HomeMy WebLinkAbout2026-02-24; City Council; 11; Internal Audit Update and Introduction of Ordinance Amending Portions of Chapter 3.28 – Purchasing to Streamline ProcurementCA Review CKM
Meeting Date: Feb. 24, 2026
To: Mayor and City Council
From: Geoff Patnoe, City Manager
Staff Contact: Toufic Tabshouri, Internal Audit Manager
toufic.tabshouri@carlsbadca.gov, 442-637-3921
Laura Rocha, Deputy City Manager, Administrative Services
laura.rocha@carlsbadca.gov, 442-339-2415
Subject: Internal Audit Update and Introduction of Ordinance Amending Portions
of Chapter 3.28 – Purchasing to Streamline Procurement
Districts: All
Recommended Action
1)Receive a report on the city’s procurement functions; and
2)Introduce an ordinance amending Sections 3.28.040, 3.28.050, 3.28.060, 3.28.070, 3.28.080
and 3.28.120 of Carlsbad Municipal Code Chapter 3.28 – Purchasing to streamline
procurement, including by increasing the City Manager’s awarding authority for the
procurement of goods and services to $250,000.
Executive Summary
Well-structured procurement and contracting functions are essential for the effective operation
of any municipal government agency to ensure that public funds are spent responsibly,
transparently, and in a manner that delivers the greatest value to the community. As a charter
city, Carlsbad has some flexibility in establishing its own contracting rules, but must follow state
law when:
•The city has not expressly exempted itself from state law
•There is no conflict between the Carlsbad Municipal Code and state law
•The state is regulating a matter of statewide concern
•The city is receiving state or federal funding for a project
Most of the city’s non-personnel expenditures go through a procurement or contracting
process, which is specified in Carlsbad Municipal Code Chapter 3.28, the city’s Purchasing
Ordinance.1 For fiscal year 2024-25, this amounts to more than $65 million in budgeted
1 The city’s Purchasing Ordinance also applies to procurements by the Carlsbad Municipal Water District and the
city’s other subsidiary entities.
Feb. 24, 2026 Item #11 Page 1 of 62
expenditures for maintenance and operations from the General Fund, in addition to the Capital
Improvement Program, the internal service fund and the enterprise funds.2
Procurement professionals manage the acquisition of goods, services, and capital
improvements that support critical government functions—from maintaining public
infrastructure to delivering health and safety services. Without a competent procurement
function, inefficiencies can arise, legal exposure may increase, and taxpayer dollars may be
wasted.
To begin implementing the internal audit recommendations, staff are recommending the
introduction of an ordinance amending Sections 3.28.040, 3.28.050, 3.28.060, 3.28.070,
3.28.080 and 3.28.120 of Carlsbad Municipal Code Chapter 3.28 – Purchasing to streamline and
increase procurement efficiency by:
• Increasing the City Manager’s awarding authority for the procurement of goods and
services to $250,000
• Clarifying the city’s current process of procuring capital outlay items approved by the
City Council in the city’s budget
• Having the City Council approve construction plans and specifications once, instead of
twice
• Clarifying the city’s current emergency procurement process
Explanation & Analysis
Audit objectives
The city’s Internal Audit Manager commenced an audit of the city’s procurement function with
the objectives of:
1. Determining whether procurements are processed in accordance with the City of Carlsbad's
laws, policies, and procedures.
2. Evaluating the design and function of internal controls over procurements.
3. Comparing the City of Carlsbad's purchasing regulations to those of other government
entities, guidelines, and best practices.
4. Evaluating the efficiency and effectiveness of the city's procurement operations; assessing
the current structure of the procurement function.
Audit findings
The audit found:
1. The City of Carlsbad’s procurement and contracting activities are generally in compliance
with applicable laws, policies, and procedures.
2. Internal controls are effective in ensuring adherence to these requirements; however, the
controls in place, while robust, were sometimes cumbersome, leading to inefficiencies in
the process.
3. The city’s purchasing laws and regulations are similar to those of peer agencies.
4. While procurement and contracting functions are operating effectively, there are
opportunities to enhance efficiency, effectiveness, and oversight.
2 Enterprise funds account for fee-supported public services. They are separate from the General Fund, fees cannot
exceed service costs and revenues are restricted to that purpose. The water district, for example, is run out of an
enterprise fund, as are wastewater services.
Feb. 24, 2026 Item #11 Page 2 of 62
Summary of audit recommendations
1.The City Council should consider increasing the City Manager’s approval authority to at least
$150,000 and adjust this figure periodically for inflation.
2.The city should consider streamlining the approval process for contracts.
3.The city should update the Purchasing Policies and Procedures Manual, which was issued in
2016.
4.The City Manager or designee should consider assigning a qualified employee to coordinate
the development of a performance measurement system for procurement.
5.The City Manager should consider centralizing the procurement function and creating a
Procurement Manager position.
Management agreed with all the recommendations and will implement and/or evaluate them,
where applicable, based on resource availability and taking into consideration any process
changes related to the Core Systems Modernization Project. Management’s response to the
recommendations is included in the audit report but will be presented separately.
Proposed initial action in response to audit recommendations
The City Council approved a minute motion on Sept. 23, 2025, directing the City Manager to
include with the Internal Auditor’s report on procurement proposed efficiency improvements
to the city’s procurement process that are consistent with the audit recommendation and
governmental best practice standards. To begin implementing the internal audit
recommendations, staff are proposing the introduction of an ordinance amending Sections
3.28.040, 3.28.050, 3.28.060, 3.28.070, 3.28.080 and 3.28.120 of Carlsbad Municipal Code
Chapter 3.28 – Purchasing to streamline and increase procurement efficiency by:
•Increasing the City Manager’s awarding authority for the procurement of goods and
services to $250,000
•Clarifying the city’s current process of procuring capital outlay items approved by the
City Council in the city’s budget
•Having the City Council approve construction plans and specifications once, instead of
twice
•Clarifying the city’s current emergency procurement process
Increasing City Manager’s awarding authority
Based on comparable jurisdictions, where the city managers’ awarding authority ranges from
$25,000 to $250,000, and consistent with the recommendation of the city’s Internal Audit
Manager, staff recommend increasing the City Manager’s authority for the procurement of
goods and services. This change would streamline purchasing, reduce staff time and costs and
have minimal impact on transparency. Additionally, the City Manager’s awarding authority will
be reviewed annually and adjusted in response to the San Diego – All Urban Consumers
Consumer Price Index, as is done with the city’s bidding limit authority.
The city Purchasing Officer will calculate the effect of the cumulative change in the index to
$250,000 beginning in fiscal year 2027-28. Adjustment to the awarding authority limit will be
made in $10,000 increments whenever the calculated value exceeds a previously set awarding
authority by more than $5,000. The awarding authority limit will be made effective at the
beginning of a fiscal year by memorandum from the Purchasing Officer.
Feb. 24, 2026 Item #11 Page 3 of 62
Clarifying capital outlay procurement
Capital outlay items are fixed assets that have a useful life of more than a year and cost $1,000
or more. Capital outlay items and their estimated cost are listed in the city’s annual budget and
approved by the City Council as part of the budget process. To streamline procurement of
capital outlay items, once a capital outlay item is approved by the City Council in the annual
budget, no further City Council action is required to procure the item unless the cost of the
item exceeds the budgeted amount. Staff are proposing Municipal Code amendments that
clarify and increase the transparency of this process.
Approval of construction plans and specifications
Constructions projects are subject to public vetting and multiple reviews and approvals. They
are approved as part of the Capital Improvement Program. They must also go through the
Community Development Department’s review and permitting process, which may include
review and recommendation by the Traffic Safety & Mobility Commission, review and
recommendation or approval by the Planning Commission, and review and approval by the City
Council and/or the Carlsbad Municipal Water District Board of Directors.
Once a construction project is approved and permitted, if its cost is expected to exceed
$220,000, the City Council and/or the CMWD Board must approve the project plans and
specifications. Currently, staff bring the plans and specifications to the City Council and/or
CMWD for approval twice – once before soliciting bids and again when the construction
contract is awarded. Staff are proposing amendments that will result in the approvals of plans
and specifications only when the construction contract is awarded. Because plans and
specifications are subject to change during the bidding process based on questions and
requests for information from prospective bidders, approving them before soliciting bids is
inefficient and superfluous. Eliminating this step will prevent redundant staff work and reduce
the time to prepare a project for formal bidding by at least 30 to 60 days.
Clarifying emergency procurement process
The Purchasing Ordinance allows for dispensing with formal bidding procedures when there is a
local state of emergency or an emergency condition. The section of the Purchasing Ordinance
for authorizing emergency procurements tracks the language of California Public Contract Code
Section 22035(a) but is missing two words, which makes the section difficult to understand and,
therefore, less transparent. Staff are proposing amendments that insert the missing words,
clarifying the emergency procurement process.
The proposed ordinance is provided as Exhibit 2. A version showing the proposed changes is
provided as Exhibit 3.
Fiscal Analysis
There is no fiscal impact from receiving the audit recommendations. Any fiscal impact
associated with implementing future recommendations will be brought back to the City Council
for consideration.
Next Steps
The city’s Internal Audit Manager will follow up on the recommendations of this audit to track
the status of their implementation.
Feb. 24, 2026 Item #11 Page 4 of 62
Environmental Evaluation
The proposed action is not a “project” as defined by California Environmental Quality Act, or
CEQA, Section 21065 and CEQA Guidelines Section 15378(b)(5) and does not require
environmental review under CEQA Guidelines Section 15060(c)(3) and 15061(b)(3), because the
proposed ordinance to streamline procurement processes is an organizational or administrative
government activity that does not involve any commitment to any specific project which may
result in a potentially significant physical impact on the environment. Any subsequent action or
direction stemming from the proposed action may require preparation of an environmental
document in accordance with CEQA or the CEQA Guidelines.
Exhibits
1. Internal audit report of the city’s procurement functions
2. City Council ordinance
3. Proposed changes to Purchasing Ordinance
Feb. 24, 2026 Item #11 Page 5 of 62
Internal Audit of the
City’s Procurement
Functions
REPORT
February 2026
Toufic Tabshouri
Internal Audit Manager
Report 2026-01
Exhibit 1
Feb. 24, 2026 Item #11 Page 6 of 62
2 Audit of the City’s Procurement and Contracting Functions
TABLE OF CONTENTS
INTRODUCTION………………………………………………………..……………………………..3
Objectives & Scope ..............................................................................................4
Methodology ........................................................................................................4
Results Summary..................................................................................................5
Background ..........................................................................................................4
FINDING 1: CONTRACTS AND PROCUREMENTS ADHERE TO
LAWS, POLICIES AND PROCEDURES………………………………………………9
FINDING 2: INTERNAL CONTROLS OVER PROCUREMENT
AND CONTRACTING PROCESSES ARE EFFECTIVE BUT
CUMBERSOME………………………………………………………………………………………..11
Recommendation 1……………………………………………………………………………………….16 Recommendation 2……………………………………………………………………………………….16
FINDING 3: THE CITY’S PURCHASING LAWS AND
REGULATIONS ARE COMPARABLE TO THOSE OF OTHER
MUNICIPALITIES…………………………………………………….……………………………..17
Recommendation 3……………………………………………………………………………………….18
FINDING 4 : PROCUREMENT OPERATIONS CAN BE
IMPROVED BY ESTABLISHING PERFORMANCE GOALS,
CENTRALIZING OVERSIGHT, AND ADOPTING NEW SYSTEMS
Procurement and contracting functions are operating effectively………………...19
Performance data is not being collected, tracked or reported…………………….…23
Recommendation 4……………………………………………………………………………………….24
Management and oversight of procurement operations should be improved.25
Recommendation 5……………………………………………………………………………………….29
MAMANGEMENT RESPONSE TO RECOMMENDATIONS…….….30
CONCLUSION……………………………………………………………………………………….…32
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3 Audit of the City’s Procurement and Contracting Functions
INTRODUCTION
Well-structured procurement and contracting functions are essential for the
effective operation of any municipal government agency. This ensures that public
funds are spent responsibly, transparently, and in a manner that delivers the
greatest value to the community. Procurement professionals manage the acquisition
of goods, services, and capital improvements that support critical government
functions—from maintaining public infrastructure to delivering health and safety
services. Without a competent procurement function, inefficiencies can arise, legal
exposure may increase, and taxpayer dollars may be wasted. Most of the city’s non-
personnel expenditures go through a procurement or contracting process. For fiscal
year 2024-25, this amounts to more than $65 million in budgeted expenditures for
maintenance and operations from the General Fund, as well as Capital Improvement
Program expenditures.
As a charter city, Carlsbad has some flexibility in establishing its own contracting
rules, but it must still follow some state laws. Carlsbad has opted into the California
Uniform Public Construction Cost Accounting Act (CUPCCAA). For construction
contracts, thresholds are dictated by Public Contract Code, or PCC, §22032 and
cannot be altered by Council. For non-construction contracts, Council retains
discretion under the Charter to adjust approval limits. The municipal procurement
process is intended to procure goods and services efficiently, effectively and
economically while ensuring compliance with applicable laws, regulations and
ethical standards. The compliance aspect builds public trust and protects the agency
from costly litigation or reputational harm. Procurement staff are responsible for
many compliance tasks, including:
• Applying competitive bidding requirements
• Adhering to conflict-of-interest rules
• Maintaining documentation that supports audit readiness and legal defensibility.
Beyond compliance, a mature procurement function contributes directly to broader
organizational outcomes. Effective contracting can accelerate project delivery,
reduce lifecycle costs, and foster innovation through performance-based contracting
or cooperative purchasing. Procurement professionals also play an important
advisory role by developing expertise in various markets and tracking market
changes, conducting supplier outreach, and participating in risk management
decisions to ensure that contracts are structured to anticipate challenges and hold
vendors accountable for performance. These capabilities are especially important in
small municipalities where maximizing every dollar is critical.
