Part 4 — COMPETITIVE SOLICITATION REQUIREMENTS

Public works contracts that are not exempt from the competitive solicitation requirements under Section2.30.360 or by Council action shall be solicited, as follows:

(a) Public works contracts, providing for an estimated expenditure of $85,000.00 or less, and not otherwise required to be formally bid by the Charter, shall be solicited by informal invitation for bids in accordance with Section 2.30.400.

(b) Public works contracts, providing for an estimated expenditure exceeding $85,000.00, shall be solicited by formal invitation for bids in accordance with Section 2.30.420.

(c) Article VII, Section 6 of the City Charter requires formal bidding for public works contracts funded by bonded indebtedness of the city or by assessment against particular property in Palo Alto. Section 2.30.300 requires the formal bidding of all public works contracts exceeding $85,000.00, unless an exemption is provided by Section 2.30.360 or is otherwise authorized by Council under Section 2.30.300(d).

(d) Design-build contracts, to the extent debt financing limitations do not apply, that provide for an expenditure of more than $85,000.00 shall be solicited by requests for proposals in accordance with Section 2.30.490. Despite any law to the contrary, the design-build method of delivery may be used for any public works contract, including, without limitation, any design-build-operate contracts, where the City Manager determines, in writing, the delivery method will best fulfill the requirements of the public works project.

(e) The Council may determine that a particular public works project may be solicited and contracted for by using alternate project delivery methods, including, without limitation, construction manager at risk or competitive negotiation. Any Council action authorizing an alternate project delivery method shall set forth the reasons and factual basis supporting the use of the alternate project delivery method for the project and describe the solicitation method to be used and the criteria for determining the successful bidder, to whom the public works contract should be awarded.

(Ord. 5494 § 16, 2020: Ord. 5387 § 1 (part), 2016: Ord. 4827 § 1 (part), 2004)

Contracts for goods, not exempt from the competitive solicitation requirements under Section2.30.360 or by Council action, shall be solicited, as follows:

(a) Contracts for goods, providing for an estimated expenditure by the city of $50,000.00 or less, shall be solicited by informal invitation for bids in accordance with the provisions of Section 2.30.400; and

(b) Contracts for goods, providing for an estimated expenditure by the city exceeding $50,000.00, shall be solicited by formal invitation for bids in accordance with the provision of Section 2.30.420.

(Ord. 5494 § 17, 2020: Ord. 5387 § 1 (part), 2016: Ord. 4827 § 1 (part), 2004)

General services contracts, not exempt from the competitive solicitation requirements under Section2.30.360 or by Council action, shall be

solicited, as follows:

(a) General services contracts, providing for an estimated expenditure by the city not exceeding $50,000.00, shall be solicited by informal invitation for bids or informal request for proposals in accordance with Section 2.30.400.

(b) General services contracts, providing for an estimated expenditure by the city exceeding $50,000.00 shall be solicited by formal invitation for bids in accordance with Section 2.30.420 or by formal request for proposals in accordance with Section2.30.410.

(c) The Procurement Officer shall determine, after consideration of whether the needs of the city or the circumstances require that a contract should be awarded based on significant factors in addition to price, whether the services subject to a general services contract shall be solicited by bid or request for proposals.

(Ord. 5494 § 18, 2020: Ord. 5387 § 1 (part), 2016: Ord. 4827 § 1 (part), 2004)

Professional services contracts, not exempt from the competitive solicitation requirements under Section2.30.360 or by Council action, shall be solicited, as follows:

(a) Professional services contracts, providing for an estimated expenditure by the city not exceeding $85,000.00, shall be solicited by informal request for proposals in accordance with Section 2.30.400.

(b) Professional services contracts, providing for an estimated expenditure by the city exceeding $85,000.00, shall be solicited by formal request for proposals in accordance with Section 2.30.410.

