City Council
Report
City Council Meeting: December 12, 2017
Agenda Item: 3.F
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To: Mayor and City Council
From: David Martin, Director, Parking Operations (PCD)
Subject: Contract Modification for Parking Revenue and Access Control Equipment System: Credit Card Processing Payment Provider
Recommendation
Staff recommends that the City Council authorize the City Manager to negotiate and execute a first modification to agreement #4387 (CCS) in the amount of $1,050,000 with Payment Express, a California based company for secure credit card gateway processing services of Parking Access and Revenue Control System (PARCS) credit card transactions. This recommended modification is made as an exception to the competitive bidding process pursuant to Section 2.24.080 (d). This will result in a 5- year agreement with two 1-year renewals a new estimated amount of $1,070,000 with future year funding contingent on Council budget approval.
Executive Summary
The City of Santa Monica operates 14 parking facilities on a 7 day per week, 24 hours per day operation. They consist of several fee-for-parking facilities including Parking Structures PS1 through PS9, the Ken Edwards Center Parking Structure, the Civic Center Parking Facilities, the Main Library Parking Structure and the Pier Deck parking lot. They generate approximately $20 million in revenue annually of which approximately 75% consist of credit card transactions. Within these facilities, Parking Access and Revenue Control Systems (PARCS) are used to provide controlled access with payment options for parking fees that includes credit cards, debits cards, and cash payments. The City Manager is authorized to execute changes to the existing Payment Express payment systems contract. Payment Express, Inc. is recommended to serve as the long-term credit card payment gateway provider, integrating with the SKI-DATA PARCS equipment. The modified contract would include ongoing “gateway” credit card payment services for all 14 parking facilities in an estimated amount of $1,050,000.
Background
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At its January 10, 2017 meeting (Attachment B), Council authorized the City Manager to execute an agreement with Sentry Control Systems, Inc. (Sentry) to install SKI-DATA Parking Access and Revenue Control (PARCS) equipment within 14 parking facilities in the City of Santa Monica. On March 30, 2017 the City Manager executed agreement number 10413 (CCS) with Sentry for the purchase and installation of parking equipment and to provide ongoing maintenance service not to exceed $4.7 million for the sevenyear term of that contract.
On April 1, 2017, upon the execution of contract 10413 (CCS) with Sentry, staff began working with this provider to assess and implement a plan for the installation of the parking equipment. As part of the implementation, a thorough assessment of the parking facilities was undertaken to ensure that an effective plan was generated for project implementation. This assessment included all requirements to install the PARCS system successfully, including its payment transaction processes.
SKI-Data PARCS equipment processes all parking transactions through the application’s parking logic software. The parking logic software is the controller that operates all parking events and actions within the entry and exit lanes including all Payon-Foot (POF) Machines. Recent awareness of increasing attempts by bad actors to steal customer data have required credit/debit card transactions recipients to include greater security measures when processing payments. This is a new service, compatible with the Sentry SKI-DATA system. This new transaction process requirement requires SKI-DATA hardware to integrate with a unique credit/debit card processor firm. Sentry informed the City that Payment Express is the third party credit card gateway processor that integrates fully within the SKI-DATA PARCS system.
Payment Express is compliant with all Payment Card Industry Data Security Standards (PCI-DSS) and Euro pay/MasterCard/Visa systems (EMV) to transfer credit card transaction information securely to the City of Santa Monica’s merchant provider (Transfirst, Inc.). The Payment Express credit card processor works in conjunction with our merchant processor, Transfirst, Inc.; each performing a separate function and receives a separate fee.
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On September 13, 2017, the City Manager executed contract 4387 (CCS) with Payment Express, Inc., following an exception to competitive bid process, per municipal code
2.24.080(d) to begin the installation of the PARCS system. This contract is set to expire on December 31, 2017. It was necessary to execute this contract to allow the city to integrate Payment Express’ transaction component software code at the beginning of the installation of the PARCS system that involved the setup of multiple items prior to implementation. The contract was based on a monthly fee, not to exceed a total amount of $20,000, for the term of the contract. Payment Express normally does not allow for monthly fee agreements; however, staff was able to negotiate the current monthly fee to prevent delay with the SKI-Data installation process. As part of this new amendment, the fees would transition to a transaction-based model.
