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HomeMy WebLinkAboutCST 31-11 Report To Executive Committee PICKERING Report Number: CST 31-11 1 Date: October 11, 2011 From: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: Purchasing Policy Recommendation: 1. That Report CST 31-11 of the Director, Corporate Services & Treasurer regarding the Purchasing Policy be received; 2. That Purchasing By-law No. 5900/01 be repealed and the attached Purchasing Policy be adopted; and, 3. That the appropriate staff of the City of Pickering be given authority to give effect hereto. Executive Summary: Purchasing By-law No. 5900/01 was approved on November 5, 2001. Procurement trends and business practices have evolved and a revised Purchasing Policy is recommended for the City. The Municipal Act, 2001, S.O. 2001 c.25, section 270(1)3 states a Municipality shall adopt and maintain policies with respect to its procurement of goods and services. Adoption of the recommendation ensures the City will continue to comply with the Municipal Act. Financial Implications: The spending and approval limits for the procurement of goods and services have been increased to correspond with price increases, market trends and to improve corporate efficiencies. In certain instances, flexibility has been added or increased to provide departments with more latitude where necessary to carry on business in an efficient manner. Sustainability Implications: The policy promotes sustainably responsible procurement by encouraging the purchase of products and services that support initiatives pertaining to greenhouse gas emissions, energy, waste, biodiversity, toxicity, natural resources, product quality, water, air quality and human health. Background: The purpose of the Purchasing Policy is to clearly state the rules governing the acquisition of goods and services. This allows staff to conduct the Report CST 31-11 October 11, 2011 .52 Subject: Purchasing Policy Page 2 operations of the Corporation and to pay for same subject to the financial rules and safeguards established by the Treasurer. Purchasing By-law No. 5900/01 was approved on November 5, 2001 and is now almost 10 years old. Procurement methods and authority levels need to be reviewed and updated. The policy is the result of extensive reviews of a variety of purchasing policy and purchasing bylaws. This exercise enabled us to consider some of our current and best business practices as well as those already being applied in other similar sized area municipalities. Procurement trends, competitive and non-competitive purchasing methods have changed and have been considered in the revised policy as well. Changes in procurement law in the area of competitive bidding have also been considered in preparing the policy. . The authorities, methods, spending and approval limits required adjustment to operate efficiently in keeping with proper purchasing activity of the times. The notable changes within the expenditure limits are outlined in Attachment 2 to this report - Summary of Changes with Revised Policy. Appendix 1 of the policy, Exceptions, has been updated, keeping in mind those expenditures deemed not necessary to be covered by a Purchase Order; eg utilities, professional services, expense reimbursement, training and education. These types of expenditures are normally covered by other means dictated by the provider, such as registration forms, subscription order forms, expense reimbursement, utilities service provided by another government agency or agreement by contract. Appendix 2 of the policy, Summary of Procurement Method and Approval Authority, has been added as an additional reference to assist staff utilizing the policy. Single source and sole source provisions have been added to the policy to better address and protect the City's interests when goods, services or situations arise that require this method of procurement. A new section for Consulting and Professional Services has been added to improve efficiencies when consulting services are required but with added approvals and controls. A section has been added to enable the City to not consider a tender, proposal or quotation submitted by a bidder or to exclude participation of a bidder deemed an unsafe contracting party, documented disregard for or violation of the City's health and safety regulations, non-compliance of the Occupational Health & Safety Act and codes or has provided unsatisfactory performance, an unfulfilled commitment, or litigation likely to affect the bidder's ability to work with the City. Confidentiality provisions have been added to the policy as related to The Municipal Freedom of Information and Protection of Privacy Act (MFIPPA), RSO, 1990 to assist employees and any appointed or elected official as related to unit prices paid by or quoted for goods or services. Report CST 31-11 October 11, 2011 U Subject: Purchasing Policy Page 3 Meetings with City staff occurred to review and discuss the policy while in draft form and their comments have been considered in the final policy. The Manager, Internal Audit and Control has also reviewed the policy and provided comments, which have been incorporated. Generally speaking, City staff expressed their appreciation for revisions in the policy which will assist them in their operational objectives. Considering all of the foregoing, it is important that Council also allow, through the adoption of this report, the Treasurer the authority to make any interpretations of the Policy, make rulings that will allow the conduct of business to proceed and to take any actions necessary to this effect. The policy will be posted on the City's internet and intranet. Information sessions will also be held to introduce and explain the new policy, to the appropriate staff. It is recommended that Purchasing By-law 5900/01 be repealed and the Purchasing Policy attached to this report be approved. Attachments: 1. Purchasing Policy, as revised- 2. Summary of Changes with Revised Policy 3. By-law to establish a policy governing the purchase and disposal of goods and services Prepared By: Approved/Endorsed By: Vera A. Felgemacher Gillis A. Paterson, CMA Manager, Supply & Services Director, Corporate Services & Treasurer CSCMP, CPPO, CPPB, C.P.M., CMM III Copy: Chief Administrative Officer Recommended for the consideration of Pickering City ouncil ~)J~ 2.