HomeMy WebLinkAbout- CC-5 - Award Contract for Annual Audit Services - 5/15/2012CITY COUNCIL AGENDA REPORT
MEETING DATE: MAY 15, 2012 ITEM NUMBER: CC -5
SUBJECT: AWARD CONTRACT FOR ANNUAL INDEPENDENT FINANCIAL AUDIT SERVICES
DATE: MAY 3, 2012
FROM: FINANCE DEPARTMENT
PRESENTATION BY: BOBBY YOUNG, FINANCE & I.T. DIRECTOR
FOR FURTHER INFORMATION CONTACT: BOBBY YOUNG, FINANCE & I.T. DIRECTOR (714)
754-5243
RECOMMENDATION
1. Award contract for annual independent financial audit services for fiscal years 2012,
2013 and 2014 to Mayer Hoffman McCann, P.C., in the amount of $135,128 with an
option to extend the contract in one-year periods, for a minimum of two fiscal years.
2. Authorize City Chief Executive Officer to sign and execute a professional services
agreement with the selected audit firm.
BACKGROUND
On February 28, 2012, a RFP was released for financial audit services (see Attachment
1) with the following schedule:
• Release of RFP
• Proposals Due
February 28, 2012
March 27, 2012
In response to the City's RFP, proposals were received from five vendors. A four -person
evaluation committee independently evaluated the five proposals and interviewed the top
three firms on May 3, 2012.
The proposals were evaluated using the following criteria:
➢ Compliance with RFP requirements
➢ Understanding of the project
➢ Recent experience in conducting similar scope, complexity, and magnitude for
other public agencies
➢ Educational background, work experience, and directly related consulting
experiences
➢ Price
➢ References
1
And the three (3) firms interviewed were:
➢ Mayer Hoffman McCann, P.C.
➢ Moss, Levy & Hartzheim, LLP
➢ White Nelson Diehl Evans, LLP
In the evaluation team's ranking system, Mayer Hoffman McCann P.C., finished first with
a score of 3,630 and White Nelson Diehl Evans, LLP placed second with a score of 3,245
and Moss, Levy & Hartzheim, LLP place third with a score of 2,780.
A copy of the cumulative evaluation score sheet can be seen on Attachment 2. Staff
eliminated two firms due to their low tabulated score based on the submitted proposals.
ANALYSIS
The three firms under consideration offer exceptional audit services. The evaluation
committee, however, found that the audit proposal received by Mayer Hoffman McCann,
P.0 was superior - most notably in the areas of actual field audit hours budgeted for this
engagement, lowest annual audit fees, and the quality of the staff auditors that would be
assigned to the Costa Mesa audit.
Among other attributes, the following list summarizes the advantages to the City for
selecting the firm of Mayer Hoffman McCann P.C.
➢ The firm specializes in local government auditing. Currently, the firm serves as
auditors to approximately eighty (80) municipalities.
➢ The firm takes a proactive leadership role in local government accounting and
auditing issues, and are experts in issues of redevelopment agency compliance
and OMB Circular A-133 single audit compliance.
➢ The firm has established a high level of responsiveness to staff's inquiries and
does not bill for non -audit consultation and advisory services.
➢ The firm provides an annual Governmental Accounting Standards Board (GASB)
Technical Update each spring for clients.
➢ Mayer Hoffman McCann, P.C. uses an electronic trial balance software and IDEA
software which allows them to upload the trial balance and map it to the financial
statements and create audit lead schedules, perform analytical reviews, perform
ratio analysis and evaluate the data in other ways. The system provides a new
tool for focusing audit efforts on transactions that could be more susceptible to
fraud.
➢ While the firm was also the audit firm for the City of Bell, their management has
implemented many additional internal control measures to further tighten the audit
process.
➢ While Mayer Hoffman McCann, P.C. has been the auditor for the City of Costa
Mesa since 1991 (20 years), they regularly rotate lead personnel to provide a
different "look" at the City's financial statements. They are proposing new
personnel with this contract.
ALTERNATIVES CONSIDERED
If City Council wishes to change the audit firm recommended by the review committee,
the review committee would recommend awarding the audit services contract to White
Nelson Diehl Evans, LLP. With proposed annual audit fees for a 3 year contract of
2
$193,824.00, the proposed cost by White Nelson Diehl Evans, LLP for FY 12-13 is
$68,525. It should be noted, that while this proposal for 3 years is $58,696 ($19,565 per
year on average) higher than that of Mayer Hoffman McCann, as part of the FY 12-13
Preliminary Budget, staff included an audit budget of $75,000. Therefore, the proposed
cost by White Nelson Diehl Evans, LLP would be $6,475 less than the amount currently
proposed as part of the City's budget.
City Council also may choose to expand the scope of the services, however those
additional services may revise original prices proposed.
FISCAL REVIEW
An amount of $75,000 is currently included as part of the FY 12-13 Preliminary Budget
for financial audit services. As proposed, the cost of a three year contract with Mayer
Hoffman McCann, P.C. would be $135,128, with first year pricing of $47,500. The audit
fees are proposed to decrease to $43,380 in 2012/13 due to the elimination of the ABLE
audit, and increase approximately 2% the following year to $44,248 in fiscal year
2013/14.
Should City Council choose White Nelson Diehl Evans, LLP as the alternative, first year
pricing would be $68,525, which is still less than the amount currently included in the
preliminary budget.
LEGAL REVIEW
The professional service agreement (Attachment 4) has been reviewed and approved as
to form.
RECOMMENDATION
Of the five firms submitting proposals, the four -person evaluation committee is
recommending Mayer Hoffman McCann, P.C. because their proposal had the lowest
annual audit fees for the 3 year contract of $135,128 and were rated slightly higher for
qualifications and experience. The firm has a solid understanding of the scope of the
project; and has extensive auditing experience in municipal governments with similar
scope and complexity as the City of Costa Mesa.
