SUBJECT: RESOLUTION NO. APPROVAL TO IMPLEMENT THE AMERICAN EXPRESS CORPORA TE/ GOVERNMENT CARD PROGRAM AND MEETING PLANNERS' ACCOUNT SERVICES

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1 - _d DATE: APRIL 24, ,\ THE PORT OF LOS ANGELES Executive Director's Report to the Board of Harbor Commissioners AMERICAN EXPRESS CORPORA TE/ GOVERNMENT CARD SUMMARY: The Los Angeles Board of Harbor Commissioners is requested to approve the use of the American Express Corporate/Government Charge Card Program and Meeting Planners' Accounts (the "Program") as the Port's charge card for business and travel services, and management of meeting events, respectively. The Program will allow a not-to-exceed amount of up to fifty corporate/government cards, including the issuance of card-less meeting planners' accounts, to pay for Port business expense requirements and meeting events in accordance with existing Port travel policies and procedures. RECOMMENDATION: It is recommended that the Board of Harbor Commissioners: (1) Adopt the Resolution No. - authorizing the use of the American Express Corporate/ Government Card and Meeting Planners' Account Program; (2) Authorize the Executive Director, or designee, to terminate the existing Port credit card program agreement with Union Bank upon the effective date of the implementation of the Program; and (3) Authorize the Executive Director, or designee, to communicate the American Express Corporate/Government Card Program transition (phase out) plan to existing card holders. DISCUSSION: Backzround. 1. The Port currently has (since 1982) a credit card program with Union Bank (formerly 151 BankCard Center) that provides cardholders the ability to pay for required business and travel expenses incurred while engaged in official Port business, such as lodging, meals, transportation, and local expenses, at no cost annually but includes applicable charges. The card allows the Port to provide a mechanism that staff can use to pay for approved travel and other business requirements. The existing credit card agreement provides that expenses are subject to finance charges at a corresponding annual percentage rate of 13.5%, late charge of $29, over-limit fee of $35, and ultimately Port is liable for all charges, including any charges by unauthorized users.

2 DATE: SUBJECT: APRIL 24, 2008 Page 2 of 5 RESOLUTION NO. APPROVAL TO IMPLEMENT THE 2. There are currently 33 cardholders authorized based on a dated policy. As such, the Department is updating its policy, establishing a new Program protocol, and defining the requirements of who can be issued a card, what and how the card must be used, and the responsibilities of the cardholder. Currently, cards are issued to Commissioners, the Executive Director, Deputy Executive Directors, division heads, section heads, and Marketing division staff with frequent travel needs. Card issuance requests must be approved by the respective supervisor and Executive Director, and must provide reasonable explanation to justify the purpose of the request (i.e. need, frequency, implications, etc.). Card for travel is based on authorization. Further, the Department will revisit/update its travel policy and designate a central, point-of-contact travel coordinator. 3. The current credit card program minimized the need to issue cash advances, reducing the risk to the traveling person of having to carry cash and reducing the paperwork associated with such a process. However, the current program limits reporting capabilities and noncompetitive fees (i.e. finance, late and over limit), requiring a substantial amount of staff time to reconcile and pay for services. The structure of the current credit card program, as a result, has become more inefficient, requiring frequent adjustments to the process and procedures. 4. Currently, the City - through the Office of the Controller - uses American Express for its business travel services and used the State of California's contract with American Express to take advantage of negotiated price discounts and program benefits. The State of California performed a competitive proposal process through RFP number DGS-OFA- OPPS-06 and subsequently, selected American Express Corporate Services. The term of said Agreement expires on October 31, 2011, inclusive of the two, one-year extensions. See Transmittal 2. Benefits of Provosed Program 5. In summary, the proposed resolution authorizes the Executive Director to enter into an Agreement with American Express to issue government/corporate cards to pay for authorized business and travel related expenses, and the issuance of meeting planners' accounts as a business tool to pay for event expenses at discounted rates. The implementation of the proposed Program will improve administrative control, increase accountability, and provide additional added benefits as described herein. In addition, adopting the proposed resolution will enable staff to increase reporting capabilities, reduce the amount of time and cost associated with administrating the Program, and most importantly, provide billing consolidation of all charges into one bill delineated by card account- saving time and money for the Port. 6. The proposed Program provides a mechanism to pay for authorized, legitimate, and necessary expenses incurred during the normal course of City related business and travel; reduces the need for travel cash advances and use of personal funds and credit cards; lowers the need for administrative support while providing the card holder greater

