Template revised September 22, 2016. COMMISSION AGENDA MEMORANDUM Item No. 4c ACTION ITEM Date of Meeting January 17, 2017 DATE: January 10, 2016 TO: Ted Fick , Chief Executive Officer FROM: Peter Garlock, Chief Information Officer SUBJECT: Contract Amendment for Parking System Replacement Vendor (#C800728) Amount of this request: $0 Total estimated project cost: $5,500,000 ACTION REQUESTED Request Commission authorization for th e Chief Executive Officer to execute a contract amendment with ParkingSoft for feature enhancements to the system and to include vendor provided maintenance . EXECUTIVE SUMMARY On January 6 , 2015, Commission approved the Public Parking Revenue Control System Replacement project to replace the current system used for the SeaTac public garage. ParkingSoft was selected via a competitive procurement and a contract was signed in March 2016. Deployment of the new system is currently scheduled for 2 nd quarter 2017 and additional enhanceme nts will be deployed by end of the year. This request will approve a contract amendment for feature enhancements identified during design to improve reliability , reduce credit card processing fees , and provide additional payment options . The estimated contract cost of $400,000 is greater than ten percent of the original contract value ; therefore, Commission authorization is required under the General Delegation of Authority, Section 4.2.3.8 . This cost will be accommodated within the current approved pro ject budget (# C800728). In addition, the amendment will add vendor managed support for an estimated annual contract cost of $200,000 . Annual support costs will stay static for three years , and are then estimated to rise 4% per year through year ten. Total recurring costs with this amendment will be 32% lower than recurring costs for the current system. They are budgeted in the Aviation Maintenance operating budget. JUSTIFICATION This amendment includes several enhancements with important benefits. (1) Reduce s our risk of failure in connectivity to third party credit card processing services COMMISSION AGENDA – Action Item No. 4c Page 2 of 4 Meeting Date: January 17, 2017 Template revised September 22, 2016 ; format updates October 19, 2016. (2) Significantly reduce s our credit card processing fees by eliminating an additional credit card processing gateway , and providing more detailed transaction information (3) Offe rs additional payment options to general parking customers , as well as our corporate parking program customers (4) Transfer maintenance responsibilities for on -site application infrastructure to the vendor clarifying accountability for availability, accuracy, and Payment Card Industry (PCI) requirements DETAILS Scope of Work The following scope is included in the proposed contract amendment. (1) Create a direct connection to the Port’s preferred credit card processor (2) Accept debit card and Automated Clearing House (ACH) payments (3) Improve s ystem architecture to eliminate single point s of failure (4) Provide better support for on -site ParkingSoft system infrastructure and software Schedule Original Commission Authorization January 12, 2015 Parking system deployment complete June 2017 Additional program support December 2017 Cost Breakdown Ther e is no change to the original approved project budget as a result of this amendment. ALTERNATIVES AND IMPLICATIONS CONSIDERED Alternative 1 – Utilize standard credit card gateway provided by ParkingSoft as a link to the Port’s credit card processor. Cost Implications: $0 Pros : (1) Standard delivered credit card interface will reduce complexity in the initial implementation. (2) $340,000 in capital costs would be available for other efforts. Cons: (1) An additional gateway for credit card processing increases opportunities for failure that would result in lost revenue for the Port. (2) There would be an estimated annual increase of $ 97,000 in credit card processing fees from the additional credit card gateway. (3) An estimated savings of $65,000 in credit card processing fees would not be realized. This is not the recommended alternative. COMMISSION AGENDA – Action Item No. 4c Page 3 of 4 Meeting Date: January 17, 2017 Template revised September 22, 2016 ; format updates October 19, 2016. Alternative 2 – Utilize standard fault tolerance architecture provided by ParkingSoft and manage local infrastructure with Port resources. Cost Implications: $0 Pros : (1) Standard architecture will reduce complexity in the initial implementation. (2) $60,000 in capital costs and an estimated $171,000 in annual maintenance will be available for other efforts. Cons: (1) Standard architecture with a single point of failure does not adequately protect against connectivity or credit card processor issues that could result in lost revenue for the Port. (2) Accountability for availability, accuracy, and compliance with PCI requirements would be shared between the vendor and the Port, resulting in potential finger pointing . This is not the recommended alternative. Alternative 3 – Approve a contract amendment to create a direct connect ion to the Port’s credit card processor, accept debit card and ACH payments, improve reliability , and include vendor support of on -site system infrastructure . Cost Implications: $400,000 increase in c ontract costs and an estimated initial annual contract cost of $200,000. This increase can be accommodated within the originally approved budget. Pros: (1) Realize credit card processing fee savings of an estimated $ 162,000 annually over other alternatives . (2) Improve customer service by offering multiple payment options . (3) Protect against revenue loss from connectivity or credit card processor issues . (4) Clearer accountability on vendor for availability, accuracy, and PCI requirements . Cons : (1) Capital and recurring funds are not available for other efforts . (2) Additional complexity in the initial system implementation. This is the recommended alternative. FINANCIAL IMPLICATIONS Cost Estimate/Authorization Summary Capital Expense Total COST ESTIMATE Original estimate $5,500,000 $0 $5,500,000 AUTHORIZATION Previous authorizations $5,500,000 0 $5,500,000 COMMISSION AGENDA – Action Item No. 4c Page 4 of 4 Meeting Date: January 17, 2017 Template revised September 22, 2016 ; format updates October 19, 2016. Current request for authorization $0 0 $0 Total authorizations, including this request $5,500,000 0 $5,500,000 Remaining amount to be authorized $0 $0 $0 Annual Budget Status and Source of Funds There is no change to the authorized project budget as a result of this amendment. Future Revenues and Expenses ( Total cost of ownership) (1) Annual initial recurring costs of approximately $200,000 will be budgeted in the Aviation Maintenance operating budget. (2) Estimated annual savings of $162,000 are expected from a reduction in credit card processing fees over the originally planned implementation. (3) $50,000 in Port labor savings are expected from a transition to vendor managed infrastructure. ATTACHMENTS TO THIS REQUEST None PREVIOUS COMMISSION ACTIONS OR BRIEFINGS January 6, 2015 – The Commission authorized the Chief Executive Officer to (1) proceed with the Public Parking Revenue Control System Replacement project; (2) authorize the procurement of required hardware, software, and vendor services; (3) authorize Port staff to implement the project for a total project cost not to exceed $5,500,000; and (4) authorize procurement of post -implem entation maintenance contracts.