Chapter 2.92 CONTRACT APPROVAL AND PROCUREMENT POLICIES

Chapter 2.92
CONTRACT APPROVAL AND PROCUREMENT POLICIES

Sections:

2.92.010 Contract authority.

2.92.020 Procurement process.

2.92.080 Chart reflecting purchasing thresholds and requirements for non-public works procurements.

2.92.100 Severability.

2.92.005 Purpose.

The purpose of this chapter is to establish the policies to be followed by the city for the approval of contracts and the procurement of equipment, supplies, materials and services. (Ord. 2792 § 1 (Exh A), 2009)

2.92.010 Contract authority.

A. The city council authorizes the mayor, or mayor’s designee, to enter into and execute on behalf of the city the following contracts without individual approval of each contract by the city council, so long as the contract is consistent with the approved budget for the city, and the city’s liability under the contract does not exceed available fund balances. Department directors or their designees shall be responsible for verifying the availability of fund balances for any contracts, agreements or purchases attributable to their departments.

1. Professional service contracts, including contracts for architectural, engineering, legal, and consulting services involving a cost or fee (excluding sales tax) of less than $10,000. The term “professional service” means a type of service which requires as a condition precedent to the rendering of such service the obtaining of a license or other legal authorization or activities such as consulting that have a primarily intellectual final product (e.g., accountants, appraisers, engineers, architects, land surveyors, attorneys, and other consulting services in the areas of development, environmental assessment, financial and human resources);

2. Maintenance contracts and service contracts for nonprofessional services involving a cost or fee (excluding sales tax) of less than $10,000 per year;

3. Public works projects involving a cost or fee of less than $50,000;

4. Settlement agreements involving a cost or fee of less than $50,000, and retention of legal counsel and expert consultants, involving risk management claims or suits;

5. Other routine agreements where no expenditure is involved, or the cost, expenditure, or fee (excluding sales tax) does not exceed $10,000;

6. Lease agreements for materials, supplies, and equipment where the expenditure or fee does not exceed $10,000 per year;

7. Sale of surplus property with an estimated value of $10,000 or less, which has been certified for disposition, such sale or disposition to be made by the administration in accordance with applicable law and any procedures established by the finance director or designee deemed to be in the best interest of the city;

8. Contracts which carry out or implement a provision of the Lynnwood Municipal Code or established city policy, e.g., maintenance or performance bonds for plat improvements;

9. Emergency Contracts. For purposes of this chapter, the term “emergency” shall have the same meaning as defined in RCW 39.04.280(3);

10. Employment and Personnel Matters. Unless otherwise provided by statute or ordinance, e.g., salaries and compensation are subject to city ordinance;

11. Contracts of a “continuing nature” for the operation of programs and services approved in the budget or for a schedule of payments, including but not limited to interlocal agreements (ILA) and multiple-year personal service contracts which have been expressly approved by the city council, do not require subsequent annual approvals; provided, that any such contract is listed specifically as a line item in the budget under BARS Code Category 40 (Services).

B. The breaking down of any purchase or contract into units or phases for the purpose of avoiding the maximum dollar amount is prohibited. The amount of a contract includes all amendments; provided, amendments that do not exceed in total 10 percent of the contract amount may be entered into without prior city council approval.

C. The mayor, in the mayor’s discretion, may present any contract to the city council for prior approval, even if the contract is allowed to be approved without prior city council approval.

D. All interlocal agreements shall be presented to the city council for prior approval, except for interlocal agreements that create no liability or expense to the city, e.g., interlocal purchasing agreements as determined by the finance director or designee.

E. The mayor shall promptly provide to the city council a copy (or summary) of any contract or interlocal agreement (including any amendment) that has not received prior approval by the city council.

F. “Contract” means any agreement creating a legal relationship between the city and another person or entity, or any amendment thereto. (Ord. 2792 § 1 (Exh A), 2009; Ord. 2650 § 1, 2006; Ord. 2129 § 1, 1997; Ord. 2087 § 1, 1996)

2.92.020 Procurement process.

A. Background. The city is a noncharter code city established under Title 35A RCW. While bid requirements for public works projects established for first class cities apply to the city pursuant to RCW 35A.40.210(1), the city council, rather than the state Legislature, generally sets policy for the purchase of equipment, supplies, materials and services not related to a public works project.

