REPORT TO COUNCIL
SUBJECT
Title
Action to Authorize the City Manager to Negotiate and Execute an Agreement with Lyngsoe Systems, Inc. for an Automated Materials Handling System and Related Services, Authorize the Use of City Public Works Forces at the Northside Branch Library for System Installation Improvements, and Approve Related Budget Amendments
Report
BACKGROUND
The Northside Branch Library (Northside Library) maintains a collection of over 60,000 items, including books, audiovisual materials, and digital media, and processed approximately 134,000 returned items in FY 2024/25. To support operations at this scale, libraries commonly utilize Automated Materials Handling Systems (AMHS) to automate the check-in and sorting of returned materials. These systems typically consist of patron self-return kiosks, a staff-operated induction station for manual processing, a conveyor system, and multiple sortation pathways to streamline material handling and reshelving.
Northside Library’s existing AMHS, which is approximately 13 years old, has reached the end of its useful life and requires frequent and costly repairs. In addition, the current system’s configuration extends through a narrow room with induction points located at opposite ends, resulting in inefficient use of space and significantly limiting staff workspace, particularly along the south side of the room, which is largely inaccessible. The system also generates substantial operational noise, contributing to a disruptive work environment. Due to these factors, the City identified the need to replace the existing AMHS at Northside Library. A new system is expected to improve operational efficiency, reduce staff labor associated with material handling, and provide a more functional and ergonomic workspace.
To implement this replacement, the City initiated a formal procurement process in accordance with Section 2.105.140(c) of the Santa Clara City Code (City Code). A Request for Proposal (RFP) was conducted, and award was made based on “best value.” On August 27 2025, staff issued the RFP to solicit firms to provide an AMHS for Northside Library. The RFP was published on the City’s e-procurement system. Four proposals were received from the following firms:
• Bibliotecha
• FE Technologies
• Lyngsoe Systems
• mk Solutions
An evaluation panel comprised of five (5) representatives from various divisions within the Library Department conducted the evaluation process in two phases. Phase 1 consisted of independent review and scoring of written proposals to establish a shortlist of the top-ranked firms, resulting in two finalists. Phase 2 included site visits to Bay Area libraries currently utilizing each finalist’s system to observe the system performance in an operational environment, followed by oral presentations. These presentations provided an opportunity for proposers to highlight system functionality, features, and service capabilities, and allowed the evaluation panel to ask clarifying questions.
In addition to procuring the new AMHS, installation of the system requires modifications to the existing facility. To address the building modification work required to install the AMHS, staff is recommending that the City Council approve the Use of City Public Works Forces. In this case, the Public Works Department would complete any structural modifications needed.
Charter Section 1310 titled Contracts on Public Works states in part that “every contract involving an expenditure of more than one thousand dollars ($1,000.00) for the construction or improvement, (excluding maintenance and repair), of public buildings, works, streets, drains, sewers, utilities, parks and playgrounds shall be let to the lowest responsible bidder.” The section further states that the City Council “may declare and determine that, in its opinion, the work in question may be performed better or more economically by the City with its own employees, and after the adoption of a resolution to this effect by at least four affirmative votes, it may proceed to have said work done in the manner stated, without further observance of the provisions of this section.”
The City Council previously approved the same building modification work at Central Park Library to be completed by City Forces in RTC 18-387.
DISCUSSION
Upon completion of the evaluation process for the RFP, the panel recommended award to Lyngsoe Systems, Inc. (Lyngsoe), as the highest-ranked proposer in accordance with the criteria set forth in the RFP. Lyngsoe is a well-established provider of AMHS solutions and is recognized for delivering reliable, high-quality systems with strong long-term performance in library environments.
The proposed agreement (Attachment 1) has an initial term of five years, commencing on or about July 1, 2026 and ending June 30, 2031, with a not-to-exceed amount of $349,748. The agreement also includes options to extend maintenance and support services for up to additional 10 years with a not-to-exceed amount of $181,923 for the option years, for a total not-to-exceed amount of $531,671 over the full 15-year term if all options are exercised.
Of the initial term amount, $285,762 is allocated for equipment manufacturing and installation, inclusive of applicable sales tax of $21,723 and a 10% contingency of $25,978 to address unforeseen conditions during installation, subject to City authorization.
The remaining $63,986 includes $5,000 for the removal of the existing AMHS system and $58,986 for a five-year maintenance and support plan, which includes routine software and hardware maintenance, access to spare parts, repair service request, and 24/7 technical support.
Following the initial term, the agreement provides the option to extend services for up to an additional ten (10) years to ensure continuity of maintenance and support throughout the anticipated useful life of the system, estimated between 10 to 15 years.
A detailed cost breakdown is provided in the table below.
|
SERVICE |
PAYMENT DETAILS |
COST |
|
GENERAL SERVICES |
|
General Services and Equipment |
Fixed fee to be paid upon completion of the following milestones: -20% upon completion of project kick-off -35% upon shipping confirmation -45% upon Go-Live |
$238,061 |
|
9.125% Sales Tax |
Estimated applicable sales tax, to be applied on invoice |
$21,723 |
|
10% Contingency |
Additional funding to support unforeseen needs or additional features, authorized in writing by the City. |
$25,978 |
|
|
GENERAL SERVICES NOT-TO-EXCEED |
$285,762 |
|
MAINTENANCE & SUPPORT SERVICES |
|
Year 1 (Effective Date - 6/30/2027) |
N/A |
Included |
|
Year 2 (7/1/2027-6/30/2028) |
Fixed fee, invoiced annually |
$14,099 |
|
Year 3 (7/1/2028-6/30/2029) |
|
$14,522 |
|
Year 4 (7/1/2029-6/30/2030) |
|
$14,958 |
|
Year 5 (7/1/2030-6/30/2031) |
|
$15,407 |
|
|
MAINTENANCE & SUPPORT NOT-TO-EXCEED |
$58,986 |
|
EXISTING SYSTEM REMOVAL |
|
Existing System Removal |
One time, fixed fee |
$5,000 |
|
AS-NEEDED TRAINING |
|
On Site Training Under 4 Hours |
|
Included |
|
Virtual/Remote Training |
|
Included |
|
Onsite Training Exceeding 4 hours |
Hourly rate for as-needed training, paid for through contingency funding if requested by the City, |
$165/hour |
|
Initial Five-Year Term Total |
$349,748 |
|
Optional Maintenance and Support Extension Years |
$181,923 |
|
TOTAL NOT-TO-EXCEED AMOUNT (15 YEARS) |
$531,671 |
As currently planned, Lyngsoe will handle the tasks outlined in the table above, while the Public Works Department will make any necessary modifications to the structure of the Northside Library.
Staff believes that the work described below is best performed with City Forces based on the following factors: (1) the work is limited in size and scope; (2) City Forces have knowledge and experience with the building that is being modified; and (3) bidding out the work and contracting with a private entity would not likely result in lower overall cost or time savings. Therefore, staff recommend that the City Council determine that City Forces can better perform the alteration of the library facilities and approve the use of City Forces.
Location: Northside Branch Library, 695 Moreland Way
Type of Service: Prepare site for new book sorting machine
Description of Work: Replace electrical connections, modify wall penetrations and reframe to accommodate new machine, repair interior drywall, exterior wall finish, patch and paint.
Estimated Cost: $88,000
The total initial project cost is $437,748, including the purchase and installation of the Lyngsoe AMHS equipment ($285,762), five-year maintenance and support ($58,986), removal of the existing system ($5,000), and associated construction required to accommodate the system ($88,000).
This project including the equipment installation and construction has been reviewed with the City Attorney’s Office. While the Northside design and construction defect litigation is ongoing, the City Attorney’s Office has determined that the project may proceed subject to the review of the construction scope and any notice to defendants that may be required.
