SR-05-12-2015-3NID
City Council
Nanda Manion,
City Council Regular Meeting: May 12, 2015 t
Agenda Item: k3 N
To: Mayor and City Council
From: Gigi Decavalles- Hughes, Director
Subject: Third Modification to Contract with Kronos, Inc, for Software Licenses and
Upgrades, Mobile Licenses, Professional Services, and Ongoing
Maintenance and Support Services
Staff recommends that the City Council:
1) Authorize the City Manager to negotiate and execute a third modification to
Contract #8417 with Kronos, Inc., a Massachusetts -based company, for software
licenses and services to implement mobile license technology in the amount of
$15,000; and a fourth modification in the amount of $20,000 to develop new
interfaces and make changes to existing interfaces for the new Enterprise
Resource Planning (ERP) system. This will result in a 15 -year amended contract
ending June 30, 2020, for a total not to exceed amount of $380,000; and
2) Authorize the City Manager to negotiate and execute a second modification to
the maintenance and support agreement with Kronos, Inc., a Massachusetts -
based company, in the amount of $497,000 (including a 10% contingency) for the
City's electronic timekeeping and attendance hardware and software. This will
result in a 15 -year amended contract ending June 30, 2020 with a new total
amount not to exceed $1,128,653 with future year funding contingent on Council
approval and budget adoption.
Executive Summary
The City of Santa Monica purchased electronic timekeeping and attendance hardware
and software from Kronos more than 15 years ago. The City has two contracts with
Kronos: one for hardware and software purchases and services, governed by a sales
agreement; and one for hardware and software maintenance, governed by a
maintenance and support agreement. Staff has returned to Council three times since
the primary agreement to request funds for additional licenses and service support to
accommodate new employees and technology upgrades, and to extend the
maintenance agreement terms.
The contract for purchases and services is incorporated by reference into the
maintenance agreement, such that the right to purchase additional licenses is extended
with maintenance agreement extensions. The current maintenance contract is a five -
year sole- source agreement ending on June 30, 2015. Staff requests modifications
totaling $35,000 to purchase licenses for and implement mobile license technology, and
to develop and update interfaces for the new Enterprise Resource Planning (ERP)
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system. These modifications can be accommodated within current contract authority,
reflecting unspent project and contingency authority from prior agreements. The total
not to exceed amount for hardware, software, and services remains unchanged at
$380,000.
Staff requests Council approval to amend the contract for ongoing hardware and
software maintenance for an additional five -year term, and approve additional budget
authority. The current contract expires on June 30, 2015. The estimated five- year cost
for maintenance is $497,000, including a 10% contingency to cover the maintenance
cost for any additional licenses purchased during that time frame, for a total not to
exceed $1,128,653 since the first agreement. The new term, which applies to both
contracts, would extend through June 30, 2020.
Background
On December 15, 1998 (Attachment A), Council authorized the purchase of a
timekeeping and attendance system from Kronos, Inc. for the Police Department. The
contract included an amount not to exceed $270,000 for the purchase of a time,
attendance, and labor management system, and a contract in an amount not to exceed
$125,163 for a maintenance agreement to cover the five years following the end of the
system warranty, through December 2005. Staff recommended Kronos, Inc. to provide
this service following a competitive process.
On November 23, 2004 (Attachment B), following a staff evaluation, Council authorized
a new contract for the purchase of a time and attendance software system from Kronos,
Inc., for citywide use. This contract was for a not to exceed amount of $316,000 for
software licenses, and for a not to exceed amount of $248,653 for maintenance and
support services for a five -year term. Following this initial purchase and software
agreement, staff has modified the contract three times to add software purchases and
professional services to accommodate new staff, and to extend the maintenance
agreement: administratively, on December 23, 2008; and through Council approval on
September 14, 2010 (Attachment C) and June 12, 2012 (Attachment D). Currently, the
contract for hardware and software purchases and services is for a not to exceed
amount of $380,000. The maintenance contract is for a cumulative not to exceed
amount of $631,653 through the period ending June 30, 2015.
Discussion
The use of electronic timekeeping hardware and software reduces the inefficiency of
manual timecards and helps to reduce the risk of human processing errors and fraud.
There are some employees that do not report to City facilities so they do not have the
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ability to use a computer or a time clock to record their time worked. The requested
modifications to the software purchase contract, for $15,000 and $20,000 respectively,
address this issue and support Enterprise Resource Planning (ERP) system integration.
The third modification, $15,000, includes software purchases for mobile licenses that
will allow employees to record their time from a mobile device ($7,500), funds for
professional services to implement this new technology ($7,500); the fourth modification
will include the new interfaces required to transfer data between the Kronos system and
the new ERP ($20,000). The total not to exceed amount for hardware and software
purchases and services would remain $380,000, reflecting available contract authority
related to unused contingency and unspent professional services funds from previous
agreements.
Through the current date, software purchases are governed by a sales agreement that
falls under the authority of the maintenance agreement, such that extending the
maintenance agreement implicitly extends the sales agreement terms and provides for
additional purchases within that time frame. To clarify both contracts, staff recommends
modifying the sales agreement to cover a specific five -year term, which would include
the option to make additional purchases within budget authority during that time frame.
Contract terms would remain concurrent with the maintenance agreement, but would be
clearly defined by contract.
To receive critical hardware and software support and software updates from Kronos,
Inc., for the City's electronic timekeeping and attendance software, the City must
continue to purchase maintenance and support services from Kronos, Inc., the sole
provider of these services. Staff therefore recommends a modification to the agreement
with Kronos, Inc. for maintenance and support services for a period of five years. The
total anticipated expenditure of $497,000 for an additional five years of service
beginning in FY 2015 -16 will increase the contract amount not to exceed $1,128,653.
This includes a 10% contingency for maintenance of additional hardware or software
licensing that may be necessary over the next five years.
Vendor Selection
Staff evaluated new timekeeping and attendance alternatives during the RFP process
for the new Enterprise Resource Planning System (ERP). However, functionality
contained within the evaluated ERP systems did not measure up to the robust
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functionality contained within the Kronos system. Therefore, staff made the decision to
continue using the Kronos system and to expand the licensing technology to
accommodate the mobile workforce.
Kronos is the only vendor that can provide maintenance and support for its software
system, therefore the vendor is treated as a sole- source vendor for this component of
the contract pursuant to section 2.24.080 (d) of the Municipal Code.
Financial Impacts and Budget Actions
The contract modifications to be awarded to Kronos, Inc. for software licenses and
services total $35,000, for a contract total not to exceed $380,000. Funds are available
in the FY 2014 -15 Capital Improvement Program budget in accounts 0010462.589000
and C019113.589000. Funds will be encumbered as needed.
The contract modification to be awarded to Kronos, Inc. for the maintenance and
support agreement is $497,000, for an amended contract total not to exceed
$1,128,653. Funds will be included in various department budgets in the FY 2015 -17
Proposed Biennial Budget for Council approval and budget adoption. Future year
funding is contingent on Council approval and budget adoption.
Prepared By: Gayle Kirby, Financial Systems & Payroll Administrator
Approved Forwarded to Council
i'
Gi"gi ecavalles -Wugi es,!Directorl /30/2015 Elaine M Polachek, Interim City M5woerl5
Attachments:
A. December 15, 1998 Staff Report
B. November 23, 2004 Staff Report
C. September 14, 2010 Staff Report
D. June 12, 2012 Staff Report
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