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HomeMy WebLinkAbout18 - Integrated Enterprise Resource Planning�P CiTY OF NEWPORT BEACH City Council Staff Report March 25, 2014 Agenda Item No. 18. TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Dave Kiff, City Manager — (949) 644 -3002, dkiff @newportbeachca.gov PREPARED BY: Sheri Anderson, Rob Houston, Steve Montano PHONE: (949) 644 -3307, (949) 644 -3033, (949) 644 -3124 TITLE: Consideration of Agreement for Integrated Enterprise Resource Planning Software System (ERP) and Implementation Services (Tyler Technologies Inc.) ABSTRACT: This item is the appropriation and selection of a vendor for a new Enterprise Resource Planning (ERP - also referred to as our Financial + Many Other Elements) software. The proposed vendor is Tyler Technologies. The proposed contract amount is $3.766M. RECOMMENDATION: Approve and authorize the Mayor to execute an agreement with Tyler Technologies Inc. for the purchase, installation, and implementation of an Enterprise Resource Planning Software System and related subsystem software in an amount not to exceed $3,766,697. FUNDING REQUIREMENTS: The total ERP project costs over the five -year term of the contract are anticipated to be $4,543,785 (see attachment titled Proposed Contractual Costs and Project Budget). This amount includes costs for software license, implementation, and maintenance fees; contingency funding; and project oversight and staffing. Software License. Implementation, and Maintenance Fees The Tyler Technologies Inc. not to exceed contractual amount is $3,766,697, which consists of $2,909,265 in software, hardware and implementation services and $857,432 in annual maintenance fees over the five -year term. The majority of the annual maintenance fees will be incurred in future years and will be expensed as departmental internal service fund charges. As the City moves through the phases of this project, its staff and administration will be challenged to rethink current practices and provide the necessary framework for the City to align administrative processes with current leading practices. To further this goal, the not t0437 exceed contract amount with Tyler Technologies includes resources for business process consulting, a half time project management staffing resource, and change management assistance. Contingency In the event that extra work is needed beyond what is indicated in the Statement of Scope of Work, staff has allocated a contingency budget of $200,000 and a budget of $15,000 for other miscellaneous items. The City has identified and budgeted contractual cost stated above to include three "customizations" (i.e., functionalities that require changes to the source code in order to be delivered). There are some functional requirements that have been responded to in the Request for Proposals as either requiring additional procedures or modification. While in most cases these requirements can be met with additional configuration, there may be cases where supplemental code may need to be used. A contingency for extra work or third party application licensing will provide for software modifications, additional interface work with 3rd party applications, and any optional components deemed necessary during the discovery phase that were not originally specified in the base project. Project Oversight and Staffing Staffing backfill in the amount of $562,088 for the duration of the project has been identified. This consists of a temporary HR analyst for 18 months and IT overtime staffing of 450 hours over 30 months. The Finance Department will have the largest staffing commitment to the ERP project than any other department and is requesting authorization to add accountant hours to backfill the work of staff that will be impacted by the planning and implementation process. As part of a larger strategic human capital management initiative, the new positions will a) mitigate the impending ERP workload, b) maintain and improve the analytical capacity to serve other departments during and after the ERP implementation, and c) better position Finance Department staff during the business process change that will occur during the ERP implementation. The ERP implementation is scheduled to take between 25 and 30 months and will consist of 5 major phases (see Project Timing Section below). Each phase has a life -cycle that requires involvement in chart of account development, business process rules discovery and planning, conversion /interface development, configuration, training, and testing. This schedule will span 3 budget and 2 Comprehensive Financial Annual Report (CAFR) preparation cycles, which will place a significant strain on existing staffing resources. The total FY 2013 -14 available budget for the acquisition and implementation of the ERP system is $3,736,169. The total anticipated first -year expenditures for the project are approximately $2,926,384. No additional appropriation of funds for the project is necessary. DISCUSSION: Background The City's current financial management system is provided by Sungard and was implemented over 20 years ago. The City has grown since then and has developed operational needs beyond the abilities of the current system. In addition to the current financial system, the City operates multiple stand -alone customized applications and interfaces in various departments. Under the current system, many items are tracked and managed in Microsoft Excel spreadsheets and Access databases including: Contract Management, Budgeting, Grant Management, Cash Flow Management, Records Management, HR Background Questionnaire, Livescan Log, DMV Physicals, Intern Log, Temp & Contractor Log, Disability Claims and 438 Workers Compensation Claims, and other items. Because the City's financial system was not originally designed to integrate with many of the City's more modern business applications, duplicate entry and manual reconciliation are required where IT staff have not developed and maintained customizations. By replacing the current system, the City will gain operational efficiencies by eliminating the need for redundant processes and duplicate data entry, while improving integration between the financial system and other core functions. The benefits that will accrue to the City as the result of this effort will be stronger decision support (better and timelier information), expanded use of web and mobile device applications to improve customer convenience and numerous workflow process improvements that will streamline and enhance workplace efficiency. This improved integration will also greatly enhance the reporting capability the City will have to provide more accurate information for decision making. Highlights of limitations in the current financial system and other stand -alone systems within the City's operations include the following: • Antiquated and limited number of cost accounting tools. • Insufficient flexibility and configurability has required City IT staff to develop and maintain multiple customizations to integrate with desktop applications. • Lack of online approval or workflow. • Lack of ability to generate detailed report queries on the General Ledger. • Inflexible chart-of- account /budget control structures. • Inability to create flexible ad -hoc reports for management and user purposes. • Proliferation of independent databases throughout the organization. • Inability to query databases and have access to on -line /real -time data. • Limited technical support for existing software. We concluded that most of these problems can be overcome through a financial system using best business practices as its framework. The goal of this procurement is to obtain an integrated financial and human resource system that provides us with leading -edge software to perform a broad range of functions such as purchasing, payroll, human resources, general accounting, budgeting, and other capabilities. Selection Process A Request for Proposals (RFP) solicitation was issued on April 30, 2013, inviting proposals from parties interested in providing the City with an Enterprise Resource Planning (ERP) system. The RFP was distributed directly to known ERP system providers and also posted on the City's website, making it available to the public. The proposal submission deadline passed on June 7, 2013 and the City received a total of five (5) proposals from the following proposers: CRW Systems Kinsey — Infor Phoenix Business, Inc. SunGard Public Sector, Inc. Tyler Technologies, Inc. Although price was a significant factor in selecting a vendor, staff also considered how well the vendors complied with the main selection criteria defined in the RFP. The proposals underwent a preliminary review based on administrative requirements of the proposers and minimum functional requirements of the proposed systems, as set forth in the RFP solicitation. Of particular note, the RFP solicitation included a 'Functional Requirements Checklist' that 439 contained fields enabling proposers to demonstrate their proposed systems' functionality with respect to the City's requirements. This checklist was a mandatory submittal item, per the instructions in the RFP. The proposal from CRW Systems demonstrated that their proposed system was primarily functional with regard to permits and permitting but lacked functionality in most of the other resource planning requirements mandated by the City. Furthermore, the proposal from SunGard Public Sector, Inc. did not provide a response in any manner to the City's system functionality requirements. As such, both proposals were deemed non - responsive and were not recommended for further evaluation. The three (3) remaining responsive proposals were subject to a technical review, in which the functionality of each proposed system was compared and evaluated. The evaluation panel consisted of City Manager's Office, Information Technology, Human Resources and Finance staff, as well as a consultant assisting the City on this project. The panel was charged with determining the relative weight of each major system functionality category and then rating the proposed systems against these metrics. The technical review identified the proposed systems from Kiney - Infor, Phoenix Business, Inc. and Tyler Technologies, Inc. as all satisfactorily meeting the City's functional system requirements. The evaluation panel then assessed the cost proposals associated with each system. The following table illustrates the estimated system and maintenance costs proposed to the City, as taken directly from each proposal. Please note that these costs include maintenance for a period of five (5) years after system implementation: Proposer Estimated System Cost (5 Years) Tyler Technologies (Tyler Munis) $1,430,897 Kinsey — Infor (Infor- Lawson) $3,941,088 Phoenix Business, Inc. (SAP) $14,614,372 Due to the significantly higher proposed cost of their proposed system despite the lack of any demonstrated advantages over the other two systems, the proposal from Phoenix Business, Inc. (proposing SAP software) was removed from further consideration in the evaluation process. The City invited the remaining proposers, Kinsey -Infor and Tyler Technologies, Inc. to participate in live demonstrations encompassing the various areas of functionality offered by their systems. Each proposer was given one week to present to an audience consisting of various department end -users that would potentially use their system. All attendees participated in scoring each of the proposers based on the information and functionality presented. During this process, Tyler Technologies, Inc. outscored Kinsey -Infor among all of the raters and in a force - ranking exercise, the Tyler Technologies, Inc. system was preferred by a count of 29 to 4 raters. Following the evaluation processes described thus far, the decision was made by the City to pursue further evaluation of Tyler Technologies, Inc. and to discontinue the evaluation of Kinsey - Infor, barring any major setbacks with the former. The City identified two cities as recent ERP system clients of Tyler Technologies whose system requirements mirrored those of the City: Victorville and Culver City. Both agencies agreed to host live site visits to enable City representatives to see the Tyler Technologies, Inc. ERP in a live functional setting. The City dispatched a team consisting of staff end -users of the ERP 40 system to attend these site visits and identify any areas of concern regarding the system. These site visits provided the City with an opportunity to engage current users of the Tyler Technologies, Inc. system and the City representatives took advantage of this opportunity to ask about the advantages and shortcomings of the system encountered by its current users. The site visit team concluded these visits with a list of specific functionality issues which would eventually be negotiated but left largely satisfied with how the system performed in a live -time municipal government setting. In addition to this outreach City staff spoke to representatives from the City of Beverly Hills and the City of Pasadena whom have both selected Tyler during recent ERP RFP processes. Both cities conducted lengthy vendor demonstrations and review and determined that Tyler had the best product to meet the demanding needs of their organizations. The complexity of the evaluation process, which encompassed a technical review, cost review, live system demonstrations and site visits, reflect the complex nature of the ERP system the City wishes to procure. Following this comprehensive best -value procurement and evaluation process, the City identified Tyler Technologies as the highest -rated proposer of an ERP system to the City. This contract with Tyler Technologies, Inc. furthers the City's goal to provide high quality public services and increase the efficient management of public resources. The contract also supports the goal to maintain fiscal responsibility and stability by implementing an ERP system that centralizes financial and human resources data for consistency, reliability and accuracy. Additionally, this project supports the IT Department's mission of providing proven state- of -the- art technologies in the most strategic, cost effective and efficient means in furtherance of the projects and initiatives outlined in the IT Strategic Plan. Finally, this project will provide an opportunity for the City to improve customer service and provide users with improved and enhanced access to information, while fostering an efficient and dynamic administrative environment that will be well prepared for the future challenges facing the City. Project Timing The planned implementation will occur in five stages as provided in the attachment titled "ERP Implementation Cycle." Additionally, the project will be organized according to a phased software implementation plan. Phase 1 will include Core Financials and be delivered by October 1, 2015. Phase 2 will include Core Human Resources and Payroll to be delivered to the City by January 1, 2016. Phase 3 will include Utility Billing to be delivered to the City by June 1, 2016. Phase 4 will include Work Orders to be delivered to the City also by June 1, 2016. Phase 5 will include Business Licenses and Performance Based Budgeting to be delivered to the City by October 1, 2016. ENVIRONMENTAL REVIEW: Staff recommends the City Council find this action is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378)of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. NOTICING: The agenda item has been noticed according to the Brown Act (72 hours in advance of the 441 meeting at which the City Council considers the item). ATTACHMENTS: Description Proposed Contractual Costs and Project Budget ERP Implementation Cycle Phased Implementation Schedule Contract (w /o Exhibits A -J which are available for review in the City Clerk's office and the Finance Department) 442 ATTACHMENT A Tyler Munis ERP Proposed Contractual Costs and Project Budget Software, Hardware and Implementation Services Software License Fees 3rd Party Hardware and Software Implementation Services Data Conversion Business Process Consulting Project and Change Management Other Services Total Software, Hardware and Implementation Services Maintenance Fees Year 1 FY 13/14 Year 2 FY 14/15 Year 3 FY 15/16 Year 4 FY 16/17 Year 5 FY 17/18 Total Maintenance Fees Total Tyler Not To Exceed Cost Staffing Backfill Temp or Limited Term - 1 HR Analyst for 18 months Temp or Limited Term - 2 Accountants for 24 months IT Overtime (450 hours over 30 months) Total Backfill Additional Costs SQL /VMWare licensing Contingency Total Additional costs ERP PROJECT COST GRAND TOTAL 03/19/2014 IT Internal Service Fund (ITSF) ITSF Operating ITSF Replacement Costs to be Costs to be expensed through expensed through Total Project existing ERP Internal Service Costs budget Fund $859,460 $859,460 32,105 32,105 141,500 141,500 444,500 444,500 435,000 435,000 996,700 996,700 $2,909,265 215,741 $31,495 31,495 198,268 198,268 203,347 203,347 208,581 208,581 215,741 215,741 $857,432 $3,766,697 $156,000 156,000 370,088 370,088 36,000 36,000 $562,088 $15,000 15,000 200,000 200,000 $215,000 $4,543,785 $3,717,848 $825,937 443 EIS P Implementation Life Cycle iTi�Ar V=" �Iecfion and a Ivativn Testi Acceptance, and Go L MR i RFP ■ Drmgf*rf1v*Y� IF SO V-Siti, WrwKe ChNGk% er€erd * Voklate amcen flow I niltiation roject Planning Contiaci nrlyntLwlsu.n � Icrta��n p1arF}schr�.i+r f ��}iiA '.vd l +.•� ^' '.J t Prated k -ck -sit 1P Churl of 4Kcoum devil * Asi}and up be ant "is + Brsz pracrfic*l 4rFE W Prn arrt Cnrtrtrw V"erlatt 6&vel ■ (04;gwatian * 1nmPka+rwwdition berm 9ro" ■ End vw "iriiit Knowledge Transfer and Etna "is structuml Foundation I I ATTACHMENT B ATTACHMENT C 445 nsmllmionsl Implemen btionf phases Smrt Fnish NI< 1 p ld 4515 pI ]5 p315 Wl5 p116 OI I6 mlb All Moy Iw 1 1.1 Au I Sep IX Nov Ce[ Jw Hb M Mr Mpy Iun I lul Ay I Sep I IX Rb hqr Rpr Mo lun /ul Fug Sep PFasel OSN1 /i01a 10 "I'l15 x PzrcdUxom6o es5o�rm: Pn.,.z azrmrzbss bvbermlfi ueruy elilF,e abmlrzoss ovzoaal6 Work01tl, /Rlgom[ IONIMIS U6 /41 /1016 Builne55ll[Pne /Mrso MoeS OS/Ol/ib16 M /30/3016 445 ATTACHMENT D SOFTWARE LICENSE PURCHASE AND PROFESSIONAL SERVICES AGREEMENT WITH TYLER TECHNOLOGIES, INC. FOR ENTERPRISE RESOURCE PLANNING SYSTEM THIS SOFTWARE PURCHASE AND PROFESSIONAL SERVICES AGREEMENT ( "Agreement ") is made and entered into as of this 26th day of March 26, 2014 ( "Effective Date "), by and between the CITY OF NEWPORT BEACH, a California municipal corporation and charter city ( "City "), and TYLER TECHNOLOGIES, INC., a Delaware corporation ( "Tyler"), whose address is One Tyler Drive, Yarmouth, MA 04096, and is made with reference to the following: RECITALS A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. City desires to engage Tyler to furnish, license, deliver, install and maintain Tyler software products in order to implement the Enterprise Resource Planning ( "ERP ") system ( "Project "). C. Tyler possesses the skill, experience, ability, background, certification and knowledge to provide the professional services described in this Agreement. D. City has solicited and received a proposal from Tyler, has reviewed the previous experience and evaluated the expertise of Tyler, and desires to retain Tyler to provide products and render professional services under the terms and conditions set forth in this Agreement. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. TERM The term of this Agreement as it relates to Services, including, but not limited to software maintenance Services, shall commence on the Effective Date, and shall terminate five (5) years from the installation date of the Tyler Software Products, not to exceed December 31, 2019 unless terminated earlier as set forth herein. The parties may elect to extend the term of the Agreement for purposes of maintenance Services by written amendment to the Agreement. However, the license for the software purchased by the City in conjunction with this Agreement is irrevocable in nature (subject to Client's compliance with the license grant in this Agreement) and shall not be subject to the limitations in term as set forth above. 