(c) In lieu of the solicitation requirements set forth in Subsections (a) and (b), professional services contracts in any amount may be awarded from a list of qualified professionals to be created and maintained by the Procurement Officer, so long as the list is created and the award of contract to an entity on the list is in compliance with procedures contained in this chapter and in the purchasing manual.

(Ord. 5494 § 19, 2020: Ord. 5387 § 1 (part), 2016: Ord. 4827 § 1 (part), 2004)

(a) Solicitation of Contracts.

(1) Contracts for the purchase or sale-incidental-to-purchase of wholesale utility commodities and services, providing for an estimated expenditure not exceeding $85,000.00, shall be solicited by informal invitation for bids or informal request for proposals in accordance with Section 2.30.400. Contracts for the purchase or sale-incidental-to-purchase of wholesale utility commodities and services, providing for an estimated expenditure exceeding $85,000.00, shall be solicited by formal invitation for bids, formal request for proposals or combination thereof, in accordance with Section 2.30.410, 2.30.420 or 2.30.430 or through solicitation of counterparties enabled to transact under a Council-approved master agreement in accordance with Section 2.30.340(a)(3).

(2) Council shall pre-approve standard form master agreement templates for wholesale utility commodities and services and such agreement shall be made publicly available.

(3) Whenever the city desires to award a contract under a Council-approved master agreement for wholesale utility commodities and services, any counterparty which has executed a Council-approved master agreement with the city, and is otherwise eligible to bid for or propose in regard to the particular transaction in accordance with the Energy Risk Management Policy, Guidelines, and Procedures Manual, may be solicited in writing. The counterparty offering the price and other required product and performance terms and conditions for wholesale utility commodities and services deemed to be the most advantageous to the city shall be eligible for an award of contract respecting the transaction.

(b) Delegation of Master Agreement Terms and Conditions. For master agreements and other contracts for wholesale utility commodities and services not otherwise within the City Manager's authority to award, the Council may authorize the City Manager to award and sign contracts with qualified, eligible counterparties. The Council authorization shall specify the limits of the authority delegated, including the maximum expenditure limit of the authority and the terms of the contracts and/or transactions that may be executed under the delegation of authority.

(1) Electricity master agreements. Any Council action delegating authority to the City Manager to contract for electricity commodities and services shall specify generally at least the following terms and conditions: quantity and the description of energy and energy services to be procured, including, without limitation: on-peak and off-peak energy and ancillary services; term, specifying a not-to-exceed period of time; period of delivery denoted in years or months or years and months; and point of delivery.

(2) Gas master agreements. Any Council action delegating the authority to contract for gas commodities and services shall specify generally at least the following terms and conditions: quantity and the description of gas services to be procured, including, without limitation: scheduled gas and gas transportation services; term, specifying a not-to-exceed period of time; period of delivery denoted in years or months or years and months; and point of delivery of the locus on the interstate transmission system at which transfer of title is made.

(c) Required Contract Terms for Wholesale Utilities Commodities and Services Contracts. The city shall use standard form contracts, as practicable, including, without limitation, form contracts copyrighted by the Edison Electric Institute, the Western States Power Pool Inc., Inc., the North American Energy Standards Board, Inc, and contracts used by the city's "feed-in tariff" energy program. Unless waived by Council action, a contract for gas or electricity wholesale utility commodities and services, and any amendment to that contract, shall not be awarded by the city and executed by the duly authorized representatives of the city, unless the following terms and conditions are required: (1) governing law shall be the laws of the State of California; (2) choice of venue shall be the county of Santa Clara; and (3) a counterparty shall obtain and maintain during the term of the contract the minimum credit rating established as of the date of award of contract of not less than a BBB- credit rating established by Standard & Poor’s and a Baa3 credit rating established by Moody's Investors Services.

(d) Public Agency Contracts. The city may procure and make sales-incidental-to-purchase of wholesale utility commodities and services from energy counterparties through public agencies, including, without limitation, the Northern California Power Agency and the federal Western Area Power Administration.

