Title
Phoenix-Hermosillo Trade Office Results and Request to Amend and Fund Contract 157487
Description
This report details Phoenix-Hermosillo Trade Office results for Fiscal Year (FY) 2023-24 and requests the Economic Development and Housing Subcommittee recommend City Council approval of funding and revising a contract extension for Discover Phoenix and Arizona LLC to provide trade development services in Hermosillo, Mexico. The aggregate amount for the remaining three years of the five-year contract will not exceed $510,000. Funding is available in Community and Economic Development Department's General Fund budget.
THIS ITEM IS FOR DISCUSSION AND POSSIBLE ACTION.
Report
Summary
The City's first Hermosillo, Mexico trade office opened in 2017 to support Phoenix companies interested in trading with Mexico, and to attract Mexican companies and investors looking to expand in the United States. Mexico is Arizona's top trading partner with $8 billion in exports and $11.8 billion in imports in 2023. This activity is expected to grow as the on-shoring trend continues to bring manufacturing back to North America. This strategy has been effective and yielded unprecedented growth and activity in FY 2023-24.
The Phoenix-Hermosillo Trade Office assisted 294 new companies from northern Mexico and Phoenix in last year. This is a 60 percent year-over-year increase. Over 90 percent of these companies were from northern Mexico and interested in developing business opportunities in Phoenix. Through the Hermosillo trade office contract, four Memoranda of Understanding for Economic Development Collaboration with the Mexican states of Nuevo Leon and Baja California, and the cities of Monterrey and Hermosillo in Mexico have been executed. The Phoenix-Hermosillo Trade Office also formally implemented the City's North America Supply Chain Sourcing Services to assist prospective and existing Phoenix companies regionalizing and solving their supply chain needs. As a result of these efforts, five companies incorporated in Arizona and four companies physically located operations in Phoenix.
Following a competitive solicitation process in 2022, this Subcommittee recommended and the City Council approved the funding for the first two years of the contract with an aggregate value of $280,000. If approved, this request will amend the contract to replace three one-year renewal options with one three-year renewal option and provide funding for these three years. By amending the contract, the City will secure pricing for the remainder of the contract that reflects an inflation adjustment and an expansion of services in the Phoenix-Hermosillo Trade Office. Funding approval is expected to result in an increase in trade activity and continuity for the City's presence in Mexico.
Procurement Information
RFP-CED22-HTDS, the Hermosillo Trade Development Services Request for Proposals, was issued on June 13, 2022, and conducted in accordance with Administrative Regulation 3.10. Discover Phoenix and Arizona LLC was the sole proposer and was deemed responsive by staff.
Contract Term
If approved, the contract will be extended for three years and will end on November 29, 2027.
Financial Impact
The aggregate amount for the three-year extension will not exceed $510,000. Funding is available and has been programmed in the Community and Economic Development Department's General Fund budget.
Concurrence/Previous Council Action
On October 26, 2022, the City Council approved Contract 157487 with Ordinance S-49105.
Department
Responsible Department
This item is submitted by Deputy City Manager John Chan and the Community and Economic Development Department.