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2015-08-17 Council Packet - Work Session
u A. Call to Order AGENDA KENAI CITY COUNCIL WORK SESSION AUGUST 17, 2015 6:00 P.M. — 8:00 P.M. KENAI CITY COUNCIL CHAMBERS 210 FIDALGO AVE., KENAI, AK 99611 http: / /www. kenai.city B. Introduction (Councilors Molloy & Knackstedt) C. Public Comment (limited to 3 minutes per individual) D. Review of Proposed Amendments to Kenai Municipal Code 7.15 — Purchases and Sales (Councilors Molloy & Knackstedt) E. Discussion of Kenai Municipal Code 7.15 — Purchases and Sales (City Manager) F. Council Discussion G. Public Comment (limited to 3 minutes per individual) H. Adjournment All meetings are open to the public and participation is encouraged. Agendas and supporting documents are posted on the City's website at www.ci.kenai.ak.us. For additional information, please contact the City Clerk's Office at 907 - 283 -8231. [PAGE LEFT BLANK INTENTIONALLY] Presented by Randy Daly Procurement Matters Proposed Improvements to the City of Kenai Procurements Currently the City of Kenai procurement code does not apply the definition of local consistently, lacks a strong definition of local, provides no accountability for illegal activities by suppliers, which leads to increased economic leakage and de- incentivizes Alaskan owned businesses from locating in Kenai. Language supporting Locally Owned Businesses will decrease costs over the long run, increase job growth, provide greater consumer choice ft increase income the city of Kenai. Why Local Less Economic Leakage According to research on comparative impact on local economies, locally owned companies are 64% more effective in creating economic effect for each dollar of revenue that occurs in that business when compared to local in name only companies. The assets of these small firms are, by definition, sited in the community and owned by people residing there. These local businesses comprise more than half the US economy by output and jobs. These businesses have maintained their share of US GDP since 1990. Moreover we know these businesses are the best job producers per dollar of investment or purchasing.' When a local company buys services in support of their operation such as legal, accounting, janitorial, and advertising those dollars are spent more often with other locally owned companies creating additional taxable events and income to the City of Kenai. Compare those same service purchases to a Multi- national company and you find those purchases happen outside the City, in other words those economic events have leaked out of Kenai, and the city loses the revenue they would have received if they occurred inside the city. And when it comes to creating jobs inside the City of Kenai. The cost of attracting jobs from an outside business was more than thirty times more expensive than the cost of incentivizing a local firm to hire one more worker.2 Local Ownership Import Substitution, LOIS for short. Local ownership means that working control of a business resides within a geographically defined community. And import substitution means that whenever it's cost - effective to produce goods and services locally, a community should do so. LOIS firms deliver these benefits more reliably, more sustainably than non -local alternatives do. That means our choices- as consumers, as investors, as entrepreneurs, as policymakers- can make a huge difference in how well our communities prosper. A smarter approach to economic development is to focus on local businesses because they generate the greatest benefits. Towns that recognize, that the better their entrepreneurs do the better the town will do, generally find themselves on a positive growth curve. Please see example 1. Local Preference Language Currently the City of Kenai defines local so broadly that any company with an address qualifies as local. Please see example 2 ' Peter Buffet z Corporate Attraction Study Lane County Oregon. Technology . Commitment . Integrity Page 3 of 63 Presented by Randy Daly Going beyond the previous example there is a t least one company in Kenai right now that rents space and a telephone number in City of Kenai but has no employees. What exactly is the benefit of designating such companies as local? Why should it matter exactly who owns a business? Please see example 3 An appropriate definition of local might include language such as, "Locally owned businesses are those with a majority of owners living in the same geographic community where the business is based." Dollar Amounts of Preference Currently the City of Kenai has an arbitrary cap on the dollar amount of purchases that a local preference can be applied to. This practices creates questions. Where did these arbitrary numbers come from? What percentage of procurements do they represent? How effective is our city at doing business with local companies? Why doesn't a local preference matter after $25,000.00? Why not keep the $1,250.00 preference in place on larger orders? Former City Councilman Duane Bannock advocated for, 'local preference accumulated below $25,000.00 to be left on procurements above $25,000.00." Mr. Bannock expanded on the idea saying, "that remains correct today (08.10.2015), If there is need for a limit it should be at least $1,000,000.00." Local Preference should not apply to only one industry. Currently the City of Kenai allows local preference for only one class of procurements, construction. Why not apply local preference to all business classes? Why would Kenai give preference to an industry that could easily pull up stakes and leave? Consider CONAM, it was considered local while housed at KPEDD but not once it moved. Was it ever really local? No the location was and is controlled by an office in another city, a big business. Big businesses are no longer the significant job creators in the US. In fact, once these businesses become publicly traded they are rewarded by investors when they cut jobs in the name of efficiency. The main source of job creation, from this perspective, are startups and existing small and medium businesses.; For an example of Local performance we can look at Data show that community banks have done a better job serving their local loan needs... Community banks, as a whole, increased their total loans by about 2 percent, as compared to a 6 percent decline for larger banks... And in bad times... Business lending in particular stands out, with community banks Loans dropping by 3 percent as compared with 21 percent decline for larger banks.' Accountability Currently Kenai has no enforced consequences for bad actors in the economy. Please see example 4 Conclusion Language supporting Locally Owned Businesses will decrease costs over the long run, increase job growth, increase income the city and provide greater consumer choice. 3 Lou Stein, Valley Ventures, Upper Ohio Valley. 4 Thomas Hoenig, President, Federal Reserve Bank of Kansas City. Technology . Commitment . Integrity Page 4 of 63 Presented by Randy Daly Example 1: Larry Semmens, former finance manager at the City of Kenai quoted the IT hardware budget at $50,000.00 annually. Predominantly the city purchased computers from Dell or Dell's authorized government reseller such as GCSIT, and this has been doing so for 20 years. So if we take: $50,000.00 x 20 years = $1,000,000.00 For the City of Kenai's million dollar investment in Dell and its suppliers the city received: Zero job growth Dell and GCSIT do not have employees residing in the City of Kenai. Zero business growth Dell, GCSIT, North Tech Group do not have a business location in the City of Kenai. Zero Sales Tax revenue Dell, GCSIT, North Tech Group do not have a business location in the City of Kenai. Zero Property Tax revenue Dell, GCSIT, North Tech Group do not have a business location in the City of Kenai. Simply by selecting a different brand, one available from a locally owned business the city would have plugged the economic leakage of well over $1,000,000.00. And benefitted from spending by the locally owned business to fulfill orders to the city. Example 2: Ultimately the problem with the City of Kenai's local preference. The city cannot tell the difference between Multi - nationals which create economic leakage and locally owned companies that maximize economic multipliers. Let's compare vendors in the City of Kenai market, Konica Minolta is a twelve year old corporation form New York that is a wholly owned subsidiary of the Chinese corporation Konica Minolta Holdings whose majority shareholder is the Chinese's National Bank a government controlled entity, and HiSpeed Gear Inc. an Alaskan corporation headquartered in the City of Kenai in its 18th year of business. This and the following are screen shots are from the SOA web site, things you should notice about you'll notice this entity: Home State: New York Mailing Address: Ramsey, New Jersey Physical Address: Ramsey, New Jersey Page 5 of 63 Presented by Randy Daly W f, StoteotAlasku myAlaska My Government Resident 111. n. ssin Alaska Visiting Alaska State Employees ■ Stdeof Alaska > Commerce > CUPL > C0q,omtonssearen Name Information Percent Owned Search and Database Downlo ad T1 N A,,AE(S) Information BRIAN CUPKA Director, Secretary Privacy Polcy _ ype DONALD WARWICK _ Name Refund Policy Legal Name KONICA MINOLTA BUSINESS SOLUTIONS USA INC 1 Search License Data Lpreyious Legal Name I Minolta Corporation . COmoatiocs Emlbes ENTITY DETAILS oRculs Agent Entity Type: Business Corporation . Business Licenses Tobacco Endorsements Entity #: 59123F Professional ucenses Status: Good Standing • searm x, secimns tName ontvl Data Downloads AK Formed Date: 9/1311996 . corporations Download Duration /Expiration: Perpetual . Officials Download Home State: NEW YORK Agents Download Next Biennial Report Due: 1/2/2016 . Business License Download . Tobacco Endorsement Entity Mailing Address: 100 WILLIAMS DRIVE, RAMSEY, NJ 07446 Download Proresstonal ucense odarncad Entity Physical Address: 100 WILLIAMS DRIVE, RAMSEY, NJ 07446 . GuldeDSeAmaDamloao REGISTERED AGENT Agent Name: PRENTICE -HALL CORPORATION SYSTEM, INC. Registered Mailing Address: 9360 Glacier Hwy Ste 202, JUNEAU, AK 99801 Registered Physical Address: 9360 Glacier Hwy Ste 202, JUNEAU, AK 99801 OFFICIALS ❑ Show Former AK Entity# Name Titles Percent Owned ALAN NIELSEN Director BRIAN CUPKA Director, Secretary DONALD WARWICK Director HIROSHI OKAZAKI Director Note: None of the company's directors are residents of the State of Alaska, Kenai Peninsula Borough, or the City of Kenai. Now Compare KM to this screen shot for HiSped Gear Inc. Home State: Alaska Mailing Address: Kenai, Alaska Physical Address: Kenai, Alaska Not only is HSG local but the representative firm is local. The question to ask is which one is more beneficial to the City of Kenai and the answer supported by years of research and many, many books Page 6 of 63 Presented by Randy Daly (please refer to the bibliography) is the company with local ownership. Also 100% of the ownership of HSG resides in the City of Kenai. 0 P, SteteidAtoska myAlaska My Government Resident Business in Alaska Ysinn9Alaska State Employees a Staleol Alaska > Commerce > CBPL Information • Search and Daaoase Dnxnoad Inbrmat:on • Pmacy Polity • Rebno Pol:cy Search License Data • Cbmoranons • Entues Mla!s Agents • eusmess Lcenses • Tobacco EMorsemenls • Plo!esNdwl Lkemes • SearchMSeclipns(Nameonin Data Downloads • Cotpaatans Do Wd • Oldclals Download • Agents Dcwnbad • Bus ness License Dwm cad • Tobacco Endorsement Dre nload • PraY' N lLRense Dsenkad • Gude Use A em Dowmoaci NAME(S) Type Name Legal Name HISPEED GEAR, INC EN= DETAILS Entity Type: Business corporation Entity #: 84311D Status: Good Standing AK Formed Date: 12129/2003 Duration/Expiration: Perpetual Home State: ALASKA Next Biennial Report Due: 11212017 Entity Mailing Address: 610 ATTLA WAY, SUITE 2, KENAI, AK 99611 Entity Physical Address: 610 ATTIA WAY, SUITE 2, KENAI, AK 99611 REGISTERED AGENT Agent Name: BLAINE D GILMAN Registered Mailing Address: 130 N WILLOW STE 5, KENAI, AK 99611 Registered Physical Address: 138 N WILLOW STE 5, KENAI, AK 99611 OFFICLAI.S AKEntitol Name I Tales Green VMS MARY DALY I Director, President RANDY DALY I Director, Secretary, Treasurer FILED DOCUMENTS Date Filed I Type I Filing I Certificate ❑ Show Former The company with local ownership has also provided the lowest cost of hardware and operation the last several times the city has bought copiers, unfortunately the multi - national received the business and the revisions proposed in the draft provided do nothing to changes these outcomes. Page 7 of 63 Presented by Randy Daly Example 3: Developing a methodology for measuring the true local economic impact of business of all sizes. To truly measure the impact of Locally Owned Businesses versus the local operation of a Multi- national it is important to eliminate as much product differentiation the following focuses on commodity office supplies in the Phoenix market. Four factors: Labor: Profit: 1) Labor Costs, which directly inject money into the local economy through payments of wages and benefits to local residents; 2) Profits, which remain in the community in proportion to local ownership; 3) Local Procurement of goods and services for resale and operations; and 4) Charitable Giving, when local firms contribute a greater share of revenues to local causes. In previous studies, local businesses were found to spend a larger percentage of revenue on labor and this was no exception. Wist provides greater employment wages and benefits through two channels. The first is that the entire management and administrative operation is employed by Wist and located in their Tempe headquarters. While Office Max may have a small locally based management team, most of the management team is located in Naperville, Illinois at their headquarters. Another major advantage is that the customer service and sales force for Wist are all located in the Phoenix area. Office Max operates six regional call centers throughout the country. An order placed from central Phoenix for delivery to the region may well be serviced by sales and administrative personnel in Columbus, Ohio, who, of course, spend their paychecks outside Arizona. Civic Economics made no attempt to compare wage and benefit rates on an hourly or per employee basis, only total wages and benefits paid locally. The profits earned by Wist remain in the Phoenix area. Whether these profits are used by the firm's owners to buy retail goods or real estate, give to preferred causes, or even rest in a savings account, it is a good bet that this money resides somewhere in the community and gets recirculated as it is spent or invested. Office Max, as a publicly held corporation, distributes profits to investors throughout the world. Of course, some of these investors are located in the Phoenix region, but that