Chapter 4.10
PURCHASING AND CONTRACTING
Sections:
4.10.020 Purpose and interpretation of chapter.
4.10.040 Contracting authority.
4.10.050 Contracts enforceable against City.
4.10.060 Availability of funds.
4.10.070 Approval of contracts – Reports to Council.
4.10.080 Execution of contracts.
4.10.095 Termination of contracts.
4.10.100 Competitive sealed bidding required – Exceptions.
4.10.110 Competitive sealed bidding.
4.10.120 Competitive sealed proposals – Negotiated procurement.
4.10.130 Limited competition procurement.
4.10.140 Sole source procurement.
4.10.150 Emergency procurement.
4.10.160 Award to responsible bidder or proposer.
4.10.170 Rejection of bids or proposals.
4.10.190 Local vendor preference.
4.10.200 Ethics of contracting and purchasing.
4.10.010 Definitions.
When used in this chapter, the following words and phrases shall have the meanings set forth in this section:
“Construction” means the on-site field surveying, erection, rehabilitation, alteration, extension or repair including painting or redecorating buildings, highways or other improvements to real property under contract for the City.
“Contract” includes all types of agreements, regardless of what they may be called, for the procurement of supplies, services or construction.
“Contract amendment” means any change in the terms of a contract accomplished by agreement of the parties, and includes a change order.
“Director” means the City Clerk, Fire Chief, Public Works Director or Treasurer.
“Professional service” means a service which involves the exercise of discretion and independent judgment together with advanced or specialized knowledge, expertise or training gained by formal studies or experience, and includes without limitation a service provided by an engineer, architect, attorney or accountant or consultant.
“Purchasing agent” means department directors or the Mayor.
“Service” means a contract performance whose principal element is not the furnishing of tangible or intangible property.
“Supplies” means tangible or intangible personal property. (Ord. 23-04 § 4, 2023; Ord. 13-17 § 4, 2013)
4.10.020 Purpose and interpretation of chapter.
A. The purposes of this chapter are to:
1. Maximize fair and open competition and discourage collusive bidding for City contracts consistent with the efficient operation of the City government; and
2. Maximize the purchasing value of City funds.
B. This chapter shall be construed and applied to promote the purposes stated in this section. (Ord. 13-17 § 4, 2013)
4.10.030 Purchasing.
A. All purchases over $100.00 except those made from petty cash shall be authorized by a purchase order or contract.
B. All purchases require a department director’s signature for approval.
C. The Mayor shall manage the budget with the assistance of the Treasurer and department directors. All purchases over $5,000 require the Mayor’s approval.
D. Petty Cash Fund. The Council shall establish a petty cash fund for reimbursements of minor expenses. Receipts shall be required for disbursement of petty cash. The Clerk’s office will manage the petty cash fund of $100.00.
E. Emergency Purchasing Policy. In the event of an emergency situation, the Mayor and department director will determine if the expense can be funded by transfer of funds from other line items in the department’s budget. (See HMC 4.05.030.) If funds are not available in the approved budget, the matter will need to go before the Council. (Ord. 23-04 § 4, 2023; Ord. 13-17 § 4, 2013)
4.10.040 Contracting authority.
The City may, pursuant to an award in accordance with this chapter, contract with any person to acquire any supplies, services or construction required by the City. (Ord. 13-17 § 4, 2013)
4.10.050 Contracts enforceable against City.
No contract for supplies, services or construction, or any amendment thereto, may be enforced against the City unless its terms have been approved in accordance with this chapter and unless the contract or amendment thereto has been set forth in writing executed in accordance with this chapter. (Ord. 13-17 § 4, 2013)
4.10.060 Availability of funds.
No contract for supplies, services or construction, or any amendment thereto that increases the contract price, may be approved or executed unless the Treasurer has certified that funds are available for the City’s performance under the contract. (Ord. 13-17 § 4, 2013)
4.10.070 Approval of contracts – Reports to Council.
A. The Mayor may execute contracts for supplies, services or construction under which the City is obligated to pay no more than $20,000 without Council approval. The Mayor shall report to the Council of all expenditures.
