Title
Resolution to Approve a Service Agreement with UKG Inc. for UKG Pro Workforce Management and Human Capital Management Software for FY2027-FY2031 ($2,586,020.15) (8 Votes Required)
Memorandum
Attached for your review and action is a resolution to approve a service agreement with UKG Inc. for the implementation and subscription of UKG Pro Workforce Management (WFM) and Human Capital Management (HCM) software. This agreement transitions the City from its current legacy environment in place since 2007 for Time and Attendance to the latest UKG Pro WFM platform, providing enhanced capabilities for payroll, timekeeping, accrual tracking, advanced scheduling, mobile functionality, data analytics, AI functionality, and human resources service delivery.
This resolution replaces the FY2027-FY2028 subscription pricing previously authorized under the City’s existing UKG agreement and establishes new subscription pricing for FY2027-FY2031 to reflect the transition from legacy UltiPro Time services to UKG Pro WFM and expanded HCM/WFM functionality.
The transition to UKG Pro WFM is a strategic initiative by the Payroll, HR, and Information Technology Departments to modernize the City’s workforce management infrastructure and expand its core Time and Attendance, Payroll, and Human Resources product offerings.
The annual cost for the subscription services is calculated based on per-employee-per-month fees, fixed service fees, and applicable credits for the termination of legacy UltiPro Time services. The total requested authorization includes a 10% contingency to account for potential fluctuations in employee counts above the minimum quantities specified in the order form. The contract has been scoped so contingency funds are not expected to be needed; however, the contingency will be available if the City grows more than expected. There is a 0% year-over-year increase during the 5-year term.
Budget/Fiscal Impact: The total authorization requested for FY2027-FY2031 is $2,586,020.15, or $517,204.03 per year, which includes annual base subscription fees of $470,185.48 and a 10% annual contingency of $47,018.55. This expenditure is partially planned for the FY2027 budget, with $385,000.00 budgeted and the remaining $132,204.03 being appropriated from the IT fund balance ($85,185.00 for recurring services and $47,019.00 for contingency). FY2028 through FY2031 will be budgeted for in the Information Technology Services Fund Budget.
Staff
Prepared by: Jake Chase, Applications Delivery Manager
Prepared by: Joshua Baron, IT Director
Reviewed by: Kim Buselmeier, Financial Manager
Approved by: Milton Dohoney Jr., City Administrator
Body
Whereas, The City of Ann Arbor seeks to modernize its workforce management, payroll, and HR systems to improve administrative efficiency and data accuracy;
Whereas, UKG Inc. provides a comprehensive Human Capital Management and Workforce Management suite (UKG Pro) that meets the operational requirements of the City at large;
Whereas, the proposed agreement includes a 60-month initial term with a transition from legacy UltiPro Time and Attendance to the enhanced UKG Pro WFM platform;
Whereas, The annual subscription cost for FY2027-FY2031 is estimated at $470,185.48 per year based on the specified monthly minimum quantities and fixed service fees, with no year-over-year increase during the 60-month term;
Whereas, A 10% annual contingency of $47,019.00, for a total contingency of $235,095.00 over the 60-month term, is required to account for months where actual employee counts may exceed the minimum quantities set forth in the order form;
Whereas, UKG Inc. complies with the requirements of the City’s Non-discrimination and Living Wage Ordinances;
Whereas, $385,000.00 of the required FY2027 amount has already been budgeted in the FY2027 Information Technology Department budget and the remaining $85,185.00 will be appropriated from the IT fund balance; and
Whereas, Funding for FY2028-FY2031 will be included in future Information Technology Department budgets;
RESOLVED, That City Council approve the Service Agreement with UKG Inc. for UKG Pro software and services for FY2027-FY2031 in an amount not to exceed $2,586,020.15;
RESOLVED, That City Council appropriates $85,185.00 from the Information Technology Fund fund balance to the FY 2027 Information Technology Fund expenditure budget;
RESOLVED, That City Council approves a ten percent (10%) contingency of $47,109.00 per fiscal year for the life of this service agreement with UKG Inc., subject to City Administrator approval;
RESOLVED, That City Council appropriates up to $47,109.00 to be used as contingency from the Information Technology Fund fund balance to the FY 2027 Information Technology Fund expenditure budget;
RESOLVED, That the amounts authorized herein may be used without regard to fiscal year;
RESOLVED, That the Mayor and City Clerk be authorized and directed to execute the Service Agreement/Order Form, after approval as to substance by the City Administrator and approval as to form by the City Attorney;
RESOLVED, That the City Administrator be authorized to terminate the legacy UltiPro Time services in accordance with the terms of the agreement to facilitate the transition to UKG Pro WFM; and
RESOLVED, That the City Administrator be authorized to take all necessary actions to implement this resolution, including the execution of the agreement and any subsequent amendments or renewals that do not exceed the authorized amount.