HomeMy WebLinkAbout75B - LOCAL BUSINESS PREFERENCE ORDINANCREQUEST FOR
COUNCIL ACTION
CITY COUNCIL MEETING DATE:
MARCH 5, 2012
TITLE:
PUBLIC HEARING - LOCAL BUSINESS
PREFERENCE ORDINANCE
CITY MANAGER
RECOMMENDED ACTION
CLERK OF COUNCIL USE ONLY:
APPROVED
? As Recommended
? As Amended
? Ordinance on 1st Reading
? Ordinance on 2"d Reading
? Implementing Resolution
? Set Public Hearing For_
CONTINUED TO
FILE NUMBER
Adopt an ordinance amending the Santa Ana Municipal Code to provide Santa Ana and
Orange County businesses a percentage preference for all requests for proposals, contracts
and bids where the City is not otherwise restricted from offering such a preference.
2. Adopt a resolution providing Santa Ana Businesses with a seven percent preference and
Orange County businesses a four percent preference for all requests for proposals, contracts
and bids where the City is not otherwise restricted from offering such a preference.
BACKGROUND
In 2010, the City released 57 requests for proposals or bids to provide goods, materials or
professional services to the City. The total value of these contracts totaled more than $6.5 million
dollars.
In response to general direction from the City Council an interdepartmental committee including: the
Planning and Building Agency, Public Works Agency, City Attorney's Office, Finance and
Management Services Agency and the Community Development Agency was formed to research
and analyze local preference as a method to continue the City's support and promotion of local
businesses.
A local business preference allows the City to promote local businesses, as well as benefit from
enhanced economic activity as dollars re-circulate in the local economy by way of multiplier
effects. Multiplier effects have been shown to benefit the community in three unique ways:
1. Direct effects - Benefits the local economy by directly investing money through the
awarding of a City contract to a local business.
2. Indirect effects - Indirect effects occur when money awarded to a local business results in
inter-industry purchases of materials, supplies, goods and services. Another potential
indirect effect is the increase in employment associated with greater workloads/demands.
75B-1
Local Business Preference Ordinance
March 5, 2012
Page 2
A Study in Phoenix, Arizona by the economic consulting firm Civic Economics found that
when using a local vendor, 33.4 percent of the total contract revenue remained in the
community compared to only 11.6 percent when using a national vendor'. Fora $100,000
contract, this results in an additional $21,800 dollars staying in the local economy in
addition to the initial contract amount. A similar study from Austin, Texas found that for
every $100 dollars spent locally, $45 dollars remained in the local economy, compared to
only $13 dollars spent at a "big box" vendor2. Another study by the Center for Economic
Research and Education of Central California found in the City of Fresno that while the
proposed local preference program would cost the City $243,565 in higher contract
amounts, it would result in over $3.3 million dollars in output via multiplier effects in the
community3.
3. Induced effects - Induced effects are the increases in household income as a result of
both the direct and indirect effects. Increases in household income have been found to
modify spending patterns and increase consumption.
In these ways, the benefits to the City of awarding a contract to a local business extend beyond
the value of the initial contract. While the exact value of multiplier effects are difficult to predict,
various studies regarding local sourcing of materials, supplies and services have found a
consistent increase in the amount of money that remains in the local economy when a local
vendor is utilized. This increase in money has also been correlated with increases in
employment, as well as taxable transactions for the City.
The City has for many years used a one percent bid preference for Santa Ana businesses. The
rationale for this preference is that the City receives one percent of the sales tax captured on
taxable sales, which offsets the costs. Recent analysis by the Finance and Management
Services Agency indicates, however, that this preference amount has had little or no effect on the
actual number of Santa Ana businesses becoming the lowest bidder and thus being awarded City
contracts.
DISCUSSION
Sections 421 and 422 of the City's Charter outline purchasing regulations and requirements for
Public Works and Non-Public Works contracts and thus structure how local preference can be
implemented (Exhibit 1). A review of the City's charter language by the City Attorney's Office has
concluded that local preference may not be given for Public Works construction involving "the
erection or improvement of public buildings, streets, drains, sewers or parks." Contracts involving
maintenance and repair of these facilities would be eligible for a preference. In addition to charter
restrictions, several funding sources including Caltrans, HUD, State and Federal grants contain
language that precludes the use of a local preference. Given these limitations, the proposed local
preference program will apply to all contracts and bids not otherwise restricted by the funding
source, the City charter, State or Federal law.
