AGENDA MEMORANDUM

 

 

Meeting Date:           January 12, 2009

 

From:                          Mike Thornton, Purchasing Manager

 

Subject:                      Resolution authorizing  an agreement with Pinnacle Data Systems, Inc. to provide service related to utility bill printing, mailing, and e-present

 

 

Staff Recommendation:

Staff recommends approval of the resolution authorizing execution of the agreement with Pinnacle Data Systems, Inc. (PDS) and the associated fixed price schedule.

 

Analysis:

The purpose of this Request for Proposal is to contract with an interested and qualified firm to provide services in the printing, mailing, and electronic presentation of the City’s utility bills, inserts, and notices.  The City currently prints the utility bills and handles all activities related to mailing.

 

There are many key reasons staff desires to outsource this activity.  This memo will address each of these reasons by presenting what is currently done, what the drawbacks are and how outsourcing will benefit the City and its customers.

 

Eliminate Dedicated Equipment

This project was accelerated due to the condition of the current mailing machine owned by the City.  The current machine is used to fold and stuff the bills, inserts, notices and return envelopes into the envelope to be mailed.  This machine is beyond the end of its useful life.  It is now at a point that it is barely serviceable and literally held together by rubber bands and paper clips.  Customer Service budgeted $30,000.00 for a new machine in the 2009 fiscal year.  This purchase has been postponed waiting for the results of this project.

 

Outsourcing the bill printing and mailing will eliminate the City from requiring dedicated equipment for utility bills.  The specialty equipment would no longer be needed and the cost of maintenance agreements and replacement equipment would be eliminated.

 

Bill Layout and Aesthetics

The City will be required to redesign the current bill to accommodate changes mandated by the St. Johns River Water Management District (SJRWMD).  The District mandates specific information such as usage graphs related to water accounts print on the bill.  The City currently does not have this capability.  Using a third party that has more advanced capabilities will allow the City to meet the District mandates and avoid penalties or fines.

 

Implementing the requirements of the SJRWMD would require additional custom programming by our utility billing system software company.  The estimated cost for this additional programming is $12,000 plus annual fees to maintain the custom programs.

 

Outsourcing this function will allow the City to abandon these customized programs and avoid future costs to maintain them.  It will also allow a more aesthetically pleasing bill to be designed.  The bill can include information that is useful and more meaningful.  This improved information should reduce the number of calls received by customer service.

 

Improved Messaging and Intelligent Inserting

Currently, the City does not have the capability to include dynamic messages that print on the bill.

 

Pinnacle Data Systems provides a method for staff to designate a ‘message area’ on the bill.  This area will accommodate up to 200 characters.  Staff can then update the message on-line.  The message can be changed as frequently as desired by the City.  This message could be changed to provide customers timely information.

 

PDS can also provide intelligent inserting to target specific clients or accounts.  This feature would allow the City to include inserts in only Commercial accounts or include inserts for customers in a specific area or district of the city.

 

e-Present or Paperless Bill

Of the 30,919 customer accounts 656 (2 %) receive an e-mail notification and a paper bill in the mail.  There are 313 (1%) customers signed up for e-mail only, no bill mailed.  A recent survey of utility customers indicated more would participate if the e-Bill looked like a bill.

 

PDS will be able to e-mail bills in portable document format (PDF) to customers.  The electronic PDF bill is an exact replica of the bill being printed and mailed.  This feature should result in more customers participating in e-Present billing and reduce the overall costs of billing.  As the number of bills mailed decreases, the cost to the city will decrease.

 

PDS will also provide a seamless interface to the Internet based Click-2-Gov (C2G) system already used by the City.  Customers can sign-into their C2G account and view their account information.  What they see is only information presented in table format.  The customer cannot view their bill.  PDS will provide the interface allowing customers that use the Click-2-Gov option to view the electronic PDF version of their bill.

 

A payback analysis performed by PDS indicates if the number of customers using e-Present only, no paper bill, increases by 10% the City will recover the initial cost and annual costs associated with e-present in only 3 years.  The recovery of the costs is due to savings in materials and postage.  As the number of customers signing up for e-Present bill only increases the City’s cost for processing those bills will decrease.

 

Customers frequently call requesting a copy of their bill for whatever reason.  Currently, bills cannot be reprinted in their original format.  The e-Present provided by PDS can be used by our staff to reprint or e-mail an exact duplicate of the bill to those customers not using the Click-2-Gov Internet service.

Address Correction

City staff handles all address corrections and processing of returned bills due to incorrect addresses.

 

PDS would take over the processing of address corrections and all returned mail.  PDS would provide the City a list of corrected addresses.  Staff would then update our customer database to eliminate any future mailing errors for those customers.

 

Mail Forwarding

PDS is a certified USPS mailing facility.  They have postal inspectors on site working with their mailing operations.  This allows PDS to efficiently handle all mail forwarding requirements.  This would be very beneficial for customers that are seasonal residents.