represents an incalculably small portion of the total profit. Procurement: Wist Office Products also has an advantage over Office Max when it comes to retaining Phoenix - based companies to provide administrative services that Wist does not do internally. These include such expenditures as accounting, legal, and marketing work. Wist also has a budget for marketing in local media outlets. Office Max, as a national chain, needs not contract for such services in each market area. Rather, these services are provided in -house or contracted for through corporate headquarters in the Chicago area. Technology . Commitment . Integrity Page 8 of 63 Charity: Presented by Randy Daly Even though this represents a small dollar advantage for Wist Office Products relative to Office Max, they are proud of their contributions to a wide range of local causes during the past year. As with other locally -owned businesses, Wist's owners and managers are invested in the community and are thus more likely to donate to these types of causes in their community. When taking these factors into account the results are striking. Preliminary Findings: Wist Office Products recirculates 18.96% of their revenue in the local economy whereas Office Max Contract recirculates only 11.56%. Wist, based on these figures, produces 64% greater local economic impact per dollar of revenue than Office Max. However, these values tell only part of the story,' Or to say it another way, according to SustainableConnections.org, Several studies have shown that when you buy from an independent, locally owned business, rather than nationally owned businesses, significantly more of your money is used to make purchases from other local businesses — continuing to strengthen the economic base of the community. Not only are you investing in your own city, but you're also reducing your individual environmental footprint, creating jobs, and putting your tax dollars to good use. Putting that into dollars and cents, Businessweek reported 'for every $100 spent at a locally owned store, $45 remains in the local economy, compared with about $13 per $100 spent at a big box store." Observation: While this study might be used simply to praise locally owned and similarly situated local suppliers of other lines of goods or in other communities, Civic Economics believes that it provides... ...a strong economic rationale for reevaluating procurement policies and screening bidders with an eye toward enhancing the local or regional economy at no additional cost to the purchaser. Conventional procurement policy focuses on price and service considerations alone, and the data provided for this analysis indicates that locally owned companies are highly competitive, if not superior, on both fronts. However, these findings suggest that firms and institutions with long -term investments in a given community might benefit from giving additional consideration to the enhanced economic impact of truly local firms. ' Procurement Matters: The economics of Local Suppliers, 2007 6 Business week Article: 4 Things to Remember Every Time You Shop for Clothes, Shannon Whitehead in Sustainable Fashion Technology . Commitment . Integrity Page 9 of 63 Presented by Randy Daly An example of a policy that does not address the added benefit of locally owned companies or the degrees of locality Three degrees of Locality: TRUELOCAL Wist Office Products is a solid example of the true local supplier. The company maintains all operations in the Phoenix area, including warehouse, distribution, and administration. All Wist employees reside in the region. All Wist property resides locally. All Wist owners reside in the region. And all Wist charitable contributions are made in the region. At the conclusion of a given transaction, nearly 35% of associated revenue remains in the local economy. PAPER LOCAL Office Max Contract and its national chain competitors, though, highlight another degree of locality. While Office Max maintains a warehouse and small staff in the region, Staples maintains only a small sales force in the area. Of the revenues that pass through the local distribution center of Office Max, 11.6% will remain in the local economy after a given transaction concludes. The same contract through Staples yields only the most nominal local economic activity associated with some portion of one day for a delivery driver and vehicle. OTHERS However, recent years have seen an increase in the paper local supplier. These firms will have a local owner and a local address and may even qualify under one or more disadvantaged business programs for public procurement. The false local, though, maintains no warehouse or distribution operation and only the most minimal administrative organization. In reality, these firms are merely agents for national suppliers. Transactions originated through these firms are administered and satisfied by the larger, non -local supplier with only a commission or other fee paid to the local shell. Fortunately, procurement officials will be able to identify these false local suppliers with even a most cursory review. Conclusion: Researchers, including Civic Economics, have in recent years developed a better understanding of the economics of local retail and service provision. The premise that locally -owned and operated businesses generate greater local economic activity than their chain counterparts has become widely understood and accepted. In communities across the nation and abroad, public policy has adapted to this reality through a variety of planning and zoning tools. Even more widespread is the consumer - driven "buy local" movement. In the Phoenix area, Local First Arizona is among the leaders in this movement, with hundreds of participating businesses and supportive individuals uniting behind a marketing campaign to allow concerned citizens to support those firms that make Phoenix special. Despite the widespread consensus that local retail firms promote strong local economies, there has been little research into the economics of local contract procurement even as national firms have entered every market in America. Prior to this study, neither Civic Economics nor any other research organization could put a dollar value to the impact of traditional local suppliers like Wist. Now, with the release of this study, Technology . Commitment . Integrity Page 10 of 63 Presented by Randy Daly the answer is clear. Local suppliers generate dramatically greater economic activity than their chain competitors. In the case at hand, using the most locally invested of the national chain suppliers, one with a sizeable physical presence in the Phoenix area, the local firm generates nearly three times the economic impact. Example 4: In 2008 New York found Dell guilty of fraud against consumers .7 The City of Kenai did nothing. In 2010 the SEC fines Dell Inc, Mike Dell and Officers for fraud against investors. 8 The City of Kenai does nothing. Recently Konica Minolta fell so far behind on tax payments that they were published in the delinquent tax rolls assembled by the Kenai Peninsula Borough and reported by the Peninsula Clarion, not only did the City of Kenai do nothing they awarded placement of S new copiers later that same year, and blocked competition from locally owned companies. Bibliography: Books: Boomtown USA; The 7 1/2 Keys to Big Success in Small Towns. Jack Shultz / Niop Big Box Swindle; The True Cost of Mega- Retailers and the Fight for America's Independent Business Stacy Mitchell / Beacon Local Dollars. Local Sense; How to Shift Your Money from Wall Street to Main Street. Michael H. Shuman / Chelsea Green Slow Democracy; Rediscovering Community Brining Decision Making Back Home. Susan Clark Et Woden Teachout / Chelsea Green 7 Nancy Gohring , IDG News Service, May 281h 2008 8 Edward D. Hess, Forbes, July 22nd 2010 Technology . Commitment . Integrity Page 11 of 63 Studies Presented by Randy Daly The Local Economy Solution; How Innovation, Self - Financing "Pollinator" Enterprise can Grow Jobs and Prosperity. Michael H. Shuman / Chelsea Green The Small -Mart Revolution; How Local Businesses are beating The Global Competition. Michael H. Schuman / Berrett Koehler Up Against the Wal- Marts; How Your Business Can Prosper in the Shadow of Retails Giants Don Taylor 8 Jeanne Smalling Archer / Amacom Procurement Matters: The Economic Impact of Local Suppliers 2007 Procurement Matters: The Economic Impact of Local Suppliers 2012 Civic Economics / Civic Economics Page 12 of 63 'Villaye with a Past, Gc*� with a Future 'VIII► 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 19 Telephone: 907 - 283 -7535 / FAX: 907 - 283 -3014 MEMORANDUM TO: Mayor Porter, City Council Members, Student Representative FROM: Council Members Knackstedt & Molloy DATE: July 8, 2015 SUBJECT: Ordinance No. DRAFT - 2015 Repealing & Re- Enacting Purchasing Code, Etc. The City's purchasing code, (found in Kenai Municipal Code Chapter 7.15- Purchases and Sales), has not been significantly reviewed and revised in at least ten years. In January, 2015, we embarked on a review process which resulted in a draft ordinance that proposes to reorganize this chapter, expand public solicitation requirements, redefine professional services, provide an appeals process, and make other material and housekeeping changes, all by repealing the existing chapter and re- enacting it as a new chapter. During our review, we considered code from the Borough, the City of Soldotna, other municipalities, and the State of Alaska, and received recommendations from the City Administration (some of the Administration's recommendations, but not all, are included in the draft). We think it best to begin with a work session on the draft ordinance rather than by presenting this ordinance for introduction and then scheduling a work session. We ask the City Council to schedule a work session on this draft ordinance for August, 2015. We think that this work session would be two (2) hours or less, and we have some ideas for the format of this work session to discuss with you at our July 15`h regular meeting. Following the work session, we plan to submit a revised ordinance for introduction. Council final action and vote can be as late as the October 21, 2015 regular meeting, provided that the revised ordinance is not on the list of tabled and pending items. I We respectfully request your support in scheduling a work session on this draft ordinance for August, 2015. 1 KMC LI5.050(e) provides that the list of tabled and pending items "shall be stricken at the end of the meeting at which the certification of a regular election" takes place. It is our understanding that the City Clerk expects the certification of the October 6"h City election to take place at the October 21'` meeting, so final Council action and vote could be as late as the October 21" meeting. Page 13 of 63 [PAGE LEFT BLANK INTENTIONALLY] Page 14 of 63 "'Villaye with a Past, Git with a Future" 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 Telephone: 907 - 283 -75351 FAX: 907 - 283 -3014 MEMORANDUM TO: Council Members Molloy and Knackstedt FROM: City Attorney, Scott Bloom DATE: July 8, 2015 SUBJECT: Sectional Analysis of DRAFT KMC 7.15 Purchases & Sales Ordinance This memo will outline the major changes between the proposed rewrite of KMC CHAPTER 7.15 and the existing code section: 1. The majority of the definitions, including the definition of "Contractual services" in existing KMC 7.15.010 — "Contractual services" defined, are moved to a definitions section in the proposed KMC 7.15.130 - Definitions, for organizational purposes. A new definition of "Professional Services" is provided that is more in line with other municipal definitions and the State's definition. This new definition excludes management services, which are currently included as a professional service. 2. Existing KMC 7.15.020 has the ambiguous title "Made by whom" and has been renumbered as 7.15.010 and titled "Purchase Authority." The new section also clarifies the types of purchases that can be made and who has authority to make them. 3. Existing KMC 7.15.030 - When prior approval by Council is required, is renumbered and renamed as KMC 7.15.020 - Purchases Requiring Council Approval and is otherwise similar. 4. Proposed KMC 7.15.030 - Informal Purchasing for Minor Purchases, is a new code section defining how minor purchases are made. This is similar to the current City Manager's policy, but has not previously been codified. 5. Existing KMC 7.15.040 - Competitive bidding, is renamed "Competitive Bidding for Large Purchases." The new section clearly requires an open advertised bid in all cases, whereas the existing section allows for a process utilizing a minimum of three quotes or an open bid process. 6. Existing KMC 7.15.045 - Local preferences, is renumbered as 7.15.080. The new section adds a local preference for purchases of $15,000 or greater, but less than $25,000, under new KMC 7.15.030(a)(3), removes the definition of "Local Bidder" to the new definitions section, and is otherwise unchanged. Page 15 of 63 Page 2 of 2 7. Existing KMC 7.15.050 - Purchases, when competitive bidding not required, has been moved to KMC 7.15.070 - Innovative Procurement and Other Exceptions, subsection (b). It removes the exception for purchases of $25,000 or less and professional services, but is otherwise mostly consistent with the existing code section. 8. Existing KMC 7.15.055 - Competitive sealed proposals for construction, is renumbered as KMC 7.15.050, for organizational purposes, but is otherwise materially the same as the existing code section. 9. The proposed KMC 7.15.060 - Procurement for Professional Services, is a new section that requires an open competitive process for solicitation of professional services for services of $10,000 or more. The new code section also provides a process for procuring professional services. An exception is provided for procurement of legal services. 10. The proposed new KMC 7.15.070 - Innovative Procurement and Other Exceptions, mentioned above, incorporates the exceptions to competitive bidding above and also mirrors the Kenai Peninsula Borough's process for innovative procurement methods that are in the City's best interest. This process requires a written communication to Council that an innovative procurement method is in the City's best interest based on new or unique requirements of the City, new technologies or to achieve best value. Specific requirements contained in subsections (1) and (2) of this new code section are required to utilize innovative procurement methods. 11. Existing KMC 7.15.060 - Sales, surplus, competitive bidding, is renumbered as KMC 7.15.090, but otherwise is largely the same. 12. Existing KMC 7.15.080 - Telephone polls— Authority, procedure, recordation, is deleted in its entirety in the proposed ordinance, as it is a process no longer utilized by the City and is inconsistent with modern practices. 