1 Dan Houston, "Procurement Matters: The Economic Impact of Local Suppliers," Civic Economics (November 2007).
2 Dan Houston and Dr. Michael Oden, "Big Box Retail and Austin: An Independent Review," Civic Economics (October 2004)
3 Dr. Antonio Avalos and Dr. Edward Birdyshaw, "Assessing the Economic Impact of a Local Preference Ordinance in
the City of Fresno," Center for Economic Research and Education of Central California (January 2007).
75B-2
Local Business Preference Ordinance
March 5, 2012
Page 3
Additionally, it is recommended that the local preference ordinance only apply to eligible contracts
up to $100,000. This recommendation is based on a review of other cities parameters, as well as
an analysis of the City's most typical contracts. For example, a comparison of other cities local
preference ordinance showed indicated a range from $30,000 up to $1,000,000, with a majority in
the $100,000 dollar range (Exhibit 2). Further, an analysis of City of Santa Ana bids/RFP's in 2010
showed a mean contract value of $126,122 and a median contract value of $53,130. This lower
median value indicates that a majority of City contracts are below the proposed $100,000 threshold
and thus would be eligible for local preference.
Tiered Preference System
Santa Ana lies in the center of urban Orange County. As such, the Santa Ana economy is to a
large degree tied to the regional economy, similar to how the City is tied to the region in terms of
air quality, water quality, regional transportation, etc. To balance the City's goal to promote
Santa Ana businesses while being mindful of the City's place within the regional economy, a
tiered preference level is proposed. This tiered system is proposed to provide Santa Ana
businesses with a seven percent preference and other Orange County businesses with a four
percent preference.
The recommended seven percent preference best balances the costs of doing business (sales
tax, business license tax, etc.) with providing local businesses with an advantage in winning city
contracts. Analysis of a 20-contract sample of Santa Ana contracts indicated that a seven
percent preference would have resulted in approximately 25 percent of contracts being awarded
to local businesses. The proposed preference levels are also consistent with several nearby
cities that have recently adopted local preference ordinances, including the City of Los Angeles
(8%) and the City of Long Beach (10%).
Administration/Implementation
In an effort to minimize additional burdens on local businesses staff proposes to use the
California Department of General Services Small Business Certification program. This State
administered program, will ensure that businesses in the City and County that are competing for
City contracts meet the definition of a small local business while not overly burdening local
businesses with complicated forms and applications (Exhibit 3). Once a local business is
certified by the state it is cataloged in an online database that can be used by the City when
determining whether a business qualifies for the City's local preference program. The use of the
State Department of General Services for certification is also used by the City of Los Angeles as
part of their local preference program.
The California Department of General Services essentially functions as the business manager and
procurement office for the state and is the primary administrator of the Small Business Services
certification program. This program certifies small businesses in order to assist them in receiving
75B-3
Local Business Preference Ordinance
March 5, 2012
Page 4
State Contracts. Becoming a certified small business can be done online through the state's e-
procurement website free of charge. Once a business is certified it will be electronically notified of
available state bid solicitations as well as receive a five percent preference on State contracts.
There are currently 128 Santa Ana businesses already certified by the California Department of
General Services as a Small Business.
The local preference ordinance will give preference to businesses during the procurement for
both bids for materials, supplies, labor and equipment and requests for proposals for professional
services. The following are examples of how the local preference ordinance will apply in these
two scenarios:
Example 1. Bid for materials supplies labor and equipment:
Santa Ana Business Orange County
Business Other Lowest Bid
Bid Amount $95,000 $93,000 $90,000
7% local preference 4% local preference N/A
Amount used for selection
of contract awarded $88,350 $89,280 $90,000
In the above scenario, the Santa Ana business would be awarded the contract. The contract
amount would be the original bid of $95,000.
Example 2. Requests for proposals for professional services:
In a Request for Proposal (RFP) for professional services price alone may not be criterion upon
which a contract is awarded. In this example, the local preference will increase the total
evaluation points a business receives. These evaluations are typically done on a 0 to 100 point
scale.
