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CC - Item 1A - Purchasing Policy Workshop to Review the Proposed Purchasing Policy Update RecommendationsROSEMEAD CITY COUNCIL STAFF REPORT TO: THE HONORABLE MAYOR AND CITY COUNCIL FROM: BEN KIM, CITY MANAGER DATE: DECEMBER 12, 2023 SUBJECT: PURCHASING POLICY WORKSHOP — REVIEW OF THE PROPOSED PURCHASING POLICY UPDATE RECOMMENDATIONS DISCUSSION The City engaged NIGP Consulting ("Consultant") in January 2023 to conduct a procurement policy and procedure assessment ("Assessment") and to provide revision recommendations. The purpose of the engagement was to conduct a comprehensive assessment of the City's purchasing policies and procedures. The aim was to determine whether the city was adhering to industry best practices and to ascertain whether greater delegated authority for procurement activities was necessary to streamline operations, increase work efficiencies, and mitigate risk. The objective of this workshop is to communicate the Consultant's findings and recommendations, as well as seek further guidance from the Council regarding the potential execution of said recommendations. The findings and recommendations of the evaluation are detailed in the attached report. Several key recommendations include: Update procurement dollar thresholds. The recommended dollar threshold updates are detailed in the table below. Averaging the responses of all agencies to the NIGP 2019 Benchmark Survey Report (Survey), the average starting threshold for small procurements was determined to be thirteen thousand dollars. However, this increase from $1,000 to $13,000 maybe deemed excessive at this time. An analysis of all agencies that participated in the NIGP 2019 Benchmarking Survey Report determined the average threshold levels for formal competition for procurements to be $54,033 (for non -IT) and $57,611 (for IT). Current delegation of authority to award contracts dollar thresholds: 3.24.015 Purch wing mrOmAs. Valu of Purchase Purchase method Method of Approval $5,000.00 or les Direct competitive purchasing Approval bV director of procedure, unks subject to an department responsible for the alternative purchasing procedure. project, using a vendor or letter of agreement. $5,000.01 to $30,000.00 Informal competitive purchasing Approval by City Manager. procedure, unlessubjectto an alternative purchasing procedure. $30,000.01 or More Formal competitive purchasing Approval by the CitV Council. procedure, unks subject to an alternative urchasing procedure. AGENDA ITEM LA City Council Meeting — Purchasing Policy Workshop December 12, 2023 Page 2 of 4 Current and Consultant proposed delegation of authority to award contracts dollar thresholds: Th,.,h.ld Up m $]AW iue�ei Up to $5,000 Procurement Required pCord or Direct Purchase; no pCard Holder or $5,000_01 to $30,000.00 Approval by the City Manager. quotations required Department Director >$1,000.01- >$50W01- Written Quotes (minimum 2) Department Director $SAW $15,000 unless subject to alternative procedure >$15AWA1 41SAW.01 Written Quotes (minimum 3) City Manager -$30,000 -$50,000 unless subject to alternative procedure >$30AWA1 450AWA1 Formal Competitive Process, City Council unless subject to alternative procedure Enable the City to make annual updates to the dollar thresholds for procurement based on the Consumer Price Index. This would be based on the all -urban consumers published by the United States Federal Secretary of Labor (Bureau of Labor Statistics) for the Los Angeles Area (CPI -U). The most recent revision to the Purchasing Ordinance approval limits occurred on August 23, 2016, when the threshold for City Council approval on purchases rose from $25,000 to $30,000. Subsequent to that period, the Los Angeles metropolitan area experienced an inflation surge exceeding 30%. Adopt California Uniform Public Contracting Cost Accounting Act ("CUPCCAA"). CUPCCAA provides for the expedited award of Public Works contracts, faster project delivery, and reduced time, effort, and expense associated with bidding projects based on higher thresholds than permitted under the California Public Contract Code 20160 to 20175. Adoption of CUPCCAA would empower City staff to procure lower dollar value construction services using a less onerous procurement method, or even use in-house staff for small projects, if knowledgeable and available, up to a higher threshold than currently exists. The threshold for formal bidding would be significantly higher than that currently used by the City. Current delegation of authority to award contracts dollar thresholds: 3 2LM Delegation of authority to award contraatg. Public works contracts five thousand dollars ($5,000.00) or less maybe approved and executed at the director level without formal bidding. Public works contracts between fine thousand dollars and one cents ($5,000.01) and thirty thousand dollars ($30,000.00) may be approved and executed by the City Manager. A table summarizing the methods of approvaland bidding requirement is provided below. Value of Public Project Method of Approval Bidding Requirement Up to $5,000.00 Approval by director of department responsible for the project, using a vendor or letter of agreement. Bidding not required. $5,000_01 to $30,000.00 Approval by the City Manager. Bidding required. $30,000.01 or more. Approval by the City Council. Bidding required. (Ord. No. 988, 5 4(Exh. B), 6-25-19) City Council Meeting — Purchasing Policy Workshop December 12, 2023 Page 3 of 4 Current and Consultant proposed delegation of authority to award contracts dollar thresholds based on CUPCCAA standards: To clarify, public projects exceeding a value of two hundred thousand dollars ($200,000) must be awarded through a formal competitive bidding process. Bidding is open to all qualified contractors, and the award is made to the lowest responsible bidder. Authorize the adoption of revised CUPCCAA thresholds automatically. This would be contingent solely on the State's revision. Adoption of revised thresholds is thereby automated, eliminating the need for Council intervention for each instance. Establish a Purchasing Card Program (pCard). The use of pCards will replace blanket purchase orders and petty cash, reducing the administrative workload and challenges associated with both methods. In contrast to traditional credit cards, which have a single credit limit, significant control mechanisms are available to manage cardholder transaction limits and restrictions for specific types of purchases. Although not all administrative tasks are eliminated, the pCard application simplifies monitoring, access adjustments, and financial system uploads to reduce data entry errors. Implementing a pCard program is frequently perceived as empowering employees and improving morale, in addition to immediately paying suppliers. Many pCard programs also provide a "rebate" based on the total spend on the entity's cards. Create separate manuals for policy and for procedures. The detailed procedures for procurement activities would best be consolidated into a separate Procurement Procedures Manual with flowcharts and training for employees that procure on behalf of the City. These procurement procedures should be relocated from the Policy, resulting in a policy -only manual, although these two manuals are companion documents and must align. This will provide a clear delineation between policy and procedures. Consider consolidating procurement functions to one professional procurement position. The Consultant was mindful of the City's structure/organization and staff limitations. While the City manages some relatively large expenditures, the staff with delegated authority are responsible for multiple functions of which procurement is outside of their "core functions." Consolidating the procurement functions within one professional procurement position would alleviate Department staff City Council Meeting — Purchasing Policy Workshop December 12, 2023 Page 4 of 4 of these non-core functions, provide trained procurement advisory services, enhance transparency, and provide one primary point of contact to enhance consistency and efficiencies throughout the procurement processes and contracting functions. Per the request of Council Member Low, the City Council shall be furnished with a report detailing all purchase orders surpassing $10,000. Staff recommends that the report be furnished to the City Council no later than 45 days subsequent to the end of each fiscal quarter. The Consultant concluded that although the current policies are firmly established and in accordance with State legislation, however they could be improved to support the City's uninterrupted operations more efficiently and effectively. To view the full Procurement Policy and Procedure Assessment Report, please see attachment A. STAFF RECOMMENDATION 1. Receive and file "Procurement Policy and Procedure Assessment" report. 2. Discuss the report recommendations, including the updates to procurement dollar thresholds, and provide direction to staff. 3. Authorize the City Manager to submit for City Council consideration an amendment to the Purchasing Ordinance that would increase dollar thresholds for procurement, including future CPI adjustments, with respect to RMC Title 3, Chapter 3.24.015 Purchasing Methods. 4. Authorize the City Manager to submit for City Council consideration a resolution to become subject to the California Uniform Public Contracting Cost Accounting Act and to file a copy of the approved resolution with the State Controller's Office. 