HomeMy WebLinkAboutORDINANCE 2119-2005l
CITY OF KENAI
Suggested by: Council
ORDINANCE N0.2119-2005
AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AMENDING
SECTION 7.15.050(1) TO INCREASE THE AMOUNT THAT CAN BE SPENT ON
PURCHASES OF SUPPLIES, MATERIALS, EQUIPMENT OR CONTRACTUAL SERVICES
WITHOUT A COMPETITIVE BID PROCESS FROM ~ 10,000 TO X25,000.
WHEREAS, KMC 7.15.050(1) provides that purchases of supplies, materials,
equipment or contractual services in an amount over ~ 10,000 are subject to
competitive bidding; and,
WHEREAS, for purchases less than X25,000, the City is able to obtain the best pricing
through methods other than competitive bidding; and,
WHEREAS, it is in the best interest of the City of Kenai to raise the limit on purchases
of supplies, equipment, materials and contractual services that can be purchased
without competitive bidding from ~ 10,000 to X25,000.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI,
ALASKA that KMC 7.15.050(1) is amended as follows:
?.15.050 Purchases, when competitive bidding not required.
The following may be purchased without giving an opportunity for
competitive bidding:
(1) Supplies, materials, equipment, or contractual services whose cost
does not exceed [~ 10,000] 25 000 in a single transaction;
PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 21st day of
September, 2005.
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PAT PORTER, MAYOR
ATTEST:
Carol L. Freas, City Clerk
Introduced: September 7, 2005
Adopted: September 21, 2005
Effective: October 21, 2005
CITY OF KENAI
210 FIDALGO AVE., SUITE 200 KENAI, ALASKA 99611-7794
~ TELEPHONE 907-283-7535
.. _ _ FAX 907-283-3014 ~
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1992
MEMORANDUM
To: Charles M. Kopp, Acting City Manager
Through: Jack LaShot, Public Works Manager
From: Robert C. Springer, Building Official
Date: September 8, 2005
Re: Competitive Bidding Process
Competitive bids for projects that have significant costs, such as over $100,000 and
equipment bids provide needed competition resulting in lower prices. Competitive bids
for smaller projects such as anything under $25,000 actually have a negative effect.
Common sense suggests any competitive bidding would result in lower prices, however I
have seen the exact opposite happen, prices actually increase. Projects from $25,000
to $100,000 may or may not have lower prices depending on the type of project.
When a maintenance project comes up we typically take it to a local contractor for price
quotes. If the quotes are over $10,000 then we spend from 2 to 4 days of city personnel
time putting together bid specs for a competitive bid process. Then it takes at least 30
days for a bid opening and then anotherweek for Council approval, this whole process
can take 8 to 12 weeks just to get a project to the contractor. to start work.
The contractors that provided the original price quotes typically raise their price about
15% when they competitively bid the project. There are several probable reasons for
this increase:
1. Smaller contractors are discouraged about the increased paperwork and
insurance requirements and charge accordingly.
2. The 8 to 12 week delay from when a contractor initially provides a price quote
and the bid opening date can increase material costs or contractors have had to
make other commitments that they must break to do the City's project.
. ~ ~~ 3. Competitive bidding makes known publicly who is interested in a project thus a
contractor who knows who their com etition is will raise their rice knowin that
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the competition will be bidding higher or in some cases if no one is interested in
bidding a smaller project the contractor then knows he has no competition and
will increase his price.
4. Bid specs create a more restrictive guideline to follow thus stopping the benefits
of design/build bidding by the contractor, increasing his costs and his price.
The following are some examples of City projects that, after competitively bidding, the
cost of the project increased:
1. Standpipe installation. Initial quote $19,060 after competitive bid $22,334.
2. Gym floor resurface/repair. Initial quote $16,320 after competitive bid $19,127.
3. Roof top heater replacement. Initial quote $19,421 after competitive bid $20,378.
4. Exterior repainting. Initial quote $11,345 after competitive bid $14,050.
I estimate that 90% of all maintenance projects come in under $25,000. With the
increasing costs most projects are now coming in over $10,000, so an increase in the
competitive bidding threshold would save employee time and money.
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