SR 11-24-2015 3H
City Council
Report
City Council Regular Meeting: November 24, 2015
Agenda Item: 3.H
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To: Mayor and City Council
From: Gigi Decavalles-Hughes, Director, Finance Department, Business & Revenue
Operations
Subject: Modification to Agreement with Transworld Systems Inc. for Collections
Services
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and
execute a first modification to Contract No. 9763 (CCS) with Transworld Systems Inc.,
a California-based company, to extend the contract term through December 30, 2018,
for collections services on delinquent debt. This will result in a five-year amended
agreement with no change to the total contract amount not to exceed $200,000, with
future year funding contingent on Council budget approval.
Executive Summary
In October 2013, the City of Santa Monica contracted with NCO Financial Systems, Inc.
(currently Transworld Systems Inc.) to provide collections services and increase
revenue on delinquent debt. The current contract expires on December 30, 2015. The
collection agency function has been an important part of the Finance Department’s
dedicated collections program that was established in FY 2013-14. Extending the
contract for an additional three years would allow staff to continue this work and fully
integrate additional department programs into the collections process. Staff
recommends modifying the original contract term for an additional three -year term,
which would result in a five year amended contract, with no change to the total contract
amount of $200,000.
Background
On July 9, 2013 (Attachment A), following a competitive bidding process, Council
approved a two-year contract with Transworld Systems Inc. to provide collections
services on delinquent debt. The contract supports the City’s dedicated collections
program that was established in FY 2013-14, providing the use of collection agency
services to assist with the collection of delinquent debts such as fees, taxes and fines .
The contract was executed in October 2013 for a term through December 30, 2015 for
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an amount not to exceed $200,000.
Discussion
The purpose of Transworld Systems Inc.’s (TSI) collections services is to increase
revenue from delinquent accounts by providing collections services as an extension to
the City’s resources. City staff perform internal collections actions on past due accounts
before referring to the collections agency. In FY 2014-15, City staff collected 34% of the
total amount of delinquent accounts processed. After City internal collections
processing, TSI collected about 13% of the amount referred , which is 3% above the
industry collection rate for government debt and 7% higher than that of local
government. TSI is compensated an average of about 25% on successful collections ,
which is within the industry average of 20%-35%. Total actual collections since the
beginning of the contract term, including on-going payment arrangements, is $488,000
on approximately 670 accounts. Due to Finance Department staff changes, the initiation
of regular referrals to the collection agency was delayed until June 2014. Exte nsion of
the contract for three additional years would allow City staff to continue to integrate
additional department programs into the collections program without further delay and
continue its successful collections program.
Staff recommends that Council authorize a contract modification to extend the term
through December 30, 2018.
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the
recommended action. Funds are available in the FY 2015-16 budget in account
012241.555060 to pay for ongoing collections services. Future year funding is
contingent upon Council budget approval.
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Prepared By: Sonya Neely, Billing & Collections Administrator
Approved
Forwarded to Council
Attachments:
A. July 9, 2013 Staff Report (Web link)
Reference:
Modified Contract No. 9763
(CCS)