Chapter 2.16 PURCHASING SYSTEM AND PROCEDURES

The city manager is the city’s purchasing agent. He or she shall establish the procedure and forms to carry out such duty in accordance with the charter and this chapter. [Ord. 1405 N.S. § 2, 1984].

2.16.020 Applicability of chapter.

All purchases of and contracts for supplies, services, materials, equipment and public works by the city, or by an officer or employee thereof, shall be made only in accordance with and pursuant to the provisions of this chapter. [Ord. 1405 N.S. § 2, 1984].

2.16.030 Encumbrance of funds.

A purchase order for supplies, services, materials or equipment shall not be issued unless there exists an unencumbered appropriation in the fund against which the purchase is to be charged. [Ord. 1405 N.S. § 2, 1984].

2.16.040 Declaration of policy.

A centralized purchasing system for all departments is adopted in order:

(a) To secure supplies, services, materials and equipment at the lowest possible cost commensurate with quality needed;

(b) To exercise positive financial control over purchases;

(d) To assure the quality of purchases. [Ord. 1405 N.S. § 2, 1984].

2.16.050 Estimates of requirements.

Departments shall file detailed estimates of their requirements for supplies, services, materials and equipment in such manner, at such times, and for such future periods as the purchasing agent shall prescribe. [Ord. 1405 N.S. § 2, 1984].

2.16.060 Requisitions.

All departments shall submit to the purchasing agent requests for supplies, services, materials and equipment in such manner, at such times, and on such requisition forms as the purchasing agent shall prescribe. [Ord. 1405 N.S. § 2, 1984].

2.16.070 Purchase orders.

All departments shall purchase supplies, services, materials and equipment only in such manner, at such times, and by such purchase order forms as the purchasing agent shall prescribe. Purchase orders shall be required for all expenditures. [Ord. 1405 N.S. § 2, 1984].

2.16.080 Bidding procedures – Dispensation when.

Purchase of supplies, services, materials and equipment shall be by quotation or bid procedures as set forth in this chapter. Such procedures may be dispensed with by the purchasing agent, in his or her sole discretion and judgment as to the best interest of the city, as follows:

(a) When an emergency requires that an order be placed immediately with the nearest available source of supply;

(b) When the amount involved is less than $2,000;

(d) When a service, such as that available from an attorney, accountant, architect or specialized consultant, involves a specialized knowledge or personal skill;

(e) When supplies or equipment, such as communication systems, traffic signals, and parking meters, have been uniformly adopted in the city or otherwise standardized;

(f) When the supplies, equipment or materials are such that suitable technical or performance specifications are not available and the city is unable to develop descriptive specifications;

(g) When the article can be purchased more economically through the central purchasing authority of another governmental agency;

(h) When specific used supplies, materials or equipment will best serve the city’s needs; or

(i) When reasonably necessary for the preservation or protection of public peace, health, safety or welfare of persons or property.

Provided, that even when procedures are dispensed with hereunder, council approval, by resolution, shall be required for purchases in excess of the maximum amount for which the purchasing agent is authorized, as specified in Article II of this chapter. [Ord. 14-005 § 2, 2014; Ord. 1405 N.S. § 2, 1984].

2.16.090 Competitive negotiation.

As an alternative to the procedures set out in Articles II and III of this chapter, in the case of obtaining consulting and other specialized personal services, those services may be obtained by competitive negotiations. When this process is utilized, the best offer judged against proposal evaluation shall be accepted. Any offer exceeding the maximum amount for which the purchasing agent is authorized, as specified in Article II of this chapter, shall require council approval by resolution prior to acceptance. [Ord. 14-005 § 2, 2014; Ord. 1405 N.S. § 2, 1984].

2.16.100 Lowest responsible bidder – Determining.

For the purpose of this chapter, in addition to price, the “lowest responsible bidder” will be determined after the following factors have been considered:

(a) The ability, capacity and skill of the bidder to perform the contract or provide the service required;

(b) Whether the bidder has the facilities to perform the contract or provide the service promptly, or within the time specified, without delay or interference;

(d) The bidder’s record or performance of previous contracts or services;

(e) The previous and existing compliance by the bidder with laws and ordinances relating to the contract or service;

(f) The sufficiency of the financial resources and ability of the bidder to perform the contract or provide the service;

(g) The quality, availability and adaptability of the supplies, equipment, materials or services to the particular use required;

(h) The ability of the bidder to provide future maintenance and service for the use of the subject of the contract;

(i) The number and scope of conditions attached to the bid.

