REPORT ON REQUEST FOR PROPOSAL FOR A LEARNING MANAGEMENT SYSTEM WITH INTEGRATED ONLINE LEARNING CONTENT
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1 COUNCIL AGENDA: 12/9/14 ITEM: 0,! ZYL CITY OF SAN JOSE CAPITAL OF SILICON VALLEY Memorandum TO: HONORABLE MAYOR AND CITY COUNCIL FROM: Julia H. Cooper SUBJECT: SEE BELOW DATE: Approved (, Date ^ f/z.'s""/// SUBJECT: REPORT ON REQUEST FOR PROPOSAL FOR A LEARNING MANAGEMENT SYSTEM WITH INTEGRATED ONLINE LEARNING CONTENT RECOMMENDATION Accept the report on the Request for Proposal for a Learning Management System with Integrated Online Learning Content and adopt a resolution authorizing the City Manager to: 1. Negotiate and execute an Agreement with Saba Software, Inc. (Redwood Shores, CA) for the purchase of a Learning Management System with integrated online learning content, including software cloud subscription services, implementation, integration to the Human Resources PeopleSoft System, training and related professional services, for an initial sixyear term ending February 2021, with a maximum compensation not-to-exceed $259,008 for the initial twelve months of the Agreement, and an estimated $1,146,508 for the six-year term, subject to the annual appropriation of funds; 2. Execute change orders to cover any unanticipated changes or requirements in the system design and implementation, not-to-exceed $25,900 (10% of first year compensation) as may be required; 3. Execute amendments to increase maximum compensation in the event a greater number of users than estimated register for e-learning classes, subject to the appropriation of funds; 4. Execute one-year options to extend the term of the Agreement to provide ongoing cloud subscription and content services after the initial six-year term, subject to the annual appropriation of funds.
2 Page 2 OUTCOME Provide a web-based Citywide Learning Management System ("LMS") for talent/learning management to engage and develop employees' skills by delivering online, self-study training and education for all City of San Jose ("City") employees. EXECUTIVE SUMMARY This memorandum provides the City Council with a report on the Request for Proposal (RFP) process. After a thorough and complete evaluation of proposals from six different companies, staff recommends award of contract for the purchase and implementation of an LMS to Saba Software, Inc. ("Saba"), which submitted the most advantageous proposal to the City, for a maximum compensation not-to-exceed $1,146,508 for an initial six-year term. Various funds have been identified for year one costs as outlined in the Budget Reference table, however, funding for years two through six ($177,500 per year) will be incorporated into the development of the Base Operating Budget. BACKGROUND Starting in Fiscal Year , the City of San Jose experienced a decade of continuing shortfalls and budget cuts. As a result of budget reductions, the City's investment in training diminished substantially. In Fiscal Year , the Human Resources Training and Development Division was eliminated. The elimination of this Division impacted efforts toward Citywide training classes for Microsoft Office computer skills (i.e. Word, Excel, etc.) and for department-specific training. As the budget stabilizes and the City works to rebuild the workforce, it is essential to invest in technology and employee training to establish a renewed emphasis on learning and development throughout the organization. Utilizing technology in the form of an e-learning System will help to provide alternate, efficient, and cost effective means of delivering training. A Learning Management System with integrated online learning content will help transform the organization by providing employees the tools necessary to increase their skills, knowledge, and abilities for career development and job satisfaction. ANALYSIS In March 2014, the Finance Department released a Request for Proposal (RFP) for a Learning Management System with integrated online learning content through the City's e-procurement system. A total of 127 companies viewed the RFP, and six proposals were received by the May 2, 2014 deadline as listed below:
3 Page 3 American Management Association "American Management" (Orlando, FL) Aspire HR "Aspire" (Dallas, TX) Cornerstone OnDemand "Cornerstone" (Santa Monica, CA) eclass4learning "eclass" (Port Washington, WI) Saba Software, Inc. "Saba" (Redwood Shores, CA) Visionary Integration Professionals "Visionary" (Folsom, CA) Evaluation Team: The proposals were evaluated by a five-member team. Each team member independently evaluated and scored the proposals and oral presentations. Minimum Qualifications: Staff determined all proposals were responsive and met the initial pass/fail review of the stated minimum qualifications. Experience (20% weight): The evaluation team evaluated the proposers' experience including number of years providing learning management systems, quality of references, staff qualifications, and project approach. Technical Capabilities (40% weight): A thorough review of each company's technical proposal was evaluated including management approach, software capabilities, implementation plan, training, customer service and training content packages. Cost (30% weight): Cost proposals were opened and scored at the conclusion of the technical proposal evaluation. Proposers were required to submit a cost proposal covering six years of services. Oral Presentations: The top four proposers, Aspire, Cornerstone, Saba, and Visionary, were invited to participate in the oral presentations to demonstrate their knowledge and understanding of the City's requirements, introduce key personnel that would be assigned to the project, and to present a comprehensive demonstration of their system. Presentations/System Demonstrations were conducted on August 21-22, Prior to their scheduled demonstrations, both Aspire and Visionary withdrew from the process because after reviewing the demonstration script they concluded that their solution did not meet the City's requirements or did not have content to demonstrate. Best and Final Offer (BAFO) \ A Best and Final Offer was issued to finalists in order to clarify the City's requirements and obtain best and final pricing. The evaluation results are summarized on the next page:
4 Page 4 Max Saba Cornerstone Evaluation Criteria Points (Redwood Shores, CA) (Santa Monica, CA) Technical Capabilities Experience Cost Local Business Preference Small Business Preference TOTAL Protest Period: The RFP process included a ten-day protest period that commenced when Proposers received the City's Notice of Intended Award on October 2,2014. No protests were received. Local and Small Business Preference: In accordance with City policy, ten percent of the total evaluation points were reserved for local and small business preference. None of the Proposers requested consideration for the preference. Award Recommendation: Staff recommends award of contract to Saba as the best value solution per the evaluation criteria as set forth in the RFP. Saba's proposal scored the highest overall; meeting or exceeding all of the RFP specifications, and their solution was found to have the following key attributes: Impressive track record of successful LMS implementations, reliability of implemented systems and superior customer service as validated through reference checks. A web-based solution that does not require additional installation of software on individual computer workstations. Partners with content providers Open Sesame Marketplace and SlcillSoft, which provides access to over 3,300 courses and 100 other content providers. References were checked with the City of Los Angeles, CA, County of Santa Clara, CA and the City of Houston, TX. The reference checks were very positive. Summary of Agreement: Staff is requesting authority to negotiate and execute an Agreement with Saba for cloud software subscription services, content, and professional services including implementation, integration to PeopleSoft, and system training. The initial term of the agreement is for six years with the option to extend the agreement annually to provide ongoing cloud subscription and content services. The compensation schedule for the implementation shall include payments tied to the successful completion of key implementation project milestones. Annual subscription volume pricing is based on the actual number of employees who register for online training, plus volume pricing for content (fee-for-service model) based on 50-90% discount off list price. The Agreement provides for Open Sesame Marketplace and SkillSoft as the content providers.
5 Page 5 The cost for the option years after the initial six-year term shall be based on renewal quote from Saba and any requests for compensation increases must be justified by the vendor and are subject to approval by the City. EVALUATION AND FOLLOW-UP This memorandum will not require any follow-up from staff. POLICY ALTERNATIVES Alternative #1: Continue with current limited training services. Pros: Allows City Departments to coordinate their own training programs. Cons: There is currently not sufficient City staffing available to design and implement all the various training programs required. Reason for Not Recommending: Utilizing technology is the most efficient and cost effective method to facilitate and deliver a wide variety of e-leaming content, streamline administration, management and tracking of City staff training. PUBLIC OUTREACH This memorandum will be posted on the City's website for the December 9, 2014 City Council agenda. COORDINATION This memorandum has been coordinated with the Human Resources Department, the Information Technology Department, and the City Manager's Budget Office. FISCAL/POLICY ALIGNMENT This action is consistent with the following General Budget Principles "We must focus on protecting our vital core city services for both the short- and long-term" and "We must continue to streamline, innovate, and simplify our operations so that we can deliver services at a higher quality level, with better flexibility, at a lower cost" and the Strategic Initiative "Make San Jose a Tech-Savvy City; lead the way in using technology to improve daily life."
6 Page 6 COST SUMMARY/IMPLICATIONS The following outlines the elements of the contract. 1. AMOUNT OF RECOMMENDATION (6 year term): $1,146, COST ELEMENTS: Year 1 (12 months) Implementation - Cloud/Software subscription (based on 5,000 estimated employees) $ 62,500 -Implementation 71,958 -Travel 10,000 - Training 4,550 - Integration to People Soft 10,000 - Content (estimated) 100,000 Subtotal (Year 1) $259,008 Annual Cloud Subscription and Content - Year 2 ($162,500 cloud subscription & content, + $15,000 (options) $ 177,500 - Year 3 ($162,500 cloud subscription & content, + $15,000 (options) 177,500 - Year 4 ($162,500 cloud subscription & content, + $15,000 (options) 177,500 - Year 5 ($162,500 cloud subscription & content, + $15,000 (options) 177,500 - Year 6 ($162,500(cloud subscription & content, + $15,000 (options) 177,500 Subtotal (Years 2-6) $887,500 Total (Years 1-6) $1.146,508 Contingency (@ 10% of first year total) $25,900 GRAND TOTAL $1,172, SOURCE OF FUNDING: Various Funds for Year 1, see below Budget Reference table 4. FISCAL IMPACT: The funding for years 2 through 6 ($ 177,500 per year) will be incorporated into the development of the Base Operating Budget. After the initial six-year term, the ongoing subscription and content costs are estimated at $177,500 per year. Future price adjustments must be justified by the vendor, approved by the City, and are subject to the annual appropriation of funds. BUDGET REFERENCE The table below identifies the fund and appropriations proposed to fund the contract and contingency recommended as part of this memorandum.
7 Page 7 Fund # Appn # Appn. Name Total Appn. Amount of costs for Contract Organizational Effectiveness $253,000 $98,508 IX Adopted Operating Budget Page City Manager's Office Non-Personal/ Equipment $1,145,433 $188,400 VIII-52 YEAR 1 TOTAL (including contingency) $284,908 Last Budget Action (Date, Ord. No.) 10/07/2014, Ord. No /17/2014, Ord. No CEOA Not a Project, File No. PP10-066(a), Agreements and Contracts. /s/ JULIA H. COOPER Director of Finance For questions, please contact Mark Giovannetti, Deputy Director, Finance at (408)
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