February 2, 1998

To: Corporate Services Committee

From: W. A. Liczyk

Chief Financial Officer & Treasurer

Subject: Interim Purchasing By-Law

Purpose:

To provide for the continued efficient operation of the procurement function of the City pending the development and adoption of comprehensive long term policies and by-laws of the amalgamated City.

Source of Funds:

N/A

It is recommended that:

(1) Authority be granted, in the interim, for the former municipalities to continue the use of the standard form of contracts and general conditions that were in use prior to 1998 with any necessary modifications;

(2) That a form of quotation request to be used be developed, pending the development and approval of full procurement policies, where appropriate in securing bids for the supply of goods and services, such form to be based upon policies approved by Council;

(3) The Chief Financial Officer & Treasurer report to Council through the Corporate Services Committee as soon as possible on uniform procurement policies;

(4) Authority be granted for the introduction of a Bill in Council in the form of the draft by-law attached as appendix "A" providing for the award of bids pursuant to quotation requests and tenders where the award is to the lowest bidder meeting the specifications and requirements and does not exceed $2.5 million;

(5) That the reporting/awarding structure outlined in this report be adopted; and

(6) The appropriate City officials be authorized and directed to take be the actions necessary to give effect hereto.

Council, at its meeting in January 6, 1998 enacted By-law No. 7-1998. This By-law, the Interim Financial Control By-law, provided for a delegation to the Chief Administrative Officer to make commitments and expend funds provided in the estimates and approved capital projects of up to $500,000 in any single contract. The By-law provides that the Chief Financial Officer & Treasurer may designate various City officials with signing authority within this overall limit.

The procedure and policies followed by the seven constituent municipalities of the City of Toronto not only varied from one municipality for the next but also, particularly in the case of tender contracts, varied amongst departments in the same municipality.

Although staff is working to develop consistent procedures and policies to be followed throughout the City, it is clear that these may only be developed over time. The approach to such development must, however, be organized. Moreover operations must have continuity and efficiency in the interim.

Although Bill 103 provides for the continuation of the by-laws of the constituent municipalities in the applicable jurisdiction until repealed by City Council, and although some practices authorized by these by-laws will, of necessity, continue in the short run, there are purchasing functions which must be standardized and instituted as soon as possible if operations are to be carried out efficiently on behalf of the whole City. In the circumstances, some policy decisions are best made and followed now pending the rationalization, development, debate and decision of Council on these policies for the longer term. These policies include Fair Wage, Canadian Content and others. In the long run it may also be appropriate to develop further policies such as , for example, those addressing environmental issues.

The terms and conditions of the quotation form will have to be standardized. So also will the form of contract for construction and other capital projects and the general conditions therefor. The process for calling tenders and awarding purchase orders and contracts needs to be made uniform and consistent throughout all operating units within the City, and with overall policies and procedures respecting expenditures and the procurement and the disposal of goods, property and services.

Pending a comprehensive report to Council on all these matters, it is appropriate that interim steps be taken to ensure continuity and efficiency in the operation of the purchasing function on behalf of the City.

In respect to quotations, a standard form of quotation request will be developed to be used on behalf of the City, where appropriate, in securing bids for the supply of goods and services. This form should be based upon those heretofore used in the former municipalities with the best practices selected from each. In respect of contracts for capital works projects, the forms heretofore used may continue to meet operational requirements with appropriate modifications. Ultimately, policies respecting the use of a standard form of construction contract and general conditions will be adopted. Accordingly, a recommendation to this effect is made in this report.

Lastly, the seeking of bids and quotations, and generally carrying out the procurement process, must continue without interruption throughout the amalgamation process. Since the award of the vast majority of contracts is made to the lowest bidder meeting the specifications and requirements, the award itself is an administrative decision which may properly be delegated to staff so long as Council is satisfied that procedures are in place ensuring an open, fair and competitive process providing reasonable access to potential bidders, and the opportunity to supply goods and services or carry out construction contracts on behalf of the City through a fair, transparent, open and competitive process which is fairly administered.

Attached is a form of proposed by-law which will enable a contract awards committee composed of staff to award contracts to the lowest bidder, where such award is within the approved estimate or the amount approved by Council and the amount of the award is $2.5 million or less.

The proposed by-law will allow the following reporting/awarding structure:

(1) Quotation and Tender calls in the amount of $500,000 or less - awarded by the Chief Administrative Officer or designate.

(2) Quotation and Tender calls over $500,000 and up to $2.5 million - reported to Bid Committee for awarding. Prior to each meeting of the Bid Committee, the agenda for the meeting together with the minutes of the last previous meeting will be distributed to each member of Council, each member of the Bid Committee, the Purchasing Agent, the City Solicitor and other appropriate City officials.

(3) Quotation and Tender calls over $2.5 million - reported to appropriate Standing Committee of Council and Council for awarding.

Nick Kristoffy

392-7051

Wanda Liczyk

Chief Financial Officer & Treasurer

APPENDIX "A"

City of Toronto

Draft By-law

Interim Purchasing By-law

WHEREAS it is necessary and expedient to establish a procedure and authority for the calling of bids and the award of contracts pending the development and adoption of comprehensive by-laws establishing financial controls and procurement policies.

The Council of the City of Toronto HEREBY ENACTS as follows:

1. the Chief Financial Officer and Treasurer or his or her designate;
2. the Chief Administrative Officer or his or her designate;
3. any City official who initiated the Call or Request that is before the Committee at any given meeting or part thereof, or his or her designate; and
4. the City Clerk or his or her designate.

1. Duties of the City Clerk

 

The City Clerk shall be responsible for

 

(a) Maintaining minutes of each meeting of the Bid Committee, and

 

(b) distributing, prior to each meeting of the Bid Committee, the agenda for the meeting together with the minutes of the last previous meeting to each member of Council, each member of the Bid Committee, the Purchasing Agent, the City Solicitor and other appropriate City officials.

 

2. Duties of the Bid Committee

1. the Purchasing Agent, after consulting with the City official who has initiated the Call or Request, has recommended the Award in the report submitted under paragraph 2(e);

 

1. the amount of the Award is equal to or less than the funding Approved by Council and is equal to or less than $2.5 million;

 

2. the Award is to the lowest bidder whose Bid meets the specifications and requirements set out in the Request or the Call;

 

3. there is no written objection to the Award filed with the Bid Committee before the Award is made;

 

4. the terms and conditions of the contract between the Bidder and the City created by the Award are determined as at the time the Bid is opened without the necessity of further negotiations between the parties other than minor clarification of the contract terms; and

 

5. all voting members of the Bid Committee who are present at the meeting vote in favour of the Award.

1. Standing Committee

 

(1) If all the conditions in subsection 5(3) are not met or where the Bid Committee does not make an Award that it is authorized to make, the Bid shall be referred to the appropriate standing committee of Council.

 

(2) Bids referred to a standing committee of Council shall be reported upon to the standing committee by the Purchasing Agent in consultation with the City official on whose behalf the Request or Call was made and, where necessary, the City Solicitor.

 

2. Access to Bids

(Corporate Seal)