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PROPOSAL:

Adoption of New Procurement Policy and Procedure

SYNOPSIS:

This action is to consolidate/modify existing policies into a new Procurement Policy and Procedure and expand the justification for sole source as recommended by the Ad Hoc Sole Source Committee on November 13, 1997. Relative to adding preference points for small businesses, on December 19, 1997, the Administrative Committee determined to defer such action until after further consideration of the Board’s Ethnic Community Advisory Group’s concerns regarding an appropriate definition of small business.

COMMITTEE:

Administrative, November 21 and December 19, 1997, Recommended for Approval

RECOMMENDED ACTION:

Adopt the new Procurement Policy and Procedure.

Barry R. Wallerstein, D.Env.
Acting Executive Officer

Background

On August 28, 1997, Proposition 209 became effective, prohibiting the granting of preferential treatment to any individual or group on the basis of race, sex, color, ethnicity or national origin in the operation of public employment, public education, or public contracting.

The District’s Contracting and Purchasing and Consultant Selection Policies in effect on August 28, 1997, granted preference points based on race and sex, and required outreach efforts targeted at minorities and women. This includes the ten-point advantage for use of minority- and women-owned business firms, the seven-point advantage for use of
minority- and women-owned business subcontractors, and the three-percent cost benefit for minority- and women-owned businesses. It is District Counsel’s opinion that the preference points for minority- and women-owned businesses likely violate Proposition 209.

Interim Policy

On October 10, 1997, due to Proposition 209, the Board adopted an Interim Contracting Purchasing and Consultant Selection Policy to ensure compliance with Proposition 209. The Interim Policy removed preference points based on race, ethnicity, sex or national origin, and only required a good faith effort to subcontract with minority- and women-owned business if subcontracts are to be let, when contracts are funded in whole or in part by EPA funds. This is a federal requirement and condition of receipt of grant funds. In addition, in compliance with Federal requirements, the Interim Policy allows local preference points only if the contract does not involve federal funding.

Proposed Policy

On October 24 and November 21, 1997 the Administrative Committee considered a number of options for amending the Interim Contracting Purchasing & Consultant Selection Policies, including preference points based on labor surplus areas, enterprise zones, and community development block grant areas, and local business and small business
preference.

After thorough consideration, the Administrative Committee on November 21, 1997, recommended a small business preference based on the definition contained in District Rule 102. Rule 102 defines Small Business as "a business which is independently owned; operated and meets the following criteria, or if affiliated with another concern, the combined activities of both concerns shall meet these criteria:

(a) The number of employees is 10 or less; and

(b) The total gross annual receipts are $500,000 or less; or

(c) Not-for-profit training center."

The proposed policy would award preference points to small businesses, disabled veteran-owned businesses or joint ventures therewith. Under the consultant selection process, ten points would be granted to small businesses, disabled veteran-owned businesses, or a joint venture; seven points would be granted for the use of small or veteran-owned business subcontractors; and five points would be granted to local businesses. Under the bid process, small and veteran-owned businesses would be provided a three-percent cost advantage and local businesses not funded in whole or part with federal funds would be provided a two-percent cost advantage in bid evaluation.

On December 19, 1997, the Administrative Committee determined to defer this item until after further consideration of the concerns raised by the Ethnic Community Advisory Group regarding the restrictiveness of the proposed definition. A proposal for a small business preference will be brought back to the Board at a later date.

Good Faith Effort Requirement

The District receives an annual grant from the federal Environmental Protection Agency pursuant to Section 105 of the Clean Air Act. These funds, which account for approximately four percent of the District’s budget, are accounted for in the District’s general fund. Given the broad purposes for which they are granted, the Section 105 funds would be difficult to segregate from other general fund programs. The Mobile Source Air Pollution Reduction Review Committee (MSRC) and some TAO contracts do not receive Section 105 Funds. Receipt of Section 105 funds is conditioned on compliance with provisions of the Code of Federal Regulations which require the grantee and subgrantee to take "all necessary affirmative steps to assure that minority firms, and women business enterprises . . . are used when possible." 40 CFR Chap. 1, §31.36(e). The code states that the affirmative steps shall include six specific actions. [ Section 31.36(e)(2) provides: Affirmative steps shall include: (i) Placing qualified small and minority businesses and women’s business enterprises on solicitation lists; (ii) Assuring that small and minority businesses, and women’s business enterprises are solicited whenever they are potential sources; (iii) Dividing total requirements, when economically feasible, into smaller tasks or quantities to permit maximum participation by small and minority business, and women’s business enterprises; (iv) Establishing delivery schedules, where the requirement permits, which encourage participation by small and minority business, and women’s business enterprises; (v) Using the services and assistance of the Small Business Administration, and the Minority Business Development Agency of the Department of Commerce; and (vi) Requiring the prime contractor, if subcontracts are to be let, to take the affirmative steps listed in paragraphs (e)(2) (i) through (v) of this section.] The Administrative Committee recommends the "Good Faith Effort" requirement, which is a condition of receipt of 105 grant funds, be a requirement for only those contracts funded in whole or in part with Federal funds. This would require all contractors, minority and non-minority, to comply with good faith effort requirements if subcontracts are to be let.

Sole Source and Procedural Changes

In addition to the changes being proposed as a result of Proposition 209, the Ad Hoc Sole Source Committee recommended that the conditions set forth in the Consultant Selection Policy for justification of sole source be expanded to provide more specificity. Since these changes and the revisions resulting from Proposition 209 required a major re-write of the policies, staff believed that this was an opportune time to consolidate the
Contracting and Purchasing Policy and Procedure and the Consultant Selection Policy and Procedure into a single Procurement Policy and Procedure. Consolidation of these two policies will eliminate inconsistencies and redundancies in the current policies. Moreover, since the current policies were approved in May 1993, several procedural changes have occurred such as publication of Notices Inviting Bids/Proposals on the Internet which have been incorporated in the new policy. The new provisions for sole source selection are found at Section VIII (B)(2), pp. 20-21, of the new Procurement Policy.

Proposal

Staff proposes that the new Procurement Policy and Procedure be adopted to: 1) incorporate the changes approved by the Board in the Interim Policy; 2) incorporate the changes recommended by the Ad Hoc Sole Source Committee; and 3) consolidate the Contracting and Purchasing Policy and Procedure and Consultant Selection Policy and Procedure into a single document.

Fiscal Impact

None.

Attachments

Procurement Policy and Procedure

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