COUNCIL COMMUNICATION
TO: Honorable Mayor and Council
FROM: Jill Olsen, Administrative Services Director
SUBJECT:Title
Discussion and Action: Ordinance No. 25-1357 Amending Lake Havasu City Code Chapter 3.10, Procurement, Including but Not Limited to Adding and Revising Definitions and Exceptions and Increasing Thresholds (Introduction) (Jill Olsen)
Body
FUNDING SOURCE:
N/A
PURPOSE:
To introduce an ordinance repealing and replacing Chapter 3.10 of the City Code related to Procurement.
BACKGROUND:
An increase in the thresholds within the City Code would allow for greater government efficiency and productivity in the daily functions of the City, throughout each department. A change in the City Code would decrease the time, resources and funds spent by the City for routine purchases.
The City purchases tools, equipment, services and amenities for the good of the public nearly every day. The increase in thresholds would provide the tools necessary to be more efficient and responsive, resulting in reduced delays, a more streamlined approach, and saving taxpayer dollars. The amount of time spent obtaining quotes for small purchases requires a lot of work and time without an equal benefit.
A change also expands opportunities for attracting small and local businesses to engage in and secure City contracts for routine purchases. It would make it easier for small local businesses, such as plumbing services, electrical services, metal works, asphalt and pothole repairs, concrete and curb repairs, and similar, who may not otherwise engage in a more formal process, do business with the City.
Before the City Council for consideration is a change to the City Code related to procurement. In addition to the sections of the City Code related to Procurement, the City follows an internal procurement policy. The City Code, as well as State and Federal Statutes and Laws, provide the guidance needed for the City to draft and abide by the City’s internal policy, which provides the day-to-day direction for the City Team.
The existing City policy requires certain solicitation practices depending on the amount of the purchase. For purchases up to $5,000, there is no quote or formal solicitation requirement, although due diligence and appropriate steps to ensure the City is spending dollars wisely is required. For purchases between $5,000 and $10,000, three verbal quotes must be obtained. Purchases between $10,000 and $20,000 require Director approval. The City Manager approves all purchases up to $50,000, utilizing the appropriate solicitation methods.
Should the City Council approve the threshold increase for Council approval, the internal City policy will be updated to reflect an increase in all thresholds. Purchases up to $20,000 would require three verbal quotes. Purchases up to $100,000 would require an informal solicitation process. All purchases over $100,000 would require a formal solicitation process.
The current Procurement section of the Lake Havasu City Code requires purchases over $50,000 to be presented to the City Council for their consideration for approval. The threshold in 2010 was increased $40,000. In 2015, it increased to $50,000. Best practice and industry standards are to evaluate threshold amounts every five to seven years to reflect inflation adjustments.
Research conducted with comparable Arizona cities shows that seventy percent of those cities are at the $100,000 threshold for City Council approval. The threshold for contract amendments in these cities are at 10%. The City threshold for amendments is currently at 5%. An increase of these two thresholds (expenditure greater than $100,000 and contract amendments greater than 10%) ensure that larger or more significant projects would receive additional scrutiny to ensure public funds are being spent appropriately and efficiently. Thresholds are designed to avoid overly burdening City Council with small-scale projects, allowing focus on larger investments or more complex initiatives.
The proposed revisions are shown in the attachment with the new language underlined and deleted language struck through (redline version), as well as a clean version reflecting the changes proposed.
A summary of changes is as follows:
1. Increase purchase threshold amount that exceeds $100,000 to require approval by the City Council. The City Manager shall award contracts for purchases up to $100,000. This increase would also apply to emergency purchases and sole source purchases. If an emergency purchase exceeds the City Manager’s authority, the purchase will be submitted to the City Council at a future meeting.
2. Add approval language on multi-year contracts.
3. Incorporate several administrative items by enhancing definitions and providing clarity.
4. If a contract amendment is 10% or less of the contract amount and not more than $100,000 that amendment may be approved by the City Manager.
5. Add language to ensure the City’s Code aligns with Procurement of Construction for solicitation and contracts that fall under A.R.S. Title 34 and authorize an increase from the maximum dollar amount of $1,000,000 up to $2,000,000 for job-order-contracting of construction. The City Manager approves individual job-orders up to $100,000. The City Council awards individual job orders greater than $100,000.
COMMUNITY IMPACT:
The proposed revisions to the City Code related to procurement improve government efficiency, allowing the City to be more responsive, better utilize resources, and better support our small local businesses in Lake Havasu City.
FISCAL IMPACT:
N/A
ATTACHMENTS:
Ordinance No. 25-1357
Code 3.10 Procurement
Redline Code 3.10 Procurement
SUGGESTED MOTION:Recommended Action
I move to introduce Ordinance No. 25-1357 amending Lake Havasu City Code Chapter 3.10, Procurement.