RPVCCA_SR_2011_06_07_06_Increased_UPCCA_Informal_Bid_LimitCITY OF
MEMORANDUM
RANCHO PALOS VERDES
TO:HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
DATE:
FROM:CAROL W.LYNCH,CITY ATTORNEY,and
SHIRl KLIMA,ASSISTANT CITY ATTORNEY
JUNE 7,2011
SUBJECT:INCREASED UPCCAA INFORMAL BID LIMIT
REVIEWED:CAROLYN LEHR,CITY MANAGER ~
RECOMMENDATION
Read the ordinance by title only,waive further reading and 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 Informal Bid Limit as
Permitted by the State and Remove the Informal Bid Limit Exception.
BACKGROUND
The California Legislature passed the Uniform Public Construction Cost Accounting Act,
Public Contract Code section 22000 et seq.("UPCCAA")to promote uniformity of
bidding procedures and cost accounting standards for construction projects performed
or contracted for by public agencies in the State.In Public Contract Code section
22032,the UPCCAA establishes three levels of public projects.Public projects of thirty
thousand dollars ($30,000)or less may be performed by the employees of the public
agency by force account,negotiated contract,or purchase order.Public projects of one
hundred and twenty-five thousand dollars ($125,000)or less may be let to contract by
an informal bid procedure.Public projects of more than one hundred and twenty-five
thousand dollars ($125,000)must be let to contract by formal bidding procedures.
Additionally,there is an informal bid limit exception in Public Contract Code section
22034(f).This exception provides that the governing body of the public agency 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.This exception is only permitted if all bids received are in excess of one
hundred twenty-five thousand dollars ($125,000)and the governing body determines
the cost estimate of the public agency was reasonable.
The City of Rancho Palos Verdes ("City")previously passed Municipal Code section
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Increased UPCCAA Informal Bid Limit
June 7,2011
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2.42.050,which adopts these limits and the informal and formal bid procedures.Within
that section,the City adopted the informal bid limit exception in subsection (B)(5).
DISCUSSION
According to Public Contract Code sections 22019 and 22020,the California Uniform
COnstruction Cost Accounting Commission (the "Commission")adjusts the limits within
section 22032 periodically,and the State Controller must adopt the Commission's
recommendation.Any such adjustment is effective beginning the fiscal year which
commences not less than sixty (60)days following the Controller's notification to all
public agencies of the adjustment.The Commission recently proposed,and the
Controller adopted,increasing the informal bid limit to one hundred seventy-five
thousand dollars ($175,000).The State Controller notified all public agencies in a letter
dated April 25,2011,which is attached.The force account limit remains thirty thousand
dollars ($30,000).
Currently,Municipal Code section 2.24.050 refers to the different levels of public
projects by referring back to Public Contract Code section 22032.For example,
subsection (B)of the ordinance states:"Public projects that fall within the dollar limits
prescribed by subsection (b)of Section 22032 of the California Public Contract Code or
any successor statute may be let to contract by the informal bid procedures set forth in
this subsection."This is problematic now because the statute has not yet been
amended,although the informal bid limit amount has increased.Until the Legislature
amends the amounts listed in the statute,this reference will continue to refer to the
lower limit of one hundred twenty-five thousand dollars ($125,000).Thus,the Proposed
Ordinance changes this language to actual amounts permitted by state law.For
example,new subsection (B)would state:"Public projects of one hundred seventy-five
thousand dollars ($175,000)or less may be let to contract by the informal bid
procedures set forth in this subsection."
The Commission and the State Controller do not have the authority to amend the
informal bid limit exception listed in section 22034(f),which is reiterated in Municipal
Code section 2.42.050(B)(5).Thus,this exception amount of one hundred thirty-seven
thousand five hundred dollars ($137,500)has not been increased.Because this
amount is lower than the new informal bid limit amount,it is no longer of use as an
exception.Thus,the Proposed Ordinance removes subsection (B)(5)entirely.
