I. RECOMMENDATION:
The Financial Services Director recommends that Coalinga City Council award the bid to Cedars Business Services, LLC (“CBS”) for Collection Agency Services for unpaid and delinquent accounts receivable.
II. BACKGROUND:
The City of Coalinga issued a Request for Proposals (“RFP”) for Collection Agency Services on March 31, 2026 seeking a qualified and experienced full-service collection agency to provide collection services for unpaid and delinquent accounts receivable, including utility services, returned checks, service fees, damage to City property invoices, and miscellaneous receivables.
The City has not had an active collection agency since October 2024 following the bankruptcy of the City’s previous collection provider. The City currently has roughly 2,452 closed accounts eligible for collections totaling approximately $883,600.
The RFP anticipated award of a single contract for an initial three-year term with two optional two-year extensions.
The RFP required proposers to demonstrate:
- Experience with public-sector and utility collections
- Regulatory compliance with FDCPA, CFPB Regulation F, TCPA, FCRA, and California laws
- Secure technology and reporting capabilities
- Consumer self-service tools
- Data security protections including PCI DSS and SOC 2 Type II or equivalent controls
- Monthly and annual reporting
- Skip tracing and credit bureau reporting capabilities
Addenda were issued clarifying operational expectations, including:
- Initial placement of all backlog accounts at contract commencement
- Ongoing monthly or quarterly placements thereafter
- Permission for email and SMS communications
- Requirement for City approval of settlements and legal action
- Tyler ERP and InvoiceCloud operating environment
- Estimated monthly forward-flow placement amounts
- Anticipated establishment of KPI benchmarks with the selected agency
III. DISCUSSION:
The City received two proposals in response to the RFP:
- Cedars Business Services, LLC (“CBS”)
- Key 2 Collect, Inc.
Staff evaluated both proposals using the criteria established in the RFP, including qualifications, related public-sector experience, technology, completeness of response, pricing, references, and past performance.
Following review and evaluation, staff determined that CBS submitted the most qualified and responsive proposal and provides the best overall value to the City.
CBS Strengths
CBS demonstrated significant experience providing municipal and public-sector collection services throughout California, including work for:
- CalPERS
- CalTrans
- CalRecycle
- Contra Costa County
- Riverside Public Utilities
- Other California public agencies
CBS demonstrated substantial expertise with utility receivable collections and public-agency compliance requirements.
The proposal also demonstrated:
- Strong regulatory compliance infrastructure
- Advanced consumer and City online portals
- Secure API/SFTP integration capabilities
- Real-time reporting dashboards
- Audit-ready reporting tools
- Payment processing and consumer self-service functionality
- Structured implementation and onboarding processes
- Robust cybersecurity and data-protection controls
- PCI DSS compliance and SOC2-aligned security controls
CBS also demonstrated extensive experience with:
- FDCPA compliance
- CFPB Regulation F compliance
- TCPA compliance
- California Rosenthal Act compliance
- CCPA/CPRA privacy compliance
- Credit bureau reporting
- Skip tracing and account recovery processes
Staff determined CBS presents lower operational and compliance risk due to its demonstrated municipal experience, mature compliance program, and stronger technology platform.
Staff contacted the references provided by both agencies; however, responses were only received from references for CBS. Representatives from CalTrans and Contra Costa County both provided positive feedback regarding CBS’s performance and services. CalTrans indicated that CBS achieved strong recovery results, worked directly with the DMV, and that their contract had been extended into a second term due to satisfactory performance. Contra Costa County stated that communication and responsiveness were top priorities for CBS, noted they have worked with the agency for approximately five years, and indicated their intent to extend the contract again upon expiration.
Cost Proposal
CBS proposed a contingency-based fee structure under which the City incurs no upfront costs. Fees are collected only from successfully recovered accounts.
The proposed fee structure includes:
- 22% contingency fee for backlog accounts
- 25% contingency fee for ongoing placements
- 34% contingency fee for legal recoveries
Although CBS was not the lowest-cost proposer, staff determined the additional compliance safeguards, municipal experience, technology infrastructure, and reporting capabilities provide greater long-term value and reduced operational risk to the City.
Comparative Evaluation
Key 2 Collect submitted a responsive and competitive proposal with lower pricing; however, staff identified several comparative advantages favoring CBS, including:
- Greater California municipal experience
- More extensive public-sector client portfolio
- More mature compliance governance
- Stronger technology and reporting infrastructure
- More robust implementation capabilities
- Enhanced audit and cybersecurity controls
Based on the overall evaluation criteria, staff concluded CBS represented the strongest overall proposal and best meets the City’s operational, compliance, and service objectives.
Contract Agreement
Staff will bring back the agreement in June.
IV. ALTERNATIVES:
1. Reject both proposals
2. Consider Key 2 Collect, Inc. proposal over CBS
V. FISCAL IMPACT:
The agreement is contingency-based and does not require upfront City expenditures. Fees will be deducted only from amounts successfully recovered.
The City currently has roughly $883,600 in delinquent receivables eligible for collections. Based on industry standards for municipal utility and service receivables, recovery rates for comparable portfolios typically range from approximately 10% to 30%, depending on account age and collectability.
No General Fund appropriation is required for this service. |