5. Authorize the City Manager to bring forward to the City Council for consideration an agreement with NIGP Consulting to incorporate and implement the report recommendations, which includes creating a separate procurement policy and procedure manual in line with industry best practice. FISCAL IMPACT None — This is informational only. PUBLIC NOTICE PROCESS This item has been noticed through the regular agenda notification process. Prepared by: Bryan Chua Finance Director Attachment A: Procurement Policy and Procedure Assessment Report Attachment A Procurement Policy and Procedures Assessment Report NIGPConsulting powered by periscope PROCUREMENT POLICY AND PROCEDURE ASSESSMENT Submitted by: Lynda Allair, NIGP-CPP, CPPD, Cor Procurement Professionals Delivering Results FINAL REPORT for NIGPConsulting powered by periscope PROCUREMENT POLICY AND PROCEDURE ASSESSMENT TABLE OF CONTENTS EXECUTIVE SUMMARY ......................................................Error! Bookmark not defined. INTRODUCTION..................................................................... Error! Bookmark not defined. PROJECTSCOPE................................................................................................................... 10 I. Ordinances, Statutes, Municipal Codes, Procurement Policies to Ensure Consistency with Current Practices and Industry Best Practices in the Public Procurement Profession .... 11 II. State Legislation and Regulatory Constraints that Impact the City ................................ 15 III. Existing City Policy and Procedure that may Impede Efficiency, Create or Increase Risk, Weaken Controls, Limit Flexibility, Limit Transparency or Weaken Accountability in the ProcurementFunction................................................................................................. 17 IV. Existing City Policy and Procedures and all Related Documents Addressing Procurement Practicesand Procedures............................................................................................ 23 V. Analysis Against ABA Model Procurement Code and Industry Best Practices ................ 24 CONCLUSION....................................................................................................................... 28 APPENDICES........................................................................................................................ 29 APPENDIX A: SUMMARY OF RECOMMENDATIONS........................................................... 30 APPENDIX B: RESOURCES REVIEWED............................................................................... 32 APPENDIX C: VIRTUAL INTERVIEWS................................................................................. 33 APPENDIX D: ABA MODEL PROCUREMENT CODE COMPARISON ....................................... 34 N IC PConsulting ,..d b, pelisCoPB Page 2 IEXECUTIVE SUMMARY The Executive Summary provides a brief overview of the engagement methodology and recommendations. In January 2023, the City of Rosemead, CA ("City") contracted with NIGP Consulting to perform a Procurement Policy and Procedure Assessment ("Assessment"), and to provide recommendations for revisions. The results of the Assessment are presented in this Final Report ("Report") The Project Scope included the following areas to be considered: Ordinances, statutes, municipal codes, procurement policies to ensure consistency with current practices and industry best practices in the public procurement profession. II. State legislation and regulatory constraints that impact the City. III. Existing City policy and procedure that may impede efficiency, create, or increase risk, weaken controls, limit flexibility, limit transparency or weaken accountability in the procurement function. IV. Existing City policy and procedures and all related documents addressing procurement practices and procedures. V. The American Bar Association Model for Procurement Code ("MPC") and industry best practices. The NIGP Consultant ("Consultant") gathered, studied, and reviewed numerous source and data documents. The Consultant also conducted individual interviews with identified stakeholders to assess the current state of the procurement environment, particularly in regard to the application of procurement policy and procedure, i.e., alignment between current policy and procedures versus actual practice, and to identify inefficiencies and areas of concern. The Consultant additionally interviewed the City's Legal Counsel to identify potential legal concerns and/or compliance issues. The Consultant's recommendations are summarized and presented in Appendix A: Summary of Recommendations. N IC PConsulting powered b, periscope Overview General operational themes that emerged during the Assessment include the following: Policy -20-01 Purchasing Policies and Procedure Manual ("Policy"), 45 pages in length, amalgamates both procurement policy and procedures and contributes to confusion amongst staff. • Threshold levels related to procurement categories and methodologies are considered low relative to today's supply market. • The procurement contracting process entails several steps from the time identification of the need occurs through to the end of the contract. Numerous City staff including the City Manager, Assistant City Manager, Director of Finance, City Clerk and various accounts payable staff could potentially interact with the contracting process to varying degrees depending on the type of requirement and cost thereof. The separation of duties for authorizations and procure -to -pay functions are managed through the City's Munis system, with system security protocols controlling read/write/approve access. The City should be mindful of maintaining these protocols as organizational adjustments are made. • There is a lack of definitive evidence that procurement process training is provided to all staff with procurement authority, although this could be due to the scope of this engagement. It is suggested that training directly related to authority level in either a totally decentralized or hybrid structure, procurement policy and procedures, as well as documentation requirements related to both contract formation and contract administration would be highly beneficial. • The City is making good efforts to automate and reduce some of the manual work associated with the procure -to -pay processes by implementing a variety of technological solutions. Overall, the City's policies and procedures are detailed and sound, and they will benefit from the following high-level enhancements: • Incorporate public procurement best practices to guide policy recommendations. In the years since the City's current policies became effective (i.e., early 2008 with only minor revisions in mid -2019), there have been many new Global Best Practices developed and published by NIGP The Institute for Public Procurement("NIGP"). The City is to be commended for performing a comprehensive assessment to ensure that the City's Procurement policies and procedures are valid and current. N IC PConsulting powered by periscope Consider increasing the delegated authority for procurement activities to streamline activities while mitigating risk. The City does have delegated authority within its Municipal Code and policies; however, there are some inconsistencies and conflicts within the current policy and procedures relative to authority areas versus operational areas, perhaps generated by the 2019 revisions. The purpose of the policy is to make appropriate and efficient delegations to the City Manager, Assistant City Manager, Department Directors, Senior Department Managers and line staff, and to facilitate prudent and expedient operations of the City. The recommendations will preserve the City Council's Oversight Authority, and City Manager's designation as the Chief Procurement Officer (CPO), and with continued delegation of authority as the CPO sees fit. • Create separate manuals for policy and for procedures: The detailed procedures for procurement activities would best be consolidated into a separate Procurement Procedures Manual with flowcharts and training for employees that procure on behalf of the City. These procurement procedures should be relocated from the Policy, resulting in a policy -only manual, although these two manuals are companion documents and must align. This will provide a clear delineation between policy and procedures and should relieve some of the staff confusion associated with the currently combined document. • Consider consolidating procurement functions to one professional procurement position: The Consultant was mindful of the City's structure/organization and staff limitations. While the City manages some relatively large expenditures, the staff with delegated authority are responsible for multiple functions of which procurement is outside of their "core functions." Consolidating the procurement functions within one professional procurement position would alleviate Department staff of these non- core functions, provide trained procurement advisory services, enhance transparency, and provide one primary point of contact to enhance consistency and efficiencies throughout the procurement processes and contracting functions. Conclusion The Consultant determined that the existing policies, while well-established and aligned with State legislation, would benefit from updates that will more efficiently and effectively support uninterrupted operations for the City. The City has prudently acted to undertake this Assessment to update its Procurement policies and procedures to meet its current challenges and better prepare for the future. NIGP Consulting sincerely appreciates the opportunity to perform this Assessment. The City's leaders and staff were professional, knowledgeable, and insightful during our frequent NIC PConsulting powered b, periscope Page 5 meetings and discussions. The Consultant is encouraged the project sponsors and senior management recognize the need to review, assess, and implement changes to further align City procurement policies and procedures to best practices. This willingness to change is essential for the City to transform the procurement operation to be flexible and agile to realize the City's Vision and fulfill its Mission as identified in the 2030 Strategic Plan. N IC PConsulting powered by periscope Page 6 IINTRODUCTION The Assessment was conducted by one of our NIGP Consulting Senior Consultants ("Consultant') who brings