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2003-1057-Resolution No. 2003-003 Recorded 7/8/2003DESCHUTES COUNTY OFFICIAL NANCY BLANKENSHIP, COUNTY COMMISSIONERS' JOURNAL 111111111111111111111111111111 2003-1057 CLERK°S Q 1003-1057 07/09/2003 08:19:30 AM DESCHUTES COUNTY CLERK CERTIFICATE PAGE This page must be included if document is re-recorded. Do Not remove from original document. REVI ED LEG 0-lJNSEL DESCHUTES COUNTY pFFICIAL NANCY BLANKENSNIP, COUNTY COMMISSIONERS' JOURNAL 111111!11111111111111111111120000183 CLERKDS CJ 1003-163 03/14/2003 12;08;59 PM BOARD OF COUNTY COMMISSIONERS FOR DESCHUTES COUNTY, OREGON, ACTING AS THE GOVERNING BODY OF THE SUNRIVER SERVICE DISTRICT A Resolution: Adopting Public Contract Rules for the District Pursuant to ORS 279.049(5); Granting Exemptions from Competitive Bidding for Certain Contracts and Classes of Contracts Pursuant to ORS 279.015(2); and Designating Certain Service Contracts as Personal Service Contracts Pursuant to ORS 279.051(2); to ORS 279.051(2). * RESOLUTION NO. 2003-003 * * Rerecorded to correct scrivner's * error. WHEREAS, the Governing Body of the Sunriver Service District ("District") has designated, pursuant to ORS 279.055(2), that it is the District's Local Public Contract Review Board ("Board"); and WHEREAS, the Governing Body of the Sunriver Service District has delegated its authority to the Managing Board of the Sunriver Service District for administrative and operational issues; and WHEREAS, ORS 279.049(5) empowers public contracting agencies such as the District to adopt rules of procedure for public contracts; and WHEREAS, ORS 279.051(2) authorizes the Governing Body to designate certain service contracts or classes of service contracts as personal service contracts; and WHEREAS, ORS 279.015(2) authorizes the Governing Body to exempt certain public contracts or classes of contracts from the competitive bidding process otherwise required by the Public Contract Rules, upon certain findings; and WHEREAS, the Governing Body has held a public hearing to take comment on exempting certain public contracts and classes of contracts from the competitive bidding process pursuant to ORS 279.015(2) and designating certain services as personal services pursuant to ORS 279.051(2); and WHEREAS, the Governing Body deems it necessary and advisable to adopt its own updated rules and exemptions to better tailor public contracting rules to the District's operations, now, therefore, , BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS FOR DESCHUTES COUNTY, OREGON, ACTING AS THE GOVERNING BODY OF THE SUNRIVER SERVICE DISTRICT, as follows: Section 1. The Governing Body hereby adopts the Public Contract Rules attached as Exhibit A ("Public Contracting Rules") and incorporates them into the District Policies and Regulations as shown; PAGE 1 of 2 — ORDER NO. 2003-003 (03/12/03) S:\LEGAL\SPECIAL DISTRICTS\SUNRIVER CSD\ORDER 2003-003 [ADOPTING PUBLIC CONTRACT RULES].DOC Section 2. The Governing Body further adopts those exemptions from competitive bid for classes of contracts contained in Public Contracting Rules based upon the findings in attached Exhibit "B," pursuant to ORS 279.015(2). Section 3. The Governing Body hereby designates certain service contracts or classes of service contracts as personal service contracts and creates procedures for selection of personal service contracts in the attached Exhibit "A," pursuant to ORS 279.051(2). DATED this 12th day of March 2003. ATTEST: Recording Secretary BOARD OF COUNTY COMMISSIONERS FOR DESCHUTES COUNTY, OREGON, ACTING AS THE GOVERNING BODY OF THE SUNRIVER SERVICE STRICT TOM DEWOLF, Commissioner MICHAEL M. DALY, Com sioner PAGE 2 of 2 — ORDER NO. 2003-003 (03/12/03) S:\LEGAL\SPECIAL DISTRICTS\SUNRIVER CSD\ORDER 2003-003 [ADOPTING PUBLIC CONTRACT RULES].DOC EXHIBIT A SUNRIVER SERVICE DISTRICT CONTRACTING RULES Table of Contents 1. SCOPE.....................................................................Page ...........................................................1 1.1 Statutory Authority...................................................................................................1 1.2 Attorney General's Rules Applicable......................................................................1 1.3 Statutory Requirements Not Reiterated..................................................................1 1.4 Federal Requirements..............................................................................................1 1.5 State Requirements 1.6 ..................................................................................................1 Non -Appropriation Clause 1.7 .......................................................................................1 Contracts with Sunrivers Owners Association........................................................1 1.8 Procurement Guidelines 1.9 ...........................................................................................2 Effective Date and Effect 1.10 .........................................................................................2 District Definition ....................................................................................................2 2. PROCUREMENT METHODS..........................................................................................2 2.1 General Principles....................................................................................................2 2.2 Exempt Public contracts..........................................................................................3 2.3 Emergencies and Disasters.......................................................................................3 3. PERSONAL SERVICES CONTRACTS............................................................................3 3.1 Designation of Certain Service Contracts............................................................:...3 3.2 Sufficient Quality and Fair and Reasonable Price..................................................3 3.3 Personal Services Contracts between $5,000 and $75,000 ......................................4 3.4 Personal Services Contracts Over $75,000..............................................................4 3.5 Exempt Personal Services Contracts.......................................................................4 3.6 Legal Sufficiency.....................................................................................................4 4. EXEMPTIONS...................................................................................................................4 4.1 Class Exemptions.....................................................................................................4 4.2 Tag -On Contracts.....................................................................................................5 4.3 Specific Exemptions................................................................................................5 5. CANCELLATION.............................................................................................................5 CONTRACTING RULES 1. SCOPE 1.1 Statutory Authority These Rules are adopted in accordance with ORS 279.049(5) to establish the rules of public contracting procedure the Sunriver Service District ("District") will use for its public contracts, and, in accordance with ORS 279.051(1), to create procedures for the screening and selection of persons to perform personal services contracts. 