B. General Provisions.

1. Administration of Purchasing and Contracting Activities. All purchasing activities within the city are required to be processed and administered by the purchasing and contracts division of the administrative services department. Such purchasing activities include, but are not limited to, purchase orders, requests for proposal (RFP), requests for quote (RFQ), requests for qualifications (RFQual), requests for information (RFI), invitations to bid (ITB) and other similar initiatives. Any contracts or contracting activities not specifically delegated to the public works department shall be processed and administered by the purchasing and contracts division.

2. Delegation of Purchasing and Contracts Activities. The purchasing and contracts division may, from time to time at its discretion, with the approval of the mayor and the finance director, delegate certain purchasing activities to other departments within the city when such activities accrue to the benefit of the city. Examples of delegated purchasing and contracts activities are: (a) the division’s issuance of procurement cards to employees, when the issuance of the procurement cards has been approved by the applicable department director and the finance director and (b) certain repetitive contracts less than $10,000 when using a contract document that has been approved by the finance director or designee and the city attorney.

3. Procurement Process Subject to Contract Approval Authorization. The provisions set forth in this section provide processes governing city purchasing, contracting, hiring, and disbursing. Specified types of contracts and maximum dollar thresholds of contracts that require individual approval of each contract before the city, through the mayor or mayor’s designee, enters into the contract are set forth in LMC 2.92.010, Contract authority. The processes set forth in this section are subject to the requirements of LMC 2.92.010.

4. Federal Funds. When procurement involves the expenditure of federal funds, purchasing shall be conducted in accordance with any applicable federal laws or regulations.

5. Grants. When procurement involves the expenditure of a grant, purchasing shall be conducted in accordance with any applicable grant laws or regulations, in addition to all other applicable provisions of the LMC.

6. Breaking Down of Purchase and Amount of Purchase. The breaking down of any purchase or contract into units or phases for the purpose of avoiding the maximum dollar amount is prohibited. The amount of a contract includes all amendments, provided amendments that do not exceed in total 10 percent of the contract shall be considered within the limitations set forth herein.

7. Disbursements.

a. General. Disbursement shall be based on a requisition signed by the applicable department head, and approved by the finance director, or their designees.

b. Small Items Not Stocked – Monthly Purchase Orders. The finance director is authorized to establish monthly purchase orders with local vendors for periods of not more than 12 months for the purchase of items which are not stocked by the departments of the city and are available at usual market prices. Such local vendors shall be selected on the basis of overall price policies, breadth, and depth of stocks and delivery service.

8. Emergency Procurements. Notwithstanding any other provisions of this section, the mayor or designee may make or authorize others to make emergency procurements of materials, supplies, equipment, or services, without complying with the requirements of this section when there exists a threat to public health, welfare, or safety or where the city may suffer a substantial monetary loss by reason of the time required to follow regular purchasing procedures; provided, that such emergency procurements shall be made with such competition as is practicable under the circumstances. A written determination of the basis for the emergency and for the selection of the particular contractor shall be included in the contract file. As soon as practicable, a record of each emergency procurement shall be made and shall set forth the contractor’s name, the amount and type of the contract, and listing of the item(s) procured under the contract, which shall be reported to the city council at the next subsequent meeting.

9. Credit Cards. The mayor or designee is authorized to establish credit card agreements for issuance of credit cards to eligible users for purchase of items, products and services required for city purposes. The mayor or designee shall adopt procedures to implement this section. Credit cards shall be distributed in a manner that is controlled and under approval of the mayor or designee, for any user who has a recognizable need for such a card. The mayor or designee shall establish credit limits, pursuant to the card issuer, that establish controls on card use. The mayor or designee shall authorize payment of credit card bills, establishing city procedures for the review, controls and audits of such bills.