 

Staff Coverage and Expertise

Currently, there is one person trained and dedicated to complete utility bill printing and mailing in house.  This person has been doing this for about five years.  Given the special knowledge required for this function, the Customer Service Division is very dependent on this person to perform the function.  Not having staff trained in this very specialized function can create a hardship if the primary person is out on vacation or sick.  Outsourcing this activity will alleviate the dependency the Customer Service Division has on this one individual to complete utility bills.

 

The assigned person currently spends about 85% of his time on utility bill related tasks.  The staff member currently processing the bills will coordinate and monitor the transmission of the electronic files and monitor the completion of the mailings with the new vendor.  Their time can be used in other areas of the Customer Service Division.  One such task will be overseeing the implementation of the new Fair and Accurate Credit Transactions Act (FACTA) requirements related to credit history checks and identity theft.

 

Best of Breed Practice

Outsourcing of processing in areas where it makes good fiscal or business sense is recognized as a ‘Best of Breed Practice’.  Staffs’ research and analysis of this process reveals that it makes good business sense to partner with a company specializing in utility bill printing, processing and mailing.  The following government entities responded to an Internet poll of SunGard Public Sector customers as having outsourced their utility bill processing.

 

·         Town of Lady Lake, FL

·         City of New Port Richey, FL

·         City of Fort Walton Beach, FL

·         City of Cocoa, FL

·         City of Sanford, FL

·         City of Cape Coral, FL

·         City of Crystal River, FL

·         City of Inverness, FL

·         City of Marco Island, FL

·         City of Tavares, FL

·         City of Columbia, MO

·         Spotsylvania County, VA

·         City of Modesto, CA

·         City of Winchester, VA

 

Cost of Service

This section will provide the costs for the City to process the bills compared to PDS processing them.  The final table details the cost of each task or service provided by Pinnacle Data Systems.  The city does not have hard costs for each of the services listed here making it difficult to compare at a line item level.

 

Staff has performed an analysis of the utility bill printing, processing, and mailing function.  This table shows per piece and total annual cost for the City and PDS to print, process, and mail utility bills.  These numbers assume 312,576 utility bills processed annually.  These numbers do not include the 68,800 notices processed and mailed last fiscal year.  Costs in these tables DO NOT include postage. 

 

COST COMPARISON

ITEMIZED COSTS OF SERVICE

 

 

CITY OF LEESBURG

 

 

Item Description

Per Piece Cost

 

Quantity

 

Extended Cost

Price per Impression

$0.0850

312,576

$26,568.96

Insertion Costs/Sheet (Mail Machine 5 yr life.)

$0.0160

312,576

$5,001.22

White Laser Paper with Perforated 24# 1-4 Color

$.0165

312,576

$5,157.50

No 10 Double Window Envelope

$0.0165

312,576

$6,251.52

No 9 Business Reply w/Poly Window

$0.0200

312,576

$6,251.52

Labor Costs (85% of full time position)

$22,800.00

1

$22,800.00

CITY OF LEESBURG RECURRING ANNUAL

$0.2304

 

$72,030.72

 

PINNACLE DATA SYSTEMS

 

 

Item Description

Per Piece Cost

 

Quantity

 

Extended Cost

Statement Processing

$0.0368

312,576

$11,502.80

Postal Optimization

$0.0150

312,576

$4,688.64

Intelligent Insertion

$0.0100

312,576

$3,125.76

No. 10 Double Window

$0.0178

312,576

$5,563.85

No. 9 Reply Envelope

$0.0141

312,576

$4,407.32

8.5 x 11" Perforated Stock

$0.0172

312,576

$5,376.31

PDS RECURRING ANNUAL COST

$0.1109

 

$34,664.68

First Year One-Time Programming Set-up Fee

$1,500.00

 

$1,500.00

PDS FIRST YEAR COST

$0.1157

 

$36,165.04

 

As previously discussed, PDS can provide e-Presentation of utility bills to those customers that have signed up for the service.  This table shows the costs for the e-Present service.

 

Utility Bill Printing and Processing

With e-Present

 

With e-Present

Per Piece/Bill

Cost

Per Bill

e-Present Cost

Annual Cost

w/e-Present

City of Leesburg

$0.2304

Not Available

$72,030.72

Pinnacle Data Systems

$0.1109

$0.07

$50,275.60

 

This table details the cost of each service or task provided for utility bill e-Present Processing.  The costs and quantities are extended to provide an estimated annual cost in the first and subsequent years.  The City does not provide this service.  Itemized costs for the City are not available.  An estimate of the technology and specialized programming that would be required to allow the City to provide this service would most likely be cost prohibitive.

 

 

e-Billing / Presentation Pricing

Web Presentation

$0.0200

312,576

$6,251.52

$6,251.52

Per Image/Cost

$0.0134

312,576

$4,201.02

$4,201.02 

e-Mail Delivery Fee

$0.0400

4,272

$170.88

e-present License Fee

$5,000.00

$5,000.00

$5,000.00

Annual Cost for e-Present

$15,610.92

One-Time Programming & Setup Fee

$3,000.00

$3,000.00

Total First Year Cost for e-Present*

$18,610.92

 

 

* Does not include a charge of $0.03 per megabyte(MB) for on-line document storage.  Cost of this item depends on the file size of bills and the number of customers using Click-2-Gov service.