the breadth and depth of procurement expertise necessary to perform the Assessment and provide prudent recommendations. Lynda Allair, NIGP-CPP, CPPO has over 40 years of experience as a public procurement leader within the provincial, municipal and health care sectors. She has extensive expertise in procurement legislation (both nationally and internationally), policy development, cross -functional planning, project implementation, procurement performance, sustainability program development and implementation, and business analysis. She is an active leader in local and international public procurement associations. Lynda develops educational content and instructs public procurement classes for NIGP; the University of Guelph, Ontario; and others upon request. Lynda has been part of the NIGP Consulting Program since 2010, assisting public entities to transform their procurement operations to become high -performing and strategic in nature. N IC PConsulting powered by p-,cpe Page 7 IMETHODOLOGY AND APPROACH The Assessment was conducted using NIGP Consulting's four -phased methodology. In use since 1995, this proven methodology provides consistency and thoroughness for each unique project. Each of the four project phases are critical to fully assessing an entity and preparing a final report with appropriate recommendations specific to the entity. In Phase 1— Preparation: As part of the preparation phase of the engagement, the Consultant requested documentation in each of the designated areas of the Project Scope. The Consultant was informed through State of California codes, statutes, and regulations. The Consultant worked closely with City staff to compile the stakeholder list for the interviews and to review the interview questions in advance. Please see Appendix B: Resources Reviewed for the full list of resources that were analyzed. In Phase 2— Data Collection: Virtual interviews were conducted with seven (7) stakeholders beginning with the kick-off meeting on January 30, 2023, followed by individually scheduled interviews on February 22 and March 2, 6, and 14, 2023. Those interviewed included: • City Manager • Assistant City Manager • Finance Director • Public Works Director • Parks & Recreation Director • City Clerk • City Attorney (contracted) Follow-up communication was conducted both via email with the Project Manager during the interview period as well as after the interviews were completed to obtain clarifications. Stakeholders were identified in collaboration with Michael Bruckner, Assistant City Manager, and Bryan Chua, Finance Director, and were representative of the primary internal customers who have procurement responsibilities within the City and/or who interact with the procurement function. An interview was also conducted with the City Attorney. Interviews N IC PConsulting z,ad., ,�.o. Page S inform the Consultant of stakeholder needs, what is working well, and where there are challenges which provide opportunities for improvement. Please see Appendix C: Virtual Interviews for those who the Consultant interviewed. In Phase 3—Analysis: The Consultant reviewed and analyzed all data, to include requesting input and/or clarifications from City staff where needed. This Report provides recommendations reflective of Global Best Practices of Public Procurement. These recommendations support strategic objectives for managing an effective procurement operation, focused on simplifying and streamlining processes and increasing the levels of open competition and transparency. In Phase 4— Deliverables: The deliverables included a draft Report of Findings and Recommendations (provided to the City for review and input) followed by this final Report. The purpose of the Report is to recognize where the City is performing well as well as to provide opportunities for increasing the efficiency and effectiveness of the procurement function within the City. Project deliverables also provided the option for a live/virtual presentation and discussion with the City about the final Report by the Consultant. The Recommendations within this Report are based on Global Best Practices of Public Procurement and industry course content. They also reflect the Values and Guiding Principles of Public Procurement. They are summarized and presented in Appendix A: Summary of Recommendations. For insight on recommendations about delegation and increases of authority for procurement, the Consultant cited the most current NIGP Public Procurement Benchmark 2019 Survey Report. All references serve as industry benchmarks of high -performing procurement departments. The Recommendations also reflect the Consultant's vast experience and expertise in public procurement. Supporting documentation is attached as follows: • Appendix A • Appendix B • Appendix C • Appendix D N IC PConsulting powered by periscope Summary of Recommendations Resources Reviewed Virtual Interviews ABA Model Procurement Code Comparison IPROJECT SCOPE The Project Scope included the review and consideration of the following: I. Ordinances, statutes, municipal codes, procurement policies to ensure consistency with current practices and industry best practices in the public procurement profession. II. State legislation and regulatory constraints that impact the City. III. Existing City policy and procedure that may impede efficiency, create, or increase risk, weaken controls, limit flexibility, limit transparency or weaken accountability in the procurement function. IV. Existing City policy and procedures and all related documents addressing procurement practices and procedures. V. The American Bar Association Model for Procurement Code (MPC) and industry best practices. For each above Project Scope area, the Consultant offers the following: • Approach which identifies the benchmark for the analysis. • Findings which identify the current state of the procurement function. • Recommendations which will bring the entity in closer alignment with Global Best Practices and industry standards. N IC PConsulting �a,aa by p»rm� Page 10 I. ORDINANCES, STATUTES, MUNICIPAL CODES, PROCUREMENT POLICIES TO ENSURE CONSISTENCY WITH CURRENT PRACTICES AND INDUSTRY BEST PRACTICES IN THE PUBLIC PROCUREMENT PROFESSION A. APPROACH The City is a "general law City" under Cal Gov Code § 34102, which requires the City to operate under the general laws of the State of California. Keeping this in mind, the Consultant reviewed the following documents: • California Public Contracts Code, Division 2, General Provisions, Part 1, Sections 1100-9203; Part 3, Sections 20100-22178; Part 4, Sections 22200-22201; Part 5, section 22300 • United States Code Title 41. Public Contracts, Subtitle 1, Division B, Chapter 19, Section 1908, Pages 59-60 URL: https://www.law.cornell.edu/uscode/text/41/1908 (inflation adjustment) • California Uniform Public Contracting Cost Accounting Act ("CUPCCAA") • California Uniform Construction Cost Accounting ("CUCCA") Manual — 2021 Edition • CUCCA Conflict of Interest Code • Uniform Commercial Code ("UCC') • City Municipal Code, Chapter 3.24: Purchasing System for Non -Public Works Contracts • City Municipal Code, Chapter 3.28: Public Project Bidding Procedures • Policy — 20-01 Purchasing Policies and Procedures Manual ("Policy') The Consultant also compared the City's Municipal Code, Chapter 3.24: Purchasing System for Non -Public Works Contracts; Chapter 3.28: Public Project Bidding Procedures; and Policy to the American Bar Association 2000 Model Procurement Code (MPC) in order to determine whether or not the Policy encompassed all prudent provisions of the MPC. While the MPC is not a policy document, it does contain sample language that may be used in a policy document. The MPC is a comprehensive and thorough outline of the necessary components of the legal structure for public procurement, and it serves public agencies very well. B. FINDINGS The Consultant offers the following observations: 1. The City Council has the authority to establish or modify policies for the City based on State Statutes and California Public Contracts Code. Limitations are attributable to the City being classed a "general law City" under Cal Gov Code § 34102. N IC PConsulting powered by pensc Page 11 2. The City Council has delegations of authority. Delegations of authority are provided in both Chapter 3.24 Purchasing System for Non -Public Work Contracts and Chapter 3.28 Public Project Bidding Procedures. 3. There is alignment of City Municipal Code and Procurement Policies and Procedures with California Legal Requirements: The City's Municipal Code and Policy align with State statutes, although there is an opportunity to leverage the CUPCCAA which, to date, has been considered but not implemented. It is commendable that the City has considered this and has deferred a final decision until completion of this Review. 4. Price analysis procedures in Policy do not align with industry best practices: The City's Policy and procedure for the determination of value (analyzing the out-of-pocket expense for procurement) is inconsistent with global best practices in procurement. The City clearly differentiates between the "raw" price of supplies and equipment, i.e., associated additional expenses such as taxes not included, versus the "total price", i.e., other expenses necessary to place the item in service or to perform under a contract. City procedures indicate that the "raw" price will be used to determine the appropriate procurement method based on specific dollar thresholds. This practice is inconsistent with procurement best practices. This inconsistency generates the risk of the City utilizing an inappropriate procurement method, particularly if the City adopts CUPCCAA, as the CUCCA Policies and Procedures Manual, 2021 Edition, Page 59, specifically states: Costing Materials and Supplies Direct Purchase: The total material and supplies costs are the invoiced amount. This amount should be posted to the project tracking system for direct purchases on a timely basis. This recorded amount should include the cost of the materials and supplies, freight, sales tax, use tax and any other appropriate costs. S. There appears to be deficiencies in Post -Contract Execution Procedures, i.e., Contract Administration: The City's Policy does not address contract administration functions, resulting in lack of direction and confusion for Department staff. The Policy currently does not provide guidance on how to monitor and correct supplier performance issues, how to identify impacts and options related to delays, and how to determine contract termination options (such as for breach, convenience or mutual agreement terminations). 