TO: Mayor and City Council
THROUGH: Krishna Namburi, Interim City Manager
FROM: Josh Eggleston, Chief Financial Officer
SUBJECT:
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Provide a comprehensive overview of the City’s procurement process.
Ward(s): All Wards
Councilor(s): All Councilors
Neighborhood(s): All Neighborhoods
Result Area(s): Good Governance.
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SUMMARY:
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On the August 25, 2025, City Council directed staff to provide a comprehensive overview of the City’s procurement process.
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ISSUE:
Information only.
RECOMMENDATION:
recommendation
Information only.
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FACTS AND FINDINGS:
The City of Salem is committed to ensuring a transparent, efficient, and fair procurement process that supports the city's operational needs. The procurement process is governed by local, state, and federal regulations, ensuring compliance and accountability in all purchasing activities.
Objectives of Procurement
1. Value for Money: The City aims to obtain the best possible value for taxpayer dollars by balancing cost, quality, and service.
2. Fair Competition: The City encourages competition among vendors to ensure a diverse range of options and to promote innovation.
3. Public Procurement Processes: The procurement process is designed to be transparent, with opportunities for public input through competitive bidding and solicitation processes. This transparency helps ensure that procurement decisions are made fairly and equitably.
4. Oversight Mechanisms: Various oversight mechanisms, such as audits and reports, are in place to ensure that procurement activities are conducted in accordance with established policies and regulations, providing an additional layer of accountability without direct council involvement. The Contracts and Procurement Division went through a procurement performance audit by Moss Adams in March 2023.
Procurement Process
1. Needs Assessment: Departments identify their needs and develop specifications for the goods or services required.
2. Market Research: The procurement team conducts market research to identify potential suppliers and assess market conditions.
3. Solicitation: Depending on the value and complexity of the procurement, the City may issue requests for proposals (RFPs), invitations to bid (ITBs), or requests for quotes (RFQs).
A. Types of Procurements
1) Good and Services: Supplies, Equipment, Janitorial Services, Landscape Services, Vehicles, etc. For fiscal year 2025, approximately 316 procurements were done for goods and services.
2) Personal Services: Contracts for services performed in a professional capacity including, but not limited to, services of an accountant, attorney, auditor, court reporter, information technology consultant, physician, or broadcaster. For fiscal year 2025, approximately 37 procurements were done for personal services.
3) Professional Services: Contracts for an architect, engineer, photogrammetric mapping, transportation planning, land surveying services, or provider of related professional services. For fiscal year 2025, approximately 76 procurements were done for professional services.
4) Public Improvement: A project for which the City contracts or carries on construction, reconstruction, major renovation, demolition, removal of hazardous waste or painting on real property, by or for the City. For fiscal year 2025, approximately 37 procurements were done for public improvements.
B. Procurement Methods
1) Verbal Quotes. A minimum of three verbal quotes are requested from $5,001 to $10,000. Verbal quotes can be obtained by calling or emailing 3 companies for quotes. 35 verbal quotes requested.
2) Written Quotes. A minimum of three written quotes are requested from $10,001 to $100,000. Written quotes can be obtained by emailing and receiving written quotes from a minimum of 3 companies. 28 written quotes requested.
3) Formal Solicitation. Over $100,000. Posted on OregonBuys (State of Oregon Procurement System). For Invitations to Bid, the bid is awarded by the lowest and responsive bidder. For Request for Proposals, the proposals are awarded to the highest scoring proposer based on the criteria listed in the RFP, which may include, cost, qualifications, staff, references, etc. 170 formal solicitations.
4) Sole Source. Over $5,000, the department shall justify why the goods or services are only available from one source. Typically, market research is performed to verify this justification, the sole source is posted on OregonBuys for transparency. 73 sole sources posted.
5) Cooperative Agreements. Cooperative procurements refer to a purchasing method where multiple public agencies or organizations join together to procure goods or services collectively. This approach allows them to leverage their combined purchasing power to achieve better pricing, terms, and efficiencies. 123 cooperative agreements used.
a) Key benefits of cooperative procurements include:
• Cost Savings: By pooling resources, agencies can negotiate lower prices due to higher volume purchases.
