City of Port Huron, MI Purchases, Sales and Leases

This division is intended to address the policy for the purchase, sale or lease of real and personal property and services for the City for the direction of the City Manager in accordance with Chapter 10 of the Charter.

This division is also intended to recognize the obligation to the taxpayers to maximize the purchasing, sale and lease power of public funds to gain the best value for our residents through competitive bidding policies, procedures and standards that maintain a system of quality and integrity and which promotes efficiency, effectiveness and equity. The City will comply with all applicable federal and state laws.

This division shall apply to all expenditures of public funds by all operating departments of the City for public purchasing, irrespective of its source. Whenever the purchase involves the expenditure of federal or state assistance funds, the purchase shall be conducted in accordance with any applicable mandatory federal and state laws and regulations which are not reflected in this division. Nothing in this division shall prevent the City from complying with the terms and conditions of any grant, gift or bequest which are otherwise consistent with law.

§ 2-792 Organization and authority.

[3-14-2011 by Ord. No. 1321]

The Purchasing Division of the Department of Finance, supervised by the Purchasing Agent, shall be responsible for the administration of the purchasing system of the City as provided for in § 2-127. The purchasing authority and responsibility shall be delegated as follows:

City Council:

Shall establish the purchasing policy by ordinance.

Shall award all contracts for the purchase, sale or lease of real and personal property and services that exceed threshold amounts prescribed in § 2-793(c).

City Manager:

Shall establish purchasing procedures in accordance with this division.

Shall review and be the final authority on all purchasing actions taken and sales made by the City consistent with the Charter, ordinances and applicable state law.

Administrative officers and operating departments:

Shall ensure the availability of budgeted funds for all purchases and leases.

Shall provide for the maintenance of efficiency, economy and accountability in the City's purchases, sales and leases.

Shall purchase or supervise the purchase of all goods and services, in coordination with the Purchasing Agent, as may be required to maintain adequate inventories of materials and supplies for their municipal operations in accordance with the purchasing, sales and lease policies and procedures established.

Shall establish procedures within their respective departments to ensure adherence to the purchasing policies and procedures.

§ 2-793 General policy for purchases of goods and services.

[3-14-2011 by Ord. No. 1321; 6-26-2017 by Ord. No. 17-005]

Definition of purchasing. "Purchasing," as herein used, shall mean any action taken by the City acting as buyer for the purpose of obtaining materials, supplies, services, personal property of any kind and public improvements (hereafter referred to as "goods and services") from a vendor acting as seller, whether by purchase, rent, lease, lease-purchase or any other similar methods of acquisition as may be used by the City.

Scope of purchasing. Purchasing decisions shall be based upon price, quality, delivery, references, written standards, experience, previous service, recommendations by consultants and other relevant factors promoting the best interest of the City.

Threshold amount. Purchases of goods and services or contracts that exceed $20,000, adjusted annually by the Consumer Price Index as determined by the State of Michigan for tax assessment rounded up to the nearest hundred (or such similar measure of inflation if state procedures change), shall be made only after the approval of the City Council has first been secured.

[8-9-2021 by Ord. No. 21-005]

(d)

Purchases or contracts below threshold amount. All purchases of goods and services, the cost of which is less than the threshold amount, may be made in the open market, but such purchases shall, where practical, be based on at least three competitive bids and shall be awarded to the lowest responsive and responsible bidder meeting specifications as described in § 2-797. The Purchasing Agent, or designee, may solicit bids verbally, in writing, electronically or any other appropriate means. For federal grant purposes, all micro purchases for $3,000 and below are subject to the above policy.

(e)

Purchases within budget appropriation. No purchases of goods or services shall be made and no encumbrance shall be incurred unless sufficient funds to cover the purchase or encumbrance have been budgeted and are available within the approved budget.

(f)

Inspection of materials. The responsibility for the inspection and acceptance of all goods, materials, supplies and equipment shall rest with the ordering department.

(g)

Rule against subdivision. No purchase shall be subdivided for the purpose of circumventing the threshold amount imposed by this division or any policy or procedure.

(h)

Documentation of purchases and sales. All purchases and sales shall be evidenced either by written contract, purchase order or by a receipt, invoice or sales slip. Public works construction projects shall require a written contract.

(i)

In default. No contract shall be made, nor shall any payment be made, to any person who is in default to the City as provided for in the Charter, § C10-6.

