notice of public meeting - phoenix, arizona · this item is for information and discussion. page 15...

*Revised

NOTICE OF PUBLIC MEETING PHOENIX CITY COUNCIL

FINANCE, EFFICIENCY AND INNOVATION SUBCOMMITTEE Pursuant to A.R.S. Section 38-431.02, notice is hereby given to the members of the PHOENIX CITY COUNCIL FINANCE, EFFICIENCY AND INNOVATION SUBCOMMITTEE and to the general public, that the FINANCE, EFFICIENCY AND INNOVATION SUBCOMMITTEE will hold a meeting open to the public on Wednesday, June 22, 2011, at 10:00 a.m. located in the Subcommittee Room, 12th Floor, Phoenix City Hall, 200 West Washington Street, Phoenix, Arizona. The agenda for the meeting is as follows: 1. Call to Order

Chairman Gates

2. Approval of Minutes of the May 25, 2011 Meeting

Page 3 Subcommittee members

3. Street Light Maintenance Savings Staff will provide information on a cost saving initiative involving street light maintenance. This item is for Discussion and Possible Action.

1 15 Minutes Wylie Bearup

4. Electric Vehicles Staff will provide information on an analysis of adding electric vehicles to the city’s fleet. This item is for Information Only.

Page 13 0 Minutes Carolyn Bristo

5. Organizational Review Staff will provide an update on new organizational review efforts. *City Council Report included. This item is for Information and Discussion.

Page 15 10 Minutes Janet Smith

6. Innovation and Efficiency Task Force Update Task Force Staff will provide a status update. *City Council Report previously listed as Item 5 and previously attached Item 6 deleted. This item is for Information Only.

Page 17 0 Minutes Mario Paniagua and Debbie Cotton

7. Innovative Procurement Methods Staff will provide information on the city’s current procurement methods and discuss an innovative procurement method. This item is for Information and Discussion.

Page 19 20 Minutes Jeff DeWitt and Carolyn Bristo

8. Rightsourcing The Task Force will provide an update on Rightsourcing and managed competition initiatives. This item is for Information and Discussion.

5 15 Minutes John Chan

9. Pension Reform Task Force Update The Task Force will provide a status update. This item is for Information and Discussion

Page 31 10 Minutes Rick Naimark

10. Transparency in Financial Reporting Staff will present information on transparency in the city’s financial reporting. This item is for Information and Discussion

Page 33 10 Minutes Jeff DeWitt

11. Call to the Public Chairman Gates 12. Future Agenda Items Chairman Gates 13. Adjournment Chairman Gates For further information, please call Dennis Murphy, Management Assistant, City Manager’s Office at 602-495-5467. Persons paid to lobby on behalf of persons or organizations other than themselves shall register with the City Clerk prior to lobbying or within five business days thereafter, and must register annually to continue lobbying. If you have any questions about registration or whether or not you must register, please contact the City Clerk’s Office at 602-262-6811. For reasonable accommodations, call Dennis Murphy at Voice/602-495-5467 or TTY/602-534-5500 as early as possible to coordinate needed arrangements.

2

Finance, Efficiency and Innovation, June 22, 2011, Agenda Item 2

CITY OF PHOENIX CITY COUNCIL FINANCE, EFFICIENCY AND INNOVATION SUBCOMMITTEE

SUMMARY MINUTES May 25, 2011

Subcommittee Room Phoenix City Hall 200 West Washington Street Phoenix, AZ 85003 Council Members Present Councilman Bill Gates, Chair Councilman Claude Mattox Vice Mayor Thelda Williams Councilman Tom Simplot City Staff PresentDavid Cavazos Penny Parrella Janet Smith Debbie Cotton Danny Murphy Mario Paniagua David Krietor Deanna Jonovich Joe Bowar Jesus Sapien Tom Buschatzke Jeff DeWitt Maria Hyatt Ron Serio Rick Naimark Lisa Esquivel Kini Knudson Brandie Ishcomer Barbara Coppage Sam Feldman Genevieve Siri Rob Sweeney Janey Pearl Michael Hughes Mary Kyle Wylie Bearup Dennis Murphy Tom Godbee Laura A. Madson Brown Public Present Matt Mayer Amy Brant Jim Albu Laura Etten David Schwartz Gary Hubbard Rick Ker Rick DeGraw 1. Call to Order

Chairman Bill Gates called the meeting to order at 1:07 p.m. with Vice Mayor Thelda Williams, Councilman Claude Mattox, and Councilman Tom Simplot present.

2. Approval of Minutes of the April 27, 2011 Meeting

Vice Mayor Williams made a motion to approve the April 27, 2011 meeting minutes. Councilman Simplot seconded the motion. The motion passed 4:0.

9. Update on Pension Reform Study Item was taken out of order.

3

Mr. Rick Naimark, Deputy City Manager, introduced Mr. Rick DeGraw, Pension Review Task Force chairman, and Ms. Donna Buelow, Retirement Program Administrator. Mr. Naimark gave a brief presentation of the Pension Reform Task Force efforts to date and the vendor selection for the consulting and actuarial analysis for the Pension Reform Task Force. Mr. Naimark explained the Task Force had comprehensively reviewed information on the City’s pension system, studied other retirement systems, and reviewed other pension system reforms. Mr. Naimark stated the City would be hiring an outside attorney to ensure that changes made to the system and City Charter comply with Arizona Law. Mr. Naimark announced the Segal Company was the successful bidder with a $200,000 not to exceed price for consulting and actuarial analysis. Mr. Naimark stated staff and the Task Force are requesting the Subcommittee to approve entering into a contract with the Segal Company for the consulting and actuarial analysis for the Pension Reform Task Force. Mr. DeGraw, Chairman of the Task Force, gave a brief presentation on his impressions of the process. Councilman Simplot asked what the impact of requiring a minimum age of employment for departments. He asked what the effect of a minimum age of 25 would be on the pension system. Mr. DeGraw responded the Task Force had not been tasked with that assignment. Mr. Naimark responded the Task Force had reviewed the rules of retirement. Councilman Simplot said he wanted to see the analysis of requiring a minimum hiring age. Councilman Mattox said the City needs the information from the consultant for labor negotiations. Mr. Degraw explained they will be discussion points, but it was not likely that there would be recommendations in time for negotiations. Chairman Gates asked what resources the State used to make their recent changes. Mr. DeGraw responded the State has actuaries and lawyers on call at Arizona State Retirement System (ASRS). Chairman Gates asked what the City has. Mr. Naimark responded the City has an actuary on contract and outside legal counsel. Mr. Degraw commented the changes to the State system were enacted in an 18 hour period and he doubted there was an in-depth analysis. Councilman Mattox commented that the City needed to complete the study and it was better to have an outside professional complete the analysis in response to a call from the public. Chairman Gates commented the Compensation Consultant selection is also recommended to be The Segal Company. Mr. Naimark responded it is a

4

different branch of a very large company that will be working on the Compensation study. Chairman Gates asked if there would be a recommendation in time for the Elections. Mr. Naimark explained the study items would be completed by the sunset date of December and it would be in time for the 2013 election or a special election if Council chose that option. Councilman Mattox made a motion to approve staff’s recommendation and Vice Mayor Williams seconded the motion. The motion passed 4:0.

3. Water Services Organizational Changes and Savings Mr. Jerome Miller, Deputy City Manager, introduced Mr. Neil Mann, Acting Water Services Director, and Ms. Maria Hyatt, Assistant Water Services Director. Mr. Miller presented a brief overview of the Department’s efforts to consolidate and find efficiencies since February when the Department was charged, by City Council, to research efficiencies when the new Water rates were adopted. Councilman Mattox stated he was concerned about selling underground storage capacity. He asked if the City would have the ability to retrieve water when it was needed. Additionally, he asked what the plan was for retrieving water when it was needed and for a report on meeting the City’s needs. Mr. Miller replied staff will complete a report and brief the Subcommittee. Vice Mayor Williams asked what percentage of pay stations were online. Ms. Hyatt explained approximately 15% pay online. Vice Mayor Williams asked if the City could provide an incentive to pay on-line. Ms. Hyatt responded she would bring that topic up at her next Infrastructure meeting. Councilman Mattox asked if the City would start to reimburse the tax payers. Mr. David Cavazos, City Manager, responded staff was still in the process of determining how the savings would be returned to the customer. Ideas for return to tax payers include forgoing rate increases or a rebate. Councilman Mattox made a motion to support staff’s recommendation. Vice Mayor Williams seconded the motion. The motion passed 4:0.

4. Compensation Consultant Selection Approval

Ms. Janet Smith, Human Resources Director, Ms. Lisa Esquivel, Deputy Human Resources Director, and Mr. Rick Degraw, Task Force member, provided information on the selection process for the consultant to complete a citywide compensation study. Ms. Smith stated that The Segal Company was selected as the vendor and would be completing the study for $430,000. Councilman Mattox asked if the consultant’s report would be done in time for negotiations. Ms. Smith responded the report is expected in the January 2012 time period.