2. SERVICES TO BE PERFORMED Tyler shall diligently perform all the Services described in the Investment Summary attached hereto as Exhibit B and detailed in the Statement of Work attached hereto as Exhibit A and the Support Call Process attached hereto as Attachment 2 to Tyler Technologies, Inc. Page 1 446 Exhibit A, the Software Maintenance Agreement attached hereto as Attachment 3 to Exhibit A ( "Services" or "Work "). Any revisions to the scope of Services shall be made by written amendment to the Agreement signed by both parties and approved as to form by the City Attorney. 3. SOFTWARE LICENESES Tyler agrees to grant to City licenses to use Tyler's software products and associated third party software products as identified in the Investment Summary attached as Exhibit B ( "Software Products ") in accordance with the terms and conditions of the Software License Agreement attached hereto as Exhibit C, the Third Party Product Agreement attached hereto as Exhibit D and the Adobe End User License Agreement attached hereto as Exhibit E, respectively, and all incorporated herein by reference (the "Licenses "). 4. TIME OF PERFORMANCE 4.1 Tyler shall perform the Services in accordance with the mutually agreed project schedule included in Exhibit A. In the absence of a specific schedule, the Services shall be performed to completion in a diligent and timely manner. The failure by Tyler to materially adhere to the schedule set forth in Exhibit A or perform the Services in a diligent and timely manner may result in termination of this Agreement by City. 4.2 Notwithstanding the foregoing, Tyler shall not be responsible for delays due to causes beyond Tyler's reasonable control. However, in the case of any such delay in the Services to be provided for the Project, each party hereby agrees to promptly provide notice (within two (2) business days) of the occurrence causing the delay to the other party so that all delays can be timely addressed. 4.3 Tyler shall submit all requests for extensions of time for performance in writing to the Project Administrator as defined herein not later than ten (10) calendar days after the start of the condition that purportedly causes a delay. The Project Administrator shall review all such requests and may grant reasonable time extensions for unforeseeable delays that are beyond Tyler's control. 4.4 For all time periods not specifically set forth herein, the parties shall respond in the most reasonably expedient and appropriate manner under the circumstances, by hand - delivery or mail. 5. COMPENSATION TO TYLER 5.1 City shall pay Tyler for the Tyler software products, Services and Licenses listed in the Investment Summary (but not including any item in the Optional Section), attached hereto as Exhibit B and incorporated herein by reference, on a not -to- exceed basis for the Term in accordance with the provisions of this Agreement, including, without limitation, the Compensation Schedule included in Attachment 1 to Exhibit B. Tyler's compensation for all Work performed in accordance with this Agreement, including all reimbursable items and subconsultant fees, shall not exceed Three Million Seven Hundred Sixty Six Thousand Six Hundred Ninety Seven Dollars and 001100 Tyler Technologies, Inc s Page 2 447 ($3,766,697.00), without prior written authorization from City. No billing rate changes shall be made during the term of this Agreement without the prior written approval of City. 5.2 Taxes: The fees set forth in the Investment Summary and Compensation Schedule included within Exhibit B do not include any taxes, including, without limitation, sales, use or excise tax. City and Tyler specifically agree and designate the point of sale and place of delivery for any and all taxable purposes under this Agreement, including, but not limit to, all Services and Software Products, shall be the City of Newport Beach 100 Civic Center Dr., Newport Beach, CA 92660. Furthermore, under the City's Direct Payment Exemption permit number SR EAA 24- 089475 DP, the City will self- accrue its Use Tax obligation to the California State Board of Equalization within thirty (30) days of delivery of the products to the City. If only partial delivery of the taxable items in the Investment Summary included in Exhibit B are received by the City, the City will only pay the California State Board of Equalization the amount of Use Tax due on the value of the items delivered in accordance with the prices set forth in the Investment Summary in Exhibit B. City shall provide Tyler with a copy of the City's Direct Payment Exemption permit within thirty (30) days of the Effective Date. 5.3 Tyler shall submit invoices to City describing the Work performed or Software Products delivered in accordance with the Compensation Schedule included in Attachment 1 to Exhibit B. Tyler's bills shall include the name of the person who performed the Work, a brief description of the Services performed and /or the specific task in the Scope of Services to which it relates and /or Software Product provided, the date the Services were performed, the time spent on all Work billed, and a description of any reimbursable expenditures. City shall pay Tyler no later than sixty (60) calendar days after receipt of the invoice by City staff. 5.4 City shall reimburse Tyler only for those costs or expenses reasonably incurred in connection with the Services and otherwise in conformance with the requirements of this Agreement. Expenses will be incurred in accordance with the then - current Tyler Business Travel Policy. The current Tyler Business Travel Policy is attached hereto as Attachment 2 to Exhibit B. 5.5 In the event City cancels services less than two (2) weeks in advance of the date services are to be performed, and such cancellation is not directly related to Tyler's failure to perform pursuant this Agreement, City is liable to Tyler for (i) all non- refundable expenses incurred by Tyler on City's behalf; and (ii) daily fees associated with the canceled services if Tyler is unable to re- assign its personnel. 