with a new Chapter 14, Purchasing, Contracting and Selling Procedure of Title I of the Code of the City of Ann Arbor (Ordinance No. ORD-07-61)
Memorandum
Your approval is requested to repeal Chapter 14, Purchasing, Contracting and Selling Procedure, of Title I of Code of the City of Ann Arbor and replace it with a new Chapter 14, Purchasing, Contracting and Selling Procedure.
A cross-functional team comprised of Finance, the Attorney's Office, Public Services, Community Services and Safety Services met over several months to review and analyze the purchasing, contracting and selling procedures used by the City. The attached ordinance amendment to Chapter 14 of the City Code is a result of that process.
The team recognized that the City of Ann Arbor organizational structure has changed since 1992 and many procedures and terminology outlined the existing ordinance and related administrative procedures were no longer applicable or if applicable could be made more efficient.
The following highlights the changes to various provisions of the Chapter to reflect the present organization and appropriate operating practices:
· General language revisions throughout the ordinance to reflect internal changes and existing procedures.
· Addition of a definition section for clarification of term
· Revision of the competitive bidding exceptions to include cooperative purchasing arrangements with other governmental agencies.
· Revision of the surplus property sales requirements to implement efficiencies
· Addion of new provision providing for the development of bid discount processes in connection with the City's environmental policies or based on locality.
· Addition of new provisions outlining the process for bid protests and the removal of vendors from City bid lists.
Staff
Prepared by: Mary Joan Fales, Senior Assistant City Attorney
Reviewed by: Tom Crawford, CFO/Finance and Administrative Services Administrator
Approved by: Roger W. Fraser, City Administrator
Body
ORDINANCE NO. ORD-07-61
First Reading : December 17, 2007
Public Hearing : January 7, 2008
Approved: January 22, 2008
Published: January 27, 2008
Effective: Feburary 6, 2008
Purchasing contracting and selling procedure
AN ORDINANCE TO REPEAL CHAPTER 14, PURCHASING, CONTRACTING AND SELLING PROCEDURE, OF TITLE I OF THE CODE OF THE CITY OF ANN ARBOR AND REPLACE IT WITH A NEW CHAPTER 14, PURCHASING, CONTRACTING AND SELLING PROCEDURE, OF TITLE I OF THE CODE OF THE CITY OF ANN ARBOR.
The City of Ann Arbor ordains:
Section 1: That Chapter 14, Purchasing, Contracting and Selling Procedure, of Title I of the Code of the City of Ann Arbor be repealed in its entirety.
Section 2: That a new Chapter 14, Purchasing, Contracting and Selling Procedure, of Title I of the Code of the City of Ann Arbor be added to said Code to read as follows:
Chapter 14
PURCHASING, CONTRACTING AND SELLING PROCEDURE
1:311. Procurement/Purchasing; Purchasing agent.
Procurement/Purchasing, Accounting Services Unit primary function is to assist the various Services Areas/Units in securing the best products, repairs and services available for the purposes intended in the most efficient and economical manner possible and to ensure all acquisitions of products, repairs and services are made in conformance with City Charter and Code Requirements and established Operational Procedures
The city administrator shall adopt necessary operational procedures for the procurement of goods and services. No contract for the purchase of services, goods or construction shall be entered into, with the exception of emergency purchases, unless there is certification by the Finance and Administrative Service Area that there is a sufficient unencumbered balance in the budget or appropriation against which the charge for the purchase is to be made and unless the City Attorney's office has approved the contract, bond and insurance, as applicable, as to form. No Service Area, officer or employee of the City shall be empowered to execute any purchase order, change order, agreement or contract except as authorized by this Ordinance. Failure to comply with this Ordinance shall render a contract voidable.
The administrator shall designate a purchasing agent for the city. The Purchasing Agent shall serve as the principal public purchasing official for the City. He/she shall be responsible for the procurement of goods and service, and construction as well as disposing of City assets in accordance with this Ordinance.
