Discussion/Direction: Proposed Amendments to the City of Flagstaff's Procurement Code Manual, Article 25, "Change Orders", Sections 25.1 "Change Order Process", 25.2 "Change Order Conditions", and 25.3 "Change Order Membership."

Council Direction.

Staff will be presenting Resolution 2019-03 at the April 16, 2019 Council meeting for consideration of adoption by Council.  This resolution is staff’s recommended changes to the Procurement Code Manual as it related to Change Orders in Article 25.  This meeting will provide the Council with an overview of the staff recommended changes as well as some example projects which effectively used the tools provided under Change Orders in the Procurement Code Manual.

On February 6, 2018, a Future Agenda Item Request (F.A.I.R.) was introduced to discuss the current and past practices outlined in Article 25, "Change Orders" for the assignment of Contract Allowances, Owner and Contractor Contingencies, and Change Order Percentages and received two votes to continue.

At the July 3, 2018, Council Meeting, staff presented a two-year history on city projects over $250,000 which used the change order options as outlined in the Procurement Code Manual. Upon further Council discussion, the item received four votes from the Council to continue the discussion.

Between July and September, staff met internally to discuss Article 25 of the manual and looked to develop ways to amend the manual in order to strengthen the use in the organization. The team consisted of staff from Community Development, Public Works, Water Services and Management Services Divisions. Staff developed recommended changes to the manual that addressed the percentages, justifications, and types of change order options available for certain types of procurements. Staff met with the Councilmember that presented the F.A.I.R. item in order to explain the changes that staff is recommending. Staff received direction from the City Manager's Office to bring the changes back to Council in a resolution for further discussion and possible adoption.

On October 16, 2018, staff presented a resolution with the staff's recommended changes to Article 25 of the manual. Council discussed staff's recommendation and provided staff direction to make some additional minor changes to help bring clarity to the language. Council made a motion to postpone the reading of the resolution so that staff could incorporate the recommended changes.

At the April 9, 2019 work session staff will present staff and Council proposed amendments to Article 25 of the manual and provide some examples of city projects that have effectively used the contract allowances, administrative change orders, owner's contingencies, and contractor's contingencies.

For the April 16, 2019, Council meeting, staff will bring a recommended action to read and adopt a resolution amending the Procurement Code Manual based on staff proposed amendments and revisions suggested by Council.