3879 Purch Policy Attachment
City of Moses Lake
Purchasing Policy
& Procedures
Competitive Bidding Thresholds
Category Limit Process Ref.
Purchases for materials,
supplies & equipment
including installation &
taxes
< $10,000 No formal bid requirements. Verbal quotes, State contract, or use of purchasing cooperatives are encouraged 2.1
> $10,000 or more 3 written quotes, State contract, or qualifying purchasing cooperative
2.2
2.3
General service contracts
RCW’s do not require bids for services. This does not include A&E
It is encouraged to get 3 quotes but use reasonable judgement when evaluating whether bids should be obtained. 2.12
Architectural & engineering services Competitive process, comply with RCW 39.80 2.9
Federal grant guidelines,
2 CFR 200.320 (use
City or Fed, whichever is
more restrictive)
$3,000 or less, aggregate No bids if prices determined to be “reasonable”
$3,001 - $150,000 aggregate 3 written quotes or State contract
Over $150,000 aggregate Sealed bids
Public Works (RCW 39.04 & RCW 35.23.352 as authorized in RCW 35A.40.200)
Project costs < $75,500 single craft, street signalization or lighting; or < $116,155 multi craft
Direct quotes allowed, but bond and retainage required, or
Limited small works process (only under $50,000), or
Small works roster, or
formal bid process
2.6
2.7
2.8
Project costs < $350,000 Small works roster*, or
Formal bid process
2.7
2.8
Project costs > $350,000 Formal bid process 2.8
*Limited public works threshold to $50,000. Cities may waive retainage for roster projects. If estimated cost exceeds $250,000, City must notify all contractors on the roster that bids are being sought (ESSB 5418).
Contract Authorization Thresholds
Category Limit Authorized Signer
General services and Public Works
Aggregate contract value < $50,000 Department Director
Aggregate contract value between $50,000 - $100,000 City Manager
Aggregate contract value > $100,000 City Manager, authorized by City Council
All Interlocal Agreements and multi-year contracts that have budgetary impacts beyond a departments regular recurring budget authority must be approved by Finance Committee and City Council prior to authorization.
Architect and Engineering Services are based on qualifications rather than price. Reference section 2.9
Equipment & supplies
Within budget capacity Department Director or designee
Not within budget capacity Department Director or designee, after Finance Committee or City Council approval.
Any purchase related to technology must be approved by the Information Systems Director (section 2.4)
Contract amendments & change orders
Amendment/change order value < $50,000 Department Director or designee
Amendment/change order value between $50,000 - $100,000 City Manager
Amendment/change order value > $100,000 City Manager, authorized by City Council
An amendment that brings the total contract value into a higher authorization limit must be approved through the authorized signer process for the higher authorization limit.
Example A: a contract for $90,000 was originally signed by the City Manager. A $20,000 contract amendment would bring the total contract value up to $110,000 which would have originally required Council authorization. This amendment would need Council authorization.
Example B: A contract for $1,000,000 was originally authorized by City Council. A $20,000 contract amendment can be signed by the Department
Contents
1. INTRODUCTION ...................................................... 1
1.2 Code of Ethics (RCW 42.23) ........................... 1
1.3 Conflict of Interest ........................................... 1
1.4 Unauthorized Purchases ................................. 2
1.5 Sustainable Purchasing .................................. 2
1.6 Define the Need .............................................. 2
1.7 Determine the Cost ......................................... 2
1.8 Determining Contract Value ............................ 2
1.9 Exceptions to the Competitive Process........... 3
1.10 Emergency Procurements ............................... 3
2. NEW PROCUREMENT ............................................ 4
2.1 Small Purchases of Goods & Services ........... 4
2.2 State Contracts ................................................ 4
2.3 Large Purchases for Materials, Supplies &
Equipment ....................................................... 4
2.4 Technology Purchases .................................... 5
2.5 Public Works ................................................... 5
2.6 Small Works - Limited Public Works Process . 6
2.7 Public Works – Small Works Roster ............... 6
2.8 Public Works – Formal Bid Process ................ 6
2.9 Purchases of Architectural and Engineering (A&E) Services ................................................ 7
2.10 Public Works - Design Build ............................ 7
2.11 Purchases of Professional Services................ 7
2.12 Purchases of General Services ....................... 8
3. OTHER PROCESSES AND CONSIDERATIONS ... 9
3.1 Request for Proposal (RFP) and Request for Qualifications (RFQ’s) .................................... 9
3.2 Bid Opening Process .................................... 10
3.3 No Bid or Non-Responsive/Responsible Bids or Submittals ................................................. 10
3.4 Rule 171 – Sales Tax Exemptions ................ 11
3.5 Prevailing Wages .......................................... 11
3.6 Retainage ...................................................... 12
4. CONTRACT CONSIDERATIONS .......................... 12
4.1 The Contract ................................................. 12
4.2 Payment Options .......................................... 13
4.3 Contract Executions & Administration .......... 13
4.4 Contract Monitoring – Performance .............. 14
4.5 Contract Monitoring – Payment .................... 14
4.6 Amendments & Change Orders .................... 15
4.7 Contract Close-Out & Termination ................ 15
5. OTHER PURCHASING INFOMATION .................. 16
5.1 Purchase Order Procedures ......................... 16
5.2 Disposal of Surplus Property ........................ 17
5.2 Capital Outlay – Fixed Assets ....................... 17
5.4 Credit Card Policy ......................................... 17
Common Acronyms, Terminology and References ...... 18
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1. INTRODUCTION
1.1 Purpose of the Policy
The Purchasing Policy and Procedures Manual is provided to guide and assist City staff on basic procurement and contracting requirements as set forth in the Washington State statutes, and local policies to ensure the City is receiving maximum value for the products and services received and assure fiscal responsibility in the purchasing process.
This Policy establishes guidelines and clarifies the procedures for public work projects; the procurement of professional and personal services, including architectural and engineering design services; the acquisition of supplies, equipment, and materials; and the acquisition of services through competitive negotiation when needed as indicated in the Purchasing Manual Matrix at the beginning of this document. These guidelines do not apply to the acquisition, sale, conveyance, license, or lease of real property.
All references to the Revised Code of Washington (RCW) and Federal grant regulations shall be incorporated as part of this policy including all future amendments.
It should be understood that anyone purchasing goods or services with Federal or State funds will understand and abide by the purchasing guidelines set forth by the granting agency. In cases where these policies conflict with any State and Federal law or regulations, the terms of that law or regulation prevails.
1.2 Code of Ethics (RCW 42.23)
The public must have confidence in the integrity of its government. The purpose of this Code of Ethics is to give guidance to all employees and elected officials so that they may conduct themselves in a manner which will be in the best interest of the City of Moses Lake.
It is essential that those doing business with the City observe the following guiding ethical standards: • Actions of City employees shall be impartial and fair. • The City will not accept, donations of materials or services in return for a commitment to continue to initiate a purchasing relationship. • City employees may not solicit, accept, or agree to accept any gratuity for themselves, their families or others that would or could result in personal gain. Purchasing decisions must be made impartially. • The City does not discriminate on the basis of sex, age, race, color, religion, national origin, mental or physical disability, marital, veteran or any other protected status. • To keep confidential all information acquired by reason of one’s position, which may be used for personal or financial gain for the employee or other persons. • City employees shall not accept monetary gifts of any kind: cash, debit/credit cards, refundable vendor gift cards, etc. excluding: non-monetary gifts valued less than $50.00, items received that do not result in personal gain, samples to the City used for general City use.
1.3 Conflict of Interest
City staff or Council Members may not undertake consulting, professional practice or other assignments which would result in a conflict of interest. If a potential conflict of interest exists the employee or Council Member will notify their supervisor, the Mayor and/or City Attorney to determine if the employee or Council Member should continue being involved with the purchase or contract.
Personal gifts or gratuities that might influence or give the appearance of influencing the requisition or purchase of material(s) must be declined.
City officers, employees, and agents may not participate in the selection, award, or administration of a contract supported by a Federal award if they have a real or apparent conflict of interest. As stated in 2 CFR 200.318(c), such a conflict of interest would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employees or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract. The officer, employees, and agents of the non-Federal entity must neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts.