1.2 Attorney General's Rules Applicable The Attorney General's Model Contract Rules adopted under ORS 279.049 apply to the District except as specifically excepted herein. 1.3 Statutory Requirements Not Reiterated The District is subject to public contracting requirements under ORS Chapter 279. Those requirements generally are not reiterated in these Rules. 1.4 Federal Requirements The District may be subject to certain contracting requirements when a particular contract is supported with federal funds. Those requirements are not reiterated in these Rules. Conflicts between these Rules and a federal requirement imposed by a federal statute, rule, or grant agreement shall be resolved in favor of the federal requirement. 1.5. State Requirements The District may be subject to certain contracting requirements when a particular contract is supported with State Highway funds. In particular, ORS 279.057 requires contracts for services of engineers, architects and land surveyors to be procured using a certain qualification- based selection process. If the District receives monies from the State Highway Fund, or a loan or a grant from the State that would be used to pay for a portion of the design and construction of the project and the funds exceed 35 percent of the project and the value of the project exceeds $400,000, those procedures are required. Those requirements are not reiterated in these Rules. Conflicts between these Rules and a State requirement imposed by a State Statute, Rule or Grant Agreement shall be resolved in favor of the State Government. 1.6 Non -Appropriation Clause All contracts to provide for financing of needed equipment and supplies shall include a clause which provides that the contract may be terminated upon non -appropriation of funds by the CONTRACTING RULES Page 1 District Governing Body. 1.7 Contracts with Sunriver's Owners Association Any Agreement, Lease, License, Agreement with or sale or transfer to the Sunriver Owner's Association shall not be greater than the fair market value, reasonable cost for the Agreement and must include an analysis by an independent third party verifying the value and reasonableness of such Agreement. 1.8 Procurement Guideline The District may establish and modify from time to time written or unwritten procurement guidelines consistent with these Rules. 1.9 Effective Date and Effect These Rules take effect upon adoption and supersede any conflicting procedures or practices. Any contracts previously executed in conformance with these Rules are hereby ratified. 1.10 District Definition _District means as used herein, the Sunriver Service District, a district created under ORS Chapter 451. The District is governed by the Governing Body of the Sunriver Service District which is comprised of the Deschutes County Board of Commissioners. The Governing Body has delegated the management of the District to the Managing Board. Under these Rules, the actions of the Managing Board shall constitute the actions of the District unless the context specifies otherwise. The Governing Body has delegated the authority to the District Managing Board to act as the Public Contract Review Board. "District's designee" means the person(s) to whom the managing Board has delegated authority for procurement. 2. PROCUREMENT METHODS 2.1 General Principles ORS 279.007(2) allows the District broad latitude in selecting a solicitation process that will result in offers that represent optimum value to the District, provided the District adheres to the criteria described in ORS 279.005. Nothing in these Rules shall be deemed to limit the District's ability to exercise the authority to select a solicitation process granted directly by ORS 279.007(2). Competitive bidding will be presumed to be the procurement method of choice for public contracts unless: (1) the public contract is expressly exempted from competitive bidding by statute; (2) the public contract is exempt or exempted from competitive bidding under these Rules, consistent with ORS 279.015(2); (3) the public contract should be procured by an alternative method based upon ORS 279.007. CONTRACTING RULES Page 2 2.2 Exempt Public Contracts Except in the case of an emergency or disaster, if no method is specified by the exempting statute, Contracting Rule, or specific exemption granted by the District's Contract Review Board, a public contract that is exempt from competitive bidding may be awarded based upon any method permitted under ORS 279.007, including but not limited to competitive negotiation. An exempt public contract may be awarded based upon competitive bidding if the District determines that, notwithstanding the exemption from competitive bidding, an award based upon competitive bidding would be in the District's best interests. 2.3 Emergencies and Disasters A public contract exempt from competitive bidding because of an emergency or disaster may be awarded by any commercially reasonable means under the circumstances. 3. PERSONAL SERVICES CONTRACTS 3.1 Designation of Certain Service Contracts ORS 279.051(2) allows local contract review board to designate certain service contracts or clauses of service contracts as personal service contracts and to create procedures for the screening and selection of persons to perform such services. Personal services shall mean services where the unique or unusual professional, analytical, creative, or artistic abilities of the individual providing the service are of paramount importance. In addition to the general description of personal service contracts, the following classes of contracts are personal service contracts: Contracts for services performed as an independent contractor in a professional capacity, including but not limited to: the services of an accountant, attorney, architect, architectural or land use planning consultant, physician or dentist, registered professional engineer, appraiser or surveyor, aircraft pilot, data processing consultant; Contracts for educational, human custodial care services and other human services including emergency medical technicians, air life and ambulance services. In addition, the District designates the Interim Services Agreement, the Administrative Services Agreement, and future contracts between the District and the Sunriver Owners Association to provide accounting services, administrative services, and consulting services to be personal service contracts and exempts them from competitive bidding. 