5

Vice Mayor Williams commented there is a focus on government employees. She stated the City had difficulty hiring employees and she hoped there would be flexibility to adjust to the current market. Ms. Smith responded there will be structure to retain the City top talent and also, allow for successful recruitment. Chairman Gates stated he was concerned about all the studies. He said he wonders why the City has to spend $430,000 on a study when someone could pick up the telephone and ask for the comparative data. Mr. Degraw commented comparative studies are complicated and each component of an employee’s compensation package may not be readily available to a caller. He explained there are groups that have access to all this data, culled generically, for benchmarking. Mr. Degraw stated the Segal Company uses that type of data. Ms. Smith explained the study is not a title review and job descriptions are used to get accurate comparisons. Chairman Gates asked what happens if the study states that the City is above market. Ms. Smith responded once a compensation strategy is developed, the City Manager can adjust pay. Ms. Smith explained benefits are negotiated. Vice Mayor William made a motion to approve staff’s recommendation to enter into a contract with The Segal Company. Councilman Mattox seconded the motion. The motion passed 4:0.

5. Medical Benefits Savings Ms. Smith and Ms. Mary Kyle, Deputy Human Resources Director, presented information on savings from the recent Health Care Insurance Request for Proposal (RFP) process and the implementation of wellness, education, and awareness initiatives that are aimed at driving down the cost of insurance, such as biometric screening and annual physicals. Vice Mayor Williams asked if participation in these initiatives would be mandatory. Ms. Kyle explained participation was not mandatory, but participation did provide for a $20 monthly reduction in insurance premiums. Vice Mayor Williams asked if the cost of the physical is covered for the employees. Ms. Kyle responded the physicals would be provided at no cost to the employee. Chairman Gates thanked the presenters for their work focusing on health care cost reduction.

6

6. Veolia Transportation Services Contract Reduction Ms. Debbie Cotton, Public Transit Director, introduced Mr. Kini Knudson, Deputy Public Transit, who presented information on proposed contract reduction of transit-related support services. Vice Mayor Williams made a motion to support staff’s recommendation for the proposed contract reduction and corresponding savings. Councilman Simplot seconded the motion. The motion passed 4:0.

7. First Transit Cost Savings Measures Ms. Cotton introduced Mr. Jesus Sapien, Transit Superintendent, who presented information on cost saving measures to implement in FY11/12 with First Transit, Inc. transit service agreement. Vice Mayor William asked about having language about self reporting in the contract. Mr. Sapien responded the First Transit contract requires self reporting. Vice Mayor Williams made a motion to support staff’s recommendation for the proposed cost savings measures. Councilman Simplot seconded the motion. The motion passed 4:0.

8. Innovation and Efficiency Task Force Update

Chairman Gates asked if there were any questions on the Task Force update. There were no questions. Chairman Gates thanked the Task Force for their efforts.

13. Cost Calculations for City Capital Projects

This item was taken out of order. Mr. Wylie Bearup, Street Transportation Director, presented information on hard and soft construction costs experienced by the Capital Improvement Program (CIP). Chairman Gates asked where project contingency resides. Mr. Bearup responded contingency is carried in both soft and hard costs, depending on the risk. Councilman Mattox asked if there is a typical amount for contingency. Mr. Bearup responded there is not a typical cost and cost depended on risk. He explained the higher the risk, the larger the contingency established. Councilman Mattox asked what percentages are assigned to low and high risk. Mr. Bearup responded five and ten percent respectively.

7

Councilman Simplot asked what the purpose of contingency is. He asked if it was for Brownfield concerns. Mr. Cavazos explained if the City buys land with an environmental concern and does not identify and exclude the environmental problem; the City is then responsible for the issue. Chairman Gates asked what percentage project management costs comprise of the total project cost. Mr. Bearup stated project management was five to six percent of 2010 projects. Chairman Gates asked if the City had become more efficient at project management. Mr. Bearup explained the City is getting the best quality contractors for large project and the costs have decreased. Councilman Mattox asked what happens if there is unspent contingency? Mr. Bearup explained the contingency gets rolled back into the project. He stated that savings are shared between the City and contractor.

10. Managed Service for Data Network and Telephone Services

Mr. Cavazos introduced Mr. Charles Thompson, Chief Information Officer, who presented information on the city migration from the existing telephone and network system to a right-sourcing vendor for managed services. Vice Mayor Williams asked if the City would have the latest equipment. Mr. Thompson responded the technology would refresh periodically to stay current over the course of the vendor’s period of services. Chairman Gates asked for a definition of periodically. Mr. Thompson responded that periodically means every four to five years. Chairman Gates asked if the Subcommittee would see the contract before its break. Mr. Thompson responded he would return to subcommittee in July and August.

11. Update on Enhanced Financial Compliance Initiative

Mr. Jeff DeWitt, Finance Director, introduced Ms. Vicki Rios, Deputy Finance Director, and Mr. Rob Sweeney, Assistant Chief Information Officer. Mr. DeWitt presented an update on the Enhanced Compliance Initiative. Councilman Simplot asked about single family property rental taxpayer. Mr. DeWitt responded that staff was researching these taxpayers. Mr. Sweeney responded staff is using the Maricopa County Property database in the project. Councilman Simplot asked about a retail business owner that recently contacted his office about receiving notification from the City that taxes had been overpaid. Mr. DeWitt explained that the City is aiming to eliminate this situation by allowing amended returns.

8

Mr. Cavazos commented that the City is working to identify taxpayers that rent five to six units to ensure the City is collecting the money it is due.

12. Update on Efficiency Studies There was no discussion on this item.

14. On-Street Parking Efficiency Study

Mr. Bearup introduced Mr. Tom Godbee, Assistant Street Transportation Director who gave a presentation on the On-Street Parking Efficiency Study. Mr. David Schwartz, Secured Storage Technologies, commented on the study and suggested it was a study short-coming to dismiss the use of sensors in parking systems. Councilman Simplot commented the sensors would be a good idea, particularly in the Uptown area of Phoenix. Mr. Bearup stated staff would be glad to consider the option and would need to offer the option to every vendor.

15. Call to Public No public comments were received.

16. Future Agenda Items

No agenda items were discussed. 17. Adjournment

Chairman Gates adjourned the meeting at 3:02 p.m.

Respectfully submitted, Laura A. Madson Brown Management Assistant II Budget and Research Department

9

This page is left intentionally blank.

10

Finance, Efficiency and Innovation, June 22, 2011, Agenda Item 3 CITY COUNCIL REPORT

TO: Rick Naimark Deputy City Manager

FROM: Wylie Bearup Street Transportation Director

SUBJECT: STREETLIGHT MAINTENANCE CONTRACT IN APS SERVICE AREA

This report provides information concerning the selection of a firm to provide streetlight maintenance services for the Arizona Public Service area. It also requests Council approval to enter into a contract with the selected firm and create a full-time Electrical Inspector II position in the Street Transportation Department to support the contracted work. THE ISSUE Before 2008, all streetlight maintenance activities were performed by Salt River Project (SRP) and Arizona Public Service (APS) in their respective service areas. The City of Phoenix owned the streetlights and contracted with SRP to provide maintenance for about 39,000 lights, and with APS to service approximately 52,000 lights. In 2008, SRP informed the City that they could no longer perform maintenance on the lights in their service area. The City of Phoenix decided to outsource the service using the Job Order Contracting process. The City issued an RFQ and selected Republic ITS to provide service in the SRP area using a qualifications-based selection process that considered past performance on similar work. Staff has been pleased with the service provided by this contract. This year, building upon the lessons learned from contracting out maintenance in the SRP area, staff used a selection process that considered both qualifications and price to choose a firm to provide streetlight maintenance services for the APS service area. Through this process, Fluoresco Lighting and Signs was selected. Currently, the City pays APS $1.83 per streetlight per month for an annual routine maintenance cost of $1,141,920. The Flouresco contracted price would be $.99 per pole per month for an estimated annual routine maintenance cost of $617,760. This represents a gross savings of $524,160 per year. If approved by City Council, the Street Transportation Department would enter into a Job Order Contract (JOC) agreement with Fluoresco Lighting and Signs for an annual amount not to exceed $1,560,000. This will cover the annual routine maintenance cost of $617,760 and any non-routine or emergency repairs that may be needed. OTHER INFORMATION In order to successfully administer this contract, it will be necessary to create one full-time Electrical Inspector II position in the Street Transportation Department. Prior to this

11

contract, streetlight work in the APS service area was completed by APS crews. The new contract language requires all streetlight work to be preauthorized and pre-approved; this will allow the City more control over budget and work flow. Additionally, the contract requires all approved streetlight work to be inspected and approved by the City during construction and prior to acceptance. The Street Transportation Department currently has one staff person assigned to approve and inspect work on the 39,000 streetlights in the SRP service area. Authorizing and inspecting work for 52,000 additional streetlights in the APS service area will require one additional full-time position. The cost of this position, including the purchase of a vehicle, is $99,236. Funding is available in the Street Transportation 2011-12 budget using savings achieved from the maintenance contract with Fluoresco. The total estimated savings after funding the requested position is $424,924. RECOMMENDATION Staff requests that the Finance, Efficiency, and Innovation Subcommittee recommend City Council approval to enter into a Job Order Contract (JOC) agreement with Fluoresco Lighting and Signs to provide streetlight maintenance in the APS service area. Staff also requests approval of one new full-time Electrical Inspector II position to support this contract.

