EXHIBIT A
PURCHASING AND PROCUREMENT POLICY
HILTON HEAD PUBLIC SERVICE DISTRICT
Pursuant to a Resolution dated September 23, 2020, the Hilton Head No.1 Public Service District Commission (the “Commission”), the governing body of the Hilton Head No.1 Public Service District (the “District”) has adopted this Purchasing and Procurement Policy (this “Policy”). The District, as a political subdivision of the State of South Carolina (the “State”), is required to adopt procedures embodying sound principals of appropriately competitive procurement and this Policy has been adopted for such purpose. Further, this Policy is to ensure the fair and equitable treatment of all persons who are providing, or seeking to provide, supplies and/or services to the District.
A. PURCHASE AUTHORIZATION
I. Purchasing Agent
The General Manager of the District or an officer of the District designated by the General Manager shall be the “Purchasing Agent” for the District. The Purchasing Agent shall be responsible for: (A) the purchase of supplies, materials and equipment and contractual services required by any office or department of the District; (B) the storage and distribution of all supplies, materials and equipment required by any office or department of the District; (C) establishing written specifications, whenever practicable, for supplies, materials and equipment required by any office or department of the District – such specifications shall be definite and certain and may be weighted based on those factors deemed prudent by the Purchasing Agent; (D) maintaining, whenever practicable, a written inventory of the District’s materials, supplies or equipment; (E) soliciting and maintaining an up-to-date list of qualified suppliers who have requested their names to be added to a “bidders list”. The purchasing agent shall have authority to remove temporarily the names of vendors who have defaulted on their quotations, attempted to defraud the District or who have failed to meet established specifications or delivery dates; (F) considering environmentally sustainable options where appropriate; and (G) obtaining as full and open competition as possible on all purchases, contracts and sales as described in this Policy.
II. Budgeted Purchases
A. For the purchase of an individual item that is less than $25,000 and has been included in the District’s most recently adopted Operating Budget and/or Capital Improvement Plan, no competitive quotations are required. The Commission authorizes the Purchasing Agent to make all such purchases on an as needed basis.
B. For the purchase of an individual item that is $25,000 or greater but less than $100,000 and has been included in the District’s most recently adopted Operating Budget and/or Capital Improvement Plan, verbal or written solicitations from at least two (2) suppliers is required. The Commission authorizes the Purchasing Agent to make all such purchases on an as needed basis.
C. For the purchase of an individual item that is $100,000 or greater and has been included in the District’s most recently adopted Operating Budget and/or Capital Improvement Plan, competitive bidding is required and all such purchases shall be formally approved (to include, when the circumstances may dictate in the discretion of the General Manager, ratification subsequent to the purchase) by the Commission.
III Unbudgeted Purchases
A. For the purchase of an individual item that is less than $25,000 and such item has not been included in the District’s most recently adopted Operating Budget and/or Capital Improvement Plan, no competitive quotations are required and such purchases need not be formally approved by the Commission. The Commission authorizes the Purchasing Agent to make all purchases of less than $25,000.
B. For the purchase of an individual item that is $25,000 or greater but less than $100,000 and such item has not been included in the District’s most recently adopted Operating Budget and/or Capital Improvement Plan, verbal or written solicitations from at least two (2) suppliers is required and all such purchases shall be formally approved (to include, when the circumstances may dictate in the discretion of the General Manager, ratification subsequent to the purchase) by the Commission.
C. For the purchase of an individual item that is $100,000 or greater and such item has not been included in the District’s most recently adopted Operating Budget and/or Capital Improvement Plan, competitive bidding is required and all such purchases shall be formally approved (to include, when the circumstances may dictate in the discretion of the General Manager, ratification subsequent to the purchase) by the Commission.
IV. Purchases Over Budgeted Amount
For purchases of all individual items that are greater than $25,000 and which have been determined to be more than 10% in excess of the amount authorized for such purchase in the District’s most recently adopted Operating Budget and/or Capital Improvement Plan, such purchases shall be formally approved (to include, when the circumstances may dictate in the discretion of the General Manager, ratification subsequent to the purchase) by the Commission.
