HomeMy WebLinkAboutStaff Report 14932 (2)
City of Palo Alto (ID # 14932)
City Council Staff Report
Meeting Date: 11/14/2022 Report Type: Action Items
City of Palo Alto Page 1
Title: Review and Provide Direction on Wage and Benefits Requirements for
Inclusion in a New Janitorial Services Request for Proposal (RFP)
From: City Manager
Lead Department: Public Works
Recommendation
Staff recommends that Council review and provide direction on the wage and benefits
requirements for the new Janitorial Services Request for Proposal (RFP).
Executive Summary
Staff is seeking Council direction on wage and benefit requirements for inclusion in a new
janitorial services RFP that will solicit proposals to service City facilities. To assist Council in the
discussion, options are presented for further input.
• Wage and benefit requirement options:
• Option 1 City-Determined Wages/Benefits: Total wage and benefits of $20.84
(estimated)
• Option 2 PUC Prevailing Wage/Benefits: Total wage and benefits of $29.98
• Option 3 PUC + Union Wage/Benefits: Total wage and benefits of $29.98 or
higher
• Adding two additional janitorial job classifications for a total of seven classifications
with higher pay requirements for more demanding or highly skilled work
Mayor Burt and Councilmember Stone, through a Colleagues Memo, have recommended that a
new janitorial contractor be required to provide PUC prevailing wages and benefits at a
minimum and require employees be covered by a collective bargaining agreement.
Council direction on RFP wage and benefit requirements is critical to proceeding with the RFP.
Delay would result in the need for an additional extension of the current contract to avoid a gap
in janitorial services between the existing and new contract. The RFP process is currently
structured to solicit and select a new contractor, with a new contract negotiated by early 2023.
Staff will bring forward a new contract for Council consideration in early 2023.
Background
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The City’s current janitorial services contract expires on February 28, 2023. The contract was for
a five-year term beginning in 2017, with a six-month extension approved by Council in June
20221. Past janitorial contractors struggled to meet the City’s contract performance standards.
As part of the 2017 procurement, staff placed greater emphasis on meeting performance
solutions and adequate staffing levels. As part of the 2017 RFP requirements and evaluation
process, staff recognized that emphasis on characteristics such as paying a higher wage and
provision of health care and paid time off benefits would support the goals of a more reliable
and higher performing work force. The current contractor proposed the highest employee
hourly wage, provided paid time off, and health and welfare benefits to their employees.
Wages and benefits were included in the contract terms given their importance in
determination of the successful bidder. The improvement from previous contractors has been
dramatic. The contract custodial staffing has been well-managed by the current contractor,
with an employee retention rate for the entire five-year contract of almost 90 percent. Staff
receives infrequent to no complaints of service levels, a significant improvement from the daily
complaints of missed or poor services experienced with prior service providers.
Discussion
An RFP to solicit responses for janitorial services has been drafted and is ready for issuance
pending refinements as directed by the City Council as part of this item. The RFP retains key
changes from the 2017 RFP model to eliminate past contractor performance issues and focus
on quality and consistency of services by: requiring a minimum level of staffing, requiring a
minimum level of management, and requiring a minimum cost for material and supplies to help
contractors bid the job more accurately.
In addition to the continuation of 2017 RFP requirements, the current draft RFP specifies two
new requirements:
1) Baseline wage and benefit requirements for the contract: This provides a degree of
transparency in the proposers’ cost structure, clarity of objectives, and hopefully
ensures meeting goals of high retention rates as currently have been experienced.
2) Defines two proposed additional janitorial job classifications for a total of seven
classifications: This provides higher wage requirements for more demanding or highly
skilled work (see Table 1 below).
Wage requirements, referenced as ‘City-determined Wages’ in Table 1, are essentially a
continuation of the wages required by the current contract. For example, the current contract
hourly wage for the Custodian classification is $17.39, while the hourly wage contemplated for
the RFP is $17.50. This figure could be adjusted higher based on CPI. This remains in compliance
with the expected minimum wage effective January 1, 2023 of $17.25 per hour.
Staff has also considered requiring proposers to include alternative pricing based on the
California Public Utilities Code (PUC) prevailing wage for Janitor/Cleaner work in Santa Clara
1 City Council Staff Report June 2022 ID# 14161 https://www.cityofpaloalto.org/files/assets/public/public-
works/facilities/sr-14161-amendment-to-extend-term-with-swa-services-group-inc_1.pdf
City of Palo Alto Page 3
County (Attachment A). While the PUC prevailing wage requirements do not legally apply to the
City’s janitorial services, they can be used to define a standard for wages and benefits for this
work in Santa Clara County, albeit only for the single job classification of Janitor/Cleaner.
