Chapter 21 contracting basics for suppliers

Who is OCA?

The City’s Office of Contract Administration (OCA) oversees the administration of Chapter 21 contracting, which is further described below.

What is Chapter 21 contracting?

Like other governmental organizations, the City has many laws it must follow when it wants to buy goods and services. These laws were put in place to ensure that the City spends its money fairly and transparently. One of these laws is known as “Chapter 21” (named for its chapter number in the City’s Administrative Code). Chapter 21 spells out the process the City must follow when buying:

• Commodities (everything from office supplies to protective gear)
• General services (janitorial services, lab work, etc.)
• Professional services (interpretation, consulting, etc.)
• Equipment leases, software license and support, and online content.

You can learn more about what each type of purchase means here.

What transactions are not considered Chapter 21 contracting?

Transactions that do not fall under Chapter 21 contracting are those that fall under San Francisco Administrative Codes Chapter 6 (Construction), Chapter 23 (Property Contracts), and Chapter 21G (Grant Agreements), as well as transactions that don’t meet the definition of contract under any other Administrative Code section such as membership dues, conference fees, regulatory fees, government licensing fees, Federal, State or regional parks and bridges fees, application fees, fines, taxes, stamps or mailboxes purchased from the United States Postal Service, and other transactions of a similar nature.

How does the City buy commodities and services under Chapter 21?

Commodities and general services: 

OCA is responsible for purchasing commodities and general services on behalf of City departments. There are some exceptions to this rule. For example, under Administrative Code Sections 21.04, 21A and 21.42, some City departments have the authority to purchase certain commodities and services without OCA's approval. These transactions must still comply with all City laws and programs. 

Before making any purchases for commodities and general services of any amount, departments must first determine if what they need can be purchased from an existing citywide contract set up by OCA for City departments to use. If so, then they should use that contract. If what they need cannot be purchased from one of OCA's citywide contracts, then City departments may proceed to purchase the commodity or general service through other means. 

In general, departments can buy commodities and general services valued at $10,000 or less on their own after making an attempt to request at least three quotes. But if the value of the transaction exceeds $10,000, they must go through OCA so that OCA can formally bid out their request .

Professional services:

While OCA is responsible for purchasing commodities and general services on behalf of City departments, professional services can be purchased by City departments on their own (though they must do so with OCA’s final approval).

When does the City conduct solicitations?

When purchasing goods and services for an amount greater than $10,000, the City must engage in a competitive solicitation. Competitive solicitations can take a variety of forms. The three most common are:

• Low Bid/Invitation for Bids (IFB)
• Request for Proposal (RFP)
• Request for Qualification (RFQ)

To learn how you can do business with the City, find bid opportunities and other information related to being a City supplier, click here.

What is the difference between a purchase order and a multi-year contract and how does the City decide which to use?

The City generally issues a purchase order (PO) for one-time, non-recurring purchases with a duration of one year or less. A multi-year contract, on the other hand, is generally suitable for recurring purchases. This is because it is usually more efficient and cost effective for the City to put recurring transactions on a multi-year contract than buy them one by one. 

While commodities and general services can be purchased using either a PO or a contract, professional services, software and online content can only be purchased using a contract, regardless of the amount on the contract. This is because purchases for professional services, software licenses or online content can be riskier to the City compared to the purchase of simple commodities and general services. As such, the City must pay particular attention to contract terms and conditions for such transactions.

For technology purchases only, City departments also have two additional options:

• Technology Marketplace: The City’s Technology Marketplace consists of 50+ suppliers with whom OCA has negotiated multi-year contracts for as-needed purchases of technology goods and services. To use the Technology Marketplace, departments must first submit a request to OCA for review and approval. Once approved, OCA issues a purchase order to the awarded Technology Marketplace reseller. When using this process, City departments cannot sign any agreements, but must abide by the manufacturer’s license, use and support terms. All other matters are governed by the contract between the Technology Marketplace reseller and the City. Learn more about the City’s Technology Marketplace here.

• Citywide Enterprise Agreements: Both OCA and the City’s Department of Technology (DT) DT establish citywide agreements for the purchase of specific technologies. Unlike the Technology Marketplace agreements which can be used for a wide range of goods and services, these citywide technology and enterprise agreements are specific to a specific technology or manufacturer. Each agreement (or pool of agreements) comes with its own specific requirements around how the agreement can be used by City departments.