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Purchasing Division

CONTRACTING AUTHORITY

  • A. City Attorney - Approval of Form of Contracts (Model Agreements)
    The City Attorney is appointed by the City Council for legal services. The City Council has also approved the firm of Best, Best & Krieger. City Council may approve other legal firms at their discretion. Any and all contracts for legal services performed by firms other than City Council approved legal firms will require a preliminary review by the City Attorney before execution of the contract. The City Attorney must also approve any substantive modifications to the City Model Agreements.
  • B. Risk Management Division - Approval of insurance limits and all contract risk issues.
  • C. Purchasing Manager - Ensure all contracts resulting from a bid conducted by the Purchasing Division are approved in accordance with A. & B. above.

CONTRACTING GUIDELINES

  • A. Bidding - Departments may perform bidding/contracting for themselves (with approval of the Purchasing Manager). If the department conducts a bid, they are responsible for generating, negotiating and finalizing the related contract(s). All solicitations for prices/proposals that will result in a contract must use the following procedures:
    • When soliciting vendors for prices or proposals for anything that will need a contract, such as professional services, on-site work or large equipment purchases, you must provide all of the vendor(s) with two things: 1) a clearly written Scope of Work or list of Equipment Specifications, and 2) a copy of the Model Agreement that they will be required to sign.
    • Departments performing their own bidding should consult with Purchasing as to which Model Agreement is appropriate for their particular use.
      When reviewing bids or proposals, look for any contractual terms or conditions in the vendor’s bid or proposal, and seek advice from Purchasing to ensure that the bids/proposals do not conflict with the contract(s).
  • B. No Bid Contracts Departments may negotiate contracts themselves, as follows:
    • Don't accept other agreements. When presented with a "proposal" which also includes contractual provisions, indicate to the consultant or other contractor that the City's Model Agreement will be used, but that much of the "scope of work" from the proposal will be used for Exhibit "A" of the Model Agreement.
    • Follow all applicable municipal code competitive bidding requirements.
  • C. Insurance
    • Insurance coverage limits shall be approved by the Risk Management Division prior to soliciting bids and/or prior to sending a draft Model Agreement to a vendor for negotiation.
    • An “Additional Insured” endorsement is required for Commercial General Liability Insurance (CGL). A contract with a vendor that fails to provide this endorsement shall not be finalized and work shall not be authorized to be performed unless 1) the endorsement is provided prior to beginning work, or 2) the Human Resources / Risk Manager provides written approval waiving the endorsement requirement.
    • A “Waiver of Subrogation” endorsement is required for Worker’s Compensation Insurance (WC). A contract with a vendor that fails to provide this endorsement shall not be finalized and work shall not be authorized to be performed unless 1) the endorsement is provided prior to beginning work, or 2) the Risk Management Division provides written approval waiving the endorsement requirement.

CITY MODEL AGREEMENTS (revised as of March 2023)

IMPORTANT

THE DECISION TO USE A SHORT-FORM CONSTRUCTION CONTRACT IS NOT BASED ON THE DOLLAR AMOUNT OF THE CONTRACT ALONE. THE ACTIVITIES TO BE CONDUCTED MUST BE CONSIDERED. HAZARDOUS OPERATIONS WHERE THE OUTCOME COULD ENDANGER PEOPLE OR PROPERTY MAY REQUIRE A MORE DETAILED CONTRACT. PLEASE CONTACT RISK MANAGEMENT WITH ANY QUESTIONS ABOUT HAZARD/RISK EVALUATION.