Santa Ana Orange County Other Highest
Business Business Evaluation
Original evaluation points
received 91 95 97
7% local preference 4% local preference N/A
Total evaluation points after
local preference added 97.4 98.8 97
75B-4
Local Business Preference Ordinance
March 5, 2012
Page 5
In this scenario the Orange County business would be awarded the contract as its total
evaluation points would become the highest with the local preference. As in scenario number
one above, the use of local preference will not affect the final contract amount.
Modifications/Adjustments
It is recommended that the local preference program be adopted by ordinance, and the percent of
preference be adopted by Resolution with seven percent for local businesses and four percent for
Orange County businesses. Adopting the specific percentage preference levels by resolution will
allow the City Council to modify preference levels as it deems appropriate.
Outreach Efforts
Recognizing that the final measure of effectiveness for the proposed ordinance will depend on the
extent that it is utilized by the local businesses community; staff reached out to local chambers of
commerce as well as the Orange County Business Council to seek their input on the proposed
ordinance. A summary of the proposed ordinance was sent to the Santa Ana Chamber of
Commerce, the Hispanic Chamber of Commerce, the Vietnamese American Chamber of
Commerce, the Black Chamber of Commerce and the Orange County Business Council for their
review. Responses received to the proposed ordinance were supportive with an official letter of
support from the Orange County Business Council (Exhibit 4).
Should the proposed ordinance be adopted, additional marketing and outreach will be undertaken to
ensure that local businesses are aware of the opportunities provided by this ordinance. One
example of this additional outreach would be the creation of an online business registry through the
City's website where local businesses could sign up to receive RFPs or bid requests for particular
categories of goods or services. Categories in the registry could include: engineering services,
financial services, environmental services, office supplies, fleet, information technology and
tools/equipment. The City would then send RFP's or bid requests to all businesses that expressed
an interest in a particular category.
FISCAL IMPACT
Based on the information available regarding bids for materials, supplies, labor and equipment
and requests for proposals, the estimated fiscal impact would be $26,000 annually (Exhibits 5 &
6). It is important to note that while this fiscal impact represents the direct cost to the City as a
result of paying higher contracts; it does not account for the numerous economic benefits that
local preference ordinances have been shown to have on the local economy.
75B-5
Local Business Preference Ordinance
March 5, 2012
Page 6
Based on 2010 contract information, a 25 percent increase in local vendors being awarded City
contracts would have resulted in approximately $280,000 additional dollars circulating in the local
economy as a direct effect, with additional money entering the local economy through indirect
and induced effects as discussed above.
APPROVED AS TO FUNDS AND ACCOUNTS:
a . Trevino
Executive Director
Planning & Building Agency
M F:rb
rbVeportslocal Business Preference Ordinance 03-05-12.cc
Francisco Gutierrez
Executive Director
Finance & Management Services Agency
Exhibits 1. Charter Excerpt
2. Local Preference Contract Value Restrictions
3. Department of General Services Eligibility Requirements for Small Business Certification
4. Letter of support from Orange County Business Council
5. Fiscal Impact Calculations
6. Fiscal Impact Comparisons
75B-6
Citv Charter Excerpt
Sec. 421- Non-public works contracts.
(a) The City shall not be bound by any contract, unless the same shall be made in writing by order of the City
Council, except as hereinafter provided, and signed by an officer on behalf of the City who has been
authorized to do so by the City Council. The approval of the form of all contracts shall be endorsed thereon by
the City Attorney, or his or her designated representative.
(b) The City Council may by ordinance authorize the City Manager to bind the City on contracts for such amounts
as may be established from time to time. At least quarterly, the City Manager shall place on the City Council
agenda for information, a report of contracts let by the City Manager pursuant to authority granted hereby.
That report shall include the identities of contractors and amounts of each contract.
(c) The City Council shall establish by ordinance rules and procedures for competitive bidding for purchases of,
or contracts for materials, supplies, equipment, or services, including exceptions from formal bidding as the
City Council may deem appropriate, including providing for emergencies. Nevertheless, such rules and
procedures shall provide, where feasible, for review of such alternative sources of such materials, supplies,
equipment, or services, including professional services, as may be available in competition with one another
and selection therefrom on the basis of obtaining maximum quality goods, services, or performance at
minimum cost, and may provide for use of other public agency bidding and contracting processes where
found to be otherwise consistent with this Charter. Nothing herein contained shall authorize any person to
bind the City on any such contract if the same be a portion of a larger purchase or series of purchases which,
in the aggregate, exceed the authority set by the City Council hereunder.