3.2 Sufficient Quality and Fair and Reasonable Price The individual in charge of selecting a personal services contractor on behalf of the District shall ensure that the quality of the service offered by the personal services contractor is sufficient for the District's particular needs under the circumstances, and that the cost to the District for the services is fair and reasonable under the circumstances. CONTRACTING RULES Page 3 3.3 Personal Services Contracts between $5,000 and $75,000 If the total cost of a personal services contract is estimated to be between $5,000 and $75,000, proposals may be solicited informally, either orally or in writing. If it is practicable, proposals shall be solicited from a sufficient number of qualified prospective proposers to ensure that no fewer than two qualified proposers submit proposals. If fewer than two qualified proposers submit proposals, the efforts made to solicit proposals shall be documented in the District's files. Price may be considered, but need not be the determining factor. Proposals may also be solicited in writing, at the District's discretion. 3.4 Personal Services Contracts Over $75,000 If the total cost of a personal services contract is estimated to be more than $75,000, proposals will be solicited using a written request for proposal pursuant to the Attorney General's model public contract rules. 3.5 Exempt Personal Services Contracts. The Interim Services Agreement, the Administrative Services Agreement and future contracts between the District and SROA to provide administrative services and consulting services are exempt. Contracts for accounting, third party contract review of agreements between SROA and the District, and legal services are exempt. 3.6 Legal Sufficiency Personal services contracts shall be on form contracts approved for form by the District's legal counsel, or shall be individually approved as to legal sufficiency for the District by the District's legal counsel. 4. CLASS EXEMPTIONS 4.1 Class Exemptions The District hereby exempts from competitive bid requirements those classes of public contracts set out in OAR chapter 125, Division 310, Sections 0005, 0010, 0012, 0030, 0035, 0040, 0044, 0180, 0300, and 0500; and OAR Chapter 125, Division 320, Sections 0010, 0020 and 0025; and OAR Chapter 125, Division 330, Sections 0260, 0340 and 0450; Fuel Contracts; Tag -On Contracts from competitive bid requirements. 4.2 Tag -On Contracts CONTRACTING RULES Page 4 The District may enter into a contract for the purchase of goods or services, other than public improvements or personal services, from an entity that is selling substantially identical goods or services by contract with another Oregon public agency (the "Originating Agency") if: (a) The Originating Agency selected the contractor through a competitive process that complied with the District's contracting rules: (b) The District contract is executed not later than 90 days after the date of the contract with the Originating Agency; and (c) The contract allows the District to purchase the goods and services at the unit prices or rates and under the same conditions as set forth in the originating agency's contract, subject only to price adjustments for minor modifications to customize the goods and services to the District's specifications and modifications to conform timing and place of performance to the District's requirements. For the purposes of this subsection, a specification modification will be considered minor if it does not change the brand, model or primary purpose or function of the goods or services and does not result in a unit price or rate adjustment of more than five percent as the unit pricing or rates set forth in the Originating Agency's contract. 4.3 Specific Exemptions The District may, upon adoption of the proper findings, exempt specific contracts from competitive bid requirements. 5. CANCELLATION The District may cancel a procurement at any time before a contract is signed, if the District determines cancellation is in the District's best interests. If a procurement is canceled, the District shall not be liable for any costs incurred by prospective offerors. If a procurement is canceled before bids or proposals are opened, the bids or proposals shall be returned to the bidders and proposers unopened, except that the District may open a bid or proposal to determine the identity and address of the bidder or proposer if the name and address are not shown on the outside of the envelope. If a procurement is canceled after bids or proposals are opened, the District shall retain the bids or proposals. CONTRACTING RULES Page 5 EXHIBIT B FINDINGS IN SUPPORT OF CLASS EXEMPTIONS FROM COMPETITIVE BIDDING UNDER ORS 279.015(2) The Governing Body of the Sunriver Service District finds as follows: Generally: ORS 279.015(2) empowers the Governing Body, acting as the local contract review board, to adopt rules exempting certain classes of contracts from competitive bidding upon approval of the following findings: (a) It is unlikely that such exemption will encourage favoritism in the awarding of public contracts or substantially diminish competition for public contracts; and (b) The awarding of public contracts pursuant to the exemption will result in substantial cost savings to the District. Based on those findings, and on the findings discussed below, the Governing Body exempts the following classes of contracts from the competitive bidding requirements of ORS Chapter 279: Specifically: The Governing Body has reviewed the classes of contracts described below and has found that the following factors justify the exemptions from the competitive bidding requirements. Those factors include the following: Operational budget and financial data; public benefits; specialized expertise required; public safety, market conditions; technical complexity and funding sources. A. Tag -On Contracts Findings of Fact: 1. The District has limited resources to enter into competitive procurement procedures. ORS 279.0151(8) provides a statutory exemption from bidding for the use of another agency's contract, but under very limited circumstances. The District finds that the competitive procurement process is adequately served if they enter into a contract executed by another Oregon agency that used a competitive process that complies with the District's contracting rules. In many instances, there will be substantial savings in cost and time to enter into a contract that has previously been competitively bid by another Oregon agency. The District would be able to contact another agency in the state of Oregon who may have recently awarded a new contract and has been satisfied with the product or service. Since the contract was competitively bid, it would be unlikely that entering into the contract would diminish competition. Conclusions of Compliance with the Law: FINDINGS Page 1 These findings indicate that it is unlikely that a class exemption for Tag -On contracts will encourage favoritism in the awarding of District contracts or substantially diminish