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SR 05-09-2017 3C Ci ty Council Report City Council Meeting : May 9, 2017 Ag enda Item: 3.C 1 of 7 To: Mayor and City Council From: David Martin, Director , Parking Operations (PCD) Gigi Decavalles -Hughes, Director, Finance Department Subject: Fourth Modification to Agreement 9210 (CCS) for Parking Citation Processing, Parking Permit Fulfillment, and Payment Processing Services Recommended Action Staff recommends that the City Council: 1. Assign agreement #9210 (CCS) from Xerox State & Local Solutions, Inc. to Conduent State & Local Solutions, Inc. 2. Authorize the City Manager to negotiate and execu te a fourth modification to agreement #9210 (CCS) in the estimated amount of $1.9 million (includes 10% contingency) with Conduent State & Local Solutions, Inc., a New -Jersey -based company, for parking citation processing, parking permit fulfillment, and p ayment processing services. This will result in a nine -year amended agreement with an estimated agreement amount of $14.5 million, with future year funding contingent on Council budget approval. Executive Summary The City currently contracts with Xerox S tate & Local Solutions, Inc. (Xerox) for parking citation processing, parking permit fulfillment, and payment processing services based on the recommendations in the 2009 Walker Parking Study for an integrated parking management system to improve the effic iency and effectiveness of managing the City’s parking resources. In February 2017 Xerox State & Local Solutions, Inc. formally changed its name to Conduent State & Local Solutions, Inc. (Conduent), requiring assignment of the agreement from Xerox to Condu ent. The current contract expires on June 30, 2017 with a two -year renewal option remaining. Staff recommends a fourth modification to agreement #9210 (CCS) to assign the agreement to Conduent; extend the current term to June 30, 2018 only, leaving one rem aining one -year renewal option; and modify the agreement to include additional conditions that conform to the City standards for contractual services. The proposed fourth modification will result in an estimated increase of $1.9 million (includes 10% conti ngency) in the contracted amount for a total estimated agreement amount of $14.5 million . Background 2 of 7 On November 23, 2009, the three Westside cities of Santa Monica, West Hollywood, and Beverly Hills jointly issued a Request for Proposals (RFP) for citat ion processing, handheld devices, license plate readers, and permit processing systems. The objectives stated in the RFP conform to the recommendations in the 2009 Walker Parking Study for an integrated parking management solution. The intended benefit of a joint RFP was economies of scale and working collaboratively as one entity in terms of service and performance standards, but each of the three Westside cities would award its own contract with the selected vendor. Four proposals were received and Xerox (then ACS State & Local Solutions, Inc.) was unanimously selected as the best bidder based on price, range of products and services offered, ability to address the Westside cities’ issues, and commitment to implement an integrated parking solution. On May 11, 2010, Council authorized the City Manager to negotiate and execute agreement # 9210 (CCS) with ACS State & Local Solutions, Inc. in the estimated average amount of $1,400,000 per year for a period of five years, with two additional two -year renewal op tions, to provide parking citation processing, parking permit fulfillment, and payment processing services. The parking permit fulfillment portion of the agreement would be implemented in four phases as Xerox had to build new software solutions to provide the services. In April 2012 agreement #9210 (CCS) was assigned to Xerox following the name change as a result of ACS State & Local Solutions, Inc. being acquired by Xerox. There have been three modifications to agreement #92 10 (CCS) through administrative procedures as these modifications did not alter the terms or contract amount. On July 10, 2012, the City issued a first modification to accommodate new functionality and clarify services to be provided by Xerox, including allowing Xerox to also accept Ame rican Express payments in addition to VISA and MasterCard and allowing the City to purchase permit stock from Xerox per the City’s specifications. On February 13, 2013, the City issued a second modification to accommodate reimbursement to Xerox for postage and mailing costs related to the services provided. On June 23, 2015, the City issued a third modification to exercise the first renewal option and extend the term to June 30, 2017, clarify the additional services to be performed by Xerox per the 3 of 7 original agreement, and revise the pricing schedule. Discussion The