-71 Zo11 Tony Prevedel, P.Eng. Chief Administrative Officer ATTACHMENT#1_.TOREPORT#Ss.T,-_3I-i1City Policy I CKERIN 7Z P01 y Title: Purchasing Policy Policy Number: PUR 010 Reference: Date Originated: Date Revised: X November 5, 2001 September, 2011 Approval: Chief Administrative Officer Point of Contact: Manager, Supply & Services Policy Objective Through the City of Pickering's Corporate Priorities process, two key priorities recognized are Financial Management and Corporate Best Practices. In light of these stated Corporate Priorities, the City is committed to provide leadership, quality service delivery, and the best value to our taxpayers through the provision of fair, transparent, competitive procurement policies, procedures and processes. The City will achieve this through efficient and professional service delivery, appropriate commitment authority, consultation, cooperation, innovative solutions, standardization, education and collective knowledge of products and market conditions, and partnerships while developing and maintaining quality vendor and client relations. Index 01 Definitions 02 Responsibilities 03 Administrative Procedures 04 Purchasing Principles 05 Sustainability Considerations 06 Authorities, Procurement Methods and Dollar Limits 07 Approvals During Council Recess 08 Third Party Contracts Related to Development 09 Single Source or Sole Source 10 Consulting and Professional Services 11 Design and Development Service 12 Emergency Purchase 13 Cooperative Purchasing 14 Purchasing Cards 15 Disposal of Surplus Assets 16 Code of Purchasing Ethics 17 Conflict of Interest 18 Prohibitions 19 Exceptions .20 Confidentiality - Access to Information 21 Disqualification of Bidders 22 Bidder Terminated, Unsatisfactory Performance 23 Tendering Irregularities Appendix 1 Exceptions Appendix 2 Summary of Procurement Method and Approval Authority 01 Definitions 01.01 Acquisition - the process of obtaining goods and services. 01.02 Authority or Authorized - the right to conduct the tasks outlined in this Policy. 01.03 Bid - an offer or submission received from a vendor in response to a request, which may be accepted, not considered or rejected. 01.04 Bidder - the person, firm or corporation submitting an offer to the City. 01.05 Blanket Order - a type of purchase order which is an agreement between the City and supplier to facilitate the reordering of repetitive use materials or services for a specified term (e.g. for repairs or maintenance purposes) and not to be used for a Capital expenditure. 01.06 Centralized Purchasing - the activities conducted by the Supply & Services Section of the Corporate Services Department which is responsible for the acquisition of all goods and services 01.07 Chief Administrative Officer (CAO) - the Chief Administrative Officer of the City or a designate 01.08 City - The Corporation of the City of Pickering 01.09 Clerk - the City Clerk or a designate 01.10 Committee - a Standing Committee of Council Policy Title: Purchasing Policy Page 2 of 25 Policy Number: PUR 010 b 01.11 Consulting and Professional Services - services requiring technical skills provided on the basis of a defined project or undertaking to recommend and/or assist in implementing solutions including but not limited to supervision related to the project or undertaking 01.12 Contract - a binding agreement between two or more parties. In the absence of any other document, a Purchase Order constitutes a contract 01.13 Contract Administrator - a person with authority to administer the terms of a contract to oversee the work of a vendor or contractor 01.14 Cooperative Purchasing - the participation of the City with one or more public agencies in a bid solicitation 01.15 Council - the Council of the City of Pickering 01.16 Delegate - a person given authority by the Manager to acquire pricing on goods and services 01.17 Designate - a person authorized to act on behalf of another which may include signing authority to purchase within prescribed limits and/or approval authority 01.18 Director - a Director, or the Chief Administrative Officer in the capacity as Head of the Administration Department, or designate, as head of a department 01.19 Disposal - the selling, trading, assignment, and/or scrapping of surplus assets 01.20 Emergency - a situation that is, in the opinion of the CAO or a Director, a threat to public health, safety, property, life or the environment and exists where the immediate acquisition of goods or services is essential to prevent serious delay, injury, damage, restore basic service provided by the City and warrants operating outside this policy or limit potential liability 01.21 Evaluation Committee - procedures may be established to provide for an evaluation committee comprised of a minimum of two representatives from the Client Department and one from Supply & Services to evaluate proposals in an RFP process for the purpose of making a recommendation 01.22 Goods and/or Services - labour, materials, products, equipment, services, supplies, act to be done, furnished or performed by a vendor that are the subject of the contract Policy Title: Purchasing Policy Page 3 of 25 Policy Number: PUR 010 01.23 Informal Quotation - an offer received from a vendor through an informal process in response to a request for pricing which can be on a vendor's quotation form 01.24 Limited Purchase Order - form used to acquire items carried in inventory, to repair and/or service a vehicle or equipment or items considered shop sundries 01.25 Manager - the Manager, Supply & Services or a designate, under the general direction of the Treasurer 01.26 Proposal - a written offer from a vendor in response to a written request for proposal (RFP) which may be subject to discussion or negotiation. An RFP process may be used when the good or services cannot be definitively specified, where such proposals would result in specific offers by the vendors. 01.27 Purchase Order - contract, in an approved form, issued to a vendor to acquire goods or services, including Blanket Order and Limited Purchase Order 01.28 Purchase Requisition - a request, in a form approved by the Manager to acquire goods or services 01.29 Purchasing Card (PCard) - a credit card issued by the City that is used to purchase and pay for goods and/or services subject to spending and/or transaction limits 01.30 Quotation - a written offer received from a vendor in a form prescribed by the Manager in response to a request for quotation (RFQ) 01.31 Responsive and Responsible Bidder - one who complies with the instructions of the bidding document, contractual terms, conditions, specifications and who can reasonably be expected to provide satisfactory performance of the proposed contract based on adequate financial and other resources, satisfactory reputation, references, and performance on similar contracts 01.32 Real Property - lands, buildings, tenements and/or any interest, estate or right or easement affecting same 01.33 Surety - a formal pledge lodged, or sum of money deposited, as a guarantee against a damage or loss, non-fulfilment of an obligation, such as a specified amount in the form of cash, certified cheque, bid bond, agreement to bond, performance bond, labour and materials payment Policy Title: Purchasing Policy Page 4 of 25 Policy Number: PUR 010 ,J O bond, letter of credit or any other approved form of collateral acceptable and deemed necessary by the Treasurer 01.34 Single Source - where there is more than one source in the open market but only for reasons of function or service, one vendor is recommended for consideration of the particular goods and/or services 01.35 Sole Source - only one source of supply available for particular goods and/or services 01.36 Standardization - the adoption of a single product or group of products to be used by one or more departments 01.37 Systems Contract - an agreement with a supplier carrying an inventory of specific items for the City such as office supplies, janitorial supplies, work wear, etc. 01.38 Tender - a written offer in a form specified by Supply & Services received from a bidder in response to a request for tender 01.39 Treasurer - Director, Corporate Services & Treasurer or a designate 01.40 Vendor - individual, firm, supplier, contractor, architect, consultant or bidder 02 Responsibilities 02.01 Council to: (a) Approve this policy. (b) Actively support this Purchasing Policy. 