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TO: |
Mayor and Members of Council |
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FROM: |
Andy Taylor, Commissioner of Corporate Services Barb Cribbett, Treasurer Joel Lustig, Director of
Financial and Client Services |
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PREPARED BY: |
Kevin Newson, Purchasing Manager |
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DATE OF MEETING: |
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SUBJECT: |
Revisions to Purchasing By-Law
143-2000 |
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RECOMMENDATION:
THAT
the report entitled “Revision to Purchasing By-Law 143-2000” dated
AND THAT the Town of
PURPOSE:
The
purpose of this report is to replace Purchasing By-law 143-2000, originally
approved by Council in August 2000. The rationales for the changes are to
improve the efficiencies of the purchasing process as well as ensure compliance
with the Procurement Requirements of Section 271 of the Municipal Act, 2001,
S.O. 2001.
BACKGROUND:
Section
271 of the Municipal Act, 2001 requires that Municipalities adopt
procurement policies prior to January 2005. The Act defines a number of goals
and circumstances under which municipalities should have clear policies to
govern. For the most part the Town’s existing By-law meets the guidelines
recommended in the Act.
Staff began meeting with Operating Departments in
2003 to discuss Purchasing By-law 143-2000. The focus of these meetings was to
obtain input and gain support for enhancements to the purchasing process. All
Commissions offered recommendations for improvement, believing a more efficient
procedure would greatly assist the time and effort required to process
acquisitions. Further to these meetings, staff reviewed thirteen other
OPTIONS/DISCUSSION:
Contract Award Authorities
The
dollar thresholds that determine whether an acquisition requires a formal
quotation have been increased.
The
following chart outlines the proposed changes in cost levels.
Present
Proposed
Formal Quotation $25,000 to $50,000 replaced
w/ Req. for Quotation
Request for Proposal greater than $50,000 greater
than $100,000
Tender greater
than $50,000 greater
than $100,000
The proposed improvements
are the same as the Region of York’s revised Purchasing By-Law, which was
adopted at their Finance and Administrative Committee on
Request for Quotation
This
process permits an informal request for at least three quotations for specific
goods or services. Bid responses can be submitted in writing, email or
transmitted by facsimile. Currently Request for Quotations are used for items
less than $25,000. It is proposed that
Requests for Quotation be called for the purchase of all acquisitions below
$100,000, which would eliminate the need for Formal Quotations, RFP’s and
Tenders for items less than $100,000.
Although not new in practice, this process was not clearly defined in
the existing By-law.
The purchase of items for less than $100,000
represents approximately 41% of the Purchasing and Operating Departments’
procurement activities. This represents considerable resource allocation yet
only 5% of the dollar value of items purchased.
Requests for Quotation for items that cost less than $100,000 will
significantly streamline this process, reducing current delays and permit
Purchasing staff the ability to better allocate their time to service their
customers and develop new sources of supply.
Consultants and Professional Services
This
section of the By-law has become redundant as the definition of goods and
services now incorporates Consultants and Professional Services.
Disqualified bidders list
The
current Purchasing By-law has no provisions for disqualifying bidders. The proposed process will enable the Town to
disqualify vendors from bidding on contracts for a period of two years based on
properly documented poor performance, non-performance, or conflict of interest.
To be included on the list staff must document the infraction and the vendor
must be notified in writing. This new process will improve efficiency and
productivity by reducing staff time required to evaluate quotations and monitor
unacceptable vendors.
Negotiation of Request for Proposals and Request for
Quotations
The current Purchasing By-law has no provisions for negotiating price. The proposed By-law will enable the Town to negotiate specifications, terms and conditions or price of a proposal prior to the contract award. This procedure will enable the Purchasing department to receive the best value for the goods and services it procures.
Standardization of product
The
proposed Purchasing By-law recommends guidelines for the standardization of
goods to permit economies of scale as well as reduced maintenance and inventory
costs. This new initiative will permit
savings while reducing administrative costs.
Expression of Interest
The
proposed Purchasing By-law recommends a new process that will enable the Town
to conduct market research to better prepare formal bid documents. This
procedure will allow Staff to determine product availability, vendor interest
and explore new and innovative ideas.
Pre-Qualification section with the ability to create rosters
The proposed Purchasing
By-law will enable the Town to qualify suppliers based on their backgrounds,
capabilities, resources and the goods or services they are offering. Successful
suppliers will be invited to submit bids for a particular requirement or be
included on a roster for future bids. This procedure has been improved over the
process in the exiting By-law. Rosters will reduce administrative costs and
dramatically improve the time required to process purchases while maintaining
the integrity of an open competitive bidding practice.
