HomeMy WebLinkAboutStaff Report 4284
City of Palo Alto (ID # 4284)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 12/9/2013
City of Palo Alto Page 1
Summary Title: Extension of Banking Contract
Title: Approval of Banking Services Contract Extension with Wells Fargo for
One Year in a Not to Exceed Amount of $120,000
From: City Manager
Lead Department: Administrative Services
Recommended Motion
The City Council approves Amendment No. 2 to Contract C09128288 with Wells Fargo Bank for
a total contract amount not to exceed $120,000 for one year beginning January 1, 2014
(Attachment A).
Recommendation
Staff recommends that Council approves extending the current banking services contract with
Wells Fargo Bank (Attachment A) for one additional year. The contract would be effective from
January 1, 2014 through December 31, 2014.
Background
In 2005, the City conducted a Request for Proposal (RFP) process for banking services. After
reviewing the proposals from a number of banks, the City selected Wells Fargo (Wells) for
general banking services. The selection of Wells ended a long-term relationship with Bank of
America, the prior banking services provider. The agreement with Wells consisted of a three
year contract plus an additional two years based on satisfactory performance which Wells has
exceeded. The five year service contracts ended December 31, 2010.
In November 2010, staff requested that Council extend the existing contract with Wells for
three additional years, rather than initiate a new RFP. This approach was taken at the depth of
the recession for a number of operational and cost related issues. Changing banking services
represents a significant workload issue for staff but staff believes it is appropriate at this
juncture to re-survey the market.
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Discussion
Staff has completed a new and more disaggregated RFP for financial services. These services
are grouped into six distinct categories (see chart below) with the purpose of increasing
competition among providers and lowering costs as well as taking advantage of “cutting edge”
technology and services.
Group Number Service
Service Group 1 General Banking (includes Accounts Payable Check Issuance)
Service Group 2 Lockbox Service
Service Group 3 Accounts Payable Payment Solution(s)
Service Group 4 Merchant Service
Service Group 5 Investment Safekeeping (Custodial) Service
Service Group 6 Purchase (Credit) Card (aka P-Card)
The RFP was mailed to 23 companies, posted to City’s website and posted to the California
Society of Municipal Finance Offices’ (a professional organization) website which includes firms
providing financial services. Staff reached out to financial institutions on file and those that
hadn’t solicited business from the City in the past. The City has received eight proposals. Once
staff has analyzed the proposals and the components, it will seek Council approval of new
contracts in February/March 2014.
Due to the increased complexity of the financial services used by the City and as a result of the
addition of new services indicated below, the evaluation process is more complicated and will
take a longer period than past processes and longer than staff originally expected.
outsourcing Utility Payment Processing (Lockbox Service)
having the bank consolidate all receipts of third party bill payers ( Internet Bill Payment)
new and stronger regulations governing safeguarding of sensitive data (credit card
information
Development of new Accounts Payable Payment solutions
Staff is requesting, therefore, a one year banking services contract extension from January 1,
2014 to December 31, 2014 at an annual estimated cost of $120,000. Actual annual costs will
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depend on the volume and mix of fees or services. During the contract extension period, new
contracts will be awarded with start date of March/April 1, 2014 via Council action. If Wells is
not selected, service transition will begin shortly thereafter and is expected to be completed
within a 6 month period.
Staff is not requesting separate contract extensions on the lockbox and merchant services
because they are currently included in the banking services contract. The accounts payment
solution will be a new service and the Purchase Card (P-Card) three year contract does not
expire until January 2015. As for the latter (P-Card), staff is taking this opportunity to bid this
sooner to determine if the City can obtain better service and/or pricing now and save on staff
time in doing a separate RFP a year later. Typically, the financial industry is constantly
improving their processes to gain efficiencies and/or lowering costs. In the past, staff has been
successful in obtaining pricing concessions during the life of the existing banking services
contract. We are applying this experience to the P-Card contract.
Timeline and Resource Impact
A one year banking services contract extension from January 1, 2014 to December 31, 2014 is
expected to result in an annual, not to exceed cost of $120,000. Half of these costs will be
covered by existing funding in the FY 2014 operating budget, and half will be covered by funds
in the FY 2015 operating budget. Of the total amount, approximately $41,000 will be funded by
the operating budget of the Administrative Services Department and approximately $79,000
will be funded by the operating budget of the Utilities Department based on the services
provided by the contractor.