12


TO: Rick Naimark Deputy City Manager

FROM: Carolyn F. Bristo Acting Public Works Director

SUBJECT: ELECTRIC VEHICLE UPDATE

This report provides information to the Finance, Efficiency and Innovation Subcommittee on the City’s involvement with electric vehicles and associated infrastructure. This report is for information only. THE ISSUE As the emphasis on sustainability grows, new technology for the use of electric vehicles continues to emerge. Some examples include the Nissan Leaf, Chevy Volt, and Ford Focus. The Leaf and Focus are all electric, while the Volt is an electric hybrid, but all three vehicles are powered by an electric battery, with significant range restrictions in terms of electric driven mileage. Many retail customers are eligible for a tax credit from the federal government when they purchase an all electric vehicle such as the Nissan Leaf, but the City is not aware of a mechanism at this time to help offset the cost by these credits. The Federal government has recently announced the intent to increase its fleet of electric vehicles and the city will be evaluating their approach and success in that regard. OTHER INFORMATION Electric Transportation Engineering Corporation, dba ECOtality North America is the recipient of a grant from the U.S. Department of Energy, intended to encourage the development of a large publicly available electric vehicles charging infrastructure in several cities in the U.S. including the city of Phoenix. ECOtality will install charging stations and collect data relating to public use of the stations. The City of Phoenix has entered into a License Agreement with ECOtality North America, to facilitate the installation of electric vehicle charging stations on some or all of the following 20 City-owned facilities: • 305 and Adams Street Garages • Agave Library • Burton Barr Central Library • Cesar Chavez Library • Cholla Library/Metro Center • Convention Center North Garage • Convention Center South Garage

• Heritage & Science Central Garage • Maryvale Baseball Park • Mesquite Library/PV Mall • Nina Mason Pulliam Rio Salado

Audubon Center • Phoenix Art Museum • Phoenix Children’s Museum

13

• Convention Center West Garage • East Garage – 601 E. Washington

• Phoenix Municipal Stadium • Sky Harbor Airport-Terminal 3 • Sky Harbor Airport- Terminal 4

The City will have no maintenance obligations associated with the charging stations and the charging equipment will be removed by ECOtality at the end of the term or may be retained by the City, at the City’s sole discretion. At this time the City of Phoenix does not have a contract in place to purchase electric vehicles; however, staff is working to add these to the contract in the future so the flexibility to purchase a vehicle upon availability is addressed. Public Works anticipates having the option for purchasing electric vehicles on contract by the fall. Allocating budgeted funds and finding an appropriate business use for one of these electric vehicles would be the next consideration, as well as securing charging infrastructure. The City has purchased certain electric units in the past, but these are mostly items like golf carts or other multi-use carts with business uses that match the range limitations. The technology is improving and manufacturer's are making electric vehicles or electric hybrids more available in the marketplace for applications the City would consider. For example, a hybrid aerial device, which powers the engine by diesel, but the motor controls for the aerial device (bucket) by battery powered electric motor, is an example. Price premiums on these types of equipment continue to be prohibitive, especially when considering the limited financial resources to purchase fleet equipment over the past few years. CONCLUSION This report is for information only.

14

Finance, Efficiency and Innovation, June 22, 2011, Agenda Item 5* CITY COUNCIL REPORT

TO: David Cavazos City Manager

FROM: Janet Smith Human Resources Director

SUBJECT: ORGANIZATIONAL REVIEW – FY 2011-12

This report provides an update to the Finance, Efficiency and Innovation Subcommittee on a new organizational review process for FY 2011-12. This report is for information only. BACKGROUND During FY 2010-11, an organizational review process was implemented which resulted in the elimination of 85.4 positions and over 40 reclassification actions all of which, according to Budget and Research’s estimation, could result in a savings to the City over two years of $5.9 million. Some positions were also added to improve service in the land development and building permit process; increase volunteer utilization; and facilitate grant seeking and successfully compete for viable grant opportunities. Department restructuring from the FY 2010-11 organizational review resulted in an 18% increase in average span of control, from an average of 5.3 employees for every supervisor to 6.3 employees for every supervisor. In addition, most departments eliminated one or more supervisory or management layers from their organizational structures to improve communication and speed decision-making. THE ISSUE In October 2010, staff committed to the Finance, Efficiency, and Innovation Subcommittee to make organizational review an annual process. As such, the City will be initiating a new organizational review process for FY 2011-12, with anticipated completion by October 2011. Different from last year’s process, this year departments will be asked to address the following items during their review:

• evaluation of department policies, procedures, and programs to ensure they are supportive of the business community;

• encourage employees’ initiative in meeting the City’s organizational goals; • department initiatives that are aligned and support the City’s Strategic Plan; and, • assess services and programs to explore right-sourcing opportunities.

Presentations of the department’s organizational review to the City Manager will begin the week of September 12, 2011. This report is for information only. No Subcommittee action is requested.

15


16

Finance, Efficiency and Innovation, June 22, 2011, Agenda Item 6* CITY COUNCIL REPORT


FROM: Debbie Cotton, Public Transit Director and Mario Paniagua, Budget and Research Director

Innovation and Efficiency Task Force Co-Chairs

SUBJECT: INNOVATION AND EFFICIENCY TASK FORCE - UPDATE

This report updates the Finance, Efficiency, and Innovation Subcommittee on the impact and savings accomplished through the Innovation and Efficiency Task Force.

Impact of the Innovation & Efficiency Task Force

The Innovation and Efficiency Task Force has been a tremendous success for the City of Phoenix. The membership of the Task Force includes citizens who represent the City’s private sector and business community, as well as several key City of Phoenix executives and department heads. All of the members are focused on the best interests of the residents of Phoenix and continuing to improve delivery of important services in the most cost effective manner. The Task Force is action-oriented, maintains a long-term vision, and is persistent in seeking ways to enhance the City’s efficiency and spark innovation to better position the City for the future. Savings

Although the Task Force began only 18 months ago when established by the City Manager in January 2010, substantial ongoing savings to the City have been identified and recommended within a relatively short time frame. These savings build upon the efficiencies and cost cutting measures that all departments implement on a regular basis. The results of such a combined effort already have done much to make the organization better. A recent survey showed that 95% of residents feel they were treated professionally and courteously, all while we have achieved our lowest staffing level in nearly 40 years at 10.4 per 1,000 residents. The table below lists the savings achieved through the Innovation and Efficiency Task Force. These efforts are reflected in General Fund savings of $3.9 million and $6.1 million in Non-General Fund savings, for a total of $10 million in additional savings. Since the Task Force was created in December 2009, a cumulative total of $14.5 million in General Fund savings and $20.5 million in Non-General Fund savings, for a grand total of $35 million, has been identified and recommended.

17

Phase II Innovation & Efficiency Savings Initiative General Fund Non General Funds All Funds

Organizational Review $1,737,000 $2,293,000 $4,030,000

Risk Management In-Sourcing $253,000 $142,000 $395,000

Printing Services Consolidation $197,000 $176,000 $373,000

Marketing Partnership Program $23,840 - $23,840

Water Department Organizational Changes & Savings- May 2011 - $2,200,000 $2,200,000

Competitive Rebid of Health Insurance Costs $1,670,000 $980,000 $2,650,000

Transit Contracts Savings - $352,000 $352,000

Phase II Savings (2011) $3,880,840 $6,143,000 $10,023,840

Phase I Savings (2010) $10,619,000 $14,442,000 $25,061,000

Phases I & II Total Savings $14,499,840 $20,585,000 $35,084,840 Several more initiatives are underway and being evaluated and additional savings are expected. As part of continually identifying savings and discovering further innovations for improvement, the work of the task force continue to be focused on the following areas:

1. Communications

2. Compensation & Benefits 3. Customer Service

4. Fines & Fees 5. Right Sourcing

6. Regulatory Review 7. Technology & Continuous Improvement

Recommendation This report is for informational purposes only.