competition for District contracts as required by ORS 279.015(2)(a). Contracts will be made under conditions where pricing or contractual commitment has already been established by competitive means. The exemption will result in substantial cost savings because the District will be able to enter into contracts without going through the expense and delay of the competitive procurement process. B. CONTRACT AMENDMENTS (INCLUDING CHANGE ORDERS AND EXTRA WORK) (OAR 125-310-0010) Findings of Fact: 1. This class exemption permits the District to make contract amendments, including change orders, extra work, field orders, or other change in the original specifications that increase the original contract price, without further competitive bidding, subject to the limitations of this rule. 2. The exemption allows contract amendments to be made to existing contracts for goods and services where the initial contract was obtained through competitive means and awarded to the lowest, responsive and responsible bidder or to the highest, responsive and responsible, in accordance with state law and District policies and procedures. This practice ensures that the substantial cost savings achieved by the District in the initial award to the most competitive bidder or best will be carried forward in the contract amendments. Because the initial contract is competitively awarded, this class exemption is not likely to result in favoritism or substantially diminish competition. 3. The exemption is necessary because in the course of the contract, it is impossible for District staff to know or plan for all possible contingencies, including additional requirements, emergencies, unplanned environmental cleanup, and other unforeseen circumstances. The District must have the flexibility it needs to respond to contingent circumstances in a prompt and cost-effective manner. For these reasons, the exemption has operational and budgetary benefit, public benefits, and public safety benefits. 4. There is no need for dollar limits on contract amendments where unit prices or additive alternate prices were provided during the bidding or proposal process that established the cost basis for the additional work or product and a binding obligation exists on the parties covering the terms and conditions of the additional work or product. Therefore, OAR 125-310-0010 permits amendments in unlimited dollar amounts. However, where these conditions are not met, but there is a need to amend the contract, OAR 125-310-0010(5) permits contract amendments within limits which are reasonable and which do not exceed a certain percentage of the initial contract price, in order to guarantee that competition for public contracts is not substantially diminished. 5. Substitute performance by a contractors surety, as described in OAR 125-310- 0010(6), must be allowed as an exempted practice so the District can realize the full benefit of the performance bond that secured the initial contract award. In such cases, the contractors surety must be enabled to fulfill its obligations to the District on behalf of the secured contractor. FINDINGS Page 2 Therefore, such substitute performance by contractor's surety shall not be deemed a public contract for the purposes of ORS 279.015(1). 6. This rule generally allows the District to complete the work at hand, or to purchase additional needed products, without the additional costs in time, project start-up, and project coordination if the additional work or product required must be competitively bid. There is also a substantial, though indirect, cost component represented by the knowledge and awareness of the on-site contractor about the additional work needed. However, the conditions and dollar limits of this exemption ensure that competitive means will be used to procure work to be performed or product to be provided in cases which do not meet the requirements of this rule. This exemption thus allows the District to retain the specialized expertise of the contractor, and has operational and budgetary benefits, but does not diminish competition. It also better permits value engineering by the experienced contractor. Conclusions of Compliance with the Law: These findings indicate that it is unlikely that this class exemption will encourage favoritism in the awarding of District contracts or substantially diminish competition for District contracts as required by ORS 279.015(2)(a). Amendments under OAR 125-310-0010(1)-(4) will be made under conditions where pricing or contractual commitment have already been established by competitive means, or there is an emergency or unplanned environmental cleanup. Amendments under OAR 125-310-0010(5) are limited in dollar amount. Substitute performance by a contractor's surety under OAR 125-310-0010(6) is necessary to get the full value of the performance bond requirements in the initial contract. The use of this exemption to amend District contracts under the specific conditions outlined will result in substantial cost savings to the District as required by ORS 279.015(2)(b). C. CONTRACTS UNDER CERTAIN DOLLAR AMOUNTS (OAR 125-310-0012) Findings of Fact:- 1. act: 1. OAR 125-310-0012 subsection (1) of this class exemption permits the District to award contracts not to exceed $75,000 on an informal basis, if the District has determined that (i) the awarding of the contract through informal competitive quoting will result in cost savings and (ii) certain conditions are met which are designed to enhance competition. This exemption has operational and budgetary benefits because the cost and delay of the full bidding process generally exceeds the amount of savings realized from competitive bidding contracts under this dollar amount. The exemption also has public benefits and responds to the market by recognizing that many smaller or newer companies that are likely to be interested in the smaller contracts, including those owned by women and minorities, may not have the staff or the expertise to respond pursuant to the formal process. . 