The City of Coquitlam

Procurement Policy

Approved By: Council

Council Resolution: 321

Effective Date: April 2, 2007

Revision Date: September 10, 2010

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The City of Coquitlam

Procurement Policy
Table of Contents

Page

OBJECTIVES.................................................................................................................................................3
INTRODUCTION.........................................................................................................................................4
PROCEDURES TO REMEMBER ................................................................................................................6
RESPONSIBILITIES......................................................................................................................................7
PURCHASING AUTHORITIES AND RESPONSIBILITIES......................................................................9
COOPERATIVE VENTURES.................................................................................................................... 18
EMERGENCY PURCHASES .................................................................................................................... 18
SPECIAL CATEGORY EXPENDITURES ................................................................................................. 19
CONTINGENCY........................................................................................................................................ 21
SCOPE CHANGES.................................................................................................................................... 21
BONDING ................................................................................................................................................. 23

Supplementary Documents
1 ................................................................................................................. Purchasing Card Procedures
2 ..................................................................................... Co-operative Purchasing Group Guidelines
3 ............................Standard Document for Request for Information/Expressions of Interest
4 ................................................................................ Standard Document for Request for Proposal
5 ............................................................ Standard Document for Master Municipal Construction
Documents (MMCD) Client/Consultant Agreement, 2000
6 ............................................................ Standard Document for Tendering (Unit Price Contract)

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The City of Coquitlam

Procurement Policy
OBJECTIVES
Effective procurement is a critical support function needed for local government to fill
its mandate. The procurement system needs to be responsive, cost effective, and as
open as possible to public scrutiny.
The effectiveness of local government procurement can be enhanced by:
(1)

providing a range of goods and services to the user in the right quantity, quality,
timeliness and value;

(2)

using a process which is simple, clear and well explained to users, vendors and the
public;

(3)

promoting total value concepts full costing which takes into account the full
range of costs including acquisition, maintenance, replacement, disposal and
training costs associated with goods or services;

(4)

promoting sustainable procurement best practices in the acquisition, use and

disposition of goods, services, assets and infrastructure in consideration of:
a) environmental impact; promoting goods and services that make lesser or
negligible demands on non-sustainable resources and avoiding those which
adversely affect air, water or terrestrial environments;
b) economic and financial impact; total cost of ownership, corporate
responsibility;
c) social impact; ethical and social well being, healthy communities.

(5)

encouraging the most open bidding process practical, one that is available to all
qualified or pre-qualified bidders;

(6)

providing full disclosure of criteria and considerations used for:

a)
b)
c)
d)

(7)

qualifying vendors;
determining equivalency;
measuring quality;
distributing potential cost savings between vendor and purchaser (value
analysis).

allow for flexibility within limits to promote accountability and allow for
unanticipated and unplanned circumstances.

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The City of Coquitlam

Procurement Policy
INTRODUCTION
Procurement is the process through which a government acquires Assets,
Infrastructure, Goods and Services for its own use. The essential elements of the Citys
Procurement Policy are:
Authority persons undertaking procurement actions must have formal authorization
to do so. The Community Charter confers the power to award contracts that are
outside the budgeted amounts to Council and also the City Manager. Through this
policy and Council Resolution, Council provides the authorization for staff to perform
and oversee various steps of the procurement process as outlined on the schedule of
Purchasing Authorities and Responsibilities on Page 9. All goods and services are to be
acquired in accordance with this policy unless authorized on an exception basis by City
Council or the City Manager.
The process to procure City assets, infrastructure, goods and services is a two step
process involving the acquisition expertise of the department that will be the owners
and the commitment by the Purchasing department.
Competition the City government believes that the methods of procurement for
goods and services should be competitive where possible to:

reduce costs to the public through marketplace competition;

encourage innovation and efficiencies;
demonstrate the application of fair and open selection criteria.

The level of external competition required for City purchases is based on the dollar
value and nature of the specific purchase. The cost associated with administering a
competitive process should be proportionate to the benefit received as a result of the
competition. For example, the cost of advertising certain small product purchases
would exceed the cost of the product. Conversely, the City would only incur the
expense of an Invitation to Tender (ITT) or Request for Proposals (RFP) for very large
purchases. The schedule of Purchasing Authorities and Responsibilities on Page 9
provides a summary and guideline.
Contracts contracts typically fall into two general categories:
(1) Expenditure of City funds;
(2) Generation of revenue.

