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HomeMy WebLinkAbout25G - AGMT - COST REVIEW SRVSREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: SEPTEMBER 16, 2014 TITLE: AGREEMENT WITH PROCURE AMERICA FOR COST REVIEW SERVICES - C / ! CITY MANA16ER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: APPROVED ❑ As Recommended ❑ As Amended ❑ Ordinance on1"Reading ❑ Ordinance on 2ndReading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER Authorize the City Manager and Clerk of the Council to execute a three year agreement with Procure America for cost review services in an amount not exceed $50,000 subject to non - substantive changes approved by the City Manager and City Attorney. DISCUSSION Procure America provides cost review services by analyzing invoices, supplier contracts, and other pertinent information related to various areas that include telecommunications, utilities, treasury services, and document management. Upon completion of a review, Procure America will provide a report and outline any cost saving strategies, if any. Procure America will receive one percent of the total gross spend value for the review and 40% of any net savings realized. Procure America will waive the review cost if no net savings are realized. STRATEGIC PLAN ALIGNMENT Approval of this item supports Strategic Plan Goal #4 City Financial Stability, Objective #3 (Maintain a structurally balanced budget with appropriate reserve levels). FISCAL IMPACT Funds will be paid by savings generated from the Procure America review. I -%hr .") lk- Francisco Gutierrez Executive Director Finance and Management Services Agency Exhibit: Agreement 25G -1 25G -2 CONSULTANT AGREEMENT This agreement for the performance of services ( "Agreement') is made and entered into on this _ day of September, 2014 ( "Effective Date "), by and between Procure America, a California Corporation which provides cost reduction consulting services to public and private agencies /companies, with its principal place of business located at 31103 Rancho Viejo Road, San Juan Capistrano, California 92675 (herein after referred to as "Consultant "), and the City of Santa Ana, a charter city and municipal corporation organized and existing under the Constitution and laws of the State of California (hereinafter "City "), with its principal place of business located at 20 Civic Center Plaza, Santa Ana, CA 92701, City and Consultant may be referred to herein individually as a "Party" or collectively as the "Parties" or the "Parties to this Agreement." RECITALS A. City desires to retain a Consultant having special skill and knowledge in providing cost reduction consulting services by analyzing client's policies, procedures, supplier contracts, past invoices, and other pertinent information in order to provide client recommendations that achieve cost savings consistent with operations; B. Consultant represents that Consultant is able and willing to provide such services to the City; C. hi undertaking the performance of this Agreement, Consultant represents that it is knowledgeable in its field and that any services performed by Consultant under this Agreement will be performed in compliance with such standards as may reasonably be expected from a professional consulting firm in the field, D. The Parties have specified in this Agreement the terms and conditions under which such services will be provided and paid for. NOW THEREFORE, in consideration of the mutual and respective promises, and subject to the terms and conditions hereinafter set forth, the parties agree as follows: SCOPE OF SERVICES Consultant shall perform those services identified in Procure America's Statement of Work as set forth in Exhibit A to this Agreement. 2. COMPENSATION a) The review cost associated with the initiation of cost reduction services is equal to 1% of the gross annual spend of the target reviewed category and thereafter ProcureAmerica will share 40% of the net savings realized. This 1% fee is typically paid in advance, however for the City of Santa Ana, this fee will be either waived if 25G -3 no savings are found and/or if the City elects not to proceed with ProcureAmerica s recommendations. If the City elects to proceed with ProcureAmerica's recommendations, the review costs associated with the cost reduction services will be paid from the actual savings and thereafter Consultant will be paid 40% of the net savings realized. b) Payment by City shall be made within thirty (30) days following receipt of proper invoice per expense category as described in the Statement of Work attached hereto as Exhibit A. This Agreement shall commence on the date first written above and terminate on June 30, 2018, unless terminated earlier in accordance with the Statement of Work or Section 12, below. 4. INDEPENDENT CONTRACTOR Consultant shall, during the entire term of this Agreement, be construed to be an independent contractor and not an employee of the City. This Agreement is not intended nor shall it be construed to create an employer- employee relationship, a joint venture relationship, or to allow the City to exercise discretion or control over the professional manner in which Consultant performs the services which are the subject matter of this Agreement; however, the services to be provided by Consultant shall be provided in a manner consistent with all applicable standards and regulations governing such services. Consultant shall pay all salaries and wages, employer's social security taxes, unemployment insurance and similar taxes relating to employees and shall be responsible for all applicable withholding taxes. 