The URL can be used to link to this page

Home My WebLink AboutApprove the Finance Department's Plan to Conduct a Comprehen 2000 Main Street, ' Huntington Beach,CA 92648 City of Huntington Beach File #: 22-665 MEETING DATE: 9/6/2022 REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Al Zelinka, City Manager VIA: Dahle Bulosan, Chief Financial Officer PREPARED BY: Serena Bubenheim, Finance Manager - Budget Subject: Approve the Finance Department's plan to conduct a comprehensive review of the City's procurement policies Statement of Issue: During the July 19, 2022 City Council Meeting, Mayor Pro Tern Posey requested a comprehensive review of the City's procurement policies to promote transparency and adherence to best practices. The Finance Department, under the City Manager's direction, has prepared a formal review plan for City Council's consideration. Financial Impact: Staff will perform the procurement policy review with the support of an on-call consulting firm that will be selected via a Request for Proposal (RFP) process, which is currently underway. A contract with the selected firm will be presented to the City Council for consideration on September 20, 2022. Recommended Action: Approve the plan to review the City's procurement policies as outlined in this report. Alternative Action(s): Do not approve the recommended action, and direct staff accordingly. Analysis: Background.- Municipal procurement policies are integral in procuring the necessary goods and services consistent with the quality that is required to meet the operational needs of City departments, while ensuring taxpayers receive the maximum value for each dollar spent. These policies ensure there is no conflict of interest related to any awarded contracts and provides all vendors and service providers a City of Huntington Beach Page 1 of 5 Printed on 9/6/2022 File #: 22-665 MEETING DATE: 9/6/2022 fair and equal opportunity to participate. The City's existing procurement policies work towards the aforementioned goals, advancing its strategic objectives and promoting greater public trust. The City's Charter, Municipal Code, and Administrative Regulations along with federal and state laws provide the authoritative guidance for the City's procurement policies, which have varying requirements and levels of approval based on the type of contract awarded (i.e. professional service, legal expert services, goods, maintenance and clerical support, leases, and Public Works construction). Overview of Existing Purchasing Policies The City's requirements and levels of approving authority vary based on the type of contract that is being procured. Each individual procurement policy is detailed below: Goods&Services ➢Purchases of supplies and services (other than professional services) City Charter Section 613, Municipal Code 3.02 Amount Method Authority $0-$30,000 Informal Bid Department Head, Finance $30,000 or more Competitive Bid City Council -through the budget process Professional Services ➢Consultants, architects, engineers City Charter Section 613, Municipal Code 3.03,AR 228 Amount Method Authority $30,000 or less Informal Bid Department Head $30,000 to$50,000 Competitive Bid Department Head, Finance $50,000 to$100,00(Competitive Bid Department Head, Finance, City Manager $100,000 or more Competitive Bid City Council Public Works Construction ➢Physical construction and improvements of any City infrastructure City Charter Section 614,AR 119 Amount Method Authority $25,000 or less Informal Bid Department Head, City Manager $25,000 or more Competitive Bid City Council Signature Authority Levels mount Contract Type Authority City of Huntington Beach Page 2 of 5 Printed on 9/6/2022 powere1%Legistar- File #: 22-665 MEETING DATE: 9/6/2022 Unlimited Goods Department Head &City Manager(subject bidding requirements set forth in Muni Cod & City Council budget approval) Unlimited Services Department Head &City Manager(subject bidding requirements set forth in Muni Cod & City Council budget approval) $0-$50,000 Professional Services Department Head $50,000-$100,000 Professional Services City Manager Over$100,000 Professional Services City Council $0-$100,000 Expert Services City Attorney Over$100,000 Expert Services City Council $0-$25,000 Public Works Department Head & City Manager Over$25,000 Public Works City Council As part of its review, staff performed a preliminary survey of neighboring cities' procurement policies to gain a comparative understanding of Huntington Beach's policies. This effort may highlight certain policies that may appear to be outliers and warrant additional analysis during the formal review process. The formal review process may also include the identification and comparison to other cities not listed in the preliminary survey tables below. Goods&Services City Formal Bid Threshold City Council Approval Threshold Newport Beach