| | | | | | | | Agenda Item - 5.b.
City of Garden Grove
INTER-DEPARTMENT MEMORANDUM
| To: | Scott C. Stiles
| From: | Patricia Song
| | Dept.: | City Manager
| Dept.: | Finance
| | Subject: | Approve Second Amendment and Authorization of an increase to the purchase order with Fidelity National Information Services, Inc. and extension of the contract for electronic payment services. (Action Item) | Date: | 11/10/2020 |
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| | | | | | | | OBJECTIVE
For City Council to approve the second contract amendment and authorize an increase to the current purchase order for Fidelity National Information Services, Inc. for electronic payment services (FIS) and to approve an extension of the agreement for three years. |
| | | | | | | | BACKGROUND
FIS, formerly known as Metavante Corporation, has served the City since 2008 and has intimate knowledge of the City’s process and transaction history. FIS provides an electronic payment process for payment options such as, web-based payments, payments by phone, electronic fund transfers, and debit or credit card payment. These payment options have been providing convenience to City residents and other customers. |
| | | | | | | | DISCUSSION
In May 2008, the City Council approved an agreement with FIS for electronic payment services. The service fee is based on type and volume of transactions processed. The contract renews automatically on an annual basis, until the agreement is terminated by either party at least (90) days prior to the expiration date. Over the years, the Finance Department has budgeted for service cost increases each year due to increased transaction volumes.
Based on last year's expenditure of $315,000, staff is requesting to increase the amount of our current purchase order with FIS to $350,000 per year to avoid interruption to our day-to-day operations.
The current transaction fee is 2.5398% of the transaction amount for utility transactions and 2.9993% for all other transactions. FIS has agreed to lower the transaction fee to 2.35% for all transactions in return for extending the contract for an additional three years. |
| | | | | | | | FINANCIAL IMPACT
No additional appropriation will be necessary as the cost for processing credit card payments has been included in the corresponding departments' operating budget. The request is to adjust the purchase order amount to reasonably reflect the actual cost of processing electronic card payments.
The contract's annual amount of $350,000 will continue to be included in the operating budget. At the fund level, sources of funding are as follows:
General Fund - $100,000
Water Enterprise Fund - $210,000
Sewer Enterprise Fund - $40,000
Furthermore, by extending the current agreement for an additional three years, the City will realize cost savings by locking in a lower transaction fee of 2.35%. Estimated savings is $35,000/year depending on the number and type of credit card transactions.
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| | | | | | | | RECOMMENDATION
It is recommended that the City Council:
- Authorize an increase to the current purchase order with FIS to $350,000 per year for electronic and card payment processing services; and
- Authorize the City Manager to execute the second amendment to the agreement with FIS extending the contract term for three additional years, and to approve minor modifications deemed necessary.
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| ATTACHMENTS: | | Description | Upload Date | Type | File Name | | Second Amendment | 11/4/2020 | Agreement | Amendment_No._2_(City_of_Garden_Grove)_Extension_10-30-20.doc | | FIS Contract | 9/18/2020 | Backup Material | FIS_CONTRACT.pdf |
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