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SR 12-12-2017 3F City Council Report City Council Meeting: December 12, 2017 Agenda Item: 3.F 1 of 6 To: Mayor and City Council From: David Martin, Director, Parking Operations (PCD) Subject: Contract Modification for Parking Revenue and Access Control Equipment System: Credit Card Processing Payment Provider Recommendation Staff recommends that the City Council authorize the City Manager to negotiate and execute a first modification to agreement #4387 (CCS) in the amount of $1,050,000 with Payment Express, a California based company for secure credit card gateway processing services of Parking Access and Revenue Control System (PARCS) credit card transactions. This recommended modification is made as an exception to the competitive bidding process pursuant to Section 2.24.080 (d). This will result in a 5- year agreement with two 1-year renewals a new estimated amount of $1,070,000 with future year funding contingent on Council budget approval. Executive Summary The City of Santa Monica operates 14 parking facilities on a 7 day per week, 24 hours per day operation. They consist of several fee-for-parking facilities including Parking Structures PS1 through PS9, the Ken Edwards Center Parking Structure, the Civic Center Parking Facilities, the Main Library Parking Structure and the Pier Deck parking lot. They generate approximately $20 million in revenue annually of which approximately 75% consist of credit card transactions. Within these facilities, Parking Access and Revenue Control Systems (PARCS) are used to provide controlled access with payment options for parking fees that includes credit cards, debits cards, and cash payments. The City Manager is authorized to execute changes to the existing Payment Express payment systems contract. Payment Express, Inc. is recommended to serve as the long-term credit card payment gateway provider, integrating with the SKI-DATA PARCS equipment. The modified contract would include ongoing “gateway” credit card payment services for all 14 parking facilities in an estimated amount of $1,050,000. Background 2 of 6 At its January 10, 2017 meeting (Attachment B), Council authorized the City Manager to execute an agreement with Sentry Control Systems, Inc. (Sentry) to install SKI-DATA Parking Access and Revenue Control (PARCS) equipment within 14 parking facilities in the City of Santa Monica. On March 30, 2017 the City Manager executed agreement number 10413 (CCS) with Sentry for the purchase and installation of parking equipment and to provide ongoing maintenance service not to exceed $4.7 million for the seven- year term of that contract. On April 1, 2017, upon the execution of contract 10413 (CCS) with Sentry, staff began working with this provider to assess and implement a plan for the installation of the parking equipment. As part of the implementation, a thorough assessment of the parking facilities was undertaken to ensure that an effective plan was generated for project implementation. This assessment included all requirements to install the PARCS system successfully, including its payment transaction processes. SKI-Data PARCS equipment processes all parking transactions through the application’s parking logic software. The parking logic software is the controller that operates all parking events and actions within the entry and exit lanes including all Pay- on-Foot (POF) Machines. Recent awareness of increasing attempts by bad actors to steal customer data have required credit/debit card transactions recipients to include greater security measures when processing payments. This is a new service, compatible with the Sentry SKI-DATA system. This new transaction process requirement requires SKI-DATA hardware to integrate with a unique credit/debit card processor firm. Sentry informed the City that Payment Express is the third party credit card gateway processor that integrates fully within the SKI-DATA PARCS system. Payment Express is compliant with all Payment Card Industry Data Security Standards (PCI-DSS) and Euro pay/MasterCard/Visa systems (EMV) to transfer credit card transaction information securely to the City of Santa Monica’s merchant provider (Transfirst, Inc.). The Payment Express credit card processor works in conjunction with our merchant processor, Transfirst, Inc.; each performing a separate function and receives a separate fee. 3 of 6 On September 13, 2017, the City Manager executed contract 4387 (CCS) with Payment Express, Inc., following an exception to competitive bid process, per municipal code 2.24.080(d) to begin the installation of the PARCS system. This contract is set to expire on December 31, 2017. It was necessary to execute this contract to allow the city to integrate Payment Express’ transaction component software code at the beginning of the installation of the PARCS system that involved the setup of multiple items prior to implementation. The contract was based on a monthly fee, not to exceed a total amount of $20,000, for the term of the contract. Payment Express normally does not allow for monthly fee agreements; however, staff was able to negotiate the current monthly fee to prevent delay with the SKI-Data installation process. As part of this new amendment, the fees would transition to a transaction-based model. Discussion As part of contract number 10413, Sentry is required to abide and comply with parking industry data-security standards, as they emerge, during the life of the installation contract. Such requirements include meeting or exceeding the new requirements of the Payment Card Industry Standards Council, as outlined in their data security standard “PCI-DSS,” the payment application data security standard “PA-DSS Level 1.0,” the pin transaction security “PCI-PTS” requirements, and the point-to-point encryption “PCI- P2PE” standard. Payment Express was the only provider at the time of contract execution that could meet the PCI-P2PE standard. The primary purpose of PCI-DSS is to reduce the risk of payment card (debit and credit) data loss by preventing, detecting, and reacting to potential breaches or “hacks” that could lead to customer account data compromises. Adhering to emerging PCI-DSS standards and guidelines provides a superior level of security for our customers, as they expect and trust that the City of Santa Monica has taken all the necessary measures to protect their private financial information. In order to achieve compliance with those standards and guidelines, it is necessary to integrate 4 of 6 Sentry, who installed PARCS equipment in the City’s 14 parking facilities, with Payment Express, who provides secure payment processing to the PARCS equipment. Payment Express secured transactions work the following way:  The SKI-Data Parking logic and companion Point-of-Sale software are integrated with the Payment Express equipment and security software and “tell” the Payment Express gateway what to charge.  The payment gateway (Payment Express) is a level 1, PCI compliant, payment gateway. All customer credit card information captured on the gateway is fully encrypted. Payment Express is responsible for securely processing a customer’s card transaction. Once Payment Express does that, Payment Express sends the transaction revenue on to the city’s merchant business bank (Transfirst) accounts. The credit card authorization information is included with each transaction record.  The City’s acquiring bank (Transfirst) is responsible for settling the processed transactions into the City’s merchant bank (Wells Fargo) accounts. The benefits of this proprietary integration of transaction processing ensures customer security, rapid processing of transactions, and expanded payment options. Software updates and new features are deployed remotely, removing cost and lead-time for an onsite technician. This will become more important moving forward as Credit/ Debit Card providers issue a range of Chip cards. Staff seeks City Council approval to modify the existing agreement with Payment Express, to extend the current agreement for 5 years with the option to renew, annually for up to two additional years, by which fees are to be paid by the City to Payment Express. This modified agreement would allow the PARCS transactions to move from a monthly fee to a transaction-based model. The City will pay 0.05 cents per transaction processed, regardless of the amount of the transaction. Through FY 2016-17, the city processed a total amount of 2.8 Million credit card transactions directly associated with the PARCS system. Staff estimates that in FY 2017-18 the city will process an 5 of 6 estimated amount of 2.8 to 3 million transactions, which translates to an estimated annual cost of $150,000. This estimated amount considers the transactions currently processed by the current PARCS system in conjunction with the new SKI-Data PARCS system once installed. Vendor Selection Payment Express, at the time of the contract execution, was the sole source provider to SKI-Data for their respective services. SKI-DATA integrates with payment express for EMV card readers, which includes credit card chip-reading technology. Payment Express meets the security standards as mentioned above. At this time, it is the sole proprietary source of parts and services to SKI-Data to ensure security of these transactions. This recommendation is made as an exception to the competitive bidding process pursuant to section SMMC 2.24.080 (d) and is for an estimated amount of $1,050,000, which modifies the current agreement to a five-year contract with two one- year renewal options, with future year funding contingent on Council Approval. Financial Impacts and Budget Actions The agreement modification, to be awarded to Payment Express, is for an estimated amount of $1,050,000. Funds in the amount of $1,070,000 are available in the FY 2017- 18 budget in the Planning and Community Development Department. The agreement will be charged to account 01417.555011 - Contractual Services. Future year funding is contingent on council budget approval. Prepared By: Henry Servin, City Traffic Engineer Approved Forwarded to Council 6 of 6 Attachments: A. City of Santa Monica Oaks Initiative Notice Signed B. January 10, 2017 Council Meeting 