10. Local Preference. The city may consider a local tax preference to determine the lowest responsive and responsible bidder, when purchasing materials, supplies or equipment. This consideration is at the city’s option for each purchase and shall not be mandatory. In this determination, the city shall consider the sales tax that would be charged by each supplier, in calculation of the lowest responsive and responsible bidder. The city shall then calculate and credit towards the offer price the share of such tax revenue it would specifically receive as a result of purchasing from a supplier located within city boundaries. The purchase must then be awarded to the lowest bidder after such tax revenue has been considered, whenever this local preference is utilized by the city as a factor in determination of lowest bidder. Such tax revenue consideration shall comply with the provisions of RCW 39.30.040 now and as amended.

C. Procurement Process and Expenditure Guidelines – Purchase of Materials, Supplies, Equipment, and Services Less Than $50,000.

1. Small Purchases. Purchase of materials, supplies, or equipment, where the cost (excluding sales tax) is $10,000 or less, may be made by the mayor and department directors or designees in accordance with procedures adopted by the finance director in the best interests of the city.

2. Purchase by Quotations. Except as provided in subsection (B)(8) of this section, Emergency Procurements, and subsection (E) of this section, Noncompetitive Purchases and Alternative Procurement Procedures, or other purchases specifically approved by the city council, the city shall follow the following processes to obtain written quotes from vendors for the purchase of materials, supplies, equipment or services associated with the purchased equipment or goods where the cost (excluding sales tax) is in excess of $10,000, and less than $50,000:

a. Requests for Quotation (RFQ).

i. Written requests for quotations shall specify at a minimum the following:

(A) Specific materials, equipment, supplies or associated services to be purchased;

(B) Number, quantity, quality, and type of units;

(D) Freight costs;

(E) Point of delivery; and

(F) Terms of payment;

ii. A city buyer shall make an effort to contact at least three vendors. The number of vendors contacted may be reduced if the item or items being sought are only available from a smaller number of vendors. When fewer than three quotes are requested or if there are fewer than three replies, an explanation shall be placed in the procurement file or published on the city website;

iii. Whenever possible, quotes will be solicited on a lump sum, fixed unit price basis, or hourly rates;

iv. A written or electronic record shall be made by the city buyer of each vendor’s quote on the materials, equipment, supplies, and services, and of any conditions imposed on the quote by such vendor;

v. All of the quotes shall be collected, determination of the lowest responsive bidder shall be made by the buyer in conjunction with the applicable department director, or designee, and documentation of the selection and selection process shall be placed in the procurement file or on the city website;

b. Determining Lowest Responsible Bidder. The city shall purchase the materials, equipment, supplies or associated services from the lowest responsible bidder; provided, that whenever there is a reason to believe that the lowest responsible bidder has not presented the best price obtainable, all quotes may be rejected and the city may call for new quotes or enter into direct negotiations to achieve the best possible price. The following factors, in addition to price, may be taken into account by the city in determining the lowest responsible bidder:

i. Any preferences provided by law to Washington products and vendors;

ii. The quality of materials, equipment, supplies or services to be purchased;

iii. The conformity of the materials, equipment, supplies or services to the city’s specifications;

iv. The purposes for which the materials, equipment, supplies or services are required;

v. The time for delivery of materials, equipment, supplies or performance of services;

vi. The character, integrity, reputation, judgment, experience and efficiency of the vendor; and

vii. Such other information as may have a bearing on the decision to purchase the material, equipment, supplies or services;

c. Life Cycle Costing. In considering quotes for the purchase of materials, equipment, or supplies, whenever there is reason to believe that applying the “life cycle costing” method of quote evaluation would result in the lowest total cost to the city, first consideration shall be given to the quote with the lowest life cycle cost which complies with the specifications. “Life cycle cost” means the total cost of an item to the city over its estimated useful life, including costs of selection, acquisition, operation, maintenance, and, where applicable, disposal, as far as these costs can reasonably be determined, minus the salvage value at the end of its estimated useful life. The “estimated useful life” of an item means the estimated time from the date of acquisition to the date of replacement or disposal, determined in any reasonable manner;

d. Award. As soon as practical after the award is made, the bid quotations of each vendor’s quotes shall be made available to the public by access to the city website. Any contract awarded pursuant to an RFQ under this subsection need not be advertised;

e. Filing of Statements on Awards to Other Than Contractors Submitting Lowest Quotation. When the award for a contract is not given to the contractor submitting the lowest quotation, a statement of the reasons for placing the contract elsewhere shall be prepared and filed with the other contract documents relating to the contract, and shall be available to the public by access to the city website;

f. Rejection of Quotations. The city may reject all quotations or parts thereof, when it is determined the public interest will be served thereby, and upon rejection shall include the reasons therefor in the records, which shall be available to the public by access to the city website.