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Attachments:
1. RFP for Financial Audit Services
2. Cumulative Evaluation Score Sheet
3. Proposal
4. Professional Services Agreement
THO AS RT
City Attorney
3
REQUEST FOR PROPOSAL
FOR
AUDIT SERVICES
FINANCE DEPARTMENT
CITY OF COSTA MESA
Released on February 28, 2012
AUDIT SERVICES
REQUEST FOR PROPOSAL (RFP)
The City of Costa Mesa seeks proposals from qualified firms for Professional Auditing Services
Responses must conform within the requirements of the Request for Proposal (RFP). The City
reserves the right to waive any irregularity in any proposal or to reject any proposal that does not
comply with this RFP. Selection of the proposer will be made solely by the City on criteria
determined by the City.
The use of the term "firm" throughout this document means an individual proprietorship, a
partnership, a limited liability company, a corporation or joint venture.
The successful proposer will be required to enter into a professional services agreement that will
include the requirements of the RFP as well as other requirements. By submitting a proposal, the
proposer agrees to all the terms of the RFP.
Other than as specified in the RFP, proposers may not contact individual City Council Members or
the City's staff. To do so will disqualify the proposer. Except for questions of Kim Wilson,
Purchasing Coordinator, proposers may only speak with staff or City Council Members in a setting
that is part of the formal selection process. This is for the protection of all proposers so that all
proposals will be submitted to the same evaluation process.
1. ABOUT THE CITY
The City of Costa Mesa is a general law city, which operates under the council/manager form
of government with a General Fund budget of $95 million and a total of $115 million for fiscal
year 2011-2012.
The City of Costa Mesa, incorporated in 1953, has an estimated population of 116,479 and has
a land area of 16.8 square miles. It is located in the southern coastal area of Orange County,
California, and is bordered by the cities of Santa Ana, Newport Beach, Huntington Beach,
Fountain Valley and Irvine.
The City is a "fall service city" and provides a wide range of services..These services include:
police and fire protection; animal control; emergency medical aid; building safety regulation
and inspection; street lighting; land use planning and zoning; housing and community
development; maintenance and improvement of streets and related structures; traffic safety
maintenance and improvement; and full range of recreational and cultural programs.
The City of Costa Mesa is home of the Segerstrom Center for the Arts, Orange County
Fairgrounds, South Coast Repertory Theater and the South Coast Plaza Shopping Center,
which is the single largest commercial activity center in the City. The volume of sales
generated by South Coast Plaza secures its place as the highest volume regional shopping
center in the nation.
The City has an exceptionally qualified Finance staff. The City utilizes Oracle's PeopleSoft
HRMS 8.8 for its HR, Benefits, Time&Labor and Payroll functional applications and People
Tools 8.42 for technical development and maintenance. In addition, the City utilizes Telestaff
for Fire personnel time reporting and scheduling. Employees are paid on Friday on a bi-weekly
payroll basis or 26 pay periods each year. The City currently has 468 Full -Time Employees
which includes approximately 230 sworn personnel) and 102 Part -Time Employees (PTE).
2. SCHEDULE OF EVENTS
This request for proposal will be governed by the following schedule:
Release of RFP
February 28, 2012
Deadline for Written Questions
March 13, 2012
Responses to Questions Posted on Web
March 20, 2012
Proposals are Due
March 27, 2012
Interviews (Tentative)
April 12, 2012
Approval of Contract (Tentative)
TBD
3. SCOPE OF WORK
The following is a summary of the City of Costa Mesa scope of audit for the years ended June
30, 2012, 2013, 2014, with options for 2015 and 2016:
A. Entities requiring separate reports prepared by the auditors:
• City of Costa Mesa — Comprehensive Annual Financial Report
The audit firm will perform an audit of all funds of the City's reporting entity. The
audit will be conducted in accordance with auditing standards generally accepted in
the United States and standards applicable to the financial audits contained in the
Government Auditing Standards, issued by the Comptroller of the United States.
• Costa Mesa Community Foundation
The audit firm will conduct a financial audit of the Foundation. The Foundation was
formed for the purpose of providing donors opportunity to contribute assets for the
benefit of the community. The City provides the Foundation operational support.
The Foundation qualifies as a tax-exempt organization under Section [501(c)(3)] of
the Internal Revenue Code and Section 23701 (d) of the California Revenue and
Taxation Code.
• Costa Mesa Public Financing Authority
The audit firm will conduct a financial audit of the City's Public Financing
Authority. The Financing Authority was created for the purpose of providing
financing for capital improvements and the purchase of local obligations. The audit
will be performed in accordance with auditing standards generally accepted in the
United States and Government Auditing Standards.
• Costa Mesa Housing Authority
The audit firm will conduct a financial and compliance audit of the newly created
Costa Mesa Housing Authority. The compliance audit shall include the provisions
of laws and regulations identified in the Guidelines for Compliance Audits of
California Redevelopment Agencies, issued by the State Controller.
B. The City additionally requires the following annual reports prepared by the auditors:
• Single Audit
• Appropriation Limit Calculation
• Management Letter - The audit firm shall issue a separate "management letter" that
includes recommendations for improvements in internal control that are considered
to be non -reportable conditions.
• AB 2766 Audit Report
C. Entities requiring separate report prepared by the auditors for a single year:
• Costa Mesa Redevelopment Agency(RDA)
The audit firm will conduct a financial and compliance audit of the City's
Redevelopment Agency. The compliance audit shall include the provisions of laws
and regulations identified in the Guidelines for Compliance Audits of California
Redevelopment Agencies, issued by the State Controller. A one year audit of the
RDA will be required due to the recent court rulings abolishing the California
redevelopment agencies.
