To: HONORABLE MAYOR AND From: Jose Obregon

CITY COUNCIL

Subject: SEE BELOW Date: November 3, 2003

SUBJECT: REPORT ON REQUEST FOR QUOTATION FOR SECURITY SERVICES

RECOMMENDATION

Adoption of a resolution authorizing the Director of General Services to:

a) Execute a one-year agreement with two, one-year options to renew with Silicon Valley Security and Patrol, Inc. for security guard services for the Department of Transportation (DOT), with a total first year compensation not to exceed $389,191.

b) Execute a one-year agreement with two, one-year options to renew with Silicon Valley Security and Patrol, Inc. for security guard services for Parks, Recreation and Neighborhood Services Department (PRNS), with a total first year compensation not to exceed $81,689.

c) Execute a one-year agreement with two, one-year options to renew with National Security Industries for security guard services for the General Services Department (GSD), with a total first year compensation not to exceed $105,783.

d) Execute a one-year agreement with two, one-year options to renew with National Security Industries for security guard services for the Environmental Services Department/Water Pollution Control Plant (ESD/WPCP), with a total first year compensation not to exceed $180,940.

e) Execute change orders to each of the four one-year agreements for a contingency amount not to exceed 10% of the first year compensation in the event that additional security hours are required due to unforeseen circumstances, without further City Council action other than the appropriation of necessary funding.

f) Execute each of the options to renew on all four agreements without further City Council action other than the appropriation of necessary funding.

BACKGROUND

The Departments of Transportation, Parks Recreation and Neighborhood Services, General Services and Environmental Services/WPCP require a variety of unarmed security services for various City facilities including parking lots, community centers, City Hall, and the WPCP. Each Department has a scope of services that is specific to their individual needs. However, the general requirements that apply to all departments include providing a level of comfort for City staff and the public while using City facilities, securing various access points after hours, observe and monitor, and respond to any incident by following post orders as defined in the scope of services.

In fiscal year 2002-03, the four Departments listed above spent an aggregate total of $858,000 representing approximately 46,000 guard hours for security on four individual service orders. Each order was competitively quoted and awarded on an individual basis. The incumbent suppliers are:

· Pinkerton (for ESD/WPCP and PRNS). Pinkerton now operates under the name of Securitas

· Industrial Protection Services (for General Services)

· Omni Patrol (for DOT)

The General Services Purchasing Division determined one potential benefit to the City was to issue one consolidated Request for Quotation that included detailed requirements for all four Departments. The RFQ objectives were to provide the best overall value to the City by conducting a competitive process and selecting suppliers capable of providing services for one or more departments, and maximizing cost savings by leveraging the City’s considerable expenditures for these services. Companies are typically more aggressive in their unit pricing when higher volumes are offered.

The general requirements to submit a quote included:

1. Have guards who possess valid credentials evidencing Security Guard Registration with the Bureau of Security and Investigative Services of the California Department of Consumer Affairs to meet the requirements as set forth in this RFQ by the effective date of the Agreement.

2. Hold a current Private Patrol Operator License (PPO) issued by the State of California, Department of Consumer Affairs.

3. Have established and comprehensive personnel recruitment and training programs.

ANALYSIS

On July 3, 2003 the RFQ process was initiated. The requirement was advertised on the City’s bid line, and distributed to eleven companies. The RFQ process had a question and answer period, allowing all interested parties to submit written questions regarding the City’s requirements. Staff issued one addendum in response to these questions to further clarify the City’s requirements.

Companies responding to the RFQ were given the option of quoting all of the work for each of the four Departments, or any combination of work.

Ten companies submitted quotations by the July 28, 2003 due date:

1. Atlas Security and Patrol, Inc.- San Jose, CA

2. Black Bear Security Services, Inc. - San Francisco, CA

3. First Alarm Security and Patrol, Inc.- San Jose, CA

4. Guardsmark, LLC - San Jose, CA

5. Industrial Services, d.b.a./Industrial Protection Services - San Jose, CA

6. National Security Industries - San Jose, CA

7. Omni Patrol, Inc. - San Jose, CA

8. Securitas Security Services USA, Inc.- Campbell, CA (formally Pinkerton Security)

9. Silicon Valley Security and Patrol, Inc.- San Jose, CA

10. Viable Alternatives Corporation d.b.a./San Mateo Security Services - Belmont, CA

After an initial evaluation of the quotations, Securitas and Guardsmark were eliminated from further consideration. Securitas took a number of exceptions to the City’s Terms and Conditions that were provided with the RFQ document. Guardsmark altered the pricing form by adding several labor categories that were not requested. This made it difficult to evaluate their pricing relative to the other companies that completed the form without alteration.

An initial price evaluation of the responsive quotes showed that two contractors, San Mateo Security Services, and Black Bear Security Services, Inc. quoted rates that were greater than the highest rate that the City paid last year by 34% and 13%, respectively. Therefore, these companies were not considered further.

Six companies were considered for final evaluation as demonstrated in Table A. National Security Industries and Silicon Valley Patrol quoted the lowest and second lowest rates, respectively.

