HomeMy WebLinkAboutIR 9962 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9962
To the Mayor and Members of the City Council November 15, 2016
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*a SUBJECT: PROPOSAL TO IMPROVE CONTRACT MANAGEMENT AND
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INCREASE DELEGATED AUTHORITY FOR CONTRACTING AND
PURCHASING
The purpose of this Informal Report is to outline proposed changes to the City's contracting and
purchasing process that are intended to increase efficiency, effectiveness, and accountability.
The City has recently undergone a review of its processes and procedures relating to contract
management. Through this process, it was determined that improvements can be made in
several areas of contract administration, including areas such as reporting and monitoring of
compliance with performance and payment terms. In order to implement these improvements,
staff will be recommending that the City Council increase the City Manager's delegated authority
for contracting and purchasing to streamline the process and reduce the staffing burden in order
to create capacity within available resources to allow additional staff time to be devoted to
enhanced contract management.
On December 6, 2016, the City Council will be presented with a Mayor and Council
Communication (M&C) and ordinance that would amend Chapter 2, Article I, Section 2-9 of the
City Code to allow the City Manager to execute contracts involving expenditures of up to
$100,000 without City Council approval. Currently, City Council approval is required for any
contract over $50,000.
While the current delegated authority for contract execution mirrors the threshold for when
competitive bidding is required under state law, home rule cities have broad discretion to
establish their own thresholds for when approval by the governing body is required for execution
of a contract. Several Texas cities have a formal approval/delegated authority threshold that is
higher than the threshold for formal bidding under state law. Staff surveyed other Texas cities
and found that two, Denton and Garland, employ a $100,000 approval threshold; Dallas utilizes a
$70,000 threshold; and Austin, Houston, and San Antonio have thresholds of$50,000.
A review of the past 12 months of M&Cs showed that there were 82 contracts involving
expenditures between $50,001 and $100,000 that were sent to the City Council for approval.
Under the proposed increase, none of these M&C's would be required. A higher approval
threshold will speed up the purchasing process and small project delivery. The basic purchasing
process can be as short as three days for a routine informal bid or as long as three months for a
full, formal process for more complex projects. While a change in the delegated authority
threshold would not alter the City's obligation to go out for formal bids, it would save significant
time.
Staff is also recommending that the City increase the City Manager's delegated authority to
administratively approve (i) acquisition of easements that involve expenditure of $100,000 or less
in City funds and (ii) amendments or change orders to a contract from $50,000 to a cumulative
threshold of $100,000 inclusive of the original contract. For the amendments and changes orders,
any subsequent one that causes an increase beyond the cumulative threshold of $100,000 will
require City Council approval in increments of $100,000. This proposed change will not affect a
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9962
To the Mayor and Members of the City Council November 15, 2016
h�T�i7 Page 2 of 2
�i
{i7 Y
*a SUBJECT: PROPOSAL TO IMPROVE CONTRACT MANAGEMENT AND
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INCREASE DELEGATED AUTHORITY FOR CONTRACTING AND
PURCHASING
contract that is subject to the limitations found under Texas Local Government Code Chapter 252
that places a limit on delegated authority for change orders of $50,000 or less and that prohibits
an increase of the original contract price by more than 25 percent. Additionally, the proposed
change will not affect a change order to a public works contract that involves a decrease or
increase of $100,000 or less of city funds, which is already permitted under the City Code.
The proposed changes would not affect the Business Diversity Enterprise Ordinance. The
M/S/WBEs will still be invited to bid on all requests over $3,000, and the Office of Business
Diversity will still set participation goals or issue waivers for all requests valued over $50,000.
Under the new process, each contract will be assigned to a departmental Contract Manager who
will be the designated staff member with the responsibility to manage, track, and monitor all
aspects of the contract. These recommended changes to the City's contracting and purchasing
process will improve the City's ability to deliver goods and services without any threat to the
public trust or reduction in opportunities to increase contractor and subcontractor diversity.
Staff will be recommending that the proposed changes be effective January 1 , 2017 to allow time
to update the City Code and notify City employees as well as suppliers of the changes.
If you have any questions, please call Aaron Bovos, Chief Financial Officer, at 817-392-8517, or
Jack Dale, Purchasing Manager, at 817-392-8357.
David Cooke
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS