AGENDA TITLE:
title
Approve Revisions to the Purchasing Policy Including Local Vendor Preference, Purchasing Authority Updates, and Enhanced Procurement Procedures (IS - BUD)
end
MEETING DATE:
July 1, 2026
PREPARED BY:
Jennelle Baker-Bechthold, Budget Manager
recommendation
RECOMMENDED ACTION:
Approve revisions to the Purchasing Policy including local vendor preference, purchasing authority updates, and enhanced procurement procedures.
body
BACKGROUND INFORMATION:
The City's Purchasing Policy was last comprehensively revised on May 20, 2022. Since that time, staff has identified opportunities to improve the policy by clarifying purchasing procedures, strengthening internal controls, incorporating applicable provisions of the Municipal Code, and establishing a local purchasing preference program to support local businesses and economic activity within the community.
Staff conducted a comprehensive review of the policy in coordination with DKG Consultants to ensure the policy remains current, effective, and aligned with industry best practices. The proposed revisions include administrative updates, clarification of purchasing authorities and procurement procedures, enhanced internal control measures, and the addition of a local purchasing preference section. The revisions also incorporate a new section addressing federal procurement requirements to ensure compliance with 2 CFR Part 200 (Uniform Guidance) when expending federal grant funds.
The proposed Purchasing Policy revisions were reviewed by the Finance Committee, which recommended approval of the updated policy and forwarding the revisions to the City Council for consideration.
Collectively, the proposed updates are intended to improve consistency, transparency, and accountability in the City's procurement processes while providing staff with clear guidance for the acquisition of goods, services, and public works projects.
DISCUSSION
The proposed updates to the Purchasing Policy are summarized below:
1. Local Vendor Preference (Page 4)
Staff evaluated local vendor preference policies utilized by other Northern and Central California municipalities and public agencies. The purpose of a local vendor preference policy is to support local economic development by encouraging the use of businesses that contribute directly to the community through employment opportunities, investment, and the generation of local tax revenues.
Staff's review found that a 5% local vendor preference is the most common approach among comparable agencies:
|
Agency |
Local Preference % |
Maximum Preference Value |
|
San Joaquin County |
5% |
$50,000 |
|
Stockton |
5% (City) / 2% (County) |
No cap identified |
|
Tracy |
10% |
$3,000 |
|
Elk Grove |
5% |
$50,000 |
|
Folsom |
5% |
No cap identified |
|
Davis |
5% |
No cap identified |
|
Vacaville |
5% |
No cap identified |
|
Chico |
5% |
$50,000 |
|
Fresno |
5% |
$75,000 |
A local vendor preference does not require the City to award a contract to a local business regardless of cost or qualifications. Rather, it provides a limited evaluation preference when comparing responsive and responsible proposals. The preference is intended to recognize the economic benefit that local businesses provide to the community while maintaining competition and ensuring prudent stewardship of public funds.
Staff recommends establishing a local vendor preference of five percent (5%), not to exceed $50,000, for the procurement of goods and services when permitted by law. To qualify as a local vendor, a business would be required to maintain a physical business location within the City of Lodi, possess a valid City business license, and have continuously operated within the City for a minimum of one year prior to the solicitation date.
Consistent with best practices and legal requirements, the preference would not apply when prohibited by state or federal law, grant funding requirements, cooperative purchasing agreements, piggyback contracts, or other procurement methods where local preferences are not permitted.
The proposed local vendor preference is intended to balance the City's responsibility to obtain the best value for taxpayers while recognizing the economic benefits generated by businesses that operate within and contribute to the Lodi community. Staff believes the proposed policy is consistent with practices implemented by comparable California jurisdictions and supports the City's broader economic development objectives.
2. Updating Purchasing Authority Thresholds plus annual CPI Increases (Page 1)
The current purchasing authority thresholds have remained unchanged despite significant increases in the cost of goods, services, equipment, and construction-related expenditures. As a result, purchases that would have previously fallen within the administrative approval threshold now frequently require additional approval levels due solely to inflationary cost increases rather than an increase in the scope or complexity of the procurement.
The proposed revision increases the City Manager's purchasing authority to $80,000, Department Directors to $40,000, and the IT Manager to $80,000. The revised policy also establishes an annual adjustment based on the Consumer Price Index (CPI). This change will help maintain the purchasing authority's intended purchasing power over time, reduce the need for frequent policy amendments, and improve administrative efficiency by allowing routine purchases to be processed at the appropriate management level.
The proposed authority remains subject to all applicable purchasing requirements, including competitive quotation and bidding thresholds, budget appropriations approved by the City Council, and other internal controls established within the Purchasing Policy. The revisions do not alter the City Council's authority over contracts or expenditures that exceed established approval limits or otherwise require Council action by law or policy.
3. Establishment of Purchasing Officer Role (Page 2)
The updated policy incorporates language consistent with the Lodi Municipal Code formally recognizing the position of Purchasing Officer. The Purchasing Officer, appointed by the City Manager, is responsible for the oversight and administration of the City’s purchasing functions.
While this position is already established in the Municipal Code, its inclusion in the Purchasing Policy provides clarity regarding roles and responsibilities and ensures alignment between the policy and existing code provisions. The duties of the Purchasing Officer may be combined with other administrative functions, as permitted by the Municipal Code.
4. Update Thresholds Associated with the Public Works Projects (Page 3 & 4)
• Projects $75,000 or less - Purchase Order and No bids
• Projects between $75,000 and $220,000 - informal bidding process
• Projects more than $220,000 - formal bidding process
5. Update Vehicle Purchase Threshold to $100,000 (Page 3)
The proposed revision increases the vehicle purchase approval threshold to $100,000. Vehicle costs have increased significantly in recent years due to inflation, supply chain constraints, regulatory requirements (including EV purchase mandates), and the increasing costs of additional installations for public safety, utility, and specialized fleet vehicles. As a result, many routine vehicle replacement purchases now exceed existing approval thresholds despite having been previously approved through the City's budget process.
Under the proposed policy, vehicle purchases exceeding $100,000 will continue to require City Council approval. Vehicle purchases below the threshold may be approved administratively in accordance with the Purchasing Policy.
The proposed change is intended to improve administrative efficiency by reducing the need for separate Council approvals for routine vehicle replacements that have already been reviewed and funded as part of the adopted budget. Planned vehicle purchases will continue to be presented to and reviewed by the City Council during the annual budget development process, ensuring transparency and oversight of fleet replacement expenditures.
6. Strengthened Documentation Requirements (Page 5)
• Identification of vendors who declined or did not respond
7. Adding Language for Blanket/Open Purchase Orders (Page 6)
8. Detailing Procedures for Informal/Unsealed Quotes for Purchases Under $80,000 (Page 8)
9. Strengthens Language for Renewals Over $80,000 go to Council (Page 14 & 18)
The revisions are intended to improve fiscal oversight, ensure compliance, and promote cost-effective
procurement practices. Staff recommends approval of the revised Purchasing Policy.
FISCAL IMPACT:
Not Applicable.
FUNDING AVAILABLE:
Not Applicable.