13. Existing KMC 7.15.090 - Purchases and sales— Certain City officers, is renumbered as KMC 7.15.100, but is otherwise largely the same. 14. Existing KMC 7.15.100 - Setting fee schedules, is removed in its entirety from KMC Chapter 7.15 - Purchases and Sales, and put in KMC Chapter 7.25 - City Budget, (KMC 7.25.120) where it fits more appropriately. No other material changes are made to the code section. 15. Existing KMC 7.15.110 - Tax compliance, is renumbered to KMC 7.15.110, but is otherwise materially the same. 16. New proposed KMC 7.15.120 - Appeal Procedure, provides an appeals process for bid and proposal protests. It provides specific timelines for filing and responding to protest as well as procedures. It allows for appeals to go to the City Manager and then to Superior Court. Page 16 of 63 Sponsored by: Council Members Molloy and Knackstedt CITY OF KENAI ORDINANCE NO. *DRAFT* -2015 AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, REPEALING AND REENACTING KENAI MUNICIPAL CODE CHAPTER 7.15 - PURCHASES AND SALES, TO EXPAND PUBLIC SOLICITATION REQUIREMENTS, REDEFINE PROFESSIONAL SERVICES, REORGANIZE THE CHAPTER, PROVIDE AN APPEALS PROCESS, AND MAKE OTHER MATERIAL AND HOUSEKEEPING CHANGES AND AMENDING CHAPTER 7.25 -CITY BUDGET, TO INCLUDE ?SETTING FEE SCHEDULES. WHEREAS, Kenai Municipal Code Chapter 7.15 - Purchases and Sales, determines the City's process for procuring goods and services as well as sales of surplus items; and, WHEREAS, the Chapter has not been significantly reviewed and revised in at least ten years and is in need of review and revisions; and, WHEREAS, formalizing the process for purchasing services and supplies for less than $25,000 provides for standardized purchasing methodology; and, WHEREAS, requiring a competitive process for soliciting professional services over $25,000 provides a fair process open to all qualified proposers; and, WHEREAS, eliminating former KMC 7.15.080- Telephone polls - Authority, procedure, recordation, is appropriate as it is no longer a utilized process and is inconsistent with other requirements of code; and, WHEREAS, moving KMC 7.15.100-Setting fee schedules, to KMC Chapter 7.25 -City Budget, is appropriate as it is not a topic consistent with the intent and purpose of the chapter dealing with purchases and is consistent with the budget process; and, WHEREAS, codifying an appeals process for bids and proposals provides consistency and fairness to the City and the public; and, WHEREAS, providing a new definition for professional services that is more consistent with other municipal and state definitions is in the City's best interest; and WHEREAS, making other housekeeping and organizational changes to the Chapter will make it easier to use and understand. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, as follows: Section 1. Form: That this is a code ordinance. Page 17 of 63 Ordinance No. *DRAFT* -2015 Page 2 of 20 Section 2. Amendment of Chapter 7.15 of the Kenai Municipal Code: That Kenai Municipal Code, Chapter 7.15 - Purchases and Sales, is hereby amended as follows: [7.15.010 "CONTRACTUAL SERVICES" DEFINED. CONTRACTUAL SERVICES," FOR THE PURPOSE OF THIS CHAPTER, SHALL MEAN SERVICES PERFORMED FOR THE CITY BY PERSONS NOT IN THE EMPLOYMENT OF THE CITY, AND MAY INCLUDE THE USE OF EQUIPMENT OR THE FURNISHING OF COMMODITIES IN CONNECTION WITH SAID SERVICES UNDER EXPRESS OR IMPLIED CONTRACT. CONTRACTUAL SERVICES SHALL INCLUDE: TRAVEL, FREIGHT, EXPRESS, PARCEL POST, POSTAGE, TELEPHONE, TELEGRAPH, UTILITIES, RENTS, PRINTING AND BINDING, REPAIRS, ALTERATIONS, AND MAINTENANCE OF BUILDINGS, EQUIPMENT, STREETS, BRIDGES, AND OTHER PHYSICAL FACILITIES OF THE CITY, AND OTHER SERVIS PERFORMED FOR THE CITY BY PERSONS NOT IN THE EMPLOYMENT OF THE 7.15.020 MADE BY WHOM. ALL PURCHASES OF SUPPLIES, ATERIAL EQUIPMENT, AND CONTRACTUAL SERVICES FOR THE OFFIC DEPARTMENT , AND AGENCIES OF THE CITY GOVERNMENT SHALL BE MADE BY THE CITY ADMINISTRATOR OR BY OTHER CITY PERSONNEL IN ACCO NCEWITH PURCHASE AUTHORIZATIONS ISSUED BY THE CITY ADMINISTRATOI�� ;"i° 7.15.030 WHEN PRIOR APPROVAL BY COUNCIL IS REQUIRED. (A) EVERY CONTRACT FOR, OR PURCHASE OF, FIFTEEN THOUSAND DOLLARS ($15,000.00) OR MORE OF`SUPPLIES, MATERIALS, EQUIPMENT, OR CONTRACTUAL SERVICES SHALL REQLE THE PRIOR APPROVAL OF THE COUNCIL. THE ONLY EXCEPTIONS WILL BE: (1) UTILITIES BILLS (ELECTRICITY, GAS, FUEL, AND TELEPHONE); (2) CITY'S ROUTINE INVESTMENT PURCHASING; (3) MONTHLY PAYMENTS FOR PAYROLL DEDUCTIONS (I.E., INCOME TAX, F.I.C.A., RETIREMENT, AND FRINGE BENEFITS), INCLUDING BOTH EMPLOYER'S AND EMPLOYEE'S SHARE; (4)AUTHORIZED DEBT; (5) MONTHLY CONTRACTED JANITORIAL SERVICE. (B) ALL SUCH EXCEPTIONS WILL BE PAID WHEN THEY FALL DUE AND PAYMENTS WILL BE RATIFIED BY COUNCIL AT THE NEXT REGULAR COUNCIL MEETING. 7.15.040 COMPETITIVE BIDDING. (A) BEFORE ANY PURCHASE OF, OR CONTRACT FOR, SUPPLIES, MATERIALS, EQUIPMENT, OR CONTRACTUAL SERVICES ARE MADE, THE CITY PURCHASING AUTHORITY SHALL SUBMIT TO AT LEAST THREE (3) PERSONS, FIRMS, OR New Text Underlined; [DELETED TEXT BRACKETED] Page 18 of 63 Ordinance No. *DRAFT* -2015 Page 3 of 20 CORPORATIONS DEALING IN AND ABLE TO SUPPLY THE SAME, OR TO A SMALLER NUMBER IF THERE ARE NOT THREE DEALING IN AND ABLE TO SUPPLY THE SAME, A REQUEST FOR QUOTATION (OR INVITATION TO BID) AND SPECIFICATIONS TO GIVE THEM OPPORTUNITY TO BID; AND /OR PUBLISH NOTICE OF THE PROPOSED PURCHASE IN A NEWSPAPER OF GENERAL CIRCULATION WITHIN THE CITY. (B) THE PURCHASE OF, OR CONTRACT FOR, SUPPLIES, MATERIALS, EQUIPMENT, OR CONTRACTUAL SERVICES SUBJECT TO SUBSECTION (A), SHALL BE AWARDED TO THE MOST RESPONSIBLE BIDDER PURSUANT TO SUBSECTION (F). (C) WHEN SUCH PURCHASES ARE TO BE MADE FROM FEDERAL OR STATE GRANT FUNDS, ANY AND ALL CONDITIONS, PROVISIONS, OR REQUIREMENTS WHICH MAY BE NECESSARY TO COMPLY WITH TH QUISITE FEDERAL OR STATE LAWS, RULES, OR REGULATIONS WITH REIS TO SUCH GRANTS MAY BE INSERTED IN THE BID AND CONTRACT DOCUMENWILL BE COMPLIED WITHIN THE AWARD OF THE BID FOR SUCH PU HASES. (D) ALL BIDS SHALL BE SEALED AND LE OPE D IN PUBLIC AT A DESIGNATED TIME AND PLACE. (E) THE PURCHASING AUTHORITY MAY REPEATEDLY REJECT ALL BIDS AND AGAIN MAY SUBMIT TO THE S` �OR OTHER PERSONS, FIRMS, OR CORPORATIONS THE REQUEST FOR Q T LION (OR INVITATION TO BID) AND /OR AGAIN PUBLISH NOTICE OF THE PROPO PURCHASE. (F) THE CITY PURCHASING AUTHORI SHALL PURCHASE FROM THE LOWEST RESPONSIBLE BIDDER, BASING A DETERMINATION ON RESPONSIBILITY OF THE BIDDER ON THE FOLLOWING FACTORS: ADHERENCE TO THE BID SPECIFICATIONS, QUALITY, PROPOSED TERMS OF DELIVERY, ANY ADDITIONAL COST TO THE CITY THAT WOU)* BE INCURRED DUE TO LOCATION OF THE BIDDER, PERFOibWCE RECORD, FINANCIAL CAPABILITY, AND COMPLIANCE WITH CONDITIONS 'IMPOSED IN THE SOLICITATION FOR BIDS. IF AFTER CONSIDERATION OF THE BIDS, BIDDER RESPONSIBILITY, THE PURCHASING AUTHORITY DETERMINES THAT TWO (2) OR MORE BIDDERS ARE EQUALLY COMPETITIVE, HE OR SHE MAY PURCHASE FROM ONE SUCH BIDDER OR MAY DIVIDE THE PURCHASE AMONG THEM, BUT ALWAYS ACCEPTING THE BID OR BIDS MOST ADVANTAGEOUS TO THE CITY. 7.15.045 LOCAL PREFERENCES. (A) IN AWARDING COMPETITIVE BID PURCHASES OR CONSTRUCTION CONTRACTS UNDER KMC 7.15.040, PREFERENCE MAY BE GIVEN TO AN OTHERWISE QUALIFIED "LOCAL BIDDER" UNLESS SUCH PREFERENCE IS PROHIBITED BY THE FUNDING SOURCE. (B) FOR PURPOSE OF THIS SECTION, A "LOCAL BIDDER" IS A PERSON WHO: New Text Underlined; [DELETED TEXT BRACKETED] Page 19 of 63 Ordinance No. *DRAFT* -2015 Page 4 of 20 (1) HOLDS A CURRENT STATE BUSINESS LICENSE, AND IN ADDITION FOR CONSTRUCTION CONTRACTS, HOLDS A CURRENT, APPROPRIATE STATE CONTRACTOR'S REGISTRATION CERTIFICATE; (2) SUBMITS A BID FOR A COMPETITIVE PURCHASE OR CONSTRUCTION CONTRACT UNDER THE NAME AS APPEARING ON THE PERSON'S LICENSE AND, WHERE APPLICABLE, A CERTIFICATE; (3) HAS CONTINUOUSLY MAINTAINED A PHYSICAL PLACE OF BUSINESS WITHIN THE KENAI PENINSULA BOROUGH STAFFED BY THE BIDDER OR AN EMPLOYEE OF THE BIDDER FOR A PERIOD OF ONE HUNDRED EIGHTY (180) DAYS IMMEDIATELY PRECEDING THE DATE OF THE BID OPENING. BIDDER MUST PROVE COMPLIANCE WITH THIS REQUIREMENT TO THE CITY'S SATISFACTION. MERE MAINTENANCE OF A MAIL BOX OR TELEPHONE ANSWERING SERVICE, FOR EXAMPLE, IS NUFFICIENT TO COMPLY WITH THIS PROVISION; AND (4) IF A JOINT VENTURE, IS COMPOSED ENTI Y OF VENTURERS THAT QUALIFY UNDER THIS SECTION. (C) AN AWARD SHALL BE MADE TO THE LOWEST R SPONSIBLE BIDDER PURSUANT TO KMC 7.15.040(F) OF THIS CHAPTER AS APPLICABLE, EXCEPT THAT A BID MAY BE AWARDED TO A LOCAL BIDDER IF THE LOCAL BIDDER'S BID IS NOT MORE THAN FIVE PERCENT (5 0/.� HIGHER THAN THE LOWEST RESPONSIBLE NON -LOCAL BIDDER'S BID; PROVIDED, HOWEVER, SUCH PREFERENCE SHALL NEVER EXCEED TWENTY -FIVE THOUSAND DOLLARS ($25,000.00), AND FURTHER PROVIDED THAT THE OTHER PROVISIONS OF KMC 7.15.040(F) OF THIS CHAPTER AS APPLICABLE, HAVE BEEN MET AND THE CITY CHOOSES TO AWARD THE BID. THIS PREFERENCE WILL NOT BE GRANTED WHERE THE CITY USES NON- COMPETITIVE PURING AS, PROVIDED IN KMC 7.15.050 OF THIS CHAPTER. 7.15.050 PURCH THE FOLLOWING COMPETITIVE BI] ITIVE BIDDING NOT REQUIRED. WITHOUT GIVING AN OPPORTUNITY FOR (A) SUPPLIES, MATERIALS, EQUIPMENT, OR CONTRACTUAL SERVICES WHOSE COST DOES NOT EXCEED TWENTY -FIVE THOUSAND DOLLARS ($25,000.00) IN A SINGLE TRANSACTION; (B) SUPPLIES, MATERIALS, EQUIPMENT, OR CONTRACTUAL SERVICES WHICH CAN BE FURNISHED ONLY BY A SINGLE DEALER OR WHICH HAS A UNIFORM PRICE WHEREVER BOUGHT; (C) SUPPLIES, MATERIALS, EQUIPMENT, OR CONTRACTUAL SERVICES PURCHASED FROM ANOTHER UNIT OF GOVERNMENT AT A PRICE DEEMED BELOW THAT OBTAINABLE FROM PRIVATE DEALERS, INCLUDING WAR SURPLUS; (D) CONTRACTUAL SERVICES PURCHASED FROM A PUBLIC UTILITY CORPORATION AT A PRICE OR RATE DETERMINED BY STATE OR OTHER GOVERNMENT AUTHORITY. New Text Underlined; [DELETED TEXT BRACKETED] Page 20 of 63 Ordinance No. *DRAFT* -2015 Page 5 of 20 (E) PROFESSIONAL SERVICES. PROFESSIONAL SERVICES MEANS THOSE ADVISORY, CONSULTING, ARCHITECTURAL, MANAGEMENT, ENGINEERING, RESEARCH OR DEVELOPMENT SERVICES THAT INVOLVE THE EXERCISE OF DISCRETION AND INDEPENDENT JUDGMENT TOGETHER WITH AN ADVANCED OR SPECIALIZED KNOWLEDGE, EXPERTISE OR TRAINING GAINED BY FORMAL STUDIES OR EXPERIENCE. EXAMPLES OF PROFESSIONAL SERVICES INCLUDE, BUT ARE NOT LIMITED TO, ACCOUNTANTS, ARCHITECTS, APPRAISERS, ENGINEERS, FACILITIES MANAGEMENT, LAND SURVEYORS, AUDITORS, MEDICAL SERVICES, FINANCIAL CONSULTANTS, ATTORNEYS, PLANNING CONSULTANTS, ECONOMISTS, COMPUTER PROGRAMMERS AND SYSTEM ANALYSTS, INSURANCE CONSULTANTS AND RISK ANALYSTS, INSURANCE PROVIDERS AND OTHER SPECIALIZED CONSULTANTS. (F) SUPPLIES, MATERIALS, EQUIPMENT OR NT1! CTUAL SERVICES PURCHASABLE UNDER THE CONTRACT OF ANOTHE VERNMENTAL AGENCY IN WHICH CONTRACT THE CITY IS AUTHORIZED TO P ATE. (G) (1) THE CITY MAY AWARD A CONTRACT FO UPPLIES, SERVICES, PROFESSIONAL SERVICES OR CONSTRUCTION WITHOUT PETITION, FORMAL ADVERTISING OR OTHER FORMAL PROCEDURE WHERE THE CITY MANAGER DETERMINES IN WRITING THAT AN EMERGENCY THREATENING THE PUBLIC HEALTH, SAFETY OR WELFARE REQ�#IRES THAT THE CONTRACT BE AWARDED WITHOUT DELAY. THE CITY MANAGER SHALL MAKE A REPORT ON SUCH CONTRACT TO THE COUNCIL NO LATER )VAN, THE NEXT REGULAR MEETING FOLLOWING AWARD OF THE CONTRACT (2) FOR PURPOSES OF THIS SUBSECTION, AN "EMERGENCY" IS DEFINED AS THE OCCURRENCE OR IMMINI�NT THREAT OF WIDESPREAD OR SEVERE DAMAGE, INJURY, LOSS OF LIFE OR PROPERTY, OR SHORTAGE OF FOOD, WATER, OR F `EL RESULTING FROM: (A) INCIDENT SUCH AS STORM, HIGH WATER, WIND - DRIVEN WATER, AL WAVE, TSUNAMI, EARTHQUAKE, VOLCANIC ERUPTION, LANDSLIDE, MUDSLIDE, AVALANCHE, SNOWSTORM, PROLONGED EXTREME COLD, DROUGHT, FIRE, FLOOD, EPIDEMIC, EXPLOSION OR RIOT; (B) THE RELEASE OF OIL OR A HAZARDOUS SUBSTANCE IF THE RELEASE REQUIRES PROMPT ACTION TO AVERT ENVIRONMENTAL DANGER OR MITIGATE ENVIRONMENTAL DAMAGE; (C) EQUIPMENT FAILURE IF THE FAILURE IS NOT A PREDICTABLY FREQUENT OR RECURRING EVENT OR PREVENTABLE BY ADEQUATE EQUIPMENT MAINTENANCE OR OPERATION; (D) ENEMY OR TERRORIST ATTACK OR A CREDIBLE THREAT OF IMMINENT ENEMY OR TERRORIST ATTACK IN OR AGAINST THE STATE THAT THE ADJUTANT GENERAL OF THE DEPARTMENT OF MILITARY AND VETERANS AFFAIRS OR A DESIGNEE OF THE ADJUTANT GENERAL, IN CONSULTATION WITH THE COMMISSIONER New Text Underlined; [DELETED TEXT BRACKETED] Page 21 of 63 Ordinance No. *DRAFT* -2015 Page 6 of 20 OF PUBLIC SAFETY OR A DESIGNEE OF THE COMMISSIONER OF PUBLIC SAFETY, CERTIFIES TO THE GOVERNOR HAS A HIGH PROBABILITY OF OCCURRING IN THE NEAR FUTURE; THE CERTIFICATION MUST MEET THE STANDARDS OF AS 26.20.040(C); IN THIS SUBSECTION, "ATTACK" HAS THE MEANING GIVEN UNDER AS 26.20.200; OR (E) AN OUTBREAK OF DISEASE OR A CREDIBLE THREAT OF AN IMMINENT OUTBREAK OF DISEASE THAT THE COMMISSIONER OF HEALTH AND SOCIAL SERVICES OR A DESIGNEE OF THE COMMISSIONER OF HEALTH AND SOCIAL SERVICES CERTIFIES TO THE GOVERNOR HAS A HIGH PROBABILITY OF OCCURRING IN THE NEAR FUTURE; THE CERTIFICATION MUST BE BASED ON SPECIFIC INFORMATION RECEIVED FROM LOCA 'j# STATE, FEDERAL, OR INTERNATIONAL AGENCY, OR AN0AffR SOURCE THAT THE COMMISSIONER OR THE DESIGNEE DIFEWINES IS RELIABLE. 