V. Certain Contracts
1. Architectural, engineering and surveying contracts may be directly negotiated. The selection, however, shall be made upon certain qualifying criteria as established by the General Manager.
2. Professional services for (a) attorneys, (b) auditors, (c) engineering and other consultants, (d) financial advisors, (e) underwriters and (f) technology providers are explicitly exempted from the provisions of this Policy.
3. The District, in the reasonable discretion of the General Manager, may exempt specific supplies, services, information technology or construction from the purchasing procedures required by this Policy; such exemptions shall be approved by the Commission.
VI. Lease Purchases
To the extent necessary, the General Manager may negotiate the terms of any lease purchase transaction so long as the financing is ratified and/or approved by the Commission.
VII. Single Source Vendors
The District may, out of reasonable necessity and in the reasonable discretion of the Purchasing Agent, make direct purchases from a single source vendor. Examples include, but are not limited to, technical and operational suppliers where only select markets provide service within an area, vendors that provide long-term support or services for specific equipment such as water treatment and distribution systems and wastewater collection and treatment systems, radio systems, phone systems, extrication equipment, etc.
VII. Emergency Procurement
The Purchasing Agent may make or authorize others to make emergency procurements when there exists a threat to public health, welfare, critical economy and efficiency, safety under emergency conditions, or where normal daily operations are affected; provided that such emergency procurements shall be made with such competition as is practical under the circumstances. A written determination of the basis of the emergency and the selection of the particular contractor shall be included in the contract file.
VIII. Cooperative Purchasing
The District may participate in, sponsor, conduct or administer a cooperative purchasing agreement for the procurement of any supplies, services or construction services with one or more public procurement entities or external procurement activities in accordance with an agreement entered into between the participants. Such cooperative purchasing may include, but is not limited to, joint or multi-party contracts between public procurement entities and open-ended state public procurement unit contracts which shall be made available to local public procurement units.
IX. Small, Minority, and Women Owned Businesses
The District wishes to ensure that small, minority, and women owned business enterprises be offered a fair opportunity to fully participate in the overall procurement process of the District. The District does not have a certification program for small, minority, and women owned businesses, but encourages qualifying businesses to become certified with the South Carolina Department of Transportation (www.scdot.org/business/bus-development-dbe-sbe-cert.aspx)1 and/or the South Carolina Division of Small and Minority Business Contracting and Certification (osmba.sc.gov)1. As used herein, “small, minority, and women owned business” means a firm located within Beaufort County which is certified by the aforementioned programs. In an effort to be inclusive in its procurement process, the District consults directories maintained by the aforementioned organizations to identify and directly solicit certified small, minority, and women owned businesses operating on Hilton Head Island and/or in Beaufort County.
X. Surplus Property
1. Surplus property consists of two types of property: (A) property available from the State that can be purchased by the District from the General Services Division of the State without requiring competitive bids; or (B) property of the District which: (a) has reached or is rapidly approaching an expiration date or the end of its useful life; (b) is worn-out or otherwise no longer useful to the organization for its intended purposes; (c) is obsolete; or (d) too costly to maintain or operate.
2. Items which have little or no salvage value, considering the cost of disposing of same, such as older model computers and printers, may be offered to employees at nominal prices, as established by General Manager, before other means of disposition are considered.
3. Items with salvage value, but which are likely to bring little at a conventional auction, may be sold through an internet site such as www.govdeals.com or any other reputable internet site or auction service which the General Manager has determined will offer the most exposure to potential interested buyers, or which will likely result in the highest return for the District.
4. Surplus property with trade-in value may also be traded-in to a dealer or vendor in exchange for, or toward the purchase of, items needed by the District.
5. Surplus property may also be sold to, traded with or donated to other governmental entities, if such is found to be in the best interests of the District.
B. LIMITATIONS
I. Unlawful to use District position for private gain
It shall be unlawful for any official, employee, volunteer or member of the Commission to use their relationship with the District as a means to gain economic advantage while conducting personal business activities with firms which provide special pricing to the District and using their status with the District to gain such advantage shall be punishable to the fullest extent of the laws of the State.