6. The City's Procurement function is decentralized. Decentralization does not provide a consistent and easy way for Departments to access Procurement staff. Procurement is generally not a core function of Executive leadership or Senior Management. Centralization of authority and oversight of policy, as well as the centralization of procurement advisory services and training, enhances the ability to ensure consistency in procedures and accountability. While a totally centralized procurement function is not realistic for the City, the implementation of a hybrid approach would be more in N IC PConsulting ,...,.d by periswpe Page 12 alignment with industry best practices. The Consultant was mindful of the City's structure/organization and staff number limitations. C. RECOMMENDATIONS The Consultant recommends the following based on the review of the relevant jurisprudence: 1. Ensure Price Analysis Procedures are consistent and uniform. Expenses such as shipping, insurance, storage, demurrage, etc., beyond the "raw" price of a good or service, can contribute significant value to the total price paid by an entity. Failure to include such expenses can arbitrarily skew a contract award, particularly if expenses over the long term are not considered as may be the case when calculating total cost of ownership. 2. Develop comprehensive contract administration procedures. The absence of clearly written contract administration procedures can result in the inability to adequately monitor, report, and correct a supplier's poor performance, resulting in unrealized benefit to the City and the inability to terminate a contract. 3. Consider creating a new supply chain position, perhaps titled "Contract Specialist." Providing a single -point -of -contact for procurement functions is the most practical way for the City to implement a hybrid procurement structure. This will provide a central support, oversight and control mechanism to provide consistency, transparency and accountability in procurement functions enterprise wide for the City. Based on the current Organization Chart, some vacancies exist which might be repurposed to create a new supply chain position, for example, Contract Specialist. This new position could provide the day-to-day management of and support for the following procurement functions: • Assist Departments in assessing needs and developing budget estimates. • Provide advisory services for the best procurement and contracting methods. • Provide advice regarding procurement best practices and trends. • Develop and maintain solicitation document templates. • Manage complex procurement solicitations, evaluations, and award processes. • Issue purchase orders within the Munis system. • Oversee contract administration functions, i.e., ensure documentation is maintained in contract files. • Maintain centralized contract repository. • Oversee City's Purchasing Card program. • Research cooperative agreements, market trends, and supply chain issues. • Operational management of assets disposal to maximize residual financial recovery. N 1 C P Page 13 � Consulting ....r,b by pawiszpe • Assist in negotiation process planning and implementation. • Provide procurement specific training to new staff (on -boarding process) as well as current staff. • Provide support in project management processes. • Provide single -point -of contact to better manage supplier relationships. Implementing such a position would relieve Senior Executive, Management and Department staff of many day-to-day procurement functions that distract them from their core functions, vest routine procurement operational duties with one individual, provide consistency in processes and legal compliance, and enhance records management. Additionally, if this position reports to the Assistant City Manager, procurement functions now completed by Finance staff (issuing purchase orders) and the City Clerk (posting solicitations on the eProcurement platform) creates a definitive separation of duties, particularly between procurement and financial (payment) functions. This is often an issue identified in audit findings. N I C PConsulting Page 14 ,o�bred by pb ,iicpb II. STATE LEGISLATION AND REGULATORY CONSTRAINTS THAT IMPACT THE CITY A. APPROACH The Consultant conducted a review of relevant legislation and regulatory constraints that impact the City and the City's options for adjustments. The primary focus of Section II relates to the California Uniform Public Contracting Cost Accounting Act (CUPCCAA) which has dollar thresholds higher than the City's current thresholds. Thresholds for non-public works will be addressed in Section III. B. FINDINGS The Consultant offers the following observations related to CUPCCAA: CUPCCAA is currently not adopted by the City. CUPCCAA provides for the expedited award of Public Works contracts, faster project delivery, and reduced time, effort, and expense associated with bidding projects based on higher thresholds than permitted under the California Public Contract Code 20160 to 20175. Adoption of CUPCCAA would empower City staff to procure lower dollar value construction services using a less onerous procurement method, or even use in-house staff for small projects, if knowledgeable and available, up to a higher threshold than currently exists. The threshold for formal bidding would be significantly higher than that currently used by the City. CUPCCAA thresholds for 2023 are as follows: N IC PConsulting powered by nmope Page 15 A potential drawback to CUPCCAA is that the City would be limited to the current CUPCCAA thresholds. Under current processes, Council would need to approve any new thresholds when the State revises them. However, the Council does have the authority to update City policy in such a way that CUPCCAA threshold values could be automatically adopted as they are revised. This streamlines the adoption process for threshold revisions. 1. The City is limited to two construction methods. The City is only permitted to use the traditional Design -Bid -Build and Design -Build methods for obtaining construction services. The City mostly uses the traditional method and has very limited exposure to utilizing Design -Build. (Job Order Contracting could potentially be beneficial to the City, particularly for small renovation projects; however, this method is not permitted under California statutes. Construction Manager at Risk (CMAR), an enhanced method which is somewhat of a combination of the traditional method and Design -Build, is also prohibited by California statutes.) C. RECOMMENDATIONS The Consultant offers the following Recommendations: 4. Adopt the CUPCCAA. This provides City staff with a less onerous procurement process for low dollar value construction services at a higher threshold and the formal bidding process would be based on a significantly higher threshold than currently used by the City. 5. Permit automatic adoption of revised CUPCCAA thresholds based solely on the State's revision(s). This automates adoption of revised thresholds without Council intervention for each occurrence. N 1 C, PConsulting b, pore-,, Page 16 III. EXISTING CITY POLICY AND PROCEDURE THAT MAY IMPEDE EFFICIENCY, CREATE OR INCREASE RISK, WEAKEN CONTROLS, LIMIT FLEXIBILITY, LIMIT TRANSPARENCY OR WEAKEN ACCOUNTABILITY IN THE PROCUREMENT FUNCTION A. APPROACH Best practices in public procurement advances guided the Consultant's policy review and recommendations. There have been many new Global Best Practices developed and published by NIGP since the update of the City's Policy. The Best Practices studied for updating the City's policies included: • Achieving an Optimal Procurement Card (PCard) Program • Audits • Contract Administration • Contract Closeout • Debriefs • Developing A Procurement Manual • Ethical Procurement • Market Research Process: Research, Analysis, and Intelligence • Place Of Procurement Within the Entity • Risk Management • Strategic Procurement Planning • Transparency in Public Procurement • Using Cooperative Contracts All of these Global Best Practices are available at https://nigp.org/global-best-practices . The Consultant reviewed the California Public Contract Code, Division 2, General Provisions, Part 1, Sections 1100-9203; Part 3, Sections 20100-22178; Part 4, Sections 22200-22201; Part 5, section 22300 and others pertaining to the City and procurement, as well as United States Code Title 41. Public Contracts, Subtitle 1, Division B, Chapter 19, Section 1908, Pages 59-60, pertaining to indexing dollar threshold amounts. The Consultant compared the City Procurement Policy dollar thresholds with the thresholds reported in the most recent (2019) NIGP Public Procurement Benchmarking Survey Report. The benchmarking report includes data from all types of public procurement entities. The Consultant also considered the readability and user-friendliness of the current City Policy and associated documents. Complex documents can contribute to confusion, misunderstanding, and incorrect interpretations. N1 P Page 17 °°2 Consulting po.