HomeMy WebLinkAbout02-21-06 Finance Com MinutesDUBLIN CITY CQUNCIL
Finance Committee of the Whole
Tuesday, February 21, 2006
Minutes of Meeting
Mr. Keenan, Chair, called the meeting to order at 6:20 p.m.
Council members present were Mr. Keenan, Mr. Lecklider and Mr. McCash, also in
attendance: Mayor Chinnici-Zuercher.
Staff members present were Ms. Grigsby and Ms. Hoyle.
Mr. Keenan stated that the purpose of the meeting is to consider a proposal to increase
the City's formal competitive bidding threshold.
Ms. Grigsby stated that the City's Charter provides that City Council shall establish the
City's bidding threshold. It has been several years since a modification to the bidding
threshold has been requested. It is necessary to occasionally amend that threshold to
facilitate efficient City operations. Staff has conducted a study to determine what the City's
threshold should be. It is currently $30,000 as established by Council in 2001. Prior to
that action, it had been $20,000 since 1996. When inflation is factored into the current
threshold a $36,000 figure results, but that amount would not really improve the process.
The bidding threshold of other entities, including the State, was considered. Dublin's
threshold has historically been twice the State's threshold. Last year, the State increased
their bid threshold to $25,000, which would indicate a $50,000 threshold for Dublin.
Staff also met with certain staff members to evaluate the various issues they deal with in
the competitive bidding and purchase process for their division. They also looked at the
various bid projects that are brought to Council for approval throughout the year -which
projects should continue to have Council authorization? There are some items that are
currently brought to City Council that do not need Council review -the print project for the
Recreation Center brochure, sign shop materials, chlorine and pond maintenance. A bid
threshold that would make sense is $75,000. Because an increase from $30,000 to
$75,000 is significant, it is appropriate for the Finance Committee to review staff's proposal
and make a recommendation for Council action.
Changing the bid threshold would result in a savings in both money and staff time. In
many cases, the current bidding process is not saving the City money, as the City must
select from the bids received. For the project on Council's agenda tonight, only one bid
was received. Many vendors do not participate in a formal competitive bid process
because it istime-consuming. Often a best price is obtained by calling the vendor and
negotiating a price.
The City also makes an effort to use cooperative purchasing for several items, such as
gasoline and vehicles. Those purchases are not brought to Council, as the cooperative
purchasing prices are arrived at through a bidding process. Staff is trying to identify some
other areas that cooperative purchasing could be used for.
Staff also looked at the prevailing wage issue. In establishing a new bid threshold, it may
be helpful to consider the prevailing wage requirement for new construction, which is
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February 21, 2006
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slightly over $69,000. Therefore, staff considers the proposed bid threshold of $75,000 to
be appropriate.
Mr. Keenan stated that attachment C in the packet includes noteworthy information: {1)
the approximate cost of the bidding process -bid packet, advertising, etc. is $2,000, and
{2} the cost of the bond, depending on who the vendor is, runs around 1 - 2% of the cost.
The argument far the prevailing wage amount is a good one. He inquired if it would be
necessary to bid a project at the Rec Center, for instance, that cost approximately
$60,000.
Ms. Grigsby responded that the requirements for renovation projects are different from
new-build, new roadway projects.
Mr. Keenan inquired if renovation projects must always require prevailing wage.
Ms. Grigsby responded that the threshold is $20,000 plus.
Mr. Keenan inquired what type of City project could be accomplished for $60,000.
Ms. Hoyle responded that the roof repair job was a renovation. The price was around
$22,000 and prevailing wage was paid.
Mr. Lecklider stated that the prevailing wage threshold is very low, whether renovation or
new build.
Ms. Grigsby responded that the renovation threshold is $20,000+ and new construction is
$69,000+.
Mr. Lecklider stated that if Dublin raised its bid threshold to $75,000 what happens to those
construction projects between $69,000 and $75,000?
Ms. Grigsby responded that attachment D details the process that would be followed.
Mr. McCash noted that raising the bid threshold would not affect the prevailing wage a
requirement.
Mr. Keenan inquired if the new build projects are subject to prevailing wage.
Ms. Grigsby responded that they are not.
Mr. Keenan stated that if a project is bid, it is subject to the prevailing wage. If it is not bid,
is it still subject?
Mr. McCash stated that if it is a renovation project, it would be subject to prevailing wage.
If it is a new build, it is not.
Mr. Keenan inquired if there are any other protocols. When the project will cost under
$20,000.00, is the purchaser required to obtain two price quotes?
Ms. Grigsby responded that those are proposed as compensating controls. The City has
not had formalized requirements, but this will formalize some of those requirements.
Mr. Keenan stated that the Township is required to do that as part of its purchase order.
Ms. Grigsby stated that it is assumed that price quotes are obtained with a purchase order.
Mr. Keenan inquired if the City bids a project, must it select from the bidders, or could the
City see or negotiate a lower price in some other manner?
Ms. Grigsby responded that the City must select from the bids. The competitive process is
good, but for small contracts such as the $48,000 contract on the agenda tonight, many
vendors do not want to invest the time to bid on a small project. In addition, putting
together the bid specifications on a project is not easy -they must be sufficiently detailed,
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February 21, 2006
Page 3
yet not too much so. When the information shared with the vendors is not adequate, the
City does not receive good bids. It is anticipated that a new bid threshold will mean that
not as many projects will be bid. This would free staff time to seek lower prices and
pursue other cooperative purchasing opportunities.
Mr. Keenan inquired if it would ever be desirable to bid a project that is under the $75,000
threshold.
Ms. Grigsby responded that it is possible, and there would always be the ability to do so.
Mr. Lecklider inquired how to avoid the perception of competitive vendors that the City is
giving its business to a preferred vendor.
Ms. Grigsby responded that can be the perception when Council is asked to approve a
purchase on which only one bid was received. It is important that staff make phone calls
to solicit a broader base of price quotes. In addition, the City website could be used to
inform vendors that the City will be accepting price quotes for an anticipated project. If
staff is aware of a vendor misperception, staff can take proactive steps to involve that
vendor.
Mr. Lecklider stated that he would like to know that the City has an internal process to
avert that type of perception and to ensure the opportunity is there for vendors who would
want to solicit the City's business.
Mr. McCash stated that revision of the City's bid threshold and bidding process has been
needed for some time. Too much staff time and effort has been required.
Mayor Chinnici-Zuercher suggested that if a formalized bidding process is not followed for
a project that an ad be placed in the newspaper classified section or at the City's website.
Doing so would demonstrate the City's efforts to make vendors aware of the opportunity. It
is also important to continue to offer the small projects. What is small scale to one vendor
will keep a small business owner in business.
Mr. McCash suggested that the news notice could be a request for statement of interest
(RSI). Interested vendors would submit a form providing their interest and their
qualifications to provide the product or service. Staff could review the statements and
select vendors to contact for price negotiation.
Mr. Keenan stated that if adopted, this would be a significant change in the bid threshold.
In the first year, it would be helpful to Council to have a quarterly report on those
purchases that did not come to Council due to the increased threshold, so they could
assess the impact of the change during the first year.
Committee consensus was to recommend Council approval of the bid threshold increase
to $75,000. Staff will prepare legislation for a first reading at the March 6 Council meeting.
The meeting was adjourned at 6:50 p.m.
Clerk of Council