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The City of Coquitlam

Procurement Policy
The Purchasing Manager has the authority to commit purchase orders related to the
expenditure of City funds. The General Manager has the authority to commit the City
to revenue generating contracts with approval by City Council or the City Manager. This
expenditure must be subject to compliance with all documentation requirements of
this policy as Council has approved the expenditure upon fiscal budget approval.
Documentation all steps in the procurement process should be recorded in writing.
The City is subject to the Freedom of Information and Protection of Privacy Act
legislation. Therefore, our procurement decisions will be subject to public scrutiny from
time to time. It is critical that we not only follow our stated policies but are able to
demonstrate our compliance.
Compliance both the City and our suppliers are required to adhere to the legal
commitments we make. There are many forms of commitment or contract made,
ranging from a purchasing card transaction, to a purchase order, or a formally executed
contract. All of these agreements are equally binding on the City. The appropriate form
of commitment/contract is determined by the dollar value of the specific transaction
and is set out on the schedule of Purchasing Authorities and Responsibilities on Page 9.
This policy is designed to assist City staff in meeting the Citys stated procurement
objectives and to protect the City and its staff against potential litigation and perceived
or actual conflicts of interest.
Two Signatures The purpose of the dual signature requirement is to ensure that two
parties that understand the purchase, the application and the budgetary constraints,
provide acquisition authority to authorize the transaction. One of the signatures shall
have the appropriate level of Purchasing Signing Authority spending amounts as
delegated by the General Manager.

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Procurement Policy
PROCEDURES TO REMEMBER
Wherever possible, the Procurement Policy should be adhered to. Approvals and all
required documents shall be in place prior to commitment, delivery and/or invoice for
the goods and/or services.
Critical Procedures to Remember:
(1)

(2)
(3)

(4)
(5)

Purchase Requisitions require two signatures. One from the actual requester,
and a second from an individual with budget acquisition authority sufficient to
cover the purchase.
Formal revisions to a contract must be processed in accordance with the schedule
of Purchasing Authorities and Responsibilities on Page 9 of this Policy.
Any contract information requested from outside the City must by directed
towards and reviewed by the Citys Freedom of Information and Protection of
Privacy coordinator.
All expenditure dollar amounts indicated in the Procurement Policy exclude HST,
because municipalities receive a refund of approximately 85% of HST paid.
In order to provide transparency and meet the intent of the North American Free
Trade Agreement (NAFTA), Agreement on Internal Trade (AIT), New West
Partnership Trade Agreement (NWPTA), etc. competitive bids will be advertised
on BC Bid and the Citys website at the following thresholds:
$75,000 for goods and services;
$200,000 for construction

The Following Activities are Prohibited:

(1)
(2)
(3)

(4)

(5)

The division of contracts or purchases to avoid the requirements of this Policy.

Committing the City without the appropriate authority to do so. Refer to the
schedule of Purchasing Authorities and Responsibilities on Page 9.
Purchase by the City of any goods or services for personal use by or on behalf of
any member of Council, appointed officers, employees of the City or their
immediate families. In the case of personal electronic expenditures, refer to City
Employee PC Purchase Plan Policy document.
Purchase by the City from any member of Council, appointed officers, employees
of the City or their immediate families or from any other source that could result
in a conflict of interest. Refer to Guidelines for Staff Conduct employee booklet.
The purchase of any City-owned goods by a member of Council, appointed
officers, employees of the City or their immediate families.

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Procurement Policy
RESPONSIBILITIES
DEPARTMENTS
General Managers are responsible to ensure that their staff understand and comply
with the Procurement Policy.
All Managers and Supervisors are responsible to:
(1) Ensure that all purchases are performed in accordance with this policy, unless the
policy has been specifically waived by Council.
(2) Delegate Purchasing Acquisition Signing Authority at appropriate levels to staff
within their own Department. The Manager of Financial Services will review the
delegation of signing authority within each department for appropriateness in
relation to budget responsibilities. See Appendix 8.
(3) Ensure that all paper & electronic Purchase Requisitions properly include:

description of the materials and services requested;

budget availability;
appropriate general ledger account coding;
proper approval, including appropriate signatures;
proper competition in compliance with policy;
for electronic purchase requisitions, please forward all related information and
approvals to Purchasing.