�rad eyp-,�Pa To reduce regulatory constraints that may impede efficiency in the procurement function, the Consultant considered a number of options. These options included the following: • Additional delegation of authority. Implementation of a Purchasing Card Program to replace the use of blanket purchase orders, traditional corporate credit cards and petty cash, reducing administrative workload. Consolidation of procurement functions in a new position, i.e., Contract Specialist, to free up Department staff time, provide consistency in processes, and provide contract administration support. Delegating authority is vital for thriving entities as it enables leaders to focus on progressively higher priority level activities for the entity. Further, for those that accept delegated authority, it encourages a greater sense of responsibility and an opportunity to grow and implement prudent initiatives. Based on staff interviews, the Consultant also looked at the Policy in relation to the working relationships and workflow between and among staff who perform procurement functions, implementing the Policy. The NIGP Procurement Guide For Elected and Senior Officials was consulted by the Consultant as it further defines the procurement information that the City Council, Executive and Directors need to know. B. FINDINGS The Consultant offers the following observations: 1. The current Policy is difficult to read. The document is lengthy (45 pages) and combines policies with procedures, resulting in readers being unsure as to what content is policy versus procedure. This type of combined document is more difficult to maintain because all changes have to be approved by the governing body, impeding the ability to be agile and responsive to changing procedural requirements. Separate documents provide clarity to readers. Many public entities have unbundled their policy and procedure manuals for these very reasons. 2. The current Policy uses dated terminology which may be distracting or misleading for readers. For example, the public procurement profession has moved to using "supplier" rather than "vendor" and there are inconsistencies of use for other terms throughout the document. Some of these deficiencies may be addressed by updating definitions to align with the MPC and the NIGP Dictionary of Terms. NIC PConsulting powered by periscope 3. The City dollar threshold limits are, in some cases, below the industry in general. These thresholds are reviewed and adjusted periodically by most entities to reduce the amount of work to obtain competitive responses to bids and proposal requests, while managing risks associated with informal solicitations. 4. The City currently utilizes Blanket Purchase Orders to encumber funds in the financial system, petty cash for micro -purchases, and corporate credit cards for select staff. The use of blanket purchase orders and petty cash require manual processes that impact workloads and create administrative challenges. These methods do not provide a real-time window to expenditures, or automated controls. Corporate credit cards, although providing a method to manage emergency procurements, do not provide threshold oversight in real-time, nor do they provide restrictions on particular types of purchases. 5. Contract administration and contract close-out processes are not addressed in documents reviewed. The absence of comprehensive contract administration and contract close-out procedures in City documents is a gap in process controls and accountability. Inadequate contract administration and close-out create significant risk to the City which could result in the City's inability to identify contractor deficiencies in a timely manner, and the inability to exercise liquidated damages or terminate an under- performing supplier for breach of contract. 6. Distribution of the City's procurement functions over several staff and multiple departments can contribute to confusion regarding who does what specific functions. Consolidating the procurement functions and advisory support services in one position would minimize this confusion, free up Department staff time to focus on their core functions, provide a resource for strategic procurement planning, promote consistency in processes, provide contract administration support, and contribute to more robust contract files to support defense when challenged. This new "Contract Specialist" position has previously been addressed in this Report in Section I, C. Recommendations, #3. Higher level approval is required for non-compliant procurements. Non-compliant procurements should require approvals two levels higher (2 up) from the individual who was not compliant with Policy. This practice is one method to ensure that upper-level managers are aware of non-compliance issues and take corrective action(s) before situations deteriorate. Such a policy would be a pro -active action and provide a method to respond if such a procurement were to occur. 8. There maybe potential delays in the procurement process due to the requirement for City Council to approve procurements exceeding $30,000. Currently, City Council N I Cu PConsulting po—ed oy pe;,_ope Page 19 C. approval is required for all procurements exceeding thirty thousand dollars ($30,000). Although the approval process is managed by using the "Consent Agenda" methodology, the risk does exist that the time delay from award recommendation preparation to the next Council Meeting for approval could negatively impact timely contract execution. It is highly likely that this risk would escalate under either of the following potential conditions: 1) disruption in the supply chain when goods or services may be in high demand and/or short supply, or 2) during disruptive events such as severe weather or supply disruptions caused by strikes or transportation route closures. Under either of these conditions, a rapid decision regarding the procurement award could be critical in meeting City requirements. One method to manage such risks is to increase threshold levels as outlined in Recommendation #9 below to provide a less formal competitive process for lower value procurements. 6. Create separate documents for policy and procedures. If separated, policies and policy amendments could be approved by the City Council, and procedural changes would be approved at the Executive Management level. 7. Procedures Manual should be a training tool. Detailed procedures for procurement activities would best be consolidated into a procurement procedures manual with flowcharts and training for employees that procure on behalf of the City. The procurement procedures should be relocated from the City Procurement Policy documentation. 8. Update Policy terminology to align with MPC and NIGP Dictionary of Terms. Using current terminology consistently would provide clarity, particularly for newer staff. 9. Designate the City Manager as the Chief Procurement Officer (CPO), and with continued delegation of authority as the CPO sees fit. The City Manager should be provided with a broader delegation of authority for supply chain activities through the procure -to -pay continuum. 30. Implement a Purchasing Card Program (pCard). The pCards will replace the use of blanket purchase orders and petty cash reducing the administrative workload and challenges associated with both of these methods. Unlike traditional credit cards which have only one credit limit, significant control mechanisms are available to manage pCard holder transaction limits and restrictions for specific types of purchases. Not all administration workload disappears but the pCard application facilitates monitoring, access adjustments and financial system uploads to reduce data entry errors. Implementation of a pCard program is often perceived as empowering staff and N IC PConsulting powered by periscope Page 20 improving morale, in addition to paying suppliers immediately. Many pCard programs also offer a "rebate" based as a percentage of total spend on the entity's cards. The NIGP 2019 Benchmark Survey ( htta://bitly.ws/GkoB ) also indicates that 81% of public entities have a pCard program. 11. Update Procurement Dollar Thresholds. The dollar threshold recommended updates are shown in the following table. The NIGP 2019 Benchmark Survey Report (Survey) designated a $13,000 threshold as the average level for the starting threshold for small procurements after an analysis of all agencies responding to the Survey. The NIGP 2019 Benchmark Survey Report identified $54,033 (non -IT) and $57,611 (for IT) thresholds as the average threshold level for formal competition for procurements after an analysis of all agencies responding to the Survey. However, based on the much lower thresholds currently utilized by the City, the following threshold increases are recommended at this time. The City should periodically review and adjust threshold levels based on updated benchmark data and market conditions. Threshold Level Procurement Required Current Proposed Method Approval Up to $1,000 Up to $5,000 pCard or Direct Purchase; no pCard Holder or quotations required Department Director >$1,000.01- >$5,000.01- Written Quotes (minimum 2) Department Director $5,000 $15,000 unless subject to alternative procedure >$15,000.01 >$15,000.01 Written Quotes (minimum 3) City Manager -$30,000 - $50,000 unless subject to alternative procedure >$30,000.01 >$50,000.01 Formal Competitive Process, City Council unless subject to alternative procedure 12. Enable the City to make annual updates to the dollar thresholds for procurement based on the Consumer Price Index for all urban consumers published by the United States Federal Secretary of Labor (Bureau of Labor Statistics) for the Los Angeles Area (CPI -U). Further information on the Consumer Price Index for all urban consumers for the Los Angeles Area can be found at https:Hdata.bls.gov/cgi-bin/surveymost?cu. 13. Develop and implement comprehensive contract administration and contract close- out procedures. Further information on this can be found in the Contract Management N1 C PConsulting powered M periscope Page 21 Standard available from the National Contract Management Association at https://www.ncmahq.org/Web/Web/Standards --- Practices/Contract-Ma naaeme nt- Standard-Publication.aspx?hkev=5f1fdc7a-f748-437d-a5a1-3e9af7cdb83c. 14. Develop and implement a non-compliant procurement policy and associated procedures that require approvals two levels higher, or the City Manager, to enhance the degree of accountability and enhance policy enforcement. Page 22 __... �:+moi` ..:.. •,r„_.. v,.