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41-08 OrdinanceRECORD OF ORDINANCES si.~~,~;. o,~. Form No. 30011 41-08 Ordi,zcrnce No. Pas•.recl ?p AN ORDINANCE AMENDING CHAPTER 37, "CONTRACTING AND COMPETITIVE BIDDING," OF THE DUBLIN CODIFIED ORDINANCES TO INCLUDE REVERSE AUCTION AS A METHOD OF COMPETITIVE BIDDING. WHEREAS, Dublin City Council, under Home Rule authority, has the ability to exempt the City of Dublin from certain sections of the Ohio Revised Code relating to contracting and competitive bidding; and WHEREAS, Dublin City Council, under Home Rule authority, also has the ability to exempt the City from Ohio Revised Code Section 9.314 by enacting legislation establishing procedures for reverse auction, a process through which prospective providers of goods and/or services to the City submit proposals though the Internet; and WHEREAS, procedures including, but not limited to, reverse auction can be utilized to ensure that the City obtains reasonable pricing for goods and services; and WHEREAS, it is in the City's best interest to amend Chapter 37 of the Dublin Codified Ordinances to provide for obtaining goods and services by reverse auction. NOW, THORE, BE IT ORDAINED by the Council of the City of Dublin, State of Ohio, of the elected members concurring that: Section 1. Chapter 37 of the Dublin Codified Ordinances is hereby amended by adding Section 37.04. Exceptions and Alternatives to Competitive Bidding, Section (E) Reverse Auction. §37.04 EXCEPTIONS AND ALTERNATIVES TO COMPETITIVE BIDDING (E.) Whenever the City of Dublin determines that the use of the reverse auction is advantageous to the City, the City Manager or his/her designee may purchase goods or services by reverse auction. 1.) The City, in establishing a reverse auction process, will: a. Determine the specifications and requirements of the goods or services to be acquired; b. Identify and provide notice to potential sellers concerning the proposed acquisition; c. Establish prequalification requirements to be met by a seller to be eligible to participate in the reverse auction. 2.) Prior to conducting a reverse auction, the City shall establish a threshold amount which shall be the maximum amount that the City is willing to pay for the goods or services to be acquired. 3.) The City shall enter into a contract with a seller which meets the specifications or description of the goods or services to be procured and whose proposal the City determines to be the most advantageous. Section 2. That this ordinance shall take effect and be in force from the earliest point in time permitted by law. Passed this .~'`~ day of '~~~~, 2008 Mayor -Presiding Officer ATTEST: Ord. 41-08 -attachment ORC X9.3 i4 Purchasing services or supplies by reverse auction. (A) As used in this section: (1) "Contracting authority" has the same meaning as in section 307.92 of the Revised Code (2) "Political subdivision" means a municipal corporation, township, county, school district, or other body corporate and politic responsible for governmental activities only in geographic areas smaller than that of the state and also includes a contracting authority. (3) "Reverse auction" means a purchasing process in which offerors submit proposals in competing to sell services or supplies in an open environment via the intemet. (4) "Services" means the furnishing of labor, time, or effort by a person, not involving the delivery of a specific end product other than a report which, if provided, is merely incidental to the required performance. "Services" does not include services famished pursuant to employment agreements or collective bargaining agreements. (5) "Supplies" means all property, including, but not limited to, equipment, materials, other tangible assets, and insurance, but excluding real property or interests in real property. (B) Whenever any political subdivision that is required by law to purchase services or supplies by competitive sealed bidding or competitive sealed proposals determines that the use of a reverse auction is advantageous to the political subdivision, the political subdivision, in accordance with this section and rules the political subdivision shall adopt, may purchase services or supplies by reverse auction. (C) A political subdivision shall solicit proposals through a request for proposals. The request fox proposals shall state the relative importance of price and other evaluation factors. The political subdivision shall give notice of the request for proposals in accordance with the rules it adopts. (D) As provided in the request for proposals and in the rules a political subdivision adopts, and to ensure full understanding of and responsiveness to solicitation requirements, the political subdivision may conduct discussions with responsible offerors who submit proposals determined to be reasonably susceptible of being selected for award. The political subdivision shall accord offerors fair and equal treatment with respect to any opportunity for discussion regarding any clarification, correction, or revision of their proposals. (E) A political subdivision may award a contract to the offeror whose proposal the political subdivision determines to be the