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HomeMy WebLinkAboutCS 52-04PICKERING REPORT TO EXECUTIVE COMMITTEE Report Number: CS 52-04 Date: November 26, 2004 From: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: Compliance with Procurement Requirements of Section 271, Municipal Act, 2001, S.C. 2001, Chapter 25 (The Act) Recommendation: It is recommended that report CS 52-04 of the Director, Corporate Services & Treasurer be received for information. Executive Summary: Under the Municipal Act, 2001, municipalities are required to have policies in place governing the acquisition of goods and services. Council adopted its current Purchasing By-law on Policy and Procedures on November 1, 2001 governing the acquisition of goods and services. The Purchasing Policy & Procedures in place meets the requirements of the new Municipal Act. Financial Implications: Not applicable Background: In December 2001, the new Municipal Act (Municipal Act, 2001, S.C. 2001, Chapter 25), hereinafter referred to as the "Act" was passed by the Ontario Legislature. As part of this requirement, before January 2005, municipalities and local boards must develop policies - adopted by bylaw or in the case of local boards by resolutions - that will be used for procuring goods and services. On November 1, 2001, Council approved a Purchasing By-law and the Policy & Procedures for procuring goods and services. The APTA Purchasing Policy & Procedure was developed from the City's Purchasing Policy & Procedure to include some variances best suited to APTA's operational requirements. In May 2002, the APTA Board approved the APTA Purchasing Policy & Procedure, Report #APTA 08-02. The Purchasing Policy being prepared by the Pickering Public Library for the Board's approval is based upon the policy adopted by the Council of the City of Pickering on November 2, 2001 as described above, with necessary modifications. For example, the Corporate Structure of the Library differs from that in the City. In particular, there is neither a named position of Manager, Supply & Services nor that of Director, Corporate Services & Treasurer. These authorities rest with the Chief Executive Officer. Furthermore, the Board has delegated all authority for purchases, contracts, tenders Report CS 52-04 Compliance with Procurement Requirements of Section 271, Municipal Act, 2001, S.C. 2001, Chapter 25 (The Act) Date: November 26, 2004 Page 2 etc. to the CEO who exercises this authority in conjunction with the City Treasurers when appropriate. Therefore, certain sections or descriptions in the City's policy are not applicable to the Library. However, generally the purchasing limits, definitions, policies and procedures described in the City's policy have been in use by Library staff for many years. However, all purchasing limits, definitions, policies and procedures described in the City's policy had been adopted by the Library Board and have been in use by Library staff for many years. Procurement Requirements Required Under Section 271 of the Municipal Act, 2001 271. (1) Before January 1, 2005 a municipality and a local board shall adopt policies with respect to its procurement of goods and services, including policies with respect to: The municipality adopted a purchasing policy on March 20, 1989 by Resolution #35/89 and a purchasing guideline was developed in 1995 implemented into business practise. In essence, the municipality has had practises and procedures in place for many years with respect to its procurement of goods and services. On November 5, 2001, Council repealed Resolution #35/89 and any other by-laws or resolutions governing the subject matter and approved the recommendation of Report CS 35-01 adopting a policy with respect to its procurement of goods and services. Purchasing Bylaw No. 5900/01 establishing policies governing the purchase and disposal of goods and services for the City was approved by Council Resolution #136/01 and amendment approved by Council Resolution #25/03, Item 3. (a) the types of procurement processes that shall be used The types of procurement processes that shall be used are identified in Policy Items 04, 05, 06, 07, 11, generally referred to as authorities and dollar limits when types of processes take place such as tenders, quotations, informal pricing, negotiation, emergency purchase, co-operative purchasing and exemptions. Types of procurement processes are further identified in Procedure No. PUR 010-001, Items 05, 06, 08, 09, 10, 11, 12, 14. Generally the sections refer to requisitioning goods and services, where Iow dollar value procurement tools (e.g. procurement card, credit card) can be used, where types of requisitions, purchase orders and blanket purchase orders can be utilized to acquire goods and/or services and where a systems contract (e.g. stationery supplies) can be utilized. Furthermore, types of procurement processes noted in the purchasing procedures include methods known as