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HomeMy WebLinkAbout10/08/2012 Work SessionCity of Springfield Work Session Meeting MINUTES OF THE WORK SESSION MEETING OF THE SPRINGFIELD CITY COUNCIL HELD MONDAY, OCTOBER 8. 2012 The City of Springfield Council met in a work session in the Jesse Maine Meeting Room, 225 Fifth Street, Springfield, Oregon, on Monday. October 8. 2012 at 530 p.m., with Mayor Lundberg presiding. ATTENDANCE Present were Mayor Lundberg and Councilors Pishioneri, VanGordon, Wylie, Moore (6:OOpm), Ralston and Woodrow. Also present were Finance Director Bob Duey, City Attorney Joe Leahy, City Recorder Amy Sowa and members of the staff. 1. Proposed Updates to Municipal Code 2.700 through 2.718. Finance Director Bob Duey presented the staff report on this item. The State of Oregon Legislature passed HB3316 which required the City to update our Municipal Code surrounding how we selected certain consultants for engineering; surveying and architectural professional services. The City was also exploring an opportunity for cost savings and process improvement by updating the dollar threshold for the formal solicitation process and including the use of electronic means for solicitations and contract execution. Mr. Duey said Procurement Office Jayne McMahan and City Attorney Joe Leahy had been working on this and in addition to making the required changes, looked through the rest of the Code regarding purchasing that should be addressed. Ms. McMahan said there were three changes being proposed regarding the purchasing code. The first was the legislative change and the other two were process improvement and cost saving measures. The 2011 legislative session passed HB 3316 which required the City to use a qualifications based selection process for the selection of engineers, architects, land surveyors, etc. The new statute required that the City could no longer use price as selection criteria forany contract over $100.000 for these types of services. In the Request for Proposal (RFP), the City could use other criteria such as previous experience in `like projects °, specialized experience, proposed approach and methodology to meet the project requirements, staff experience, firm ownership and employment practices, project management techniques, firm availability to the locale, and firm familiarity with project locale. Only after the City selected the supplier could they talk about price and negotiate. After the negotiations, if the City was not able to negotiate a price that the City deemed fair and reasonable, they could go to the next qualified supplier and negotiate with them. The impact to the City was that some of the smaller firms could perhaps be more competitively priced. The City had not yet had a need to hire any of the consultants under the new statute, but there would soon be a need. This could turn into a positive for some of the local engineering suppliers if the formal solicitation process was also changed. Ms. McMahan said the other two changes were staff initiated for process improvement. The first of these changes was increasing the threshold on the intermediate purchases. Under the City's current process, the Municipal Code followed three primary limits of authority: 1) Small Informal — from $0 to $5000; 2) Intermediate Bids — $5,000 to $34,999.99: and 3) Formal Sealed - $35.000 and above. She explained the process of each. All bids over $35,000 must be awarded by formal action of the City of Springfield Council Work Session Minutes October 8, 2012 Page 2 Council. State statute did allow for intermediate procurements to go up to 150,000. Currently Springfield Municipal Code had the City operating on the lower end of the continuum at $35,000, requiring bids of $35,000 or more to require Council approval. Ms. McMahan said the City was looking at process improvement and standardization across the organization, including leveling some of our policies and practices with Metropolitan Wastewater Management Commission (MVTMC) as well. MWMC had adopted model rules whereby the City of Springfield and Eugene staff conducted business with a formal threshold for sealed bids with approval of their Commission on any procurement over $150,000. Springfield staff was working on the Fire Merger and standardizing processes and policies with the City of Eugene. The City of Eugene Municipal Code required formal bidding for purchases greater than $100,000. Staff also did some benchmarking with other municipalities similar in size to Springfield. Bend required formal bidding for purchases over $100,000 and Gresham required formal bidding for purchases over $50,000. Gresham was looking at increasing their threshold to $100,000. Corvallis required formal bidding for purchases over $50,000 and Lane County required formal bidding for purchases over $100,000. During their research on limits set by other cities and agencies, they asked about abuse of anything between the informal and the formal and didn't find any evidence of such abuse. Ms. McMahan noted that the formal solicitation had numerous steps that were time consuming, not only for staff and the City Attorney, but also the bidding community. In the past year, staff had received feedback from a few suppliers that our requirements and documentation needs were too time consuming for their team, given the low dollar value of the potential contract. The timeline from advertising to contract execution was quite lengthy. If the City were to raise the formal solicitation threshold from $35,000 to a higher threshold, the City would benefit by potentially not losing local small companies from competing thus keeping tax dollars in the community. We would also be addressing the City Council goal of inclusion and potentially broadening our local supplier base and attracting more Minorities. Women and Emerging Small Businesses (MWESB). Additionally, with the reduced steps to solicit goods and services, the City would benefit from the cost savings in terms of staff resources, advertising and printing costs. All departments across the