Approve Increasing the Threshold for Procuring Services Using a Formal Competitive Negotiation Process

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith reported on staff’s recommendation to approve increasing the threshold for procuring services using a formal competitive negotiations process from $25,000.00 to $100,000.00.

The report stated that, in accordance with recent changes to California State Law enacted by Assembly Bill 116, the Board approved Resolution No. 2009-092, which amended the District’s Procurement Policy (Policy) to allow procurement of equipment, supplies and materials valued at up to $100,000.00 by obtaining, when practical, a minimum of three quotations, either written or oral, that permit comparison on the basis of price and other terms. The changes included increasing the threshold for using formal competitive bidding and a lowest responsible bidder basis of award and to permit award of such contracts on either a low bid or best value basis.

The report also stated that the method for procuring services is established by Board policy and not subject to any competitive bidding statute. The current Policy requires that services valued at greater than $25,000.00 be procured using a formal competitive process. The report noted that, at Committee’s meeting of November 13, 2009, staff recommended raising the $25,000.00 threshold to $100,000.00 for service contracts, which would be the same threshold for procurements of equipment, supplies and materials, and be in alignment with thresholds used at most other transportation agencies in the region. At that meeting, the Committee requested that, before proceeding with the recommendation, the Committee would need additional information. Staff provided that information in the staff report, and the Committee members present so noted. There is no direct fiscal impact associated with this recommended change to the Policy. A copy of the staff report is available in the Office of the District Secretary and on the District’s web site.

At the meeting, Ms. Murray provided a summary of the answers to the questions posed by the Committee members at its November 13th meeting.

Discussion ensued, including the following comments and inquiries:

• Director Newhouse Segal made the following inquiry and comment:
  • She inquired as to whether a limit will be imposed as to how many contracts a single company can be awarded. In response, Ms. Kupersmith stated that there is no limit on the number of contracts that one business can have with the District. However, Ms. Kupersmith stated that she will perform oversight to prevent the potential of artificially breaking up large contracts into small contracts to bypass the process. Ms. Kupersmith noted that the Federal Transit Administration (FTA) has identified utilizing the threshold of $100,000.00 for service contracts as desired Best Practices.
  • She suggested that other public agencies may not have the same safeguards as those of the District, and inquired as to whether the FTA is imposing the desired Best Practices as a punitive measure to get all public agencies at the same level. In response, Ms. Kupersmith answered in the negative and stated that the FTA performs a Triennial Review to audit all required FTA procedures to ensure compliance with regulations, and that process finds and corrects any insufficiencies. In addition, Mr. Miller stated that the FTA position of desired Best Practices is to bring about better procurement policies and consistencies for the benefit of those companies that want to bid on Federally-funded projects.

• Director Sanders commended staff for addressing the issues from the Board and expressed her satisfaction that the status of service contracts will be presented to the Board quarterly.

Staff recommended, and the Committee concurred by motion made and seconded by Directors STROEH/ELSBERND, to forward the following recommendation to the Board of Directors for its consideration:

RECOMMENDATION

The Rules, Policy and Industrial Relations Committee recommends that the Board of Directors approve increasing the threshold for procuring services using a formal competitive negotiations process from $25,000.00 to $100,000.00, which process is in line with District policy for the procurement of equipment, supplies, or materials and is permissible under Federal transportation procurement guidelines for Best Practices; and, amend the Procurement Policy accordingly.

Action by the Board at its meeting of January 8, 2010 – Resolution
NON-CONSENT CALENDAR

AYES (11): Directors Cochran, Elsbernd, Kerns, McGlashan, Newhouse Segal, Pahre, Sanders, Snyder and Stroeh; Second Vice President Eddie; President Boro
NOES (0): None

Public Comment

There was no public comment.

Adjournment

All business having been concluded, the meeting was declared adjourned at 9:50 a.m.