II. Noncompetitive purchases
The purchasing of supplies, materials or items of equipment that are controlled by virtue of patent or copyright rights so that competition is impracticable, or where the articles proposed to be purchased are produced and offered for sale by fewer than five reputable firms eligible to offer their products in direct competition and where it is impracticable to substitute other supplies, materials or items of equipment proposed to be purchased, informal purchase negotiations may be undertaken by the staff and purchase awards may be made as a result of such negotiations so long as the Purchasing Agent otherwise complies with the provisions of this Policy.
III. Prohibition of interest
1. Any purchase order or contract within the purview of the District in which an agent or any officer or employee of the department is financially interested, directly or indirectly, shall be void.
2. Every officer, employee, volunteer or member of the Commission associated with the District are expressly prohibited from accepting, directly or indirectly, from any person to which purchase order or contract is or might be awarded, any rebate, gift, money or anything of value whatsoever, except where given for the use and benefit of the District.
3. These limitations are not intended to prohibit the acceptance of articles of negligible value which are distributed generally, nor to prohibit employees from accepting social courtesies which promote good public relations nor to prohibit employees from obtaining loans from regular lending institutions.
C. BID REQUIREMENTS
I. Competitive bidding required
Except as otherwise provided herein, all purchases of and contracts for supplies and contractual services, all leases and rental agreements and all sales of the District’s property which has become obsolete and usable shall, except as otherwise specifically provided in this Policy, be based wherever possible on competitive bids.
II. Bid Acceptance and Evaluation
Bid acceptance and evaluation tabulations shall be unconditionally accepted without alteration or correction, except as authorized herein. Bids shall be evaluated based on the requirements set forth in the invitation of bids, which may include criteria to determine acceptability, such as cost, inspection, specifications, testing, quality workmanship, delivery and suitability for a particular purpose. The District reserves the right to reject or accept any proposal. The District is not required to accept the lowest bidder, but rather shall accept the bid that most closely conforms to the bid conditions.
III. Pre-qualified Candidates
If the Purchasing Agent determines that the use of competitive bidding is not suited for the complexity of the project, may not allow necessary flexibility, may not result in requisite innovation or may unduly restrict cost savings, the Purchasing Agent may determine to pre-qualify the field of bidders and thereafter request competitive bids from only the prequalified candidates.
IV. Performance Bonds
1. Generally. Payment and performance bonds are required for all District construction contracts in excess of $50,000 (or such other amount as may be required by State law), and any other procurements in which risk protection is appropriate as set forth above, in the amount of 100% of the contract price. The bonds shall be delivered by the proposed contractor to the District at the same time the contract is executed. If a bidder or vendor fails to deliver the required bonds, the bidder’s or vendor’s bid or offer shall be rejected and its bid or offer security shall be forfeited. In the event of such a failure the District may, at its discretion: (i) award the contract to the next lowest bidder; or (ii) engage in negotiations for a contract with the next eligible offer; or (iii) conduct a re-procurement to satisfy the requirement.
2. Reduction of Amount. The amount of the payment and performance bonds may be reduced, depending upon the circumstances in a procurement.
(A) Prior to Solicitation: The District may elect to reduce the performance bond or payment bond required prior to issuing a solicitation for a construction contract procurement to a lesser amount if the District determines that such lesser amount provides adequate protection for the District or that it is less costly or more advantageous to the District to self-insure a part of the performance of the contractor.
(B) During Performance: The District may reduce the amount of the bonds as work is completed, if the General Manager determines in writing that such reduction is in the best interests of the District.
V. Right to revoke award
The District expressly reserves the right to revoke the public contract award to the lowest and best bidder if: (1) it determines that the information on which the award was granted was erroneous; and (2) the correct information makes the awarded bidder’s material or product not meet the standards and specification required by the law. If an award is revoked, the District must re-advertise in order to award the bid.
