Staff Report.Purchasing Policy
PREPARED BY: Holly Zappala
Management Analyst
Reviewed by: Town Manager, Assistant Town Manager, Town Attorney, and Finance Director
110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 11/16/2021 ITEM NO: 22
DATE: November 5, 2021
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Staff Recommends the Following Actions Regarding Town Purchasing:
a. Approve the Recommendation of the Council Policy Committee to
Approve the Proposed Updates to the Town Purchasing Policy;
b. Proceed with an Introduction and First Reading of an Ordinance of the
Town Council of the Town of Los Gatos, by Title Only, Amending Chapter
2 (Administration), Article V, Division 2 of the Town Code Regarding
Purchasing; and
c. Adopt a Resolution of the Town Council of the Town of Los Gatos in the
Matter of Uniform Public Construction Cost Accounting Procedures.
RECOMMENDATION:
Staff recommends the following actions regarding Town purchasing:
a. Approve the recommendation of the Council Policy Committee to approve the proposed
updates to the Town Purchasing Policy;
b. Proceed with an introduction and first reading of an Ordinance of the Town Council of the
Town of Los Gatos, by title only, amending Chapter 2 (Administration), Article V, Division 2
of the Town Code Regarding Purchasing; and
c. Adopt a Resolution of the Town Council of the Town of Los Gatos in the matter of Uniform
Public Construction Cost Accounting Procedures.
BACKGROUND:
At its January 25, 2021 meeting, the Council Policy Committee added an update to the Town
Purchasing Policy to its work plan for 2021. The existing Purchasing Policy was created in 2008
and can be found as Attachment 1 to this report.
PAGE 2 OF 5 SUBJECT: Purchasing Policy, Ordinance, and Resolution DATE: November 16, 2021
BACKGROUND (continued):
At its October 26, 2021, the Council Policy Committee reviewed the proposed updated 2021
Town Purchasing Policy, found in Attachment 2 to this report. The Committee unanimously
agreed to forward a recommendation to the Town Council to approve the proposed updates to
the Purchasing Policy.
DISCUSSION:
As part of the update process, staff reached out to comparable municipalities in Santa Clara
County to request copies of their Purchasing Policies and corresponding code sections. Staff
received responses from the cities of Campbell, Gilroy, Morgan Hill, Saratoga, and Sunnyvale.
Purchasing guidelines vary across municipalities and are tailored to each agency. The following
table shows where each of the above-referenced cities falls in reference to the purchase
amount thresholds that trigger requirements for purchase orders (PO), quotes, formal bidding
procedures, and Council approval. The table also shows which of the agencies have opted into
the California Uniform Public Construction Cost Accounting Act (the Act) for public works (PW)
projects and what year the policy was last updated.
City
Policy
Revised
Opted
into the
Act
PO
Required
Quotes
Required
Formal Bids
Required
Council
Approval
Required
Campbell 2017 Yes $200 $5,000 $25,000 &
limits in the Act for PW
projects
$50,000
Gilroy 2020 No $3,000 $3,000 $100,000 &
$35,000 for PW
projects
$100,000 &
$35,000 for PW
projects
Morgan Hill 2019 Yes $5,000 $500 $25,000 &
limits in the Act for PW
projects
$60,000
Saratoga 2015 Yes $5,000 $1,000 Only PW projects in
excess of informal bid
limit in the Act
$25,000
Sunnyvale 2019 No $1.0
$15,000 $50,000 $100,000
Los Gatos
(existing)
2008 No $1,000 $1,000 if
feasible,
$5,000
required
$25,000 $50,000
Los Gatos
(proposed)
2021 Yes $3,000 $3,000 $50,000 &
limits in the Act for PW
projects
$100,000
PAGE 3 OF 5 SUBJECT: Purchasing Policy, Ordinance, and Resolution DATE: November 16, 2021
DISCUSSION (continued):
The proposed 2021 Town Purchasing Policy provides updated thresholds, aligns with current
Town practices, and memorializes certain Town procedures, such as the Request for Proposal
process. Additionally, the proposed update adds important guidelines to bring the Town into
compliance with evolving regulations such as Senate Bill 1383 and incorporates best practices
addressing equity in purchasing.
Town Code sections 2.50.105 through 2.50.145 that reference purchasing should be updated in
tandem with the Purchasing Policy in order to ensure consistency. The corresponding,
proposed red-lined updates to the Code sections can be found as Attachment 3 to this report.