02.02 Chief Administrative Officer to: (a) Approve amendments to this policy for consideration by Council. (b) Actively support the Purchasing Policy. 02.03 Treasurer to: (a) Review amendments to this Policy made by the Manager for consideration by the CAO and Council. (b) Approve administrative changes to procedures required to implement the provisions of this Policy. Policy Title: Purchasing Policy Page 5 of 25 Policy Number: PUR 010 9 (c) When required or requested, provide final decisions in regards to matters of interpretation and implementation of this Policy. (d) Review and approve all award reports to ensure sufficient budgeted funds exist to support the recommendation for award. (e) Approve changes to the PCard transaction limit to reflect changes for efficiencies. (f) Assess the potential risks by vendors providing goods or services to determine appropriate insurance coverage and obtain requisite proof of coverage. 02.04 Directors/Division Heads/Managers to: (a) Actively support the Purchasing Policy. 02.05 Manager to: (a) Recommend necessary amendments to this Policy for consideration by the Director, Corporate Services & Treasurer and CAO. (b) Interpret and apply the provisions of this Policy on a day-to- day basis. (c) Prepare and maintain administrative procedures required to implement the provisions throughout this Policy. (d) Administer PCard program and procedures. 03 Administrative Procedures 03.01 This Policy shall be read in conjunction with written administrative procedures. 04 Purchasing Principles 04.01 The Manager shall: (a) Be responsible for the provision of services for the acquisition and disposal of goods or services required by the City. Policy Title: Purchasing Policy Page 6 of 25 Policy Number: PUR 010 (b) Arrange for the procurement by purchase, rental or lease of the required quality and quantity of goods or services in an efficient and cost-effective manner. (c) Ensure the greatest value for the City by exercising professional purchasing practices, free from influence and interference, and encourage open, fair, transparent and competitive bidding and where practical, sustainable practices. (d) Promote acceptance of bids based on total acquisition and life cycle cost, or in the case of a service, the preferred or best level of service, rather than the lowest bid received. (e) Provide for the appropriate level of delegated commitment authority to enable clients to meet service level expectations. (f) Assist in the facilitation, comparison and assessment of alternate service delivery options. 05 Sustainability Considerations 05.01 Staff shall: (a) Consider, and where appropriate include, one or more of the following matters when preparing specifications for the acquisition of goods and services : i. reducing greenhouse gas emissions ii. protecting indoor and outdoor air quality iii. improving energy, fuel and water efficiencies iv. improving biodiversity v. protecting the quality and/or quantity of ground and surface water systems vi. minimizing packaging and waste vii. making efficient use of natural resources, and using sustainable harvesting or extraction practices, including Forest Stewardship Council (FSC) certified papers viii. giving preference to high quality durable materials that can be repaired and/or upgraded ix. requiring materials that contain reusable parts, and/or that are made from renewable, compostable or recyclable materials or can be taken back for recycling X. reducing or eliminating hazardous or toxic substances xi. minimizing human health impacts Policy Title: Purchasing Policy Page 7 of 25 Policy Number: PUR 010 05.02 The Manager shall: (a) Encourage sustainable purchasing practices and promote the use of and utilize the G.I.P.P.E.R's Guide - Governments Incorporating Purchasing Practises which are Environmentally Responsible - as part of the awareness of environmentally responsible procurement to address sustainability objectives. 06 Authorities, Procurement Methods and Dollar Limits 06.01 The Manager and Treasurer shall have the authority and responsibility to operate a centralized purchasing program on behalf of the City. 06.02 The Manager shall have the authority to negotiate terms or conditions of a contract or agreement as deemed necessary. 06.03 The Manager, Treasurer or delegates shall have the authority to sign contracts, agreements and any other documents on behalf of the City with third parties for the acquisition, delivery and maintenance of goods or services acquired in accordance with this Policy. 06.04 Dollar limits (Canadian funds) include all costs of acquisition including delivery, custom fees and duties, disposal surcharges, and any other fees, charges or costs, but exclude HST. 06.05 The Manager, with the approval of the appropriate Director for the employee concerned, may delegate to an employee all or part of the authority to purchase up to an amount of $1,000 on the understanding the employee promotes the objectives of this Policy. 06.06 The Manager may recommend a bidder for the acquisition of goods or services upon such terms and conditions as he or she deems appropriate consistent with the requirements of this policy (summarized in Appendix 2). 06.07 The Manager shall have the discretion to review pricing and processes undertaken to ensure compliance with this policy. 06.08 Pricing for goods or services over $1,000 and up to $3,000 not covered by a contract, service or blanket order may be obtained by the Manager or other staff. A minimum of one informal quote is required, and must accompany a purchase requisition. 06.09 Pricing for goods or services over $3,000 and up to $5,000 not covered by a contract, service or blanket order may be obtained by the Manager or other staff. Three informal quotes, where possible, Policy Title: Purchasing Policy Page 8 of 25 Policy Number: PUR 010 42 are required. A recommendation is subject to the approval of the appropriate level of authority and quotes must accompany a purchase requisition. 