The focus of this report is on the operation of the procurement function within the
City of Carlsbad. Procurement serves as a bridge between internal departments and
external vendors. It aligns operational needs with budget priorities and policy
Feb. 24, 2026 Item #11 Page 8 of 62
4 Audit of the City’s Procurement and Contracting Functions
goals—such as sustainability, local business inclusion, or workforce equity. By
standardizing processes and offering procurement training across departments, the
contracting function helps ensure consistency, fairness, and efficiency in how the
municipality conducts business. In this way, procurement is not just a necessary
administrative function—it is a vital instrument of good governance, financial
stewardship, and public service delivery.
Objectives & Scope
This audit had four objectives, as follows:
1. Determine whether procurements are processed in accordance with the City of
Carlsbad's laws, policies, and procedures
2. Evaluate the design and function of internal controls over procurements
3. Compare the City of Carlsbad's purchasing regulations to those of other
government entities, guidelines, and best practices
4. Evaluate the efficiency and effectiveness of the City's procurement operations;
assess the current structure of the procurement function
The first two objectives pertain to compliance, and they are basic objectives
commonly found in performance audits that are not primarily concerned with
compliance. Any significant non-compliance issues should be identified and
addressed prior to examining operational effectiveness and efficiency. Internal
controls are the main mechanism that helps maintain compliance. They should be
well-designed, reviewed and updated regularly, and operating as intended.
The third objective entails benchmarking against other government entities. Findings
related to objectives 1 and 2 may be superfluous if the city’s approach to
procurement is deficient compared to other entities.
The fourth objective is to evaluate the efficiency and effectiveness of the
procurement function. This evaluation informs how well procurement is fulfilling its
operational role—the focus of this audit as noted earlier. Efficient and effective
procurement processes reduce the cost and time required to deliver public services.
Scrutinizing procurement practices helps identify bottlenecks, process inefficiencies,
or policy gaps that could inflate costs or delay projects, and highlight best practices
that drive value and accountability.
Methodology
• Interviewed managers and staff in the Finance and Public Works departments to
obtain an overview of contracting and procurement operations.
Feb. 24, 2026 Item #11 Page 9 of 62
5 Audit of the City’s Procurement and Contracting Functions
• Reviewed the Purchasing Policies and Procedures Manual, Council policies, and
the Carlsbad Municipal Code ordinance governing purchasing to identify and test
compliance requirements.
• Examined the routing and approval processes for contracts and payments and
their related internal controls to evaluate their function and strength.
• Reviewed contracts documents and data for fiscal years 2024 and 2025 to
measure the efficiency of processing contracts and to test controls.
• Reviewed the procurement policies and laws of other municipalities and
compared them to those of Carlsbad.
• Examined the organizational structure, staffing, processes and technology used
in contracting and procurement operations to identify efficiencies.
Results Summary
The audit found that the City of Carlsbad’s procurement and contracting activities
are generally in compliance with applicable laws, policies, and procedures, and that
internal controls are effective in ensuring adherence to these requirements.
However, the controls in place—while robust—were sometimes cumbersome,
leading to process inefficiencies. The audit concluded that increasing the City
Manager’s contract approval authority to at least $150,000, with periodic
adjustments for inflation, could reduce delays caused by routine items awaiting City
Council action. This recommendation applies only to non-construction contracts.
Construction contracts remain governed by CUPCCAA (PCC §22032), which
establishes the $75,000/$220,000 informal thresholds and the $220,000 formal
bidding threshold. Similarly, streamlining the City Council’s contract approval
process—potentially integrating it into the budget approval process—could further
expedite project delivery without increasing risk.
Comparisons with other municipalities found the City’s purchasing laws and
regulations to be similar to peer agencies. However, the City’s Purchasing Policies
and Procedures Manual, last issued in 2016, has been revised but that revision is still
in draft form. The audit recommended completing the review and approval process
for the draft update and establishing a regular revision schedule to keep the manual
current.
While procurement and contracting functions are operating effectively, the audit
identified opportunities to enhance efficiency, effectiveness, and oversight.
Performance data is not currently being tracked or reported, limiting the City’s
ability to measure results, identify areas for improvement, and ensure
accountability. The audit recommended developing a performance measurement
system, including stakeholder input and potential benchmarking, and leveraging
technology to automate reporting.
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6 Audit of the City’s Procurement and Contracting Functions
Finally, the audit found that centralizing procurement under a dedicated
Procurement Manager could improve oversight, enhance staff capabilities, and
create long-term efficiencies. Such a change should be implemented carefully, with
input from affected departments—particularly Public Works—to ensure service
levels are maintained. Implementing performance measures prior to centralization
would provide a foundation for monitoring and sustaining service quality during any
transition.
Feb. 24, 2026 Item #11 Page 11 of 62
7 Audit of the City’s Procurement and Contracting Functions
Background
Carlsbad Municipal Code Chapter 3.28, known as the Purchasing Ordinance of the
City of Carlsbad, establishes the legal framework and administrative processes for
the procurement of goods, services, and awarding of construction contracts. The
ordinance aims to establish a uniform purchasing system, ensure fair treatment of
vendors, obtain best value for taxpayers, and promote integrity and transparency. It
applies to all City departments and covers a broad spectrum of procurements from
low-cost supplies to major construction contracts.
The ordinance delineates the roles and responsibilities of the City Council, City
Manager, City Attorney, Purchasing Officer, and End Users in the procurement
process.
• The City Council holds the ultimate authority over large contracts, formal
bidding thresholds, and policy direction, approving major procurements and
delegating change-order authority when appropriate.
• The City Manager is responsible for the overall administration of
procurement operations, awarding contracts within delegated monetary
limits, managing emergency procurements, and supervising the Purchasing
Officer.
• The City Attorney provides legal review of procurement documents and
contracts to ensure compliance with applicable laws and to mitigate legal
risks, and is also the awarding authority for the procurement of legal
services.
• The Purchasing Officer, appointed by the City Manager, serves as the central
procurement professional, managing solicitations, vendor relations,
compliance with procedures, and the maintenance of purchasing records.
• End users, typically city departments, initiate procurement by identifying
needs, preparing requisitions, developing specifications, and participating in
bid evaluations to ensure that procured goods or services meet operational
requirements.
The ordinance defines twenty-one key procurement terms. For example, the term
“best value” is defined and distinguished from “lowest price” as it considers factors
like supplier capability, delivery terms, product reliability, long-term maintenance,
and service support.
The ordinance lays out clear procedures for several procurement methods,
depending on the nature and dollar value of a purchase. For smaller purchases
below a designated threshold (currently $45,000 per year per agreement), City staff
may use informal purchasing methods. The best practice is to solicit at least three
price quotes—either written or verbal—and selecting the vendor offering the best
Feb. 24, 2026 Item #11 Page 12 of 62
8 Audit of the City’s Procurement and Contracting Functions
value. The City Manager or designee is authorized to approve awards under this
method.
Formal bidding is required for the procurement of goods or services when the value
exceeds this threshold, in which case the City Manager, Purchasing Officer or
designated staff1 prepares bid specifications and advertising, and ensures that the
opportunity is posted publicly to encourage competitive sealed bids. For purchases
above $100,000 per agreement year, the City Council must formally approve the
contract award to the best value bidder.
For professional services—such as engineering, legal, or consulting work—the
ordinance allows a process of competitive negotiation. If the contract exceeds
$45,000, city staff must solicit proposals from qualified firms, evaluate them on
qualifications and best value, and negotiate final contract terms. Award is subject to
City Council approval or designee depending on the amount.
Construction contracts are divided into two categories: informal and formal.
Informal construction procurement applies to projects below the formal bidding
threshold. The City solicits qualified contractors, posts notices at least 10 days
before the bid due date, and the City Manager awards the contract. For larger
projects exceeding the threshold, formal bidding is required. The bidding
opportunity must be advertised in a local newspaper of general circulation at least
14 days prior to the bid opening, and posted for at least 30 days prior to bid
opening. The City Council must then approve the award to the lowest responsive
and responsible bidder.
The City also uses a Job Order Contracting method, which allows for competitively
bid long-term “on-call” construction contracts for repetitive, small-scale work. Job
Order Contracts can total up to $1 million over a period of five years, with individual
task orders capped at the formal bidding threshold (currently $220,000). This flexible
method allows the City to complete minor repairs and improvements efficiently and
economically.
The ordinance also permits the City to use cooperative purchasing agreements with
other public agencies when it is in the City’s best interest. The Purchasing Officer
must evaluate such opportunities and ensure the resulting agreement delivers good
value. This provision allows Carlsbad to take advantage of pricing and terms
negotiated by regional and national buying groups. For example, the City uses such
an agreement to purchase janitorial supplies.
Authority for issuing change orders is also clearly delineated in the ordinance. The
City Council may delegate approval authority for contract amendments and change
1 This authority is delegated to staff.
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9 Audit of the City’s Procurement and Contracting Functions
orders to the City Manager, especially for large or complex projects. In cases of
emergency, the City Manager has broad authority to bypass standard bidding
procedures and move quickly to secure goods, services, or construction required to
address the emergency.
Finally, the ordinance also provides exemptions to the competitive process under
certain limited circumstances, such as when a sole-source supplier is necessary,
when compatibility with existing equipment mandates a specific product, or when
emergency conditions justify expedited procurement.
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10 Audit of the City’s Procurement and Contracting Functions
FINDING 1: CONTRACTS AND PROCUREMENTS ADHERE
TO L AWS, POLICIES AND PROCEDURES
Compliance testing in this audit included sampling 24 public works contracts and
amendments. (In this context, public works contracts refer to the type of work and includes
improvements beyond those managed by the Public Works Branch.) The sampled items
were judgmentally selected to obtain a diverse representation of departments, project
managers, contractors, and dollar amounts. The contracts were tested for compliance with
the City of Carlsbad’s purchasing ordinance, and to verify the required authorizations and
approvals. The sample items are listed below.
Sample No. Type of Contract Department or
Division Amount
1 Standard Public Works - Formal Facilities $14,126,653
2 Standard Public Works - Formal Transportation $8,406,387
3 Professional Services Agreement
- <$10K Utilities $9,087
4 Professional Services Agreement
- >$10K Fleet & Facilities $496,692
5 Master Agreement
Public Works
Contract
Administration
$900,000
6 Standard public works - Informal Parks &
Recreation $42,200
7 Minor Public Works Fire Department $16,487
8 Professional Services Agreement
- >$10K
Environmental
Sustainability $200,000
9 Master Agreement
Construction
Management &
Inspection
$800,000
10 Professional Services Agreement
- >$10K Fleet $457,105
11 Professional services Agreement
- >$10K Facilities $4,014,609
12 Standard public works - Formal Transportation $3,993,598
13 Standard Public Works - Formal Utilities $3,823,800
14 Standard Public Works - Informal Parks &
Recreation $42,200
15 Master Purchase Agreement Utilities $40,000
16 Maintenance Service Agreement Facilities $3,250
17 Amendment Transportation $2,109,572
18 Amendment Facilities $1,229,697
19 Amendment Transportation $1,200,000
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11 Audit of the City’s Procurement and Contracting Functions
Sample No. Type of Contract Department or
Division Amount
20 Amendment
Construction
Management &
Inspection
$800,000
21 Amendment Environmental
Sustainability $218,910
22 Amendment Utilities $200,000
23 Amendment Fleet & Facilities $521,837
24 Amendment Fleet $20,875
The testing results indicated no significant discrepancies or missing documentation.
Therefore, contracting processes appear to be adhering to laws and regulations, and no
recommendation is necessary at this time.
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12 Audit of the City’s Procurement and Contracting Functions
FINDING 2: INTERNAL CONTROLS OVER PROCUREMENT
AND CONTRACTING PROCESSES ARE EFFECTIVE BUT
CUMBERSOME
Internal controls are the policies, procedures and practices that an organization puts
in place to safeguard its assets, ensure the accuracy and reliability of its records,
promote operational efficiency, and encourage adherence to laws, regulations and
internal policies. In financial processes, internal controls help detect and prevent
transaction errors, deter fraud, ensure that financial statements are accurate, and
maintain compliance with accounting standards. In other operating areas such as
procurement, internal controls govern processes such as purchase requests,
approvals, and execution to ensure that public funds are spent appropriately,
competitive bidding practices are followed, and conflicts of interest are avoided.
Internal Controls over procurements and contract are effective, but many of them
rely on manual operation and are therefore prone to error. The city is implementing
an enterprise resource planning system that will encompass procurement functions,
and procurement processes and controls will be reevaluated during the
implementation. The system is currently expected to be operational in September
2026.
As shown in the following diagram, procurement processes involve several systems
that are partially integrated at best. The financial system is used to record
transactions and issue payments, but a separate system is used to obtain signatures
for approvals. The city’s financial system does not have an efficient method for
tracking spending on contracts against the executed contract amount, so this check
has to be performed manually by contract professionals. Executed contracts are
stored in a centralized citywide system, but documentation for work-in-process and
other procurement documents are stored in various other locations. Professional
staff who work on contracts and procurements devise their own methods for
tracking tasks for various procurements as no single citywide system provides
project management, workflow, and document control. These methods include a
small database, spreadsheets, and handwritten notes. The City of Carlsbad is
currently implementing a new financial system that contains procurement
functionalities; the implementation will streamline procurement processes and
consolidate some of these disparate components.
