Description: AGENDAHED.JPG

 

Item No:                    5C.

 

Meeting Date:           January 14, 2013

 

From:                          Mike Thornton, Purchasing Manager

 

Subject:                      Resolution authorizing the Mayor to execute a Linking Authorization Contract with FIA  Card Services, N.A. (Bank of America) allowing the City to participate in the Hillsborough County Procurement Card Program.

 

 


Staff Recommendation:

Staff recommends approval of resolution authorizing execution of the Linking Authorization Contract with FIA Card Services, N.A. (Bank of America).

 

Analysis:

This staff report presents information related to two Resolutions.  The first Resolution requests the Commission to approve a resolution authorizing the Mayor to execute a Linking Authorization Contract with FIA Card Services, N.A. (Bank of America).  An additional part of this item is the implementation of an e-payables program that is discussed in greater detail.  The second resolution presents vendor invoice payment terms staff requests Commission to adopt.  These payment terms will become a term of every purchase for goods or services and will be applied by the Finance Department when processing vendor invoices for payment.

 

Procurement Card Program Linking Agreement

The City of Leesburg uses a procurement card (P-Card) program with Bank of America as the card issuer.  The P-Card program allows city employees to make small dollar purchases of goods and services necessary for the operation of their department(s).  The City’s card program is administered by the Purchasing Division.  A P-Card program allows the City to make small dollar purchases in a cost effective manner.  The alternative to using a P-Card would be to issue purchase orders and make payment by paper check.  The estimated cost of issuing a PO and paper check is $100.00.

 

There are many benefits to using P-Cards for purchases.  Not only does it provide convenience for departments and a lower cost of procurement and payment, but the P-Card programs also offer a rebate percentage to the organization.  The City of Leesburg receives a rebate each year based on the dollars spent through the P-Card program and the rebate percent level.  The level is determined by the Contract and the spend level.

 

The City first implemented a P-Card program with Suntrust Bank in September 2005.  At that time, the City was using the State of Florida contract for procurement card services.  A trend in government procurement was for a lead agency to issue a Request for Proposal for Procurement Card Services.  The lead agency would contract with the selected card provider/bank and then make the contract available to other government agencies.  This method created consortiums that allowed smaller governments with less annual spend than the lead agency to take advantage of a higher rebate percentage.

 

On July 27, 2009, the City Commission approved Resolution 8490 approving execution of an Inter-local Agreement with Polk County allowing the City to participate in the Polk County Procurement Card Consortium.  At that time, the Polk County agreement with Bank of America offered the most favorable terms and rebate.  Following execution of the Inter-local Agreement, the City switched from Suntrust Bank to Bank of America as the City’s card provider.

 

The Purchasing Division has identified a more favorable P-Card Consortium contract and is requesting execution of the Linking Agreement required to change to the P-Card Consortiums contract negotiated by Hillsborough County with Bank of America.  Nothing will change on the City side.  The City will continue to use the same cards.  What will change is the City will be eligible for a higher rebate percentage.  This program will provide a higher rebate percentage to the City.  The City is currently receiving a 1% rebate on all purchases (excluding large dollar transactions).  Changing to the Hillsborough County program will provide a rebate of 1.25% (excluding large dollar transactions).

 

Based on Fiscal Year 2012 spending of $2,082,922.79, the 1.25% will provide a rebate amount of $26,036.53.  This will be a $5,207.31 increase in the rebate amount paid back to the City.  The next section discusses the implementation of an e-payables program.  An aggressive and successful implementation of an e-payables program has the potential to significantly increase this rebate amount.

 

This table contains data related to the City’s P-Card program.

 

PROCURMENT CARD PROGRAM DATA

Number of cards issued

231

Highest Per Transaction Limit

$4,999.99

 

Fiscal Year 2011

Fiscal Year 2012

Number of Transactions

9,730

9,838

Annual Dollars Spend

$1,820,881.51

$2,082,922.79

Average Transaction Amount

$187.14

$211.72

Average Monthly Spend

$151,740.13

$173,576.90

Total Accounts Payable Payments

$107,045,898.31

$109,526,532.31

Percent paid by P-Card

1.70%

1.90%

Rebate Amount Received

$17,053.93

TBD

 

 

E-Payables Program

Most businesses today provide many value added services.  Banks and financial institutions are certainly no different.  Bank of America offers a full line of services for the purchase to pay cycle.  One of those services is their e-payables program.  This program provides an additional payment method to the City.

