CITY OF CARMEL-BY-THE-SEA

Council Report
August 3, 2015
To:

Honorable Mayor and Members of the City Council

Douglas J. Schmitz, City Administrator

From:

Sharon Friedrichsen, Director of Budget and Contracts

Subject:

Update on Contract Administration and Processing

RECOMMENDATION:
Receive an update on improvements that have been made to the Citys processing and
oversight of purchasing, including contract administration.
EXECUTIVE SUMMARY:
On 5 May 2015, Council received an investigative report on the Citys contracts. During this
agenda item, Council provided direction regarding items to be implemented as an effort to
monitor contracts and related expenditures. The purpose of the 3 August report is to provide
a synopsis of the updates that have been implemented thus far.
ANALYSIS/DISCUSSION:
The specific direction provided by Council and the implementation status is summarized
below.
1. Staff to review the Purchasing Policy for updates:
a. The Citys Municipal Code pertaining to purchasing has been clarified to reflect the
contract authorization limit of $24,999 for the City Administrators authorization and
that contracts of $25,000 or more require Council approval via resolution.
b. A training on the Citys purchasing code and processing of purchase orders was
provided to City staff on May 20, 2015; a contract review summary sheet and
routing form have been created and purchase orders are established for the full
amount of the contract upon the execution of the contract. This will enable the
current financial system to track the amount of payments made toward a contract
and indicate when the contract amount has been expended and not allow additional
payments to be made until an amendment has been appropriately processed.
c. Staff are in discussion with the Association of Monterey Bay Area Governments
regarding the organizations assistance on creating a purchasing policies and
procedures manual.
2. City Administrator will provide monthly to the Council a report on contracts under $25,000 which he has signed:
a. The City Administrator provided a report covering contracts he executed from MayJune 2015 as part of the 7 July 2015 meeting and will continue to include an
updated log as part of each agenda packet.

Council Meeting Date: 08/03/2015

Agenda Item: 5.A
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3. Implement recommendations by Carolina Bayne (more explicit language in the contract,

including a clear scope of work with deliverables); and require that invoices contain a
statement of work performed and greater details regarding travel expenses.
a. With assistance by the City Attorney, contract templates for professional services
consultants and contractors have been updated and include language that the
consultant will not be compensated for any additional services exceeding
$24,999.00 unless approved by Council; the template language on compensation
clearly indicates that the not to exceed amount is inclusive of all costs, including
travel, and that contracts including exhibits identifying the scope of services and
payment schedule.
b . A contract review and routing form has been created and contracts are reviewed to
make sure there is a set term of the contract, a not to exceed amount and exhibits
pertaining to scope of work and fee schedule before being processed.
4. Prepare and provide to vendors before entering into a contract a summary billing
expectations:
a. A vendor checklist has been drafted and will be disseminated to vendors within the
next few weeks .
5. Explore options for the possible creation of a Finance or Audit Committee:
a. Staff is continuing to research this option.
6. Require personal disclosure of contacts:
a. Language regarding conflict of interest in included with the professional services
and contractor agreement templates.
7. Expedite the purchase of new financial system.
a. The IT Manager is working on developing a Request for Proposals for a financial
system.
In addition, staff have been reviewing all contracts and determining which contracts are
expired and processing accordingly, including soliciting bids for service and preparing contract
amendments as applicable.

FISCAL IMPACT: There have been no additional costs associated with implementing these
updates thus far. The cost of a financial system has been included within the equipment and
vehicle fund as part of the adopted Fiscal Year 2015-16 budget.
PREVIOUS COUNCIL ACTION/DECISION HISTORY:
Council received an investigate report on contracts on 5 May 2015

APPROVED:

Date:

~1/.dr i.r

Douglas J.

Council Meeting Date : 08/03/2015

Agenda Item: S.A
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