• Airborne Law Enforcement Services (ABLE)
The audit firm will perform an audit of the General and Capital Projects funds of the
reporting entity. Airborne Law Enforcement Services was a joint venture between
the City of Costa Mesa and the City of Newport Beach to provide regional law
enforcement helicopter services to the respective jurisdictions. On July 1, 2011, the
program was terminated. However, audited financial statements of the ABLE
program will be required until all assets of the program are sold or auctioned which
may take one or two years. The audit will be performed in accordance with auditing
standards generally accepted in the United States and Government Auditing
Standards, issued by the Comptroller of the United States.
D. Deliverables
• It is desired that the work contemplated under the Agreement commence the first
week in September. Interim can start at as early as April.
• It is desired that all auditor prepared financial statements, notes, and supplementary
schedules along with an auditor report are due by December 1.
The accounting records will be ready for the final audit by September 1. City Finance staff will
provide normal cooperation and assistance during the audit including typing of confirmation
requests, pulling and refilling of supporting docs ments and reconciliation of major asset and
liability balances. The audit staff will have inquiry access to all of the City's financial systems
during the audit.
All working papers and reports are to be retained at the auditors' expense for a minimum of
three years. The audit firm will be responsible for making working papers available to the City
of Costa Mesa or any governmental agencies included in the Audit of Federal Grants.
The City's CAFR (Comprehensive Annual Financial Report) and adopted budget may be
accessed at the City's website at:
www.costamesaca.gov
4. PROPOSAL FORMAT GUIDELINES
Interested contractors are to provide the City of Costa Mesa with a thorough proposal using the
following guidelines:
Proposal should be typed and should contain no more than 20 typed pages using a 12 -point font
size, including the transmittal letter and resumes of key people, but excluding Index/Table of
Contents, tables, charts, and graphic exhibits. Each proposal will adhere to the following order
and content of sections. Proposal should be straightforward, concise and provide "layman"
explanations of technical terms that are used. Emphasis should be concentrated on conforming
to the RFP instructions, responding to the RFP requirements, and on providing a complete and
clear description of the offer. Proposals, which appear unrealistic in the terms of technical
commitments, lack of technical competence or are indicative of failure to comprehend the
complexity and risk of this contract, may be rejected. The following proposal sections are to be
included in the bidder's response:
A. Vendor Application Form and Cover Letter
Complete Appendix A, "Request for Proposal -Vendor Application Form" and attach this
form to the cover letter. A cover letter, not to exceed three pages in length, should
summarize key elements of the proposal. An individual authorized to bind the consultant
must sign the letter. The letter must stipulate that the proposal price will be valid for a
period of at least 180 days. Indicate the address and telephone number of the contractor's
office located nearest to Costa Mesa, California and the office from which the project will
be managed.
B. Background and Project Summary Section
The Background and Project Summary Section should describe your understanding of the
City, the work to be done, and the objectives to be accomplished. Refer to Scope of Work
of this RFP.
C. Methodology Section
Provide a detailed description of the approach and methodology to be used to accomplish
the Scope of Work of this RFP. The Methodology Section should include:
1) An implementation plan that describes in detail (i) the methods, including controls by
which your firm manages projects of the type sought by this RFP; (ii) methodology for
soliciting and documenting views of internal and external stakeholders; (iii) and any
other project management or implementation strategies or techniques that the
respondent intends to employ in carrying out the work.
2) Detailed description of efforts your firm will undertake to achieve client satisfaction
and to satisfy the requirements of the "Scope of Work" section.
3) Detailed project schedule, identifying all tasks and deliverables to be performed,
durations for each task, and overall time of completion.
4) Detailed description of specific tasks you will require from City staff. Explain what the
respective roles of City staff and your staff would be to complete the tasks specified in
the Scope of Work.
D. Staffing
Provide a list of individual(s) who will be working on this project and indicate the functions
that each will perform. Include a resume for each designated individual.
Upon award and during the contract period, if the contractor chooses to assign different
personnel to the project, the Contractor must submit their names and qualifications
including information listed above to the City for approval before they begin work.
E. Qualifications
The information requested in this section should describe the qualifications of the firm, key
staff and sub -contractors performing projects within the past five years that are similar in
size and scope to demonstrate competence to perform these services. Information shall
include:
1) Names of key staff that participated on named projects and their specific
responsibilities with respect to this scope of work:
2) A summary of your firm's demonstrated capability, including length of time that
your firm has provided the services being requested in this Request for Proposal.
3) Provide at least five local references that received similar services from your firm.
The City of Costa Mesa reserves the right to contact any of the organizations or
individuals listed. Information provided shall include:
♦ Client Name
♦ Project Description
♦ Project start and end dates
♦ Client project manager name, telephone number, and e-mail address
F. Fee Proposal
The City desires a three-year cost proposal.
Fee Schedule
Describe your fee schedule for each year of your proposal as follows
for fiscal years 6/30/12, 6/30/13, and 6/30/14:
Description of Services Provided
Estimated
Estimated
Hours
Cost
Audit of the City
Preparation of the CAFR
Audit & Financial Report of the Costa Mesa
Community Foundation
Audit & Financial Report of the Costa Mesa
Public Financing Authority
Audit & Financial Report of the Costa Mesa
Housing Authority
OMB Circular A-133 Single Audit of Federal
Grants of the City
Other Re orts
Audit & Financial Report of the Costa Mesa
Redevelopment Agency
Audit & Financial Report of the Airborne
Law Enforcement Agency (ABLE)
Total $ (Not to Exceed
Hourly Rates
The firm should provide hourly rates of the firm's employees for services that
may be requested outside the scope of the audits:
Classification
Hourly Rate
Partner
$
Manager
Senior Accountant
Staff Accountant
Note: The City of Costa Mesa fiscal year covers the period of July 1 through June 30
5. PROCESS FOR SUBMITTING PROPOSALS
♦ Content of Proposal
The proposal must be submitted using the format as indicated in the proposal format
guidelines.