1:312. Definitions
The following words and phrases used in this chapter, unless a different meaning is clearly required by the context, shall have the following meanings:
(1) Bonds means specific security required as part of procurement of goods and services and includes, but is not limited to:
a. Bid Security Bond: A bond provided by a guarantor, satisfactory to the City and authorized to do business in the State, or the equivalent in cash, or otherwise supplied in a form acceptable to City and approved by the City Attorney to ensure that a bidder shall not withdraw its bid.
b. Payment Bond: A bond provided by a guarantor, satisfactory to the City and authorized to do business in the State, or the equivalent in cash, or otherwise supplied in a form acceptable to the City and approved by the City Attorney, which assures payments, as required by law, to all persons supplying labor or material for completion of work under the contract.
c. Performance Bond: A bond provided by a guarantor, satisfactory to the City and authorized to do business in the State, purchased by the successful bidder to protect the City from loss if the bidder is unable to complete the contract as agreed and which secures the fulfillment of all contract requirements.
City may require other forms of bonds, or in addition to or in lieu of bonds any other form of security deemed in the best interest of the City.
(2) City means the City of Ann Arbor, its service areas and their component units.
(3) Contract means the total legal obligation resulting from the parties' agreement as affected this Ordinance and other applicable law but not including collective bargaining agreements.
(4) Contractor means any person having a contract with the City.
(5) Cooperative Purchasing means the combination of procurement requirements of two (2) or more government or public agencies in order to obtain the benefits of volume purchases and/or reduction in administrative expenses.
(6) Environmentally Preferable Products means goods and materials that have a less adverse impact on human health and the environment when compared with competing goods and materials. This comparison shall consider raw materials acquisition, production, manufacturing, packaging, distribution, re-use, operation, maintenance, and waste management of the good or material.
(7) Environmentally Preferable Services means services that have a more beneficial or less adverse impact on human health and the environment when compared with competing services.
(8) Invitation to Bid (ITB) means a formal request to prospective vendors soliciting price quotations or bids; contains, or incorporates by reference, the specifications or scope of work and all contractual terms and conditions.
(9) Local Vendor means a vendor that operates a business within the legal boundaries of the City of Ann Arbor. To be considered a local vendor, the vendor must have a verifiable business address (not a PO Box) at which business is being conducted and the vendor must also agree to comply with all other policies and requirements of the bid/rfp.
(10) Non-Responsive bid means a bid/RFP response that does not conform to the mandatory or essential requirements of the ITB/RFP.
(11) Procurement means buying, purchasing, renting, leasing, or otherwise acquiring any supplies, services or construction. It also includes all functions that pertain to the obtaining of any supply, service or construction, including description of requirements, selection and solicitation of sources, preparation and award of contracts, and all phases of contract administration.
(12) Professional Services means services rendered by members of a recognized profession which involve extended analysis, exercise of discretion, and independent judgment in their performance, and an advanced, specialized type of knowledge, expertise or training customarily acquired either by a prolonged course of study or equivalent experience in the field, and for these reasons are unique and not subject to price competition in the usual sense. Examples of "professional services" typically acquired by the City include appraisal, architectural and engineering services, software development/design, legal services and medical services.
(13) Quality Based Selection means a professional service provider selection based on demonstrated competence and qualifications followed by contract negotiation with the most qualified firm relative to fair and reasonable compensation.
(14) Request for Information (RFI) means a request to potential bidders for information concerning an item or service that will assist the responsible Service Area of the City in the development of specifications.
(15) Request for Quote (RFQ) means an informal solicitation or request for information, where oral or written quotes are obtained from vendors, without formal advertising or receipt of "sealed" bids. Used only where Ordinance does not require formal "sealed" bids, such as small emergency purchases, but price competition is desired.
