REPORT TO COUNCIL
SUBJECT
Title
Introduce an Ordinance Amending Chapters 2.08 and 2.09 of the Sunnyvale Municipal Code Relating to Delegation of Authority to Director of Finance, Methods of Procurement for Purchases of Goods and Services, Methods of Acquisition for Public Works Contracting, and Receipt of Formal Bids and Proposals
Report
REPORT IN BRIEF
Approval is requested to amend various sections in Chapters 2.08 (Purchases of Goods and Services) and 2.09 in the Sunnyvale Municipal Code (Public Works Contracting). Specifically, Sections 2.08.060 and 2.09.060 would be amended by removing the requirement to solicit, where possible, a minimum of three bidders with respect to informal bids or quotes anticipated to cost $50,000 or less. Informal bids or quotes anticipated to cost more than $50,000 would still require a minimum of three bidders or an exemption justification.
Approval is also requested to amend the language in Sections 2.08.1110 and 2.09.110 to reflect the City's transition to an electronic procurement platform with respect to the opening of bids. In addition, recommended changes would memorialize the Director of Finance's authority to interpret Chapters 2.08 and 2.09 of the Sunnyvale Municipal Code (SMC) and adopt policies and procedures consistent with the SMC.
EXISTING POLICY
The City's purchasing policies are established by the following:
* Section 1309 of the City Charter (Contracts of Public Works)
* Section 1317 of the City Charter (Centralized Purchasing)
* Chapter 2.08 of the Sunnyvale Municipal Code (Purchases of Goods and Services)
* Chapter 2.09 of the Sunnyvale Municipal Code (Public Works Contracting)
* Council Policy Manual, Chapter 7 Planning and Management, Section 7.1.1 (Fiscal - Long Range Goals and Financial Policies), Subsection 7.1.H (Centralized Purchasing System)
ENVIRONMENTAL REVIEW
The action being considered does not constitute a "project" within the meaning of the California Environmental Quality Act ("CEQA") pursuant to CEQA Guidelines section 15378(b)(5) in that it is an organizational or administrative government activity that will not result in direct or indirect changes in the environment.
BACKGROUND AND DISCUSSION
The City is committed to ensuring the efficient, transparent, and cost-effective procurement of goods and services. To ensure that the City continues to meet those goals while maintaining compliance with legal requirements and keeping pace with industry best practices, staff conducted a comprehensive review of Sunnyvale Municipal Code ("SMC") Chapters 2.08 and 2.09, including Section 2.08.060 (Methods of procurement) and 2.09.060 (Methods of acquisition) and conducted a survey of neighboring cities. This review resulted in a recommendation to adjust the number of quotes required for various dollar thresholds when acquiring goods and services.
The current procurement requirements impose administrative requirements for low-dollar procurements that can delay necessary purchases and increase staff workload without providing significant additional value. In certain instances, the requirement to solicit a minimum number of quotes exceeds industry best practices, is not aligned with the procurement processes of peer municipalities and is not required by State law or the City Charter. By modernizing these requirements, the City can enhance operational efficiency, improve vendor responsiveness, and maintain fiscal responsibility.
The proposed ordinance updates the dollar thresholds for informal bidding in procurement of goods and services and for public works contracting. For purchases between $5,001 and $50,000, departments will no longer be required to solicit a minimum of three quotes for procurements. In fiscal year 2024/25, the City processed 1,605 purchase orders in this category. Under the proposed ordinance, departments will have the discretion to determine the most effective approach for these procurements, allowing for greater flexibility and efficiency. Departments could still solicit three quotes, but it would not be required.
The proposed revisions to SMC Sections 2.08.060 and 2.09.060 strike a balance between efficiency and appropriate controls in procurement. These changes will streamline operations, reduce administrative overhead, and ensure the City remains responsive to the evolving needs of the community and marketplace. Staff have also conducted a thorough review of associated administrative purchasing policies and procedures and will update operational documents pending Council approval of the proposed ordinance. The detailed changes to the quote thresholds are outlined in Attachment 1 for review and consideration.