This section shall be deemed a part of the terms and conditions of the Commission solicitation of bids, and all bidders shall be deemed to have accepted the terms and conditions of this section.
VI. Procurement Regulations of Other Entities
Whenever procurements are funded with state or federal funds, the procurement shall be made in compliance with applicable state and federal laws and regulations, if any, as may be required as a condition of the receipt of such funds. Whenever this Policy is more restrictive than the state or federal laws and regulations, the provisions of this Policy and the related District procedures shall be followed.
VII. Projects with Multiple Stages
When projects subject to the provisions of this Policy have multiple stages, which could be subject to either a single bid or proposal for all stages or to multiple bids or proposals for the stages as they evolve, the District may seek bids or proposals for the entire project or it may seek bids or proposals for the initial stage of the project and thereafter amend the initial contract after it is in operation, or within a reasonable time of its completion, to include the subsequent stages. In the latter instance, the subsequent stages must be similar in character of performance and location, when location is relevant to the initial stage, and the pricing components for the subsequent stages must be substantially the same as the initial contract submitted for bids or proposals.
VIII. Multi-Term Contracts
To the extent permitted by law, a contract for supplies or services may be entered into for a period of time not to exceed a total of five years, provided: (a) the terms of the contract and the conditions of renewal or extension, if any, are included in the solicitation and funds are available for the first fiscal period at the time of contracting; (b) such contracts shall contain a clause stating that when funds are not appropriated to support continued performance in any subsequent fiscal period, the contract shall be cancelled and shall not be subject to non-substitution of subsequent providers; and (c) pricing increases for succeeding fiscal periods, if any, shall not exceed 10% of the preceding year’s contract price.
D. ALTERNATIVE PROJECT DELIVERY METHODS
I. Generally
The General Manager, in proposing to utilize this section of the Policy, must detail in the project file why utilizing this section of the Policy is in the best interests of the District. Thereafter, the Commission shall make a determination whether to authorize one of the alternative procurement methodologies provided hereinbelow. The terms used herein and not otherwise defined shall generally have the same meaning as for those terms defined in the State’s procurement code, which is found at Sections 11-35-2910 et seq. of the Code of South Carolina, 1976, as amended; where any such terms have been changed, those terms have been intentionally adapted for use by the District. The policy of the State in promoting alternate forms of project delivery, as set forth in Act No.174 of 2008, is acknowledged as authority for implementing these specialized procurement methods.
II. Alternative Procurement Methods
1. Design-Build is a project delivery method in which the District enters into a single contract for design and construction of an Infrastructure Facility. Procurement of Design-Build services is appropriate when the District does not have the in-house capability to design and supervise the project, and when compliance with technical regulations and best practices for construction is critical. With the assistance of experts, the District may develop performance specifications for the desired infrastructure which can then be used to develop Design Requirements for submission to Design-Build firms for development. The Design-Build services may be awarded to either (a) the responsive, responsible bidder where price is a factor, or (b) the responsible contractor (selected from a group of pre-approved contractors) who is the low bidder. Errors and omissions insurance is required to cover the architectural and engineering services provided by the offeror.
2. Design-Bid-Build is a project delivery method in which the District sequentially awards separate contracts, the first for Architectural and Engineering Services to design the project and the second, based on competitive bidding by the District, for construction of the project according to the final design. This is the traditional method of designing and constructing facilities. The procurement of Construction Management Services (see D(II)(6) herein below) for such a project would make this method a specialized method of procurement.
3. Operation and Maintenance is a project delivery method whereby the District enters into a single contract for the routine operation, routine repair, and routine maintenance of an existing, or to-be-constructed, Infrastructure Facility. Operation and Maintenance services shall be procured from prequalified contractors by utilizing competitive sealed proposals submitted in response to a Request for Proposals, which has established the supplies and services required to maintain and operate infrastructure facilities.
