6. PURCHASING BY-LAW REVISION

RÈglement sur les marchÉs revision

COMMITTEE RECOMMENDATION

That Council approve the changes to the Purchasing By-law that were made due to a regular housekeeping review and as a result of recommendations made during the Rural Summit, as identified in Appendices 1 and 2.

RECOMMENDATION DU COMITÉ

Que le Conseil approuve les modifications apportées au Règlement sur les marchés en raison d’un examen d’ordre administratif régulier et à la suite des recommandations formulées au cours du Sommet rural, telles que définies dans les Annexes 1 et 2.

DOCUMENTATION

1. Chief Corporate Services Officer’s report dated 23 May 2006
(ACS2006-CRS-FIN-0018).

Report to/Rapport au :

Corporate Services and Economic Development Committee

Comité des services organisationnels et du développement économique

and Council / et au Conseil

23 May 2006 / le 23 mai 2006

Submitted by/Soumis par : Greg Geddes, Chief Corporate Services Officer/

Chef des Services généraux

Contact Person/Personne ressource : Marian Simulik, Acting Director, Financial Services and City Treasurer/Directrice des services financiers et Trésorière municipale par intérim

Financial Services/Services financiers

580-2424, Ext./poste 14159, Marian.Simulikl@ottawa.ca

City Wide

Ref N°: ACS2006-CRS-FIN-0018

SUBJECT:	PURCHASING BY-LAW REVISION
OBJET :	RÈglement sur les marchÉs revision

REPORT RECOMMENDATION

That the Corporate Services and Economic Development Committee recommend that Council approve the changes to the Purchasing By-law that were made due to a regular housekeeping review and as a result of recommendations made during the Rural Summit, as identified in Appendices 1 and 2.

RECOMMANDATION DU RAPPORT

Que le Comité des services organisationnels et du développement économique recommande au Conseil d’approuver les modifications apportées au Règlement sur les marchés en raison d’un examen d’ordre administratif régulier et à la suite des recommandations formulées au cours du Sommet rural, telles que définies dans les Annexes 1 et 2.

BACKGROUND

The Purchasing By-law for the City of Ottawa was approved by City Council at its meeting of 28 February 2001. Since that time, the By-law has served the objective of obtaining best value when purchasing goods, construction and services while treating all suppliers equitably, in accordance with the guiding procurement principle that purchases be made using a competitive process that is open, transparent and fair to all suppliers.

Under Section 271 of the Municipal Act, 2001, municipalities are statutorily obligated to adopt policies with respect to the procurement of goods and services, in accordance with a comprehensive guide, which was developed by the Ministry of Municipal Affairs and Housing in 2003. The City of Ottawa Purchasing By-law meets the policy requirements outlined in the Act, and has been used by the Ministry as an example of a thorough procurement policy for those involved in the municipal procurement process.

One of the key requirements of the Municipal Act is that these provisions of the By-law be reviewed at regular intervals to evaluate its effectiveness. The Financial Services Branch and Legal Services Branch have undertaken a review of the By-law and have determined that further changes are required to reflect administrative practices.

In addition, these amendments take into account recommendations made during the Rural Summit. Currently there is a requirement for tendering purchases exceeding $25,000.00. Raising this limit to $50,000.00 will allow businesses easier access without formal bid notification and receipt of sealed bids. The other significant change is the elimination of the requirement to use suppliers from standing offers for any purchase under $2,000.00. This will result not only in more efficient use of the staff time but also will allow staff to purchase goods and services from vendors throughout the City.

A new provision has also been added allowing for the Director of Infrastructure Services and Supply Management to award jointly non-competitive contracts in order to complete outstanding works that have been identified in approved subdivision or site plan agreements where the City holds sufficient funds as security or can recover the costs from the developer(s).

The amending by-law included as attachment 1 makes a number of needed changes to the definitions and clause numbering, and also recognizes the organizational changes mde in recent years to the City structure. The by-law also contains more meaningful changes which are addressed in more detail below.

PRESCRIBED COUNCIL APPROVAL - section 9 - item (1) - sub-item (h) added to recognize that Council approval is required for any contract award as a result of a Public Private Partnership opportunity for which the framework, guiding principles or significant terms and conditions for such a contract have not been previously approved by Council.

