RPVCCA_CC_SR_2012_11_07_G_UPCCAA_LimitsCITY OF
MEMORANDUM
RANCHO PALOS VERDES
TO:
FROM:
DATE:
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
CAROL W.LYNCH,CITY ATTORNEY,and
SHIRl KLIMA,ASSISTANT CITY ATTORNEY
NOVEMBER 7,2012
SUBJECT:INCREASED UPCCAA LIMIT FOR LEVEL 1 PROJECTS AND ADDING
AN EXCEPTION FOR LEVEL 2 PROJECTS
REVIEWED:CAROLYN LEHR,CITY MANAGER ~'i"
RECOMMENDATION
Introduce Ordinance No.__,an Ordinance of the City of Rancho Palos Verdes,
Amending Section 2.42.050 of the Rancho Palos Verdes Municipal Code to Increase the
Limit for Level 1 Projects and Add a New Exception to Level 2 Projects.
EXECUTIVE SUMMARY
The California Legislature passed the Uniform Public Construction Cost Accounting Act,
Public Contract Code Section 22000 et seq.("UPCCAA")as an alternative to the bidding
procedures for construction projects contracted for or performed by public agencies in the
State.In 2007,the City Council amended the Rancho Palos Verdes Municipal Code to
adopt the provisions of the UPCCAA as the City's standard procedures for awarding public
works contracts.The proposed ordinance amends the Municipal Code to make it
consistent with the Legislature's recent changes to the UPCCAA.
BACKGROUND
In Public Contract Code Section 22032,the UPCCAA established three levels of public
projects.The least expensive public projects (Level 1),previously $30,000 or less,may be
performed by the employees of a public agency ("force account"),negotiated contract,or
purchase order.More expensive public projects of $175,000 or less (Level 2)may be
awarded to a contractor by following an expedited bid procedure.The most expensive
public projects that will cost more than $175,000 (Level 3)must be awarded to a contractor
after following bidding procedures that take more time and have additional requirements.
DISCUSSION
The California Legislature recently amended Public Contract Code Section 22032(a)to
increase the monetary limit for Level 1 Projects from $30,000 to $45,000.In Staff's
experience,being able to negotiate these small contracts with contractors has resulted in a
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cost savings to the City.Thus,Staff recommends amending Section 2.42.050(A)of the
Municipal Code so that the Municipal Code will be consistent with State law.
Additionally,the California Legislature amended Public Contract Code Section 22034(f)to
provide more latitude to the City Council in awarding Level 2 Projects so that the City
Council can award a Level 2 Project that exceeds the $175,000 limit in certain limited
circumstances.Those circumstances are:1)the amount of the contract will not exceed
$187,500;2)all of the bids that were received are in excess of $175,000,and 3)the City
Council adopts a resolution by a four-fifths vote awarding the contract to the lowest
responsible bidder,which includes a finding that the cost estimate of the public agencywas
reasonable.In other words,if all ofthe bids for a Level 2 Project exceed $175,000,but the
amount of the contract that will be awarded will not exceed $187,500,the City Council can
award the project,and the City is not required to spend the time and resources to re-bid
the project for a financial difference of only $12,500.Thus,Staff recommends adopting the
ordinance to add this exception into the Municipal Code.
The proposed ordinance does not include any changes for Level,,3 Projects.
FISCAL IMPACT
By adopting the proposed Ordinance,the Level 1 amount is increased by $15,000.This
could result in a cost savings to the City,although it is unclear how much would be saved,
because it is unknown how many projects will fall within this $15,000 difference between
the old and new Level 1 limits.The exception to Level 2 projects also could result in a cost
savings to the City,although it is unclear how much would be saved,because it is unknown
how many Level 2 projects will receive all bids in excess of $175,000,but the amount of
the low bidder's bid will be $187,500 or less.
ALTERNATIVE
The City Council could reject the proposed Ordinance and determine not to amend Section
2.42.050 at this time.The result would be that the City would continue to utilize the Level 1
limit of $30,000 and would not have the option to utilize the exception to Level 2 projects
that is discussed above,and the City's Code would not conform to the UPCCAA.