7.15.055 COMPETITIVE SEALED PROPO R CONSTIRIPTION. (A) WHEN THE USE OF COMPETITIVE ELLEgrIDDING FOR CONSTRUCTION PROJECTS IS EITHER NOT PRACTICABLE ORIWDVANTAGEOUS TO THE CITY, A CONTRACT MAY BE ENTERED INT Y US F THE COMPETITIVE SEALED PROPOSALS METHOD. (B) PROPOSALS SHALL BE SOLICITE `,, O A REQUEST FOR PROPOSALS. (C) WHEN THE CITY COUNCIL DETERMINES THAT IT IS ADVANTAGEOUS TO THE CITY, THE CITY MAY ISSUE A REQUEST FOR PROPOSALS REQUESTING THE SUBMISSION OF OFFERS TO PROVIDE - CONSTRUCTION IN ACCORDANCE WITH A DESIGN PROVIDED BY THE OFFEROR. (D) ADEQUATE PUBLIC NOTICE OF THE REQUEST FOR PROPOSALS SHALL BE GIVEN IN THE SAME MANNER AS PROVIDED IN KMC 7.15.040(A), PROVIDED THE MINIMUM TIME SHALL BE THIRTY (30) CALENDAR DAYS. (E) A REGISTER OF PROPOSALS SHALL BE PREPARED CONTAINING THE NAME OF EACH OFFEROR, THE NUMBER OF MODIFICATIONS RECEIVED, IF ANY, AND A DESCRIPTION SUFFICIENT TO IDENTIFY THE ITEM OFFERED. (F) THE REQUEST FOR PROPOSALS SHALL STATE THE RELATIVE IMPORTANCE OF PRICE AND OTHER EVALUATION FACTORS. (G) AS PROVIDED IN THE REQUEST FOR PROPOSALS, DISCUSSIONS MAY BE CONDUCTED WITH RESPONSIBLE OFFERORS WHO SUBMIT PROPOSALS DETERMINED TO BE REASONABLY SUSCEPTIBLE OF BEING SELECTED FOR AWARD FOR THE PURPOSE OF CLARIFICATION TO ASSURE FULL UNDERSTANDING OF, AND CONFORMANCE TO, THE SOLICITATION REQUIREMENTS. OFFERORS SHALL BE ACCORDED FAIR AND EQUAL TREATMENT WITH RESPECT TO ANY OPPORTUNITY FOR DISCUSSION AND REVISION OF PROPOSALS AND SUCH REVISIONS MAY BE PERMITTED AFTER SUBMISSIONS New Text Underlined; [DELETED TEXT BRACKETED] Page 22 of 63 Ordinance No. *DRAFT* -2015 Page 7 of 20 AND PRIOR TO AWARD FOR THE PURPOSE OF OBTAINING BEST AND FINAL OFFERS. (H) AWARD SHALL BE MADE TO THE RESPONSIBLE OFFEROR WHOSE PROPOSAL IS DETERMINED IN WRITING TO BE THE MOST ADVANTAGEOUS TO THE CITY, TAKING INTO CONSIDERATION PRICE AND THE EVALUATION FACTORS SET FORTH IN THE REQUEST FOR PROPOSALS. NO OTHER FACTORS OR CRITERIA SHALL BE USED IN THE EVALUATION. THE CONTRACT FILE SHALL CONTAIN THE BASIS ON WHICH THE AWARD IS MADE. (I) PROPOSALS SHALL BE RECEIVED AT THE TIME AND PLACE DESIGNATED IN THE REQUEST FOR PROPOSALS, AND SHALL BE OPENED SO AS TO AVOID DISCLOSING THEIR CONTENTS TO COMPETING PROPONENTS DURING THE PROCESS OF NEGOTIATION. PROPOSALS SHALL BE OPEN TO PUBLIC INSPECTION ONLY AFTER THE CONTRACT AWARD. HOWEVER, 711E CITY SHALL ISSUE A NOTICE OF INTENT TO AWARD TO ALL RESPONDING PROPOSERS AT LEAST SEVEN (7) DAYS PRIOR TO COUNCIL APPROVAL. UP' UEST BY A COMPETING PRO)� PROPONENT, THE RECOMMENDED AWARDEF P6 SHALL BE OPENED FOR REVIEW. �� (Ord. 2022 -2003) 7.15.060 SALES, SURPLUS, COMPETftM- SIDDflW (A) EXCEPT AS PROVIDED IN SUBSECTION:*) NO SURPLUS OR OBSOLETE SUPPLIES, MATERIALS, OR EQUIPMENT MAY BE SOLD (EXCEPT BY TRADING IN ON OTHER GOODS OR SE ICES) UNTIL THE COUNCIL SHALL HAVE DECLARED THEM OBSOLETE OR SUI�US. BEFORE THE CITY ADMINISTRATOR SELLS ANY SURPLUS OR OBSOLETE SUPPLIES,` MATERIALS, OR EQUIPMENT, EXCEPT AS OTHERWISE PROVIDED IN THE NEXT SECTION, HE OR SHE SHALL ADVERTISE THEM FOR SALE IN A NEW15PAPER OF GENERAL CIRCULATION IN THE CITY OR GIVE NOTICE IN SUCH OTIJR MANNER AS HE OR SHE DEEMS NECESSARY ADEQUATELY TO REACH PR PECTIVE BUYERS TO GIVE THEM AN OPPORTUNITY TO MAKE BIDS. ALL BIDS SHALL BE SEALED AND SHALL BE OPENED IN PUBLIC AT A DESIGNATED TIME AND PLACE, EXCEPT WHEN THE SALE IS BY AUCTION OR BY AN INTERNET SALE PROCESS. (B) THE COUNCIL MAY BY RESOLUTION, INCLUDING SUCH TERMS AND CONDITIONS AS IT DEEMS APPROPRIATE, DECLARE AND AUTHORIZE SALE OF SURPLUS OR OBSOLETE SUPPLIES, MATERIALS OR EQUIPMENT BY A BROKER IF THE NATURE OF ITEMS IS SUCH THAT SALE BY BROKER IS IN THE BEST INTEREST OF THE CITY. THE CITY MANAGER SHALL SUBMIT A WRITTEN REPORT TO THE COUNCIL OF ANY ITEM SOLD BY A BROKER INCLUDING THE COMMISSION, BUYER, AND THE TERMS AND CONDITIONS OF THE SALE. SUCH WRITTEN REPORT SHALL BE INCLUDED IN A COUNCIL PACKET WITHIN THIRTY (30) DAYS AFTER THE SALE DATE. (C) THE CITY ADMINISTRATOR MAY REPEATEDLY REJECT ALL BIDS AND ADVERTISE OR GIVE NOTICE AGAIN. HE OR SHE SHALL SELL SUCH SUPPLIES, New Text Underlined; [DELETED TEXT BRACKETED] Page 23 of 63 Ordinance No. *DRAFT* -2015 Page 8 of 20 MATERIALS, OR EQUIPMENT TO THE HIGHEST RESPONSIBLE BIDDER FOR CASH. IN CASE OF A TIE, HE OR SHE MAY SELL TO EITHER OF THE BIDDERS TYING, OR MAY DIVIDE THE SALE AMONG TWO (2) OR MORE TYING, ALWAYS SELLING TO THE HIGHEST RESPONSIBLE BIDDER OR BIDDERS FOR CASH. (D) COLLECTION MATERIALS REMOVED BY THE LIBRARIAN PURSUANT TO THE LIBRARY'S COLLECTION DEVELOPMENT POLICY MAY BE SOLD, TRADED OR OTHERWISE DISPOSED OF WITHOUT FURTHER DECLARATION BY COUNCIL AND IN ANY MANNER DEEMED APPROPRIATE BY THE LIBRARIAN AS LONG AS THE SALE, TRADE OR DISPOSAL IS IN THE BEST INTEREST OF THE LIBRARY. ALL ETHICAL AND CONFLICTS OF INTEREST PROVISIONS DESCRIBED BY CITY ORDINANCE, RESOLUTION, POLICY, OR REGULATION MUST BE FULLY COMPLIED WITH IN SUCH SALE, TRADE, OR DISPOSAL. WITHIN THIRTY (30) DAYS OF THE END OF EACH FISCAL YEAR, THE LIBRARIAN SHALL PROVIDE A FULL ACCOUNTING TO THE CITY MANAGER AND COUNCIL OF ALL MATERIALS SOLD, TRADED OR OTHERWISE DISPOSED OF THE PRIOR FISCAL YEAR. 7.15.070 SALES, WHEN COMPETITIVE BID r�F G N REQijTED. THE CITY ADMINISTRATOR MAY SELL TH O ING ONLY WITH NOTICE TO AND APPROVAL OF CITY COUNCIL WITUT GIVING AN OPPORTUNITY FOR COMPETITIVE BIDDING: (A) SURPLUS OR OBSOLETE SUPPLIES, MATERIALS, EQUIPMENT OR OTHER PROPERTY, EXCLUDING REAL PROPERTY, THE' VALUE OF WHICH DOES NOT EXCEED ONE THOUSAND DOLLARS ($1,000.00) IN A SINGLE TRANSACTION; Or (B) SUPPLIES, MATERIALS, EQUIPMENT OR OTHER PROPERTY, EXCLUDING REAL PROPERTY, WHEN SOLD AT A PRICE AT LEAST AS GREAT AS THAT PAID BY THE CITY FOR THE SAME, PROVIDED THAT THE FOLLOWING CONDITIONS SHALL BE MET: (1) ANY UCH PROPERTY VALUED IN EXCESS OF ONE THOUSAND DOLLARS ($1,OQ0.00) SHALL BE APPRAISED BY A QUALIFIED APPRAISER WITHIN SIX (6) MONTHS PRECEDING THE SALE, AND THE SALE PRICE SHALL BE NOT LESS THAN THE APPRAISED VALUE. (2) THE CITY COUNCIL SHALL APPROVE OF THE SALE OF ANY SUCH PROPERTY VALUED IN EXCESS OF ONE THOUSAND DOLLARS ($1,000.00). 7.15.080 TELEPHONE POLLS— AUTHORITY, PROCEDURE, RECORDATION. (A) AUTHORITY. THE CITY MANAGER MAY OBTAIN AUTHORIZATION FROM COUNCIL BY TELEPHONE POLL TO: (1) PURCHASE BUDGETED SUPPLIES, MATERIALS, OR SERVICES IN EXCESS OF TWO THOUSAND FIVE HUNDRED DOLLARS ($2,500.00) IF THE NEED IS CRITICAL IN HIS OR HER ESTIMATION; AND (2) EXECUTE GRANT APPLICATIONS, ACCEPT BIDS AND TRANSFER FUNDS FOR THE BUDGETED ITEMS TO ACCOMPLISH THE FOREGOING. New Text Underlined; [DELETED TEXT BRACKETED] Page 24 of 63 Ordinance No. *DRAFT* -2015 Page 9 of 20 (B) PROCEDURE. ALL QUESTIONS FOR TELEPHONE POLLS SHALL BE IN WRITING AND APPROVED BY THE CITY MANAGER OR DESIGNEE FOR SUBMITTAL TO THE CITY CLERK. THESE POLLS WILL BE APPROVED BY THE FINANCE DIRECTOR TO DETERMINE WHETHER THE PROPER APPROPRIATION IS MADE BY ORDINANCE. THE CITY CLERK MAY DESIGNATE WHICH CITY EMPLOYEES SHALL CONDUCT THE POLL. NO MORE THAN ONE (1) QUESTION SHALL BE CONDUCTED PER TELEPHONE POLL EXCEPT IN CASES OF EXTREME EMERGENCY WHERE MORE THAN ONE (1) QUESTION MAY BE PRESENTED AND EXCEPT THAT THE QUESTION CONCERNING TRANSFERENCE OF FUNDS MAY BE PRESENTED ALONG WITH THE MAIN QUESTION. WHENEVER POSSIBLE, THE QUESTIONS SHALL ELICIT A "YES" OR "NO" RESPONSE. IN ALL CASES, THE DESIGNATED EMPLOYEES SHALL MAKE A REASONABLE ATTEMPT TO CONTACT ALL COUNCIL MEMBERS. AT LEAST FOUR (4) MEMBERS OF THE COUNCIL MUST PARTICIPATE IN THE VOTE FOR THE POLL TO BE VALID. A TWO- THIRDS (2/3) MAJORITY OF ALL COUNCIL MEMBERS POLLED SHALL BE REQUIRED FOR TELEPHONE POLL AUTHORIZATION. IF THE TELEPHONE POLL FAILS, THE MATTED ,,SHALLjLE CONSIDERED AS AN AGENDA ITEM AT THE NEXT REGULAR COUNCIL MEETI (C) RECORDATION. AT THE NEXT REGULAR COUNCIL EETING, THE CITY CLERK, DURING HIS OR HER REPORT, SHALL READ INTO THE RECORD THE RESULTS OF THE POLL INDICATING THE QUESTION POSED AND THE VOTE OF EACH COUNCIL MEMBER REACHED. 7.15.090 PURCHASES AND SALES — CERTAIN CITY OFFICERS. PURCHASES FROM, AND SALES TO, THE CITY ADMINISTRATOR AND COUNCILPERSONS SHALL ALSO BE GOVERNED BY THE CITY CHARTER, SECTION 5 -8 EXCEPT AS FOLLOWS: (A) THE CITY ADMINISTRATOR, COUNCIL PERSONS, AND CITY EMPLOYEES MAY SELL OR BARTERYANYTHING TO THE CITY, OR MAKE A CONTRACT WITH THE CITY, OR PURCHASE ANYTHING FROM THE CITY WITHOUT THE NECESSITY OF COMPETITIVE SEALED ROVIDED SUCH SALES, CONTRACT, OR PURCHASES INVOLVE A CONSIDERA VDN OF NOT MORE THAN FIVE HUNDRED DOLLARS ($500.00) IN VALUE. (B) ANY SALE, CONTRACT OR PURCHASE, OF NOT MORE THAN FIVE HUNDRED DOLLARS ($500.00) AUTHORIZED UNDER SUBSECTION (A) ABOVE, MUST BE MADE AT SUCH PRICES OR RATES PREVAILING IN THE COMMUNITY AND WITHOUT FAVORITISM OR DISCRIMINATION. (Ord. 1178) 7.15.100 SETTING FEE SCHEDULES. THE COUNCIL MAY ADOPT AND AMEND A FEE SCHEDULE SPECIFYING THE RATES, CHARGES, OR FEES IMPOSED BY THE CITY. UNLESS OTHERWISE PROVIDED IN THE KENAI CODE OF ORDINANCES, ANY RATES, CHARGES, OR New Text Underlined; [DELETED TEXT BRACKETED] Page 25 of 63 Ordinance No. *DRAFT* -2015 Page 10 of 20 FEES IMPOSED BY THE CITY OF KENAI SHALL BE SET BY THE CITY MANAGER AND SHALL BE EFFECTIVE UPON APPROVAL BY RESOLUTION OF THE CITY COUNCIL. 7.15.110 TAX COMPLIANCE. (A) NO CONTRACT THAT REQUIRES COMPETITIVE BIDDING PURSUANT TO A CITY ORDINANCE MAY BE AWARDED TO AN INDIVIDUAL OR BUSINESS THAT IS IN VIOLATION OF CITY TAX ORDINANCES UNLESS THE VIOLATION IS CURED WITHIN TEN (10) BUSINESS DAYS OF NOTICE. (B) IF AN INDIVIDUAL OR BUSINESS BECOMES DELINQUENT ON ANY CITY TAX OBLIGATION DURING THE TERM OF A CONTRACT, THE CITY MAY TERMINATE THE CONTRACT IF NOT CURED WITHIN TEN (10) BUSINESS DAYS OF NOTICE, AND THE CITY MAY OFFSET AMOUNTS OWED BY THE CI O THE INDIVIDUAL OR BUSINESS UNDER A CONTRACT FOR THE AM T OF OUTSTANDING TAX OBLIGATIONS INCLUDING APPLICABLE PENALTI4 ND- INTEREST. (C) TAX COMPLIANCE VERIFICATION IS ACT REQUflW FOR PURCHASES WHEN THE CITY CONDUCTS BUSINESS V4JU 0 ROUCN OTHER FEDERAL, STATE OR LOCAL GOVERNMENTAL AGENCITW 7.15.010 Purchase Authority (3) Monthly payments for payroll deductions (i.e., income tax, F.I.C.A., retirement, and fringe benefits), including both emvlover's and employee's share; (4) Authorized debt; or (5) Monthly contracted Janitorial service. (b) All such exceptions will be paid when they fall due and payments will be ratified by Council at the next regular Council meeting. 7.15.030 Informal Purchasing for Minor Purchases. (a) Purchases for supplies, materials, epuivment ; New Text Underlined; [DELETED TEXT BRACKETED) Page 26 of 63 Ordinance No. *DRAFT* -2015 Page 11 of 20 (1) Purchases up to $5,000 may be made without formal purchasing procedures as long as the price is known to be fair and reasonable within the available market. (2) Purchases greater than $5,000 but less than $15,000 require the solicitation of three or more written quotes using an applicable purchasing form. If three quotes cannot reasonably be obtained, a written iustification must be documented on an applicable purchasing form. (b) The purchase of, or contract for, supplies, materials, equipment, or contractual services subiect to subsection (a), shall be awarded to the most responsible bidder (d) All bids shall be sealed and shall be opened in public at a designated time and place. (e) The City may repeatedly reject all bids and again may submit to the same or other persons, firms, or corporations the request for quotations (or invitation to bid) and /or again publish notice of the proposed purchase. fit The City shall purchase from the lowest responsible bidder, basing a determination on responsibility of the bidder on the following factors: adherence to the bid specifications, quality, proposed terms of delivery, any additional cost to the City that would be incurred due to location of the bidder, performance record, financial cavability, and compliance with conditions imposed in the solicitation for bids. If after New Text Underlined; [DELETED TEXT BRACKETED) Page 27 of 63 Ordinance No. *DRAFT* -2015 Page 12 of 20 advantageous to the City .(b) Proposals shall be solicited through a request for proposals. ll When the City Council determines that it is advantageous to the City, the City (d) Adequate public notice of the rc manner as provided in KMC 7.15. 040. (e) A register of proposals shall be the number of modifications received, the item offered. M The request for proposals shall evaluation factors. jgl As provided in the rotest for (hh) Award shall be made to the responsible offeror whose proposal is determined in shall be used in the evaluation. The contract file shall contain the basis on which the award is made. j1 Proposals shall be received at the time and place designated in the request for proposals, and shall be opened so as to avoid disclosing their contents to competing proponents during the process of negotiation. Proposals shall be open to publi c inspection only after the contract award. However, the City shall issue a notice of intent to award to all responding proposers at least seven (7) days prior to Council approval. Upon request by a competing proponent, the recommended awardee's proposal shall be opened for review. New Text Underlined; [DELETED TEXT BRACKETED] Page 28 of 63 Ordinance No. *DRAFT* -2015 Page 13 of 20 7.15.060 Procurement of Professional Services. (a) Professional services for a total contract amount, including all reasonably foreseeable change orders and modifications, less than $10,000 may be procured in any reasonable manner. must be documented on an applicable purchasing form. fc) Professional services procured in an amount in excess of $15,000 must be be modified or interpreted only in written addenda. The City may negotiate with one' s& more qualified and responsible proponents Proponents deemed eligible for negotiations shall be treated equally regarding any do so, the City may reiect any and all proposals. ff� Legal services may be procured by direct negotiation with an attorney or law services of legal counsel shall be pursued by the City Attorney, or in the case of a conflict of interest, the City Council. 7.15.070. Innovative Procurements and Other Exceptions. faa) A contract may be awarded for supplies, services, professional services, or New Text Underlined; [DELETED TEXT BRACKETED] Page 29 of 63 Ordinance No. *DRAFT* -2015 Page 14 of 20 section only when the City Manager or designee determines in writing to the City Council that it is advantageous to the City to use an innovative competitive procurement process in the procurement of new or unique requirements of the City, new technologies, or to achieve the best value. This process is appropriate when it may be in the best interest of the City to consider an award to other than the lowest priced offer or other than the highest technically rated offer. (1) To utilize an innovative procurement procedure the requesting department shall submit: (A) a detailed procurement plan to the City Manager for review and approval before public notice is issued as required under KMC 7.15.040. The plan shall, at a minimum, address the method of (B) (2) When apply: L1 L1 ll ID1 proposed contract provisions, and value for the Citys stated in the solicitation. source selection. The less definitive the requirement, the more development work required, or the greater the performance risk, the more technical or past performance considerations may play a dominant role in source selection. (b) The following may be purchased without giving an opportunity for competitive bidding: ll bought; New Text Underlined; [DELETED TEXT BRACKETED] Page 30 of 63 Ordinance No. *DRAFT* -2015 Page 15 of 20 L ll ll (5) price or rate determined by State or government authority. City is authorized to participate. meeting following award of the contract. (A) For purposes c occurrence or iniurv, loss of resulting from: f ij An incid tidal w ii lll iv Enemy c enemy c The release of oil or a hazardous substance if the release requires prompt action to avert environmental danger or ll 26.20.040fc1: in this subsection. "attack" has the mean ing given under AS 26.20.200: or An outbreak of disease or a credible threat of an imminent outbreak of disease that the Commissioner of Health and Social Services or a designee of the Commissioner of Health New Text Underlined; [DELETED TEXT BRACKETED] Page 31 of 63 Ordinance No. *DRAFT* -2015 Page 16 of 20 state, federal, or international agency, or another source that the Commissioner or the designee determines is reliable. 