Consideration and Approval of Contract:  Copy Center and Mail Room Services contract with Xerographics of Flagstaff.

Approve the Contract with Xerographics of Flagstaff for Copy Center and Mailroom Services for a fixed annual amount of $77,317.   Current annual variable costs for service (copy, print, bindery services) are expected to be approximately $17,500.  The total annual cost for this contract is estimated to be $95,000.

Award of the contract will authorize Xerographics of Flagstaff to perform Copy Center and Mailroom Services for the City of Flagstaff.

Subsidiary Decision Points: None.

City staff currently operates Copy Center and Mailroom Services for the City.  Current funds used for internal operations will be used for the future operations provided by Xerographics of Flagstaff.  The current annual cost estimate for continuing to provide services in-house is $98,000 per year.  The cost is based on current internal costs plus annualized equipment purchases projected in the next five years.  In addition, current internal cost estimates do include unknown future cost variables such as wages, pension, and equipment maintenance agreements.

Effective governance.

No.

1)  Approve the Contract. This allows the City to hold current costs flat and avoids future capital outlay for copy equipment.
2)  Do Not Approve the Contract.   If Council does not approve this contract, City staff will continue to provide Copy Center and Mailroom Services.  The City will need to make significant capital outlays to continue the service.  In addition, the Customer Service Section will continue to cover staffing shortages in the Copy Center and Mailroom, causing a staffing shortage for Customer Service.                        

The City has operated Copy Center and Mailroom Services within City Hall for many years.  Copy center operations include copy, print, scan, service of City Hall satellite copiers, and other miscellaneous services.  Mailroom operations include internal and external delivery of United States Postal Service mailings, logging and recording of City Hall deliveries, and other miscellaneous services.  Operational costs for Copy Center and Mailroom costs are recovered through select per item charges.  Examples of charges include charges for copies, laminations, bindings, among others.
 
With the slowdown in the economy, in conjunction with a decrease in the number of Copy Center jobs due to a focus on paperless activities, the City reduced staff to one staff member in the Copy Center.  Ultimately, Copy Center and Mailroom Services were transferred to the Customer Service Section with the city-wide reorganization in 2009. 
 
Since the transfer of operations, all members of the Customer Service Section have been trained on Copy Center and Mailroom operations.  This has allowed for continued operations due to absences caused by vacation, sickness, etc.  However, in order to provide that coverage, customer service operations (counter, phone, and backroom operations) are forced to go down one staff member in order to cover the Copy Center.  The shortage in customer service impacts the operations noted previously, causing longer wait times for customers, and delaying the completion of backroom activities.

The outsourcing of the Copy Center and Mailroom Services is anticipated to have no impact and will be transparent to City Council and staff.

The approval of this contract will allow the City to continue to provide the same services that internal customers expect.  In addition, with the knowledge, experience, and technology Xerographics of Flagstaff brings to this operation, the City may be able to see enhanced Copy Center and Mailroom Services. 

The Copy Center and Mailroom Services recover their costs by charging for the services they provide to the various City divisions.  The City purposefully set rates to over-recover operating costs in order to build up reserve monies to upgrade Copy Center and Mailroom equipment.  In every year prior to FY13, the Copy Center was able to over-recover the annual operating expenses to contribute toward this reserve.  Cost recovery in FY13 was significantly less than in previous years due to the reduction in the overall quantity of copies.  Staff forecasts a continuing decrease in cost recovery in the near term, unless a new charge out structure is put into place.  The reduction in cost recovery also coincides with the need for significant capital outlays from the reserve funds in order to continue to provide customers and staff with the best possible experience.

Due to the pressures of reduced staffing and coverage problems, reduced revenues, and the need for new equipment, staff opted to put out a Request for Proposals (RFP) to see what options might be that were available.  In the RFP, staff outlined a scope of work that requested information on a combination of different operational models: on-site copy center and/or mailroom services and off-site copy center and/or mailroom services.   There were a total of seven (7) proposal responses that were evaluated and scored according to evaluation criteria outlined in the RFP document. Four (4) Proposers provided a proposal for off-site copy center services only and three (3) Proposers provided proposals for both on-site copy center and mailroom services. Given the overall scoring results, the evaluation committee made a decision to advance six (6) of the seven (7) Proposers to the ‘shortlist’ to participate in the presentation and interview phase of the evaluation process. Based on the overall scope of work options and evaluating the various ‘presented approaches’, the evaluation committee deemed that awarding one (1) contract, with one (1) Proposer for both copy center and mailroom services, would be in the best interest of the City. Staff recommends moving forward with a local Flagstaff Vendor (Xerographics of Flagstaff) to provide, and possibly enhance, Copy Center and Mail room Services.

The approval of this Contract will allow the City to maintain and possibly enhance current services in a cost effective manner. 

Inform.