Two bills are currently pending to amend Public Contract Code section 22032(b)to
raise the informal bid limit to one hundred seventy-five thousand dollars ($175,000),
conforming the statute's language to the Controller's change.One,Assembly Bill 720,
also raises the force account limit in section 22032(a)to forty-five thousand dollars
($45,000),but itdoes not propose amending the informal bid limit exception listed in
section 22034.The other,Assembly Bill 943,preserves the current force account limit
of thirty thousand dollars ($30,000)in Public Contract Code section 22032(a),but it
raises the informal bid limit exception in section 22034 to one hundred eighty-seven
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Increased UPCCAA Informal Bid Limit
June 7,2011
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thousand five hundred dollars ($187,500).If adopted,these bills will only go into effect
on January 1,2012.If one of these bills passes,staff may propose another
amendment to the City's ordinance,either raising the force account limit or re~inserting
the informal bid limit exception with a higher limit,depending on the bill that is passed.
FISCAL IMPACT
By adopting the Proposed Ordinance,the informal bid amount is increased,and thus
fewer projects will have to be formally bid.This could result in savings to the City,
although it is unclear how much would be saved because it is unknown how many bids
will fall within this fifty thousand dollar ($50,000)differential between the old and new
informal bid amounts.
ALTERNATIVE
The City Council may 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 informal bid limit of one hundred twenty~five thousand dollars ($125,000).At a
future date,if the Legislature amends the Public Contract Code,the informal bid limit
will automatically change to reflect the new statutory language,since currently Section
2.42.050 refers to the limits listed in the Public Contracts Code.
CONCLUSION
The Proposed Ordinance amends Municipal Code section 2.42.050 to increase the
informal bid limit in accordance with the State Controller's determination and clarify the
various limit amounts.The Proposed Ordinance also removes the informal bid limit
exception which is no longer of use.Accordingly,the City Attorney's Office recommends
that the City Council introduce the Proposed Ordinance.
ATTACHMENTS
•Notice dated April 25,2011 from John Chiang,California State Controller,to all
public agencies subject to the terms of the Uniform Public Construction Cost
Accounting Act regarding increase in the informal bid limit pursuant to Public
Contract Code section 22032.
•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
Informal Bid Limit as Permitted by the State and Remove the Informal Bid Limit
Exception.
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6-3
JOHN CHIANG
<ITa!ifurnia ~tah~<ITuntru!I.er
April 25,2011
To:ALL PUBLIC AGENCIES SUBJECT TO THE TERMS OF THE UNIFORM
PUBLIC CONSTRUCTION COST ACCOUNTING ACT
Re:Increase In The Infonnal Bid Limit Pursuant To Public Contract Code Section 22032
This letter is to inform you that the informal bid limit prescribed by section 22032 of
the Public Contract Code will be increased to $175,000 effective for the fiscal year
beginning July 1,2011.'fhis increase is pursuant to the terms of the Uniform Public
Construction Cost Accounting Act (Act)and is at the recommendation of the California
Uniform Construction Cost Accounting Commission (CUCCAC).
The Act provides public agencies economic benefits and greater freedom in
expediting public works projects.Agencies electing to follow the cost accounting
procedures set forth in the Cost Accounting Policies and Procedures Manual,prescribed
by the CUCCAC,will have the advantages of an increased force account limit,an
increased bid limit,and an alternative informal bidding procedure.
Any city,county,redevelopment agency,special district,school district,and
community college district can voluntarily elect to become a participant of the Act.After
opting into the Uniform Public Construction Cost Accounting Act,by resolution of its
governing board,participants enjoy the advantage of the streamlined awards process,as
well as reductions in paperwork related to advertising and report filing.In return,the
signatory agency agrees to provide cost accounting information in the format prescribed
in the Cost Accounting Policies and Procedure Manual and to adhere to the terms of the
Act until the agency formally opts out.For more details or contact information,please
visit our website at h1.1p'jfyy")::,!]Y~g.9.ca.gov/ard/local/cuccac.
