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HomeMy WebLinkAbout13 - Council Policy F-14 - Service ContractsCITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. 13 May 9, 2006 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Office of the City Attorney Robin L. Clauson, City Attorney (949)644 -3131 rclauson &city.newport- beach.ca.us SUBJECT: Amendment to Council Policy F -14 (Service Contracts) ISSUE: Should the City Council amend Council Policy F -14 to provide an updated and comprehensive guide to staff and the public regarding service contract selection, preparation, approval and amendment? RECOMMENDATION: Adopt the attached resolution amending Council Policy F -14. DISCUSSION: Background: The service contracts entered into by the City of Newport Beach are affected by legal requirements from a number of different sources including, but not limited to, the City Charter, the Newport Beach Municipal Code, Council Policies and Resolutions, and state law. This creates a complex web of requirements that staff must navigate to produce contracts that are in compliance with all applicable legal requirements. To ensure that City contracts comply with all legal requirements, the City Attorney's Office analyzed the interaction between the laws, policies and procedures affecting City contracts, and performed an in -depth review of the City's current contract system practices. Based thereon, the City Attorney's Office identified several areas where the City could improve its policies for service contract formation. The City Attorney's Office also developed a roadmap for achieving a city -wide best practices system in the contract setting to provide detailed guidance to staff. Amendment to Council Policy F -14 (Service Contracts) May 9, 2006 Page 2 At the same time, the City Manager's Office noted a need for clarified procedures for professional consultant selection, and directed the Administrative Services Department to prepare such procedures for adoption. After staffs review and input, these procedures were incorporated into revised Council Policy F -14, which was presented to the City Council at its April 25, 2006 study session. At that study session, Council reviewed the terms of the proposed policy, noted a few changes and clarifications needed, and directed the City Attorney's Office to bring the amended Council Policy F -14 back to the Council at its regular session for adoption by resolution. Authority: Since Newport Beach is a charter city, the authority under which the City enters agreements is granted by the Charter of the City of Newport Beach. To the extent that general law statutes are not inconsistent with the City Charter, the statutes applicable to general law cities also apply to charter cities. Most notably, the California Public Contract Code, Government Code, and Corporations Code may also affect provisions and procedures for certain City contracts. City Charter Section 421 provides that the City shall not be bound by any contract, unless it is in writing and signed by the Mayor and City Clerk, or signed by another City officer to whom the City Council delegated or directed signing authority. When it adopted the current version of Council Policy F -14, the City Council delegated authority to Department Directors (who are City officers) to sign contracts for services of $30,000 or less. Charter Section 421 also permits the City Council to delegate authority to the City Manager to bind the City to contracts, so long as that delegation is performed by ordinance or resolution. In 1969, through Resolution 7072, the City Council delegated authority to the City Manager to sign certain contracts that did not exceed $5,000. In 1987, through Resolution 87 -67, Council expanded the authority of the City Manager to sign a wider variety of contracts, and increased his signing authority for service contracts to $30,000. Council Policy F -14 currently gives Department Directors the same $30,000 signing authority for service contracts. Substantive Changes: The proposed amendments to Council Policy F -14 clarify the provisions of the existing Council Policy, incorporate the provisions of Resolution 87 -67, and set forth expanded provisions to cover contract situations that current Council Policy F -14 does not address. For example, proposed Council Policy F -14 sets forth authority to amend service contracts, specifies which City official is authorized to Amendment to Council Policy F -14 (Service Contracts) May 9, 2006 Page 3 sign amendments at different levels of increased contract amount, and states when a contract amendment must be presented to the City Council. It reflects past practice by setting forth the service contracts the City Attorney is authorized to sign. It clarifies that all service contracts require the City Attorney's review and the City Clerk's attestation, and must be accompanied by proof of the appropriate level of insurance. It contains procedures for contract review, approval, and retention, as well as professional services consultant selection procedures. The proposed Council Policy F -14 also instructs staff on the preferred methods of entering into contracts in emergency situations. During an emergency, services must be acquired in a setting where some of the standard contract procedures and requirements are not