City has had an agreement with Xerox since July 2010 for parking citation processing, parking permit fulfillment, and payment processing services. Agreement #9210 (CCS) with Xerox expires on June 30, 2017 with one remaining two -year renewal option. Xerox assists the City with the administrative processes of the parking citations the City issues. Xerox processes the citations by uploading the citations to its citation and permit management system daily; accepting citation payments in person, by mail or online; responding to phone inquiries; and mailing legal and payment notices to the vehicles’ registered owners. The California vehicle code entitles register ed owners to certain appeal process es aft er a citation is issued. These appeal procedures consist of an initial review and/or an administrative hearing. Xerox is tasked with the intake of these appeals, assign ing them to the appropriate departments for response, manag ing the administrative hearin g schedules, and notify ing the register owners of the appeal decisions. In addition, Xerox is tasked with the collection of unpaid citations. Xerox, on behalf of the City, notifies the California Department of Motor Vehicles (DMV) and/or Franchise Tax Boar d (FTB) of any unpaid citations, tracks the remittances intercepted by these agencies, and appl ies them to the appropriate citations accordingly. In 2016 the City issued over 280,000 parking citations. Approximately 18,500 of these citations resulted in the customers requesting an initial review for the validity of the citation, and 1,800 of the customers found to be liable proceeded to request an administrative hearing from the City’s hearing officer for an independent review. As a result, Xerox responde d to over 40,000 phone inquiries, and mailed 13,000 unpaid notices to DMV and 1,000 notices to FTB respectively. For parking permit processing, Xerox is responsible for processing over 50,000 parking permit renewals every year for the preferential parkin g program. There are four renewal cycles every calendar year with a total of over 20,000 customer accounts. Xerox works 4 of 7 closely with staff to send out renewal notices to existing account holders and process the renewals accordingly. Customers can renew the ir permits online or by mail. Xerox houses and maintains the permit stock on the City’s behalf. Finally, Xerox provides payment processing services related to parking citation processing and parking permit fulfillment including lockbox services, which hel ps simplify collection and processing of receivable payments. Assignment of Agreement On January 29, 2016, Xerox announced its plan to separate into two independent, publicly traded Fortune 500 companies: a document technology company known as Xerox Corpo ration and a business process outsourcing company known as Conduent Incorporated. The separation concluded and , as of January 1, 2017, the business process services provided by Xerox Corporation is now conducted under the new name Conduent, Inc. As of Febr uary 16, 2017, Xerox State & Local Solutions, Inc., an indirect but wholly owned subsidiary of Conduent, Inc. changed its name to Conduent State & Local Solutions, Inc. to align itself more clearly with the Conduent brand. The name change does not affect t he contract between Conduent and its customers and business partners as Conduent State & Local Solutions, Inc. remains the same legal entity with the same employer identification number (EIN) after the name change. Contract Extension Staff explored the po ssibility of issuing a new RFP to obtain a new service provider for the range of services currently provided by Xerox. This exploration was also intended to identify available new technologies relating to citation/permit issuance and management since the c ontract was executed. While new and improved technologies exist, there are few companies that are able to provide the full range of services desired by the City. Staff recommends extending the agreement with Xerox to minimize any service interruptions whil e continuing to allow staff to ex plore other possibilities for the best integrated parking solution. Contract Modifications 5 of 7 The amount of the agreement is dependent on the number of citations and parking permits issued. The original agreement was approved at an estimated amount of $1,400,000 per year , or $12.6 million for the duration of the agreement if all renewal options were exercised. The City has spent close to $9.4 million since the inception of the agreement through FY 2015 -16 , and is projected to spend an estimated additional amount of $4.6 million between FY 2016 -17 and FY 2018 -19 on all contracted services, bringing the estimated total to $14 million for the duration of the agreement. Staff recommends a fourth modification in the estimated amount of $1.9 