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Item 1.D.
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| City Council Regular | |
| Date: | 03/24/2025 |
| Title: | Outsourcing of Custodial Services at City Hall |
| Presented by: | John Caterino, Facilities Manager |
| Department: | City Hall Administration |
| Presentation: | No |
| Legal Review: | Yes |
| Project Number: | N/A |
RECOMMENDATION
Staff recommends that Council approve and award a contract for the outsourcing of custodial services at New City Hall (316 N. 26th St.) to Pride of Montana, Inc. for $614,038.19 for first three years, with an option to extend for an additional two years for a total contract cost of $1,054,712.92
BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)
Currently, the Facilities Division provides custodial services at City Hall.
It is becoming increasingly difficult to provide a level of custodial service that meets customer satisfaction while maintaining a cost-effective bottom line. A few variables make this mission challenging:
Moving into New City Hall makes things more challenging for custodial services considering the increased amount of area to clean and maintain:
Drawbacks of outsourcing include:
Outsourcing is not new to the Division. Services that are currently outsourced include snow removal, compulsory systems testing (elevators, FACP), pest control, renovation projects, access control installation, and highly skilled mechanical/electrical/plumbing repairs.
Facilities advertised a Requests for Proposal (RFP) on 01/03 and 01/10/2025 in Yellowstone County News and on the City’s Website. Proposal submission date was 01/24/2025.
Eight (8) firms attended the pre-bid walk, seven (7) firms submitted Intent to Respond forms, and six (6) firms submitted responses.
A review committee unanimously selected Pride of Montana, Inc., based on the following criteria:
It is becoming increasingly difficult to provide a level of custodial service that meets customer satisfaction while maintaining a cost-effective bottom line. A few variables make this mission challenging:
· Expanded amount of space occupied by City Hall tenants
· Increasing cost associated with Facilities Maintenance Support I salaries
· Difficulty hiring qualified personnel
· Ensuring coverage of sick and/or vacation time of staff
· Goal of stabilizing charges for tenants
· Unable to provide adequate amount of supervision time for training, quality control checks, and leadership without a dedicated supervisor position
· Shift coverage at BOC with City Hall personnel
· Increasing cost associated with Facilities Maintenance Support I salaries
· Difficulty hiring qualified personnel
· Ensuring coverage of sick and/or vacation time of staff
· Goal of stabilizing charges for tenants
· Unable to provide adequate amount of supervision time for training, quality control checks, and leadership without a dedicated supervisor position
· Shift coverage at BOC with City Hall personnel
Moving into New City Hall makes things more challenging for custodial services considering the increased amount of area to clean and maintain:
· Old City Hall is approximately 36,000 square feet to clean
· New City Hall is approximately 120,000 square feet to clean
· New City Hall has significantly more public space and restrooms, which require more dedicated attention
· New City Hall is approximately 120,000 square feet to clean
· New City Hall has significantly more public space and restrooms, which require more dedicated attention
Industry benchmark standard for custodial work is 1 FTE for 28,000 sf (reference attached). That would require 4.3 FTEs to effectively service New City Hall. The Facilities Division is not equipped to tackle this obstacle under the current staffing model. It would require adding and hiring an additional two Facilities Maintenance Support I FTE’s at approximately $123,288 for the first year. This does not account for any additional costs associated with supervision and management of custodial staff.
Knowing the current model and staffing will not provide the level of custodial services we need; we analyzed two options: increase FTEs or outsource this scope of work to a vendor. The Facility Division’s goal was to determine the most cost effective and efficient service model, while providing the same or better service that City staff and public visitors expect.
After performing a cost benefit analysis of the two options, it was determined that outsourcing custodial services to a vendor would be more cost effective. Additionally, by outsourcing custodial work, the Division can focus more administrative effort and resources on the core strategic work deliverables of repairs, maintenance, and capital projects.
Benefits of outsourcing include:
Knowing the current model and staffing will not provide the level of custodial services we need; we analyzed two options: increase FTEs or outsource this scope of work to a vendor. The Facility Division’s goal was to determine the most cost effective and efficient service model, while providing the same or better service that City staff and public visitors expect.
After performing a cost benefit analysis of the two options, it was determined that outsourcing custodial services to a vendor would be more cost effective. Additionally, by outsourcing custodial work, the Division can focus more administrative effort and resources on the core strategic work deliverables of repairs, maintenance, and capital projects.