♦ Preparation of Proposal
Each proposal shall be prepared simply and economically, avoiding the use of elaborate
promotional material beyond those sufficient to provide a complete, accurate and reliable
presentation.
♦ Number of Proposals
Submit five (5) copies plus one (1) disk/flash drive copy of your proposal in sufficient
detail to allow for thorough evaluation and comparative analysis.
♦ Submission of Proposals
Complete written proposals must be submitted in sealed envelopes and received no later
than 4:00 p.m. (P.S.T) on March 27, 2012 to the address below. Proposals will not be
accepted after this deadline. Faxed or e-mailed proposals will not be accepted
Julie Folcik, City Clerk
City of Costa Mesa
77 Fair Drive
Costa Mesa, CA 92626
RE: RFP AUDIT SERVICES
♦ Inquiries
Questions about this RFP must be directed in writing, via e-mail to:
Kim Wilson
kimberly.wilson(&costamesaca. gov
From the date that this RFP is issued until a firm is selected and the selection is announced,
firms are not allowed to communicate for any reason with any City employee other than the
contracting officer listed above regarding this RFP, except during the pre -proposal
conference. Refer to the Schedule of Events of this RFP or the City webpage to determine
if a pre -proposal conference has been scheduled. The City reserves the right to reject any
proposal for violation of this provision. No questions other than written will be accepted,
and no response other than written will be binding upon the City.
♦ Conditions for Proposal Acceptance
This RFP does not commit the City to award a contract or to pay any costs incurred for any
services. The City, at its sole discretion, reserves the right to accept or reject any or all
proposals received as a result of this RFP, to negotiate with any qualified source, or to
cancel this RFP in part or in its entirety. All proposals will become the property of the City
of Costa Mesa. If any proprietary information is contained in the proposal, it should be
clearly identified.
6. EVALUATION CRITERIA
The City's consultant evaluation and selection process is based upon Qualifications Based
Selection (QBS) for professional services. The City of Costa Mesa may use some or all of the
following criteria in its evaluation and comparison of proposals submitted. The criteria listed
are not necessarily an all-inclusive list. The order in which they appear is not intended to
indicate their relative importance:
A. Compliance with RFP requirements
B. Understanding of the project
C. Recent experience in conducting similar scope, complexity, and magnitude for other
public agencies
D. Educational background, work experience, and directly related consulting experiences
E. Price
F. References
The City may also contact and evaluate the bidder's and subcontractor's references; contact
any bidder to clarify any response; contact any current users of a bidder's services; solicit
information from any available source concerning any aspect of a proposal; and seek and
review any other information deemed pertinent to the evaluation process. The evaluation
committee shall not be obligated to accept the lowest priced proposal, but shall make an award
in the best interests of the City.
After written proposals have been reviewed, discussions with prospective firms may or may not
be required. If scheduled, the oral interview will be a question/answer format for the purpose of
clarifying the intent of any portions of the proposal. The individual from your firm that will be
directly responsible for carrying out the contract, if awarded, should be present at the oral
interview.
A Notification of Intent to Award may be sent to the vendor selected. Award is contingent
upon the successful negotiation of final contract terms. Negotiations shall be confidential and
not subject to disclosure to competing vendors unless an agreement is reached. If contract
negotiations cannot be concluded successfully, the City may negotiate a contract with the next
highest scoring vendor or withdraw the RFP.
7. STANDARD TERMS AND CONDITIONS
♦ Amendments
The City reserves the right to amend this RFP prior to the proposal due date. All
amendments and additional information will be posted to the City website:
www.costamesaca.gov
Also, you can sign up for email notifications at the City website.
♦ Cost for Preparing Proposal
The cost for developing the proposal is the sole responsibility of the bidder. All proposals
submitted become the property of the City.
Contract Discussions
Prior to award, the apparent successful firm may be required to enter into discussions with
the City to resolve any contractual differences. These discussions are to be finalized and all
exceptions resolved within one (1) week from notification. If no resolution is reached, the
proposal may be rejected and discussions will be initiated with the second highest scoring
firm. See Appendix B for a sample agreement.
Confidentiality Requirements
The staff members assigned to this project may be required to sign a departmental non-
disclosure statement. Proposals are subject to the Freedom of Information Act. The City
cannot protect proprietary data submitted in proposals.
Financial Information
The City is concerned about bidders' financial capability to perform, therefore, may ask
you to provide sufficient data to allow for an evaluation of your firm's financial
capabilities.
Insurance Requirements
City requires that licensees, lessees, and vendors have an approved Certificate of Insurance
and endorsement (not a declaration or policy) on file with the City for the issuance of a
permit or contract. Within ten (10) consecutive calendar days of award of contract,
successful bidder must furnish the City with the Certificates of Insurance proving coverage
as specified in Professional Service Agreement, Section 5.0 in Appendix B.
Please carefully review the Sample Agreement and Insurance Requirements before
responding to the Request for Proposal enclosed herein. The terms of the agreement,
including insurance requirements have been mandated by City Council and can be modified
only if extraordinary circumstances exist. Your response to the Request for Proposal must
indicate if you are unwilling or unable to execute the agreement as drafted as well as
providing the insurance requirements. The City will consider this in determining
responsiveness to the Request, for Proposal.
