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Agenda 05/08/2012 Item #16E55/8/2012 Item 16.E.5. EXECUTIVE SUMMARY Recommendation to reject proposals received as a result of Letter of Intent (LOI) 10 -5562 E- Payables and to work in coordination with the Clerk of Courts who wi11 solicit proposals to expand opportunities for electronic payments and electronic payment systems to include "Procure to Pay" programs such as E- Payables as well as other programs designed to increase efficiency and reduce paper processing. OBJECTIVE: To automate the vendor payment process using established methods that reduce the use of paper checks to include credit card payment programs and other solutions. CONSIDERATIONS: In fiscal year 2010, while Purchasing Department staff was seeking options to reduce costs and /or enhance revenue generating opportunities for the County, they learned that several public agencies in Florida, and throughout the country, were actively pursuing additional revenue share opportunities associated with credit card programs and electronic "procure to pay" solutions. Collier County has been operating 'a purchasing credit card program since 1997 that yielded rebates of approximately $32,000 in fiscal year 2011. Using a "procure to pay" solution, the County would contract with a bank that would approach the County's current (and future) vendors to sign up to receive payment via a credit card account with the bank. Using such a system, the County would continue to issue a purchase order under its current system, receive and accept the goods or services and receive an invoice for the purchase. The Finance Department staff would audit the invoice in the same manner as they do presently. However, instead of issuing payment directly to each participating vendor, Finance would provide a pay file authorizing the bank to pay the vendor, the Bank would pay the vendor, and the County would reimburse the bank for vendor payments made. Other public agencies in Florida (e.g., Bay County) have enhanced revenue to their agencies through the use of "procure to pay" solutions. In addition to the creation and growth of new revenue, additional benefits of the program include: • The Clerk's Finance Department would retain the ability to audit each payment, • Reduced cost of printing checks and bank processing fees for the County and the vendor, • Increased protection over payments due to VISA insurance benefits, and •- Reduced 1099 reporting obligations (as it defers to the banking institution). "Procure to pay" solutions would be voluntary for the County's vendors. Vendors would be given the option to utilize the program or continue to receive payment through existing payment methods. A number of Collier County vendors including Bound Tree Medical, Federal Express, Genuine Parts (NAPA), Helena Chemical, Siemens Water Technologies, and Staples Advantage utilize or have utilized such programs in the past. These programs typically lower administrative handling costs and provide increased visibility into transaction details for these vendors. Staff anticipates that during the first year of a program start-up, the County could realize an additional revenue stream of approximately $50,000 — $100,000 based on annual vendor activity between four to eight million dollars. The Purchasing Department issued LOI 10 -5562 soliciting proposals for an electronic "procure to pay" solution in late July 2010. Notices were distributed to 150 firms; 35 firms downloaded Packet Page -1142- 5/8/2012 Item 16.E.5. solicitation information. On August 9, 2010, eight proposals were received. A Selection Committee comprised of two staff members from the Clerk's Finance Office and two staff members from Board departments reviewed eight (8) proposals. The Selection Committee short- listed four firms; each firm was given an opportunity to present their proposal, and respond to additional questions to the Selection Committee. The Selection Committee unanimously recommended Commerce Bank on November 16, 2010. Contract negotiations began in January 2011 between the selected provider, County staff, County Attorney's Office, the Clerk's Finance Department, and the Clerk's legal representative. Numerous conference calls were held and several iterations of the contract went back and forth between the County, the Clerk and Commerce Bank culminating with Commerce Bank's final offer in February 2012. The Finance Department and their attorney could not accept the bank's final contract which resulted in an impasse in negotiations. On April 10, 2012 Commerce Bank appeared before the Board and the Board directed staff to bring this item back for full discussion. In light of the time that elapsed from the initial solicitation and the prolonged contract negotiation period, staff believes it would be advantageous to re- solicit for proposals with updated terms and conditions, including those identified by the Clerk of Courts and Finance Department. Additionally, the Clerk of Courts is seeking other methods to reduce the work involved with processing checks for payment by implementing and maximizing opportunities to expand the use of electronic payments. The Clerk of Courts is interested in issuing the solicitation to include e- payables, improved ACH processing, pay cards in lieu of paper paychecks, and any other programs /processes that may be available. The solicitation would combine the requirements of both the Clerk of Courts and the Board of County Commissioners. FISCAL IMPACT: The anticipated first full calendar year implementing a "Procure to Pay" program is anticipated to generate rebates to the County of $50,000 — $100,000 in new revenue; this analysis is based on vendors in the County's current vendor database that have subscribed to credit card payment programs. The program is projected to grow in future years with potential revenues estimated at $250,000 annually. GROWTH MANAGEMENT IMPACT: There is no growth management impact associated with this Executive Summary. LEGAL CONSIDERATIONS: This item was reviewed by the County Attorney, is legally sufficient, and requires majority vote for approval. -JAK RECOMMENDATION: That the Board of County Commissioners rejects all proposals received for LOI 10 -5562 E- Payables and directs the County Manager, or his designee, to work with the Clerk of Courts in developing a comprehensive requirements document and solicitation that meets the needs of both the County's and the Clerk of Courts to streamline processes, reduce costs, and /or increase revenues as possible.. PREPARED BY: Len Golden Price, Administrative Services Division Administrator Packet Page -1143- COLLIER COUNTY Board of County Commissioners Item Number: 16.E.5. 5/8/2012 Item 16.E.5. Item Summary: Recommendation to reject proposals received as a result of Letter of Intent (1-01) 10 -5562 E- Payables and to work in coordination with the Clerk of Courts who will solicit proposals to expand opportunities for electronic payments and electronic payment systems to include "Procure to Pay" programs such as E- Payables as well as other programs designed to increase efficiency and reduct paper processing. Meeting Date: 5/8/2012 Prepared By Name: pochopinpat Title`. Administrative Assistant,Facilities Management 4/27/2012 3:54:45 PM Submitted by Title: Administrator, Administrative Services Name: PriceLen 4/27/2012 3:54:47 PM Approved By Name: MarkiewiczJoanne Title: Manager - Purchasing Acquisition,Purchasing & Gene Date: 4/27/2012 4:22:52 PM Name: pochopinpat Title: Administrative Assistant,Facilities Management Date: 4/27/2012 5:06:52 PM Name: PriceLen Title: Administrator, Administrative Services Date: 4/27/2012 5:22:10 PM Name: KlatzkowJeff Title: County Attorney Packet Page -1144- Date: 4/30/2012 2:38:39 PM Name: KlatzkowJeff Title: County Attorney Date: 4/30/2012 2:46:30 PM Name: FinnEd Title: Senior Budget Analyst, OMB Date: 4/30/2012 3:36:47 PM Name: OchsLeo Title: County Manager Date: 4/30/2012 5:08:41 PM Packet Page -1145- 5/8/2012 Item 16.E.5.