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13 Audit of the City’s Procurement and Contracting Functions
Simplified diagram of city systems used for processing procurements
Financial
System
Document
Storage System
Document
Signing System
Database
Contracts &
Related
Documents
Working Files
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14 Audit of the City’s Procurement and Contracting Functions
The following table provides the results of this audit’s assessment of internal
controls over procurement processes.
Control Area or Process Internal Audit Assessment
Governance & Policy Strong
Segregation of Duties Strong
Vendor Management & Selection Adequate
Requisition & Purchase Orders Strong
Approval Process Strong
Vendor Invoices & Payments Strong
Receiving & Inventory Control Needs Improvement
Recordkeeping & Documentation Strong
Monitoring & Auditing Needs Improvement
Most areas were rated as strong because of the presence of robust or multi-level
checks such as approvals and reviews. However, the receiving and inventory control2
processes need improvement. They are decentralized at the departmental level, and
functions may not be segregated. Segregation of duties is a prudent measure to
implement when feasible because it helps reduce the risk of fraud by reducing the
ability for a single employee to place an order for goods, accept the delivery of those
goods and then improperly divert them. Similarly, the auditing and monitoring
processes need improvement, as there is no ongoing citywide monitoring or auditing
of inventory or regular auditing of consumables or other assets.
2 Some departments such as Public Utilities and Fleet have inventory systems in place.
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15 Audit of the City’s Procurement and Contracting Functions
Internal controls can be classified in several ways. A common way is to distinguish
between hard controls and soft controls.
• Hard controls are strong and generally not dependent on human operation to
function. They will function unless someone makes an active effort to
circumvent or defeat them. Examples are door locks, computer system access
restrictions, segregation of duties, and documented approval processes.
• Soft controls, on the other hand, require human adherence to operate
effectively. Examples include policies and procedures, ethical guidelines, and
cultural norms that can influence employee behavior. An organization with a
strong ethical climate and leadership that emphasizes integrity can discourage
misconduct even when hard controls are absent.
Controls can also be categorized by their purpose: preventive, detective, and
corrective.
• Preventive controls are designed to stop errors or irregularities before they
occur—such as requiring competitive bids for large procurements or restricting
system access to authorized users.
• Detective controls identify issues after the fact—such as regular internal audits,
budget-to-actual variance analyses, or review of purchasing logs for unusual
patterns.
• Corrective controls address problems once they are identified, such as instituting
new approval levels after a policy violation is detected.
• Compensating (or mitigating) controls are implemented to reduce risks when
ideal or preferred controls is not practical, feasible, or cost-effective to
implement. They “compensate” for a missing or weak primary control to help
achieve the same control objective. For example, in a financial system, the best
practice is to segregate duties so that no single employee can both authorize and
record a payment. However, this segregation might not be possible in a small
workplace with limited staff. As a compensating control, the organization can
assign another employee to conduct a monthly review of all transactions to
detect any irregularities.
Stronger controls—such as multi-level approvals, extensive documentation, or
automated monitoring systems—can enhance assurance and reduce the likelihood
of errors or fraud, but they also require resources in the form of staff time,
technology, and administrative overhead. Overly burdensome controls may slow
down processes, reduce operational efficiency, and frustrate staff, sometimes
leading to workarounds that undermine the very controls in place.
When designing internal controls, it is essential to ensure that the cost of control is
proportionate to the level of risk addressed, aiming for a balanced design that
protects the organization without impeding its effectiveness. A well-designed
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16 Audit of the City’s Procurement and Contracting Functions
internal control system employs a balanced mix of preventive, detective, and
corrective measures to provide comprehensive oversight of processes.
Some internal controls can become more restrictive than necessary simply due to a
lack of update. For example, the City Manager’s approval authority3 was established
in 2008 at $100,000 and has not been adjusted since. Had the authority been
adjusted periodically at the rate of inflation, it would be over $150,000 by now as
shown in the table below. Increasing the City Manager’s approval authority would
free time on the City Council’s docket without adding any appreciable risk to the
City.
Calendar
Year
Inflation-Adjusted
Approval Authority Inflation Rate
2008 $100,000 3.8
2009 $103,800 -0.4
2010 $103,385 1.6
2011 $105,039 3.2
2012 $108,400 2.1
2013 $110,677 1.5
2014 $112,337 1.6
2015 $114,134 2.1
2016 $116,531 1.3
2017 $118,046 2.1
2018 $120,525 2.4
2019 $123,417 1.8
2020 $125,639 1.2
2021 $127,147 4.7
2022 $133,122 8
2023 $143,772 4.1
2024 $149,667 2.9
2025 $154,007
A report by the City’s Purchasing Officer showed that 34 and 42 non-public works
contracts were submitted for approval before the City Council in fiscal years 2023-24
and 2024-25, respectively. Of these, only 5 and 3 were for an amount between
$100,000 and $150,000.
3 This limit pertains to contracts other than construction. The limit for construction contracts is set
forth in the CUPCCAA, which the city voluntarily opted into. The limit is currently $220,000.
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17 Audit of the City’s Procurement and Contracting Functions
A review of City Manager award authorities from comparable jurisdictions shows a
range of authority levels.
Carlsbad $100,000
Escondido $200,000
Irvine $200,000
National City $25,000
Newport Beach $120,000
Oceanside $100,000
San Clemente $60,000
San Marcos $250,000
Vista $150,000
There is no statewide legal requirement or other standard that establishes award
authority levels, although the governing bodies of larger government entities tend to
grant higher thresholds to their executives. For example, the City of San Diego’s
thresholds are set at over $30 million, $5 million, and $1 million for major public
works, job-order task orders, and consultant agreements respectively. Furthermore,
despite researching the issue, this audit could not find documentation such as risk-
based analyses to support these authority levels. Rather, these levels seem to have
been historically established and periodically adjusted on an ad hoc basis.
Similarly, the process that provides for City Council oversight of contracts should be
related to the interests of council members and their constituents, or the inherent
risk of the contract and not be merely based on a dollar threshold.
Recommendation 1
The City Council should consider increasing the City Manager’s approval authority to
at least $150,000, and adjust this figure periodically for inflation. This
recommendation applies only to non-construction contracts. Construction contracts
remain governed by CUPCCAA (PCC §22032), which establishes the
$75,000/$220,000 informal thresholds and the $220,000 formal bidding threshold.
Doing so would reduce the number of contracts that are placed on the City Council
docket without resulting in any appreciable risk to the City of Carlsbad. This can
result in project delays whenever the City Council docket is full and their approval is
deferred to future meetings.
Recommendation 2
The City should consider streamlining the approval process for contracts.
Streamlining the process may entail:
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18 Audit of the City’s Procurement and Contracting Functions
a) Developing a tool for determining which contracts should require City Council
approval. Such a tool would incorporate risk-based criteria for evaluating contracts
and a rating scale. This tool would provide a more sophisticated output than the
current simple but crude method of forwarding all contracts exceeding a set dollar
threshold for City Council approval.
For example, two construction projects costing a similar amount – say two million
dollars – may have very different risk characteristics. One for repaving a few miles of
road is less risky than one for upgrading a water treatment plant. Factors such as the
technical complexity of the project, the availability of qualified contractors, and the
potential for materials price increases may differ markedly between the two
projects.
b) Working with the City Attorney’s Office to evaluate the legal feasibility of any
proposed changes and identify any necessary changes to the municipal code or
council policies. Any risk-based approval framework could supplement professional
and service contracts, but CUPCCAA thresholds for construction remain statutory
and cannot be replaced. Application to non-construction contracts would require
amendments to Carlsbad Municipal Code Chapter 3.28 and possibly Council policy.
Note that risk-based evaluation tools for projects and contracts are available and
widely used for evaluating bid proposals. For example, federal guidance to grantees
for determining that a bidder is responsible4 should vary according to the size,
complexity, and nature of a potential contract.5 The city currently incorporates a risk
evaluation for prioritizing for capital improvement projects. City Council members
should be able to view a listing of all contracts prior to their award and retain the
ability to review any contract before it is awarded. Transparency and visibility can be
achieved by publishing a list of contracts with a basic description of each and the risk
score each received.
4 A responsible contractor is one possessing the ability to successfully perform under the terms and
conditions of the contract.
5 Federal Transit Agency Circular 4220.1G
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19 Audit of the City’s Procurement and Contracting Functions
FINDING 3: THE CITY’S PURCHASING LAWS AND
REGULATIONS ARE COMPARABLE TO THOSE OF OTHER
MUNICIPALITIES
Researching the procurement laws, policies, and procedures of similar California cities—
where all are subject to the same overarching state laws—offers clear benefits. It allows
cities to identify common practices, regional standards, and effective approaches that have
been successfully implemented by peers operating under similar legal constraints. By
examining how similar-sized cities address procurement challenges such as competitive
bidding thresholds, local vendor outreach, or conflict-of-interest policies, a city can adopt
improvements that enhance compliance, efficiency, and transparency.
However, even among California cities, comparisons have limitations. Differences in charter
status, organizational structure, staffing capacity, political priorities, and local market
conditions can all influence how procurement is actually carried out. A practice that works
well in one city may not be practical in another due to limited resources or different
governance models. Additionally, formal policies may not always reflect operational
realities; simply replicating another city’s written procedures without understanding how
they function in practice could result in ineffective or burdensome controls. For these
reasons, comparisons should be used as a guide—not a blueprint—when considering
changes to procurement practices. They should be complemented by an internal
assessment of the city’s own needs and capacities, and by consultation with stakeholders
involved in procurement activities.
This audit compared the City of Carlsbad’s purchasing ordinance and regulations against
those of two Southern California municipalities with similar demographics, larger cities, San
Diego County, and the State of California. While comparisons with similar municipalities are
the most appropriate, the more comprehensive regulations of larger government entities
provide insight about potential clauses that should be included in the City’s laws. The
following table summarizes the main sections of the City of Carlsbad’s purchasing ordinance.
Section Purpose or Content
Definitions Provides specific definitions for 21 terms
used throughout the ordinance.
Roles and authorities Identifies five roles and delineates the
authority and responsibilities of each: City
Council, City Manager, City Attorney,
Purchasing Officer and End User.
Procurement of goods Establishes three methods for the
procurement of goods: Small Procurements,
Informal Bidding for Goods, and Formal
Bidding for Goods. The methods are
primarily based on the dollar value of a
procurement.
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20 Audit of the City’s Procurement and Contracting Functions
Procurement of professional
services and services
Establishes three methods for the
procurement of professional services and
other services: Small Procurements,
Informal Bidding for Goods, and Formal
Bidding for Goods. The methods are
primarily based on the dollar value of a
procurement.
Competitive negotiations for
goods, services, and professional
services
Allows for procuring services, some
professional services (other than those
listed in the previous section), and highly
specialized goods using competitive
negotiations under certain conditions.
Construction projects Generally follows the California Public
Contract Code.
Design-build contracts Allows for an alternative contracting
method to the California Public Contracting
Code.
Job order contracts Allows for the use of a type of contract for
minor or recurring construction tasks.
Execution of change orders and
amendments
Requires change orders or contract
amendments to be in writing
Cooperative purchasing Allows for joining with certain other
organizations in cooperative purchase plans
or programs.
Exemptions Lists 14 exemptions from the purchasing
ordinance.
Emergencies Allows for sidestepping purchasing
ordinance provisions upon a declaration of
an emergency.
The audit found that the City of Carlsbad’s purchasing ordinance and regulations, as
embodied in the Purchasing Policies and Procedures Manual, are comparable to
those of other similar-sized municipalities. While some of the manuals and other
procurement-related guidance publications of other government entities are
organized in a more user-friendly format and incorporate graphics, the publications
include similar language and clauses that cover the basic procurement laws.
Recommendation 3
The City should update the Purchasing Policies and Procedures Manual, which was
issued in 2016. The City should also establish a revision period for this manual. While
a new update has been drafted, it has not been reviewed by stakeholders or
approved. The manual integrates charter-based policies along with state compliance
requirements (CUPCCAA, PCC, Labor Code).
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21 Audit of the City’s Procurement and Contracting Functions
FINDING 4: PROCUREMENT OPERATIONS CAN BE
IMPROVED BY ESTABLISHING PERFORMANCE GOALS,
CENTRALIZING OVERSIGHT, AND ADOPTING NEW
SYSTEMS
Procurement and contracting functions are operating effectively
This audit used two management evaluation tools to provide a high-level
assessment of procurement operations. The first is a capability maturity model,
which gives insight on how well functions and processes are defined, managed, and
optimized. The model typically rates processes on a scale of 1-5 as follows:
Maturity Level Description
Level 1: Initial (Ad Hoc)
There may be common practices, but
processes are lacking, minimal or poorly
documented. Performance is often reactive
and inconsistent.
Level 2: Repeatable (Managed)
Basic processes exist and can be repeated, but
they are not well-documented, followed, or
understood.
Level 3: Defined (Standardized) Processes are well-documented, standardized,
and consistently followed.
Level 4: Managed (Measured)
Performance metrics and key performance
indicators are in place and track process
effectiveness.
Level 5: Optimized (Continuous
Improvement)
Relevant data is collected and analyzed in a
timely manner to continuously improve
operations.
The model provides a structured approach to identify strengths, gaps, and
opportunities for improvement. The audit considered the following distinct
procurement capabilities:
• Sourcing Strategy
Sourcing strategy involves systematically identifying potential suppliers and
evaluating them based on criteria such as quality, reliability, cost
competitiveness, and capacity. This process typically includes market research,
supplier outreach, request for proposal or request for quotation processes, and
supplier vetting. The goal is to build a pool of qualified suppliers that align with
the organization’s goals for quality, cost, innovation, and long-term value.
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22 Audit of the City’s Procurement and Contracting Functions
• Supplier Management
Supplier management focuses on establishing and maintaining effective
relationships with vendors through clear contracts, regular communication, and
performance monitoring. This includes managing contract terms and renewals,
resolving disputes, ensuring suppliers meet agreed service levels, and fostering
collaboration for mutual improvement.
• Procurement Planning
Procurement planning aligns purchasing activities with organizational needs and
financial constraints through demand forecasting and budget integration. It
involves analyzing past consumption patterns, understanding future project
requirements, and coordinating with stakeholders to project future demand and
ensure timely purchasing, avoid stockouts, and optimize resource allocation.
• Purchase Execution
Purchase execution encompasses the operational steps of acquiring goods and
services — issuing purchase orders, obtaining required internal approvals, and
managing related documentation. Effective purchase execution supports
transparency, accurate financial tracking, and timely receipt of goods and
services, all while adhering to established procurement policies.
• Compliance & Risk Management
This function involves monitoring for fraud, conflicts of interest, and non-
compliance, as well as identifying risks in the supply chain such as geopolitical
issues or supplier insolvency. Proactive compliance and risk practices protect the
organization from legal liabilities and reputational harm while promoting ethical
procurement behavior.
• Performance Measurement
Performance measurement tracks procurement’s contributions to organizational
goals by monitoring key metrics such as cost savings, process efficiency, supplier
performance, and contract compliance. Using dashboards and regular reporting,
procurement teams analyze data to identify opportunities for improvement and
demonstrate value to stakeholders. Effective performance measurement
supports data-driven decision-making and continuous improvement of
procurement operations.
The second tool used in this audit is the People-Processes-Technology framework,
which is widely employed to measure organizational effectiveness and facilitate
change management in various undertakings such as digital transformation,
enterprise architecture, business process improvement, and enterprise resource
planning. It can help organizations train staff, manage resistance to change, map and
optimize workflows, and select appropriate systems to support those processes.
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23 Audit of the City’s Procurement and Contracting Functions
The framework emphasizes balancing three critical dimensions — people, processes,
and technology — to drive successful outcomes, and it is widely embraced in
information technology and business management. The framework is useful because
it is simple, it encourages holistic thinking, and it aligns business and technology
goals.
People Processes Technology
The human element —
skills, culture, behavior,
and knowledge.
The structured approach
to work — workflows,
policies, and procedures.
The tools and systems
that support people and
processes.
Roles and responsibilities
Efficiency and
standardization
Software and hardware
Training and
development
Clear workflows and
documentation
Automation and
integration
Communication and
collaboration
Quality assurance and
control
Data management and
analytics
Leadership and
motivation
Continuous improvement
Scalability and security
Using the capability maturity model rating scale, this audit scores the procurement
function as a three. This rating is informed by the use of the People-Process-
Technology framework. A higher score cannot be justified due to the absence of
performance measures (discussed in the next section) as well as the limitations of
the technology systems currently supporting procurement transactions.
However, as shown in the following table, the procurement professionals employed
with the City have a long tenure in their jobs, as do the directors and executives
overseeing them.
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24 Audit of the City’s Procurement and Contracting Functions
Job Title Tenure with
City
Years in Current
Position
1 Senior Contract Administrator 26.9 7.4
2 Senior Contract Administrator 26.5 4.3
3 Senior Contract Administrator 8.3 8.3
4 Contract Administrator 25.3 8.0
5 Contract Administrator 21.5 5.4
6 Contract Administrator 7.4 1.7
7 Buyer/Contract Administrator 6.9 2.8
8 Associate Contract Administrator 3.9 3.0
Tenure is a relevant attribute because government procurement roles are
specialized and there are very few educational institutions that offer degrees in this
field; employees gain experience primarily through work. This is unlike other
administrative and technical functions such as accounting or engineering where
employees usually begin their careers with a relevant educational preparation.
Nonetheless, this assessment was mainly based on a qualitative evaluation of
employee knowledge and experience and not simply on their tenure.
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25 Audit of the City’s Procurement and Contracting Functions
Performance data is not being tracked and reported
To evaluate the efficiency of operations, it is important to establish performance
objectives and to collect and analyze the relevant data. For various reasons, the City
of Carlsbad does not currently have performance measures in place for procurement
and contracting activities. Such objectives for a municipal procurement department
can be related to processing efficiency, compliance, cost-effectiveness, supplier
performance, and stakeholder satisfaction. A listing of potential performance
measures is included in the table below.
Measure Definition
Process Efficiency & Timeliness Measures
Purchase Order Cycle Time Average time from purchase request to order
completion.
Requisition-to-Order Time Time taken to convert a purchase request into a
purchase order.
Contract Processing Time Time required to draft, review, and approve
supplier contracts.
Percentage of On-Time
Deliveries
Orders received by the requested delivery date.
Stakeholder Satisfaction Measures
Internal Client Satisfaction Feedback from municipal departments on
procurement responsiveness and service.
Dispute Resolution Time Average time to resolve procurement-related
conflicts with vendors or internal stakeholders.
Cost Management Measures
Cost Savings Percentage Savings achieved through negotiations, bulk
purchasing, or process improvements.
Procurement Cost as a
Percentage of Spend
Total procurement department costs relative to
total purchasing spend.
Variance from Budget Difference between projected and actual
procurement spend.
Compliance & Risk Measures
Compliance Rate Percentage of purchases following established
procurement policies and regulations.
Audit Findings Number and severity of issues found in
procurement audits.
Supplier Contract Compliance Percentage of suppliers adhering to contract
terms (pricing, service levels).
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26 Audit of the City’s Procurement and Contracting Functions
Measure Definition
Supplier Performance Measures
Supplier Lead Time Average time suppliers take to fulfill orders.
Supplier Quality Rating Defect rate or quality assessment of goods and
services delivered.
Percentage of Preferred
Supplier Spend
Share of total spend going to pre-vetted, high-
performing suppliers.
Sustainability & Social Impact Measures
Percentage of Local Supplier
Spend
Share of procurement budget spent with local
businesses.
Green Procurement Rate Percentage of purchases meeting sustainability
or environmental standards.
Diverse Supplier Participation Spend or contract count awarded to minority-,
women-, or veteran-owned businesses.
Performance measurement requires careful consideration to select appropriate
measures, and to weigh the cost of measurement against the benefits and utility of
the measures. Different stakeholders may care about different measures. For
example, a finance manager will be concerned about cost measures, whereas a
community relations manager will be more concerned about project timeliness and
the concerns of residents. The City Manager may be concerned about issues that are
of interest to the City Council – contractor performance on a building,6 for example
– whereas procurement staff are likely to be concerned with measures of their
workload.
Recommendation 4
The City Manager or designee should assign a qualified employee to coordinate the
development of a performance measurement system for procurement. Developing a
set of measures will entail identifying all procurement stakeholders, surveying them,
and possibly benchmarking with other government agencies. It should also entail
evaluating the configuration and reporting features of new technology systems and
modules that will be supporting procurement to automate and facilitate
performance measurement. Implementation could align with the Workday ERP
rollout (expected September 2026), which will provide automated reporting
features.
6 The Public Works Branch is currently developing a contractor performance evaluation.
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27 Audit of the City’s Procurement and Contracting Functions
Management and oversight of procurement operations should be improved
In a municipality the size of Carlsbad, structuring procurement operations as a
centralized or decentralized function has significant implications for efficiency, cost
control, and service quality. In a centralized structure, all purchasing decisions and
activities are managed by a single, dedicated procurement department. A
decentralized structure allows individual departments to manage their own
purchasing independently, with little to no reliance on a central procurement office.
The attributes of each structure are listed in the following two tables.
Attributes of a Centralized Procurement Function
Advantages Disadvantages
Cost Savings: Bulk purchasing and
vendor consolidation lead to better
pricing and economies of scale.
Slower Response Time: Departments
may face delays when waiting for
procurement approvals or specialized
orders.
Standardization: Consistent
procurement policies, contracts, and
compliance processes across
departments.
Limited Departmental Flexibility:
Unique departmental needs might be
overlooked in favor of standardized
processes.
Stronger Compliance: Easier
enforcement of procurement rules,
regulatory requirements, and audit
standards.
Bureaucratic Bottlenecks: More layers
of review can slow decision-making,
especially for small or urgent
purchases.
Specialized Expertise: Dedicated
procurement staff often have deeper
knowledge of purchasing practices and
vendor management.
Potential for Disconnect: The central
procurement team might lack day-to-
day understanding of each
department’s specific requirements.
Improved Reporting & Transparency:
Centralized data allows for clearer
tracking of spending and performance
metrics.
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28 Audit of the City’s Procurement and Contracting Functions
Attributes of a Decentralized Procurement Function
Advantages Disadvantages
Faster Decision-Making: Departments
can respond quickly to their own needs
without waiting for centralized
approvals.
Higher Costs: Missed opportunities for
bulk purchasing and inconsistent pricing
across departments.
Greater Flexibility: Departments can
tailor purchasing decisions to their
specific requirements.
Inconsistent Compliance: Variations in
how policies and procurement laws are
followed increase the risk of non-
compliance.
Closer Vendor Relationships:
Departments often have more direct
interaction with suppliers for their
specialized needs.
Duplication of Effort: Multiple
departments performing similar
procurement functions can lead to
inefficiency.
Empowered Departments: Greater
ownership of budgets and procurement
fosters accountability and innovation.
Weaker Oversight: Harder to track
spending, vendor performance, and
overall procurement effectiveness
across the municipality.
Some municipalities adopt a hybrid approach — centralizing high-value, strategic
purchases while allowing departments autonomy for smaller, day-to-day purchases.
This balances efficiency with flexibility
The following diagram shows the organizational structure of the current
procurement professionals in the City of Carlsbad. The majority of these employees
are located within the Public Works Branch, and most of their work involves
construction contracts. This placement is logical since the Public Works Branch is
responsible for the majority of contractual expenditures and the most complex
projects and contracts. The professionals in the Finance Department review
purchase orders for accuracy before payments are processed and also prepare some
contracts. Other departments are able to conduct small procurements, but have to
rely on the expertise of staff in the Public Works Branch or Finance Department for
help in drafting and processing large contracts.
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29 Audit of the City’s Procurement and Contracting Functions
Senior Contract
Administrator
Assistant Finance
Director /
Purchasing
Officer
Contract
Administrator
Finance
Director
Senior
Management
Analyst
Senior Contract
Administrator
Contract
Administrator
Associate
Contract
Administrator
City Council & Mayor
Senior Contract
Administrator
Engineering
Manager
Contract
Administrator
Contract
Administrator
Community
Development
Director
Senior
Management
Analyst
Fire
Chief
Police
Chief Deputy City
Manager,
Public Works
Deputy City
Manager,
Community
Services
Deputy City
Manager,
Administrative
Services
City Manager
City Attorney
Procurement
Professional
Designated Role in
the Municipal Code
Assistant City Manager
Feb. 24, 2026 Item #11 Page 34 of 62
30 Audit of the City’s Procurement and Contracting Functions
The City of Carlsbad’s procurement function is decentralized, with most
procurement staff working in the Public Works Branch or the Finance Department.
This organizational structure makes sense, considering that the Public Works Branch
is responsible for the largest projects and associated contracts. However, a main
shortcoming of this structure is that there is no single employee who serves as a
subject-matter expert and resource to users or who manages all procurement staff
and helps coordinate their work. The managers currently overseeing procurement
functions are very experienced. The Deputy City Manager for Public Works and the
Deputy City Manager for Administrative Services have long, relevant experience in
government procurement, as does the Purchasing Officer. However, no individual is
dedicated to managing the procurement function. The management analysts and
managers have other responsibilities that consume most of their time. In that sense,
they are mostly overseeing procurement functions and not managing them.
For contract staff, a centralized procurement structure—where they work under one
manager—typically offers greater professional benefits than a decentralized
structure. In a centralized model, staff operate within a cohesive team that provides
clear leadership, standardized processes, and consistent expectations. They are
more likely to receive structured training, ongoing professional development, and
support in navigating complex procurements. A procurement manager can advocate
for staff needs, coordinate workload distribution, and foster a collaborative
environment where knowledge and best practices are shared. This can improve staff
skills, job satisfaction, and career advancement opportunities.
In contrast, contract staff in a decentralized structure often work in isolation within
their assigned departments. Without a dedicated procurement manager, they may
lack access to specialized training or guidance, and may be forced to navigate
procurement rules and challenges on their own. Inconsistencies across departments
can lead to confusion or uneven performance expectations. Additionally, staff may
have less opportunity for professional growth and peer collaboration, and their
career path within the organization may be more limited. While some staff might
value the autonomy of working closely with a specific department, the lack of
centralized support generally diminishes opportunities for skill development,
consistency in practice, and overall career progression. Thus, contract staff are
generally better off in a centralized structure with clear leadership and professional
support.
A survey of local government municipalities found a mix of organizational structures
for purchasing departments.
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31 Audit of the City’s Procurement and Contracting Functions
Recommendation 5
The City Manager should consider centralizing the procurement function and
creating a Procurement Manager position. Doing so will increase the capabilities of
procurement staff and may lead to efficiencies and have a positive impact on
employee retention.
Implementing this recommendation will entail an analysis of staffing resources and
careful deliberations among stakeholders to realize the potential benefits and
minimize any disruptions during and after any transition. The Public Works Branch
should be satisfied that the level of service and support it receives from contracting
will not decrease. Implementing performance measures (Recommendation 4) will
help provide baseline data about current performance levels that will inform the
analysis of resources.