The proposed Ordinance Amending Chapter 2 (Administration), Article V, Division 2 of the Town
Code Regarding Purchasing can be found as Attachment 4 to this report.
An overview of the major proposed updates to the Policy is as follows:
1. Opts the Town of Los Gatos “in” to the California Uniform Construction Cost Accounting
Act (the Act) for public works projects. The Act is legislation that was enacted in 1983 to
help promote uniformity of the cost accounting standards and bidding procedures on
construction work performed or contracted by public entities in the state. The Act is a
voluntary program available to all public entities in the State, but it applies only to those
public agencies that have “opted in” to the provisions set forth by the Act using the
processes outlined in the Act. Key provisions include:
a. The Act allows for public project work in the amount of $60,000 or less to be
performed by a public agency’s force account using the public agency’s own
resources, or by negotiated contract, or by purchase order;
b. public projects in the amount of $200,000 or less may use informal or formal
bidding procedures; and
c. public projects at a cost of more than $200,000 must use formal bidding
procedures to let the contract.
Every five years, the Act Commission reviews the informal bid limits for inflation and
other factors to determine whether adjustments should be made. If an adjustment is
made, the State Controller notifies the affected public agencies. In order for Los Gatos
to “opt in” to the Act, the Council must elect by resolution to become subject to the Act
and the Town must file a copy of the approved resolution with the State Controller’s
Office. A proposed Resolution in the Matter of Uniform Public Construction Cost
Accounting Procedures can be found as Attachment 5 to this report.
2. Reflects a decentralized purchasing process, removes the Town Purchasing Agent, and
adds Department Purchasing Representatives in order to align with current Town
practices.
3. Adds Healthy Food and Beverage Guidelines per direction from Santa Clara County
Public Health.
PAGE 4 OF 5 SUBJECT: Purchasing Policy, Ordinance, and Resolution DATE: November 16, 2021
DISCUSSION (continued):
4. Memorializes the Town Request for Proposal process. This includes Requests for
Information, Requests for Statements of Qualifications, or others as deemed
appropriate.
5. Adds specific language to the Recycled Products and Materials section in order to be in
compliance with Senate Bill 1383 (SB 1383), a state-wide effort to reduce emissions of
short-lived climate pollutants. Beginning January 1, 2022, SB 1383 requires cities and
counties to procure annually a quantity of recovered organic waste products. As there
is so much paper present in the solid waste disposal stream, the procurement of
recycled content and recyclable paper will grow demand for these products and support
recycling to help meet the organic waste diversion goals of SB 1383.
6. Expands the current preference for local businesses to include preference for minority,
disabled, and woman-owned businesses, consistent with the Town Council’s Strategic
Priority of advancing Diversity, Equity, and Inclusion efforts.
7. Increases the Purchase Order requirement/staff level purchase approval threshold from
$1,000 to $3,000.
8. Sets the threshold for requiring at least three quotes prior to purchasing to $3,000. The
current guideline is $1,000 if feasible and required for over $5,000.
9. Increases the threshold for requiring formal bidding procedures (excluding public works
projects, which would align with the thresholds in the Act) from $25,000 to $50,000.
10. Increases the threshold for Town Council approval from over $50,000 to $100,000.
CONCLUSION:
Staff recommends the Town Council take following actions regarding Town purchasing:
a. Approve the recommendation of the Council Policy Committee to approve the proposed
updates to the Town Purchasing Policy;
b. Proceed with an introduction and first reading of an Ordinance of the Town Council of
the Town of Los Gatos, by Title Only, amending Chapter 2 (Administration), Article V,
Division 2 of the Town Code regarding purchasing; and
c. Adopt a Resolution of the Town Council of the Town of Los Gatos in the Matter of
Uniform Public Construction Cost Accounting Procedures.
COORDINATION:
This report was coordinated with all Town Departments.
FISCAL IMPACT:
There is no associated fiscal impact.
PAGE 5 OF 5 SUBJECT: Purchasing Policy, Ordinance, and Resolution DATE: November 16, 2021
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.
Attachments:
1. Existing 2008 Purchasing Policy
2. Proposed 2021Purchasing Policy
3. Proposed red-line changes to Town Code Sections 2.50.105 through 2.50.145
4. Draft Ordinance of the Town Council of the Town of Los Gatos Amending Chapter 2
(Administration), Article V, Division 2 of the Town Code Regarding Purchasing
5. Draft Resolution in the Matter of Uniform Public Construction Cost Accounting Procedures