Table A

Note that the “bold” areas in Table “A” in the National and SVP (Silicon Valley Patrol) columns denote the recommended award for each departments work scope

Reference checks were conducted on each company. A minimum of two references per company was obtained. It should be noted that four of the six companies in Table A have done business with the City in the past. The reference checks confirmed that each company has the necessary background and expertise to perform the work.

SUMMARY

It is recommend that this service be split between the two suppliers providing the lowest quoted prices. Although issuing 100% of this requirement to the lowest quoter would further lower costs by approximately $24,000, there are risks with this approach. The new supplier will be expected to come up to speed rapidly and with a minimum of service disruptions on four distinct work scopes at multiple locations and with four different City customers. City staff is of the opinion that two suppliers dedicated to two customers each would be more effective in addressing both transition and ongoing operations issues. In addition, the increased manpower and infrastructure of two suppliers provides the City with more capability and flexibility in the event that service requirements change and additional security support is required.

Utilizing two service providers still allows the City to attain an annual cost savings of $100,593 when compared to current contract costs. The contracts with National and Silicon Valley Patrol include a clear statement of work with defined and measurable performance criteria, and a specific process for addressing service delivery issues.

Living Wage/Prevailing Wage

These contracts are subject to the City's Living Wage Policy, which includes a mandated minimum level of compensation to employees. The minimum level of compensation required is $10.31 per hour if health benefits are provided or $11.56 per hour if health benefits are not provided. The Water Pollution Control Plant is exempt from the Living Wage Policy.

These contracts are not subject to Prevailing Wage requirements.

Local Business Enterprise

Both National Security Industries and Silicon Valley Patrol qualify as a San Jose based supplier in accordance with Resolution 64649 of the City’s Local Preference Policy for the procurement of general services. National has 300 total employees with 200 operating out of their San Jose facility, and Silicon Valley Patrol has 220 total employees with 175 in San Jose.

In Sourcing

This work scope requires approximately 46,000 man hours annually, or the approximate equivalent of 25 full time employees. The departments requesting security services do not have the required number or classification of qualified personnel available to perform this work. Departments would need to recruit, hire, train and successfully certify personnel to perform these functions. In addition, departments would need to provide direct oversight and management personnel, materials and equipment. Contracting security services is cost effective and affords flexibility in meeting fluctuating needs.

This recommendation is scheduled to be heard at the Treatment Plant Advisory committee (TPAC) meeting on November 13, 2003.

COST IMPLICATIONS

This recommendation is consistent with the Mayor’s Budget Strategy under Section A, General Principals, #2; “We must focus on protecting our vital core city services”, and under Section C, Expenditure Controls, #5; “Direct the Manager to seek every opportunity to rebid contracts to save costs. This shall include review of any contracts, which have options for renewal”.

As stated above, it is anticipated that the annual cost savings for consolidated security services will be $100,593. This is calculated by comparing FY 2003-2003’s expenditures at last years contract rates, and comparing the same volumes at the new contract rates. This equates to over $300,000 of cost savings over the three year term of the agreements.

PUBLIC OUTREACH

Posted on the City’s Bidline.

COORDINATION

The memorandum has been coordinated with the Department of Transportation, the Parks, Recreation and Neighborhood Services Department, the Environmental Services Department, the City Attorney’s Office, the City Manager’s Budget Office, Employee Services Department and the Office of Equality Assurance.

BUDGET REFERENCE

Department of Transportation

Fund #	Appn #	Appn. Name	Total Appn.	Amt. for Contract	2003-2004 Proposed Operating Budget	Last Budget Action (Date, Ord. No.)
533	0512	N/P Equipment	$6,744,240	$389,191	Page 826

Parks Recreation and Neighborhood Services

Fund #	Appn #	Appn. Name	Total Appn.	Amt. for Contract	2003-2004 Proposed Operating Budget	Last Budget Action (Date, Ord. No.)
001	0642	N/P Equipment	$9,390,345	$81,689	Page 416	9/9/03 Ord. No. 26978

General Services Department

Fund #	Appn #	Appn. Name	Total Appn.	Amt. for Contract	2003-2004 Adopted Capital Budget	Last Budget Action (Date, Ord. No.)
395	4276	Roof Replacement, Painting and Supplemental Needs	$500,000	$82,346	Page 975

General Services Department

Fund #	Appn #	Appn. Name	Total Appn.	Amt. for Contract	2003-2004 Proposed Operating Budget	Last Budget Action (Date, Ord. No.)
001	3133	City Security Measures	$35,065	$23,437	Page 687	10/14/03 Ord. No. 26997

Environmental Services Department/WPCP

Fund #	Appn #	Appn. Name	Total Appn.	Amt. for Contract	2003-2004 Proposed Operating Budget	Last Budget Action (Date, Ord. No.)
513	0762	Non-personal/ Equipment	$30,196,654	$180,940	Page 191	9/9/03 Ord. No. 26978

CEQA

Not a project

Jose Obregon

Director of General Services