5. INSURANCE Prior to undertaking performance of work under this Agreement, Consultant shall maintain and shall require its subcontractors, if any, to obtain and maintain insurance as described below: a. Commercial General Liability Insurance. Consultant shall maintain commercial general liability insurance which shall include; but not be limited to protection against claims arising from bodily and personal injury, including death resulting therefrom and damage to property, resulting from any act or occurrence arising out of Consultant's operations in the performance of this Agreement, including, without limitation, acts involving vehicles. The amounts of insurance shall be not less than the following: single limit coverage applying to bodily and personal injury, including death resulting therefrom, and property damage, in the total amount of $1,000,000 per occurrence, $2,000,000 in the aggregate. Such insurance shall (a) name the City, its officers, employees, agents, volunteers and representatives as additional insured(s); (b) be primary and not contributory with respect to insurance or self-insurance programs maintained by the City; and (c) contain standard separation of insureds provisions. 2 25G -4 b. Business automobile liability insurance, or equivalent form, with a combined single limit of not less than $1,000,000 per occurrence. Such insurance shall include coverage for owned, hired and non -owned automobiles. c. Worker's Compensation Insurance. In accordance with the provisions of Section 3300 of the Labor Code, Consultant, if Consultant has any employees, is required to be insured against liability for worker's compensation or to undertake self- insurance. Prior to commencing the performance of the work under this Agreement, Consultant agrees to obtain and maintain any employer's liability insurance with limits not less than $1,000,000 per accident. d. If consultant is or employs licensed professionals such as an architect or engineer: Professional liability (errors and omissions) insurance, with a combined single limit of not less than $1,000,000 per claim. e. The following requirements apply to the insurance to be provided by Consultant pursuant to this section: (i) Consultant shall maintain all insurance required above in full force and effect for the entire period covered by this Agreement. (u) Certificates of insurance shall be furnished to the City upon execution of this Agreement and shall be approved in form by the City Attorney. (iii) Certificates and policies shall state that the policies shall not be canceled or reduced in coverage or changed in any other material aspect without thirty (30) days prior written notice to the City. f. If Consultant fails or refuses to produce or maintain the insurance required by this section or fails or refuses to furnish the City with required proof that insurance has been procured and is in force acid paid for, the City shall have the right, at the City's election, to forthwith terminate this Agreement. Such termination shall not affect Consultant's right to be paid for its time and materials expended prior to notification of termination; Consultant waives the right to receive compensation and agrees to indemnify the City for any work performed prior to approval of insurance by the City. 6. INDEMNIFICATION Consultant agrees to and shall indemnify and hold harmless the City, its officers, agents, employees, consultants, special counsel, and representatives from liability: (1) for personal injury, damages, just compensation, restitution, judicial or equitable relief arising out of claims for personal injury, including health, and claims for property damage, which may arise from the direct or indirect operations of the Consultant or its contractors, subcontractors, agents, employees, or other persons acting on their behalf which relates to the services described in section 1 of this Agreement; and (2) from any claim that personal injury, damages, just compensation, restitution, judicial or equitable relief is due by reason of the terms of or effects arising from this Agreement. This indemnity and hold harmless agreement applies to all claims for damages, just compensation, restitution, judicial or equitable relief suffered, or alleged to have been suffered, by reason of the events referred to in this .Section or by reason of the terns 25G -5 of, or effects, arising from this Agreement, City may make all reasonable decisions with respect to its representation in any legal proceeding. 7. CONFIDENTIALITY If Consultant receives from the City information which due to the nature of such information is reasonably understood to be confidential and /or proprietary, Consultant agrees that it shall not use or disclose such information except in the performance of this Agreement, and further agrees to exercise the same degree of care it uses to protect its own information of like importance, but in no event less than reasonable care. "Confidential Information' shall include all nonpublic information. Confidential information includes not only written information, but also information transferred orally; visually, electronically, or by other means. Confidential information disclosed to either party by any subsidiary and /or agent of the other party is covered by this Agreement. The foregoing obligations of non -use and nondisclosure shall not apply to any information that (a) has been disclosed in publicly available sources; (b) is, through no fault of the Consultant disclosed in a publicly available source; (c) is in rightful possession of the Consultant without an obligation of confidentiality; (d) is required to be disclosed by operation of law; or (e) is independently developed by the Consultant without reference to information disclosed by the City. 8. CONFLICT OF INTEREST CLAUSE Consultant covenants that it presently has no interests and shall not have interests, direct or indirect, which would conflict in any manner with performance of services specified tinder this Agreement. 