D. Procurement Process and Expenditure Guidelines – Purchase of Materials, Supplies, Equipment, or Services Equal to or Greater Than $50,000. Procurements or purchases of materials, supplies, equipment or services equal to or greater than $50,000 shall be made using one of the following procedures:

1. Contract by Sealed Invitation to Bid.

a. General. Unless otherwise specifically approved by the city council, contracts relating to purchases or materials, equipment, supplies or services where the cost (excluding sales tax) is equal to or greater than $50,000 may be by sealed bid and approved by the city council;

b. Invitation to Bid. An invitation to bid (ITB) shall be issued which shall include the specifications and the contractual terms and conditions applicable to the procurement;

c. Public Notice. Public notice of the ITB shall be given not less than 13 calendar days prior to the date set forth therein for the opening of bids, unless for good cause shown the city council authorizes a different period of time. Such notice shall be published at least once in a newspaper of general circulation. The public notice shall state the date and time of bid opening. Bids not received by the date and time stated for bid opening will not be accepted or considered;

d. Bid Opening. Bids shall be opened publicly by the finance director or designee at the time and place designated in the ITB. The amount of each bid, and such other relevant information as the finance director or designee deems appropriate, together with the name of each bidder, shall be recorded. The record and each bid shall be open to public inspection;

e. Determining Lowest Responsible Bidder. In the case of ITBs, the city shall purchase the materials, equipment, supplies or services from the lowest responsible bidder; provided, that whenever there is a reason to believe that the lowest responsible bidder has not presented the best price obtainable, all quotes may be rejected and the city may call for new quotes or enter into direct negotiations to achieve the best possible price. The following factors, in addition to price, may be taken into account by the city in determining the lowest responsible bidder:

i. Any preferences provided by law to Washington products and vendors;

ii. The quality of materials, equipment, supplies, or services to be purchased;

iii. The conformity of the materials, equipment, supplies, or services to the city’s specifications;

iv. The purposes for which the materials, equipment, supplies, or services are required;

v. The time for delivery of materials, equipment, or supplies or performance of services;

vi. The character, integrity, reputation, judgment, experience and efficiency of the vendor; and

vii. Such other information as may have a bearing on the decision to purchase the material, equipment, supplies, or services;

f. Life Cycle Costing. In considering the purchase of materials, equipment, or supplies, whenever there is a reason to believe that applying the “life cycle costing” method of quote evaluation would result in the lowest total cost to the city, first consideration shall be given to purchases with the lowest life cycle cost which complies with the specifications. “Life cycle cost” means the total cost of an item to the city over its estimated useful life, including costs of selection, acquisition, operation, maintenance and, where applicable, disposal, as far as these costs can reasonably be determined, minus the salvage value at the end of its estimated useful life. The “estimated useful life” of an item means the estimated time from the date of acquisition to the date of replacement or disposal, determined in any reasonable manner;

g. Correction or Withdrawal of Bids – Cancellation of Awards. Correction or withdrawal of inadvertently erroneous bids before or after bid opening, or cancellation of awards or contracts based on such bid mistakes, may be permitted by the city. Mistakes discovered before bid opening may be modified or the bid may be withdrawn by written or electronic notice received in the office designated in the invitation for bids prior to the time set for opening. After bid opening, corrections in or withdrawal of bids shall be permitted only to the extent that the bidder can show by clear and convincing evidence that a mistake was made, the nature of the mistake, and the bid price actually intended. However, downward correction of a bid, which would displace the apparent low bidder, shall only be permitted if the error made and the intended bid price can be determined solely from the bid documents. All decisions to permit the correction or withdrawal of bids after bid opening, or to cancel awards or contracts based on bid mistakes, shall be made by the city council;

h. Award. Information about the bids, along with a recommendation for award, shall be submitted to the city council by the finance director or purchasing manager or their designee with the concurrence of the appropriate department. The city council may award the bid to the lowest responsible bidder, or may reject all bids in its discretion. The contract shall be awarded to the lowest responsible bidder whose bid meets the specifications and evaluation criteria set forth in the ITB.

