(Dec. 4, 2012, 5:50 a.m.) -- City management will seek City Council approval tonight (Dec. 4) to let management bind the City to contracts of up to a quarter of a million dollars without voted Council approval or public disclosure of parties, amount or subject matter before the contracts are entered into.
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:
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
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.