TRANSMITTAL TO Eugene D. Seroka, Executive Director Harbor Department

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1 TRANSMITTAL TO Eugene D. Seroka, Executive Director Harbor Department DATE COUNCIL FILE NO. FROM COUNCIL DISTRICT The Mayor 15 PROPOSED AGREEMENT NO WITH CHERRYROAD TECHNOLOGIES INCORPORATED TO PROVIDE TECHNICAL SUPPORT SERVICES FOR THE ENTERPRISE RESOURCE PLANNING SYSTEM OF THE HARBOR DEPARTMENT Transmitted for further processing and Council consideration. See the City AdministrativeOfficer report attached. MAYOR V Ana Guerrero MAS:ABN: t CAO 649-d

2 REPORT from OFFICE OF THE CITY ADMINISTRATIVE OFFICER Date: July 26, 2016 CAO File No. Council File No Council District: 15 To: The Mayor From: Reference: Subject: Miguel A. Santana, City Administrative Officer Correspondence from the Harbor Department dated June 3, 2016; referred by the Mayor for report dated June 7, 2016 PROPOSED AGREEMENT NO WITH CHERRYROAD TECHNOLOGIES INCORPORATED TO PROVIDE TECHNICAL SUPPORT SERVICES FOR THE ENTERPRISE RESOURCE PLANNING SYSTEM OF THE HARBOR DEPARTMENT SUMMARY The Harbor Department (Port) Board of Harbor Commissioners (Board) requests approval of Resolution No authorizing Agreement No (Agreement) with CherryRoad Technologies Incorporated (CherryRoad) to provide technical support services for the Port's Enterprise Resource Planning (ERP) System. The ERP System is the core business informational system for the Port. The Port states that the ERP System provides critical financial and purchasing functions, including, but not limited to, general ledger, accounts payable and receivables, cash management, fixed assets, budgeting, projects, grants, purchasing and inventory activities. CherryRoad will provide professional and expert services to assist and train Port staff in maintaining technical support services for the ERP System. The term of the proposed Agreement is for a total of five years and a maximum expenditure amount of $2,948,000, In accordance with Charter Section 373, Council approval is required for a contract with a term in excess of three years. BACKGROUND The Port has used the ERP System since October 2012, when the Port replaced the previous mainframe financial system. In June 2013, the Port selected C3 Business Solutions (C3) through a competitive Request for Proposal (RFP) process. The Port entered an agreement with C3 for a contract term of three years, from June 2013 to June 2016, in an amount not to exceed $1.9 million. In the agreement, C3 was responsible to provide both functional and technical support services for the ERP System, on an as-needed basis. Total expenditures for the three-year agreement have been approximately $1.5 million or an average of $500,000 per year. The Port states that C3 provided support services and training to Port staff in the use of proprietary software product^ and..executing the financial and business benefits of the ERP Systems, The benefits included: improving the integrated and interfaced workflows and internal control systems; upgrading the financial, operating and capital budgetary controls and systems; and, expanding the use of automated administration and audit procedures.

3 CAO File No PAGE 2 In October 2015, the Port released a new RFP process to assist and provide support services for the ERP System. The Port received six proposals that were evaluated by a Selection Committee comprised of staff from the Port and the Los Angeles World Airports (LAWA). Four of the six firms were invited to participate in interviews. The Port selected the top two contracting firms, CherryRoad and C3, based on the following evaluation criteria: «Qualifications, experience, and references; Project organization, personnel, and staffing; Approach and engagement management; Rates, fees, and budget control; and, Quality and responsiveness of the proposal. Based on the evaluation, the Port decided to separate the functional and technical support services agreements because of the individual strength and expertise demonstrated by the two top contractors. The Port staff recommended to the Board to enter into a proposed Agreement with CherryRoad to provide technical support services only for the ERP System. C3, the previous contractor, was recommended to provide the functional support services for the ERP System. The RFP score for CherryRoad was a close second to the score for C3. The Board has approved the agreement for CherryRoad and C3, and will submit the agreement for C3 under a separate report. PROPOSED CHERRYROAD AGREEMENT The Port is requesting to enter into a new five-year proposed Agreement with CherryRoad to provide technical support services for its ERP System. The proposed Agreement will be from the effective date of approval up to a five-year contract term. CherryRoad is a leading integrator of enterprise software and provides comprehensive systems integration, consulting, hosting and cloud services that maintain and improves enterprise performance for the public and commercial sectors. CherryRoad has headquarters in New Jersey and offices across the country, including an office in Sacramento, California. CherryRoad has a reputation for combining technology, organizational, functional and market expertise into practical solutions. The Port states that the ERP System is its core business informational system and provides interface and support to financial and purchasing functions in approximately 25 business, operational and decision support areas in the Port of Los Angeles (POLA). The Port states that although departmental staff performs most of the work to support and maintain the ERP System, Port staff needs to continue to use CherryRoad contractors for technical support services, on an as need basis, because of the proprietary and specialized nature of the software. According to the Port, without the ERP System, the POLA would not be able to meet the needs of a modem enterprise in terms of timely reporting, and financial and process integration and controls. CherryRoad will provide the Port with the following technical support services for the ERP System: 1) Support, maintain and meet the requirements and operation of the ERP System for the Port; 2) Train and transfer knowledge to Port staff, particularly the Informational Technology staff; and, 3) Upgrade and maintain ERP software, as needed.