B. No contract for supplies, services or construction under which the City is obligated to pay more than $20,000 may be executed unless the Council has approved a memorandum setting forth the following essential terms of the contract:
1. The identity of the contractor;
2. The contract price;
3. The nature and quantity of the performance that the City shall receive under the contract;
4. The utilizing department; and
5. The time for performance under the contract.
C. Notwithstanding subsection (B) of this section, the Mayor may execute a contract awarded as an emergency procurement under HMC 4.10.150 without Council approval; provided, that the contract may not continue after the next regular Council meeting without Council approval.
D. Notwithstanding subsection (B) of this section, the Mayor is allowed to purchase or make payments for budgeted routine and ongoing contracts for public utility services without Council approval; provided, that the terms and conditions of service are determined by a tariff on file with a state or federal regulatory agency. (Ord. 23-04 § 4, 2023; Ord. 13-17 § 4, 2013)
4.10.080 Execution of contracts.
A. All City contracts for supplies, services and construction, and any amendments thereto, shall be signed by the Mayor.
B. All official contract files shall be maintained by the City Clerk and will be disposed of in accordance with the adopted Records Retention Schedule. (Ord. 13-17 § 4, 2013)
4.10.090 Contract amendments.
A. Contract amendments shall not be used to avoid procurement by the competitive procedures established under this chapter.
B. A contract amendment shall not be executed unless the Council has approved a memorandum setting forth the changes to the essential terms of the contract if the amendment will cause the price of the contract, as amended, to exceed:
1. Twenty thousand dollars; or
2. One hundred ten percent of the original contract price or $20,001, whichever is greater, if the original contract price exceeded $20,000. (Ord. 13-17 § 4, 2013)
4.10.095 Termination of contracts.
Authority to include clauses for termination for default and termination for convenience is granted under AS 36.30.430. (Ord. 13-17 § 4, 2013)
4.10.100 Competitive sealed bidding required – Exceptions.
A. Except as this section provides otherwise, all City contracts for supplies, services and construction shall be awarded by competitive sealed bidding under the procedure in HMC 4.10.110.
B. In addition to awarding contracts by competitive sealed bidding, the City may award a contract:
1. By competitive sealed proposals under the procedure in HMC 4.10.120, where authorized by that section;
2. By limited competition under the procedure in HMC 4.10.130, where authorized by that section;
3. To a sole source supplier as authorized by HMC 4.10.140;
4. Under an expedited procurement procedure in the event of an emergency, as authorized by HMC 4.10.150;
5. Under the procedure prescribed by the source of funding for the contract;
6. For professional services without competition in an amount not to exceed $20,000;
7. Under which the City is obligated to pay no more than $5,000, without competition;
8. To a vendor under the terms of a contract awarded to that vendor under a competitive bidding procedure by the government of the United States, the state of Alaska or another state, or an agency, instrumentality or political subdivision of them. (Ord. 13-17 § 4, 2013)
4.10.110 Competitive sealed bidding.
A. The purchasing agent shall initiate competitive sealed bidding by issuing an invitation for bids. The invitation for bids shall state, or incorporate by reference, all specifications and contractual terms and conditions applicable to the procurement.
B. The purchasing agent shall assist the City Clerk in giving public notice of the invitation for bids at least 14 days before the last day on which bids will be accepted, by posting in a location at the City offices that the Mayor designates for this purpose and, if the amount of the contractual services, purchase or sale is estimated to exceed $20,000, by publication in a newspaper of general circulation in the City. The contents of the notice shall be sufficient to inform interested readers of the general nature of the supplies, services or construction being procured, where to obtain a copy of the invitation to bid, and the procedure for submitting a bid.
C. The terms of an invitation for bids may be modified or interpreted only by written addendum issued by the purchasing agent. Each addendum to an invitation for bids shall be sent to each recipient of the invitation for bids. A bid is responsive only if it acknowledges receipt of all addenda to the invitation for bids.
D. The City shall not accept bids that are received after the time for receipt of bids stated in the invitation for bids. A timely bid is subject to unconditional acceptance without alteration or correction, except that:
1. A bidder may withdraw a bid before the time for receipt of bids;
2. After the time for receipt of bids, the City, in its discretion, may permit a bidder to correct an error in a bid that is apparent from examination of the bid document.
E. Bids shall be opened publicly at the time and place designated in the invitation for bids. The purchasing agent shall tabulate the amount of each bid and shall record such other information as may be appropriate for evaluation, together with the name of each bidder. The tabulation shall be open to public inspection, and a copy of the tabulation shall be furnished to each bidder on request.
