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Item # 17
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
July 19, 2022
TOPIC: Amendment to the Online Marketplace Purchase of Goods Contract
AGENDA TITLE:
Approve an Amendment to the Amazon Capital Services, Inc. Contract for the Purchase
of Online Marketplace Goods for an Annual Amount Not to Exceed $400,000 per Year,
for a Two-Year Term (Specification No. 19-028) (General and Non-General Fund)
RECOMMENDED ACTION
Authorize the City Manager to execute an amendment to increase the blanket order
contract with Amazon Capital Services, Inc. for an additional $300,000 per year for the
period beginning July 20, 2022 and expiring June 30, 2024, subject to non-substantive
changes approved by the City Manager and City Attorney.
DISCUSSION
On May 21, 2019, The Santa Ana City Council awarded a contract to Amazon Capital
Services, Inc. for the purchases of online marketplace goods. The awarded amount was
not to exceed an annual amount of $100,000 per year. Since the enactment of the
contract, multiple City agencies regularly mention that Amazon can easily provide one-off
items consistently at a cost effective rate. Furthermore, Amazon’s Business Prime online
ordering system provides tracking and payment information for the requesting agency
and spend analysis reports for buyers.
Over the past three years, the utilization of the Amazon ordering system has significantly
reduced non-Public Works related services and goods, and has created efficiencies within
departments to secure their orders at a much quicker pace. Currently, there are over
20,000 vendors located within Orange County selling on Amazon with 840 of them in
Santa Ana. Amazon has also created a campaign to highlight Santa Ana vendors as a
first choice option, then Orange County vendors as a second choice, followed by various
sellers while departments search for their items.
Additionally, with the implementation of the City’s Amazon Business Prime account in
2019, orders have steadily increased due to the vast assortment of one-off items that
Amazon routinely provides. Therefore, staff recommends amending the contract to
increase the contract amount by $300,000 per year.
Amendment to the Online Marketplace Purchase of Goods Contract
July 19, 2022
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ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action.
FISCAL IMPACT
Funds for the duration of the contract period, an amount not to exceed $400,000 annually,
will be budgeted in various departmental Miscellaneous Operating Expense account
(no.63001).
Submitted By: Kathryn Downs, Finance and Management Services Executive Director
Approved By: Kristine Ridge, City Manager
Orozco, Norma
From: Nathaniel Greensides <mynci90@gmail.com>
Sent: Tuesday,July 12, 2022 9:36 PM
To:eComment; Downs, Kathryn
Subject: Public comment agenda item 17
Dear City Council,
tl;dr: continued reliance upon Amazon's business models of goods distribution may eventually result in
catastrophe for local businesses and the local economy.
While I applaud the city utilizing cost effective and efficient contracts awarded to third parties for necessary
government operations, I remain weary of Amazon as a mega corporation and its monopolistic business
practices. (I am not the only one either: https://www.yalelawjournal.org//pdf/e.710.Khan.805_zuvfyyeh.pdf)
I myself was once a vendor who listed products for sale on Amazon's platform to make some extra money in
college. Then their systems failed to allow me to create custom listings which fell outside of their databases'
information leading to unhappy customers who were expecting products from me based on Amazon's faulty
database system.
Additionally, the fees and structure of demands placed upon third party vendors who sell goods on Amazon's
platform often result in unreasonable expectations and terms for the workers who need to fulfill the orders and
contracts with Amazon as a means of goods distribution. This sentiment and understanding comes from my
short experience working with a Japanese collectible toys distributor based in Anaheim called Bluefin (AKA
Bandai Namco Collectibles). While Bluefin held contracts to distribute toys with local independent retail hobby
shops all around the country, those contracts were much smaller than the contracts which Amazon negotiates
with distribution companies in North America. Thus, many local independent retailers found themselves with
no stock for sale to end consumers while Amazon absorbed all stock for sale on their platform. This in turn put
the independent distributors in a bind to continue to fulfill Amazon contracts while smaller independent retailers
slowly go out of business and eventually the distributor becomes more and more just another Amazon
distribution center OR in the case of Bluefin, acquired by a larger multinational toy company such as Bandai
Namco to remain competitive against Amazon.
I understand that the contract is necessary in the short term and has proven beneficial thus far. However I would
advise a portion of the proposed $400,000 be re-apportioned to hiring and training a qualified Santa Ana
resident to cut out Amazon as a middleman. The person in the role would research the local vendors which the
Amazon business rep has positioned for procurement of goods and materials. The person would then reach out
and establish communication and training to said local vendors to become listed on Santa Ana's bid portals to be
able to make contracts directly with the City and ensure the long term viability as a Santa Ana owned and
operated business ventures. The savings incurred by the local vendors in making direct contracts with the city
may also allow for local vendors to in turn expand and hire other local residents.
Sincerely,
Nathaniel Greensides
Ward 5 resident
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