(Ord. No. NS-1405, 3-13-78, approved at election 6-6-78; Ord. No. NS-1642, 8-2-82, approved at
election 11-2-82; Ord. No. NS-2715, 7-3-06, approved at election 11-7-06)
Sec. 422 - Public works contracts
(a) For purposes of this section, "public works construction" shall be deemed to mean a project for the erection or
improvement of public buildings, streets, drains, sewers, or parks. Maintenance and repair of public buildings,
streets, drains, sewers, or parks shall not be considered as public works construction.
(b) Every contract for public works construction in excess of that amount set from time to time by ordinance of the
City Council pursuant to (c) below, shall be made by the City Council with the lowest and best bidder after
publication for at least two (2) days in a newspaper of general circulation in the City of notice calling for bids
and fixing a period during which such bids will be received, which shall be for not less than ten (10) days after
the first publication of said notice, except where alternate contracting procedures are utilized pursuant to (c),
below.
(c) The City Council shall adopt by ordinance rules and procedures for competitive bidding for all public works
contracts, which rules and procedures shall establish limits for public works contracts approved by the City
Manager. Such rules and procedures shall establish criteria for thresholds for formal and informal bidding,
and notice requirements therefor; standards for rejection of bids and dispensing with bidding; criteria and
procedures for prequalifying bidders and contractors; and utilization of alternate project delivery systems such
as design-build contracts. For purposes of this Article, "design-build" means a range of methods of procuring
design and construction from a single source, where the selection of the single source occurs before the
development of complete plans and specifications. Notwithstanding the foregoing, any rule permitting
dispensing of bidding and/or performing work with City forces for any reason including an emergency shall
require the affirmative votes of at least two-thirds (2/3) of the members of the City Council.
(Ord. No. NS-2715, 7-3-06, approved at election 11-7-06)
EXHIBIT 1
75B-7
Local Preference Contract Value Restrictions
City Local Preference Contract Amount Restrictions
San Francisco 5%-15% Under 10 Million
Long Beach 10% 100,000
Los Angeles 8% 1,000,000
Costa Mesa 5% 100,000
Concord 5% 100,000
Fresno 5% 500,000
Under $200,000 = $5,000
Hayward
5% $200,000 - $400,000 = $7,500
$400,000 - $750,000 = $8,750
over $750,000 = $10,000
San Juan Capistrano 3% No limit
San Jose 5% 100,000
Santa Cruz 3% Over $10,000 and within 3% of lowest price
Thousand Oaks 5% 100,000
Lansing 500,000
Phoenix
2
5%-5% 5% for contacts up to $250,000
. 2.5% for $250,000 - $500,000
10% for purchases up to $10,000
Detroit 6%-10% 8% up to $100,000
6% up to $500,000
Boise Contracts over $50,000
Kethickan, AK 10% 100,000
EXHIBIT 2
75B-8
California Department of General Services
Eligibility Requirements
In order for a small business to be eligible for certification, the small business must meet the following
requirements:
¦ Be independently owned and operated;
¦ Not dominant in field of operation;
¦ Principal office located in California;
¦ Owners (officers, if a corporation) domiciled in California; and,
¦ Including affiliates, be either,
• A business with 100 or fewer employees; an average annual gross receipts of $14 million or less, over
the last three tax years;
• A manufacturer* with 100 or fewer employees; or,
• A microbusiness. A small business will automatically be designated as a microbusiness, if gross annual
receipts are less than $3,500,000; or the small business is a manufacturer with 25 or fewer employees.
* For Small Business Certification purposes, a manufacturer is a business that is both of the following:
1. Primarily engaged in the chemical or mechanical transformation of raw materials or processed
substances into new products.
2. Classified between Codes 31 to 339999, inclusive, of the North American Industrial Classification System
(NAICS) Manual, published by the United States Census Bureau, 2007 edition.
EXHIBIT 3
75B-9
ORANGE COUNTY
BUSINESS COUNCIL
January 26, 2012
2 Park Plaza, Suite 100 1 Irvine, CA 92614-5904 1 P 949.476.2242 F 949.476.0443 ! www.ocbc.org
Mr. Jay Trevino
City of Santa Ana
Planning and Building Agency
20 Civic Center Plaza, M20
Santa Ana, CA 92702
Mr. Trevino:
Rtcoje
11% 14N3 AD
On behalf of the Orange County Business Council (OCBC), I am writing to you
regarding the City of Santa Ana's Local Preference Ordinance scheduled to be heard
for the City Council's consideration on March 6, 2012.