(4) Conduct all business transactions in an ethical and professional manner.

(5) Ensure the Purchasing staff are informed of, and involved in, all competitive bid
processes as required by this policy.
(6) Supply Purchasing staff with definitive specifications as to the desired function and
quality, and such details and information as may be required in a Request for
Information (RFI), Request for Quotation (RFQ), Invitation to Tender (ITT) and
Request for Proposal (RFP).

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Procurement Policy
RESPONSIBILITIES
PURCHASING DEPARTMENT
(1) The Purchasing staff as part of the Finance Division provides support to City staff
and acts on behalf of the City as authorized by Council, and in accordance with the
attached tables.
(2) Purchasing has the responsibility to determine the need for specific cooperative and
inventory related requirements on behalf of the City. This responsibility extends to
determining, in conjunction with user expertise, the supplier, pricing, terms and
conditions, issuing the contract or purchase order and following up to ensure proper
delivery.
(3) Purchasing will be responsible for issuing a Request for Information (RFI), Request
for Quotation (RFQ), Request for Proposal (RFP), and Invitation to Tender (ITT) when
requested by a department or where no one department assumes sole ownership.
Departments can be responsible for issuing their own standard City approved
template documents and Purchasing will retain responsibility for providing
document numbering, process tracking and maintaining document files. Where
departments choose to issue their own documents, they must ensure that
Purchasing is informed.
(4) Purchasing will participate in competitive bid administration, evaluation, contract
selection and award decision.
(5) Other Purchasing responsibilities will include:
Commitment Authority between $1 - $20,000,000
Monitoring compliance with this policy
Checking authorized requisitions
Maintaining Purchase Orders/Agreements
Maintaining records of business transactions as required
Disposing of all assets as required, including surplus and scrap
Conducting all Purchasing Department business transactions in an ethical and
professional manner.
Providing qualified vendors the opportunity to receive requests for Information,
Quotations, Tenders and Proposals
Analyzing bids with end users
Writing and issuing the contractual agreement, i.e. purchase order, blanket
order, letter of award for contracts
Review of - WorkSafeBC clearances
Review of - Insurance Requirements

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The City of Coquitlam Procurement Policy

Purchasing Authorities and Responsibilities
Anyone given responsibility for initiating or approving a Purchase Requisition under this schedule is accountable and responsible to ensure that proper and adequate
budget authorities exist and that the purchase does not violate any City policy, legal or statutory requirements.
Authorities and
VALUES
Responsibilities for
$0-2,500
$2,500-$50,000
$50,000-$250,000
$250,000
All Goods & Services
(See pages 10-11)
(See pages 12-13)
(See pages 14-15)
(See pages 16-17)
Citys
Expenditures within
Expenditures within the approved budget Purchases in excess of $250,000 will be
Procurement
the approved budget
are authorized by the Department/
identified in the budget and therefore
approved by Council and are authorized by
Card or Invoice
are authorized by the
Division or as delegated by the General
Manager.
the Department /Division or as delegated
Signoff
Department/Division
or as delegated by
by the General Manager.
Acquisition
If not previously approved through the
the General
Authority
annual budget approval process, and for
If not previously approved through the
Manager.
variance amounts in excess of
annual budget approval process, and for
$100,000.00, the expenditure must be
variance amounts in excess of $100,000.00,
approved by Council or City Manager.
the expenditure must be approved by
Council or City Manager.
N/A
Purchasing Manager
Purchasing Manager or authorized
Purchasing Manager or authorized
Commitment
or authorized
Purchasing Staff.
Purchasing Staff.
Authority
Purchasing Staff
No written
One written quote
Minimum 3 Written Quotes or Proposals
Invitation to Tender or Request for Proposal
quotes required.
When the minimum of three written
Must advertise
Competition
quotes are not available, there should be
an explanation of Non-Compliance.
Advertise at NWPTA threshold amounts
Invoice/Receipt
Purchase
Purchase Requisition
Purchase Requisition
Requisition
Tender/RFP/RFQ/RFI document
Tender/RFP/RFQ/RFI document
Contract, if
Contract if applicable
Contract if applicable
applicable
Documentation
Summary of Evaluation
Summary of Evaluation
Purchase Order
Purchase Order
Report (to Council or General Manager as
applicable)
Purchase Order
Other Types of
Purchases