4. Design-Build-Operate-Maintain is a project delivery method in which the District enters into a single contract for design, construction, operation and maintenance of an Infrastructure Facility over a contractually defined period. Ownership of the facility may be in the name of the District or leased by the District from a non-profit corporation. All or a portion of the funds required to pay for the services provided by the contractor during the contract period are either appropriated by the District prior to award of the contract or secured by the District through fee or user charges or other sources of revenue. The District should not participate in financing any such project without an opinion from bond counsel or tax counsel. Errors and Omissions insurance is required to cover the architectural and engineering services provided by the offeror.
5. Design-Build-Finance-Operate-Maintain is a project delivery method in which the District enters into a single contract for design, construction, finance, maintenance, and operation of an Infrastructure Facility over a contractually defined period. No funds are appropriated to pay for any part of the services provided by the contractor during the contract period. Procurement of Design-Build-Finance-Operate-Maintain services shall generally follow procedures outlined above for Design-Build projects with the additional elements of financing and operation incorporated into the project. A preliminary determination by the District should have been made that project revenues would be sufficient, over the length of the proposed contract, to cover design, construction, finance, and operations, and that the traditional Design-Bid-Build approach is inappropriate or impracticable for this project. The District should not participate in financing any such project without an opinion from bond counsel or tax counsel. Errors and Omissions insurance is required to cover the architectural and engineering services provided by the offeror.
6. Construction Management at-risk is a project delivery method in which the District awards separate contracts, one for architectural and engineering services to design an Infrastructure Facility and the second to a construction manager at-risk for both preconstruction and construction of the Infrastructure Facility according to the design specifications of the architect or engineer. The contract with the construction manager at-risk may be awarded before completion of design. The construction manager at-risk shall assume the risk for construction, rehabilitation, alteration or repair of the Infrastructure Facility at a fixed or guaranteed maximum price.
7. Construction Management Services is a project delivery process by which a qualified third party provides construction leadership with a defined scope throughout various phases of the project (e.g. planning, design and construction). Construction Management Services are typically procured using competitive sealed bidding or competitive sealed proposals and bids may be awarded to either (a) the responsive, responsible bidder where price is a factor, or (b) the responsible contractor (selected from a group of pre-approved contractors) who is the low bidder. Construction Management Services, specifically included a construction manager at-risk, may be procured for any of the alternative delivery methods authorized herein. Errors and Omissions insurance may be required to cover any architectural and engineering services provided by the offeror.
8. Other Special Project Delivery Methods or combinations of the above may be utilized provided that the District can demonstrate that the delivery methods meets the intent of this Policy and receives the approval of the Commission. Insurance of various types may be required as additional security for the District for the particular method of project delivery.
E. APPEALS; AUTHORITY TO DEBAR
I. Protests
1. Right to Protest. Any actual or prospective bidder, proposer or contractor who is aggrieved in connection with the solicitation or award of a contract shall protest to the General Manager. The protest, setting forth the grievance and the grounds thereof, shall be submitted in writing within ten days after such aggrieved person knows or should have known of the facts giving rise thereto, but in no circumstance after 15 days notification of the award of the contract.
2. Resolution. The General Manager shall have the authority to settle or resolve a protest of an aggrieved bidder, proposer or contractor (actual or prospective), concerning any award of a contract.
3. Decision. If the protest is not resolved by mutual agreement, the General Manager shall issue a decision in writing within ten business days after receipt of the initial protest. The decision shall state the reasons for the action taken.
4. Appeal. A decision of the General Manager shall may be appealed to the Commission within 10 business days of the submission of the written decision by the General Manager. Requests for an appeal to the Commission shall be held during the next occurring regularly scheduled meeting of the Commission, or such other time as may be mutually agreeable to the parties. At the meeting, the aggrieved party and the General Manager shall have an opportunity to present their findings to the Commission. Upon receipt of the findings of both parties, the Commission shall make a final determination. The decision of the Commission shall be final and conclusive.
II. Debarment
After reasonable notice to the person or firm involved and reasonable opportunity to be heard, the Purchasing Agent shall have the authority to debar or suspend a person, contractor or firm from consideration for award of any contract by the District. Any debarment or suspension of a person or firm, including the terms thereof, shall be approved by the Commission (with advice from the District’s attorney) in writing.