11/27/2017 Purchase of New Parking Access and Revenue Control Equipment - City of Santa Monica, California http://santamonicacityca.iqm2.com/Citizens/Detail_LegiFile.aspx?MeetingID=1085&MediaPosition=&ID=2064&CssClass=&Print=Yes 1/7 Purchase of New Parking Access and Revenue Control Equipment Information Department:Planning and Community Development Sponsors: Category:03. Consent Calendar Attachments Printout January 14, 2014 Staff Report May 12, 2015 Staff Report Oaks for Contract Approval for PARC System Recommended Action Recommended Action Staff recommends that City Council: 1. Authorize the City Manager to negotiate and execute a contract with Sentry Control Systems, Inc., a California based company, in an amount not to exceed $4,700,000 for the purchase, installation, and up to 7 years of maintenance of the Parking Access and Revenue Control System for various City owned parking facilities, with future year maintenance funding contingent on Council approval; and 2. Authorize the budget changes as outlined in the Financial Impacts and Budget Actions section of the report. Staff Report Body Executive Summary The City of Santa Monica operates parking facilities 24 hours/7 days per week generating approximately $32 million in revenue annually. Parking Revenue and Access Control Systems are used to provide controlled access to the parking facilities, payment options for parking fees that includes credit cards and debit cards, and management reports. Sentry Control Systems, Inc. (Sentry) is recommended as the best proposer to provide a new Parking Access and Revenue Control System for the City’s parking operations. The contract would include purchase and installation of new parking equipment for 14 parking facilities for an amount not to exceed $2,300,000, and provide ongoing maintenance service for five years with an option to extend for two additional years for a total seven-year amount not to exceed $2,400,000. An agreement to cover up to seven years of maintenance is recommended as the average life expectancy of parking equipment is seven to ten years. Background At its January 14, 2014 meeting (Attachment A), Council authorized the City Manager to execute an agreement with DataPark USA, Inc. (DataPark) for the purchase, installation, and up to ten years of City of Santa Monica California Staff Report 2064 11/27/2017 Purchase of New Parking Access and Revenue Control Equipment - City of Santa Monica, California http://santamonicacityca.iqm2.com/Citizens/Detail_LegiFile.aspx?MeetingID=1085&MediaPosition=&ID=2064&CssClass=&Print=Yes 2/7 maintenance of the Parking Access and Revenue Control System (PARCS) with License Plate Recognition (LPR) for the downtown parking structures, Main Library parking structure, Civic Center parking facilities, Ken Edwards Center, and Pier Deck parking lot. PARCS equipment includes items such as computer servers, terminals for payment, and entry/exit gates within the parking facilities. The system manages the access in and out of the parking facilities. Parkers must present a valid parking credential such as a key card or pull a ticket to make payment. The system also accepts validations. The system provides revenue control for short term (i.e. transient) and monthly (i.e. non- transient) parking management solutions with payment options either before or after the time period parked as well as reporting capabilities on revenues and length of parking session. Fees can be incremental by time or a flat rate. Parking Structure 6 opened to the public on December 19, 2013. In order to avoid a delay of the operation, the City issued a Request for Quotes in September 2013 for temporary leasing of a standalone PARC System for the new facility. The City received quotes from DataPark and WPS as well as a “No Bid” form from Sentry Systems. DataPark was selected based on providing the lowest cost to meet all required specifications. The system was delivered and installed prior to the January 14th Council meeting noted above to support the grand opening of Parking Structure 6. On May 12, 2015 meeting (Attachment B), Council authorized the City Manager to execute a first modification to contract #9860 in the amount of $160,000 with DataPark USA, Inc. to provide a Point of Sale system at the five cashier-staffed beach parking lots (Lots 4, 5 South, 1 North, 3 North, and 8 North). Due to installation issues, staff postponed the installation of this additional equipment. The equipment was never installed. In 2012 DataPark USA, Inc. was purchased by FAAC Group. In 2013 Hub Parking Technologies was reorganized as FAAC’s Parking Business unit and DataPark USA, Inc. was subsequently reorganized as a product line of HUB Parking Technologies (HUB Parking) and is no longer a separate corporate entity. For the purposes of this staff report, the name HUB Parking will be used instead of DataPark since this is now the corporate entity name. Discussion In May 2014, following the installation of HUB PARCS equipment in parking structure 6, the City began installation of the HUB Parking PARCS equipment in the remaining structures in the downtown and the Pier deck. The City experienced significant issues with the installation of the new system including system wide failures and inadequate hardware. Additionally, because the requirements to enter system testing were not met, acceptance testing of the system was not completed. Although the city was able to collect revenues on most days, there were many instances during the first year of installation where the city was not able to collect revenues from parkers due to system failures. 