HomeMy WebLinkAboutStaff Report 2301-0770CITY OF PALO ALTO
CITY COUNCIL
Special Meeting
Monday, January 23, 2023
Council Chambers & Hybrid
5:00 PM
AGENDA ITEM COVER PAGE
14.City Council discussion and direction regarding wage requirements for the contract for
next Janitorial services
A.Review and Provide Direction on Wage and Benefits Requirements for Inclusion
in a New Janitorial Services Request for Proposal (RFP)
B.Responsible Contracting Standards Colleague's Memo (Stone & Burt) (9:30 –
10:30 PM)
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City Council
STAFF REPORT
From: City Manager
Report Type: ACTION ITEM
Lead Department: Public Works
Meeting Date: January 23, 2023
Title
Review and Provide Direction on Wage and Benefits Requirements for Inclusion in a New
Janitorial Services Request for Proposal (RFP)
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
Councilmember Burt and Vice Mayor 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.
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This item was originally agendized for Council’s November 14, 2022 meeting but was continued.
To avoid a gap in janitorial services, Council approved an amendment to extend the current
contract by six months. The new contract expiration date is August 31, 2023. Council direction
on RFP wage and benefit requirements is critical to proceeding with the RFP. Following the RFP
process, staff will bring forward a new contract for Council consideration in spring 2023.
Background
The City’s current janitorial services contract expires on August 31, 2023. The contract was for a
five-year term beginning in 2017, with six-month extensions approved by Council in June 2022[1]
and December 2022[2]. 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
a significantly improved employee retention rate. 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.
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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 City’s 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
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, Councilmember Burt and Vice Mayor 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.
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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.
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
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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.
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Timeline
The current contract expires on August 31, 2023. Once staff receives Council direction on RFP
wage and benefit requirements, staff will proceed with the RFP process, and will bring a new
contract to Council for consideration in spring 2023.
Resource Impact
Funding for the current contract extended through August 31, 2023 (approximately $2.5 million
annually) was appropriated as part of the Fiscal Year 2023 Adopted Budget, with funding for July
and August 2023 subject to the Council’s appropriation of Fiscal Year 2024 funding. 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.
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[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
[2]City Council Staff Report December 2022 ID#14820 https://www.cityofpaloalto.org/files/assets/public/agendas-
minutes-reports/reports/city-manager-reports-cmrs/2022/id.-14820-approval-of-amendment-no.-3-with-swa-
services-group-inc.-swa.pdf
ATTACHMENTS
Attachment A: Prevailing Wage Sheet
Report #: 2301-0770
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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.
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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.
CITY COUNCIL
COLLEAGUE’S MEMO
Sponsor(s): Greer Stone, Patrick Burt
Meeting Date: January 23, 2023
TITLE
Responsible Contracting Standards Colleague's Memo (Stone & Burt)
BACKGROUND
On March 21, 2022, speakers at the City Council meeting raised concerns over labor conditions
and wages associated with the City’s third-party contract for janitorial services provided to the
City of Palo Alto. On July 14, 2022, the San Jose Spotlight released an article detailing
allegations of wage theft made by seven janitors that clean City facilities. left unaddressed, the
City faces the potential risk for labor disruption, interruption of services, and turnover of its
essential workforce. In addition, the city has a moral obligation to assure that the rights are
protected of workers performing contracted services to the city.
Background and Discussion:
In 2017, the City awarded its current janitorial services contract. As part of the bidding process,
City staff recommended the adoption of evaluation criteria to address issues with turnover and
low-quality performance. On March 21, 2022, speakers at the City Council meeting raised
concerns over labor conditions and wages associated with the contract. These concerns
included failure to pay contract wages, failure to provide a clear “Paid Time Off” or vacation
policy, failure to provide necessary materials to perform job duties, failure to reimburse
expenses and mileage, failure to provide safety training or personal protective equipment, and
failure to provide sufficient staffing.[1]
On September 15, 2022, Congresswoman Anna Eshoo wrote to Mayor Burt, recognizing “the
prevalence of reported exploitation in the janitorial industry, employers must be vigilant to
ensure that janitors are treated fairly.” Additionally, Congresswoman Eshoo encouraged the
city to “take into consideration the labor practices of any janitorial contractor with which it
engages.”[2] The City also received a letter on June 15, 2022, from State Senator Josh Becker,
encouraging an investigation into allegations of wage theft, because “property service
industries tend to have track records of high turnover, poor quality of service, and wage theft.
