Title
Interactive Digital Kiosks Revenue Contract - Request for Award - RFP 63-2213 (Ordinance S-48731)
Description
Request to authorize the City Manager, or his designee, to: 1) enter into an agreement with IKE Smart City, LLC, to provide interactive digital kiosks in downtown Phoenix; and 2) authorize one additional Street Transportation Department position funded by advertising revenues paid to the City by IKE Smart City, LLC through the interactive digital kiosk agreement. Further request to authorize the City Treasurer to accept, and the City Controller to disburse, all funds related to this item. The gross sales for IKE Smart City, LLC, based on the deployment of ten kiosks over the 10-year aggregate term is estimated to result in $2.94 million in revenue to the City.
Additionally request the City Council to grant an exception to Phoenix City Code 3-8 to allow off-site (off-premise) advertising on the interactive digital kiosks in public right-of-way.
Report
Summary
This contract will provide static kiosks in downtown areas to convey information to residents and visitors about upcoming community events, public meetings and other pertinent real-time information for residents and visitors.
Static kiosks have been used in downtown areas across the United States, including Phoenix for many years to convey information to residents and visitors about upcoming community events, public meetings, and other pertinent information for residents and visitors. Technology advances have allowed for a more interactive experience with interactive digital kiosks that have a touch-screen design to provide real-time information. Digital kiosks can now provide free WiFi access, emergency call access, way-finding, local business advertisement opportunities, access to services, and local employment information. Interactive digital kiosks have been deployed in major cities across the United States and locally in Mesa and Tempe.
Based on discussions with Council Members and downtown stakeholders, the Street Transportation Department (Streets) has been working to provide interactive digital kiosks as an innovative way to enhance visitor and resident experiences, promote events, provide directions, explore venues, post job opportunities, offer social services, conduct surveys, and generate additional revenue to the City.
This item has been reviewed and approved by the Information Technology Services Department.
With a few exceptions, Phoenix City Code 3-8 prohibits advertising in public right-of-way. The digital interactive kiosks that will be operated and maintained by IKE Smart City, LLC will be installed in the public right-of-way. As approved, the digital interactive kiosks in the public right-of-way would be granted an exception to Phoenix City Code 3-8 to allow off-site (off-premise) advertising.
Procurement Information
Streets conducted a Request for Information (RFI) process last Fall for Interactive Digital Kiosks at the request of the Transportation, Infrastructure and Planning Subcommittee. Staff intended to utilize the RFI and industry responses to identify industry best practices, constraints, opportunities, and interested vendors. Eight firms responded to the RFI.
Based on the RFI responses, Streets issued a Request for Proposal (RFP) for Interactive Digital Kiosks in January 2022. Three firms responded to RFP 63-2213 with one firm deemed non-responsive. Following a review of the proposals, in consideration of the RFP criteria, the evaluation panel deemed IKE Smart City, LLC to have the most responsive and responsible proposal.
The selection was made using a competitive procurement process in accordance with Phoenix City Code Chapter 43 and Administrative Regulation 3.10.
The evaluation panel consisted of staff from the Public Transit, Street Transportation, and Community and Economic Development departments and a representative from the Communications Office. Each proposal was evaluated and scored on the following criteria (1,000 total possible points):
- Method of Approach - 250 Points
- Revenue Sharing Plan - 250 Points
- Specifications and Technical Abilities - 200 Points
- Qualifications and Experience - 125 Points
- Content Management and Communications System - 75 Points
- Value Added Services - 75 Points
- References - 25 Points
The evaluation committee recommendations were reached by consensus in consideration of the published selection criteria. The results are as follows:
Selected Firm
IKE Smart City, LLC: Rank 1
Additional Proposer
Smart City Media, LLC: Rank 2
Contract Term
The initial term will be for five years, with an option for one five-year extension.
Financial Impact
This is a revenue-generating contract only with no capital outlay required by the City. Annually, IKE Smart City, LLC will pay to the City, the greater of 32 percent of Gross Advertising Revenues, or $14,000 per kiosk in years one through five, increasing at 10 percent every five years thereafter. Based on the initial deployment of 20 kiosks, the minimum annual guaranteed (MAG) revenue is $280,000 or approximately $2.94 million over the life of the contract with extensions included.
All expenses will be borne by the advertising contractor. The MAG will not decrease below the level of annual revenue outlined. Annually, the City will be paid the percentage of gross advertising sales revenue or the MAG; whichever is greater. Streets will utilize the annual revenues to cover the costs of the additional staff time for the City to manage and administer the interactive digital kiosks contract.
The City will also receive 12.5 percent of advertising time at no cost to the City to be dedicated to promote civic content and $550,000 in annual advertising for Phoenix across IKE Smart City, LLC kiosks and large format signs in more than 25 markets where IKE Smart City, LLC operates.
The one additional Street Transportation Department position requested will be funded entirely by advertising revenues paid to the City by IKE Smart City, LLC through the interactive digital kiosk agreement. Additional advertising revenues are anticipated to be used by Streets for downtown area street-related projects.
Concurrence/Previous Council Action
The Transportation, Infrastructure and Planning Subcommittee:
- Heard this item on Sept. 15, 2021; and
- Recommended City Council approval on April 20, 2022, by a vote of 4-0.
The Economic Development and Equity Subcommittee:
- Heard this item on Oct. 27, 2021; and
- Heard this item on April 27, 2022.
Location
Council Districts: 7 and 8
Department
Responsible Department
This item is submitted by Deputy City Manager Mario Paniagua and the Street Transportation Department.