practicable. It directs the City to enter Emergency On- Call Agreements whenever possible, so that qualified, experienced consultants with the appropriate level of insurance and set hourly billing rates will already be in a contractual relationship with the City when an emergency arises. The proposed amendments to Council Policy F -14 also suggest that the City Manager's signing authority be increased to reflect the larger contracts the City is entering into, as well as the sharply increasing costs of services and materials that the City must acquire. The City Manager's signing authority was established in 1967 and expanded 18 years later in 1987. This year, it has been 19 years since the last increase in the City Manager's spending authority, and staff feels it is an appropriate time to increase his spending authority again. At its April 25, 2006 study session, the Council had no objection to raising the limit of the City Manager's service contract signing authority from $30,000 to $50,000. Authorizing the City Manager to sign contracts funded by permit or project applicants was also recommended by staff. This issue was raised by Planning Department staff who pointed out that project applicant funds, rather than City budget funds, pay for Negative Declaration and EIR preparation. In this situation, the applicant is essentially paying for temporary staff augmentation. Currently, even for projects where only the applicant's funds are involved, the City Council must review and approve contracts when the contract amount exceeds $30,000. If Council review were not required, the City would have loss difficulty meeting certain CEQA requirements. CEQA generally requires that the City contract with an environmental consultant within 45 days of receiving the completed application. Those 45 days pass quickly during the Planning Department's process of sending out an RFP, receiving proposals, preparing a contract, and getting its approval scheduled at a Council meeting. Sometimes it is impossible to meet the 45 -day deadline as a result. City Charter Section 421 permits the City Council to delegate the authority to sign this sort of contract to the City Manager. At its April 25, 2006 study session, the City Council approved the concept of authorizing the City Manager to sign applicant- funded contracts without monetary limit. However, the Council directed Amendment to Council Policy F -14 (Service Contracts) May 9, 2006 Page 4 that it be notified when an applicant- funded contract exceeding $100,000 was going to be entered by the City, so that the Council could be apprised of major projects proposed within the City as far in advance as possible. The City Attorney's Office has changed the language of the F -14 amendment to reflect Council's directions. At the April 25, 2006 study session, Council Member Ridgeway pointed out an important clarification, which has been incorporated into the "Limitations" section of revised Council Policy F -14. The terms of City Charter Section 1110 (Contracts on Public Works) require that all contracts for construction or improvement of public works must be let by the City Council when the total contract amount exceeds $30,000. Although most service contracts are handled differently than public works contracts within the City, public works contracts do involve service elements. The requirements of Charter Section 1110 will still be followed. The City Council shall award public works contracts over $30,000 to the lowest responsible bidder and may either have the contract signed by the Mayor, or direct the City Manager or responsible Department Director to sign the public works contract. Environmental Review: The City Council's consideration of this item does not require environmental review. Public Notice: This item was noticed in accordance with the requirements of the Ralph M. Brown Act. Funding Available, Prepared by: SIGNATURE / ) /1, Catherine Wolcott, Contract Attorney Submitted by: SIGNATURE Fob Kobin L. Clauson, City Attorney Attachments: Resolution Amending Council Policy F -14 F A users\ catlshared \CCstaffReporff - 14050906. doc RESOLUTION NO. 2006- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH AMENDING COUNCIL POLICY F -14 (AUTHORITY TO CONTRACT FOR SERVICES) WHEREAS, Section 421 of the City Charter provides that the City Council may, by Resolution, authorize the City Manager to bind the City with or without a written contract, for the acquisition of services and other items included within the budget approved by the City Council, and may impose a monetary limit upon such authority; and WHEREAS, Section 421 of the City Charter provides that the City Council may designate and direct other officers of the City to bind the City through written contracts. NOW, THEREFORE, the City Council of the City of Newport Beach hereby resolves as follows: Section 1: Council Policy F -19 attached hereto is hereby approved and adopted. Section 2: This resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall certify the vote adopting the resolution. ADOPTED this 9" day of May, 2006. ATTEST: LaVonne Harkless, City Clerk Don Webb, Mayor -1- F -14 AUTHORITY TO CONTRACT FOR SERVICES PURPOSE To set forth the City's policy establishing authority for committing City funds for Service Contracts. LIMITATION Contracts for services are