5.6 Tyler shall riot receive any compensation for Extra Work performed without the prior written authorization of City. As used herein, "Extra Work" means any Work that is determined by the parties to be necessary for the proper completion of the Project, but which is not included within the Scope of Services and which the parties did not reasonably anticipate would be necessary at the execution of this Agreement. Compensation for any authorized Extra Work performed within three (3) years of the Effective Date shall be paid at the rates set forth in the Investment Summary as set forth in Exhibit B unless otherwise agreed to by the parties. Tyler Technologies, Inc. �� Page 3 448 5.7 Electronic Payment. City shall remit payment to Tyler via electronic payments. Tyler's electronic payment information is as follows: Bank: Wells Fargo Bank, N.A. 420 Montgomery San Francisco, CA 94104 ABA: 121000248 Account: 4124302472 Beneficiary: Tyler Technologies Inc. —Operating 6. PROJECT MANAGER 6.1 Tyler shall designate a Project Manager, who shall coordinate all phases of the Project. This Project Manager shall be available to City at all reasonable times during the term of Agreement . Tyler shall use commercially reasonable efforts to not remove or reassign the Project Manager. 6.2 Tyler, at the reasonable discretion of City, shall remove from the Project any of its personnel assigned to the performance of Services upon written request of City provided that such request for removal is for cause, and that Tyler shall have a reasonable opportunity to remedy the .condition supporting the City's request for removal to avoid removal of personnel from the Project. Tyler warrants that it will furnish the necessary personnel to complete the Project on a timely basis as contemplated by this Agreement. 7. ADMINISTRATION This Agreement will be administered by the City Manager's Office. The City Manager or designee shall be the Project Administrator and shall have the authority to act for City under this Agreement. The Project Administrator shall represent City in all matters pertaining to the Services to be rendered pursuant to this Agreement. 8. CITY'S RESPONSIBILITIES To assist Tyler in the execution of its responsibilities under this Agreement, City agrees to provide access to and upon request of Tyler, one copy of all existing relevant information on file at City. City will provide all such materials in a timely manner so as not to cause delays in Tyler's Work schedule. 9. STANDARD OF CARE 9.1 All of the Services shall be performed by Tyler or under Tyler's supervision. Tyler represents that it possesses the professional and technical personnel required to perform the Services required by this Agreement, and that it will perform all Services in a manner commensurate with the highest professional standards. For purposes of this Agreement, the phrase "highest professional Tyler Technologies, Inc. Page 449 standards" shall mean those standards of practice recognized by one (1) or more comparable firms performing similar work under similar circumstances. 9.2 All Services shall be performed by qualified and experienced personnel who are not employed by City. By delivery of completed Work, Tyler certifies that the Work conforms to the requirements of this Agreement, all applicable federal, state and local laws, and the highest professional standards. 9.3 Tyler represents and warrants to City that it has, shall obtain, and shall keep in full force and effect during the term hereof, at its sole cost and expense, all licenses, permits, qualifications, insurance and approvals of whatsoever nature that is legally required of Tyler to practice its profession. Tyler. shall maintain a City of Newport Beach business license during the term of this Agreement. 9.4 Tyler shall not be responsible for delay, nor shall Tyler be responsible for damages or be in default or deemed to be in default by reason of incidents of force majeure (including, without limitation, strikes, lockouts, accidents, and acts of God), or the failure of City to furnish timely information or to approve or disapprove Tyler's Work promptly, or delay or faulty performance by City, contractors, or governmental agencies. 10. HOLD HARMLESS 10.1 To the fullest extent permitted by law, Tyler shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents, volunteers and employees (collectively, the "Indemnified Parties ") from and against any and all claims, demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, attorneys' fees, disbursements and court costs) of every kind and nature whatsoever (individually, a Claim; collectively, "Claims ") for bodily injury, death or damage to property which arise from any breach of the terms and conditions of this Agreement resulting from Tyler's negligence, recklessness, and /or willful acts, errors and /or omissions of Tyler, its principals, officers, agents, employees, vendors, suppliers, consultants, subcontractors, anyone employed directly or indirectly by any of them or for whose acts they may be liable, or any or all of them). 10.2 Notwithstanding the foregoing, nothing herein shall be construed to require Tyler to indemnify the Indemnified Parties from any Claim arising from the negligence, recklessness or willful misconduct of the Indemnified Parties. 10.3 Nothing in this indemnity shall be construed as authorizing any award of attorneys' fees in any action on or to enforce the terms of this Agreement. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by Tyler. 11. INDEPENDENT CONTRACTOR It is understood that City retains Tyler on an independent contractor basis and Tyler is not an agent or employee of City. The manner and means of conducting the Work are under the control of Tyler, except to the extent they are limited by statute, rule Tyler Technologies, Inc. Page 5 450 or regulation and the expressed terms of this Agreement. No civil service status or other right of employment shall accrue to Tyler or its employees. Nothing in this Agreement shall be deemed to constitute approval for Tyler or any of Tyler's employees or agents, to be the agents or employees of City. Tyler shall have the responsibility for and control over the means of performing the Work, provided that Tyler is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct Tyler as to the details of the performance of the Work or to exercise a measure of control over Tyler shall mean only that Tyler shall follow the reasonable direction of City with respect to the performance of the Services in accord with requirements of this Agreement. 12. COOPERATION The parties agree to work closely and cooperate fully with one another, including any appropriate designees. 13. CITY POLICY Tyler shall discuss and review all matters relating to Project direction with City's Project Administrator in advance of all critical decision points in order to ensure the Project proceeds in a manner consistent with City goals and policies. 14. PROGRESS Tyler is responsible for keeping the Project Administrator informed on a regular basis regarding the status and progress of the Project, activities performed and planned, and any meetings that have been scheduled or are desired. 