In the event the lowest bidder is rejected, the purchasing agent or council, as the case may be, shall provide the lowest bidder with written explanation and/or findings regarding the rejection.

(j) In the case of a bid received from a bidder, a portion of whose sales tax is paid to the city, the purchasing agent shall calculate the actual cost to the city of accepting such bid. Said actual cost shall be the bid amount less sales tax revenue which would be received by the city were the city to accept such bid. Said actual cost shall be the price utilized by the city, in addition to the other factors set out in this section, in determining the lowest responsible bidder.

(k) Local Business Preference.

(1) Local bidders must bid with the same specification as required of nonlocal bidders.

(2) Where competitive bidding is utilized for the purchase of supplies, equipment, materials or general services as specifically set forth in this section, the city shall grant preference to a local bidder who submits a quote or bid within five percent of the lowest responsible bidder and who is otherwise responsive and responsible to the invitation for bids.

(3) Where the lowest responsible bidder is not a local business, the purchasing officer shall provide the lowest responsible local business bidder, should one exist and its bid is within five percent of the lowest responsible bidder, with notice and an opportunity to reduce its bid to match that of the lowest responsible bidder.

(4) Upon notice being provided pursuant to this section, the local business shall have two full business days to provide written notice to the purchasing officer of its desire to match the lowest bid.

(A) In the event the local business elects to match, the contract will be awarded to the local business.

(B) In the event the local business provided the opportunity to match does not opt to match the lowest responsible bid, the award of the contract shall be given to the lowest responsible bidder.

(5) In instances where a local business and a nonlocal business submit equivalent lowest responsible bids, the purchasing officer shall give preference to the local business.

(6) All notices required under this section may be made orally, in writing or electronically.

(7) The application of a local preference as set forth in this section shall only apply if factors such as quality, previous performance, and availability are equal among bidders.

(8) Local preference shall not apply to any procurement of public work, purchases procured under federal or state requirements, cooperative purchases with other agencies, or where prohibited by other specific directive.

(9) No Exemption From Local Sales Tax. The application of a local preference as set forth in this section shall not exempt any eligible local business to which a contract is executed or awarded from having to pay all applicable federal, state or local sales tax.

(10) Local Business Defined. For purposes of this section, a “local business” means a business enterprise including, but not limited to, a sole proprietor, partnership, or corporation which has the following:

(A) A valid business license issued from the city; and

(B) Has a place of business with a physical address located within the jurisdictional limits of the city at least six months prior to publication of the call for bids and has at least one full-time employee located at the city business address. [Ord. 21-030 § 2, 2021; Ord. 1828 N.S. § 1, 1992; Ord. 1405 N.S. § 2, 1984].

2.16.110 Surplus supplies and equipment.

All using departments shall submit to the purchasing agent, at such time and in such form as he or she shall prescribe, reports showing all supplies and equipment which are no longer used or which have become obsolete or worn out. The purchasing agent shall have authority to sell all supplies and equipment which cannot be used by any department or which have become unsuitable for city use, or to exchange the same for, or trade in the same on, new supplies and equipment. The purchasing agent shall utilize all appropriate means to realize maximum return possible on such sales, exchanges and trades. [Ord. 1405 N.S. § 2, 1984].

2.16.120 Inspection – Testing.

The purchasing agent shall inspect supplies and equipment delivered and contractual services performed, to determine their conformance with the specifications set forth in the order or contract. The purchasing agent shall have authority to require chemical and physical tests of samples submitted with bids and samples of deliveries which are necessary to determine their quality and conformance with specifications. [Ord. 1405 N.S. § 2, 1984].

2.16.130 Illegal contracts – Interest by city employee, officer.

(a) No officer or employee of the city shall be or become directly interested in any contract work, or business, or in the sale of any article, the expense, price or consideration of which is payable from the city treasury, nor shall such officer or employee receive any gratuity or advantage from any contract or person furnishing labor or material for same.

(b) Any contract with the city in which any officer or employee is or becomes interested may be declared void by the council.

(1) Members of city volunteer and reserve organizations who are not also full- or part-time employees of the city;

(2) Members of city boards, commissions and committees.

(d) The provisions of this section shall not be construed so as to excuse compliance with state laws regulating conflicts of interest. [Ord. 1910 N.S. § 1, 1993; Ord. 1405 N.S. § 2, 1984].