�_as'. - IV. EXISTING CITY POLICY AND PROCEDURES AND ALL RELATED DOCUMENTS ADDRESSING PROCUREMENT PRACTICES AND PROCEDURES A. APPROACH The Consultant conducted a comprehensive review of all documents and data provided by the City or researched through the State website. B. FINDING The Consultant offers the following observations based on the review of existing City policy and procedures and all related documents pertaining to Procurement: 1. Documents are currently aligned to the MPC with minor exceptions. Gaps identified when City Procurement documents are compared to the ABA Model Procurement Code are detailed in Section V. C. RECOMMENDATIONS 15. Conduct a review of all existing procurement templates to ensure alignment with changes. General and Special Contract Terms and Conditions, solicitation/report templates, and all other forms currently employed in the procurement process should be reviewed to ensure alignment with Policy updates. 16. Conduct a review of companion financial and Council reporting documents to ensure alignment with updated Policy changes. N IC PConsulting powered by pads ope Page 23 V. ANALYSIS AGAINST ABA MODEL PROCUREMENT CODE AND INDUSTRY BEST PRACTICES A. APPROACH The Consultant conducted a comprehensive review of the City's Policy and other relevant legislation against the ABA Model Procurement Code (MPC), the results of which are summarized in Appendix A: ABA Model Procurement Code Comparison. B. FINDINGS 1. The MPC comparison indicates adequate levels of policy control and procedural accountability per each MPC Article as follows: a. Article 1 General Provisions: Each component is either addressed or is not applicable for this engagement. b. Article 2 Procurement Organization: Each component is either addressed in the City's Policy or is not applicable to this engagement. c. Article 3 Source Selection and Contract Formation: Most components are met although some are noted only on a limited basis. There are a few components that are not addressed, and which are relatively simple to correct. d. Article 4 Specifications: This is adequately covered although a couple of gaps are noted. e. Article 5 Procurement of Infrastructure Facilities and Services: Most components are addressed by referencing California Statutes rather than providing detailed information in the Manual. Incorporating by reference is one way to pull the details into a document; however, it is time consuming for the reader to access the source document, often resulting in frustration and lack of adequate information. f. Article 6 Modification and Termination of Contracts for Supplies and Services: Similar to the finding above, these are addressed by referencing California Statutes and may benefit from providing detailed information in the Manual. g. Article 7 Cost Principles: These, too, are addressed by referencing California Statutes rather than providing detailed information in the Manual. h. Article 8 Supply Management: This is addressed with minor gaps. N IC PConsulting powered by pen cope C. i. Article 9 Legal and Contractual Remedies: Basically, this is not covered except as may be provided under California law or any grantor's requirements, details of which were not provided. Article 10 Intergovernmental Relations: Procurement policy speaks minimally to cooperative purchasing. Other components are not specified in the Policy although they might be incorporated under another policy outside of procurement. k. Article 11 Assistance to Small and Disadvantaged Businesses: Most of the specific requirements and procedures are identified under Federal Requirements and captured by reference. I. Article 12 Ethics in Public Procurement: Some components are covered under the California Administrative Code and referenced in the City Municipal Code while a few are partially addressed in the City's Purchasing Policy and Procedures Manual. Others are assumed to be provided for in California law although the Consultant is unable to site a specific Section. 17. Consider adding these MPC provisions for inclusion in the Policy: Severability. If any provision of this Policy or any application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or application of this Policy which can be given effect without the invalid provision or application, and to this end the provisions of this Policy are declared to be severable. • Supplementary General Principles of Law Applicable. Unless displaced by the particular provisions of this Policy, the principles of law and equity, including the Uniform Commercial Code of this State, the law merchant, and law relative to capacity to contract, agency, fraud, misrepresentation, duress, coercion, mistake, or bankruptcy shall supplement the provisions of this Policy. Requirement of Good Faith. This Policy requires all parties involved in the negotiation, performance, or administration of contracts to act in good faith. • Reporting on Anticompetitive Practices. When for any reason collusion or other anti-competitive practices are suspected among any bidders, offerors, or City staff, notice of the relevant facts shall be transmitted to the Attorney General. 18. Develop Suspension and Debarment procedures to enable the City to have a reasonable time to investigate the issues that would lead to debarment of a firm. NIC PConsulting Page 25 powered by periscope These two actions are excellent tools that encourage contract compliance and enable meaningful actions, should a supplier behave inappropriately. The City should consider leveraging Los Angeles County's Internal Services Division procedures and registers to facilitate this. 19. Develop a formal debriefing policy and procedures for the City. A debrief meeting is used to provide constructive feedback to a proposer on their proposal. Proposers may consider this feedback when preparing subsequent proposals. Entities may benefit equally from the information learned during a debrief, which they can utilize when preparing subsequent solicitations. Debriefs may also serve to develop relationships and build trust with proposers. Debriefings of unsuccessful suppliers are permitted, although not required under the MPC, and many public entities require debrief meetings by policy. U.S. FAR 15.506 requires the purchasing entity to provide a debrief to a proposer for procurements conducted under FAR Part 15 if the proposer requests a debrief in writing within three calendar days after the entity's award notice. 20. Provide Authority to the City Manager to appoint/approve members of the Evaluation Team for large or complex Procurements. This ensures that individuals with subject matter expertise, who do not have a conflict of interest, are appointed/approved as evaluators. 21. Ensure the provision for pre-solicitation/pre-specification conferences that would provide potential suppliers with a level playing field when specific sites are viewed and/or specifications are reviewed, prior to posting. This is part of "Other Requirements of the Procurement Process" and also includes meetings with suppliers such as pre-bid, pre -proposal conferences, and site visits. The pre -specification meeting is becoming more prevalent. This enables staff to achieve input on draft specifications in a transparent manner. 22. Update bond requirements to manage risk more effectively. The form of security is best updated to not permit cash and/or letter of credit. Handling cash is an avoidable risk in this case. A letter of credit, even if marked "irrevocable," is not a best practice. The other forms of security are easily accessible and present less risk in processing. 23. Reject Bids for non-compliance with bid security requirements. This is recommended so that no authority is granted the ability to waive non-compliance as a minor irregularity. Bid security requirements affect a respondent's price. This will be an economic advantage and, therefore, renders a bid or proposal non-responsive. Authors of specifications should use caution if considering a bid security requirement (bond) for any good or service outside of the construction sector, in which providing a bond is a normal practice. N IC PConsulting e,ed b, pe , o, Page 26 24. Develop a comprehensive stand-alone Code of Conduct or Ethics Policy. This policy should encompass anti-trust situations, as well as the various types of conflict of interest, gratuities, gifts, reporting requirements, etc. General Comment: Use the ABA Model Procurement Code Comparison chart to pinpoint and develop policies and procedures appropriate to manage City risk going forward. Although the City is fairly well aligned and compliant with the MPC Articles, some deficiencies do exist Updates to these Articles should be relatively simple and straightforward although the City should consider incorporating at least minimal direction for staff to restrict the need to routinely access source documents, such as State statutes. MPC Article 9 is the biggest gap, but State law may provide structure for components. NIC PConsulting powered by periscope Page 27 ICONCLUSION The Consultant conducted a comprehensive review of the City of Rosemead's Purchasing Policy to determine alignment with State statutes, ordinances and Municipal Code to provide recommendations for revisions. The Consultant also conducted individual interviews with identified stakeholders to assess the current state of the procurement environment, particularly in regard to the application of procurement policy and procedure, i.e., alignment between current policy and procedures versus actual practice, identify inefficiencies and areas of concern. The Consultant also interviewed the City's Legal Counsel to identify potential legal concerns and/or compliance issues. Based on the interviews and document review, the decentralized