Title
A Resolution Of The City Commission Of The City Of Hollywood, Florida, Ratifying The City Manager’s Emergency Approval Of A Blanket Purchase Agreement Up To $270,000.00 With Bank Of America, N.A. And Approving And Authorizing The Appropriate City Officials To Execute An Agreement With Bank Of America, N.A. For Electronic Payment Services For An Initial Five-Year Term With Up To 20 One-Year Annual Renewals Based Upon Master Services Agreement With Central Florida Expressway Authority In Accordance With Section 38.41(C)(5) Of The Procurement Code. (Piggyback)
Strategic Plan Focus
Financial Management & Administration
Body
Staff Recommends: Approval of the Attached Resolution.
Explanation:
Since 2002, the City has utilized Bank of America, N.A. as its electronic payment service provider by participating in the State of Florida’s agreements which were procured through competitive bidding on three separate occasions over the years. During this time, the City has been able to secure favorable terms.
The City’s current agreement with Bank of America, N.A. as a participant with the State of Florida expired on June 11, 2023. The existing terms of the agreement have been extended to allow time for the City to obtain the necessary approvals for a new agreement with Bank of America, N.A., or to transition to another service provider. This extension expired 12/11/2024.
Bank of America, N.A. agreed to further extend the terms of the existing participation agreement for up to an additional three months or March 11, 2025. An Emergency Blanket Purchase Agreement up to $270,000.00 was approved by the City Manager per Memo PR-25-048.
Under the current agreement, Bank of America, N.A. provides electronic services (merchant services) based on pass-through pricing for transparency and lower overall costs. Pass-through pricing is made up of merchant processing fees plus credit card interchange (card issuer fees) and assessment fees (MasterCard and Visa). Interchange and assessment fees make up the “wholesale” cost of payment processing which is the lowest possible cost. Merchant processing fees are the markup. The City seeks the lowest possible markup for processing electronic payment transactions.
Over the past decade, the City has been approached by numerous merchant service providers to try to offer a more competitive rate. After reviewing the City’s merchant statements, these merchant service providers confirmed that the City’s pricing was more competitive than what they could offer.
The City has reviewed the pricing and terms of the State’s new electronic payment services provider, NIC Services of Tyler Technologies, and found the pricing to be less competitive, with a merchant processing fee of $0.11 per transaction versus the current rate of $0.03 per transaction the City has through Bank of America, N.A.
As a result of the increased costs under the new State of Florida electronic payment services agreement, other municipalities and government entities sought to participate in Central Florida Expressway Authority’s agreement which mirrors the pricing and terms of the previous State of Florida agreement. This prompted Bank of America, N.A. to draft an amendment to Central Florida Expressway Authority’s Master Services Agreement allowing any government entity or political subdivision located within the jurisdictional limits of the State of Florida to participate.
While many government entities are continuing to benefit by participating in Central Florida Expressway Authority’s Master Services Agreement, there are others that are looking to secure their own electronic payment services agreement with substantially the same terms directly with Bank of America, N.A.
The Department of Financial Services has reviewed the Central Florida Expressway Authority’s agreement and has determined that it is in the best interest of the City to secure the same favorable pricing and services that the City has received by participating in the State of Florida’s agreement previously.
Bank of America, N.A. is one of the largest merchant services providers in the industry, and the City has found the Provider’s performance to be satisfactory over the past 21 years. Bank of America, N.A. is also the second-largest bank in the United States with a vast network and extensive resources.
Section 38.41(C)(5) of the Procurement Code states the CPO (Chief Procurement Officer) may procure, without following formal solicitation procedures, all goods, supplies, materials, equipment, and services that are the subject of contracts with the state, its political subdivisions, the United States government, other governmental entities, or a corporation not for profit whose members are governmental entities, public officers, or any combination thereof ("piggyback"), provided that the goods, supplies, materials, equipment, or services are the subject of a price schedule negotiated by the entities listed above and is based strictly on competitive bids, quotations, or competitive proposals and not on any preference.
The Director of Financial Services and Chief Procurement Officer recommend that the City Commission ratify the City Manager’s Emergency Approval of a Blanket Purchase Agreement up to $270,000.00 with Bank of America, N.A. and approve and authorize the appropriate City officials to execute an agreement with Bank of America, N.A. as a participant in the Master Service Agreement with the Central Florida Expressway Authority or alternatively, execute a substantially similar agreement directly. The Central Florida Expressway Authority contract is an annual contract that renews each year until canceled. The City of Hollywood was able to negotiate an initial five-year term with up to twenty one-year renewals until canceled.
Fiscal Impact:
Funding for this agreement is available in the FY 2025 Operating Budget in various departmental accounts. Under the agreement, Bank of America, N.A. will provide merchant services based on pass-through pricing which is made up of merchant processing fees of $0.03 per transaction plus interchange and assessments along with other ancillary services as needed and specified within the Master Service Agreement and its amendments.
Costs are incurred only when revenue is collected.
Recommended for inclusion on the agenda by:
Pamela Harrell, Assistant Director, Financial Services/City Treasurer
Stephanie Tinsley, Director, Financial Services
Adam Reichbach, Assistant City Manager