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32 Audit of the City’s Procurement and Contracting Functions
MANAGEMENT RESPONSE TO RECOMMENDATIONS
Recommendation 1:
The City Council should consider increasing the City Manager’s approval authority to
at least $150,000, and adjust this figure periodically for inflation. Doing so would
reduce the number of contracts that are placed on the City Council docket without
resulting in any appreciable risk to the City of Carlsbad. Many of these contracts are
of little interest to City Council members and the public. They can, however, result in
project delays whenever the City Council docket is full and their approval is deferred
to future meetings.
Management Response:
Management agrees that increasing the City Manager’s approval authority to at
least $150,000 would reduce the number of agreements brought forward to the City
Council. Although the number of agreements that would be reduced is relatively
minimal as of today, as inflation continues to drive costs upward, the number of city
agreements that will exceed $100,000 will only increase on an annual basis. Staff
recommend amending the City of Carlsbad Municipal Code Chapter 3.28 to increase
the City Manager awarding authority to $250,000. This increase paired with annual
inflationary increases, when applicable, would increase efficiency on an ongoing
basis with minimal impacts to transparency.
Recommendation 2:
The City should consider streamlining the approval process for contracts.
Streamlining the process may entail:
a) Developing a tool for determining which contracts should require City Council
approval. Such a tool would incorporate risk-based criteria for evaluating contracts
and a rating scale. This tool would provide a more sophisticated output than the
current simple but crude method of forwarding all contracts exceeding a set dollar
threshold for City Council approval.
For example, two construction projects costing a similar amount – say two million
dollars – may have very different risk characteristics. One for repaving a few miles of
road is less risky than one for upgrading a water treatment plant. Factors such as the
technical complexity of the project, the availability of qualified contractors, and the
potential for materials price increases may differ markedly between the two
projects.
b) Working with the City Attorney’s Office to evaluate the legal feasibility of any
proposed changes and identify any necessary changes to the municipal code or
council policies.
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33 Audit of the City’s Procurement and Contracting Functions
Management Response:
Management agrees that evaluating the possibility of implementing a risk-based tool
may offer potential benefits. Collaboration with the City Attorney’s Office will be
critical to ensure legal compliance is maintained. Additionally, the criteria
determination for which types of contracts will require City Council/Board approval
will need to be evaluated thoroughly to ensure the priorities of the City
Council/Board and community members are upheld.
Recommendation 3:
The City should update the Purchasing Policies and Procedures Manual, which was
issued in 2016. The City should also establish a revision period for this manual. While
a new update has been drafted, it has not been reviewed by stakeholders or
approved.
Management Response:
Management agrees an update to the Purchasing Policies and Procedures Manual is
needed. The update is currently underway; however, the Core Systems
Modernization project will not be completed until the fall of 2026 and may require
additional amendments. Staff anticipate completing the comprehensive update in
2027.
Recommendation 4:
The City Manager or designee should assign a qualified employee to coordinate the
development of a performance measurement system for procurement. Developing a
set of measures will entail identifying all procurement stakeholders, surveying them,
and possibly benchmarking with other government agencies. It should also entail
evaluating the configuration and reporting features of new technology systems and
modules that will be supporting procurement to automate and facilitate
performance measurement.
Management Response:
Performance measures and workload indicators are tools used by most government
agencies, including the City of Carlsbad. As part of the city’s annual adopted budget,
performance measures are included for all functional departments. With that said,
management agrees identifying and tracking additional measures and indicators
specific to procurement and contract/project management may yield insights to
drive improvement and efficiency. As the Core Systems Modernization project
progresses, staff will determine the applicability and appropriateness for specific
measures and indicators with the tentative plan to begin reporting out in fiscal year
2027-28.
Feb. 24, 2026 Item #11 Page 38 of 62
34 Audit of the City’s Procurement and Contracting Functions
Recommendation 5:
The City Manager should consider centralizing the procurement function and
creating a Procurement Manager position. Doing so will increase the capabilities of
procurement staff and may lead to efficiencies and have a positive impact on
employee retention.
Implementing this recommendation will entail an analysis of staffing resources and
careful deliberations among stakeholders to realize the potential benefits and
minimize any disruptions during and after any transition. The Public Works Branch
should be satisfied that the level of service and support it receives from contracting
will not decrease. Implementing performance measures (Recommendation 4) will
help provide baseline data about current performance levels that will inform the
analysis of resources.
Management Response:
Management agrees that a centralized procurement function may result in
additional benefits and efficiencies. Typically, within centralized procurement
functions, streamlining and consistency are the most notable benefits. However,
making a change from decentralized to centralized often results in operational
impacts across various functions, potentially requiring the need for additional
resources. A comprehensive study, with external assistance, will likely be required to
ensure all factors are considered. Furthermore, the functionality of the city’s new
financial system, expected to go live in the fall of 2026 will help inform this analysis.
If directed by the City Council, staff can incorporate the necessary budget request in
fiscal year 2026-27 with implementation of results, as applicable, in fiscal year 2027-
28.
Feb. 24, 2026 Item #11 Page 39 of 62
35 Audit of the City’s Procurement and Contracting Functions
CONCLUSION
Establishing and maintaining an efficient and effective government procurement
function is a demanding task. Procurement is not a publicly visible function like
policing, nor does it impact residents directly like water delivery, where a disruption
in service will be instantly noticed.
It is an internal administrative function that has dual compliance and service aspects.
Procurement staff have to be responsive to end users while protecting the city’s
interests by ensuring that laws and rules are being followed. These dual aspects can
create tension as staff balance work demands and expediency without degrading the
quality of their work. Successful procurement professionals possess technical
knowledge, customer service skills, and attention to detail. But conducting
successful procurements and achieving the goal of maximizing the value of city
resources and taxpayer dollars also requires participation and coordination with end
users and oversight and vetting by management and attorneys. Any weakness in this
team effort may lead to costly mistakes in dollars and delays.
The city currently has competent procurement staff and seasoned management that
give it a solid foundation for conducting successful procurements. The ongoing
modernization of its technology systems will allow it to build on this foundation by
automating routine, manual work and conducting more informative analytical work.
More dedicated attention to managing the procurement function citywide will also
accrue benefits to the city.
Feb. 24, 2026 Item #11 Page 40 of 62
Exhibit 2
ORDINANCE NO. CS-510 .
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, AMENDING SECTIONS 3.28.040, 3.28.050, 3.28.060, 3.28.070,
3.28.080 AND 3.28.120 OF CARLSBAD MUNICIPAL CODE CHAPTER 3.28 –
PURCHASING TO STREAMLINE PROCUREMENT, INCLUDING BY INCREASING
THE CITY MANAGER’S AWARDING AUTHORITY FOR THE PROCUREMENT OF
GOODS AND SERVICES TO $250,000
WHEREAS, Chapter 3.28 of the Carlsbad Municipal Code, the City of Carlsbad’s Purchasing
Ordinance, details the city’s procurement processes, including specifying the City Manager’s awarding
authority for the procurement of goods, services, and professionals services at $100,000.00 or less per
agreement year; and
WHEREAS, the city’s Internal Audit Manager evaluated the city’s procurement operations,
practices and internal controls and issued report 2026-01 to the City Council on February 24, 2026; and
WHEREAS, the internal audit report included a recommendation for the City Council to consider
increasing the City Manager’s approval authority to at least $150,000, and to adjust this figure
periodically for inflation; and
WHEREAS, based on city managers’ awarding authorities from comparable jurisdictions ranging
from $25,000 to $250,000, it is recommended that the city’s awarding authority for the City Manager
be increased to $250,000 to reasonably reduce costs and maximize efficiency; and
WHEREAS, the internal audit report also noted that, while the city’s procurement and
contracting functions are operating effectively, there are opportunities to enhance efficiency,
effectiveness, and oversight; and
WHEREAS, to streamline and increase procurement efficiency, it is recommended that the
Purchasing Ordinance be amended to clarify the current process of procuring capital outlay items
approved by the City Council in the city’s budget, have the City Council approve construction plans and
specifications only once instead of twice, and clarify the city’s current emergency procurement process.
NOW, THEREFORE, the City Council of the City of Carlsbad, California, ordains as follows:
SECTION I. The above recitations are true and correct.
SECTION II. The ordinance is not a “project” as defined by California Environmental Quality
Act, or CEQA, Section 21065 and CEQA Guidelines Section 15378(b)(5) and does not require
environmental review under CEQA Guidelines Section 15060(c)(3) and 15061(b)(3), because an
ordinance to streamline procurement processes is an organizational or administrative government
Feb. 24, 2026 Item #11 Page 41 of 62
activity that does not involve any commitment to any specific project which may result in a potentially
significant physical impact on the environment. Any subsequent action or direction stemming from the
proposed action may require preparation of an environmental document in accordance with CEQA or
the CEQA Guidelines.
SECTION III. Carlsbad Municipal Code, Title 3, Chapter 3.28, Section 3.28.040, is amended to
read as follows:
3.28.040 Procurement and disposition responsibilities.
A.End User. The end user shall:
1.Identify its procurement needs and the availability of funding;
2.Submit to the purchasing officer specifications for the required goods, services,
professional services, and/or construction projects;
3.Participate in the evaluation of bids and proposals; and
4.Inspect goods delivered, services performed, professional services rendered,
and/or construction projects to determine conformity with the requirements set
forth in the bid or proposal documents and with contractual obligations, and
authorize payments for conforming goods, services, professional services, and/ or
construction projects.
B.Purchasing Officer. The purchasing officer shall be responsible for the procurement of
goods, services, professional services, and/or construction projects for the city in
accordance with the provisions of this chapter. Except as provided for herein, no
procurement shall be made contrary to the provisions of this chapter. Any agreement
or contract for the purchase of goods, services, professional services, and/or
construction projects made contrary to the provisions of this chapter shall be void and
any claim or demand against the city based thereon shall be invalid. The purchasing
officer shall:
1.Prepare and recommend to the City Manager operational procedures and forms for
the procurement of goods, services, professional services, and/or construction
projects in cooperation with the end users and for the disposal of surplus personal
property;
2.Procure or supervise the procurement of all goods, services, professional services,
and/or construction projects needed in coordination with end users;
3. Process the contracts awarded administratively and/or by City Council;
4.Whenever possible, establish standardized specifications and consolidation of
requirements for goods and/or services required by two or more end users; and
Feb. 24, 2026 Item #11 Page 42 of 62
5.Sell or otherwise dispose of surplus personal property, and lost and unclaimed
property held by the city's police department.
C.City Manager. The City Manager shall be the awarding authority for:
1.All procurement of goods for which the cost to the city is $250,000.00 or less;
2.All contracts for services and professional services of $250,000.00 or less per
agreement year;
3.All construction project contracts less than the formal bidding threshold
established by the UPCCAA;
4.Any change order, amendment or extension to an existing contract which when
added to the contract amount, including prior change orders, is within the
authority granted in subsections (C)(1) through (C)(3) above;
5.Any construction project change order up to the dollar amount equal to the
contingency amount set when the underlying contract was awarded;
6.Any construction project change order in which the total amount of the original
contract and all amendments and change orders are less than the formal bidding
threshold established by the UPCCAA;
7.Any change order or amendment to a non-construction project contract awarded
by the City Council in an amount up to 25% of the original contract amount,
including the total of all amendments and change orders, up to a limit of
$250,000.00 per agreement year;
8.Any extensions to a contract awarded by the City Council as delegated in the
contract or the approving resolution;
9.The City Manager shall approve alternate procurement methods, if appropriate,
for use on an experimental basis, and recommend to the City Council additions,
deletions or modifications to the city's procurement methods;
10.The City Manager shall have the authority to delegate the awarding of contracts,
amendments and change orders for goods, services, professional services, and/or
construction projects as set forth in this chapter by memorandum or by
administrative order;
11.Each month the City Manager shall send to the City Council a report of all contracts
that have been awarded over the formal bidding requirement.
12.The City Manager awarding authority shall be reviewed annually and adjusted in
response to the San Diego—All Urban Consumers Consumer Price Index. The
purchasing officer shall calculate the effect of the cumulative change in the index
to $250,000.00 beginning in fiscal year 2027-28. Adjustment to the awarding
authority limit will be made in $10,000.00 increments whenever the calculated
value exceeds a previously set awarding authority limit by more than $5,000.00.
Feb. 24, 2026 Item #11 Page 43 of 62
The City Manager awarding authority limit adjustment will be made effective at
the beginning of a fiscal year by memorandum from the purchasing officer.
D.City Council. The City Council shall be the awarding authority for:
1.Any procurement of goods, services and/or professional services costing more than
$250,000.00 per agreement year;
2.Any construction project contract at or above the formal bidding threshold
established by the UPCCAA;
3.Any change order or amendment that exceeds the City Manager's authority.
E.City Attorney. The City Attorney shall be the awarding authority for the procurement of
legal services, regardless of the dollar amount, up to the amount of appropriations
available.
SECTION IV. Carlsbad Municipal Code, Title 3, Chapter 3.28, Section 3.28.050, is amended to
read as follows:
3.28.050 Procurement of goods.
A. Small Procurements. Procurements of goods where the total cost of goods
are $30,000.00 or less in any one transaction, shall be made using simplified and cost
effective operational procedures and forms approved by the City Manager. The use of
formal or informal bids is not required, but is considered the best management practice.
The small procurement limit shall be reviewed and adjusted annually per the
procedures set forth in subsection (C)(1) of this section. Procurement requirements
shall not be divided so as to constitute several small procurements under this
subsection.
B.Informal Bidding for Goods.
1.Informal bidding procedure shall be utilized:
a.When the anticipated cost of the goods to be purchased is less than the dollar
amount established for formal bidding for goods in subsection (C)(1) herein;
or
b.When no bids are received pursuant to the formal bid procedures established;
or
c.When all bids received substantially exceed the city's estimated costs, as
determined by the purchasing officer through the formal bidding procedure.
d.The City Council may designate types or classes of procurements costing more
than the dollar amount established for formal bidding in subsection (C)(1)
herein; which may be purchased through the use of informal bidding
procedures whenever the City Council finds that use of the informal bidding
procedure is advantageous to the city consistent with applicable law.
