REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTYSAN BERNARDINO COUNTY
AND RECORD OF ACTION
August 9, 2022
FROM
ENSEN MASON, Auditor-Controller/Treasurer/Tax Collector
SUBJECT
Title
Agreement with LexisNexis Risk Solutions for Electronic Library Services
End
RECOMMENDATION(S)
Recommendation
Approve Agreement and related documents, including Master Terms & Conditions, Terms & Conditions for Use of the Online Services, including non-standard terms, and the following pricing schedules with LexisNexis Risk Solutions for computer-assisted legal research and electronic library services in an aggregate amount not to exceed $180,000 retroactively for the period of July 1, 2022, through December 31, 2023:
1. Schedule A-1 - Accurint for Government
2. Schedule A-2 - Batch Services (Non-Fair Credit Reporting Act) for best social security number
3. Schedule A-3 - Batch Services (Non-Fair Credit Reporting Act) for daily address verification
(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 item will not result in the use of additional Discretionary General Funding (Net County Cost). The estimated cost of $180,000 over the 18-month term will be fully 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.
BACKGROUND INFORMATION
ATC’s Revenue Recovery Division (RRD), formerly Central Collections, provides debt collection services to San Bernardino County (County) agencies and the Superior Court. Collection services are performed using several methods, including utilization of an electronic library system as a form of skip tracing to ensure maximum recovery of debt owed to County agencies and the Superior Court. This system assists in locating debtors and, as a result, generates revenue for RRD’s clients and the County. RRD retains a portion of the fines and fees collected to fund collection activities.
The recommended agreement will allow ATC to pay LexisNexis Risk Solutions (LexisNexis) for its services rendered since July 1, 2022, and continue utilizing its services through December 31, 2023. Preparation of this item began in December 2021; however, due to extensive document review, final agreements and pricing schedules were 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.
The LexisNexis Master Terms & Conditions and Schedule A documents (Agreement) are LexisNexis’ standard commercial contract terms, which include 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. LexisNexis may unilaterally change the terms of the Agreement by providing email notice to the County employee designated as the County “Administrator”.
• The County standard contract requires any changes to the contract to be reduced to writing, executed, and attached to the original contract and approved by the person(s) authorized to do so on behalf of Contractor and County.
• Potential Impact: The new terms are effective upon notice, so the County could be agreeing to new terms without review by anyone, including County Counsel, and without the approval of the new terms by the Board.
2. There is no restriction on LexisNexis’ ability to assign the Agreement.
• The County must approve any assignment of the contract.
• Potential Impact: LexisNexis 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 or consent.
3. The County is required to indemnify LexisNexis against third party claims based on (a) use of information furnished by or through LexisNexis; (b) breach of the Agreement; and (c) any unauthorized acquisition or access of personally identifiable information.
• The County standard contract does not include any indemnification or defense by the County of a Contractor.
• Potential Impact: By agreeing to indemnify LexisNexis, the County could be contractually waiving the protection of sovereign immunity. Claims that may otherwise be barred against the County, time limited, or expense limited could be brought against LexisNexis without such limitations and the County would be responsible to defend and reimburse LexisNexis for costs, expenses, and damages, which could exceed the total Agreement amount.
4. LexisNexis limits its maximum aggregate liability to the County to $100,000, excluding its indemnification obligations, gross negligence, willful misconduct, and violations of law.
• The County standard contract does not include a limitation of liability.
• Potential Impact: Claims could exceed the liability cap and the Agreement amount leaving the County financially liable for the excess. In addition, the County’s liability under the Agreement is not similarly limited.
5. Payment terms are Net 45 date of invoice with late payment interest of 18% per annum.
• County standard payment terms are Net 60 days with no interest or late payment penalties.
• Potential Impact: County standard processing time is 60 days or more. Failing to pay within 45 days from the date of invoice will result in a material breach of the Agreement, which would allow LexisNexis to terminate the Agreement and seek other legal remedies, including charging the County interest at a rate of 18% per annum, which would exceed the Agreement amount.
6. The term of the Agreement is indefinite, remaining in effect for so long as LexisNexis is providing services to the County, until terminated by either party.
• County Policy 11-06SP does not permit indefinite term or automatically renewing contracts unless approved by the Board.
• Potential Impact: There is no end term to the Agreement and the County is indefinitely bound to the terms and conditions of the Agreement until it affirmatively terminates all LexisNexis services.
7. 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: LexisNexis is headquartered in New York and the contracting entity is principally situated in Georgia. LexisNexis may also have significant ties in other states. Having no express venue in the Agreement means that venue could be applied anywhere in the United Sates where LexisNexis has significant ties, including New York and Georgia, which may result in additional expenses that exceed the amount of the Agreement.
8. LexisNexis provides the software “AS IS” and disclaims all warranties of any kind.
• There is no warranty requirement in the County standard contract. The County expects its vendors and service providers to fully warrant the products and services they provide to the County.
• Potential Impact: The County’s use of the software is solely at its own risk.
The LexisNexis Terms & Conditions for Use of the Online Services (Online Terms) is LexisNexis’ standard commercial contract terms for online services, which include 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. Governing law of the Online Terms is the State of New York.
• The County standard contract requires California governing law.
• Potential Impact: The Online Terms will be interpreted under New York law. Any questions, issues or claims arising under this contract will require the County to hire outside counsel competent to advise on New York law, which may result in fees that exceed the total contract amount.
2. LexisNexis may unilaterally change the Online Terms by mailing notice to the County or displaying electronically in the online services.
• The County standard contract requires any changes to the contract to be reduced to writing, executed and attached to the original contract and approved by the person(s) authorized to do so on behalf of Contractor and County.