Benefits of outsourcing include:
· Cost savings of approximately $77,618 for the first year
o Vendor guarantees pricing for 5 years with 3% escalator
· Less administrative time spent managing custodial issues, including:
o Coordination of shift coverage
o Laundry service
o Daily check-in and weekly sync meetings
o Dispenser replacement
o Safety Data Sheet inventory and updates
o Laundry service
o Daily check-in and weekly sync meetings
o Dispenser replacement
o Safety Data Sheet inventory and updates
· Staffing
o Vendor recruits, hires, trains, and supervises cleaning crew
o Management team provides quality control and oversight
o Facilities will not need to overstaff to ensure proper coverage
o Facilities will not need to pay shift differential for later shifts
o Management team provides quality control and oversight
o Facilities will not need to overstaff to ensure proper coverage
o Facilities will not need to pay shift differential for later shifts
· Results
o Vendors can have better control over results by using the ISSA 612 standard
· Equipment
o Vendor will provide all equipment to service building
o Facilities will not need to maintain, repair, procure, or replace equipment
o Facilities will not need to maintain, repair, procure, or replace equipment
· Uniforms and Shoes
o Will not need to pay for uniforms or shoes
o Approximately $600 is paid for 11 kits per the Union contract for new hire FTE
o Facilities Division provides $100 annual allowance for replacement of worn uniforms
o Facilities Division reimburses shoes up to $200 per FTE annually per the Union contract
o Approximately $600 is paid for 11 kits per the Union contract for new hire FTE
o Facilities Division provides $100 annual allowance for replacement of worn uniforms
o Facilities Division reimburses shoes up to $200 per FTE annually per the Union contract
· Hours
o Vendor can clean after hours to lessen the impact on City staff during working hours
o Facilities will not need to pay overtime for coverage during certain City holidays
o Facilities will not need to pay overtime for coverage during certain City holidays
· Experience
o Vendor knows how to appropriately build workload to ensure maximum efficiency
o Vendor knows how to schedule cleaning tasks to provide consistent results
o Vendor knows how to schedule cleaning tasks to provide consistent results
Drawbacks of outsourcing include:
· Will have to bid work via an RFP
· Vendor can give thirty days’ notice and terminate contract
· Prevailing wages could fluctuate
· Vendor can give thirty days’ notice and terminate contract
· Prevailing wages could fluctuate
Outsourcing is not new to the Division. Services that are currently outsourced include snow removal, compulsory systems testing (elevators, FACP), pest control, renovation projects, access control installation, and highly skilled mechanical/electrical/plumbing repairs.
Facilities advertised a Requests for Proposal (RFP) on 01/03 and 01/10/2025 in Yellowstone County News and on the City’s Website. Proposal submission date was 01/24/2025.
Eight (8) firms attended the pre-bid walk, seven (7) firms submitted Intent to Respond forms, and six (6) firms submitted responses.
A review committee unanimously selected Pride of Montana, Inc., based on the following criteria:
· Thoroughness of response
· History of firm
· Firm experience with similar scope and magnitude
· Qualifications
· Approach and methodology to cleaning
· Personnel and staffing
· History of firm
· Firm experience with similar scope and magnitude
· Qualifications
· Approach and methodology to cleaning
· Personnel and staffing
STAKEHOLDERS
City:
External Parties:
· City Council as approving body
· Facilities Division as Contract Administrator
· City Hall Tenants (City Council, Administration, Human Resources, Building, Planning, Engineering, Police, Community Development, Courts, Legal, Code Enforcement, Parking, Finance, IT)
· Facilities Division as Contract Administrator
· City Hall Tenants (City Council, Administration, Human Resources, Building, Planning, Engineering, Police, Community Development, Courts, Legal, Code Enforcement, Parking, Finance, IT)
External Parties:
· Pride of Montana, Inc
ALTERNATIVES
Alternatives include:
1. Reject contract and maintain the current staffing levels. If this alternative is selected, the Facilities Division would be unable to provide a standard level of custodial services at New City Hall
2. Keep the current staffing levels and augment custodial services with a vendor, which would be a cost of around $48,000 -$56,000 annually. This option would also add supervisory time for managing staff and a vendor
3. Reject both City Hall and BOC contracts and approve the Facilities Division to hire additional staff to provide adequate services at both locations.
2. Keep the current staffing levels and augment custodial services with a vendor, which would be a cost of around $48,000 -$56,000 annually. This option would also add supervisory time for managing staff and a vendor
3. Reject both City Hall and BOC contracts and approve the Facilities Division to hire additional staff to provide adequate services at both locations.
a. This would require adding 2 Facility Maintenance Support I positions and a supervisory position at an estimated cost of $227,628 for the first year.
FISCAL EFFECTS
Hiring a vendor instead of hiring additional FTEs will save approximately $51,251 in the first year of the contract. Cost savings will be passed on to Tenants at City Hall by reducing their annual charges.
The pricing in RFP was an annual lump sum for services for 3 yrs, with options to extend into years 4 and 5. Therefore, the expenses incurred will be as follows:
Staff requests that both vendor contracts for City Hall and BOC be approved to realize the maximum cost savings. If City Hall contract is approved and BOC contract is not, there will be additional costs incurred due to reassignment of staff to BOC that is currently shared between the two sites. There will be 3 FTE assigned to BOC instead of the current 2.5 FTE and BOC tenant charges will increase to cover that cost.
The pricing in RFP was an annual lump sum for services for 3 yrs, with options to extend into years 4 and 5. Therefore, the expenses incurred will be as follows:
| Year | Price |
| 1 | $198,660.00 |
| 2 | $204,619.80 |
| 3 | $210,758.39 |
| 4 | $217,081.15 |
| 5 | $223,593.58 |
Staff requests that both vendor contracts for City Hall and BOC be approved to realize the maximum cost savings. If City Hall contract is approved and BOC contract is not, there will be additional costs incurred due to reassignment of staff to BOC that is currently shared between the two sites. There will be 3 FTE assigned to BOC instead of the current 2.5 FTE and BOC tenant charges will increase to cover that cost.