Feb. 24, 2026 Item #11 Page 44 of 62
2.The informal bidding procedure shall be as follows:
a.Bids shall be obtained by written or oral request.
b.When possible, a minimum of three bidders should be solicited.
c.Best value criteria, if used, must be determined before bids/quotes are
published or distributed to potential bidders/suppliers.
d.Responses shall be in writing, and may be transmitted by facsimile, by mail,
electronically over the Internet, or by any other means of delivery as
described in the bid documents.
e.The award shall be based on best value to the city or the lowest bid submitted
by a responsive bidder, as determined by the purchasing officer, and shall be
awarded by the City Manager.
C.Formal Bidding for Goods.
1.Formal bidding procedures shall be utilized when the anticipated cost of the goods
is greater than $30,000.00 per agreement year. The bid limit shall be reviewed
annually and adjusted in response to the San Diego—All Urban Consumers
Consumer Price Index. The purchasing officer shall calculate the effect of the
cumulative change in the index to $30,000.00 beginning in fiscal year 2009.
Adjustment to the bid limit will be made in $5,000.00 increments whenever the
calculated value exceeds a previously set bid limit by more than $2,500.00. The bid
limit adjustment will be made effective at the beginning of a fiscal year by
memorandum from the purchasing officer.
2.Procurement requirements shall not be divided so as to avoid the formal bidding
requirements.
3.The formal bidding procedures shall be as follows:
a.The purchasing officer, or designee, shall issue a notice inviting bids using one
or more methods designed to provide reasonable public notice in a manner
which will permit current information to be disseminated widely. The notice
shall include:
i.Instruction to bidders;
ii.Specifications describing the required goods;
iii.Bid forms and schedules;
iv.Any required bond forms;
v.General contract provisions;
vi.The time on or before which bids will be received;
vii.Where and with whom bids shall be filed;
Feb. 24, 2026 Item #11 Page 45 of 62
viii.The date, time and place where and when bids will be publicly
opened;
ix.Statement of bidders exceptions.
b.The sealed formal bids shall be received by the purchasing officer, or
designee, at a time, date and place designated in the bid documents. Formal
bids, timely received, will be publicly opened by the purchasing officer, or
designee, and the aggregate bid pricing shall be read aloud.
c.Any person or entity with whom the city has contracted to prepare or assist
in the preparation of bid or proposal documents is ineligible to submit a bid
or proposal for the provision of the goods so specified in the notice inviting
bids or proposals.
d.Formal bids received after the deadline for receipt of bids shall not be
accepted by the city and shall be returned to the bidder unopened, unless
opening is necessary for identification purposes. The purchasing officer, or
designee, shall submit written notification to the bidder whose bid was
received after the deadline stating what the deadline was, when the bid was
actually received and that the bid is being returned because it was received
after the deadline.
4.If no bids are received or if no bids meet the requirements as specified in the
solicitation documents, the purchasing officer may reissue the solicitation using
the informal bidding procedures, negotiate a contract based upon the solicitation,
without further complying with this section or the city may cease the procurement.
5.If two or more bids are received with the same total amount or unit price, quality
and service being equal, and if the public interest will not permit the delay of re-
advertising for bids, the City Council, or the City Manager if the procurement is
under $250,000.00, may exercise sound discretion and accept the bid it chooses.
6.In considering formal bids for goods, the awarding authority may waive minor
defects or irregularities, provided that the irregularities do not affect the bid
amount or give a particular bidder an advantage over others.
7.All bids shall be deemed rejected if no City Council or City Manager action is taken
on the bids or proposals within 90 days after the bids have been received and
opened, unless bidders agree to extend a bid's effective date upon request by the
city.
D.Additional Responsibilities and Authorities.
1.The city shall have the authority to require a performance bond in such amount as
it finds reasonably necessary to protect the best interests of the city consistent
with applicable law. If the city requires a performance bond, the amount of the
bond shall be described in the notice inviting bids and bid proposal documents.
Feb. 24, 2026 Item #11 Page 46 of 62
2.All contracts may be awarded based on the best value for the city. Best value
criteria, if used, must be determined before bids/quotes are published or
distributed to potential bidders/suppliers.
3.The City Manager shall be the awarding authority for procurement of goods for
which the cost to the city is $250,000.00 per agreement year or less, or for capital
outlay items within the amount approved by the City Council in the budget
process.
4.The City Council shall be the awarding authority for procurement of goods for
which the cost to the city is more than $250,000.00 per agreement year and have
not been previously approved as capital outlay items in the budget process or
exceed the approved budget amount for capital outlay items.
E.The city's goods procurement practice prohibits unlawful activity, including, but not
limited to, rebates, kickbacks, or other unlawful consideration. No city employee shall
participate in the selection process if that employee has a relationship with a person or
business entity seeking a contract with the city that would subject that employee to the
prohibition of Government Code Section 87100. (Conflicts of Interest).
SECTION V. Carlsbad Municipal Code, Title 3, Chapter 3.28, Section 3.28.060, is amended to
read as follows:
3.28.060 Procurement of professional services and services.
A.Professional Services Procurement.
1.Request for proposals should be used when professional services are needed. The
selection of professional services for, private architectural, landscape
architectural, engineering, environmental, land surveying or construction project
management firms should be based on the professional qualifications necessary
for the satisfactory performance of the professional services required, on
demonstrated competence, and on a fair and reasonable price consistent with
Government Code Section 4526.
2.Procurements of professional services where the total cost of services are
$30,000.00 or less per agreement year shall be made using simplified and cost
effective operational procedures and forms approved by the City Manager. If the
cost of needed professional services is expected to exceed $30,000.00 per
agreement year, at least three proposals should be solicited for the professional
service needed whenever possible. The purchasing officer may waive the
requirements for solicitation of multiple proposals if only one individual or firm can
reasonably provide the professional services, and it is in the best interest of the
city to waive the requirement.
B.Small Procurements of Services. Procurements of services where the total cost of
services are $30,000.00 or less in any one transaction, shall be made using simplified
and cost effective operational procedures approved by the City Manager and forms
Feb. 24, 2026 Item #11 Page 47 of 62
approved by the City Manager. The use of formal or informal bids is not required, but
is considered the best management practice. The small procurement limit shall be
reviewed and adjusted annually per the procedures set forth in Section 3.28.050(C)(1).
Procurement of services requirements shall not be divided so as to constitute several
small procurements under this subsection.
C.Informal Bidding for Services.
1.Informal bidding procedure, as set forth in Section 3.28.050(B)(2) may be utilized:
a.When no bids are received pursuant to the formal bid procedures established;
or
b.The City Council may designate types or classes of procurements costing more
than the dollar amount established for formal bidding in subsection (D)(1)
herein; which may be purchased through the use of informal bidding
procedures whenever the City Council finds that use of the informal bidding
procedure is advantageous to the city consistent with applicable law.
D.Formal Bidding for Services.
1.Formal bidding procedures shall be utilized when the anticipated cost of the
services is greater than $30,000.00 per agreement year. The bid limit shall be
reviewed annually and adjusted in response to the San Diego—All Urban
Consumers Consumer Price Index. The purchasing officer shall calculate the effect
of the cumulative change in the index to $30,000.00 beginning in fiscal year 2009.
Adjustment to the bid limit will be made in $5,000 increments whenever the
calculated value exceeds a previously set bid limit by more than
$2,500.00. The bid limit adjustment will be made effective at the beginning of a
fiscal year by memorandum from the purchasing officer.
2.Procurement requirements shall not be divided so as to avoid the formal bidding
requirements.
3.The formal bidding procedures and requirements shall be as set forth in Section
3.28.050(C) and (D).
4. The City Manager shall be the awarding authority for procurement of services and
professional services for which the cost to the city is $250,000.00 or less per
agreement year.
5.The City Council shall be the awarding authority for procurement of services and
professional services for which the cost to the city is more than
$250,000.00 per agreement year.
E.The city's services and professional services procurement practice prohibits unlawful
activity including, but not limited to, rebates, kickbacks, or other unlawful
consideration. No city employee shall participate in the selection process if that
employee has a relationship with a person or business entity seeking a contract with
Feb. 24, 2026 Item #11 Page 48 of 62
the city that would subject that employee to the prohibition of Government Code
Section 87100. (Conflicts of Interest).
SECTION VI. Carlsbad Municipal Code, Title 2, Chapter 3.28, Section 3.28.070, is amended to
read as follows:
3.28.070 Competitive negotiations for goods, services, and professional services.
A. The purchasing officer may authorize the solicitation of services and/or professional
services other than those listed in Section 3.28.060, and the purchase of highly
specialized goods by competitive negotiations when:
1. The cost of the goods, services and/or professional services is greater than the
dollar amount established for formal bidding in Section 3.28.050(C)(1) and
Section 3.28.060(D)(1); and
2. The goods are such that suitable technical or performance specifications are not
readily available; or
3. The city is not able to develop descriptive specifications; or
4. Requesting proposals for the particular service or goods to be procured would be
more advantageous to the city.
B. Whenever possible, at least three proposals shall be received and the award will be
based on the proposal that is determined to be most advantageous to the city, taking
into consideration price and the evaluation criteria set forth in the request for
proposal. Competitive negotiations are not intended to be used for the purpose of
avoiding the bidding procedure set forth in this chapter.
C. The City Manager or designee shall award contracts for goods and/or services less than
$250,000.00 per agreement year.
D. The City Council shall award contracts for goods and/or services over $250,000.00 per
agreement year.
SECTION VII. Carlsbad Municipal Code, Title 3, Chapter 3.28, Section 3.28.080, is amended to
read as follows:
3.28.080 Construction projects.
Except where specifically exempted from such laws by ordinance of the City Council, contracts
for construction projects in the city shall be governed by applicable state laws including the
California Public Contract Code, Division 2, Part 1, and Division 2, Part 3, the Local Agency
Public Construction Act, which includes the adoption by the city of the alternative provisions
of the Uniform Public Construction Cost Accounting Act for use in the city. Contracts for
construction projects shall also be governed by the current edition of the standard
specifications for public works construction and the latest supplement thereto, adopted by
Feb. 24, 2026 Item #11 Page 49 of 62
the Greenbook Committee of the Public Works Standards, Inc., except as otherwise provided
by the City Council or the City Manager if the contract is within his or her authority.
A.Construction projects less than the amount specified in Section 22032(a) of the
California Public Contract Code may be performed by city employees by force account,
by negotiated contract or by purchase order.
B.Construction projects less than the amount specified in Section 22032(b) of the
California Public Contract Code may be let to contract by informal procedures set forth
in this section.
C.Construction projects of more than the amount specified in Section 22032(c) of the
California Public Contract Code shall be let by formal bidding procedure.
D.It shall be unlawful to split or separate work or projects into smaller work orders on
projects for the purpose of evading the provisions of this chapter.
E.The City Council shall adopt plans and specifications for all construction projects that are
formally bid when the value exceeds the limits established by the UPCCAA.
F.The city Traffic Engineer, or another professional civil engineer licensed by the State of
California that is designated by City Council resolution, shall review and approve plans
and specifications for all traffic control devices included in construction projects not
adopted by City Council pursuant to subsection E of this section.
G.The city Director of Public Works, or another professional civil engineer licensed by the
State of California that is designated by City Council resolution, shall review and approve
plans and specifications for all construction projects not adopted by City Council
pursuant to subsection E of this section, except for plans and specifications reviewed
and approved pursuant to subsection F of this section.
H.The informal bidding for construction projects procedures shall include the following
procedures:
1.The purchasing officer or designee shall develop a list of qualified contractors
eligible to submit bids on informal contracts awarded by the city. The list shall be
organized in accordance with the license classifications of the contractor's state
license board.
2.The purchasing officer or designee shall mail notice inviting informal bids to all
contractors on the list of qualified contractors and construction trade journals not
less than 10 calendar days before bids are due.
3.The notice inviting informal bids shall describe the project in general terms, how to
obtain more detailed information about the project, the time, date and place for
the submission of bids, and whether or not the project will require the payment of
prevailing wages.
4.When the awarding authority deems feasible, bid documents may be transmitted
and/or received over the internet.
5.The awarding authority may in its sole discretion reject any or all bids presented
and waive any minor irregularity or informality in such bids. The contract shall be
Feb. 24, 2026 Item #11 Page 50 of 62
awarded to the lowest responsive, responsible bidder. If no bids are received
through the informal procedure, the project may be performed by city employees,
by force account or negotiated contract without further complying with this
section.
6. The City Manager or designee shall award all informal contracts.
I. The formal bidding procedures for construction projects shall include the following:
1. The purchasing officer, or delegate, shall mail notice inviting formal bids for
construction projects to construction trade journals at least 15 calendar days
before the bid opening date. The notice inviting formal bids shall be published at
least 14 calendar days before the bid opening date in a newspaper of general
circulation in the city. In addition to the newspaper, the notice inviting formal bids
may be advertised in any manner which will permit the information to be widely
disseminated.
2. When the awarding authority deems feasible, bid documents may be transmitted
and/or received over the internet.
3. The awarding authority may waive any minor irregularity or informality in such bids
or may, in its sole discretion, reject all bids presented.
4. The contract shall be awarded to the lowest responsive, responsible bidder.
5. If no bids are received through the formal procedure, the project may be
performed by city employees, by force account or negotiated contract without
further complying with this section.