Concurrently, Mayor Burt and Councilmember Stone have submitted a Colleagues Memo on
this topic. The Colleagues Memo recommends that the new janitorial contractor be required to
provide PUC prevailing wages and benefits at a minimum and have employees covered by a
collective bargaining agreement.
Table 1 provides a comparison of hourly wage options for the new janitorial RFP. The PUC
prevailing wage is only defined for “Janitor/Cleaner”, so it would apply to all of the custodian
classifications that have been defined by the City. If Council directs that wages and benefits be
based on the PUC prevailing wage, staff could also develop wage requirements for the
classifications other than Custodian, using the PUC prevailing wage for Custodian as a basis. The
hourly wage for Union janitorial employees where the wage must be equal to or greater than
the PUC prevailing wage is not known, as it would be dependent on specific collective
bargaining agreements. Consistent with the current contract, staff expects to include a
proposed wage requirement of 3% annual wage increases over the five-year term, or to require
increases in alignment with the PUC prevailing wage.
Table 1: Comparison of Janitorial Worker Hourly Wage Options Applicable in May 2023
Classification City-determined
Wages*
PUC Prevailing
Wage
PUC + Union
Wage
Custodian $17.50 $20.00 $20.00 or higher
Parking Garage Custodian $19.50 $20.00 $20.00 or higher
Parks Custodian $19.50 $20.00 $20.00 or higher
Utility Custodian $21.50 $20.00 $20.00 or higher
Lead Custodian $22.50 $20.00 $20.00 or higher
Police Department Custodian $25.50 $20.00 $20.00 or higher
Supervisor $30.50 n/a unknown
*Classifications and wages developed by staff for the current draft RFP.
In addition to minimum hourly wages, the City’s current contract and the PUC prevailing wage
require benefits such as time off and healthcare plans. Table 2 compares the total wages and
benefits, expressed as an hourly total, for the three potential RFP options. Similar to the hourly
wages comparison in Table 1, the wages and benefits for the for Union janitorial employees
where wages and benefits must be equal to or greater than the PUC prevailing wage is not
known, as they would be dependent on specific collective bargaining agreements.
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Table 2: Comparison of Janitorial Worker Custodian Classification Wages and Benefits
Expressed on an Hourly Wage Basis Applicable in May 2023
May-23
City-determined
Wages/Benefits
PUC Prevailing
Wage/Benefits
PUC + Union
Wage/Benefits
Hourly Staff Cost Wage $17.50 $20.00 $20.00 or higher
Sick & Vacation Benefits $0.34 $0.81 $0.81 or higher
1-week PTO 5-10 days vacation, 3
days sick
5-10 days vacation,
3 days sick or more
Holiday $0 $0.46 $0.46 or higher
no paid holidays 4 holidays 4 holidays or more
Health & Welfare $3.00* $8.25 $8.25 or higher
Only after 24 months
of service
After 24 months of
service or earlier
Pension $0 $0.30 $0.30 or higher
401k optional
Leadership & Education $0 $0.09 $0.09 or higher
other training
Other Payment $0 $0.07 $0.07 or higher
Industry
Investigation Fund
Total Wage & Benefits $20.84 $29.98 $29.98 or higher
% Increase from “City-
determined
Wages/Benefits” n/a 44% 44% or higher
* Estimated based on Health & Welfare benefits provided under current contract.
As demonstrated in Table 2, transitioning to PUC prevailing wages results in an estimated 44
percent increase in labor costs for the janitorial service provider. Transitioning to PUC prevailing
wages as a minimum with Union representation results in an estimated minimum 44 percent
increase, dependent on the terms of the collective bargaining agreement.
It is possible for staff to proceed with the RFP requesting alternative pricing for more than one
level of required wage and benefits. However, should Council direct the RFP to require a
collective bargaining agreement, staff would recommend this be stated as a proposal
requirement as individual proposers would likely either meet this requirement or not.
Timeline
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The current contract expires on February 28, 2023. With the time needed for solicitation and
the upcoming holidays, Council direction on RFP wage and benefit requirements is critical to
proceeding with the RFP. Any delays will likely result in the need for an additional extension of
the current contract in order to avoid a gap in janitorial services between the existing and new
contract.
Resource Impact
Funding for the current contract extended through February 28, 2023 (approximately $2.5
million annually) was appropriated as part of the Fiscal Year 2023 Adopted Budget. Based on
input from Council regarding the wage and benefits requirements for the RFP, additional
funding is expected to be needed and will be requested for appropriation when staff returns to
Council to recommend contract award. Adjustments to the funding for this contract will also be
recommended for alignment with the approved contract as part of the annual budget process
for subsequent fiscal years, subject to the Council’s appropriation of funding. Council may also
question the comparison of the costs described above with an alternative of providing janitorial
services with City employees. A preliminary review indicates that an in-house alternative would
cost at least 40 percent higher than the highest cost alternative shown here.
