March 2, 2004
SUBJECT: Reconsideration of Staff Request to Amend Existing Contract to Provide Uniforms for Certain City Employees (Continued from February 24, 2004, Meeting)
REPORT IN BRIEF
This report requests Council's reconsideration of a staff request to amend an existing contract with Aramark Uniform Services, Inc., of San Jose to provide and launder uniforms for City employees. The requested contract amendment would authorize additional expenditures up to $25,000 through March 31, 2004, the end of the current contract term, and extend the contract for one additional year at a cost of $75,000.
This request was first presented to Council at its February 24, 2004, meeting. At that time, Council requested that staff submit a revised report with additional information at its March 2, 2004, meeting. This report is provided in response to that request.
BACKGROUND
The City has traditionally contracted with a commercial uniform provider to provide and launder uniforms for field crews, mechanics, water laboratory technicians, and other employees who typically work with materials, such as chemicals, street slurry seal, etc., which require an industrial cleaning process. These employees are located primarily within the Department of Public Works.
Ordinarily, uniform providers provide eleven sets of clothing to each employee on a rental basis. The employee has five sets, plus a spare, to wear while five sets are being laundered. Clean uniforms are delivered and soiled uniforms are collected for laundering on a weekly basis. The City is charged a weekly fee per article of clothing per employee.
The City's contract with Aramark Uniform Services began as the result of a competitive bid in 1997 and has been renewed annually since then. The City's prior contract was in effect for many years. These types of contracts are typically long in duration due to the tremendous amount of time it takes to convert from one uniform provider to another. Purchasing staff anticipates that the uniform contract will be considered for rebid in 2007.
DISCUSSION
Staff has investigated a variety of methods for providing uniforms for City employees. In some cases, purchasing uniforms for home laundry was found to be the most cost-effective method; and that approach has been implemented, where appropriate. Certain employees work with industrial materials that should not be washed in a home laundry facility, and uniform rental has been determined to be the most cost-effective process in these cases.
The existing one-year contract for uniform rental and laundering, which is in the form of a Blanket Purchase Order, is in an amount not to exceed $50,000 and will expire on March 31, 2004. The contract was established at $50,000 because Purchasing staff was investigating the possibility of reducing the total number of uniform rentals as a cost reduction measure. Following discussions between Human Resources, Purchasing, and Public Works program managers, this did not appear to be a viable alternative. The issue raised was that the provision of uniforms is a form of compensation which increases an employee's income for retirement benefits calculation. The proposal to eliminate this service would cause "PERS-able" income to be reduced and, therefore, may not be acceptable to the labor associations. Staff will be discussing this issue with the Sunnyvale Employees Association during the upcoming negotiation.
To date, total payments are near the contract not-to-exceed amount; and January and February's invoices have been held, pending completion of this report. Although staff makes every effort to pay City obligations within thirty days of invoice receipt, staff reductions in Purchasing and Accounts Payable have resulted in a significant backlog and processing delays.
Staff requests that Council increase authorized expenditures under the existing contract in an amount not to exceed $25,000 to reflect charges for January through March 2004. This will make a total amount of $75,000 for the current contract through March 2004 and will allow payment of the January and February invoices as well as invoices which will be received for uniform rental and laundering services through March 31, 2004.
Staff also requests authorization to extend the existing contract through March 31, 2005, at an estimated cost of $75,000 for the additional year.
FISCAL IMPACT
Total cost to the City for additional funding for the existing contract which will end March 31, 2004, and a one-year contract extension will not exceed $100,000 for a total contract amount not to exceed $150,000 ($50,000 original contract amount plus additional expenditures of $25,000 through March 31, 2004, plus $75,000 for a one-year contract extension). Funds have been budgeted in various activities throughout the City.
RECOMMENDATION
It is recommended that Council:
1. Authorize additional expenditures of $25,000 under the existing contract with Aramark Uniform Services, Inc., through March 31, 2004; and
2. Extend the existing contract through March 31, 2005, and authorize expenditures in an amount not to exceed $75,000 for the one-year extension; and
3. Authorize the Purchasing Officer to issue a Change Order to the existing contract reflecting the actions in 1 and 2 above.
Prepared by:
Elaine Wesely
Purchasing Officer
Reviewed by:
Mary Bradley
Director, Finance
Reviewed by:
Marvin Rose
Director, Public Works
Approved by:
Amy Chan
Acting City Manager