Over$25,000 Over$120,000 Santa Ana Over$25,000 Over$50,000 Huntington Beach Over$30,000 Approved through budget Irvine Over$45,000 Over$1,000,000 Anaheim Over$50,000 Over$200,000 Costa Mesa Over$50,000 Over$50,000 Professional Services City Formal Bid Threshold City Council Approval Threshold Newport Beach Over$25,000 Over$120,000 Huntington Beach Over$30,000 Over$100,000 Irvine Over$45,000 Over$1,000,000 Anaheim Over$50,000 Over$200,000 Costa Mesa pending pending Santa Ana pending Over$25,000 City of Huntington Beach Page 3 of 5 Printed on 9/6/2022 powerel&$ Legistar- File #: 22-665 MEETING DATE: 9/6/2022 Public Works Construction City Formal Bid Threshold City Council Approval Threshold Anaheim Over$15,000 Over$400,000 Huntington Beach Over$25,000 Over$25,000 Santa Ana Over$25,000 Over$250,000 Newport Beach Over$120,000 Over$120,000 Costa Mesa Over$200,000* Over$200,000 Irvine Over$200,000* pending .Per Public Contract Code section 22032(c),which is set by the State of California Proposed Review Plan: Like any policy, the City should conduct periodic reviews of its purchasing policies to ensure they are up to date with the latest regulations while continuing to facilitate ongoing operations in an efficient and cost effective manner. Staff has developed a review plan per Mayor Pro Tern Posey's request during the July 19, 2022 City Council Study Session. As part of the review, the Finance Department will review Department Directors' spending limits, bidding requirements, best practices, and other policies to promote transparency to the public and proper oversight by City Council. The plan includes the following actions: 1. Review Huntington Beach procurement policies (including City Manager/Department Directors' spending limits and bidding requirements) to determine opportunities for updates and clarifications and to assess compliance with State, Federal, local, and other pertinent laws and regulations; 2. Interview City department heads, management, and/or staff to identify opportunities for improvements in the purchasing processes; 3. Review various procurement best practices such as those recommended by the California Association of Public Procurement Officials (CAPPO); 4. Review the procurement policies of comparable cities; 5. Review emergency procurement policies for compliance with Federal Emergency Management Agency (FEMA) requirements; 6. Present findings and recommended changes to City Council for feedback at a future Study Session; and 7. Based on feedback from City Council, present final recommended changes to City Council for consideration. The League of California Cities presented best practices on public procurement as part of their January 22, 2021 Academy on Financial Responsibilities and City Revenues for Mayors and Council Members. In sum: 1) public procurement is not designed to achieve speed, but rather to provide a fair and competitive process; 2) locally adopted ordinances or policies provide the framework for purchases of supplies and services; and 3) state law lays out Public Works project requirements. These best practices will provide the framework for this review and any policy modifications that are City of Huntington Beach Page 4 of 5 Printed on 9/6/2022 powerelO LegistarT"^ File #: 22-665 MEETING DATE: 9/6/2022 proposed. Lastly, the City Manager's Office and Finance Department issued a request for proposal on August 3, 2022 to secure on-call consulting services to assist in the procurement review if City Council decides to move forward with the plan. The selected consultant should have a strong understanding of the best practices and help update any policies to meet those standards. The consultant will also assist in the implementation of any changes approved by City Council. Environmental Status: Not applicable Strategic Plan Goal: Financial Sustainability, Public Safety or Other Attachment(s): None City of Huntington Beach Page 5 of 5 Printed on 9/6/2022 powere't%Legistar— 9/6/2022 vNT N G T p ,:os,pRPORATFo _ = Procurement Policy Review Plan City Council Meeting FFB 17, 190g September 6, 2022 C�UNTY CA SUPPLEMENTAL Mee*g Date: Presentation Overview • Background • Procurement Review Plan • City of Huntington Beach Procurement Policies • Preliminary Survey & Best Practices • Recommended Action I I N 6T0 wOPP0441 '� F9 n U = FODUNTI CPS\ ? 