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2009-189\\codad\departments\legal\our documents\ordinances\09\dme procurement ordinance.doc ORDINANCE NO. OD - 7 AN ORDINANCE FINDING A PUBLIC PURPOSE AND ESTABLISHING PROCUREMENT PROCEDURES FOR PURCHASES BY DENTON MUNICIPAL ELECTRIC (DME) FOR ELECTRIC PRODUCTION, TRANSMISSION, DISTRIBUTION AND STATION SYSTEMS IN ACCORDANCE WITH TEXAS LOCAL GOVERNMENT CODE 252.022c; PROVIDING A SEVERABILITY CLAUSE AND AN EFFECTIVE DATE. WHEREAS, Chapter 252 of the Local Government Code exempts from the requirements of such Chapter expenditures made by a municipally owned electric utility for any purchases made by the municipally owned electric utility in accordance with procurement procedures adopted by an ordinance of its governing body that sets out the public purpose to be achieved by those procedures; and WHEREAS, the City of Denton, Texas a home-rule municipal corporation in the State of Texas, owns and operates a municipal electric utility, Denton Municipal Electric; and WHEREAS, the Denton City Council desires to adopt this Ordinance in order to modify purchasing procedures for Denton Municipal Electric; and WHEREAS, the Denton City Council further finds that these purchasing procedures will benefit the public purpose, the citizens of Denton, and the customers and ratepayers of Denton Municipal Electric by providing for Denton Municipal Electric purchases to conform with all applicable state procurement laws as well as the City Charter and this Ordinance while assuring that procurements are both beneficial and cost-effective for Denton Municipal Electric and its customers and fair and equitable to suppliers; and WHEREAS, Section 252.022(c) of the Texas Local Government Code provides that the requirements of Chapter 252 of said Code to not apply to expenditures by a municipally owned electric utility in connection with any purchases by the municipally owned utility or divisions of a municipally owned utility made in accordance with procurement procedures adopted by a resolution of the body vested with authority for management and operation of the municipally owned utility that sets out the public purpose to be achieved by those procedures; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Council hereby adopts the procurement procedures by a municipally owned utility, more particularly outlined in Exhibit "A", a copy of which is attached hereto and made a part hereof for all purposes. SECTION 2. This Ordinance shall become effective immediately upon its passage and approval. i i sAour documents\ordinances\09\dme procurement ordinance.doc PASSED AND APPROVED this the day of a~~W&VkL, 2009. MARK . B HS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: ~ APPRO ED A TO LEGAL FORM: .4NITA BURGESS, CITY ATTORNEY BY: f~ , EXHIBIT "A" 1. General Policy- Purchases by Denton Municipal Electric of equipment, supplies, materials, and services used on electric production, transmission, distribution and station systems, including, but not limited to transformers, cable/wire, and poles, shall be made in a manner that: (a) Conforms with the substance of all applicable state procurement laws, the City Charter, all applicable City Ordinances, and this Resolution; (b) Is beneficial and cost-effective for Denton Municipal Electric and its customers; and (c) Is fair and equitable to suppliers and service providers. Actions and procurements not addressed by this ordinance shall be governed by the applicable provisions of Chapter 252 of the Texas Local Government Code. 2. Solicitation Type- The Purchasing Agent will determine the type of solicitation to be used in a procurement, taking into account both the fundamental requirements of fairness in selecting parties to contract with Denton Municipal Electric as well as the competitive needs of Denton Municipal Electric. Normally, an Invitation for Bid will be used for standard commodity purchases and a Request for Proposal will be used for procurement of services and for custom built and/or technical equipment,, including, but not limited to, equipment that is related to the production, transmission, distribution, or metering of electricity. Procurement of professional services and public works construction not governed by Chapter 252 of the Local Government Code will not be affected by this section. Procurements that meet the requirements of critical business need as set forth in Section 7 below may follow the procedures established therein. 3. Bids and Proposals- The general business practice will be for all responses to solicitations to be submitted by mail, courier, electronically or by fax. Electronic signatures will be acceptable. However, this practice may be waived at the discretion of the Purchasing Agent, if there is a business need, to either permit telephone responses or to require sealed responses. Sealed responses will be required for solicitations over $100,000, unless the solicitation is for a "Critical Business Need" as set forth in Section 7. 4. Advertising Requirement- Any solicitation estimated to be in excess of $100,000 will be advertised for a minimum of seven (7) days prior to the bid opening on the internet, or by such other means, including newspaper publication, as is determined necessary to reach a wide and diverse number of potential bidders or proposers. If the newspaper is used, an advertisement will be run at least 7 days prior to the bid opening date. However, if the Purchasing Agent determines and provides a written justification that there is a business need, a solicitation may be advertised for a lesser period of time or in a different fashion. 5. Change Orders- If changes are necessary after the performance of the contract is begun, the municipality may approve change orders of similar or related items, provided that: (a) Additional money for increased costs is appropriated for that purpose from available funds or is provided for by the authorization of the issuance of time warrants. (b) If a change order involves a decrease or an increase of $100,000 or less, the City Manager or the person acting on his/her behalf may approve the change order. (c) The original contract price may not be increased under this section by more than 25 percent. The original contract price may not be decreased under this section by more than 25 percent without the consent of the contractor. 6. Project Expenditure Approval- The City Manager is authorized to approve expenditures for individual purchases up to $500,000 provided that: (a) the procurement is for materials and services for: electric production, transmission, distribution, and station projects (b) the project is included in the approved budget/CIP; (c) the cumulative total of purchases for any project does not exceed the amount available for that project; (d) purchases, in excess of $250,000, that have been recommended for approval by the PUB or approved by City Council (whichever meets first) and; (e) standard purchasing practices have been followed. Expenditures in excess of $100,000 will reported retroactively to Council and/or PUB. 7. Critical Business Need- The procedures set forth in the above sections may be changed or modified by the City Manager, or the person acting on his/her behalf, on a case-by case basis as necessary in order to meet a critical business need of Denton Municipal Electric for the purchases of goods or services for electric production, transmission, distribution and station systems. The expenditure shall not exceed. $500,000. Circumstances which could give rise to a finding of critical business need include: (a) emergency situation, including procurements necessary to protect the public health or safety of in response to a public calamity; (b) a procurement necessary because of unforeseen damage to public equipment, machinery, or other property; (c) a procurement for personal services or highly technical services and testing; (d) a procurement of items that are available from only one source; (e) a procurement necessary to protect the competitive interests or position of Denton Municipal Electric. A critical business need will be submitted in writing, using the "Critical Business Need Justification" form, by the General Manager of Denton Municipal Electric, reviewed by the Purchasing Agent, and approved by the City Manager. The Mayor and/or the Public Utility Board Chairperson shall be notified of the expenditure before approval by the City Manager. Once it has been determined that a procurement is necessary to meet a critical business need of Denton Municipal Electric, the Purchasing Agent will manage the procurement so as to assure that it expeditiously meets the critical business need while providing competition to the extent possible and maintaining a fair process. Critical business needs shall be reported retroactively to the PUB and retroactively accepted by the City Council.