The Policy & Services Committee unanimously recommended that the City Council accept an auditor advisory report that found the city’s contract solicitation and signature authority thresholds have not kept pace with rising costs and peer practices.

Kate Murdoch, city auditor, told the committee the review benchmarked 15 peer agencies and found roughly half had adopted the California Uniform Public Construction Cost Accounting Act (CUPCCA), which sets construction bidding thresholds (CUPCCA currently sets the formal bidding threshold at $220,000) compared with Palo Alto’s $85,000 threshold. "Updating the city's procurement procedures will improve purchasing processes, eliminate administrative inefficiencies, and better align the city with peer and industry best practices," Murdoch said.

Murdoch also noted federal changes affecting procurement: "In October, the federal acquisition regulation raised its threshold for micropurchases from $10,000 to $15,000." She recommended the city consider increasing bid and signature authority levels, incorporate an annual CPI adjustment into the code, consider adopting CUPCCA, and expand exemptions for items that typically do not benefit from full competitive bidding such as certain IT services and specialized professional services.

Council members pressed staff on transparency and reporting. Council member Stone asked whether other cities automatically adjust thresholds for inflation; Murdoch confirmed some peers use annual CPI adjustments through state processes. David Ramberg of Administrative Services said staff already provides semiannual reporting to council on informal agreements and would include further reporting in any follow-up recommendations.

The committee moved to accept the audit report and recommended staff return with proposed changes for council consideration. The clerk recorded a roll-call vote with Chair Venker, Council member Stone, and Council member Liu voting yes; the motion carried.

What happens next: Staff signaled they will return in 2026 with concrete proposals to align thresholds and reporting practices, including potential code changes and draft ordinance language for council approval.