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←General Government and Licensing Committee · 2020-11-30 · 2020.GL19.2

The filed record

Authority to Enter into a Non-competitive Contract with Ernst and Young to Support Category Management and Strategic Sourcing

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The decision

2020-12-16 · Toronto City Council · amended

As filed

City Council on December 16, 17 and 18, 2020, adopted the following: 1. City Council authorize the Controller to negotiate and enter into an amending agreement with Ernst and Young LLP to continue supporting Purchasing and Materials Management Division's Category Management and Strategic Sourcing initiative by increasing the value of the contract from $1.0 million gross ($1.018 million net of Harmonized Sales Tax recoveries) by an additional $8.985 million gross ($9.143 million net of Harmonized Sales Tax recoveries) to a potential upset limit of $9.985 million gross ($10.161 million net of Harmonized Sales Tax recoveries) broken down by: a.

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adding $3.485 million gross ($3.546 million net of Harmonized Sales Tax recoveries) for consulting services related to developing category governance, improving reporting, strategic sourcing support and the development of a supplier relationship and contract management framework; b. including a 5 percent success fee for Ernst and Young LLP's support in obtaining an estimated 110 million in benefits from category management and strategic sourcing events for an upset limit for a success fee of $5.5 million ($5.597 million net of Harmonized Sales Tax) subject to the maximum success fee for Ernst and Young LLP's support in obtaining an estimated 110 million in benefits, being adjusted to exclude the 2020 savings and benefits already achieved during previous contract extensions; and c. extending the term of the agreement to May 31, 2022. 2. City Council request the Chief Financial Officer and Treasurer to report to the General Government and Licencing Committee in the second and fourth quarters each year during the length of the contract, and before the contract is closed-out, quantifying and detailing the each of the project savings and benefits that have been achieved, the value brought to each one by the consultants, and on progress in training staff and developing systems and tools that will ensure that the City can sustain the procurement transformation on its own going forward. 3. City Council request the Auditor General to perform a value-for-money audit of the non-competitive contract with Ernst and Young LLP for continued support of Purchasing and Materials Management Division's Category Management and Strategic Sourcing strategy, including whether there are recommendations to improve contracts that use success fees and how outcomes for such contracts are measured. 4. City Council direct the Chief Financial Officer and Treasurer to report to the General Government and Licencing Committee on the use of contract extensions up to $500,000, with particular attention to its use more than once on the same contract.

The vote

Adopt Item as Amended · Carried, 18-4

For (18)Ana Bailão, Anthony Perruzza, Brad Bradford, Denzil Minnan-Wong, Frances Nunziata, Gary Crawford, James Pasternak, Jennifer McKelvie, Joe Cressy, John Tory, Kristyn Wong-Tam, Mark Grimes, Michael Ford, Michael Thompson, Paul Ainslie, Paula Fletcher, Shelley Carroll, Stephen Holyday
Against (4)Gord Perks, John Filion, Josh Matlow, Mike Layton
Absent (3)Cynthia Lai, Jaye Robinson, Mike Colle
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Every name opens that member’s record.

On the agenda

As the city filed it

The purpose of this report is to request approval for a non-competitive contract with Ernst and Young LLP for continued support of Purchasing and Materials Management Division's Category Management and Strategic Sourcing Unit. The continuation of these services with Ernst and Young LLP is a cost mitigation strategy to help with the City's financial situation by realizing financial benefits through the strategic sourcing of procurements within the City's top 6 categories of spend: Construction and Maintenance, Technology, Facilities Management, Fleet, Professional Services, Refuse and Waste Management which contribute to the $20 million in year savings target.

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Purchasing and Materials Management Division, with the assistance of Ernst and Young LLP, has been able to obtain $41 million in benefits to date (between 2019 and April 2020) as part of the implementation of Category Management ("Phase 1"). The City entered into a new contract with Ernst and Young LLP to cover the period of May to October. This further contract extension ("Phase 2") will deliver additional financial benefits of an estimated $110 million incremental to the $41 million in confirmed benefits to date. Further to the strategic sourcing opportunities that will be pursued as part of Phase 2, Ernst and Young LLP will also work with Purchasing and Materials Management Division to create the governance framework and operationalize this practice in addition to the creation of category profiles and strategies to incorporate Divisional and City objectives and priorities. Ernst and Young LLP was originally retained through a competitive process for Phase 1 and completed their main contract for a value of $4.5 million in April 2020. Purchasing and Materials Management Division entered into a non-competitive contract to extend Ernst and Young LLP for an additional 3 months for $0.5 million which was subsequently amended for another $0.5 million for a total contract value of $1.0 million. This proposed further extension would increase the contract value by $3.485 million for consultancy work plus a 5 percent success fee for Ernst and Young LLP to assist the City in completing strategic sourcing events and achieving an estimated $110 million in additional confirmed benefits which will equal an estimated success fee of $5.5 million. Overall this will increase the total contract value by $8.985 million net of Harmonized Sales Tax (for a total contract value of $9.985 million) and extend the contract until end of March 2022

Staff recommended

The Controller and the Chief Procurement Officer recommends that: 1. City Council authorize the Controller to negotiate and enter into an amending agreement with Ernst and Young LLP to continue supporting Purchasing and Materials Management Division's Category Management and Strategic Sourcing initiative by increasing the value of the contract from $1.0 million gross ($1.018 million net of Harmonized Sales Tax recoveries) by an additional $8.985 million gross ($9.143 million net of Harmonized Sales Tax recoveries) to a potential upset limit of $9.985 million gross ($10.161 million net of Harmonized Sales Tax recoveries) broken down by: a.

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adding $3.485 million gross ($3.546 million net of Harmonized Sales Tax recoveries) for consulting services related to developing category governance, improving reporting, strategic sourcing support and the development of a supplier relationship and contract management framework; b. including a 5 percent success fee for Ernst and Young LLP's support in obtaining an estimated 110 million in benefits from category management and strategic sourcing events for an upset limit for a success fee of $5.5 million ($5.597 million net of Harmonized Sales Tax); and c. extending the term of the agreement to March 31, 2022

Considered

  • 2020-11-30 · General Government and Licensing Committee · amended

    Decision as filed

    The General Government and Licensing Committee recommends that: 1. City Council authorize the Controller to negotiate and enter into an amending agreement with Ernst and Young LLP to continue supporting Purchasing and Materials Management Division's Category Management and Strategic Sourcing initiative by increasing the value of the contract from $1.0 million gross ($1.018 million net of Harmonized Sales Tax recoveries) by an additional $8.985 million gross ($9.143 million net of Harmonized Sales Tax recoveries) to a potential upset limit of $9.985 million gross ($10.161 million net of Harmonized Sales Tax recoveries) broken down by: a.

    Show the rest of Decision as filed, 615 more characters as filed

    adding $3.485 million gross ($3.546 million net of Harmonized Sales Tax recoveries) for consulting services related to developing category governance, improving reporting, strategic sourcing support and the development of a supplier relationship and contract management framework; b. including a 5 percent success fee for Ernst and Young LLP's support in obtaining an estimated 110 million in benefits from category management and strategic sourcing events for an upset limit for a success fee of $5.5 million ($5.597 million net of Harmonized Sales Tax); and c. extending the term of the agreement to May 31, 2022.

  • 2020-12-16 · Toronto City Council · amended

On the record

The item as the City filed it

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