PURCHASES NOT EXCEEDING $25,000 - section 18. Title, and dollar limits changed to reflect increased threshold for using the Request for Quotation up to $50,000. Now appears as PURCHASES NOT EXCEEDING $50,000 - REQUEST FOR QUOTATION. Also, the reference to $25,000 in sections 18 (1), and 18 (5) changed to read, $50,000.00.

PURCHASES EXCEEDING $25,000 - REQUEST FOR TENDER - section 19. Title, and dollar limits changed to reflect increased threshold for using the Request for Tender above $50,000. Now appears as PURCHASES EXCEEDING $50,000 - REQUEST FOR TENDER. Also, the reference to $25,000 in section 19 (1), changed to read, $50,000.00.

PURCHASES EXCEEDING $25,000 - REQUEST FOR TENDER - section 19 - new item (9) added to recognize that a competitive standing offer is also an acceptable procurement process.

PURCHASES EXCEEDING $25,000 - REQUEST FOR PROPOSAL - section 20 - Title changed to PURCHASES EXCEEDING $50,000 - REQUEST FOR PROPOSAL to recognize existing practice, and item (4) expanded to recognize that a competitive standing offer is also an acceptable procurement process.

STANDING OFFER PURCHASES - section 21 - item (5) changed to recognize that the "obligation" to use only authorized firms where a standing offer is in place, will apply only to purchases above $2,000.00. This amendment will allow work crews, and other field staff, on an exception basis, to obtain small dollar requirements without restrictions that may actually result in greater cost, when travel and staff time are considered. This amendment will also allow field staff to implement initiatives endorsed at the recent Rural Summit.

NON-COMPETITIVE PURCHASES - section 22 - item (7), (8) and (9) amended to permit the Director of Infrastructure and Supply Management to award jointly a contract for which no competitive bids were solicited provided that the contract is to complete outstanding works in approved plans of subdivision or site plans and the City holds sufficient funds as security to complete the works or the subdivision or site plan agreement contains provisions to recover the the costs from the developer.

UNSOLICITED PROPOSALS - section 25 - item (2) revised to recognize the existance of the Ottawa Option policy for unsolicited proposals, as approved by Council 23 October 2002.

IRREGULARITIES CONTAINED IN BIDS - section 30 - although section 30 is unchanged, Schedule "A", attached, to which the section refers, is revised as a result of staff experience since amalgamation, detailed discussion with the Manager Corporate and Commercial Law, and several meetings with the Standard Practices Committee of the Ottawa Construction Association.

SCHEDULE "A" - existing schedule "A", items 1 to 17 inclusive, deleted and replaced with attached revised schedule "A", items 1 to 11 inclusive.

The request to increase the allowable threshold for competing opportunities through the less formal Request for Quotation process, from the current $25,000.00 to the recommended $50,000.00 level is the result of an analysis of purchasing experience since amalgamation, as well as feedback from a number of sources, including the Universal Program Review ("UPR"), and the more recent Rural Summit. The tender threshold of $25,000.00 has been in effect at the City of Ottawa since amalgamation, and prior to that was the standard at both the Region and former City dating back to the 1980s. Inflation alone suggests a review of the level at which it becomes necessary to issue a formal Request For Tender, with all the associated bonding and bid distribution requirements which apply. Additionally, through the UPR review in 2004, the clear message to Supply Management was to remove any restrictions for the small vendor to compete at the City. A similar message has been one outcome from the recent successful Rural Summit. Supply Management Division is confident that the City will be assured competition in the marketplace to ensure "best value", in raising the tender threshold from $25,000.00 to $50,000.00, and allowing competition through the less formal Request For Quotation process without the requirement for formal bonding and distribution through either Merx, or the OCA, up to the $50,000.00 threshold.

CONSULTATION

Consultation with our internal clients and stakeholders, as well as industry representatives in the construction community has led to some of the recommendations contained herein.

FINANCIAL IMPLICATIONS

The changes identified in this report do not present any direct funding impacts on the City.

SUPPORTING DOCUMENTATION

APPENDIX 1 - Amending By-Law No. 2006-

APPENDIX 2 - Revised Schedule "A" dealing with Bid Irregularities

APPENDIX 3 - Former Schedule "A" dealing with Bid Irregularities

DISPOSITION

City Solicitor to prepare amendments to consolidated By-Law 50-2000.