7.15.080 Local Preferences. (a) In awarding comnetiti� 7.15.030(a)(3), Preference may be given to an otherwise qualified "local bidder" unless such Preference is Prohibited by the funding source. conditions of the sale. Such written report shall be included in a council Packet within thirty (30) days after the sale date. responsible bidder or bidders for cash. (d) Collection materials removed by the librarian pursuant to the library's as long as the sale, trade or disposal is in the best interest of the library. All ethical New Teat Underlined; [DELETED TEXT BRACKETED] Page 32 of 63 Ordinance No. *DRAFT* -2015 Page 17 of 20 prior fiscal year. be governed by the City Charter, Section 5 -8 except as follows: (b) , Any sale, contract or purchase, of not more than five hundred dollars ($500) authorized under subsection (a) above, must be made at such prices or rates prevailing in the community and without favoritism or discrimination. 7.15.110 Tax Comvliance. (bb) If an individual or business becomes delinquent on any City tax obligation 7.15.120 Appeal Procedures. (a) Any party submitting a bid or proposal for a contract with the City and who believes that they are adversely affected by the City's relevant ordinances, regulations, facsimile and must comply with all requirements of this section. If the fifth day is a New Text Underlined; [DELETED TEXT BRACKETED] Page 33 of 63 Ordinance No. *DRAFT* -2015 Page 18 of 20 (b) Rejection of Appeal. The Clerk shall reject an untimely or incomplete appeals. Such reiection shall be final and may be appealed to the Superior Court pursuant to the Court Rules of Appellate Procedure. (cc) The protest appeal must be in writing and shall include the following information: () the name, address, a -mail, and telephone (and facsimile if available) numbers of the protester; (2) the signature of the protester or the protester's representative; 131 identification of the contracting agency and the solicitation or contract at issue; (44) a statement of the legal and factual grounds of the protest, including copies of relevant documents; and, (51 the form of relief requested. , L1 appeal. W If the City Manager sustains a protest in whole or in part, the City Manager shall implement an appropriate remedy. In determining an appropriate remedy, the City Manager shall consider the circumstances surrounding the solicitation or good faith of the parties, the extent the procurement has been accomplished, costs to the agency and other impacts on the agency of a proposed remedy, and the urgency of the procurement to the welfare of the City. (hh) Notwithstanding subsections (a) and (b) immediately above, if the City Manager sustains a bid protest appeal in whole or part, the protester's damages shall not exceed the reasonable bid or proposal preparation costs. New Text Underlined; [DELETED TEXT BRACKETED] Page 34 of 63 Ordinance No. *DRAFT* -2015 Page 19 of 20 the Alaska Rules of Appellate Procedure. 7.15.130 Definitions. The following definitions apply for this Chapter: (a) "Contractual Services," means services other then professional services performed for the City by persons not in the employment of the City, and may include the use of equipment or the furnishing of commodities in connection with said services under express or implied contract. Contractual services shall include: travel, freight, express, parcel post, postage, telephone, telegraph, utilities, rents, printing and binding, repairs, alterations, and maintenance of buildings, equipment, streets, (b) A "Local Bidder" is a person who: IGI M Holds a cL contracts. certificate; (2) Submits a the name certificate; (3) Has contit other services, such as architectural, engineering, land surveying, legal and financial, which involve the exercise of discretion and independent iudgment together with an advanced or specialized knowledge, expertise or training gained by formal studies or experience. Section 3. Amendment of Chapter 7.25 of the Kenai Municipal Code: That Kenai Municipal Code, Chapter 7.25 - Purchases and Sales, is hereby amended by enacting a new code section as follows: 7.25.120 Setting Fee Schedules. New Tent Underlined; [DELETED TEXT BRACKETED] Page 35 of 63 Ordinance No. *DRAFT* -2015 Page 20 of 20 Ordinances, any rates, charges, or fees imposed by the City of Kenai shall be set by the city manager and shall be effective upon approval by resolution of the Council. Section 4. Severability: That if any part or provision of this ordinance or application thereof to any person or circumstances is adjudged invalid by any court of competent jurisdiction, such judgment shall be confined in its operation to the part, provision, or application directly involved in all controversy in which this judgment shall have been rendered, and shall not affect or impair the validity of the remainder of this title or application thereof to other persons or circumstances. The City Council hereby declares that it would have enacted the remainder of this ordinance even without such part, provision, or application. Section 5. Effective Date: That pursuant to KMC 1.15.0700, this ordinance shall take effect 30 days after adoption. ENACTED BY THE COUNCIL OF THE CITY OF ATTEST: Sandra Modigh, G New Text Underlined; [DELETED TEXT Page 36 of 63 this * day of *, 2015. Introduced: *, 2015 Enacted: *, 2015 Effective: *, 2015 M "Villaye with a Past, C# with a Futurell 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 Telephone: 907 - 283 -7535 / FAX: 907 - 283 -3014 II IIIf 1992 MEMO: TO: City Council FROM: Rick Koch, City Manager DATE: August, 14, 2015 SUBJECT: Work Session Materials — Repealing & Re- Enacting Purchasing Code The purpose of this correspondence is to provide the reference materials I will be using in the Administration's discussion of proposed changes to the City's Purchasing Code, KMC 7.15. I will provide a memorandum summarizing Administrations comments and suggestions this weekend and will provide this to Council and the Clerk through e -mail. There may be minor corrections to the attached materials, but if so, I expect them to be editorial in nature. Thank you in advance for taking the time to compare the City of Kenai's present purchasing code, the proposed code re- write, the Administration's suggested amendments, and the procurement processes of other similar jurisdictions. If you have any questions, please contact me at your convenience. attachments Page 37 of 63 Current Kenai Municipal Code Invitation to Bid to a Procurement of Supplies, Prior Approval of Minimum of 3 Vendors Materials, Equipment, and Council Required to and /or pubic notice of Construction Services Execute Contract /PO ITB's Less than $15,000 No No $15,000 - $25,000 Yes No Geater than $25,000 Yes Yes* Procurement of Professional Prior Approval of Informal Request for Services Council Required Proposals (RFP's) Less than $15,000 No No $15,000 and Greater Yes No* * Requirements Dictated by Funding Source Page 38 of 63 Proposed Re -Write of Kenai Municipal Code (KMC 7.15) Procurement of Supplies, Materials, Equipment, and Construction Services Less than $5,000 $5,00 - $15,000 $15,001- $25,000 Greater than $25,000 Procurement of Professional Services Less than $10,000 $10,000 - $14,999 Greater than $15,000 Prior Approval of Council Required to Execute Contract /PO No No Yes Yes Prior Approval of Council Required to Execute Contract /PO No No Yes New Requirements and /or Limits Invitation to Bid to a Minimum of 3 Vendors and /or pubic notice of ITB's No Yes No N/A Informal Solicitation for quotes (3) No Yes N/A Page 39 of 63 Formal Invitation to Bid Process No No No Yes Formal Request for Proposal (RFP) Required No No Yes Administration Suggested Amendments to Proposed Re- Write of Kenai Municipal Code (KMC7.15) Procurement of Supplies, Materials, Equipment, and Construction Services Less than $5,000 $5,000 - $15,000 $15,001 - $50,000 Greater than $50,000 Procurement of Professional Services Less than $25,000 $25,000 - $50,000 Greater than $15,000 Prior Approval of Council Required to Execute Contract /PO No No Yes Yes Prior Approval of Council Required to Execute Contract /PO No No Yes New Requirements and /or Limits Invitation to Bid to a Minimum of 3 Vendors and /or pubic notice of ITB's No No Yes N/A Informal Solicitation for quotes (3) No Yes N/A Page 40 of 63 Formal Invitation to Bid Process No No No Yes Formal Request for Proposal(RFP) Required No No Yes Municipality of Anchorage Invitation to Bid to a Prior Approval of Minimum of 3 Procurement of Supplies, Materials, Equipment, Assembly Required to Vendors and /or and Construction Services Execute Contract/PO pubic notice of ITB's Less than $5,000 No No Less than $10,000 - Construction Only No No Less than $50,000 No Yes Less than $500,000 No N/A Greater than $500,000 Yes N/A Procurement of Professional Services Less than $5,000 $5,000 - $49,999 Greater than $50,000 Greater than $500,000 Prior Approval of Assembly Required to Informal Solicitation Execute Contract /PO for quotes (3) No No No Yes No N/A Yes N/A Page 41 of 63 Formal Invitation to Bid Process No No No Yes Yes Formal Request for Proposal(RFP) Required No No Yes Yes Procurement of Supplies, Materials, Equipment, and Construction Services Less than $5,000 $5,000 - $40,000 Greater than $40,000 Procurement of Professional Services Less than $5,000 $5,000 - $40,000 Greater than $40,000 Kenai Peninsula Borough Prior Approval of Assembly Required to Execute Contract /PO No No No Prior Approval of Assembly Required to Execute Contract /PO No No No Invitation to Bid to a Minimum of 3 Vendors and /or pubic notice of ITB's No Yes N/A Formal Invitation to Bid Process No No Yes Informal Solicitation for Formal Request for quotes (3) Proposal (RFP) Required Page 42 of 63 No No Yes No N/A Yes Procurement of Supplies, Materials , Equipment, and Construction Services Less than $100,000 Greater than $100,000 Procurement of Professional Services Less than $100,000 Greater than $100,000 State of Alaska Prior Approval of Legislature Required to Execute Contract /PO N/A N/A Prior Approval of Legislature Required to Execute Contract /PO N/A N/A Invitation to Bid to a Minimum of 3 Vendors and /or pubic notice of ITB's No N/A Informal Solicitation for quotes (3) No N/A Page 43 of 63 Formal Invitation to Bid Process No Yes Formal Request for Proposal(RFP) Required No Yes Procurement of Supplies, Materials, Equipment, and Construction Services Less than $10,000 $10,000-$20,000 Greater than $20,000 Procurement of Professional Services* Less than $100,000 Greater than $100,000 City of Soldotna Prior Approval of Council Required to Execute Contract /PO No No Yes Invitation to Bid to a Minimum of 3 Vendors and /or pubic notice of ITB's No Yes No Prior Approval of Assembly Required to Informal Solicitation for Execute Contract /PO quotes(3) Yes Yes * Soldotna Code references Alaska Statutes No No Page 44 of 63 Formal Invitation to Bid Process No No Yes Formal Request for Proposal(RFP) Required No Yes City of Wasilla Page 45 of 63 Invitation to Bid to a Procurement of Supplies, Prior Approval of Minimum of 3 Materials, Equipment, and Council Required to Vendors and /or Formal Invitation Construction Services Execute Contract /PO pubic notice of ITB's to Bid Process Less than $5,000 No No No $5,000- $10,000 No Yes No $10,000 - $30,000 No No Yes Greate than $30,000 Yes No Yes Prior Approval of Formal Request Procurement of Professional Assembly Required to Informal Solicitation for Proposal (RFP) Services Execute Contract /PO for quotes (3) Required Less than $30,000 No No No $30,000 - $50,000 Yes No No Greater than $50,000 Yes No Yes Page 45 of 63 City of Homer * Requires Council Approval if greater than $10,000 and not in adopted budget Page 46 of 63 Prior Approval of Invitation to Bid to a Procurement of Supplies, Council Required Minimum of 3 Materials, Equipment, and to Execute Vendors and /or Formal Invitation Construction Services* Contract /PO pubic notice of ITB's to Bid Process Less than $10,000 No No No $10,000 - $25,000 No Yes No Greater than $25,000 No No Yes * Requires Council Approval if greater than $10,000 and not in adopted budget Page 46 of 63 Prior Approval of Assembly Required to Formal Request Procurement of Execute Informal Solicitation for Proposal (RFP) Professional Services Contract /PO for quotes (3) Required Less than $10,000 No No No $10,000 - $25,000 No Yes No Greater than $25,000 No No Yes * Requires Council Approval if greater than $10,000 and not in adopted budget Page 46 of 63 Procurement of Supplies, Materials, Equipment, and Construction Services Less than $5,000 $5,000- $15,000 $15,000-$50,000 Greater than $50,000 Procurement of Professional Services Less than $5,000 $5,000- $15,000 $15,000- $50,000 Greater than $50,000 City of Palmer Prior Approval of Council Required to Execute Contract /PO No No Yes Yes Invitation to Bid to a Minimum of 3 Vendorsand /or pubic notice of ITB's No Yes Yes No Formal Invitation to Bid Process No No No Yes Prior Approval of Formal Request for Assembly Required to Informal Solicitation Proposal (RFP) Execute Contract /PO for quotes (3) Required No No No No Yes No Yes Yes No Yes No Yes Page 47 of 63 MUNICIPALITY OF ANCHORAGE Professional service means those advisory, consulting, architectural, engineering, research or developmental services which involve the exercise of discretion and independentjudgment together with an advanced or specialized knowledge, expertise or training gained by formal studies or experience. • 7.15.040 - Assembly approval of contracts. /:11 No contract for supplies, services, professional services or construction whereby the municipality is obligated to pay more than $500,000.00 pursuant to a contract awarded through competitive procedures, which are described in sections 7.20.020 through 7.20_040 (bids) and 7.20.060 (proposals)., or more than $30,000.00 pursuant to contracts awarded under section 7.20.080 A.5, or more than $50,000.00 pursuant to contracts awarded through other authorized procedures, may be executed unless the assembly has approved a memorandum setting forth the essential terms of the contract. To the extent applicable for particular contracts, the following essential terms shall be set forth: 2. 4. 5. The identity of the contractor; The contract price; The nature and quantity of the performance that the municipality shall receive under the contract; The using agency; and The time for performance under the contract. All contracts awarded through competitive procedures under this subsection A that are more than $50,000.00 and less than $500,000.00 shall be repotted to the assembly in an informational memorandum once each month. The report shall contain the information described in subsections 1. through S. of this subsection. B C. If contracts are awarded to more than one bidder pursuant to an invitation for bids, contracts with different bidders shall be considered separately for purposes of determining the application of subsection A. of this section. if any contract to be awarded tinder a given bid is subject to assembly approval, the award of other contracts pursuant to the same invitation for bids may, at the discretion of the purchasing officer, be delayed pending assembly approval. No grant to a governmental or quasi - governmental agency or to a private nonprofit corporation under the provisions of Choa ler 7.7Q for more than $50,000.00 may be issued unless the assembly has approved a memorandum setting forth: 1. 