06.10 Pricing for goods or services over $5,000 and up to $30,000 not covered by a contract, service or blanket order, shall be obtained by the Manager. Three informal quotes, where possible, are required. 06.11 Pricing for goods or services with an estimated total price over $30,000 shall be obtained by the Manager. The Manager shall determine when a Request for Proposal, Request for Quotation or Tender is the most appropriate method to acquire goods or services and shall solicit a minimum of three proposals, quotations or tenders if possible. Advertising is at the discretion of the Manager but an estimated value over $100,000 shall be advertised. 06.12 Where the compliant quotation or tender meeting specifications and offering best value to the City is acceptable or where the highest scoring proposal is recommended and the estimated total purchase price is: (a) Over $30,000 and up to $75,000, the Manager may approve the award, subject to consultation with the appropriate Director and confirmation of financing by the Treasurer. (b) Over $75,000 and up to $125,000, the Manager may approve the award, subject to the approval of the Director, Treasurer and the CAO. (c) Over $125,000, the Manager may approve the award, subject to the approval of the Director, Treasurer, CAO and Council. 06.13 Revenue generating proposals for services are subject to the approval of Council prior to the Manager awarding the contract. 06.14 Goods or services obtained by sealed public tender shall be advertised or by invitation from a list of qualified bidders, or a combination thereof. Tendering documents shall be issued and opened in public at a specified date and time. Tenders that are late, illegible, unsigned, contain insufficient deposit, contain uncertified cheques, are incomplete or do not include a deposit, bond or surety, shall be rejected. The terms and conditions of the deposit, bond or Policy Title: Purchasing Policy Page 9 of 25 Policy Number: PUR 010 43 surety are subject to the approval of the Treasurer. The Manager and appropriate Director shall jointly recommend a tendering award. 06.15 The Manager shall ensure that all recommendations dealing with the award of a quotation, proposal or tender contains the appropriate funding statement from the Treasurer. 06.16 Authorities and responsibilities shall be applied and administered having regard to the provisions of the Corporate Financial Control Policy and approved Signing Authorities. 06.17 If a bid has been approved by Council and awarded to the selected Bidder and the selected Bidder fails to enter into a contract, the Manager shall be granted the authority to proceed to the next lowest responsive and responsible Bidder or the next highest evaluated responsive and responsible proponent for a proposal call, for the award of this contract, without going back to Council for approval, providing there are no bid irregularities, requirements remain unchanged and the new contract is within budget. The approval shall be obtained from the appropriate Director, Treasurer and CAO. The Director shall prepare a report to Council for information purposes for the next scheduled Committee and Council meeting. 07 Approvals During Council Recess 07.01 The Chief Administrative Officer is authorized to act on behalf of Council in approving an award of a project, and the Treasurer is authorized to approve financing for same, during any recess, break or absence of Council on the condition that: (a) The project is in a budget approved by Council; (b) Such actions are in compliance with the Purchasing Policy and the Financial Control Policy; (c) The project is not debt financed; and (d) A report respecting those approvals is subsequently submitted to Council. 08 Third Party Contracts Related to Development 08.01 City works and services being completed through a Third Party contract identified in a subdivision, development, or site plan agreement are exempt from the requirements of the Purchasing Policy and may proceed without a purchase order, without a report to Council and without other requirements typical of work contracted by the City where: Policy Title: Purchasing Policy Page 10 of 25 Policy Number: PUR 010 4 4 (a) Funding has been approved in the budget; (b) Funding is not debt financed; (c) Works are identified in approved plans and/or defined in the Developer's Agreement; and (d) Works are being completed by the developer's contractor. 09 Single Source or Sole Source 09.01 The Manager is authorized to make single or sole source purchases, without competitive bids and enter into a contract if any of the following conditions apply. 09.02 Excludes Section 10, Consulting and Professional Services. 09.03 Single Source - examples (a) In an emergency. (b) A fluctuating market prevents the Manager from obtaining price protection or owing to market conditions, the required goods or services are in short supply. (c) Bids have been solicited and no responsive bid has been received or bids fail to comply with the specifications or conditions, or the lowest bid received exceeds the estimated cost and it is impractical to recall. (d) The extension or reinstatement of an existing contract would prove most cost effective or beneficial. The extension shall not exceed one year. (e) Goods are required for resale and the determining criteria are marketability and profitability, eg. Museum, promotional items. (f) The nature of the requirement would not be in the public interest to solicit competitive bids as in the case of security or confidentiality. (g) Due to market conditions or unexpected circumstances, required goods or services are in short supply. 09.04 Sole Source - examples (a) Competition is precluded because of the existence of a sole source, patent rights, copyrights, secret processes, control of basic raw material or similar circumstances. Policy Title: Purchasing Policy Page 11 of 25 Policy Number: PUR 010 1 u~ (b) A component or replacement part is involved for which there is no substitute. (c) Compatibility with an existing product is the overriding consideration. (d) The purchase involves goods or services for which there is no reasonable substitute or competitive product. (e) Supply of which is controlled by a vendor with a monopoly. (f) Purchase of goods in a commodity market. (g) Work to be performed on or about a leased building or portions thereof that may be performed only by the lessor. (h) Work to be performed on property by a contractor according to provision of a warranty or guarantee held in respect of the property or the original work. (i) For a contract to be awarded to the winner of a design contest. (j) Original works of art. (k) Purchase of real property. 09.05 The appropriate Director shall summarize the rationale for a single or sole source request in a memo to the Manager. 09.06 A single source or sole source purchase up to $10,000 is subject to the approval of the Manager. 09.07 A single source or sole source purchase over $10,000 and up to $30,000 is subject to the approval of the Manager and the Director. 