LSSI Cost Proposal for

the Delivery of Library Services

in the City of Santa Clarita, California

Proposal in Response to:

Santa Clarita RFP: AD-10-11-03
Released August 4, 2010

Due Date: August 16, 2010, 5:00 p.m. PST

Submitted to:
City of Santa Clarita
Purchasing
23920 Valencia Boulevard, Suite 245
Santa Clarita, California 91355-2196

Submitted by:
Library Systems & Services, LLC
12850 Middlebrook Road, Suite 400
Germantown, MD 20874-5244
www.lssi.com

Innovation. Experience. Opportunity. A Brighter Future for your Library.

LSSI is an Equal Opportunity Employer

Proposal for the Delivery of Library Services in the City of Santa Clarita
August 16, 2010

June 10, 2010

Jon Bischetsrieder
City of Santa Clarita Purchasing Department
23920 Valencia Boulevard, Suite 245
Santa Clarita, CA 91355-2196

RE: RFP AD-10-11-03: Delivery of Library Services in the City of Santa Clarita, California

Dear Mr. Bischetsrieder:

LSSI is pleased to respond to the City of Santa Clarita’s Request for Proposals for the Delivery of Library
Services in the City of Santa Clarita, and welcomes the opportunity to offer the residents of the City a
more efficient and affordable service model, resulting in enhanced library services and more open hours.
This true public-private partnership with LSSI will ensure that the City of Santa Clarita regains local
control of the libraries, while ensuring that the libraries are operated in the most cost-effective manner
possible. The City will own all the assets of the libraries – the buildings, books, computers and
furnishings. LSSI will provide the staff and library expertise to administer the day-to-day library
operations.

We understand that the City will need to negotiate with the County of Los Angeles to purchase the
existing Valencia Library building at fair market value, as well as the existing library collections of all
three libraries. A contract with LSSI will reduce the City’s costs for library operations, and the resulting
savings can be used to fund start-up costs, library improvements, and enhancements to overall services.
LSSI will help the City of Santa Clarita use the available library resources to ensure that the City’s
libraries become a vibrant community centerpiece.

Our proposal describes how LSSI will work with the City of Santa Clarita to improve services in the three
City libraries: Valencia, Newhall, and Jo Ann Darcy Canyon Country libraries. The City has pledged to
increase the existing budget for books and other library materials by nearly 22%, which will provide fresh
popular materials for library users at every visit. Perhaps most important, a partnership with LSSI will
enable the City to regain local control of the libraries, including all policies and assets, while managing
the Library’s operations through a company with nearly thirty years of library experience and a solid track
record of outstanding performance.

If City officials so choose, LSSI will explore the possibility of the libraries joining the Inland Library
System, which includes the Riverside County Library System, as well as the San Bernardino County,
Victorville, Murrieta, Moreno Valley, College of the Desert, and Inyo County Libraries. This would offer
Santa Clarita libraries the use of that network’s Integrated Library System.

Business Confidential—LSSI proprietary information 1

Proposal for the Delivery of Library Services in the City of Santa Clarita
August 16, 2010

For nearly three decades, LSSI’s sole business has been providing innovative services and products to
libraries, a specialization that focuses all of our corporate resources on this single operational area. LSSI
is recognized as the leader in the provision of outsourced library services. We partner with communities
of all types and sizes, ranging from the City of Red Oak, Texas with a population of 10,000, to Riverside
County, California with nearly two million residents. LSSI’s corporate philosophy is to work as a team
with our customers, adding our expertise to that of the local authorities, community library groups, and
local library staff members to ensure the best possible service levels are achieved.

Since 1997, LSSI has operated the Riverside County Library System, which has expanded under LSSI’s
leadership from twenty-five to thirty-three branches, two bookmobiles and a city museum. Other
California libraries LSSI operates include the Moorpark Library and the three-branch Shasta Public
Libraries. LSSI also staffs and operates the fifteen-branch Jackson County, Oregon Library System. In
Texas, LSSI operates libraries for the cities of Red Oak, Leander, and San Juan. LSSI also operates seven
public libraries for four cities and one county in Tennessee, as well as one county system in Kansas. In
each case, under LSSI’s administration the hours of operation, programming for the communities, and
materials spending have increased substantially. In Riverside County alone, LSSI has helped to raise
more than $3.5 million in supplemental funding to improve library services. Perhaps most important, each
library has become a visible cornerstone of its community and a destination enjoyed by everyone.

LSSI provides highly qualified staff with directly relevant experience, as well as any necessary back-up
staff or staffing replacements. LSSI will interview all current staff members who wish to join the new
City library system and will give them preference during the hiring process. LSSI currently has a total
staff of nearly 800 employees, more than 90 of whom are professional librarians with MLS degrees from
ALA-accredited programs. LSSI’s staff members carefully adhere to all local operating standards and
policies, and are flexible in providing whatever services are needed.

In summary, by contracting with LSSI in a public-private partnership for the operation of its libraries, the
City of Santa Clarita will enjoy:

• Complete local control of library budgets, assets, planning and policies

• Increased accountability
• Smooth transition from County to City library operations
• Cost effective operations, with greater efficiencies and lower costs
• Improved customer service and hours of operation
• Nationally recognized, award-winning programs tailored to the community.

LSSI offers the City a much greater return on its tax dollars invested in library services. LSSI’s proposal,
including the prices proposed, is valid through June 30, 2011. If you have any questions about this
proposal, please call me on (301) 540-5100, extension 233. We look forward to partnering with the City
of Santa Clarita to make the City’s libraries a top community destination.

Cordially,

Frank A. Pezzanite
Chief Executive Officer (CEO)

Business Confidential—LSSI proprietary information 2

Proposal for the Delivery of Library Services in the City of Santa Clarita
August 16, 2010

5.1 PROPOSAL IDENTIFICATION SHEET

Contractor’s Legal Name: Library Systems & Services, LLC

Type of entity: Limited Liability Corporation

Federal Tax ID: 52-2003416

Person Authorized to Enter into Contracts

Name and Title:

Frank A. Pezzanite, CEO

Address: 12850 Middlebrook Rd., Suite 400, Germantown, MD 20874-5244

Phone: 301-540-5100, X 233 Fax: 301-540-5122

E-mail: frank.pezzanite@lssi.com

Signature: _________________________________________________________

Date: ___August 12, 2010______________

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Proposal for the Delivery of Library Services in the City of Santa Clarita
August 16, 2010

DELIVERY OF LIBRARY SERVICES

IN THE CITY OF SANTA CLARITA, CALIFORNIA

COST PROPOSAL
TABLE OF CONTENTS

Transmittal Letter
Identification Sheet
Request for Proposal Form

5.8 Cost Proposal

5.8.1 Costs by Library Site and by Year of Contract

5.8.2 Costs by Category

5.8.3 Costs for Other Items

Appendix A: LSSI Code of Conduct

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Proposal for the Delivery of Library Services in the City of Santa Clarita
August 16, 2010

5.8 Cost Proposal

5.8.1 Costs by Library Site and by Year of Contract

Year One
Valencia Darcy Newhall Total
$1,707,230.00 $1,054,731.00 $355,672.00 $3,117,633.00

Year Two
Valencia Darcy Newhall Total
$1,732,839.00 $1,070,552.00 $1,073,921.00 $3,877,312.00

Year Three
Valencia Darcy Newhall Total
$1,758,831.00 $1,086,611.00 $1,090,030.00 $3,935,472.00

Year Four
Valencia Darcy Newhall Total
$1,785,214.00 $1,102,910.00 $1,106,380.00 $3,994,504.00

Year Five
Valencia Darcy Newhall Total
$1,811,992.00 $1,119,453.00 $1,122,976.00 $4,054,421.00

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Proposal for the Delivery of Library Services in the City of Santa Clarita
August 16, 2010

5.8.2 Costs by Category

Category Year 1 Year 2 Year 3 Year 4 Year 5

Staffing $2,010,549 $2,762,584 $2,802,486 $2,853,643 $2,889,817
Training $20,000 $20,000 $20,000 $20,000 $20,000
Operations $509,584 $517,228 $524,986 $532,861 $540,854
Acquisitions $550,000 $550,000 $560,000 $560,000 $575,000
Administration $27,500 $27,500 $28,000 $28,000 $28,750
Total Per Year $3,117,633 $3,877,312 $3,935,472 $3,994,504 $4,054,421
Total for 5 Years: $18,979,342.00

5.8.3 Costs for Other Items Not Included in RFP But Attainable Within the Estimated Annual Budget and
not included in the above costs.
Item Estimated Cost Year 1
Lease – Building $12,250
Maintenance (Building & Grounds) $195,500
Insurance $30,100
Utilities $55,000
Equipment & Technology $40,000
Total $332,850
Operating Income from Fines & Fees ($185,000)
Estimated Cost less Operating Income $147,850

Performance Bond (if required) $375,115

LSSI has included general, overhead, and administrative costs in hourly rates for labor.

This cost proposal is valid through June 30, 2011.

LSSI accepts and will adhere to RFP Article 27,” Gratuities” and, further, we have attached to this proposal our Corporate Code of
Conduct, adopted in 2008, which addresses these and other concerns.