Employees violating this section are subject to disciplinary action commensurate with the severity of the violation, ranging from a letter of reprimand to termination of employment. Any instance where a potential conflict of interest may arise must be disclosed in writing by the responsible department to the federal awarding agency or pass-through entity in accordance with applicable Federal awarding agency policy.
Commented [SJ1]: Wellness giftcards????
Commented [JM2R1]: I think this means gift cards from a vendor, like a kickback
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1.4 Unauthorized Purchases
Purchases for personal use are not allowed. The person ordering the unauthorized and unjustified purchase is personally liable for the costs of the purchase or contract and may be subject to disciplinary action, up to and including termination. If the purchase was made without proper authorization but is in fact a justified purchase, then the Department Director has the option to approve the purchase after the fact; unauthorized purchases may be subject to disciplinary action, up to and including termination, regardless of after the fact approval.
1.5 Sustainable Purchasing
The City shall acquire its goods and services in a manner that complies with all federal and state laws, and other requirements (e.g., City ordinances or resolutions, interlocal agreements). The City shall purchase and use materials, products and services which are fiscally responsible. Fiscal factors to be considered include but are not limited to: lowest total cost; leveraging the City’s buying power; impact on staff time and labor; long-term financial/market changes; technological advances in a rapidly changing market.
1.6 Define the Need
The first question that should be answered is what type of purchase is it? The major categories of purchases include:
Public Works: (RCW 39.04.010) includes all work; construction; alteration; repair or improvement other than ordinary maintenance, unless such maintenance is contracted out; executed at the cost of the City:
• Examples: demolition, remodeling, renovation, road construction, building construction, and utilities construction. • Ordinary maintenance is not specifically defined in this statute but is generally considered to include work not performed by contract and performed on a regular basis to service, check or replace items that are not broken. • For purposes of prevailing wage requirements, public works includes ordinary maintenance when performed by contract. See Section 3.5 discusses prevailing wages.
Materials, Supplies and Equipment - Materials, supplies and equipment are considered tangible items which are manufactured and are moveable at the time of purchase. It is important to distinguish between materials, supplies and equipment used in public works contracts as opposed to non-public works contracts as different bidding requirements apply to each. Examples are: office supplies, off the shelf software, hardware, trucks, copy machines, auto parts, gravel, and janitorial supplies.
Services: Distinguishing between services and public work is also important, as services may also have different bidding requirements. Services include the labor, time, or effort of a human being. The City has three classifications of services:
1. Professional Services: Services provided by independent consultants that require specialized knowledge, advanced education, professional licensing, or certification and where the primary service provided is mental or intellectual, involving the consistent exercise of judgment and discretion. Examples are: accountants, attorneys, consultants, graphic artists.
2. Architectural and Engineering Services (A&E Services): These services are to be acquired under the authority and procedures outlined in RCW Chapter 39.80. Examples are: engineers, land surveyors, architects, and landscape architects.
3. General Services: All other service-related work that is not considered a public work or professional service. Most often these are routine in nature (i.e.: yearly, monthly, weekly, etc.). Examples are: building maintenance, elevator maintenance, and instructors.
1.7 Determine the Cost
Once the need has been defined, the estimated cost of the goods or services will generally determine what competitive selection process will need to be followed. Estimated costs should include: all applicable sales and use taxes, freight, set up, etc., all phases of construction related work (but not engineering or architectural design fees). RCW 35.23.352(1) prohibits splitting public work project costs to avoid the appropriate advertising and bidding requirements. Costs should not include donated materials, labor, supplies, etc.
1.8 Determining Contract Value
Contract value refers to the total aggregate value of the contract including all base periods, plus potential renewal periods. • Example #1: A three-year contract for $40,000 per year is considered a $120,000 contract.
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• Example #2: A contract originally routed as a one year $40,000 contract. If a renewal is negotiated for an additional year for another $40,000, the aggregate value of the contract becomes $80,000. • Exception: Hardware/software maintenance agreements are treated as stand-alone agreements and do not need to be aggregated to the original hardware/software purchase agreement. For determining purchasing thresholds of contracts that do not have a stated value (such as mutual benefit contracts), the contract value should be determined based on the gross value of goods or services being provided.
1.9 Exceptions to the Competitive Process
Exceptions to the competitive process - Applies to contracts for public works and contracts for purchases, providing Federal or State grant purchasing requirements are met. Exceptions should make good business sense and be in the best interest of the City. In all cases, it is the City’s responsibility to conduct a good faith review of all available providers and determine that the requested vendor is the only applicable provider of such services/items. It is important to note that ONLY the requirement for competitive bidding or advertising is waived. It does not waive any contractual requirements, approvals, or insurance requirements.
Exemptions to the Competitive Bidding Requirements as Provided in RCW 39.04.280(1):
Type Example
Purchases that are clearly and legitimately limited to a single source of supply
• Licensed or patented goods or service.
• Items that are compatible w/ existing equipment, inventory, systems, programs, or services.
• Meets City standards (i.e. meters).
• Factory-authorized warranty services.
• Meets the specialized need of the City.
Purchases involving special facilities or market conditions • Item is of special design, shape or manufacture that matches or fits w/ existing equipment, inventory, systems, programs, or services.
Purchases of insurance or bonds • Insurance or bonds.
Purchases in urgent need or emergency • See Section 1.10.
Certain government to government purchases
• If another City provides maintenance service to Moses Lake using their own forces, no competitive bidding requirements arise. However, if the other City contracts with a private company for this service, competitive bid limits would apply.
Exemption Process - The reason the non-emergency purchase or contract is exempted from required procedures should be documented prior to the purchase or contract award. Explain what features/knowledge/qualification the vendor can provide that are not available from other sources. Exemptions in emergency situations must be approved by the Department Director or designee and must be documented immediately after the purchase or contract award. The documentation should be kept in the purchase or contract file and is open to public inspection.
1.10 Emergency Procurements
For purposes of this section “emergency procurement” means unforeseen circumstances beyond the control of the City that either: (a) present a real, immediate threat to the proper performance of essential functions; or (b) will likely result in material loss or damage to property, bodily injury, or loss of life if immediate action is not taken. Competitive bidding may be waived subject to the following process, (RCW 39.04.280(2)):
Emergency Process:
• Step 1 – Notify the Department Director or designated Department Manager of emergency. If the Department Director or designated Department Manager determines that an emergency situations exists and a contractor needs to be called in, the Director will notify the City Manager of the situation. • Step 2 – Upon concurrence of the City Manager that an emergency situation exists, and upon the City Manager’s authorization, contractors can be called upon to make necessary repairs. • Step 3 – Department will develop a contract, outlining prevailing wage, bond requirements, and payments schedules.
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• Step 4 – The Department must also prepare written determination of the basis for the emergency. This written determination shall be included in the contract file and entered into the public record no later than two weeks following the award of the contract. • Step 5 – The Department Director will ensure that a description and estimate of the work is published within seven (7) days of commencement of the work (RCW 39.04.020). • Step 6 – Details of the emergency will be presented to the City Council within two weeks (or as soon as practical) following the award of the emergency contract.
2. NEW PROCUREMENT
2.1 Small Purchases of Goods & Services
Small purchases are typically goods or services (excluding Public Works) under $10,000 and include memberships, training, etc. These purchases can be made using Purchase Order. Federal grant expenses must follow federal guidelines which may be more restrictive than City policy. See 5.1 for purchase order procedures.
Process Allowed Uses Non-Allowed Uses
Credit card/ purchase order (see Section 5.4 for the Card Policy)
Business related purchases where an account can’t be established or would delay the purchase of a critical item, business travel reservations.
Alcohol, capital equipment, cash advance, consulting services, personal items, professional services, businesses where account is established
Purchase order or misc. services Goods and Services at low risk and not otherwise covered under a contract. Example of misc. services: subscriptions, memberships, training
2.2 State Contracts
The Washington State Department Enterprise Services (DES) offer existing contracts for goods and services that the City may use. The City has signed the Master Contracts Usage Agreement with DES for the ability access their contracts and encourages the use of these contracts whenever possible. When using a state contract the City, utilizing the State’s competitive process thus eliminating the need for the City to perform one.
Purchases made with a State Contract must be approved in the same manner as any other purchase. See the Purchasing Manual Matrix at the beginning of the document for the purchasing approvals requirements. The web site for DES contracts is: http://des.wa.gov/services/contracting-purchasing.