11/27/2017 Purchase of New Parking Access and Revenue Control Equipment - City of Santa Monica, California http://santamonicacityca.iqm2.com/Citizens/Detail_LegiFile.aspx?MeetingID=1085&MediaPosition=&ID=2064&CssClass=&Print=Yes 3/7 On June 30, 2016, after working with HUB for several months and being unable to correct certain issues with the system staff issued a letter of default to HUB Parking and is exercising the City’s rights under the agreement to cancel the agreement during the installation period of the agreement. Staff subsequently began the selection process for a new PARCS provider. Vendor Selection On October 17, 2013, the City issued a RFP via the City’s online bidding site in accordance with the City Charter and Municipal Code provision that require competitive bidding for this project. The evaluation committee, comprised of staff from the Finance and Information System Departments, City of West Hollywood Parking Operations, Downtown Santa Monica, Inc. and Macerich, reviewed all four proposals received. Walker Parking Consultants also reviewed all the proposals and provided comments based on their professional experience to the committee without providing a recommendations. The selection committee met twice and had extensive discussions on all evaluation criteria, including but not limited to pricing, proposed solutions, capacity of service performance, ongoing operating costs, financial and inventory resources, and system compliance levels. The evaluation committee recommended DataPark USA Inc. (now Hub Parking) as the best proposer, ranking the four qualified proposers. The results of the evaluation (based on a maximum average score of 10 for all four companies were: Proposer Score DataPark 8.19 WPS 7.44 Sentry 6.53 Zeag 6.28 Due to the recent process that was completed in 2013 to select a new vendor, staff used the existing qualified list of proposers. WPS and Sentry were both invited to update their proposals for consideration by a newly formed selection committee. Zeag was not invited to participate since the company is also now a product line of HUB Parking Technologies. 11/27/2017 Purchase of New Parking Access and Revenue Control Equipment - City of Santa Monica, California http://santamonicacityca.iqm2.com/Citizens/Detail_LegiFile.aspx?MeetingID=1085&MediaPosition=&ID=2064&CssClass=&Print=Yes 4/7 The two finalists were invited on June 30, 2016 to submit updates to their original proposals as part of an amendment to the original procurement process. Both proposers submitted updated proposals. Each proposer was also provided a list of the evaluation committee members with an opportunity to report any conflicts of interest. Each evaluation committee member was also required to submit a signed acknowledgement that they had no conflicts. No conflicts were reported by either the proposers or evaluation committee members. The evaluation committee included representatives from Planning & Community Development, Finance, Information Systems, Santa Monica Place/Macerich, and the City of West Hollywood Parking Operations division. Macerich participated in the evaluation process pursuant to its lease agreement for Parking Structures 7 and 8. Representatives of SP+ Municipal Services, the City’s parking operator, also reviewed the proposals and participated in interviews held with each proposer. SP+ provided comments to the committee as subject matter experts in parking operations and PARC systems, their experience as the City’s parking operator, and familiarity with the City’s operations. SP+ provided objective feedback to the committee in a consultative role. SP+ did not score the proposals. Based on the proposals submitted the companies achieved the following average scores from the committee members out of a total of 300 points possible: Proposer Score Sentry 243 WPS 203 Following are the costs (installation and maintenance) proposed by the two companies: Proposer Cost with 7 Year Warranty/Service Installation Extended Warranty, Maintenance, Service, and Validations Total Sentry $2,428,563* $3,466,896 $5,646,459 WPS $2,566,366 $1,635,111 $4,201,477 *Sentry’s pricing is based on redeploying some existing Skidata equipment owned by the City of Santa Monica 11/27/2017 Purchase of New Parking Access and Revenue Control Equipment - City of Santa Monica, California http://santamonicacityca.iqm2.com/Citizens/Detail_LegiFile.aspx?MeetingID=1085&MediaPosition=&ID=2064&CssClass=&Print=Yes 5/7 Although not the lowest priced proposer originally, the evaluation committee scored Sentry the highest overall and recommends Sentry as the best proposer overall due to the following critical