REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
August 9, 2022
FROM
ENSEN MASON, Auditor-Controller/Treasurer/Tax Collector
SUBJECT
Title
Agreement with Ontario Systems, LLC d/b/a Finvi for Revenue Plus Collector System Software License, Support, and Development
End
RECOMMENDATION(S)
Recommendation
Approve Software License Agreement, including non-standard terms, with Ontario Systems, LLC d/b/a Finvi for software licensing, support, and development of the proprietary Revenue Plus Collector System, including a Statement of Work for professional services related to the proprietary Revenue Plus Collector System in an amount not to exceed $816,668 retroactively for the three-year period of July 1, 2022, through June 30, 2025.
(Presenter: Ensen Mason, Auditor-Controller/Treasurer/Tax Collector, 382-7000)
Body
COUNTY AND CHIEF EXECUTIVE OFFICER GOALS & OBJECTIVES
Improve County Government Operations.
Operate in a Fiscally-Responsible and Business-Like Manner.
FINANCIAL IMPACT
Approval of this agreement will not result in the use of additional Discretionary General Funding (Net County Cost). The annual contract cost for these services will be reimbursed through collection revenue. Sufficient appropriation and revenue have been included in the Auditor-Controller/Treasurer/Tax Collector’s (ATC) 2022-23 budget and will be included in future recommended budgets.
The total cost of the recommended agreement is $816,668 and includes a base cost of $616,668 for licensing, software support, and maintenance, plus $50,000 for database conversion in year one, and $50,000 each year for additional programming services.
|
|
2022-23 |
2023-24 |
2024-25 |
3- Year Total |
|
Base Cost |
$ 199,952 |
$ 205,501 |
$ 211,214 |
$ 616,668 |
|
Database Conversion |
50,000 |
0 |
0 |
50,000 |
|
Additional Programing |
50,000 |
50,000 |
50,000 |
150,000 |
|
TOTAL |
$ 299,952 |
$ 255,501 |
$ 261,214 |
$ 816,668 |
Additional programming services may be required in the case of future legislative changes, changes in business practices, or as other programming needs arise. These programming services will be utilized on an as-needed basis and charged accordingly. As such, if the County does not require any additional programming services, the County will not incur those costs.
BACKGROUND INFORMATION
ATC’s Revenue Recovery Division (RRD) provides debt collection services to San Bernardino County (County) departments and the Superior Court. Ontario Systems, LLC d/b/a Finvi’s (Finvi) proprietary Revenue Plus Collector System (RPCS) software licensing, support, and development will ensure the continued use and support of RRD’s primary software application, which is needed to perform all facets of collection activity, including maintaining all account history such as calls made and received; notating all correspondence, balances due, and payments made; sending letters and requests for information to locate assets; completing tax interception, including preparing submission modifications, deletions, and posting money received; tracking next steps for workflow on the collection accounts; and interfacing automated batch jobs for gathering and updating demographic information.
The recommended agreement will allow ATC to pay Finvi for its services rendered since July 1, 2022, and continue utilizing its services through June 30, 2025. Upon contract approval, Finvi will also begin providing any additional programming required as outlined in the Statement of Work, which includes analysis and programming to provide the County with a reusable data extract process. Preparation of this item began in December 2021; however, due to extensive contract negotiations, a final draft was not received until July 2022. This item is presented today at the first available Board of Supervisors (Board) meeting following the operational, fiscal, and legal reviews of the agreement.
Finvi’s Software License Agreement (Agreement) is its standard commercial contract, which includes terms that differ from the standard County contract and omit certain County standard contract terms. The non-standard and missing terms include the following:
1. Finvi may assign the Agreement without notice to the County and without the County’s approval.
• The County must approve any assignment of the contract.
• Potential Impact: Finvi could assign the Agreement to a third party or business with which the County is legally prohibited from doing business due to issues of Federal debarment or suspension and conflict of interest, without the County’s knowledge. Should this occur, the County would be out of compliance with the law until it becomes aware of the assignment and terminates the Agreement.