(j)

Standards of conduct and conflicts of interest. Public contracts with public servants (elected or appointed officials or City employees) shall be governed by state law and the Charter (§ C2-6 and § C10-5). Recognizing that City purchases involve the use of public funds, the following standards shall apply to all purchases made by the City:

All vendors, current and prospective, shall be treated equitably. Purchasing decisions shall be based upon price, quality, delivery, references, written standards, experience, previous service, recommendations by consultants and other relevant factors promoting the best interest of the City.

Public servants (elected or appointed officials or City employees) shall be prohibited from furnishing to any prospective bidder information that would give any vendor an unfair advantage over other prospective vendors.

Purchasing records shall be retained by the Finance Department for public review in accordance with state law.

The standards of conduct and behavior in purchasing policies and procedures shall also be regulated by the City's Ethics Ordinance,[1] Personnel Manual and state law.

[1]

Editor's Note: See Ch. 6, Code of Ethics.

(5)

Public servants (elected or appointed officials or City employees) shall be prohibited from doing business with the City while serving as a public servant, unless approved by City Council and in accordance with the state law and the Charter.

§ 2-794 Purchasing methods.

[3-14-2011 by Ord. No. 1321; 6-26-2017 by Ord. No. 17-005]

All purchases of goods and services shall be obtained through one of the following methods and regardless of the method of purchase used, all goods and services exceeding the threshold amount shall require City Council approval unless otherwise not required under the purchasing ordinance:

Formal bids. Formal bids shall be asked for in all transactions involving the expenditure above, or expected to be above, the threshold amount, and the transaction evidence by a written contract unless otherwise provided by this division.

Definition. A "formal bid" shall be defined as the submission of a written, sealed price quotation by a vendor to the City pursuant to the issue of public notice thereof by the City, and based on written specifications and standard conditions stipulated by the City for the purpose of purchasing goods and services for the use of the City. Bids may be received by various means, including, but not limited to, written, facsimile, electronic (e.g., internet, email), or other reliable means, subject to the purchasing policies and procedures of the City and as may be specified in the bid submission requirements. Facsimiles, electronic or other similar bids shall be deemed as a written, sealed price quotation, provided they are forthwith transferred to the Finance Department and kept confidential until the public bid opening.

Notice inviting bids. A notice inviting bids shall include a general description of the articles to be purchased or sold, submission requirements, state where bid blanks and specifications may be secured and the time and place for opening bids. Notice of bids shall be posted or advertised at least seven calendar days preceding the last day set forth for the receipt of bids. The notice of bids shall be advertised by one or more methods, the first of which shall be the one that generates no cost to the City, as follows:

At a minimum, notice of bids shall be posted in the purchasing section of the City's website.

Notice of bids shall also be posted, where applicable, on the website(s) of those bid cooperatives of which the City is a member.

Additional trade magazines and/or the City's official newspaper shall be utilized only when such electronic posting is deemed inappropriate in order to garner adequate exposure to potential vendors.

The Purchasing Agent may also post notice of all pending purchases or sales on the bulletin board in City buildings or other appropriate locations.

The Purchasing Agent may also advertise all pending purchases or sales through such additional notices as the Agent deems to be in the best interest of the City.

If any perspective bidder fails to receive notice, it shall in no way invalidate any contracts entered into hereunder.

Bid, performance, labor and material bonds. Bid bonds, performance bonds or maintenance bonds shall be required when it is determined that such bonds are reasonably necessary to protect the best interests of the public; provided, however, performance bonds shall be provided when required by state law (PA 213 of 1963).[1] Labor and material bonds shall be required as provided by this Act, and each shall be executed by the contractor and a corporate surety in an amount not less than the total amount of the contract. Such bonds shall not require City Council approval, but shall be approved by the appropriate administrative officer, or his or her designee, as to substance and by the City's Attorney as to form, issuing surety and execution.

[1]

Editor's Note: See MCLA § 129.201 et seq.

Addendums/clarifications. Bid addendums and clarifications may be issued by the administrative officer of the applicable operating department in coordination with the Purchasing Agent.

Bid opening. Bids shall be opened publicly at the time and place designated in the invitation to bid and in the presence of the Purchasing Agent and a designated representative from the appropriate operating department, or their designees. The amount of each bid and other relevant information, together with the name of each bidder, shall be recorded by the Purchasing Agent, or designee, who may refer the bids to any appropriate City officer for tabulation before reviewing them. Bid tabulations shall be open and available to public inspection in accordance with state law.