(16) Request for Proposal (RFP) means a bid solicitation method used for requirements exceeding authorized limits when it is expected that negotiations with one or more bidders may be required with respect to any aspect of the requirements, or other factors will be considered in the selection of the contractor/consultant in addition to price.
(17) Responsible bidder mean a person who has the capability in all respects to perform fully the contract requirements and who fits the criteria identified in the invitation for bids.
(18) Responsive bidder means a person who has submitted a bid, which conforms in all respects to the requirements set forth in the invitation for bids.
(19) Services means the furnishing of labor, time, or effort by a contractor not required to deliver a specific end product, other than reports which are merely incidental to required performance. This term includes consultant services other than architectural, engineering, land surveying, construction management, and related services.
(20) Sole Source means the only known vendor possessing the unique and singularly available capability based on technical qualifications, time constraints, or personnel expertise, to meet the requirements of the solicited bid/RFP.
(21) Subcontractor means any person having a contract to perform work or render service to a prime contractor as a part of the prime contractor's agreement with the City.
(22) Supplies means all personal property including but not limited to equipment, materials, printing, and insurance.
(23) Tie Bid means bids that are equal in all aspects (price, quality, specifications, etc.)
(24) Vendor means any person or entity who offers goods for purchase or services for hire.
1:313. Purchases or contracts of $25,000.00 or less.
Purchases of supplies, materials or equipment, the cost of which is $25,000.00 or less, may be made in the open market but such purchases shall, where practicable, be based on at least 3 competitive bids and shall be awarded to the lowest responsible bidder. Bids shall be solicited in accordance with adopted administrative policy. Any or all bids may be rejected. The city administrator is authorized to purchase personal property or to contract for the purchase of personal property or services without the necessity of council approval in cases where the total amount of the purchase will not exceed $25,000.00. When a purchase or contract exceeds $25,000.00, it must be approved by the city council. The city administrator shall adopt rules to prevent purchases inconsistent with this ordinance.
1:314. Purchases or contracts over $25,000.00.
Any expenditure for supplies, materials, equipment, construction project or contract obligating the city, where the amount of the city's obligation is in excess of $25,000.00 shall be governed by the provisions of this section.
(1) Notice inviting sealed competitive bids shall be made available for public inspection at the Procurement Unit at least 5 days before the final date for submitting bids thereon, and, in the case of contracts requiring bidders to prequalify, at least 5 days before the final date for submission of sworn statements. Such notice shall give briefly the specifications of the supplies, materials or equipment or construction project or other matter to be contracted for, and shall state the amount of bond or other security, if any is to be required, to be given with the contract. The notice shall state the time limit, the place of filing and the time of opening bids and shall also state that the right is reserved to reject any or all bids. Any other conditions of award of the contract shall also be stated in general terms. In the case of contracts over $25,000.00 for the construction, maintenance or repair of public works, the notice shall state that bidders must prequalify as required by this chapter.
(2) The purchasing agent shall also solicit bids from a reasonable number of qualified prospective bidders by sending each a copy of the notice requesting bids and notice thereof shall be posted in the City Hall.
(3) Unless prescribed by the council, the Service Area administrator shall prescribe the amount of any security to be deposited with any bid which deposit shall be in the form of cash, certified or cashier's check or bond written by a surety company authorized to do business in the state of Michigan. The amount of such security shall be expressed in terms of percentage of the bid submitted. Unless fixed by the council, the Service Area administrator, after consultation with the City Attorney as appropriate, shall fix the amount of the performance bond and in the case of construction contracts, the amount of the labor and material bond to be required of the successful bidders.
(4) Bids shall be opened in public by the purchasing agent or designee at the time and place designated in the notice requesting bids. The bids shall thereupon be carefully examined and tabulated. After tabulation, all bids may be inspected by the competing bidders. If the bid amount is in excess of $25,000, the tabulation of the bids shall be reported to the council with the recommendation of the city administrator for award.