18



FROM: Jeff Dewitt Finance Director

SUBJECT: CITY PROCUREMENT METHODS

This report provides a high level overview of the City’s procurement methods, their appropriate use, the regulations that govern them, a new process the City is piloting for use on some complex procurements, and other considerations of the procurement process. THE ISSUE The City’s procurement process is based upon the principle of open and fair competition. Open and fair competition saves the City and its taxpayers money, improves vendor performance, curbs fraud, provides accountability for results, and instills confidence in the City and the public about the integrity and cost effectiveness of public procurement. Competition also ensures that all vendors desiring to conduct business with the City are given a fair and reasonable opportunity to do so. The procurement processes are established to reflect the requirements and desired outcome of the City and ensure that all vendors and participants are subject to equivalent terms, conditions and requirements. DISCUSSION Following is a discussion of City of Phoenix procurement regulations, responsibilities, current methods, and a new process that is being piloted for complex procurements. Procurement Regulations City Administrative Regulation (A.R.) 3.10 regulates City of Phoenix procurements and establishes uniform procurement procedures for all commodities and services for the City of Phoenix. Federally funded procurements also may have additional requirements. Additional City, State, and Federal guidelines are required for construction projects and are not discussed in this report. The procurement process outlined in A.R. 3.10 is established by case law, Federal law and regulations, the Arizona State Constitution and Arizona Revised Statutes; as well as local law and regulation including A.R. 3.10 and the Phoenix City Charter and Code. Procurement Responsibilities As outlined in AR 3.10, various departments have responsibility for procurement in the City of Phoenix.

19

Finance Procurement Division (Centralized)

• All procurement of commodities and general services (nonprofessional) costing $1,000 or greater

• Develop requirements contracts for citywide use (requirements contracts are developed for City goods and services that require frequent purchases on a departmental or Citywide basis)

City Departments (Decentralized) • Petty Cash (up to $100) • Any procurement costing $1,000 or less • Professional services (all amounts) • Procure items using requirements contracts developed by Finance Procurement

City Engineer

• Construction, architectural, and landscaping contracts (usually involves plans, designs, and drawings).

Responsibility for professional service procurements is decentralized, while general (nonprofessional) service procurement is centralized. Professional services are technical in nature and meet more specialized needs; work is predominantly intellectual and varied. General services are distinguished as more repetitive, routine or mechanical in nature, following established or standardized procedures as contrasted with customary and regular exercise of discretion or independent judgment. City Council approval is required for all procurements expected to exceed $50,000. This approval is also required for requirements contracts where purchases are expected to exceed $50,000 over the life of the contract. Emergency procurements (discussed below are an exception). Current Procurement Methods In accordance with A.R. 3.10, procurement personnel are required to make competitive purchases whenever possible. Depending on the size and nature of the procurement, various methods are authorized as described below. Procurement of Goods and Services Exceeding $50,000 - IFB Procurements which will exceed an aggregate dollar amount of $50,000 and which are primarily price driven will be solicited through an Invitation for Bid (IFB). The Invitation for Bid is the primary, and preferred, procurement process utilized by Finance Procurement as it is the most objective and quickest method for large dollar purchases. Minimum qualifications can be set forth in the specifications and must be adhered to by the bidders. The Invitation for Bid solicitation results in the contract award recommendation to the “lowest responsive, responsible” bidder. IFBs must be submitted to the City in a “sealed bid” prior to the advertised bid opening. Bids are opened in a public process and bid amounts are read to all bidders. The IFB is useful in both simple and complex procurements when the items or services required can be clearly specified. All terms and requirements are specified in the IFB. Deviations in cost or service level are not allowed. For example, the City can specify in

20

a janitorial service IFB that the floors must be mopped at least once per day and ask for a price for this service. Bidders that agree to mop the floor more often will not get any kind of price adjustment or credit for this extra service. The bid will be awarded to the lowest cost vendor that is both responsive and responsible. Procurement of Goods and Services Exceeding $50,000 - RFP If solicitation through an IFB is either not practicable or not advantageous to the City, a contract may be entered into by competitive sealed proposals using a Request for Proposal (RFP) process. This method is used when the City wishes to: (1) use a contract other than a fixed price type; or (2) conduct interviews with proposers concerning technical aspects of their proposals; or (3) compare the quality and contractual factors of the proposals submitted; or (4) award a contract in which price is not the determining factor or when factors in addition to price are considerations or (5) when the City isn’t clear as to what exactly it wants and wishes for vendors to propose options. The “highest rated Proposer” is the Proposer with the best over-all proposal based on additional factors in addition to price such as technical ability and customer service. The pricing portion is objectively calculated; other portions of the RFP are graded by a team of unbiased evaluators carefully chosen to have technical knowledge in the area. The RFP document sets forth the relative importance of factors, in addition to pricing, that will be considered in awarding the contract. Procurement of Goods and Services Exceeding $50,000 – RFQ The Request for Qualifications (RFQ) method is most often used to develop a Qualified Vendor List (QVL). In most cases, the RFQ process is used when the City wants to have a list of vendors readily available that have certain qualifications, such as professional certifications or experience or when the scope of work is not clearly defined, when a service is frequently used, or when the departments/functions are expected to have a need for the same type of service. Common examples of QVLs are for attorneys, IT professionals, and financial advisors. The RFQ solicitation has a general description of requirements, certifications, or experience. Vendors that respond to the RFQ process are evaluated by a team in a process similar to the RFP process, but rather than picking one qualified vendor, this process results in either a pass/fail list or else a ranked list of potential vendors. Procurement of Goods and Services Exceeding $50,000 – Cooperative Contracts Cooperative Procurement can be an exception to competitive bidding. Local municipalities, County, and State governments all benefit from cooperative procurement by pooling and consolidating their requirements. Cooperative procurement (sometimes known as “piggybacking”) is the combining of the requirements of two or more government entities or non-profits to obtain the advantages of volume purchases, reduction in administrative expenses or other public benefits. A procurement cooperative is set up by a lead government agency for use by government entities. Government entities then participate in cooperative procurement through inter-local agreements. Cooperative procurements reduce administrative costs and also encourage the sharing of information and expertise in specific commodity and service areas, resulting in solicitations that are more attractive to vendors. When the City

21

“piggybacks” on a contract, it is basically relying on the third party contractor’s procurement process and the terms of that procurement, including the final contract. The City cannot change the terms of the contract. Therefore, if the third party contract doesn’t have necessary terms, such as required Federal terms because of the City’s funding source, the City can’t “piggyback.” Procurement of Goods and Services Exceeding $50,000 – Noncompetitive Procurement other than competitively (such as a sole source) must be justified or authorized pursuant to A.R. 3.10. The Deputy Finance Director may authorize exceptions to the A.R 3.10 selection process if special circumstances exist for goods and nonprofessional services. For professional service procurements, Deputy City Manager approval is required. Circumstances that would warrant noncompetitive procurements may include, but are not limited to, sole source procurements, time restrictions, unusual nature of a specific project or service, and emergency procurements. An emergency procurement is defined in City regulations as the procurement of goods and services needed for emergency situations where health, safety or welfare of the public is endangered; the City is exposed to serious cost consequences if immediate corrective or preventive action is not taken; or the department/function identifies an immediate and critical operational need. All emergency purchases are handled through the Procurement Division of Finance. If the procurement is greater than $50,000, the department director is responsible for obtaining Deputy City Manager’s approval prior to the purchase. Within one working day after the emergency procurement, the department must notify the City Manager (or delegate) in writing of the procurement actions taken. Procurement of Goods and Services under $50,000 – Quotes When the goods or service procurement is expected to be under $50,000, buyers request written quotes from all known vendors. The process begins by the buyers requesting quotes from Phoenix businesses. Buyers expand the quote process as necessary to make sure there is adequate competition, leading to the best price or service. The buyers contact at least three vendors for quotes. Unlike the other competitive processes, the bids are not sealed, but can be faxed or submitted through e-mails. When the amount is expected to be between $5,000 and $50,000, the quote process is advertised and quotes are solicited for a period of at least ten days. New Procurement Method The City recently added a new method of procurement, a process developed by the Performance Based Studies Research Group (PBSRG) at Arizona State University known as ASU Best Value Procurement. The City is currently learning this process from ASU and has recently completed one RFP using the process (Materials Recycling Facility Operations). The ASU Best Value Procurement process uses the City’s RFP process, but adds additional documents to evaluate past vendor performance, additional measurement