most advantageous to the political subdivision, taking into consideration factors such as price and the evaluation criteria set forth in the request for proposals. The contract file shall contain the basis on which the award is made. (F) The rules that a political subdivision adopts under this section may require the provision of a performance bond, or another similar form of financial security, in the amount and in the form specified in the rules. Effective Date: 10-26-2001; 09-16-2004; I1-OS-2004 Office of the City Manager 5200 Emerald Parkway • Dublin, OH 43017 Phone: 614-410-4400 • Fax: 614-410-4490 CITY OF DUBLIN> Memo TO: Members of City Council FROM: Jane S. Brautigam, City Manager ~.,,,,~ s , DATE: June 26.2008 INITIATED BY: Marsha I. Grigsby, Director of Finance Michele M. Hoyle, Budget Manager RE: Ordinance 41-08 Code Amendment re Reverse Auction -Additional Information Summary This memo is provided to further outline how the City will use the reverse auction following passage of Ordinance 41-08. This process was intended to provide a more cost effective alternative to the current sealed competitive bid, as well as to provide a comparison tool for use in cooperative bidding alternatives such as state, county or other municipal contracts. In addition, it is hoped that a broader range of potential vendors will become available for City goods and services, thus increasing the competitiveness of City pricing. This option has been available in Ohio since enactment of Ohio Revised Code Section 9.314, effective October 26, 2001. Other cities and government entities successfully have used the reverse auction method for procurement of goods and services ranging from road salt and vehicles to some construction projects. Attached for your reference are several examples of these entities including newspaper stories from Clark County, Indiana, and Cuyahoga Falls, Ohio. Also attached is a list of frequently asked questions, as well as a sample of upcoming bid events. Several possible opportunities for use of the reverse auction are anticipated including the bid for road salt, as indicated at the June 16 meeting. This commodity normally is bid using a sealed competitive bid, for which the City receives three or fewer proposals. In addition, we generally compare the bids we receive with those received by the Ohio Department of Transportation and those received by a regional cooperative. These comparisons will continue; however, based on the experience of other jurisdictions, we anticipate the reverse auction will require that vendors further refine their bids. Another area for which reverse auction will be useful will be for vehicle procurement. For this item, we routinely use pricing of the State of Ohio's term contract as the basis for comparison. Using the reverse auction method will provide a current comparison to validate the available pricing or to improve upon this pricing. An additional benefit of this process will be with the third party pre-qualification of the prospective bidders. This should further ensure that the bidder can deliver the goods and services as outlined in the specifications. Memo to Council re Ord. 41-08 -Code Amendment re Reverse Auction June 26, 2008 Page 2 of 2 We intend to test this process and thoroughly evaluate its effectiveness for the City of Dublin. With each event, we determine all bidding parameters, including the length of time between conclusion of the bidding and award of the bid, and can decline all bids if none are acceptable to the City. In addition, we plan to limit the use of reverse auction to the purchase of commodities and vehicles until we have evaluated the effectiveness of this bidding method. If it is the preference of City Council, we can modify the ordinance to specify the limited use. As we did for the first year following the increase of the bidding threshold, we can provide quarterly reports to City Council of the purchases made using the reverse auction, if City Council so desires. Recommendation: We recommend passage of Ordinance 41-08 at the second reading/public hearing on July 1. Reverse auction saves Clark County $11,000 Page 1 of 1 Reverse auction saves Clark County $11,000 By LARRY THOMAS Larry.Thomas @ newsandtribune.com October O5. 2007 10:37 am -Atrial run of an online reverse-auction process could save Clark County as much as $11,000 on road salt this winter, compared to the best bid received during a traditional bidding process in August. During Thuz-sday's County Commissioners meeting, Cory Masters, an agent for Kentucky-based BidBridge, said, "It was a pretty dramatic difference from August." In August, Cargill's low bid for road salt was $49.25 per ton for up to 1,500 tons. Cargill was also the low bidder among four firms during the hour-long online reserve auction on Sept. 27, at $41.90 per ton. North American Salt Co. had the next-lowest bid at $42.12. "It's a great idea; it made us $11,000," said Commissioner Mike Moore. "All it took was a little competition." Commissioner Ed Meyer, the board's president, said the county likely will utilize the reserve-auction service for other bulk products. ``That went real well," said Meyer of the road salt