Consideration and Adoption of Resolution No. 2018-49:  A resolution of the City Council of the City of Flagstaff, Arizona amending the Procurement Code Manual, Article 25, Change Orders, Sections 25.1 Change Order Process, Section 25.2 Change Order Conditions, and Section 25.3 Change Order Membership and establishing an effective date. 

This Resolution is to amend the City's Procurement Code Manual in accordance with staff-proposed amendments to Article 25, Change Orders.  Staff has reviewed the Change Order section to improve the understanding, use of, and documentation requirements for Contract Allowances, Administrative Change Orders, Owner's Contingency and Contractor's Contingency.  The updated thresholds for these options include a requirement to provide written justification for the request related to the contract being considered.  The changes also remove the ability to add Administrative Change Order Authority to certain types of contracts including Construction Manager at Risk (CMAR) and Design/Build. 
 

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Council Goals
Community Outreach--Enhance public transparency and accessibility.
 
Strategic Plan
Strategic Priority #1-- Provide exceptional service
   3.  Foster Clear and consistent communication
   5.  Demonstrate respect, equity, and strong ethics

Strategic Priority #3-- Foster a resilient and economically prosperous City
   2.  Deliver outstanding services through a healthy environment, resources, and infrastructure
   4.  Promote policies that reflect a positive and safe community
  
Strategic Priority #4-- Work in partnership to enhance a safe and livable community
   4.  Promote the high quality of life through consistent standards, rules, and regulations

1.  Adopt Resolution 2018-49 as submitted.
2.  Recommend revisions to Resolution 2018-49 then adopt.
3.  Do not adopt Resolution 2018-49 and provide staff with direction for future changes.

During the June 3, 2018, Council Meeting, staff listened to the Council conversation related Contract Allowances, Owner and Contractor Contingencies, Change Order Authority and change order percentages.  From that meeting staff from Management Services, Community Developement, Water Services, and Public Works reviewed our Procurement Code Manual related to the topics discussed.  Staff reviewed the Change Order article and determined there are ways to improve this article that would enhance the understanding of and limit the use of certain change order options for contracts.  We future added a requirement to provide written justification when it is deemed that a Contract Allowance, Administrative Change Order, Owner's Contingency and/or Contractor Contingency is recommended. 

Staff is bringing forward our recommendations for changes in the form of a Resolution for consideration.  The City has a formal, comprehensive, Procurement Code Manual which was approved and adopted by City Council under Resolution No. 2013-19 on July 16, 2013.  Any and all proposed amendments are required to be adopted per City Code, Chapter 1, Section 20-001-0004. 

Since the June 2013 adoption, there have been two updates to the Procurement Code Manual.  These occurred on June 2, 2015, by Resolution No.2015-24 and on May 1, 2018, by Resolution No. 2018-11.   

This proposed Resolution No. 2018-49 is to obtain approval and adoption of the proposed amendments applicable to Article 25, Sections 25.1, 25.2 and 25.3 within the City's Procurement Code Manual that are outlined in the attached Resolution.

Adopting the proposed language as amendments to Article 25 within the City's Procurement Code Manual will:

1.  Provide better clarity and help eliminate varying interpretation to certain language applicable to Article 25, Sections 25.1, 25.2 and 25.3 within the City's Procurement Code Manual;

2.  Incorporate additional requirements to justify and approve contingency, allowance and change order authority for construction-related projects.

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Improved transparency with the City's Procurement practices, as well as strengthening justification for approval of adding contract allowance, administrative change order authority and contingencies for construction contracts.

Inform