Report Prepared by: John Cardoza, Software Analyst, Information Technology
Title
SUBJECT: Approval to Waive the Competitive Bidding Requirement and Approval of a First Amendment with THOR, Inc. for AS/400 Consulting Services and Authorization to Increase the not to Exceed Spending Authority From $534,000 to $839,370
REPORT IN BRIEF
Considers waiving the competitive bidding requirement and approve the first amendment with THOR, Inc. for AS/400 consulting services and authorization to increase the not to exceed spending authority from $534,000 to $839,000.
RECOMMENDATION
City Council - Adopt a motion:
A. Waiving the competitive bidding requirements for professional services due to sole sourcing as stated in Section 3.04.210 of the Merced Municipal Code; and,
B. Approving the first Amendment to the agreement with THOR, Inc.; and,
C. Authorizing the not to exceed spending authority to THOR, Inc. from $534,000 to $839,000; and,
D. Authorizing the City Manager or Deputy City Manager to execute the necessary documents.
Body
ALTERNATIVES
1. Authorize agreement as recommended: or,
2. Refer to staff for further evaluation: or,
3. Deny.
AUTHORITY
Charter of the City of Merced, Section 200.
CITY COUNCIL PRIORITIES
As provided for in the 2022-23 Adopted Budget
DISCUSSION
The City currently utilizes the vendor THOR Inc. for the support and maintenance of the existing Central Square ERP system. The current contract with THOR Inc. is set to expire on June 30th, 2023. The proposed 1st Amendment with THOR Inc. for three (3) years between July 1st, 2023 and July 30th, 2026 is for the support, maintenance, and assistance with the data migration of the Central Square ERP system.
The length of the contract term is for three (3) years but the terms for the billing are on an as needed-/ time and material basis for services. The City will only use the services as needed and will have no financial commitment beyond the hourly rate. This contract guarantee’s the hourly rate over the term while the transition to the new Tyler Technology ERP system is under way. THOR’s hourly rate has a slight step increase per year beginning July 2024 through the remainder of the contract (July 2026).
|
Fiscal Year |
Estimated hours a week |
Hourly bill rate |
Estimated hours per year |
|
July 2023-July 2024 |
20 hours a week |
$121/hour |
1,080 hours a year |
|
July 2024-July 2025 |
15 hours a week |
$127/hour |
810 hours a year |
|
July 2025-July 2026 |
10 hours a week |
$133/hour |
540 hours a year |
The Information Technology Department anticipates the number of hours required for support and maintenance of the Central Square ERP system will decrease as the City transitions to the new Tyler ERP system. Conversely, hours required to assist with the data migration from the old ERP system to the new ERP system will increase during the same period. The total number of hours per year is expected to decrease over the next three (3) years.
At the end of the three (3) year contract the Information Technology Department will re-evaluate the remaining business requirements on the old ERP system and come back to Council with a new contract for application support requirements since the City will not be migrating all data.
We are waiving the competitive bidding sole source procurement with THOR because of our unique City programming needs. As a former employee of Central Square, the programmer employed through THOR contains extensive knowledge of the City’s unique custom modules within the legacy ERP software. Therefore, we must waive the competitive bidding requirements and purchase from THOR.
IMPACT ON CITY RESOURCES
It is anticipated that future year funding will be available in the Information Technology budget for Fiscal Year 23/24, 24/25, and 25/26 to cover the cost of the professional services contract with THOR Inc. No new funding request would be required for this contract.
FY23/24 672-0404-512-1700 $130,680
FY24/25 672-0404-512-1700 $102,870
FY25/26 672-0404-512-1700 $ 71,820
ATTACHMENTS
1. Thor Master Service Agreement
2. Thor Services Agreement Consultant Attachment