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HomeMy WebLinkAboutStaff Report 2307-1793CITY OF PALO ALTO Finance Committee Regular Meeting Tuesday, October 17, 2023   Agenda Item     1.Printing Services Review of Alternative Service Delivery (Finance Committee Referral) – CEQA Status - not a project. Presentation 1 9 2 9 Finance Committee Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: Administrative Services Meeting Date: October 17, 2023 Report #:2307-1793 TITLE Printing Services Review of Alternative Service Delivery (Finance Committee Referral) – CEQA Status - not a project. RECOMMENDATION Staff recommends the Finance Committee recommend to the City Council to direct staff to: 1) Maintain print and mail services in-house as adopted in the Fiscal Year (FY) 2024 Adopted Budget; and 2) Report out on the status of the costs and performance of the print shop in 12-18 months. EXECUTIVE SUMMARY In 20191, the Finance Committee directed staff to explore the options for delivering printing services along with possible cost savings and required services levels. Printing services are provided by City staff to satisfy the myriad printing needs of City departments with fast turnaround. This review was designed to consider outside providers to satisfy these needs at a cost savings. After conducting a request for proposal (RFP) process, which included two rounds of collecting cost information, staff recommends maintaining printing services in-house as the best way to meet organization needs while keeping costs within the range demonstrated in the market at this time. Recognizing that market conditions and business need vary over time, staff will periodically revisit this conclusion. Guiding staff’s thinking about the formation of the recommendation there were several factors that rose to the surface. Impacts to customer service, personnel planning, organization-wide change management, customer experience, and timely delivery of products were taken into consideration along with cost in developing the recommendation. The recommendation reflects the balancing of these interests along with financial impacts to strive towards the goal of achieving a solution that positively affects most of these factors. These impacts are noted towards the end of the report. 1FY 2020 Budget Referrals Update; https://www.Cityofpaloalto.org/civicax/filebank/blobdload.aspx?BlobID=74171 1 9 2 9 BACKGROUND The City has historically operated an in-house print shop, which is located on Level A of City Hall. The print shop also serves as the mail room for the City’s inbound and outbound mail and the staff for these services functions as one team. The print shop is part of the Administrative Services Department and operates as a separate internal service fund (ISF). As an ISF the costs of the print shop are allocated to City departments based on their actual usage. Examples of their workload includes the mail room sending out 271,000 utility bills per year and the print shop producing an estimated 500 individual Council packets totaling an estimated 200,000 – 500,000 printed pages over a recent twelve-month period. A hybrid structure serves the print shop where outside vendors are used for a portion of jobs, roughly 10-to-15 percent, that may need special work outside the scope of in-house services – examples include poster signage, large format laminate, and other more specialized requests. Under this structure the bulk of everyday printing, the other 85-to-90 percent, is managed by the print shop. A sampling of the print jobs that the City handles include: Table #3: Sample of Jobs and Volume Currently Handled by the Print Shop (except where noted) Job Number per Year (est.) Council Packets 200,000 – 500,000 pages Calendars 160 copies Brochures 96,000 pages Envelopes 48,000 units Enjoy Catalogue (may use outside contractors to fulfill but looking to bring in house) 37,000 copies Nature Trail Guides 250 copies Park Signs 30 units Postcards 48,000 units Rack Cards 3,000 Theater Programs 36,000 units Posters 150 units Library Handouts 5,000 Notice Cards 1,000 units Reports with Binding 300 units Street and Parking Signs 5,000 units The City also has 62 copiers, spread across the organization’s many facilities that is provided under a separate contract with ARC. These machines are primarily for small jobs that departments can handle quickly. The City’s contract with ARC for the copiers is volume based so the City only pays for the resources used. Larger and specialized print jobs are sent to the print shop. Having an on-site print shop offers flexibility and fast turnaround times for City departments. The print shop also shares staff with the mail function, which allows for flexibility of resources for redundancy as well as flexibility to immediately increase resources during high volume. This level of service meets the dynamic needs of departments in providing up to date and attractive 1 9 2 9 information to customers in a variety of printed formats. While the City has made a push to digitize many internal documents, the need for printed materials remains to adequately communicate with the public. During budget discussions over the years, the question of whether print