distinct from contracts for procurement of specific material items. If the only purpose of a contract is for the City to obtain goods, material or equipment, guidelines contained in the City's Purchasing Procedures will be followed. Contracts entered for the purpose of obtaining related service, installation, repair or maintenance of goods, materials and equipment shall also be formed under the guidelines contained in the City's Purchasing Procedures. The terms and conditions of contracts for service, installation, repair or maintenance of goods shall be included on the City's Purchase Order form, and additional contractual and procedural provisions may be necessary under the Purchasing Procedures for equipment maintenance, computer software and hardware purchases which exceed $10,000, and other purchase - related services which exceed $30,000. Under the terms of City Charter Section 1110, contracts for public works that exceed $30,000 in total expenditures must be awarded by the City Council. At its option, the City Council may direct the contract to be signed by the Mayor, the City Manager or the responsible Department Director. APPLICATION The policy contained herein applies to all other contracts for services, whether acquired under a standard or emergency basis, including but not limited to professional services, audit services, public works project services, public property maintenance and repair services, and maintenance, custodial and repair services for all City facilities. POLICY A. Authority to Enter Contracts The Charter of the City of Newport Beach permits the City Council to delegate authority to sign contracts to the City Manager, and such other officer or officers as the Council may designate, and to impose monetary limits on such signing authority. By resolution, the Council has delegated authority to sign service contracts to certain City officers, with specific monetary limits. 1 101151 Regardless of whether an elected or nonelected City officer signs the service contract, the contract and any subsequent contract amendments shall also be signed by the City Clerk, shall be in a form approved by the City Attorney, and the City Attorney shall review and approve all contract and contract amendment documents prior to contract execution. 1. The City Manager. The City Manager is authorized to sign and award contracts for services without prior Council approval, provided the contract amount does not exceed $50,000 and funds are available. This authority shall not be delegated below the Assistant City Manager level. The City Clerk shall sign all such contracts, and the City Attorney shall review and approve all contract documents prior to contract execution and award. a. Some services are paid for by permit applicants, but the contracts for those services are entered by the City, on behalf of the applicants. Funds to pay for these services are provided by the applicant and held by the City in an applicant deposit account. The City Manager is authorized to sign all service contracts which are paid for with funds from the applicant's deposit account, regardless of the amount of the contract. b. When services are paid for by funds in an applicant deposit account and the total cost of services shall exceed $100,000, the City Manager shall provide notice of the permit application and a brief description of the proposed project to the City Council. 2. Department Directors. Department Directors are authorized to sign written contracts for services that do not exceed $30,000 without further Council review, as long as the services were approved by the City Council as part of the annual Department budget. This authority may not be delegated below the Department Director level. The City Clerk shall sign all such contracts, and the City Attorney shall review and approve all contract documents prior to contract execution and award. 3. City Attorney. The City Attorney is authorized to :sign contracts for all services for outside counsel and experts related directly to and necessary for prosecution and defense of pending litigation as defined in the Brown Act, and for services for outside counsel and experts necessary to address other pending or potential legal claims or legal issues so long as funds for outside counsel, experts and related legal services were approved by the City Council as part of the annual budget process. B. Authorltv to Amend Contracts If circumstances arise that were not reasonably foreseeable by the parties at the time of contracting, and which make extra work necessary for the proper completion of the service, a contract amendment and corresponding increase in total contract amount may be necessary. For purposes of this policy, "total 2 F -14 contract amount" shall be defined as the total consideration paid over the term of the agreement, including any previous amendments to the contract. 1. If the original contract did not exceed $30,000 and was signed by a Department Director, the Department Director overseeing the contract may sign the contract amendment if that amendment will not cause the total contract amount to exceed 125 % of the original contract amount. 2. The City Manager may sign and award the contract amendment if the total cost of services will not exceed 125% of the original contract amount, or if the total contract amount does not exceed $50,000, whichever is greater. 