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Home My WebLink About50A - ORD AMND MANAGER'S CONTRACT AUTHORITYREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: DECEMBER 4, 2018 TITLE: ADOPT AN ORDINANCE TO AMEND CITY MANAGER'S CONTRACTING AUTHORITY FOR NON-PUBLIC WORKS AND PUBLIC WORKS CONTRACTS {STRATEGIC PLAN NOS. 4, 1; 7,51E) 1% MANAGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: APPROVED ❑ As Recommended ❑ As Amended ❑ Ordinance on 1� Reading ❑ Ordinance on 2nd Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER Adopt an ordinance seeking to amend and re -organize provisions of the municipal code relating to the City Manager's authority to bind the city to any one non-public works and public works contracts under Chapter 2, Article VII of The Santa Ana Municipal Code as follows: deleting section 2.1 of Chapter 2, Article 1 relating to the City Manager's authority to approve change orders; ii) deleting Section 2-801 of Chapter 2, Article VI I relating to the City Manager's authority to bind the City to any one written contract for an amount not exceeding $25,000; iii) deleting Section 33-201 of Chapter 33, Article VIII of the Santa Ana Municipal Code relating to the City Manager's authority to bind the City to any one written contract for emergency public works construction in an amount not exceeding $10,000; iv) amending Section 2-748 of Chapter 2, Article VII concerning the City Manager's contracting authority (1) for non-public works contracts to increase from $25,000 to $100,000; (2) for public works contracts to increase from $25,000 to $250,000; and (3) for emergency public works construction to increase from $10,000 to $100,000 and (4) to amend his/her contracting authority for public works change orders. 50A-1 Amend City Manager's Contracting Authority for Non -Public Works and Public Works Contracts December 4, 2018 Page 2 DISCUSSION Pursuant to Sections 421(b) (non-public works contracts) and 422(c) (public works contracts) of the City of Santa Ana Charter, the City Council may, by ordinance, authorize the City Manager to 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. Regardless of the contract amount, all contracts and agreements must comply with the City's Purchasing Policies & Procedures designed to ensure fair, transparent, and competitive procurement practices. When an agency identifies a need to enter into a contract to purchase materials and supplies or an agreement for services, the agency budgets for those items. The recently adopted Public Works Agency's FY 18-19 budget, for example, has approved $43,082,785 in contract expenditures. 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. In order to obtain City Council approval of a contract or agreement in excess of $25,000, staff must prepare a Request for Council Action (RFCA) report. Preparing an RFCA takes a substantial amount of staff time and effort from various agencies within the City. Specifically, the RFCA is first prepared by the initiating division and approved by the initiating agency. The document must then be reviewed and approved by the City Attorney and other affected agencies. The RFCA's are then submitted to the City Manager Office (CMO) for consideration and final review of the report's content. Upon approval from the CMO, the Finance and Management Services Agency reviews and approves the RFCA for consistency with the approved budget and accounts. Once all financial -related matters have been reviewed and approved, the RFCA is finally submitted to the Clerk of the City Council to be included in the City Council meeting agenda documents. The above-described process is lengthy and requires substantial staff time from various City agencies for each contract approval. Thus, significant savings in staff time will be achieved by reducing the number of contracts and agreements that must be presented to the City Council for approval. Additionally, Staff has determined that streamlining the process to execute PWA contracts and agreements for the construction, rehabilitation, maintenance, testing and inspection of public infrastructure would improve the City's ability to provide efficient and timely service delivery. 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 are on the rise in recent 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 widely from a low of $20,000 (Stanton and Seal Beach) to a high of $1,000,000 (Irvine). All of the cities comparable to Santa Ana in 50A-2 Amend City Manager's Contracting Authority for Non -Public Works and Public Works Contracts December 4, 2018 Page 3 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 amend 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% 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. The proposed action will increase the City Manager's authority to approve contracts and agreements in an effort to improve efficiency within City processes, improve the delivery of services necessary for the continued enhancement and preservation of public infrastructure and help meet Strategic Plan objectives. 