22

criteria, and additional documentation of risks and actions to mitigate the risks. The process also includes several additional meetings and interviews with vendors throughout the process. While the process is longer and more time consuming, the theory is that more work up front will lead to a more successful contract and less work in the long term. The City is working with ASU to identify a list of potential procurements that will work best for this method. Currently, complex procurements and procurements where vendor ideas or new innovations can improve the results appear to be the best fit. As the city gains more experience with this process, we will be looking for ways to use elements of this process to improve all of our procurement methods. Other Procurement Considerations The Phoenix City Charter provides that all contracts must be drafted under the supervision of the City Attorney’s Office. Contracts and amendments must be filed with the City Clerk’s Office. The City provides certification services for small businesses interested in participating in the Small Business Enterprise (SBE) program as a means of expanding and growing their firms. The SBE Reserve Contract Program includes opportunities for goods and general services providers to participate in city procurement opportunities. Contracts are reserved by the Finance Department when three or more certified SBEs exist that could provide the service. The competition is then restricted to include only certified SBE firms. The City supports environmentally preferred procurement. Environmentally preferred procurement means purchasing products or services that have a reduced effect on human health and the environment when compared to competing products or services that serve the same purpose. Over the years, a number of directives and policies have been developed to encourage staff to purchase goods and services more responsibly and with the least negative environmental impact as practicable. Arizona law currently prohibits a local preference as being unconstitutional. In Big D Construction v. Court of Appeals, the Arizona Supreme Court ruled in 1990 that Arizona’s bid preference for Arizona construction firms was unconstitutional under the Arizona Constitution. Big D involved the construction of the Cardinals’ training facility in the City of Tempe. As a result of this ruling, any local purchasing preferences are not allowed and programs such as community outreach to encourage more local vendors are pursued. The City encourages the City itself, as well as its residents, to shop locally which supports the local economy, increases the City’s tax base, supports local businesses, and helps increase and maintain jobs in Phoenix. The City strives to legally and effectively promote the “Shop Phoenix” philosophy (City Council Policy Session approval Oct 14, 2008). To this end, the Procurement Division of Finance developed a number of initiatives to promote the “Shop Phoenix” philosophy. Procurement staff developed and implemented a community outreach initiative to legally and effectively increase local vendor interest and opportunity to bid on and successfully win City

23

contracts to supply needed goods and services. Pursuant to A.R.S. §§ 1-501 and -502, the City of Phoenix is prohibited from awarding a contract to any natural person who cannot establish that he or she is lawfully present in the United States. In order to establish lawful presence, this person must produce qualifying identification and sign a City-provided affidavit affirming that the identification provided is genuine. This requirement will be imposed at the time of contract award. In the event the prevailing responder is unable to satisfy this requirement, the City will offer the award to the next-highest scoring responder RECOMMENDATION This report is for information only.

24


TO: Debbie Cotton Public Transit Director Mario Paniagua Budget & Research Director

FROM: John Chan Phoenix Convention Center Director

SUBJECT: RIGHT-SOURCING UPDATE

This report provides information to the Finance, Efficiency and Innovation Subcommittee on citywide right-sourcing efforts of the Right-Sourcing Work Group of the Innovation and Efficiency Task Force. THE ISSUE Services Currently Outsourced – The city of Phoenix has a long history of outsourcing a wide range of municipal services to the private sector. In fiscal year 2009-10, city departments contracted approximately $432 million in services to private contractors in more than 350 areas. The complete list is outlined in Attachment A. These services were determined to be outsourced as a result of thorough evaluation processes to ensure that the highest level of services could be provided at the lowest possible cost to the community. It is important to note that these numbers do not include additional contracted services that would be impractical for the city to perform internally such as designing and constructing capital infrastructure projects or facilities. Also, the city has found that in many cases, outsourcing the delivery of a service does not always result in cost savings. All costs must be examined in the evaluation of what programs or services it makes sense to outsource. The Right-Sourcing Work Group and the Budget and Research Department are compiling updated information from the current budget year on all general fund and enterprise funded services that the city contracts out to the private sector and will return to the Subcommittee after the summer recess with a detailed report. Ongoing Initiatives – Currently, several city departments are already in the process of implementing right-sourcing initiatives for city services. These short-term initiatives are summarized in Attachment B. In addition, innovation and efficiency studies for the Police Department, Fire Department, Municipal Court, Public Defender, City Prosecutor’s Office and Water Services Department are in process to analyze operations and develop recommendations. Recommendations from these studies will likely identify additional

25

opportunities to further explore whether right-sourcing might result in cost savings and is appropriate. There is also an opportunity to tie the city’s review of right-sourcing into of another process that will soon be underway as part of the city’s work to optimize our financial resources. The Budget and Research Department is preparing to work with city departments to update the city’s inventory of programs, staffing and costs as the first step in a zero-based budgeting review process. This inventory of services, expected to be completed by this fall, will be very helpful to the city’s efforts to identify functions for possible right-sourcing. Additionally, the city will be conducting its second year of organizational review, a process used by city management to delve into organizational changes that can help streamline our structure, reduce managerial layers, and empower lower level staff. A component of the organizational review will involve a discussion on the appropriateness of right-sourcing within each department. Services Inappropriate for Outsourcing – The city is currently in the process of refining the comprehensive criteria necessary to properly evaluate the appropriateness and potential cost savings of outsourcing a specific function, program, or service. As previously mentioned, continuing to deliver a service internally, or in-sourcing by transitioning from contracted services to internal staff, may be more cost effective. The Aviation and Law Departments have very recent examples of in-sourcing that are expected to save the city millions of dollars. Even beyond cost, in many instances it is necessary and appropriate to apply other factors and criteria that are essential in determining whether certain services should be performed internally. The determining factors for providing services exclusively may include compliance with federal laws, regulations related to federally funded grant programs, federal regulations, state statutes, city charter and code, administrative oversight, accountability, transparency, public health and safety, continuity of services, protection of confidential information, and conflicted interests. Another factor to consider is that most city capital projects have been funded through tax exempt bond financing. IRS rules limit the amount of private activity that can occur on public facilities and careful analysis and consultation with bond counsel is required on a case-by-case basis to ensure that privatization would not negatively impact the tax exempt nature of such funded projects. Competitive Bidding and Managed Competition – Phoenix is committed to providing the highest levels of services to the community at the lowest possible cost. City departments are focused on right-sourcing the greatest amount of services as possible through competitive bidding processes and utilizing managed competition where feasible. The Finance Department Purchasing Division currently bids out approximately 250 goods and general services contracts each year, with most as five year contracts. More than double this amount is completed by city departments for the more complex or professional services procurements. Typical procurement processes take three to six months to complete. More complex procurements can take well over a year to award. Additional time and resources can be added to the process in the event of challenges to the bid or award process.

26

Since 1979, the city of Phoenix has been a leader in the use of managed competition beginning with the competitive bidding of sanitation service contracts. In this process, the operating department competes with the private sector to provide municipal services to ensure quality service at the most competitive price. Over the years, city staff has effectively competed with the private sector due to the efficient management of our solid waste collection operations. The use of managed competition is a lengthy process and requires extensive coordination and resources in preparing bid specifications, reviewing proposals for accuracy, verifying costs and budget impacts and administering contracts. The Right-sourcing Workgroup will return to the Subcommittee later this year with an update on all of the city’s right-sourcing efforts. RECOMMENDATION This report is for information only.

27


28

Attachment A

29


30

Innovation and Efficiency Task Force

Summary of Citywide Outsourcing Levels

Finance, Efficiency and Innovation Subcommittee

June 22, 2011

Attachment A

Department Item - Description $

Dept Sub Total

Expense

Dept Sub Total

Revenue Contracts

Aviation Admin/Environmental/Noise Mitigation $8,763,000

Cust Svc/Marketing/Public Relations $2,929,000

Busing/Ground Trans/Parking $33,794,000

Bldg/Technology/System Maintenance $30,074,000

Safety/Security $5,401,000

Aviation Sub $80,961,000

Budget & Research Budget Preparation Enterprise System Maintenance $79,000

B & R Sub $79,000

City Auditor Financial Audits $450,000

City Auditor Sub $450,000

City Clerk Election Services $217,200

Records Services $59,300

Information Technology Services $629,000

Printing Services $504,000

Mail Services $103,500

City Clerk Sub $1,513,000

Cmty Econ Dev Management Technical Assistance $248,000

Sub Contract/ARRA Adult Wkforce Cnx/In-house Svcs $600,000

Rapid Response - Dislocated Worker $52,000

Youth Workforce Conx Contracts (formula funds) $1,600,000

ARRA Youth $600,000

ARRA Summer Youth $1,500,000

Occupational Training Account $740,000

Feasibility Study $40,000

Enhanced Municipal Service District - non-profit - 40 ppl $2,100,000

Greater Phoenix Economic Council $578,000

Transit Oriented Development Specialist $10,000

Grant Writing $4,500

Translation Services $3,000

Cmty Econ Dev Sub $8,075,500

Development Services Residential Plan Review $30,000

Scanning of Large Plans $20,000

Development Svcs Sub $50,000

Emergency Management IGA - Emergency Response Participation with Maricopa County $80,000