I want to commend staff for their outside the box and innovative approach to promoting
economic development on a local level. Through initiatives such as OCBC's "Turning
Red Tape into Red Carpet Awards", OCBC has sought to honor and recognize the hard
work of local governments throughout the county who have cut through red tape to
create a more business-friendly environment in Orange County
As communicated to OCBC, the Santa Ana Local Preference Ordinance would establish
a 4% preference for small Orange County Businesses, and a 7% preference for small
Santa Ana businesses on all qualifying bids for materials, supplies, labor, equipment, or
services. In addition, the local preference would only apply to all proposals/contracts
between $5,000 and $100,000 where the City is not otherwise restricted from offering a
preference due to funding source, the City Charter, State or Federal Law.
OCBC strives to champion a vibrant and competitive economic climate, particularly
when it comes to the use of taxpayer dollars in the procurement process by public
agencies. As such, OCBC would be supportive of an Ordinance which would allow for
the use of local preference in occasions where competitive bids and proposals are
deemed to be equal and meet all requirements set forth by the City.
EXHIBIT 4
THE LEADING VOICE OF BUSINESS IN ORANGE COUNTY 75B-1 0
Mr. Jay Trevino
January 26, 2012
Page 2
We applaud staff's efforts to promote local businesses in working to bolster economic
activity in the Orange County community.
Since
Lucy "Dtnn
Preside t nd Orange Cou jo
usiness Council
LD:MP:bb
75B-11
Local Preference Ordinance
• The City released 57 bids for materials, supplies, labor and equipment or
requests for proposals in 2010.
• Of these, 31 would have been eligible for local preference based on the criteria
established in the proposed ordinance
• Based on the analysis of a 20-contract sample by the Finance and
Management Services Agency, a local preference of 7% would result in
approximately 25% of contracts going to local businesses.
Fiscal Impact Calculations:
Number of eligible contracts (31)
Total value of eligible contracts ($1,446,609) Average price per contract ($46,664.81)
$46,664.81 x 7% preference = Average additional cost per contract ($3,266.54)
# of eligible contracts (31) x Estimated % to local businesses (25%) = 8 contracts
Number of local Average additional _ Estimated additional cost per year
business contracts X City cost per contract for Local Preference Program
(8) ($3,266.54) ($26,132.32)
* - Examples of contracts that would not be eligible include: Contracts over $100,000, Public Works
Construction contracts, cancelled bids, etc.
EXHIBIT 5
75B-12
Fiscal Impacts
Maximum Contract
Amount Number of qualifying
contracts fiscal Impact
$100,000 31 $26,132.32
$150,000 34 $34,264.17
$250,000 39 $52,217.90
EXHIBIT 6
75B-13
75B-14
2/7/12
ORDINANCE NO. NS-XXX
AN ORDINANCE OF THE CITY COUNCIL OF THE
CITY OF SANTA ANA AMENDING ARTICLE VII.II
OF CHAPTER 2 OF THE SANTA ANA MUNICIPAL
CODE, ESTABLISHING A PREFERENCE FOR
LOCAL BUSINESSES IN THE PROCUREMENT OF
MATERIALS, SUPPLIES, LABOR, EQUIPMENT OR
SERVICES
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. The City of Santa Ana encourages businesses to locate in the City and
desires to support businesses located in the City of Santa Ana and the
surrounding Orange County area; and
B. An examination of contracts awarded by the City indicates that local
businesses are under-represented in providing goods and services to
the City; and
C. Awarding contracts to local businesses promotes not only those local
businesses, but also simulates economic activity throughout the
community as the City directly invests in its local businesses; and
D. The investment in local businesses results in a multiplier effect arising
from those businesses increasing purchases of materials, supplies,
equipment and labor from other local sources, resulting in the re-
circulation of local dollars in the local economy; and
E. As a result of additional local opportunities, household spending
increases, which increases taxable transactions occurring in the local
community; and
F. Providing a bid preference for small local businesses will increase the
number of local businesses that participate in City contracting, which
will increase the circulation of city dollars, stimulate a stronger
economic base and decrease the unemployment rate in the City.