Things to consider when purchasing on a State Contract: • Review State contract for participation requirements and work with State buyer. • Contact vendor to verify the vendor will honor State contract pricing. Obtain details of purchase including invoicing, availability, delivery, etc. State contracts include standard terms and conditions. When utilizing a state contract, all of the state contract terms and conditions apply. However, on occasion, the City may opt to change the state’s contract requirements which will require the City to develop its own Purchase Agreement identifying those requirements that are unique to the City’s purchase.
A City purchase order will be needed for equipment and supplies purchased through a state contract and may require a State PO as well. See 5.1 for the purchase order procedures.
2.3 Large Purchases for Materials, Supplies & Equipment
Any purchase of material, supplies, and equipment, where the cost exceeds $10,000 shall be by written quote, state contract, qualified purchasing cooperative or competitive process. Purchases for supplies, materials and equipment included in the budget shall be approved by the Department Director or designee. Purchases not in the budget must be approved by the City Council.
Commented [SJ3]: We have made these types of purchases on CC’s Capitol is few and far between, but still think we should take this part off. Personal items happens-accidentally- and the employee pays the city back for the charges Business with a city account- I think this happens simply because the employee is unaware of the account.
Commented [JM4R3]: I agree, all these should not be charged to a credit card
Commented [SJ5R3]: But, we have and continue to
Commented [AW6R3]: We need to overhaul our purchasing processes with credit cards. I prefer that there are centrally obtained credit cards that are checked out by employees to use for the allowed uses spelled out in this section.
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Things to consider when making a large purchase for material, supplies & equipment that do not qualify as a public work: • Identify grants funding requirements to follow, if any • Prepare product specifications - warranties, delivery, liquidated damages, etc. • Prepare documents – advertisements, equal opportunity, bid proposal sheet bidder’s checklist, bid bond, etc., as needed • Advertise, publish, and notify – call vendors or advertise in official newspaper, in Daily Journal of Commerce, on internet, email notifications, as appropriate • Prepare addenda if required and notify plan holders and post online • Schedule and conduct bid openings, when needed • Award the bid after determining the lowest, responsible, responsive bidder and prepare council agenda materials, if needed
The Purchase Agreement documents: • Contact information for both contractor and city employee. • Bid/Specifications including successful vendor’s required forms submitted at time of bid (e.g.: Non-Collusion, Affidavit of Equal Opportunity, Bid Offer Form, etc.), as appropriate. • City’s Insurance Requirements with successful vendor’s Certificate of Insurance, if appropriate.
Document storage & Routing • A copy of the Purchase Agreement documents should be available to the City’s authorized signer to review and in the agenda packet when City Council approval is needed. • Send an electronic copy of the signed multi-year agreements to the City Clerk to record in the city’s Document Center and an email notification of all new contracts to other impacted departments.
2.4 Technology Purchases
To purchase telecommunications and data processing (computer) equipment or software the City must determine what is being purchased: is it a service, installation, supply or equipment. If the software, phones, or computers are off the shelf it is most likely a supply or equipment. If a major portion of the software cost is to customize the program for City needs, then the purchase is service. If the purchase involves installation of cable, conduits, and other devices the purchase may be a public works. Each type of purchase has its own purchasing requirements to follow and is discussed throughout Section 2 with the RFP/Q process discussed in Section 3.1. If the purchase is determined to be a public works RCW 39.04.270(3) allows a negotiation process rather than taking the lowest responsive/responsible bidder that is required in a typical public works bid.
Departments must work with the Information Technologies Department to purchase both hardware and software, to allow that department to adequately support these technologies. This will help ensure compatibility with the City’s electronic computing systems and will provide a more satisfying and dependable computing experience for the users.
All potential acquisitions of electronic computing systems, including workstations, peripherals, and software, must be approved by the Information Systems staff. This includes acquisitions using grant funds. Prior to the requisition request, the requesting department and/or user must complete the HR Onboarding Request Form at least two weeks in advance of employee hire date. The Information Systems staff will review the request with the requester. If the request is approved, Information Systems will purchase the product on behalf of the requesting department. Electronic Computing Systems is all information technology (e.g., hardware and. software) owned by the City and used to conduct official business.
2.5 Public Works
Public Work – RCW-39.04.010 - "Public work" means all work, construction, alteration, repair, or improvement other than ordinary maintenance, executed at the cost of the state or of any municipality, or which is by law a lien or charge on any property therein. Limitations on work by public employees Day Labor Limit - RCW 35.23.352 defines the limits where the City can use their own labor force to perform a public work, this limit is currently set at $75,500 for projects including a single craft and $116,155 for projects including multiple crafts. Determining the Cost of a Public Work - The total construction cost of each project must be estimated to correctly apply bid limit dollar amounts to determine if a public works project must be competitively bid. This estimate may be prepared by an outside third party; however, the final cost estimate must be validated by the City. The total construction cost (estimated as if the project were to be bid) is used to make that determination. The estimate shall include materials, supplies, equipment, and labor on the
Commented [SJ7]: Fact check this. Debbie/Jen?
Commented [JM8R7]: Definitely, I think they are trying to do this with Laserfiche
Commented [SJ9]: I think we view “public works” differently, because it is a “department” for us.
Commented [JM10R9]: Yes
Commented [AW11R9]: Public work is statutorily defined and there is a process to go through to determine if something is a public work because it requires a different approval process
Commented [SJ12]: IT Department
Commented [JM13R12]: Yes
Commented [SJ14]: We don’t have that. IT help ticket created?
Commented [JM15R14]: That’s a good question for Debbie, what is going to be the new process for requesting IT equipment
Commented [SJ16]: Fact check this. Richard/Mike/Dave??
Commented [JM17R16]: Yeah Alaina or yourself should face check this
Commented [AW18R16]: These limits are statutorily defined and so if the law changes the statutory limit would be updated. check the RCW or the question can be posed to Municipal Research and Services Center
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construction of that project and applicable sales and use taxes. However, the value of volunteer labor, donated material, or donated equipment need not be included in the cost estimate for a public works project, as these are not a cost to the agency. Bid Splitting - RCW 35.23.352(1) and RCW 39.04.155(4) prohibits the division of a project into units of work or phases of work to avoid the restriction on work that may be performed by day labor on a single project.
Small Works Roster - The City of Moses Lake has contracted with Municipal Research and Services Center of Washington (MRSC) for the City’s use of a statewide electronic database for small public works roster and consulting services developed and maintained by MRSC. Access to the Small Works Roster is available: http://www.mrscrosters.org/. At least once a year, on behalf of the City, MRSC publishes in a newspaper of general circulation within the jurisdiction a notice of the existence of the roster or rosters and solicit the names of contractors for such roster or rosters. Responsible contractors shall be added to the appropriate MRSC roster or rosters at any time that they submit a written request and necessary records. The City may require master contracts to be signed that become effective when a specific award is made using a small works roster.
2.6 Small Works - Limited Public Works Process
A work, construction, alteration, repair, or improvement with the project costs estimated to be < $75,500 for a single craft, street signalization or lighting or < $116,155 for a multiple craft project, may negotiate with an individual contractor, but are subject to bonding and retainage requirements. Public Works projects with costs less than $50,000 qualify as a Limited Public Works and may follow the procedures below, waiving retainage and bond requirements (federal/state guidelines prevail).
Department will solicit electronic or written quotations from a minimum of three contractors from the appropriate small works roster. Invitation for quotations shall include an estimate of the scope and nature of the work to be performed, materials and equipment to be furnished, and the date, time, and location to return quote. However, detailed plans and specifications need not be included in the invitation. A limit of three electronic or written quotes are required, and the contract shall be awarded to the lowest responsible bidder.
Limited Public Works Process: • The City will maintain a list of the contractors contacted and contracts awarded during the previous 24 months under the limited public works process, including contractor name, registration number, amount of contract, brief description of work and date contract awarded. • All contracts shall utilize the City of Moses Lake’s Small Works General Conditions that outlines prevailing wages, retainage, insurance, and other City requirements. • The contract shall be awarded to the lowest responsible bidder and approved in accordance with the Purchasing Policy Matrix. • Send a copy of the unsigned agreement to the City Clerk’s Office with the vendor contact name, title, and email for electronic signature routing and an email notification to other impacted departments.