Emergency purchase of Real Property
A
procedure to give authority to the Chief Administrative Officer to purchase
real property when it is deemed to be in the best interest of the Town has been
added to the proposed Purchasing By-law. This process will allow the Town to
secure real property when time constraints will not permit the regular process.
Local Supplier Preference
The
proposed Purchasing By-law includes a principle stating that according to the
Discriminatory Business Practices Act, R.S.O. 1990, c. D.12, preference cannot
be given to local suppliers. This
statement clarifies existing legislation to local suppliers.
Updating of titles
The
proposed By-law updates the definition for the title Director to additionally
include General Manager, Treasurer, Town Architect and Deputy Fire Chief.
In-house Bidding
The
Municipal Act, 2001, requires that procurement policies make provision for
in-house bidding. The new By-law accommodates this requirement by stating that
the Town will not solicit in-house bids in competition with outside firms.
Benefits of Changes to the By-law
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An efficient system for processing purchases under $100,000
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Through the pre-qualification procedure an improved system for
processing most contracts
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An opportunity for negotiated savings
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The development of new sources of supply
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Purchasing will improve its’ customer service with more of their input
on larger contracts
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Compliance to the Procurement Requirements of Section 271 of the
Municipal Act, 2001, S.O. 2001.
The
proposed changes will not alter the number of reports presented to Council.
Expenditure Control Policy
A
complimentary policy governing the control of expenses was modified to further
streamline processes. The Expenditure Control Policy was changed to improve the
procedure for payment of invoices, contract overruns and contingency contracts.
The new processes will permit the payment of invoices in a timely manner
allowing the corporation to take advantage of discounted payment terms.
Conclusion
Staff
have reviewed the Town’s existing Purchasing By-Law 143-2000 in light of the
requirements of the Municipal Act, 2001 and the recommendations from
Operating Departments. The proposed
amendments to the Purchasing By-law are recommended to ensure the By-law
remains responsive to the need for timely and responsible procurement of goods
and services.
FINANCIAL CONSIDERATIONS:
There are no financial
implications associated with the recommendations set out in this report.
BUSINESS UNITS CONSULTED AND AFFECTED:
All business units have been
consulted and their recommendations have been incorporated in the revised
Purchasing By-law.
ATTACHMENTS:
Appendix “A” – A
Comparison of Bid Limit and Award Authorities Between Various Municipalities
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Joel Lustig, Director of
Financial and Client Services |
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Barb Cribbett, Treasurer |
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Andy Taylor, Commissioner,
Corporate Services |
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Q:\Finance and Administration\Finance\SHARED\2004 Finance_Admin Cttee
Reports\0474 Revisions Purchasing By-law 143-2000.doc
Appendix “A”
Tender, Proposal and Quotation Limits Survey
A Comparison of Bid Limits
and Award Authorities
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Regions and Municipalities |
Formal Quotes |
Formal Tender/RFP |
Authorization
to Award |
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>$20,000 <$100,000 |
>$100,000 |
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Halton |
>$25,000 <$100,000 |
>$100,000 |
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(current) |
>$25,000 <$50,000 |
>$50,000 |
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Department Heads up to $100,000 ·
CAO/tenders/RFPs up to $350,000 ·
Council over $350,000 |
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<$100,000 Informal Quotation |
>$100,000 |
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<$50,000 Informal Quotation |
>$50,000 |
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>$25,000 <$50,000 |
>$50,000 |
·
Department Heads – Quotations ·
CAO/low tenders/RFPs up to $1 million
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Peel |
>$25,000 <$100,000 |
>$100,000 |
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CAO - Low Bid |
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>$25,000 <$100,000 |
>$100,000 |
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Department Heads – Quotations ·
Council/Tenders/RFPs |
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Proposed >$50,000 <$100,000 |
>$100,000 |
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Department Heads – Quotations ·
CAO/low tenders/RFPs up to $1 million
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Vaughan
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>$20,000 <$100,000 |
>$100,000 |
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Department Heads – Quotations ·
Council/Tenders/RFPs |
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York |
<$100,000 Informal
Quotation |
>$100,000 |
·
Department Heads – Quotations ·
CAO - Low Tenders ·
$100,000 - $500,000 low RFPs |
