Blanket Contract Amendment for Mister Safety Shoes Inc., for the supply and fitting of various Safety Footwear

Transcription

1 GM17.6 REPORT FOR ACTION Blanket Amendment for Mister Safety Shoes Inc., for the supply and fitting of various Safety Footwear Date: December 30, 2016 To: Government Management Committee From: Director, Purchasing and Materials Management Division Wards: Ward(s) affected or All SUMMARY The purpose of this report is to request the authority to amend various expired Blanket s issued to Mister Safety Shoes Inc., as a result of the RFQ for the supply and fitting of various Safety Footwear, for the period from May 12, 2011 to June 30, There is no money owing to Mister Safety Shoes Inc., in relation to the Blanket s set out in this report. This report is administrative in nature and represents additional volumes of safety shoes issued by multiple Divisions, not increased pricing of shoes. The amendment is being requested to bring the expired Blanket s into compliance in accordance with Section C of the City of Toronto Municipal Code Chapter 71(Financial Control By-Law). The amendment is required as a result of data entry errors that occurred during the life of the contract that masked the total spend under the contract. This error was determined after the expiry of the contract and steps have been taken to ensure this does not occur in the existing contract, or any similar contracts. RECOMMENDATIONS The Director, Purchasing and Materials Management Division recommends that: The Government Management Committee in accordance with Section C of the City of Toronto Municipal Code, Financial Control By-law, grant authority to amend the various expired Blanket s with Mister Safety Shoes Inc. for the supply and fitting of various Safety Footwear, for various divisions for the period from May 12, 2011 to June 30, 2015, by an additional total amount of all combined s in the amount of $344,054 net of all charges Page 1 of 5

2 ($350,109 net of HST recoveries), revising the current value from $4,337,337 to $4,600,878 net of all charges ($4,681,853 net of HST recoveries). FINANCIAL IMPACT The total expenditure increase is $344,054 ($350,109 net of HST recoveries). The Original Bid Committee Award Value was $3,756,824 and the contract length was May 12, 2011 to June 30, City staff processed an additional $580,513 in amendments during the life of the contract, of which $80,513 were done inadvertently. An amendment for $344,054 ($350,109 net of HST recoveries) is therefore required to bring the expired s into compliance and to remove any over-expenditure s from the Blanket Over-Expenditure Report. Funding has been spent from the annual Operating Budgets. There are no outstanding invoices to be paid against the s listed below. Table 1 sets out the three contracts that need to be amended. Table 1 Division No.'s Value Issued at Time of Award Previous Amendment s New Required Amendments taxes and Revised Value including the amendment value New Value (Net of HST Recoveries) Toronto Water $412,324 $142,925 $555,249 $565,021 PFR* $930,776 $14,712* $1,032,827 $1,051,005 Fire** $581,735 $210,000** $105,904 $897,639 $913,437 Not yet processed POA's $1,924,83 5 $210,000 $263,541 $2,485,715 $2,529,463 * Value corrected by applying unspent funds totalling $87,339 ** Fire Services processed two (2) authorized amendments totalling $210,000 (total contract value $791,735) during the period. After the amendments of $263,541 and the additional approval of the $80,513 which staff had previously inadvertently approved, the total value of the contract will be revised from $4,337,337 to $4,600,878 net of all charges. The Deputy City Manager & Chief Financial Officer has reviewed this report and agrees with the financial impact information. Page 2 of 5

