DEPARTMENT: Finance
DEPARTMENT HEAD: Troy Elliott
COUNCIL DISTRICTS IMPACTED: City Wide
SUBJECT:
AP Invoice Automation System
SUMMARY:
This ordinance authorizes a contract with Readsoft, Inc. for the purchase, configuration, implementation and training for software to further automate and streamline Accounts Payable invoice processing. Readsoft, Inc. has been a certified data capture SAP partner since 2001 with over 1,000 SAP customers and has extensive public sector experience. The initial software implementation, configuration and training will be for a seven month period upon City Council approval.
It is estimated that the additional automation, which includes the use of Optical Character Recognition (OCR) capabilities, will result in timelier payments to vendors allowing the City to take better advantage of lost vendor discounts, improve vendor relations and potentially increase the level of vendor participation in future bids. This contract will allow for the reallocation of existing resources to focus on vendor relations and payment as opposed to data input.
Funds in the amount of $384,000 are available from the ITSD Portfolio project fund.
BACKGROUND INFORMATION:
The City is undergoing a phased effort to modernize its invoice management and payment process. The initial phase, which went live in April 2010, focused on scanning invoices and delivering electronic images throughout the organization using workflow to obtain all the necessary information to process the invoices into SAP.
The volume of transaction activity handled currently by COSA's Accounts Payable Section includes:
· 3,000 Total Active Vendors; (~7,000 vendor master records)
· Total Invoices Received Annually = 110,000 PO; 36,000 Non-PO; 10,000 Employee Travel & Expense Reimbursements
· 50% of invoice transactions correspond to <8% of total dollar spend
Through subsequent phases, the Accounts Payable division seeks to (1) further automate and improve the total solution for the capture, workflow and financial posting of invoices; (2) develop a comprehensive program for onboarding vendors to the improved invoice capture solutions; and (3) incorporate performance measurement and reporting through a comprehensive standardized and ad hoc reporting capability.
On August 23, 2013, the Finance Department issued a Request for Competitive Sealed Proposals (RFCSP) for implementation services and software recommendations to further automate and streamline Accounts Payable invoice processing with a submission deadline of October 2, 2013. Six qualified proposals were received and evaluated by the selection committee ("committee"). Readsoft, Inc. was selected by the committee as the recommended Respondent for award. The committee based its decision on several weighted factors, to include experience, background and qualifications and proposed plan. Additional factors were applicable, including price, SBE Prime Contract Program, and M/WBE Prime Contract Program and were considered in the final scoring.
The committee consisted of members from the Finance and Information Technology Services Departments with advisory members from two operational departments and the City Attorney's office.
ISSUE:
City Council action is required to authorize the award of the proposed contract. Authorization of this agreement allows the City to obtain an optimized accounts payable solution in the following areas of front end data capture of supplier invoices from paper, SAP integration, workflow accessible inside and outside of SAP, Non-PO coding and approval, PO-based invoice exception resolution and archive and retrieval of imaged documents via FileNet using the SAP Archive link.
This contract will be awarded in compliance with the Small Business Economic Development Advocacy (SBEDA) Program, which requires contracts be reviewed by a Goal Setting Committee to establish a requirement and/or incentive unique to the particular contract in an effort to maximize the amount of small, minority, and women-owned business participation on the contract. The Goal Setting Committee applied the Small Business Enterprise (SBE) Prime Contract Program to this solicitation at fifteen (15) evaluation preference points. However, no evaluation preference points were awarded to Readsoft Inc., as they are not certified as a Small Business Enterprise (SBE) within the San Antonio Metropolitan Statistical Area (SAMSA).
In addition, respondents certifying their commitment to serve as mentors in the City of San Antonio's Mentor Protégé Program were eligible to receive five (5) evaluation criteria percentage points. However, Readsoft Inc. did not receive any evaluation preference points associated with the mentorship incentive as they did not certify their commitment to serve as mentors in the City of San Antonio's Mentor Protégé Program.
The Local Preference Program was not applied in the evaluation of responses received for this contract.
The Veteran-Owned Small Business Preference Program does not apply to this contract since it was solicited prior to January 15, 2014, the effective date of the program.
ALTERNATIVES:
Should the contract with Readsoft, Inc. not be approved, the City will be constrained with current time consuming processes and ineffective allocation of resources that limit the timely payment of invoices to vendors, reduces the ability of the City to capture additional discounts and strains vendor relations.
FISCAL IMPACT:
Finance is requesting City Council authorization of an agreement with Readsoft, Inc., for the purchase, installation, configuration and implementation of software to further automate and streamline Accounts Payable invoice processing for an initial cost not to exceed $384,000.00. The cost for the perpetual software license and initial support during implementation is $258,653.00 and the configuration, implementation of software and training is $125,347.00.
The City will incur maintenance and support costs in the amount of $46,442.00 for the perpetual license on an annual basis, subject to subsequent annual budget approvals. Annual maintenance costs may be subject to increase and will be addressed via contract amendment.
Additional costs for server hardware not to exceed $50,000.00 are not covered by this contract but are in the project and may be required for the implementation of this software.
Funds in the amount of $384,000 are available from the ITSD Portfolio project fund.
RECOMMENDATION:
Staff recommends approval of an ordinance authorizing an agreement with Readsoft, Inc. implementation services and software recommendations to further automate and streamline Accounts Payable invoice processing.
This contract was procured by means of Request for Competitive Sealed Proposals and a Contracts Disclosure Form is required.