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 all contracts approved by the City Manager along with corresponding amounts, purpose/scope, contractor/vendor name, etc. STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's efforts to meet Goal #4 - City Financial Stability, Objective #1 (maintain a stable, efficient and transparent financial environment), and Goal #7 - Team Santa Ana, Objective #5 (create a culture of innovation and efficiency within the organization), Strategy E (identify best practices and opportunities for process improvement and automation across City departments in order to provide effective and efficient delivery of City services to the community). ENVIRONMENTAL IMPACT There is no environmental impact associated with this action Amend City Manager's Contracting Authority for Non -Public Works and Public Works Contracts December 4, 2018 Page 4 FISCAL IMPACT There will be significant savings of staff time that cannot be quantified at this time. 7 Fuad SjHeiss, P.E., P Executi Director Public orks Agency Exhibit: 1. Proposed Ordinance 2. Survey of Orange County Cities thryn Downs, CPA Executive Director Finance and Management Services Agency SC 12.4.2018 ORDINANCE NO. NS-XXXX AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA ANA AMENDING SECTION 2-1, SECTION 2-801, AND SECTION 33-201 OF THE SANTA ANA MUNICIPAL CODE RELATING TO THE CITY MANAGER'S AUTHORITY TO BIND THE CITY TO NON-PUBLIC WORKS AND PUBLIC WORKS CONTRACTS, AND REORGANIZING THE CITY MANAGER'S CONTRACT AUTHORITY UNDER CHAPTER 2, ARTICLE VII OF THE SANTA ANA MUNICIPAL CODE THE CITY COUNCIL OF THE CITY OF SANTA ANA DOES ORDAIN AS FOLLOWS: Section 1. The City Council of the City of Santa Ana hereby finds, determines and declares as follows: A. Pursuant to Sections 421(b) (non-public works contracts) and 422(c) (public works contracts) of the City of Santa Ana Charter, the City Council may, by ordinance, authorize the City Manager to bind the City on contracts at amounts that may be established from time to time by the City Council. B. Currently, the City Manager is authorized to bind the City to both non-public works contracts 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. C. Regardless of the contract amount, all contracts must comply with the City's Purchasing Policies & Procedures designed to ensure fair and competitive procurement practices. D. On average, the City Council is currently presented with over 250 contracts and agreements for approval annually. The process to obtain City Council approval can be lengthy and requires a substantial amount of City staff time. This process also adversely impacts the City's ability to provide efficient and timely delivery of services to its constituents and businesses. E. Increasing the City Manager's contracting authority for both non-public works and public works contracts and change orders to such contracts will free staff time to devote to other necessary public services. F. Increasing the City Manager's contracting authority for both non-public works and public works contracts and change orders to such contracts will also streamline the process to execute Public Works Agency contracts and agreements for the construction, rehabilitation, maintenance, testing and inspection of public infrastructure, thereby improving the delivery of services Exhibit l ;. 1 SC 12.4.2018 necessary for the continued enhancement and preservation of such public infrastructure. G. Reorganizing the City Manager's contracting authority from three different articles in the Municipal Code into one Article will provide a concise and organized location within the Municipal Code for City Staff and the public to reference this delegation of authority by the City Council to the City Manager, as provided under the City Charter. Section 2. Section 2-1 of Chapter 2, Article I of the Santa Ana Municipal Code is hereby amended to read as follows: Section 3. Section 2-801 of Chapter 2, Article VII of the Santa Ana Municipal Code is hereby amended to read as follows: Sec. 2-801. — Reserved. Section 4. Section 33-201 of Chapter 33, Article VIII of the Santa Ana Municipal Code is hereby amended to read as follows: Sec. 33-201. — Reserved. emGFgGRGY publiG.... kis GE)Rst etian on a.. amount net e)( -ending the 61 m nf_tPR Section 5. Chapter 2, Article VII of the Santa Ana Municipal Code is hereby amended