2. Subsection (1)(a) of this class exemption permits the District to award contracts for public improvements between $5,000 and $75,000 under the requirements of subsection (1)(a), which requires the district to obtain at least three competitive quotes, if available. This process ensures that competition and neutral consideration will continue to be part of the selection process. Contracts for under $5000 are statutorily exempted from the competitive process by ORS 279.015(1)(d) FINDINGS Page 3 Conclusions of Compliance with the Law: It is unlikely that this exemption will encourage favoritism in the awarding of public contracts or substantially diminish competition for public contracts, in accordance .with ORS 279.015(2)(a). This exemption applies only to purchases of goods and services under a limited dollar amount, and then, only after efforts to obtain competitive quotes are made. The District has vendor services, including open lists from which vendors are contacted for quotations. The informal quotation process encourages competition from smaller firms who can respond easily and without great expense to submit quotes on District business. If the contract is for a public improvement, all state requirements relating to performance bonds, prevailing wage, and contractor registration are required to be met. The awarding of public contracts pursuant to this exemption will result in substantial cost savings to the District as required by ORS 279.015(2)(b). Informal competition will be maintained in order to achieve cost savings in price. It is faster and cheaper for the District to use informal rather than formal means of obtaining competitive quotes for goods and services for purchases under $75,000. Document preparation expense is saved. Advertising and postage expenses are saved. Purchases of goods and services for District programs can be made quickly. D. ADVERTISING CONTRACTS (OAR 125-310-0005) Findings of Fact: The District has traditionally purchased advertising primarily in newspapers, so the following findings relate primarily to newspapers and written publications: 1. By their nature, media sources are generally unique. Advertisements are placed in a particular source because of the specific audience that source serves. Thus the exemption addresses market conditions, and has operation benefits. 2. Competition is limited to furnish advertising space in daily newspapers of general, trade, or business circulation in the vicinity of the District. There is only one daily newspaper of general circulation in the greater Central Oregon area, The Bulletin. There is only one daily newspaper of general statewide trade circulation in which most government agencies in Oregon routinely advertise procurements of public improvements or construction, The Portland Daily Journal of Commerce. 3. Cost savings are difficult to quantify where the sources are unique and not interchangeable. For example, the newspaper industry's practice is to establish advertising contract rates for advertising purchasers. The purchaser can maximize cost savings based through a contractual commitment to advertise, based on volume, format, and placement of advertisements. Where the volume of purchases warrants, the District may enter into advertising contracts to get the best price on its advertising needs. In addition, because of the limited competition and the need to target specific markets mentioned above, the cost of a formal bidding process would be a waste public funds. The exemption has budgetary and financial benefits. FINDINGS Page 4 Conclusions of Compliance with the Law: Due to limited competition and unique nature of sources, it is unlikely that this class exemption will encourage favoritism in the awarding of District contracts or substantially diminish competition for District contracts, as required by ORS 279.015(2)(a). Further, any contracts awarded under this exemption would result in the most substantial cost savings available to the District, as required by ORS 279.015(2)(b), where the District can achieve volume savings through contracts for advertising with a particular media source, and by saving the costs of what would otherwise be a wasted solicitation effort. This exemption of a class of contracts complies with the statutory requirements. E. EMERGENCY CONTRACTS (OAR 125-310-0030) Findings of Fact: 1. Under ORS 279.015(4)(a), public contracts may be exempted from the requirements of ORS 279.015(1) if emergency conditions exist which require prompt execution of the contract, subject to the additional requirements of ORS 279.015(5). 2. ORS 279.015(5) requires the Board to adopt rules allowing the Board and its officer for contracts under $50,000, such as the Managing Board Chair or other designee, to declare that an emergency exists and to establish procedures for determining when emergency conditions are present. Subsections 1 and 2 of this rule accomplish this. Further, ORS 279.015(4) requires that the rules shall prescribe that if an emergency is declared, any contract awarded under this exemption must be awarded within 60 days following he declaration of the emergency, unless the Board grants an extension. Subsection 3 of this rule states this requirement. Conclusions of Compliance with the Law: Procurements made by the District in compliance with this exemption rule meet the requirements of ORS 279.015(4)(a) and 279.015(5) as emergency public contracts. F. EQUIPMENT REPAIR AND OVERHAUL (OAR 125-310-0035) Findings of Fact: 1. The need for equipment repair or overhaul cannot be anticipated by District staff. If a piece of equipment is broken or not working properly, the District incurs cost of downtime, possible replacement equipment rental fees, staff time, and other inconveniences or disabilities to its programs. The exemption for such services thus has operational and budgetary benefits. The exemption also enhances public safety by permitting prompt repair of potentially dangerous malfunctions. FINDINGS Page 5 2. Generally, there are a limited number of vendors who are able to perform repair or overhaul on a particular piece of equipment because of its make or manufacture. Sophisticated equipment may require specially trained personnel available from only one source. Often, a piece of equipment will have a partial warranty in place which will guarantee some savings to the District in the parts and/or labor needed to do the repair or overhaul. This warranty savings may only be achieved if the original manufacturer or provider of the equipment performs the necessary repair or overhaul. The exemption thus addresses the need for the specialized expertise and technical complexity. Conclusions of Compliance with the Law: It is unlikely that this class exemption will encourage favoritism in the awarding of public contracts or substantially diminish competition for public contracts, as required by ORS 279.015(2)(a), because the dollar value of the exempted purchase may not exceed $75,000 without further exemption from the Board. The department that needs to have equipment repaired or overhauled will seek quotes or bids where it is practical. If it is not practical to obtain competitive quotes or bids, the requisitioning department must provide written justification to the District that will become part of the public record of the contract. The awarding of public contracts pursuant to this exemption will result in substantial cost savings to the District, as required by ORS 279.015 (2) (b), because the District incurs direct and indirect costs from the moment equipment breaks down or becomes unusable. This exemption only applies to equipment already owned by the District. Time is of the essence in contracts for the repair or overhaul of District -owned equipment. The District must be able to purchase necessary services and parts as quickly as possible in order to minimize equipment downtime. G. CONTRACTS FOR PRICE REGULATED ITEMS (OAR 