LAKEPORT, Calif. – During a public hearing last week on a proposal to update the city's purchase system, the Lakeport City Council's members voiced their desire to see a local vendor preference continue at its current percentage, despite the potential for litigation.

City Attorney David Ruderman took to the council a proposed update to the city's purchasing system ordinance, which last was updated in 1979.

He told the council during the meeting that, at the very least, the ordinance needed to be updated to reflect inflation.

The current ordinance requires that any purchase over $500 must be informally bid, i.e., awarded to the lowest of three bids staff generates from the open market, while any purchase above $5,000 must be formally bid and approved by the council. That means the city manager's authority to enter into contracts for the purchase of supplies and equipment is limited to $5,000, Ruderman explained in his written report.

Ruderman also pointed out in his report that the city's current purchasing system does not address contracts for professional services, with the council's approval required for all professional services agreements. It also does not designate a city purchasing agent, address how to dispose of surplus city property or include a local vendor preference, which he said is governed by a separate policy.

Ruderman worked with City Manager Margaret Silveira and Finance Director Dan Buffalo to identify a “reasonable” purchasing system that ensures that the city and its departments will receive high quality goods and services at minimum cost to the taxpayer; exercises positive financial control over purchases; clearly defines the authority for all purchases; and limits the administrative demands imposed by the purchasing system to those reasonably necessary to achieve the other objectives of that system.

The ordinance Ruderman proposed to the council governs the purchase of supplies and equipment, as well as services; raises the threshold for bidding from $500 to $3,000; does not require competitive bidding for purchases of $3,000 or less; and allows supplies, equipment and services that cost between $3,000 and $50,000 to be purchased after the informal solicitation of bids.

The proposed ordinance also says that the purchase of supplies, equipment and services that cost more than $50,000 must be bid by the formal bid procedures.

The city is required to purchase from the lowest possible bidder, although it does not need to contract for professional services – such as architectural, engineering, environmental and land surveying services – with the lowest responsible bidder “if staff provides a rationale for deviating from the lowest bid, approved by the City Manager, such as the demonstrated competence and professional qualifications necessary for satisfactory performance of the services required,” Ruderman wrote.

Under the new proposed purchasing system ordinance, department heads must approve purchases of $3,000 or less; the department head and either the purchasing officer or city manager must sign off on purchases of between $3,000 and $25,000; and the department head, city manager and city council must give approval for purchases of over $25,000, Ruderman reported.

Ruderman said the new system also includes a local vendor preference of 5 percent of the bid price, similar to the policy the City Council adopted in 2010. However, that 2010 policy's vendor preference is for 10 percent.

He said local vendor preferences are permissible “when aimed at ameliorating disadvantages suffered by local firms because doing business within the city limits is more expensive than doing business outside the city,” adding that a local business preference is justified in this case, as the city is acting as a “market participant.”

Other aspects of the proposed ordinance include exemptions from the bidding requirements for purchases of $3,000 or less; sole source purchasing, such as in cases where only one vendor provides the goods the city is seeking, as well as special allowances for sole source vendors within the city; purchases during declared states of emergency; purchases from other governmental entities; purchases of professional services; and how to sell surplus city property.

The Sept. 2 hearing was the second public hearing the council held on the proposed ordinance.

Between the two hearings, Ruderman said city staff had reviewed purchasing contracts going back to 2010 to look at the local vendor preference, which he said didn't seem to be a driving factor for most of the agreements.

Councilman Tom Engstrom said he was OK with most of the aspects of the proposed ordinance, but he wanted to leave the city's local vendor preference at 10 percent.

He said that everyone who runs for city council says they want to do something for local business and then they don't, noting he recently counted 26 empty storefronts on a drive through the city.

“I want to leave it at 10 percent, not lower it down to 5,” Engstrom said.

Despite the possibility that the city could be sued over a higher vendor preference – which Ruderman informed the council of during the discussion – other council members agreed with Engstrom's stance.

Mayor Pro Tem Martin Scheel said many city residents would appreciate the risk the council is taking with the preference. “I think the positive far outweighs the negative on this,” he said.

“If we don't do all we can to support local businesses, this town is going to dry up and blow away,” Engstrom added.

No members of the public offered comment during the hearing, which ended with staff telling the council that they will bring back the proposed ordinance with council's revisions on the percentage of the local vendor preference at a future meeting.

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