11-OWNER DIRECT PURCHASE (ODP) GUIDELINES.pdf

SECTION 00502

OWNER DIRECT PURCHASE (ODP) GUIDELINES

Pursuant to Florida Statutes, Section 212.08(6), and Florida Administrative Code, Number 12A-1.094, the City of Palm Bay is exempt from Florida Sales Tax for the purchase of construction materials, supplies and/or equipment incorporated into a construction project. The City reserves the option to exercise this right to direct purchase selected materials on all construction projects and such direct purchase shall be without any additional cost to the City. All bids are to be submitted with all applicable taxes included.

The Contractor shall be fully responsible for all matters relating to the receipt of materials, equipment, supplies and furnishings, including but not limited to providing and obtaining all warranties and guarantees in favor of and for the benefit of the City for all materials, equipment, supplies and furnishings as required by the Contract Documents and the Agreement. Notwithstanding the foregoing, the City shall be responsible for payment of the invoices issued by the supplier, vendor or subcontractor (henceforth referred to as suppliers).

In accordance with the City Code of Ordinance 38.06(E)(19) the competitive solicitation and selection process shall not apply for Direct Material Purchases (henceforth referred to as ODP materials), such as purchases of materials, equipment, prefabricated elements and components, appliances, furniture, fixtures, and other goods, pursuant to a program contained in a construction contract that has been awarded in accordance with any provision of this Ordinance, whereby the City makes such purchases directly from a vendor by using a City purchase order.

The procedures outlined here may change at any time without prior notice to Contractor.

1. City shall have the option to make certain purchases under the Contract Documents and Agreement for the Project through its Owner Direct Purchase Program as means of taking advantage of its tax-exempt status. All monies which would have been payable as taxes if not for Owner Direct Purchase Program, will insure to the benefit of the City.

2. City’s direct purchase of materials will not limit the CONTRACTOR’S responsibility for obtaining the materials, or installation, coordination, storage, protection, or warranty of the materials as required by the Contract Documents.

3. At any time upon the request of the City, the Contractor shall provide City with a list of all intended suppliers for such materials as specified by City for consideration for procurement by the City as ODP materials. The list shall include price quotes from the suppliers, as well as a description of the materials to be supplied, estimated quantities and prices. The City will purchase the material from suppliers selected by the Contractor for the price originally negotiated by the Contractor.

4. When a material is selected to be directly purchased for the Project by the City, the Contractor shall prepare a Purchase Order Requisition Form acceptable to City to specifically identify the materials which City has, at its sole option, elected to purchase directly. The Purchase Order Requisition Form shall include:

a. the name, address, telephone number and contact person for the material supplier

b. manufacturer or brand, model or specification number of the item

c. quantity needed as estimated by supplier

d. the price quoted by the supplier for the materials identified therein

e. any sales tax associated with such quote

f. delivery dates as established by Contractor

g. an attachment of the actual quote furnished by the material supplier to the Contractor

5. The Purchase Order Requisition Form shall include reference to any terms and conditions, which have been negotiated with the suppliers; i.e., payment terms, warranties, retainage, etc. The Purchase Order Requisition Forms are to be submitted to the City no less than seven (7) days prior to the need for ordering such ODP materials, in order to provide sufficient time for City review and approval and to assure that such ODP materials may be directly purchased by City and delivered to the Project site without any delay to the Project.

6. After receipt of the Purchase Order Requisition Form, City shall prepare Purchase Order(s) for equipment, materials or supplies which the City chooses to purchase directly. Pursuant to the Purchase Order, the supplier will provide the required quantities of material at the price established in the supplier’s quote, less any sales tax associated with such price. Promptly upon receipt of each Purchase Order, Contractor shall verify the terms and conditions of the Purchase Order prior to its issuance to supplier and in a manner to assure proper and timely delivery of items. The City's Chief Procurement Officer or her designated representative shall be the approving authority for the City on Purchase Orders in conjunction with direct purchased materials. The Purchase Order shall require that the supplier provide the required shipping and handling insurance. The Purchase Order shall also require the delivery of the ODP materials on the delivery date provided by the Contractor in the Purchase Order Requisition Form and shall indicate F.O.B. jobsite. The City's Purchase Order(s) shall contain or be accompanied by the City's current tax exemption certificate.

7. The City’s purchase order shall be sent directly to the supplier by the City with a copy sent to the Contractor, including a copy of the Certificate of Entitlement on the form attached hereto and incorporated herein as Exhibit “A”. Pursuant to the Purchase Order, the supplier will provide the required quantities of material at the price established in the supplier's quote to the Contractor or subcontractor.