nature of the City's procurement function is deemed to be the root cause of issues identified. Gaps in Policy and procedures do exacerbate this, however, moving to a hybrid procurement model will be beneficial. The implementation of a Contract Specialist as the single -point -of -contact for procurement advice and support will be instrumental in supporting a hybrid procurement operation, i.e., delegated authority with centralized oversight. Based on the City's proactive approach by initiating this Assessment, the interest and cooperation provided by City staff, and the quality and comprehensive nature of the City's existing Purchasing Policy and Procedures Manual, the Consultant is confident of the City's success in continuing the transformation to a high -performing entity Thank you for the opportunity to share industry best practices and professional recommendations for your consideration. NIGP Consulting and the Consultant stand ready to support the efforts of the City in any future improvements and transformation. We further are available to assist the City as a continued resource for learning, to assist in any additional support service needs, and certainly to continue to advocate for the City's procurement function's continued growth and development. For information regarding developing strategic tools and methods for procurement operations, please contact Marcheta Gillespie, NIGP Consulting by email at: meillespie(aDni¢o.com. NIGP Consulting stands ready to offer our continued support and further engagement if and as needed. N1 C PConsulting powered by periscope Page 28 IAPPENDICES Supporting documentation is attached as follows: • Appendix A Summary of Recommendations • Appendix B Resources Reviewed • Appendix C Virtual Interviews • Appendix D ABA Model Procurement Code Comparison N I C PConsulting powered by periscope Page 29 APPENDIX A: SUMMARY OF RECOMMENDATIONS SUMMARY OF RECOMMENDATIONS: 1 Ensure Price Analysis procedures are consistent and uniform. 2 Develop comprehensive Contract Administration procedures. 3 Consider creating a new supply chain position, perhaps titled "Contract Specialist." 4 Adopt the CUPCCAA. Permit automatic adoption of revised CUPCCAA thresholds based solely on the State's revision(s). Create separate Policy and Procedure documents. 5 6 7 Procedure document should be a training tool (including flowcharts, forms, etc.). 8 Update Policy terminology to align with MPC and NIGP Dictionary of Terms. Designate the City Manager as the Chief Procurement Officer, and with continued delegation of authority as she/he sees fit. Implement a Purchasing Card Program. 9 10 11 Update Procurement Dollar Thresholds. 12 Update annually the Procurement Dollar Thresholds, based on the Consumer Price Index. 13 Develop and implement comprehensive Contract Administration and Contract Close -Out procedures. 14 Develop and implement a Non -Compliant Procurement Policy and associated Procedures. 15 Conduct a review of all existing procurement templates to ensure alignment with changes. 16 Conduct a review of companion financial and Council reporting documents to ensure alignment with changes. NIC PConsulting W w wn-WP. Page 30 17 Consider adding these MPC provisions for inclusion in the City Procurement Policy: • Severability • Supplementary General Principles of Law Applicable • Requirement of Good Faith • Reporting on Anticompetitive Practices Develop Suspension and Debarment procedures to enable the City to have a reasonable time to investigate the issues that would lead to debarment of a firm. 18 19 Develop a formal debriefing policy and procedures for the City. 20 Provide authority to the City Manager to appoint/approve members of the Evaluation Team. 21 Ensure the provision for pre-solicitation/pre-specification conferences. 22 Update bond requirements to manage risk more effectively. 23 Reject Bids for Non-compliance with Bid Security Requirements. 24 Develop a comprehensive stand-alone Code of Conduct or Ethics Policy. N IC PConsulting erect by pensope Page 31 APPENDIX B: RESOURCES REVIEWED RESOURCES• DOCUMENTS California Public Contracts Code, Division 2, General Provisions, Part 1, Sections 1100-9203; Part 3, Sections 20100-22178; Part 4, Sections 22200-22201; Part 5, section 22300 United States Code Title 41. Public Contracts, Subtitle 1, Division B, Chapter 19, Section 1908, Pages 59-60 URL: https://www.law.cornell.edu/uscode/text/41/1908 (inflation adjustment) City Municipal Code, Chapter 3.24: Purchasing System for Non -Public Works Contracts City Municipal Code, Chapter 3.28: Public Project Bidding Procedures Policy -20-01 Purchasing Policies and Procedures Manual Organizational Chart — City of Rosemead 09/01/2022 Sample Bid Package: Garvey Park Tennis Courts Resurfacing, 11-16-22 Sample RFP Package: RFP No. 2022-06 — Building Services 2022 Proposed CUPCCAA Ordinance to Replace Chapter 3.28 — In process but on hold Proposed CUPCCAA Staff Report California Uniform Public Contract Cost Accounting Act (CUPCCAA) California CUCCAC Manual — 2021 Edition California CUCCAC Conflict of Interest Code Uniform Commercial Code Purchase Order List FY 2022 2030 Strategic Plan NIGP Procurement Guide for Elected And Senior Officials URL: https://nigp.org/resou rce/resea rch-papers/NIG P%20Procurement%u20G u ide%20-% 20n igp- procurement-guide-for-elected-and-senior-officials.pdf?dl=true GLOBALORDER Achieving and Optimal Procurement Card (PCard) Program Audits Contract Administration Contract Closeout Debriefs Developing A Procurement Manual Ethical Procurement Market Research Process: Research, Analysis, and Intelligence Place Of Procurement Within the Entity Transparency in Public Procurement Risk Management Strategic Procurement Planning Using Cooperative Contracts APPENDIX C: VIRTUAL INTERVIEWS NIC PConsulting urea by per •� Page 32 1 VIRTUAL INTERVIEWS Ben Kim, City Manager 2 Michael Bruckner, Assistant City Manager 3 Bryan Chua, Finance Director 4 Michael Chung, Public Works Director 5 Tom Boecking, Parks & Recreation Director 6 Ericka Hernandez, City Clerk 7 Rachel Richman, City Attorney N IC PConsulting ao W W pence Page 33 APPENDIX D: ABA MODEL PROCUREMENT CODE COMPARISON Purpose, Rules of Construction Yes Supplementary General Principles of * See Note at the end of this Table Law Applicable Three specific provisions; See also Note at the Requirements of Good Faith Yes * end of this Table Application of this Code N/A Not Applicable for this engagement Severability, * See Note at the end of this Table Effective Date Yes Prominently displayed Determinations Yes Specific authority for determinations Some definitions are not MPC, they are pertinent Definitions Yes to City only or flow through from the California Public Contracts Code or other Regulations Specific provisions and applications for solicitation opportunities/documents, but not Public Access to Procurement Partial definitive on Public Records Requests limitations Information or process, i.e., "after bid openings, bids will be available for review at the City Clerk's office..." Authorization for the Use of Electronic Transmissions N/A Not Applicable for this engagement N IC PConsulting ,ereb by periscope Page 34 NIC PConsulting powered by risope Organization Article 2 Procurement Creation of the Office of Chief CPO Authority is vested in the City Manager for Procurement Officer (CPO) (1) the procurement of general supplies, equipment, and routine services, (2) administration of the purchasing policy, and (3) Yes management of surplus City property but is silent on Construction (Public Works); various City staff performs the administration functions based on delegated authority Appointment and Qualifications No These are not part of the Procurement Policy Tenure, Removal and Compensation No These are not part of the Procurement Policy Authority/Duties of the CPO Yes Delegation of Authority Yes Based on dollar thresholds Centralization of Procurement However, there are some exemptions and there Authority Yes is delegation of authority provisions Authority to Contract for Legal Services Yes Under "Professional Services" definition Exemptions Yes The specific procurements are clearly stated Procurement Regulations Yes Several cited in the Policy Procurement Advisory Council and Yes City Council Other Groups Article 3 Source Selection and Contract Formation Some definitions are not ABA Code, they are Definitions Yes pertinent to City or State of California Methods of Source Selection Yes Competitive Sealed Bidding Yes Conditions for Use Yes Public Notice Yes NIC PConsulting powered by risope Bid Opening Yes Bid Acceptance and Evaluation Yes Correction or Withdrawal of Bids; Cancellation of Bids Yes Award Yes Multi -Step Sealed Bidding No Competitive Sealed Proposals Yes Conditions for Use Yes Basically "Professional Services" Public Notice Yes Receipt of Proposals Yes Evaluation Factors No No Procedures outlined Discussion with Responsible Offerors No Negotiation is mentioned but no procedures outlined Award Yes Award Notice is addressed but limited notice procedures Debriefings No Small Purchases Yes Sole Source Procurements Yes Emergency Procurements Yes Differentiates between "emergency" and "urgent' Cancellation of ITBs & RFPs Yes For Bids, but RFPs not addressed Responsibility of Bidders and Offerors Yes Under "qualified vendor characteristics" Prequalification of Suppliers Limited Related to Public Works Types of Contracts Limited NIC PConsulting �by�dK� Page 36 NIC PConsulting �.