Loading...
HomeMy WebLinkAboutIR 9499 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9499 To the Mayor and Members of the City Council July 17, 2012 `�` Page 1 of 2 r SUBJECT: COOPERATIVE PURCHASING AGREEMENTS This informal report provides a response to the questions regarding the use of cooperative purchasing agreements and the local preference option outlined in the Texas Local Government Code for vehicles and other goods and services. Cooperative Purchasing for Goods and Services Greater than $50,000 The City of Fort Worth has long supported the use of cooperative purchasing contracts in order to provide goods and services for City departments and residents in an efficient and effective manner. Cooperative purchasing saves acquisition effort and time by using another governmental entity's bids. This strategy eliminates redundant government bids as well as improves customer service by saving six to eight weeks of bid process time on each purchase using a cooperative. Cooperative purchasing also saves money through economies of scale. Many cooperative contracts include larger volumes than the City generates itself. Cooperative contracts are publicly advertised, competed and awarded in accordance with public bid laws to ensure fair competition and equal opportunity. During the last 12 months, the City has awarded 38% of contracts using cooperative purchasing, eliminating the need for four additional buyers on staff at an estimated cost of $300,000 per year. The City evaluates the pricing on cooperative contracts regularly as described below using vehicles as an example. In addition, on occasion following a direct bidding process by the City, a cooperative agreement will be determined to be the better deal and will be awarded instead. An example of this will be included on the July 17th City Council agenda for the award of computer training services. Competitive Bidding and Local Preference for Goods and Services Greater than $50,000 The City of Fort Worth could issue all Requests for Proposals directly to ensure local vendors who are not successful participants in cooperative agreements have the opportunity to earn the City's business. If they are the successful low or best-value bidder, they would be awarded the contract. In addition, Sections 271.905 and 271.9051 of the Texas Local Government Code (TLGC) allow municipalities to utilize local preference. These statutes allow certain Cities the ability to award a competitive bid to local businesses as follows: • For purchases of goods of $500,000 or more if the local vendor is within 3% of the lowest bid • For purchases of goods and services from $50,000 to $500,000 if the local vendor is within 5% of the lowest bid, and • For construction services up to $100,000 if the local vendor is within 5% of the lowest bid. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9499 To the Mayor and Members of the City Council July 17, 2012 `�` Page 2 of 2 r SUBJECT: COOPERATIVE PURCHASING AGREEMENTS In order to offset local preference allowed by some governmental entities, many states, including Texas, have passed reciprocity laws. These laws allow Cities to penalize vendor bids from Cities that have adopted local preferences. Analysis of Vehicle Purchases The Equipment Services Department (ESD) receives three bids on all vehicle purchases below the $50,000 threshold, usually including two cooperative contracts and one local vendor. In virtually every case, the cooperative contract is the best value but the analysis is particularly important when the cooperative agreements are old or the market has changed significantly. As a result of these on-going comparisons, most large vehicle purchases (greater than $50,000) are acquired through cooperative contracts. The Equipment Services Department's review of the next three truck purchases scheduled for this summer showed that local vendors either chose not to bid or ranged from 4.05% to 38.38% higher in base bid cost. Dealerships that choose to compete in the fleet/commercial market have separate fleet/commercial vehicles departments from their retail sales. Only one Fort Worth dealership has chosen to commit full time staff to work the fleet/commercial vehicle market. The fleet/commercial vehicle market creates additional costs for the dealerships related to carrying costs of the vehicles. Also, some dealerships do not have the space to store the large volume of vehicles upon delivery from the factory. Recommendation City staff recommends the continued use of cooperative agreements due to the time and labor savings of cooperative purchasing and the cost savings of the volume purchases. However, it is important that cooperative pricing continue to be periodically reviewed against local market opportunities. Staff will develop a local preference ordinance and work with the Chambers to seek input from the business community. In addition, if the City Council prefers to pursue direct competitive bidding for more of the City's procurement, the necessary resources should be evaluated during the upcoming budget process. If you have any questions regarding this information, please contact Jack Dale, Purchasing Manager, at (817) 392-8357 or Wayne Corum, Equipment Services Director, at (817) 392-5118. Tom Higgins City Manager ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS