City of Lawrence

Finance Department

MEMORANDUM

DATE:	12/31/08
TO:	David L. Corliss, City Manager
FROM:	Heidi Nelson, Assistant Finance Director
CC:	Diane Stoddard, Assistant City Manager Cynthia Boecker, Assistant City Manager Ed Mullins, Finance Director Alan Landis, Purchasing Specialist
RE:	Recommendation for Collection Services Agreement

Please include the following item on the City Commission consent agenda for consideration at the January 6, 2009 meeting:

Authorization for the City Manager to negotiate an agreement with Haase and Long for collection services.

Background

Beginning in 2002, the City has competitively bid collection services for city receivables including past due utility billing accounts, ambulance charges, municipal court fines and fees, and other miscellaneous receivable accounts.  Municipal Court has not participated in this RFP process after selecting Municipal Services Bureau, in 2002, due to special expertise and experience with court collections. 

Pursuant to City practice, Requests for Proposals for Collection services were again sent out in October of this year.  Municipal Court did not participate in this RFP, expressing a desire to continue using Municipal Services Bureau.  Seven proposals were received however, only three met the requirements as outlined in the RFP.

Analysis

A review committee was made up of Heidi Nelson, Alan Landis, Dawn Hiebert, and Alicia Holliday to review the proposals.  Haase and Long received the highest score. 

The fees for services provided by Haase and Long were higher than the other firms, however, the committee felt the quality of service provided and the collection rate that can be achieved by the firm will more than justify the additional expense and will be in the best interest of the City.  In addition, Haase and Long did not charge extra for some of the other services provided and most of the other agencies did.

For example, if we were to turn over $1000 to Haase and Long we would get $300 in return.  In contrast, if we were to go with next highest rated firm our return on $1000 would be any where from $116 to $258.  That firm did not provide a single anticipated rate of return for the City.  Instead a range was provided.  To further demonstrate this point, please refer to the chart below. 

City turns over $1000 to collection agency
	Projected Collection Amount	Projected Collection Cost	Projected Return to City
Haase and Long	$430	$129	$301
Next Highest Rated Agency	$147-$326	$31-$68	$116-$258

Haase and Long also projects a higher return to the City by projecting to collect on 46% of the accounts turned over to them, versus a range of 21-38% projected by the next highest rated firm.  Not only is the rate Haase and Long projects higher then the other respondents, but it is also what they have historically collected for the City of Lawrence.

Among the items the committee noted were the firms’ knowledge of the City’s operations [the City used Haase and Long (formerly Credit Bureau of Lawrence) for over 10 years prior to competitive bidding in 2002 and they were selected again in 2005], knowledge of the Lawrence community and experience collecting from a transient college population, the assignment of two and a half staff members to work all accounts turned over by a client, and the firm’s ability to customize reports to provide the information needed to track the status of accounts and performance of the agency. 

Recommendation

The Committee recommends that the City Commission authorize the City Manager to enter into an agreement with Haase and Long to provide collection services for the City’s receivable accounts as well as fire and medical charges according to the following fee schedule:

	Invoices under $1,000	Invoices over $1,000
New Accounts	30% contingency	35% contingency
Accounts Previously Turned Over to Other Agency	45% contingency	40% contingency
Accounts referred to an attorney	50%	50%