09.08 A single source or sole source purchase over $30,000 and up to $125,000 is subject to the approval of the Manager, Director, Treasurer and the CAO. 09.09 A single source or sole source purchase exceeding $125,000 is subject to Council approval. 09.10 The Manager and appropriate Director or designate is authorized to enter into negotiations without competitive bids and enter into a contract if deemed advantageous. Policy Title: Purchasing Policy Page 12 of 25 Policy Number: PUR 010 4 6 10 Consulting and Professional Services 10.01 Notwithstanding the provisions of this Policy, which covers the acquisition of goods or services, the acquisition of Consulting and Professional Services shall be conducted in accordance with the provisions of this section. 10.02 Consulting and Professional Services will be acquired on a "quality based selection" methodology rather than only the lowest price. 10.03 Where the project or annual cost of a consulting or professional service assignment is expected to be less than $30,000 and the funds are available in the approved budget, the Manager may obtain the services of a particular consultant selected by the initiating Director without going through a competitive process. 10.04 Where the project or annual cost of a consulting or professional service assignment is expected to be more than $30,000 the Manager shall obtain written proposals in accordance with procedures set out in Section 06 and: (a) An award up to $50,000 is subject to the approval of the Treasurer and the CAO. (b) An award over $50,000 is subject to the additional approval of Council. 10.05 Where the project or annual cost of a consulting or professional service assignment is expected to be more than $30,000 and the initiating Director intends to acquire the services without obtaining written proposals, the Director shall submit a report to Council to obtain approval to engage the services of a particular consultant. 10.06 A purchase order is required to confirm the consulting agreement. 11 Design and Development Service 11.01 Where design or specification development is required, the vendor providing it shall be considered a consultant and contracted as such. The design or specifications shall become the property of the City for use in obtaining competitive bids. 11.02 A vendor providing design, services, consulting or specifications shall be advised up front they will not be permitted to submit pricing or bid in the competitive process for the requirement if a competitive advantage or Policy Title: Purchasing Policy Page 13 of 25 Policy Number: PUR 010 conflict or interest is deemed to exist. The CAO and Director, Corporate Services & Treasurer will provide a final determination on this matter. 11.03 Where the design and end product is part of the same requirement or project, the scope of work will be combined and procured as one project in a competitive method. 12 Emergency Purchase 12.01 In an emergency situation the Manager shall, on the approval of the appropriate Director, obtain such goods and services as are necessary to respond to the emergency. If the purchase amount exceeds $5,000, the Director must notify the Treasurer at the earliest possible time. If the purchase amount exceeds $50,000, the Treasurer and the CAO shall be notified and the Director shall submit a report of the incident to the appropriate Committee and Council at the earliest possible time. 13 Cooperative Purchasing 13.01 The Manager may enter into arrangements with municipalities, local boards and other public bodies on a cooperative or joint venture basis where there are economic advantages and where the best interests of the City would be served. The policy of the government agency or public authority hosting the cooperative call for bids is to be the accepted policy of the City for the cooperative call and no other approval by the City is required beyond that of the Manager, appropriate Director and Treasurer unless debt financing is required then Council approval must first be obtained.' 13.02 Section 13.01 above does not preclude the issuance of a purchase order 14 Purchasing Cards 14.01 Purchasing Cards shall be used in accordance with the Purchasing Card Procedure. 14.02 The Treasurer has the authority to temporarily adjust the transaction limit for one time purchases. 15 Disposal of Surplus Assets 15.01 The Manager is authorized to dispose of surplus assets in a cost effective and efficient manner with approval of the appropriate Director and the Treasurer. Policy Title: Purchasing Policy Page 14 of 25 Policy Number: PUR 010 C 16 Code of Purchasing Ethics 16.01 The Code of Purchasing Ethics established by the National Institute of Governmental Purchasing Inc. and the Purchasing Management Association of Canada shall apply to Supply & Services staff. 16.02 The participation of members of City Council and employees of the corporation in the procurement process shall be governed by, in the case of members of Council, the City's Council Code of Practice and, in the case of employees, by the City's Employee Code of Conduct. 17 Conflict of Interest 17.01 Subject to the Municipal Conflict of Interest Act, no member of City Council, Committee or Board, employee of the City is or will become interested directly or indirectly as a contracting party or otherwise in the performance of the contract or in the provision of goods or services or in any portion of the profits thereof, or in any of the monies to be derived therefrom. This applies to relatives and former employees as well. 17.02 A vendor will be required to declare any potential conflict of interest in writing to the Manager. 17.03 The City reserves the right to disqualify from further consideration any proposals which demonstrate a conflict of interest. 17.04 A conflict of interest arising during the term of a contract must be reported immediately to the City and failure to advise may result in termination of the contract. 18 Prohibitions 18.01 No employee or member of City Council, Committee or Board shall bid on the sale of goods except those disposed of by public auction. 18.02 The City shall make no personal purchase for any employee, member of City Council, Committee or Board. 18.03 No employee, or member of City Council, Committee or Board shall purchase or offer to purchase on behalf of the City, except as may be provided for in this policy or with the express authority of Council. 18.04 Contracts entered into in contravention of section 18.03 will not be binding upon the City. The employee, or member of City Council, Committee or Board who entered into the contract will be responsible for the contract. Policy Title: Purchasing Policy Page 15 of 25 Policy Number: PUR 010 r1 'r 9 18.05 No requirement for goods or services shall be divided to avoid the requirements of this policy and the total project or annual requirement shall be considered. 