HomeMy WebLinkAboutItem 28 - Agreement Amendment for Cost Allocation PlansPublic Works Agency
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Item # 28
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
December 21, 2021
TOPIC: Agreement Amendment for Cost Allocation Plans
AGENDA TITLE
Amend Agreement with MGT of America Consulting, LLC to Increase Compensation by
$200,000 for Cost Allocation Plan Preparation (Non -General Fund)
RECOMMENDED ACTION
Authorize the City Manager to execute an amendment to the agreement with MGT of
America Consulting, LLC for preparation of Code of Federal Regulations Part 200
compliant Cost Allocation Plans necessary for state and federal grant reimbursement,
increasing the compensation by $200,000, which includes a $50,000 contingency, for a
total agreement amount of $250,000, subject to non -substantive changes approved by
the City Manager and City Attorney.
DISCUSSION
The Public Works Agency funds its Capital Improvement Program almost exclusively
through state and federal grants. Although this strategy reduces the reliance on the
General Fund, it the puts the City and the Public Works Agency under scrutiny to ensure
that policies, procedures, and internal controls meet the stringent federal guidelines set
forth in the Code of Federal Regulations Part 200 (CFR 200), also referred to as "uniform
guidance" requirements.
In May 2018, at the end of a Request for Proposals process, the City entered into an
agreement with MGT of America Consulting, LLC (previously MGT of America, Inc.), in
the amount of $167,008, to prepare annual cost allocations compliant with CFR 200
requirements. The agreement term was for three years with an option for two one-year
extensions and covered submittals for Fiscal Years 2016-17 through 2018-19. In January
2021, the California Department of Transportation completed an Incurred Cost audit for
the City of Santa Ana, which required the Public Works Agency to prepare and submit
additional cost plans for Fiscal Years 2013-14 through 2015-16, 2019-20, and 2020-21.
Before approved agreement extensions could be exercised, the agreement with MGT
expired, suspending the consultant's work and leaving $107,509 unspent.
The City Manager recently approved a $50,000 agreement that allows the consultant to
prepare the cost plans for Fiscal Years 2017-18 and 2019-20. However, to meet the audit
requirements, complete cost plans are needed for Fiscal Years 2013-14, 2015-16, 2016-
Amend Agreement with MGT of America Consulting, LLC
December 21, 2021
Page 2
17, and 2020-21, with potential revisions needed for Fiscal Years 2014-15 and 2018-19
that incorporate recently updated internal policies and procedures. Staff is requesting
City Council approval to amend the current agreement, increasing the compensation by
$200,000, which includes a $50,000 contingency for unforeseen future auditor requests,
for a total agreement amount of $250,000 for the remainder of the work (Exhibit 1).
Approval of this recommended action will allow for continued consultant support through
finalization of all audit requirements.
ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action.
FISCAL IMPACT
Funds are budgeted and available for expenditure in Fiscal Year 2021-22 in the accounts
listed below. Any unspent funds will be carried forward as needed to complete the project
or to respond to follow-up audit inquiries.
Fiscal
Accounting Unit
Accounting Unit -
Year
- Account No.
Fund Description
Account No.
Amount
Description
10117601-
Public Works-
Public Works Admin
2021-22
62300
Admin & PlanningServices
- Contract
$80,000
Services Professional
08617613-
Public Works
CIP Engineering -
2021-22
62300
Engineering/Project
Contract Services
$120,000
Management
Professional
Total
$200,000
EXHIBIT(S)
1. Agreement Amendment with MGT of America Consulting, LLC
Submitted By: Nabil Saba, P.E., Executive Director — Public Works Agency
Approved By: Kristine Ridge, City Manager
FIRST AMENDMENT TO AGREEMENT WITH MGT OF AMERICA CONSULTING, LLC, TO
PROVIDE INDIRECT COST ANALYSIS, RATE PROPOSAL, AND COST ALLOCATION
PLAN
THIS FIRST AMENDMENT TO AGREEMENT is entered into this 21 st day of December 2021, by and
between MGT of America Consulting, LLC, a Florida limited liability company ("Consultant"), and the
City of Santa Ana, a charter city and municipal corporation duly organized and existing under the
Constitution and laws of the State of California ("City"). Consultant and City are also referred to herein
as "Parties" or individually as a "Party."
RECITALS
A. On September 21, 2021, the City entered into Agreement No. N-2021-202 ("Agreement") with
MGT of America Consulting, LLC, a Florida limited liability company, to provide indirect cost
analysis, rate proposal, and cost allocation planning for two (2) years.
B. The parties desire to amend the scope and compensation terms of the Agreement.
THE PARTIES THEREFORE AGREE:
1. Section 1, SCOPE OF SERVICES, shall be amended to read as follows:
Consultant shall perform the services described in the scope of work that was included in RFP No.
