Please Review for the Possibility of a Potential Conflict of Interest: UJ.-NOne Identified by Staff D Bright D Shoals D Nicolls D Lee D Shah

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1 STAFF REPORT TO: HONORABLE MAYOR AND CITY COUNCIL FROM: SUBJECT: GAYLA R. CHAPMAN, ADMINISTRATIVE SERVICES DIRECTOr CONTRACT ADDENDUM TO AGREEMENT BETWEEN HARRIS SYSTEMS USA, INC., AND THE CITY OF GROVER BEACH, CA BACKGROUND The current City Financial System was purchased in May of 1997 and had a three year implementation plan. The system is a DOS based system with a Graphical User Interface (GUI). Due to the age of the system and many efficiencies that could be achieved by an upgrade to the system, staff began looking into upgrading during FY 14. Staff informed the City Council during the budget hearing in June 2014 of the need for the upgrade. Due to financial constraints the system upgrade was placed on hold and staff was asked to bring the potential upgrade back to the City Council later during the year. At the first quarter budget review, staff brought back the need for the new financial system. With the upgrade to the Financial System is the inclusion of a Community Development Module, which will move the Community Development Department transaction to being integrated with the City Financial System. Also, the system that the Community Development Department is currently using is based on a program that Microsoft no longer supports. The City Council approved the resolution funding the project, with implementation over three years. The City Council directed staff to initiate an Addendum to the current agreement with Harris Systems USA, Inc. for the upgrade. The contract negotiations for the new financial system have been completed and the contract is ready for approval by the City Council. DISCUSSION Discussions were held regarding the contract addendum. Staff was given the standard Addendum from Harris. Most items were acceptable, with the exception of when the modules were to be implemented. Harris Systems had included a set schedule, which allowed no flexibility in implementation. Staff requested a change to include the ability for the City to implement modules based on the City's needs. Staff also addressed the need for the per-diem rate to be based on the IRS listed rates for San Luis Obispo County. ROBERT PERRAULT CITY MANAGER Meeting Date: February Please Review for the Possibility of a Potential Conflict of Interest: UJ.-NOne Identified by Staff D Bright D Shoals D Nicolls D Lee D Shah 6 Agenda Item No.

2 Staff Report: Contract Addendum to the Agreement between Harris Systems USA, Inc. and February 2, 2015 The City of Grover Beach Page 2 ALTERNATIVES The City Council has the following alternatives to consider: 1. Authorizing the Mayor to execute the Addendum to the Agreement between Harris Systems USA, Inc. and the City of Grover Beach. 2. Provide direction to staff. RECOMMENDED ACTION Staff recommends that the City Council authorize the Mayor to execute the Addendum to the Agreement between Harris Systems USA, l~c., and the City of Grover Beach. FISCAL IMPACT Funding for the upgrade to the Financial System in the amount of $320,200 was approved on November 17, 2014 by Resolution No PUBLIC NOTIFICATION The agenda was posted in accordance with the Brown Act. Attachments 1. Addendum to Agreement between Harris Systems USA, Inc., and the City of Grover Beach, CA.