Environmental Review
This report is not a project under the California Environmental Quality Act; therefore, an
environmental review is not required.
Attachments:
Attachment A: Amendment No 2 to Contract No C09128288 Between the City of Palo
Alto and Wells Fargo Bank (PDF)
AMENDMENT NO. :2 TO CONTRACT NO. C09128:288
BETWEEN THE CITY OF PALO ALTO AND
WELLS FARGO BANK
This Amendment No.2 to Contract No. C09128288 ("Contract") is entered into on
the 9th Day of December, by and between the CITY OF PALO ALTO, a California chartered
municipal corporation ("CITY"), and WELLS FARGO BANK, located at 550 Califomia Street, 10lh
Floor, San Francisco, California, 941040, Telephone (415)396-7485 ("CONSULTANT").
RECIT ALS:
WHEREAS, the Contract was entered into between the parties for the provision of
Banking Services; and
WHEREAS, CITY intends to extend the term to December 31, 2014 and increase
Compensation for additional term January 1, 2014 through December 31, 2014 to not exceed
$120,000,00; and
WHEREAS, the parties wish to amend the Contract;
NOW, THEREFORE, in consideration of the covenants, telIDs, conditions, and
provisions of this Amendment, the parties agree:
SECTION 1. Section 3 TERM is hereby amended to read as follows:
"TERM. The services provided under this agreement shaH commence on January 1,
2005 and shall be completed on or before December 31,2011 with an option to renew for up to three
additional one year periods through December 31, 2014"
SECTION 2. Section 4 is hereby amended to read as follows:
"COMPENSATION. City shall pay CONSULTANT as compensation for full performance of this
Contract:
A not to exceed amount of One Hundred Twenty Thousand Dollars ($120,000.00) in accordance of
the fee schedule set forth in Exhibit "B" attached hereto for the 2014 term (January 1, 2014 through
December 31).
SECTION 3. Except as herein modified, all other provisions of the Contract,
including any exhibits and subsequent amendments thereto, shall remain in full force and effect.
1 Revision July 25, 20U
IN WITNESS WHEREOF, the parties have by their duly authorized representatives
executed this Amendment on the date first above written.
CITY OF PALO ALTO
City Manager By:..l""....::..---r---fl--""=--~
APPROVED AS TO FORM:
Senior Asst. City Attorney
Attachments
WELLS FARGO LETTER DATED 11112/2013 CONTRACT NO. C09128288 EXTENSION
2 Revision July 25, 2012
Govel'nment & Institutional Banking
Government Banking, NorthWest Division
550 California Street, 1()lh Floor
MAC A0112-102
San Francisco, CA 94104
November 14, 2013
Tarun Narayan
Senior Management Analyst
Administrative Services-Treasury Division
250 Hamilton Ave.,Ath floor
Palo Alto, CA 94301
Subject: Contract No. COg128288 Extension
Dear Tarun:
Wells Fargo is pleased to extend the term of Banking Services Contraet No. C09 [28288, between the City of Palo Alto and
Wells Fargo Bank from Deeember 31, 2013 to December 31, 2014. AU terms and eonditions that are eurrently in plaee will
remain in effect.
Please sign below indicating your aceeptance of this extension and retum one original copy to my attention at the address
listed above.
Thank you for your business and continued partnership with Wells Fargo Bank. We look forward to continuing to provide
banking services and will strive to meet or exeeed your expectations with regard to products and customer service.
Sincerely,
Mary Lou Lopez
Vice President
(415) 396-0929
Wells Fargo Bank, N,A,
Together we'll go far
Government & Institutional Banking
Government Banking, NorthWest Division
550 California Street, 10,b Floor
MAC A0112-102
San Francisco, CA 94104
ACCEPTED BY;
"COMPANY'
City of Palo Alto
By:
Name:
Title:
Date:
By:
Name:
Title:
Date:
Wells Fargo Bank, N.A.
Together we'll go far