F. If the lowest responsive and responsible bid exceeds the amount of funds certified by the finance director to be available for the procurement, and if sufficient additional funds are not made available, the scope of the procurement may be reduced to bring its estimated cost within the amount of available funds. The purchasing agent shall issue a new invitation for bids for the reduced procurement, or, upon a finding that the efficient operation of the City government requires that the contract be awarded without delay, the purchasing agent may negotiate with one or more of the lowest responsive and responsible bidders. The City may award the reduced contract to the bidder that agrees to the best negotiated terms. (Ord. 13-17 § 4, 2013; Ord. 18-11 § 5, 2018)
4.10.120 Competitive sealed proposals – Negotiated procurement.
A. The purchasing agent may procure supplies, services or construction by competitive sealed proposals under this section, if the purchasing agent determines that it is not practicable to develop sufficiently detailed contract terms or specifications for procurement by competitive sealed bidding, that either vendor qualifications or the means and methods that a vendor will use are material to vendor selection, or that additional factors other than contract price are applicable in determining who to award a contract to that will be in the best interests of the City.
B. The purchasing agent shall solicit competitive sealed proposals by issuing a request for proposals. The request for proposals shall state, or incorporate by reference, all specifications and contractual terms and conditions to which a proposal must respond, and shall state the factors to be considered in evaluating proposals and the relative importance of those factors. Public notice of a request for proposals shall be given in accordance with HMC 4.10.110(B).
C. The terms of a request for proposals may be modified or interpreted only by written addendum issued by the purchasing agent. Each addendum to a request for proposals shall be sent to each recipient of the request for proposals. A proposal is responsive only if it acknowledges receipt of all addenda to the request for proposals.
D. The City shall not accept proposals that are received after the time for receipt of proposals stated in the request for proposals. A timely proposal is subject to unconditional acceptance without alteration or correction, except that:
1. A proposer may withdraw a proposal before the time for receipt of proposals.
2. After the time for receipt of proposals, the City, in its discretion, may permit a proposer to correct an error in a proposal that is apparent from examination of the proposal document.
E. The City shall evaluate each proposal submitted by a responsible proposer under the criteria set forth in the request for proposals. The purchasing agent may award a contract to the responsible proposer that the City determines has submitted the best proposal, or the purchasing agent may negotiate final contract terms with one or more responsible proposers that the City determines have submitted the most responsive proposals. Such negotiations may include solicitation from proposers of best and final offers. The purchasing agent shall provide all proposers that are selected to participate in negotiations with an equal opportunity to discuss and revise proposals. In conducting negotiations or requesting revisions, neither the purchasing agent nor any other City officer or employee shall disclose any information derived from competing proposals. After conducting negotiations, the purchasing agent shall award the contract to the highest ranked proposer deemed eligible for negotiations that agrees to contract terms acceptable to the City.
F. The contents of a proposal shall not be disclosed to any competing proposer until the purchasing agent has issued a written notice of intent to award to all responding proposers. After the issuance of the notice of intent to award, the proposal selected for award shall be open to public inspection. (Ord. 13-17 § 4, 2013)
4.10.130 Limited competition procurement.
A. The purchasing agent may procure supplies, services and construction having an estimated value not exceeding $20,000 by comparing current printed or electronic catalog pricing or by soliciting bids or proposals from a limited number of potential contractors under this section.
B. The purchasing agent will identify vendors that are qualified and available to provide the supplies, services or construction, and compare catalog prices or solicit bids or proposals from at least three vendors, or from all vendors if there are no more than three. The solicitation may be either oral or written, and shall be in a form reasonably calculated to yield the lowest responsive bid by a responsible bidder. In soliciting bids or proposals, the purchasing agent shall allow each vendor that submits a bid an equal opportunity to negotiate price, delivery schedule and terms.