Emergency Mgmt Sub $80,000

Environmental Programs Clean Water Act Section 404 - Consultant Workshop $2,200

404 Permits for PRD $7,000

404 Program Support $3,000

Environmental Programs Sub $12,200

rev 04.30.10 1 of 12




June 22, 2011

Attachment A


Dept Sub Total

Expense

Dept Sub Total

Revenue Contracts

Equal Opportunity None $0

Equal Opportunity Sub $0

Family Advocacy Center Sexual Assault Counseling $128,700

Long-term Case Management $57,283

Domestic Violence Counseling $85,800

Family Advocacy Center Sub $271,783

Finance Insurance brokerage Services $150,000

Liability Claims Adjusting/Appraisal $35,000

Risk Management Consulting $12,000

Acquisition Services $1,200,000

Relocation Services $800,000

Appraisal Services $900,000

Finance Sub $3,097,000

Fire Custodial Services $616,000

Backboard - retrieval/cleaning/disinfection $45,000

Hazardous waste pick-up $30,000

Apparatus door maintenance and repair $50,000

Pest Control $15,000

Appliance repairs $15,000

Fire Dept Health Center Staffing $1,700,000

Medical Director $239,000

Contract for on-time delivery of medical

supplies; svc contract related to specialty

supplies. Emergency Medical Supplies $3,000,000

Plumbing Services $12,000

Printing Service $3,000

X-ray maintenance repairs and service $18,000

Security Services $130,000

Fence Installation, repair and temporary set-up $75,000

Elevator repairs $7,500

Service for fire sprinklers (RCI) $50,000

SCBA air quality testing (trace analysis) $60,000

Fire Sub $6,065,500

Government Relations Consultants and Professional Services $229,976

Government Relations Sub $229,976

rev 04.30.10 2 of 12




June 22, 2011

Attachment A


Dept Sub Total

Expense

Dept Sub Total

Revenue Contracts

Historic Preservation Contract Historians $25,000

Contract Photographer $6,000

Contract Hearing Officer $3,000

Sign production and posting for hearings/historic district street signage $3,000

Historic Preservation Sub $37,000

Housing Accounting Services $3,465

Appraisals $15,000

Auditing $33,450

Contractual Construction $1,010,736

Financial Advisory Services $212,392

HQS Inspections $425

Janitorial Services $2,000

Legal Services $223,774

Property Management $4,584,010

Resident Trainings $387,006

Section 8 Hearings $7,515

Title Search $98,559

Utility Allowance Scheduling $75,000

Housing Sub $6,653,332

Human Resources (Personnel) Employment Verification, e-Verify (TALX) $18,000

Unemployment Verification (TALX) $7,000

Employee Counseling Services (EAP Preferred) $184,000

Employee background Screening (Inquiries, Inc) *all departments $60,000

Hazardous Waste Removal $180,000

Employee Training(safety, language, other specialized training) $130,000

Human Resources Sub $579,000

Human Services

Education Contracts $14,880,268

Community Services Contracts $2,183,866

Senior Services Contracts $613,500

Human Services Sub $17,677,634

rev 04.30.10 3 of 12




June 22, 2011

Attachment A


Dept Sub Total

Expense

Dept Sub Total

Revenue Contracts

Information Technology Tape Destruction $1,500

(All current FY, not Base FY) ADD 1500 addit. Ports to PCI required quarterly scan $4,500

Convert HahtSite to Java $50,000

Support for expansion of Remedy to city depts. in support of audit compliance $160,000

CyberSource Credit Card Process Maintenance $7,014

Orthophotography (every other year) - none this year $0

Microfiche Services $3,600

Smock and mat cleaning $550

Diversified Technologies- Air handler maintenance and T&M repairs $24,000

Contract cable install labor for CIP/op moves/adds/changes on telephony ntwk $1,292,586

PBX and voicemail maint/repair/materials (Blackbox, AVST) $1,445,000

Cisco SmartNet maintenance for data network equipment $936,300

Outside labor for data network moves/adds/changes $50,000

Perform FCC, APCO and Micronet Frequency coord; sppt 800 & 700 plan rebanding

licensing and channel expansions to RWC $15,000

Blue Stake charges for outside support provided by Pegasus Utility Locating Svcs $186,420

DR services provided by IBM $231,648

Motorola contract - prov onsite infrastructure sppt, network monitoring, dispatch svcs,

network security svcs, and depot level repair $1,452,505

Outside GIS tech svcs needed to support Fiber Management Program $96,100

Photo copier rental $12,544

Software licensing, maint & support svc - Oracle, IBM, Remedy, Motorola, Computer

Associates $4,991,970

Offsite tape storage $23,820

Remodeling: radio communication sites $29,500

Maintenance for sun servers, IBM hardware, and enterprise dis backup and storage

equipment $714,019

Radio equipment repair; fire suppression systems inspections and repair; badging access

system maintenance and repair; radio tower inspections and repair $184,240

Pest control at communications towers $6,840

Training and consultants $191,185

Contracts for circuits and lines $307,640

Move furniture and deliver surplus equipment to Finance $5,000

Temp labor to support Telecom, Accounting and Switchboard service areas due to

vacancies $63,600

Printing services $50,000

Outside vendor provided telecom lines needed to support City's central phone system. $2,100,000

Information Technology Sub $14,637,081

Law Civil - Risk Management ($8 to 10 million/year) $9,000,000

Criminal - Diversion Programs - Prostitution - Catholic Charities $299,000

Law Sub $9,299,000

Library Landscape maint at Central Library and three branch libraries to the private sector $62,000

Cataloging (26%) and processing (90%) of library materials $411,174

Selection (75%) of library materials $55,000

Graphic design (varies annually) $3,000

Library Sub $531,174

rev 04.30.10 4 of 12




June 22, 2011

Attachment A


Dept Sub Total

Expense

Dept Sub Total

Revenue Contracts

Municipal Court ACS - Data entry of AZ Traffic Ticket & Complaint $168,000

Data Pros - Off-site data storage for Court's Case Management System $5,000

SunGard - Disaster recovery for Court's Case Management System $61,000

AmCad - Development of new Case Management System $247,000

Kelly IT Services - SQL database analysis for new Case Management System $25,000

Court contracts w/ collection agencies to

perform collections on unpaid orders

more than 45 days delinquent.

Collections - Fees charged by agencies added to balance due when accounts are referred to

agency. City staffing costs to admin program: $292,000/yr. Court's collection program

recoveries over past 3 FY averaged $7,138,000/yr (excl collection fees). Collection fees paid

to agencies have averaged $2.4 million. All collection fees paid to agencies are fully

recovered from defendants. 0 revenue balance - program is cost recovery.

$0

Automated Call Service - Pilot Program $73,000

AVTronics - transcription services for court proceedings $35,000

Intergov Agmt with Superior Court Jury Commissioner for formation and maintenance of juror

pool and summons mailings $100,000

Behavior Data Systems - Substance abuse screening - Required by State law $23,000

Municipal Court Sub $737,000

Neighborhood Services Lot cleanings $159,787

Environmental Reviews (Growing) $743

Preservation Abatement $390,463

Demolition Contracts $86,125

JFL Homes Non Profit Agencies $18,209

Storefront Professional Services $147,085

W&S Non Profit Agencies $212,643

Tenant Assistance $8,510

Fight Back - Professional Svc $20,011

HOME Reconstruct $1,489,199

Graffiti Safety $1,492

Shopping Cart Retrieval $52,588

Rehab Consultants $13,364

Emergency Home Repairs $2,392,926

Rental Rehab $535,055

Hardship $1,102,378

Substantial Housing Reh $373,975

Weatherization $1,102,271

Lead Abatement $349,682

APS Weatherization $160,130

CDBG Agencies $3,656,884

Neighborhood Services Sub $12,273,522

Office of Arts and Culture Education Program $208,000

Office of Arts and Culture Sub $208,000

rev 04.30.10 5 of 12




June 22, 2011

Attachment A


Dept Sub Total

Expense

Dept Sub Total

Revenue Contracts

Parks and Recreation Active Credit Card processing (included fee with Active Recreation Software) $150,000

Oakland Athletics Baseball Club - Field Maintenance at Spring Training Facility $500,000

Warden/Cockerel - Sound Tech Services at Baseball Stadiums $25,000

Somerset Landscape Maintenance $100,000

Tree Care Plus - Landscape irrigation and Repair $25,000

Flouresco Lighting and Sign - Baseball Stadium Lighting $15,000

TEAM Security - Stadium Security and Parking Management $65,000

Hernandez Plumbing & Mechanical Services of AZ - Emergency plumbing/sewer svc $8,000