15. INSURANCE Without limiting Tyler's indemnification of City, and prior to commencement of Work, Tyler shall obtain, provide and maintain at its own expense during the term of this Agreement or for other periods as specified in this Agreement, policies of insurance of the type, amounts, terms and conditions described in the Insurance Requirements attached hereto as Exhibit F, and incorporated herein by reference. 16. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS Except as specifically authorized under this Agreement, the Services to be provided under this Agreement shall not be assigned, transferred contracted or subcontracted out without the prior written approval of City. No assignment shall release the original parties or otherwise constitute a novation. Notwithstanding the foregoing, should Tyler be the subject of a merger or consolidation, Tyler may, upon reasonable notice to the City, assign this Agreement in its entirety to the surviving entity and the City's approval to such assignment shall not be unreasonably withheld. Tyler Technologies, Inc. Page 6 451 17. SUBCONTRACTING Except as specifically authorized herein, the Services to be provided under this Agreement shall not be otherwise assigned, transferred, contracted or subcontracted out without the prior written approval of City. 18. OWNERSHIP OF WORK PRODUCT 18.1 Documents and Printouts. All reports, drafts, maps, records, plans, drawings, plans, specifications, and printouts and other documents prepared by Tyler in furtherance of the work shall be the sole property of the City and shall be delivered to City whenever requested. Tyler may make duplicate copies of such materials for its own file or for such other purpose as may be authorized in writing by the City. Notwithstanding anything to the contrary herein, Tyler shall retain ownership of all intellectual property rights in and to the Tyler Software Products and User Guides. 18.2 Documents, including drawings and specifications, prepared by Tyler pursuant to this Agreement are not intended or represented to be suitable for reuse by City or others on any other project. Any use of completed documents for other projects and any use of incomplete documents without specific written authorization from Tyler will be at City's sole risk and without liability to Tyler. Further, any and all liability arising out of changes made to Tyler's deliverables under this Agreement by City or persons other than Tyler is waived against Tyler, and City assumes full responsibility for such changes unless City has given Tyler prior notice and has received from Tyler written consent for such changes. 18.3 All written documents shall be transmitted to City in formats compatible with Microsoft Office and /or viewable with Adobe Acrobat. 19. CONFIDENTIALITY 19.1 All Documents, including drafts, preliminary drawings or plans, notes and communications that result from the Services in this Agreement, shall be kept confidential unless City expressly authorizes in writing the release of information or such release is required by applicable law. 19.2 Both parties recognize that their respective employees and agents, in the course of performance of this Agreement, may be exposed to confidential information and that disclosure of such information could violate rights to private individuals and entities. Each party agrees that it shall not disclose any confidential information of the other party and further agrees to take appropriate action to prevent such disclosure by its employees or agents. The confidentiality covenants contained herein will survive the termination or cancellation of this Agreement for a period of two (2) years. This obligation of confidentiality will not apply to information that: a) At the time of the disclosure is in the public domain; b) After disclosure, becomes part of the public domain by publication or otherwise, except by breach of this Agreement by a party; c) A party can establish by reasonable proof was in that party's possession at the 'time of disclosure; d) A party receives from a third party who has a right to disclose it to that party; or Is subject to requests made under the California Public Records Act or the Freedom of Information Act, only to the extent disclosure is based on the good faith Tyler Technologies, Inc. Page 7 452 written opinion of the receiving party's legal counsel that disclosure is required by law; provided, however, that that receiving party shall give prompt notice of the service of process or other documentation that underlies such requirement and use its best efforts to assist the disclosing party if the disclosing party wishes to obtain a protective order or otherwise protect the confidentiality of such confidential information. The disclosing party reserves the right to obtain protective order or otherwise protect the confidentiality of its confidential information. 20. INTELLECTUAL PROPERTY INDEMNITY Tyler shall defend and indemnify City, its agents, officers, representatives and employees against any and all liability, including costs, for infringement or alleged infringement of any United States' letters patent, trademark, or copyright, including costs, contained in Tyler's Documents provided under this Agreement. 21. RECORDS Tyler shall keep records and invoices in connection with the Services to be performed under this Agreement. Tyler shall maintain complete and accurate records with respect to the costs incurred under this Agreement and any Services, expenditures and disbursements charged to City, for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Tyler under this Agreement. All such records and invoices shall be clearly identifiable. Tyler shall allow a representative of City to examine, audit and make transcripts or copies of such records and invoices during regular business hours. Tyler shall allow inspection of all Work, data, documents, proceedings and activities directly related to the Agreement for a period of three (3) years from the date of final payment to Tyler under this Agreement. Such inspection shall occur after one (1) week advance notice. 22. WITHHOLDINGS In the event City believes products or services do not conform to warranties in this Agreement, City will provide written notice to Tyler within fifteen (15) calendar days of receipt of the applicable invoice. City is allowed an additional fifteen (15) calendar days to provide written clarification and details. Tyler will provide a written response to City that will include either a justification of the invoice or an adjustment to the invoice. Tyler and City will develop a plan to outline the reasonable steps to be taken by Tyler and City to resolve any issues presented in City's notice to Tyler. City may only withhold payment of the amount actually in dispute until Tyler completes its action items outlined in the plan. Notwithstanding the foregoing, if Tyler is unable to complete its actions outlined in the plan because City has not completed its action items outlined in the plan, City will remit full payment of the invoice. Tyler shall not unreasonably discontinue work while items are disputed in accord with this provision. 