19 Exceptions 19.01 Items listed in Appendix 1 are excluded from the requirements of this Policy. The items may be procured by obtaining one price, subject to the funds being available in the current or capital budgets. For accountability and transparency purposes, a Purchase Order may be required when there is a set pre-determined fee or an upset limit. 19.02 Notwithstanding, Directors are required to provide details to the Treasurer and the CAO of any contractual arrangements under Appendix 1 with third parties that exceed $25,000 annually or are for more than one year. Such details will be provided prior to the commencement of the contract arrangement. 20 Confidentiality and Access to Information 20.01 Contents of quotation, tendering, request for proposal documents, with the exception of the information read publicly at a tender opening or reported to Council, shall be treated as confidential and protected as set out under The Municipal Freedom of Information and Protection of Privacy Act (MFIPPA), RSO, 1990, Section 11( c), as amended. 20.02 Subject to The Municipal Freedom of Information and Protection of Privacy Act (MFIPPA), RSO 1990, no employee, or any appointed or elected official, shall divulge the unit prices paid by or quoted to the City for goods or services. The total price in the case of public tenders or the total price in the case of quotations the name of the successful bidder, as well as any prices included in public reports to Committee and Council may be revealed. 21 Disqualification of Bidders 21.01 A tender, proposal or quotation submitted by a bidder shall be rejected, (a) if the bidder, or any officer or director of the bidder is or has been engaged either directly or indirectly through another corporation including by common ownership or control or otherwise related to a party in litigation with the City, its elected or appointed officers, or its employees; AND Policy Title: Purchasing Policy Page 16 of 25 Policy Number: PUR 010 J~ (b) in the opinion of the Manager, the litigation is likely to affect the bidder's ability to work with the City, its consultants or representatives, and the City's experience with the bidder in the matter giving rise to the litigation indicates that the City is likely to incur increased staff and legal costs in the administration of the contract if it is awarded to the bidder. 22 Bidder Terminated, Unsatisfactory Performance 22.01 The City reserves the right to not consider a bidder for a period of time or exclude a bidder from eligibility to submit a bid, when: 1. a bidder has provided unsatisfactory performance by documented evidence of substandard performance or unfulfilled commitment; or 2. a bidder has been deemed an unsafe contracting party, where there is documented evidence of disregard for or violation of the City's health and safety regulations, practices, instructions or non-compliance of the Occupational Health & Safety Act and Codes; or 3. there is evidence that a bidder has attempted to exert illegal, undue or inappropriate influence over any employee, consultant, official, Member of Council, other bidder or any other person in connection with the City's decision to accept or decline a bid. 22.02 In reaching a decision, the Manager, and appropriate Director shall be entitled to rely upon results of performance evaluations relating to other contracts for the City and outside parties performed by the subject bidder. 22.03 No tender, proposal or quotation will be considered or accepted from the subject bidder during the term of the suspension. 22.04 Previous experience or the results of any performance evaluation may be disclosed by City staff to other municipalities or government bodies upon request, where the subject bidder has listed the City as a reference. 22.05 The bidder may apply to the City for reconsideration or reinstatement if the bidder is able to demonstrate that the practices or issues leading to the suspension have been rectified. 22.06 The City reserves the right to not consider a tender/quotation/RFP from a bidder or any company affiliated with or controlled by the bidder who: Policy Title: Purchasing Policy Page 17 of 25 Policy Number: PUR 010 (a) has been prohibited from bidding on City contracts by City Council; (b) has had a contract with the City terminated within three years of the bid close date due to default of the contract; (c) has failed to rectify the performance of any previous contract default to the City's satisfaction, and cannot provide assurances and demonstrate appropriate action to ensure the same or similar problems will not reoccur; or (d) has failed to provide health and safety documentation to the City's satisfaction. 23 Tendering Irregularities 23.01 Guideline for Handling Irregularities: (a) To maintain the integrity of the public tendering process. (b) To maintain a flexible process in which low bids are not rejected because of minor irregularities. This approach allows the City to maximize the advantages of a competitive public tender process. (c) To ensure that the City's Policy for dealing with irregular tenders promotes fair competition. (d) To ensure that any bid accepted by the City is legally capable of being accepted. (e) To ensure that no bidder can avoid its bid by its own default or mistake. (f) Irregularities that go beyond the scope of these guidelines shall be reviewed with the Treasurer and the Manager shall have the authority to waive irregularities deemed to be minor. In exercising judgement, the advice of the City Solicitor may be requested. Where deemed to be a major irregularity, the Treasurer shall consult with the CAO who jointly shall have the final decision on acceptance or rejection of the bid. Policy Title: Purchasing Policy Page 18 of 25 Policy Number: PUR 010 23.02 Tendering irregularities will be dealt with as follows: Irregularity Response 1. Late bid. Automatic rejection and will be returned unopened to the bidder. Bids will be deemed to have been received when the City has stamped the envelope with the time and date of receipt. • If the bidder's address is not clearly available on the envelope or package, it will be opened solely to access this information in order to return it to the bidder. 2. Bid envelope or package is not sealed. . Automatic rejection. 3. Bid not completed by non-erasable ink. . Automatic rejection. 4. Bid not legible. • Automatic rejection. 5. Bidder's original ink signature missing . Automatic rejection. from signature page. 6. Bid qualified or restricted by a statement . Automatic rejection. or alteration added to any part of the document. 7. Bid received on documents other than . Automatic rejection unless allowed for in those provided by the City. the bid instructions or received on a true copy (not retyped) of the original document issued by the City 8. Bid does not meet specifications. . Automatic rejection. 