APPENDIX 1

BY-LAW NO. 2006-

A by-law of the City of Ottawa to amend By-law No. 50 of 2000 respecting the purchasing of goods, services and construction for the City of Ottawa.

The Council of the City of Ottawa enacts as follows:

1. The definition of “Director” in subsection 3(1) of By-law No. 50 of 2000 entitled “Being a By-law respecting the purchasing of goods, services and construction for the City of Ottawa”, as amended, is repealed and the following definition is substituted therefor:

“Director” means the person appointed by the City Manager or Deputy City Manager or Chief Corporate Services Officer to be responsible for the operation of a branch and includes the person appointed to the position of City Manager, Deputy City Manager, Chief Corporate Service Officer, Chief Information Officer, Treasurer and Auditor General.

2. The definition of “tender” in subsection 3(1) of the said By-law No. 50 of 2000 is amended by striking out the dollar figure “$25, 000” where it occurs therein and substituting the dollar figure “$50,000” therefor.

3. Paragraph (b) of subsection 7(3) of the said By-law No. 50 of 2000 is amended by striking out the expression “Human Resources Department” where it occurs therein and substituting the expression “Employee Services Branch” therefor.

4. Subsection 9(1) of the said By-law No. 50 of 2000 is amended by,

(a) striking out the word “and” where it occurs at the end of paragraph (f),

(b) striking out the punctuation “.” where it occurs at the end of paragraph (g) and substituting “, and” therefor, and

(c) adding the following paragraph immediately after paragraph (g):

(h) where a contract is a result of a public private partnership (“P3”) opportunity.

5. Subsection 11(1) of the said By-law No. 50 of 2000 is amended by striking out the dollar figure “$25, 000” where it occurs therein and substituting the dollar figure “$50,000” therefor.

6. Paragraph (d) of subsection 12(6) of the said By-law No. 50 of 2000 is repealed and the following paragraph is substituted therefor:

(c) forward the value analysis to Supply Management for documentation on the procurement file.

7. Subsection 13(2) of the said By-law No. 50 of 2000 is amended by,

(a) striking out the punctuation “.” where it occurs therein, and

(b) adding the expression “in conjunction with the reporting requirement prescribed in subsection 39(2).” immediately after the word “services”.

8. Section 15 of the said By-law No. 50 of 2000 is amended,

(a) by striking out the dollar figure “$25,000” where it occurs in the items “Request for Quotation”, “Request for Tender” and “Request for Proposal” in subsection (1) and substituting the dollar figure “$50,000” therefor, and

(b) by striking out the expression “Sections 15” where it occurs therein and substituting the expression “Sections 16” therefor.

9. Section 18 and the heading immediately preceding Section 18 are amended by striking out the dollar figure “$25,000” wherever it occurs in the heading and the section and substituting the dollar figure “$50,000” therefor.

10. The heading immediately preceding Section 19 is amended by striking out the dollar figure “$25,000” and substituting the dollar figure “$50,000” therefor.

11. Section 19 of the said By-law No. 50 of 2000 is amended,

(a) by striking out the dollar figure “$25,000” wherever it occurs in the section and substituting the dollar figure “$50,000” therefor, and

(b) by adding the following subsection immediately after subsection (8):

(9) The use of a standing offer, as defined in Section 21, shall also be an acceptable procurement process, where appropriate, for purchases exceeding $50,000.

12. The heading immediately preceding Section 20 is amended by striking out the dollar figure “$25,000” and substituting the dollar figure “$50,000” therefor.

13. Subsection 20(4) of the said By-law No. 50 of 2000 is amended by adding the following sentence thereto at the end of the subsection:

The use of a standing offer, as defined in Section 21, shall also be an acceptable procurement process, where appropriate, for purchases exceeding $50,000.

14. Subsection 21(5) of the said By-law No. 50 of 20000 is repealed and the following subsection is substituted therefor:

25. (2) Where purchasing action is initiated by a branch for frequently used goods or services for which a standing offer is in place and the value of the purchasing action exceeds $2,000, it is to be made with the supplier or suppliers listed in the Standing Offer.

15. Sections 22 is amended by repealing subsections (8) and (9) of the said By-law No. 50 of 2000 and substituting the following therefor:

22. (7) Any non-competitive contract that does not satisfy the provisions of subsection (1) is subject to the City Manager’s approval.