• Time Efficiency: Cooperative agreements often streamline the procurement process, reducing the time spent on bidding and contract management.
• Access to a Broader Range of Products and Services: Agencies can benefit from a wider selection of vendors and offerings.
• Shared Resources: Agencies can share best practices and expertise in procurement, leading to improved processes.
Cooperative procurements are often facilitated through established cooperative purchasing organizations, which manage the bidding process and contracts on behalf of the participating agencies.
6) Emergency Procurements. 1 emergency. “Emergency” means circumstances that:
a) Could not have been reasonably foreseen;
b) Create a substantial risk of loss, damage or interruption of services or a substantial threat to property, public health, welfare or safety; and
c) Require prompt execution of a contract or amendment in order to remedy the condition.
7) Direct Negotiation. 32 Direct Negotiations done. Personal services may be procured through direct negotiations if:
a) The contract price does not exceed $25,000; or
b) The confidential personal services, including special counsel, or professional or expert witnesses, or consultants, are necessary to assist with pending or threatened litigation or other legal matters in which the City may have an interest; or
c) The nature of the personal service is not project-driven but requires an ongoing, long-term relationship of knowledge and trust.
8) Direct Appointment. 4 Direct Appointments done. The City Manager may authorize direct appointment of a consultant if:
a) The fee to be paid is not reasonably anticipated to exceed $100,000; or
b) The professional services that have been substantially described, planned, or otherwise previously studied or rendered in an earlier contract with the same consultant, and awarded under Informal Written Solicitations or Requests for Proposal, and the new contract is a continuation of the project.
4. Evaluation: Submitted proposals or bids are evaluated based on predetermined criteria, including price, quality, and vendor qualifications. The evaluation committee shall include at least two (2) City employees and may include at least one (1) employees of another public agency, receives the proposals for review after the proposals are reviewed by procurement for compliance with the RFP, and conflict of interest forms provided to the committee. The committee will review all proposals based on the evaluation criteria in the RFP, conduct reference checks, interviews, and demonstrations. The committee will make a decision that is then approved by the department director for award.
5. Awarding Contracts: Contracts are awarded to the lowest responsive bidders or the highest scoring proposers, and all parties are notified of the decision by posting notice on OregonBuys. Contracts and then routed to Legal for review and approval.
6. Contract Management: The procurement team monitors contract performance to ensure compliance with terms and conditions, addressing any issues that arise.
Vendor Engagement
The City values its relationships with vendors and encourages participation in the procurement process. The procurement team participates in one to two reverse tradeshows a year to update vendors about upcoming City projects and annual requirement contracts. The City's procurement process is designed to be efficient, equitable, and responsive to the needs of the community, by adhering to best practices and fostering strong vendor relationships.
The City uses OregonBuys to post bidding opportunities over $100,000. OregonBuys is the state's procurement system designed to facilitate the purchasing process for public agencies in Oregon. Here are some key features and benefits of OregonBuys:
1. Centralized Procurement: OregonBuys provides a single platform for state agencies, local governments, and other public entities to conduct procurement activities, streamlining the purchasing process.
2. User-Friendly Interface: The system is designed to be user-friendly, making it easier for both buyers and vendors to navigate and participate in the procurement process.
3. Electronic Bidding: OregonBuys allows for electronic submission of bids and proposals, which can enhance efficiency and reduce paperwork.
4. Access to Opportunities: Vendors can access a wide range of procurement opportunities from various public agencies across the state, increasing their chances of securing contracts.
5. Compliance and Transparency: The system helps ensure compliance with state procurement laws and regulations, promoting transparency and accountability in the procurement process.
6. Training and Support: OregonBuys offers training resources and support for both public agency staff and vendors to help them effectively use the system.
Overall, OregonBuys aims to improve the efficiency and effectiveness of public procurement in Oregon, benefiting both agencies and vendors.
Annual Requirement Contracts
Contracts based on annual estimates are agreements that the City enters into with vendors to provide goods or services over a specified period, typically one year with a renewal option up to four years. These contracts are structured around estimated quantities and costs, allowing for flexibility in procurement while ensuring that the city can meet its operational needs efficiently. The City currently maintains approximately 700 annual contracts that are either renewed or rebid each fiscal year.
