SR 10-24-2017 3G
City Council Report
City Council Meeting: October 24, 2017
Agenda Item: 3.G
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To: Mayor and City Council
From: Gigi Decavalles-Hughes, Director, Finance Department, Budget
Subject: First Modification to Professional Services Agreement for Cost Allocation Plan
and User Fee/Cost of Services Study
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and
execute a first modification to agreement #9993 in the amount of $26,300 with MGT of
America, Inc., a Florida-based company, to prepare cost allocation plan updates for an
additional two years and six months, through June 30, 2020. This will result in a
five-year and six-month amended agreement with a new total amount not to exceed
$128,400, with future year funding contingent on Council budget approval.
Executive Summary
Municipal finance involves separation of various government funds from the City’s
General Fund, some (such as enterprise funds) because it is legally required, others
(such as special revenue funds) for better business practices. The purpose of a Full
Cost Allocation Plan (CAP) is to ensure that the General Fund recover indirect costs
from enterprise funds, special revenue funds and other funds, and to use indirect cost
information obtained through the plan to establish user fees, permits and applications
fees, billing rates, hourly rates, and costs of special services. The City prepares a new
CAP every two years to align with the biennial budget cycle. MGT of America, Inc. plans
to prepare a CAP update in FY 2017-18. The current agreement with MGT of America,
Inc. expires on December 12, 2017. A modification to the agreement is required to
extend the term for an additional two years and six months to complete the CAP update
in FY 2017-18, review user fees as required in FY 2018-19, and prepare another CAP
update in FY 2019-20. This first modification would increase the contract by $26,300,
resulting in a five-year and six-month amended agreement in the amount not to exceed
$128,400 for services through June 30, 2020.
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Background
On November 11, 2014 (Attachment A), Council awarded a three-year agreement to
MGT of America, Inc. to develop and prepare a new CAP, conduct a comprehensive
citywide review of user fees and charges, prepare a CAP update, and review user fees
as necessary. In FY 2015-16, the consultant developed a new Full Cost – CAP for all
funds for the City, developed a new Federal Office of Management and Budget (OMB)
A-87 (Code of Federal Regulations at 2 CFR Part 225) CAP, and conducted a user fee
analysis on zoning fees. In FY 2016-17, the consultant conducted a comprehensive
cost-based user fee study of all other user fees, including a comparative analysis of key
fees to those of surrounding cities. The term of the agreement will expire in December
2017.
Discussion
The City prepares a new CAP every two years to align with the biennial budget cycle
and a comprehensive fee study every four years, with annual smaller studies to
accommodate new activities and adjustments as necessary. The current agreement
includes funding for MGT of America, Inc. to prepare a CAP update and perform smaller
updates for certain fees in FY 2017-18. In keeping with the City’s practice of entering
into five-year contracts where possible to increase the efficiency of its procurement
process, and reflecting the timing of the work product provided for each study, staff
recommend extending the agreement for an additional two years and six months to
better align with the budget process. In FY 2018-19, the consultant would review user
fees as necessary. In FY 2019-20, the consultant would prepare another CAP update
for all funds for the City.
Consultant Selection
On August 5, 2014, the City issued a Request for Proposals (RFP) inviting proposals to
develop and prepare a new Cost Allocation Plan and undertake a comprehensive
citywide review of user fees and charges. The RFP was posted on the City’s online
bidding website and notices were advertised in the Santa Monica Daily Press in
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accordance with City Charter and Municipal Code provisions. A total of 39 firms
obtained the RFP package. Five proposals were received. A selection committee
comprised of staff from the Finance Department evaluated the proposals based on
criteria listed in the RFP, including qualifications and experience with similar projects,
capacity and technical capabilities, project approach and proposed work plan, costs,
and references.
As a result of this evaluation process and based upon the above criteria, MGT of
America, Inc. was recommended as the best qualified firm to develop and prepare a
new Cost Allocation Plan and undertake a comprehensive citywide review of user fees
and charges.
Although MGT was not the lowest cost proposal, the services included in its proposal
were the most comprehensive, showed the most complete understanding of the
information and resources necessary to complete the projects within the City’s required
timeline, and exhibited a comprehensive level of experience in completing similar
projects in California. MGT is thoroughly familiar with all relevant federal and State of
California cost plan requirements, and the legal issues surrounding user fees. The State
of California and several federal districts have approved MGT’s cost plan methodology.
MGT has completed cost allocation plan studies for over 40 counties and cities in
California and user fee/cost of services studies for over 25 cities in California. The firm’s
proposed team has over 50 years of experience in governmental cost determination.
Financial Impacts and Budget Actions
The agreement modification to be awarded to MGT of America, Inc. is $26,300 for an
amended agreement total not to exceed $128,400. Funds are available in the
FY 2017-18 budget in the Finance Department. The agreement will be charged to
account 01208.555060. Future year funding is contingent on Council budget approval.
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Prepared By: Susan Lai, Budget Manager
Approved
Forwarded to Council
Attachments:
A. November 11, 2014 Staff Report
B. Oaks Initiative - MGT
REFERENCE:
FIRST MODIFICATION TO
AGREEMENT NO. 9993
(CCS)