APPENDIX A
REQUEST FOR PROPOSAL
VENDOR APPLICATION FORM
TYPE OF APPLICANT: ❑ NEW ❑ CURRENT VENDOR
Legal Contractual Name of Corporation:
Contact Person for Agreement:
Corporate Mailing Address:
City, State and Zip Code:
E -Mail Address:
Phone:
Contact Person for Proposals:
Business Telephone:
Is your business: (check one)
❑ NONPROFIT CORPORATION
Is your business: (check one)
Fax:
E -Mail Address:
Business Fax:
❑ FOR PROFIT CORPORATION
❑ CORPORATION ❑ LIMITED LIABILITY PARTNERSHIP
❑ INDIVIDUAL ❑ SOLE PROPRIETORSHIP
❑ PARTNERSHIP ❑ UNINCORPORATED ASSOCIATION
Names & Titles of Corporate Board Members
(Also list Names & Titles of persons with written authorization/resolution to sign contracts)
Names
Federal Tax Identification Number:
Title Phone
City of Costa Mesa Business License Number:
(If none, you must obtain a Costa Mesa Business License upon award of contract.)
City of Costa Mesa Business License Expiration Date:
1 OF2
APPENDIX B
PROFESSIONAL SERVICES AGREEMENT
CITY OF COSTA MESA
THIS AGREEMENT is made and entered into this day of , 20 ("Effective
Date"), by and between the CITY OF COSTA MESA, a municipal corporation ("City"), and
a California ("Consultant").
WITNESSETH:
A. WHEREAS, City proposes to utilize the services of Consultant as an independent
contract to as more fully described in Consultant's Proposal attached as
Exhibit "A"; and
B. WHEREAS, Consultant represents that it has that degree of specialized expertise
contemplated within California Government Code, Section 37103, and holds all necessary
licenses to practice and perform the services herein contemplated; and
C. WHEREAS, City and Consultant desire to contract for the specific services described in
Exhibit "A" (the "Project") and desire to set forth their rights, duties and liabilities in connection
with the services to be performed; and
D. WHEREAS, no official or employee of City has a financial interest, within the
provisions of California Government Code, Sections 1090-1092, in the subject matter of this
Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and conditions
contained herein, the parties hereby agree as follows:
1.0. SERVICES PROVIDED BY CONSULTANT
1.1. Scope of Services. Consultant shall provide the professional services described
in Consultant's Proposal, a copy of which is attached hereto as Exhibit "A" and incorporated
herein by this reference.
1.2. Professional Practices. All professional services to be provided by Consultant
pursuant to this Agreement shall be provided by personnel experienced in their respective fields
and in a manner consistent with the standards of care, diligence and skill ordinarily exercised by
professional consultants in similar fields and circumstances in accordance with sound
professional practices. It is understood that in the exercise of every aspect of its role, within the
scope of work, consultant will be representing the City of Costa Mesa, and all of its actions,
communications, or other work, during its employment, under this contract is under the direction
of the department. Consultant also warrants that it is familiar with all laws that may affect its
performance of this Agreement and shall advise City of any changes in any laws that may affect
Consultant's performance of this Agreement.
1.3. Performance to Satisfaction of Citv. Consultant agrees to perform all the work to
the complete satisfaction of the City and within the hereinafter specified. Evaluations of the
work will be done by the City Clerk or her designee. If the duality of work is not satisfactory,
City in its discretion has the right to:
(a) Meet with Consultant to review the quality of the work and resolve the
matters of concern;
(b) Require Consultant to repeat the work at no additional fee until it is
satisfactory; and/or
(c) Terminate the Agreement as hereinafter set forth.
1.4. Warran . Consultant warrants that it shall perform the services required by this
Agreement in compliance with all applicable Federal and California employment laws
including, but not limited to, those laws related to minimum hours and wages; occupational
health and safety; fair employment and employment practices; workers' compensation insurance
and safety in employment; and all other Federal, State and local laws and ordinances applicable
to the services required under this Agreement. Consultant shall indemnify and hold harmless
City from and against all claims, demands, payments, suits, actions, proceedings, and judgments
of every nature and description including attorneys' fees and costs, presented, brought, or
recovered against City for, or on account of any liability under any of the above-mentioned laws,
which may be inctured by reason of Consultant's performance under this Agreement.
1.5. Non-discrimination. In performing this Agreement, Consultant shall not engage
in, nor permit its agents to engage in, discrimination in employment of persons because of their
race, religion, color, national origin, ancestry, age, physical handicap, medical condition, marital
status, sexual gender or sexual orientation, except as permitted pursuant to Section 12940 of the
Government Code.
1.6. Non -Exclusive Agreement. Consultant acknowledges that City may enter into
agreements with other consultants for services similar to the services that are subject to this
Agreement or may have its own employees perform services similar to those services
contemplated by this Agreement.
1.7. Delegation and Assignment. This is a personal service contract, and the duties
set forth herein shall not be delegated or assigned to any person or entity without the prior
written consent of City. Consultant may engage a subcontractor(s) as permitted by law and may
employ other personnel to perform services contemplated by this Agreement at Consultant's
sole cost and expense.
I.S. Confidentiality. Employees of Consultant in the course of their duties may have
access to financial, accounting, statistical, and personnel data of private individuals and
employees of City. Consultant covenants that all data, documents, discussion, or other
information developed or received by Consultant or provided for performance of this Agreement
are deemed confidential and shall not be disclosed by Consultant without written authorization
by City. City shall grant such authorization if disclosure is required by law. All City data shall
be returned to City upon the termination of this Agreement. Consultant's covenant under this
Section shall survive the termination of this Agreement.
2.0. COMPENSATION AND BILLING
2.1. Compensation. As compensation for the provision of services outlined in Exhibit
"A" and in accordance with this agreement, Consultant shall be paid in accordance with the fee
schedule set forth in Exhibit "B," attached hereto and incorporated by reference. Consultant's
total compensation shall not exceed Dollars ($ .00). Consultant shall devote xxx
hours of staff time to complete the Project.
