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HomeMy WebLinkAboutMemo - Manager's ApprovalCITY OF MIAtiMI, FLORIDA INTER -OFFICE iMIEMO.RA:NI)UM TO: Daniel J. Alfonso. City Manager FROM: ,Annie Perez, CPPO, Director. Procurement DATE: April 1Q, 2017 FILE: SUBJECT: Recommendation of Award of Contract for 800 MHz P25 Digital Trunked Simulcast Network System REFERENCES: Request for Proposals (RFP) No. 592382 ENCLOSURES; Recommendation to Negotiate Memo; Financing Analysis Letter Recommendation Based on the findings below, the Department of Procurement (Procurement) hereby recommends approval to award Contract No. RFP 592382, to Harris Corporation (Harris), to provide an 800 MHz P25 Digital Trunked Simulcast Network System (System). as part of the ongoing efforts to upgrade and enhance two-way radio communications throughout the City of Miami (City), specifically the City's police, fire, and general government departments, for the benefit of all public safety and local government users. and the citizens that they serve. The System includes several related networks and project components: 1. 800 MHz P25 Digital Trunked Simulcast Network; 2. Full featured Radio Dispatch Console System; 3. VHF High Band and Marine, UHF and 800 MHz Base Stations to provide for interoperability with adjacent localities but not limited to; Miami -Dade County and the State of Florida; 4. High capacity, digital microwave site connectivity; 5. Integrated Network Alarm and Control System; 6. Assets and network management systems; 7, Network traffic logging recorder system; 8. Site modifications to include shelter, tower and emergency generators; and 9. Replacement of Site on Wheel ten (10) channel standalone trunked P25 System. The impact of this item is citywide in nature. Fiscal Impact The fiscal impact for the initial three (3) year, with two (2) additional two (2) year period contract term is Eleven Million Dollars (_$11,000,0001. This represents a savings of $3,226,622 overall to the City. The Contract will have a contingency allowance of Ten Percent ($1,100,000), to be used at the City's discretion, and with the approval of the City Manager, without requiring City Commission's approval, to pay for any element or service that was unforeseen, or that is desirable, but not specifically required of the Contractor by the Contract Documents. Harris's negotiated price is firm and fixed for the term of the contract, which in turn will protect the City from future change orders. The negotiated price includes the cost of warranty and equipment for the first year of the Contract for: 1) Software FX: 2) Hardware Refresh; 3) NOC Monitoring; 4) Radio Digital Console; 5) Radio Infrastructure; and 6) Site Facility. Additionally, Harris is also providing two PR 17171 1 (2) years of warranty and maintenance on digital microwave equipment, and three (3) years on subscriber equipment warranty and maintenance, at no additional cost to the City. The costs of the extended warranty and maintenance have already been negotiated for additional years of the Contract, in the event the City decides to purchase the warranty and maintenance. As requested in the RFP, Harris included leasing (financing) options in their proposal; Harris proposed financing through a third party. Signature Public Financing Corp. Harris offered a 1.69% interest rate for a five (5) year lease term; 1.95% for a seven (7) year lease term; and a 2.20% for a ten (10) year lease term. As part of the due diligence process, Procurement requested The PFM Group, a City Financial Consultant, to evaluate the financing proposal received from Harris, based on their knowledge of the municipal market, and the specific market for Florida equipment leases. Refer to The PFM Group's response (attached). Notwithstanding the foregoing, at the City's discretion, the City may consider seeking proposals for financing, which would enable the City to match its product selection with a more competitive financing. Savings Harris's proposed price of $13,216,174.25, included maintenance cost for four (4) years, in the amount of $3,316,174.25. The City opted to not purchase the maintenance at this time. This reduced Harris's original proposed amount to $9,900,000 During negotiations, the City's negotiation team (Team) requested upgrades and adjustments to the proposed equipment and services, not contemplated in the solicitation and Harris's proposed price. These items included, but not limited to: 1) Upgrade to KovaNerint Logging Recorder; 2) Design change from two transmit and three receive sites to five transmit/receive sites; 3) Upgrade of 1,650 XG75P Portables to XL-200P Portables; 4) Upgrade of XG75P Portables to Additional XG75P; 5) Reconfiguration of Police's mobile and desktop packages, to include encryption, OTAR, speaker mics, vehicular charges, spare battery, etc.: 6) Reconfigured Dispatch by removing VIDA Connect; 7) Structural enhancements to Station 11; 8) Equipment trade-in credit; 9) Four (4) years of online course offerings for technicians at no additional cost to the City; 10) Thirty percent (30%) off list price to repair parts for the term of the Contract; and 11) Reduction on the cost of Project Management. These upgrades and adjustments amount to an increase in the proposed base price from $9,900,000 to $14,226,622,14 (an increase of $4,326,622). As a result of initial negotiations held on March 1, and 20, 2017, the Team was able to realize a savings to the base price from $14,226,622 to $12,353,646 (a reduction of $1,872,976). On March 23, Procurement on behalf of the Team, instructed Harris in writing, to carefully analyze their price for any further cost savings they can in turn extend to the City, and provide what is considered Harris's "Best and Final Offer" (BAFO), which should not exceed $11,000,000. Harris responded with a BAFO of $11,000,000, an increased single line item system discount, amounting to a $3,226,622 overall savings to the City. Background On May 16, 2016, the City on behalf of the General Services Administration (GSA) Department, issued a Request for Proposals (RFP) No. 592382 under full and open competition. to obtain proposals from qualified, experienced firms to provide a fully featured System. Orr August 30, 2016, PR 17171 2 two (2) proposals were received in response to this solicitation; Harris, and Motorola Solutions, Inc. (Motorola). Subsequently, the proposals were reviewed by Procurement for responsiveness; both were deemed responsive. The proposals were further evaluated by an Evaluation Committee (Committee), comprising of City personnel and subject matter experts from other jurisdictions (cities of Miami Beach, Hialeah and Coral Gables). The Committee evaluated the proposals following the guidelines and technical criteria published in the RFP. Both firms, Harris and Motorola, were invited to oral presentations. Following oral presentations, the Committee recommended Harris, the highest ranked, responsive and responsible proposer for negotiations (refer to Recommendation to Negotiate memo). The negotiation team was comprised of representatives from the following City Departments, representatives from neighboring cities, along with the assigned City Attorney: Procurement, GSA; Information Technology; Fire; Police; Cities of Coral Gables and Hialeah. Accordingly, due to the complexity of the project, the Team met on January 25, 2017, February 6, and 13, 2017, to review the proposals and prepare the strategy to negotiate a contract with Harris. These meetings were closed to the public, pursuant to Florida Statutes 286.011. The City Attorney and Procurement staff also met to address clarifications by Harris to the Professional Services Agreement's terms and conditions. Negotiation meetings were held with Harris on March 1, 20. and 31, 2017; negotiations were successfully completed on March 31, 2017. Due diligence was conducted to determine responsibility, including verifying corporate status and performing reference checks. There were no performance or compliance issues, and no adverse finding related to Harris's responsibility. Harris has demonstrated that the firm possesses the necessary qualifications, relevant experience. technical capacity. experienced personnel, and a well- defined approach, required to meet the reeds of the City and successfully complete this critical project. A notice to proceed will be issued by the City once a contract has been executed. Approval of this recommendation to award, which is within your delegated signature authority, is requested. Approved Date: Y.-/N Daniel J. AIfa'ns Ci /M. nager c: Fernando Casamayor, Assista t ty Manager/Chief Financial Officer Nzeribe lhekwaba, P.E., Assistant City Manager/Chief of Operations Rodolfo Llanes, Chief of Police Joseph F. Zahralban, Chief of Fire Rafael Suarez -Rivas, Esquire, Senior Assistant City Attorney Ricardo Falero, Director, GSA Brian Lopez, Superintendent, GSA Michael J. Manning, Senior Consultant, Federal Engineering, Inc. / L.R. Kimball Lydia Osborne, CPPO. CPPB, Assistant Director, Procurement PR 17171 3 a The PFM Group Memorandum au'e 434 „rar Gablew F_ 13114 To: City of Miami, Florida From: Public Financial Management Re: Public Safety Radio System RFP — Financing Options 78B 671433 .30$ 443 1'S t !at www atm..or^ October 12, 2016 Recently. the City of Miami, Florida (the "City") issued RFP No. 592382, which solicited proposals for the construction of a public safety radio system, including options for financing the project. The City received two proposals from Motorola Solutions ("Motorola") and Harris Corporation ("Harris') for the construction of the radio system, and both proposals included leasing (financing) options put forth by the respective firms. In the case of the Motorola proposal, they offered financing through a subsidiary called "Motorola Solutions, Inc.," and Harris offered financing through a third party named 'Signature Public Funding Corp.' On September 28. 