ENVIRONMENTAL REVIEW
The actions being considered are exempt from the California Environmental Quality Act ("CEQA") pursuant to CEQA Guidelines sections 15301(a) (Class 1 - Existing Facilities) because they involve no expansion of existing use and negligible interior and exterior alterations.
FISCAL IMPACT
The initial term of the proposed agreement with Lyngsoe Systems, Inc. has a not-to-exceed amount of $349,748, including a 5-year maintenance support plan. Of this amount, $290,762 is allocated for equipment manufacturing and installation, including $21,723 for applicable sales tax and $25,978 for a 10% contingency, and removal of the existing system. Public Works Department costs for facility modifications required for the AMHS installation are estimated to be $88,000, bringing the total cost, excluding the annual maintenance plan, to $378,762.
There is partial funding for these costs in the Northside Branch Library - Automated Materials Handling System project in the Library Capital Fund with a current budget of $332,400. Staff recommends the following FY 2025/26 budget amendments to reallocate $46,362 from the Central Park Library - Concrete Sidewalk Replacement project in the Library Capital Fund to the Northside Branch Library - Automated Materials Handling System project for an updated FY 2025/26 project budget of $378,762. This amount is assumed to be carried over in FY 2026/27.
Budget Amendment
FY 2025/26
|
|
Current |
Increase/ (Decrease) |
Revised |
|
Library Capital Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenditures Central Park Library - Concrete Sidewalk Replacement |
$115,652 |
. ($46,362) |
$69,290 |
|
Northside Branch Library - Automated Materials Handling System |
$332,400 |
$46,362 |
$378,762 |
|
|
|
|
|
The remaining $58,986 of the initial term not-to-exceed amount is allocated for the 5-year maintenance support plan and will be invoiced annually. Funding for these costs will be requested in the Library Operating Budget as part of the next budget cycle.
The agreement also includes an additional not-to-exceed amount of $181,923 for options to extend maintenance and support services for up to additional 10 years, for a total not-to-exceed amount of $531,671 over the full 15-year term if all options are exercised, subject to the appropriation of funds.
COORDINATION
This report has been coordinated with the Finance Department and City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Determine that the proposed actions are exempt from CEQA pursuant to Section 15301 (Existing Facilities) of Title 14 of California Code of Regulations;
2. Authorize the City Manager or designee to negotiate and execute the Agreement with Lyngsoe Systems, Inc. for the automated materials handling system (AHMS) at the Northside Branch Library, including design, installation, and ongoing maintenance and support services for a term of five years, starting on or around July 1, 2026 and ending on June 30, 2031, with a maximum compensation not-to-exceed $349,748, subject to the appropriation of funds and approval as to form by the City Attorney;
3. Authorize the City Manager or designee to take any actions as necessary to implement and administer the Agreement with Lyngsoe Systems, Inc. and negotiate and execute amendments to (a) add or delete services consistent with the scope of services, (b) extend the term for up to ten (10) additional years through June 30, 2041, in such increments as determined by the City to ensure continued access to ongoing maintenance and support services and c) increase the maximum compensation by up to $181,923 for a total maximum compensation of $531,671 for maintenance and support in the extended terms, subject to the appropriation of funds, and approval as to form by the City Attorney;
4. Based upon the facts presented in the staff Report, determine that the proposed alterations necessary for the installation of the AMHS at the Northside Branch Library, 695 Moreland Way, with an estimated value of $88,000 may be performed better and more economically by the City with its own employees and approve the use of City forces for this work; and
5. Approve the FY 2025/26 budget amendments in the Library Capital Fund to decrease the Central Park Library - Concrete Sidewalk Replacement project appropriation by $46,362 and increase the Northside Branch Library - Automated Materials Handling System project appropriation by $46,362 (majority affirmative Council votes required).
Staff
Reviewed by: Patty Wong, City Librarian
Approved by: Jovan Grogan, City Manager
ATTACHMENTS
1. DRAFT Agreement - Lyngsoe Systems - Northside AMHS
2. Lyngsoe Standard Ts and Cs