Bid acceptance. Bids shall be accepted (with the exception of late bids, which shall not be accepted) without alteration or correction, except as otherwise authorized by the purchasing procedures or the factors stipulated in the invitation to bid.

Request for proposals. Requests for proposals (RFP) shall be asked for where appropriate, including situations where the use of competitive sealed bidding is either not practicable or not advantageous to the City. RFPs are used where multiple factors and criteria will be considered, such as transactions involving professional services, for situations where there is not sufficient information to prepare specific specifications suitable for formal bidding procedures, where a discussion with the vendor is necessary in order to understand the proposal, or for other reasons which are determined by the City. Whenever it is determined that it is in the best interest of the City to solicit RFPs, the successful proposal will be evaluated and determined based upon the proposer's ability to provide the services requested, the City's prior experience with the proposer, the nature and degree of expertise required, the professional experience of the proposer, the costs of the services and any references received with respect to the successful proposer. Each operating department will establish procedures for issuing RFPs in the best interest of the City, including, but not limited to, public notice, written specifications and a public opening.

Professional services. Requests for proposal shall be used for the employment of professional services or consultants where technical expertise or knowledge of a specialized field is critical to the performance of that service. Professional services include, but are not limited to, auditors, engineers, planning and financial consultants, architects, accountants and other similar professionals. The City Council shall approve all professional service contracts above the threshold amount and the City Manager, or his or her designee, shall have the authority to procure the services for contracts below the threshold amount.

Sole source purchases. Sole source purchases are allowed when only one item or service will meet the City's needs and when only one vendor can supply that item or service. If a proprietary item is required, a sole source circumstance may exist in the following circumstances:

The compatibility or standardization of equipment, accessories or replacement parts is the paramount consideration and the items are only available from one vendor.

The vendor, or a distributor, has an exclusive right to sell in a geographic area.

The item is required to maintain the warranty or service contract in force for the particular equipment.

The item is not interchangeable with similar items from another source.

The sole supplier's item is needed for trial use or testing.

When there is doubt that the product or service is sole source, competition should be solicited.

All sole source purchases which exceed threshold limits must be approved by City Council. Sole source purchases which do not exceed the threshold limits must be approved by the purchasing committee. Insufficient time for solicitation of bids is not sufficient reason to justify a sole source procurement. Price, terms and conditions shall be negotiated to obtain the best purchase terms for the City.

(5)

Continuity of professional services. A professional service contract may be extended beyond the expiration of the contract if it would be in the best interest of the City to extend the contract based on uniformity of results or history of services. Contracts that are extended that exceed the threshold amount shall require the prior approval of the City Council.

(6)

Emergency purchases. With the mutual concurrence of the City Manager and administrative officer of an operating department, a purchase may be made to alleviate a situation in which there is a threat to health, welfare, or safety, or to address an immediate regulatory mandate, or is necessary to the continuation of the work of the department that does not allow time for normal competitive purchasing procedures. This method may not follow required purchasing methods as previously described due to the immediate need, but shall be made with such competition as is practicable under the circumstances. Such purchases and the emergency causing them shall be reported in detail to the Director of Finance and Purchasing Agent immediately at the time the costs are incurred or purchased.

(7)

Cooperative purchasing. It shall be the policy of this City to engage in those cooperative purchasing efforts for goods and services with other governmental agencies, such as MiDeal or MITN, whenever such activity is feasible and economically advantageous to the City. All cooperative purchasing conducted under this article shall be consistent with the methods of this section. If the Purchasing Agent or other officer has engaged in cooperative purchasing bids of goods and services with another government or governments or other similar agency where joint bids have been taken and are advantageous to the City, such bids will be deemed to conform with the City's purchasing procedures.

(8)

Life cycle costs as determination of selection. Life cycle cost analysis shall be used where it is the most appropriate method of determining the benefit to the City. "Life cycle costs" are defined as the sum of all recurring and one-time (nonrecurring) costs over the full life span or a specified period of a good, service, structure or system. It includes purchase price, installation cost, operating costs, maintenance and upgrade costs and remaining (residual or salvage) value at the end of ownership or its useful life.