8. In conjunction with the issuance by the City’s Purchase Orders for ODP materials to suppliers, the City’s Project Manager shall prepare and submit a deductive Change Order with a complete description referencing the full value of all ODP materials to be provided by each supplier from whom the City elected to purchase materials directly, plus all sales taxes associated with such materials in CONTRACTOR’S bid to the City. The Contractor shall promptly execute the deductive change order and return it to the City. The Change Order will be countersigned by the Chief Procurement Officer or designee.

9. The Project Manager will also initiate an electronic deductive purchasing requisition through the City’s ERP system against the CONTRACTOR’S Purchase Order for the Project, deducting the full value of all ODP materials to be provided plus all sales tax. The Procurement Department will process the requisition and provide a copy of the revised Purchase Order to the Contractor along with the fully executed and countersigned deductive Change Order.

10. The Contractor shall be required to obtain consent from their Surety acknowledging that Surety’s obligation under our Construction Bond. Bonds remain unmodified and in full force and effect, notwithstanding that the City has entered into a separate Purchase Order with (Supplier) for the direct purchase of the Materials that will be deducted and deleted from the Contract by the Deductive Change Order.

11. The Contractor shall be bound by the obligations and responsibilities set forth in the Contract Documents and the Agreement. The Contractor shall be responsible for all matters relating to the receipt of direct purchased materials under these Guidelines and the Contract Documents, including, but not limited to, preparation of shop drawings and submittals, verifying correct quantities, verifying documents of orders in a timely manner, coordinating purchases, providing and obtaining all warranties and guarantees required by the Contract Documents, inspection and acceptance of the materials at the time of delivery, loading orientation, and other arrangements normally required by the Contractor for the materials furnished. The Contractor shall provide all services required for the unloading, handling and storage of materials through installation.

12. The Contractor shall be responsible for maintaining the project schedule and the execution of the terms and conditions of the ODP Purchase Order, including expediting the suppliers' delivery schedules.

13. Notwithstanding the delivery of ODP materials to the Project site for the CONTRACTOR’S inspection, custody and incorporation into the Work, the City shall retain legal and equitable title to any and all direct purchased materials.

14. While in CONTRACTOR’S possession, Contractor shall handle and store all ODP materials in a manner consistent with the supplier’s or manufacturer’s instructions regarding handling and storage to ensure later installation of ODP materials in a sound and undamaged condition. The Contractor shall assume all risk and remain fully responsible for all material incorporated into any project, directly purchased by the City or not. This will include, but not be limited to, insurance, theft, storage, damage during installation, coordination, quantities ordered, submittals, protection, scheduling, shipping, security, expediting, receiving, installation, cleaning and all applicable warranties, etc.

15. The Contractor shall ensure that direct purchased materials conform to the specifications, and determine prior to incorporation into the Work if such materials are patently defective, and whether such materials are identical to the material ordered and match the description on the Bill of Lading.

As ODP materials are delivered to the Project site, the Contractor shall inspect all shipments from the suppliers, and if in conformance with the Purchase Order, approve the supplier’s invoice for materials delivered as described below. The Contractor shall assure that each delivery of ODP material is accompanied by documentation adequate to identify the Purchase Order against which the purchase is made. This documentation may consist of an itemized delivery ticket, packing slip or invoice from the supplier conforming to the Purchase Order against which the purchase is made, together with such additional information as the City may reasonably require. The Contractor shall forward such documentation to the City to match up with the invoice for payment.

16. If the Contractor discovers materials to be defective upon inspection, the Contractor shall not incorporate such materials into the Work and shall immediately notify the City and coordinate the repair or replacement of those materials without any undue delay or interruption to the work. To the extent that the CONTRACTOR’S scheduled critical path is adversely impacted, then such delay shall be considered a force majeure delay, entitling the Contractor to a time extension but shall not be entitled to damages for delays as set forth in Section 8.21 of the Agreement. All repair, maintenance or damage-repair calls shall be forwarded to the Contractor for resolution with the appropriate supplier, Subcontractor or Vendor.

17. If the Contractor fails to perform such inspection and otherwise incorporates into the work such defective or nonconforming ODP materials, the condition of which it either knew or should have known by performance of an inspection, Contractor shall be responsible for all damages to City resulting from CONTRACTOR’S incorporation of such materials into the work, including liquidated or delay damages.

18. The City shall be directly invoiced by the suppliers for all ODP materials. In the event that Contractor receives any invoices (other than copies of invoices, the originals of which have been sent directly by the supplier to the City), Contractor shall not pay such invoice and shall immediately notify the supplier that the City must be directly invoiced on all ODP materials.

