Agenda Item # 10.4 For Council Meeting of: May 4, 2010 CITY OF SANTA ROSA CITY COUNCIL potx

Agenda Item # 10.4 For Council Meeting of: May 4, 2010 CITY OF SANTA ROSA CITY COUNCIL TO: MAYOR AND CITY COUNCIL SUBJECT: CONTRACT EXTENSION – FINANCIAL AUDIT SERVICES STAFF PRESENTER: JIM WRIGHT, PURCHASING AGENT, FINANCE DEPARTMENT AGENDA ACTION: RESOLUTION _____________________________________________________________________ ISSUE(S) Shall the City of Santa Rosa extend Contract No. 06-8366 for financial audit services with Macias Gini & O’Connell LLP, Walnut Creek, California, for a one-year period with a reduction in rates in the amount of $150,000, and waive competitive bidding and on a sole source basis, extend the contract for an additional one-year period to the same firm in the amount of $155,000? Total amount of award is $305,000. BACKGROUND 1. On March 21, 2006, Request for Proposals (RFP) 05-06-20, solicited by the City of Santa Rosa for financial audit services, was awarded by the City Council to Macias Gini & Company LLP for a three-year term through March 31, 2009. 2. Additional services were added and the contract extended through March 31, 2010 in Amendment Numbers 1, 2 and 3, and the name of the firm changed to Macias Gini & O’Connell LLP. 3. The contract terms state the contract may be extended for one additional one-year term upon agreement of the contractual parties. 4. The City Council and the Finance Department require outside auditing services to audit all of the City funds including the Housing Authority and Redevelopment Agency. In addition, the audit firm is to issue the required opinion letters in order for the City to satisfy the requirements to issue a ‘single audit” edition of its General Purpose Financial Statement. 5. Funding for audit services is available in the FY 2009-10 operational budgets of the various departments that utilize these services, and will be available in future year budgets when approved by Council. This is trial version www.adultpdf.com Contract Extension – Financial Audit Services Page 2 of 3 ANALYSIS 1. The City performed a comprehensive RFP in 2006 which identified Macias Gini & Company LLP, now Macias Gini & O’Connell LLP, as offering the best value for auditing services, of the four firms that submitted proposals, and a contract award was approved by Council. The performance of Macias Gini & O’Connell LLP, over the contract term has been satisfactory. 2. Macias Gini & O’Connell LLP, has submitted a request to renew the contract for an additional two-year period, with a decrease in contract rates. Rates would be $150,000 for the first one-year period, which is a 5% decrease from current contract rates, and rates for the second one-year period would be $155,000, which is a 1% decrease from current contract rates. The current U.S. Bureau of Labor Statistics All Urban Consumer Price Index (CPI-U) for San Francisco/Oakland/San Jose indicates a 4% increase over the same period last year, so the offered contract rates with decreases seem beneficial to the City. 3. The contract was originally bid for up to a five-year term, and the first one-year extension recommended would be the fifth year of this five-year term. The second one-year extension recommended would extend the contract for up to a six-year term, and is an option should the Council consider this second one-year extension in the best interest of the City. This second one-year extension would require a waiver of competitive bids, and a sole source award. 4. Staff recommends both one-year extensions as in the best interest of the City due to what appear to be favorable rates, and in addition for the second one-year extension, timing purposes. The City is currently configuring and implementing a new financial software system, and staff is expected to be actively engaged in learning and integrating this new system well into next fiscal year. To consider changing auditors would require the City to undergo a comprehensive and time- consuming request for proposals (RFP) process the middle of next Fiscal Year 2010-11, which could negatively impact the timely and full integration of the new system. In addition, the consistency offered by having the same auditors during the transition from the last year of the existing financial system to the first year of the new system could be hugely beneficial to the City. This consistency in auditors could identify inconsistencies and problems areas associated with the transition, and improve the quality of the audit for the first year with the new financial system. 5. The recommended contract extensions if approved by Council would provide financial auditing services to the City through March 31, 2012. Staff expects that for following year auditing services, an RFP would be performed in the middle of Fiscal Year 2011-12 to allow interested firms to propose financial auditing services for the City. The timing for this RFP process would be much better than if performed the middle of next Fiscal Year 2010-11, considering the considerable staff time involved, assuming the new financial software system will have been fully integrated. This is trial version www.adultpdf.com Contract Extension – Financial Audit Services Page 3 of 3 6. The City and Macias Gini & O’Connell LLP, entered into an agreement on April 1, 2006, awarded by the City Council. See contract activity chart below: Award/Amendment Date Description Amount Authorization Contract Award Apr. 1, 2006 Award (3-Year Term) $446,809 City Council Amendment No. 1 Sept. 26, 2007 Add Services $5,126 Finance Director Amendment No. 2 Oct. 8, 2008 Add Services $33,746 City Manager Amendment No. 3 April 14, 2009 Contract Extension (1-Year Term) $158,315 City Council Amendment No. 4 Pending Contract Extension (1 st Year) $150,000 City Council Amendment No. 4 Pending Contract Extension (2 nd Year) $155,000 City council Total Cumulative Value Pending Amendment No. 4 $948,996 4. The City Purchasing Agent issued Amendment No. 4, in the amount of $305,000 to extend the contract for an additional two-year term with a decrease in contract rates. With approval of Amendment No. 4, the cumulative value of the contract will be $948,996. Under the City’s Contract/Purchase Order Modification Policy, Amendment No. 4 requires approval by Council. RECOMMENDATION This resolution, recommended by the Finance Department, extends Contract No. 06- 8366 for financial audit services with Macias Gini & O’Connell LP, Walnut Creek, California for a one-year period in an amount of $150,000 with a reduction in rates, and waives competitive bidding and on a sole source basis, extends the contract for an additional one-year period to the same firm in the amount of $155,000. Total amount of award is $305,000. Funding for audit services is available in the FY 2009-10 operational budgets of the various departments that use the services, and will be available in future budgets when approved by Council. Author: Jim Wright, x3706 Attachments: • Amendment No. 4 • Exhibit E This is trial version www.adultpdf.com This is trial version www.adultpdf.com This is trial version www.adultpdf.com This is trial version www.adultpdf.com This is trial version www.adultpdf.com . Agenda Item # 10. 4 For Council Meeting of: May 4, 2 010 CITY OF SANTA ROSA CITY COUNCIL TO: MAYOR AND CITY COUNCIL SUBJECT: CONTRACT EXTENSION –. $33, 746 City Manager Amendment No. 3 April 14, 2009 Contract Extension (1-Year Term) $158,315 City Council Amendment No. 4 Pending Contract Extension (1 st Year) $150,000 City Council. No. 4 Pending Contract Extension (2 nd Year) $155,000 City council Total Cumulative Value Pending Amendment No. 4 $ 948 ,996 4. The City Purchasing Agent issued Amendment No. 4,