3 Attachment 1 ADDENDUM to Agreement Between Harris Systems USA. Inc. and the City of Grover Beach, CA This Addendum ("Addendum") is made and entered into on January 20, 2015 by and between Harris Systems USA Inc. d/b/a Harris Enterprise Resource Planning ("HARRIS") and the City of Grover Beach, California ("Customer''). WHEREAS, in addition to the software, services and other items provided by HARRIS to Customer under the prior Agreement dated June 24, 1997, Customer desires to order from HARRIS certain Innoprise Financials, Centralized Cash Receipting (CCR), Human Resources, Payroll, Employee Self Service, Applicant Tracking including Citizen Access, Utility Billing including Miscellaneous Receivables and Citizen Access, and Community Development including Citizen Access Applications ("INNOPRISE APPLICATIONS"), maintenance services, and/or hardware as described in this Add~ndum to the Agreement ("Addendum"). NOW THEREFORE, in consideration of the mutual promises, covenants and agreements contained herein, the receipt and legal sufficiency of which is hereby acknowledged, the parties hereby mutually promise, covenant and agree as follows: 1. The recitals above are made a part of the parties' agreement. 2. The following definitions shall apply to this Addendum: (a) "Designated Computer System" shall mean the Customer's platform and operating system environment which is operating the Licensed Programs. (b) "Licensed Program" or "Licensed Programs" shall mean program material in machine-readable or interpreted form, and may include, where appropriate, listings of either machine code or source code and related materials, including operating instructions and documentation provided by HARRIS to Customer, and including any such programs previously provided to Customer by HARRIS pursuant to the Agreement, and including all copies made by Customer. (c) "Reimbursable Expenses" shall refer to the expenses for travel (including travel time spent by any HARRIS employee billed at $75/hr. and per diem expenses as listed in Addendum C), lodging, meals, car rental, mail charges (including overnight courier service), and related expenses incurred by HARRIS in connection with rendering the maintenance services and any other services described in this Addendum. 3. Customer hereby orders from HARRIS, and HARRIS agrees to deliver to Customer, the INNOPRISE APPLICATIONS and related hardware, if any (collectively, the "Innoprise ERP Applications") listed and described on Addendum A attached hereto, for the prices listed on Addendum A. HARRIS shall install the INNOPRISE APPLICATIONS on the Designated Computer System for the installation price described on Addendum A. Customer shall reimburse HARRIS for any Reimbursable Expenses incurred by HARRIS in connection with HARRIS' delivery, installation and maintenance of the INNOPRISE APPLICATIONS. HARRIS shall deliver invoices to Customer for amounts due under this Addendum by , unless requested in hard copy, prior to the last day of the month. Customer plans to implement the INNOPRISE APPLICATIONS over a three year period. The customer shall pay for License fees and/or Professional service fees, for each module, upon project kickoff (listed on Addendum B). 4. HARRIS grants to Customer and Customer hereby accepts a personal, non-exclusive, non-transferable right and license to use the software included in the INNOPRISE APPLICATIONS on the Designated Computer System. All INNOPRISE APPLICATIONS shall constitute a Licensed Program, and all of the terms of the Agreement applicable to the Licensed Program(s) shall also apply to the INNOPRISE APPLICATIONS, and are fully incorporated herein by reference. HARRIS may terminate the license granted under this Addendum upon default by Customer under any of the terms of the Agreement or this Addendum. The right to the use of said license is extended only while a paid maintenance contract is in force. 5. HARRIS agrees to render for Customer, and Customer agrees to accept from HARRIS, maintenance services for the INNOPRISE APPLICATIONS. Such maintenance services shall be rendered during the same maintenance year previously established by HARRIS pursuant to the Agreement. Customer shall pay to HARRIS annual maintenance fees for such maintenance services (as listed on Addendum A attached hereto). The initial maintenance fees will be invoiced on a prorated basis through the end of the year as each INNOPRISE APPLICATION becomes the predominate system of use. At that time credits will be issued for unused prepaid maintenance fees for the corresponding Harris Select application. Thereafter maintenance fees for the INNOPRISE APPLICATIONS are due annually in advance. The annual maintenance fee for the INNOPRISE APPLICATIONS will increase 4% each year starting in January 2016 through the January 2020 renewal. In subsequent years the annual maintenance fee increase may be greater than 4%~ After Customer has migrated from Select to Innoprise they may continue using the Select software for inquiryonly purposes by paying an additional annual maintenance fee of$1,400 for a single concurrent user license. This fee consists of$500 for the Select maintenance and $900 for the third-party maintenance.