expression of interest, request for quotation, tenders and proposals. Emergency purchases and co-operative purchasing are detailed further within the procedures. Report CS 52-04 Compliance with Procurement Requirements of Section 271, Municipal Act, 2001, S.C. 2001, Chapter 25 (The Act) Date: November 26, 2004 Page 3 (b) the goals to be achieved by using each type of procurement process The goals to be achieved by using each type of procurement process are identified in Policy Item 04, authorities and dollar limits. For example, employees may be delegated authority to purchase goods and services up to a specified dollar value and the objectives of this policy in any competitive or direct purchase are to be met. Informal pricing may be obtained for a specified dollar value and the award be approved upon such terms and conditions deemed beneficial to the City, on the understanding the objectives of this policy in any competitive or direct purchase are met. Formal quotations for a specified dollar value where the compliant quotation meeting specifications and offering best value is acceptable, which includes approving an award, upon such terms and conditions deemed beneficial to the City on the understanding that the objectives of this policy in any competitive or direct purchase are met. The dollar value for tendering and acceptance of a tender are to be in keeping with policy directives as well. The goals identified in Policy Items 05 negotiation, 06 emergency purchase, 07 co- operative purchasing, 11 exemptions include goal directives such as most cost-effective or beneficial; lowest obtainable prices given the emergent nature of the situation; economic advantages and where the best interests of the City would be served in so doing. The goals to be achieved by using each type of procurement process are identified in Policy Items 03.02, 03.03, 03.04, 03.06 and 03.07 within the purchasing principles. General examples of directives include arrange for procurement in an efficient and cost effective manner; ensure the greatest value is obtained; encouraging where practical standardization and open and competitive bidding. Furthermore, to promote acceptance of bids based on total acquisition and life cycle cost rather than lowest bid received; assist in the comparison and assessment of alternative service delivery options and encourage wherever applicable, specifications that are environmentally responsible and friendly. (c) the circumstances under which each type of procurement process shall be used The circumstances under which each type of procurement process shall be used are identified in Policy Item 04, authorities and dollar limits where the dollar value identifies the circumstance to which a procurement process will apply such as direct purchase without a purchase order, informal pricing, formal quotations, calling for tenders. Circumstances determining process are also identified within Procedure No. PUR 010- 001, Items 05 requisitioning goods and services, 06 purchase orders, Iow value purchase arrangements i.e. purchasing cards, credit cards and other forms of contract agreements, limited purchase order forms, blanket order forms, 08 expression of interest, 09 request for quotations, 10 request for tenders, 11 request for proposals, 12 emergency purchases over $1,000, and 14 co-operative purchasing, each identifying the circumstance under which the types of procurement processes shall be used. Report CS 52-04 Compliance with Procurement Requirements of Section 271, Municipal Act, 2001, S.O. 2001, Chapter 25 (The Act) Date: November 26, 2004 Page 4 (d) the circumstances under which a tendering process is not required The circumstances under which a tendering process is not required is identified in Policy Items 05 negotiation, generally stated as when an event could not be foreseen occurs that is a threat to public health, service, welfare or public property and requires immediate delivery of supplies, or performance of services; when competition is precluded because of the existence of sole source, patent rights or similar circumstances; when no responsive bid has been received or the lowest bid exceeds the estimated cost. The circumstance under which a tendering process is not required is identified in Policy Item 06 and Procedure No. PUR 010-001 Item 12 emergency purchase, generally a situation where the immediate purchase is essential to prevent serious delays and further damage, restore minimum service, given the emergent nature of the situation. the circumstances under which in-house bids will be encouraged as part of a tendering process Work, which can be performed in-house, is reviewed by the City and where it can be, is performed in-house. Inviting bids is not considered until work is deemed to be that which cannot be performed in-house. Therefore, in-house bids are not part of the City's tendering process. how the integrity of each procurement process will be maintained and