Report Prepared by: Julio C. Márquez, Purchasing Supervisor, Finance Department.
Title
SUBJECT: Authorize the Use of Alternate Suppliers When Ferguson Enterprises LLC and PACE Supply Corp. are Unable to Fulfill Purchase Orders of Waterworks Supplies per Bid 11072023 as Awarded by Council on December 18, 2023
REPORT IN BRIEF
Considers allowing the use of alternate suppliers to procure waterworks supplies when the awarded suppliers Ferguson Enterprises LLC and PACE Supply Corp. cannot fulfill purchase orders, if prices offered by alternate suppliers are comparable in function, manufacturing quality, and cost to the products requested from Ferguson and PACE.
RECOMMENDATION
City Council - Adopt a motion:
A. Authorizing the use of alternate suppliers for the procurement of waterworks supplies when Ferguson Enterprises LLC and PACE Supply Corp. cannot fulfill purchase orders, if prices offered by alternate suppliers are comparable in function, manufacturing quality, and cost to the products requested from Ferguson and PACE; and,
B. Authorizing the City Manager to execute the necessary documents.
Body
ALTERNATIVES
1. Approve, as recommended by staff; or,
2. Approve, subject to conditions other than recommended by staff (identify specific findings and/or conditions amended to be addressed in the motion); or,
3. Deny; or,
4. Refer to staff for reconsideration of specific items (specific items to be addressed in the motion); or,
5. Continue to a future meeting (date and time to be specified in the motion).
AUTHORITY
Charter of the City of Merced, Article XI, Section 1111-Competitive bidding, and Merced Municipal Code Chapter 3.04.050- Requisitions and 3.04.120 Written Contracts.
CITY COUNCIL PRIORITIES
As provided for in the 2024-2025 Adopted Budget.
DICUSSION
History and Past Actions
The Purchasing Division assists the Water Department with keeping an inventory of waterworks supplies. It is part of the overall inventory under the management of the division’s Central Stores.
The City has met its needs for waterworks supplies in the past year through purchases from Ferguson Enterprises Inc. and PACE Supply Corp. as authorized by City Council on a previous bid award.
Purchasing issued request for bids number 11072023 for the procurement of waterworks supplies and performed a public bid opening on November 7, 2023. City Council awarded the bid to Ferguson and PACE on December 18, 2023 (agenda item 23-1067). Exhibits 1 & 2 contain the bid pricing for years one and two. Note, pricing highlighted in green indicates the low bid for each item.
Staff recommended Council to award the bid to both vendors and allow the issuance of POs to each vendor for years 2024 (year one) and 2025 (year two) with the following understanding:
Each vendor would be awarded only the line items for which it was the low bidder. Should one supplier fail to honor the bid pricing over the prescribed year, Purchasing would order those same items from the opposite supplier who was not originally awarded those same line items. Before doing so, Purchasing would obtain separate quotes to compare prevailing pricing against the bid pricing submitted by the opposite supplier and select the lowest.
The reason for requesting this type of permission was to protect the City against the uncertainty of abrupt supply chain disruptions.
Staff is currently having difficulties with restocking many of the most common waterworks inventory items. There are manufacturing labor shortages in the US, supply shortages of finished products coming out of the Middle East, and other issues affecting product availability and cost.
The awarded suppliers are not able to supply a sizable percentage of our orders and back orders have extended from several weeks to up to three months. Staff has had to reach out to alternative vendors to be able to restock inventory to minimum quantities to supply Water Department staff with at least enough supplies to carry out daily operations and keep a few items for emergency jobs.
It was originally expected that out of the $400,000 previously authorized by Council, $300,000 was going to be spent in inventory stock and $100,000 in miscellaneous items used by other public works departments in small jobs on the first year. However, Purchasing staff now foresees that the full amount may be needed for stock inventory alone. This will not impact other public works departments as they have already requested (and Council has authorized them on July 1, 2024) to purchase up to $100,000 in parts, equipment, and supplies for the current fiscal year.
The total combined amount of all POs for Ferguson, PACE, and any additional suppliers staff may find will not exceed the previously approved amount of $400,000 for year one and $435,000 for year two. All unused POs will expire by December 31, 2025.
IMPACT ON CITY RESOURCES
Purchases for the items in the pricing list are put into inventory. Items are expensed when Purchasing staff issues them to departments. Funding is available within the departments’ adopted budget.
ATTACHMENTS
1. Price Listing Exhibit 1
2. Price Listing Exhibit 2