Important Tips for Writing Your Agency’s Procurement Policies

No doubt most public servants take great care to spend public funds carefully, with propriety, and, most importantly, legally. That said, when it comes to purchasing and bidding, clearly adhering to a systematic process can sometimes be difficult. Irregularities in purchasing and bidding fall within the top five most common SAO audit findings. These missteps - especially when magnified by media reporting – erode public trust in an agency’s management skills.
 
One way to combat these issues and maintain public trust is through strict adherence to an agency-wide procurement policy/procedure manual. If your agency doesn’t yet have a procurement manual, or if you’re looking to give yours a refresher, I’ve put together a few tips in checklist form to help you get started.
 
All Procurements

• Reference any RCW sections that contain purchasing and contracting guidance (bid limits, etc.) specific to your agency. If there are no such limits stated, then your entity can and should establish reasonable thresholds and processes for purchases, services, and public works contracts.
• State a code of ethics to guide the personal and professional conduct of agency personnel who manage or participate in procurement activities.
• For each type of procurement (purchases, services, and public works contracts) acknowledge general principles of:
  • minimal competition for small purchases/contracts
  • informal competition for larger purchases/contracts
  • formal competition for purchases/contracts

Purchases

• For purchases below the agency’s bid limits, identify reasonable procedures for obtaining quotes from vendors (number of quotes, process, and documentation).
• For purchases, most agencies can take advantage of the “vendor list” process of RCW 39.04.190 for purchases above the agency’s minimal competition bid limits.  The agency’s process/policy should restate the statutory guidance and add any nuances due to its internal procedures.
• For purchases above the bid limits and/or vendor list limit, identify competitive parameters for bid advertisements (official newspaper and/or web site postings), sealed bids, public bid openings, protests, etc.
• Set forth procedures and practices for use of DES master contracts, federal contracts, and intergovernmental purchases.

Public Works Contracts

• For public works contracts of any size, note that prevailing wages must be paid and that contracts can only be awarded to properly licensed contractors in accordance with RCW 39.04.350.
• Recognize sales tax, retainage and bonding requirements that may apply.
• For public works contracts below the agency’s bid limits, identify reasonable procedures for obtaining quotes from contractors (number of quotes, process, and documentation).
• For public works contracts less than $300,000, most agencies can take advantage of the small public works roster process in RCW 39.04.155 for contracts above (and below) the agency’s minimal competition bid limits.  The agency’s process/policy should restate the statutory guidance and add any nuances due to its internal procedures or use of a rosters service provider.
• For public works contracts above bid limits and/or $300,000, identify competitive parameters for bid advertisements (official newspaper and/or website postings), sealed bids, public bid openings, protests, etc.
• Note need for certificates of insurance.

Professional A/E Services

• Note that a qualifications-based selection (QBS) procedure is required. Under that process, an agency assesses the expertise of competing firms and selects the most highly-qualified firm, then negotiates the final project scope and associated fee. If the agency and most highly-qualified firm cannot reach an agreement on project scope, schedule, and budget, the agency then negotiates with the next most highly-qualified firm.
• Advance notification of need for A/E services must be provided via a legal advertisement for a given need or solicitation for a consultant roster.

Personal Services Contracts

• Except for port districts under chapter 53.19 RCW and public facility districts under chapter 36.100 RCW, local agencies in Washington State have no statutory restrictions on contracting for personal services and so have great latitude in setting their own policies and procedures.
• An agency should include policies and procedures that recommend differing levels of effort and procedure in selecting a service provider based on the estimated contract price and the complexity and type of project or work to be accomplished.
• Levels of competition for the purposes of this blog are minimal, informal, and formal.

Purchased Services Contracts

• Local agencies in Washington State have no statutory restrictions on contracting for purchased services and so have great latitude in setting their own policies and procedures.
• An agency should include policies and procedures that recommend differing levels of effort and procedure in selecting a service provider based on the estimated contract price and the complexity and type of project or work to be accomplished.
• Levels of competition for the purposes of this blog are minimal, informal, and formal.

Exemptions to Competitive Processes
RCW 39.04.280 provides uniform exemptions to municipal competitive bidding requirements when awarding contracts for equipment, supplies, and material purchases and for public works projects
Under this statute, competitive bidding procedures may be waived by resolution of the governing body of the municipality for:

• Purchases that are clearly and legitimately limited to a single (sole) source of supply
• Purchases involving special facilities or market conditions
• Purchases in the event of emergency
• Purchases of insurance or bonds
• Public works contracts in the event of an emergency.

Auctions
RCW 39.30.045 allows any municipality, as defined in RCW 39.04.010, to purchase any supplies, equipment, or materials at auctions conducted by the federal government, any state agency, any municipality or other government agency, or any private party without being subject to public bidding requirements, if the items can be obtained at a competitive price. MRSC recommends preapproval by the manager/council/commission of an upper bidding limit for the person doing the bidding.
 
For further insights and sample procurement policies from a number of agencies on this issue, check out our Purchasing and Contracting webpages.