19. The Contractor shall provide City a list indicating the acceptance of the materials within fifteen (15) days of receipt of said invoice for materials. The list shall reference the applicable Purchase Order and include a copy of the invoices (with original invoice sent directly to the City by the supplier), delivery tickets, Bill of Lading, written acceptance of the delivered items, and such other documentation as the City may require. Upon receipt of the appropriate documentation, the City will make payment directly to the suppliers of the ODP materials via check made payable and remitted directly to the supplier. The Contractor is responsible for obtaining waiver and release of liens and claims as appropriate.

20. The Contractor shall maintain records of all ODP materials it incorporates into the work. The

Contractor shall account monthly to the City for any ODP materials delivered into the CONTRACTOR’S possession, indicating portions of all such materials which have been incorporated into the work.

21. The City may purchase and maintain Builder’s Risk Insurance sufficient to protect against any loss or damage to ODP materials. Such insurance shall cover the full value of any materials not yet incorporated into the Work from the time the City first takes title to any of such materials through the time when the last of such materials are incorporated into the Work, or are returned to the Subcontractor or Vendor at the CONTRACTOR’S discretion, prior to City’s payment for same.

22. At the City’s election, it may request the Contractor to procure the Builder’s Risk policy. If the Contractor purchases the Builder’s Risk Insurance, the cost of the premium shall be a reimbursable Cost of the Work and submitted as a Change Order. Such insurance shall cover the full value of any ODP materials not yet incorporated into the Work from the time the City first takes title to any of such materials through the time when the last of such materials are incorporated into the Work, or are returned to the supplier at the CONTRACTOR’S discretion, prior to City’s payment for same.

If required by the City, the Contractor shall purchase and maintain Builder’s Risk, “all-risk” insurance based on the completed value of the Project. The Contractor must name the City as additional insured on its policy with respect to all ODP materials and City shall be solely entitled to all proceeds related to the loss or damage of ODP materials.

23. The Contractor agrees and understands that it shall undertake all warranty enforcement and other related duties of the City for all ODP materials. Additionally, all ODP materials shall be warranted and guaranteed by the Contractor as part of the CONTRACTOR’S warranty and guarantee of the Work to the same extent and degree as other materials procured and provided to the Work by Contractor. CONTRACTOR’S warranty and guarantee duties shall be governed by and carried out pursuant to the terms of the Contract Documents and Agreement. To that end, the Contractor expressly agrees it shall make no distinction in discharging such warranty and guarantee duties and obligations between ODP materials and equipment and materials otherwise supplied by the Contractor.

24. In the event that materials, supplies, or equipment purchased under this option are defective or rejected for any reason whatsoever, and it becomes necessary in the opinion of the City to initiate legal action against the responsible party, the City, should it so choose, may assign and subordinate to the Contractor any claims the City has against the responsible party resulting from the Purchase Order and to execute any legal documents necessary to accomplish the assignment, subordination or subrogation of such claims; Contractor hereby consents to such assignment, subordination or subrogation; and City agrees to cooperate with the Contractor in such legal action.

25. The City shall in no way be liable for interruption or delay in the Project, for any defects or other problems with the Project, or for any extra costs or time resulting from delay in the delivery of, or defects in, direct purchased materials.

EXHIBIT A TO SECTION 00502

CERTIFICATE OF ENTITLEMENT

For direct purchase of construction materials by a governmental entity pursuant to Florida Statute, Section 212.08(6), and Florida Administrative Code, Number 12A-1.094

The undersigned authorized representative of City of Palm Bay, Florida (hereinafter “Governmental Entity”), Florida Consumer’s Certificate of Exemption Number 85-8012646361C-4, affirms that the tangible personal property purchased pursuant to Purchase Order Number from

(Supplier) will be incorporated into or become a part of a public facility as part of a public works contract (solicitation number/name) with

(Contractor) for the construction of the public work as described in the above referenced contract.

The City affirms that the purchase of the tangible personal property contained in the attached Purchase

Order meets the following exemption requirements contained in Florida Statute Section 212.08(6) and

Florida Administrative Code 12A-1.094:

1. The attached Purchase Order is issued directly to the vendor supplying the tangible personal property the Contractor will use in the identified public works;

2. The vendor’s invoice will be issued directly to Governmental Entity;

3. Payment of the vendor’s invoice will be made directly by Governmental Entity to the vendor from public funds; and

4. Governmental Entity will take title to the tangible personal property from the vendor at the time of purchase or of delivery by the vendor.

This Certificate of Entitlement must be retained in the Supplier’s and the CONTRACTOR’S books and records.

George Barber MPA, CPPO, CPPB, NIGP-CPP Date Chief Procurement Officer City of Palm Bay, Florida

Attachments: Purchase Order Florida Consumer’s Certificate of Exemption