to read as follow: ARTICLE VII. — RESERVED CITY MANAGER'S CONTRACTING AUTHORITY Section 2-748. — Resewed. City manager's contracting authority. y 1 M ..... Section 3. Section 2-801 of Chapter 2, Article VII of the Santa Ana Municipal Code is hereby amended to read as follows: Sec. 2-801. — Reserved. Section 4. Section 33-201 of Chapter 33, Article VIII of the Santa Ana Municipal Code is hereby amended to read as follows: Sec. 33-201. — Reserved. emGFgGRGY publiG.... kis GE)Rst etian on a.. amount net e)( -ending the 61 m nf_tPR Section 5. Chapter 2, Article VII of the Santa Ana Municipal Code is hereby amended to read as follow: ARTICLE VII. — RESERVED CITY MANAGER'S CONTRACTING AUTHORITY Section 2-748. — Resewed. City manager's contracting authority. y 1 M SC 12.4.2018 (a) Non-public works contracts The city manager is authorized to bind the City to any one or more written non-public works contract, per vendor, in an amount or amounts not exceeding the sum of one hundred thousand dollars ($100,000.00). For purposes of this section, a non-public works contact shall mean any contact not deemed to be a public works contract under subsection (b)(1). (b) Public works contracts The city manager is authorized to bind the City to any one or more written public works contract, per vendor, in an amount or amounts not exceeding the sum of two hundred and fifty thousand dollars ($250,000.00). For purposes of this section, a public works contact shall be deemed to mean a project for the erection, improvement, and/or maintenance and repair of public buildings, streets, drains, sewers, or parks.. The city manager is authorized to bind the city to any one written contract for emergency public works construction in an amount not exceeding the sum of one hundred thousand dollars ($100,000.00). The city manager of the City of Santa Ana is hereby authorized to bind the City of Santa Ana on change orders to any one public works contract, per vendor, without previous city council approval when such change order for any one (1) public works contract, together with any previously approved change orders for said contract, do not cumulatively amount to an increase of the city's expenditure obligation under said contract of more than ten (10) per cent of the original contract amount, .or the amount of twenty-five thousand dollars ($25,000.00), whichever is the greater. Section 2-749 — Reserved. Section 6. If any section, subsection, sentence, clause, phrase or portion of this ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this ordinance. The City Council of the City of Santa Ana hereby declares that it would have adopted this ordinance and each section, subsection, sentence, clause, phrase or portion thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases, or portions be declared invalid or unconstitutional. Section 7. Effective Date. This ordinance shall become effective thirty (30) days following its second reading and its adoption. 50A-7 SC 12.4.2018 Section 8. The City Clerk shall certify to the adoption of this Ordinance and cause it, or a summary of it, to be published once within 15 days of adoption in a newspaper of general circulation printed and published within the City of Santa Ana, and shall post a certified copy of this Ordinance, including the vote for and against the same, in the Office of the City Clerk in accordance with Government Code § 36933. ADOPTED this —day of December, 2018. Miguel A. Pulido Mayor APPROVED AS TO FORM: -z— Sonia Carvalho City Attorney AYES: Councilmembers: NOES: Councilmembers: ABSTAIN: Councilmembers: ABSENT: Councilmembers: CERTIFICATE OF ATTESTATION AND ORIGINALITY I, MARIA D. HUIZAR, Clerk of the Council, do hereby attest to and certify that the attached Ordinance No. NS-XXXX to be the original ordinance adopted by the City Council of the City of Santa Ana on , and that said ordinance was published in accordance with the Charter of the City of Santa Ana. Date: Maria D. Huizar Clerk of the Council City of Santa Ana y 1 m • City or District Authorized CM Limits Population Irvine $1,000,000 276,176 Westminster $175,000 94,476 Newport Beach $120,000 87,182 Long Beach $100,000 478,561 Huntington Beach $100,000 202,648 Anaheim $50,000 357,084 Garden Grove $50,000 176,896 Costa Mesa $50,000 115,296 Fountain Valley $50,000 56,920 San Juan Capistrano $45,000 36,759 La Habra $35,000 62,850 Seal Beach $33,000 25,984 Buena Park $30,000 83,995 Rancho Santa Margarita $30,000 49,329 Orange $29,999 141,952 Brea $25,000 44,890 Cypress $25,000 49,978 La Palma $25,000 15,948 Placentia $25,000 52,755 San Clemente $25,000 65,543 Santa Ana $25,000 338,247 Tustin $25,000 82,334 Fullerton $24,999 144,214 Stanton $20,000 39,470 , 2 • y 50A-10