2.2. Additional Services. Consultant shall not receive compensation for any services
provided outside the scope of services specified in the Consultant's Proposal or in an amount
exceeding $_.00 unless the City or the Project Manager for this Project, prior to Consultant
performing the additional services, approves such additional services in writing. It is
specifically understood that oral requests and/or approvals of such additional services or
additional compensation shall be barred and are unenforceable.
2.3. Method of Billing. Consultant may submit invoices to City supervisor for
approval on a progress basis, but no more often than two times a month. Said invoice shall be
based on the total of all Consultant's services which have been completed to City's sole
satisfaction as of the date the invoice is created. City shall pay Consultant's invoice within forty-
five (45) days from the date City receives said invoice. Each invoice shall describe in detail, the
services performed, the date of performance, and the associated time for completion. Any
additional services approved and performed pursuant to this Agreement shall be designated as
"Additional Services" and shall identify the number of the authorized change order, where
applicable, on all invoices.
2.4. Records and Audits. Records of Consultant's services relating to this Agreement
shall be maintained in accordance with generally recognized accounting principles and shall be
made available to City or its Project Manager for inspection and/or audit at mutually convenient
times for a period of three (3) years from the Effective Date.
3.0. TIME OF PERFORMANCE
3.1. Commencement and Completion of Work. The professional services to be
performed pursuant to this Agreement shall commence within five (5) days from the Effective
Date of this Agreement. Said services shall be performed in strict compliance with the Project
Schedule approved by City as set forth in Exhibit "C," attached hereto and incorporated herein
by this reference. The Project Schedule may be amended by mutual agreement of the parties.
Failure to commence work in a timely manner and/or diligently pursue work to completion may
be grounds for termination of this Agreement.
3.2. Excusable Delays. Neither party shall be responsible for delays or lack of
performance resulting from acts beyond the reasonable control of the party or parties. Such acts
shall include, but not be limited to, acts of God, fire, strikes, material shortages, compliance with
laws or regulations, riots, acts of war, or any other conditions beyond the reasonable control of a
party.
4.0. TERM AND TERMINATION
4.1. Term. This Agreement shall commence on the Effective Date and continue for a
period of months ending on 20 , unless previously terminated as
provided herein or as otherwise agreed to in writing by the parties. Paragraph 4 can simply be
modified to provide receiver will secure a separate certificate and funding for any fees
awarded... prior to discharge of the receiver for up to four (4) term periods of one (1) year each.
4.2. Notice of Termination. The City reserves and has the right and privilege of
canceling, suspending or abandoning the execution of all or any part of the work contemplated
by this Agreement, with or without cause, at any time, by providing written notice to Consultant.
The termination of this Agreement shall be deemed effective upon receipt of the notice of
termination. In the event of such termination, Consultant shall immediately stop rendering
services under this Agreement unless directed otherwise by the City.
4.3. Compensation. In the event of termination, City shall pay Consultant for
reasonable costs incurred and professional services satisfactorily performed up to and including
the date of City's written notice of termination. Compensation for work in progress shall be
prorated as to the percentage of work completed as of the effective date of termination in
accordance with the fees set forth herein. In ascertaining the professional services actually
rendered hereunder up to the effective date of termination of this Agreement, consideration shall
be given to both completed work and work in progress, to complete and incomplete drawings,
and to other documents pertaining to the services contemplated herein whether delivered to the
City or in the possession of the Consultant.
4.4. Documents. In the event of termination of this Agreement, all documents
prepared by Consultant in its performance of this Agreement including, but not limited to,
finished or unfinished design, development and construction documents, data studies, drawings,
maps and reports, shall be delivered to the City within ten (10) days of delivery of termination
notice to Consultant, at no cost to City. Any use of uncompleted documents without specific
written authorization from Consultant shall be at City's sole risk and without liability or legal
expense to Consultant.
5.0. INSURANCE
5.1. Minimum Scope and Limits of Insurance. Consultant shall obtain, maintain, and
keep in full force and effect during the life of this Agreement all of the following minimum
scope of insurance coverages with an insurance company admitted to do business in California,
rated "A," Class X, or better in the most recent Best's Key Insurance Rating Guide, and
approved by City:
(a) Commercial general liability, including premises -operations,
products/completed operations, broad form property damage, blanket
contractual liability, independent contractors, personal injury or bodily
injury with a policy limit of not less than One Million Dollars
($1,000,000.00), combined single limits, per occurrence. If such insurance
contains a general aggregate limit, it shall apply separately to this
Agreement or shall be twice the required occurrence limit.
(b) Business automobile liability for owned vehicles, hired, and non -owned
vehicles, with a policy limit of not less than One Million Dollars
($1,000,000.00), combined single limits, per occurrence for bodily injury
and property damage.
(c) Workers' compensation insurance as required by the State of California.
Consultant agrees to waive, and to obtain endorsements from its workers'
compensation insurer waiving subrogation rights under its workers'
compensation insurance policy against the City, its officers, agents,
employees, and volunteers arising from work performed by Consultant for
the City and to require each of its subcontractors, if any, to do likewise
under their workers' compensation insurance policies.
(d) Professional errors and omissions ("E&O") liability insurance with policy
limits of not less than One Million Dollars ($1,000,000.00), combined
single limits, per occurrence and aggregate. Architects' and engineers'
coverage shall be endorsed to include contractual liability. If the policy is
written as a "claims made" policy, the retro date shall be prior to the start
of the contract work. Consultant shall obtain and maintain, said E&O
liability insurance during the life of this Agreement and for three years
after completion of the work hereunder.
5.2. Endorsements. The commercial general liability insurance policy and business
automobile liability policy shall contain or be endorsed to contain the following provisions:
(a) Additional insureds: "The City of Costa Mesa and its elected and
appointed boards, officers, officials, agents, employees, and volunteers
are additional insureds with respect to: liability arising out of activities
performed by or on behalf of the Consultant pursuant to its contract with
the City; products and completed operations of the Consultant; premises
owned, occupied or used by the Consultant; automobiles owned, leased,
hired, or borrowed by the Consultant.."