2.16.140 Interference with bidding procedure by officer or employee.

No officer or employee of the city shall aid or assist a bidder in securing a contract to furnish labor, materials, supplies, equipment or services, at a higher price or rate than that proposed by any other bidder, or favor one bidder over another, or give or withhold information from any bidder not given or withheld from all other bidders, or willfully mislead any bidder in regard to the character of the materials or supplies called for, or knowingly accept materials, supplies or equipment of a quality inferior to that called for by the contract, or knowingly certify to a greater amount of labor performed or materials, supplies or equipment furnished, than has respectively been performed or received. [Ord. 1405 N.S. § 2, 1984].

2.16.150 Officer defined.

The term “officer” as used in PGMC 2.16.130 and 2.16.140 shall include the mayor, councilmembers, city clerk, city manager, city treasurer, city attorney, members of boards, commissions and committees, and assistants, if any, to the clerk, manager, treasurer and attorney. [Ord. 1405 N.S. § 2, 1984].

2.16.155 Exemption from Public Contract Code.¹

Except as provided in this code or pursuant to agreement approved by the city council, the city of Pacific Grove, as a charter city, is exempt from the provisions of the California Public Contract Code. [Ord. 02-26 § 1, 2002].

2.16.157 Optional purchasing procedures for special assessment districts.

When authorized by resolution, the city manager may delegate, or thereafter revoke, purchasing authority under this chapter to an agent selected by the advisory board for any district formed by the city and operating in accord with California Streets and Highways Code 36500. Expenditure of assessment revenues on behalf of the city shall be in accordance with the BID program and budget approved by the city council, but such expenditures may be made without compliance with the city purchasing regulations required by this chapter. The city manager may authorize assessment revenues remitted to the city for that district to be deposited directly with the agent holding delegated purchasing authority pursuant to this section; provided, that the city council has approved the budget and an agreement with the agent regarding program deliverables. The delegated agent shall report to the city manager each receipt or expenditure made under this section. [Ord. 07-020 § 2, 2007].

Article II. Open Market Purchases

2.16.160 Authorized for purchases by the purchasing agent.

(a) Purchases of supplies, services, materials, equipment and contractual services, including public works, having an estimated market value under $35,000² may be made by the purchasing agent in the open market, as hereinafter described in this article, without observing the formal contract procedures prescribed in Articles III and IV of this chapter.

(b) The purchase authority limit set forth in subsection (a) of this section shall be adjusted on July 1st of each fifth fiscal year, starting on July 1, 2020, by council resolution. The adjustment shall cause an increase or decrease to the purchase limit based upon the cumulative change in the Consumer Price Index (CPI) that occurred since the last adjustment, based upon the “CPI, All Urban Consumers, San Francisco-Oakland-San Jose area; base years 1982-1984 = 100,” as published by the U.S. Department of Labor, or any comparable replacement or successor index. For ease of administration, the purchase authority limit set for each following five-year period shall be adjusted by rounding to the nearest $5,000.

(c) A written report of all purchases made under authority of this section shall be provided to council on a quarterly basis.

(d) All purchases made under the authority of this section shall be accumulative per subject as per PGMC 2.16.420, Splitting projects. [Ord. 22-017 § 4, 2022; Ord. 21-019 § 2, 2021; Ord. 14-005 § 2, 2014; Ord. 1405 N.S. § 2, 1984].

2.16.170 Quotations – Notice of invitation.

The purchasing agent shall invite quotations from prospective sellers, vendors, suppliers or contractors. [Ord. 1405 N.S. § 2, 1984].

2.16.180 Quotations – Submission in writing.

Written quotations shall be submitted to the purchasing officer who shall keep a record of all open market quotations and orders for a period of two years after receipt of such quotations. [Ord. 1405 N.S. § 2, 1984].

2.16.190 Quotations – Number required.

Open market purchases shall be based, wherever reasonably possible, on at least three written quotations. [Ord. 1405 N.S. § 2, 1984].

2.16.200 Quotations – Rejection.

The purchasing agent, in his or her sole discretion, may reject:

(a) Any quotation that fails to meet the quotation requirements in any respect; or

(b) All quotations for any reason whatsoever and may invite new quotations. [Ord. 1405 N.S. § 2, 1984].