(9)

Reverse online auctions. When it is determined that the bidding methods prescribed in this section will not result in the best value for the City, the Purchasing Agent may use a third form of competitive selection known as reverse auction. A reverse auction is a real-time purchasing event that is conducted over the internet. Interested bidders submit responses in a manner similar to those in an invitation to bid, with the exception that no prices are included. Those bidders whose products or services meet the specifications are invited to the reverse auction event. These bidders will then be provided with instructions for the reverse online auction. During the event, bidders may submit multiple prices electronically over a short time period, with the lowest cost winning. Reverse auctions are often advantageous for items of definite quantity and definite delivery. Price is a primary factor in the award.

(10)

The following purchasing method exemptions may apply:

No advantage to bid. The purchase of goods and services is other than a public work or improvement and the product or material contracted for is not competitive in nature and no advantage to the City would result from requiring competitive bidding. Prior City Council approval shall be required for purchases above the threshold amount.

Recurring expenses of goods and services. The Director of Finance, or designated representative, shall be authorized to purchase and/or make payment for repetitive contractual obligations incurred by the City, without regard to threshold amount limitations, competitive bidding and without City Council approval, provided such expenditures are within the approved budget and funds are available for such expenditures. Such repetitive contractual obligations include, but are not limited to, debt payments, utility billings, legal or other professional billings, lease agreements, payments of property taxes to other taxing jurisdictions, fuel expenses, payroll, payroll taxes and employee benefit expenses, etc.

§ 2-795 Bid evaluation — Purchasing Committee.

[3-14-2011 by Ord. No. 1321]

Purchases of goods and services which require prior approval of the City Council shall be evaluated by the Purchasing Committee, consisting of the Director of Finance, Director of Public Works, Purchasing Agent and City Clerk, or their designated representatives. Bid evaluation shall be based on the requirements set forth in this division and in the invitation to bid, which may include criteria to determine acceptability, such as quality, references, workmanship, delivery, inspection, testing, suitability for a particular purpose and recommendations by City consultants. Upon reviewing the bids, the Purchasing Committee shall transmit the tabulation to the City Manager and to the City Council with its recommendation.

§ 2-796 Council action on bids.

[3-14-2011 by Ord. No. 1321]

Upon receipt of the bid tabulation and recommendation of the Purchasing Committee for purchases of goods and services requiring prior City Council approval, the City Council shall retain the right to reject bids or take any of the following actions in awarding a bid:

Award a contract to the lowest bidder who is determined to be a responsible and a responsive bidder as follows:

Definition of responsible bidder. "Responsible bidder" is herein defined as a person or firm which has the capability in all respects to fully perform the contract requirements, and which has the integrity and reliability which will assure good faith performance. Items to be considered are:

The ability, capacity and skill of the bidder to perform the contract to provide the services required.

Whether the bidder can perform the contract or provide the service promptly, or within the time specified, without delay or interference.

The character, integrity, reputation, judgment, experience and efficiency of the bidder.

The quality of performance of previous contracts or services.

The previous and existing compliance by the bidder with laws and ordinances relating to the contract or services.

The sufficiency of the financial resources and ability of the bidder to perform the contract or provide the service.

The quality, availability and adaptability of the supplies or contractual services to the particular use required.

The ability of the bidder to provide future maintenance and service for the use of the subject of the contract.

The number and scope of conditions attached to the bid.

Definition of responsive bidder. A "responsive bidder" is herein defined as a person or firm that has submitted a bid which conforms in all material respects to the descriptions, specifications, terms, conditions and other factors called for in the invitation to bid.

Waive any inconsequential informality or defect in the bids.

Award a contract to a bidder other than the low bidder in accordance with § 2-797 (preference for local bidders section).

Award a contract by division among two or more vendors if such alternatives are duly indicated in the original invitation to bid.

(5)

If two or more bidders are the lowest bidder, and determined to be a responsible and a responsive bidder, the successful bidder may be determined by lot.

§ 2-797 Preference for local bidders/City-based businesses.

[3-14-2011 by Ord. No. 1321]

Purpose. The City believes that its purchasing practices should encourage local vendors to provide goods and/or services to the City, resulting in increased economic activity through more local jobs, tax revenues, and expenditures to entice businesses to be located in the City.

Definition of City-based business. "City-based business" means a physical and economic relationship to the City of Port Huron determined by a verifiable business address (not a temporary location, such as a post office box or construction trailer, etc.) within the corporate boundaries of the City, activities carried out in the City of Port Huron are substantial enough to consider it a City-based business and the filing of a City income tax or personal property tax return for the calendar year prior to the date of the bid submittal.

