CITY COUNCIL AGENDA ITEM
ACTION REQUESTED:
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Approve the award of RFP 24-224, Debt Collection Services, to Municipal Collection Services, LLC for a fee not to exceed 25% of the total monies collected and for a three-year term
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DEPARTMENT: Finance Department
SUBMITTED BY: Raymond Munch, Finance Director
BOARD/COMMISSION REVIEW:
N/A
BACKGROUND:
A critical element of maintaining the City’s financial stability includes the receipt of monies due to the City in an efficient and timely manner. The Finance Department begins the process of contacting customers with delinquent accounts, but if Finance staff are unable to collect payment, the account is sent to the third-party debt collection service provider.
The City’s current contract for debt collection services ends on January 31, 2025. Accordingly, the Finance Department issued RFP 24-224, Debt Collection Services, in September 2024 to solicit for a new third-party debt collection service.
DISCUSSION:
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Advertisement Date: |
9/9/2024 |
Notices Sent: |
125 |
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Opening Date: |
10/2/2024 |
Planholders: |
30 |
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Proposals Received: |
5 |
Proposals were received from the following vendors:
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Bull City Financial Solutions |
Penn Credit Corporation |
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Credit Service International |
RTR Financial Services |
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Municipal Collection Services |
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A selection team comprised of staff from the Finance Department evaluated the proposals, which were scored based on the criteria set forth in the RFP:
1. Capability, Capacity and Qualifications of the Proposer (35%)
2. Suitability and Quality of the Approach (40%)
3. Reporting and Metrics (25%)
After reviewing and scoring the proposals, the selection committee invited the top three vendors, Bull City Financial, Municipal Collection Services and Penn Credit, to attend interviews.
Following the completion of the interviews, the selection committee rescored the vendors. The vendor with the highest qualification score, Municipal Collection Services, LLC, is recommended for award. The table below provides a summary of the final qualification scores:
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Vendor |
Qualification Score |
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Municipal Collection Services |
78.8 |
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Penn Credit Corporation |
76.2 |
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Bull City Financial Solutions |
65.4 |
Although Municipal Collection Services (MCS) had the highest collection fee at 25%, as a local debt collection company, it has experience with the State of Illinois’ local debt recovery program (LDRP). LDRP allows local governments to use the Illinois Office of Comptroller (IOC) to help collect unpaid municipal debts such as parking tickets, ordinance violations, traffic/court fines, administrative judgments, and utility bills. MCS will help the City develop an LDRP program and create and update LDRP files to submit to the State. If the City receives payment of the debt via LDRP, MCS’s fee drops to 15%. The selection team also felt that MSC’s empathetic customer service approach aligned with the City’s “small town in a large city” brand.
The term of the contract is three years from February 1, 2025 to January 31, 2028, with two one-year options to extend.
FISCAL IMPACT:
CIP #: N/A
Debt collection service fees are expensed to various Administrative Services Fees accounts and allocated based on the revenue being collected. The 2025 budget includes $3,004,597 for various administrative service fees, including debt collection services. The award can be accommodated within the 2025 budget, and staff will ensure there is funding in future budgets for this award. While there is a cost to debt collection services, the benefit of collecting monies due to the City outweighs the cost for the service.