Sincerely,
Original signed by:
JOHN CHIANG
California State Controller
300 Capitol Mall.Suite 1850,Sacramento,CA 95814.P.O.Box 942850,Sacramento.CA 94250.(916)445-2636.fax:(916)322-4404
777 S.flgueroa Street.Suite 4800,Los Angeles.CA 90017 •(213)833-6010 •fax:(213)833-60 I1
.Y.!C:{:f.,t."'t..;lKXI.,LUt$Q'Y..
6-4
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 INFORMAL BID LIMIT AS PERMITTED
BY THE STATE AND REMOVE THE INFORMAL BID LIMIT
EXCEPTION.
WHEREAS,the informal bid limit proscribed in subsection (b)of section 22032 of
the Public Contract Code has been one hundred and twenty-five thousand dollars
($125,000);and,
WHEREAS,the California State Controller recently notified all public agencies
that the informal bid limit will be increased to one hundred and seventy-five thousand
dollars ($175,000)effective for the fiscal year beginning July 1,2011;and,
WHEREAS,the City Council now seeks to amend Section 2.42.050 of Chapter
.2.42 of Title 2 of its Municipal Code in order for the informal bid limit increase to be
effective in the City;and,
WHEREAS,the informal bid limit exception in Public Contract Code section
22034(f),as reiterated in Rancho Palos Verdes Municipal Code section 2.42.050(B)(5),
states that if all bids received are in excess of one hundred twenty-five thousand dollars
($125,000),the governing body of the public agency 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,the informal bid limit exception amount has not been raised and
therefore is no longer of use;and,
WHEREAS,the City Council now seeks to remove the informal bid limit exception within
subsection (B)(5)of Section 2.42.050 of Chapter 2.42 of Title 2 of the Rancho Palos
Verdes Municipal Code.
NOW,THEREFORE,THE CITY COUNCIL OF THE CITY OF RANCHO PALOS
VERDES DOES HEREBY FIND,DETERMINE,AND ORDER AS FOLLOWS:
Section 1:Section 2.42.050 of Chapter 2.42 of Title 2 of its Municipal Code is
hereby amended to read as follows (with the proposed changes in bold and underline):
"2.42.050 -Bid requirements,purchasing procedures and contracting procedures.
This section shall govern the procedures for bidding and awarding all purchase
orders and contracts to perform public projects,including any associated purchase of
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goods and supplies for such projects.Bidding requirements and other purchasing and
contracting procedures are categorized into three different levels set forth below.Each
level shall govern purchases and contracts of different values.Level 1 shall govern the
least expensive purchase orders and contracts and Level 3 shall govern the most
expensive purchase orders and contracts.Notwithstanding any provision of this
chapter,the bidding and other procedures for awarding public project contracts shalf not
violate the limitations of the Uniform Public Construction Cost Accounting Act,as they
may be amended from time to time by the State Controller or the State
Legislature.
A.Level 1 Projects.Public projects of thirty thousand dollars ($30,000)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.
B.Level 2 Projects.Public projects of one hundred and seventy-five
thousand dollars ($175,000)or less may be let to contract by the
informal bid procedures set forth in this subsection.Contracts that are
authorized to be awarded pursuant to level two procedures may be
awarded by the Director.All level two contracts shall require competitive
oral or written bidding,as described below in this subsection.The Director
shall determine whether a competitive oral or written bidding procedure for
a public project is in the best interest of the City.If the Director
determines that a competitive oral bidding procedure is in the best interest
of the City,the City may solicit oral bids as provided pursuant to
subsection 1 of this section.Otherwise,the City shall require competitive
written bids as provided in this subsection 2 of this section.