(1) The city may engage the public agency to act as the agent of the city to procure wholesale utility commodities and services, provided that the public agency conducts a competitive selection process and awards one or more contracts in substantial compliance with the contract procurement procedures and requirements of this chapter, unless such substantial compliance is waived by the Council action accompanied by findings in support of the waiver.

(2) The City Attorney shall determine whether the contract procurement process of the public agency substantially complies with the provisions of this chapter. For the purposes of this Section 2.30.340, the public agency's competitive selection process, if any, shall be deemed to substantially comply if the public agency:

a. conducts a formal or an informal invitation for bids or request for proposals process to solicit bids or proposals for the provision of wholesale utility commodities and services;

b. executes a standard form contract, including, without limitation, a form contract copyrighted by the Edison Electric Institute, the Western States Power Pool, Inc. Inc., or the North American Energy Standards Board, Inc.; and

c. unless waived by the Council, the standard form contract requires or specifies:

1. the governing law shall be the law of the State of California;

2. the choice of venue shall be identified according to either the county in which such public agency does business, or the preference for federal or state court jurisdiction over the public agency, the energy counterparty, and the contract; and

3. the energy counterparty shall obtain and maintain during the term of the contract the minimum credit rating established as of the date of award of contract of not less than a BBB- credit rating established by Standard & Poor’s and a Baa3 credit rating established by Moody's Investors Services.

(e) Energy Risk Management Policy, Guidelines and Procedures Manual. All procurement of wholesale utility commodities and services, shall conform to the requirements of the Energy Risk Management Policy, Guidelines and Procedures Manual.

(Ord. 5494 § 20, 2020: Ord. 5387 § 1 (part), 2016: Ord. 5148 § 1, 2012: Ord. 4827 § 1 (part), 2004)

It is unlawful to ‘split’ or separate into smaller portions, work orders, projects, purchases, contracts, or public works projects for the purpose of evading the competitive solicitation requirements or contract authority limitations of this chapter, including, without limitation, the ‘splitting’ or division of work or services between or among offices, departments or divisions or other organizational units of the city.

(Ord. 5387 § 1 (part), 2016: Ord. 4827 § 1 (part), 2004)

The following are exemptions from the informal and formal competitive solicitation requirements of this chapter, except as otherwise provided. These exemptions will be narrowly interpreted and applied. The department requesting an exemption shall provide all relevant information supporting the application of the exemption to the Procurement Officer. Based upon this information, the Procurement Officer shall make a recommendation to the City Manager and the City Manager shall determine whether an exemption from the competitive solicitation requirements applies. Nothing herein is intended to preclude the use of competitive solicitations, as practicable.

(a) Emergency Contracts, provided that any procurement of goods and services obtained during an emergency declared by the Federal Emergency Management Agency shall comply with applicable FEMA Public Assistance Program's orders, rules, regulations, guidelines and control procedures for cost reimbursement purposes.

(b) Whenever solicitations of bids or proposals would for any reason be impracticable, unavailing or impossible, provided that in the case of a public works project, the project is not otherwise required by the charter to be formally bid. These situations are those where solicitations of bids or proposals would not be useful or produce any operational or financial advantage for the city. Situations where solicitations of bids or proposals would be impracticable, unavailing or impossible, include, without limitation, the following:

(1) Contract specifications cannot be drawn in a way that would enable more than one vendor, consultant or contractor to meet them;

(2) Due to circumstances beyond the control of the city, the time necessary to use the competitive solicitation process, procedures and requirements would result in a substantial economic loss to the city or the substantial interference with a required city operation;

(3) Special conditions attached to a grant, donation or gift requires the use of particular goods and/or services.

All requests for exemptions under this subsection shall be supported by written documentation (facsimile or electronic mail may be used), approved by the department head and the Procurement Officer.