125-310-0040) Findings of Fact: Competition is not a relevant issue in the procurement of goods or services where the provider, rate or price of the goods or services being purchased is established by federal, state, or local regulatory authority. The goods or services are provided through a sole source and the prices or rates are set by the regulatory authority. Examples are: a. . Postage - Postal rates and services are regulated and provided by the United States Postal Service, a federal agency. b. Electricity - Service providers and rates in the District are regulated by the Oregon Public Utilities Commission. C. Garbage - In the District, rates and service areas are regulated by Metro and individual cities. Service providers are licensed and franchised to furnish hauling within their service areas. d. Water - Water service is a regulated function of the local government or services. FINDINGS Page 6 Conclusions of Compliance with the Law: It is unlikely that this exemption will encourage favoritism in the awarding of public contracts or substantially diminish competition for public contracts, as required by ORS 279.015(2)(a), since there is virtually no competition available in these price regulated services. The awarding of public contracts pursuant to this exemption will result in substantial cost savings to the District, as required by ORS 279.015(2)(b), because the District is not in a position to economically provide these goods and services to itself in any other manner. H. PURCHASES UNDER FEDERAL CONTRACTS (OAR 125-310-0044) Findings of Fact: 1. Federal contracts for goods and services are established by federal agencies with private vendors through competitive processes which meet the standards of ORS chapter 279. These processes include open competitive bidding, to which all interested vendors are invited to participate. No Oregon company is excluded from or disadvantaged in participation in bidding on federal contracts. Thus the exemption has the public benefit of supporting a competitive selection process, while providing the operational and budgetary benefits to the District by avoiding the cost and delay of replicating the solicitation process. 2. The prices or rates for goods and services under federal contracts are based upon competitive bids or proposals. This rule requires the District to document the cost savings to be gained from the anticipated purchase(s) from the federal contract. Documentation might include competitive comparison of previous bid prices obtained from other sources, including local Oregon businesses. 3. This rule requires that the District obtain the permission of both the federal agency and the federal vendor to use the federal contract. Conclusions of Compliance with the Law: This exemption will not encourage favoritism or substantially diminish competition in the awarding of District contracts, as required by ORS 279.015(2)(a). All vendors, including Oregon businesses, are able to compete for the initial federal contract. Also, the District will not use a federal contract without agency and vendor permission. This exemption will result in substantial cost savings to the District, as required by ORS 279.015(2)(b). Federal contracts are based on competitive bidding, which results in the most advantageous price to the federal agency. Before it makes a purchase from a federal contract, the District will document the cost savings it will achieve by using the contract. These two facts will ensure that the District purchases the desired goods or services at the best price available. Further, by being able to take advantage of a competitive federal procurement, the District saves the cost of needlessly duplicating the solicitation process. I. PRODUCT PREQUALIFICATION (OAR 125-310-0180) FINDINGS Page 7 Findings of Fact: 1. There are occasions when the District needs to establish a list of prequalified products before it invites bids or proposals to furnish the products. The first occasion is when the District has a special performance or design need, but it is impractical for the District to create a specification for the type of products to be purchased. It would be very burdensome and time- consuming for the District to generate non -brand name, generic performance specifications for such equipment every time it wants to make a purchase. This exemption thus recognizes the technical complexity of "spec-ing" such products. Also, competition would be poorly served because bidders and proposers would not know in advance whether their offered product would meet the general specification substantially enough to be considered a responsive offer. The decision to make an award would be slow, because each product offered would have to be analyzed against the District's specification. Slowdown in the award process affects both bidders, who are asked to hold their bids open until award is made, and District programs, because staff are not able to order the equipment they need until the contract is awarded. In this case, it might be more cost-effective and efficient for the District to prequalify products and establish a list of approved products before invitations to bid are sent out. The prequalification process can be done some time before the need for a new contract; once the prequalified product list is established, the bidding and contract award process can go quickly and smoothly. 2. A second occasion when prequalification of products will be useful is when the specific design or performance specifications for a product are so exacting that the District must have time to carefully consider what is offered in the market that may or may not meet the specifications and, if necessary, reconsider its options before issuing an invitation to bid. This recognizes both the technical complexity of the product, as well as the market conditions relating to that particular product. 3. The rule sets out a process of prequahfication which requires the use of advertisement or other appropriate means to notify vendors of competing products of their opportunity to submit items for prequalification. 