The City’s current financial software system was developed on the PICK database with overlapping BASIC programming language, and maintained by in-house staff since the 1970’s. It is a legacy financial system that has become operationally unwieldy, lacks industry best practices, internal controls, and modern security features. Hence, there is a need to acquire a new and integrated ERP solution that will leverage modern technology to enhance operational efficiency, facilitate transparency, enhance internal controls, and integrate administrative business functions.

Over the past five years, the City’s external financial auditors have commented on the weaknesses associated with the City's financial system. During the City Council’s workshop discussion conducted in March 2016, City Council and management identified the implementation of an ERP solution as a need and priority to ensure financial data integrity and reliability. The City Council approved an allocation of $200,000 in the FY 2016-17 budget to begin this ERP solution initiative.

Given the scope and scale of this project, it was deemed mission critical to retain the services of an ERP consultant that will assist city staff with software vendor selection. The consultant, as appropriate, will partake in the eventual system conversion and software implementation.  Staff identified three project phases during which consulting services would be needed.

• Phase One (Tasks 01-10 in the proposal) – ERP Software Vendor and Module Selection

o   ERP consultant to assess City software needs, prepare a request for proposal for software vendor selection, and assist the City with vendor contract negotiations.

• Phase Two (Task 11 in the proposal) - Implementation

o   ERP consultant to assist City with implementing the software modules purchased.

• Phase Three (Task 12 in the proposal) - Look Back

o   ERP consultant to review the goals of the ERP system conversion and assess whether the goals have been met and identify areas of improvement for future module selection and implementation. 

An executive steering committee and a project management team were formed to oversee and manage this project. A Source Selection Committee (SSC), comprised of the Accounting, Information Technology, and Human Resources managers, led the development of a request for proposal (RFP) to source the services of a qualified ERP consulting firm.

RFP No. S-1198 was advertised on July 22, 2016, and a non-mandatory pre-proposal meeting was held on August 4, 2016.  Seven proposals were received by the August 22, 2016, deadline. Two of the seven consulting firms were disqualified for submitting incomplete proposals.

The SSC scored the remaining proposals based on the project plan proposed, qualifications of the team, and price. Proposals that fell below the competitive score of 1,823 were eliminated from further consideration in the RFP process. The SSC also conducted interviews with the four (4) remaining qualified consulting firms and obtained and reviewed references. The top two consulting firms were then asked to provide best and final offers. The final scores and pricing are listed below.

Schafer Consulting was deemed the most qualified and best fit for the project. Their overall approach aligns with City requirements to identify system needs, implement best practices, and navigate the change management challenges of a project of this magnitude. Schafer Consulting’s average hourly rate was the more competitive of the top two firms. Further, the scope of work and hours proposed by Schafer Consulting for implementation indicated that the firm is more in tune with the challenges the City will likely encounter during the implementation phase. 

Total cost of ERP consulting services is estimated to be $394,260. The cost for phase one will be $108,206. Phase one will begin in Fiscal Year 2016-17, and is expected to be completed in Fiscal Year 2017-18. The total cost for phases two and three, which are at the City’s option, are $246,000 for phase two and $40,000 for phase three. The cost for phases two and three will be spread over the number of years required to implement the software modules. This process is estimated to span between four to six years.

The funds for phase one will be paid with approved and available funds in the Fiscal Year 2016-17 budget, and the requisite funds for phases two and three will be appropriated annually in future fiscal years as part of the regular budget cycle.  Any changes in the future will result in reductions or increases in the annual fees based on City needs for implementation and look back services at the standard personnel fees outlined in the proposal.

It is recommended that City Council:

• Award a contract to the highest scoring proposer, Schafer Consulting, Inc., in the amount of $394,260, for all three phases for ERP Consulting and other services as outlined in the proposal; and
  
  
• Authorize the City Manager or his designee to execute the contract and, as needed, approve two additional option years for ERP implementation and other services as outlined in the proposal.

By:  Ellis Chang, Accounting Manager