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BOARD MEETING DATE: April 9, 1999 AGENDA NO. 14

PROPOSAL:

Revise Procurement Policy and Procedure

SYNOPSIS:

At its October 9, 1998 meeting, the Board approved in concept changes to the Procurement Policy and Procedure. The changes will streamline our business processes and make the best use of the new Finance and Human Resources system. The revisions will also update the policies and procedures to reflect organizational and policy changes that have occurred since the Procurement Policy and Procedure was last revised on January 9, 1998 including the addition of a new small business definition and small business bid and proposal evaluation preference. In addition, the contractor selection criteria used in proposal evaluation has been revised to provide greater flexibility.

COMMITTEE:

Administrative, March 19, 1999, Recommended for Approval

RECOMMENDED ACTION:

Adopt the revised Procurement Policy and Procedure.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

As part of the implementation of the new integrated Finance and Human Resources system, the AQMD’s outside consulting firm recommended changes to our current business practices to streamline our processes and improve workflow. These changes were approved in concept by the Board at its October 9, 1998 meeting with the stipulation that the final changes to the policy be brought back to the Board for approval. The first change eliminates the need for Board approval of RFPs and RFQs for budgeted items over $50,000 except for those RFPs or RFQs that deviate from approved AQMD policies and procedures. AQMD staff will, however, provide the Board with a report listing all RFPs and RFQs scheduled to be released within the next month as part of the monthly Board agenda package. The second change raises the dollar threshold for total acquisition cost of a fixed asset from $1,500 to $2,500.

Small Business Definition and Bid and Proposal Preference

At the time the Procurement Policy and Procedure was approved by the Board on January 9, 1998, definition of a small business and a small business bid and proposal evaluation preference were not included in the policy. At its meeting on December 19, 1997, the Administrative Committee decided to defer this item to permit adequate time to consider concerns raised by the Ethnic Community Advisory Group regarding the proposed small business definition.

The small business definition was discussed by both the Ethnic Community Advisory Group and the Local Government and Small Business Assistance Advisory Group. The ECAG has not reached a consensus on what the small business definition should be. The Local Government and Small Business Assistance Advisory Group has agreed that the small business definition used by the State of California should be used for purposes of procurement. This definition as revised by Assembly Bill 2505 that became law on January 1, 1999 defines a small business as: 1) an independently owned and operated business; 2) not dominant in its field of operation; 3) with its principal office located in California; 4) its officers domiciled in California, and 5) a business that together with affiliates is either a service, construction, or non-manufacturer with 100 or fewer employees, and average annual gross receipts of ten million dollars ($10,000,000) or less over the previous three years, or a manufacturer with 100 or fewer employees.

For purposes of AQMD procurements, the State of California definition set forth above has been revised to remove the requirement for the business to have its principal office located in California and its officers domiciled in California. This change was made to satisfy EPA requirements prohibiting the granting of geographical preferences as a condition of receiving EPA grant funds. Businesses that satisfy all other elements of the State of California definition shall be granted a 5 percent preference on bids in response to RFQs and ten (10) points in the evaluation of proposals submitted in response to RFPs. A joint venture that is at least 51 percent owned by a small business satisfying the definition shall also receive the bid and proposal preference. Contractors that subcontract at least 25 percent of the total contract value to small businesses will receive seven (7) points in the proposal evaluation.

Contractor Selection Criteria

Because of concerns raised by members of the Mobile Source Committee, staff was asked to revisit our evaluation method used on competitive proposals. The current two-step method requires a proposal to score at least 70 points out of a possible 100 points on the first step in order to be deemed technically qualified and proceed to the second step. On the second step cost represents 70 percent of the final score. As a result, cost may unduly influence the contractor selection on procurements requiring special technical expertise. Therefore, in order to permit a more equitable evaluation result on certain types of procurements, the method for proposal evaluation has been changed from the two-step evaluation method to a single step method with cost and technical weightings based upon the nature of the work being procured. For procurements involving research and development work or requiring special technical expertise, a higher weighting would be assigned to technical criteria and less weight would be placed on cost. Alternatively, for procurements of standardized services which are widely available from a number of qualified sources, greater weight would be given to cost and less weight assigned to technical factors. Staff recommends that for procurement of standardized services, technical factors including past experience be weighted at 50 points and cost be weighted at 50 points. For procurement of services requiring special technical expertise and research and development efforts, staff recommends that technical factors including past experience be weighted at 70 points and cost be weighted at 30 points.

Organizational and Procedural Changes

Other revisions to the Procurement Policy and Procedure were made to reflect organizational changes and procedural changes that have occurred since the policy was adopted in January 1998. For example, the Purchasing section has been transferred to Finance and consolidated with the Contracts section under a new group called Procurement.

Proposal

Staff proposes that the revised Procurement Policy and Procedure be adopted to:
1) incorporate changes approved in concept by the Board to streamline AQMD business processes and improve workflow; 2) add a small business definition and small business bid and proposal evaluation preference; 3) revise the contractor selection criteria used in proposal evaluation to provide greater flexibility; and 4) update the policy to reflect organizational and procedural changes.

Attachments

Revised Procurement Policy and Procedure

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