18-023 as well as an updated scope, including specifically an indirect costs rate proposal for Fund 86
for Fiscal Years ("FY") 2013-2014, 2015-2016, 2016-2017, 2017-2018, 2019-2020, and 2020-2021;
Fund 86 indirect cost rate revisions for FY 2014-2015 and 2018-2019; an internal service fund full cost
analysis and cost allocation for Fund 101 for FY 2013-2014, 2015-2016, 2016-2017, 2017-2018, 2019-
2020, and 2020-2021; and an internal service fund full cost analysis and cost allocation revisions for
FY 2014-2015 and 2018-2019. If requested by City, Consultant will assist with submission of rate
proposal and cost allocation plan to federal and/or state agencies. Exhibit A, attached hereto and
incorporated herein, is the original scope of work for RFP No. 18-023 and Exhibit B-1, attached hereto
and incorporated herein, is an updated scope of work showing the additional services to be provided.
2. Section 2, COMPENSATION, shall be amended to read as follows:
a. City agrees to pay, and Consultant agrees to accept as total payment for its services
under this Agreement, the rates and charges identified in Exhibit B and Exhibit B-1.
The total sum authorized under the term of this Agreement, including any extension
periods, shall not exceed two hundred fifty thousand dollars and zero cents ($250,000).
This amount includes (1) a base sum of $200,000 and (2) a twenty-five (25) percent
contingency in the amount of $50,000.
3. Except as hereinabove modified, the terms and conditions of said Agreement remain
unchanged and in full force and effect.
[signatures on next page]
Pagel of 2
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to the Agreement the date
and year first above written.
ATTEST:
Daisy Gomez
Clerk of the Council
CITY OF SANTA ANA
...........
Kristine Ridge
City Manager
APPROVED AS TO FORM: MGT of America Consulting, LLC.
Sonia R. Carvalho, City Attorney
randon Salvatierra jF
J. Bradley rgessDeputy City Attorney Exec ti ice President
RECOMMENDED FOR APPROVAL:
Lj 6-%
Nabil Saba, P.E.
Executive Director
Public Works Agency
Page 2 of 2
Exhibit A
Appendxa�
ATTACHMENT I
SCOPE CiP'wORK
CITY OF SANTA ANA
REQUEST FOR .PROPOSALS
FOR
FUL COST ALLOCATION PLAN FOR ENGINEERING SERVICES
AND/OR
INTERNAL SERVICE FUND ALLOCATION STClDY
FOR PUBLIC WORDS ADMINTSTRATTVE SERVICES
RFP NO.: 18-023
Proposers may respond to one or both of the projects detailed below:
(1) Fi] L COST ALLOCATION PLAN YOR ENGINEERING SERVIC
a l aun
The City of Santa Ana is the only city in Orange County delivering capital projects using in-
house staff to design and perform construction management with an expectation of fut cost
recovery. Therefore, overhead cast rates will deviate from a majority of other Orange County
cities utilizing general fund subsidies.
In 2016, the City hired a consultant to complete preparation of an Indirect Cost Rate Proposal
aaad cost reimbursement services related to the Capital Improvement Program (CIP) for. the
Public Works Agency, The City of Santa Ana, Public Works Agency is currently seeking
consultant proposals to prepare fiscal year (FY) 16/17, BY 17/18, and FY 18/19 Cost Allocation
Plans that are acceptable to federal, state, and local grant agencies. It is critical that the FY 16/17
Cost Allocation Plan is completed, submitted, and accepted by local funding agencies prior to the
end of the current fiscal year, which ends June 30, 2017. The City's last updated Cost Allocation
Plan was completed for FY 15/16.
Most of the grants awarded to the Public Works Agency from Caltrans and the Orange County
Transportation Authority (OCTA) Comprehensive Transportation Funding Program for the
City's Capital Improvement Program (CIF) projects are distributed on a reimbursement basis. To
receive the grant funds, Public Works staff must submit detailed reimbursement documentation,
as required by the respective funding agencies. However, because the reimbursement requests
include both direct and indirect City employee labor costs, an approved Cost Allocation Plan is
required that calculates the appropriate Indirect Cost Rate percentage that can be uaed,
rag.0se
The purpose of this project is to ensure that the City of Santa Ana has a basis of applying
comprebensive overhead rates and is accurately accounting for the true cost of providing various
services within Public Works Agency. A Pull Cost Allocation Plan is able to allocate all indirect
costs. Additionally, best practices, accounting standards and OMB 2 CFR Part 225 make it
necessary for the City to maintain a well -documented Cost Allocation. Plan, that will help it to
appropriately allocate general and administrative costs in its budget; properly identify overhead
rates that can be used in the calculation of billable hourly rates for federal and state grants, user
fees, and reimbursements fiv n other governmental agencies, The City's goal is to have a well -
City of Santa Ana RFP 18-023
Page AM
documented and defensible Cost Allocation Plan prepared annually that will identify rates that
can be used to recover billable hourly costs for services and develop user fees that comply with
Proposition 218.