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Proposal for the Delivery of Library Services in the City of Santa Clarita
August 16, 2010

Appendix A. LSSI Code of Conduct

Business Confidential—LSSI proprietary information 1

 LSSI Code of Conduct
Library Systems & Services, LLC, (LSSI) has established a reputation for honesty and fairness
with customers, suppliers, employees, and others. Officers and employees of LSSI and its
divisions must always conduct themselves so as to maintain this reputation.

This Code of Conduct provides standards for business dealings. It is meant to provide guidance
on the policies that are part of the LSSI business philosophy. Individual LSSI Divisions may
adopt more restrictive rules of conduct according to the needs and customs of their respective
markets and industries.

No Code can cover every possible circumstance. LSSI’s officers and employees are expected
to live up to high moral and ethical standards, even if the specific situation is not covered in the
Code. Failure to live up to the high LSSI standards of ethical, moral and legal conduct can
result in termination of employment by LSSI.

Integrity and good character are very important. No one is encouraged or authorized to act in
any way that would be immoral, unethical, or illegal. No one is encouraged or authorized to
seek short-term business advantage at the expense of proper conduct.

The Board of Managers has approved this Code of Conduct and has directed that it be
administered uniformly and vigorously throughout all parts of LSSI. Management has been
directed to give continuing attention, including periodic audits, to Code adherence.

A. Definitions

LSSI: Library Systems & Services, LLC and any of its departments, divisions, or subsidiaries.
(LSSI may also be referred to in this Code as the “company.”)

LSSI Person: Any member of the Board of Managers, officer, manager, or employee of LSSI or
any of its divisions or subsidiaries.

Board: LSSI’s Board of Managers. The Board of Managers is the governing body of LSSI (a
Limited Liability Company) and is similar to the Board of Directors of a corporation.

Code: LSSI’s Code of Conduct.

B. Theft

No LSSI Person will steal, embezzle, or wrongfully take any money, goods, services, or
benefits belonging to LSSI or any customer, supplier, or any other person or
organization.

C. Improper Payments to Others

1. No unethical or illegal means will be used to get business. No direct or indirect

payments, gifts, contributions, services, bribes, kickbacks, payoffs, or any
 offers or promises of anything of value will be made to any organization, firm or
individual to procure orders, contracts, or favorable treatment.
2. Lawful, established discounts and allowances may be offered and given to
customers. Reasonable sales promotion items or other reasonable gifts may be
given. Persons with ability to influence LSSI’s business may be entertained.
Entertainment expenses should be reasonable and in relation to anticipated
business opportunity. Unusual entertainment expenses must be cleared in
advance with an appropriate LSSI officer.

3. Any commissions, fees, bonuses, allowances, or other payments made to any

organization or individual must be reasonably related in value to the service
rendered or benefit received, must be recorded, and must not be illegal or in
violation of other parts of this Code.

D. Improper Payments from Others

1. No LSSI Person will accept a payment, gift, contribution, commission, property,

or service for any purchase, payment, or action of LSSI or for any promise of
purchase, payment, or action by LSSI. No LSSI Person will accept any bribe,
kickback, payoff, or anything of value, or any promise of such which might
appear to place LSSI or LSSI Persons under obligation.

2. LSSI Persons may accept nominal gifts and customary entertainment as part of
continuing relationships with suppliers or others so long as the value in the
aggregate during any fiscal year is reasonable in terms of the business
relationship, and such gifts and entertainment, if valued in excess of $100, are
promptly disclosed to the LSSI Person’s Supervisor.

3. An LSSI Person may accept free lodging or meals in a customer or supplier

facility so long as he/she is on LSSI business and the free lodging or meals are
noted on the LSSI Person’s expense report.

E. Standards for Business Relationships

1. LSSI Persons will always treat with respect customers, suppliers, coworkers,
applicants for employment, and others whom they encounter in a business
capacity.

2. LSSI Persons shall not engage in discrimination or harassment of customers,

suppliers, coworkers, applicants for employment or others on the basis of race,
color, religion, sex, age, disability, handicap, veteran status or national origin.

3. An LSSI Person may not use his or her position with LSSI to influence the
behavior of a customer, supplier, coworker, applicant for employment or other
person for the principal purpose of deriving a personal benefit.

4. An LSSI Person may not use LSSI letterhead, telephones, computers or other
communications facilities (i) to create the impression, without authority, that any
communication has LSSI’s official sanction; (ii) for any illegal or immoral purpose,
any political purpose, or any commercial purpose other than official LSSI
 business; or, (iii) for personal purposes other than reasonable, customary, non-
confidential communications.

5. When procuring goods and services for LSSI, LSSI Persons will select reputable
and responsible vendors, and will avoid sources whose business practices do not
meet LSSI’s standards of ethical conduct and corporate citizenship.