23. ERRORS AND OMISSIONS In the event of errors or omissions that are due to the negligence or professional inexperience of Tyler which result in expense to City greater than what would have resulted if there were not errors or omissions in the Work accomplished by Tyler, the additional design, construction and /or restoration expense shall be borne by Tyler. Tyler Technologies, Inc. v Page 8 453 Nothing in this Section is intended to limit City's rights under the law or any other sections of this Agreement. Nothing is this section shall be construed to require Tyler to pay the cost of substitute goods or services. This Section is, in all respects, subject to Sections 27.2 (Dispute Resolution Process) and 30 (Limitation of Liability) of this Agreement. 24. CITY'S RIGHT TO EMPLOY OTHER CONSULTANTS City reserves the right to employ other Consultants in connection with the Project. The foregoing notwithstanding, any Consultant shall be subject to the terms and conditions of this Agreement, including, without limitation, the provisions regarding handling and use of confidential information. 25. CONFLICTS OF INTEREST 25.1 Tyler or its employees may be subject to the provisions of the California Political Reform Act of 1974 (the "Act "), which (1) requires such persons to disclose any financial interest that may foreseeably be materially affected by the Work performed under this Agreement, and (2) prohibits such persons from making, or participating in making, decisions that will foreseeably financially affect such interest. 25.2 If subject to the Act, Tyler shall conform to all requirements of the Act. Failure to do so constitutes a material breach and is grounds for termination of this Agreement by City in accordance with Section 28 belon!. Tyler shall indemnify and hold harmless City for any and all claims for damages resulting from Tyler's violation of this Section. 26. NOTICES 26.1 All notices, demands, requests or approvals, including any change in mailing address, to be given under the terms of this Agreement shall be given in writing, and conclusively shall be deemed served when delivered personally, or on the third business day after the deposit thereof in the United States mail, postage prepaid, first - class mail, addressed as hereinafter provided. 26.2 All notices, demands, requests or approvals from Tyler to City shall be addressed to City at: Attn: Rob Houston, Assistant to the City Manager City Manager's Office City of Newport Beach 100 Civic Center Drive PO Box 1768 Newport Beach, CA 92658 26.3 All notices, demands, requests or approvals from City to Tyler shall be addressed to Tyler at: Attn: Associate General Counsel Tyler Technologies, Inc. Tyler Technologies, Inc. Page 9 454 One Tyler Drive Yarmouth, MA 04096 27. CLAIMS Unless a shorter time is specified elsewhere in this Agreement, before making its final request for payment under this Agreement, Tyler shall submit to City, in writing, all claims for compensation under or arising out of this Agreement. Tyler's acceptance of the final payment shall constitute a waiver of all claims for compensation under or arising out of this Agreement except those previously made in writing and identified by Tyler in writing as unsettled at the time of its final request for payment. 28. MEET AND CONFER PROCESS 28.1 For all disputes under this Agreement, a party will notify the other party in writing within fifteen (15) days of becoming aware of a dispute. If the parties cannot resolve such dispute within thirty (30) calendar days of receipt of written notice of dispute, the parties will each promptly designate an executive level representative from its organization to meet with its counterpart from the other party to resolve the dispute. Thereafter, either party may assert its other rights and remedies under this Agreement within a court of competent jurisdiction. 28.2 All meetings and discussions during the Meet and Confer Process will be deemed confidential settlement discussions not subject to disclosure under Federal Rule of Civil Procedure 408 or any similar applicable state rule. 28.3 Nothing in this provision will prevent a party from applying to a federal or state court of competent jurisdiction to obtain injunctive relief pending resolution of the dispute through the dispute resolution procedures set forth herein. 29. TERMINATION 29.1 In the event that either party fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, that party shall be deemed in default in the performance of this Agreement. If such default is not cured within a period of forty -five (45) calendar days of receipt of notice of default from the alleging party, the non - defaulting party may terminate the Agreement forthwith by giving to the defaulting party written notice thereof. 29.2 Notwithstanding the above provisions, City shall have the right, at its sole and absolute discretion and without cause, of terminating this Agreement at any time by giving no less than forty -five (45) calendar days' prior written notice to Tyler. 29.3 In the event of any termination of this Agreement, City shall pay Tyler for non - defective products and Services delivered in accord with the requirements of this Agreement and costs incurred up to the effective date of termination for which Tyler has not been previously paid. On the effective date of termination, Tyler shall deliver to City all non - proprietary and non - confidential reports, documents and other information developed or accumulated in the performance of this Agreement, whether in draft or final form. Tyler Technologies, Inc. Page 10 455 29.4 Procedure on Termination. If this Agreement is terminated following the Completion of Services, then the City may retain the copy of the Software in its possession subject to the terms of the Software License Agreement but it shall not be entitled to any additional Licenses, nor will it receive updates of, or modifications to, the Software made by Tyler. Notwithstanding the foregoing, the City will remain subject to the obligations imposed upon it pursuant to this Agreement with respect to the Software, including, but not limited to, such obligations relating to use of the Software and confidentiality. 30. DISCLAIMER THE WARRANTIES SET FORTH IN THIS AGREEMENT, INCLUDING ATTACHMENTS AND EXHIBITS, ARE EXCLUSIVE AND IN LIEU OF ALL OTHER RIGHTS, REMEDIES, AND WARRANTIES EXPRESSED, IMPLIED, OR STATUTORY, INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND SYSTEM INTEGRATION, WHICH ARE HEREBY DISCLAIMED BY TYLER. 