2. Contract by Request for Proposal (RFP) Response.

a. General. Contracts relating to purchases of materials, equipment, supplies or services where the cost (excluding sales tax) is equal to or greater than $50,000 may be by RFP response and approved by the city council;

b. Solicitation for Proposal Responses. The RFP shall be issued which shall include the specifications or scope of work and the contractual terms and conditions applicable to the procurement;

c. Public Notice. Public notice of the RFP shall be given not less than 13 calendar days prior to the date set forth therein for the RFP deadline, unless for good cause shown the city council authorizes a different period of time. Such notice shall be published at least once in a newspaper of general circulation. The public notice shall state the date and time of the due date for the proposal response. Responses not received by the RFP deadline will not be accepted or considered;

d. Response Opening. Responses shall be opened by the finance director or designee at the time and place designated in the RFP or as soon thereafter as practicable. RFP responses are generally not opened publicly, but the results shall be posted on the city website;

e. Determining Most Favorable Response. The following factors, in addition to price, may be taken into account by the city in determining the most favorable response:

i. Any preferences provided by law to Washington products and vendors;

ii. The quality of materials, equipment, supplies, or services to be purchased;

iii. The conformity of the materials, equipment, supplies, or services to the city’s specifications;

iv. The purposes for which the materials, equipment, supplies, or services are required;

v. The time for delivery of materials, equipment, or supplies or performance of services;

vi. The character, integrity, reputation, judgment, experience and efficiency of the vendor; and

vii. Such other information as may have a bearing on the decision to purchase the material, equipment, supplies, or services, including but not limited to answers to RFP questions, references, demonstrations, presentations, and site visits;

f. Correction or Withdrawal of Responses. Correction or withdrawal of inadvertently erroneous responses before or after response submission may be permitted by the city. Mistakes discovered before response date may be modified or the response may be withdrawn by written notice received in the office designated in the RFP prior to the time set as the due date and time. After response submission corrections in or withdrawal of response shall be permitted only to the extent that the responder can show by clear and convincing evidence that a mistake was made, the nature of the mistake, and the response actually intended. However, downward correction of price information in a response shall only be permitted if the error made and the intended price can be determined solely from the response documents. All decisions to permit the correction or withdrawal of responses after the due date, or to cancel awards or contracts based on mistakes, shall be made by the finance director or designee;

g. Award. Information about the RFP responses, along with a recommendation for award, shall be submitted to the city council by the finance director or purchasing manager with the concurrence of the appropriate department. The city council may award the contract to the responder that submitted the most favorable response or may reject all responses in its discretion. The contract shall be awarded to the responder who was determined to have submitted the most favorable response and whose response meets the specifications and evaluation criteria set forth in the RFP.

3. The finance director or designee may from time to time employ alternate vendor sourcing methods such as request for qualification, request for information, two-step request for proposal (also known as request for qualification/request for quotation), or other like initiatives, which are deemed to be in the best interest of the city.

E. Noncompetitive Purchases and Alternative Procurement Procedures. The finance director or designee is authorized to make purchases without obtaining competitive bids or quotations as required under this section, and otherwise if specifically approved by the city council, under the following conditions:

1. Items of Special Design. When an item required is of special design, shape or manufacture to match or fit in with an existing installation and competitive bidding is impracticable;

2. Surplus or Distress Sale. When it is possible to procure obvious bargains in surplus or distress material, supplies or equipment. Purchases made under this subsection do not require a sole source justification process;

3. Items for Quick Delivery. When the obtaining of competitive bids or quotations will cause delay resulting in an appreciable loss to the city. Purchases made under this subsection do not require a sole source justification process;

4. Interlocal Agreements. Materials, equipment, and supplies may be purchased on a city, state (or other governmental) bid contract or cooperative purchasing arrangement without following the procedures outlined in this section if the city has an interlocal agreement with the city, state (or other government) providing for a cooperative purchasing arrangement in accordance with Chapter 39.34 RCW;

