City Council Agenda Report
TO: Mayor Clauzel and Members of the City Council
FROM: Ken Irwin, City Manager
BY: Mike Willett, Public Works Director
MEETING DATE: June 6, 2023
ITEM NO: 5.9
SUBJECT: Approve Addendum No. 2 to the Street Sweeping Contract Services Agreement with Contract Sweeping Services for a Five-Year Extension for Continued City-Wide Street Sweeping Services, Beginning July 1, 2023, through June 30, 2028.
RECOMMENDATION
Motion to Approve Addendum No. 2 to the Street Sweeping Contract Services Agreement with Contract Sweeping Services for a five-year extension for continued City-wide street sweeping services, beginning July 1, 2023, through June 30, 2028.
BACKGROUND
Currently, the City contracts commercial and residential street sweeping services to Contract Sweeping Services from Milpitas, CA. Residential routes are swept weekly and downtown streets and schools are swept daily. The five-year contract Addendum No. 1 with Contract Sweeping Services is set to expire June 30, 2023. Given the current economic climate, with inflation and the increased cost of doing business, the City negotiated Addendum No. 2 to the street sweeping contract services agreement. The extension would continue city-wide street sweeping services for an additional five years.
ANALYSIS
The current contract is scheduled to expire on June 30, 2023. Staff met with the current service provider, Contract Sweeping Services, and they have committed to extending the existing contract for five more years and provide the City with the same level of weekly street service, with the terms of services unchanged.
The terms included in Addendum No.2 are as follows:
1. The maximum fees to be charged by the Contractor set forth in years 1 through 5 for Addendum No. 2 are listed below. Year-1, the Contractor shall charge no greater than the maximum rate as provided in item 2. In years 2 through 5, the City will adjust the maximum fee under this addendum to reflect annual changes in the Consumer Price Index (CPI) for the SF-Bay Area statistical area. Such adjustments shall not exceed five percent (5%) per year. The adjustment shall become effective on the anniversary of the Effective Date and be based on the previous twelve-month index analysis. Years 2-5 of the proposed fees below include a 5% maximum CPI increase. Should actual CPI increase in year 2-5 be lower, the lower CPI increase will be applied.
2. Year-1, increase the current service cost by 10%, effective July 1, 2023, from $175,316.28 per year ($14,609.69 per month) to $192,847.91($16,070.66 per month).
3. Year-2, increase the service cost by a maximum 5% CPI, effective July 1, 2024, from $192,847.91 per year ($16,070.66 per month) to $202,490.30 ($16,874.19 per month).
4. Year-3, increase the service cost by a maximum 5% CPI, effective July 1, 2025, from $202,490.30 per year ($16,874.19 per month) to $212,614.82 ($17,717.90 per month).
5. Year-4, increase the service cost by a maximum 5% CPI, effective July 1, 2026, from $212,614.82 per year ($17,717.90 per month) to $223,245.56 ($18,603.80 per month).
6. Year-5, increase the service cost by a maximum 5% CPI, effective July 1, 2027, from $223,245.56 per year ($18,603.80 per month) to $234,407.84 ($19,533.99 per month).
7. The City will continue to bear responsibility for disposal and costs associated with street sweeper waste. Currently, the responsibility is accounted for in Addendum No. 1 and will continue with Addendum No. 2.
The current agreement set to expire on June 30, 2023, included two increases over the life of the term, the first and second years only. The prior five-year term included just one CPI increase.
Over the last 10 years of service the contractor has received three CPI increases, therefore staff concur that the request for an initial 10% increase in year one and CPI increases every year after with a maximum of 5% is reasonable. The proposed contract services agreement Addendum No. 2 would extend the term from July 1, 2023, through June 30, 2028. It is the opinion of staff that Contract Sweeping Services has been reliable under the current contract with minimal complaints received. All terms and conditions under the current agreement would remain in full force, except for the terms listed above, including maintaining the quality of service currently provided and as needed and emergency service calls.
If approved by the Council, the City Manager would execute Addendum No. 2 to the existing contract and include the proposed increases and maintain waste disposal responsibilities listed above. A copy of Addendum No. 2 to the contract services agreement is attached.
FISCAL IMPACT
The costs associated with street sweeping services are budgeted for within the Garbage Fund (600-790) and paid for through the Garbage Rates and is accounted for in the FY 2023/24 Adopted Preliminary Budget.