That the City Council approve and authorize the City Manager to execute Amendment No. 3 with Nationwide Environmental Services, Inc., for contract street sweeping services.

BACKGROUND
The City's street sweeping services are currently provided by Nationwide Environmental Services (NES).  The initial agreement was approved for six years ending June 30, 2013, with an option of two two-year extensions.  Pursuant to the agreement, NES sweeps the City’s arterial streets and residential streets on a weekly basis, as well as sweeps the parking lot areas of City-owned properties.

Amendment No. 1 to the original agreement was executed on March 23, 2010, which extended the agreement through June 30, 2017.  Amendment No. 1 was initiated during a period of economic downturn and, as a condition of extending the agreement for four additional years, NES agreed to lower the cost of their services by five and one-half percent (5.5%) to help reduce costs to the City.

Amendment No. 2 was executed on June 6, 2016, and extended the agreement through June 30, 2024, with the possibility of renewal for three additional years, with a final expiration date of June, 30, 2027. In exchange for extending the agreement, NES agreed to freeze their annual costs for the first three years of the Amended Agreement, as well as set a two percent (2%) Consumer Price Index (CPI) cap on their contract costs after the initial three-year freeze on cost increases expired.

DISCUSSION
In August 2021, NES notified the City that uncontrollable rising costs for labor, materials, fuel, parts, and other overhead costs were having a significant detrimental impact on their ability to provide future reliable service in the City.  NES expressed that as a result of these inflationary costs, a rate adjustment was requested. Staff has reviewed and analyzed the NES request and negotiated in good faith toward mutually satisfactory contract modifications.  Additionally, staff will closely monitor inflationary factors and trends and determine if the contract merits further modification for the best interest of the City.  Furthermore, staff intends to evaluate regional economic conditions in Fiscal Year 2023-2024, which will coincide with several local cities having their street sweeping contracts either expire and be rebid, or undergo renegotiation.
 
Below are the key contract elements that staff has negotiated and propose for modification. These items have been agreed to by NES:

If approved by the City Council, this contract amendment will increase street sweeping costs for the remaining four months of the current fiscal year by $14,000. On a full year basis, these changes will increase the base contract cost by approximately $42,000 in Fiscal Year 2022-2023 to a total of approximately $386,608 per year, with future year contract adjustments determined by the annual CPI at that time. 

NES continues to demonstrate a high degree of service reliability and City staff have an excellent working relationship with NES staff.  NES has provided the City with exceptional service and been responsive to concerns and service requests in a timely manner. Staff recommends that the City Council approve the modified terms to the agreement that will also extend the contract for five additional years ending June 30, 2027, with an option of one additional five-year term extension ending June 30, 2032, upon mutual agreement between the City and NES.

The City Council approved and adopted the Fiscal Year 2021-2022 Refuse Budget cost center 184101-7739 (Professional Service) has sufficient available funds to cover the additional proposed $14,000 increase in the sweeping contract for the remainder of this fiscal year.