HomeMy WebLinkAboutResolution No. 2018-05tlte ei!y"(,
KENAI, AlASKA
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Sponsored by: Adm inistration
C ITY OF KE NAI
RESOLUTION NO. 20 18-05
A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI , ALASKA, ADOPTING A POLICY
TO PROVIDE PROCEDURES FOR INCLUDING CONTINGENCY FUNDING IN CONTRACTS.
WHEREAS , inclusion of an appropriate and Council approved contingency amount in contracts
will provide for efficie nt management while maintaining proper controls over City contracts ; and,
WHEREAS, it is appropriate to include a Council approved contingency in contracts where
identified uncertainties justify the inclusion .
NOW , THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI , ALASKA:
Section 1. That Council Policy No. 2018-02: Procedures for Including Contingency Funding
in Contracts, attached, is approved .
Section 2. That this resolution takes effect immediately upon passage.
PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 7th day of February, 2018.
BRIAN GABRIEL SR., MAYOR
ATTEST:
POLICY NO. 2018-02: Procedures for Including Contingency Funding in
Contracts.
Purpose
Inclusion of an appropriate Council approved contingency amount in contracts will provide for
efficient management whi le maintaining proper controls over City contracts .
Scope
Contracts where identified uncertainties justify the inclusion of an appropriate and counc il
approved contingency amount.
Policy
1. Including Contingency in Bids:
a. The administration will identify uncertainties in projects and include a bid item to cover
potential contingencies needed to complete the project.
b. This is a contingent sum in the bid schedule that if changed wil l not affect the order of
bidders from low to high .
2. Council Award of Contracts:
a. The administration will identify possible uncertainties and the amount of recommended
contingency in the memo accompanying the Council action.
b. The Council may approve or change the amount of recommended contingency prior
to approving the award of a contract.
3. Administration's Management of Awarded Contracts:
a. The administration will issue a Purchase Order and execute a contract for the amount
awarded by Council.
b. The administration may not authorize expenditures in excess of th e contract amount
wi thout additional approval from the Council.
c. If the administration seeks additional funding to comple te the project, a rep ort of how
the original contingency was expended wi ll be provided , and j ustificatio n for the
additional funding requested.
d . At the end of the project the admin is tration wi ll pro vi de a report of the amount of and
how contingency funds were expended .
Effecti ve Date :
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Appro ved by Resolution 2018-05
BRIAN GABRIEL SR , MAYOR
ATTEST:
Jamie Heinz , City Clerk
't;;tlti!e t<J/t/t, a Paif~ Ct~ t<J/t/t, a rat~ "
210 Fida Igo Ave, Kenai, Alaska 99611-7794
Telephone: (907) 283-7535 I Fax: (907) 283-3014
www.kenai.city
MEMORANDUM
TO:
THROUGH :
FROM:
DATE:
SUBJECT:
Mayor Brian Gabriel and Kenai City Council
Paul Ostrander, City Manager ?·c..?.
Sean Wedemeyer, Public Works Director/Capital Projects Manager SA IA/
January 26, 2018
Resolution 2018-05 -Adopting a Policy to Provide for Including
Contingency in Contracts
The purpose of this memo is to recommend adopting the resolution approving the policy for
including contingency in contracts.
Currently, prior to the issuance of purchase orders for the contract amount of goods or services
to be purchased in excess of $15,000 , Administration includes the requested purchase orders
on a list to be authorized by City Council. In the case of large purchases or purchases resulting
from a request for proposal, a resolution is prepared for adoption. For purchase orders related
to change orders , the procedure creates difficulties in the management of contracts . Any
monetary changes to a contract require a change order, which must be approved by Council. In
most cases, the City Manager has already authorized the change order, and the work has either
been completed or is in the process by the time the Council considers the change order for
approval. This process puts the Council in a position of approving a purchase order increase
after-the-fact and effectively circumvents the intent of this internal control.
Inclusion of an appropriate contingency amount in contracts will provide for efficient management
while maintaining proper controls over City contracts . This policy will allow for the Council to
approve or change the amount of recommended contingency prior to approval of the contract
award.
Thank you for your consideration.