(b) Notice: "Said policy shall not terminate, be suspended, or voided, nor
shall it be cancelled, nor the coverage or limits reduced, until thirty (30)
days after written notice is given to City.
(c) Other insurance: "The Consultant's insurance coverage shall be primary
insurance as respects the City of Costa Mesa, its officers, officials, agents,
employees, and volunteers. Any other insurance maintained by the City of
Costa Mesa shall be excess and not contributing with the insurance
provided by this policy."
(d) Any failure to comply with the reporting provisions of the policies shall
not affect coverage provided to the City of Costa Mesa, its officers,
officials, agents, employees, and volunteers.
(e) The Consultant's insurance shall apply separately to each insured against
whom claim is made or suit is brought, except with respect to the limits of
the insurer's liability.
5.3. Deductible or Self Insured Retention. If any of such policies provide for a deductible
or self-insured retention to provide such coverage, the amount of such deductible or self-insured
retention shall be approved in advance by City. No policy of insurance issued as to which the
City is an additional insured shall contain a provision which requires that no insured except the
named insured can satisfy any such deductible or self-insured retention.
5.4. Certificates of Insurance: Consultant shall provide to City certificates of
insurance showing the insurance coverages and required endorsements described above, in a
form and content approved by City, prior to performing any services under this Agreement.
5.5. Non -limiting: Nothing in this Section shall be construed as limiting in any way,
the indemnification provision contained in this Agreement, or the extent to which Consultant
may be held responsible for payments of damages to persons or property.
6.0. GENERAL PROVISIONS
6.1. Entire Agreement: This Agreement constitutes the entire Agreement between the
parties with respect to any matter referenced herein and supersedes any and all other prior
writings and oral negotiations. This Agreement may be modified only in writing, and signed by
the parties in interest at the time of such modification. The terms of this Agreement shall prevail
over any inconsistent provision in any other contract document appurtenant hereto, including
exhibits to this Agreement.
6.2. Representatives. The Chief Executive Officer or his or her designee shall be the
representative of City for purposes of this Agreement and may issue all consents, approvals,
directives and agreements on behalf of the City, called for by this Agreement, except as
otherwise expressly provided in this Agreement.
Consultant shall designate a representative for purposes of this Agreement who
shall be authorized to issue all consents, approvals, directives and agreements on behalf of
Consultant called for by this Agreement, except as otherwise expressly provided in this
Agreement.
6.3. Project Managers. City shall designate a Project Manager to work directly with
Consultant in the performance of this Agreement.
Consultant shall designate a Project Manager who shall represent it and be its
agent in all consultations with City during the term of this Agreement. Consultant or its Project
Manager shall attend and assist in all coordination meetings called by City.
6.4. Notices: Any notices, documents, correspondence or other communications
concerning this Agreement or the work hereunder may be provided by personal delivery,
facsimile or mail and shall be addressed as set forth below. Such communication shall be
deemed served or delivered: a) at the time of delivery if such communication is sent by personal
delivery; b) at the time of transmission if such communication is sent by facsimile; and c) 48
hours after deposit in the U.S. Mail as reflected by the official U.S. postmark if such
communication is sent through regular United States mail.
IF TO CONSULTANT: IF TO CITY:
City of Costa Mesa
77 Fair Drive
Costa Mesa, CA 92626
Tel: Tel: 714-754-5219
Fax: Fax: 714-754-5040
Attn: Attn:
6.5. Drug-free Workplace Policy. Consultant shall provide a drug-free workplace by
complying with all provisions set forth in City's Council Policy 100-5, attached hereto as
Exhibit "D" and incorporated herein by reference. Consultant's failure to conform to the
requirements set forth in Council Policy 100-5 shall constitute a material breach of this
Agreement and shall be cause for immediate termination of this Agreement by City.
6.6. Attomevs' Fees: In the event that litigation is brought by any party in connection
with this Agreement, the prevailing party shall be entitled to recover from the opposing party all
costs and expenses, including reasonable attorneys' fees, incurred by the prevailing party in the
exercise of any of its rights or remedies hereunder or the enforcement of any of the terms,
conditions, or provisions hereof.
6.7. Governing Law: This Agreement shall be governed by and construed under the
laws of the State of California without giving effect to that body of laws pertaining to conflict of
laws. In the event of any legal action to enforce or interpret this Agreement, the parties hereto
agree that the sole and exclusive venue shall be a court of competent jurisdiction located in
Orange County, California.
6.8. Assignment: Consultant shall not voluntarily or by operation of law assign,
transfer, sublet or encumber all or any part of Consultant's interest in this Agreement without
City's prior written consent. Any attempted assignment, transfer, subletting or encumbrance
shall be void and shall constitute a breach of this Agreement and cause for termination of this
Agreement. Regardless of City's consent, no subletting or assignment shall release Consultant of
Consultant's obligation to perform all other obligations to be performed by Consultant hereunder
for the term of this Agreement.
6.9. Indemnification and Hold Harmless Consultant agrees to defend, indemnify, hold
free and harmless the City, its elected officials, officers, agents and employees, at Consultant's
sole expense, from and against any and all claims, actions, suits or other legal proceedings
brought against the City, its elected officials, officers, agents and employees arising out of the
performance of the Consultant, its employees, and/or authorized subcontractors, of the work
undertaken pursuant to this Agreement. 'The defense obligation provided for hereunder shall
apply without any advance showing of negligence or wrongdoing by the Consultant, its
employees, and/or authorized subcontractors, but shall be required whenever any claim, action,
complaint, or suit asserts as its basis the negligence, errors, omissions or misconduct of the
Consultant, its employees, and/or authorized subcontractors, and/or whenever any claim, action,
complaint or suit asserts liability against the City, its elected officials, officers, agents and
employees based upon the work performed by the Consultant, its employees, and/or authorized
subcontractors under this Agreement, whether or not the Consultant, its employees, and/or
authorized subcontractors are specifically named or otherwise asserted to be liable.