Key Components of Annual Estimate Contracts
1. Estimation of Needs:
o Forecasting: Departments assess their anticipated needs for the upcoming year, considering historical data, projected growth, and changes in service demand.
o Quantitative Estimates: Departments provide estimates of the quantities of goods or services required, which serve as the basis for the award and the purchase order is set up for the amount budgeted for the fiscal year. Some annual requirement contracts are bid by hourly rates, estimates of different types of scenarios that may occur during the year.
2. Contract Structure:
o Fixed vs. Variable Pricing: Contracts may include fixed pricing for certain items or services, while others may have variable pricing based on actual usage or market conditions.
3. Performance Metrics:
o Service Levels: Contracts outline performance expectations, including delivery timelines, quality standards, and response times for services.
o Monitoring and Reporting: Vendors may be required to provide regular reports on their performance against the established metrics.
4. Adjustments and Amendments:
o Revising Estimates: If actual usage significantly deviates from the estimates, the contract may allow for adjustments to quantities or pricing.
o Amendment Procedures: The contract should specify the process for making amendments, including the documentation required and the approval process.
5. Renewal Options:
o Contract Extensions: Many contracts include options for renewal based on performance and mutual agreement, allowing the City to continue working with a vendor that meets its needs effectively.
o Re-evaluation: Prior to renewal, the City assesses the vendor's performance and the relevance of the estimated needs for the upcoming period.
6. Budget Considerations:
o Annual Budget Alignment: Contracts based on annual estimates must align with the City’s budgetary constraints, ensuring that expenditures do not exceed allocated funds.
o Financial Planning: Departments must plan for potential fluctuations in costs based on the estimates provided in the contract.
Consultant of Record for Personal and Professional Services
1. Definition: "Consultants of Record" are usually defined as consultants or firms that have been officially designated by the City to provide specific services or expertise.
2. Selection Process: Requests for proposals (RFPs) or qualifications-based selections to ensure fairness and transparency.
3. Scope of Services: The RFP specifies the types of services that can be provided by consultants of record, which may include engineering, project management, and other specialized services. The RFP may also specify the dollar amounts for Consultant of Records selection for the project assignment, under $250,000 allow for a direct appointment for the consultant that is the best fit for the project. Over $250,000 would allow the department to do an RFP among the consultants of record for a specific project assignment.
4. Contractual Obligations: There are usually guidelines regarding the contractual obligations of the consultants, including performance standards, deliverables, and compliance with applicable laws.
5. Duration of Engagement: The length of the contract and provisions for renewal or extension are specified in the RFP.
6. Accountability and Oversight: The RFP often include mechanisms for monitoring the performance of consultants of record to ensure they meet contractual obligations and provide value to the agency.
7. Transparency and Fairness: Ensuring that the selection and engagement of consultants are conducted transparently and fairly is a key focus of public contracting rules.
Benefits of Annual Estimate Contracts
• Flexibility: These contracts allow the City to adjust to changing needs without undergoing a full procurement process each time.
• Cost Management: By estimating annual needs, the City can better manage its budget and negotiate favorable pricing with vendors.
• Efficiency: Streamlined procurement processes reduce administrative burdens, allowing departments to focus on service delivery.
Contracts based on annual estimates are a strategic approach for the City to manage its procurement needs effectively. By providing a framework for estimating quantities and costs, these contracts facilitate flexibility, cost control, and efficient service delivery, ultimately benefiting the City's operations and its residents.
City Council Role in Procurement
While the City Council approves budgets and funding allocations which creates the ability to pay for contracts, the actual procurement process is executed administratively by staff who implement the policies set forth by the council.
1. The City Council provides the following oversight:
• Approve the City’s Public Contracting Rules when adopted and revised.
• Review, Approve, and Award the Auditing Services RFP and Contract.
• Approve Public Improvement Contracts that are exempt from the requirement of competitive bidding, examples include the Salem Police Facility, Civic Center Seismic Improvements, Library Seismic Improvements, and Public Works Operations Building. These projects required an RFP vs. low bid due to the written findings provided with each project.
• Review of monthly procurements over $25,000.
• Declarations of Emergency with high visibility.
Shawna Self, NIGP-CPP, CPPB
Contracts and Procurement Division
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