6. The City Council shall award all formal contracts.
SECTION VIII. Carlsbad Municipal Code, Title 3, Chapter 3.28, Section 3.28.120 is amended to
read as follows:
3.28.120 Emergencies.
In cases of emergency, as determined by the City Council, including, but not limited to,
states of emergency defined in Government Code Section 8558, as may be amended from
time to time, when repair or replacements are necessary to permit the continued conduct
of the operation or services of a public agency or to avoid danger to life or property, the
City Manager may then proceed at once to replace or repair any public facility or
infrastructure and/or procure the necessary goods and/or services without adopting the
plans, specifications, or working details, or giving notice of bids to let contracts. Emergency
work may be completed by day labor under the direction of the City Manager, or by
contractor, or a combination of the two. The City Manager is delegated the power to
declare a public emergency subject to confirmation by the City Council, by a four-fifths
vote at its next regular meeting following the City Manager declaring a public emergency.
SECTION IX. SEVERABILITY: If any section, subsection, subdivision, paragraph, sentence,
clause or phrase of this ordinance or any part of it is for any reason held to be unconstitutional, such
decision shall not affect the validity of the remaining portion of this ordinance or any part of it. The City
Feb. 24, 2026 Item #11 Page 51 of 62
Council of the City of Carlsbad declares that it would have passed each section, subsection, subdivision,
paragraph, sentence, clause or phrase of the ordinance, irrespective of the fact that any one or more
section, subsection, subdivision, paragraph, sentence, clause or phrases is declared unconstitutional.
EFFECTIVE DATE: This ordinance shall be effective thirty days after its adoption; and the City
Clerk shall certify the adoption of this ordinance and cause the full text of the ordinance or a summary
of the ordinance prepared by the City Attorney to be published at least once in a newspaper of general
circulation in the City of Carlsbad within fifteen days after its adoption.
INTRODUCED AND FIRST READ at a Regular Meeting of the Carlsbad City Council on the 24th
day of February, 2026, and thereafter
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City
of Carlsbad on the __ day of ________, 2026, by the following vote, to wit:
AYES:
NAYS:
ABSTAIN:
ABSENT:
APPROVED AS TO FORM AND LEGALITY:
_________________________________
CINDIE K. McMAHON, City Attorney
_______________________________________
KEITH BLACKBURN, Mayor
_______________________________________
SHERRY FREISINGER, City Clerk
(SEAL)
Feb. 24, 2026 Item #11 Page 52 of 62
Exhibit 3
Chapter 3.28
PURCHASING
3.28.040 Procurement and disposition responsibilities.
A. End User. The end user shall:
1. Identify its procurement needs and the availability of funding;
2. Submit to the purchasing officer specifications for the required goods, services,
professional services, and/or construction projects;
3. Participate in the evaluation of bids and proposals; and
4. Inspect goods delivered, services performed, professional services rendered, and/or
construction projects to determine conformity with the requirements set forth in the
bid or proposal documents and with contractual obligations, and authorize payments
for conforming goods, services, professional services, and/ or construction projects.
B. Purchasing Officer. The purchasing officer shall be responsible for the procurement of
goods, services, professional services, and/or construction projects for the city in
accordance with the provisions of this chapter. Except as provided for herein, no
procurement shall be made contrary to the provisions of this chapter. Any agreement or
contract for the purchase of goods, services, professional services, and/or construction
projects made contrary to the provisions of this chapter shall be void and any claim or
demand against the city based thereon shall be invalid. The purchasing officer shall:
1. Prepare and recommend to the City Manager operational procedures and forms for the
procurement of goods, services, professional services, and/or construction projects in
cooperation with the end users and for the disposal of surplus personal property;
2. Procure or supervise the procurement of all goods, services, professional services,
and/or construction projects needed in coordination with end users;
3. Process the contracts awarded administratively and/or by City Council;
4. Whenever possible, establish standardized specifications and consolidation of
requirements for goods and/or services required by two or more end users; and
5. Sell or otherwise dispose of surplus personal property, and lost and unclaimed property
held by the city's police department.
Feb. 24, 2026 Item #11 Page 53 of 62
C.City Manager. The City Manager shall be the awarding authority for:
1.All procurement of goods for which the cost to the city is $100250,000.00 or less;
2.All contracts for services and professional services of $100250,000.00 or less per
agreement year;
3.All construction project contracts less than the formal bidding threshold established by
the UPCCAA;
4.Any change order, amendment or extension to an existing contract which when added
to the contract amount, including prior change orders, is within the authority granted
in subsections (C)(1) through (C)(3) above;
5.Any construction project change order up to the dollar amount equal to the
contingency amount set when the underlying contract was awarded;
6.Any construction project change order in which the total amount of the original
contract and all amendments and change orders are less than the formal bidding
threshold established by the UPCCAA;
7.Any change order or amendment to a non-construction project contract awarded by
the City Council in an amount up to 25% of the original contract amount, including the
total of all amendments and change orders, up to a limit of $100250,000.00 per
agreement year;
8.Any extensions to a contract awarded by the City Council as delegated in the contract
or the approving resolution;
9.The City Manager shall approve alternate procurement methods, if appropriate, for use
on an experimental basis, and recommend to the City Council additions, deletions or
modifications to the city's procurement methods;
10.The City Manager shall have the authority to delegate the awarding of contracts,
amendments and change orders for goods, services, professional services, and/or
construction projects as set forth in this chapter by memorandum or by administrative
order;
11.Each month the City Manager shall send to the City Council a report of all contracts
that have been awarded over the formal bidding requirement.
12.The City Manager awarding authority shall be reviewed annually and adjusted in
response to the San Diego—All Urban Consumers Consumer Price Index. The
purchasing officer shall calculate the effect of the cumulative change in the index to
$250,000.00 beginning in fiscal year 2027-28. Adjustment to the awarding authority
limit will be made in $10,000.00 increments whenever the calculated value exceeds a
previously set awarding authority limit by more than $5,000.00. The City Manager
Feb. 24, 2026 Item #11 Page 54 of 62
awarding authority limit adjustment will be made effective at the beginning of a fiscal
year by memorandum from the purchasing officer.
D.City Council. The City Council shall be the awarding authority for:
1.Any procurement of goods, services and/or professional services costing more than
$100250,000.00 per agreement year;
2.Any construction project contract at or above the formal bidding threshold established
by the UPCCAA;
3.Any change order or amendment that exceeds the City Manager's authority.
E.City Attorney. The City Attorney shall be the awarding authority for the procurement of legal
services, regardless of the dollar amount, up to the amount of appropriations available.
3.28.050 Procurement of goods.
A.Small Procurements. Procurements of goods where the total cost of goods are
$30,000.00 or less in any one transaction, shall be made using simplified and cost effective
operational procedures and forms approved by the City Manager. The use of formal or
informal bids is not required, but is considered the best management practice. The small
procurement limit shall be reviewed and adjusted annually per the procedures set forth in
subsection (C)(1) of this section. Procurement requirements shall not be divided so as to
constitute several small procurements under this subsection.
B.Informal Bidding for Goods.
1.Informal bidding procedure shall be utilized:
a.When the anticipated cost of the goods to be purchased is less than the dollar
amount established for formal bidding for goods in subsection (C)(1) herein; or
b.When no bids are received pursuant to the formal bid procedures established; or
c.When all bids received substantially exceed the city's estimated costs, as
determined by the purchasing officer through the formal bidding procedure.
d.The City Council may designate types or classes of procurements costing more
than the dollar amount established for formal bidding in subsection (C)(1) herein;
which may be purchased through the use of informal bidding procedures
whenever the City Council finds that use of the informal bidding procedure is
advantageous to the city consistent with applicable law.
2.The informal bidding procedure shall be as follows:
a.Bids shall be obtained by written or oral request.
b.When possible, a minimum of three bidders should be solicited.
Feb. 24, 2026 Item #11 Page 55 of 62
c.Best value criteria, if used, must be determined before bids/quotes are published
or distributed to potential bidders/suppliers.
d.Responses shall be in writing, and may be transmitted by facsimile, by mail,
electronically over the Internet, or by any other means of delivery as described
in the bid documents.
e.The award shall be based on best value to the city or the lowest bid submitted by
a responsive bidder, as determined by the purchasing officer, and shall be
awarded by the City Manager.
C.Formal Bidding for Goods.
1.Formal bidding procedures shall be utilized when the anticipated cost of the goods is
greater than $30,000.00 per agreement year. The bid limit shall be reviewed annually
and adjusted in response to the San Diego—All Urban Consumers Consumer Price
Index. The purchasing officer shall calculate the effect of the cumulative change in the
index to $30,000.00 beginning in fiscal year 2009. Adjustment to the bid limit will be
made in $5,000.00 increments whenever the calculated value exceeds a previously set
bid limit by more than $2,500.00. The bid limit adjustment will be made effective at
the beginning of a fiscal year by memorandum from the purchasing officer.
2.Procurement requirements shall not be divided so as to avoid the formal bidding
requirements.
3.The formal bidding procedures shall be as follows:
a.The purchasing officer, or designee, shall issue a notice inviting bids using one or
more methods designed to provide reasonable public notice in a manner which
will permit current information to be disseminated widely. The notice shall
include:
i.Instruction to bidders;
ii.Specifications describing the required goods;
iii.Bid forms and schedules;
iv.Any required bond forms;
v.General contract provisions;
vi.The time on or before which bids will be received;
vii.Where and with whom bids shall be filed;
viii.The date, time and place where and when bids will be publicly
opened;
Feb. 24, 2026 Item #11 Page 56 of 62
ix.Statement of bidders exceptions.
b.The sealed formal bids shall be received by the purchasing officer, or designee,
at a time, date and place designated in the bid documents. Formal bids, timely
received, will be publicly opened by the purchasing officer, or designee, and the
aggregate bid pricing shall be read aloud.
c.Any person or entity with whom the city has contracted to prepare or assist in
the preparation of bid or proposal documents is ineligible to submit a bid or
proposal for the provision of the goods so specified in the notice inviting bids or
proposals.
d.Formal bids received after the deadline for receipt of bids shall not be accepted
by the city and shall be returned to the bidder unopened, unless opening is
necessary for identification purposes. The purchasing officer, or designee, shall
submit written notification to the bidder whose bid was received after the
deadline stating what the deadline was, when the bid was actually received and
that the bid is being returned because it was received after the deadline.
4.If no bids are received or if no bids meet the requirements as specified in the
solicitation documents, the purchasing officer may reissue the solicitation using the
informal bidding procedures, negotiate a contract based upon the solicitation,
without further complying with this section or the city may cease the procurement.
5.If two or more bids are received with the same total amount or unit price, quality and
service being equal, and if the public interest will not permit the delay of re-
advertising for bids, the City Council, or the City Manager if the procurement is under
$100250,000.00, may exercise sound discretion and accept the bid it chooses.
6.In considering formal bids for goods, the awarding authority may waive minor defects
or irregularities, provided that the irregularities do not affect the bid amount or give
a particular bidder an advantage over others.
7.All bids shall be deemed rejected if no City Council or City Manager action is taken on
the bids or proposals within 90 days after the bids have been received and opened,
unless bidders agree to extend a bid's effective date upon request by the city.
D.Additional Responsibilities and Authorities.
1.The city shall have the authority to require a performance bond in such amount as it
finds reasonably necessary to protect the best interests of the city consistent with
applicable law. If the city requires a performance bond, the amount of the bond shall
be described in the notice inviting bids and bid proposal documents.
Feb. 24, 2026 Item #11 Page 57 of 62
2.All contracts may be awarded based on the best value for the city. Best value criteria,
if used, must be determined before bids/quotes are published or distributed to
potential bidders/suppliers.
3.The City Manager shall be the awarding authority for procurement of goods for which
the cost to the city is $100250,000.00 per agreement year or less, or for capital outlay
items within the amount approved by the City Council in the budget process.
4.The City Council shall be the awarding authority for procurement of goods for which
the cost to the city is more than $100250,000.00 per agreement year and have not
been previously approved as capital outlay items in the budget process or exceed the
approved budget amount for capital outlay items.
E.The city's goods procurement practice prohibits unlawful activity, including, but not limited
to, rebates, kickbacks, or other unlawful consideration. No city employee shall participate in
the selection process if that employee has a relationship with a person or business entity
seeking a contract with the city that would subject that employee to the prohibition of
Government Code Section 87100. (Conflicts of Interest).
3.28.060 Procurement of professional services and services.
A.Professional Services Procurement.
1.Request for proposals should be used when professional services are needed. The
selection of professional services for, private architectural, landscape architectural,
engineering, environmental, land surveying or construction project management
firms should be based on the professional qualifications necessary for the satisfactory
performance of the professional services required, on demonstrated competence,
and on a fair and reasonable price consistent with Government Code Section 4526.
2.Procurements of professional services where the total cost of services are $30,000.00
or less per agreement year shall be made using simplified and cost effective
operational procedures and forms approved by the City Manager. If the cost of
needed professional services is expected to exceed $30,000.00 per agreement year,
at least three proposals should be solicited for the professional service needed
whenever possible. The purchasing officer may waive the requirements for
solicitation of multiple proposals if only one individual or firm can reasonably provide
the professional services, and it is in the best interest of the city to waive the
requirement.
B.Small Procurements of Services. Procurements of services where the total cost of services
are $30,000.00 or less in any one transaction, shall be made using simplified and cost
effective operational procedures approved by the City Manager and forms approved by the
City Manager. The use of formal or informal bids is not required, but is considered the best
management practice. The small procurement limit shall be reviewed and adjusted annually
Feb. 24, 2026 Item #11 Page 58 of 62
per the procedures set forth in Section 3.28.050(C)(1). Procurement of services
requirements shall not be divided so as to constitute several small procurements under this
subsection.
C.Informal Bidding for Services.