Scone of Secs
Prepare the City's .Bull Cost Allocation Plan for FY 1 G/17; FY 17/18; and FY 18/19 (total cost
plan and an OMB 2 CFR Fart 225 plan), which may include the following elements (if the
consultant feels that additional tasks are warranted, they must be clearly identified in the
consultant's proposal):
A. 'Work and meet with selected City staff to refine the project scope, purpose, uses and
goals of the City's Full Cost Allocation Plan to ensure that the study will be both accurate
and appropriate to the City's needs. Review project schedule and answer any questions
pertaining to the successful development of the study.
B. if necessary, meet with staff and conduct inteMews as needed to gain an understanding
of the Public Work Agency's processes and operations. This includes where certain
services and Ametions are performed together or shared through cooperation between
different divisions. Costs should be identified so that they can be allocated to anal tracked
accordingly.
C. Identify the total cost of providing each City service at the appropriate activity level and
in a manner that is consistent with all applicable laws, statutes, rules and regulations
governing the collection of fees, rates, and charges by public entities including, but not
limited to, the State Controller's Office Guidelines for Cost Claiming and OM13 2 CFR
Park 225 standards.
D. Develop a Full Cost Allocation Model using budgeted and/or actual data for calculating
the full costs of providing each City service. The requirements of the model should allow
for:
a. Additions, revisions, or removal of direct and overhead costs so that the full Cost
Allocation Plau can be easily adapted to a range of activities, both simple and
complex.
b. The ability of the City to continuously update the model and full Cost Allocation
Plan from year to year as the organization changes.
c. The addition of hypothetical service area information for future service
enhancements, and the ability to calculate the estimated costs of providing the
service under consideration (i.e. ad -hoc analysis),
E. Report on ether matters that come to your attention in the mural of your evaluation that
in your ,professional opinion the City should consider.
F. Present the plan to the City's management group and make necessary adjustments as
requested,
G. Prepare and deliver presentations (as needed) to the Council to facilitate their
understanding of the plan and its implications to the City.
H, Provide the City with an electronic copy of the final comprehensive. review, including
related schedules and cost documentatiotx in a format such as Microsoft Word and
City of Santa Ana RFP 18-023
Page Al-2
Microsoft Excel that can be edited and updated by City staff to accommodate changes in
the organization or changes in cost.
Prepare a final report and provide five bound copies, one unbound copy, and a single
Microsoft Excel and PDF file of the Full Cost Recovery Plan that can be made available
to City staff. Models, tables and graphs should be provided in Microsoft Excel. Any Cost
Allocation Model revisions developed shall also be made available to the City in
Microsoft Excel and PDF formats, providing the ability to add, delete and/or update
information as needed..
J. Provide a computer Based model in Microsoft Excel for adjusting these fees and charges
for the City's current and future needs and provide the City with an elcetroonic copy of the
final comprehensive study, including related schedules and cost documentation in a
format that can be edited and updated by City sty to accommodate changes in the
organization or changes in costs.
K. Consult with City staff should the need arise to defend the Cost Allocation Plan as a
result of audits or other challenges.
L. Identification of an appropriate agency to review the Cost Allocations Plan, and establish a
process for obtaining the approvals,
,P, oi!eet tmgUlle_and-Pr%G s
It is critical that the FY 16/17 Cost Allocation Plan is completed, submitted, and accepted by
local funding agencies at earliest possible date, not to exceed the end of the current fiscal year of
June 30, 2017. In subsequent years, preparation of the Cost Allocation Plan, shall be, prepared
following the close of books for the previous fiscal year (approximated tisneframe of December).
The Consultant shall provide a project schedule that outlines individual tasks, milestoues,
and deliverables, Any major change to the project schedule must bo approved by the, City.
Provide a description of the project budget itemized according to the Finn's proposed
tinrioline and broken into each service of phase of work, such a.9 t'ne planning,
development, and/or implementation phase.
Fees for subsequent years to update the Plan of Fees should the City choose to continue
service.
City of Santa Ana RFP l8-E}23
Page Al-3
(2) 1 N TE FAAA, Crd, UNTI) ALLQCA1JJ2N,5J1J.DY
The following additional'work will be added at the City's discretion. Proposers must confirm
that they are able to perform this type of work and allocate an estimated 175 hours in their Pee
Proposal. A detailed Scope of Work and negotiated fee will be established prior to the Notice to
Proceed.