2015, the City's procurement department requested PFM's assistance in specifically evaluating the financing proposals PFM is performing this assistance based on our knowledge of the municipal market. and the specifc market for Florida equipment leases. In order to evaluate the responses received by the City, PFM used its database of recent equipment lease financings since Janiary 2015. it should be noted that this also includes the police equipment lease financing recently completed by the City. The purpose or the database reference is to provide Comparable data points to determine if the financing rates and terms provided in the RFP responses are (1) representative of current market conditions. and (2) reasonable with respect to covenants and other requirements. Further, in this memorandum we have also provided a summary of the index on which the proposed rates are based on. and offer same preliminary notes on the terms within each proposal. Finallythis memorandum concludes with a summary of the responses as well as a recommendation with which to move forward. The PFM Group F.rl„r:r.:-.# ::1: rn`Strrrit arty err' 10/12/2016 Page 2 of 3 Table 1 Summary Database of FL Equipment Lease Financings completed since January 2015 Aoraraga t;fe Winnieg Bidder Proposed Princ[pai MAW it Sara ioareltunr. Closing Date Term iyearsi Nears' trllerett Ras. All Wii ut �:r.E,.;F.es';e�. f. '�atC 1 3.981. : 54`t: r:siar+r Cr-Jo 2i urt'i. FL hest arm leseh Comte Sr`.uar D:strizt ..ease Plan i}r1c1: ca:lnty S:npol wgt Ct xate! Leaie tease .r?.rsa heir :rate 5ominarr ni Sej t c Frvirctngt TIrm A r2: are • Btri:r.!:f iai;f i is ,y :.:-.14e . ae.r] ,, sr 9 ds , .14 5 2 713 2.642 5 ]3aa 2;^a 5 5 232). 5 2.3.51 Further detal on the recent comparable lease financings for the City, (August 2015), Miami -Dade County (February 2016). and Miami -Dade County Public Schools (August 2016) is included in the summary table below and compared alongside the two RFP responses. Lease Proposals Miami 'Radio System - Harris Corporation Miami RadiaSystem • Motorola Solutions M ami Police Equipmen7 Miami•Dade Police Le3Se Equipment Lease Miami -Dade 5,:haols Lease 1 Dot.] Ptcp sY]..l 9:29 2C'i`.i of 49/2016 r[ 3/ 21/ 2015 2/16F 201E is 5lr....,3 Amount Financed S9,'t:0,E,C% 1=,CJ35,t.:;G 53',CClO,CCCo S10,51,11),CLI i. Y.I3LC..: tease Teirn 5, 7, or IC rears 5, 1, or LO years 5 year 5, 6, or 7 years 5 )ea , Interestl?:3tfi.3; 5y-ar-1.69'S.. 5•ga',3i.3.5d?S 5year •1.5f1,'S /] 5�4tr-1.25.a5 '''; S�ear�1.3==. 7year-1.95'o 7year -2.75'0 - 6year-1-34a - -0 year• i.lf,`rl 1Oyear -3;:y1 - 7 ?ea, - 1.43i - •tPre'pa•fni rtt P 'aity Ally pa., tl-rt c !te 3t 101v Lt:x;,no'ui: Any time of:er one Year, no penalty Any t:'-n-! as se t rirst na i of Term, lc, penalty Aa1y time after firs; half of ;errs: rta3 penalty Eased on the historical information provided through the database, the rates indicated in the Motorola proposal are significantly higher than comparables. The proposal from Harris (through Signature) seems more in line with what the City of Miami completed last year for their police equipment lease. Since that time, however, PFM has observed a decrease in rates on equipment lease financings. The chart on the next page shows the actual H15 rate for a seven year terra. It should be noted that the H15 is a taxable rate. therefore in providing lease quotes the lessor typically reduces it to a tax-exempt equivalent (by multiplying by 64%-70%). The chart simply serves to further illustrate the point that rates have trended lower since the City implemented the prior equipment lease, and as such the City can expect a lower cost of funds than was received in the RFP response. �-- The PFM Group Table 2: Historical H 15 Rate j7 y War term, since January 2015 i.50 Tyr H15 Rate, 2015 to date 101 t 212016 Page 3 of 3 • august 2015 average: 1.95% February 2016 average• 1 39% • 4..1 August 2016 average: 1.271 .n es .r7 e. .n es .-. yn :n .%, In sr, :B sJ LO .Q S X +D ▪ o A • o ^-▪ ' o 0 40 0 ▪ 0 0 C. N Pv r! - ? N '1 P- o N IN N �. f `. !V 'NI hl q IN .N N --. fl n. 7 in- ,r N d3 Lh e», ,▪ -+ r ▪ .-? N M �▪ . t` x! ?N An alternative, if deemed availably by procurement, would be to separate the two aspects of the RFP. It would appear that the City could achieve more favorable financing terms by specifically requesting proposals from a wider universe of banks that specialize in equipment lease financings. This could be done in the same way it was done for the City's 2015 lease, and could be turned around in a short tmeframe. Furthermore. this would enable the City to select what it deems as the most favorable equipment proposal, without needing to consider the financing aspect of the proposals which is ancillary to the functional needs of the City. We believe that this format would enable the City to match its product selection with a more competitive financing. Please do not hesitate to contact us if you have any questions or comments on the memorandum.