Exceptions. The following purchases of goods and services shall be exempt from local bidder preference provisions: emergency purchases, sole source purchases, cooperative purchases, request for proposals, bid solicitations that utilize federal funding that prohibit awards based on local preference criteria and bid solicitations that utilize "life cycle cost" as the basis of award in place of submitted bid price.

(d)

Preference. When bids are received, the following shall apply:

The person or business submitting the lowest bid who is determined to be a responsible and a responsive bidder as provided for in § 2-796(1) shall be deemed the lowest bidder. If the lowest bidder is not a City-based business, the lowest City-based bidder with a bid within 3% of the lowest bid on any contract bid in an amount of $100,000 or less and within 1% on any bid amount in excess of $100,000 shall be deemed the lowest bidder if it agrees to reduce its bid to match the bid of the lowest bidder. A lowered bid by a City-based business which is premised upon, in whole or in part, changes to or variances to the bid specifications, contract requirements or scope of work shall be considered nonresponsible and will not be considered.

If such a City-based business does not reduce its bid to match the lowest bid, then the next lowest bidder that is a City-based business with a bid within the applicable lowest-bid threshold amounts in § 2-797(d)(1) shall be deemed the lowest bidder, if it agrees to reduce its bid to match the bid amount of the lowest bidder.

If no responsive and responsible City-based business within the applicable bid threshold amounts in § 2-797(d)(1) agrees to reduce its bid, then the contract shall be awarded to the person or business with the lowest bid who is determined to be a responsible and a responsive bidder.

No contract awarded pursuant to this section shall be sublet in any matter that permits 50% or more of the dollar value of the contract to be performed by a subcontractor or subcontractors who do not meet the definition of City-based business or where the City determines the goods and/or services provided will not provide an economic benefit to a City-based business.

(e)

Rights of City. This section shall not waive or constrain, in any manner, the right and prerogative of the City to reject any and all bids or proposals, to reject a bid not accompanied by required bid security or other documentation or data required by the bidding documents, or to reject a bid which is in any way incomplete, irregular, not responsible or not responsive.

§ 2-798 Execution of contracts.

[3-14-2011 by Ord. No. 1321]

Upon the award of a contract by the City Council for goods and services as provided for in § 2-796 (Council action on bids), the Council may, at the same time, authorize by resolution the appropriate City officials to execute the necessary contract documents. An executed counterpart of each contract shall be filed with the City Clerk and copies shall be distributed as may be determined by the City Manager.

After approval by City Council and execution of the contract, the City Manager shall direct the implementation of public contracts.

If a contract is necessary for a purchase of goods and services below the threshold amount, administrative officers, or their designee, may, in consultation with the Finance Department and/or legal counsel, execute appropriate contracts or agreements.

§ 2-799 Modification in contracts.

[3-14-2011 by Ord. No. 1321]

Pursuant to Chapter 10, § C10-4, of the Charter, modifications, amendments or changes in contracts to which the City is a party which required City Council approval, in accordance with ordinances establishing contract procedures for the purchase, sale, lease or services by the City, become effective upon approval of the City Council. However, notwithstanding the above, when it becomes necessary in the completion of any public work or public improvement done under a public works contract to make an alteration or modification in such contract, such alteration or modification shall be made by a change order agreed upon in writing and signed by the City Manager, the Director of Public Works and the contractor. Authorization for the making of a change order in a public works contract as described above shall be provided for in the original public works contract approved by the City Council.

§ 2-800 Real property.

[3-14-2011 by Ord. No. 1321]

Transactions involving the purchase, sale, gift or lease of real property shall be authorized by City Council resolution, except as provided for in the Charter and § 2-800(c), and such transaction shall be handled in accordance with state law, the Charter and this article.

The City Council may, in its discretion, determine by resolution that, for compelling reasons, a transaction involving real property is in the best interest of the public and may be purchased, sold, gifted or leased without solicitation of bids or to a bidder other than the high or low bidder.

As provided for in § C9-2 of the Charter, the following properties shall not be sold, disposed of or vacated as shown below unless approved by a majority of the electorates voting thereon at a regularly scheduled or special election:

Park or cemetery properties that have been officially dedicated by ordinance;

Waterfront property or property contiguous to the waterfront;