(5) At the time bids are submitted to the council for award, the contract to be executed shall also be submitted. If the council approves a bid, it shall approve the contract. The contract shall be executed following the filing of required bonds and insurance evidence approved by the city attorney. The council shall have the right to reject any or all bids and to waive irregularities in bidding and to accept bids which do not conform in every respect to the bidding requirements.
(6) At the time any public works construction, maintenance or repair contract is executed by a contractor, the contractor shall file a bond executed by a surety company, authorized to do business in the State of Michigan, to the city, conditioned upon the performance of said contract and holding the city harmless from all expense of inspection, engineering and otherwise caused by the delay in the completion of any improvement and further conditioned to pay all laborers, mechanics, subcontractors and material suppliers as well as all just debts, dues and demands incurred in the performance of such work. Such contractor shall also submit to the city proof of insurance, naming the city as an insured party and holding the city harmless from all liability, losses or damages caused by the contractor, the contractor's agents, employees or subcontractors. Such insurance policy shall have limits as determined by the city. Evidence of the insurance must comply with the requirements set forth in the contract documents. In the discretion of the city administrator, the bond requirement may be waived for contracts of less than $50,000.00.
(7) All bids, deposits of cash or certified or cashier's checks may be retained until the contract is awarded and signed. If any successful bidder fails or refuses to enter into the contract within 10 days after the same has been awarded or such other timeline set forth in the contract documents, or file any bond required within the same time, the deposit accompanying the bid shall be forfeited to the city, and the council may, in its discretion, award the contract to the next lowest responsible bidder or said contract may be readvertised.
1:315. Public works, qualifications required.
Pursuant to Act 170 of the Public Acts of 1933, State of Michigan, as amended, the city administrator may require the prequalification of prospective bidders for public works improvements (i.e., construction, maintenance and/or repair of public works, except public buildings). If prequalification is required, no bids shall be received from any person who has not submitted the sworn statement herein required for such contracts, nor shall any bid be considered or accepted from any person who has not been found qualified and fitted to perform the work in accordance with the terms of this section and pursuant to the procedure herein prescribed. Prequalification, as herein prescribed, shall be required of all bidders on public improvements exceeding a total cost of $5,000.00 or such other amount as may be established by the city administrator whenever bonds are not submitted to insure contract performance and payment of laborers and materialmen.
(1) Not later than 10 days prior to the time of the opening of bids for public works improvements in the City of Ann Arbor, every prospective bidder shall file with the city clerk a sworn statement in answer to a questionnaire or inquiry of standard form available from and furnished by the Procurement Unit setting forth his qualifications to satisfactorily carry out the work to be performed within the time stipulated or certify that he is prequalified by the Michigan State Highway Department to do the work required. Said qualifications include statements of the construction equipment and facilities available for use on the work advertised, his past performance on work of a similar nature and his financial resources. Such statements shall designate and describe the plant, equipment and facilities of the prospective bidder, relate his experience in doing the same or similar work and disclose his financial resources, specifying the amount of his liquid and other assets and liabilities and the number and amount of his other existing contracts or commitments, including and indicating those with the city and such other information as shall be required on the inquiry or questionnaire form. Such statements shall be and remain confidential and shall not be imparted to another person without the written consent of the prospective bidder, provided, however, that any prospective bidder who has previously been judged qualified for work of a similar nature by the city within 1 year from the date of a bid opening need not separately qualify for such public contracts unless required to do so by the Procurement Unit. The Purchasing Agent or designee shall thereupon, within 5 days, examine said statements and shall make such investigation as, in his/her discretion, appears necessary and thereupon shall immediately notify, by registered mail at the address given in the statement, each of the persons who have submitted statements whether or not their bid on said work will be considered if submitted.
(2) Any prospective bidder may, within 24 hours after the receipt of such notice, request a review of the matter before the city council.