9. Alternate bid. . Automatic rejection unless allowed for in the bid instructions or bidder has completed original bid and provided an alternate bid in addition to the original. Policy Title: Purchasing Policy Page 19 of 25 Policy Number: PUR 010 10. Bid Security a) Surety's Corporate seal or Surety . Automatic rejection. signature missing from Bid Bond or Agreement to Bond. b) Bid Bond or Agreement to Bond does . Two working days to correct. have Surety's Corporate seal and Surety signature but does not have bidder's corporate seal or bidder's statement to bind the corporation. c) Bid Deposit, Bid Bond or Agreement Automatic rejection. to Bond not provided, or not in the form specified or does not name the correct municipality as obligee, or the Surety is not licensed to do business in Ontario. d) Bid Deposit, Bid Bond of insufficient . Automatic rejection. amount. e) Agreement to Bond not sufficient. . Automatic rejection. f) Bid security is not in compliance with . Two working days to correct and if the number of days open for bidder fails to do so, bid will be rejected. acceptance as stated in the bid documents. 11. Bid does not acknowledge addenda. . Automatic rejection unless every change set out in the addenda is clearly visible on the face of the bid OR the relevant addendum issued is solely for the purpose of revising the closing date and time. 12. Bid received from a bidder who has not . Automatic rejection. been approved as a pre qualified bidder under a prequalification process. 13. Bid received from a bidder whom did . Automatic rejection. not sign-in at mandatory site visit when instructed to do so in the tendering instructions. Policy Title: Purchasing Policy Page 20 of 25 Policy Number: PUR 010 ti• 14. Failure to return the documents as . Automatic rejection unless otherwise specified. specified in the tendering instructions. 15. Partial bid (all items not bid). . Automatic rejection unless allowed for in the tendering instructions. 16. Tender envelope unclear as to contents. . Automatic rejection. 17. Uninitialed changes to the bid . Two working days to correct. The City documents that are minor (e.g. bidder's reserves the right to waive initialling and address is amended by over-writing but accept the tender. not initialed). 18. Unit prices in the Schedule of Prices . Two working days to correct. The City have been changed but not initialed. reserves the right to waive initialling and accept the tender. 19. Other mathematical errors that are not . Two working days to initial corrections consistent with unit prices. as made by the City. Unit prices shall govern and the tender will be corrected accordingly. The City reserves the right to waive initialling and accept tender as corrected. 20. Pages are missing from bid. Two working days to supply the missing pages where in the opinion of the Manager, the missing page(s) would not directly affect the bid submitted. The City reserves the right to waive the need to receive the missing pages and accept the tender or to reject the tender outright at the discretion of the Manager. 21. Withdrawal of bid. Withdrawal of bids received after the closing date and time will not be allowed. Policy Title: Purchasing Policy Page 21 of 25 Policy Number: PUR 010 ~D o 22. Tie bids. • The Manager may use one of the following methods of dealing with two low tied bids, based on the specific situation. • Request the two low bidders to resubmit pricing only. No other change to the bid is allowed. Bidders shall be allowed 24 hours from time of request. • Use a coin toss to select a recommended bid. The outcome of the tie breaking method shall be final. 23. Completion date is other than specified . Two working days to clarify the in the tendering specifications. completion date. The City reserves the right to waive the clarification of the completion date and accept the tender, or to reject the tender outright. Policy Title: Purchasing Policy Page 22 of 25 Policy Number: PUR 010 5J Appendix 1 Exceptions The following items may be procured by obtaining one price, subject to the funds being available in the current or capital budgets. For accountability and transparency purposes, a Purchase Order may be required when there is a set pre-determined fee or an upset limit. Those categories where this may be applicable are marked with an asterisk. Notwithstanding, it is expected that the objectives of this Policy will be promoted in any expenditures for goods or services. 1. Petty Cash expenditures (Policy No. FIN 030.001) 2. Purchases under $1,000 3. Training and Education a) Conference, Course, Convention and Seminar, including accommodation, travel b) Magazine, Book, Periodical, Subscriptions c) Membership Fee d) Facilitator, Trainer Fee 4. Catering, Food or Entertainment Services 5. Advertising a) Newspaper (national and local), periodical, trade journal, magazine (A contract arrangement for advertising such as the Community Page is not considered an exception). 6. Professional Fees * a) Consultant fee related to litigation b) External Auditor c) Legal Services d) Ontario Land Surveyor e) Property Appraisal f) Medical Service g) Mediation Service h) Laboratory Service i) Actuarial Studies and Reports j) Assessment Appeal, Assessment Services and Related Expenses k) Banking, Brokerage or Underwriting Service, Investment and Related Services Including Funds Transfer and Security 1) Liability, Property and Other Forms of Insurance and Adjusting Services m) Temporary Help n) Collection Services o) Tax and Cost Recovery Reviews Note: * Categories where a Purchase Order may be required. Policy Title: Purchasing Policy Page 23 of 25 Policy Number: PUR 010 ) 7 7. Utility Services (acquisition, repairs, maintenance and minor replacements) a) Natural Gas and Heating Oil b) Sewer and Water c) Postage d) Electricity e) Telecommunication Service Providers f) Cable Television g) Internet Service Providers 8. Work or services to or from other government agencies, utilities, Provincial or Federal agencies, Crown Corporations, municipalities, public agencies, or Boards. * 9. Third party contracts related to development. Refer to Policy Section 08. 10. Provision of services required by Councillors as provided for in the Council Compensation Policy unless requested (Policy ADM 190 - May 3, 2011 Council Meeting). 11. Maintenance Contract (Proprietary, Non-Value Added Resellers) a) Annual maintenance fees where the approved vendor is the sole source provider of the service; b) Upgrades already approved including support and training where the vendor is the sole source provider of the upgrade. 12. Acquisitions and Disposal of Real Property including rental, lease. 