9. NOTICE Any notice, tender, demand, delivery, or other communication pursuant to this Agreement shall be in writing and sba1I be deemed to be properly given if delivered in person or mailed by first class or certified mail, postage prepaid, or sent by telefacsimile or other telegraphic communication in the manner provided in this Section, to the following persons: To City: and, Clerk of the City Council City of Santa Ana 20 Civic Center Plaza (M -30) P.O. Sox 1988 Santa Ana, CA 92702 -1988 telefacsimile (714) 647 -6956 Executive Director, Finance & Management Services 25G -6 City of Santa Ana 20 Civic Center Plaza (M -17) P.O. Box 1988 Santa Ana, California 92702 To Consultant: Fred Annendariz, ProcureAmerica 31103 Rancho Viejo Road San Juan Capistrano, California 92675 A party may change its address by giving notice in writing to the other party. Thereafter, any notice, tender, demand, delivery, or other communication shall be addressed and transmitted to the new address. If sent by mail, any notice; tender, demand, delivery, or other communication shall be effective or deemed to have been given three (3) days after it has been deposited in the United States mail, duly registered or certified, with postage prepaid, and addressed as set forth above. If sent by tetefacsimile, any notice, tender, demand, delivery, or other communication shall be effective or deemed to have been given twenty -four (24) hours after the time set forth on the transmission report issued by the transmitting facsimile machine, addressed as set forth above. For purposes of calculating these time frames, weekends, federal, state, County or City holidays shall be excluded. 10. EXCLUSIVITY AND AMENDMENT This Agreement represents the complete and exclusive statement between the City and Consultant, and supersedes any and all other agreements, oral or written, between the parties. In the event of a conflict between the terms of this Agreement and any attachments hereto, the terms of this Agreement shall prevail. This Agreement may not be modified except by written instrument signed by the City and by an authorized representative of Consultant. The parties agree that any terms or conditions of any purchase order or other instrument that are inconsistent with, or in addition to, that terms and conditions hereof, shall not bind or obligate Consultant nor the City. Each party to this Agreement acknowledges that no representations, inducements, promises or agreements, orally or otherwise, have been made by any party, or anyone acting on behalf of any party, which are not embodied herein. 11. ASSIGNMENT Inasmuch as this Agreement is intended to secure the specialized services of Consultant, Consultant may not assign, transfer, delegate, or subcontract any interest herein without the prior written consent of the City and any such assignment, transfer, delegation or subcontract without the City's prior written consent shall be considered null and void. Nothing in this Agreement shall be construed to limit the City's ability to have any of the services which are the subject to this Agreement performed by City personnel or by other consultants retained by City. 25G -7 12. TERMINATION This Agreement may be terminated by the City upon fifteen (19) days written notice of termination. In such event, Consultant shall be entitled to receive and the City shall pay Consultant compensation for all services performed by Consultant prior to receipt of such notice of termination, subject to the following conditions: a. Asa condition of such payment, the Executive Director may require Consultant to deliver to the City all work product completed as of such date, and in such case such work product shall be the property of the City unless prohibited by law, and Consultant consents to the City's use thereof for such purposes as the City deems appropriate. b. Payment need not be made for work which fails to meet the standard of performance specified in the Recitals of this Agreement. 13. DISCRIMINATION Consultant shall not discriminate because of race, color, creed, religion, sex, marital status, sexual orientation, age, national origin, ancestry, or disability, as defined and prohibited by applicable law, in the recruitment, selection, training, utilization, promotion, termination or other employment related activities. Consultant affirms that it is an equal opportunity employer and shall comply with all applicable federal, state and local laws and regulations. 14. JURISDICTION - VENUE This Agreement and all questions relating to its validity, interpretation, performance, and enforcement shall be government and construed in accordance with the laws of the State of California. This Agreement has been executed and delivered in the State of California and the validity, interpretation, performance, and enforcement of any of the clauses of this Agreement shall be determined and governed by the laws of the State of California. Both parties further agree that Orange County, California, shall be the venue for any action or proceeding that may be brought or arise out of, in connection with or by reason of this Agreement. 