2.7 Public Works – Small Works Roster
When the estimated cost of a public works project is $350,000 or less, the City may follow the Small Works Roster (SWR) process for construction of a public work or improvement in accordance with RCW 39.04.155. Small Works Roster process can be used to obtain quotes/City Council awards quote, Municipal Services accepts the work.
Small Works Roster process:
• Prepare a bid package that includes the City Small Works General Conditions. • Prepare an advertisement for bids that indicates the estimated project cost, bid opening date, a brief description of the project, and where bid documents can be found. Send advertisement to all contractors on the MRSC Small Works Roster that have indicated that they can perform the type of work being solicited. • The contract shall be awarded to the lowest responsible bidder and approved in accordance with the Purchasing Policy Matrix. • Send a copy of the unsigned agreement to the City Clerk’s Office with the vendor contact name, title, and email for electronic signature routing and an email notification to other impacted departments.
2.8 Public Works – Formal Bid Process
Competitive bidding is designed to prevent favoritism in awarding public work contracts and to enable local governments to obtain the best work or supplies at the most reasonable prices. It is also designed to provide a fair forum for bidders and to protect the public interest. Projects with estimated costs equal to or greater than $350,000 must be bid.
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Formal Bid Process: • Department will compile bid package. • The notice to bid is to be published in the official newspaper at least 13 days prior to the date bids are to be received. The notice shall state the nature of the work for which plans and specs will then be on file. • Bids must be sealed and filed within the time specified. • Each bid requires a bid proposal deposit of 5% or more in the form of cashier’s check, postal money order, or surety bond. • Prevailing Wage and Wage Certification form is required. • Public bid opening is required. • City Council approval is required. • Grant funded projects may have additional or stricter bid requirements. • Send a copy of the unsigned agreement to the City Clerk’s Office with the vendor contact name, title, and email for electronic signature routing and an email notification to other impacted departments.
2.9 Purchases of Architectural and Engineering (A&E) Services
A&E services are to be acquired under the authority and procedures outlined in chapter RCW 39.80. A&E consultants are initially selected based upon their qualifications, rather than price (see RCW 39.80.050). The City will negotiate a contract with the most qualified firm at a price which the City determines is fair and reasonable. There are two ways to select an A&E firm based upon their qualifications: • Roster/SOQ Review – It is the City’s policy to select three or more consultants from the A&E roster maintained by MRSC in the relevant service category and evaluate their qualifications. When possible, one qualified consultant with a MWDBE classification should be included in the three selected. Documentation of the three reviews is required. • Project Specific RFQ o Use the Consultant Roster to send out RFQ to consultants in the relevant service category. When possible, one qualified consultant with a MWDBE classification should be included. See RFP’s and RFQ’s Section 3.1 for further information. o Advertise the need for project specific consultant services in the official newspaper. This process is required for federally funded projects per the Washington State Department of Transportation Local Agency Guidelines. • Send a copy of the unsigned agreement to the City Clerk’s Office with the vendor contact name, title, and email for electronic signature routing and an email notification to other impacted departments.
2.10 Public Works - Design Build
RCW 39.10.300 allows the design-build procedure for public works project where the total project cost is greater than two million dollars under three conditions: the construction activity is highly specialized and the design build approach is critical in developing the construction methodology, the project selected provide opportunity for greater innovation or efficiencies between the designer and the builder, or significant saving in project delivery time would be realized. To utilize the design-build procedure, public agencies must seek certification per RCW 39.10.270. Once certified, cities may use the design-build procedure on individual projects for a period of three years without seeking additional approval. Alternatively, public agencies that are not certified to use design-build can seek certification to use the procedure on individual projects per RCW 39.10.280. Certification of public agencies is managed by the state’s Project Review Committee. This committee works under the Washington State Department of Enterprise Services’ Capital Projects Advisory Review Board.
2.11 Purchases of Professional Services
Services provided by contractors that require specialized knowledge, advanced education, professional licensing, or certification and where the primary service provided is mental or intellectual, involving the consistent exercise of judgment and discretion is considered a Professional Service.
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Professional Services are primarily three categories: architectural and engineering (A&E), purchased services and consultants. • A&E is discussed further in Section 2.9 • Purchased services have established or standardized procedures, contribute to daily activities, complete specific assignments, may require payment of prevailing wages and may include: delivery services, artists, landscaping & janitorial services, vehicle maintenance services, HVAC system maintenance, and elevator maintenance • Consultant services is an independent person or firm contracting to perform a service, make a recommendation, or render an opinion without being in the control of the City except as to the result of the work. Consultant service do not include A&E services that have to follow RCW 39.80.
The RCW’s do not require the City to follow a competitive process for professional services except for A&E. Contracted services should be evaluated to verify the City is receiving the best service and price reasonably possible. Judgement should be used in determining if a full competitive process should be followed, obtaining three quotes, or staff’s knowledge of the area and the service providers is sufficient to ensure best price & service delivery.
Professional Service contract approvals are: up to $50,000 and 5 years term is approved by the Department Director or designee provided there is budget capacity, $50,000 (Public Works) $30,000 (All others) is approved by the City Manager. Contracts or services that could reasonably be defined as carrying out policy provisions in the budget are required to be approved by the City Council regardless of the amount. Contracts of any amount that are not consistent with the adopted budget require prior City Council approval. Contracts in excess of $50,000 are approved by the City Council.
Things to consider when contracting for professional services but not A&E: The Professional Services Agreement could include: • Contact information for both contractor and city employee. • City’s Scope of Services. • Consultant’s Proposal. • City’s Standard Insurance Requirements & Consultants insurance certificate.
Information and Technology contracts may also include: • Security Addendum, Nondisclosure Agreement, and Technology Resource Usage Policy.
Routing • The documents should be available to the City’s authorized signer to review or included in the agenda packet when Council approval is needed. • Send a copy of the unsigned agreement to the City Clerk’s Office with the vendor contact name, title, and email for electronic signature routing and an email notification to other impacted departments.
Federal and state laws prohibit contractors to be treated as employees. An Independent Contractor must meet the following six tests established by the Department of Labor & Industries otherwise they are an employee with all the employee benefits and potential penalties if found in non-compliance.
• An Independent Contractor is free from substantial control by the employer (e.g., output, scheduling, or resources). • Operates from a site or location not owned by the contracting agency. • Individual is customarily in an established trade or business. • Individual has established an account with the Dept. of Revenue and any other state agency that collects taxes. • Individual is responsible for filing schedules with the IRS. • Individual maintains a separate set of books and records reflecting items of income and expense of his/her business.
2.12 Purchases of General Services
All other service-related work that is not considered a public work or professional service. Most often these are routine in nature (i.e.: yearly, monthly, weekly, etc.) The RCW’s do not require a competitive process for the selection of general services, with the exception of the City newspaper.
The RCW’s do not require the City to follow a competitive process for professional services except for A&E. Contracted services should be evaluated to verify the City is receiving the best service and price reasonably possible. Judgement should be used in determining if a full competitive process should be followed, obtaining three quotes, or Staff’s knowledge of the area and the service providers is sufficient to ensure best price and service delivery.
If a competitive process was determined to be the best option, the RFP or RFQ procedures would be followed in Section 3.1.
Commented [SJ19]: Fact check
Commented [JM20R19]: Yes fact check for sure. Alaina or yourself should reach out to engineering
Commented [AW21R19]: This is the correct process, however, the City Manager's authority for purchases/approvals would have to be updated (Resolution 3668)
Commented [AM22R19]: $50,000 for Public Works and $30,000 for all others.
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When considering General Services remember that all public works, including maintenance when performed by contract, shall comply with RCW 39.12.020 as it pertains to prevailing wage requirements. According to RCW 39.04.010(4) there are clearly two categories of work that must comply with prevailing wage requirements: (1) Public Works and (2) Maintenance when performed by contract.
See the Purchasing Matrix at the beginning of this document for contract approval requirements.
Things to consider when contracting for General Services: The General Services Contract may include: • Contact information for both the contractor and city employee. • City’s Scope of Services. • Contractor’s Quote/Proposal. • City’s Standard Insurance Requirements and Consultant’s insurance certificate.
Routing • The contract documents should be available to the City’s authorized signer to review or included in the agenda packet when Council approval is needed. • Send a copy of the unsigned agreement to the City Clerk’s Office with the vendor contact name, title, and email for electronic signature routing and an email notification to other impacted departments.
