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HomeMy WebLinkAbout2006-26385 Reso RESOLUTION NO. 2006-26385 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, APPROVING AND AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE AMENDMENT NO. 1 TO THAT CERTAIN CONCESSION AGREEMENT BY AND BETWEEN THE CITY AND BROTHER'S VENDING, INC FOR THE OPERATION OF VENDING MACHINES ON CITY-OWNED PROPERTIES AND FACILITIES; SAID AMENDMENT PROVIDING FOR A NEW MINIMUM GUARANTEE AND PERCENTAGE OF GROSS WHEREAS, on February 23, 2005, the Mayor and City Commission authorized the Administration to issue Request for Proposals No. 09/04-05 to solicit proposals for the operation of vending machine concessions at various locations on City-owned properties and facilities (the RFP); and WHEREAS, on July 27,2005, the Mayor and City Commission adopted Resolution No. 2005-25966, authorizing the Administration to enter into negotiations with Brother's Vending, Inc., as the successful proposer, for the operation of said vending machine concessions; and WHEREAS, the Administration successfully negotiated a Concession Agreement with Brother's Vending, Inc., for an initial two (2) year term, said Agreement commencing '. . on November 1,2005, and expiring on October 31,2007, with three (3) additional one year renewal options, each at the City's sole discretion; and WHEREAS, on October 19, 2005, the Mayor and City Commission adopted Resolution No. 2005-26042, approving and authorizing the Mayor and City Clerk to execute the forgoing Concession Agreement; and WHEREAS, said Concession Agreement provided for the City and Brother's Vending, Inc. to meet to review their performance for the previous contract year to discuss and address quality, operational, maintenance and other issues; and WHEREAS, as a result of said review process the Administration would recommend that, due to unforeseen difficulties with the placement and location of several vending machines, the City and Brother's Vending, Inc. have agreed to enter into an amendment to the Concession Agreement, which would provide for a new minimum guarantee and percentage of gross. NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City Commission hereby approve and authorize the Mayor and City Clerk to execute Amendment No. 1 to that certain Concession Agreement by and between the City and Brother's Vending, Inc. for the operation of vending machines on City-owned properties and facilities; said Amendment providing for a new minimum guarantee and percentage of gross. PASSED AND ADOPTED THIS 6th day of Decemb'l, 2006. Attest: tllNJ f ~~ Robert Parcher, CITY CLERK JMG:TH:ACV:rlr F:IECON\$ALL IASSETlVENDINGIBROTHERSVENDING _AMENDMENT1 TOAGREEM ENT. RES. DOC APPROVED AS TO FORM & LANGUAGE FO CUllON COMMISSION ITEM SUMMARY Condensed Title: Resolution Approving and Authorizing the Mayor and City Clerk to Execute Amendment 1 to the Concession Agreement by and between the City and Brother's Vending, Inc. for the operation of Vending Machine Concessions at various locations on City-owned Properties, for a term of Two (2) Years, with Three (3) One-Year Renewal Options, each at the City's Sole Discretion, and Subject to a Thirty (30) Day Termination for Convenience Provision, at the City's Sole Discretion. Ke Intended Outcome Su orted: Increase resident satisfaction with availability of commercial service options. Issue: Shall the Commission Adopt the Resolution? Item Summary/Recommendation: On July 27,2005, the Mayor and City Commission adopted Resolution No. 2005-25966, authorizing the Administration to enter into negotiations with Brother's Vending, Inc. (Concessionaire), as the successful proposer, for the operation of vending machine concessions. The first year performance was reviewed by the City and Concessionaire with a resulting conclusion that due to difficulties in placing vending machines and differences in the number of projected machines, the Concessionaire has not realized projected revenues. The Concessionaire has requested, and the Administration supports, adjusting the minimum guarantee/percent of gross compensation from the current formula to option 3 of the Concessionaire's RFP, which is a minimum guarantee of $28,800 or 30% of gross, whichever is greater. The current Agreement provides a minimum annual guarantee of $38,400, or 20% of gross receipts to be paid on November 1 sl of each year and reconciled at the end of the year. The revised option is still above the number 2 bidder. The Administration recommends adoption of the Resolution. Advisory Board Recommendation: IN/A Financial Information: Source of Amount Account Approved Funds: 1 $0.00 No charge to the City. Vendor will pay fees to the City. D 2 3 4 aSPI Total Financial Impact Summary: Ci Clerk's Office Le islative Trackin Asset Management . SSET\VENDING\BrothersVendin _Amendment1 T oAgreement.SUM .doc City Manager ~ ~ MIAMIBEACH AGENDA ITEM DATE c7A I~-~ -O~ ./ ~ MIAMI BEACH City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov COMMISSION MEMORANDUM FROM: Mayor David Dermer and Members of the City Commission Jorge M. Gonzalez, City Manager ~ -...../ ~ December 6, 2006 C () A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, APPROVING AND AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE AMENDMENT NO. 1 TO THAT CERTAIN CONCESSION AGREEMENT BY AND BETWEEN THE CITY AND BROTHER'S VENDING, INC FOR THE OPERATION OF VENDING MACHINES ON CITY- OWNED PROPERTIES AND FACILITIES; SAID AMENDMENT PROVIDING FOR A NEW MINIMUM