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Home My WebLink About04.a. Review draft Position Paper to authorize the General Manager to: 1) increase an existing professional consulting services agreement with Emtec Consulting Services LLC in an amount not to exceed $350,000, increasing the cost ceiling to $2,715,000, a Page 1 of 3 Item 4.a. Algi CENTRAL SAN BOARD OF DIRECTORS POSITION PAPER DRAFT MEETING DATE: NOVEMBER 3, 2020 SUBJECT: REVIEW DRAFT POSITION PAPER TO AUTHORIZE THE GENERAL MANAGER TO: 1) INCREASE AN EXISTING PROFESSIONAL CONSULTING SERVICES AGREEMENT WITH EMTEC CONSULTING SERVICES LLC IN AN AMOUNT NOT TO EXCEED $350,000, INCREASING THE COST CEILING TO $2,715,000, AND 2) EXECUTE A CONTRACT WITH A TERM NOT TO EXCEED THREE-YEARS IN AN AMOUNT NOT TO EXCEED $400,000 FOR ONGOING SYSTEM SUPPORT FOR THE ENTERPRISE RESOURCE PLANNING REPLACEMENT, DISTRICT PROJECT 8250 SUBMITTED BY: INITIATING DEPARTMENT: JOHN HUIE, INFORMATION TECHNOLOGY ADMINISTRATION DEPARTMENT - IT MANAGER PHILIP LEIBER, DIRECTOR OF FINANCEAND ADMINISTRATION ISSUE At the June 20, 2019 meeting, the Board approved a revised consulting agreement for$2,365,000 with Emtec Consulting Services LLC related to the Enterprise Resource Planning (ERP) Replacement, District Project 8250 (Project). Approved and pending/anticipated change orders totaling up to $350,000 need to be added, for a new implementation-related contract amount not to exceed $2,715,000. Further, authorization is requested for ongoing support costs for not more than three years at a total cost not to exceed $400,000. BACKGROUND The Board-approved capital budget (as approved on June 20, 2019)for the entire ERP Project (DP 8250) is $5,205,000 and includes $2,365,000 for Emtec Consulting Services LLC. Board Policy No. BP 037 - Delegation ofAuthority to General Manager allows for changes up to $200,000 for professional services contracts greater than $2,000,000. As stated above, known and pending/anticipated change orders not to exceed $350,000 need to be added, for a new contract amount of$2,715,000. The change orders are shown below: Known Change Orders (Amount and Date) CR-002: Incremental (Integrations, Reports) +April COVI D $ 22,770 4/4/2020 November 3, 2020 Regular ADMIN Committee Meeting Agenda Packet- Page 4 of 38 Page 2 of 3 CR-004: ERP - Incremental PGLS (three weeks) $ 21,000 7/1/2020 CR-005 ERP - Two month extension, six additional reports $123,200 7/1/2020 CR-007 HCM - Benefit (Retirees and Plans)and Payroll Scope $ 37,000 9/18/2020 CR-008 ERP - Reports and Approval Notification Enhancements $ 28,000 9/18/2020 CR-009 ERP, HCM - Incremental PGLS (fourweeks) 36,460 10/19/2020 Subtotal $268,430 Anticipated Change Orders CR-010 Payroll - Six new reports and two integrations $ 50,000 AP Approval (retention), New Roth Plan Other future change orders 31,570 Subtotal 81,570 Total Contract Amendment Authority Requested $350,000 The amendment reallocates funds within the approved capital Project budget of $5,205,000. Once the $350,000 is subtracted from the project contingency of $527,000, the project contingency will be $177,000. A companion position paper for an Oracle change order related to the Permitting/Community Development component of the ERP project for$175,000 would result in a net remaining contingency amount of$2,000. Apart from the revision to the Emtec contract as described above, staff is recommending entering into an agreement with Emtec for ongoing support for the Oracle Cloud ERP system. Proposals for such ongoing support from both Emtec and Oracle were considered. Staff recommends proceeding with Emtec for at least the first year of services after go-live, given their familiarity with the configuration they have established for Central San. Over time, staff will take on an increasing role in ongoing support, which includes testing quarterly cloud software updates from Oracle, addressing trouble tickets, routine user changes, etc. Staff also requests authorization for a service contract with a term not to exceed three years. Such services would not be funded from the ERP Project (Project 8250) in the Sewer Construction budget, but would instead constitute Operations & Maintenance (O&M) expenditures. At an expected annual cost not- to-exceed $130,440, costs are estimated at$391,320, and with potential incidentals, not to exceed $400,000. Implementation of the Oracle ERP is progressing as planned, with two Human Resources modules and the financial and purchasing modules implemented to date. Payroll and budgeting are scheduling in the coming months. ALT ERNAT IVES/CONSIDERAT IONS With respect to the change orders related to implementation, there are no viable alternatives to accepting the agreed upon change orders of$268,000 as this work has either been completed or is pending, and is deemed necessary to meet baseline needs for the system. If the pending and future anticipated change order funding of an estimated $81,570 were not to proceed, important functionality necessary to provide for usable payroll and benefits modules would not be implemented, which is not practical or advisable. With respect to ongoing support, several options were considered including: 1. Services provided by Emtec 2. Services provided by Oracle November 3, 2020 Regular ADMIN Committee Meeting Agenda Packet- Page 5 of 38 Page 3 of 3 3. Services provided in house by staff. I n the near term, supplemental support from an external Oracle services expert such as either Emtec or Oracle are considered necessary. Proposals were considered from Emtec and Oracle for this service, with Emtec viewed as having an advantage given their ability to maintain some contact with the team members involved in the implementation for Central San. Overtime, more and more of these responsibilities can be transitioned in house, but having an outside specialist in the earliest stages of supporting the new system is considered prudent and appropriate. FINANCIAL IMPACTS No changes to Central San's overall budgets are proposed. The funding for the requested change is available with the dedicated project contingency for DP 8250. Funding for the ongoing support will be charged to and addressed within the O&M budgets. Funding for this was not included in the Fiscal Year 2020-21 adopted budget, but the amount will be funded from savings elsewhere in the budget. COMMITTEE RECOMMENDATION The Administration Committee reviewed this matter at its meeting on November 3, 2020 and recommended RECOMMENDED BOARD ACTION Authorize the General Manager to: 1) increase an existing professional consulting services agreement with Emtec Consulting Services LLC in an amount not to exceed $350,000, increasing the cost ceiling to $2,715,000, and 2) execute a contract with a term not to exceed three years in an amount not to exceed $400,000 for ongoing system support for the Enterprise Resource Planning (ERP) Replacement, District Project 8250 Strategdc Plan Tie-In GOAL THREE:Fiscal Responsibility Strategy 2—Ensure integrity and transparency in financial management GOAL SIX: Innovation and Optimization Strategy 2—Improve and modernize operations through technology and efficiency measures November 3, 2020 Regular ADMIN Committee Meeting Agenda Packet- Page 6 of 38