(8) Despite any other provision of this by-law, the Director of Infrastructure Services and Supply Management may jointly award a contract for which no competitive bids were solicited provided that,

(a) the contract is to complete outstanding works in approved plans of subdivision or site plans, and

(b) the City holds sufficient funds as security to complete the works or the subdivision or site plan agreement contains provisions to recover the costs from the developer.

(9) The relevant details surrounding the application of subsections (1) and (8) shall be included in the report submitted to Council pursuant to Section 39.

16. Subsection 25(2) of the said By-law No. 50 of 2000 is repealed and the following subsection is substituted therefor:

25. (2) Any procurement activity resulting from the receipt of an Unsolicited Proposal shall comply with the provisions of this by-law and the separate Ottawa Option Policy for Unsolicited Proposals as approved by City Council on October 23, 2002.

17. Section 27 of the said By-law No. 50 of 2000 is repealed and the following Section is substituted therefore:

27. Bids shall only be accepted in paper form, ensuring confidentiality and security including maintaining the “sealed” nature of bids as long as necessary where required. Bids will only be accepted by facsimile or electronic form when so stipulated in the procurement solicitation document, and subject to Supply Management having in place appropriate arrangements for receipt thereof.

18. Schedule “A” of the said By-law 50 of 2000 is repealed and the Schedule “A” attached hereto is substituted therefor.

19. This by-law includes Schedule “A” annexed hereto and Schedule “A” is hereby declared to form part of this by-law.

ENACTED AND PASSED this day of , 2006.

CITY CLERK MAYOR

BY-LAW NO. 2006 –

-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-

A by-law of the City of Ottawa to amend

By-law No. 50 of 2000 respecting the purchasing

of goods, services and construction for the City

of Ottawa.

-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-

Enacted by City Council at its meeting of

-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-

LEGAL SERVICES

AMP:ec –

COUNCIL AUTHOIRTY:

City Council –

APPENDIX 2

SCHEDULE “A”

No.	IRREGULARITY	RESPONSE
1.	Late Bids	Automatic Rejection, not read publicly, returned unopened to the bidder.
2.	Unsealed envelopes	Automatic Rejection, not read publicly, returned unopened to the bidder.
3.	Financial Security - execution a. No bid deposit, cheque not certified, or not an original financial security (e.g. a photocopy or a facsimile of a financial security).	Automatic Rejection
	b. Insufficient financial security	Automatic Rejection, unless in the opinion of Supply Management Division, the insufficiency in the financial security is trivial or insignificant.
	c. Signature and/or corporate seal of contractor, or of bonding company, or both, are missing from bid bond.	A Bid bond must be executed (signed) by both the Principal (contractor) and surety (bonding company) to be valid. If either signature is missing, the response is automatic rejection. If one or both corporate seals is missing, the bond is still considered to be valid, and no additional action is required.
4.	Bid Document – execution a. Bids not executed in non-erasable medium and signed in ink.	Automatic Rejection
	b. Bid document missing signature of authorized representative, whether corporate seal affixed, or not.	Automatic Rejection
	c. Bid documents in which all addenda issued have not been acknowledged.	Automatic Rejection, unless in the opinion of Supply Management Division, the addenda do not significantly impact the bid, in which case the bidder will be given 48 hours to formally acknowledge the addenda, with no change permitted to the original financial bid.

No.	IRREGULARITY	RESPONSE
5.	Incomplete Bids (partial bids, all required items not bid)	Automatic Rejection, unless in the opinion of Supply Management Division, the nature of the missing information does not impact the ability of the City to conduct a fair, competitive evaluation.
6.	Qualified Bids (bids qualified or restricted by a written statement, whether within the form of tender or included as an attachment)	Automatic Rejection, unless in the opinion of Supply Management Division, the qualification or restriction is trivial or insignificant.
7.	Bids received on documents other than those provided by the City.	Automatic Rejection, unless in the opinion of Supply Management Division, the intention of the bidder is clear, and the bid submission details do not deviate in any material manner from those provided by the City.
8.	Bids containing clerical or mathematical errors. a. Uninitialled changes to the bid document which are in the opinion of Supply Management Division, trivial in nature.	After official notification from Supply Management Division, bidder has 48 hours to rectify the situation and initial any changes.
	b. Uninitialled changes to the unit prices in the price schedule, and the contract totals are consistent with the price as amended. (see “e” )	After official notification from Supply Management Division, bidder has 48 hours to initial the changes.
	c. Other mathematical errors which are not consistent with the unit prices.	After official notification from Supply Management Division, bidder has 48 hours to rectify the situation and initial any changes.
	d. Extension error, based on quantity provided in bid document, and unit rate provided by bidder.	Mathematical error corrected by Supply Management Division, bidder has 48 hours to acknowledge and initial any changes. In cases where the total extended price can be confirmed by Supply Management Division with reasonable certainty, in comparison to other bid prices and historical experience, the unit rate will be corrected by Supply Management Division. Bidder has 48 hours to accept and initial any changes.
	e. Uninitialled changes to the unit prices in the price schedule, and the contract totals are not consistent with the price as amended. (see “b”)	Automatic Rejection