GUARANTEE AND PERCENTAGE OF GROSS TO: DATE: SUBJECT: ADMINISTRATION RECOMMENDATION Approve Amendment NO.1 to the Concession Agreement with Brothers Vending, Inc. ANAL YSIS The City Commission adopted Resolution No. 2005-26042 on October 19, 2005, which approved and authorized a Concession Agreement with Brothers Vending, Inc. for the operation of vending machine concessions at various locations on City-owned properties. The Concession Agreement was negotiated for an initial two (2) year term, commencing on November 1,2005, and expiring on October 31, 2007, with three (3) additional one year renewal options, each at the City's sole discretion. In May of 2006, Brothers Vending, Inc. expressed concerns with the inability to place machines because the previous vendor was remiss in removing their machines on a timely basis. Of the fifty-nine (59) locations the previous vendor had been utilizing, Brothers Vending, Inc. had only been able to place seven (7) in November, twenty-seven (27) in December, six (6) in January, three (3) in February, one (1) in March, and four (4) in April for a total of forty-eight (48) at the time of this first meeting. The Administration had offered to give the Concessionaire a deferral due to these placement difficulties. The Concessionaire did not accept the deferral at the time and brought to the Administration additional issues relating to the vending machines in regard to location access and electrical problems in various locations. The Office of Asset Management continued to meet with the Concessionaire regarding obstacles such as; limitation of products offered to youth, such as energy drinks/candy, competition with the Tennis Centers which were offering the similar products from a different producer, the actual number of vending machine placements being lower than identified in the original Request for Proposal, and preferential pricing that is below market rate. The Office of Asset Management reviewed the fifty-nine (59) locations utilized by the previous Concessionaire and assessed any problematic issues related to these locations. There were, in fact, electrical issues in some of the locations which caused a loss of revenue Commission Memorandum-Brothers Vending December 6, 2006 Page 2 of 2 over the summer vacation. Due to current construction operations on City-owned properties, and the verification that the Tennis Centers were in direct competition with the concessionaire, the review did show there were locations unavailable or a hardship to the Concessionaire. The RFP for the Tennis Center Management, which was recently issued, included a clause which will prevent competing with the Vending Machine Concession Agreement in the future. Additional areas for more vending machines were also identified to the Concessionaire. The Administration met again with the Concessionaire in October at which time Brothers Vending, Inc. provided Asset Management with the revenue reports for the previous months beginning with November 2005. Staff verified the location, number and date of installation for each machine. The receipts for the first ten months were reviewed and verified by the Internal Auditor and it was confirmed that the revenues generated fell short of the projections due to unforeseen difficulties in removing the previous vendor's equipment on a timely basis as well as problems in placing machines in locations that had been identified in the Request for Proposals. The calculations demonstrated that the revenues generated from Brothers Vending, Inc.'s Beverage and Snack machines through July with partial reporting for August totaled $48,995.95 with the minimum guarantee representing 78% of the gross revenues at time of reporting. (Attachment 1) On November 1 , 2006, the Administration had a year end meeting with the Concessionaire. Given the assessment done by Asset Management in consideration of all problematic issues faced by the Concessionaire during the first year of the Concession Agreement, Asset Management proposed at that time that Brothers Vending, Inc. had legitimate concerns and was due some consideration in moving forward with the second year of the Agreement. In keeping with the original Request for Proposal Scope of Services, and the awarded proposal, the Concessionaire has requested, and the Administration supports, accepting a switch from Option 1 to Option 3 of the original RFP which provides for a minimum guarantee of $28,800 or 30% of the gross receipts whichever is greater to be paid on a monthly basis. This is consistent with the RFP and continues to exceed the proposal made by the second highest bidder. The current Agreement provides a minimum annual guarantee of $38,400 or 20% of gross receipts to be paid on November 1 sl of each year and reconciled at the end of the year (Resolution 2005-25966 Attached). Although there had been difficulty in placing the same number of vending machines on City- owned properties as the previous vendor at the onset of the contract, currently the Concessionaire has met the number of machines functioning as the previous Concessionaire. The November 1 sl minimum guarantee has been extended until a decision has been made by the Commission on this recommendation. CONCLUSION The Administration recommends that the Mayor and the City Commission approve this Amendment which will provide equitable relief to Brother's Vending, Inc. while maintaining the City's interests. T:\AGEN DA\2006\dec0606\consentIBrolhersVending_ Amendment1 T oAgreement. MEM .doc