categories where it rated higher than WPS: · Demonstrated capacity to perform · Character, Reputation, Experience, and Stability · Qualifications of Project Manager and Staffing Commitment for Installation Sentry demonstrated a greater understanding of the resources and timeline needed for implementation. Sentry’s demonstrated capacity to perform is critical for the City’s large parking operations. In addition to preventative care, the warranty provided by Sentry includes enhanced service for remedial maintenance as well as ongoing customized training on topics determined by City staff. This type of training increases performance and helps staff to resolve issues more quickly. The agreement would include support services 24 hours per day 7 days per week including holidays, which is vital to ensure minimal downtime. The service included in the proposal by Sentry includes a dedicated service technician as well as preventative maintenance. Sentry is a market proven industry leader with strong financials. The company is based in Los Angeles with a warehouse support inventory facility in Van Nuys, making easy access to parts and equipment for service needs. Sentry’s system is installed in over 275 sites within California and 10,000 installations in 100 countries. Sentry equipment is installed in large facilities such as the LA Live/Staples Center/Convention Center, multiple UCLA sites including the Santa Monica Medical Center, the Irvine Spectrum, Orange County, as well as other local municipalities such as Beverly Hills. The company is also installed in all MGM Casinos in Las Vegas which include hotels such as New York New York, Mandalay Bay, and Aria. Following the committee’s completion of its scoring, staff was successful in securing a reduced total cost from Sentry as the highest scorer, particularly with service and warranty fees prior to submission of this staff report which the Financial Impacts section totals are based on. The best and final amount offered by Sentry for equipment were reduced to $2,275,310 from $2,428,563; the best and final amounts offered by Sentry for Extended Warranty, Maintenance, Service, and Validations were reduced from $3,466,896 to $2,401,556, bringing the total cost with a 7 year warranty and service to $4,676,866, a reduction of approximately 17% over the original pricing proposal. Protest 11/27/2017 Purchase of New Parking Access and Revenue Control Equipment - City of Santa Monica, California http://santamonicacityca.iqm2.com/Citizens/Detail_LegiFile.aspx?MeetingID=1085&MediaPosition=&ID=2064&CssClass=&Print=Yes 6/7 Draft The two finalist where notified on December 9, 2016 of the evaluation committee’s recommendation of Sentry as the best bidder. On December 19, 2016 WPS submitted a protest of the committee’s decision. On December 22, 2016 the Finance Director rejected the protest on procedural grounds based on the protest not being filed timely, even after WPS was provided with an extension to the protest deadline. However, the Finance Director noted that the even had the protest been filed timely, the protest would have still been denied based on insufficient grounds. Based on the Finance Director’s final determination staff recommends that the contract be awarded to Sentry as the best bidder. Alternatively, Council may reject all bids, and, in its discretion instruct staff to initiate a new Request for Proposals. Financial Impacts & Budget Actions The contract to be awarded to Sentry Control Systems, Inc. is for an amount not to exceed $4,700,000, including the purchase, installation, and up to seven years of maintenance. The up-front equipment purchase will cost approximately $2,300,000. A portion of these expenditures are recoverable under the original HUB Parking termination clause of the agreement. Staff is exercising all options to ensure full recovery. Additionally, Macerich will continue to make its contributions of $1,120,031.97 as deductions from revenue sharing agreements for Parking Structures 7 and 8. Funds of $468,975 are available in the FY 2016-17 Capital Improvement Program budget. Award of the contract requires the following budget actions, with the net increase coming from capital project contingency funds with the anticipation of cost recovery: 1. Transfer $200,000 from account 01417PY.555010 to C010715.589000; 2. Appropriate $470,000 in FY 2015-16 savings to account C010715.589000; 3. Release of fund balance from reserve account 1.380006 (capital project contingency) of $1,161,025; 4. Appropriate $1,161,025 to account C010715.589000. The contract will be charged to account C010715.589000. Future year maintenance funding will be included in the operating budget and is contingent on Council budget approval. Meeting History Jan 10, 2017 5:30 PM City Council Regular and Special Joint Meeting 11/27/2017 Purchase of New Parking Access and Revenue Control Equipment - City of Santa Monica, California http://santamonicacityca.iqm2.com/Citizens/Detail_LegiFile.aspx?MeetingID=1085&MediaPosition=&ID=2064&CssClass=&Print=Yes 7/7 Powered by Accela - Legislative Management REFERENCE – AGREEMENT NO. 10599 (CCS)