City would benefit from the cost savings. The City would also benefit from the shorter timelines from solicitation to acquisition for the needed goods and services. Ms. McMahan noted that a streamlined process would continue to be a competitive process. The City would develop standardized bidding templates and guidelines for staff to follow to ensure bonafrde bids were being solicited. Informality did not dispense with the requirements for documentation and accountability Further, the process would remain a fair and transparent process as it was today. These intermediate procurements would continue to be posted on the City's website, as well as sent to those in our supplier database thus ensuring the public confidence in the objectivity, transparencv and the procurement of goods and services at the lowest price. Ms. McMahan said City staff recommended the Small Informal amount remain between $0 and $5000 and an increase in the threshold of intermediate procurements from $35,000 to $100,000. The City would continue to have accountability by keeping the signing authority for Department Directors go from $35,000 up to $50,000 and requiring contracts from $50,000 to $100,000 be signed by the City Manager. This would provide a graduate authority process which would add additional oversight and accountability. The Formal Sealed would be from $100,000 and above with the same process as was currently in place for Formal Sealed solicitations, including award by formal action of the Council. City of Springfield Council Work Session Minutes October 8, 2012 Page 3 Ms. McMahan said the final area was regarding electronic contracting. Currently the City had a small paragraph in the Municipal Code that allowed for electronic publications. It allowed bids and requests; but didn't address the solicitation submittal and electronic signatures. In the current business environment, it was almost a necessity to transact business electronically. If the City were to adopt a code that gave staff the ability to use electronic solicitation and submission,, we would be addressing the needs to expedite contract execution, clip wrap or click through acceptance on electronic applications that required an individual to click "ok' to accept terms and conditions, and appropriate retention of electronically stored documents based on State requirements. The state statue allowed the City the ability to have a code that legally recognized electronic contracts. Further, the use of electronic process fed nicely into the Governor's Green Executive Order requiring State agencies to develop policies and practice to make Oregon a more sustainable state, as well as the Oregon Sustainability Act. This would also result in a cost savings, staff time as staff would no longer have to prepare documents to mail, UPS or Fed Ex, savings on paper and printing, and mailing costs. Lastly, the environment would benefit by reduced greenhouse gases from moving the documents physically in trucks or planes. This electronic process would be used at the discretion of staff and not in all instances. Ms. McMahan said staff was requesting Council to direct City staff to prepare for public hearings for revisions to the Municipal Code to 1) address the enacted HB3316: 2) to revise the Municipal Code by raising the threshold of formal solicitations from $35,000 to $100,000: and. 3) update the Municipal Code to include electronic solicitation, submittal and contracting process. Councilor Pishioneri suggested that the lower limit on the Small Informal bids should be higher, and perhaps match the limit on procurement cards. Staff should be able to get $150 of supplies without getting two other bids as it could end up costing more in the long run. The County practice was that if it was under $1500 there was no need for competitive bidding, and between $1500 and $5000 they needed competitive bill pricing. He asked if HB3316 recommended going to $1007000. Mr. Leahy said the figure of $35,000 and $100,000 was unrelated to H133316. Councilor Pishioneri asked if HB3316 affected the bidding process currently in place. Mr. Leahy said it played a role in the employment of the architects, engineers, etc., but not in the purchase of goods and services. Councilor Pishioneri said he was not comfortable going with $100,000. Eugene and Lane County were larger agencies and had larger budgets. He felt that $50,000 was reasonable. He asked how it would be handled if a bid came in just under the threshold, and then the contractor came back needing more funds. Ms. McMahan said regardless of the amount of the bid_. the contract would have a not -to- exceed amount. Change orders generally came into play when staff changed the scope of the work. Staff worked yen, hard and did a good job of defining the requirements so change orders only came in when the scope of work changed slightly. Mr. Leahy said that was correct and was why Finance and other staff were so vigilant. Also, if it was over $50,000 BOLL kicked in so anything close to the high $40,000's was watched carefully by Ms. McMahan. It was part of a system staff dealt with daily. City of Springfield Council Work Session Minutes October 8, 2612 . Page 4 Councilor Pishioneri said he was comfortable with a $50.000 threshold. Ms. McMahan noted that if the threshold was increased it would become formal and would come to Council for approval. Mr. Duey said the number of solicitations between $35,000 and $50,000 was very few so staff would not gain any of the benefits considered with that smaller increase. There would be about 15 -20 a year if the threshold was raised to $100.000. Councilor Wylie asked about the threshold for formal contracts and the threshold for Department Directors as noted on page 3 of Attachment 1 of the agenda packet. She asked for clarification. Ms. McMahan said currently, the City Manager and Department Directors could sign contracts between $5000 and $35,000. Staff was proposing the threshold of $35,000 to $100;000; but they would only increase the Department Directors' authority from $35.000 to $50,000. The City Manager would have authority, to sign between $50,000 and $100.000 as another laver of accountability. Councilor Wylie asked who would be reviewing the electronic acceptance terms. Ms. McMahan generally those were on contracts where the tents and conditions had already been agreed upon. Councilor Wylie asked if there were any drawbacks to electronic contracting. Ms. McMahan said she couldn't think of any drawbacks on electronic signatures. They would still be signed contracts with numbered pages. Mr. Leahy said one drawback could be verification on whether or not something was sent and received. He provided an example in Portland Courts. Ms. McMahan said that was correct. To help alleviate that possibility, she requested notification of receipt when she sent something. In turn; she notified receipt of the information. Occasionally, if a submittal took up too much memory, it may get rejected. When that occurred, the sender received a bounce -back message. Mayor Lundberg asked if this change basically meant they had to use other criteria for making a decision rather than the lowest bid. and then negotiate a price. Mr. Leahy said that was in the area of HB3316 for architects; engineers and other professional service providers. It did not affect purchasing goods. Price could only be used after they verified the other criteria listed. Mayor Lundberg said typically they would have seen a price first, but now they would not. Mr. Leahy said that was correct. Once they chose based on criteria, they would negotiate with the contractor. Staff would also do preliminary work to determine a fair price. If through negotiations a fair price couldn't be agreed upon, they would go to the next bidder. Mayor Lundberg said that had been her concern City of Springfield Council Work Session Minutes October 8, 2012 Page 5 Mr. Duey said this would require training of staff. Mr. Leahy said even with the higher threshold proposed for price of contracts, staff would be working hard with those vested with the authority to make sure they were in conformance with the law and spend time on training regarding negotiations for all purchases. They were looking at this twofold: the first in the area of professional people; and the second in training for all contracts. Councilor Woodrow asked if there was a penalty if the City didn't come to a negotiated cost with the first choice. Ms. McMahan said there was not. They could just go to the next qualified supplier. Councilor VanGordon said it would be important to be watchful over the first few contracts under this new statute until everyone understood the new rules. He agreed with Councilor Pishioneri's suggestion of having a minimum amount for requiring three bids and felt S 1500 was fair. He was fine increasing the threshold for formal bids to S 100.000, but wanted a sense of all of the savines that would be in that increase. Ms. McMahan referred to the last attachment in the packet which showed the solicitation steps of a formal process as they were now and an informal process. All of the steps eliminated by going to a higher threshold were stricken. It was difficult to tell the number of hours each step took as each solicitation was unique. Councilor VanGordon asked if they could provide anecdotally how many hours were spent. Mr. Duey said some of them could be cut in time by one-half to a full week. It was a substantial amount of staff time. Councilor VanGordon asked about the reference in the staff report that moving up the threshold would encourage others to bid. He asked if that was confirmed with local bidders. Ms. McMahan said it was not confirmed, but they had received feedback from suppliers that had not bid due to the time it took to go through all of the paperwork. A truncated process. which staff had been informally using since February for smaller bids, had received positive response. Councilor VanGordon said he was fine with $100,000. He would like a check in point to see what came in and some feedback showing an increase in bids submitted and a reduction in staff time. Councilor Wylie said it looked like some of the things that had been stricken, such as advertising, could be costed out. Advertisements were costly. She would like a rough estimate of the cost savings. Ms. McMahan said she was correct about the amount of time and money the longer process took. Advertising costs were increasing. Staff could provide some estimates on the cost savings. Councilor Ralston said by eliminating the steps stricken in this process, the turnaround time would also be reduced by a couple of weeks. That was another argument in favor. He noted the many steps that took a lot of time. City of Springfield Council Work Session Minutes October 8, 2012 Page 6 Councilor Moore said she was seeing concern about Council being removed from the process. She asked if Council received copies of bids submitted. Mr. Duey said through the Capital Improvement Program (CIP) process_ Council saw the projects the City would be working on during the year. Those that were below the threshold were not seen by Council. That process could be changed. Mr. Leahy said Council could request information on all bids awarded between $50.000 and $100;000 in their Communication Packet. It could include the name of the contractor, the services and the amount, but not the contract. Mr. Duey said that would be easy for staff to do. Councilor Pishioneri said getting that information would resolve his angst of going to $100.000. If it would save that much time and money, it was worthwhile. Mr. Duey said the information provided to the Mayor and Council would not be preapproval, but would be after the contract was awarded. Mayor Lundberg said the Communication Packet would be appropriate. Mr. Leahy said Council would still see intergovern mental agreements (IGA's) so they knew what agreements they had with other agencies. This would not affect that policy. ADJOURNMENT The meeting was adjourned at 6:13 p.m. Minutes Recorder —Amy Sowa Christine L. Lundberg Mayor J Attest: Amy So a City Recorder