CONCLUSION
The proposed Ordinance amends Municipal Code Section 2.42.050 to be consistent with
the State statutory amendments.Accordingly,Staff and the City Attorney's Office
recommend that the City Council introduce the proposed Ordinance.
ATTACHMENT
•Ordinance No.,An Ordinance of the City of Rancho Palos Verdes Amending
Section 2.42.050 of the Rancho Palos Verdes Municipal Code to Increase the Limit
for Level 1 Projects and Add A New Exception to Level 2 Projects.
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ORDINANCE NO.
AN ORDINANCE OF THE CITY OF RANCHO PALOS VERDES
AMENDING SECTION 2.42.050 OF THE RANCHO PALOS VERDES
MUNICIPAL CODE TO INCREASE THE LIMIT FOR LEVEL 1
PROJECTS AND ADD A NEW EXCEPTION TO LEVEL 2 PROJECTS.
WHEREAS,the California Legislature amended Public Contract Code Section
22032(a)to increase the force account limit from thirty thousand dollars ($30,000)to
forty-five thousand dollars ($45,000);and
WHEREAS,the City Council now seeks to amend Section 2.42.050(A)of the
Rancho Palos Verdes Municipal Code ("Municipal Code")so that the force account limit
increase is in effect in the City;and
WHEREAS,Municipal Code Section 2.42.050 previously included Subsection
(8)(5),which stated that if all bids received are in excess~,of"one hundred twenty-five
thousand dollars ($125,000),the City Council may,by adoption of a resolution by a four-
fifths vote,award the contract,at one hundred thirty-seven thousand five hundred
dollars ($137,500)or less,to the lowest responsible bidder,if it determines the cost
estimate of the public agency was reasonable;and
WHEREAS,last year,the California State Controller increased the informal bid
limit to one hundred and seventy-five thousand dollars ($175,000)but did not raise the
informal bid limit exception beyond one hundred thirty-seven thousand five hundred
dollars ($137,500),thus rendering the exception useless,so the City Council removed
the exception within Municipal Code Section 2.42.050(8)(5);and
WHEREAS,this year,the California Legislature amended Public Contract Code
Section 22034(f)to increase the informal bid limit exception from one hundred thirty-
seven thousand five hundred dollars ($137,500)to one hundred eighty-seven thousand
five hundred dollars ($187,500),thus rendering the exception useful once more;
NOW,THEREFORE,THE CITY COUNCIL OF THE CITY OF RANCHO PALOS
VERDES DOES ORDAIN AS FOLLOWS:
Section 1:Subsection (A)of Section 2.42.050 of Chapter 2.42 of Title 2 of the
Municipal Code is hereby amended to read as follows:
"Level 1 Projects.Public projects of forty-five thousand dollars ($45,000)or less
may be performed by City employees by force account or may be awarded by
negotiated contract or by purchase order by the Director of Public Works
("Director")without competitive bidding."
Section 2:Subsection (8)(5)is hereby added to Section 2.42.050 of Chapter
2.42 of Title 2 of its Municipal Code to read as follows:
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"If all bids received are in excess of one hundred seventy-five thousand dollars
($175,000),the City Council may,by adoption of a resolution by a four-fifths vote,
award the contract,at one hundred eighty-seven thousand five hundred dollars
($187,500)or less,to the lowest responsible bidder,if the Council determines the
cost estimate of the City was reasonable."
Section 3:The City Clerk shall certify to the adoption of this ordinance and
shall cause the same to be posted in the manner prescribed by law.
PASSED,APPROVED and ADOPTED this __day of ,2012.
ATTEST:
City Clerk
State of California )
County of Los Angeles )ss
City of Rancho Palos Verdes )
Mayor
'iJ'
I,Carla Morreale,City Clerk of the City of Rancho Palos Verdes,do
hereby certify that the whole number of members of the City Council of said City is five;
that the foregoing Ordinance No._passed first reading on ,was duly
and regularly adopted by the City Council of said City at a regular meeting thereof held
on ,and that the same was passed and adopted by the following roll call
vote:
Ayes:
Noes:
Absent:
Abstain:
City Clerk
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