Item Coversheet
City of Independence
AGENDA ITEM COVER SHEET

Agenda Title:

Feasibility of Outsourcing Human Resources and Risk Management Internal Services 
Recommendations:

Staff recommends issuing a Request for Proposals (RFP) to qualified firms to outsource risk management services. Staff recommends deferring action on human resources outsourcing at this time and allowing the new Director of Finance & Administration to evaluate opportunities to drive efficiencies and update any processes and standards. No action is requested by the City Council at this time, but staff seeks general consensus to proceed with the release of the risk management RFP. 
Background:

On June 4, 2018, the City Council adopted Resolution #6329 directing the City Manager to determine the feasibility of outsourcing human resources and risk management internal services. The resolution directed the City Manager to issue a Request for Qualifications (RFQ) on or before June 30, 2018, to determine the feasibility of outsourcing human resources and risk management internal support services.The City Manager was further directed to complete the RFQ selection process and report back to the City Council on or before September 1, 2018. 

 

Staff issued an RFQ on June 25, 2018, to solicit qualifications from private vendors to provide human resources and risk management services. The City received five responses. Firms were asked to respond to a menu of services currently provided in-house by city staff. None of the respondents were able to offer all services requested in the RFQ. In addition, all respondents requested ongoing support from internal staff, thereby precluding an entire outsourcing of the human resources division.  

 

Three of the five respondents have varying levels of expertise in payroll administration. However, staff recommends continuing to administer payroll in-house due to the complexity of our pay plan with seven bargaining groups. In addition, the City invested heavily in the selection and implementation of the new Enterprise Resource Planning (ERP) software with Tyler Munis. The City would incur significant financial penalties to abandon this software mid-implementation. Although costing proposals were not part of this RFQ, it is unlikely that any firm could create a profitable pricing structure that would completely offset the city's losses for outsourcing payroll. 

 

Four of the five firms have considerable experience in risk management services. Staff recommends proceeding with a Request for Proposals (RFP) to gather cost information to potentially outsource risk management on or after January 1, 2019.

 

Staff recommends deferring action on human resources outsourcing at this time. Human resources is heavily focused on the impending implementation of the human resources ERP on January 1, 2019. The new software will generate internal service efficiencies and enhance service levels for employees. Staff requests the opportunity to fully incorporate the system into the city's human resources services - allowing implementation of those efficiencies - and then align the organization structure and resources with the system's capabilities. In addition, the consolidation of human resources and payroll functions into the Department of Finance & Administration opens up opportunities for cross-training and better utilization of limited staff. A new Finance & Administration Director should be announced within the next month. The City Manager will set a priority for this new leader to fully evaluating staffing needs to maximize in-house functions and identify services that are appropriate for outsourcing. Based on the responses to the RFQ, there is no vendor or combination of vendors that can fully outsource all human resources functions. 


Department:          City Manager's OfficeContact Person:          Lauren Palmer


REVIEWERS:
DepartmentAction
City Managers OfficeApproved
City Clerk DepartmentApproved
City Managers OfficeApproved
City Clerk DepartmentApproved

Council Action:          Council Action:         

ATTACHMENTS:
DescriptionType
RFQ Selection Committee Score SheetBackup Material