Subject
title
Adoption of an Ordinance to amend Chapter 17 of the Rockville City Code, entitled “Procurement” to revise certain provisions of Chapter 17 of the Rockville City Code, to amend procurement spending thresholds, and to add reporting requirements.
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Department
CMO - Procurement
Recommendation
Staff recommends that the Mayor and Council adopt the attached ordinance to amend Chapter 17 of the Rockville City Code to revise certain provisions of Chapter 17, to amend procurement spending thresholds, and to add reporting requirements through the following actions: 1) motion to amend the ordinance as modified in the attached ordinance; and 2) motion to adopt the amended ordinance.
Change in Law or Policy
The proposed ordinance will modify the procurement thresholds for the City making the threshold at which the Mayor and Council would make awards at $250,000, as well as modify certain provisions within Chapter 17 relating to matters including updating the internal procurement thresholds. Per direction from Mayor and Council at the time the ordinance was initially introduced, the ordinance also codifies certain reporting requirements for procurements that would have previously been approved by Mayor and Council but that now will be approved by the City Manager.
Discussion
On September 9, 2024, Mayor and Council discussed the initial version of these proposed changes to Chapter 17 of the Rockville City Code entitled “Procurement.”
The Code amendment, among other changes, updates the threshold for when Mayor and Council approve procurements (currently $100,000, proposed $250,000).
NEW ADDITIONS: Per direction of the members of Mayor and Council when the ordinance was first considered on September 9, 2024, the revised ordinance with this agenda item includes a required annual report from the City Manager for contracts awarded, and changes and modifications to contracts involving more than $100,000 but not to exceed $250,000. The report will thus communicate to the public regarding procurements that would have been approved by Mayor and Council but that now will be approved by the City Manager. Procurements of $250,000 or more will be approved by Mayor and Council on their publicly posted agendas. The City Manager will also continue to report on any emergency procurement of $100,000 or more as soon as practicable (this threshold will not be increased to the $250,000 initially proposed).
As noted for the agenda of September 9, 2024, the purpose of Chapter 17 of the Rockville City Code “Procurement” is to provide a legal framework for the expenditure of public funds to purchase City supplies, services, and equipment, and to ensure public bidding for construction of public projects, including obtaining the most qualified vendors in a fair and impartial manner at a reasonable price. The Code also establishes financial controls over purchases and sets recommended procurement approval authority limits for the Mayor and Council, City Manager, and the Purchasing Agent.
The most noteworthy amendments in this action are related to the procurement spending thresholds. These thresholds, which govern when competitive procurement methods are conducted, as well as who is the Awarding Authority for contracts, have not been updated since 2011. The Mayor and Council have previously indicated their support for updates being made to the procurement thresholds. The information below outlines the old versus the new proposed procurement thresholds.
|
THRESHOLD |
COMPETITIVE METHODS |
CURRENT LIMITS |
NEW LIMITS |
|
Small Procurements |
P-card, Direct purchases |
<$3,000 |
<$10,000 |
|
Informal Solicitation |
Request for Quotes (RFQ) |
$3,000-$30,000 |
$10,000-$50,000 |
|
Formal Solicitations |
Invitation for Bids (IFB), Request for Proposals (RFP) |
$30,000+ |
$50,000+ |
The current procurement methods and practices will still apply and will be modified to incorporate the new procurement thresholds if the proposed Code amendment is adopted. If the proposed Code amendment is adopted, the City Manager will serve as the Awarding Authority for contract awards exceeding $50,000 but under $250,000 and the Mayor and Council will serve as the Awarding Authority for contract awards exceeding $250,000.
Staff is requesting the following amendments to Chapter 17, which includes the edits to the procurement thresholds summarized above, as well as edits to provisions that will allow for efficiencies within the City’s procurement function.
Section 17-16 Definitions: Section 17-16 is amended to edit the definition of a formal contract, specifying the new procurement threshold requiring a written contract and City Manager signature for purchases exceeding $50,000.
Section 17-16 Definitions: Section 17-16 is amended to edit the definition of an informal contract, specifying the new procurement threshold for purchases not exceeding $50,000.
Section 17-16 Definitions: Section 17-16 is amended to edit the definition of purchase order, specifying that countersignature is not required unless otherwise required by this Chapter.
