REPORT TO COUNCIL
SUBJECT
Title
Action to Ratify Purchase Orders Greater than $250,000, with an Aggregate Amount of $3,389,254 for Finance Department Central Warehouse Purchases to Replenish Silicon Valley Power Inventory Funded by the Electric Operating Fund
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure
BACKGROUND
The City’s Purchasing Division, which resides in the City’s Finance Department, maintains a “centralized purchasing system” responsible for all purchasing and contracting activities for supplies, materials, equipment, and general and professional services. Additionally, the Division manages a central warehouse, with over 3,000 inventory items, that provides support to both Silicon Valley Power (SVP) and the Water & Sewer Utilities Department.
DISCUSSION
In Fall 2022, changes to the Procurement Code were brought to the City Council to bring best practices across the City for various procurement processes. One of the key aspects addressed by the new Code was to bring clarity surrounding the requirement of City Council’s approval for the purchase of products and materials, for which the former Code was unclear of when these purchases were required to go to the City Council for approval. The new Code introduced a consistent process for goods and services, aligned procurement thresholds to best practice, and raised the City Manager authorization to $250,000 for all procurements (goods, materials, and services).
As part of the Code transition, and in the preparation of closing out fiscal year 2022/23, Purchasing identified several procurements for the Central Warehouse that did not adhere to the new Code. These included the purchase of electric transformers, switches and electric meters as part of the regular warehouse operations of ensuring adequate inventory was available for utility crews to carry out their work. In light of this, staff is seeking City Council ratification of the following purchases:
Table 1
|
PO No. |
Vendor |
Items |
Total PO Amount (including tax) |
|
28037 |
Hitachi Energy USA Inc. |
Transformers |
$529,398 |
|
28252 |
Trayer Engineering Corp |
Switches |
$2,362,246 |
|
28289 |
Elster Solutions LLC |
Electric Meters |
$497,610 |
|
|
|
Total |
$3,389,254 |
While each procurement met the previous Code’s competitive purchase process (which considered low bid and lead time), these procurements were not presented to City Council prior to execution. The Purchasing Manager has implemented additional controls within PeopleSoft, the City’s financial management system, and training for staff to ensure that purchases exceeding the $250,000 threshold are duly approved by the City Council and consistent with the new Code.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to section 15378(b)(5) of Title 14 of the California Code of Regulations as the proposed services are administrative activities that will not result in either a direct or indirect physical change in the environment.
FISCAL IMPACT
Funding for the purchase orders for electric transformers, switches and electric meters is budgeted in the Electric Operating Fund or for specific capital projects in the Electric Utility Capital Fund where applicable. Funding for future years is subject to the appropriation of funds.
COORDINATION
This report has been coordinated with the City Attorney’s Office, Electric, and Water & Sewer Utilities Department.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Ratify the purchase order for Hitachi Energy USA, Inc for electric transformers in an amount not to exceed $529,398, funded by the Electric Operating Fund and Electric Utility Capital Fund, subject to appropriation of funds.
2. Ratify the purchase order for Trayer Engineering Corp for electric switches in an amount not to exceed $2,362,246, funded by the Electric Operating Fund and Electric Utility Capital Fund, subject to appropriation of funds.
3. Ratify the purchase order for Elster Solutions LLC for electric meters in an amount not to exceed $497,610, funded by the Electric Operating Fund and Electric Utility Capital Fund, subject to appropriation of funds.
Staff
Reviewed by: Kenn Lee, Director of Finance
Approved by: Jōvan D. Grogan, City Manager
ATTACHMENTS
1. PO 28037 with Hitachi Energy USA Inc.
2. PO 28252 with Trayer Engineering Corp
3. PO 28289 with Elster Solutions LLC