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Department: Purchasing
Director: Denise Tacke, Director of Finance
Agenda Item: Contract Increase for Operational Supplies from Amazon Services, LLC
Recommended Action: Approval of Contract Modification
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Item Summary
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To approve an increase to the current awarded contract of $520,000 by $230,000 for a total contract amount of $750,000 annually for the purchase of operational supplies from Amazon Services, LLC, Amazon Business for all City departments; and authorizing the City Manager to execute all necessary documents. (Contract No. 2020-0004-C; Modification No. 2)
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Previous Action/Presentation
Council approved the initial contract on October 14, 2019, in the amount of $300,000 annually.
Council modified the award on January 10, 2022, in the amount of $220,000 for a total contract amount of $520,000 annually.
Background
The scope of services for this contract includes provision of an online marketplace that is used for the purchase of operational supplies from Amazon Business for all City departments. Amazon Business provides business-tailored features including purchase control options, approval workflows, shared payment methods, tax exemption, and procurement analytics.
Orders placed through the Amazon Business portal are routed to a designated approver for review of appropriateness and general ledger codes. This approval is required before an order is submitted to Amazon for processing. The account restricts delivery addresses to designated City locations. The Amazon Tax Exemption Program (ATEP) enables us to make tax-exempt purchases across the organization and manage our tax exemption by blocking sellers who opt not to participate in ATEP.
The program was introduced to all City departments in late calendar year 2019. At that time, we anticipated that usage would grow as departments became familiar with the benefits associated with the shared account, and this has proven to be true. Amazon purchases have been distributed across all departments and have remained within departmental budget appropriations. The usage of Amazon has continued to grow, and the company has recently introduced curated catalogs for products such as office supplies, MRO supplies, and IT peripherals that have accelerated the trend. Recently, one of Plano Public Library's largest book distributors went out of business, and we anticipate that approximately $150,000 of that business will move to Amazon Business. To accommodate growing departmental demand as well as the book buying increase, staff recommend increasing the award to Amazon Business by $230,000.
The impact of not approving this item would be to create inefficiencies for departments, increase non-contract spend, lose visibility into departmental purchases, and increase staff time spent on purchasing in Finance and other departments through reconciliation of individual procurement cards and processing of departmental purchase orders. It would also reduce the sources of supply for Plano Public Library, potentially increasing their cost of materials.
The City is authorized to purchase from a cooperative purchasing program with another local government or a local cooperative organization pursuant to Chapter 271 Subchapter F of the Texas Local Government Code and by doing so satisfies any State Law requiring local governments to see competitive bids for items. (US Communities Contract No. R-TC-17006 / City of Plano Contract No. 2020-0004-C).
Financial Summary/Strategic Goals
Approval of this item will increase the current awarded contract amount of $520,000 by $230,000 for a total contract amount of $750,000 annually for the purchase of operational supplies from Amazon Services, LLC, Amazon Business for all City departments. Funding for all expenditures will be available in various funds and cost centers within the City of Plano in the estimated annual amount of $750,000 for FY 2026-27 and $250,000 for FY 2027-28. All future year expenditures will occur within council approved appropriations.
Approval of this item will support the City's Strategic Plan Critical Success Factor of being an Excellent, Innovative, and Accountable City Government.