Section 17-37(a) Written contracts required: Section 17-37 is amended to edit the subsection pertaining to written contracts specifying that all contracts of $10,000 or more must be in writing.
Section 17-37(b) Written contracts required: Section 17-37 is amended to add language requiring that a purchase order for purchases that have a warranty contain information specifying the warranty and requiring the vendor to countersign the purchase order.
Section 17-38 Formal contracts: Section 17-38 is amended to specify the new procurement threshold of $50,000 for formal written contracts signed by the City Manager and Contractor.
Section 17-39(a): Section 17-39 is amended to specify the new procurement threshold of $250,000 for Mayor and Council as the Awarding Authority.
(NEW) Section 17-39(d) is amended to add new reporting requirements for procurements, modifications and change orders between $100,000 to $250,000.
Section 17-40(a)(1) Contract modifications; change orders; price adjustments: Section 17-40 is amended to specify the new procurement threshold of $250,000 requiring a contract to be brought back to Mayor and Council for approval.
Section 17-40(a)(2)(a) Contract modifications; change orders; price adjustments: Section 17-40 is amended to specify the new procurement threshold of $250,000 for changes to contracts originally awarded by the Council when the cumulative value of all changes exceeds the greater of $250,000 or ten percent (10%) of the original contract.
(NEW) Section 17-40(a)(3) Contract modifications; change orders; price adjustments: Section 17-40 is amended to add a new subsection requiring changes to any contract already modified by the Council where the cumulative value of all changes exceeds the greater of $250,000 or ten percent (10%) of the modified contract.
Section 17-40(b) Contract modifications; change orders; price adjustments: Section 17-40 is amended to specify the new procurement threshold of $50,000.
(NEW) Section 17-40(c) Contract modifications; change orders; price adjustments: Section 17-40 is amended to add a new subsection requiring the City Manager to annually provide a publicly available report relating to contract changes above $250,000.
Section 17-41 Multi-term contracts: Section 17-41 is amended to clarify the action of the Awarding Authority.
Section 17-61(h)(3) Formal solicitation - Competitive sealed bidding (Invitation for Bids-IFB): Section 17-61 is amended to remove this subsection in its entirety which provided the ability for a Contractor to correct errors or withdraw their bid post award.
Section 17-63 Informal solicitation: Section 17-63 is amended to specify the new procurement threshold of $50,000.
Section 17-81 Small procurements: Section 17-63 is amended to specify the new procurement threshold of $10,000.
Section 17-84(d) Emergency procurements: Section 17-84 is amended to specify the new procurement threshold of $50,000 when requiring the purchasing agent to obtain approval from the City Manager for emergency procurements.
Section 17-84(e) Emergency procurements: Section 17-84 is amended to specify the new procurement threshold of $50,000 when requiring the purchasing agent to provide an annual report list of all emergency purchases to the City Manager.
Section 17-84(g) Emergency procurements: Section 17-84 is amended to specify the new procurement threshold of $50,000 when requiring the City Manager to provide an annual report listing of all emergency procurements to the Mayor and Council.
Section 17-87(a)(1) Exemptions: Section 17-87 is amended to include additional criteria for professional services associated with other legal matters as determined reasonable and necessary by the City Attorney.
Section 17-87(a)(2) Exemptions: Section 17-87 is amended to specify the new procurement threshold to $10,000 for professional services.
Section 17-87(a)(12) Exemptions: Section 17-87 is amended to include an exemption from competitive procurement for conservation services relating to existing City-owned art.
(NEW) Section 17-87(a)(18): Section 17-87 is amended to add a new subsection that allows an exemption from competitive procurement for purchases relating solely to and directly for elections.
Mayor and Council History
The procurement spending thresholds were last amended in 2011 per ordinance #09-11. The latest amendment regarding the procurement code revisions was adopted by Mayor and Council in 2020 per ordinance #06-20 to add a provision for conducting procurement by electronic means.
Next Steps
If the Mayor and Council does not adopt the ordinance at this meeting, it will be scheduled for a decision at a subsequent meeting. If the Mayor and Council adopts this ordinance, staff will begin updating necessary documents accordingly. Additional amendments will be considered in the future and will be presented to the Mayor and Council as needed.