(c) Where competitive bids or requests for proposals have been solicited and no bid or proposal has been received, or where no bid or proposal meeting the requirements of the invitation to bid or request for proposals has been received, provided that, in the case of a public works project, the project is not otherwise required by the charter to be formally bid.

(d) Contracts for goods, wholesale commodities and services, general services or professional services available from only one source, where the Procurement Officer has determined, in writing, there is no adequate substitute or equivalent provider. Examples of acceptable sole source acquisitions or purchases may include, without limitation: equipment or services for equipment, for which there is no comparable competitive product or service except that provided by the equipment manufacturer, distributor or dealer; proprietary products sold directly by the manufacturer; a component or replacement part, for which there is no commercially available substitute and which can be obtained only from the manufacturer; goods where there is only one authorized distributor in the area; and goods where compatibility with goods in use by the city is an overriding consideration. All requests for sole source acquisitions or purchases shall be supported by written documentation (facsimile or electronic mail may be used), approved by the office or department head, and forwarded to the Procurement Officer.

(e) Contracts for goods where, pursuant to Section 2.30.900, the City Manager has determined that standardization of the supplies, materials or equipment is permissible.

(f) Placement of insurance coverage and surety bonds.

(g) Legal services contracts, including, without limitation, the services of outside counsel, consultants and other experts needed for litigation, administrative or other legal proceedings.

(h) Professional services contracts for private development related studies and services whenever the services are funded wholly by private developers.

(i) Professional services contracts, where the estimated total expenditure by the city, regardless of term, does not exceed $50,000.00.

(j) Cooperative purchases, with one or more other public agencies or through a cooperative purchasing agency, provided: (i) the services are solicited using methods substantially similar to those required by this chapter, as determined by the Procurement Officer; and (ii) the contract is consistent with the requirements specified in this municipal code.

(k) The use of another governmental or public agency's contract or substantially the same contract terms provided: (i) the agency uses a solicitation method substantially similar to the method required by this chapter; (ii) the contract is consistent with the requirements specified in this

municipal code; and (iii) the Procurement Officer determines that the city will realize overall value to utilizing the other agency's contract or contract terms compared to the city performing its own solicitation.

(l) Contracts with, or solicited on the city's behalf by, Northern California Power Agency, Transmission Agency of Northern California, and Western Area Power Administration to procure wholesale utility commodities and services that meet the requirements of Section 2.30.340(d) or 2.30.360(k).

(m) Contracts with Pacific Gas and Electric Company and the California Independent System Operator Corporation for energy transmission services to the extent necessary and expedient to provide for the general health, safety and welfare of the city's utility customers.

(n) Contracts with any public agency or governmental body to construct a public work, where the Procurement Officer determines the public agency or governmental body has used methods similar to those required by this chapter to contract for the public work.

(o) Contracts with any public utility holding a certificate of public convenience and necessity or any entity holding a cable service or video service franchise pursuant to chapter 2.10 of this municipal code to construct a public works, where such works involves property of such public utility or cable service or video service franchisee and is otherwise of direct concern to both the city and such public utility or cable service or video service franchisee, provided that the project is not otherwise required by the charter to be formally bid.

(p) Contracts with private developers to construct public improvements in connection with their development projects, even if the city contributes funds to the improvement project, provided that the projects are not otherwise required by the charter to be formally bid.

(q) Projects, where the public work is performed by the city with its own employees.

(r) Contracts, where the estimated total expenditure by the city does not exceed $10,000.00.

(s) Contracts with entities to procure at wholesale prices utility commodities and services under a city "feed-in tariff" energy program that meets the requirements of Section 2.30.340(c).

(t) Professional services contracts in relation to personnel matters for: recruitment consultants, workplace investigations, threat assessments, conflict intervention, and industrial safety.

(Ord. 5494 § 21, 2020: Ord. 5387 § 1 (part), 2016: Ord. 5148 § 2, 2012: Ord. 5081 § 1, 2010: Ord. 4827 § 1 (part), 2004)