City Mgm't Seeks Council Approval To Enter Contracts Up $250,000 Without Council Vote Or Public Disclosure Of Parties, Amount, Subject Until After Deals Done

Mgm't's current limit is $100k; First of two Council approval votes sought today (Dec. 4)

The item proposes to change a city ordinance (adopted by a previous Council years ago) by more than doubling the amount -- from $100,000 to $250,000 -- that management can approve without voted Council approval, which would simultaneously block public disclosure of the parties, amount, subject matter before the deals are done. (Exception: sole source contracts over $100k would still require Council approval.)

City management says the action will save money by streamlining approval and adds that City Hall's FY13 budget (drafted by management approved by the Council in September 6-2 [Austin, Neal dissenting, Andrews absent]) included a provision forecasting savings from the change. "The FY 13 Adopted Budget included a budget reduction of 20 percent of the Purchasing Division buying staff, eliminating one of five positions, for a savings of $98,254. These savings are contingent upon the adoption of the ordinance and implementation of the proposed purchasing revisions. In addition to the savings, the proposed change to the LBMC will reduce the City's administrative costs, increase efficiency, and improve controls," writes Financial Management Director John Gross in an agendizing memo.

Enactment of the item requires changing a city ordinance, thus requiring Council majority approval in two votes: one tonight (Dec. 4) and a second at a subsequent Council meeting.

Management's agendizing memo states:

DISCUSSION

The Fiscal Year 2013 (FY 13) budget adopted by the City Council on September 4, 2012, includes a provision to change the City's purchasing policies to streamline the purchasing process, improve efficiency, introduce enhanced financial controls, and decrease administrative expense. In order to implement some of these efficiency improvements as adopted in the budget, an amendment to the Long Beach Municipal Code (LBMC) is required.

Purchasing Agent Authority

Currently, the LBMC allows the Purchasing Agent to issue purchase orders in the amount of $100,000 or less. The Adopted FY 13 Budget captured savings from raising that amount to $250,000, which allowed for the elimination of a buyer position and implementation of a more streamlined purchasing process. The proposed ordinance and associated procedures provide this authority and include the following financial controls for purchases between $100,000 and $250,000:

• The procurement process must require at least three proposals or bids, ensuring that a competitive process has been used.

• Any sole source procurement above $100,000 will require City Council approval.

• The purchase must be in conformance with purchasing procedures developed and promulgated by the Purchasing Agent. The required purchasing procedures will include award protest procedures to provide additional pre-award controls.

• As an additional control, City purchasing procedures will provide for a quarterly report to the City Council on all purchases above $100,000 that were approved by the Purchasing Agent.

• Any purchases above $250,000 would require City Council approval.

The LBMC also currently allows the Purchasing Agent to issue purchase orders in the amount of $500,000 or less for Homeland Security grant contracts. This higher limit has worked successfully in the City for a number of years, and has allowed the City to move quickly to purchase Homeland Security equipment under strict time requirements, while adhering both to the purchasing policies required by the federal grants and the City. Similar benefits are expected from the proposed change outlined above. Additionally, KPMG, the City's external auditor, has reviewed the proposed changes and determined they do not constitute a financial control issue.

Department Authority to Make Purchases

The adopted FY13 budget includes a provision to increase a department's purchasing authority to $25,000, from the current $10,000 limit. The LBMC change allows the Purchasing Agent to delegate authority to departments for purchases. Currently, the Purchasing Agent will set the limit at $25,000, but the departments will only be able to make purchases if they follow the purchasing procedures promulgated by the Purchasing Agent...

FISCAL IMPACT

The FY 13 Adopted Budget included a budget reduction of 20 percent of the Purchasing Division buying staff, eliminating one of five positions, for a savings of $98,254. These savings are contingent upon the adoption of the ordinance and implementation of the proposed purchasing revisions. In addition to the savings, the proposed change to the LBMC will reduce the City's administrative costs, increase efficiency, and improve controls. There is no local job impact associated with this recommendation.

As always, LBREPORT.com will carry live VIDEO today's Council meeting starting at 5 p.m.

Developing.