5. Materials, Supplies, and Equipment – Sole Source Procurement. A contract for the purchase of materials, supplies, or equipment may be awarded without complying with the bidding requirements of this chapter when the finance director or designee determines in writing, subject to the approval of the city attorney, after conducting a good faith review of available resources, that there is only one source of the required materials, supplies, or equipment. The finance director or designee shall conduct negotiations, as appropriate, as to price, terms, and delivery time. An electronic record of sole source procurements shall be maintained that lists each contractor’s name, the amount and type of each contract, and a listing of the item(s) procured under each contract, which information shall be made available to the public upon request;

6. Items Purchased for Resale Purposes. A contract for the purchase of goods, materials or supplies may be awarded without complying with the bidding requirements of this chapter when the finance director or designee has determined that the items being purchased will be resold to the public in connection with city programs or facilities (e.g., inventory for resale at the city golf course);

7. Electronic Data Processing and Telecommunication Systems.

a. Purchase by Competitive Negotiations Authorized. Purchase of electronic data processing and telecommunications systems may be made by “competitive negotiations” in accordance with the procedures authorized by RCW 39.04.270;

b. Approval of Purchases. All purchases of data processing and telecommunications systems or equipment shall be approved by the city’s chief technology officer or designee to ensure system and equipment compatibility;

8. Architectural, Landscape Architectural, and Engineering Services Contracts. Procedures set forth in Chapter 39.80 RCW shall be followed for contracts for architectural and engineering services, as defined in RCW 39.80.020;

9. Contracts for Professional Services. Contracts for professional services (other than architectural, landscape architectural and engineering) shall be made in accordance with procedures adopted by the finance director in the best interest of the city. The term “professional services” means a type of service which requires as a condition precedent to the rendering of such service the obtaining of a license or other legal authorization or activities such as consulting that have a primarily intellectual final product (e.g., accountants, appraisers, engineers, architects, land surveyors, attorneys, and other consulting services in the areas of development, environmental assessment, financial and human resources);

10. The city may follow any other alternative procurement procedures as may be authorized by state law.

F. Public Works Contracts.

1. General. Public works contracts shall follow bid requirements applicable to code cities with a population in excess of 20,000, as set forth in RCW 35.22.620.

2. Small Works Roster. The city may award public works contracts using the small works roster procedures authorized by RCW 39.04.155, as may be amended from time to time.

3. Limited Public Works Projects. In lieu of awarding contracts under subsection (F)(2) of this section, the city may award a contract for a work, construction, alteration, repair, or improvement project meeting the requirements of a limited public works project and using the limited public works process provided under RCW 39.04.155, as may be amended from time to time.

G. Other Contracts. Contracts which are not otherwise provided shall be made in accordance with procedures adopted by the finance director in the best interest of the city. (Ord. 2792 § 1 (Exh A), 2009; Ord. 2412 § 1, 2002; Ord. 2406 § 1, 2002; Ord. 2375 § 1, 2001; Ord. 2366 § 1, 2001; Ord. 2102 § 1, 1996)

2.92.080 Chart reflecting purchasing thresholds and requirements for non-public works procurements.


Amount	Purchasing Guidelines and Requirements	Reserved
Less than $10,000	No competitive bid required; No purchase order required; ProCard may be required
$10,000 to $49,999	RFQ or RFP required for all purchases
$50,000 and above	RFP, RFQ/Q, ITB, RFI and all vendor sourcing documents Any expenditure in this range must be approved by the city council
$10,000/transaction $15,000/month	ProCard

(Ord. 2792 § 1 (Exh A), 2009)

2.92.100 Severability.

If any section, subsection, sentence, clause, phrase, or word of this chapter should be held to be invalid or unconstitutional by a court of competent jurisdiction, such invalidity or unconstitutionality thereof shall not affect the validity or constitutionality of any other section, subsection, sentence, clause, phrase, or word of this chapter. (Ord. 2792 § 1 (Exh A), 2009; Ord. 2102 § 2, 1996)