2.16.210 Award of purchase orders.

Purchase orders shall be awarded by the purchasing agent to the person submitting the lowest responsible quotation except if two or more quotations are received for the same total amount or unit price, quality and service being equal, and further, if in the sole discretion of the purchasing officer the public interest will not permit the delay of inviting new quotations, then the purchasing agent may accept the one he or she chooses or accept the lowest quotation made by negotiation with the persons submitting the tie quotations. [Ord. 1405 N.S. § 2, 1984].

Article III. Purchases in Amounts over the Purchasing Agent’s Authorization

2.16.220 Formal contract procedure.

Except as otherwise provided herein, purchases and contracts for supplies, services and equipment of estimated market value greater than the maximum amount for which the purchasing agent is authorized, as specified in Article II of this chapter, shall be by contract, approved by the council by resolution or motion, with the lowest responsible bidder pursuant to the procedure prescribed in this article except when such procedures may be dispensed with as defined in Article I of this chapter or as otherwise provided by law. Standard contracts may be used when approved by city attorney and council by resolution or motion. Contracts shall be provided to council prior to approval. Standard contracts may be incorporated by reference into an agenda report with specification of the parties, term, scope of work, price, and contingencies to extend the term and/or increase the price. (The procedures prescribed in Article IV of this chapter shall be observed in the case of all public works projects, as defined in Article IV of this chapter, involving expenditures greater than the maximum amount for which the purchasing agent is authorized, as specified in Article II of this chapter.) [Ord. 22-017 § 4, 2022; Ord. 14-005 § 2, 2014; Ord. 1405 N.S. § 2, 1984].

2.16.230 Notice inviting bids.

Notice inviting bids shall include a general description of the article(s) to be purchased, shall state where bid blanks and specifications may be secured, and the time and place for opening bids. [Ord. 1405 N.S. § 2, 1984].

2.16.240 Published notice.

Notice inviting bids shall be published at least 10 days before the date of opening of the bids. Notice shall be published once in an official newspaper of the city. [Ord. 1405 N.S. § 2, 1984].

2.16.250 Bidders’ list.

The purchasing agent shall also solicit sealed bids from all prospective suppliers known to the purchasing agent as responsible vendors dealing in the product to be purchased. [Ord. 1405 N.S. § 2, 1984].

2.16.260 Bidders’ security.

When deemed necessary bidders’ security may be prescribed in the notice and solicitation for bids. Bidders shall be entitled to return of bid security; provided, that a successful bidder shall forfeit his or her bid security upon refusal or failure to execute the contract within 15 calendar days after notice of award of contract has been mailed, unless the city is responsible for the delay. The council may, on refusal or failure of the successful bidder to execute the contract, award it to the next lowest responsible bidder. If the council awards the contract to the next lowest bidder, the amount of the lowest bidder’s security shall be applied by the city to the difference between the low bid and the second lowest bid; the surplus, if any, shall be returned to the lowest bidder. [Ord. 1405 N.S. § 2, 1984].

2.16.270 Bid opening procedure.

Sealed bids shall be submitted to the purchasing agent and shall be identified as bids on the envelope. Bids shall be opened in public at the time and place stated in the notice. A tabulation of all bids received shall be open for public inspection during regular hours for a period of not less than two years after the bid opening. [Ord. 1405 N.S. § 2, 1984].

2.16.280 Rejection of bids.

The council may reject any and all bids presented and may, in its discretion, readvertise for other bids. [Ord. 1405 N.S. § 2, 1984].

2.16.290 Open market purchase.

After rejecting bids the council may determine and declare by a vote of at least five of its members that the supplies, services, materials or equipment may be purchased at a lower price in the open market, and after adoption of a resolution to that effect, it may direct the purchasing agent to so purchase. [Ord. 1405 N.S. § 2, 1984].

2.16.300 Tie bids.

If two or more bids received are for the same total amount or unit price, quality and service being equal and if the public interest will not permit the delay of readvertising for bids, the council shall determine the successful bidder by drawing of lots. [Ord. 1405 N.S. § 2, 1984].

2.16.310 Performance bonds.

The city shall have authority to require a performance bond before entering a contract in such amount as it shall find reasonably necessary to protect the best interest of the city. If the city requires a performance bond, the form and amount of the bond shall be described in the notice of solicitation inviting bids. [Ord. 1405 N.S. § 2, 1984].