13. Acquisition of goods or services under a government pricing program. Note: * Categories where a Purchase Order may be required. Policy Title: Purchasing Policy Page 24 of 25 Policy Number: PUR 010 ~ U Appendix 2 Summary of Procurement Method and Approval Authority Purchase order required unless stated otherwise herein. Amounts exclusive of HST. (Director = appropriate Director) Procurement Method Dollar Range Approval Purchasing Card or Invoice Up to $1,000 Delegated by Director Purchase Order not issued Staff Purchase 1 Informal Price obtained b Staff $1,000 to $3,000 Delegated b Director 3 Informal Prices obtained b Staff $3,000 to $5,000 Director 3 Informal Prices obtained b S&S $5,000 to $30,000 Manager and Director Quotation, RFP or Public Tender $30,000-$75,000 Manager and Director (Manager, S&S to determine) $75,000-$125,000 plus CAO $125,000+ plus Council Revenue Based plus Council Consulting & Professional Services Director may obtain services Up to $30,000 Manager, Director and directly from a Treasurer particular consultant for specific assignment / project Quotation or RFP $30,000 to $50,000 Manager, Director, (Manager, S&S to determine) Treasurer, and CAO $50,000+ plus Council OR $30,000+ Council Director wants to hire a particular consultant to prepare Report to Council with reasoning Sin le Source, Sole Source Single Source or Sole Source Up to $10,000 Manager $10,000 to $30,000 plus Director $30,000 to $125,000 plus Treasurer and CAO $125,000+ plus Council Policy Title: Purchasing Policy Page 25 of 25 Policy Number: PUR 010 'PURCHASING POLICY "TACMMENT#'4 TO REPORT x C-5'T3J-tl PUR 010 y Summary of Changes with Revised Policy Revision Date: September 2011 New Section of the Policy Old Section of the Summary of Reason/Rationale Policy Change For Change Policy Statement Referenced Deleted Update to Standard policy and procedure format Policy Objective Referenced Inclusion Minor update to terminology 01 Definitions 01 Definitions Update and Clarification simplify 02 Responsibilities Referenced Update and Update to Standard simplify policy and procedure format 03 Administrative 12 Administrative Moved Revise order of Procedures Procedures Sections 04 Purchasing Principles 03 Purchasing Moved Revise order of Principles Sections 05 Environmental Embedded in 03.07 New Section 05 Expanded Considerations Purchasing Principles 06 Authorities, Procurement 04 Authorities and Update Redefine thresholds Methods and Dollar Limits Dollar Limits Terminology and with controls, improve $1000 PCard or Invoice $550 buy without a Dollar Limits. service delivery, $1,000 to $3,000 - one PO or buy with a Add Appendix 2 maintain efficiencies informal quote PCard Summary of $3,000 to $5,000 - three $550 - $5400 direct Approval informal quotes purchase Authority $5,000 to $30,000 - S&S $5400-$27,000 informal quotes informal quotes $30,000 + competitive $27,000-$108,000 pricing - RFQ, RFP or Formal Quotations Tender $108,000+ Public Tender 07 Approvals During Council Not Referenced Inclusion Combine information Recess which is found currently in 2 separate Resolutions of Council J New Section of the Policy Old Section of the Summary of Reason/Rationale Polic Change For Change 08 Third Party Contracts Not Referenced Created New Clarify the handling of Related to Development Section these types of contracts. 09 Single Source and Sole 05 Negotiation Partially Update to provide Source embedded in clarity on single and Section 05. sole source Update provisions, provide terminology, add examples and single source introduce improved and expand on approval thresholds sole source provisions and include approval thresholds 10 Consulting & 04.09.01 Consulting & Created New Establish its own Professional Services Professional Services Section section, clarify and redefine approval thresholds 11 Design and Development Not Referenced Created New Clarification as to Service Section when a consulting service can become a conflict of interest in competition 12 Emergency Purchase 06 Emergency Update Clarification Purchase terminology 13 Cooperative Purchasing 07 Cooperative Update Add approval authority Purchasing terminology 14 Purchasing Cards Not Referenced Created New Link to Purchasing Section Card Procedure 15 Disposal of Surplus 08 Disposal of Surplus Word change Clarification Assets Property and add approval process 16 Code of Purchasing 10 Code of Purchasing Change wording Applies to Supply & Ethics Ethics Services staff (not all Staff) 17 Conflict of Interest Embedded in 09 Created New Include reference to Prohibitions Section Council and Employee Codes of Conduct 18 Prohibitions 09 Prohibitions Update Clarification terminology I h New Section of the Policy Old Section of the Summary of Reason/Rationale Policy Change For Change 19 Exceptions - Appendix 1 11 Exemptions and Update Update to reflect Appendix A terminology and current day business expand practises categories 20 Confidentiality - Access Not Referenced Created New Clarification and to Information Section reference to MFIPPA 21 Disqualification of Referenced in 10.04 Created New Include provision to Bidders Tendering Section reject a bid from a Irregularities but only bidder in litigation with resulting from non- City compliance in bidding process 22 Bidder Terminated, Not Referenced Created New Include provisions Unsatisfactory Section which can exclude Performance bidder from consideration such as violation of health and safety regulations, non compliance with OHSA, substandard performance 23 Tendering Irregularities 10.04 Tendering Update Update to reflect Irregularities terminology, current day and best delete 11 and 22 business practises Appendix 2 Not Referenced Created New Condensed version of Section - Section 06 for easy SUMMARY of reference Procurement Method and Approval Authority ATTACHMENT# TO REPORT #~3 /-It 2 The Corporation of the City of Pickering By-law No. XXXX/11 Being a By-law to Establish a Policy Governing the Purchase and Disposal of Goods and Services. (Hereinafter called the Purchasing By-law) Whereas the Council of the Corporation of The City of Pickering (hereinafter the City) has sole authority to allocate funds through its adoption of budgets for approved corporate programs and objectives; Whereas the City recognizes the need for sound and effective purchasing policies for the commitment of public funds in the acquisition of goods and services; Whereas this By-law establishes the authority and responsibilities governing the purchase and disposal of goods and services subject to certain exceptions; Whereas the Municipal Act, 2001, Section 270 requires a municipality to adopt and maintain policies with respect to the procurement of goods and services; Whereas the Council of the Corporation has by Resolution adopted on November 5, 2001 authorized the enactment of this By-law and the repeal of Resolution #136/01 and any other By-laws or resolutions formerly governing the subject matter of this By-law; Now therefore, notwithstanding any other By-law or policy, the Council of the Corporation of the City of Pickering hereby enacts the following Purchasing Policy as detailed in Attachment 1. By-law read a first, second and third time and finally passed this 17th day of October, 2011. David Ryan, Mayor Debbie Shields, City Clerk