CITY COUNCIL AGENDA ITEM
ACTION REQUESTED:
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Approve the award of the fourth extension to Contract 13-025B.4, Procurement Card Services, to US Bank for an anticipated revenue of $226,250 over a five-year term
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DEPARTMENT: Finance Department
SUBMITTED BY: Rachel Mayer, Director
BOARD/COMMISSION REVIEW:
N/A
BACKGROUND:
In August 2013, the City awarded Contract 13-025B, Procurement Card Services, to US Bank to administer the City’s procurement card program. Since the original award, the City has processed three extensions to the contract in October 2016, December 2018 and July 2020.
The City uses three forms of payment to vendors - electronic funds transfer (EFT), checks and procurement cards. The procurement card program was initiated by the City in 1996 to increase vendor acceptance and operation efficiency for the purchase of goods and services per the guidelines of the Procurement Code.
This program has a number of unique controls that do not exist in a traditional procurement card environment. These controls ensure that the cards can be used only for specific purposes and within specific dollar limits. In addition, certification of all purchases is required by each cardholder with verification performed by the appropriate division manager before payment is made to the bank. Each card has set maximum dollar limits for a single purchase as well as a monthly purchase limit for all purchases. Every week a report of the cardholder purchases for the month is reviewed, receipts are provided, and transactions are approved by the employee’s manager or director. In addition, there is an audit by Finance of all procurement card activity. Finally, each card, based on the user’s needs as recommended by the Department Head and approved by the Chief Procurement Officer, can only be used at certain categories of vendors.
A summary of the 2023 procurement card program is provided below:
• Number of cardholders: 261
• Annual spend: $2,943825.72
• Annual rebate/revenue: $41,893.96
• Average number of transactions per month: 797
• Average transaction amount: $306.83
• Percentage of transactions under $1,000: 96%
DISCUSSION:
The Finance Department recommends extending the procurement card services contract with US Bank for an additional five years.
The City has a good relationship with US Bank. Earlier this year, US Bank contacted staff and recommended a different rebate program based on the City’s spending analysis. Additionally, the bank has good customer service and an easy-to-use portal for administering the procurement card program.
Additionally, the City’s current procurement cards expire in October 2024 and will be replaced with new cards that will not expire until 2029. The RFP and subsequent vendor onboarding process for a new procurement card program is approximately a year so it makes sense to start an RFP in late 2028 to start a new contract on January 1, 2030.
The term of the extension is five years from January 1, 2024 to December 31, 2029.
FISCAL IMPACT:
Rebate from the procurement card services agreement is deposited in the account number listed below. Staff projected a total of $48,000 in revenues under the agreement for 2024. The rebated amount in 2023 totaled $44,179.
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Account Number |
Fund Description |
Total Revenue Projection |
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15001100-480103 |
General Fund |
$58,000 |
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