3 DATE: APRIL 24, 2008 Page 3 of 5 flexibility to use the card wherever American Express is accepted, and increases operating efficiencies by providing the Program administrator the right tools and resources to manage and reconcile accounts online. 7. The Program is a charge card and the Port is solely responsible for all charges. Charges are due and payable at the end of each respective monthly statement cycle, which eliminates monthly finance charges. Charge limits may be customized by an employee and in the event an unauthorized or inappropriate expense is charged, staff will flag the account and take appropriate action to minimize unknown or unlimited liability. See Transmittal 3 and 4 for Program implementation letter and government card application form. 8. The Program benefits to the Port includes no annual fee (annual fee of $55 is waived) for the government card and no late (delinquency) or over-limit fee. This benefit accounts for a potential annual cost savings of more than $8,000 - $10,000. To maximize cost savings on required foreign travel, the corporate card offers the Port significant savings through its international airline traveler program, one free airfare ticket can be provided to the Port for each foreign travel paid on the corporate card. The free ticket can only be used for Port business travel only and must be consistent with City policies. The annual fee of $300 is not waived; however, based on required foreign travel airfare, the cost savings per business travel may range in excess of $8,000 per trip. Only a limited number of corporate cards will be issued. The Port's credit card policy will provide guidelines as to assignment of the corporate card. Additional benefits include increasing control and accountability through expense consolidation, reconciling expense tool, improving compliance monitoring through a dedicated payment vehicle, and managing charge card data and developing reports using real time, web-based technology. In short, the billing is consolidated onto a single, central bill which the Port receives, reconciles, and pays. See Transmittal The Program benefits to cardholders include: $350,000 door-to-door business travel accident insurance, lost baggage insurance, emergency card replacement within 24 hours when lost or stolen while on travel, assured hotel reservations, access to a World Travel Service Network consisting of over 1,700 travel and foreign exchange service locations in 130 countries, and if enrolled traveler cheques and car rental loss and damage coverage. 10. The meeting planners' account services allows for charging privileges with hotels to arrange, plan, and pay for Port events through a card-less charge account. The card-less feature eliminates unnecessary administrative activity that costs the Port time and money to orchestrate. The hotels enrolled in the meeting planners' service offer participants event rates (i.e. conference room, meal, and lodging) at discounted prices. See Transmittal 6.

4 DATE: APRIL 24, 2008 Page 4 of 5 AMERICAN EXPRESS CORPORA TE/ GOVERNMENT CARD 11. Further, another Program feature allows the enrollment of each card into the Membership Rewards services, and provide for points to be owned by the Port for its business use. Other Considerations 12. The Program allows the ability to restrict certain purchases, such as hotel accommodations, car rentals, restaurants, retail stores, travel services, department stores, oil/gas, and mail order purchases, on a card-by-card basis. 13. A separate application is required for a corporate card, which is not part of the State of California's government program. The corporate card agreement is governed by and construed in accordance to the laws of the State of New York. If any arbitration is deemed, the award may be entered as a judgment in any state or federal court having jurisdiction thereof. 14. Based on the Port's past experience with its current credit card program, other governmental business relationships with American Express, proposed Program features and benefits, required travel by staff, and anticipated administrative efficiencies and cost savings, staff recommends approval of the proposed American Express Corporate/Government Cards and Meeting Planners' Account Services Program. ECONOMIC BENEFITS: Adoption of the American Express Corporate/Government Card and issuance of the Meeting Planners' Accounts Program will not have any direct employment effects. ENVIRONMENTAL ASSESSMENT: The proposed action is a resolution to implement a charge card program and issuance of a cardless meeting planners' account through American Express Corporate Services. As an administrative action, the Director of Environmental Management has determined that the proposed action is exempt from the requirements of the California Environmental Quality Act (CEQA) in accordance with Article II, Section 2(t) ofthe Los Angeles City CEQA Guidelines. FINANCIAL IMPACT: This proposal has a positive financial impact on the Port's operating budget. Estimated annual fee of the government ("green") card and meeting planners' account is zero and the corporate card is $300. Finance, late, and over-limit fees are waived for the government card and meeting planners' accounts. The corporate card is subject to a late fee equal to the greater of $29 or 2.9% of all amounts not credited for at least one statement billing period. Estimated annual cost savings for the government and corporate cards, versus the current card program, is $8,000 - $10,000 and in excess of $47,700, per card based on six foreign trips with business companions,

5 DATE: APRIL 24, 2008 Page 5 of 5 respectively. Combined, the Port may realize efficiencies and annual cost savings close to $60,000. CITY ATTORNEY: The City Attorney assisted staff in preparing the proposed Resolution and reviewed the application and agreement, and has approved them as to form. TRANSMITT ALS: Program Resolution State of California Master Service Agreement #DGS-OFA-OPPS-06 Program Implementation Letter Government Card Application Corporate Card Application and Agreement Meeting Planners' Account Application (BTA & Hotel Amendment) v\~~~ () Finance & Administration Accounting & Budget Deputy Executive Director RALDINE KNATZ, Ph.D. ecutive Director GK/MC/KP:fc S:DEDF AffaskMgmt/Corp&Travel Card