June 14, 2005

SUBJECT: Authorization for a Two-Year Extension of an Existing Contract for Utility Billing Services (F0403-44)

REPORT IN BRIEF

Approval is requested for a two-year extension of an existing contract with InfoSend, Inc., of Fullerton to provide utility billing services, including designing, printing, inserting and mailing the City’s utility bills, for the Department of Finance.

BACKGROUND

The City of Sunnyvale Utility Billing, Collection, and Revenue Management Program in the Department of Finance is responsible for the billing and collection of revenue for the City’s three public utilities (solid waste management, water supply and distribution, and wastewater management).  A significant portion of the program’s operation is the preparation, printing, and mailing of utility bills to the City’s residential and commercial utility customers.  Currently, the City processes and mails approximately 197,000 bills a year.

For many years, the City performed the bill printing and mailing functions in- house.  Over time, the City’s bill format and equipment used to print and process bills became outdated and was in need of upgrading.  Additionally, City utility customer service staff were regularly receiving complaints about the bill format.

Seeing an opportunity to improve service to its customers through the redesign of the utility bill, the City entered into the existing contract with Infosend, Inc., after an extensive competitive proposal process and under the City Manager’s contract award authority of $50,000.  This contract will expire on June 30, 2005.   

In January 2005, the contract was amended to include a reduced processing fee for bills produced by InfoSend and presented to the City in electronic format.  Electronic bills are occasionally requested when it is necessary to send additional information out with a bill.  For example, City staff might print a hardcopy of an electronic bill and attach a letter before sending it to a customer. 

DISCUSSION

The Finance Department has been pleased with the services provided by InfoSend.  Upon contract initiation in 2004, the City began a collaborative process with Infosend to redesign the City’s utility bill.  Using an electronic file produced by the City’s utility billing system, Infosend patiently worked with staff to produce a new, improved utility bill format. 

The new format addressed many problems associated with the previous format.  New features include:

·   Larger and higher resolution type for easier reading.

·   A one-year graph of water consumption for comparison purposes.

·   A clear and concise account summary.

·   Account detail that is easy to understand.

·   Revised and simplified language for the back of the bill.

·   The ability to print special messages for specific customer types.

·   The ability to display multiple water meters on a single bill.

The new format was placed into production with a bill insert explaining how to read the new bill on September 15, 2004.

Infosend’s advanced bill printing and processing equipment allows for more efficient management of bills, a lower postage rate, the ability to pull and group bills, targeted inserting of utility bill inserts, and color highlighting of important information.  To date, Infosend has provided excellent customer service and reliable delivery of utility bills and has proven to be very responsive to the City’s changing needs.  For these reasons, staff recommends a two-year extension of the existing contract through June 30, 2007.

Currently, Infosend charges a processing fee of $0.155 per hardcopy bill and has proposed a $.01 per piece increase in this processing charge with no change in the fee for electronic bills or in inserting charges over the next two years.  This equates to a 6% processing fee increase, effective July 1, 2005, and no other fee increases through the end of the contract term.  Although expenditures through June 30, 2005, are not expected to exceed $30,000 (expenditures do not include postage which is paid separately), this number does not represent a full year’s processing costs since several months were spent designing new utility billing forms and developing an efficient process for issuing and distributing the City’s utility bills through a third party contractor.  Now that the program is fully operational, it is anticipated that expenditures will be approximately $41,000 per year but could be higher, depending on the number of utility bills processed. 

FISCAL IMPACT

Total cost to the City for the three-year contract will not exceed $130,000. Prior to initiation of the contract, the City performed the work in-house.  The work was budgeted and paid for through a combination of internal service and direct charges from the Information Technology Department and through the Utility Billing operating program budget. 

Total projected annual expenses, excluding postage, are:

Funds are available in Program 720 Utility Billing, Collection, and Revenue Management.  Postage is fully budgeted in the program, and the program’s internal service charge for Mail Services Rental has been reduced by $47,918 from FY 2004/2005 to 2005/2006 to reflect the reduction in services provided to Program 720 by the Information Technology Department.

RECOMMENDATION

It is recommended that Council authorize a two-year extension of an existing contract with InfoSend, Inc., in substantially the same form as the attached Service Agreement Amendment and in an amount not to exceed $130,000, for utility billing services for the Department of Finance.

Prepared by:

Elaine Wesely

Purchasing Officer

Reviewed by:

Mary J. Bradley

Director, Finance

Approved by:

Amy Chan

City Manager

ATTACHMENTS

1.  Draft Second Amendment to Service Agreement (.pdf)

2.   Amendment to Service Agreement (.pdf)
3.    Service Agreement (.pdf)