ISS Facility Services - Post Game Stadium Cleaning $40,000

AZ Boiler Company - Swimming Pool Heater Maintenance $3,535

Otis Elevator - Elevator Maintenance Service $8,000

Instructor contracts for programs in Recreation Centers $48,366

Revenue Contracts - City receives

revenue as a result of fees and/or

commissions generated by the following

contracts. Cricket Pavilion $1,044,814

Heritage Square through master use agreement $39,340

Phoenix Tennis Center $120,000

Sports Field Concessions (3 vendors) $50,000

Enchanted Island in Encanto Park $60,000

Ponderosa Stable in South Mountain $13,000

Aramark - Food and Beverage Concession - Phoenix Muni $24,000

Delaware North - Food and Beverage Concessions at Maryvale baseball $6,000

TOTAL Revenue: P&R $1,357,154

Parks and Recreation Sub $987,901

rev 04.30.10 6 of 12




June 22, 2011

Attachment A


Dept Sub Total

Expense

Dept Sub Total

Revenue Contracts

Phoenix Convention Center Engineering Services $18,401

Legal Services $5,708,203


Advertising Services $266,184

Temporary Employment Services $20,599

Moving Services $760

Contractual Transportation Services $14,812

Contractual Construction $2,292

Environmental Assessments $94,298

Testing $2,400

Safety and Environmental Costs $2,130

Courier and Delivery Service $1,306

Security Services $1,616,040

Event Support Services (AllStaff) $412,417

Production Support Services (Devauter) $138,911

Theater Support Services (Randstad) $16,324

Contract Custodial Services (GCA) $630,485

Pest Control Services $11,610

Odor Control Services $21,403

Window Washing Services $38,046

Carpet Cleaning Services $29,073


Electrical Services $59,086

Painting Services $21,698

General Building Contractual Services $76,505

Office Equipment Repairs $265

Machinery and Equipment Repairs $296,661

Landscape Maintenance $38,755

HVAC Services $108

Elevator, Escalator Maintenance $267,859

Remodeling and Minor Capital Improvements $7,613

Miscellaneous Maintenance and Repairs $28,865

Audio Visual Aid $11,317

Parking Management (Ampco) $2,224,234

Convention Visitors Bureau $8,336,072

Ticket Master Ticketing $15,567

Revenue Contracts - City receives

revenue as a result of fees and/or

commissions generated by the following

contracts. Food and Beverage - Revenue (Aventura) $3,809,509

Audio Visual - Revenue (AV Concepts) $693,499

Security Services - Revenue (CSC) $68,330

Electrical Services - Revenue (Commonwealth) $797,249

ATM (5 Machines) $120,000

TOTAL Revenue: PCCD $5,488,587

Phoenix Convention Center Sub $20,536,296

rev 04.30.10 7 of 12




June 22, 2011

Attachment A


Dept Sub Total

Expense

Dept Sub Total

Revenue Contracts

Planning Signage FY 08/09; varies by year $18,605

Consultants and Professional Services $73,520

Planning Sub $92,125

Police Bio Hazard Clean-up $193,000

Facility Landscaping $36,000

Access Gate Maintenance and repair $212,000

HVAC Services $20,000


Motor Vehicle Repair (seized vehicles) $413,000

Mold Mitigation $10,000

Translation services $606,000

Some forensic science services $119,000

Police Sub $1,649,000

Protocol & Sister Cities Accountant - privately funded $33,000

Manager - Youth Exchange and Teach Abroad Programs - privately funded $15,000

Protocol & Sister Cities Sub $48,000

Public Defender Legal Services - Contract Attorneys $3,571,038

Court Mandated Svcs- Interpreters $65,000

Court Mandated Svcs- Transcription $35,000

Court Mandated Svcs- Consultants $20,000

Public Defender Sub $3,691,038

Public Information Spanish Translation $111,043

Web Design (most Depts NOT PCCD or Aviation) $76,700

Video Production (mostly Aviation exp) $166,931

Public Information Sub $354,674

Public Transit (Light Rail) Bus Service $107,410,786

Dial-A-Ride Service $13,558,970

Light Rail Service $21,385,634

Special Transportation Services $590,000

Bus Stop/Passenger Facility Maintenance $2,856,180

Transit Operations Facilities Maintenance $1,370,000

Fare Services/Fare Equipment Maintenance $2,568,214

302 Building Property Management $1,032,853

Security Service $785,000

Transit Technology Maintenance $853,900

Public Transit (Light Rail) Sub $152,411,537

rev 04.30.10 8 of 12




June 22, 2011

Attachment A


Dept Sub Total

Expense

Dept Sub Total

Revenue Contracts

Public Works/EAS

ADMIN Animal Control Services $1,922,180

Environmental Remediation Services $250,000

Integrated Pest Management Services $32,000

Security Systems and Locksmith Services $5,200,000

DF Elevator Repair and Maintenance $180,000

Miscellaneous Building Operations Including HVAC repairs, Grease Trap Services and

Trash Compactors $48,000

Chiller/Cooler Maintenance and Water Treatment $171,000Plumbing, Door Maintenance and Repairs $51,000

Carpeting and Flooring, Glass/Window Replacements, Concrete/Masonry Repairs,

Interior/Exterior Painting, Carpentry and Fire Extinguisher Inspections $90,500

Consulting Services $100,000

Electrical Services Maintenance of Electrical Systems and Oversight of Small to Large Scale

Projects $75,000

Office Furniture Installations and Moving Services $291,700

Pest Control, Recycling and Window Washing $41,000

Custodial Svcs for Daily Cleaning, Trash Services, Event Set-up & Floor Cleaning $1,455,030

Security Services for Barrister Building $36,000

Parking Management Which Includes Managing Transient, Monthly and Event Parking, as

well as the DF Motor Pool Program $620,200

Most Five-Year Projects ($1.2+/M Annual Average - Less Staff Coordination / Oversight) e.g.

Replacing HVAC Equipment and Systems, Replacing VFD's, Large Flooring Projects, Large

Lighting Projects, Security Systems, Large Plumbing Projects, etc.

$1,200,000

Fire Life Safety Systems $180,000

METRO Contractual Construction, Remodeling and Testing $2,355,530

Security Services $155,596

Custodial Services, Pest Control, Odor Control, Window Washing and Floors $4,228,864

Plumbing Services, Electrical Services, Painting and HVAC Services $1,008,439

Machinery, Equipment Repair and Elevator Maintenance $997,583

Landscape Maintenance and Lot Cleanings $226,000

Gate, Fencing and Miscellaneous Repairs $102,785

Machinery and Equipment Rentals $43,650

Consulting, Professional Services and Engineering Services $144,489

Miscellaneous - Safety, Moving, etc. $31,375

EMD Aerial Inspections and Certifications $45,567

Body Shop Repairs $773,555

Reserve-A-Ride Maintenance and Repair $410,857

Emissions Testing $63,275

Fuel Site and Shop Petroleum Systems Maintenance and Repair $350,896

Glass Repair and Replacement $142,864

Repair Facility General Maintenance and Repair $49,188

Radio Repairs $4,855

SR85 Landfill Equipment Maintenance and Repair $946,968

Vehicle Make Ready $1,028,426

Tire Work $149,420

Towing $1,240,180

General Vehicle and Equipment Repair and Maintenance $3,374,506

rev 04.30.10 9 of 12




June 22, 2011

Attachment A


Dept Sub Total

Expense

Dept Sub Total

Revenue Contracts

SWD/SWCE Transfer Hauling Services $9,500,000

Armored Car Service $13,000

CFC Removal and Recovery $16,300

Environmental Services $3,600

Green waste composting service $398,000

Groundwater analytical testing $81,780

Inmate labor - AZ Department of Corrections $5,800

Inmate Labor - Maricopa County $7,200

Labor Services - temporary labor for litter control $135,700

Private landscape company $37,200

Production well equipment and service pump repair $262,170

Weigh station scale repair $43,400

Security services $245,500

Drinking water treatment system O&M $44,000

Materials recovery facilities - operation and marketing of materials $4,873,500

Recycling advertising $127,000

Solid waste customer service satisfaction surveys $42,000

Maintenance inspection on MRF equipment $22,000

Spanish translation $315

Outsourced printing $420

Managed bid competition Bid Areas - 10 bid areas; approx value over $2M/yr per bid area.

Managed competition bid process one area every 2 years. $2,000,000

Solid waste disposal Sam Lewis Prison, Town of Buckeye, IGA $200,000

SWFS Glendale reciprocal $0

Amerigas for household hazardous waste $70,000

Thermo Fluids for household hazardous waste $52,000

Household hazardous waste disposal contract with ERI $1,275,000

Certiweld $40,000

Velt's truck wash $554,000

Kelly temporary agency service $185,000

NES - Dead animal pickup $140,000

Citywide Pest Control - bee removal service $5,000

Public Works Sub $50,198,363

Retirement Retirement Plan Administrative Expenses $7,734,000

Computer System Software and Support - Private Sector $149,000

Computer System Software and Support - Public Sector City of Phoenix $36,400

Investment Consultant - Private Sector $175,000

Legal Services - Private Sector $117,600

Custodian Bank - Private Sector $113,000

Medical Examinations - Private Sector $77,700

Auditing Services - Private Sector $25,000

Auditing Services - Public Sector City of Phoenix $49,200

Actuary - Private Sector $21,200

Destruction of Confidential Documents - Private Sector $1,300

Data Comparisons - Private Sector $1,200

Transcription Services - Private Sector $1,000

Delivery Services - Private Sector $700

Retirement Sub $8,502,300

Street Transportation Streetlight Maintenance/Repair $2,277,500

rev 04.30.10 10 of 12




June 22, 2011

Attachment A

Barricades $459,600

Temporary Agencies $362,800

Computer Services $300,600

Water Pump Repair $96,500

General Repairs $57,500

Large Equipment Training $45,400

Safety Equipment $23,800

Environmental Assessments $19,500

Legal Services - Private Sector $9,800

Traffic Counts $2,700

Street Transportation Sub $3,655,700

Water Laboratory Instrument Maintenance and Repair $255,000

Laboratory Outside Analytical Services $450,000

Laboratory Third Party Auditing Services $51,000

CRAO Database Development/Management $115,000

CRAO Regulatory Planning $100,000

Testing Services $722,000

Development Planning Consulting Services $500,000

Water Conservation Project Wet $300,000

Water Conservation Retrofit Program $75,000

Water Conservation AZMET $15,000

Water Conservation Material Storage and Transportation $30,000

Operation of Lake Pleasant Treatment Plan $6,000,000

Water Production Solid Waste Disposal $24,000

Elevator Repair $11,000

Electrical Services $227,000


Centrifuge Rotating Assembly Repair $1,192,000

Gate and Fencing Repair $78,000

HVAC Services $5,000

Environmental Waste Removal $352,000

Sludge Hauling $4,450,000

Security Guards for Treatment Plants $1,500,000

Security System Maintenance $40,000

Repair and Replacement of Large Water Meter, 3' and Above $223,000

Sewer Odor Control $4,000,000

Sewer Pest and Vermin Control $324,000

Large Diameter Sewer Cleaning Services $700,000

Landscape Services $1,000,000

Contract Training Services for Plant Operators and Electricians $1,000,000

Barricade and Shortening Services $575,000

Diving Contract for Maintenance and Repairs at Water and Wastewater Plants $450,000