F. Proper Recording and Accounting

No sales, receipts, disbursements, purchase or rental of assets, disposition of assets, or

any other financial transaction shall take place without being promptly and correctly
entered upon the regular books and records of LSSI. All entries shall be made in
accordance with LSSI policy, generally accepted accounting principles, and legal
requirements. No false or artificial entries will be made.

G. Political Contributions

No direct or indirect contributions of money, property, or services shall be made to assist

any candidate for political office or to benefit any political party. LSSI stationery or other
LSSI identified materials will not be used for personal political communications. Nothing
in this Code shall prevent any LSSI Person from making contributions of his or her own
funds or time to any political candidate or organization.

H. Conflict of Interest

1. No LSSI Person will use any assets, funds, or other resources of LSSI for
personal benefit or for the benefit of another person or organization, unless such
use serves the best interests of LSSI in the normal course of business.

2. No LSSI Person will have an outside business activity or interest that might affect
that person’s ability to act in LSSI’s best interests. If there is a possibility that an
outside activity may be a conflict of interest, it must be reported to one’s superior
and noted on the Certificate of Business Conduct.

3. No LSSI Person will use the company name, logo, or letterhead in solicitations or
other non-business activities.

4. If circumstances arise where it is in the best interest of LSSI to deal with outside
organizations associated with LSSI Persons or its equity holders, such dealing
will be approved in advance by the Board or an appropriate LSSI officer with no
interest in the matter, and shall be fully documented by purchase orders,
requisitions, invoices, and similar written records and authorizations. Any LSSI
Person who believes that he or she is about to enter into such dealings shall
seek advance approval from the Board or an appropriate corporate officer before
going ahead with any transaction.

5. No relative of an LSSI Person will be employed by and work in a division or

department controlled by that LSSI Person without advance written clearance
from the Chief Executive Officer or the Chief Operating Officer.
I. Information Handling

1. Confidential company information known by LSSI Persons will not be disclosed

to any individual or organization not authorized to have such information.

2. Information given to LSSI Persons by an outside customer, supplier, or other

source, which is known or reasonably should be known to be sensitive or
confidential, will not be disclosed to any unauthorized person, either inside or
outside LSSI.

3. No LSSI Person will buy or sell, or recommend to others to buy or sell, any
security or other property interest based on knowledge obtained from association
with LSSI but not generally available to the informed public.

J. Copyrighted Materials

1. It is the policy of LSSI to respect the intellectual property rights of others. Except
for legally permitted “Fair Use,” or routing of original publications, no LSSI Person
will use or copy any copyrighted materials, whether textual, graphical, or musical,
and whether in printed or electronic form, without permission of the copyright
owner.

2. In particular, software protected by copyright will not be copied for either personal
or company use without permission of the copyright owner. This includes
software available from outside sources as well as software created by LSSI.
Uncopyrighted software created by or for LSSI is a company asset and may
involve important trade secrets. Such software may not be copied or used for
personal benefit or gain.

K. Legal Proceedings

1. LSSI Persons shall immediately notify the Chief Executive Officer or the Chief
Operating Officer or an appropriate officer of LSSI of any impending or active
legal proceedings which might involve LSSI or which might potentially
damage LSSI’s reputation, either by involvement of the company or by
involvement of any person connected with the company.

2. No LSSI Person is authorized to break any law of any government unit on

behalf of the company or in pursuit of company business. No LSSI Person
shall induce or attempt to induce anyone else to break the law.

L. Promises and Commitments

No LSSI Person shall make any promises, commitments, pledges, or representations

which the person is not authorized to make or which the person has reason to believe
cannot be kept.

M. Code Operation
1. Every LSSI director and officer, and every regular full-time and regular part-
time LSSI employee will read the Code of Conduct and sign the Certificate of
Business Conduct at the time of appointment or hiring. Good business
conduct is important for every LSSI Person. The Code of Conduct should be
made available to every employee, but especially to those who handle
significant sums of money or assets, make purchasing decisions, represent
the company in important business solicitations, or handle confidential
information. Signed certificates will remain in LSSI’s permanent files.

2. Questions of conduct will receive the highest priority whenever raised by

persons inside or outside the company. Managers must respond promptly to
any matters regarding conduct covered by this Code. Any matters which
cannot be promptly resolved or which require interpretation should be taken
to the Chief Executive Officer or the Chief Operating Officer and need not
pass through normal business channels. Any person with a concern relating
to Code of Conduct matters may bypass his or her immediate superior and
go directly to the CEO, or may bypass these persons and go directly to the
public accountants or legal advisors of the company.

3. This Code of Conduct applies to all members of the Board, officers, and
employees of all departments, divisions, and subsidiaries of LSSI.