75B-15
2/7/12
Section 2. The adoption of this ordinance is exempt from CEQA and a
Notice of Exemption will be filed if this ordinance is adopted.
Section 3. Section 2-802 of the Santa Ana Municipal Code is hereby
amended such that it reads as follows (new language in bold, deleted language
in strikeout for tracking purposes only):
Sec. 2-802. Definitions
For purposes of this article, the following definitions shall apply:
Agency shall mean the Executive Director of the City agency or
department which has responsibility for awarding a contract for services.
Agreement or contract shall mean a legal contract which complies fully
with the provisions of section 421 of the city's charter and this article. The words
agreement and contract may be used interchangeably in this article.
Electronic shall mean electrical, digital, magnetic, optical, electromagnetic,
or any other similar technology.
Local Business shall mean a business certified by the State
Department of General Services as a Small Business, which has a substantial
presence through either a headquarters or branch office within the
geographical boundaries of the City, and which headquarters or branch office
was established prior to the city inviting bids for the respective procurement.
Said business must possess a current business license and certificate of
occupancy. For purposes of this ordinance, a Post Office box address within
the City shall not qualify as a valid business location.
Materials, supplies, labor and equipment shall mean those goods or
services, but excluding services and public works construction, that are readily
ascertainable and measurable by an objective standard in terms of quantity or
quality so as to be susceptible to competitive bidding.
Orange County Business shall mean a business certified by the State
Department of General Services as a Small Business, which has a
substantial presence through either a headquarters or branch office within
the geographical boundaries of Orange County, and which headquarters or
branch office was established prior to the City inviting bids for the
respective procurement. Said business must possess a current business
license to perform work in Santa Ana. For purposes of this ordinance, a
Post Office box address within the County shall not qualify as a valid
business location.
75B-16
2/7/12
Public notice shall mean the distribution or dissemination of information to
interested parties using methods that are reasonably available. Such methods
can include publication in newspapers of general circulation, electronic or paper
mailing lists, and web site(s) designated by the city and maintained for that
purpose.
Purchasing manager shall mean that city employee or official so
designated by the city manager and authorized to carry out the responsibilities
under this article, including the promulgation and enforcement of administrative
procedures.
Purchase order (PO) shall mean that standardized contract developed
pursuant to subsection 2-8030) issued to the vendor of materials, supplies, labor
and equipment.
Services shall mean the furnishing of labor, time, or effort by a contractor,
not involving the delivery of a specific end product other than reports which are
merely incidental to the required performance. Services are of an advisory
nature, provide a recommended course of action or personal expertise, have an
end product comprised of a transmittal of information, written or verbal, and that
is related to the governmental functions of administration, management, program
management or innovation. The product may include anything from answers to
specific questions to design of a system or plan, and includes provision of
workshops, seminars, retreats, and conferences for which expertise is
necessary. This term shall not include employment agreements or collective
bargaining agreements. This term shall not include contracts for the construction,
alteration, improvement, repair, or maintenance of real or personal property.
Section 4. Section 2-803.1 is added to Chapter 2 of the Santa Ana
Municipal Code to read in full as follows:
Section 2-803.1 Local Preference in Contracts for Materials, Supplies,
Labor and Equipment.
Except for those contracts for which the Charter of the City of Santa
Ana prohibits the provision of a local preference, and/or those contracts
funded through programs or partners which prohibit the use of a local
preference, the City Council authorizes the purchasing manager to extend
a preference to Local Business and Orange County Business as set forth
herein.
(a). In the procurement of material, supplies, labor and equipment
involving expenditures between five thousand dollars ($5,000.00) and one
hundred thousand dollars ($100,000.00), the purchasing manager shall
75B-17
2/7/12
extend a preference to each local business and each Orange County
business, which preference shall be applied to the bid which provides
maximum quality at minimum price. Said preference shall be set by
Resolution of the City Council.
(b). If the bidder submitting the maximum quality at minimum cost
bid is not a local business or an Orange County business, and if a local
business or an Orange County business has submitted a responsive and
responsible bid, and with the benefit of the applicable preference, the bid
submitted by local business or Orange County business is equal to or less
than the original maximum quality at minimum cost bid, the contract shall
be awarded to the local business or the Orange County business at its
submitted bid price. If two (2) or more low bids received are equal after the
application of the preference, the contract shall be awarded in the following
order:
1) to a local business
2) to an Orange County business
3) to the bidder submitting the maximum quality at minimum
cost bid.