Scan,,,_ ee o#' Work
'Me City of Santa Ana Public Works Agency (PWA) is requesdrig proposals from qualified firms
for an Internal Service fund Allocation Study of its Administrative Services Division (Division).
The Division budget is characterized as an Internal Service Fund. Rates are currently set each
year leased on a historical assessment of services provided to other PWA departments. The
purpose of this study is to ensures that the annual assessment accurately and equitably allocates
the true costs of the Division programs and services.
The results of this study will be used in preparing the Division's FY 2019/20 budget. It is
expected that the experience and expertise of the selected Consultant on this subject matter will
inform the final project deliverables. It is also expected that all recommendations of the selected
Consultant will be consistent with any governing laws and regulations, including, but not limited
to, the Federal Office of Management and Budget. At minimum, the following deliverables must
be provided:
• Review of the Division's programs and services provided to PWA.
• Identify all interagency customers.
• Determine the bases for allocating costs.
• Prepare a cost allocation methodology far distributing annual costs to all inter -agency
customers.
r Calculate Division Internal Services Rate that can be used in support of the Engineering
Services Indirect Cost Rates for reimbursement of grants.
s Recommend Best Management Practice guidelines related to:
- Annual reconciliation of actual costs for services rendered
Cost recovery proceeds in excess of actual costs
-- Schedule for follow-up Internal Service Fund Allocation shies
City of Santa Ana RAP 18-023
Page Al -4
#*W** M G T
CONSULTING GROUP
MGT PROPOSED SCOPE OF SERVICES
INDIRECT COST RATE PROPOSAL FOR FUND 86
Date: September 9, 2021
Background:
Exhibit B
MGT has recently completed two documents, based on actual expenditures for
fiscal year 2018/2019, that provide the calculations required by federal and state
agencies. This documents will allow the city to claim indirect costs in certain
programs within Public Works. These calculations must be done annually and be
based on actual expenditures.
Scope of Services and Professional Fee:
1. Fund 86 - Indirect Cost Rate Proposal (FY 2017/2018 and 2019/2020)
2. Fund 101— Internal Service Fund Full Cast Analysis and Cost Allocation Plan
(FY 2017/2018 and 2019/2020)
a. Professional Fixed Fee: $49,500
3. Assistance - if required for submission to Federal / State agencies
a. Hourly billing as for hours requested; $250 per hour
EXHIBIT B-1
***** MGT
CONSULTING GROUP
MGT PROPOSED SCOPE OF SERVICES
INDIRECT COST RATE PROPOSAL FOR FUND 86
Date: November 23, 2021
Background:
MGT has recently completed two indirect cost documents, based on actual
expenditures for fiscal year 2018/2019, that provide the calculations required by
federal and state agencies. These documents will allow the city to claim indirect
costs in certain programs within Public Works for that fiscal year. The city has
identified several past years where these indirect cost calculations must be
completed in order to claim indirect cost reimbursement for certain public works
operations. These years, and the project scope for each year, are indicated below:
2017/2018 and 2019/2020 - Scope of Services and Professional Fee:
1. Fund 86 - Indirect Cost Rate Proposal
2. Fund 101— Internal Service Fund Full Cost Analysis and Cost Allocation Plan
a. Professional Fixed Fee: $50,000
3. Assistance - if required for submission to Federal / State agencies
a. Hourly billing as for hours requested: $250 per hour
2013/2014 and 2015/2016 - Scope of Services and Professional Fee:
4. Fund 86 - Indirect Cost Rate Proposal
5. Fund 101— Internal Service Fund Full Cost Analysis and Cost Allocation Plan
a. Professional Fixed Fee: $50,000
6. Assistance - if required for submission to Federal / State agencies
a. Hourly billing as for hours requested: $250 per hour
2016/2017 and 2020/2021- Scope of Services and Professional Fee:
7. Fund 86 - Indirect Cost Rate Proposal
8. Fund 101— Internal Service Fund Full Cost Analysis and Cost Allocation Plan
a. Professional Fixed Fee: $50,000
9. Assistance - if required for submission to Federal / State agencies
a. Hourly billing as for hours requested: $250 per hour
2014/2015 and 2018/2019 Revisions - Scope of Services and Professional Fee:
10.Fund 86 - Indirect Cost Rate Proposal
11.Fund 101-- Internal Service Fund Full Cost Analysis and Cost Allocation Plan
a. Professional Fixed Fee: $50,000
12.Assistance - if required for submission to Federal / State agencies
a. Hourly billing as for hours requested: $250 per hour