2. 3. The identity of the grantee; The grant amount; Page 48 of 63 7 4. The purpose to which grant funds are to be devoted; and The agency charged with administration of the grant. No contractor may provide supplies, services, professional services, or construction provided to the municipality before the applicable requirements of this section are first satisfied. E. Regardless of the amount involved, all contracts for professional lobbying services must be approved in advance by the assembly. (AO No. 79 -203; AO No. 82 -168; AO No. 93 -217, § 1, 2- 26 -94; AO No. 94- 123(S), § 1, 8- 25 -94; AO No. 2001- 122(S -1), § 2, 7- 24 -01; AO No. 2007 -22, § I, 2- 27 -07) • 7.20.070 - Open market procedure. A. 3 C. The purchasing officer may procure all supplies, services, professional services and construction having an estimated value of not more than $50,000.00 on the open market without formal advertising or other formal bid procedures. Whenever practicable, at least three informal bids or quotations shall be solicited for any procurement wider this section. The solicitation may be either oral or written, and shall be in a form reasonably calculated to yield the lowest responsive bid by a responsible bidder. Awards, where practicable, shall be made to the lowest responsive and responsible bidder. The purchasing officer shall keep a record of all open market bids received and awards made thereon. Local bidders preference shall be applied in accordance with hsection 7.20.040. (AO No. 79 -203, 1 -1 -80; AO No. 2001- 122(S -1), § 6, 7- 24 -01) • 7.20.080 - Proprietary and non - competitive procurements. A. The purchasing officer may contract, without the use of the competitive source selection procedures of this chapter, for the following supplies, services, professional services or construction: 01 3. C8 For contracts, including reimbursable agreements, with Federal or State units of government, any post secondary educational institutions, or utility provider where the municipality has a financial responsibility or beneficial interest in entering into an agreement. For contracts issued pursuant to any Federal, State, or local government contract where the municipality is an authorized user, or where the resulting contractor agrees to extend the same terns, conditions, and pricing to the municipality as those awarded under the original contract. (Piggy- backing) such agreements shall be limited to those contracts where the award is issued pursuant to a formally advertised solicitation. For contracts where the amount is less than $5,000.00 for supplies, services, or professional services, and $10,000.00 for construction services, and the price is fair and reasonable. Page 49 of 63 5. a For contracts pursuant to a formal recommendation by a municipal contractor specifically tasked with researching and /or reviewing the market place for qualified products or services. The municipal contractor must have been hired specifically for this purpose and must have been selected in accordance with the competitive procedures of 7 20.020 (Bids) or 7 20.060 (Proposals). For contracts where the purchasing officer determines in writing that the municipality's requirements reasonably limit the source for the supplies, services, professional service or construction to one person. All contract awards under this section, or any amendments thereto, shall be subject to the applicable approval requirements of sections 7. 15.0-40 and 7.15.080 prior to execution. C. No contractor may provide supplies, services, professional services, or construction provided to the municipality before the applicable requirements of this section are first satisfied. (AO No. 79 -203; 1 -1 -80; AO No. 2001- 122(S -1), y 7, 7- 24 -01) Page 50 of 63 5.28.020. - Definitions. • L. KENAI PENINSULA BOROUGH "Professionod service" means all advisory, consulting, technical, research or other services, such as architectural, engineering, land surveying, legal and financial, which involve the exercise of discretion and independent judgment together with an advanced or specialized knowledge, expertise or training gained by formal studies or experience. • 5.28.270. - Open market procedure. A. 91 .M The purchasing officer or agency head may procure supplies, services, professional services and construction having an estimated value of not more than $40,000.00 on the open market without formal advertising or other formal bid procedures. The solicitation for informal bids or proposals may be either oral or written, and shall be in a form reasonably calculated to yield the lowest responsive bid or proposal by a qualified and responsible bidder. If practicable, at least three bids or proposals shall be solicited for any procurement estimated to exceed $5,000.00, and the bids or proposals shall be submitted in writing. Awards for supplies services and construction shall be made by the purchasing officer to the lowest responsive, qualified and responsible bidder. All bids and proposals shall be tabulated and held in the office of the purchasing officer for public inspection for a period of not less than 30 days. 5.28.280. - Proprietary procurement. a Subject to paragraph B, a contract for supplies, services, professional services or construction may be awarded by the purchasing officer or agency head without competition under the following conditions: 2. Where it is determined by the purchasing officer or agency head that the borough's requirements reasonably limit the procurement to a sole source. The determination will be based on a written justification provided by the requesting agency head: Where it is determined by the mayor that it is in the best interest of the borough to standardize the procurement in order to maintain compatibility with existing borough requirements. Purchases without competition costing more than $40,000 must first be approved by the assembly by resolution except where the mayor determines an emergency affecting life, health, or safety exists. Page 51 of 63 STATE OF ALASKA TITLE z6. PUBLIC CONTRACTS Sec. 36.30.305. Limited competition procurements. (a) A construction contract under $100,000, or a contract for supplies, services, or professional services, may be awarded without competitive sealed bidding or competitive sealed proposals, in accordance with regulations adopted by the commissioner. A contract may be awarded under this section only when the chief procurement officer determines in writing that a situation exists that makes competitive sealed bidding or competitive sealed proposals impractical or contrary to the public interest, except that the attorney general, the public defender, or the director of the office of public advocacy as provided in AS 36.30.015(k) may make the determination for services of legal counsel, and the commissioner of transportation and public facilities may make the determination for construction contracts under $100,000 or procurements for the state equipment fleet. Procurements under this section shall be made with competition that is practicable under the circumstance. Except for procurements of supplies, services, professional services, or construction that do not exceed the amount for small procurements under AS 36.30.320(a), as applicable, the authority to make a determination required by this section may not be delegated. (b) The using agency shall submit written evidence to support a determination under this section. (c) Procurement requirements may not be artificially divided, fragmented, aggregated, or structured so as to constitute a purchase under this section or to circumvent the source selection procedures required by AS 36.30.100 - 36.30.270. (d) Single source procurements may not be made under this section. (e) Architectural, engineering, and land survey contracts under AS 36.30.270 may not be made under this section. Sec. 36.30.320. Small procurements. (a) A procurement for supplies, services, or professional services that does not exceed an aggregate dollar amount of $100,000, construction that does not exceed an aggregate dollar amount of $200,000, or lease of space that does not exceed 7,000 square feet shall be made under regulations adopted by the commissioner for small procurements. (b) [Repealed, Sec. 48 ch 137 SLA 1996]. (c) Small procurements need not be made through competitive sealed bidding or competitive sealed proposals but shall be made with competition that is practicable under the circumstances. Page 52 of 63 (d) Procurement requirements may not be artificially divided or fragmented so as to constitute a purchase under this section or to circumvent the source selection procedures required by AS 36.30.100 - 36.30.270. (e) The procurement officer shall give adequate public notice of intent to make a procurement under this section in accordance with regulations adopted by the commissioner. Sec. 36.30.990. Definitions. (21) "professional services" means professional, technical, or consultant's services that are predominantly intellectual in character, result in the production of a report or the completion of a task, and include analysis, evaluation, prediction, planning, or recommendation; Page 53 of 63 CITY OF SOLDOTNA 3.06.060 - Procurement procedures. 0 General Policy. A contract for construction, repairs, or a purchase of and contract for supplies, materials, equipment and contractual services should be based upon competition. An award should be made to the lowest responsible bidder after advertising for bids, except that a bid shall be awarded to a local bidder if the bid is not more than five percent higher than the lowest nonresident bidder's bid. Competitive bids need not be required: 1. F1 3. 4. 5. 6. B. C. For contractual services where no competition exists; For sales involving fair -trade items; For professional services; Where rates are fixed by law or ordinance; For items traded in for like items; or When the city council finds by a resolution that another manner of procurement is to the best advantage of the city. Procurements Over Twenty Thousand Dollars. 2. If the amount of the contractual service, purchase or sale is estimated to exceed twenty thousand dollars, sealed bids shall be solicited, when practicable, by publication in a local newspaper and by sending notices by mail to all active prospective bidders known. All bids shall be sealed when received, and shall be opened in public at the hour stated in the notice. The city council may limit the solicitation of bids or authorize direct negotiation by a resolution if it finds that it is in the best interests of the city. All procurements valued in excess of twenty thousand dollars shall require the formal approval of four members of the city council. Procurements Under Twenty Thousand Dollars. 2. A contractual purchase or sale where the known requirement is known to be less than twenty thousand dollars may be made either upon sealed bids or by direct negotiation, at the discretion of the city manager; but, so far as practicable, shall be based on the least three competitive bids. All bids with the name of the bidders and the amounts of the bids, together with all documents pertaining to the award of a contract, shall be made a pail of a file or record and retained for three years. Small purchases less than ten thousand dollars may be made on the open market without competitive bidding. Page 54 of 63 L] E. F. Requirements may not be artificially divided or fragmented so as to circumvent requirements for procurements over ten thousand dollars. Local Bidder. A "local bidder," for the purpose of bid awards under this section, is a person who: 1. Holds a current Alaska business license and Kenai Peninsula Borough sales tax certificate of registration and who is not a delinquent account with respect to any state or local tax, assessment or user charge; 2. 3. Submits a bid for goods or services under the name as appearing on the person's current Alaska business license; and Has maintained a place of business within the Kenai Peninsula Borough for a period of six months immediately preceding the date of the bid. Local Bidder Exception. The provisions of this section relative to a "local bidder" do not apply when the difference between the lowest responsible bid and the lowest local responsible bid is greater than five thousand dollars. Professional Services. 1. 2. 3. El 5. 2 Except as otherwise provided in this section, or unless specifically exempted by Alaska Statutes, professional services contracts should be awarded by competitive proposals. A request for competitive sealed proposals must contain the date by which the proposal must be received; a description of the services to be provided; a description of the factors that will be considered when evaluating the proposals received (including the relative importance of price and other factors); and contain a reference to where additional information may be obtained that cannot reasonably be included with the advertisement. Notice of the request for proposals shall be published in a newspaper of general circulation within the city of Soldoma. Notice shall also be mailed to all active prospective contractors on a list of persons who desire to provide professional services to the city. A person who desires to be on the professional services list shall submit to the city clerk an annual statement of qualifications, performance data, and any other information that the city clerk may require. The city manager or his delegate shall open proposals so as to avoid disclosure of contents to competing offerors during the process of negotiation, but the proposals shall be open for public inspection after the contract is awarded. Negotiations may be conducted with responsible offerors who submit proposals determined to be reasonably susceptible of being selected for award for the purpose of clarification to assure full understanding of, and responsiveness to, the solicitation requirements. Revisions of proposals may be permitted after submissions and before the award of the contract for the purpose of obtaining best and final offers. The award of a contract shall be made to the responsible and responsive offeror whose proposal is determined in writing to be the most advantageous to the city, taking into consideration price and the evaluation factors set out in the request for proposals. Other factors and criteria may not be used in the evaluation. The contract rile must contain the basis on which the award is made. Page 55 of 63 G. N. J. IN L. M. 7. A professional service contract may be awarded by sole source procurement, without competition, when the city council finds by a resolution that it is advantageous to the city. "Professional services" means professional, technical or consultant services that are predominantly intellectual in character, result in the production of a report or the completion of a task, and include analysis, evaluation, prediction, planning or recommendation. It includes architectural, engineering, land surveying and construction management services and services rendered by independent public accountants. Emergency Procurements. in the event of an extreme emergency or disaster, the city manager may waive compliance with the procurement procedures of this section for procurement of goods or services in an amount not exceeding one hundred thousand dollars. Notice to mayor and council of said actions is required to be made within twenty -four hours if practicable, nor shall any contractual obligation made pursuant to this subsection extend for any term longer than fourteen days without council approval. Award of Contracts and Purchases. Except as otherwise provided in this section, a contract or purchase made for which competitive bids are required shall be awarded to the lowest responsible bidder. The determination of the bidder's responsibility shall be based upon the bidder's: 2. 