Santa Clara County Grand Jury
• 2004-2005
City of San Jose Procurement Policies, Procedures, and Practices
⚠️ Translation Notice: This content has been automatically translated. The original English text is the official version. Translation may contain errors.
⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.
Findings 5 findings
F1
GS Purchasing has developed procurement policy and procedures manuals, but the manuals appear to be maintained and revised in an informal manner. Further, the manuals do not appear to fully address all relevant areas of the procurement process nor all applicable requirements mandated by the San Jose Municipal Code and by state and federal law. 6
F2A
The San Jose Municipal Code authorizes both centralized and decentralized processes for procurement. GS Purchasing is responsible for procuring supplies, materials, equipment and general services. However, individual City departments handle procurement of professional services, without any required participation of GS Purchasing personnel or compliance with current GS Purchasing procedures. Substantial risks (e.g. costly litigation, inadequate technical standards, higher costs, delays in delivery and installation, and the product or services not meeting the business user’s requirements) may be incurred by not having professional procurement personnel involvement or oversight in all procurement processes.
F2B
GS Purchasing personnel appear to focus primarily on processing purchase orders, and do not fully function as procurement professionals who are actively involved throughout the procurement process from identification of a need to final delivery of, and payment for, a product or service. They appear to become involved in the contract management phase of procurement only when they become aware of a problem. The current geographic remoteness of the GS Purchasing group may deter its routine involvement in many procurement processes.
F3
The Grand Jury evaluated a sample of eight procurement cases. Procurement files for five of these cases were managed by individual City departments for procurement of professional services. They appear to be poorly documented and maintained. Files for the other three cases were managed by GS Purchasing for procurement of supplies, materials, equipment and general services. These are more complete, but there appear to be inadequate standards for the contents and organization of procurement files.
F4
The San Jose Municipal Code limits the contracting authority of the City Manager, City Council appointees and certain City department heads to $100,000, with contracts above $100,000 requiring approval by the Council. This threshold for Council approval is low in comparison with other large cities and counties in California. Requiring Council approval of relatively small contracts increases costs and adds delays (e.g., preparation, review and approval of Council Memos) to the procurement process, with little discernible benefit. Routine approval of such contracts is typically granted as part of a single motion to adopt, without discussion, the “Consent Calendar” on the Council agenda.
Recommendations 4
-
R1GS Purchasing should ensure that all relevant City, state and/or federal requirements are adequately addressed in procurement policies and procedures, and should implement a formal configuration control or change control process for the maintenance and revision of procurement manuals. Consideration should be given to using the services of a professional consultant to assist in updating and revising the procurement manuals. Once policies and procedures are in place, all personnel involved in any procurement process should receive mandatory training on these policies and procedures, including periodic refresher training.
-
R2The San Jose City Council should: (a) revise the Municipal Code to specify that, excluding construction activities, GS Purchasing is fully responsible for procurement of all supplies, materials, equipment, and general and professional services; and (b) assure that sufficient staffing, training, financial resources and information technology systems are provided to enable GS Purchasing to carry out this expanded role. GS Purchasing should be located closer to the City user departments to facilitate involvement in the day-to-day development and management of major contracts. 7
-
R3Documentation standards in Procurement procedures should be strengthened. A checklist of key procurement records could be a useful way of identifying and organizing documents to be accumulated and included in a procurement file. It may be appropriate for the City Auditor to conduct a more complete assessment of the quality of existing procurement documentation in order to fully address deficiencies.
-
R4Once appropriate steps are taken, the San Jose City Council should revise the San Jose Municipal Code to significantly increase the $100,000 threshold for requiring Council approval. These steps would include revision of procurement policy and procedures manuals (Recommendation 1), provision of sufficient procurement staffing, training, financial resources and information technology systems (Recommendation 2), and institution of measures to manage conflict of interest and ensure prudent accountability. In the interim, consideration should be given to increasing the limit on contracting authority for procurement of equipment and materials when normal procedures are followed and the procurement budget has been appropriated. PASSED and ADOPTED by the Santa Clara County Civil Grand Jury on this 9 th day of June, 2005. ________________________________ Michael A. Smith Foreperson 9