4. This includes a 15 -day time limit between the closure of a prequalification list and a related invitation to bid. This time factor ensures that vendors have a reasonable time to apply to include their products on a prequalified product list. 5. Subsection 2 of this rule provides vendors with an appeal process to follow if their application for prequalification is denied. Conclusions of Compliance with the Law: Where prequalification of products is appropriate, it is unlikely that this exemption will encourage favoritism in the award of District contracts or diminish competition for District contracts (ORS 279.015(2)(a)). There are several safeguards in the rule to prevent this, including FINDINGS Page 8 notice, advertising, time and appeal process requirements to ensure that vendors are given a fair and open opportunity to participate in the prequalification process. The prequalification of products process is a time-consuming effort for the District. It is not a shortcut procurement method. The District would use this method only after balancing cost- saving considerations, such as the ability of the District to create or generate non -brand name generic specifications for types of products or the need for lengthy product evaluation prior to contract award. If the prequalification method is chosen, it will result in substantial cost savings to the District as required by ORS 279.015(2)(b) because the normal method of product selection is too cumbersome and costly to pursue. J. REQUIREMENTS CONTRACTS (OAR 125-310-0300) Findings of Fact: 1. This rule permits the District to enter into requirements contracts, in which the vendor agrees to provide specified goods and services over the term of the contract at the bid price or discount rate. A requirements contract is useful when the purchase of goods or services is routine and repetitive. 2. Requirements contracts are a common method of minimizing paperwork, achieving continuity of product, securing a guaranteed source of supply, reducing inventory, obtaining volume discounts, locking in a set price, standardizing usage, and reducing lead time for ordering. The exemption thus has operational, budgetary and financial benefits. 3. The rules require a competitive process to establish the initial contract, unless otherwise exempted under these rules. 4. The maximum term of a requirements contract is five years before competitive rebidding must be done, unless otherwise exempted. Conclusions of Compliance with the Law: It is unlikely that the exemption will encourage favoritism or diminish competition because an open competitive bidding process is required to enter into a requirements contract. The exemption will result in substantial savings to the district because it will reduce administrative costs and enable the District to take advantage of volume discounts and price reductions. K. USED PERSONAL PROPERTY - PURCHASE (OAR 125-310-0500) Findings of Fact: 1. The District is responsible to manage expenditures in the best interests of the public. Cost savings can be achieved through the procurement of used property and equipment. The District purchases used property and equipment when it meets the District's needs and is cost effective. Considerations include type, quality, quantity and estimated useful life of the used item. FINDINGS Page 9 2. Used property and equipment becomes available sporadically and without notice, and is usually sold on a first come, first served basis. When used property or equipment becomes available, the District must be able to respond immediately in order to obtain the property or equipment. The exemption thus allows the District to participate in the market for use property and equipment. 3. Some types of property or equipment may not be readily available in the new goods market. The District may have to look for used items to fill the need. 4. Competition to provide use property and equipment may be very limited and inconsistent, depending on the type of product. Conclusions of Compliance with the Law: It is unlikely that the exemption will encourage favoritism or diminish competition for District contracts because of the inconsistent and sporadic market. Further, the rule requires the District to determine through the competitive quote process if there are cost effective market alternatives to the particular used product or piece of equipment. This exemption will result in substantial cost savings to the District because the cost of used equipment and property is generally substantially less expensive than that of new. L. INFORMATION TECHNOLOGY CONTRACTS (OAR 125-320-0010) Findings of Fact: 1. Rapid changes in technology make it necessary for the District to be able to purchase needed computer equipment quickly. This exemption thus has operational benefits and recognizes market conditions. 2. Pricing for high-technology equipment also changes rapidly. It is frequently possible to take advantage of frequent price changes in the marketplace in the purchase of computer equipment. 3. There is generally sufficient competition among vendors of data and word processing hardware and software for District business. 4. The District will obtain at least three informally solicited quotes for purchases less than $75,000. 5. If a purchase of equipment or software is expected to cost more than $75,000, the District will use a formal competitive bidding or proposal process. Conclusions of Compliance with the Law: It is unlikely that this exemption will encourage favoritism in the award of District contracts or substantially diminish competition for District contracts. The purchase of technology, data and FINDINGS Page 10 word processing hardware and software will be made in accordance with other competitive bidding rules herein. The use of this exemption will result in substantial cost savings to the District. Competition will be encouraged at all dollar levels of purchase of computer hardware and software. This rule gives the District some flexibility in selecting the method of competitive procurement. M. TELECOMMUNICATIONS SYSTEMS CONTRACTS (OAR 125-320-0020) Findings of Fact: 1. Rapid changes in technology make it necessary for the District to be able to purchase needed telecommunications hardware and software quickly. This exemption thus has operational benefits and recognizes market conditions. 2. Since deregulation, there is generally adequate competition among vendors of telecommunication hardware and software to allow the District to make competitive purchases. 3. Pricing for telecommunications hardware and software also changes frequently. It is important for the District to take advantage of price competition in the marketplace. 4. The District will document reasonable efforts to obtain at least three informally solicited quotes for purchases less than $75,000. 5. If a purchase of equipment or software is expected to cost more than $75,000, the District will use a formal competitive bidding or proposal process in accordance with these rules. Conclusions of Compliance with the Law: It is unlikely that this exemption will encourage favoritism in the award of District contracts or substantially diminish competition for District contracts. The purchase of telecommunications hardware and software will be made in accordance with other competitive bidding rules herein. The use of this exemption will result in substantial cost savings to the District as required by ORS 279.015(2)(b). Competition will be encouraged at all dollar levels of purchase of computer hardware and software. N. TELECOMMUNICATIONS SERVICES (OAR 125-320-0025) Findings of Fact: 1. Since deregulation, there is generally adequate competition among vendors of telecommunication services to allow the District to make competitive procurements. This exemption thus has operational benefits and recognizes market conditions. 2. Since there is competition, price competition exists in the market place. it is important for the District to take advantage of existing competition. FINDINGS Page 11 3. Pricing for telecommunications services also changes frequently. It is important for the District to take advantage of price competition in the marketplace. 4. The District will follow document reasonable efforts to obtain at least three informally solicited quotes for purchases less than $75,000. 5. If a purchase of telecommunication equipment or software is expected to cost more than $75,000, the District will use a formal competitive bidding or proposal process in accordance with these rules. Conclusions of Compliance with the Law: It is unlikely that this exemption will encourage favoritism in the award of District contracts or substantially diminish competition for District contracts. Routinely, the purchase of telecommunications services will be made in accordance with other competitive bidding rules herein. If the anticipated purchase is over $75,000, the District will advertise its need, issue a written solicitation document, and invite written bids or proposals to be furnished in response. However, there may be circumstances where sufficient competition does not exist in the relevant geographic and service market. In such cases, the District will follow this rule in determining whether sufficient competition exists to make a competitive procurement. The use of this exemption will result in substantial cost savings to the District. Competition will be encouraged at all dollar levels of purchase. This rule gives the District some flexibility in selecting the method of competitive procurement. The rule also states the steps to be taken to document situations where sufficient competition may not exist and a sole source purchase needs to be made. O. FUEL CONTRACTS Findings of Fact: 1 The market pricing of these products varies on a daily basis. Due to the location of the District, there are few fuel vendors in the close vicinity. After reviewing the available market, the District has determined that the most cost effective and convenient for refueling is to contract with the Sunriver Owner's Association who acquires fuel on a bulk basis. The District purchases fuel at their cost plus a percentage. This provides a low cost fuel in a convenient location. The Sunriver Owner's Association has the benefit of an existing requirements contract which provides fuel at a cost less than is available on the general open market in the District area. The District makes periodic reviews of the available price of fuel in the area. In the event it is determined that the requirements' contract is not competitive in terms of price and location, the District may get "spot market" quotes and purchase the item from the vendor offering the lowest price in the most convenient location at the moment of need. 2. The District maintains lists of vendors who supply these products. Any vendor may ask to be placed on the list. When the District makes a purchase, it contacts at least three vendors FINDINGS Page 12 and makes its purchase from the least expensive source. Because of the nature of these products and the way they are supplied, most vendors are in the local area. 3. The District saves the most money if it has the flexibility to purchase in the best manner indicated by the state of the market at the time of purchase. Conclusions of Compliance with the Law: It is unlikely that this exemption will encourage favoritism in the award of District contracts or substantially diminish competition for District contracts. Local vendors have open access to the District's vendor lists and may submit price quotes at any time. The District will contact at least three vendors for a quote before making a spot purchase. The use of this exemption will result in substantial cost savings to the District as required by ORS 279.015(2)(b) since the District can use whatever method of procurement it finds in the best interest of the District at the time of need to obtain gasoline, heating oil, and like products. P. INSURANCE AND EMPLOYEE BENEFITS (OAR 125-330-0260) Findings of Fact - 1 . act: 1. The natures, type, specific services to be provided, and timing of employee benefit insurance are dictated by the labor market for fire and police employees. District administration must provide appropriate employee benefits. The exemption thus has operational and public benefits. 2. The District relies on its professional insurance broker, or "agent of record," to solicit competitive proposals from responsible companies to furnish employee benefit coverages. The agent of record solicits proposals from providers. The agent maintains a mailing list of interested providers. When it is time to solicit proposals to furnish employee benefit coverages, the agent sends solicitations to all providers on the list. 3. After receipt of proposals, the agent of record works with District administration to evaluate them and to negotiate contract awards with those firms who provide the most comprehensive and best services at the most cost-effective rates. 4. It would be impractical and costly for the District to attempt to purchase employee benefit insurance "in house" without the guidance and help provided by the professional agent of record. The District saves substantially by using professional insurance brokerage services. Conclusions Of Compliance With The Law: FINDINGS Page 13 It is unlikely that use of this exemption will encourage favoritism in the awarding of District contracts or substantially diminish competition for District contracts; and the award of District contracts pursuant to this exemption will result in substantial cost savings to the District. The District's agent of record solicits proposals from employee benefit insurance providers under conditions that foster competition among a sufficient number of potential suppliers. The District evaluates the proposals submitted to furnish employee benefit insurance for the best value to the District, given the requirements specified by the employee benefits portions of the District's agreements with represented employee groups. Q. MEDICAL AND LABORATORY SUPPLIES (OAR 125-330-0340) Findings of Fact: This exemption permits the District to purchase different brands of the same item of medical and laboratory supplies, by awarding contracts, after competitive bidding, to the lowest responsible bidder for each brand. This has operational and budgetary benefits because it enables the District to selectively choose the lowest price brand in each category. Conclusions of Compliance with the Law: This exemption is unlikely to encourage favoritism or substantially diminish competition because the exemption is narrow and because a competitive process continues to be required. The exemption would result in substantial cost savings because it would facilitate the District's ability to acquire the lowest cost brand of each item. FINDINGS Page 14