3 DECISION HISTORY An award was made by Bid Committee at its meeting of May 11, 2011, to Mister Safety Shoes Inc. for the supply and fittings of various Safety Footwear and Galoshes as a result of a Request for Quotation (RFQ) from May 12, 2011 to June 30, 2015, for a total awarded value of $3,691, net of all applicable taxes ($3,756, net of HST recoveries). Bid Committee Award document can be viewed at: COMMENTS The policy for the provision of Protective Equipment, Protective Clothing and Wearing Apparel was jointly developed by Local 79 and the City of Toronto. It is agreed that the City of Toronto will provide employees with personal protective equipment and protective work clothing as prescribed by the hazards of the job or workplace in accordance with Health and Safety. An automated safety footwear needs analysis tool is in place for Supervisors to use to determine the category/s of footwear appropriate for each job to protect employees from workplace hazards. Each City Division is responsible for authorizing the initial acquisition or replacement of employees footwear. Prior to authorizing the purchase of a replacement footwear, the Supervisor shall inspect the employee s existing footwear to verify that it is in need of replacement. The maximum pre-tax authorized amount is provided on the form by the Supervisor to ensure employees select footwear within budget or employees personally pay for any additional costs that may apply for alternate models. Upon receipt of completed Safety Footwear Authorization Form within 24 hours of sale, the Supervisor is responsible for verifying the purchase, to ensure no inappropriate charges or changes have occurred during the sale. Mr. Safety Shoes RFQ Request for Quotation No for the supply and fitting of various safety footwear, occupational footwear and galoshes for male and female employees, suitable for use by various City of Toronto division, by store and/or Mobile truck service was issued on February 18, Bid Committee, on its meeting of May 11, 2011 awarded the for Store services to Mister Safety Shoes Inc. in the amount of $3,691,847 net of all taxes ($3,756,824 net of HST recoveries) which expired June 30, Estimates provided in the RFQ for all Divisions were based on historical data provided by the respective Divisions. Throughout the term, a total of nine (9) amendments were processed for various s awarded to Mister Safety Shoes Inc. Page 3 of 5

4 In the beginning of 2016, it was determined that the total spend against the contract did not equal the authorized amount. To understand the discrepancy, PMMD staff conducted a spend analysis of the for all divisions (Affordable Housing, Children's Services, ED&C, Paramedic Services, LTCHS, PF&R, SSHA, TPH, Toronto Buildings, Toronto Fire, MLS, SWMS, Technical Services, Toronto Water, Transportation, City Planning, Facilities, Fleet, PMMD, Revenue Services, City Clerks, City Manager) in order to determine the final purchase order amendment value that needed to be processed and to determine whether the over-expenditure triggered a report to Government Management Committee. The total over-expenditure of the Mister Safety Shoes Inc. (s) was $844,054.06, which exceeds the $500,000 threshold by $344, requiring a report to Government Management Committee. The analysis took approximately 8 months to complete and due to conflicting priorities, the resolution to this situation was not a high priority. All invoices were paid and this report is to request the authority to bring the SAP s into compliance. During that analysis two errors were identified. The primary error was related to how one Division was coding information into SAP to support interface billing. Information being entered was allowing invoices to be paid, however it was not being tied to the appropriate blanket contract, which masked the true total spend. The second error, as a result, was that staff processed three (3) amendments for various Blanket s that exceeded the $500,000 staff authority line, in the amount of $80,513, as staff believed that they were still within the $500,000 authority. The results of the analysis is summarized in the following Table 2. Table 2 - Spend Analysis Summary Original Bid Committee Award Value $3,756,824 POA's processed under Authority $ 500,000 Total Value of Overall $4,256,824 Over-expenditure (Total Spend Original Bid Value) $ 844,054 POA's inadvertently processed ($80,513) Unprocessed POA value (Total Spend Total value of Overall ) ($263,541) Unprocessed POA value including POA processed without Authority ($344,054) Total Spend against $4,600,878 Page 4 of 5

5 Since the error was identified, staff have been retrained on how to enter information as it relates to interface billing to prevent the error from happening again. Therefore, we require approval to amend the contracts in the amount of $344,054 ($350,109 net of HST recoveries) to bring the contracts into compliance. CONTACT Elena Caruso Manager, Goods & Services Purchasing and Materials Management Telephone: (416) SIGNATURE Michael Pacholok Director Purchasing and Materials Management Page 5 of 5