Examples of General Services: • Customized accounting software and ongoing support services. • Cemetery, landscaping, building and grounds maintenance contracts. • Contracts for snow and ice removal. • Garbage collection and disposal (Solid waste collection and disposal contracts do not have to be bid. An RFQ/RFP process as noted in RCW 35.21.156 can be used. • Maintenance contracts for office equipment, including computers. • Official newspaper (must call annually for bids per RCW 35.23.352(7)).
Comments: • Snow plowing of City streets is not subject to bid laws or prevailing wages. • Fire extinguisher inspection and replacement is subject to prevailing wages but not bid laws. • Services that are for inspection and certification, only, are not Public Works.
3. OTHER PROCESSES AND CONSIDERATIONS
3.1 Request for Proposal (RFP) and Request for Qualifications
(RFQ’s)
An RFP is a method of soliciting competitive proposals for a defined scope of work. The proposals would normally include factors to measure qualifications, delivery, and service reputation as well as price. Stated another way, an RFP is a formal invitation from the City to a company to submit an offer. The offer is to provide a solution (or proposal) to a problem or need that the City has identified. An RFP is a solicitation process whereby the judgment of the supplier’s experience, qualifications, and solution may take precedence over their cost proposal to the City. Elements of an RFP may include: project background and scope of services; definitions; minimum qualifications; technical requirements (if any); schedule; cost proposal; submittal requirements; evaluation process and criteria; insurance requirements; funding sources (if applicable).
An RFQ is a method of soliciting competitive proposals that considers and evaluates companies based on demonstrated competency and qualification rather than price. This process is typically used for A&E services where price is not a consideration. An RFQ will generally result in negotiations.
Elements of an RFQ may include: project background and scope of services; project budget and source of funding; schedule; minimum qualifications; submittal requirements; selection process/evaluation criteria.
Depending upon the complexity of the project, a typical RFP/Q may take 6-8 weeks to complete.
Things to consider when using an RFP or RFQ:
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• Develop draft RFP/RFQ and include; schedule, grant funding requirements, scope of services, qualifications, selection process or evaluation criteria, submittal requirements, proposal validity period, term of contract. • Identify roster category and companies. • Advertise and publish or notify on City’s/MRSC website or email notifications. • Determine the participants to evaluate the RFP’s and/or interview the proposers. • Based on the amount of the service provided get approval to negotiate with the selected proposer(s).
3.2 Bid Opening Process
Bid Due Dates - It is important to make the bid submittal time clear in the bid documents. For example, “The bid form will be received up to 3:00:00 p.m. on April 27, 2010. Bids received after the date and hour, based on the time on our clock, will not receive consideration.” For example, if a bid is due at 2:00 p.m., a bid received at: 1:59 p.m. is on time; 2:00 p.m. is on time; however, a bid received at 2:00:01 is late. If a bidder insists on submitting the bid after the time due and leaves it, do not open it. Make a photocopy of the bid envelope with the time stamp, and immediately return the bid by certified mail, return receipt requested.
Equal Treatment of Bidders - Avoid giving bidders an advantage to include: not permitting bidders use of private offices and conference space for finalizing bid prices, providing an envelope for bidder to use in sealing the bid, or permitting bidder to use the agency’s telephone, computer, fax, or photocopier. Avoid disclosing the names and numbers of bidders who have submitted bids.
Receiving Bids Checklist - Is the bid in writing (no fax, email, telephone or oral bids, the Small Works Roster may have fewer formal requirements); did the bidder attend the mandatory pre-bid meeting, if applicable; is the bid envelope sealed-offer tape if not sealed; is the correct information on the envelope; is the time stamp clear; is the time stamp prior to deadline?
All bids received shall be kept in a secure and centralized location not accessible to other bidders. Bids should never be left unattended.
Withdrawal & Modification of Bids (unless otherwise specified in contract bid document) - A request to withdraw or modify the bid in advance of the deadline may be received verbally or in writing. If unfamiliar with the bidder, ask for identification. Make a photocopy of the face of the bid envelope, ensuring the bid receipt time shows up on the copy; have the bidder sign the photocopy with the following “Received by (signature, printed name, date, time.); keep the original signed photocopy; remove the bid receipt stamp or cross it out on the face of the bid envelope and return the bid envelope to the bidder; notifying the bidder that if they choose to resubmit the bid, it must be received prior to the bid submittal deadline, and stamped in again with a new time and date stamp, prior to the deadline.
Modifying Bids from a Distance (unless otherwise specified in contract bid document) - The bidder may submit additional information modifying a previously submitted bid if the modification is: received in writing; signed by an authorized representative of the bidder; received prior to the bid receipt deadline; in a sealed envelope; clear in stating what prices are being changed.
Opening the Bids - Projects following the formal bid process should be opened in a public meeting. Read each bid before opening the next one. Consider using one person to open the bids and the second person to read. The project manager should record the prices on a bid tabulation form. The bids will be evaluated for responsiveness after the bid opening. If a contractor wishes to review the bids after the bid opening, allow only one contractor at a time to review the bids in a monitored environment. Provide a Bid Summary that is available for public review within 24 hours on City website.
3.3 No Bid or Non-Responsive/Responsible Bids or Submittals
No Bids or Submittals Received - As provided in RCW 35.23.352(1), in the event the City does not receive any bids or submittals on the first call, the City has three options: 1) re-advertise and make a second call, 2) enter into a contract with any qualified contractor, or 3) purchase the supplies, materials or equipment and perform such work and improvement by day labor (City staff). Before determining which option would best fit, the department should conduct a survey of the registered bidders or proposers or any other known interested parties to determine: 1) why didn’t they submit, 2) was the City’s document too restrictive or too complex, 3) was there ample time to submit, and 4) were there too many open questions before the due date? The City Attorney’s Office may provide additional assistance in determining the best option.
Determining Lowest Responsible Bidder - The City shall award the contract for the public works project to the lowest responsible bidder, provided that, whenever there is a reason to believe that the lowest acceptable bid is not the best price obtainable, all bids may be rejected, and the City may call for new bids. A responsible bidder shall be a registered and/or licensed contractor who meets the mandatory bidder responsibility criteria established by RCW 39.04.350 and who meets any supplementary criteria established by the City. Check WSDOT standard specification requirements if contract is based on WSDOT.
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Non-Responsive and/or Not-Responsible - The City shall draft bidder responsibility criteria that are based upon clear business reasons and the criteria must not be overly restrictive of the bidding pool. Note that in Washington State, a bidder who objects to the supplemental bidder responsibility criteria may request the City to modify the criteria before the bid submittal deadline. Refer to RCW 39.04.350.
Bids may be rejected as non-responsive for multiple reasons including lack of subcontractor’s list when required (for contracts in excess of $1M or contracts of 3 or more trades), insufficient bid guarantees, bids submitted after the deadline, did the bidder qualify the bid and/or lack of acknowledgement of addenda. In general, a material irregularity is required before the bid may be deemed non-responsive which is defined as any variance which provides “a bidder substantial advantage or benefit not enjoyed by others.” In the event the City receives a bid or submittal on the first call but it is deemed non-responsive or non-responsible, the department may consult with the Attorney’s Office to determine whether it is a material or immaterial irregularity. Each project will be evaluated on a case-by-case basis.
3.4 Rule 171 – Sales Tax Exemptions
Normally sales tax applies to every sale of tangible personal property (and some services) to all persons, including cities. Thus, for bid limit purposes, the tax must be included when determining the cost of a public work, or when calculating the cost of materials, supplies, and equipment purchases separately from a public work.
However, there are some sales and use tax exemptions for certain public work projects. The exemptions include: • Labor and services rendered for the building, repairing, or improving of any street, place, road, highway, easement, right-of-way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle owned by a city or town which is used primarily for pedestrian or vehicle traffic (RCW 82.04.050(10) and WAC 458-20-171). Materials used in constructing these projects are not exempt from the sales and use tax. Private contractors that work on city street projects are exempt under these statues as well. City parking lots are not exempt. • Labor and services for the processing and handling of sand, gravel, and rock taken from city pits and quarries when the material is for publicly owned road projects (RCW 82.08.0275 and WAC 458-20-171).
