In early 2014, staff solicited proposals from eight (8) janitorial contractors to provide annual janitorial services at various City facilities. U.S. Metro Group, Inc. (“Contractor”) was the lowest bidder with a base bid price of $296,400 plus two optional tasks which brought the total bid to $320,205, which was less than the second bidder’s total price of $350,422. Soon thereafter, staff successfully negotiated the total price of the Contractor’s bid down to $313,599.96. On March 6, 2014, an Agreement was awarded to the Contractor by the City Council for the janitorial and related services in the total amount of $313,599.96 (see Agreement) for the first term.
The Agreement term commenced on May 1, 2014 for a one (1) year term with up to four (4) one year term extensions upon agreement by both parties. The Agreement allows for a cost-of-living adjustment at time of term extension pursuant to the Consumer Price Index (“CPI”) for all urban areas in Los Angeles-Long Beach-Anaheim area. However, the CPI for this area did not include any provisions related to the State of California (“State”) Mandated Minimum Wage Rate increases. The State’s minimum wage is scheduled to be increased as follows for the duration of the Agreement for employers that have 26 employees or more:
Effective Date Minimum Wage Increase Amount
January 1, 2017 $10.50/hr $0.50/hr
January 1, 2018 $11.00/hr $0.50/hr
January 1, 2019 $12.00/hr $1.00/hr
January 1, 2020 $13.00/hr $1.00/hr
Currently, the Agreement has been extended twice for a current annual amount of $360,601.56, which was related to the state minimum wage adjustments. The Agreement is nearing the end of the third term extension date on May 1, 2017.
The Contractor has provided excellent services and is a company with a combination of experience, abilities and customer service orientation that best meets the needs of the City of Brea. Staff believes their experience allows them to facilitate the City’s goal of providing high-level customer service. The majority of the janitorial staff are paid minimum wage and have worked for various contractors here at the City of Brea for many years.
Due to the State’s minimum wage increases, staff is recommending replacing the CPI cost adjustment calculations in Section B, Subsection 8, CONTRACT PRICE AND PAYMENT, of the Agreement to a set annual Agreement price per extended term. Additionally, to align the term of the annual renewal to the City’s Fiscal Year, Section B, Subsection 9, TERM; CONTRACT RENEWAL, of the Agreement will be amended to begin all subsequent terms on July 1. Therefore, this Amendment will increase the remainder of the third extended term from $360,601.56 to $367,164.06 up to June 30, 2017, to reflect the minimum wage increase that started in January. All subsequent extended terms will have a set price as indicated within the Amendment (see Amendment No. 1, Attachment A).
Therefore, based on their excellent performance to date, staff is recommending amending the Agreement to include set cost increases based on the State minimum wage increases versus the CPI and modifying the subsequent extended term date to start on July 1.
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