how the interests of the municipality or local board, as the case may be, the public and persons participating in a procurement process will be protected The integrity of each procurement process will be maintained, and the interests of the municipality, the public and persons participating in a procurement process will be protected by policy statement Policy Item 02. The policy statement identifies responsibilities of Council, Chief Administrative Officer, Department and Division Heads, Director, Corporate Services & Treasurer and Manager, Supply and Services to actively support the purchasing policy and as assigned, to recommend or approve amendments to the purchasing policy, prepare and maintain administrative procedures required to implement the provisions of the policy therein aiming to protect the integrity and the interests of the municipality, public and persons participating in the procurement process. Mitigating risks associated to fairness, effectiveness, objectivity, openness and transparency can maintain integrity in a process and protect the interests of the municipality, the public and persons participating in a procurement process. Mitigating such risks are provided within Policy Item 03.03 purchasing principles, Manager, Supply & Services, exercising professional purchasing practices, free from influence and interference, encourage where practical, standardization and open and competitive bidding. Item 05 negotiation, identifying the perimeters of the process and permission to do so. Item 09 prohibitions, generally stating no member of the City Council, or officer of the City will become interested directly or indirectly as a contracting party or in Report CS 52-04 Compliance with Procurement Requirements of Section 271, MunicipalAct, 2001, S.O. 2001, Chapter 25 (The Act) Date: November 26, 2004 Page 5 the performance of the contractor or in the supplies, goods or business, the City shall make no personal purchase for any employee, member of City Council and no requirement shall be divided to avoid the requirements of the policy. Item 10 code of purchasing ethics, shall apply to all staff involved in the procurement process; Item 11 exemptions, permitting operating outside of policy directive within a controlled manner, and Item 12 administrative procedures, all of which reinforce the requirement to maintain integrity and protect the interest of the municipality, public and persons participating in the procurement process. Furthermore, interdepartmental procedures outlined throughout Procedure No. PUR 010-001 provides additional guidance and directives towards mitigating such risks. Generally, Items 10 tenders, identifies evaluating bids, opening committee, tendering irregularities, advertising methods to notify prospective bidders; bonding requirements to mitigate performance and financial risks; 15 vendor performance to ensure compliance to contract terms and to provide some basis for resolving disputes; 11 use of an evaluation committee during an RFP process to maintain objectivity are some examples. Risks can arise where perceived unfairness in a procurement process exists. For example, suppliers, consultants or persons who provide design services or specifications or retained in preparing the work to be tendered, quoted upon or to invite proposals, may have inside or privileged information revealed during the preparation phase. Such a supplier, consultant or person also bidding for the work can have an advantage over other bidders in what should be a competitive bidding process, creating an unfair playing field among the bidders and risks to the municipality can occur. how and when the procurement processes will be reviewed to evaluate their effectiveness The processes are reviewed and evaluated for effectiveness in response to concerns of internal clients, suppliers, public, external auditors, departmental issues and changes, as well as comparing against other similar organizations. Concerns are discussed internally and to bring clarity and resolution to the issue measures are implemented by directive, operating procedure or as otherwise required, as soon as practicable. At least once annually, the Director, Corporate Services & Treasurer and the Manager, Supply & Services review the policy and procedures. Further discussion may be held with appropriate City staff and any recommendations for change are reviewed with the Chief Administrative Officer before forwarding to Council for approval. Report CS 52-04 Date: Compliance with Procurement Requirements of Section 271, MunicipalAct, 2001, S.O. 2001, Chapter 25 (The Act) November 26, 2004 Page 6 Attachments: Not applicable Prepared I~: Vera ,~. Felger~acher Manager, Supply & Services Approved / Endorsed By: Gillis A. Paterson Director, Corporate Services & Treasurer Copy: Chief Administrative Officer /' Recommended for the consideration of ,', Pickering City~ //'i/!~ Thomas J. Ott[_n. p4,'Chie[)~dministrative Officer