CITY CLERK. Contract to Provide Banking Services for the City of Toronto RFP

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1 CITY CLERK Clause embodied in Report No. 5 of the, as adopted by the Council of the City of Toronto at its meeting held on June 24, 25 and 26, Contract to Provide Banking Services for the City of Toronto RFP (City Council on June 24, 25 and 26, 2003, adopted this Clause, without amendment.) The recommends the adoption of the following report (June 2, 2003) from the Chief Financial Officer and Treasurer: Purpose: To advise the results of a Request for Proposals (RFP) for the provision of banking services to the City for a five-year period and to request the authority to contract with the successful proponent. Financial Implications: The recommended action will award a contract to the Royal Bank of Canada, the highest scoring proponent, for a five-year period at an approximate annual budgeted cost of $1,275, for banking services. Recommendations: It is recommended that: (1) a five-year contract for an estimated amount of approximately $1,275, annually be awarded to the highest scoring proponent, the Royal Bank, to provide banking services to the City of Toronto with transactional costs that are fixed over the term of the contract; (2) the Chief Financial Officer and Treasurer be authorized to implement additional services with the Royal Bank or other financial institutions where such services result in cost savings to the City and report back to Council on the services to be provided; (3) the procurement card portion of the RFP be considered separately at a later date in a report to be submitted by the Chief Financial Officer and Treasurer; and (4) the appropriate City officials be authorized and directed to take the necessary action to effect thereto.

2 2 Background: Five years after the City of Toronto Act received Royal Assent in 1997, the new amalgamated City has achieved many of the banking services objectives envisioned when the basic administrative framework was established for the new municipality. Approval of Corporate Services Committee Report No. 7, Clause No. 11, entitled, Contract to Provide Banking Services for the City of Toronto at the City Council meeting of June 3, 1998, commenced the process of streamlining the banking services of the new municipality. A focus on efficiency in banking service operations as the underlying objective has guaranteed that the entire cash management process sustains and supports the delivery of programs and services for the City. As a result of amalgamation, the City has consolidated the banking operations of the previous area municipalities and Metropolitan Toronto s into one cash management structure with the assistance of the City s Banker (Royal Bank) by means of a gradual migration of services to a centralised system. It is anticipated that there will be further efficiencies over the next five years as the City works closely with the selected proponent to access the latest in client server technology, general ledger systems and human resource/payroll applications. It is the City s intention to maximise use of this technology in partnership with its provider of banking services. Currently, the five-year contracted term for the provision of banking services by the Royal Bank expires on July 1, Discussion: In order to select a banking proponent for the next 5-year term and improve services using new technologies, a Request for Proposal (RFP ) for these services was issued on February 17, 2003, to the six major Canadian banks. The RFP was issued by the Purchasing and Materials Management Division, in accordance with its standard practices. The RFP was also advertised on the City of Toronto s internet website. A proponent s meeting was held on March 7, and proposal submissions were received on March 26, from the Royal Bank and Scotiabank for the general banking services of the City. Partial submissions were received from CIBC, National Bank and American Express for the procurement card portion of the City s business. The Toronto Dominion Bank made a late submission, which could not be accepted. A meeting to clarify aspects of the submissions for the Stage 2 phase of the evaluations was held on May 9, with the Royal Bank and Scotiabank. The following table indicates services for which each of the proponents submitted a comprehensive and satisfactory response:

3 3 CIBC Bank General Banking Social Services Revenue Collection Parking Tags Homes for The Aged Card Only No Submission No Submission No Submission No Submission Scotiabank Yes Yes Yes Yes Yes Royal Bank Yes Yes Yes Yes Yes National Bank Card Only No Submission No Submission No Submission No Submission American Express Card Only No Submission No Submission No Submission No Submission Review and Scoring of Submissions: An evaluation team consisting of senior City staff from Revenue Services, Corporate Finance, Information and Technology, Parking Tags, Accounting and Social Services familiar with banking operation requirements reviewed each proposal. The submissions by the Royal Bank and Scotiabank were the only two submissions that were evaluated for the general banking requirements. Both submissions met the mandatory requirements in Stage 1 of the evaluation process and were advanced to Stage 2. The mandatory requirements (Stage 1 of the evaluation) for each service category were: General Banking Requirements: (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv) (xvi) Bank Account Structure requirements stipulated by City; Account Activity using electronic banking medium and interest rate advise; Bank Statements and Documentation listing all daily activities; Cheque Requirements and Reports; Payroll Direct Deposit Services; Deposits; Workstations; Bank Card Services; Kiosks/Automated Teller Machines; Card; Credit Reports; Missing Deposits/Cash Transactions; Armoured Car arrangements; E-Commerce Banking proposal; Pre-authorised Debit Payments; and Lines of Credit.

4 4 Revenue Collection Requirements: Payments Made at Bank Branches; Telephone Banking Payments; Pre-Authorized Payments processing ; (iv) Mail Processing Requirements stipulated by City; (v) Customer User Guide; (vi) Access Code and Password protocols; (vii) Customer Service availability; (viii) Technical Requirements suitable to City s requirements; and (ix) Courier Services provisions. Parking Tag Operations: Mail Administration and Payment Processing; Payments Received at Parking Tag Operations; and Banking Requirements. Additional services in the RFP not included in the mandatory criteria but nonetheless part of the general banking operations of the City include services such as cheque encashment, convenient deposit facilities for all City locations, payroll services and banking provisions for the Homes for the Aged Division. Also, the requirements for revenue collection includes the consolidation of water, tax and miscellaneous payments made at financial institutions. Stage 2 of the evaluation process included the following criteria: (iv) Overall quality and scope of Services with respect to Solution functionality/business case; Ability, technical, financial and otherwise to achieve desired objectives; Understanding of Services and RFP Goals and Requirements; Methodology and solution; (v) Relevant experience, qualifications, performance capabilities and successes demonstrated; (vi) (vii) Work Plan/schedule and ability to meet critical dates; and Cost of Services. Evaluations concluded that the Royal Bank was the highest scoring proponent able to satisfy the City s requirement for a full range of services inclusive of all aspects of the Revenue, Banking Service and Parking Tag Operations. The overall quality and scope of services with respect to the banking operational requirements met with the approval of the evaluation team. The Royal Bank proposal also offered the most competitive cost structure.

5 5 The RFP highlighted the increasing use of technology in the delivery of banking services and gaining internal efficiencies. The Royal Bank has provided the commitment to technology in the form of capital invested and available resources and has indicated that it will assist the City in moving to increased use of electronic commerce and web-based applications. The Fair Wage and Labour Trades Office has reported favourably on the firm recommended. Conclusion: This report requests authority to issue a five-year contract to the Royal Bank of Canada for the provision of banking services to the City of Toronto with the exception of the procurement card. The procurement card portion will be considered separately at a later date to coincide with the City s timing on the implementation of the procurement card program. The evaluation team scored the Royal Bank highest in all of the critical banking service operations. The Royal Bank submitted the most comprehensive proposal to address the City s unique banking requirements. Contact Name: Len Brittain, Director of Corporate Finance Phone number: Fax number: address: lbrittai@toronto.ca Lou Pagano, Director, Purchasing and Material Management Division Phone number: Fax number: address: lpagano@toronto.ca (Councillor Ootes, at the meeting of Council held on June 24, 25 and 26, 2003, declared an interest in the foregoing Clause, in that he owns shares in the Royal Bank.)