Co-operative Ventures See Page 18

Emergency Purchases See Page 18
Special Category Expenditures See Pages 19-20

Definitions
Acquisition Authority:

Approves the purchase requisition, has adequate purchasing signing authority to ensure adequate budget exists, and that the acquisition is in
accordance with the Procurement Policy.
Commitment Authority: The authority to commit the City to a contract is the Purchasing Manager or authorized purchasing staff by way of a purchase order.
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Procurement Policy
ALL GOODS AND SERVICES
$0 - $2,500
This category represents a large number of orders small in value. Managing these
expenditures allows for expedient procurement as outlined in day to day and sundry
expenses by providing a convenient and less burdensome method of procuring low
value goods and services, i.e. consumables, small cleaning tasks, small repairs,
operational in nature.
Acquisition Authority
a) Authorized Cardholders will use Purchasing Cards only for Departmental
procurements and payments of goods and services within their established
purchasing authorization limits. The Cardholder authority whose name appears on
the card is the only person authorized to use that Card. The Card can be used to
make purchases only within the parameters established by the City and the
Cardholders department, such as credit limit, transaction limit, and monthly limit.
See Appendix 1.
b) Authorized budget authorities may also submit invoices for under $2,500 when
there is no acceptance of MasterCard (Citys Procurement Card).
Competition
While no written quotes or purchase requisitions are required for purchases made on
Purchasing Cards, the cardholder has the responsibility to ensure the City receives
value. When the Purchasing Card is not accepted, invoice submission, including G/L
number and approval signatures, without quote will be accepted.
Documentation
Cardholders are responsible for maintaining complete supporting records of all
purchases made with Purchasing Cards. Cardholders are required to reconcile all
transactions to a monthly statement, ensuring all purchases are accounted for, with
appropriate receipts and allocated to appropriate account combinations. These monthly
reconciliation statements are to be signed by the Cardholder and their immediate
Supervisor, Manager, or General Manager.

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Procurement Policy
ALL GOODS AND SERVICES
$0 - $2,500
Points to Remember:

Importance of the documentation that the cardholder has to maintain and submit
as outlined in the Purchasing Card Procedures, Appendix #1.
Timely processing of the monthly statement submitted to Accounting.
Procurement Card - Splitting purchases to avoid the single purchase transaction
limit is not permitted.
Only the person whose name appears on the card may use that card.
Upon submission of invoice under $2,500, when Purchasing Card is not accepted,
the G/L number and two signatures must be submitted with the invoice. One
signature must have budget acquisition approval authority for this amount.
Procurement Card Expenditures for services require verification of acceptable
insurance and WorkSafeBC coverage.

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Procurement Policy
ALL GOODS AND SERVICES
$2,500 - $50,000
These are purchases that are of medium value and require a one-quote process. This
category represents day to day operational expenditures. The limit allows for
expedience while ensuring a standard process, i.e. consulting contracts, equipment
repairs, emergency goods and services.
Acquisition Authority
Expenditures within the approved budget are authorized by the Department/Division
that has acquisition authority. If the cost exceeds the budget, the General Manager for
the budget will be responsible for the authorization of that expenditure. If the
additional amount exceeds $100,000, it must be authorized by Council or City Manager.
It is important to note that a purchase requisition is a request and not an authority to
commit the City. Staff should not commit via a verbal, written, or implied agreement
prior to the issuance of a purchase order.
Commitment Authority
The Authority to commit the City to a contract is the Purchasing Manager or authorized
Purchasing Staff by way of a purchase order.
Competition
The requisitioner, or Purchasing Department as requested, should obtain a minimum of
one written quote to be attached to the purchase requisition. The staff requesting the
expenditure must be the person responsible for the acquisition.
Documentation
Compliance with the City Procurement Policy is documented by way of:

properly approved purchase requisition;

minimum one written quotation attached to the purchase requisition;
purchase order committed by the Purchasing Manager or authorized Purchasing
Staff;
WorkSafeBC compliance and adequate insurance coverage where applicable.

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Procurement Policy
ALL GOODS AND SERVICES
$2,500 - $50,000
The authorizing signature on the requisition indicates:

agreement with the need for the purchase for City purposes;
approval of budget funds available within the Budget Manager authority;
authorizing signatory is ideally the requesting Manager with budget acquisition
authority. In the event the appropriate Manager is unavailable, a signature should
be attained by another budget approval authority who has reasonable knowledge in
relation to the expenditure;
compliance with Procurement Policy;
proper account coding of the expenditure or capital acquisition.

