Item - 2020.GL16.4

The General Government and Licensing Committee:

1. Deferred the report (September 21, 2020) from the Controller and the Chief Procurement Officer to its meeting on November 30, 2020, and requested the City Manager to report to the November 30, 2020 General Government and Licensing Committee on options to achieve the desired savings through some combination of reorganization, the hiring on permanent staff and the hiring of contract staff.

The purpose of this report is to request approval for a non-competitive contract with Ernst and Young LLP for continued support of Purchasing and Materials Management Division's Category Management and Strategic Sourcing Unit. 

The continuation of these services with Ernst and Young LLP is a cost mitigation strategy to help with the City's financial situation by realizing financial benefits through the strategic sourcing of procurements within the City's top 6 categories of spend:  Construction and Maintenance, Technology, Facilities Management, Fleet, Professional Services, Refuse and Waste Management which contribute to the $20 million in year savings target.  Purchasing and Materials Management Division, with the assistance of Ernst and Young LLP, has been able to obtain $41 million in benefits to date (between 2019 and April 2020) as part of the implementation of Category Management ("Phase 1").  The City entered into a new contract with Ernst and Young LLP to cover the period of May to October.  This further contract extension ("Phase 2") will deliver additional financial benefits of an estimated $110 million incremental to the $41 million in confirmed benefits to date.

Further to the strategic sourcing opportunities that will be pursued as part of Phase 2, Ernst and Young LLP will also work with Purchasing and Materials Management Division to create the governance framework and operationalize this practice in addition to the creation of category profiles and strategies to incorporate Divisional and City objectives and priorities. 

Ernst and Young LLP was originally retained through a competitive process for Phase 1 and completed their main contract for a value of $4.5 million in April 2020.  Purchasing and Materials Management Division entered into a non-competitive contract to extend Ernst and Young LLP for an additional 3 months for $0.5 million which was subsequently amended for another $0.5 million for a total contract value of $1.0 million.  This proposed further extension would increase the contract value by $3.485 million for consultancy work plus a 5 percent success fee for Ernst and Young LLP to assist the City in completing strategic sourcing events and achieving an estimated $110 million in additional confirmed benefits which will equal an estimated success fee of $5.5 million.  Overall this will increase the total contract value by $8.985 million net of Harmonized Sales Tax (for a total contract value of $9.985 million) and extend the contract until end of March 2022