4 6. HARRIS and Customer shall each have the same rights and remedies with respect to the maintenance services for the INNOPRISE APPLICATIONS as provided in the Agreement for all other maintenance services. Notwithstanding the foregoing, HARRIS may terminate the maintenance services for the INNOPRISE APPLICATIONS by giving at least one hundred twenty (120) days' prior written notice to Customer or immediately upon written notice to Customer if Customer defaults in any of its obligations of the Agreement or this Addendum. assigns. 7. This Addendum shall be binding and inure to the benefit of the parties hereto, and to their respective successors and 8. In the event of any conflict between the terms of this Addendum and the Agreement, this Addendum shall control. 9. HARRIS will provide the lnnoprise Application licenses to the Customer outlined in Addendum B. N. HARRIS COMPUTER CORPORATION d/b/a HARRIS CITY OF GROVER BEACH, CALIFORNIA Dennis Asbury, Executive Vice President Attest Attest Donna McMahon, City Clerk (SEAL) (SEAL)

5 ~ Addendum A Date of Issuance: January 20, 2015 OneTime Description Cost lnnoprise Application License Fees $ 203,100 Includes Harris Payment Gatway Ucense Fee $2,950 Application License Fees $ 203,100 License Fees/Software for Life Discounts $ (163,100) Early Adopter Cost Share or Conversion (13,475) Professional Services Total Discount (176,575) Total Application License Fees 26,525 License Transfer Fee $ 5,000 Harris ERP Application and Software (Remote) $ 170,700 Harris ERP Application and Software (On-Site) $ 36,500 Includes HPG Implementation $600 Total Professional Services $ 207,200 Total Software and Services $ 238,725 Travel (Estimated, Actual is billed as incurred) Harris ERP Application and Software $ 35,876 llicense for historical lookup in Select $ 1,400 Notes: First Year Maintenance (see note below) Project Total $ 276,001 Harris ERP Application and Software- Year 1 $ 40, Project funding is for over a three year period. 2. The City reserves the right to alter the implementation schedule depicted in Addendum B. 3. The License Fees and Professional Services Fees will be invoiced at the start of each phase as outlined in Addendum B. Payment is due 30 days after each invoice is created. 4. Travel estimates are based on seven onsite visits for Financials (2 visits), Payroll/Human Resources (1 visit), Community Development (2 visits) and Utility Billing (2 visits). 5. The $40,620 is what the cost of maintenance for all the Innoprise Applications would be on an annual basis if they were all installed in The actual amount invoiced when each modules becomes the predominant system of use will include a 4% increase in 2016 and in 2017.

6 AddendumB Date of Issuance: January 20, 2015 Innoprise Application Licensed Modules and Implementation Sequence, and Payment Schedule Professional Services includes Project Management, Installation, Business Process Review, Data Conversion, Report Setup, Configuration, Training and Go Live Support. Licensed Modules, Implementation Sequence and Payment Schedule for FY FY 2017 License and First Year Professional Annual FY2015 lnnoprise Modules Services Fees Maintenance Phase 1 Financials: General Ledge.r, Accounts Payable, Accounts Receivable $ 37,600 $ 10,541 Phase 2 Central Cash Receipts $ 10,925 $ 1,903 Community Development: Penn its, Planning & Phase 3 Zoning, Licenses, Code Enforcement, Alann Pennits including Citizen Access. Harris Payment Gateway. $ 57,300 $ 10,004 FY 2015 Total $ 105,825 License and First Year Professional Annual FY2016 Innoprise Modules Services Fees Maintenance Phase 4 Payroll I HR: Including ACH. Employee Self Service, Applicant Tracking including Citizen Access $ 64,300 $ 10,353 FY 2016 Total $ 64,300 License and First Year Professional Annual FY 2017 Innoprise Modules Services Fees Maintenance Phase 5 Utility Billing: including Miscellaneous Accounts Receivables, Meter Data Management $ 65,850 $ 10,225 Phase 6 Citizen Access including credit card portal $ 2,750 $ 595 FY 2017 Total $ 68,600 New Innoprise Software Project Total Costs $ 238,725 4

7 AddendumC Date of Issuance: January 20, 2015 FY 2015 Per Diem Rates - Effective October 1, 2014 COUNTY I FY2015 Lodging FY2015 STATE DESTINATION LOCATION Rate M&IE DEFINED CA San Luis Obispo San Luis Obispo $ 111 $66 5