50A - ORD CMO CONTRACT AUTHORITY

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Amend City Manager's Contracting Authority for Non -Public Works and Public Works Contracts March 5, 2019 Page 2 bind the City on contracts at amounts that may be established from time to time by the City Council. Currently, the City Manager is authorized to bind the City to non-public works and public works contracts in an amount not to exceed twenty-five thousand dollars ($25,000). All contracts and agreements over $25,000 must be approved by the City Council. This process is time and staff intensive. Regardless of the contract amount, all contracts and agreements must comply with the City's Purchasing Policies and Procedures, and the State of California Public Contract Code, which are designed to ensure fair, transparent, and competitive procurement practices. On average, the Council is presented with over 250 contracts and agreements for approval annually. Due to the nature of the services provided by the Public Works Agency (PWA), nearly half of these contracts and agreements are for PWA -related materials and services. Staff report development typically requires in excess of 15 to 20 hours of preparation time per agreement. The City Council last adopted an Ordinance revising the City Manager's contracting authority on July 3, 2006, when it increased the City Manager's authority from $10,000 to the current $25,000 level for all contracts and agreements. Costs of goods, services, and construction have risen in the ensuing years. A $25,000 contract requires a lot of administration costs and does not buy much in services or goods. Staff surveyed Orange County cities (Exhibit 2) and others in the region and found that the City Manager contracting authority ranges from a low of $20,000 (Stanton and Seal Beach) to a high of $1,000,000 (Irvine). Cites comparable to Santa Ana in population, such as Anaheim, Irvine and Long Beach, have City Manager contracting authority averaging $100,000. The proposed action will increase the City Manager's authority to enter into contracts and agreements for non-public works contracts to $100,000. The proposed action would also increase the City Manager's contracting authority for public works contracts to $250,000, which would include contracts for maintenance and repair, the procurement of materials, supplies and services relating to projects for the erection or improvement of public buildings, streets, drains, sewers, and/or parks. The Council is also being asked to consider amending the municipal code to increase the City Manager's authority to execute change orders to public works contracts to a maximum of 10% of the original contract amount or $25,000, whichever is greater. In the case of a City Manager - executed contract, the total maximum would be $275,000 ($250,000 + 10% Change Order or $25,000). In the case of a City Council -approved contract, the change order could be more (e.g., 10% of a $3 million contract is $300,000). As stated above, all procurement activity would still be subject to the same bid thresholds and stringent procurement policies and procedures in effect. The proposed Ordinance also includes City Manager authority to authorize emergency contracts up to $100,000. Emergency contracts do not require formal bids. Upon presentation of a contract to the City Manager for signature, staff shall identify budgeted funds including account numbers in the existing fiscal year budget covering the contract period. All contracts shall be reviewed and approved as to form by the City Attorney regardless of amount. The City Manager will prepare and submit to City Council on a quarterly basis a report outlining 50A-2