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HomeMy WebLinkAboutStaff Report 14161 City of Palo Alto (ID # 14161) City Council Staff Report Meeting Date: 6/20/2022 Report Type: Consent Calendar City of Palo Alto Page 1 Title: Approval of Amendment No. 2 to Contract No. C18168154 with SWA Services Group, Inc. for Janitorial Cleaning and Maintenance Services in Order to Extend the Term by Six Months through February 28, 2023 and Increase the Compensation by $1,242,777 for a New Total Not-to-Exceed Amount of $12,272,542. From: City Manager Lead Department: Public Works Recommendation Staff recommends that the City Council approve and authorize the City Manager or their designee to execute Amendment No. 2 to Contract No. C18168154 with SWA Services Group, Inc. (SWA), increasing the total compensation by $1,242,777 for continued janitorial cleaning and maintenance services, and extending the term through February 28, 2023, for a new total not to exceed amount of $12,272,542. Background On August 14, 2017, City Council approved a five-year contract in the amount of $10,652,615 with SWA (SR #8323) for janitorial cleaning and maintenance services after a request for proposal process. On December 12, 2018, City Council approved Amendment No. 1 (SR #9514) to include the addition of services at the Police Department in a new total amount of $11,029,765. On March 21, 2022, speakers at a City Council meeting raised concerns about SWA’s labor conditions and wages associated with the contract. Staff reviewed the issue and determined there was a discrepancy with the contract requirements pertaining to hourly wage rates. Following a discussion with SWA management, the issue was addressed. Discussion The current five-year contract term is scheduled to end on August 31, 2022. In the past, the timing of this contract expiration and the services procurement conflicted with the annual budget process in that new contract pricing was not finalized at the time of the budget hearings and approval, leading to the need for immediate budget amendments and contract approval following the Council break. Staff is recommending this six-month extension to the existing City of Palo Alto Page 2 contract to reset the contract expiration date for better alignment with the budget planning process. SWA’s original 5-year contract term ends on August 31, 2022. The new compensation and fee schedule for the six-month extension includes a 4% cost increase over year 5 pricing (total price increase over the six- month extension is $45,395). The price increase includes the required 3% hourly wage increase for contract employees for Year 6 per contract terms. The procurement process that resulted in the current contract with SWA included defined service levels and used selection criteria that prioritized fair wages for the contract employees over the lowest cost to the City. In preparation for the upcoming Request for Proposals (RFP), staff is actively evaluating options to structure employee wage requirements in the RFP. For example, the RFP could simply rely on Palo Alto’s existing minimum wage ordinance requirements, or could use the California Public Utilities Code prevailing wage provisions for Santa Clara County, even though these provisions may not formally apply to the City. (Further research will be conducted to ascertain the applicability of such provisions.) Staff is currently preparing the new RFP, and anticipates releasing it and bringing a new contract to Council for approval in late 2022 or early 2023. Resource Impact Funding for the six-month contract extension recommended in this report is included in the Fiscal Year 2023 Proposed Budget, pending Council approval, and will cover all but the $45,395 cost increase for basic services and any additional services costs. The $45,395 for basic services and any additional services costs will be absorbed by the Public Works, Public Services Custodial operating budget. Policy Implications Approval of this amendment is consistent with current City policies. Stakeholder Engagement Preparation for soliciting a new contract has already begun and scope of work change requests and related budget considerations from affected City Departments have been collected. Environmental Review This is not a project under the California Environmental Quality Act (CEQA).