• Potential Impact: The new terms are effective upon notice, so the County could be agreeing to new terms without review by anyone, including County Counsel, and without the approval of the new terms by the Board. County Counsel cannot advise on, whether and to what extent, New York law may affect the enforceability of unilateral changes to the terms.
3. There is no restriction on LexisNexis’ ability to assign the Online Terms.
• The County must approve any assignment of the contract.
• Potential Impact: LexisNexis could assign the Online Terms 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 or consent. County Counsel cannot advise on, whether and to what extent, New York law may permit or restrict a party’s right to assign without an express provision in the contract.
4. The Online Terms do not address 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: There is no provision in the contract addressing each party’s responsibility for paying attorneys’ fees. County Counsel cannot advise on, whether and to what extent, New York law may affect a party’s requirement to pay the prevailing party’s attorneys’ fees and costs in a legal action where no specific provision is provided in the contract.
5. The Online Terms require the County to indemnify LexisNexis for any third-party claims directed against LexisNexis that arise from unauthorized access or use by or through an authorized user, any person an authorized user permits to use the online services, and anyone who gains access due to an authorized user's failure to properly secure their identification (ID) or computer. In addition, the County will be solely responsible for notifying individuals whose information has potentially been accessed or used in an unauthorized manner, and notifying other parties, including regulatory entities and credit reporting agencies, as may be required by law, without referencing LexisNexis. Further the County is required to indemnify, defend, and hold LexisNexis harmless for all third-party claims, damages, costs, fines and expenses that result from work folders or workspaces from within research sessions that are associated with County authorized user IDs and any content uploaded to them.
• The County standard contract does not include any indemnification or defense by the County of a Contractor.
• Potential Impact: By agreeing to indemnify LexisNexis, the County could be contractually waiving the protection of sovereign immunity. Claims that may otherwise be barred against the County, time limited, or expense limited could be brought against LexisNexis without such limitations and the County would be responsible to defend and reimburse LexisNexis for costs, expenses, and damages, which could exceed the total contract amount. County Counsel cannot advise on, whether and to what extent, New York law may limit or expand this contract term.
6. The Online Terms do not require LexisNexis to meet the County’s insurance standards as required pursuant to County Policy 11-07.
• The County Policy requires contractors to carry appropriate insurance at limits and under conditions determined by the County’s Risk Management Department and set forth in the County standard contract. County Counsel cannot advise on, whether and to what extent, New York law may limit or expand this contract term.
• Potential Impact: The County has no assurance that LexisNexis will be financially responsible for claims that may arise from the County’s use of the software, which could result in expenses to the County that exceed the total Agreement amount. County Counsel cannot advise on, whether and to what extent, New York law may limit or expand this contract term.
7. LexisNexis disclaims all liability for LexisNexis and its subcontractors, third party suppliers, third party alliance entities, and any of their affiliates from any claim resulting from County’s use of the online services or materials. To the extent any liability cannot be disclaimed, LexisNexis limits its, as well as its subcontractors, third party suppliers, third party alliance entities, and any of their affiliates, aggregate liability to the lesser of the County’s actual direct damages or the amount the County paid for the online services in the 12 months prior to the date the claim arises.
• The County standard contract does not include a limitation of liability.
• Potential Impact: Claims could exceed the liability cap and the contract amount leaving the County financially liable for the excess. In addition, the County’s liability under the Agreement is not similarly limited. County Counsel cannot advise on, whether and to what extent, New York law may limit or expand the exclusion of limits to the extent prohibited by applicable law.
8. The term of the Online Terms is indefinite, remaining in effect for so long as LexisNexis is providing services to the County, until terminated by either party.
• County Policy 11-06SP does not permit indefinite term or automatically renewing contracts unless approved by the Board.
• Potential Impact: The County is indefinitely bound to the terms and conditions of the Online Terms until LexisNexis terminates the contract or until the County terminates for one of the limited permitted causes.
9. The Online Terms may only be terminated by the County if the County is under a transactional pricing plan, and there are no fixed-priced or fixed term amendments in effect between County and LexisNexis, or if LexisNexis modifies the Online Terms upon written notice to LexisNexis if any change is unacceptable to the County.
• County Policy 11-06SP does not permit indefinite term or automatically renewing contracts unless approved by the Board.
• Potential Impact: There is no end term to the contract and the County is indefinitely bound to the terms and conditions of the Agreement until it affirmatively terminates all LexisNexis services. County Counsel cannot advise on, whether and to what extent, New York law may limit or expand this contract term.
10. There is no stated venue in the Online Terms.
• The County standard contract requires venue for disputes in Superior Court of California, County of San Bernardino, San Bernardino District.
• Potential Impact: LexisNexis is headquartered in New York and the contracting entity is principally situated in Georgia. LexisNexis may also have significant ties in other states. Having no express venue in the Agreement means that venue could be applied anywhere in the United Sates where LexisNexis has significant ties, including New York and Georgia, which may result in additional expenses that exceed the amount of the contract.
ATC recommends approval of the Agreement and Online Terms, 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 May 23, 2017 (Item No. 24), the Board authorized the Purchasing Agent to issue a purchase order with LexisNexis in an aggregate amount not to exceed $600,000 for the period of July 1, 2017, through June 30, 2022. Over the past five years, LexisNexis has billed an annual average of $95,000 for electronic library services, using only 70% of the approved amount. ATC believes that the continued use of LexisNexis electronic library services is warranted to maintain core revenue recovery activities until an interface can be developed through a new collection system, which RRD plans to procure through a competitive process later this year.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Bonnie Uphold, Deputy County Counsel, 387-5455) on July 28, 2022; Risk Management (Victor Tordesillas, Director, 386-8621) on July 28, 2022; Purchasing (Bruce Cole, Supervising Buyer, 387-2148) on July 28, 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 August 2, 2022.