3. In certain situations, the City Manager and the Department Director in charge of the contract may determine that an amendment is needed that will cause the total contract amount to exceed the City Manager's amendment signing authority, and that the timing is such that a work stoppage or other undesirable consequence will result if approval of the change is delayed until the next City Council meeting. In those situations, the City Manager may approve an amendment that increases the total contract amount up to 150% of the original contract. However, the City Manager will notify all City Council Members individually if this situation develops, and if any individual Council Member objects to the increase, a special meeting of the City Council will be called to address the issue. 4. In the event of emergency work that requires an amendment to an existing contract, the emergency contracting policy outlined below shall be followed. C. Procedures 1. Bidding. It is recognized that by their nature, service contracts cannot always be awarded as a result of a competitive bid process. However, competitive bids should be obtained whenever possible before resorting to negotiated awards. 2. Approvals. a. All contracts for services, including exhibits and amendments, shall be reviewed and approved as to form by the City Attorney's Office prior to contract execution. The City Clerk shall sign and attest to all service contracts. b. City Purchase Orders are not required for service contracts. A copy of the contract shall be submitted directly to Accounts Payable, where the Fiscal Services Manager will use it as an encumbering document. Thereafter, progress payments will be handled in the same manner as progress payments on a Purchase Order, i.e. invoices will be approved by the director of the department 3 F -14 administering the contract and submitted to Accounts Payable for payment. C. Insurance - All contracts shall be accompanied by proof of the appropriate level of insurance at the time of execution. The insurance level required shall be in accordance with the City's published Schedule of Insurance (attached and herein incorporated by reference as part of this Policy), or as otherwise approved by the City's Risk Manager. 2. Retention. a. The City Clerk shall retain the original executed service contract approved by the City Council and signed by the Mayor (or such other officer as the Council may designate, in instances in which the Council approves a contract and directs a City officer to sign.) At least one copy with original signatures shall also be kept by the Department responsible for administering the contract as required by the City Document Retention Policy. b. The City Manager's Office shall retain an original executed copy of any service contract signed by the City Manager or Assistant City Manager(s), in accordance with the City Manager's Office document retention policy. C. Each department shall retain an original executed copy of any service contract signed by its Department Director, in accordance with that department's document retention policy. D. Professional Services Consultant Selection Professional consultant services differ from other services in that they are of a professional nature, and due to the ethical codes of some of the professions involved, as well as the nature of the sen,,ices provided, do not readily fall within the competitive bidding process. Professional consultants should be individually selected for a specific project or service with the objective of selecting the most qualified consultant at a fair and reasonable cost. Professional services shall be obtained by a qualifications -based selection process. The following procedures shall be used in the selection of professional consulting services. This policy shal4 include, but not be limited to, services in the following fields: Engineering (civil, mechanical, electrical, structural, traffic, geotechnical, etc.) Architecture 2 F -14 Landscape Architecture Construction Project Management Firms Environmental Planning Economic Analysis Property Appraisals Land Surveying Financial Services Data Processing Services Legal Services not otherwise authorized in Section A(3) of this Policy 1. Professional Services Consultant Selection Procedures a. Major Projects — Anticipated fee of over $100,000 or other criteria related to complexity as determined by Department Director. i. Lead Department(s) shall prepare a Request for Qualifications (RFQ) and solicit responses using current lists and industry resources. Lists of qualified consultants and RFQs shall be processed as needed, but not less than once every five (5) years. ii. A Review Board, selected by the appropriate Department Director and composed of appropriate Staff representatives and /or qualified outside representatives, shall select three (3) to five (5) qualified firms to submit proposals. iii. When a minimum of three (3) potential firms are unavailable, or if it is in the best interest of the City to limit the number of firms solicited, the basis for such action should be included in the report to the City Council. iv. The Review Board shall review the proposals received and select the most qualified firms for interviews. 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