services could be more efficiently provided by alternative means has come up. Alternative service delivery could mean using an outside vendor(s), having an in-house vendor to run the print shop, or decentralized printing with departments handling their own needs. Due to staff turnover and delays, a request for proposal (RFP) was not released until 2022 with continued engagement with the vendors on pricing through July 2023. ANALYSIS This report summarizes the staff work to evaluate alternative service delivery models including information from the RFP, neighboring jurisdictions, and service levels. Ultimately, at this time the recommendation is to accept this report and maintain service delivery methods with a revisit in the next year (12-18 months) based on the continued monitoring of service need adaptations post pandemic and in the new hybrid method of service delivery community wide. To summarize, the recommendation to keep print services in-house resulted from staff’s assessment of key dimensions of customer service / experience, personnel development, change management, timely delivery, cost. Procurement Process On May 16, 2022, an RFP for the Citywide Printing Services posted on the PlanetBids portal and sent to 111 vendors. The procurement period was 36 days, and proposals were received from five proposers on June 21, 2022, as listed in the Summary of RFP Process below. Table #1: Summary of Request for Proposal Proposal Description RFP178547, Citywide Printing Services Proposed Length of Project 3 to 5 years Number of Vendors Notified 111 Number of Proposal Packages Downloaded 13 Total Days to Respond to Proposal 36 Pre-Proposal Meeting No Number of Proposals Received 5 Proposal Price Range $403,000 to $3,723,000 Public Link to Solicitation PlanetBids Vendor Portal2 The initial results of the RFP received in 2022 were insufficient to accurately compare costs across vendors. A review of the costs made clear that vendors had interpreted the RFP instructions differently. Staff issued an addendum with more precise terms being asked for by the City in June 2 PlanetBids Vendor Portal: https://pbsystem.planetbids.com/portal/25569/bo/bo-detail/94349 1 9 2 9 2023, results were received in July 2023. Again, there continued to be areas of inconsistency with non-comparable results across vendors. As a result of inconclusive RFP results after two rounds of submissions staff plans to officially reject all proposals and not resolicit as provided for in the municipal code3. Although inconclusive in a precise comparison, this information from the service providers in the industry was informative equipping staff with sufficient market information to determine a possible range of cost for services, from $403,000 to $3.7 million. The wide range is attributable to the difference in interpretation of the specifications among the responders. Variability resulted from different materials, volume, and turnaround time as some of the general and typical variability of printing job characteristics. A breakdown of the major components of the services across vendors4 is show in the following table: Table #2: Breakdown of Major Components of Proposals Service Provided Vendor 15 Vendor 2 Vendor 3 Cost Range6 $403,000 – $957,000 $915,000 –$3.7M $1.2M –$1.35M Basic Service Delivery and pickup included with 3-5 business day turnaround typical Copying, printing, and graphics, monthly billing consumption reports, ongoing training on how to use portal Delivery and pickup included; cloud-based order placing system Extra Services Same day requests must be received prior to 8am, no guarantee of same day. Digital, toner-based, inkjet, latex, offset Rush charges applied to expedited jobs Special Costs Rush charges: Add’l 25% to unit price; cost with rush markup ~ $956,725 Rush Services $120/hr Response Time M-Th: Same day if received before 8am Fri: if received before 8am next business day, weekends special (if required) Offers Same Day and Next Day non-standard Small jobs can be sent to current printers Guaranteed turnaround: 2-4 business days for digital printing; 3-5 days for offset printing Same day and rush orders available as special order 3 2.30.470 Cancellation of solicitations -- Rejections of bids/proposals https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-62073 4 The three vendors shown represent those that scored highest with a user panel. A total of 5 proposals were received. 5 Since all bids are being rejected the names of the vendors are not being shown. 