(3) Any prospective bidder agreed at the determination of the City shall have the right of appeal by mandamus, certiorari or other proper remedy to the applicable court of jurisdiction. A bidder is not required to request a review before city council prior to seeking judicial review.
(4) Should any of the matters or things set forth in the statement or questionnaire submitted by a prospective bidder as provided in subparagraph (1) of this section, or which may be submitted at any hearing provided for in sub paragraph (2) of this section, be found to be false, deceptive or fraudulent, the person who filed or caused to be filed such statements or so testified at any hearing shall be guilty of a violation of this code.
(5) Nothing in this chapter shall be construed or utilized to negate, circumvent, or obstruct the full implementation of the equal employment opportunity policies of the City of Ann Arbor, the State of Michigan or the federal government.
1:316. Exception to competitive bidding.
Competitive bidding shall not be required in the following situations:
(1) The City may redeploy or direct transfer goods or equipment between service areas/units.
(2) The City may join in cooperative purchasing arrangements with the State of Michigan and/or other government units or public agencies. The City may accept extended government pricing with appropriate documentation, if it is determined by the city administrator or City Council to be cost-effective and in the City's best interest. In addition the City may participate in cooperative (i.e. joint) bidding in which two or more public agencies agree on specification and contract terms for a given item and combine their requirements for this item in a single ITB when cost-effective and in the City's best interest. Subsequent to the award of a cooperative bid, each public agency will issue and administer its own purchase order or contract.
(3) Procurement of professional services shall follow the monetary criteria established above; however, services may be procured through a request for proposals or quality-based selection, as deemed practical and reasonable subject to approval of the contract by the city attorney. Award shall be made of the professional services provider determined to be best qualified based on the evaluation factors set forth in the selection process and negotiation of a fair and reasonable compensation.
(4) Procurement of supplies or equipment where competitive bidding is not required by law or city charter and either clearly is not practical or no advantage would result to the city by requiring competitive bidding, the council, upon the written recommendation of the city administrator, may authorize the execution of a contract without competitive bidding. Where a contract is let without competitive bidding the proposed contract shall be approved by the city attorney as to form and content, unless prepared by him by direction of the council, and submitted to the council.
1:317. Emergency purchases and contracts.
(1) In case of emergency, any service area administrator, with the approval of the city administrator, may purchase directly any supplies, materials or equipment, the immediate procurement of which is necessary to the continuation of the work of his/her service area. Such purchases and the emergency causing them shall be reported in detail to the purchasing agent within a week from the time when made and such reports shall be preserved by the purchasing agent for a period of 2 years.
(2) In case of emergency, the city administrator without first having obtained council approval may, when necessary to alleviate the emergency, contract for professional services where the limits of City Code Section 1:321 are exceeded or for construction services. In these cases, the contract must be approved as to form and content by the city attorney. The city administrator shall report in detail to council both the contract entered into under this provision and the emergency requiring entry into the contract within 2 weeks after entry into the contract.
1:318. Inspection of materials.
The responsibility for the inspection and acceptance of all materials, supplies and equipment shall rest with the ordering service area/unit.
1:319. Sale of surplus property.
Whenever any city property, real or personal, is no longer needed for corporate or public purposes, the same may be offered for sale.
(1) Personal property, including salvage, surplus material or obsolete equipment, excluding firearms and weapons, identified by the Service Area Administrator as no longer need for public purposes may be disposed of by the purchasing agent in accordance with the provisions of this section. The value of the surplus personal property shall be determined according to applicable industry standards. If the value is less then $500, the purchasing agent may dispose of the property in a manner which is determined to be in the best interest of the City. If the value does not exceed $25,000.00, the property may be sold by auction, trade-in, or for cash by the purchasing agent upon approval of the city Administrator or designee after receiving quotations or competitive bids therefor for the best price obtainable. Personal property with a value in excess of $25,000.00 may be sold by auction, trade-in or after advertising and receiving competitive bids, as provided in section 1:313 and after approval of the sale has been given by the council.