15. PROFESSIONAL LICENSES Consultant shall, throughout the term of this Agreement, maintain all necessary licenses, permits, approvals, waivers, and exemptions necessary for provision of the services hereunder and required by the laws and regulations of the United States, the State of California, the City of Santa Ana and all other governmental agencies. Consultant shall notify the City immediately and in writing of her inability to obtain or maintain such permits, licenses, approvals, waivers, and exemptions. Said inability shall be cause for termination of this Agreement. 16. MISCELLANEOUS PROVISIONS a. Each undersigned represents and warrants that its signature hereiubelow has the power, authority and right to bind their respective parties to each of the terms of this Agreement, and shall 25G -8 indemnify City fully; including reasonable costs and attorney's fees, for any injuries or damages to City in the event that such authority or power is not, in fact, held by the signatory or is withdrawn. b. All Exhibits referenced herein and attached hereto shall be incorporated as if fully set forth in the body of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the date and year first above written. ATTEST: CITY OF SANTA ANA Maria D. Huizar David Cavazos Cleric of the Council City Manager Sonia Carvalho By: Jose doval C fAssistant City Conley RECOMMENDED FOR APPROVAL: Francisco Gutierrez Executive Director Finance & Management Services CONSULTANT Fred Armendariz, ProcureAmerica 31103 Rancho Viejo [toad San Juan Capistrano, California 92675 Consultant/Owner/President Employer ID # or Individual SS # 7 25G -9 EXHIBIT B ADDITIONAL INSURED ENDORSEMENT FOR COMMERCIAL GENERAL LIABILITY POLICY Insurance Company This endorsement modifies such insurance as is afforded by the provisions of Policy # relating to the following. 1. The City of Santa Ana, 20 Civic Center Plaza, Santa Ana, California 92701; its officers, employees, agents, volunteers and representatives are named as additional insureds ( "additional insureds ") with regard to liability and defense of suits arising from the operations and uses performed by or on behalf of the named insured. 2. With respect to claims arising out of the operations and uses performed by or on behalf of the named insured, such 'insurance as is afforded by this policy is primary and is not additional to or contributing with any other insurance carried by or for the benefit of the additional insureds. 3. This insurance applies separately to each insured - against whom claim is made or suit is brought except with respect to the company's limits of liability. The inclusion of any person or organization as an insured shall not affect any right which such person or organization would have as a claimant if not so included. 4. With respect to the additional insureds, this insurance shall not be cancelled, or materially reduced in coverage or limits except after thirty (30) days written notice has been given to the City of Santa Ana, 20 Civic Center Plaza, Santa Ana, California 92701. (Completion of the following, including countersignature, is required to make this endorsement effective.) Effective this endorsement form as a part of Policy# Issued to Named Insured Countersigned by Authorized Representative 8 25G -10 Exhibit A PROCUREAMERTCA HL SIN FSS I N I H I IGENl- t StR VIC ES Statement of Work 1.) STATEMENT OF WORK: Procure America (PA) is pleased to provide the following cost reduction consulting services to Client (as selected by Client) with the resolve and purpose of reducing or recovering costs. ❑ Waste & Recycle ❑ Utilities ❑ Doc Management/Office Products ❑ Treasury Services ❑ Telecommunications ❑ Shipping & Logistics PA shall use its best efforts to obtain cost savings for Client's benefit by analyzing Client's policies, procedures, supplier contracts, past invoices and other pertinent information as it relates to the above selected expense categories set for review. PA will further gather information as to Client's needs (past, present and future) from Client's service providers so as to build a solution that not only lowers cost, but also matches Client's operational and corporate requirements and expectations. After analyzing Client's current spending patterns, PA shall provide Client with a full report outlining PA's observations. PA's report will include a review of operations, cost reduction recommendations and potential service level enhancements. The review cost associated to this process is 1% of the gross annual spend of the target reviewed category and 40% of the net savings realized (see below section 3). This fee is typically paid in advance however for the City of Santa Ana, this fee will be either waived if no savings are found and or the City elects not to proceed with PA's recommendations or deferred and drawn from the initial savings found. If for example the Client's gross spend for telecom was $1,000,000, the review fee would be $10,000. If the Client elects to proceed with PA's recommendations then the first $10,000 of actual savings would go offset to PA to offset the deferred review fee and from there forward the Revenue Share as outlined