million (includes 10% contingency ), with an estimated agreement amount of $14.5 million, with future year funding contingent on Council budget approval. Staff also recommends a fourth modification of the agreement to include some provisions that are now City standards for contractual services such as terminating an agreement at the City ’s convenience . While Xerox has primarily met its contractual obligations, there have been a few performance issues since contract inception. During the same time period, the Parking Operations Division experienced several staff turnovers, which created continuity issues and made contract oversight more challenging. In 2016 staff met with Xerox management on multiple occasions to address the performance issues. Xero x’s contract performance has greatly improved and staff is working closely with the Xerox team to continue to improve and ensure a seamless contracting relationship. To more effectively manage this agreement, staff recommends the following conditions in t he fourth modification: Extend the term to June 30, 2018 and provide one remaining one -year renewal option. The total contract term remains at nine years. Following the last option period, staff will issue a new RFP for citation and permit processing ser vices. Include an option for the City to terminate the agreement for convenience. Include an option to allow the City to terminate the agreement in parts or in whole. 6 of 7 Revise the performance standards for parking permit fulfillment to include a penalt y provision so it is consistent for all contracted services. Vendor Selection On November 23, 2009, the three Westside cities of Santa Monica, West Hollywood, and Beverly Hills jointly issued a RFP for citation processing, handheld devices, license plate readers, and permit processing systems. The RFP was broadly publicized by all three cities. Four proposals were received to deliver all requested services; one proposal was received for only handheld citation devices. A selection committee of representativ es from all three cities reviewed the proposals and unanimously selected Xerox (then ACS State & Local Solutions, Inc.) as the best bidder based on price, range of products and services offered, ability to address the Westside cities’ issues, and commitmen t to implement an integrated parking solution. Financial Impacts and Budget Actions The agreement modification to be awarded to Conduent State & Local Solutions, Inc. is $1.9 million, for an amended estimated agreement amount of $14.5 million. Funds are a vailable in the FY 2017 -19 proposed budget in the Finance and Planning & Community Development d epartment s . The agreement will be charged to 012241.555010 for parking citation costs and 01417.555010 for parking permit fulfillment costs. F uture year funding is contingent on Council budget approval . Prepared By: Caline Evans, Administrative Analyst Approved Forwarded to Council 7 of 7 Attachments: A. Oaks - Xerox State & Local Solutions B. May 11, 2010 Staff Report C. Oaks - Conduent State & Local Solutions 2017 Officers and Directors of Xerox State Local Solutions, Inc. Name Title David A. Amoriell President Troy R. Anderson Vice President Richard J. Bastan Vice President Nicholas Bevilacqua Assistant Secretary Glen Scott Bienacker Chief Financial Officer Rich Castranova Vice President Michael Cerone Vice President Jay Chu Vice President Nancy Collins Senior Vice President R. G. Conlee Vice President David P. Cummins Senior Vice President Michael M. Davis Senior Vice President Michael Festa Director, Treasurer, Vice President Stephanie Grossman Assistant Secretary James Haddow Assistant Secretary David Hamilton Senior Vice President Donald Hubicki Vice President David R. Jarrett, Jr.Vice President - Real Estate Eric Jean Vice President Alan R. Jolly Vice President Sherry Jones Senior Vice President Zahoor A. Karamally Vice President Jeremy Katz Vice President Michael Langenohl Vice President David Lemoine Vice President Michael L. Moore Senior Vice President J. Michael Peffer Director, Vice President, Secretary John Polk Vice President John F. Rivera Assistant Treasurer Laura Rossi Vice President Richard J. Russin Senior Vice President, Assistant Secretary Officers and Directors of Xerox State Local Solutions, Inc. Name Title Nancy A. Schnepf Vice President Louis J. Schiavone Vice President Lauretta Sechrest Vice President Allen Shutt Senior Vice President David A. Splitt Senior Vice President Robert H. Strasser Assistant Secretary Zouhair Tahri Vice President Mark J. Talbot Senior Vice President Craig Venet Vice President Ann Vezina Senior Vice President Nancy P. Vineyard Vice President Charlie Watts Vice President Paul R. Webber, IV Assistant Secretary David Wright Senior Vice President REFERENCE:    Modified  Agreement    No. 9210    (CCS)