Chapter 3.40
CONTRACT PURCHASES

Sections:

3.40.010    Definitions.

3.40.020    Administration.

3.40.040    Competitive bidding – Public works.

3.40.050    Exemptions to competitive bidding requirements.

3.40.060    Prohibited practices.

3.40.070    Disposition of City property.

3.40.010 Definitions.

Unless the context requires otherwise, the terms used in this chapter shall have the following meanings:

“Adequate appropriation balance” means budgeted funds are still available in the fund budget.

“Bid” means an offer submitted by a bidder to furnish services, labor, supplies, materials, goods, equipment and other property in conformity with the specifications, delivery terms and conditions, and other requirements included in the invitation for bids or otherwise required by the City.

“Bid bond” means a bond or other appropriate security as approved in advance by the City.

“Bidder” means a firm or individual who regularly maintains a place of business, transacts business, solicits business or maintains an inventory of merchandise for sale in, and is registered or licensed by, the City.

“Bidding” means the procedure used to solicit quotations on price and delivery from prospective suppliers of contractual services, materials, goods, equipment, and other City property, which can be through either a formal or informal competitive bid process.

“Capital equipment” means any equipment of the City having an initial value of $5,000 or more and an estimated useful life of three or more years.

“City manager” means the city manager or designee.

“City property” means any item of real or personal property owned by the City.

“Contractual services” means professional and general service contracts to accomplish a particular project or service.

“Purchase” means the acquisition of supplies, materials, goods or equipment and other property.

“Purchase order” means a document used to authorize the encumbrance of City funds toward the purchase of supplies, materials, goods, equipment and other property.

“Purchasing agent” means the finance director or designee who will purchase supplies, materials, goods, equipment and other property on behalf of the City.

“Requisition” means a standard form providing detailed information as to quantity, description, estimated price, possible vendors, fund account, signature and other information necessary to make purchasing decisions.

“Responsible bidder” means a bidder who has proven by experience or information furnished to the satisfaction of the city manager that current financial resources, production or service facilities, service reputation and experience are adequate to make satisfactory delivery of supplies of acceptable quality, equipment, or contractual services and who has not violated or attempted to violate any provisions of this policy. (Ord. 07-004 § 3, 2007; Ord. 03-071 § 1, 2003).

3.40.020 Administration.

Under direction of the finance director, the purchasing procedure shall be administered in accordance with this chapter and other applicable laws. The finance director or designee(s) shall have the responsibility to:

A. Administer and maintain the purchasing system according to the rules and regulations established or authorized by applicable ordinances and statutes.

B. Coordinate the negotiation, purchase and disposition of all City supplies, materials and equipment in consultation with City staff.

C. Seek to obtain competition by bidding or negotiation on all City purchases.

D. Prescribe and maintain such administrative policies, procedures and forms as are reasonably necessary to implement this chapter.

E. Coordinate the inspection of all City-purchased equipment to assure conformance with specifications.

F. Ensure that bidders’ lists, vendors’ catalog files and other records needed for the efficient operation of the purchasing system are maintained.

G. Maintain the property inventory and fixed asset systems of the City.

H. Determine with appropriate City staff the need for any routine preventive maintenance contracts on various pieces of equipment, and to establish and maintain said maintenance contracts.

I. Periodically prepare a comprehensive list of surplus, worn out or obsolete City-owned equipment. Items which cannot be used or reassigned to another department shall be recommended for disposal at a public auction. (Ord. 07-004 § 3, 2007; Ord. 03-071 § 2, 2003).

3.40.040 Competitive bidding – Public works.

For public works contracts where the small works process in Chapter 3.50 SVMC is not used, the following competitive bid process shall be used:

A. Publication of Notice. Sealed bids shall be invited by a single publication in a newspaper of general circulation at least 15 days before the date and time set for opening such bids, and shall include an estimate of the probable cost, together with a description of the work, and shall state that plans/specifications may be obtained from the City, and include the manner, place, date and time for submitting a bid to the City. The city clerk shall also post notice of the request in a public place.

B. Rejection of Bids. The finance director may reject, without cause, any and all bids and may re-advertise for bids pursuant to the procedures herein described. If no bids are received, the finance director may negotiate the purchase with a vendor at the lowest cost possible to the City.

C. Performance Bonds. Before entering into a contract, the finance director may require a performance bond in such amount as is reasonably necessary to protect the best interests of the City and to ensure complete, proper, and full performance of the contract. A performance bond shall be required on all public works construction projects, as set forth in RCW 39.08.010 through 39.08.030, as adopted or amended.