2. The prevailing party is entitled to recover attorneys’ fees and costs.
• The County standard contract requires each party to bear its own costs and attorney fees, regardless of who is the prevailing party.
• Potential Impact: If either party institutes any legal proceedings related to the Agreement, the prevailing party will be entitled to recover reasonable attorneys’ fees, which could exceed the total contract amount.
3. Finvi agrees to indemnify the County for claims of intellectual property infringement related to the software, but only up to the maximum amount paid by the County for the infringing software under this Agreement.
• The County standard contract requires each party to bear its own costs and attorney fees, regardless of who is the prevailing party.
• Potential Impact: The costs of defense, settlement, and/or judgment in any infringement litigation could exceed the liability cap and the Agreement amount leaving the County financially liable for the excess.
4. The Agreement does not include certain standard County insurance requirements, including the waiver of subrogation.
• The County standard contract requires contractors to carry appropriate insurance at limits and under conditions determined by the County’s Risk Management Department.
• Potential Impact: No waiver of subrogation may allow Finvi’s insurer to bring suit against the County, which could result in expenses that exceed the total Agreement amount.
5. In addition to the limitation of indemnification, Finvi limits its maximum liability to the County of all other claims under the Agreement to the total amount paid by the County in the 36 months after the effective date of the Agreement.
• The County standard contract requires each party to bear its own costs and attorney fees, regardless of who is the prevailing party.
• Potential Impact: Claims could exceed the liability cap and the Agreement amount leaving the County financially liable for the excess.
6. There is no stated venue in the Agreement.
• The County standard contract requires venue for disputes in Superior Court of California, County of San Bernardino, San Bernardino District.
• Potential Impact: Finvi has offices located in Massachusetts, Indiana, New Mexico, Delaware, and Washington. Having no express venue in the Agreement means that venue could be applied to any of these states for disputes arising under the Agreement, which may result in additional expenses that exceed the amount of the Agreement.
ATC recommends approval of the Agreement, including the non-standard terms, since they are typical within the information technology industry and these services are critical for RRD collections operations.
PROCUREMENT
On June 27, 2017 (Item No. 15), the Board approved Agreement No. 17-631 with Columbia Ultimate, Inc. (CUBS) for proprietary computer software licensing, support, and development in an amount not to exceed $1,159,100 for the period of July 1, 2017, through June 30, 2022. Ontario Systems, LLC acquired CUBS in 2016 and rebranded to Finvi in 2021. ATC believes that the continued use of the RPCS software on a non-competitive basis through June 30, 2025, is warranted, and in the County’s best interest.
Finvi is a large collection software vendor with a division dedicated entirely to the needs of the public sector and has developed its programming modules accordingly. Finvi is used by numerous counties in California and offers RRD the added benefit to receive programming developed by Finvi users in other California counties. Additionally, there has been extensive customization to the RPCS software over the years to meet RRD’s specific needs, such as interfaces with the Superior Court, Franchise Tax Board, Employment Development Department, and Arrowhead Regional Medical Center to facilitate the collection of court-ordered and medical debt.
In October 2021, after 38 years of product use and support, Finvi released their decision to sunset the RPCS software platform and officially end their support on December 31, 2023. This decision will ultimately lead the County and RRD to make a significant investment in a new collection system in the near future. Until proper County procurement processes are complete, and to reduce the risk of business interruptions to RRD operations, the maintenance and support services for the RPCS software included in this request must be provided by Finvi. The ability for RRD to be successful in their business objectives depends on core revenue recovery activities performed with the Finvi application. The Purchasing Agent supports the continued use of a non-competitive procurement for these proprietary services until a new software system can be identified through a competitive process.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Bonnie Uphold, Deputy County Counsel, 387-5455) on July 18, 2022; Risk Management (Victor Tordesillas, Director, 386-8621) on June 29, 2022; Purchasing (Bruce Cole, Supervising Buyer, 387-2148) on July 1, 2022; Finance (Carl Lofton, Administrative Analyst, 387-5404) on July 27, 2022; and County Finance and Administration (Paloma Hernandez-Barker, Deputy Executive Officer, 387-5423) on July 29, 2022.