6 Staff were required to make certain assumptions to create total costs per vendor. These costs may not represent verbatim those originally presented in the RFP. 1 9 2 9 For comparison, the FY 2024 Adopted budget to run the in-house print & mail shop is approximately $1.5 million, which includes salary and benefit costs for 2.10 FTE and non-salary costs. When isolating for print specific resources, cost for service is approximately $1.1 million, however, as a combined team, this is an estimate given shared resources. The City’s print shop provides turnaround times of same day or next day approximately 90 percent of the time. Based on the market information such fast turnaround times were either not available or came with additional costs as special requests. Most firms offered multiday turnaround times for the majority of jobs. Alternative Service Model The City also provided the option to staff an on-site print shop managed by an outside firm; an onsite service provider model where the provider assumes all responsibility for equipment, staff, and management of the print shop at a negotiated fee. No potential service provider bid a managed onsite solution as a form of service delivery. In evaluating department needs it was noted that if the in-house print shop was not available departments might shift more jobs to their department copiers rather than wait for delivery from an outside vendor. In that scenario the print shop serves as an extra set of hands freeing up department staff for core department work. Neighboring Jurisdiction Comparison To place the City’s costs of providing printing services in context, staff asked several cities to provide information about their printing services. It’s important to note that depending on the City they may not have as many utilities, the same frequency of public meetings, number of recreational and entertainment options, volume of materials disseminated for public meetings (e.g. printing of full contracts), and libraries as Palo Alto. All of these are factors that drive Palo Alto’s volume of printed materials and fast turnaround. Table 4: Contextual Points from Other Cities Menlo Park • Contracted out to several vendors • $200,000 - $300,000 estimated Citywide for all vendors Los Gatos • Decentralized to departments with some outside support for occasional specialized needs • No central cost available to compare San Carlos • A mix of in-house and contracting out for print jobs • No dedicated print shop • In the range of $150,000 per year for contracts Sunnyvale • In-house print shop • Including mailing services • Total for both is $625,000 • 1 employee Mountain View • Mix of in-house and contracting out 1 9 2 9 • 1 FTE, < 1 Hourly • Plus $500,000 for several contracts with vendors Additional Variables for Consideration of Service Delivery Staff Development/Succession Planning – This service line provides an opportunity of entry for employment with the City at an entry level position. This can turn into a path for a full professional career with the City aiding in department’s succession planning efforts. Over the years, the Administrative Services, Utilities, and Information Technology Departments along with the warehouse at the Municipal Service Center have seen several staff move up in the organization after working in the print shop and remain with the City in many cases. The print shop is a good setting in which customer service and administrative skills can be developed, supporting a organization-wide view serving many departments. Staff Recommendation: Maintain In-House Print & Mail Service Delivery The recommendation to keep print services in-house resulted from staff’s assessment of key dimensions of decision making as shown below. Based on the RFP results, comparison to neighboring jurisdictions, market response to alternative models, and cultural organizational benefits such as employee development, staff recommend maintaining the print shop in-house supported by contracts with vendors for specialized work as is currently the practice. •Customer Service – City departments are the customers of the print shop. Having an onsite print shop offers streamlined access to in-person collaboration. Dedicated staff are available to listen to and respond to customer needs in real time. Delivery of print jobs can also be arranged for locations away from City Hall. •Customer Experience – Related to customer service is the experience for customers when submitting and retrieving jobs. Currently submitting jobs can be accomplished via email and followed up with a quick conversation as needed to determine the specifications of the job. When retrieving the job a short while later staff can come to A Level of City Hall and find their product on the shared counter space lined up by department. •Personnel Development – As noted above the print shop has served as an entry point for people interested in joining the City. This has served succession planning efforts by developing staff with core skills needed to take the next step in the organization. To date staff from the print shop have advanced to the Administrative Services, Information Technology and Utilities Departments along with the warehouse at the municipal service yard. •Change Management – Keeping the in-house print shop offers the least amount of change for departments when taking into consideration the relative possible cost savings. While change is necessary at times minimizing change that yields relatively minimal benefit is desirable in this case. The possible costs savings alone does not warrant instituting a change to the process that currently operates effectively. 