1.Oral Bids.
a.Bids shall be orally solicited from a mInImum of three
sources and may be received orally.The person who
solicits the bids shall prepare a memorandum to the file
documenting the identity of the bidders and the amount of
the bids that were obtained.
b.The Director shall award the contract to the lowest
responsible bidder only if Director determines that such
action is in the best interest of the City.The Director may
reject all bids,or waive any irregularities or informalities in
any bid or bidding.
c.The Director may waive the requirement to orally solicit bids
if performance of the public project is available from only one
source and may solicit only two bids if performance of the
public project is available from only two sources.
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2.Written Bids.
a.Bid specifications shall be prepared and written notices
soliciting written bids shall be disseminated to a list of at
least three prospective bidders.Such notices shall include
the closing date of the bid.
b.Bids shall be submitted in writing and must be received prior
to the bid closing date to be considered.
c.The Director shall award the contract to the lowest
responsible bidder only if the Director determines that such
action is in the best interest of the City.The Director may
reject all bids,or waive any irregularities or informalities in
any bid or bidding.
d.The Director may waive the requirement to solicit bids if
performance of the public project is available from only one
source and may solicit only two bids if performance of the
public project is available from only two sources.
3.Contractors List.The·City shall develop and maintain a list of
contractors,identified according to categories of work,in
accordance with the provisions of Section 22034 of the California
Public Contract Code,or any successor statute thereto,and the
criteria promulgated from time to time by the California Uniform
Construction Cost Accounting Commission.
4.Notice Inviting Informal Bids.At least ten calendar days prior to the
date informal bids are due,the City shall mail a notice inviting
informal bids to all contractors from the applicable category of work
to be bid,as shown on the contractors list developed in accordance
with subsection (B)(3)of this subsection,and to all construction
trade journals as specified by the California Uniform Construction
Cost Accounting Commission in accordance with Section 22036 of
the California Public Contract Code,or any successor statute
thereto.Said notice shall describe the project in general terms,
shall clearly indicate how to obtain more detailed information about
the project,and shall set forth the time and place for the submission
of bids.
C.Level 3 Projects.Public projects of more than one hundred seventy-
five thousand dollars ($175.000)shall,except as otherwise provided by
law,be let to contract by the formal bidding procedures set forth in this
subsection.Public projects which must be let pursuant to level three
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procedures shall be approved by the City Council and shall require
competitive written bidding,as described below in this subsection.
1.Bid Specifications.For all public projects that must be let pursuant
to level three procedures,bid specifications shall be prepared,and
notices inviting sealed bids shall be disseminated to at least three
prospective bidders approved by the City Manager.In addition,bid
plans and working details shall be formally adopted by the City
Council for all public projects in accordance with the requirements
of Section 22039 of the Public Contract Code or any successor
statute.
2.Notice Inviting Formal Bids.The City shall publish and mail a
notice inviting sealed formal bids in accordance with the provisions
of California Public Contract Code Section 22037,or any successor
statute thereto.
3.Receipt of Bids.Bids shall be sealed,and shall not be opened until
the time and place designated in the bid specifications.Bids must
be received prior to the bid opening to be considered.
4.The City Council shall award the .bid to the lowest responsible
bidder,or reject all bids pursuant to Public Contract Code Section
22038,or its successor statute.The City Council may waive any
irregularities or informalities in any bid or bidding.
5.The City Council may waive the procedures required by this
subsection if the City Council determines that performance of the
public project is available only from a single source and may send a
notice inviting bids to only two prospective bidders if the council
determines that performance 'of the public project is available from
only two sources."
Section 2: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 21 st day of June,2011.
Mayor
ATTEST:
City Clerk
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State of California )
County of Los Angeles )ss
City of Rancho Palos Verdes )
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 June 7,2011,was duly and
regularly adopted by the City Council of said City at a regular meeting thereof held on
June 21,2011,and that the same was passed and adopted by the following roll call
vote:
Ayes:
Noes:
Absent:
Abstain:
City Clerk
Page 5
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