Agenda Item # 12
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Date: |
July 7, 2003 |
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Committee Meeting Date: |
July 17, 2003 |
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Board Meeting Date: |
August 7, 2003 |
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ACTION
X
DISCUSSION
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| INFO
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BOARD MEMORANDUM
| TO: |
Administration and Finance Committee |
| | Santa Clara Valley Transportation Authority |
| | Board of Directors |
| | | | THROUGH: | Peter M. Cipolla |
| | General Manager |
| | | | FROM: | Scott D. Buhrer |
| | Chief Financial Officer |
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| SUBJECT: |
Extension of Contract with Union Bank of California |
RECOMMENDATION:
Authorize the General Manager to extend the existing contract with Union Bank of California for Commercial Banking and Custodial Safekeeping Services for a period of five years for an amount not to exceed $815,000.
BACKGROUND:
Pursuant to a Request for Proposals (RFP 97-47) issued in November 1997, VTA executed a contract with Union Bank of California to provide commercial banking and custodial safekeeping services. The original Board authorization was for three years plus two one-year renewal options. The current contract expires September 16, 2003.
The services are paid for through a combination of compensating balance credits and direct payment. The earning rate for the compensating balance credits is set at the 90 day US Treasury Bill rate. This rate is higher than VTA would be able to invest funds on a daily basis. Generally, the credit is earned on the average daily balance of the account and may be used to pay for account service charges only. The account service charges are allocated to the VTA Operating Fund and the VTA/ATU Pension Trust Fund.
DISCUSSION:
In order to determine whether or not it would be cost effective to conduct a new solicitation for these services, VTAs Chief Financial Officer requested a price analysis of banking services. Six public agencies that have recently renewed banking services agreements or conducted solicitations for these services were contacted and asked to provide their pricing comparison sheets. Of the six contacted, the City of Sunnyvale and the County of Solano responded by sharing their pricing information. Additionally, The City of Livermore stated that they were able to obtain sufficient reductions in costs, which negated the need for a competitive procurement.
Union Bank has proposed reductions in both their commercial banking rates and their custodial safekeeping rates, which approximate $60,000 per year or 27% when compared to the existing banking fees. These reduced rates are comparable or more favorable than those achieved by other agencies through negotiation of extensions or through competitive solicitations.
ALTERNATIVES:
The Board could request staff to conduct a competitive solicitation, however, staff feels it is unlikely that a competitive process will result in greater savings and extending the existing agreement avoids solicitation costs as well as service transition costs and difficulties.
FISCAL IMPACT:
Funds for these services are included in VTAs Operating and VTA/ATU Pension Plan budgets.
SBE PARTICIPATION:
Due to the commercial nature of these services, no specific goal was established for this contract.
| Prepared by: | Frances M. McNichol, Contracts Manager |
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