bids. "That's a starting point. "Before we got too faz- into that process, we wanted to see how it works." ~'Vork-release center Clark County's work-release center could be open Jan. 1, Director Steve Mason told County Commissioners on Thursday. Five employees -which include two case managers and three security supervisors -will begin work Sunday with training in New Castle. The commissioners questioned whether the work-release centez- -which is located on the third floor of the Clark County Jail is hiring corrections officers away from the jail. "We're getting quality, experienced people, but none of them from the jail," said Mason. "You're not having problems hiring people?" asked Commissioner Ralph Guthrie. "Not so far," Mason said. Mason said the work-release center still needs to hire an additional security supervisor, who likely would work a night shift. Copyright ©1999-2008 cnhi, inc. http://www.news-tribune.netJlocal/local_story_278103657.html/resources_printstory 6/23/2008 Page 1 of 1 Fallsnewspress.com City bids to host online auctions for some of its project contracts July 22, 2007 by Lauren Krupar Reporter Cuyahoga Falls -- City officials hope to use a reverse style of Internet auctioning to attract lower bids on city projects. "There is a process in place that allows for reverse auction bidding." Law Director Virgil Arrington said. "The contractor throws out a dollar figure and then the next throws out a dollar figure. It's an exciting process to make sure that we are getting the best bid." To begin using what Arrington described as a "reverse eBay," the city must first chance the codified ordinances. City Council could vote on the proposed changes July 23 at 6:30 p.m. in the community room of the Natatorium, 2345 Fourth St. In the city's current code, a contractor must provide specifications -- also called specs -- to the city in a bid packet that contains the contractor's price for the project. The city opens all bid packets at the same meeting and award the contract to the lowest and best bid. The proposed online bidding process would be for all but the more complex projects, city officials said. If Council approves the new process, al] potential contractors would be notified that the project would be a reverse bid. Bidders would then submit bid packets containing all of the specs except the price to the city_ If the bid packets meet the city's requirements, the city would extend an invitation to the bidder to be online at a certain date and time to bid on the project. Potential contractors could then bid against each other with the lowest bid winning the contract. While the city can set a time limit on the bidding, that limit can be extended when the city receives bids toward the end of the cycle. City officials say an outside agency would oversee the online bidding process. The city also could reject all of the bids and use a regular bidding process if the reverse bids were not satisfactory. "There's no downside to it whatsoever," Arrington said. "If it falls apart, wejust reject the bids. We always reserve in all of our bid specs the right to reject all bids and star over." The first test of this could be the Mudbrook Trail, parks and recreation officials said. "This project is going to be the city`s first try at this," said Ed Stewart. assistant parks and recreation department superintendent. "The hope is this wIll bring this [project cost] back to where it was while at the same time, it is a testing ground for the whole city." The Mudbrook Trail is planned to be built near the former gun club and follow Mudbrook until Bath Road. E-mail: ]kru par @ recordpub.com Phone: 330-686-3915 http://www.fallsnewspress.com/news/printer friendly/2285192 6/23/2008 BidBridje -FAQ Pabe 1 of 2 .dgridc e ~' ^ ~ nc~ dstance betvmen buyers and supphe.•s :: getting smalltr. / \ -_ llr;;7h1,NC EVEHTi ~~ :ES:1,,FC: Fi;'~h' ~! ; pNT:" , tSlf~ R l5 t.7Y 3'.Ce nIJ:~% l,:C:lh t - l `t ~ `~.~ ' ~ } w,s~". - - ~ ' _`~, - - ~ .' - - Bid Bridge wick Links Register Event Profile Frequently Asked Questions about Reverse Auction Purchasing Buyers Suppliers What products antl services work best in a Reverse Auction? ` ~ Is a buyer obligated 4o accopi the lowest bid? ' Ne. each buyer may evaluate Ii:e nnlin_ bids to determine for themselves 'Lo:vesi R Besl Va1ue.' BUYERS Request an animated Is the buyer obtfgatod to award? replay o! a reverse auc;-ion... ' No. if the buy<^.r rs net sabsf:ed tvit~, the bids. thou are free to re;cct a;! hies. Does a supplier have to lower their bid? `-' ~! No. they are required to submi? ti~eir bid online by tiro deadline ~:f are under!:o ndiigaLOn to iuvrsr their ~ ~~ Regirtlr bid What if there are no initial bids? Thte avent is canca!led. The buyer may proceed as if no sealed bids were recened. YJhzt if issues arise during the onGre event? During pre-event Irarning, a toll L•ee telephone numb'rr i^> provided that allows for assistance. op tc and :nc!udn•g suspension of the event until the issues r_an be resobred 'Nhen does the supplier gay the transaN.ion fee? Norma9y tivhen the payment is Wade to the suppler by the Buyer. after receipt and acceptance of the goods. egwpment. or services Nlho invites snd approves suppliers? The buyer provides a preferred supplier list HovreeG: BidBndae can stra;.