Policy Implications
The City does not have a practice of including discretionary wage and benefit requirements in
its solicitations for services. Council direction for this janitorial contract RFP may lead to the
conclusion that other services should have similar requirements.
Stakeholder Engagement
Staff is seeking direction from Council on wage and benefits requirements for the new RFP, and
will conduct industry outreach based on direction received.
Environmental Review
No environmental review is required.
Attachments:
• Attachment A: Prevailing Wage Sheet
Attachment A
GENERAL PREVAILING WAGE DETERMINATION MADE BY THE DIRECTOR OF
INDUSTRIAL RELATIONS PURSUANT TO CALIFORNIA PUBLIC UTILITIES CODE,
SECTIONS 465, 466 AND 467
Determination: STC-2021-1 Reference: 22-1877-2
Issue Date of Determination: December 22, 2021 Supersedes Det: STC-
2019-1
Expiration Date of Determination: April 30, 2024*. Effective until superseded by a new determination issued by
the Director of Industrial Relations. Contact the Office of the Director – Research Unit at (415) 703-4774 for the
new rates after ten days from the expiration date if no subsequent determination is issued.
Locality: Santa Clara County
Craft: Janitor/Cleaner
Wage Rates: Classification Basic Straight-Time Hourly Rate
Janitor/Cleaner Expires 4/30/2022 $18.25
Effective 5/1/2022 $19.25
Effective 5/1/2023 $20.00
Employer Payments: (Public Utilities Code Section 465)
Health & Welfare: $8.25 per hour after 24 months of service.
Paid Holidays: Five (5) holidays per year or $0.35 per hour after 60 days of
service. Effective 5/1/2022 Five (5) holidays per year or $0.37 per hour after 60 days of
service. Effective 1/1/2023 Six (6) holidays per year or $0.44 per hour after 60 days of
service. Effective 5/1/2023 Six (6) holidays per year or $0.46 per hour after 60 days of
service. Effective 1/1/2024 Seven (7) holidays per year or $0.54 per hour after 60 days
of service.
Pension: $0.15 per hour after 90 days of service.
Effective 5/1/2023 $0.30 per hour after 90 days of service.
Paid Vacation: Five (5) days after 1 year of service or $0.35
per hour Ten (10) days after 3 years of
service or $0.70 per hour
Fifteen (15) days after 12 years of service or $1.05 per hour.
Effective 5/1/2022 Five (5) days after 1 year of service or $0.37 per hour
Ten (10) days after 3 years of service or $0.74 per
hour Fifteen (15) days after 12 years of service or
$1.11 per hour.
Effective 5/1/2023 Five (5) days after 1 year of service or $0.38 per hour
Ten (10) days after 3 years of service or $0.77 per
hour Fifteen (15) days after 10 years of service or
$1.15 per hour.
Paid Sick Leave: Three (3) days or $0.21 per hour.
Effective 5/1/2022 Three (3) days or $0.22 per hour.
Effective 5/1/2023 Three (3) days or $0.23 per hour.
Training: $0.075 per hour.
Effective 5/1/2022 $0.08 per hour.
Effective 5/1/2023 $0.085 per hour.
Other Payment: $0.05 per hour to Industry Investigation Fund.
Effective 5/1/2022 $0.06 per hour to Industry Investigation Fund.
Effective 5/1/2023 $0.07 per hour to Industry Investigation Fund.
Bereavement Leave: Three (3) days paid leave and covers immediate family members (mother, father, spouse, son,
daughter, brother, sister, grandmother, grandfather, grandson, granddaughter, and registered domestic partner).
Recognized Holidays: New Year’s Day, 4th of July, Labor Day, Thanksgiving Day and Christmas Day. If
a holiday falls on a Sunday, it shall be observed on the following Monday. If a holiday falls on a Saturday,
it shall be observed either on Friday or Saturday as determined by the employer. Effective 2023, add
Memorial Day. Effective 2024, add President’s Day.
Straight-time Hours: Eight (8) hours per day. A week’s work shall consist of five (5) consecutive days.
Overtime Rate: All work performed in excess of 8 hours per day and on the 6th day shall be paid at one and one-
half times (1½) the basic hourly rate. All work performed on the 7th day shall be paid double (2x) the straight-time
hourly rate. Work on a holiday shall be paid at one and one-half (1½) times the basic hourly rate in addition to the
regular day’s pay.
Travel and Subsistence: Employees required to furnish own vehicle between locations shall be reimbursed at the
rate of the standard IRS mileage rate.