The city shall reserve the right to reject any or all bids.
(c). In order for the preference to apply, a bidder must certify
under penalty of perjury, that the bidder qualifies as a local business or
Orange County business. The preference is waived if the certification does
not appear on the bid.
Section 5. Section 2-805 of the Santa Ana Municipal Code is hereby
amended such that it reads as follows (new language in bold, deleted language
in strikeout for tracking purposes only):
Sec. 2-805. Procurement of materials, supplies, labor, and equipment between
five hundred dollars ($500.00) and twenty-five thousand dollars ($25,000.00).
(a) For those agreements exceeding five hundred dollars ($500.00) but
not exceeding five thousand ($5,000.00), the city manager may bind the city on
contracts for materials, supplies, labor, and equipment in amounts not exceeding
five thousand dollars ($5000.00) in any one contract or in the aggregate with any
one vendor or service provider. These contracts can be entered into
administratively without the need for informal or formal bidding.
(b) Unless exempt from bidding pursuant section 2-807, all contracts
4
75B-18
2/7/12
involving an expenditure between five thousand dollars ($5,000.00) and twenty-
five thousand dollars ($25,000.00) for materials, supplies, labor, and equipment
shall be let to the lowest responsible budder on the basis of obtaining
maximum quality at minimum cost in accordance with procedures established
by the purchasing manager. Those procedures shall provide for at a minimum
the following:
(1) There shall be a written or verbal invitation for bid which shall
include the following information: A general description of the things
to be purchased or project, the time and place for bid opening when
applicable, bid instructions, and the terms and conditions of the bid
and any resulting contract. The purchasing manager shall make a
good faith effort to notify all businesses engaged in providing such
materials, supplies, labor, and equipment located within the
boundaries of the city of the opportunity to bid.
(2) Where required by state or federal law or regulations, or upon
request by a bidder, the bids shall be opened, if sealed, and
declared in public at the time and place stated on the "Invitation for
Bid."
3two (2) or mere hi ronoiv ed a the same and the lower} }h
any or all bids.
Section 6. Section 2-806 of the Santa Ana Municipal Code is hereby
amended such that it reads as follows (new language in bold, deleted language
in strikeout for tracking purposes only):
Sec. 2-806. Procurement of materials, supplies, labor, and equipment in excess
of twenty-five thousand dollars ($25,000.00).
Unless exempt from bidding pursuant to section 2-807, all contracts
involving an expenditure in excess of twenty-five thousand dollars ($25,000.00)
for materials, supplies, labor, and equipment shall be let to the lowest
responsible biddef on the basis of obtaining maximum quality at minimum
cost, in accordance with procedures established by the purchasing manager.
Those procedures shall provide for at least the following:
(a) Public notices inviting bids shall include a general description of the
things to be purchased and the time and place for bid opening.
Adequate public notice of the invitation for bids shall be given a
reasonable time prior to the date set forth therein for the opening of
bids, in accordance with regulations established by the purchasing
manager. To the extent that public notice is by way of publication in
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a newspaper of general circulation, such publication shall be for at
least two (2) days, the first of which shall be at least ten (10) days
before the date set for opening bids.
(b) Invitation of bids shall be mailed or transmitted by other means
established by the administrative code but not recited over the
telephone or in person. Any interested bidder may obtain an
invitation for bid.
(c) All bids shall be submitted sealed in accordance with the
instructions contained in the "Invitation for Bid" form.
(d) The bids shall be opened in public, at the time and place stated on
the "Invitation for Bid." All bids shall be publicly declared.
Section 7. Section 2-808 is added to Chapter 2 of the Santa Ana
municipal Code to read in full as follows:
Section 2-808 Local Preference in Contracts for Services
Except for those contracts for which the Charter of the City of Santa
Ana prohibits the provision of a local preference, and/or those contracts
funded through programs or partners which prohibit the use of a local
preference, the City Council authorizes the Agency to extend a preference
to Local Business and Orange County Business as set forth herein.
(a) Contracts for services shall be awarded on the basis of
demonstrated competence and on the professional qualifications
necessary to for the satisfactory performance of the services required. In
evaluating proposals for service contracts in amounts up to one hundred
thousand dollars ($100,000.00), proposers which qualify as Local Business
or Orange County Business shall be eligible for preference points. The
preference shall be added to the proposal to reach a final score in
determining the most advantageous proposal. Said preference shall be set
by Resolution of the City Council.