1 9/6/2022 Background Mayor Pro Tem Posey requested a plan to review the City's Procurement Policies at the July 19, 2022 City Council Study Session on the Budget The City's procurement policies are integral in advancing public policy objectives and building public trust. y City's Charter, Municipal Code, and Administrative Regulations along with Federal and State laws provides the authoritative guidance for the City's procurement policies. The City's procurement requirements and levels of approving authority varies based on the type of contract. ✓ Professional Services ✓ Leases ✓ Legal Expert Services ✓ Public Works Construction ✓ Goods & Services Procurement Review Plan 1. Review HB procurement policies (including City Manager/Department Head spending limits, and bidding requirements) to determine opportunities for updates and clarification and to assess compliance with State, Federal, local and other pertinent laws and regulations 2. Interview City staff to identify opportunities for improvements in the procurement process 3. Review procurement best practices—California Association of Public Procurement Officials (CAPPO) 4. Review of public procurement policies of neighboring cities 5. Review emergency procurement policies for compliance with FEMA requirements 6. Present findings and recommended changes for City Council feedback at a future Study Session 7. Based on feedback, present final recommended changes to City Council for consideration The City issued a request for proposal on August 3, 2022 to secure on-call consulting services to assist in the procurement review if City Council decides to move forward with the plan. The consultant will also assist in the implementation of any changes. 2 9/6/2022 City of Huntington Beach Procurement Policies Goods& Services r- Purchases of supplies and services (other than professional services) City Charter Section 613, Municipal Code 3.02 $0- $30,000 Informal Bid Department Head (DH), Finance City Council - through the budget $30,000 or more Competitive Bid process City of Huntington Beach Procurement Policies Professional Services Consultants, architects, engineers City Charter Section 613, Municipal Code 3.03,AR 228 is $30,000 or less Informal Bid Department Head (DH) $30,000 to $50,000 Competitive Bid DH, Finance $50,000 to $100,000 Competitive Bid DH, Finance, City Manager $100,000 or more Competitive Bid City Council 3 9/6/2022 City of Huntington Beach Procurement Policies Public Works Construction ➢ Physical construction and improvements of any City infrastructure City Charter Section 614,AR 119 MethodAmount Authority $25,000 or less Informal Bid DH, City Manager $25,000 or more Competitive Bid City Council City of Huntington Beach Procurement Policies Signature Authority Levels Amount Contract Type Authority Dept Head &City Manager(subject to bidding requirements set forth in Muni Code 3.02& Unlimited Goods City Council budget approval) Dept Head &City Manager(subject to bidding requirements set forth in Muni Code 3.02 & Unlimited Services City Council budget approval) $0-$50,000 Professional Services Dept Head $50,000-$100,000 Professional Services City Manager Over$100,000 Professional Services City Council $0-$100,000 Expert Services City Attorney Over$100,000 Expert Services City Council $0-$25,000 Public Works Dept Head &City Manager Over$25,000 Public Works City Council 4 9/6/2022 Preliminary Survey and Best Practices League of California Cities (January 22, 2021): ✓ Public procurement is not designed to achieve speed, rather provide a fair and competitive process ✓ Locally adopted ordinances or policies provide the framework for purchases of supplies and services ✓ State law provides public works project requirements Example: Morgan Hill $10,000 or less hiformal Bid City Manager 4 Department c-�VNT I NGro Heads O` \HGpPPp R9"6 $10,000 to$25,000 Informal Bid City Manager 4 Purchasing � v= Officer(Finance Director) CP $25,000 to$60,000 Competitive Bid City Manager $60,000 or more Competitive Bid Cite CoLmcil UNTY CPS\ Preliminary Survey of Neighboring Cities Goods & Services Formal . . Threshold City CoupQLAgaf Newport Beach Over$25,000 Over$120,000 Santa Ana Over$25,000 Over$50,000 Huntington Beach Over$30,000 Approved through budget Irvine Over$45,000 Over$1,000,000 Anaheim Over$50,000 Over$200,000 Costa Mesa Over$50,000 Over$50,000 N11NGroA' O\ p10PORAI � F c> x �UUNTV CPS 5 9/6/2022 Preliminary Survey of Neighboring Cities Professional Services City Formal . . Threshold City Council Approval Threshold Newport Beach Over$25,000 Over$120,000 Huntington Beach Over$30,000 Over$100,000 Irvine Over$45,000 Over$1,000,000 Anaheim Over$50,000 Over$200,000 Costa Mesa pending pending Santa Ana pending Over$25,000 (��NT I NGTO O\ MGOPfORI)f0 2e � 9 n U S �r 2 FOOUNTV CPS\ Preliminary Survey of Neighboring Cities Public Works Construction City Formal . . Threshold City Council Approval Threshold Anaheim Over$15,000 Over$400,000 Huntington Beach Over$25,000 Over$25,000 Santa Ana Over$25,000 Over$250,000 Newport Beach Over$120,000 Over$120,000 Costa Mesa Over$200,000* Over$200,000 Irvine Over$200,000 * pending ��NTINGTO * Per Public Contract Code section 22032(c),which is set by the State of California y 9 c.> x c�00UNTV 6 9/6/2022 Recommended Action Approve the plan to review the City's procurement policies as outlined in the presentation W INGTO^' O` \ pPPON4>FO 'Ye �OGUNTV CPS\ Questions? 7