No department inside San Diego City Hall has caused as much frustration both inside city bureaucracy and outside than Purchasing and Contracting.
It has cycled through several department heads over the last eight years. It has strained the patience of local businesses trying to sell the city things and services and departments trying to buy them. Recently, an outside agency brought in to evaluate it determined it was dealing with “chronic process inefficiencies.”
So when city managers told a gathering of department heads about a new reform plan working its way to the mayor, they got loud applause, said Jeff Sturak, the deputy chief operations officer.
The new plan is going to City Council Monday. It includes two major changes.
One would allow department heads to approve purchases below $25,000 and publish what they buy. The second would increase the threshold for purchases that need a formal request for proposals.
At the heart of the issue is one simple observation: There’s a big choke point at Purchasing and Contracting.
Nearly every single thing the city purchases — about $900 million of goods and services — has to go through the 10-person buying staff in the department. And 84 percent of those purchases are for things that cost less than $25,000.
Each one of those takes about 20 minutes to process with the city’s beleaguered internal software system.
So, in other words, if one of the city’s golf courses needs to buy golf balls, or if a police officer needs a new baton, right now those items have to be approved by the department, and then go to the city’s purchasing team.
“Literally what they’re doing, they’re just pressing a button. Purchasing and Contracting is reviewing a $19 picture frame,” Sturak said.
That 84 percent of purchases represents only about 4 percent of what the city’s spending money on, yet it’s completely consuming the tiny department.
“This requirement is causing unnecessary backlogs and delays,” Dennis Gakunga, the city’s head of Purchasing and Contracting. After former Mayor Bob Filner hired him, he began the long task of trying to build trust in the department. He’s just about through his first year.
And he’s got a demoralized staff.
“[Purchasing and Contracting] individuals are overwhelmed by the exhaustive and mainly transactional workload, resulting in burnout and low morale,” wrote Huron, a consulting group brought in to review the department. Here’s Huron’s report.
Right now, a formal bidding process is required for purchases above $50,000. The proposed changes would move that to $150,000, allowing the Purchasing and Contracting Department to buy less expensive services after simply seeking five quotes.
“The procurement process, the formal bidding process, is not very simple. So if you’re a small business, even if you have the capacity and ability to provide that service, you may find yourself getting shut out because the document is so daunting,” Gakunga said.
Changing the threshold, Gakunga said, should increase the competition among bidders and lower prices for the city.