ACTION REQUESTED:
Title
Communication from the City Manager and Finance Director/Comptroller with a Request to Authorize the City Manager to Negotiate and Execute CONTRACT EXTENSIONS with Current City VENDORS in Exchange for Discounted Pricing, for Any Contract with an Annual Cost of $250,000 or Less.
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BACKGROUND:
For fiscal years 2012 and 2013, the City Council granted the City Manager the authority to execute contract extensions for City vendors in exchange for discounted pricing. This effort has been successful.
As staff enters into the FY2014 budget, which kept contractual services budgets at minimal growth over 2013, this tool can once again be helpful in containing cost. The Administration is seeking authorization to approach City service providers with a request to reduce current and future contact amounts in exchange for an additional year of guaranteed contract length.
The approved FY2014 budget includes $19 million in the "Contractual Services" portion of the operating budget. The list of services is very broad, ranging from the City's multi-million dollar contract for residential refuse collection to a $1,600 contract for document shredding. Most of these services are provided for a fixed fee and on an annual basis. Some, such as the garbage contract, are multi-year contracts. A small number of contracts are unit based, such as "per hour" for legal services or "per square foot" or "per lot" for environmental clean-up (Code Enforcement).
If authorization is granted, the City Manager and the Finance Director will work with each Department Head to determine which contracts might be potential targets for an extension in exchange for a discount. Consideration will be given in the following areas:
1. Is the City happy with the service offered by the vendor?
2. Is there an option other than this particular vendor? Many software agreements held by the City (i.e. Microsoft) have no realistic alternative.
3. Might the City save more money by holding a competitive bid rather than extending an existing vendor?
An expedited process will allow the City to both capture savings for the remainder of any current contract and reduce the budget for future years. For all contracts of $250,000 or less, including those "per unit" contracts that annually total $250,000 or less, the City Manager shall have the authority to negotiate and execute extensions so long as the extension is not greater than one year in length. For any contracts greater than $250,000 or for extensions greater than one year in length, the City Manager will seek approval from the full City Council.
FINANCIAL IMPACT: Successfully negotiated extensions will save the City money
NEIGHBORHOOD CONCERNS: Not applicable.
IMPACT IF APPROVED: The City Manager, Finance Department, and individual departments will begin assessing and contacting targeted vendors.
IMPACT IF DENIED: No further action will be taken.
ALTERNATIVES: None.
EEO CERTIFICATION NUMBER: Not applicable.
WHICH OF THE GOALS IDENTIFIED IN THE COUNCIL'S 2014 - 2029 STRATEGIC PLAN DOES THIS RECOMMENDATION ADVANCE?
1. Financially Sound City Government, Effective City Organization
WHICH CRITICAL SUCCESS FACTOR(S) FROM THE COMPREHENSIVE PLAN DOES THIS RECOMMENDATION IMPLEMENT?
1. Have an efficient government.
DEPARTMENT: Finance