31. LIMITATION OF LIABILITY 31.1 Professional Services. In no event shall either party be liable for special, indirect, incidental, consequential, or exemplary damages, including, without limitation, any damages resulting from loss of use, loss of data, interruption of business activities, or failure to realize savings arising out of or in connection with the provision or quality of professional services or use of the Tyler Software Products. The parties liability for damages arising out of the professional services (identified as the line item "Tyler Services" in the Investment Summary attached as Exhibit B), whether based on a theory of contract or tort, shall be limited to two (2) times the Tyler Services fees identified in the Investment Summary included in Exhibit B and paid by Client. 31.2 Maintenance Agreement (Exhibit A- Attachment 3). In no event shall Tyler be liable for special, indirect, incidental, consequential, or exemplary damages, including, without limitation, any damages resulting from loss of use, loss of data, interruption of business activities, or failure to realize savings arising out of or in connection with the provision or quality of maintenance services or use of the Tyler Software Products. Tyler's liability for damages and expenses arising out of the Maintenance Agreement, whether based on a theory of contract or tort, shall be limited to two (2) times the Software Maintenance Fees due and paid by City during the twelve (12) month period prior to the claim. The Software Maintenance Fees reflect and are set in reliance upon this limitation of liability. 31.3 Software License Agreement (Exhibit C). In no event shall Tyler be liable for special, indirect, incidental, consequential, or exemplary damages, including, without limitation, any damages resulting from loss of use, loss of data, interruption of business activities, or failure to realize savings arising out of or in connection with the use of the Tyler Software Products. Tyler's liability for damages and expenses arising out of this Software License Agreement, whether based on a theory of contract or tort, shall be limited to two (2) times the Software License Fees set forth in the Investment Summary Tyler Technologies, Inc. Y Page 11 456 included in Exhibit B and paid by Client. Such Software License Fees are set in reliance upon this limitation of liability. 31.4 Third Party Product Agreement (Exhibit D). In no event shall Tyler be liable for special, indirect, incidental, consequential, or exemplary damages, including without limitation, any damages resulting from loss of use, loss of data, interruption of business activities, or failure to realize savings arising out of or in connection with the use of the Third Party Products. Tyler's liability for damages and expense arising out of the Third Party Product Agreement attached as Exhibit D, whether based on a theory of contract or tort, shall be limited to the License fee /purchase price of the Third Party Products as set forth in the Investment Summary included in Exhibit B and paid by Client. 32. STANDARD PROVISIONS 32.1 Recitals. City and Tyler acknowledge that the above Recitals are true and correct and are hereby incorporated by reference into this Agreement. 32.2 Compliance with all Laws. Tyler shall, at its own cost and expense, comply with all applicable statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all Work prepared by Tyler shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements and be subject to approval of the Project Administrator and City. 32.3 Waiver. A waiver by either party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 32.4 Integrated Contract. This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties hereto, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. 32.5 Conflicts or Inconsistencies. In the event there are any conflicts or inconsistencies between this Agreement and the attachments attached hereto, the following order of precedence shall apply: the terms of this Agreement and Exhibits A -F, I and J shall govern, followed by Tyler's Proposal attached hereto as Exhibit G and then the City's Request for Proposal attached hereto as Exhibit H. 32.6 Interpretation. The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. 32.7 Amendments. This Agreement may be modified or amended only by a written document executed by both Tyler and City and approved as to form by the City Attorney. Tyler Technologies, Inc. Page 12 457 32.8 Severability. If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 32.9 Controlling Law and Venue. The laws'of the State of California shall govern this Agreement and all matters relating to it and any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange, State of California. 32.10 Equal Opportunity Employment. Tyler represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex, age or any other impermissible basis under law. 32.11 No Attorneys' Fees. In the event of any dispute or legal action arising under this Agreement, the prevailing party shall not be entitled to attorneys' fees. 32.12 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original and all of which together shall constitute one (1) and the same instrument. [SIGNATURES ON NEXT PAGE] Tyler Technologies, Inc. Page 13 458 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the dates written below. APPROVED AS TO FORM: CITY A Y'S OFFICE Date: %� 1I Bya1 ' { V1� V L� Aaron C. Harp Iznh, City Attorney i g)r) ATTEST: Date: CITY OF NEWPORT BEACH, a California municipal corporation Date: By: Rush N. Hill, II Mayor TYLER: Tyler Technologies, Inc., a Delaware corporation By: By: Leilani I. Brown James J. Hurley, III City Clerk Senior VP, Sales & Marketing - ERP Date: By: Stacey M. Gerard Assistant Secretary [END OF SIGNATURES] Attachments: Exhibit A — Statement of Work Exhibit A- Attachment 1: Verification Test Exhibit A- Attachment 2: Support Call Process Exhibit A- Attachment 3: Software Maintenance Agreement Exhibit A- Attachment 4: Acceptance Testing Exhibit B — Investment Summary Exhibit B- Attachment 1: Compensation Schedule Exhibit B- Attachment 2: Business Travel Policy Exhibit C — Software License Agreement Exhibit D — Third Party Product Agreement Exhibit E — Adobe End User License Agreement Exhibit F — Insurance Requirements Exhibit G — Tyler's Proposal submitted in response to Client's RFP Exhibit G — Attachment 1: Requests For Clarification Exhibit H — City's Request for Proposal Exhibit I — Escrow Agreement Exhibit J — Interface and Modification Documents Tyler Technologies, Inc. Page 14 459