 

 

Solicitation Process & Results

The Purchasing Division issued Request for Proposal 80442 soliciting interested and qualified firms to submit responses.  Three responses were received with one being disqualified due to a conflict with State of Florida Public Records Laws.  An evaluation committee consisting of staff from Finance and Information Technology evaluated the submittals and selected Pinnacle Data Systems, Inc. (formerly SunGard EXP) as the top ranked firm.  The rankings are summarized here.

 

Pinnacle Data Systems*

Southwest Direct

Evaluation Criteria

Points
Available

Eval 1

Eval 2

Eval 3

 

Eval 1

Eval 2

Eval 3

 

Experience

25

0.9

0.9

0.9

67.5

0.8

0.8

0.9

62.5

Project Mgmt

20

0.9

0.9

0.9

54

0.8

0.8

0.7

46

References & Samples

15

0.8

0.8

0.9

37.5

0.9

0.9

0.85

39.75

Pricing and Services

25

0.9

0.9

0.85

66.25

0.8

0.8

0.75

58.75

Interface to C2G

15

0.9

0.9

0.95

41.25

0

0

0

0

100

 

Total Points

266.5

 

Total Points

207

* Formerly SunGard EXP

 

Summary

The size of Pinnacle Data Systems allows them to obtain better prices on materials and labor than the City can receive on its own.  Pinnacle has a state of the art processing center that has USPS inspectors on site.  The cost of postage will always be an expense and will typically be the same for all pre-sort mailings regardless of who does the processing.

 

Pinnacle Data Systems can provide utility bill printing, processing, and mailing service to the City at an annual cost of $34,664.68, compared to an estimated cost of $72,030.72 when done by City staff.

 

Pinnacle Data Systems can provide e-bill processing and presentation for $50,275.60.  Even when adding this additional service for utility customers the annual cost with PDS is lower than the City cost without the e-Presentation service.  As previously mentioned, the City can realize a payback on the e-Presentation costs in as little as 3 years if e-Present customers increase by 10%.

 

In closing, entering into an agreement with Pinnacle Data Systems will allow the city to more efficiently and cost effectively prepare and distribute utility bills to our customers.  The customers will receive improved services and better information.  The City will be able to design and produce a more informative bill to assist our customers in analyzing their usage and past history.  The City will no longer have to purchase and maintain equipment solely for utility bill processing.  Staff time can be used more effectively in other areas of the operation.  Outsourcing the utility bill printing and mailing function is both good for the City and our utility customers.

 

Options:

1.  Authorize execution of an agreement with Pinnacle Data Systems, Inc.; or

2.  Such alternative action as the Commission may deem appropriate

 

Fiscal Impact

The City will be able to provide the same level of service and recognize a savings of $35,865.68.  The inclusion of E-Presentation will result in additional services to our customers and still result in a lower overall cost.  Capital Funds of $30,000 were budgeted in account 001-1334-513-6410 for the purchase of a new mail inserting machine. Since this is a service, a budget adjustment will need to be processed to move the funds to the account listed below.

 

Submission Date and Time:    1/21/2009 4:23 PM____

Department: _Finance Department_______

Prepared by:  _Mike Thornton_________                      

Attachments:         Yes__X_   No ______

Advertised:   _X__Not Required ______                     

Dates:   August 18, 2008______________                     

Attorney Review :       Yes___  No ____

                                                 

_________________________________           

Revised 6/10/04

 

Reviewed by: Dept. Head ________

 

Finance  Dept. __________________                                     

                              

Deputy C.M. _____EFS___________                                                                         

Submitted by:

City Manager ___________________

 

Account No. _001-1334-513-3410___

 

Project No. ___________________

 

WF No. ______________________

 

Budget  ____________________

 

Available ________0____________


 

RESOLUTION NO._______________

 

A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF LEESBURG AUTHORIZING THE MAYOR AND THE CITY CLERK TO EXECUTE AN AGREEMENT WITH PINNACLE DATA SYSTEMS, INC. FOR SERVICES TO PRINT AND MAIL UTILITY BILLS; AND PROVIDING AN EFFECTIVE DATE.

 

BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF LEESBURG, FLORIDA:

 

            THAT the Mayor and City Clerk are hereby authorized to execute an agreement with PINNACLE DATA SYSTEMS whose address is 350 Automation Way, Birmingham, AL  35210 for services related to utility bill printing, mailing, and electronic presentation pursuant to RFP 80442.

 

             THAT this resolution shall become effective immediately.

 

PASSED AND ADOPTED by the City Commission of the City of Leesburg, Florida, at a regular meeting held the _26th_ day of __January__ 2009.

 

 

 

                                                                            __________________________

                                                                             Mayor

 

ATTEST:

 

 

__________________________

City Clerk