D. Bid Bonds. The finance director may require as a condition of bidding a bid bond in the amount of five percent of the bid amount. Such bid bond shall be required on all formally bid public works construction projects, and shall be due at such time as the bid is submitted to the City. When the contract is let, all bid bonds shall be returned to the bidders except that of the successful bidder, which shall be retained until a contract is entered into and a bond to perform the work furnished as provided above. If the successful bidder fails to enter into the contract in accordance with the bid within 10 days from the date at which the bidder is notified of bid award, the bid bond shall be forfeited.

E. Award of Bid. Except as otherwise provided herein, the City will accept the bid of the lowest responsible bidder.

F. Award to Other Than Low Bidder. When the bid award is not given to the lowest responsible bidder, a full and complete statement of the reasons shall be prepared by the finance director and placed in the City file relating to the transaction. (Ord. 07-004 § 3, 2007; Ord. 03-071 § 4, 2003).

3.40.050 Exemptions to competitive bidding requirements.

The following types of purchases are exempt from competitive bidding requirements:

A. Sole Source. Purchases which by their nature are not adapted to competitive bidding, such as purchases which are clearly and legitimately limited to a single source, and contracts to repair equipment owned by the City which may be more efficiently accomplished by a certain person or firm with previous experience on the equipment. The city manager shall have previously adopted written policies, which require setting forth the contract and factual basis for this exemption, which must then be recorded with the city clerk and open to public inspection.

B. Special Facilities or Market Conditions. Purchases involving special facilities or market conditions that generally relate to acquisition of unique facilities that may be specially manufactured or not otherwise generally available. Special market conditions may require immediate acquisition based upon a favorable offer, including, but not limited to, liquidation sales, public or private party offers and similar circumstances where the acquisition can be obtained at below market value. The city manager shall have previously adopted written policies, which require setting forth the contract and factual basis for this exemption, which must then be recorded and open to public inspection.

C. Auction, Closeout, Bankruptcy Sales. If it is determined that supplies, materials, or equipment can be purchased through public auction, closeout sale, bankruptcy sale or other similar sale at a cost below the market cost, the finance director may authorize said purchase(s) up to $200,000.

D. Exchanges. The City may by agreement exchange supplies, materials or equipment with other public agencies.

E. Interlocal Agreements in Letting of Contracts for Commodities, Equipment or Services. The city manager may enter into joint purchase agreements with any and all other public agencies within the state for the purchase of any commodity, equipment or service as permitted by state law, where it is determined by the city manager to be in the best interests of the City.

F. Emergency Purchases. In the event that an emergency should arise after office hours, which emergency requires immediate action on the part of the City department involved for the protection of the best interests of the City, or should such a situation arise on a Saturday, Sunday or holiday and where it is not possible or convenient to reach the city manager, any necessary purchase shall be made by the City department for which the purchase is necessary. The purchase shall be reported to the finance director the next business day. Publication notices may be waived for emergency purchases as provided by law.

G. Petty Cash. The finance department may maintain a petty cash/change fund of up to $1,500 to help eliminate the issuance of purchase orders and claims vouchers for small items needed immediately from vendors not having open purchase orders. No single petty cash purchase shall exceed $100.00. All requests for petty cash funds or reimbursement of petty expenditures shall be reconciled by a receipt or paid invoice, or a completed petty cash form. Reimbursements and reconciliations of petty cash funds shall be made within 30 days of the transaction. No personal checks shall be cashed out of the petty cash fund.

H. Real Property. Acquisition of real property is exempt from the competitive bidding requirements set forth in this chapter. Upon approval of the city council, the city manager may proceed to acquire real property through negotiation. Such negotiations shall be based upon a fair market value appraisal of the property. The City shall not pay more than fair market value for any real property, except with prior city council approval, or except as may be approved by the Washington State Department of Transportation on behalf of the City for road construction projects.

I. Non-public works purchases or contracts for services, and public works purchases less than $50,000. Non-public works purchases or contracts for services, and public works purchases of less than $50,000 are not subject to a formal competitive bidding process. At least twice per year, the City shall publish in a newspaper of general circulation a notice of the existence of vendor lists for purchases of supplies, materials, goods or equipment, and solicit the names of vendors for the lists. The City shall establish by resolution a procedure to ensure that a competitive price is established and for awarding the contracts for the purchases to the lowest responsible bidder as defined in SVMC 3.50.040(C). Immediately after the award is made, the bid quotations obtained shall be recorded, open to public inspection, and shall be available by telephone inquiry. A contract awarded pursuant to this subsection need not be advertised. (Ord. 07-004 § 3, 2007; Ord. 05-031 § 2, 2005; Ord. 03-071 § 5, 2003).