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Procurement Policy
ALL GOODS AND SERVICES
$50,000 - $250,000
These are purchases that are large in value and require a competitive bid process to
ensure the purchases are best value and competitive.
Acquisition Authority
Expenditures within the approved budget are authorized by the Department/Division
that has acquisition authority. If the cost for a project is over the budget amount and
varies by an amount less than $100,000, the General Manager can authorize the
expenditure. If a purchase is greater than the expected budget and the additional
amount exceeds $100,000, it must be approved by Council or City Manager with
information to support the additional expenditure.
It is important to note that a purchase requisition is a request and not an authority to
commit the City to a contract. Staff should not commit via a verbal, written, or implied
agreement prior to the issuance of a purchase order.
Commitment Authority
The Authority to commit the City to a contract is the Purchasing Manager or authorized
Purchasing Staff by way of a purchase order.
The Finance Division will provide Council with a summary of contracts in excess of
$100,000 on a regular basis in conjunction with financial reporting to Council.
Competition

The requisitioner, or Purchasing Department as requested, must obtain a minimum

of three written quotes to be attached to the purchase requisition;
Proof of sufficient effort to comply with minimum of three written quotes must be
included;
Competitive bid documents should be comprehensive and provide sufficient detail
in order to achieve the required outcomes and mitigate risk and liability;
When the minimum of three written quotes are not available, there should be an
explanation of Non-Compliance. Examples of Non-Compliance could be:
- Sole Source supplier;
- Vendor base insufficient to provide suitable number of quotes.

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Procurement Policy
ALL GOODS AND SERVICES
$50,000 - $250,000
Documentation
Compliance with the City procurement policy is documented by way of:

properly approved purchase requisition;

minimum three written quotations attached to the purchase requisition;
purchase order committed by the Purchasing Manager or authorized Purchasing
Staff.

The authorizing signature on the requisition verifies:

agreement with the need for the purchase for City purposes;
approval of budget funds available within the Budget Manager acquisition
authority;
compliance with Procurement Policy;
proper account coding of the expenditure or capital acquisition;
Consulting MMCD agreement or applicable agreement approved by the City
Solicitor;
Construction requires MMCD Agreement or applicable agreement approved by the
City Solicitor;
In order to provide transparency and meet the intent of the North American Free
Trade Agreement (NAFTA), Agreement on Internal Trade (AIT), New West
Partnership Trade Agreement (NWPTA), etc. competitive bids will be advertised on
BC Bid and the Citys website at the following thresholds:
$75,000 for goods and services;
$200,000 for construction

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Procurement Policy
ALL GOODS AND SERVICES
> $250,000
These are purchases that are large in value and are higher risk. These require
comprehensive bid documents including specifications, terms and conditions and an
extensive competitive bid process to ensure all aspects of risk are identified and
administrated through contractual obligation and management.
Acquisition Authority
Purchases in excess of $250,000 are most often identified in the annual approved
budget and therefore approved by Council. Further approval is only required when the
expenditures exceed the budget previously approved by Council. If the amount exceeds
the approved budget value and varies by an amount that is less than $100,000, it will be
authorized by the General Manager. If a purchase is greater than the expected budget
and the additional amount exceeds $100,000, it must be approved by Council or City
Manager with information to support the additional expenditure.
Commitment Authority
The Authority to commit the City to a contract is the Purchasing Manager or authorized
purchasing staff by way of a purchase order.
The Finance Division will provide Council with a summary of contracts in excess of
$100,000 on a regular basis in conjunction with financial reporting to Council.
Competition
The competitive process used by the City is generally a Request for Information (RFI),
Request for Quotation (RFQ), Request for Proposal (RFP), and Invitation to Tender (ITT)
depending on the nature of the goods and services to be provided. The City has
developed standard documents for each of these competitive processes.
Purchasing will be responsible for issuing an RFI, RFQ, RFP and ITT when requested by a
department or where no one department assumes sole ownership. Departments can
use their own standard City approved bid documents and Purchasing will retain
responsibility for providing document numbering, process tracking and maintaining
document files. Where Departments choose to issue their own documents, they must
ensure that these documents have been approved by the Purchasing Manager.