In addition, staff is proposing revisions to SMC Sections 2.08.110 and 2.09.110 to align the City's procurement process with its recent transition to an electronic procurement platform. Moving from manual, in-person bid openings to a secure electronic system ensures that competitive bids are received and opened precisely at the designated deadline, reducing the risk of late or misplaced submissions. This update enhances fairness, transparency, and efficiency for staff and vendors, provides real-time access to bid information, generates administrative cost savings, and supports sustainability by reducing paper use.
Lastly, the proposed revisions to SMC Sections 2.08.050 and 2.09.050 memorialize the Director of Finance's authority to interpret Chapters 2.08 and 2.09 of the SMC and adopt policies and procedures consistent with the SMC.
The Council's approval of these amendments represents a critical step in modernizing the City's procurement framework and fostering a more agile and effective purchasing process.
FISCAL IMPACT
Adopting an ordinance to update Sunnyvale Municipal Code Chapters 2.08 and 2.09 does not have a direct fiscal impact. While removing the requirements in Sections 2.08.060 and 2.09.060 to obtain a minimum of three quotes could potentially result nominally in higher prices than what would be procured by obtaining such quotes, these changes would also result in savings in staff time and project/service delivery by reducing the administrative burden on up to 1,600 purchase orders annually. Adopting the ordinance to update Sunnyvale Municipal Code 2.08.110 and 2.09.110 would save administrative costs of executing traditional paper bid processes.
PUBLIC CONTACT
Public contact was made by posting the Council meeting agenda on the City's official-notice bulletin board at City Hall, at the Sunnyvale Public Library and in the Department of Public Safety Lobby. In addition, the agenda and this report are available at the City Hall reception desk located on the first floor of City Hall at 456 W. Olive Avenue (during normal business hours), and on the City's website.
ALTERNATIVES
1. Introduce an Ordinance Amending Chapters 2.08 and 2.09 of the Sunnyvale Municipal Code Relating to Delegation of Authority to the Director of Finance, Methods of Procurement for Purchases of Goods and Services, Methods of Acquisition for Public Works Contracting, and Receipt of Formal Bids and Proposals.
2. Do not introduce an Ordinance and provide alternative direction to staff.
RECOMMENDATION
Recommendation
Staff recommends Alternative 1: Introduce an Ordinance Amending Chapters 2.08 and 2.09 of the Sunnyvale Municipal Code Relating to Delegation of Authority to the Director of Finance, Methods of Procurement for Purchases of Goods and Services, Methods of Acquisition for Public Works Contracting, and Receipt of Formal Bids and Proposals.
Levine Act
LEVINE ACT
The Levine Act (Gov. Code Section 84308) prohibits city officials from participating in certain decisions regarding licenses, permits, and other entitlements for use if the official has received a campaign contribution of more than $500 from a party, participant, or agent of a party or participant in the previous 12 months. The Levine Act is intended to prevent financial influence on decisions that affect specific, identifiable persons or participants. For more information see the Fair Political Practices Commission website: www.fppc.ca.gov/learn/pay-to-play-limits-and-prohibitions.html
An "X" in the checklist below indicates that the action being considered falls under a Levine Act category or exemption:
SUBJECT TO THE LEVINE ACT
___ Land development entitlements
___ Other permit, license, or entitlement for use
___ Contract or franchise
EXEMPT FROM THE LEVINE ACT
___ Competitively bid contract*
___ Labor or personal employment contract
___ Contract under $50,000 or non-fiscal
___ Contract between public agencies
_X_ General policy and legislative actions
* "Competitively bid" means a contract that must be awarded to the lowest responsive and responsible bidder.
Staff
Prepared by: David Battaglia, Purchasing Officer
Reviewed by: Matthew Paulin, Director of Finance
Reviewed by: Sarah Johnson-Rios, Assistant City Manager
Approved by: Tim Kirby, City Manager
ATTACHMENTS
1. Revised Purchasing Thresholds
2. Draft Ordinance