3.40.060 Prohibited practices.

The following types of purchasing practices are hereby prohibited and may result in disqualification of the bid:

A. Collusion Among Bidders. Any agreement or collusion among bidders or prospective bidders to either buy or sell or fix prices in restraint of free competition. Such bidders may be subject to exclusion from future bidding with the City when determined by the finance director to be in the best interests of the City.

B. Disclosure of Formal Bid Contents. Any disclosure of information contained in the sealed bid prior to bid opening. Notwithstanding anything herein to the contrary, all bids submitted by bidders taking advantage of any information revealed contrary to this section shall become null and void.

C. Gratuities. In accordance with high standards of behavior, the acceptance of any gift or gratuity in the form of cash, merchandise or any other thing of value by an official or employee of the City from any vendor or contractor, or prospective vendor or contractor.

D. Employee-Owned Businesses. Obtaining City goods or services from businesses in which City officials, employees or their immediate family members have a majority ownership interest or otherwise exceed the “interests” described in Chapter 42.23 RCW.

E. Sale of Materials and Supplies. The City acquiring goods or services for any private party, or selling its materials or supplies to City officials, employees, or the public except when said materials have been declared surplus and disposed of as provided herein. (Ord. 07-004 § 3, 2007; Ord. 03-071 § 6, 2003).

3.40.070 Disposition of City property.

City property shall be disposed of in the following manner:

A. Definition. “City property” as defined herein means any property or equity interest in real or personal property held or owned by the City.

B. Surplus Property. The decision to declare property surplus shall rest solely with the city council. Upon recommendation of the finance director, the city council may declare property surplus upon one or more of the following criteria:

1. The City has or anticipates no practical, efficient, or appropriate use for the property.

2. The purpose served by the property can be accomplished by use of a better, less costly, or more efficient alternative.

3. The purpose served by the property no longer exists as determined by a change of policy or practice.

4. The property is damaged, inoperable or obsolete and the cost of repairing the same is uneconomical or impractical.

C. Sale of Property. Following passage of a resolution by the city council declaring property surplus, the finance director is authorized to sell surplus property in the following manner:

1. Upon a finding by a department director that the property is surplus to City use, the finance director shall provide notice of potential disposition to other City departments. If any department director desires to acquire and use the proposed surplus property, the property may be transferred to the requesting department director, or other authorized representative.

2. If no request for use of proposed surplus property is received, the finance director may proceed to dispose of the same by public auction, bid, or other method of sale on terms deemed to be in the best interests of the City.

3. Surplus personal property which is unsellable because of obsolescence, wear and tear, or other reasons may be dismantled, if necessary, and sold as scrap. Surplus personal property which has no marketable value or use may be discarded as refuse.

4. If the proposed surplus property is real property, notice of the proposal to declare the same surplus shall be given to the city council.

5. If the city council declares the real property as surplus, the finance director shall secure a market value appraisal of the property and proceed to sell the same by public auction or through the formal bidding procedures the city manager deems to be in the best interests of the City.

D. Trade of Real Property. Real property may be traded under the following conditions:

1. If the finance director determines that the disposal of real property declared surplus under this section could realize greater benefit to the City through consideration other than cash, the finance director may invite prospective purchasers to tender consideration of cash and property. Upon receipt of a bid tendering consideration in kind, and prior to accepting such bid, the finance director shall make a report setting forth the benefits of such a transaction. This report shall be made to the city council at a regular council meeting and the report shall be open to public inspection.

2. Before accepting any bid containing in-kind consideration, an adequate appraisal must have been made by a qualified independent appraiser.

3. If the city council finds that the bid containing the in-kind consideration has more value or benefit to the City than any other bid submitted, the finance director may accept the bid containing in-kind consideration.

E. Lease of Public Property. When specifically provided for in the City budget, the city manager may authorize the lease or sublease of any property, including real property, under such terms and conditions as the city manager may deem desirable, fair and appropriate, either by use of negotiations or bidding in the best interests of the City. Leases of real property shall not be granted for a period of more than five years, unless otherwise authorized by the city council. (Ord. 07-004 § 3, 2007; Ord. 03-071 § 7, 2003).