=gicaily source thr Irst with other suppliers frcm their Catabase. Tha buyer ut@ma;ely ,pprares all suppliers ihat are invi!ed to bid. 1"/hat if a prospective bidder is not "Internzt savvy?` The cnline bidding platform is very simple to use. A Bid6ric!ge teen member e, ill conduct a shod online pre-?vent [raining session :cith each supplier !e ensure they know hnw the protess works 'J'dhrn necessary. 3id8ridge will tvoi~t with the suppiie~ ;c ga;n computer access or biC by proxy in ;heu benal!. Where is the ES8 P.everse Auction event vievred? Just as scaled bids are opened in a public vern;e. !ne ESB events are viavreU in a puL•Irc setting determinad'oy the buyer What does the ES6 Rnversc Auction service cost? There is no crrec; charge to the bdyer to use this sen~ice The service !s funtled by a small transaction fee paid by the rrinnrnq supplier. What is?ho Ierigth of the ESB Reverse Auction? The length o! the event rs determined by the buyer and depands on. the complexity the event Usually, the evants are set to run for 30 minutes vM,ii 3 minute exionsicns w!:en a icwering b.d is placed Harr are Alternates handled? http://www.bidbrid~e.net/FAQ.aspx 6/23/2008 BidBridge -Upcoming Events Upcoming Events 062a2008 -Heritage Golt Group - Fuel 06/25!2008 -The City of North Miami Beach. Florida -Liquid Sodium Hypochlorite 06/2620D8 - MSS of Perry Township, Indiana - Fleet Vehicles 06!262008 -The ToNn of Butler, Alabama - Heavy Holy Trencher 06J26l2008 - The Clty of Selma, Alabama - Onc New Landfill Compactor 06!26/2008 - Vdodd Vdide Carriers Ltd - No. 2 Uttra Low Su Nor Diesel Fuel 06!302008 - Tutane University. New Orleans. Louisiana - Four (a) 2008 Mid-Size Busea D710712008 -The Ciry of Stoev,Ghio - City Hall Roof Project 07/022008 -Hinds County Board of Supervisors, Mississippi -One New Trackhoe Excavator 07110/2008 -The Greater Clark County Schools,!ndiana - Bread Products 2D08-2009 School Year Soon To Be Released Road Sall Copy Paper Gasoline Moto: Graders School Bus Cameras Garbage Pickup Milk and Juice Produc!s Page 1 of l BidBridge Quick Links Register Event Profile Proven Results r, BUYERS Request an animated replay of a reverse auction... http://www.bidbridge.net/Upcoming_Events.aspx 6/23/2008 .grid e B' ~ /'~ Tl~r disranct between buyrr5 and supp'rrrs ~s gt:Ung smaller Ilr:';;':",\~~ ....~' ~ '~_l.'~t0.C_ F;;,; lv' ~~ :;;N-~~•:i . , !~' I. Y c ^Ersl-i,c l0„Ih CITY OF DUBLIN.. Office of the City Manager 5200 Emerald Parkway • Dublin, OH 43017 Phone: 614-410-4400 • Fax: 614-410-4490 Memo TO: Members of City Council FROM: Jane S. Brautigam, City Manager~r-{s~~3 r3 DATE: June 12, 2008 Q I1vITIATED BY: Marsha I. Grigsby, Deputy City Manager/Director of Finance Michele M. Hoyle, Budget Manager RE: Ordinance 41-08, Amending Chapter 37 ("Contracting and Competitive Bidding") of the Dublin Codified Ordinances to Include Reverse Auction as a Method of Competitive Bidding. Background Ordinance 41-08 amends Chapter 37 of the City Code, "Contracting and Competitive Bidding," by adding Section 37.04 (E). Section 37.04 (E) authorizes the City to use reverse auction as an alternative to traditional competitive bidding using written sealed bids. Reverse auction is an on- line process through which prospective vendors make real-time offers on a specified date and during a specified time period, to provide goods or services to the City based on specifications provided by the City. Ohio Revised Code Section 9.314 (attached) specifically provides for the purchase of goods and services using reverse auction. This Section requires municipalities to adopt rules governing this process before using reverse auction for procurement. The City has been advised by legal counsel that the City must amend the Dublin Codified Ordinances and adopt rules for the process in order to use this method to procure goods and services. To most efficiently implement this method of procurement, the City will use athird-party service provider. These services do not charge the City to hold a reverse auction. Instead, prospective vendors pay a fee to subscribe to this type of service and submit to apre-qualification process. Pre-qualified vendors then are notified when specifications for goods or services which they are qualified to provide have been made available for bid, and a date is set for the auction. Vendors then can submit bids in real time during the allotted time period and revise those bids based on those submitted by competitors until the time period ends. The City is not obligated to accept any bids if it is determined that pricing offered is not acceptable. However, this process has been successful for other municipalities in reducing the cost of goods and services and has the added benefit of increasing the number of bidders who compete for City purchases while reducing the cost of a competitive bid process, which is both paper and time-intensive. If this Code amendment is approved, bids for rock salt will be the City's first test of the process. Recommendation: Staff is recommending passage of Ordinance 41-08 at the second reading/public hearing on July 1, 2008.