These issues are particularly prevalent in the janitorial industry where exploitation, sexual
harassment, and violations of wage and hour laws are commonplace.”[3] Assemblymember
Berman also urged Palo Alto to “adopt a higher level of standards for these subcontracted
services.”[4]
On July 14, 2022, the San Jose Spotlight released an article detailing the allegations of wage
theft made by seven janitors that clean City facilities. The article cited a report by the
Maintenance Cooperation and Trust Fund, a janitorial industry watchdog organization, which
describes the predominantly female Hispanic janitorial workforce as “especially vulnerable”
dealing with “greater hardships than many other types of low-wage”[5] workers. The article
also made reference to a situation in 2019 at the City of Fremont, which faced a two day labor
stoppage after janitors had a dispute over medical benefits. The article also referenced how
Mountain View recently adopted stricter standards to protect their subcontracted janitorial
workforce.[6] On January 28, 2020, the City of Mountain View adopted a motion that required
its Janitorial Services RFP to include that the awarded vendor be a firm whose employees are
covered by a collective bargaining agreement, janitors receive wages no less than the prevailing
wage as listed under the California Public Utilities Code, and that the State Labor Code’s worker
retention period be extended from 60 to 90 days.[7]
Recommendation:
As a City, we have an interest in ensuring we have uninterrupted operations, high quality
services, and that contracted workers performing services for the city are treated fairly. We
recommend the City Council direct staff to address the issues facing the City’s subcontracted
janitors by developing a policy that would heighten standards where needed within the
Janitorial Services RFP for the City Council to adopt for the upcoming and future such RFPs. This
policy should establish standards similar to those adopted by the City of Mountain View per
below:
“That the successful proposer be a firm whose employees are covered by a collective bargaining
agreement prior to the effective date of contract and that any individual performing janitorial
services for the City be paid no less than the prevailing wage and benefits established for
janitorial services pursuant to the California Public Utilities Code and set by the Department of
Industrial Relations.
That the higher wage rates and/or benefits will be paid should the collective bargaining
agreement’s wages and benefits and the prevailing wage and benefits differ.
That the State Labor Code’s worker retention period be extended from 60 to 90 days.”
Resource Implications:
Independent of this Colleagues Memo, staff has been evaluating options related to wage
requirements for the upcoming janitorial services Request for Proposals (RFP). Given the time
sensitivity of this issue in order to initiate a new contract for services, staff will present their
analysis to the City Council at the same time this Colleagues Memo is considered.
[1] City of Palo Alto, “Council Consent Agenda Responses,” June 20, 2022.
https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/council-
questions/20220620cqccs.pdf
[2] Congresswoman Anna Eshoo Letter, September 15, 2022. https://drive.google.com/file/d/1U5fZAzM3u5tLZf-
rZFpZZBofUJ8BynO0/view?usp=sharing
[3] Senator Josh Becker letter, June 15, 2022.
https://drive.google.com/file/d/14ZFpJNfSYmwT3Wznba3fTJzIC82vmgDc/view?usp=sharing
[4] Assemblymember Marc Berman letter, July 20, 2022. https://drive.google.com/file/d/1GeYSYxkrLungCxWg-
voHK3bHEuaHtmvL/view?usp=sharing
[5] “Janitors: The Pandemic’s Unseen Essential Workers,” Maintenance Cooperation Trust Fund, April 2021
[6] Ruth Silver Taube, “Palo Alto janitorial workers shed light on wage theft,” San Jose Spotlight, July 14, 2022.
https://sanjosespotlight.com/silver-taube-palo-alto-janitorial-workers-shed-light-on-wage-theft/
[7] City of Mountain View, “Meeting Minutes - Final,” January 28, 2020.
JANUARY 23, 2023 www.cityofpaloalto.org
Wage and Benefits Requirements for New Janitorial Services Request for Proposal (RFP)
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JANUARY 23, 2023 www.cityofpaloalto.org
Staff recommends that Council review and provide direction on the wage
and benefits requirements for the new Janitorial Services Request for
Proposal (RFP).
RECOMMENDATION
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JANUARY 23, 2023 www.cityofpaloalto.org
•Current contract expires August 31, 2023
•2017 RFP included:
•Emphasis on performance rather than lowest cost
•Minimum staffing levels
•2017 Contract results:
•Quality, reliable service
•higher employee retention rate
EXISTING JANITORIAL CONTRACT
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JANUARY 23, 2023 www.cityofpaloalto.org
•Draft RFP currently includes:
•Continue 2017 RFP emphasis on performance and staffing levels
•Add specific baseline wages and benefits requirements
•Add two additional janitorial job classifications with higher wages
REQUEST FOR PROPOSAL FOR NEW
CONTRACT
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JANUARY 23, 2023 www.cityofpaloalto.org
Option 1: City-Determined Wages/Benefits (current draft RFP)
Option 2: PUC Prevailing Wages/Benefits
Option 3: PUC + Union Wages/Benefits (Colleagues Memo
recommendation)
WAGE & BENEFIT REQUIREMENT OPTIONS
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JANUARY 23, 2023 www.cityofpaloalto.org
WAGE & BENEFIT REQUIREMENT OPTIONS
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.
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JANUARY 23, 2023 www.cityofpaloalto.org
WAGE & BENEFIT REQUIREMENT OPTIONS
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.
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JANUARY 23, 2023 www.cityofpaloalto.org
Staff recommends that Council review and provide direction on the wage
and benefits requirements for the new Janitorial Services Request for
Proposals (RFP).
RECOMMENDATION