4 CAO File No PAGE 3 These technical support areas include: assist the Port s Information Technology (IT) staff to operate and maintain the ERP System; system monitoring; software programming; database support and technical training; support external systems connected to the ERP Systems; upgrade of ERP software; interface with the financial management system, cash management and budgeting; capital budgeting controls; elimination of manual processes, when possible; improvement of business, purchasing, and inventory processes; and, compliance with new policies and regulations. The Port staff states that it cannot perform all of the work required to support and maintain the required technical functions of the ERP System without the as-needed services provided by the contractor. Approval of the proposed five-year Agreement with CherryRoad authorizes Port staff to use the ERP technical support services for a maximum expenditure amount of $2,948,000. Funding for the 2016/17 fiscal year (FY) is approximately $200,000. The Port will request future funding as part of its annual budget, subject to approval by the Board. The Port states that contract expenditures will be based on an as-needed basis and will not exceed $2,948,000 over the five-year term. The Port has a provision in the proposed Agreement to terminate the contract for a non-appropriation of funds. The Port states that a separate Board action and report will be submitted to the Mayor and Council to hire a contractor, C3, to provide functional support services for the ERP Systems. The Port states that both functional and technical support services are needed and the services will be coordinated jointly between the two proposed contractors to resolve complex issues and problems, whenever necessary. According to the Port, the technical and functional services will not overlap. The Port will request approval of the firm, C3, to provide functional support services for the ERP System in a separate report and agreement. The Port states that LAWA also uses two separate contractors under two agreements to provide functional and technical services to support its ERP System. Some of the above-referenced aspects of the proposed Agreement, and this report, incorporate revised information received from the Port subsequent to the initial request submittal. CITY COMPLIANCE ISSUES The City Attorney has approved the proposed Agreement and Resolution as to form and legality. The proposed Agreement is in compliance with all the City rules and ordinances. This includes City compliances issues for the following: Business Tax Certificate, Insurance and indemnification; Affirmative Action Plan; Small Business Enterprises and Minority, Woman, Disabled Veteran and Local and Other Business Enterprises; City Living Wage and Service Contract Worker Retention; Equal Benefits; and other provisions of the contract agreement. In accordance with Charter Section 1022, Port staff asked other City departments if they had City staff that could do the work. According to the Port, the City departments, which responded, notified the Port that they could not do the work or did not have available staff. The Port determined that the work can be performed more feasibly and economically by independent contractors because of the specialized nature of the work. The Port Director of Environmental Management has determined that this is a professional services agreement to support and maintain the Port s ERP System. Therefore, it is exempt from the requirements of the California Environmental Quality Act (CEQA) in accordance with Article II, Section 2(f) of the Los Angeles City CEQA Guidelines.

5 CAO File No. PAGE RECOMMENDATION That the Mayor: Approve the Harbor Department (Port) Board of Harbor Commissioners request of Resolution No authorizing Agreement No (Agreement) with CherryRoad Technologies Incorporated to provide technical support services for the Port s Enterprise Resource Planning System. The term of the proposed Agreement is for a total of five years and a maximum expenditure amount of $2,948,000. Return the proposed document to the Port for further processing, including City Council consideration. FISCAL IMPACT STATEMENT Approval of the proposed Agreement between the Harbor Department and CherryRoad Technologies Incorporated (CherryRoad) will be for a contract term of five years and a maximum expenditure amount of $2,948,000. Funding for the 2016/17 fiscal year (FY) is approximately $200,000. The Port will request future funding as part of its annual budget; subject to approval by the Board. The expenditures will be based on an as-needed basis and will not exceed $2,948,000 over the five-year term. Any subsequent funding after the current fiscal year must be approved by the Board as part of the Port s annual budgeting process. The Port has included a clause in the proposed Agreement to terminate the contract for a non-appropriation of funds. There is no financial impact on the City General Fund and funding for the proposed Agreement will be included in the Harbor Revenue Fund. TIME LIMIT FOR COUNCIL ACTION Pursuant to Charter Section 373, Long Term Contracts Approved by Council, and the Los Angeles Administrative Code Section 10.5, "Limitation and Power to Make Contracts," unless the Council takes action disapproving a contact that is longer than three years within 60 days after submission to Council, the contract shall be deemed approved. MA S:ABN:

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