Title:
Professional Services Agreement: Collection Agency Services
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FileID
File ID: 2024-01885
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Location
Location: Citywide
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Recommendation
Recommendation: Pass a Motion authorizing the City Manager or City Manager's designee to execute a Professional Services Agreement with Financial Credit Network, Inc. to provide collection agency services for an initial one-year period, with an option to renew for four additional one-year periods.
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Contact
Contact: Laterre Walsh, Program Manager, Department of Finance, (916) 808-7800, lwalsh@cityofsacramento.org, Jackie Rice, Finance Manager, Department of Finance, (916) 808-5844, jlrice@cityofsacramento.org
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Attachments
Attachments
1-RFP Evaluation and Rating Summary
2-Resolution for Debt Collection Agency Services
3-Contract
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Description / Analysis
Issue Detail
Issue Detail: The City of Sacramento has utilized Financial Credit Network to provide collection agency services for the recovery of City revenue since 1998. Financial Credit Network has recovered over $13 million on behalf of the City. These are monies that were owed to the City and would not be otherwise recoverable.
The City recently conducted a Request for Proposal (RFP) P25061241001 for debt collection agency services. The City received nine bids from agencies to provide these services. A selection committee was made up of staff from the Department of Utilities and the Department of Finance, Revenue Division. The committee reviewed the proposals and evaluated them based on the agencies’ qualifications and experience, work plan and schedule and cost proposal. Financial Credit Network was selected as the most qualified and experienced agency to perform the requested services. The evaluation and rating summary is attached.
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PolicyConsiderations
Policy Considerations: The recommendations in this report are consistent with the provisions of City Code Chapter 3.64 regarding contracts for professional services. In accordance with the Sacramento City Code Section 4.04.020 and Council’s Rules of Procedure (Chapter 7, Section E.2.d) unless waived by a 2/3 vote of the City Council, all labor agreements and all agreements greater than $1,000,000 shall be posted on the City’s website and be made available to the public at least 10 days prior to council action. The collection and recovery of delinquent debt due the City is consistent with the City Council’s policy of collecting funds for General Fund and Enterprise Fund operations to provide essential City services.
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EnvironmentalConsiderations
Environmental Considerations: None.
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Sustainability
Sustainability: None.
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Commission/Committee Action
Commission/Committee Action: None.
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Rationale for Recommendation
Rationale for Recommendation: In July 2024, the City’s Procurement Services Division, in accordance with City Code chapter 3.64, issued a Request for Proposal (P25061241001) for Debt Collection Agency Services. Based on a panel review of the proposals, staff recommend awarding the contract to Financial Credit Network.
These services will be utilized after multiple unsuccessful internal attempts to collect delinquent debts due to the City. Assignment of delinquent accounts to a third-party collection agency will allow for additional collection actions and options not available to the City (e.g. reporting delinquent debts to credit reporting agencies). This revenue recovery provides funding for the delivery of City services.
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Financial Considerations
Financial Considerations: Debt collection agency services provide the City with additional General Fund revenues that would otherwise not likely be collected. Compensation for the debt collection agency services is on a contingency basis, collected as a percentage of the delinquent revenue recovered for the City, and is added to the amount owed to the City There is no net cost to the City for debt collection agency services of delinquent City accounts. Under this agreement, the commissions paid to the collection agency will be borne by the debtor. Costs associated with the collection of an amount owed the City, regardless of whether the City pursues said collection through litigation or by any other means, will be added to the debt due the City. The City estimates that this amount will be $1.25 million over the course of the five-year contract term.
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Local Business Enterprise
Local Business Enterprise (LBE): None.
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