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Procurement Policy
ALL GOODS AND SERVICES
> $250,000
Documentation
Compliance with the City Procurement Policy is documented by way of:

the standard City document for an ITT or a RFP amended to include the project
specifications as outlined by the requesting department and stated criteria for bid
evaluation;
summary of the evaluation of bids or proposals against the stated evaluation
criteria;
final signed contract (either with a formal contract or a Purchase Order) with the
successful bidder or proponent;
Services must be accompanied by insurance and WorkSafeBC Compliance;
Construction requires MMCD Contract or applicable agreement approved by the
City Solicitor;
Consultant requires MMCD Agreement or applicable agreement approved by the
City Solicitor;
In order to provide transparency and meet the intent of the North American Free
Trade Agreement (NAFTA), Agreement on Internal Trade (AIT), New West
Partnership Trade Agreement (NWPTA), etc. competitive bids will be advertised on
BC Bid and the Citys website at the following thresholds:
$75,000 for goods and services;
$200,000 for construction

These documents are provided to the Purchasing Department for commitment of a

Purchase Order referencing all related documents including the terms and conditions.
In the case of an expenditure outside of the annual Council approved budget or formal
contract awarded by Council (duly executed by the Mayor and City Clerk) internal
documentation including a purchase requisition and purchase order will be generated
to establish commitments in the Citys financial systems. Internal supporting
documentation will include Council or City Manager approval.

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Procurement Policy
COOPERATIVE VENTURES
This policy provides the authority to the Purchasing Manager or authorized Purchasing
Staff to participate in cooperative purchasing.
The City will participate with other government agencies or public authorities in
cooperative acquisition ventures where it is in the best interests of the City to do so and
will follow the procedures set out by the agency responsible for the venture and not
those detailed in the Procurement Policy.

EMERGENCY PURCHASES
Emergency situations may occur which require immediate commitment of materials,
equipment and or services. An emergency expenditure is any expenditure that is the
result of an event caused by accident, fire, explosion or technical failure or by forces of
nature that results in the need to expend City resources:

To protect human life, safety and health

To protect property
To protect the environment
To protect the economic interest of the community

In such situations, the authorized person in charge of the situation will approve any
commitments made on behalf of the City and will process the appropriate documents
during the first business day following the event. Where the expenditure can be
accommodated within the Financial Plan, whether out of contingency funds or
reallocations, the City Manager or respective General Manager is authorized to approve
that expenditure. Emergency purchases that cannot be accommodated within the
Financial Plan will be authorized by the appropriate General Manager and reported to
Council following the event to confirm the action taken.

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Procurement Policy
SPECIAL CATEGORY EXPENDITURES
Subject to all applicable City policies and procedures (including having budget funds
available) a Purchase Order is not required for the following items:
(1)

Petty Cash (Reimbursement Form)

(2)

Training and Education (Cheque Requisition)

a)
b)
c)
d)
e)
f)

(3)

Courses Payments/Reimbursements
Conventions
Memberships or Dues
Seminars
Periodicals/Magazines/Subscriptions
Staff Training/Development/Workshops (Instructional Services not Supplies)

Refundable Employee Expenses

a)
b)
c)

Travel Expenses, Meals, Parking, Hotel, Airlines

Entertainment Services
Mileage Allowance - Vehicle

(4)

Utilities
a)
Postage
b)
Charges to other Government bodies (Port Coq. - Water & Sewer User Rates)
c)
Hydro
d)
Gas
e)
Telecommunications Charges
f)
Courier Service Charges
g)
Metro Vancouver and MVS & DD Charges
h)
Bio-Diesel Diesel, Gasoline & Propane. This product requires a competitive
process but does not require a purchase order.

(5)

General Expenses
a)
RCMP Contract Payments
b)
Payroll Remittances
c)
Operating Grants and Approved Council Grants
d)
Tax Remittances
e)
Payments made to partners for co-sponsored programs.

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SPECIAL CATEGORY EXPENDITURES
(6)

Land Acquisitions

(7)

The following services require a competitive process however, as these services

tend to benefit from long term relationships, for practical reasons, the term
between competitive processes will vary:
a)
b)
c)
d)
e)

(8)

Legal Services
Insurance
Banking
Audit
Professional Consulting Services (follow InfraGuide Best Practise)

Externally Managed Projects require Council approval to delegate the

Purchasing Authority to a construction management firm for construction
projects.

