That the City Council:
A. Approve the waiving of the formal bidding process per La Habra Municipal Code 4.20.070 (B) sole source vendor exception, and;

B. Approve and authorize the City Manager to execute an agreement with Information Management Technologies for payroll system support services.

At its Regular Meeting of Monday, March 6, 2023, City Council approved a service agreement with Tyler Technologies, Inc. (Tyler) for the licensing, implementation, maintenance, and hosting a new financial management, human resources, and payroll system. The City's current payroll system was purchased and implemented more than 20 years ago.  While it has served its purpose during this time, in its current form it is now considered to be a legacy system using technology that is no longer supported, with outdated financial tracking and reporting processes that are labor-intensive and not compliant with contemporary operating systems.  Replacing the current payroll system as the City migrates to the new Tyler system will enhance the functionality needed to provide accurate data reporting and enhanced online payroll service options to employees.  A full implementation of the new financial management, human resources, and payroll system will take approximately 24 months.

During the transition to the City's new financial management system, staff will continue to need external payroll software maintenance and support to both maintain the functionality of the current payroll system and ensure a successful transition to the new payroll system with Tyler. Due to the age and programming customization of the City's current payroll system, it is recommended that the City Council approve a sole-source agreement with Information Management Technologies, Inc. (IMT) to provide continued payroll software maintenance and support.  IMT has provided payroll system support in various capacities for the City of La Habra since 2015 on an "as-needed" basis. To continue this level of support, staff recommends that the City Council approve a two-year service contract, with additional month-to-month extensions if needed, with IMT until the City successfully completes its transition from the current payroll system to the new software in approximately 24 months. The City Attorney's office has reviewed the proposed agreement.

The City's Fiscal Year 2022-2023 adopted budget includes $35,000 for payroll system support services. Due to expected additional need for payroll software services to assist with the transition of the City's current system to the new payroll system, staff anticipates that the annual support services costs will increase to approximately $50,000 per year. If approved, this cost will be allocated to all City Departments through the annual budget process. Staff estimates that the General Fund will be allocated approximately $30,000 and all other funds will be allocated approximately $20,000. No additional appropriation is being requested for the current fiscal year as there are sufficient budgeted funds remaining for payroll system support.