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Item 14 - Agreements for As-Needed Information Technology Services
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Item 14 - Agreements for As-Needed Information Technology Services
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4/10/2024 8:24:15 AM
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City Clerk
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Agenda Packet
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Clerk of the Council
Item #
14
Date
2/2/2021
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Table 2 - Sierra Cybernetics Pricing and Markup Information <br />Resource Type W2 Employee Markup % <br />See Note A Below <br />Proposer Found <br />Resource <br />Identified <br />Resource <br />See Note C below <br />See Note D below <br />Corp -to -Carp Markup % <br />(Type I Consultants) <br />See Note B below <br />20% <br />9% <br />Est Hours Until Rate <br />Drops to Identified <br />Resource Markup% <br />1200 <br />Not Applicable <br />Note A — <br />Sierra's basic markup consists of corporate overhead rate + general and administrative rate + profit. That <br />amounts to 24%. <br />Note B — <br />Because Sierra Type 1 (C2C and 1099) consultants require less overhead, we reduce our basic markup on them <br />from 24% to 20%. <br />Note C <br />W-2 employees are provided benefits, which costs are additive to our basic markup. We offer W-2 employees <br />three categories of employment (Types 2,3,4) with varying degrees of benefits, with three different markup <br />percentages. In each case, the billing rate to the client is the same, but the employee can choose a benefit <br />package that best suits their need with a cot -responding difference in their underlying pay rate. I.e., selection of <br />lesser benefits results in a higher hourly pay rate, and conversely, to the employee. We describe this <br />arrangement as being "compensation neutral" so that, at the end of the day, the net value to the employee is <br />targeted to be the same. <br />Type 2 - No benefits. Sierra only withholds payroll taxes and pays the corporate social security, Medicare, and <br />unemployment insurance costs. Total markup on top of pay rate is 38% <br />Type 3 — Limited benefits. Type 2 plus paid leave days plus a stipend toward employee purchase of medical <br />insurance, Total markup on top of pay rate is 41.5%. <br />Type 4 — Full benefits. Fully -benefited employee with full taxes withheld, full insurance coverage, full paid <br />leave, and access to Sierra's Cafeteria 125 Plan. Total markup on top of pay rate is 61 %. <br />Note D — <br />We currently utilize this "payrolling" program with some of our other clients. The approach is the same as <br />described under Note C, with the benefit percentages being the same, but the overhead plus G&A plus profit <br />amount being only 9%, So, <br />Type 2 markup = 24% <br />Type 3 markup = 30.5% <br />Type 4 markup = 50% <br />"Proprietary Information" <br />SIERRA 5-3 SC20-01I <br />CYBERNETICS Santa Ana IT Professional Services <br />
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