DATE: November 6, 2015
TO: Board of Mayor and Aldermen
FROM: Eric Stuckey, City Administrator
Russell Truell, Assistant City Administrator / CFO
Brian Wilcox, Purchasing Manager
SUBJECT:
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Consider recommendation to direct staff to pursue obtaining legislative authority for the Board to consider whether to increase the City’s threshold for sealed submittals pursuant to public advertisement
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Purpose
The purpose of this memorandum is to provide the Board of Mayor and Aldermen with information to consider whether to direct staff to pursue obtaining legislative authority for the Board to consider whether to increase the City’s threshold for sealed submittals pursuant to public advertisement. If such legislative authority were to be sought and granted, because the dollar amount of the threshold for sealed submittals pursuant to public advertisement is established in Sec. 5-502 of the City of Franklin Municipal Code, any adjustment to the dollar amount of the threshold for sealed submittals pursuant to public advertisement would require an ordinance to amend that provision.
Background
The Municipal Purchasing Law of 1983 was amended by 2008 Public Chapter 879 of the Tennessee General Assembly (now codified as Tennessee Code Annotated § 6-56-306), permitting certain municipalities to increase to $25,000 the minimum dollar value of purchases at or above which is required sealed submittals pursuant to public advertisement. The City of Franklin is one of the eligible municipalities. By Ordinance No. 2010-72, the Board chose to implement this $25,000 threshold effective July 1, 2011.
For the following reasons, staff recommends that the Board direct staff to pursue obtaining legislative authority for the Board to consider whether to increase to $50,000 the City’s threshold for sealed submittals pursuant to public advertisement:
1. While sealed bids / proposals may be a means of obtaining best procurement pricing, it is a more cumbersome process and therefore may preclude obtaining best pricing as soon as possible.
2. There are times when writing specifications and taking bids is not practical, as for small construction projects. Recent examples of projects that fell in the $25,000 to $50,000 range include roof repairs for the shelter at Bicentennial Park and emergency repairs of storm damage of powerhouse structure at Harlinsdale Farm.
3. When only one supplier of a product or service is available, raising the City’s threshold for sealed submittals pursuant to public advertisement would reduce the number of times “sole-source” purchases would need to be contemplated.
For departments and agencies of the State of Tennessee, the State establishes the threshold for sealed submittals pursuant to public advertisement at $50,000 and the threshold for obtaining three quotes at $10,000. The $10,000 three-quote threshold for state agencies is the same as the City’s three-quote threshold, and staff recommends the City’s three-quote threshold not be adjusted at this time.
Current City practice is for the threshold for sealed submittals pursuant to public advertisement to equal the upper limit of the authority delegated to the City Administrator for execution of contracts. If this practice is to continue, and if the threshold for sealed submittals pursuant to public advertisement is increased, then it would be necessary to repeal and replace Resolution 2012-05 which establishes at $25,000 the upper limit of the authority delegated to the City Administrator for execution of contracts.
Staff recommends that any changes made by ordinance to the threshold for sealed submittals pursuant to public advertisement and made by resolution to the limit of the authority delegated to the City Administrator for execution of contracts be made effective at the beginning (on July 1) of the first City fiscal year following the adoption of the new ordinance and resolution.
Financial Impact
Staff is not aware that the revision to the threshold for sealed submittals pursuant to public advertisement as proposed above would have a negative financial impact on the City. As a rule, staff seeks to obtain the best pricing possible for all purchases.
Options
As an alternative to the revision proposed above, the City’s threshold for sealed submittals pursuant to public advertisement may be left as it is, at $25,000.
Recommendation
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For the reasons cited above, staff recommends the Board of Mayor and Aldermen direct staff to pursue obtaining legislative authority for the Board to consider whether to increase to $50,000 the City’s threshold for sealed submittals pursuant to public advertisement.