Telephone System Maintenance $416,000

Training Services $865,000

Water Sub $26,130,000

Youth & Education All from Grants Foundation CLIP Grant

Community College $79,300

ASU $17,000

Phoenix Union High School District $14,000

Research and Evaluation $55,300

Youth & Education Sub $165,600

rev 04.30.10 11 of 12




June 22, 2011

Attachment A

TOTAL $431,940,236 $6,845,741

rev 04.30.10 12 of 12

Attachment B

June 22, 2011 Attachment B

Innovation and Efficiency Task Force Right-Sourcing Work Group Summary of Short-Term Initiatives Currently in Process Department / Description Efficiencies Status / Timeframe1. Information Technology – Right-

source citywide E-mail and calendar system via Cloud Based Computing through an independent contractor to provide managed services.

Eliminates long-term capital expenditure requirements

Ensures future technology upgrades

Consolidates multiple systems

RFP closed. Department currently evaluating four proposals.

2. Water Services – Right-size operations through the elimination of 21 vacant positions across the department.

More efficient management of staff resources

Will generate approximately $1.2 million in savings

Cuts effective July 1, 2011

3. Information Technology – Right-source existing city telephone and network systems with an independent contractor to provide managed services.

Ensures future technology upgrades

Eliminates long-term capital expenditure requirements

Provides enhanced level of service at equal or lower cost

In process - RFP issued, proposal submittals closed June 2, 2011

4. Parks – Outsource landscaping of branch libraries, police precincts and fire stations to qualified vendors.

More efficient management of Parks Department staff resources.

Lower operating costs

RFP to be issued July 1, 2011; complete process by end of August, 2011

5. Public Works – Outsource tire service repair for fleet service and road service calls currently being performed in-house to qualified vendors.

Reduced tire repair service equipment costs

Maintains current levels of service


Implementation to begin in September, 2011

6. Convention Center – Outsource event communications (client internet & telecommunications) functions currently being performed in-house to an independent contractor.


Labor cost savings Enhanced revenue potential Eliminates long-term capital infrastructure and equipment replacement costs

Department preparing to issue RFP in September, 2011

7. Public Works – Competitively bid solid waste contained collection services through managed competition process.

Established process in place

Ensures high level of customer service

Ensures service will be provided at the lowest cost

Department preparing to begin bid process for Service Area F In November, 2011



FROM: Rick Naimark Deputy City Manager

SUBJECT: PENSION REFORM TASK FORCE

This report provides the Finance, Efficiency and Innovation Subcommittee with an update on the work of the Pension Reform Task Force since the May 25, 2011 FEI Subcommittee meeting. THE ISSUE On June 1, 2011 City Council authorized the City Manager to enter into a contract with The Segal Company to provide consulting and actuarial analysis for the Pension Reform Task Force appointed by the Mayor and City Council to recommend changes to the City of Phoenix Employees Retirement Plan (COPERS). The contract with Segal includes an evaluation of the financial impact of possible changes to plan provisions and alternative strategies for COPERS, and an assessment of the financial impact to the City of changes by the State Legislature to the elected officials and public safety plans. The Pension Reform Task Force held two meetings in June. On June 1, the Task Force received an update on the actuarial consultant Request For Qualifications (RFQ) and selection process; reviewed legislative changes to the Public Safety Personnel Retirement System (PSPRS) and Elected Officials Retirement Plan (EORP); and received information on Paid Time Off (PTO) programs and the cost of short-term disability programs. Segal presented their project approach and began facilitating a goal-setting process with the Task Force. In addition, the Task Force discussed a pension systems survey to include cities and private pension plans, and directed the consultant to prepare a recommendation of plans to be surveyed. At the June 8, 2011 Pension Reform Task Force meeting, staff and the consultant team noted that specific information on retirement plans offered to private sector employees is not publicly available. The financial information that is available is shown under FASB accounting rules and not on an apples-to-apples basis with public sector plan information. For this reason, staff and the consultant team recommended looking at the corporate sector as a whole using publicly available survey data on private sector retirement plans. The Task Force reviewed the top 15 cities in the US by population size, as well as several Fortune 500 companies headquartered in Phoenix and top employers in Phoenix. Following discussion, the Task Force directed the consultant team to prepare a pension systems survey including the following cities:

31

Los Angeles Houston Philadelphia Phoenix San Antonio San Diego Tucson San Jose Jacksonville Arizona State Retirement System In addition, the Task Force directed the Consultant look at the corporate sector as a whole using publicly available survey data on private sector retirement plans. The next Pension Reform Task Force meeting is scheduled for June 21, 2011. OTHER INFORMATION At the June 1 City Council meeting, the Task Force was asked to determine potential changes that could be referred to the November 2011 ballot. RECOMMENDATION This report is for information only. Funds are available in the 2010-11 and 2011-12 Human Resources Department budget.

32



FROM: Jeff Dewitt Finance Director

SUBJECT: TRANSPARENCY IN FINANCIAL REPORTING INFORMATION

This report provides information on the Finance Department’s compliance with State of Arizona transparency requirements for financial information and highlights initiatives to move beyond the requirements to increase the transparency and understanding of the City's financial performance. THE ISSUE The City of Phoenix Finance Department has a good reputation for strong internal controls over financial transactions and reporting and annually receives a Certificate of Achievement for Excellence in Financial Reporting from GFOA (Government Finance Officers Association). A bill recently passed the legislature (HB 2572) mandating all governments provide financial statement information on the internet by January 1, 2013. The City of Phoenix already complies with this law and has Comprehensive Annual Financial Statements for the last five years available to the public at www.phoenix.gov/citygovernment/financial. This web link also provided the summary budget, detailed budget and five year capital improvement programs for the City. The City's official website also received a 2011 Sunny Award from the Sunshine Review, a non-profit organization dedicated to state and local government transparency. This is the second year in a row that Phoenix has received the award. Only 112 governmental entities nationwide of the 50 states and 6,000 local governments reviewed as part of this process received this award. OTHER INFORMATION Financial transactions are primarily processed through the Controller’s Office. The Controller’s Office is responsible for assuring internal controls are in place by monitoring accounts payable, accounts receivable and payroll. Financial data is then reconciled and reported by the Financial Accounting and Reporting Division through many financial reports including the Comprehensive Annual Financial Report (CAFR), Single Audit Report for grants, and specific financial statements such as joint ventures with other cities. The recent reorganization of the Finance Department centers around leveraging technology through an ERP (Enterprise Resource Planning) Division that makes use of the various financial systems in the City to better automate reporting and processes to become more efficient in effectively processing and communicating financial information.

33

Although the City of Phoenix already complies with State transparency laws through the web accessible financial reports, the City is planning to go over and above the requirements. Following are initiatives that the Finance Department is working to implement in early 2012.

• Preparation of an easy to follow annual financial report to the Citizens, commonly called a “Popular Annual Financial Report”, or PAFR. This would supplement the Comprehensive Annual Financial Report (CAFR)

• Posting more frequently updated financial reports on the City’s website, such as the Monthly Financial Report that compares actual to budget and to prior year expenditures on a monthly basis

• Creating specific financial reports for the investors who hold or are considering purchasing City issued municipal bonds such as financial reports for the Phoenix Sky Harbor Airport and Water and Wastewater Systems

• Reviewing best practices, other governmental websites, and professional financial networks for ideas of ways to disseminate financial information

• Working with the Innovation and Efficiency Task Force Communications Subcommittee to review and provide input on the new information and to improve web access of financial information.

Once these initiatives are evaluated and implemented, the Finance Department will work with the Innovation and Efficiency Task Force and solicit input from our investors and the public to continue to improve the availability and transparency of financial information. RECOMMENDATION This report is for information only.

34