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Procurement Policy
CONTINGENCY
Contingency allowances are intended to provide the Project Manager with discretion in
meeting a requirement which is not perfectly defined.
In a unit price contract, the contract is valued according to a process established in the
contract documents. Quantities may be variable. As a result, the bid is not a fixed sum
or ceiling but, rather, a common basis of comparison among bidders. These contracts
may require a contingency as the final quantities may be more or less than the original
estimate.
Contingency options must be outlined in the Report to Council when the award is
recommended if the project has not been approved through the budget approval
process.

SCOPE CHANGES
During the course of a project additional work may arise that could not be anticipated
during the project planning process. A contractor currently working for the City may be
able to better respond to this related work and they have already posted insurance and
performance guarantees meeting the Citys requirements. Other potential bidders may
not be able to obtain requisite insurance and bonding in a timely manner.
As a result:
a) existing contractor/contractors may be asked for quotation and;
b) the lowest acceptable quotation may be used as a basis for a purchase requisition,
which in turn may result in a new separate contract / purchase order or an
adjustment to an existing contract/purchase order (Contract Amendments).

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Contract Amendments Related to Capital Project Variances
Contract amendments are described as any contract adjustments over and above the
approved budget amount plus the contingency amounts, yet are within the original
project scope.
Contract amendments for variances of amounts less than $100,000 are subject to
identification of budgetary funds and approval by the Project Manager and General
Manager.
Contract amendments for variance amounts greater than $100,000 will be reported to
and approved by Council or City Manager (by delegation of authority), provided that any
overages are offset by surpluses elsewhere within the Council approved annual budget.
It may be that this approval is provided retroactively if the commitment is due to
unforeseen circumstances and necessary for project completion.
Those adjustments within the purchasing authority will be made through the use of a
purchase requisition, supported by the appropriate documentation explaining the
circumstances of the adjustment within the original project scope. Adjustments will be
made as early as possible to avoid delays at the payment stage.
Requirements over the approved capital budget amounts will require Council or City
Manager approval.
Adjustments requiring Council approval will follow the standard Report to Council
process.

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Procurement Policy
BONDING
In general, a Bond is a three part contract, where the bonding company guarantees
that the contractor will fulfill certain obligations to the City. The bonding company is
without loss so long as the contractor fulfills his obligation to the City; however, if the
contractor fails in his contractual commitments, then the bonding company must
assume this obligation.
The use of Bonding or Surety Bonds throughout the procurement process serves a
number of different functions:

By requesting a bond, the City can be assured that the bidder has demonstrated
some level of financial stability to the bonding company.
By requesting a bond, the City is obtaining a level of surety or assurance that the
project will start and be completed in a timely manner and in accordance with the
terms of the contract.

The use of bonding is critical to the City and must be used where project assurances
are required. The City will adopt industry standard bonding practices for all
construction projects. All other projects/contracts must be assessed on their own
merit. Each type of bond provides coverage for its own area of risk as described below.
Bonds are generally considered to comprise of Bid Bonds, Performance Bonds and
Labour and Material Payment Bonds.
Bid Bonds:
The Bid Bond guarantees that if the contract is awarded to a specific bidder, that
bidder will accept the contract. If the bidder refuses, the extra costs to the owner of
awarding the contract to the next highest bidder are borne by the bonding company,
not the City. Current industry standard for a Bid Bond is 10% of the amount bid.
However, this percentage can vary depending on the complexity of the project and will
be determined by the Project Manager.
Performance Bonds:
The Performance Bond guarantees that the work will be completed on time and in
accordance with the contract specifications. If another supplier has to be engaged for
rework or to get the project completed, the Performance Bond will cover the City for
these extra costs. The Performance Bond is 50% of the total contract price.

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Procurement Policy
Labour and Material Payment Bonds:
A Labour and Material Payment Bond protects the City from liens against the project,
liens which would arise in the event that the contractor did not make proper payment
to its suppliers of either materials or labour. This bond is issued simultaneously with a
Performance Bond for an amount equal to or less than the amount of the Performance
Bond.
These bonding requirements on behalf of the Procurement Policy in no way apply to
any bonding requirements of the Planning and Development Services Department for
Subdivision and Building Permits.

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