1 9 2 9 •Timely Delivery – Among the most important factors for customer departments is the availability of fast turnaround. Whether it’s meeting the demand of a new program or public presentations and government meetings departments can reliably count on getting their product in time. •Cost – What has been shown from this RFP process, inconsistencies noted, is a snapshot of marketplace costs for printing services within the magnitude range of the City’s needs. Placed within this range the City’s cost of $1.1 million is just above the low-end and well below the high-end. The possible cost savings balanced against the other factors is outweighed in the end and this is reflected in the recommendation. Staff believes keeping the print shop in-house offers the best opportunity to meet the mix of these factors. Staff will monitor the performance of the print shop over the coming one year (12- 18 months) including cost information, tracking performance, and working with customers to factor in greater turnaround times on their print jobs. Gathering this information will help assess whether another look at outsourcing might be worthwhile if a combination of flexible turnaround times and lower costs could be found that would shift the calculation more in the direction of outsourcing in the future. An alternative to staff’s recommendation for Finance Committee consideration is to perform an entirely new RFP process with newly designed cost templates and additional vetting of vendor responses. This would delay bringing the print shop to full staffing but may produce a more refined picture of comparable market costs. FISCAL/RESOURCE IMPACT The Printing and Mailing Fund has a FY 2024 Adopted Budget of approximately $1.5 million made up of $263,000 in salary and benefits costs for 2.10 FTE and $1.2 million in non-salary costs. The expenses include postage costs of $300,000 and other expenses of $265,000. Since these costs are not related to the printing function, they can be removed from the total to determine the approximate cost of the printing service even though the two are joined. When this is done the resulting amount for the print shop is around $1.1 million when also taking into account the allocation to departments. This will be the ongoing cost of keeping the printing function in house, which currently includes $30,000 in contract dollars for supplemental printing services for jobs that are out of scope for the print shop, such as large banners or specialized binding. It’s important to consider the mailing function and related costs since those are costs that will remain no matter what’s done with printing, and they share staff. Should the City stop providing print services in-house, at minimum, one staffing resource would be necessary to retain to continue mailing functions. STAKEHOLDER ENGAGEMENT This project involved the input from City departments that use the print shop. Printing vendors were contacted to provide proposals and other cities provided information on their own printing services. 1 9 2 9 ENVIRONMENTAL REVIEW This activity is not a project under California Environmental Quality Act (CEQA) as defined in CEQA Guidelines, section 15378, because it has no potential for resulting in either a direct or reasonably foreseeable indirect physical change in the environment. APPROVED BY: Kiely Nose, Assistant City Manager 10/17/2023 Printing Services Review Finance Committee www.cityofpaloalto.org1 TITLE 40 FONT BOLD Subtitle 32 font www.cityofpaloalto.org •Background •Printing Services alternative service delivery review –FC referral 2019 for possible costs savings •RFP for printing services issued in July 2022 with inconsistent results •RFP results ranged in costs from $403k to $3.7m •24-hour “rush” turnaround an additional charge (some vendors) •Inconsistent costing approaches used by vendors 22 TITLE 40 FONT BOLD Subtitle 32 font www.cityofpaloalto.org •City Print and Mail Shop Summary •Print and Mail Shop costs ~ $1.5m with staffing at 2.5 FTE •Print Shop specific costs ~ $1.1m including shared staffing •90% of current jobs are “rush” turnaround or no extra charge vs. vendors mostly charging extra •Satisfies diverse and expedited printing needs of City departments •Good career growth opportunity for entry level employees, helps with succession planning 33 www.cityofpaloalto.org44 •Print Shop Space at City Hall •Park Signs •Postcards •Theater Programs •Posters •Library Handouts •Examples of Print Jobs •Council Packets •Calendars •Brochures •Envelopes •Nature Trail Guides •Notice Cards •Reports with Binding •Street and Parking Signs TITLE 40 FONT BOLD Subtitle 32 font www.cityofpaloalto.org55 •Summary of Proposals •Key Takeaways: •Broad range of costs •City’s cost $1.1m falls in the range •Turn around times are generally more than one day •Further Context •What do other cities do? TITLE 40 FONT BOLD Subtitle 32 font www.cityofpaloalto.org •Recommendation •Close the RFP process and keep in-house Print Shop services supplemented with contracts, which continues core printing services to departments, maximum flexibility, customer service and quick turnaround •Add outside contracts for added capacity during high demand and special printing needs and managed by the Print Shop for “one-stop shop” •Bolster Print Shop with additional printing and design skills/abilities to increase value to departments •Recruit for printing experience •RFP process would be cancelled with no award •Report out status within 18 months 66 7