cityof

CINCINNATI
Interdepartment Correspondence Sheet

November 6, 2015
FOR YOUR INFORMATION MEMO
To:

Mayor and Members of Council

From:

Harry Black, City Manager

Copies:

John Juech, Gerald Checco, Patrick Duhaney

Subject:

Metropolitan Sewer District

(4 3
Master Servicer Agreements

A number of actions are being taken enhance the Citys procurement process related to the
Metropolitan Sewer District (MSD). These actions are part of a more comprehensive effort to
modernize and improve the Citys procurement procedures in general.
Background
MSD, like other City Departments, utilizes as-needed professional services agreements, known as
Master Service Agreements (MSAs), for a variety of support needs that include design services, project
modeling, labor training and financial and information technology services.
These as-needed
MSAs are typically entered into after a Request for Qualifications- (RFQ) type selection process.
Historically, when a need for work arises, a project manager uses his or her own discretion to choose a
vendor from a list of vendors that have been designated through the RFQ-type process as qualified to
perform a specific category of services.
Inrn~st cases~th~term of~thMS~is compri~d~fi~iitiFterm of a several years wilif ulfi~le oneyear extensions that can be exercised by mutual agreement of the parties.
Most of these
agreements feature multipliers that cover the overhead of the companies providing the services, in
addition to other costs associated with the project. In a given year, the dollar value of work awarded to
contractors under these MSAs range between $30,000,000 and $35,000,000 annually.
Findings
As part of the ongoing effort to revamp and improve the Citys procurement process, a preliminary
analysis of these MSAs has indicated the following:
1) Only a small number of vendors are being selected to perform the work authorized through
MSAs. This creates an appearance of unfairness regarding how work assignments are awarded
and limits the number of vendors able to obtain work for MSD.

2) The multipliers used for some professional service categories have been inflated over the
industry standard, which has resulted in economic inefficiencies for services in some
categories.
3) Large-scale projects that should have been procured via a specifically tailored competitive
procurement, via a publically advertised RFP/RFQ process, have been initiated and completed
under MSAs, resulting in restrictions on new vendors obtaining MSD work.
4) For many years, a number of vendors have been serving in mission critical positions. However,
these positions are more appropriately staffed by City employees. These supplemental staff
arrangements are significantly more costly.
5) Contract renewal provisions have allowed many of these agreements to continue for several
years without a competitive qualifications process that would allow new vendors an
opportunity to participate.
Corrective Actions
In response to these findings, I have issued a directive that the MSD MSAs that are set to expire at the
end of 2015 not be renewed. Additionally, under Administrative Regulation 62, I have directed that
work be assigned to contractors that hold MSAs on a rotational basis or via an abbreviated proposal
process, and economic inclusion goals be applied when feasible. Finally, I have tasked MSD to
perform the following:
1) Work with City Purchasing to carefully review MSAs to determine which professional service
categories are appropriate to have on an as-needed basis and which ones are more appropriately
procured via a competitive RFP/RFQ procurement solicitation;
2) Examine the multipliers MSD uses and identify appropriate multipliers for the respective asneeded professional service categories;
3) Work with City Purchasing to issue a new competitive solicitation to procure as-needed
professional services;
4) Work with the Citys Human Resources department and other appropriate entities to transfer the
mission critical positions currently filled by consultants into City staff positions; and
5) Execute any future agreements for an appropriate fixed term without optional renewals.
Conclusion
It is anticipated these reforms will save MSD ratepayers significant dollars. In addition, it will make
the process for assigning work to contractors more equitable, transparent, and inclusive.
I want to thank MSD Director Gerald Checco and his team who have been extremely helpful in these
efforts and have pledged full cooperation going forward.
This memo is for information only, no action is needed.