No.	IRREGULARITY	RESPONSE
9.	Mistakes in Tendering On the application of the bidder, and the clear demonstration of an error in the tender, or in the bidder’s calculation sheets.	Following consultation with the bidder and the Ottawa Construction Association (where applicable), Supply Management Division may allow the bidder to withdraw the bid, in writing, without financial penalty.
10.	Other Irregularities	Supply Management Division shall have authority to waive irregularities which are considered to be trivial or insignificant.
11.	Any Irregularity	Despite any provisions herein contained, Ottawa City Council may waive any irregularity, where Council, in it’s sole opinion, considers it to be in the best interests of the City of Ottawa.

APPENDIX 3

SCHEDULE "A"

IRREGULARITY	RESPONSE
1. Late Bids.	Automatic rejection and not read publicly.
2. Unsealed Envelopes.	Automatic rejection.
3. Insufficient Financial Security (No deposit or bid bond or agreement to bond or insufficient deposit or bid bond or agreement to bond).	Automatic rejection unless, in the opinion of the Director and Supply Management, the insufficiency in the financial security is trivial or insignificant.
4. Bids not Completed in non-erasable medium and signed in ink.	Automatic rejection.
5. Incomplete Bids (Part bids - all items not bid).	Automatic rejection unless, in the opinion of the Director and Supply Management, the incomplete nature is trivial or insignificant.
6. Qualified Bids (Bids qualified or restricted by an attached statement).	Automatic rejection unless, in the opinion of the Director and Supply Management, the qualification or restriction is trivial or not significant.
7. Bids received on documents other than those provided by the City of Ottawa.	Automatic rejection unless, in the opinion of the Director and Supply Management, the matter is trivial or insignificant.
8. Bids Containing Minor Clerical Errors.	48 hours to correct and initial errors.
9. Execution of Agreements to Bond (Performance Security) Bonding company corporate seal or signature missing from agreement to bond.	Automatic rejection.
10. Execution of Bid Bonds (Financial Security) (a) Corporate seal or signature of the bidder, or both, missing. (b) Corporate seal or signature of bonding company missing.	48 hours to correct. Automatic rejection.
11. Other Bid Security - Uncertified Cheques.	Automatic rejection.
12. Documents - Execution Corporate seal or signature missing. Corporate seal and signature missing.	48 hours to rectify situation. Automatic rejection.
13. Erasures, Overwriting or Strike-Outs which are not Initialled: (a) uninitialled changes to the tender documents which are minor (example: the tenderer's address is amended by over-writing but not initialled); (b) unit prices in the Schedule of Prices have been changed but not initialled and the contract totals are consistent with the price as amended; (c) unit prices in the Schedule of Prices which have been changed but not initialled and the contract totals are not consistent with the price as amended; (d) other mathematical errors, which are not consistent with the unit prices.	48 hours to initial. 48 hours to initial. Automatic rejection. 48 hours to initial corrections as made by Supply Management.
14. Mistakes in Tendering On the application of the Tenderer and the demonstration of an error in the tender or the Tenderer's calculation sheets	Following consultation with the bidder and the Ottawa Construction Association, where applicable and requested, the Director and Supply Management may allow the bid to be withdrawn and the bid deposit returned.
15. Documents, in which all necessary Addenda, which have financial implication, have not been acknowledged.	Automatic rejection.
16. Other Minor Irregularities.	Supply Management and Directors shall have authority to waive irregularities, which they jointly consider to be minor.
17. Any Irregularity.	Despite the provisions herein contained, Council may waive any irregularity where it considers it to be in the best interest of the City.