TRANSMITTAL LETTER FOR BOARD MEETING OF SEPTEMBER 5, 2024
COMMITTEE ON PROCUREMENT
Mr. Brian A. Perkovich, Executive Director
Title
Issue purchase orders and enter into agreements for Contract 24-RFP-02 Commercial Banking and Investment Custody Services for a five-year period, with the option to extend for a two-year period, with BMO Bank N.A. for General Banking, Lockbox and Electronic Collection, and Procurement Card Services, in an amount not to exceed $155,000.00; and with The Northern Trust Company for Investment Custody Services in an amount not to exceed $225,000.00; Account 101-11000-612430, Requisitions 1611818, 1611819, and 1611820.
Body
Dear Sir:
Authorization is requested to issue purchase orders and enter into agreements with BMO Bank N.A. to provide General Banking, Lockbox and Electronic Collection, and Procurement Card Services; and with The Northern Trust Company to provide Investment Custody Services.
The Government Finance Officers Association recommends that state and local governments establish a procurement and review process in the selection of banking service providers. This RFP process will help ensure appropriate and cost-effective services while protecting the interests of the District. The request for proposal Contract 24-RFP-02 was advertised on February 21, 2024. Responsive proposals were received by March 22, 2024. The scope of work defined in this request for proposal (“RFP”) included depository services, online cash management, collection and deposit of remittances, employee purchase card services, investment settlement clearing, and vendor payment services. The firms are to provide services to the District beginning on or about February 1, 2025, until January 31, 2030, with the option to extend for a two-year period at the CPI-U adjusted rate.
The RFP process was coordinated through the Department of Procurement and Materials Management. The evaluation committee which reviewed and evaluated the submitted RFPs consisted of staff from the Treasury, Law, Finance, and Procurement and Materials Management Departments. Responses were evaluated according to the criteria defined in the RFP. Firms were ranked based on the numeric score calculated by the evaluation committee. The criteria included the proposer’s understanding of the project, proposed services, qualifications and experience, financial stability, and cost of services.
The committee reached a consensus that six proposers met the technical qualifications portion of the RFP. These firms were interviewed by the committee and requested to submit their “best and final” offers to the Director of Procurement and Materials Management.
A final evaluation matrix, including the interview evaluations and the best and final offers, resulted in an overall top ranking for BMO Bank N.A. to provide General Banking, Lockbox and Electronic Collection, and Procurement Card Services; and for The Northern Trust Company to provide Investment Custody Services. These overall top rankings were based on a composite evaluation score which was calculated from the committee’s individual evaluations for each firm’s understanding of the project, proposed services, qualifications and experience, financial stability, and cost of services. Based on the evaluation of the proposals and interviews using the criteria described above, it is recommended that service agreements be awarded to BMO Bank N.A. and The Northern Trust Company for the above services for a five-year period.
Appendix A was not included in this contract because the scope of work does not provide a practical or cost-effective opportunity for direct or indirect subcontracting.
BMO Bank N.A. was established in 1882 as Harris Bank and is currently the eighth largest bank in North America with $1.3 trillion in assets. Its corporate headquarters along with twenty-six bank branches are located in Chicago. BMO Bank N.A. has been recognized for its governance, products and services, and innovation by the American Banker and Reputation Institute. The team to be assigned to the District has extensive government experience and is headquartered in Chicago. In the District’s RFP evaluation process, BMO Bank N.A. scored highly in its ability to support the District in daily cash activity management and to provide comprehensive online banking tools. Its proposed cybersecurity plan has been reviewed and found to be satisfactory by the District’s Information Technology Department.
The Northern Trust Company was founded in 1889 and has since continuously provided trust and custody services. Headquartered in Chicago, it is currently custodian to $11.9 trillion in assets worldwide and provides safekeeping, trade settlement, and other custody services to 30% of the top 100 U.S. Public Funds. It is financially stable with a strong capital position, balance sheet, and credit ratings. In the District’s RFP evaluation process, The Northern Trust Company scored highly in its ability to serve the District with broad technical functionality along the entire custody process, and in its cybersecurity and risk mitigation strategy.
Inasmuch as BMO Bank N.A. possesses a high degree of professional skill, it is requested that the Director of Procurement of Materials Management be authorized to issue purchase orders and enter into agreements per Section 11.4 of the Purchasing Act with BMO Bank N.A. for a five-year period ending January 31, 2030, in a total amount, net of projected earnings credit, not to exceed $155,000.00. This amount is comprised of $107,000.00 to provide general banking services and $48,000.00 to provide lockbox collection and electronic collection solution services. Earnings credit is the interest that a bank pays on customer deposits. It is used to offset account services fees incurred and is calculated based on market rates and average deposit balances at the bank.
The estimated annual expenditures for general banking services are $19,617.00 for 2025, $21,400.00 per year for 2026 through 2029, and $1,783.00 for 2030 in Account 101-11000-612430, and are contingent on the Board of Commissioners’ approval of the District’s budget for those years.
The estimated annual expenditures for lockbox collection and electronic collection solution services are $8,800.00 for 2025, $9,600.00 per year for 2026 through 2029, and $800.00 for 2030 in Account 101-11000-612430, and are contingent on the Board of Commissioners’ approval of the District’s budget for those years.
It is further requested that the Director of Procurement of Materials Management be authorized to enter into agreements with BMO Bank N.A. for a five-year period ending January 31, 2030, to provide procurement card services at no cost to the District.
Inasmuch as The Northern Trust Company possesses a high degree of professional skill, it is also requested that the Director of Procurement of Materials Management be authorized to issue a purchase order and enter into an agreement per Section 11.4 of the Purchasing Act with The Northern Trust Company for a five-year period ending January 31, 2030, in an amount not to exceed $225,000.00, to provide investment custody services.
The estimated annual expenditures are $41,250.00 for 2025, $45,000.00 per year for 2026 through 2029, and $3,750.00 for 2030 in Account 101-11000-612430, and are contingent on the Board of Commissioners’ approval of the District’s budget for those years.
These contracts will be for a five-year period ending January 31, 2030, with the option to extend for an additional two-year period at the CPI-U adjusted rate, subject to Board approval.
Requested, Steven J. Lux, Treasurer, SJL:WNS
Recommended, Darlene A. LoCascio, Director of Procurement and Materials Management
Respectfully Submitted, Marcelino Garcia, Chairman Committee on Procurement
Disposition of this agenda item will be documented in the official Regular Board Meeting Minutes of the Board of Commissioners for September 5, 2024