OFFICE OF THE CITY AUDITOR
Roland E. Smith
City Auditor

July 23, 2002

TO: President De La Fuente and Members of the City Council

RESOLUTION WAIVING THE FORMAL COMPETITIVE BID REQUIREMENT AND AUTHORIZING THE CITY MANAGER TO INCREASE THE EXISTING PURCHASE ORDER WITH FEDERAL SIGNAL CORPORATION BY SIX HUNDRED NINETY THOUSAND DOLLARS ($690,000) FOR PURCHASE AND INSTALLATION OF EIGHTEEN (18) ADDITIONAL ALERTING AND WARNING SIRENS AND FOR PURCHASE OF A FIVE YEAR MAINTENANCE AGREEMENT FOR TWENTY-SEVEN (27) SIRENS, PURSUANT TO PRICING AND OTHER TERMS AND CONDITIONS OF THE CURRENT CONTRACT, FOR A TOTAL CONTRACT AMOUNT NOT TO EXCEED ONE MILLION TWENTY THOUSAND DOLLARS ($1,020,000)

SCOPE

We have reviewed the accompanying Council Agenda Report and draft resolution. Our review was limited to evaluating the reasonableness of not going through the formal competitive bid process, the reasonableness of the amounts involved, and the availability of funds.

BACKGROUND

In 1997 the City awarded a contract for $330,000 to Federal Signal Corporation to install nine (9) warning sirens from Federal Signal Corporation though the informal bid process. The draft resolution authorizes the City Manager to increase the existing purchase order with Federal Signal Corporation to install an additional eighteen (18) sirens and to purchase maintenance for all twenty-seven (27) sirens for five (5) years, without going through the formal competitive bid process.

PROCUREMENT PROCESS

The City executed a contract with Federal Signal Corporation pursuant to Resolution No. 73856 C.M.S., adopted October 21, 1997, which authorized the City Manager to waive the formal competitive bid requirement and obtain an informal bid on the open market. The contract called for Federal Signal Corporation to furnish, install and provide a five- year maintenance agreement for up to eighteen emergency alerting and warning sirens throughout the City during the period of October 14, 1997 to October 13, 1998. The contract amount was not to exceed $330,000.

According to staff investigations in 1997, there were only three (3) manufacturers of warning sirens in the United States: Alerting Communicators of America, Federal Signal Corporation, and Whelen Engineering Company. An informal bid for the sirens resulted in bids exceeding available 1992 Measure I funding. Therefore, the City accepted a bid that was within budget from Federal Signal Corporation to purchase and install nine (9), without any maintenance agreement.

A subsequent sound survey revealed that eighteen (18) additional sirens are still needed to fulfill the City's warning system strategy. All twenty-seven (27) sirens that will eventually be installed throughout the City will require annual maintenance. Federal Signal Corporation has agreed to extend the existing terms and conditions of the original agreement, including pricing. Staff concludes that retaining Federal Signal Corporation as the contractor is in the best interests of the City to assure compatibility with existing equipment and system design.

FUNDING

The total project costs are estimated to be will be $1,330,000, as summarized below

Oakland City Council Resolution No. 73856 C.M.S. dated October 21, 1997, approved $330,000 for siren installation and maintenance, using funds from the 1992 Measure I bond. (Fund 5008; organization 20711; account 52919; project C59050)

In June 2001, the City Council approved a Capital Improvement Program (CIP) budget for $1,000,000 to fund the remaining eighteen (18) sirens recommended for Phases II and
III of this project. Nine (9) sirens for Phase II, budgeted at $500,000, were approved for FY2001-2002. Nine (9) additional sirens for Phase III, also budgeted at $500,000, were approved for FY2002-2003.

CONCLUSION AND RECOMMENDATION

In our opinion, the proposed resolution is reasonable and merits favorable consideration by the City Council. We hereby recommend its approval.

Issued by:

Roland E. Smith, CPA
City Auditor

July 1, 2002