3. 4. 5. 6. Adherence to the bid specifications; Proposed terms of delivery; Compliance with state and local laws: Performance record; Financial capability; and Compliance with conditions imposed in the solicitation for bids. Rejection of Bids. The city council may cancel a solicitation or reject any and all bids or proposals submitted to the city when it determines that it is in the best interest of the city to do so. Procurement Records. All bids, with the names of the bidders and the amounts of the bids, together with all documents pertaining to the award of a contract, shall be made a part of a file or record and retained for three years. These files or records are open to public inspection at all reasonable times. Appeals. Any aggrieved bidder may, within five days after an award of contract, appeal to the city council for a hearing, with notice to interested parties, for redetermination and final award in accordance with law. Federal or State Assistance. If a procurement involves the expenditure of federal or state funds and there is a conflict between a provision of this section and a federal or state statute pertaining to the expenditure of the funds, the federal or state statute shall prevail. If there is a conflict between the federal and state statutes pertaining to the expenditure of the funds, the federal statute shall prevail. Violations of Tae Ordinances. Page 56 of 63 R The city may decline, in the municipal interest, to award a contract to any business or individual who is delinquent with respect to borough property and sales taxes. The delinquency of the taxpayer and the determination of the municipal interest are left to the exclusive discretion of the city. Any contract may be terminated for cause if it is determined that the individual or business is in violation of any taxation ordinance of the borough and if such violation is not cured within ten days of notification by regular mail. If the delinquency arises due to nontiling of sales tax, no payment will be made to the individual or business until all filings have been made and all amounts due are remitted. 3. The city reserves any right it may have to set off amounts owed by its vendors for delinquent borough and city taxes against any amount owing to the vendor(s) under a contract between the city and the vendor(s). (Ord. 2007 -20 § 2, 2007; Ord. 2005 -33 § 1, 2005; Ord. 749 § I, 2001: Ord. 444 § 1, 1987; Ord. 399 § 1 (part). 1986) Page 57 of 63 CITY OF WASILLA 5.08.010 Definitions. When used in this chapter, the following words and phrases shall have the meanings set forth in this section: "Construction" means the on -site field surveying, erection, rehabilitation, alteration, extension or repair including painting or redecorating buildings, highways or other improvements to real property under contract for the city. "Contract" includes all types of agreements, regardless of what they may be called, for the procurement of supplies, services or construction. "Contract amendment" means any change in the terms of a contract accomplished by agreement of the parties, and includes a change order. "Professional service" means a service which involves the exercise of discretion and independent judgment together with advanced or specialized knowledge, expertise or training gained by formal studies or experience, and includes without limitation a service provided by an engineer, architect, attorney or accountant. "Service" means a contract performance whose principal element is not the furnishing of tangible or intangible property. "Supplies" means tangible or intangible personal property. (Ord. 08 -29 § 5, 2008; Ord. 02 -42 2 (part), 2002) 0 5.08.070 Approval of contracts; report to council. A. The mayor may execute a contract for supplies, services or construction under which the city is obligated to pay no more than thirty thousand dollars ($30,000.00) without council approval. The mayor shall provide quarterly reports to the council of all expenditures over ten thousand dollars ($10,000.00). B. No contract for supplies, services or construction under which the city is obligated to pay more than thirty thousand dollars ($30,000.00) may be executed unless the council has approved a memorandum setting forth the following essential terms of the contract: 1. The identity of the contractor; 2. The contract price; 3. The nature and quantity of the performance that the city shall receive under the contract; 4. The using department; and 5. The time for performance under the contract. C. Notwithstanding subsection B of this section, the mayor may execute a contract awarded as an emergency procurement under Section 5.08.150 without council approval; provided, that the contract may not continue after the next regular council meeting without council approval. D. Notwithstanding subsection B of this section, the mayor is allowed to purchase or make payments for budgeted routine and ongoing contracts for public utility services without council approval; provided, that the terms and conditions of service are determined by a tariff on file with a state or federal regulatory agency. (Ord. 07 -18 § 2, 2007; Ord. 02 -42 § 2 (part), 2002) 5.08. 100 Competitive sealed bidding required; exceptions. Page 68 of 63 A. Except as this section provides otherwise, all city contracts for supplies, services and construction shall be awarded by competitive sealed bidding under the procedure in Section 5.08.110. B. In addition to awarding contracts by competitive sealed bidding, the city may award a contract: 1. By competitive sealed proposals under the procedure in Section 5.08.120, where authorized by that section; 2. By limited competition under the procedure in Section 5.08.130, where authorized by that section; 3. To a sole source supplier as authorized by Section 5.08.140; 4. Under an expedited procurement procedure in the event of an emergency, as authorized by Section 5.08.150; 5. Under the procedure prescribed by the source of funding for the contract; 6. For professional services without competition in an amount not to exceed fifty thousand dollars ($50,000.00); 7. Under which the city is obligated to pay no more than five thousand dollars ($5,000.00), without competition; 8. To a vendor under the terms of a contract awarded to that vendor under a competitive bidding procedure by the government of the United States, the state of Alaska or another state, or an agency, instrumentality or political subdivision of them. (Ord. 09 -35 § 2, 2009; Ord. 07 -06 § 2, 2007: Ord. 02 -42 § 2 (part), 2002) 5.08.130 Limited competition procurement. A. The purchasing agent may procure supplies, services and construction having an estimated value not exceeding ten thousand dollars ($10,000) by soliciting bids or proposals from a limited number of potential contractors under this section. B. The purchasing agent will identify vendors that are qualified and available to provide the supplies, services or construction, and solicit bids or proposals from at least three vendors, or from all vendors if there are no more than three. The solicitation may be either oral or written, and shall be in a form reasonably calculated to yield the lowest responsive bid by a responsible bidder. In soliciting bids or proposals, the purchasing agent shall allow each vendor that submits a bid an equal opportunity to negotiate price, delivery schedule and terms. C. The purchasing agent shall award the contract to the lowest responsive and responsible bidder. The purchasing agent shall keep a record of all solicitations of bids under this section, the bids received, and the awards made thereon. (Ord. 02 -42 § 2 (part), 2002) Page 59 of 63 CITY OF HOMER 3.16 020 Limitation on Manager's authority. I® SHARE I ....... .............. a. The Manager may not make an acquisition or contract authorized by HCC 3.16.010 if the value of the property, service or contract exceeds $10,000, without first obtaining City Council approval of the appropriation or unless the property, service or contract is listed in the City's annual budget. b. If the value of the property, service or contract exceeds $10,000 but does not exceed $25,000, the Manager may authorize the acquisition or contract with the written concurrence of the Finance Director if appropriated funds are available, and upon seeking at least three competitive bids from a minimum of three vendors. The acquisition or contract will be awarded to the lowest responsive and responsible bidder as determined in HCC 3.16.070 and without observing the procedure prescribed for the award of formal sealed bids. Written notice of such an acquisition or contract must be given to the City Council within 24 hours and at the next regular Council meeting. c. If the value of the property, service or contract exceeds $25,000, and is not listed in the City's annual budget, the acquisition or contract must be approved in advance by the City Council. [Ord. 01 -06(A) § 1, 2001; Ord. 84- 32, 19841. 3.16.030 Open market procedures SHARE ........ ... ..........:..... a. Purchases or contracts authorized by HCC 3.16.010 having an estimated value that does not exceed $25,000 may be made in the open market without publishing notice in a newspaper. b. A purchase or contract authorized by HCC 3.16.010 having an estimated value that exceeds $10,000 but does not exceed $25,000 shall be based on at least three competitive written bids and be awarded to the lowest responsive bidder as determined in HCC 3.16.070 and without observing the procedure prescribed for the award of formal sealed bids. c. Small procurement greater than $2,000 but not exceeding $10,000 shall, whenever practical, be based on at least two written or oral price quotations without observing the procedure prescribed for the award of formal sealed bids. d. All purchases or contracts less than $2,000 shall be made on the open market with such competition as is reasonable and practical in the circumstances. [Ord. 01-06(A) § 1, 2001; Ord. 8787 =29 § 1, 1988]. Page 60 of 63 3.16.060 Exceptions to bidding requirements.!© SHARE 1 _...... ....... ........... Unless otherwise authorized by law, all procurement actions shall be by competitive bidding. Authorized exceptions include: a. Negotiated procurement following unsuccessful efforts to obtain competitive bidding. b. Small procurement, below $25,000. c. Emergency procurement. d. Procurement of consultant and technical services. e. Procurement of real estate. f. Procurement of architect - engineer, construction manager, or construction completion services. g. Interagency agreements. h. Utilization of State or local government contracts. I. Sole source procurement. j. Procurement resulting from competitive sealed proposals as defined in HCC 3.16.110. k. Placement of insurance coverage. I. Electronic data processing software and hardware. Competition will be sought to the maximum extent practicable. [Ord. 01 -06 A § 1, 2001; Ord. 84_32, 1984]. 3.16.100 Change orders ority..© sHRRE Manager auth .. The City Manager or his designee is authorized, without Council approval, to enter into change orders where the amount of additional expenditure occasioned by the change order or orders does not, in the aggregate, exceed any contingency fund previously established with respect to the particular project or change the scope of work. The Manager or his designee shall report monthly to the Council the nature and amount of such change orders. Change orders exceeding in the aggregate the foregoing limitation or which change the scope of work are not binding without prior approval of the Council. (Ord. 01 -06(A) § 1, 2001; Ord. 84 =32, 1984). Page 61 of 63 CITY OF PALMER 3.21. 090 Council approval of contracts. 10 SHORE A. No contract for supplies, services, professional services or construction whereby the city is obligated to pay more than $15,000 may be executed unless the council has first approved a memorandum setting forth the essential terms of the contract. To the extent applicable for particular contracts, the following essential terms shall be set forth: 1. The identity of the selected contractor and all contractors contacted; 2. The contract price; 3. The nature and quantity of the performance that the city shall receive under the contract; 4. The using department; and 5. The time for performance under the contract. B. If contracts are awarded to more than one bidder pursuant to an invitation for bids, contracts with different bidders shall be considered separately for purposes of determining the application of subsection (A) of this section. If any contract to be awarded under a given bid is subject to council approval, the award of other contracts pursuant to the same invitation for bids may, at the discretion of the purchasing officer, be delayed pending council approval. C. No grant to a governmental or quasi - governmental agency or to a private nonprofit corporation for any amount may be issued unless the council has approved a memorandum setting forth: 1. The identity of the grantee; 2. The grant amount; 3. The purpose to which grant funds are to be devoted; and 4. The department charged with administration of the grant. Page 62 of 63 D. No contractor may provide supplies, services, professional services, or construction to the city before the applicable requirements of this section are first satisfied. E. Council approval of a memorandum as described in this section constitutes authorization for the city manager to execute the contract described in the memorandum. F. Regardless of the amount involved, all contracts for professional lobbying services must be approved in advance by the council. (Ord. 644 § 4, 2004) 3.21.220 Open market procedure. �® SHARE ....... ............................... A. The purchasing officer may procure all budgeted supplies, services, professional services and construction having an estimated value of not more than $50,000 on the open market without formal advertising or other formal bid procedures, but subject to the following. B. For procurements under this section over $5,000, whenever practicable, at least three informal bids or quotations shall be solicited and a record kept thereof. The solicitation may be either oral or written, and shall be in a form reasonably calculated to yield the lowest responsive bid by a responsible bidder. In addition, for any procurement under this section over $15,000, the solicitation and acceptance must be in writing. As required by PMC 3.21.100, all contracts must be signed by the city manager or acting city manager. C. Awards, where practicable, shall be made to the responsible bidder submitting the lowest responsive bid. The purchasing officer shall keep a record of all open market bids received and awards made thereon. D. All contract awards under this section, and any amendments thereto, shall be subject to the applicable approval requirements of PMC 3.21.090 prior to execution. (Ord. 644 § 4, 2004) Page 63 of 63 u " "Villaye with a Past, C# with a Future MEMO: 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 i M Telephone: 907 - 283 -7535 / FAX: 907 - 283 -3014 IIIRI 1991 TO: City Council FROM: Rick Koch, City Manager DATE: August, 16, 2015 SUBJECT: Work Session Materials — Repealing & Re- Enacting Purchasing Code The purpose of this correspondence is to briefly discuss the following: 1. Present purchasing code. 2. Proposed new purchasing code. 3. Comparisons with other jurisdictions. 