C. The purchasing agent shall award the contract to the lowest responsive and responsible bidder or best catalog price. The purchasing agent shall keep a record of all catalog prices considered, solicitations of bids under this section, the bids received, and the awards made thereon. (Ord. 13-17 § 4, 2013)
4.10.140 Sole source procurement.
The purchasing agent may award a contract for supplies, services or construction without competition where the purchasing agent justifies in writing that the City’s requirements reasonably limit the source for the supplies, services or construction to one vendor. (Ord. 13-17 § 4, 2013)
4.10.150 Emergency procurement.
The purchasing agent may award a contract for supplies, services or construction without competition, formal advertising or other formal procedure where the Mayor determines in writing that an emergency threatening the public health, safety or welfare requires that the contract be awarded without delay. (Ord. 13-17 § 4, 2013)
4.10.160 Award to responsible bidder or proposer.
A. A contract award under this chapter shall be made only to a responsible bidder or proposer. The purchasing agent shall determine whether a bidder or proposer is responsible on the basis of the following criteria:
1. The skill and experience demonstrated by the bidder or proposer in performing contracts of a similar nature;
2. The bidder’s or proposer’s record of good standing as a business in the community, honesty and integrity, and previous performance of governmental contracts or private sector contracts.
3. The bidder’s or proposer’s capacity to perform in terms of facilities, personnel and financing;
4. The bidder’s or proposer’s past performance under City contracts. If the bidder or proposer has failed in any material way to perform its obligations under any contract with the City, the bidder or proposer may be deemed not responsible. (Ord. 23-04 § 4, 2023; Ord. 13-17 § 4, 2013)
4.10.170 Rejection of bids or proposals.
If the Mayor or Council determines that it is in the best interest of the City to do so, the City may reject all bids or proposals. (Ord. 13-17 § 4, 2013)
4.10.180 Bonds.
A. The purchasing agent may require that each vendor that submits a bid or proposal for a procurement accompany its bid or proposal with a bid bond in an amount and in a form acceptable to the purchasing officer. The bid bond shall secure the obligation of the vendor to enter into a contract if the City accepts its bid or proposal. The bid bond shall be issued by a company qualified by law to do business as a surety in the state, or shall be in the form of a cash deposit.
B. The purchasing agent may require in an invitation for bids or request for proposals that the successful bidder or proposer provide a performance and payment bond as a condition to entering into a contract with the City. The performance and payment bond shall secure the performance under the contract, and payment for all labor and materials provided under the contract. The bond shall be in the amount and form specified in the invitation for bids or request for proposals, and shall be issued by a company qualified by law to do business as a surety in the state, or shall be in the form of a cash deposit. (Ord. 13-17 § 4, 2013)
4.10.190 Local vendor preference.
A. The City may specify in an invitation for bids or request for proposals that it will reduce the bid or proposal price of a local vendor by two and one-half percent for purposes of bid or proposal evaluation.
B. If the City has specified that an invitation for bids or request for proposals is subject to the local vendor preference authorized by subsection (A) of this section, the City will reduce the price bid or proposed by each local vendor by two and one-half percent before evaluating bid or proposal prices for purposes of contract award. The reduction authorized by this subsection is applied only for bid or proposal evaluation, and is not applied to the awarded contract price.
C. A local vendor is a person who:
1. Holds current Alaska, City of Houston and Matanuska-Susitna Borough business licenses;
2. Submits a bid or proposal under the name which appears on its current Alaska, City of Houston and Matanuska-Susitna Borough business licenses; and
3. Has physically maintained a place of business within the City staffed by the vendor or an employee of the vendor for a period of at least six months immediately preceding the date of submission of the bid or proposal. (Ord. 13-17 § 4, 2013)
4.10.200 Ethics of contracting and purchasing.
A. All City purchases and contracts shall be made solely for the public benefit of the City. In accordance with this policy:
1. A City officer or employee who has a direct or indirect financial interest in any bid or proposal for a City contract shall disclose that interest by filing a written notice of the interest with the Clerk not less than 10 days before submission of the bid or proposal in which the officer or employee has an interest. The Clerk shall post the written notice at the place maintained for the posting of public notices at City Hall.
2. No City officer or employee who has a direct or indirect financial interest in any bid or proposal for a City contract may participate in the City’s decision to award the contract.
3. No City officer or employee may solicit or receive any form of compensation from any party other than the City in connection with the awarding of a City contract.
B. A City officer or employee who willfully violates subsection (A) of this section is guilty of malfeasance in office, and shall forfeit office with the City. A contract entered into in violation of subsection (A) of this section is voidable by the Council. (Ord. 13-17 § 4, 2013)