Discussion
As part of contract number 10413, Sentry is required to abide and comply with parking industry data-security standards, as they emerge, during the life of the installation contract. Such requirements include meeting or exceeding the new requirements of the Payment Card Industry Standards Council, as outlined in their data security standard “PCI-DSS,” the payment application data security standard “PA-DSS Level 1.0,” the pin transaction security “PCI-PTS” requirements, and the point-to-point encryption “PCIP2PE” standard. Payment Express was the only provider at the time of contract execution that could meet the PCI-P2PE standard. The primary purpose of PCI-DSS is to reduce the risk of payment card (debit and credit) data loss by preventing, detecting, and reacting to potential breaches or “hacks” that could lead to customer account data compromises.
Adhering to emerging PCI-DSS standards and guidelines provides a superior level of security for our customers, as they expect and trust that the City of Santa Monica has taken all the necessary measures to protect their private financial information. In order to achieve compliance with those standards and guidelines, it is necessary to integrate 4 of 6
Sentry, who installed PARCS equipment in the City’s 14 parking facilities, with Payment Express, who provides secure payment processing to the PARCS equipment.
Payment Express secured transactions work the following way:
The SKI-Data Parking logic and companion Point-of-Sale software are integrated with the Payment Express equipment and security software and “tell” the Payment Express gateway what to charge.
The payment gateway (Payment Express) is a level 1, PCI compliant, payment gateway. All customer credit card information captured on the gateway is fully encrypted. Payment Express is responsible for securely processing a customer’s card transaction. Once Payment Express does that, Payment Express sends the transaction revenue on to the city’s merchant business bank (Transfirst) accounts. The credit card authorization information is included with each transaction record.
The City’s acquiring bank (Transfirst) is responsible for settling the processed transactions into the City’s merchant bank (Wells Fargo) accounts.
The benefits of this proprietary integration of transaction processing ensures customer security, rapid processing of transactions, and expanded payment options. Software updates and new features are deployed remotely, removing cost and lead-time for an onsite technician. This will become more important moving forward as Credit/ Debit Card providers issue a range of Chip cards.
Staff seeks City Council approval to modify the existing agreement with Payment Express, to extend the current agreement for 5 years with the option to renew, annually for up to two additional years, by which fees are to be paid by the City to Payment Express. This modified agreement would allow the PARCS transactions to move from a monthly fee to a transaction-based model. The City will pay 0.05 cents per transaction processed, regardless of the amount of the transaction. Through FY 2016-17, the city processed a total amount of 2.8 Million credit card transactions directly associated with the PARCS system. Staff estimates that in FY 2017-18 the city will process an 5 of 6
estimated amount of 2.8 to 3 million transactions, which translates to an estimated annual cost of $150,000. This estimated amount considers the transactions currently processed by the current PARCS system in conjunction with the new SKI-Data PARCS system once installed.
Vendor Selection
Payment Express, at the time of the contract execution, was the sole source provider to SKI-Data for their respective services. SKI-DATA integrates with payment express for EMV card readers, which includes credit card chip-reading technology. Payment Express meets the security standards as mentioned above. At this time, it is the sole proprietary source of parts and services to SKI-Data to ensure security of these transactions. This recommendation is made as an exception to the competitive bidding process pursuant to section SMMC 2.24.080 (d) and is for an estimated amount of $1,050,000, which modifies the current agreement to a five-year contract with two oneyear renewal options, with future year funding contingent on Council Approval.
Financial Impacts and Budget Actions
The agreement modification, to be awarded to Payment Express, is for an estimated amount of $1,050,000. Funds in the amount of $1,070,000 are available in the FY 2017- 18 budget in the Planning and Community Development Department. The agreement will be charged to account 01417.555011 - Contractual Services. Future year funding is contingent on council budget approval.
Prepared By: Henry Servin, City Traffic Engineer
Approved Forwarded to Council
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Attachments:
A. City of Santa Monica Oaks Initiative Notice Signed
B. January 10, 2017 Council Meeting