3.5 Prevailing Wages
What are Prevailing Wages? - The Department of Labor and Industries (L&I) requires that workers be paid prevailing wages when employed on all public works, public building service maintenance and contracted maintenance, based upon the classification of labor performed. Prevailing Wages are defined as the hourly wage, usual benefits, and overtime, paid in the largest city in each county, to the majority of workers, laborers, and mechanics. Prevailing wages are established, by L&I, for each trade and occupation employed in the performance of public work. They are established separately for each county and are reflective of local wage conditions.
What are the responsibilities of the City when contracting for public works? - The City, in awarding a contract, must make the determination of whether that contract involves “public work” and communicate it to contractors in the bid specifications and contracts. Contractors are not responsible for making the legal determination of whether a contract does or does not meet the definition of a “public works” contract. RCW 39.12.030 requires the City to include the applicable wage rates in the bid documents. If federal funds are involved in the project all bid documents must refer to the Davis-Bacon Act, which requires the wages to be the higher of the federal wage rates for each trade and occupation or Washington State’s wage rates.
What provisions must be made for prevailing wage? - Awarding agencies must stipulate in bid specifications and contracts for public work that workers shall receive the prevailing rate of wage. Those documents must also contain a list of the applicable prevailing wage rates. Compliance with the law is not met by referring contractors to the department or other sources to obtain wage rate information. Intents and affidavits of prevailing wages can be found on the Washington State Department of Labor and Industries web site currently at: https://fortress.wa.gov/lni/wagelookup/searchforms.aspx.
What are the public building service maintenance contract requirements? - Public building service maintenance (janitorial) contracts of more than one year duration must include wage language recognizing the potential for future variance in applicable prevailing wages each year after the first year of the contract.
What are awarding agency requirements when disbursing public funds? - Agencies may not make any payments where contractors have not submitted an Intent to Pay Prevailing Wage form that has been approved by the Industrial Statistician of L&I. Agencies may not release final payment until all contractors have submitted an Affidavit of Wages Paid form that has been certified by the Industrial Statistician of L&I. The requirement to submit these forms should also be stated in the contract.
What are the contractor’s filing requirements? - Public work contracts require that every contractor and sub-contractor on
the project file the Statement of Intent to Pay Prevailing Wages and Affidavit of Wage Paid forms.
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Is there a minimum contract amount for a contractor to file? - There is no minimum dollar contract amount. That is, Intent and Affidavit forms are required for every public works contract regardless of the size of the contract.
When does the contractor file Intent? - The Intent form is filed immediately after the contract is awarded and before work begins if that is possible. The City may not make any payment until contractors have submitted an Intent form certified by the Industrial Statistician.
When does the contractor file an Affidavit? - The Affidavit form is not filed until after all the work is complete. The City may not release final payment until all contractors have submitted an Affidavit form that has been certified by the Industrial Statistician.
3.6 Retainage
What is the purpose of retainage - According to RCW 60.28.011(1) “Public improvement contracts shall provide, and public bodies shall reserve, a contract retainage not to exceed five percent of the moneys earned as a trust fund for the protection and payment of: (a) The claims of any person arising under the contract; and (b) the state with respect to taxes improved pursuant to Titles 50 (Employment Security Department), Title51 (Labor and Industries), and Title 82 (Department of Revenue).
Retainage is not withheld on projects funded in whole or in part by federal transportation funds.
Per RCW 39.08.010(3), the city may, at the option of the contractor, retain ten percent of the contract amount in lieu of a bond on contracts of one hundred fifty thousand dollars or less.
When can retainage be released - After final acceptance of the project, the retainage may be released after all release notifications have been received from the Department of Revenue, Department of Labor and Industries, and Department of Employment Security. Upon receipt of all releases, the Contracts Coordinator or Project Manager shall notify the Finance Department to release the funds.
4. CONTRACT CONSIDERATIONS
4.1 The Contract
The single most important element in the contract is the Scope of Work/Services. The Scope documents all elements of the work, magnitude of the project and reflects the mutual understanding of the parties. The scope should be consistently applied in the solicitation and the contract.
Here are a few things to consider when developing the scope: hold the contractor accountable: be precise; avoid ambiguity; use active voice (i.e., “the Contractor will or shall”); due dates & deliverables. Other considerations when developing the contract are term of contract or period of performance, compensation, and payment. The City’s standard payment terms are the contractors provide monthly invoices to the City and all invoices shall be paid within 30 days of receipt and approval.
The bid documents and contracts have record retention requirements that vary depending on the type of purchase or contract and what the funding source is: federal, state, bonds. Even the bid documents from unsuccessful bidders must be kept for a time. It is the Department’s responsibility to know the records retention requirements for their department and should work with the City Clerk on document destruction. Risk Management Considerations: The City enters into numerous contracts throughout the year. These contracts involve risk. City property can be damaged. Employees of the City, contractors, sub-contractors, and suppliers can be injured. Members of the public can be harmed. These and other accidental losses can arise during and as a result of the activities during the contract fulfillment process. The City seeks to transfer responsibility to such events to those with whom it contracts. The City’s approach to contracting is designed and managed so as to avoid undue exposure to risk with exceptions where it makes good business sense. Insurance requirements are completely dependent upon the activity being performed under contract. Which requirements and how much are determined on a case-by-case basis. Certificates of insurance may be required depending on the nature and scope of the work to be performed. For the contractor insurance requirements specific to any project, the Department Director shall consult with the City Manager and City Attorney. Verification of appropriate insurance requirements shall be completed prior to the commencement of work. Any waiver of insurance requirements requires the approval of the City Manager. This may be appropriate in the following situations:
Waiving a portion of the Standard Insurance Requirements:
Commented [SJ23]: Pay Estimate? Richard question
Commented [JM24R23]: I think they referring to pay estimate. But yes we need confirmation from engineering
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• Where the contractor is a sole proprietor, the worker’s compensation insurance requirements may be waived. • Where the contractor or its employees will not be using automobiles in the performance of the contract, the business automobile requirement may be waived.
Review by City Attorney: All written contracts, bonds, and instruments of every kind and description to which the City shall be a party shall be approved as to form and legality by the City Attorney.
4.2 Payment Options
Prior to contract award, payment terms should be identified to determine the most effective compensation method. The most common methods are:
Hourly/Time and Materials - The City pays a fixed hourly rate and pays for the cost of certain specific services and/or materials. For certain professions, such as consultants, this is the standard option. Time and materials contracts should have a ceiling amount or a not to exceed amount included. This type of payment term may be used if the City is unable to clearly define the level of effort required to accomplish the objectives. A time and materials contract places most of the risk on the City and little on the contractor and provides no positive profit incentive to the contractor for cost control or labor efficiency. Frequent contract monitoring is required to ensure that the number of hours is kept to a reasonable level.
Materials on hand are typically not paid until installed. Larger items could be considered when the items can be secured on site to avoid larger upfront costs by contractor to finance large dollar items (i.e. generator).
Fixed or Lump Sum - The contractor receives a fixed amount or lump sum payment based on terms established in the contract. Typically, payment is tied to a completion of agreed upon performance achievements. Other alternatives are possible, such as progress payments made to compensate for activities conducted over the specific period of the contract. This type of contract should generally establish a minimum allowable level of compensation. With this method of compensation, the City may not be required to pay if specific terms in the contract are not met and thus the risk is placed on the contractor. It is critical to word contract specifications carefully to reduce risk of varying interpretations by city and contractors.
Cost Reimbursement - A Cost reimbursement method of compensation has a higher risk for the City because it reimburses the contractor for all costs incurred under the terms of the contract. To prevent overpayment, allowable cost provisions should be clearly identified. Contract managers should consider including a contract provision for a maximum allowable compensation level for the contract period and budget. Cost reimbursement contracts generally require more fiscal pre-planning and monitoring than other methods.
Performance Based - These contracts are based on attainment of a specific outcome. The rate of compensation is generally negotiated based on cost information provided by the contractor. Generally, performance-based contracts identify the maximum allowable compensation. This allows the City to define the quality of services in terms of performance standard and pay accordingly. Performance based contracts differ from time and materials or fixed price contracts in that if the quantifiable quality of service is low, the payment may be reduced or withheld. This requires a higher level of reporting from the contractor to the City. The contractor primarily assumes the risk because the City does not pay if performance levels are not met.
