On July 28, 2023, the Mayor and City Commission, via agenda item C4O, approved a referral to the Public Safety and Neighborhood Quality of Life Committee to discuss the issuance of solicitations prior to existing contracts expiring in order to avoid unnecessary contract extensions.

When referring to contract extensions, it is important to differentiate between contracts that are extended pursuant to optional renewal terms pre-established in the contract and those contracts that must be extended on a month-to-month basis while a replacement contract is completed or for other reasons.

With regard to the optional renewal periods, most contracts awarded for operational needs include a three (3) year initial term, as well as two (2), one (1) year renewal periods. The optional renewal periods are purposely built into the contract to allow the City to maximize the cost-effectiveness of its contracts. If contractor performance is satisfactory, exercising a renewal period allows the City to continue to acquire the contracted goods and services at the prices initially awarded. This is particularly cost-effective during inflationary periods such as has been the case over the last several years. Prior to recommending a renewal, staff confirms contractor performance and any increases in the Bureau of Labor Statistics Consumer Price Index (CPI) for the local area. If contractor performance is satisfactory and the local market is experiencing inflationary pressures, it is in the City’s best interest to exercise an optional renewal term. If contractor performance is not satisfactory or the local economy is experiencing deflationary pressures, the optional renewal periods are not exercised.

With regard to the month-to-month extensions of contracts, occasionally, it is necessary to exercise such an option for extenuating circumstances, such as when a replacement contract cannot be awarded or for other extenuating circumstances. The table below includes those contracts that are currently extended on a month-to-month basis because a replacement contract could not be awarded prior to the then current contract expiring.

When considering that the City currently maintains approximately 840 active contracts, the five (5) contracts on a month-to-month status represent less than 1% of all active contracts.

Further, staff has completed a review of contract awards completed during the last fiscal year (FY 2023). On average, contracts intended to replace existing contracts were awarded 92 days prior to the expiration of the contract being replaced.

The referral references beginning the solicitation process for expiring contracts ahead of contracts expiring. The Administration agrees and, in fact, that is the current practice.  The solicitation process for replacement contracts is typically initiated approximately six (6) to nine (9) months prior to the final expiration date of the contract, depending on complexity of the solicitation and staff resources. Six (6) to nine (9) months is typically sufficient time to award a replacement contract, barring any major issues, before a current contract expires. Beginning the solicitation process too far in advance of the contract's effective date is not recommended as doing so will require bidders to hold bid prices for an extended period, which results in increased pricing risk for bidders. Typically, the greater the risk perceived by bidders, the higher the costs the bid will yield.