(2) Real property may be disposed of when no longer needed for public purposes in accordance with applicable state law, city charter and ordinance requirements.
1:320. Wage and Employment Requirements.
Notwithstanding any other provision in this Code, the city shall not enter any contract, understanding or other arrangement for a public improvement for or on behalf of the city unless the contract provides that all craftsmen, mechanics and laborers employed directly on the site in connection with said improvements, including said employees of subcontractors, shall receive the prevailing wage for the corresponding classes of craftsmen, mechanics and laborers, as determined by statistics for the Ann Arbor area compiled by the United States Department of Labor. At the request of the City, any contractor or subcontractor shall provide satisfactory proof of compliance with this provision. Where the Contract and the Ann Arbor City Ordinance are silent as to definitions of terms required in determining contract compliance with regard to prevailing wages, the definitions provided in the Davis-Bacon Act as amended (40 U.S.C. 278-a to 276-a-7) for the terms shall be used. Further, to the extent that any employees of the Contractor providing services under this contract are not part of the class of craftsmen, mechanics and laborers who receive a prevailing wage in conformance with Section 1:319 of Chapter 14 of Title I of the Code of the City of Ann Arbor, the Contractor agrees to conform to Chapter 23 of Title I of the Code of the City of Ann Arbor.
It is the policy of the City of Ann Arbor that all vendors of goods and services to the City of Ann Arbor by contract shall as a condition of providing goods and services, adhere to all applicable Federal, State and local laws, ordinances and regulations, prohibiting discrimination in regards to vendors employees and applicants for employment.
1:321. Real estate appraisals.
The city shall not purchase, sell or lease any real estate or any interest therein unless the city council first receives an appraisal report concerning the fair market value of the real estate interest transferred. The appraisal report must be prepared by a qualified, independent real estate appraiser in accordance with instructions given by the city.
The qualifications of the appraiser shall include an appropriate designation from a recognized professional appraiser organization such as: "The Society of Real Estate Appraisers" and "The Institute of Real Estate Appraisers."
An appraisal report shall not be required for the following real estate transactions:
(1) Leases requiring the city to pay a total of less than $50,000.00.
(2) Donations of real estate interests to the city.
(3) Acquisition of any real estate interest by the city where all of the city's costs are less than $10,000.00 for a single parcel of $50,000.00 for a series of contiguous interests including easements, rights-of-way or partial takings.
(4) The acquisition or disposal of any interest in real estate for which the administrator gives a recommendation that there be no appraisal and the council adopt a resolution specifying the reasons why an appraisal is unnecessary.
1:322 Bid Discounts
The City may establish and maintain a bid discount process for the procurement of goods or services based on locality or environmental policy.
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1:323 Removal from Bidders List
A vendor may be removed from the bidders list by the city administrator if the vendor has failed to provide goods or services satisfactorily in accordance with bid specifications and/or terms of the contract. It shall be the joint responsibility of the Purchasing Agent and the user service area/unit to document any acts of noncompliance or unsatisfactory performance on the part of the vendor. A vendor may be removed from the bidders list for a maximum of two (2) years.
1:324. Bid Protests
All protests must be in writing and filed with the Purchasing Agent within five (5) business days of the award action. The vendor must clearly state the reasons for the protest. If a vendor contacts a City service area/unit and indicates a desire to protest an award, the service area/unit shall refer the vendor to the Purchasing Agent. The Purchasing Agent will provide the vendor with the appropriate instructions for filing the protest. The protest shall be reviewed by the city administrator or designee who's decision shall be final.
Section 3: In the event any court of competent jurisdiction shall hold any provision of this Ordinance invalid or unenforceable, such holding shall not invalidate or render unenforceable any other provision thereof.
Section 4: That Section 1:315 of this ordinance shall take effect on the tenth day after legal publication. The remainder of this ordinance shall be effective immediately after passage and publication.