City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2023-00038 3/7/2023 Consent Item 16.
Omnia Cooperative Agreement with Amazon Business for use of Online Marketplace for Various Goods [Published for 10-Day Review on 2/23/2023] File ID: 2023-00038
Location: Citywide
Recommendation: Pass a Motion: 1) approving the citywide use of Omnia Partners cooperative purchasing agreement R-TC-17006 with Amazon Business for the use of their online marketplace for the purchase of various goods through January 18, 2028 in an amount not-to-exceed $9 million.
Contact: Ashley Petralli, Program Specialist, 916-808-5749, [email protected], Finance
Presenter: None.
Attachments:
1-Description/Analysis
2-Omnia Cooperative Contract No. R-TC-17006
3-Business Prime Fee Waiver Terms and Conditions
Description/Analysis
Issue Detail: Departments throughout the City of Sacramento have been utilizing bank-issued Procurement Cards (P-Cards) to purchase miscellaneous goods using the City’s free Amazon Business platform since 2006. Each department has historically been responsible for tracking spend and ensuring thresholds requiring competition have not been crossed for items purchased for a single scope within any given fiscal year. Additionally, P-Card limits ensure purchases greater than the City’s $5,000 micropurchase threshold are not authorized without review and approval of the Procurement Division of the Department of Finance. As total annual spend with Amazon continues to grow, the need for citywide organization and approved spending authority becomes greater.
Amazon Business is currently providing Omnia Cooperative contract R-TC-17006 to the City of Sacramento. This contract was competitively bid by Prince William County Public Schools, VA, was executed on January 19, 2017, and will expire January 18, 2028. Although the City has been utilizing
File ID: 2023-00038 3/7/2023 Consent Item 16.
the Amazon Business platform since 2006, this cooperative agreement, was not incorporated into our platform until 2020.
The City as a whole has spent $906,009.43 under the existing agreement across all departments since the cooperative agreement was incorporated into our business platform in 2020. Total citywide spend has increased approximately 43% on average annually since 2017. If we assume this average increase for each fiscal year throughout the remaining years of the cooperative contract and consider the total amount already spent since the contract was executed in 2017, it is estimated that the City will spend approximately $8.7 million over the life of the contract. The Procurement division seeks the authority to establish a not-to-exceed amount of $9 million for this cooperative contract to retroactively cover existing spend since contract execution in 2017 and account for estimated expenditures through the contract’s expiration date in 2028.
In addition to the standard Amazon Business services, Amazon is now also offering Enterprise Business Prime to the City of Sacramento for free for the year of 2023, based on annual spend and future projections. The Enterprise Business Prime platform offers free shipping, additional spend visibility, back-office account management, and guided buying to promote products from local businesses and climate friendly products.
Total spend for the City during the calendar year of 2022 was $298,000 across all departments.
Public agencies spending $350,000 annually will continue to be offered Enterprise Business Prime for free each year. If a public agency does not hit the spending minimum, Amazon may continue to offer Enterprise Business Prime for free but reserves the right to charge $3,500 annually for the upgraded platform.
Policy Considerations: The recommendations in this report are in accordance with City Code Section 3.56.240 which authorizes the City Manager, when it’s advantageous to the City, to use cooperative purchasing agreements approved by the Council to purchase supplies or non- professional services through legal contracts of other governmental jurisdictions or public agencies, eliminating the need to perform additional competitive bidding by the City of Sacramento.
The Sacramento City Code Section 4.04.020 and Council Rules of Procedure (Chapter 7, Section E.2.d.) mandate that unless waived by 2/3 vote of the Council, all labor agreements and all agreements greater than $1 million shall be made available to the public at least ten (10) days prior to council action. This item was published for 10-day review on February 23, 2023, in compliance with the City Code.
Economic Impacts: None.
Environmental Considerations:
California Environmental Quality Act (CEQA): This report concerns administrative activities and
File ID: 2023-00038 3/7/2023 Consent Item 16.
governmental fiscal activities that do not constitute a “project” as defined by the CEQA Guidelines Sections 15378(b)(2) and 15378(b)(4) and are not subject to the provisions of CEQA (CEQA Guidelines Section 15060(c)(3)).
Sustainability: Amazon Business offers a variety of both Amazon-branded products and third-party items that feature sustainability certifications through Amazon’s Climate Pledge Friendly program.
These products can be highlighted on the City’s Enterprise Business Prime platform through guided buying.
Commission/Committee Action: Not applicable.
Rationale for Recommendation: Amazon Business has been utilized by the City in conjunction with City P-Cards since 2007. Amazon’s online marketplace inherently fosters competitive pricing and offers an efficient and convenient way for City departments to make purchases of miscellaneous goods without the need for a purchase order. In addition to inherent competitive pricing on this platform, the Amazon Business account is supported by a competitively bid cooperative agreement which maximizes staff resources. Amazon’s Omnia Cooperative contract R-TC-17006 was competitively bid by Prince William County Public Schools, VA, was executed on January 19, 2017, and will expire January 18, 2028. When comparing the administrative costs required, such as product research, vendor research, advertising, awarding, and creating a contract, it is often more cost-effective to make purchases through a cooperative agreement.
Centralizing the use of this cooperative as a citywide agreement will allow for better oversight, the option to establish Enterprise Business Prime to receive free shipping and will allow the City to participate in guided buying which will highlight and encourage purchases from local businesses and climate friendly goods.
In 2022 the City spent over $5,000 on shipping costs for Amazon purchases. If the City is charged the $3,500 for the Business Prime platform during future years, the savings on shipping costs alone will justify the expenditure.
Financial Considerations: Departments will use operating budgets and project funding to purchase goods from Amazon Business as required and as budget allows. P-Cards will continue to be used for these purchases and will be reconciled by the cardholder and their department.
Local Business Enterprise (LBE): Amazon is a Local Business Enterprise within the City of Sacramento and currently has 12,864 sellers within their platform that also qualify as Local Businesses.