1.Informal bidding procedure, as set forth in Section 3.28.050(B)(2) may be utilized:
a.When no bids are received pursuant to the formal bid procedures established; or
b.The City Council may designate types or classes of procurements costing more than
the dollar amount established for formal bidding in subsection (D)(1) herein;
which may be purchased through the use of informal bidding procedures
whenever the City Council finds that use of the informal bidding procedure is
advantageous to the city consistent with applicable law.
D.Formal Bidding for Services.
1.Formal bidding procedures shall be utilized when the anticipated cost of the services is
greater than $30,000.00 per agreement year. The bid limit shall be reviewed annually
and adjusted in response to the San Diego—All Urban Consumers Consumer Price Index.
The purchasing officer shall calculate the effect of the cumulative change in the index
to $30,000.00 beginning in fiscal year 2009. Adjustment to the bid limit will be made in
$5,000 increments whenever the calculated value exceeds a previously set bid limit by
more than
$2,500.00. The bid limit adjustment will be made effective at the beginning of a fiscal
year by memorandum from the purchasing officer.
2.Procurement requirements shall not be divided so as to avoid the formal bidding
requirements.
3.The formal bidding procedures and requirements shall be as set forth in Section
3.28.050(C) and (D).
4.The City Manager shall be the awarding authority for procurement of services and
professional services for which the cost to the city is $100250,000.00 or less per
agreement year.
5.The City Council shall be the awarding authority for procurement of services and
professional services for which the cost to the city is more than $100250,000.00
per agreement year.
E.The city's services and professional services procurement practice prohibits unlawful activity
including, but not limited to, rebates, kickbacks, or other unlawful consideration. No city
employee shall participate in the selection process if that employee has a relationship with
a person or business entity seeking a contract with the city that would subject that employee
to the prohibition of Government Code Section 87100. (Conflicts of Interest).
Feb. 24, 2026 Item #11 Page 59 of 62
3.28.070 Competitive negotiations for goods, services, and professional services.
A.The purchasing officer may authorize the solicitation of services and/or professional
services other than those listed in Section 3.28.060, and the purchase of highly specialized
goods by competitive negotiations when:
1.The cost of the goods, services and/or professional services is greater than the dollar
amount established for formal bidding in Section 3.28.050(C)(1) and Section
3.28.060(D)(1); and
2.The goods are such that suitable technical or performance specifications are not readily
available; or
3.The city is not able to develop descriptive specifications; or
4.Requesting proposals for the particular service or goods to be procured would be more
advantageous to the city.
B.Whenever possible, at least three proposals shall be received and the award will be based
on the proposal that is determined to be most advantageous to the city, taking into
consideration price and the evaluation criteria set forth in the request for proposal.
Competitive negotiations are not intended to be used for the purpose of avoiding the
bidding procedure set forth in this chapter.
C.The City Manager or designee shall award contracts for goods and/or services less than
$100250,000.00 per agreement year.
D.The City Council shall award contracts for goods and/or services over $100250,000.00 per
agreement year.
3.28.080 Construction projects.
Except where specifically exempted from such laws by ordinance of the City Council, contracts for
construction projects in the city shall be governed by applicable state laws including the California
Public Contract Code, Division 2, Part 1, and Division 2, Part 3, the Local Agency Public Construction
Act, which includes the adoption by the city of the alternative provisions of the Uniform Public
Construction Cost Accounting Act for use in the city. Contracts for construction projects shall also
be governed by the current edition of the standard specifications for public works construction and
the latest supplement thereto, adopted by the Greenbook Committee of the Public Works
Standards, Inc., except as otherwise provided by the City Council or the City Manager if the contract
is within his or her authority.
A.Construction projects less than the amount specified in Section 22032(a) of the California
Public Contract Code may be performed by city employees by force account, by negotiated
Feb. 24, 2026 Item #11 Page 60 of 62
contract or by purchase order.
B.Construction projects less than the amount specified in Section 22032(b) of the California
Public Contract Code may be let to contract by informal procedures set forth in this section.
C.Construction projects of more than the amount specified in Section 22032(c) of the California
Public Contract Code shall be let by formal bidding procedure.
D.It shall be unlawful to split or separate work or projects into smaller work orders on projects
for the purpose of evading the provisions of this chapter.
E.The City Council shall adopt plans and specifications for all construction projects to bethat are
formally bid when the value exceeds the limits established by the UPCCAA.
F.The city Traffic Engineer, or another professional civil engineer licensed by the State of
California that is designated by City Council resolution, shall review and approve plans and
specifications for all traffic control devices included in construction projects not adopted by
City Council pursuant to subsection E of this section.
G.The city Director of Public Works, or another professional civil engineer licensed by the State
of California that is designated by City Council resolution, shall review and approve plans and
specifications for all construction projects not adopted by City Council pursuant to subsection
E of this section, except for plans and specifications reviewed and approved pursuant to
subsection F of this section.
H.The informal bidding for construction projects procedures shall include the following
procedures:
1.The purchasing officer or designee shall develop a list of qualified contractors eligible to
submit bids on informal contracts awarded by the city. The list shall be organized in
accordance with the license classifications of the contractor's state license board.
2.The purchasing officer or designee shall mail notice inviting informal bids to all
contractors on the list of qualified contractors and construction trade journals not less
than 10 calendar days before bids are due.
3.The notice inviting informal bids shall describe the project in general terms, how to obtain
more detailed information about the project, the time, date and place for the submission
of bids, and whether or not the project will require the payment of prevailing wages.
4.When the awarding authority deems feasible, bid documents may be transmitted and/or
received over the internet.
5.The awarding authority may in its sole discretion reject any or all bids presented and
waive any minor irregularity or informality in such bids. The contract shall be awarded to
the lowest responsive, responsible bidder. If no bids are received through the informal
procedure, the project may be performed by city employees, by force account or
Feb. 24, 2026 Item #11 Page 61 of 62
negotiated contract without further complying with this section.
6.The City Manager or designee shall award all informal contracts.
I.The formal bidding procedures for construction projects shall include the following:
1.The purchasing officer, or delegate, shall mail notice inviting formal bids for construction
projects to construction trade journals at least 15 calendar days before the bid opening
date. The notice inviting formal bids shall be published at least 14 calendar days before
the bid opening date in a newspaper of general circulation in the city. In addition to the
newspaper, the notice inviting formal bids may be advertised in any manner which will
permit the information to be widely disseminated.
2.When the awarding authority deems feasible, bid documents may be transmitted and/or
received over the internet.
3.The awarding authority may waive any minor irregularity or informality in such bids or
may, in its sole discretion, reject all bids presented.
4.The contract shall be awarded to the lowest responsive, responsible bidder.
5.If no bids are received through the formal procedure, the project may be performed by
city employees, by force account or negotiated contract without further complying with
this section.
6.The City Council shall award all formal contracts.
3.28.120 Emergencies.
In cases of emergency, as determined by the City Council, including, but not limited to, states of
emergency defined in Government Code Section 8558, as may be amended from time to time,
when repair or replacements are necessary to permit the continued conduct of the operation or
services of a public agency or to avoid danger to life or property, the City Manager may then
proceed at once to replace or repair any public facility or infrastructure and/or procure the
necessary goods and/or services without adopting the plans, specifications, or working details,
or giving notice of bids to let contracts. Emergency work may be completed by day labor under
the direction of the City Manager, or by contractor, or a combination of the two. The City
Manager is delegated the power to declare a public emergency subject to confirmation by the
City Council, by a four-fifths vote at its next regular meeting following the City Manager declaring
a public emergency.
Feb. 24, 2026 Item #11 Page 62 of 62
Procurement Audit Report
Toufic Tabshouri, Internal Audit Manager
Zach Korach, Finance Director
February 24, 2026
2
PROPOSED ACTION
1.Accept the audit report findings and
recommendations
2.Consider the introduction of an ordinance
to amend sections of Carlsbad Municipal
Code Chapter 3.28 Purchasing
ITEM 11: PROCUREMENT AUDIT
3
TODAY’S PRESENTATION
•Background
•Audit Objectives
•Findings & Recommendations
•Management Response
•Proposed Action
ITEM 11: PROCUREMENT AUDIT
4
BACKGROUND
Why is procurement important?
•Almost all city spending (other than employee pay) goes through a
procurement process
•A good procurement system operates efficiently, ensures compliance
with applicable laws and regulations, and maximizes the value of
taxpayer funds
•Inefficient procurement processes can adversely impact many
municipal operations
ITEM 11: PROCUREMENT AUDIT
5
AUDIT OBJECTIVES
1.Determine whether procurements are processed in accordance with the City
of Carlsbad's laws, policies, and procedures
2.Evaluate the design and function of internal controls over procurements
3.Compare the City of Carlsbad's purchasing regulations to those of other
government entities, guidelines, and best practices
4.Evaluate the efficiency and effectiveness of the City's procurement
operations; assess the current structure of the procurement function
ITEM 11: PROCUREMENT AUDIT
6
AUDIT FINDINGS & RECOMMENDATIONS
Finding #1
Contracts and procurements adhere to laws, policies and procedures.
Finding #2
Internal controls over procurement and contracting processes are effective
but cumbersome.
ITEM 11: PROCUREMENT AUDIT
7
AUDIT FINDINGS & RECOMMENDATIONS
Recommendation #1
The City Council should consider increasing the City Manager’s approval
authority to at least $150,000 and adjust this figure periodically for
inflation.
ITEM 11: PROCUREMENT AUDIT
8
AUDIT FINDINGS & RECOMMENDATIONS
Recommendation #2
The City should consider streamlining the approval process for contracts. Streamlining the process may entail:
a)Developing a tool for determining which contracts should require City Council approval. Such a tool would incorporate risk-based criteria for evaluating contracts and a rating scale. This tool would provide a more sophisticated output than the current simple but crude method of forwarding all contracts exceeding a set dollar threshold for City Council approval.
b)Working with the City Attorney’s Office to evaluate the legal feasibility of any proposed changes and identify any necessary changes to the municipal code or council policies.
ITEM 11: PROCUREMENT AUDIT
9
AUDIT FINDINGS & RECOMMENDATIONS
Finding 3
The City’s purchasing laws and regulations are comparable to those of other municipalities
Recommendation #3
The City should update the Purchasing Policies and Procedures Manual, which
was issued in 2016. The City should also establish a revision period for this manual. While a new update has been drafted, it has not been reviewed by stakeholders or approved.
ITEM 11: PROCUREMENT AUDIT
10
AUDIT FINDINGS & RECOMMENDATIONS
Finding #4
Procurement operations can be improved by establishing performance
goals, centralizing oversight, and adopting new systems
ITEM 11: PROCUREMENT AUDIT
11
AUDIT FINDINGS & RECOMMENDATIONS
Recommendation 4:
The City Manager or designee should assign a qualified employee to coordinate
the development of a performance measurement system for procurement.
Developing a set of measures will entail identifying all procurement stakeholders,
surveying them, and possibly benchmarking with other government agencies. It
should also entail evaluating the configuration and reporting features of new
technology systems and modules that will be supporting procurement to
automate and facilitate performance measurement.
ITEM 11: PROCUREMENT AUDIT
12
AUDIT FINDINGS & RECOMMENDATIONS
Recommendation 5:
The City Manager should consider centralizing the procurement function and creating a Procurement Manager position. Doing so will increase the capabilities of procurement staff and may lead to efficiencies and have a positive impact on employee retention.
Implementing this recommendation will entail an analysis of staffing resources and careful deliberations among stakeholders to realize the potential benefits and minimize any disruptions during and after any transition. The Public Works Branch should be satisfied that the level of service and support it receives from contracting will not decrease. Implementing performance measures (Recommendation 4) will help provide baseline data about current performance levels that will inform the analysis of resources.
ITEM 11: PROCUREMENT AUDIT
13
MANAGEMENT RESPONSE #1
City Manager awarding authority
•Staff propose increasing limit to $250,000
•Increase efficiency, decrease costs
•Reasonable and sufficient controls and oversight remain intact
•Time estimate: upon ordinance adoption
ITEM 11: PROCUREMENT AUDIT
14
MANAGEMENT RESPONSE #2
Streamlining approval process
•Staff propose CMC amendment to alleviate need for City Council to authorize bidding
•Increase efficiency, decrease costs
•Reasonable and sufficient controls and oversight remain intact
•Time estimate: upon ordinance adoption
ITEM 11: PROCUREMENT AUDIT
15
MANAGEMENT RESPONSE #3
Update purchasing policies and manual
•Subsequent to Workday implementation, staff will conduct
comprehensive update
•Time estimate: fiscal year 2027-28 – 2028-29
ITEM 11: PROCUREMENT AUDIT
16
MANAGEMENT RESPONSE #4
Performance measures
•The city’s budget includes many performance measures and workload indicators
•Following implementation of new Workday system, staff will evaluate processes and procedures to ensure appropriate measures and indicators are identified and reported
•Time estimate: fiscal year 2027-28
ITEM 11: PROCUREMENT AUDIT
17
MANAGEMENT RESPONSE #5
Centralization of purchasing function
•Following implementation of new Workday system, staff will engage a consult to perform analysis on centralization vs. decentralization
•Any changes and/or budget impacts will be brought to the City Council for consideration
•Time estimate: fiscal year 2027-28 – 2028-29
ITEM 11: PROCUREMENT AUDIT
NEXT STEPS
•Track the implementation of audit
recommendations
18 18
ITEM 11: PROCUREMENT AUDIT
19
PROPOSED ACTION
1.Accept the audit report findings and
recommendations.
2.Consider the introduction of an ordinance
to amend sections of Carlsbad Municipal
Code chapter 3.28 Purchasing
ITEM 11: PROCUREMENT AUDIT