REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Eric G. Parra, Interim City Manager
VIA: Travis K. Hopkins, Assistant City Manager
PREPARED BY: Catherine Jun, Deputy City Manager
Subject:
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Approve and authorize execution of a service agreement between the City of Huntington Beach and Procure America for expense reduction and cost recovery services
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Statement of Issue:
Under this service agreement, Procure America will audit several categories of the City’s business-related expenses to recommend potential opportunities for cost savings or revenue generation. Upon review, the City Manager may choose to approve any (or none) of the recommendations and direct Procure America to realize savings on behalf of the City.
Financial Impact:
There is no direct cost for Procure America to prepare its initial audit and recommendations. If the City Manager authorizes Procure America to implement one or more recommendations, any savings or revenue will be split 70/30 (City/Procure America) for a limited duration of 12-60 months, depending on the level of services requested from Procure America. After that term, the City will be entitled to the entirety of those savings.
Recommended Action:
recommendation
Approve and authorize the Mayor and City Clerk to execute a “Service Agreement Between the City of Huntington Beach and Procure America for Expense Reduction and Cost Recovery Services.”
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Alternative Action(s):
Do not approve the recommended action, and direct staff accordingly.
Analysis:
Procure America, headquartered in Orange County, specializes in cost reduction services for public sector organizations such as municipalities, counties, and special districts. Procure America proposes a no-cost audit of the following four categories: utilities, telecommunications, treasury services, and shipping and logistics. Utilizing subject matter experts to audit these categories, Procure America will present potential cost savings and revenue-generating recommendations for the City’s consideration. Sample recommendations for past Procure America clients include: (1) identifying utility refunds and rate changes to reduce ongoing utility charges; (2) auditing telephone contracts to uncover unused or unneeded services, billing errors, and opportunities to renegotiate contracts for savings; and (3) analyzing the agency’s selected bank to ensure it offers the best products, pricing, and services.
Following a careful review of the audit and recommendations, the City Manager may authorize Procure America to implement any, all, or none of their recommendations. In exchange, the City and Procure America will engage in a cost-sharing of any savings or revenue that are realized, wherein the City will receive 70% and Procure America will receive 30% for 12 months (for any cost recovery following a basic bill audit) or 60 months (for a more comprehensive audit with additional areas of focus beyond billing matters). Following the initial cost share period, the City will receive 100% of all cost savings.
The proposed service agreement with Procure America will “piggyback” off an existing, competitively bid agreement between the County of Orange and Procure America (Attachment 2), which complies with purchasing requirements outlined in Municipal Code section 3.02.190(C). City staff also reached out to past clients in the cities of Santa Ana, Yorba Linda, and the County of Orange, which provided positive referrals for Procure America.
Environmental Status:
This action is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly.
Strategic Plan Goal:
Goal 2 - Fiscal Stability, Strategy A - Consider new revenue sources and opportunities to support the City's priority initiatives and projects.
For details, visit www.huntingtonbeachca.gov/strategicplan <http://www.huntingtonbeachca.gov/strategicplan>.
Attachment(s):
1. Service Agreement between the City of Huntington Beach and Procure America
2. Agreement between the County of Orange and Procure America