4. Suggested changes to present and /or proposed purchasing code. Present Purchasing Code From the perspective of the Administration, the current purchasing code provides both the flexibility and guidance necessary to ensure the business of the municipal corporation is conducted in a legal, fair, and ethical manner, while at the same time providing an appropriate degree of flexibility to respond to procurement schedules, and conditions, without imposing administratively intense, costly, and inefficient regulation. The majority of similar jurisdictions have incorporated higher dollar levels of procurement controls, as the cost of goods and services tend to increase in cost over time. If Council desires to amend the existing code, or adopt new code, this would be an opportune time to increase current dollar limitations for various levels of procurement activities. The guidance presently provided in KMC 7.15, efficiently and effectively meets the needs of the municipal corporation, and with minor amendments to recognize the increased costs of goods and services would continue to meet the City's and citizens of Kenai's needs. Under the present purchasing code all procurements greater than $15,000 must be approved in advance by the City Council. Proposed New Purchasing Code Since this is a work session, it is not my intention to go through the proposed code item by item, but rather to discuss in general, the proposal. The proposed new code provides for a decrease in limits in several areas of normal procurement activity. In general, similar jurisdictions provide for higher dollar levels of informal procurement rather than less. There are additional administrative burdens established in the proposed code which will require more time than presently required to undertake procurement activities. The proposed code also re- defines "professional services." The current code defines "management services" as a professional service, this would be eliminated under the proposed code. The City presently contracts for management services for the following facilities: 1. Golf Course 2. Visitor Center 3. Multi- Purpose Facility (Winter) 4. Recreation Center 5. Vintage Pointe Under the proposed code these services would either need to be procured through a formal competitive proposal process, or if by sole- source negotiation through a non -code ordinance process. Under the proposed purchasing code all procurements greater than $15,000 must be approved in advance by the City Council. Comparisons with Other Jurisdictions Please find attached Exhibit "A ", this spreadsheet summarizes the procurement regulations, as it relates to dollar limits for the following Alaska Communities: 1. Municipality of Anchorage 2. Kenai Peninsula Borough 3. State of Alaska 4. City of Soldotna 5. City of Wasilla 6. City of Homer 7. City of Palmer Exhibit "A" also summarizes the procurement dollar limitations for the City's current code, proposed code, and the Administrations suggested amendments. As you can see the average dollar limit for various procurements are generally higher than those currently provided for in the City's current code. It is also important to note, that several jurisdictions, the Kenai Peninsula Borough and the City of Homer, do not require Assembly /Council approval for the procurement of goods and services of any dollar amount if it is included in the approved budget. Assembly /Council approval is only required if it is a non - budgeted expenditure. Administration's Suggested Changes to Present and /or Proposed Purchasing Code. The majority of changes suggested by Administration are contained in Exhibit "A." In summary those changes raise the threshold for procurement of goods and services, including professional services, from $15,000 to $25,000 without Council approval, and raises the threshold for the procurement of goods and services, not including professional services, through an informal procurement process from $25,000 to $50,000. Administration recommends for the procurement of professional services as provided for in our current code. The proposed changes do not address legal issues, rather they place limitations upon the Council's ability to determine the appropriate methodology by which to procure professional services, as Council determines to define professional services. While the majority of the City's procurement of professional services is regulated by the funding source, in those instances where GF funding is utilized, retaining Council options and flexibility should be retained. Additionally, Administration recommends that the current definition of professional services be retained, or a definition similar to that used by the City of Wasilla, "Professional Service means a service which involves the exercise of discretion and independent judgment together with advanced or specialized knowledge, expertise or training gained by formal studies or experience, and includes without limitation a service provided by an engineer, architect attorney, or accountant." Under the Administrations suggested amendments all procurements greater than $25,000 must be approved in advance by the City Council. Please find a corrected page for the spreadsheets contained in your worksheet packet. If you have any questions, please contact me at your convenience. attachments Comparison of Current City of Kenai Procurement Code, Proposed Procurement Code, Administration Suggested Amendments, and Other Jurisdictions EXHOI A Page ' Of Dollar Limits for Procurement of Supplies, Materials, Equipment and Construction Services Informal, Not Informal Requiring Municipality of Anchorage Kenai Peninsula Borough* State of Alaska City of5oldotna City of Wasilla City of Homer* City of Palmer Requiring Competition $5,000 - $10,000 $ 5,000.00 $ 100,000.00 $ 10,000.00 $ 5,000.00 $ 10,000.00 $ 5,000.00 Competition W/O Council Approval $ 50,000.00 $ 40,000.00 N/A $ 20,000.00 $ 10,000.00 $ 25,000.00 $ 15,000.00 Informal, Requiring Council Approval N/A N/A N/A N/A N/A N/A $15,001- $50,000 Formal, Not Requiring Council Approval $ 500,000.00 >$40,000 >$100,000 N/A $ 30,000.00 >$25,000 N/A Formal, Requiring Council Approval > $50,000 N/A N/A >$20,000 >$30,000 N/A >$50,000 Average of Above $ 20,350.00 $ 26,670.00 N/A N/A N/A Current City of Kenai Code Proposed City of Kenai Code Administration Suggested $ 15,000.00 $ 5,000.00 N/A $5,000- $15,000 $15,000- $25,000 $15,000- $25,000 N/A N/A >$25,000 >$25,000 Amendments $ 15,000.00 $15,000-$2S,000 $25,000- $50,000 N/A >$50,000 EXHOI A Page ' Of Comparison of Current City of Kenai Procurement Code, Proposed Procurement Code, Administration Suggested Amendments, and Other Jurisdictions EXHIBrr pap 2 O � Dollar Limits for Procurement of Professional Services Informal, Not Requiring Competition Informal Requiring Competition W/O Council Approval Informal, Requiring Council Approval Formal, Not Requiring Council Approval Formal, Requiring Council Approval Municipality of Anchorage $ 5,000.00 $ 50,000.00 N/A $ 500,000.00 > $50,000 Kenai Peninsula Borough* $ 5,000.00 $ 40,000.00 N/A >$40,000 N/A State of Alaska $ 100,000.00 N/A N/A >$100,000 N/A City ofSoldotna ** $ 100,000.00 N/A N/A N/A >$100,000 City of Wasilla $ 30,000.00 N/A $ 50,000.00 N/A >$50,000 City of Homer* $ 10,000.00 $ 25,000.00 N/A >$25,000 N/A City of Palmer $ 5,000.00 $ 15,000.00 $15,001- $50,000 N/A >$50,000 Average of Above $ 36,430.00 N/A N/A I N/A N/A Current City of Kenai Code $ 15,000.00 N/A >$15,000 N/A N/A Proposed City of Kenai Code $ 10,000.00 $10,000 - $15,000 N/A N/A >$15,000 Administration Suggested Amendments $ ZS,000.00 N/A >$25,000 N/A N/A EXHIBrr pap 2 O � Administration Suggested Amendments to Proposed Re- Write of Kenai Municipal Code (KMC7.15) Procurement of Supplies, Materials, Equipment, and Construction Services Less than $15,000 $15,000 - $25,000 $25,001 - $50,000 Greater than $50,000 Procurement of Professional Services* Less than $25,000 $25,000 - $50,000 Greater than $50,000 New Requirements an Prior Approval of Council Required to Execute Contract /PO No No Yes Yes Prior Approval of Council Required to Execute Contract /PO No Yes Yes d /or Limits Invitation to Bid to a Minimum of 3 Vendors and /or pubic notice of ITB's No Yes Yes N/A Informal Solicitation for quotes (3) No No No Formal Invitation to Bid Process No No No Yes Formal Request for Proposal (RFP) Required No No No * Dictated by Funding Source y't' :1' v , ,�d�ra'.EnL Me "Villaye with a Past, C# with a Future" OFFICE OF THE CITY MANAGER 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 Telephone: 907 - 283 -7535 ext 221 / FAX: 907 - 283 -3014 KMC 7.15 governs the purchases made by the City of Kenai. The following policy is intended as a supplement to KMC 7.15. The intent of the policy is to assure the expenditure of public funds is being made in the most responsible matter. The policy in no case shall be less restrictive than KMC 7.15. The expected goal of any purchase shall be to receive the lowest cost for a good or service that meets the needs of the purchasing department. Purchases less than $1,000.00 Purchases less than $1,000.00 do not require request for quotes or formal solicitation. Departments are encouraged to shop and verify the price being paid is competitive. Purchases greater than $1,000.00 but less than $5,000.00 Purchases greater than $1,000.00 but less than $5,000.00 will require a minimum of three verbal quotes that shall be documented on the purchasing verbal quote form. If three quotes are not available a brief explanation as to why and justification for selection of the vendor is required. The completed verbal quote form will be maintained by the department and made available upon request. Purchases greater than $5,000.00 but less than $15,000.00 Purchases greater than $5,000.00 but less than $15,000.00 will require a minimum of three written quotes. Written quotes will be solicited using the purchasing written quote form. If three quotes are not available a brief explanation as to why and justification for selection of the vendor is required. The completed written quote forms will be maintained by the department and made available upon request. Purchases greater than $15,000.00 but less than $25,000.00 Purchases greater than $15,000.00 but less than $25,000.00 will require City Manager approval to NOT require formal solicitation or bid. A written request to exempt a purchase from formal solicitation will include justification and the proposed method to be used in the absence of formal bid. At a minimum the requirements of purchases greater than $5,000.00 but less than $15,000.00 shall be followed. Purchases greater than $25,000.00 Purchases of goods or non - professional services greater than $25,000.00 shall be by formal competitive bid. Any deviation from formal competitive bid must be allowable under KMC 7.15.050 and be approved by the City Manager. Purchases of professional services greater than $25,000.00 will require City Manager approval to NOT require formal solicitation for bid. A written request to exempt a purchase from formal solicitation will include an explanation as to why the selected vendor was chosen and reasonable assurance the cost is competitive. K A EINI.nASIG Date: Item to be purchased: Description: Make/Model: Vendor Selected: Vendor: "villaye with a Paso C# with a Fixture" 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 Telephone: 907 - 283 -7535 ext 221 / FAX: 907 - 283 -3014 Verbal Quote Form Unit Price: Vendor 1 Vendor Name: Date: Time of Call: Make /Model of Quoted Item: Quantity Available: Vendor 2 Vendor Name: Unit Price: Date: Time of Call: Make/Model of Quoted Item: Quantity Available: Unit Price: Vendor 3 Vendor Name: Date: Time of Call: Make/Model of Quoted Item: Quantity Available: Unit Price: Quantity: Sales Person: Sales Person: Sales Person: Date: Item to be purchased: Quantity Requested: Item to be Delivered by: "i'l(aye with a Past, C# with a Future 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 Telephone: 907 - 283 -7535 ext 221 / FAX: 907- 283 -3014 Written Quote Form Description: (Attach additional Infonnanon or Drawings if applicable) Make /Model: (Attach addrhona Information in Draovings if applicable) Vendor Information: Vendor Name: Sales Person: Quoted Price Good Until: Make /Model of Quoted Item: (Attach additional Intonnanon or Drawings if applicable) Quantity Available: Unit Price: Date ' "Vil(aye with a Past, C# with a F"ture 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 Telephone: 907 - 283 -7535 ext 221 / FAX: 907 - 283 -3014 Exemption From Formal Bid Request Requesting Department: Item to be purchased: Vendor Name: Quantity Available: _ Item to be Delivered by Unit Price: Description: (Attach additional In onnation or Drawings if applicable) Make /Model: (Attach additional In onnabon or Drawings if applicable) Justification for Exemption: (Attach additional Information itneeded) Method Used to Assure Competitive Pricing: ( Attach additional Intonnanon rtneeded) Approved 1-1 Declined El City Manager: