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Home My WebLink AboutFIN-2025-159 - Procurement By-Law Threshold UpdateStaff Report Financial Services Department www.kitchener.ca REPORT TO: Committee of the Whole DATE OF MEETING: April 7, 2025 SUBMITTED BY: Ryan Scott, Chief Procurement Officer PREPARED BY: Ryan Scott, Chief Procurement Officer Lesley MacDonald, City Solicitor WARD(S) INVOLVED: N/A DATE OF REPORT: March 27, 2025 REPORT NO.: FIN -2025-159 SUBJECT: Procurement By -Law Threshold Update RECOMMENDATION: That Council approve amendments to Procurement By-law No. 2022-109, as per Attachment A, to align with the Canadian Free Trade Agreement (CFTA) dollar thresholds, to allow for the expanded procurement of local and Canadian goods, services and/or construction, as outlined in Financial Services Department report FIN -2025-159, as previously presented on March 17th, Chief Administrative Officers report CAO -2025-135; and further, That the proposed by-law being considered read a first and second time and be referred to the third reading on the agenda this date. REPORT HIGHLIGHTS: • The purpose of this report is to obtain approval for proposed amendments to the Procurement By-law No. 2022-109 thresholds as outlined in this report. • This report supports the delivery of core services. BACKGROUND: On March 17, 2025, the Chief Administrative Officer on behalf of the City of Kitchener Tariff and Trade Task Force presented the City's response to US Tariffs and Trade. One of the actions was to amend the procurement by-law thresholds to align with the Canadian Free Trade Agreement (CFTA) dollar thresholds which will allow for the expanded procurement of local and Canadian goods, services and/or construction. REPORT: Municipalities in Ontario and Canada are required to comply with the Canadian Free Trade Agreement (CFTA), and the Canadian European Trade Agreement (CETA). CFTA sets *** This information is available in accessible formats upon request. *** Please call 519-741-2345 or TTY 1-866-969-9994 for assistance. Page 13 of 88 minimum dollar thresholds where a formal competitive procurement process must be conducted that is open to all interested parties regardless of where they are located. These prescribed thresholds currently prevent municipalities from fully supporting buy Canadian, buy local for goods, services or construction activities. For procurements that fall below these limits, there is more flexibility to conduct targeted procurement activities that prioritize Canadian purchases. The City's Procurement By-law is updated periodically (typically every 5 years) where limits are reviewed and updated. The City's Procurement By-law was last updated in 2022 and the thresholds in the current by-law reflect the prescribed CFTA limits that were identified at that time. In an effort to support a buy Canadian, buy local approach, staff recommend updating the thresholds in the Procurement By-law to mirror current CFTA prescribed limits, which have increased since 2022 and to automatically update them when new limits are published. The proposed changes to the thresholds are as follows: Invitational Competition procurement is proposed to increase the upset dollar threshold from $120,001 to $133,800 for goods and/or services and from $120,001 to $334,400 for construction work. There are also proposed changes to the thresholds internally to support a buy Canadian, buy local approach which are identified in Attachment A. Open competitive procurement is conducted for projects exceeding the stated upset dollar threshold. In addition to these changes, staff recommend increasing delegated authority to the Chief Procurement Officer for sole source awards from $120,000 to $250,000. This increase will allow for greater flexibility in supporting buy Canadian, buy local, and will allow for quicker procurements of items such as fleet vehicles, that may become available in Canada within existing inventory as way to mitigate the impacts of immediate tariffs. STRATEGIC PLAN ALIGNMENT: This report supports the delivery of core services. FINANCIAL IMPLICATIONS: The recommendation has no impact on the capital budgets. The recommendation has no impact on the operating budgets. COMMUNITY ENGAGEMENT: INFORM — This report has been posted to the City's website with the agenda in advance of the council / committee meeting. PREVIOUS REPORTS/AUTHORITIES: a CAO -2025-135 City of Kitchener Response to U.S. Tariffs and Trade APPROVED BY: Jonathan Lautenbach, Chief Financial Officer, Financial Services Department Page 14 of 88 ATTACHMENTS: Attachment A — Amendment to Procurement By-law 2022-109 Page 15 of 88 BY-LAW NUMBER OF THE CITY OF KITCHENER (Being a by-law to amend By-law No. 2022-109 regarding the Procurement of Goods and Services) WHEREAS it is deemed necessary and expedient to amend By-law 2022-109; NOW THEREFORE the Council of the Corporation of the City of Kitchener enacts as follows: 1. Section 12.c) of By-law 2022-109 is hereby deleted and replaced with the following: "12. c) Where any Contract has been authorized under this By-law, the CPO may authorize disbursement of additional funds, under a Contract or by Purchase Order, provided that the additional funds: i) shall not exceed the greater of $133,800 or ten percent (10%) of the original Contract price; ii) are available within the relevant budget; and iii) are required to complete works that are necessary as part of the original scope of the Contract and do not expand the scope of work under the Contract beyond what was expressly contemplated under the original Procurement." 2. Section 16.4 of By-law 2022-109 is hereby deleted and replaced with the following: " 16.4 When the Procurement Value of the Emergency purchase exceeds $133,800, the CPO shall provide a report to Council in accordance with Section 27." 1 Page 16 of 88 3. Section 27.1 of By-law 2022-109 is hereby deleted and replaced with the following: "27.1 The CPO must submit quarterly procurement information reports to Council to provide the following information about the City's procurement activities: a) The circumstances and details of approved procurements exceeding $133,800 in value, under delegated authority of the CPO; and b) the circumstances and details of any emergency purchase(s) with a procurement value exceeding $133,800." 4. Schedule "B" of By-law 2022-109 regarding Delegated Procurement Authorities is hereby deleted and replaced with Schedule "B" attached, dated April 7, 2025. PASSED at the Council Chambers in the City of Kitchener this day of April, A.D. 2025. 2 Mayor Clerk Page 17 of 88 SCHEDULE"B" DELEGATED PROCUREMENT AUTHORITIES —APRIL 7, 2025 Note 1: All described methods must be conducted in accordance with applicable procurement procedures and protocols under the City's Procurement Procedures and Protocols. Page 18 of 88 Authority to Authority to Requirement Procurement Procurement Method (Note 1) Approve the Execute Value Process Award of a Agreement Contract and/or Issue a Purchase Low Cost Purchase - low Up to $40,000 Non -Competitive Purchase made through DH or designate CPO (Note 3) value procurement of any corporate purchasing card or goods, services and issuance of purchase order, or construction other. Any value (in Goods, Services and accordance with Standing Offer Purchase made through DH or designate CPO Construction as specified competitive corporate purchasing card or in Standing Offer method) issuance of purchase order Competition Any value (in Goods, Services and accordance with Invitational Solicitation document issued to CPO CPO Construction from existing competitive Competition suppliers on the Qualified Qualified Supplier Roster method) Supplier Roster Goods and Services (low $40,001 - $80,000 Invitational Solicitation document issued to CPO CPO bid) Competition a minimum of 3 suppliers. Goods and Services $80,001 - Invitational Solicitation document issued to CPO CPO $133,800 Competition a minimum of 3 suppliers by the Procurement Section Goods and Services $133,801 or more Open Solicitation document publicly CPO CPO Competition posted by the Procurement Section. Construction $40,001 - Invitational Solicitation document issued to CPO CPO $334,400 Competition a minimum of 3 suppliers by the Procurement Section Construction $334,401 or more Open Solicitation document publicly CPO CPO Competition posted by the Procurement Section. Establish Standing Offer Any value Open Solicitation document publicly CPO CPO or Qualified Supplier Competition posted by the Procurement Roster Section Goods, Services or $40,001 - Non -Competitive Contract awarded directly to a CPO CPO Construction under the $250,000 or Limited Competition supplier without competition or circumstances included in bids solicited from a limited Schedule "C". number of suppliers in place of an Open Competition Goods, Services or $250,001 or more Non -Competitive Contract awarded directly to a COUNCIL CPO Construction under the or Limited supplier without competition or circumstances included in Competition bids solicited from a limited Schedule "C". number of suppliers in place of an Open Competition Note 1: All described methods must be conducted in accordance with applicable procurement procedures and protocols under the City's Procurement Procedures and Protocols. Page 18 of 88 Note 2: The need for an executed agreement, in addition to the issuance of a PO, is determined in accordance with the City's Procurement Procedures and Protocols. Note 3: CPO - Chief Procurement Officer is head of the City's Procurement Section or designate. Note 4: Procurement thresholds for open competition will be adjusted bi-annually to the limits published by the Ontario Public Buyer Association. 2 Page 19 of 88