(b). A non local proposer associating with a Local Business or
Orange County Business, shall be eligible for the local preference if a
minimum of fifty percent (50%) of the contract value will be performed
by the Local Business or Orange County Business.
Section 8. Any provision of the Code that is inconsistent with the
provisions of this Ordinance, to the extent of such inconsistencies and no
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further, is hereby repealed or modified to that extent necessary to effect the
provisions of this Ordinance.
Section 9. 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 10. This ordinance shall become effective thirty days after its
adoption by the City Council.
ADOPTED this day of 2012
APPROVED AS TO FORM:
Joseph Straka, Interim City Attorney
By:
Laura Sheedy
Assistant City Attorney
AYES: Councilmembers
NOES: Councilmembers
ABSTAIN: Councilmembers
NOT PRESENT: Councilmembers
Miguel A. Pulido
Mayor
7
75B-21
2/7/12
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-XXX 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:
Clerk of the Council
City of Santa Ana
75B-22
Lss2/7/12
RESOLUTION NO. 2012-XXX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SANTA ANA SETTING A LOCAL PREFERENCE LEVEL IN
THE PURCHASE OF GOODS, SUPPLIES, LABOR,
EQUIPMENT AND PROFESSIONAL SERVICES
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS
FOLLOWS:
Section 1. The City Council of the City of Santa Ana hereby finds, determines
and declares as follows:
A. Section 2-803.1 of the Santa Ana Municipal Code (Code), adopted by
Ordinance NS - XXXX, provides that the City Council may set by resolution
the level of preference to be provided to local businesses in the procurement
of goods, supplies, labor and equipment.
B. Section 2-808 of the Santa Ana Municipal Code (Code), adopted by
Ordinance NS - XXXX, provides that the City Council may set by resolution
the level of preference to be provided to local businesses in the procurement
of services.
C. The City Council fines that as to the local preference in procurement:
An analysis of recent procurements indicates that if a preference of seven
percent (7%) were extended to local business, and a preference of four
percent (4%) were extended to Orange County business, approximately
twenty-five percent (25%) of Santa Ana contracts would be awarded to
local business or Orange County business; and
2. The estimated fiscal impact of extending a local preference is $XXX; and
3. A seven percent preference for local business assists in balancing the
cost to the local business associated with doing business in the City,
including business license tax, sales tax and property tax; and
4. Because the city lies in the center of Orange County, extending a
preference to Orange County businesses will provide benefit to the
regional economy, including the City.
Resolution No. 2012-XXX
75B-23 Page 1 of 2
D. Based upon all the testimony, reports and other evidence submitted on this
matter, the City Council makes the above-specified findings. The Request for
Council Action dated March 19, 2012 regarding this resolution, together with
Ordinance No. NS- XXXX and the Request for Council Action which
accompanied said Ordinance are incorporated herein by this reference as
though fully set forth.
Section 2. The City Council hereby establishes a preference of seven percent
(7%) for local businesses and a preference of four percent (4%) for Orange County
businesses.
Section 3. The Purchasing Manager shall implement this preference in the
purchase of goods, supplies, labor and equipment. The Agency shall implement this
preference in procurement of services.
Section 4. This Resolution shall take effect on the effective date of the
Ordinance Establishing a Local Purchasing Preference, and the Clerk of the Council
shall attest to and certify the vote adopting this Resolution.
ADOPTED this day of
2112
Miguel A. Pulido
Mayor
APPROVED AS TO FORM:
Joseph Straka, Interim City Attorney
By:
Laura Sheedy
Assistant City Attorney
AYES:
Councilmembers
NOES: Councilmembers
ABSTAIN
Councilmembers
NOT PRESENT: Councilmembers
Resolution No. 2012-XXX
756-24 Page 2 of 2
CERTIFICATE OF ATTESTATION AND ORIGINALITY
I, MARIA D. HUIZAR, Clerk of the Council, do hereby attest to and certify the attached
Resolution No. 2012-XXX to be the original resolution adopted by the City Council of the
City of Santa Ana on
Date:
Clerk of the Council
City of Santa Ana
Resolution No. 2012-XXX
756-25 Page 3 of 2
75B-26