 

This program is an alternate payment method.  The City will continue to make purchases as normal using purchase orders.  Vendors will enroll in the e-payables program.  Enrollment in the program means the vendor has agreed to accept payment of their invoices by P-Card.  Instead of the City printing and mailing a paper check to the vendor, accounts payable will prepare an electronic transaction file that will be transmitted to Bank of America.  Bank of America then places the funds to be paid, the invoice amount, on a ‘virtual credit card’.  The bank will notify by e-mail the vendor/merchant can charge the owed amount against the ‘virtual credit card’.  The merchant is responsible for any fees charged by the card network as with a regular credit card transaction.

 

This e-payables program benefits the City in two ways.  It reduces the cost of paying city vendors and it increases the annual rebate amount the City receives on card purchases/payments.  Bank of America performed an analysis for the City and has determined a conservative annual financial benefit to the City of $58,529 and a potential maximum financial benefit of $81,590.  The maximum benefit could be realized if the identified potential vendors enroll in the e-payables program to accept payment by virtual credit card.  The full analysis results are attached for your review.

 

The more vendors enrolled in the e-payables program will provide the most financial benefit to the City.  The use of e-payables as an alternate payment method is a trending best practice in the public accounts payable arena.  More and more government agencies are implementing an e-payables program in order to operate more efficiently and cost effective.

 

Staff has set a tentative go-live date for the e-payables program of February 1, 2013.  As part of the e-payables implementation, Bank of America will be contacting City vendors they have identified as already participating in other e-payables programs or very likely to participate.  Bank of America will administer vendor enrollment during the implementation phase of the e-payables program.  After implementation, the City will be responsible for enrolling vendors in the e-payables program.

 

Staff will present a Resolution to the Commission recommending formal adoption of Vendor Invoice Payment Terms.

 

Options:

1.  Approve the resolution authorizing execution of the Linking Agreement; or

2.  Such alternative action as the Commission may deem appropriate

 

Fiscal Impact: 

Approval of the linking agreement will result in the City receiving a higher rebate percentage/amount for all procurement card purchases.  The Fiscal Impact will be positive with the City receiving a higher annual rebate payment from Bank of America.

 

Submission Date and Time:    1/9/2013 6:17 PM____

 

Department: ___Finance / Purchasing__

Prepared by:  __Mike Thornton________                     

Attachments:         Yes_X__   No ______

Advertised:   ____Not Required __X___                     

Dates:   __________________________                     

Attorney Review :       Yes___  No ____

                                                 

_________________________________           

Revised 6/10/04

 

Reviewed by: Dept. Head ________

 

Finance  Dept. __________________                                     

                              

Deputy C.M. ___________________                                                                         

Submitted by:

City Manager ___________________

 

Account No. ___NA______________

 

Project No. ___________________

 

WF No. ______________________

 

Budget  _______NA_____________

 

Available ______NA_____________

 

RESOLUTION NO._______________

 

RESOLUTION OF THE CITY COMMISSION OF THE CITY OF LEESBURG, FLORIDA, AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE A LINKING AUTHORIZATION CONTRACT WITH FIA  CARD SERVICES, N.A. (BANK OF AMERICA) ALLOWING THE CITY TO PARTICIPATE IN THE HILLSBOROUGH COUNTY PROCUREMENT CARD PROGRAM; AND PROVIDING FOR AN EFFECTIVE DATE.

 

BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF LEESBURG, FLORIDA:

 

            THAT the Mayor and City Clerk is hereby authorized to execute a Linking Authorization Agreement an agreement  with FIA CARD SERVICES, N.A. (BANK OF AMERICA), for services related to providing a Procurement Card Program according to the terms and conditions of the Hillsborough County RFP No. S-0001-09(JSW).

 

             THAT this resolution shall become effective immediately.

 

PASSED AND ADOPTED by the City Commission of the City of Leesburg, Florida, at a regular meeting held the 14th day of January 2013.

 

 

 

                                                                            __________________________

                                                                             Mayor

 

ATTEST:

 

 

__________________________________

City Clerk