Article IV. Public Works Contracts

2.16.320 Written contract.

Every project involving an expenditure greater than the maximum amount for which the purchasing agent is authorized, as specified in Article II of this chapter, for the erection, improvement or repair of public buildings and works, in all sewer and street work, and in furnishing materials or supplies for same shall be let by written contract, approved by the council by resolution, with the lowest responsible bidder in accordance with the procedures prescribed in this article. PGMC 2.16.080 notwithstanding, dispensation of bid procedures for projects described in this section shall be made only as allowed in this article. [Ord. 14-005 § 2, 2014; Ord. 1667 N.S. § 1, 1989; Ord. 1405 N.S. § 2, 1984].

2.16.330 Notice inviting bids.

Notices inviting bids shall be published once in an official newspaper of the city at least 10 days before the date of opening the bids. In addition to the published notice, the purchasing agent may solicit bids from prospective vendors and contractors by direct mail requests, by notice on official city bulletin boards, or by any other means advantageous to the city. Notices inviting bids shall include a general description of the contractual services to be purchased and shall state where bid blanks and written specifications may be secured, and shall designate the date, time and place for opening bids. [Ord. 1405 N.S. § 2, 1984].

2.16.340 Bidders’ security.

When deemed necessary, bidders’ security may be prescribed in the public notice inviting bids. Bidders shall be entitled to return of bid security; provided, that a successful bidder shall forfeit his or her bid security upon his or her refusal or failure to execute the contract within 15 calendar days after the notice of award of contract has been mailed, unless the city is responsible for the delay. The council, on refusal or failure of the successful bidder to execute the contract, may award it to the next lowest responsible bidder. The amount of the lowest bidder’s security shall be applied by the city to the contract price differential between the lowest bid and the second lowest bid, and the surplus, if any, shall be returned to the lowest bidder. [Ord. 1405 N.S. § 2, 1984].

2.16.350 Bid opening procedure.

Sealed bids submitted to the city shall be identified as bids on the envelope, and shall be opened in public on the date, at the time and place stated in the public notices. [Ord. 1405 N.S. § 2, 1984].

2.16.360 Tabulation of bids.

All bids received shall be tabulated and after consultation with the appropriate department head shall be forwarded to the council with a recommendation as to the best and lowest bid. A tabulation of all bids received shall be available for public inspection for not less than two years after the bid opening. [Ord. 1405 N.S. § 2, 1984].

2.16.370 Tie bids.

If two or more bids received are for the same amount, quality and service being equal, and if the public interest will not permit the delay of readvertising for bids, the council shall determine the successful bidder by drawing of lots. [Ord. 1405 N.S. § 2, 1984].

2.16.380 Acceptance or rejection of bids.

The council, in its discretion, when it is in the best interests of the city to do so, may waive any informalities or minor irregularities in any bid process, and may reject any or all bids. [Ord. 1405 N.S. § 2, 1984].

2.16.390 Work by day labor.

If all bids are rejected or no bids are received the council may readvertise or may, by an affirmative vote of at least five of its members, declare and determine that in its opinion the work in question may be more economically or satisfactorily performed by day labor, by either city employees or others, and after adoption of a resolution to that effect, may proceed to have the same done in the manner stated. [Ord. 1405 N.S. § 2, 1984].

2.16.400 Emergencies – Contracts let without bids.

Public works contracts governed by this article may be let without advertising for bids if such work shall be deemed by the council to be of urgent necessity for the preservation of life, health or property, and shall be authorized by resolution passed by an affirmative vote of at least five of its members and containing a declaration of the facts constituting such urgency. [Ord. 1405 N.S. § 2, 1984].

2.16.410 Performance bonds.

The council, before entering into a contract governed by this article, may require a performance bond or other adequate security guaranteeing performance, in an amount as it shall find reasonably necessary to protect the best interests of the city. Form of acceptable security shall be described in the notice inviting bids. [Ord. 1405 N.S. § 2, 1984].

2.16.420 Splitting projects.

No undertaking involving amounts in excess of the maximum amount for which the purchasing agent is authorized, as specified in Article II of this chapter, shall be split into parts for the purpose of avoiding the provisions and restrictions of this article. [Ord. 14-005 § 2, 2014; Ord. 1405 N.S. § 2, 1984].

Editor’s Note: As adopted by Ord. 02-26, this section was designated as PGMC 2.16.160. It was editorially amended to PGMC 2.16.155 due to the earlier codification of PGMC 2.16.160.

By operation of PGMC 2.16.160(b) the purchase authority limit referenced in this subsection (a) was adjusted to $40,000 for the period beginning July 1, 2020, and ending June 30, 2025.