GENERAL CONTRACT PRINCIPLES

  • A. Contract Interpretation
    • Although subject to a number of requirements imposed by statutory and case law, basic contract principles apply to the interpretation of contracts entered into by public entities. Civil Code Section 1635 provides:
      • “All contracts, whether public or private, are to be interpreted by the same rules, except as otherwise provided by this code.”
      • Civil Code Sections 1636 through 1656 set forth a number of rules for the interpretation of contracts. Since most contracts executed by public entities are prepared in their entirety by those public entities, particular attention should be paid to Civil Code Section 1654 which provides:
      • “In cases of uncertainty not removed by the preceding rules, the language of a contract should be interpreted most strongly against the party who cause the uncertainty to exist.”
  • B. Helpful Hints for Dealing with Model Agreements
  1. Don't Accept Other Agreements
    The City has approved Model Agreements for virtually every contractual situation; the City should not have to accept contracts from consultants or other contractors. When presented with a "proposal" which also includes contractual provisions, indicate to the consultant or other contractor that the City's Model Agreement will be used, but that much of the "scope of work" from the proposal will be used for Exhibit "A" of the model agreement.
  2. Fill-In the Blank Models
    The models are designed as "fill-in-the-blank" working documents. That is, wherever variable or project-specific information is called for, there are provided brackets that look like "[***___***]" for easy reference. This will allow for the search for these characters and quickly insert the needed information. All brackets and blanks should be removed before executing the agreement.
  3. Negotiating Changes
    Sometimes consultants will want to make minor (or not so minor) changes to the models. Please note that deviations in the text of the models must be reviewed and approved by the Risk Management Division and/or the City Attorney. Even a small word change, especially in the insurance and indemnification provisions, can have a significant impact on the interpretation of the contract. You should consult the Risk Management Division first - they will involve the City Attorney if necessary.
  4. Attaching Exhibits
    Be careful not to "blindly" attach exhibits to the Model Agreements. Oftentimes, proposals contain contradictory contractual information, usually at the end, so attaching the entire documents can create contradictory interpretations. The exhibits for each model should work as follows:
    • Model Professional Services Agreement:
      Exhibit "A" is for the Scope of Work only, so it should contain a description of the work or tasks to be performed.
      Exhibit "B" is for the project schedule or milestones, if any. If the consultant is to perform on an "as-needed" basis only, insert language such as "The Consultant shall perform its Services within any reasonable time frames established by the City's Representative." Provide turn-around time deadlines, if appropriate. If you find that the Consultant has intermingled schedules or milestones within its Scope of Work, simply insert language such as "See Exhibit "A" for schedule/milestone information."
      Exhibit "C" is for the Consultant's rate schedule and reimbursable expense information. The rate schedule is important to establish hourly rates for extra work or change orders. With respect to the reimbursable expense information, do not be afraid to negotiate a reduction or elimination of some terms. A good example is the "overhead" or "surcharge" placed on third party expenditures. Anything above 10% or 15% seems unreasonable, and oftentimes they will eliminate the percentage mark-up altogether.
    • Model Maintenance - General Services Agreement:
      Same comments as with the Professional Services Agreement. However, Exhibit "B" should also be used to indicate whether Payment and Performance Bonds are required for the project.
    • Model Short Form Letter Agreement:
      This is designed to be a very simple agreement with an Exhibit "A" only, so both the Scope of Work and schedule/milestone information can be inserted in this exhibit. As with the other models, be careful not to include contradictory language. Departments using this agreement must contact the Risk Management Division for insurance requirements.
    • Model Short Form Construction Contract:
      Exhibit "A" is for the Plans and Specifications and/or General Conditions. Incorporate standard specifications or general conditions, if desired, such as the Caltrans Standard Specifications or the Greenbook. Be careful to make necessary adjustments within Exhibit "A" as well. Just as with the formal public works bid and contract set, adjustments are usually needed, but may not be as significant with a simpler project.
      Exhibit "B" is for the Special Conditions, which do not relate to Specification or General Condition information. An example would be project specific site protection information.
      Exhibit "C" is the required Workers' Compensation Labor Code Certification.
  5. Insurance Provisions
    With insurance provisions, it is particularly important not to agree to any changes without approval of the Risk Management Division and/or the City Attorney. Also, endorsements are absolutely necessary, since "certificates" of insurance provide no protection.
  6. Indemnification
    This is a provision about which you may receive a lot of suggested revisions. Consult with the Risk Management Division before agreeing to any changes.
  7. Language "Below" the Signatures
    Technically, any language "below" the signatures is not part of the agreement, which is why you will always see the exhibits referenced as "attached hereto and incorporated herein by reference." The act of incorporating the exhibits by reference into the agreement brings them "above" the signatures, at least from a legal standpoint. It is for this reason that you should not attach any additional exhibits without incorporating them by reference into the agreement. Consult the City Attorney before adding any exhibits, to make sure they are incorporated properly and do not otherwise contradict the Model Agreement.
  8. Attach Model Agreement to Bids and Requests for Proposals
    This is important, since it puts all consultants and other contractors on notice as to the required contract provisions. It will put the City in a good position with respect to negotiating requested changes to the model once the City identifies the intended consultant/contractor.
  9. Payment Bonds and Notice of Completions
    California Civil Code mandates that the City require a payment bond for “public work” projects “involving an expenditure in excess of $25,000.” California Civil Code defines a “public work” as “any work of improvement contracted for by a public entity.” For “on-call” service agreements where a contractor will be providing a “work of improvement”, a payment bond will be required for individual projects which involve an expenditure of more than $25,000. A Notice of Completion will need to be filed at the completion of the project. A payment bond will be required whenever a change order or amendment will increase the amount to be paid under the contract by 10% or more.
  10. California Department of Industrial Relations (“DIR”)
    Beginning April 1, 2015, no contractor or subcontractor may be awarded a City Agreement unless registered with the DIR pursuant to Labor Code Section 1725.5. The City will report all necessary contracts to the DIR as required by the Prevailing Wage Laws.

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