4.3 Contract Executions & Administration
Contract Execution - The contract is fully executed when all authorized parties have signed it. Upon execution, signed copies of the contract should be provided or available to all interested parties including, at a minimum; the contractor, the Project Manager, Contracts Coordinator, and City Clerk. The City Clerk will store the contract in the city’s Document Center.
Contract Administration - Contract administration means any activity related to contracting, including the decision to contract, contractor screening, contractor selection, contract preparation, contract monitoring, auditing and post contract follow up. Typical responsibilities of the contract manager include: • Understanding the contract, including the specific contract obligations and performance indicators by which performance will be monitored. • Assessing the risks related to the project before soliciting proposals and contracting to determine the extent of the monitoring required.
Commented [KK25]: I think we should include a statement about automatic renewal provisions in contracts and close monitoring of those contracts; we have had issues in the past with contract auto renewing without prior review and then not having the option to cancel.
Commented [AW26R25]: Agreed. Sentence added.
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• Ensuring the contractor has a clear understanding of how the contract will be managed and monitored. • Providing the contractor with guidance and technical assistance, as needed, to promote effective contract performance. • Identifying the extent and source of funding for services provided. • Monitoring the contractor’s activities to ensure quality service delivery. Ensuring funding is used only for authorized purposes. • Reviewing invoices and verifying that delivery of services is rendered. • Resolving issues or problems that arise during the contract. • Measuring and tracking satisfaction with contractor performance. • Complying with Federal, State and City rules and regulations. • Documenting the contract to validate that effective contract management has occurred. • Monitoring the term of the contract to ensure timely contract performance, renegotiation if needed, or to not allow for an automatic renewal (if provided for) if the renewal is not needed. Contract managers need to be mindful of not doing the following: • Instructing the contractor to begin work before the contract is executed and approved. • Changing the description, scope, period of performance, or cost of the contract without processing a written amendment. • Directing the contractor to do work that is not specifically described in the contract. If work not described in the original contract is needed, a change order is required. Avoid change orders that go beyond original scope of work. • Signing a contractor’s contract form. This should not happen. • Authorizing payment to the contractor or allowing field changes without change order for any work not performed satisfactorily. • Paying for the same or similar services more than once.
4.4 Contract Monitoring – Performance
Monitoring Contract Performance - Monitoring means any planned, ongoing, or periodic activity that measures and ensures contractor compliance with the terms, conditions, and requirements of a contract. The level of monitoring should be based on a risk assessment of the contractor’s role in delivering the services and the contractor’s ability to deliver under the terms of the contract. A weekly statement of days and project schedules should be provided.
The purpose of monitoring is to ensure the contractor is: • Complying with the terms and conditions of the contract and applicable laws and regulations. • In compliance with the contract through identifying and resolving potential problems and providing constructive, timely feedback. • Adhering to the project schedule and making appropriate progress toward the expected results and outcomes. • Providing the quality of service expected.
Monitoring Activities May Include: • Periodic contractor reporting – Require the contractor to submit progress reports or other appropriate data or reports, based on pre-defined criteria, and review the contractor’s reports for verification of services provided and adherence to the contract. Substandard performance should be identified and addressed timely and appropriately. • Invoice review – Compare billings with the terms agreed upon in the contract. Ensure the costs being charged are within the contract parameters, prevailing wages were paid, if applicable. • Other periodic contact with contractor – On-site visits to maintain contact with the contractor to review progress on a regular basis. Good contract monitoring includes a continuous dialogue with the contractor. • Other grant review requirements – grant agreements may have additional requirements for project or sub-recipient monitoring.
4.5 Contract Monitoring – Payment
Reviewing Invoices for Payment - Contract payment is the process by which the contractor submits invoices for reimbursement for services and receives payments. The contract or project manager must carefully review the contractor’s request for payment to verify the accuracy of all charges.
Considerations: • If a contract is state or federally funded the review procedures must meet the grant requirements. • Are the hours/costs commensurate with the services or deliverables received? • Is the service period identified on the invoice and were the services rendered prior to contract expiration?
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• Do the rates invoiced match the rates stated in the contract? • Has the necessary documentation been included to verify charges accurately? Is there enough money remaining on the contract? • Reimbursable expenses: travel, mileage; food; miscellaneous expenses
If charges are acceptable, the contract manager signs the invoice approving payment. Payment terms are determined by the contractor or vendor and honored by the City.
4.6 Amendments & Change Orders
Amendments - Amendments are changes to service contracts. Changes to contracts may be processed as amendments, rather than new contracts, only if the changes are within the general scope of the original contract.
Change Orders - A change order is the formal document that alters some condition of the contract documents. After bid opening and prior to execution, no changes should be discussed. The change order may alter the contract price, schedule of payments, completion date, or the plans and specifications. Change Orders are changes to Public Works Agreements and reflect reductions or additions to the work that must be completed to meet the contract requirements and without which the work requested in the original contract could not be completed. If a change order issued is truly due to unforeseen conditions, with no change in the original scope, then a new competitive bid process is not required. These situations should be distinguished from extra work which could stand on its own and is outside and independent of the contract. Appropriate uses of change orders include:
Scope – This may include adding, modifying or deleting tasks, services or deliverables, or revising specifications. Changes to scope should be well documented and include any additional costs associated with these changes. Changes that are outside the general scope of the contract are not appropriate to award through contract amendments. Such changes would have the effect of making the work performed substantially different from the work the parties bargained of at the time the original contract was awarded.
Cost – If the cost of the contract is increased or decreased, document reasons for change (e.g.: scope changes).
Term of Contract/Period of Performance - An extension to the contract end date is the most common change to the period of performance. Minor modifications that do not materially affect the scope or cost of the contract, such as address changes or staff changes do not require a formal amendment but should be documented in writing.
Processing Contract Amendments/Change Orders - Oral change orders are risky. Even though the contract documents requirements require all change orders to be in writing, the actions of both the owner’s representative and the contractor can constructively waive that requirement. To protect the City’s interests, all amendments or change orders should be executed in writing prior to the contract period of performance ends and before the contractor begins work as authorized by the amendment.
Contract amendment or change order approvals vary depending on the type and amount. Please see the Purchasing Manual Matrix at the beginning of this document for these requirements.
4.7 Contract Close-Out & Termination
Contract Termination - Contracts may be terminated prior to the completion date of the contract either for convenience of the parties or for cause. Contact the City Attorney’s Office for guidance when considering a contract termination. All contract terminations should be done in writing and routed through the contract process (refer to the contract for process).
Contract Close-Out Process - Invoices that are submitted after contract expiration may still be paid if the invoice or pay estimate clearly shows that services were preformed prior to contract expiration and sufficient funds existed prior to close-out.
Note that every effort should be made to process invoices in a timely manner to eliminate delays and extra steps in payment processing.
Public Works Close-Out Process for Projects > $35,000 - To close out a project the Project Manager or the Contracts Coordinator can verify that all contractors and sub-contractor have filed their affidavits of prevailing wages on Washington State Department of Labor and Industries web site currently at https://fortress.wa.gov/lni/wagelookup/searchforms.aspx. After the City Council accepts the project/contract as complete a notice of completion of a public works contract form must be filed with the State Department of Labor & Industries for contracts $35,000 and above.
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Once the contract is complete it is critical that the Project Manager complete the close-out process in a timely manner and stay on a schedule. • Project Acceptance Memo 60-day lien period starts from the date of project acceptance. • Council Final Acceptance is prepared by the Project Manager and then the Department Director or Project Manager request’s final acceptance from City Council. • Notice of Completion of Public Works Contract completed and submitted to Department of Labor & Industries by Contract Coordinator or Project Manager after Council acceptance • Employment Security Release Letter received by Contract Coordinator or Project Manager. • Department of Revenue Release Letter received by Contract Coordinator or Project Manager. • Department of Labor & Industries Release Letter received by Contract Coordinator or Project Manager.
Final Steps – Releasing Retainage: • Retainage – Once the above-mentioned letters are received the Contract Coordinator or Project Manager will request the finance department to release retainage by PO. • Retainage Bond – Once the above-mentioned letters are received the Contract Coordinator or Project Manager will release the bond, if additional retainage above the bond amount was retained then the retainage release will apply also. • Escrow with bank – Once the above-mentioned letters are received the Contracts Coordinator or Project Manager will request the bank to release the retainage held, if additional retainage above the deposited amount was retained then the additional retainage release will apply also.