�b,"..P. Page 37 Limited Defined maximum contract term is 5 years Multi -Year Contracts including extensions Right to Inspect Plant No Right to Audit Records No Finality of Determinations No Reporting of Anti -Competitive Practices * See Note at the end of this Table Retentions of Procurement Records No Not unless addressed in a separate Records Retention Policy Reporting/documentation requirements are not Record of Procurement Actions Taken No specified in the City Purchasing Policy , Specifications Article Definitions of Terms yes Some definitions are not MPC they are pertinent to City or State Regulations for Specification Other than identifying requesting department as Preparation No responsible Duties of the CPO Yes Duties of the City Manager Relationship with Using Agencies No Maximum Practicable Competition Limited Defines minimum number of quotations required for informal procurements Specifications Prepared by other than Although permits suppliers to respond to [City] Personnel opportunities for which they prepared the Yes specifications which is an Organizational Conflict oflnterest Facilities and Services Article 5 Procurement of Infrastructure Definitions Some definitions are not MPC, they are pertinent Yes to City or State Project Delivery Methods Authorized Yes Referenced California Statutes NIC PConsulting �.�b,"..P. Page 37 Source Selection Methods Assigned to Yes Referenced California Statutes Project Delivery Methods Scope Yes Referenced California Statutes Design Bid Build Yes Referenced California Statutes Operations and Maintenance Yes Referenced California Statutes Design Build Yes Referenced California Statutes Design Build Operate Maintain No Referenced California Statutes Design Build Finance Operate No Referenced California Statutes Maintain Choice of Project Delivery Methods Yes Referenced California Statutes A & E Services Defined under "Professional Services; Referenced Yes California Statutes & Municipal Code Bid Security Yes Referenced California Statutes & Municipal Code Contract Performance and Payment Yes Referenced California Statutes & Municipal Code Bonds Bond Forms and Copies Yes Referenced California Statutes & Municipal Code Errors and Omissions Insurance Yes Referenced California Statutes & Municipal Code ModificationArticle 6 .. Contract Clauses and their 7PartiallAlso referenced California Statutes administration Article 7 Cost ,- Cost Principles Regulations Required Yes Referenced in California Statutes NIC PConsulting Page 38 Article 8 Supply Definitions of Terms Limited Based on City requirements for asset management Supply Management Regulations Limited Limited to asset disposal but does not address Required inventory holdings or management of same Allocation of Proceeds from Sale or Yes Disposal of Surplus Supplies Remedies Article 9 Legal and Contractual Authority To Resolve Protested No Solicitations and Awards Right to Protest No Authority to Resolve Protests No Authority to Debar or Suspend No Authority to Resolve Contract & Breach No of Contract Controversies Except as may be provided under California law Remedies No but not addressed in current policies and procedures Time Limitations on Actions No Protest of Solicitations or Awards No Suspension or Debarment Proceedings No Contract and Breach of Contract No Controversies Appeal and Review of Procurement No Appeals Board Decisions NIC PConsulting Po Weretl by P¢�SCOPO Article 10 -Intergovernmental Relations Cooperative Purchasing Authorized Yes By policy but limited details in Procedures Joint Use of Facilities (e.g., sharing For City this is not specified in the Procurement office space and equipment with No Policy another entity) Supply of Personnel, Information and Technical Services (e.g., sharing For City this is not specified in the Procurement personnel and various services with No Policy another entity) DisadvantagedArticle 11 Assistance to Small and Statement of Policy and Its Limited Majority of specific requirements and procedures Implementation are identified under current Federal Requirements related to procurement of Definitions Yes property or services stemming from Federal aid and compliance with 23 CFR Part 172, 2 CFR Part Chief Procurement Officer Duties 200, and other Federal regulations Public Procurement Article 12 Ethics in General Standards of Ethical Conduct California Administrative Code Section 18730 Yes referenced in City Municipal Code General Ethical Standards for California Administrative Code Section 18730 Employees Yes referenced in City Municipal Code General Ethical Standards for Non- partial Particularly to lobbying and "cone of silence" Employees provisions Criminal Sanctions No Except as provided for in California law N IC PConsulting �'. "'m� Page 40 Employee Conflict of Interest Description and examples are anti-competitive practice related versus personal and/or organizational conflict of interest (CA Administrative Code Section 18730 referenced in Partial City Municipal Code). Gifts and gratuities are mentioned under Federal Requirements section, but "intrinsic value" is not defined, and no reporting processes are detailed. Employee Disclosure California Administrative Code Section 18730 Yes referenced in City Municipal Code Gratuities and Kickbacks California Administrative Code Section 18730 No referenced in City Municipal Code Prohibition Against Contingent Fees California Administrative Code Section 18730 No referenced in City Municipal Code Restrictions on Employment of Present No Except as may be provided in California law and Former Employees Use of Confidential Information Except as may be provided in California law In the No Procurement Policy Civil and Administrative Remedies Against Employees Who Breach Ethical No Except as may be provided in California law Standards Civil and Administrative Remedies California Administrative Code Section 18730 Against Non -Employees Who Breach No referenced in City Municipal Code Ethical Standards *Note: The Consultant recommends that the City consider these MPC provisions for inclusion in the Policy: • Severability. If any provision of this Policy or any application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or application of this Policy which can be given effect without the invalid provision or application, and to this end the provisions of this Policy are declared to be severable. NIC PConsulting poweretl Dy periscope Page 41 • Supplementary General Principles of Law Applicable. Unless displaced by the particular provisions of this Policy, the principles of law and equity, including the Uniform Commercial Code of this State, the law merchant, and law relative to capacity to contract, agency, fraud, misrepresentation, duress, coercion, mistake, or bankruptcy shall supplement the provisions of this Policy. • Requirement of Good Faith. This Policy requires all parties involved in the negotiation, performance, or administration of City contracts to act in good faith. • Reporting on Anticompetitive Practices. When for any reason collusion or other anti- competitive practices are suspected among any bidders, offerors, or City staff, notice of the relevant facts shall be transmitted to the Attorney General. END OF REPORT AND APPENDICIES NIC PConsulting powered by periscope Page 42 NI G P Consulting powered by periscope City of Rol Procureme Procedure Lynda Allair, NIGP-C NIGP Consulting December 12, 2023 Procurement Professionals Deliv Introduction Brief Project Overview ■ Kick -Off Meeting with Project Sponsors ■ Collection of various documentation ■ Staff & Legal Council Interviews Analysis ■ Documentation Provided versus Legislative Requirements • Determine limitations • Determine inconsistencies/gaps • Identify Opportunities ➢ Efficiencies and improvements ➢ Collaborative opportunities Findings and Recommendations N IC PConsulting ,„ ,�eypee—, Framework • Legal Requirements • City's Organizational Structure • City's Culture • Resources versus Workload N I C PConsulting Findings r Description — provided with cor Some items are interdependen • Opportunity for synergy N I C PConsulting ,--j I, �r-op Recommendations Aligned with • Local Jurisprudence • ABA Model Procurement Code • Global Best Practices • NIGP Benchmark Survey(s) Provide Guidance • Manage Risk • Identify efficiencies and improvements NIC PConsulting ,were.f by risc— Recommendations Non -PW Procurement Thresholds • Purchasing power declined significantly since current thresholds set Aug 2016 (especially since Mar 2020) • Update levels as per Consultant recommendations and Staff Report • Based on NIGP Benchmark Survey 2019 Enable Annual Threshold Updates • Based on all -urban consumers for LA area (CPI -U — published by Bureau of Labor Statistics) • Maintain purchasing power N IC PConsulting pow by p riscow Recommendations Adopt California Uniform Public Construction Cost Accounting Act (CU PCCAA) • Provides for expedited award of Public Works contracts based on higher thresholds than permitted under California Public Contract Code 20160 t0 20175 • Less onerous bidding requirements based on higher thresholds than current City Enable Automatic Adoption of Revised CUPCCAA Thresholds • Revised thresholds adopted as published NI C P Consulting Recommendations Disentangle Policies and Procurement Procedures • Create separate Policy Manual and Procurement Procedures Manual • Improves clarity/understanding • Facilitates training and compliance • Include flowcharts and forms (facilitates version control) • Update terminology during revisions N I C PConsulting �nwa�ed by Ferismpa Recommendations Implement dedicated Procurement Professional position • Consolidates procurement functions • Relieves Department staff of "non-core" procurement functions • Provides professional procurement advisory services and training to staff and suppliers • Manages procurement processes including Contract Administration and Supplier Relationship Management • Enhances transparency and consistency • Throughout procure -to -pay process • Messaging to suppliers • Coordination with other public sector entities N I C PConsulting fX;W&h tl by periscope Moving Forward ■ City Executive • has implemented some initial workflow improvements ■ City determines next steps • Priority of Initiatives • Availability of Resources ■ NIGP Consulting is available to provide additional assistance NIC PConsulting Thank choosing NIGP Consulting! Marcheta Gillespie, President of NIGP Code & Consulting mgillespieO-nimcom (520)940-7194 NIG PConsulting N IC PConsulting �mwered by purixc�Nx d