below in section 3 would be in effect. This component of the agreement does not extend the agreement. Each expense category that is reviewed would carry its own SOW and review cost. 1) POST REVIEW PHASE: For the entire balance of the relationship with Client, PA will continue to consult with Client in an effort to continuously look for efficiencies in the chosen areas of focus. On a monthly basis, the PA team will review Client's invoicing and deliverables to ensure accountability by Client's service providers with respect to the spirit and intent of the agreement between Client and the third party service provider. This monthly review will take into account service levels, cost controls and overall client satisfaction. Further, PA will continuously consult with Client to anticipate changes in service needs to ensure that the proper service provider, contract and procedures are in place to address Client's go forward requirements. 3.) REVENUE SHARE: Client has in place certain existing costs as it pertains to the requested expense categories selected for review ( "Established Rates "). PA's report will document the Established Rates for each service or product chosen for review and outline the methodology for PA's findings. Client and PA will then discuss, agree and document the Established Rates for the targeted service or product. After the initial review is completed, PA will produce an addendum to this agreement that outlines the Established Rates, billing cycles and other operational details associated to the go forward strategy. If Client elects to proceed with any or all of the recommendations as set forth in PA's report, Client agrees to compensate PA for the savings associated with the proposal. The Revenue Share to PA is forty percent of the actual realized savings 25G -11 measured by the difference between the agreed upon Established Rates and Client's new costs as set forth in PA's report and documented through actual realized savings. In some cases, the PA staff may discover over billing, credits, rebates or other sources of revenue. This income is to be considered expense reduction for purposes of this Agreement and will be accounted for in the same manner as the expense reduction savings. This revenue shall be shared with PA after the refunds or other credits are realized by Client. In other cases, PA may have the ability to recover rebates or other compensation by contractors or service providers. PA shall disclose this compensation to Client and both parties shall share this revenue as savings at the time the revenue is received. It may be necessary to institute cost reduction strategies within a specific expense category in stages. If this occurs, then each stage of Implementation will be viewed with Its own billing cycle. 4,) CLIENT PARTICIPATION: Client shall give its full cooperation to PA in providing all required documents, invoices, contracts and staff consultation time to PA's evaluation team in order to conduct the expense reduction review. During the review process (not to exceed 90 days from the date PA receives the historical cost documentation from Client), Client agrees not to renegotiate, amend or extend in place contracts or introduce operational procedures /changes that will effect cost/pricing and or contractual obligations of the Client to the supplier. Any cost reduction made, during the specified assessment process will be credited to PA's presence and is therefore treated as such and factored into the shared revenue structure. During the course of the relationship between PA and Client, Client and PA understand that despite PA's recommendations, suggestions, potential suppliers and other proposals, Client has the right not to proceed with said proposals. However, if Client does pursue any or all of the documented review recommendations (with or without PA's further assistance), PA is entitled to the appropriate revenue share as outlined in Section 3 above. Client agrees to grant PA the right to review any materials (books, records, invoices, contracts or other information) related to the review category selected by Client in Section 1 above. Any additional Client request or engagement, written or otherwise, to review expenses in any areas not checked off in Section 1.) Will also be governed by this agreement. This Agreement shall commence with the Client's first PA invoice per expense category and will be in effect for an initial 36 month term. Each expense reduction category carries its own 36 month term /billing cycle commencing an the first invoice for that particular practice group. All invoices are due upon receipt. Any payments received more than 30 days from invoice date will be charged a 1.5% per month interest fee. If the savings is implemented in Stages, each Stage will carry its own 36 month term. PA and Client shall have the option to terminate this Agreement after the initial term with a 30 day prior written notice to the other party. 5.) CONFIDENTIALITY: Each party shall maintain in strict confidence all information received from the other party in the performance of this Agreement. Client acknowledges and agrees that any intellectual property developed or used by PA shall be the property of PA. IN WITNESS WHEREOF, Client has executed this Agreement to be effective on the date below. Company: By: Title: Signature: rr I Date: 00 P ROCU REAMERICA IYNF� ) ri *F i6FN' SFP ,1, '-s Procure America 31103 Rancho Viejo Road San Juan Capistrano CA 92079 25G -12