5. OTHER PURCHASING INFORMATION
5.1 Purchase Order Procedures
When required by a vendor, a Purchase Order (PO) must be obtained prior to a purchase of goods or services (training, memberships, etc.) made by a department. To obtain the PO, authorized personnel in each department will request a quote from the vendor, and once received and reviewed, forward the quote to the department’s administrative assistant to create the PO in the financial management system, Innoprise. Once complete, the administrative assistant will propose the PO in the system, and the manager or department head (depending on the amount) will receive an email notification that the PO is awaiting their review and approval in the system. If the requisition approver is not available to approve, a higher-level supervisor or Division Manager may be able to approve the requisition.
All purchase orders clearly instruct the vendor to include the City PO number on all invoices. The invoices with the wrong or no PO number will be set aside until research can be completed which results in the vendor receiving payment later than necessary. All vendors should be directed to mail or email invoices to the Accounts Payable Technician at PO Box 1579 Moses Lake WA 98837, or sjacobs@cityofml.com. Please forward invoices received by the Department immediately to Accounts Payable.
Processing: The employee initiating the requisition should have the vendor, quantities, prices descriptions and specifications, make and model number and sizes.
At the time the purchase is made, a signed packing slip, bill of sale or receipt must be returned to the department’s manager for approval before being routed to the department’s administrative assistant. The Administration will keep the documents together and compare to the vendor invoice that the order is complete and correct before entering the invoice into the system for payment.
At least weekly, purchase orders should be reviewed for completeness by each Department. When it is determined that all or a substantial portion of the items listed on the purchase order have been received, the Departmental employee with authority to do so should: • Approve payment of the purchase by signing the purchase order acknowledging that the items have been received. • Attach the packing slip, receipt or bill of sale, and written quotations (if the quote is necessary to facilitate the purchase) to the PO.
If the invoice differs substantially from the purchase order, the ordering Department may be required to review and approve the invoice for payment. No payment will be made on any invoice until all goods and/or services billed have been received.
Commented [SJ27]: When required by the vendor.
Commented [JM28R27]: I concur
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5.2 Disposal of Surplus Property
Surplus property is anything and everything that is owned by the City, is tangible, movable (not permanently affixed) and considered either obsolete or of no further use to the City in the foreseeable future. City Resolution 3760 defines the procedures to legally surplus property, however, property purchased with federal funds must follow the procedures established by the awarding agency.
5.3 Capital Outlay – Fixed Assets
Contact the Finance Department for additional assistance.
A fixed asset is a specific piece of real or personal property which meets all of the following characteristics: • Unit cost of $20,000 or more, including tax, set-up and freight • Infrastructure project costs of $100,000 or more. (Infrastructure assets include roads; bridges; water and sewer systems; drainage systems; lighting systems; and would include a pump house or lift station but would not include a water reservoir or the treatment plant.) • Tangible in nature, possesses physical substance • Expected useful life of greater than five years
Inventories, spare parts and maintenance activities will not be considered a capital outlay for financial purposes.
Each department shall keep a list and monitor the small and attractive items they purchase. Small and attractive items include cameras, portable computing equipment, high value tools, etc. The department shall ensure that the items listed are inventoried annually and reasonable action taken should any items be missing.
When entering a requisition for capital purchases please keep this in mind when selecting the appropriate BARS number to be used.
5.4 Credit Card Policy
City credit cards will be obtained by the Finance Director and distributed to each Department Director and one designated employee within the Department to use for City purchases. Cards are requested using the Cardholder Data Collection Form provided by Umpqua Bank. The form is filled out and signed by the designated employee and Human Resources before given to the Accounts Payable technician. The AP Tech uses the form to request a new cardholder on the credit card company’s website, and once complete, a new card for the employee is mailed to the City within the next 2 weeks. Credit limits are determined by Department Directors.
City employees use their credit cards in accordance with the guidelines above. (see 2.1) Employees must receive approval before a purchase is made. City employees wishing to use the City credit card for purchases will contact the designated individual within the department and give the name of the vendor, the estimated amount of the purchase and a description of the purchase being made. The transaction will then be entered into a log for ease of reconciliation of the account statement.
Receipts are submitted to the department manager for account coding. Once the receipt has been coded, it is given to the administrative assistant for their department who will reconcile the receipts with the monthly statement. When the monthly statement is received by the department, reconciliation must be performed immediately, and all documents forwarded to the Finance Department. Timely payment of the credit card bill is imperative. The individual card holder statements are entered into the financial system, Innoprise, as a “Wire Invoice” and then submitted to Accounts Payable for a final audit and approval. The Accounts Payable Technician makes the master statement payments on the credit card providers website electronically on the due date each month. The entry of the individual statements into the system ensures that the system balances with the bank.
Authorized uses of the City’s credit cards are: hotel room deposits to hold rooms for authorized official travel on City business; equipment and supply vendors with which the City does not currently have an account, is not expected to have an account, or where the requirements of opening an account would delay a critical purchase or result in less beneficial terms; internet purchases.
Refer to the Purchasing Matrix at the beginning of this documents. Cash advances on the City credit card are prohibited.
Personal charges will not be made with a City credit card. Any charges that cannot be properly identified or which are not appropriate to City policies or regulations shall be paid immediately by the user of the card by cash, check or payroll deduction. Charges to be reimbursed shall include any interest and all other related charges made by the credit card company. Personal charges may be subject to disciplinary action, up to and including termination.
Commented [AW29]: I would like to implement updating of this policy. We need a centralized system for credit cards
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Common Acronyms, Terminology and References
The following terms are often used interchangeably and typically use these terms as described below:
Purchasing is the act, function, and responsibility for the acquisition of equipment, materials, supplies and services. The term describes the process of buying.
Procurement includes all functions that pertain to the acquisition, including description of requirements, selection and solicitation of sources, preparation and award of contract and all phases of contract administration.
Vendor is typically used when referring to a supplier, one who sells goods, materials, or supplies.
Contractor is typically used when referring to a construction or maintenance company. Can also apply to an individual or business having a contract with the City.
Consultant is typically used when working on a Professional Service Contract. The term means a person with education and/or experience which uniquely qualifies them to perform some specialized services.
Bid is an offer submitted by a contractor in response to an invitation to bid (ITB) or advertisement. Typically, bids result in contracts awarded to the lowest responsive, responsible bidder.
Quote is a statement of prices, terms of sale, and description of goods or services offered by a vendor to the City. Commonly used in more informal solicitations.
Proposal is the document submitted by the offeror in response to an RFP/Q. Proposals allow contract award based on factors other than cost and may result in negotiations.
Acronyms: SOQ – Statement of Qualifications; RFQ – Request for Qualifications; RFP – Request for Proposal; ITB – Invitation to Bid (Formal Bid); ITQ – Invitation to Quote (Small Works); MWDBE – Minority, Women, and Disadvantaged Business Enterprise; CFP – Capital Facilities Plan
Workstations are desktop computers, laptops, tablet PCs, etc. that is City owned.
Peripherals are all technology related hardware, such as printers, monitors, personal digital assistants (PDA), digital cameras, etc. that connect to or have the potential to connect to the City’s network and/or City workstations.
Users include, but is not limited to, city employees, volunteers and consultants who are authorized by the City to access the City’s electronic computing systems.
Reference Documents:
MRSC City Bidding Book: http://mrsc.org/Home/Publications.aspx This publication provides guidance to all cities/towns and is updated as the RCW’s change and has many useful examples. If use this book as guidance please make sure you are following requirements for the City of Moses Lake.
MRSC Contracting for Services: http://mrsc.org/Home/Publications.aspx This publication provides guidance on contracting for services. It includes guidance on selecting architectural and engineering consultants under chapter RCW 39.80 and on contracting for personal and purchased services
MRSC Small Works Roster Manual: http://mrsc.org/Home/Publications.aspx
MRSC Find Your Contracting Requirements: http://mrsc.org/Home/Research-Tools/Contracting-Requirements.aspx This tool helps local government officials in Washington State identify and understand their statutory legal requirements for purchasing and contracting.
DOT Local Agency Guidelines (LAG): http://www.wsdot.wa.gov/Publications/Manuals/M36-63.htm
2 CRF 200 provides guidance on federal purchases & cost principals.
If reviewing the RCW’s and WAC’s the City of Moses Lake is a Code City with a population >20,000.