Notwithstanding the foregoing, the Consultant shall not be liable for the defense or
indemnification of the City for claims, actions, complaints or suits arising out of the sole active
negligence or willful misconduct of the City. This provision shall supersede and replace all
other indemnity provisions contained either in the City's specifications or Consultant's Proposal,
which shall be of no force and effect.
6.10. Independent Contractor. Consultant is and shall be acting at all times as an
independent contractor and not as an employee of City. Consultant shall have no power to incur
any debt, obligation, or liability on behalf of City or otherwise act on behalf of City as an agent.
Neither City nor any of its agents shall have control over the conduct of Consultant or any of
Consultant's employees, except as set forth in this Agreement. Consultant shall not, at any time,
or in any manner, represent that it or any of its or employees are in any manner agents or
employees of City. Consultant shall secure, at its sole expense, and be responsible for any and
all payment of Income Tax, Social Security, State Disability Insurance Compensation,
Unemployment Compensation, and other payroll deductions for Consultant and its officers,
agents, and employees, and all business licenses, if any are required, in connection with the
services to be performed hereunder. Consultant shall indemnify and hold City harmless from
any and all taxes, assessments, penalties, and interest asserted against City by reason of the
independent contractor relationship created by this Agreement. Consultant further agrees to
indemnify and hold City harmless from any failure of Consultant to comply with the applicable
worker's compensation laws. City shall have the right to offset against the amount of any fees
due to Consultant under this Agreement any amount due to City from Consultant as a result of
Consultant's failure to promptly pay to City any reimbursement or indemnification arising under
this paragraph.
6.11. PERS Eligibility Indemnification. In the event that Consultant or any employee,
agent, or subcontractor of Consultant providing services under this Agreement claims or is
determined by a court of competent jurisdiction or the California Public Employees Retirement
System (PERS) to be eligible for enrollment in PERS as an employee of the City, Consultant
shall indemnify, defend, and hold harmless City for the payment of any employee and/or
employer contributions for PERS benefits on behalf of Consultant or its employees, agents, or
subcontractors, as well as for the payment of any penalties and interest on such contributions,
which would otherwise be the responsibility of City.
Notwithstanding any other agency, state or federal policy, rule, regulation, law or
ordinance to the contrary, Consultant and any of its employees, agents, and subcontractors
providing service under this Agreement shall not qualify for or becomeentitled to, and hereby
agree to waive any claims to, any compensation, benefit, or any incident of employment by City,
including but not limited to eligibility to enroll in PERS as an employee of City and entitlement
to any contribution to be paid by City for employer contribution and/or employee contributions
for PERS benefits.
6.12. Cooperation. In the event any claim or action is brought against City relating to
Consultant's performance or services rendered under this Agreement, Consultant shall render
any reasonable assistance and cooperation which City Wright require.
6.13. Ownership of Documents. All findings, reports, documents, information and data
including, but not limited to, computer tapes or discs, files and tapes furnished or prepared by
Consultant or any of its subcontractors in the course of performance of this Agreement, shall be
and remain the sole property of City. Consultant agrees that any such documents or information
shall not be made available to any individual or organization without the prior consent of City.
Any use of such documents for other projects not contemplated by this Agreement, and any use
of incomplete documents, shall be at the sole risk of City and without liability or legal exposure
to Consultant. City shall indemnify and hold harmless Consultant from all claims, damages,
losses, and expenses, including attorneys' fees, arising out of or resulting from City's use of
such documents for other projects not contemplated by this Agreement or use of incomplete
docs ments furnished by Consultant. Consultant shall deliver to City any findings, reports,
documents, information, data, in any form, including but not limited to, computer tapes, discs,
files audio tapes or any other Project related items as requested by City or its authorized
representative, at no additional cost to the City.
6.14. Public Records Act Disclosure: Consultant has been advised and is aware that all
reports, documents, information and data including, but not limited to, computer tapes, discs or
files Punished or prepared by Consultant, or any of its subcontractors, and provided to City may
be subject to public disclosure as required by the California Public Records Act (California
Government Code Section 6250 et. seq.). Exceptions to public disclosure may be those
documents or information that qualify as trade secrets, as that term is defined in the California
Government Code Section 6254.7, and of which Consultant informs City of such trade secret.
The City will endeavor to maintain as confidential all information obtained by it that is
designated as a trade secret. The City shall not, in any way, be liable or responsible for the
disclosure of any trade secret including, without limitation, those records so marked if disclosure
is deemed to be required by law or by order of the Court.
6.15. Conflict of Interest. Consultant and its officers, employees, associates and
subconsultants, if any, will comply with all conflict of interest statutes of the State of California
applicable to Consultant's services under this agreement, including, but not limited to, the
Political Reform Act (Government Code Sections 81000, et seq.) and Government Code Section
1090. During the term of this Agreement, Consultant and its officers, employees, associates and
subconsultants shall not, without the prior written approval of the City Representative, perform
work for another person or entity for whole Consultant is not currently performing work that
would require Consultant or one of its officers, employees, associates or subconsultants to
abstain from a decision under this Agreement pursuant to a conflict of interest statute.
6.16. Responsibility for Errors. Consultant shall be responsible for its work and results
under this Agreement. Consultant, when requested, shall furnish clarification and/or explanation
as may be required by the City's representative, regarding any services rendered under this
Agreement at no additional cost to City. In the event that an error or omission attributable to
Consultant occurs, then Consultant shall, at no cost to City, provide all necessary design
drawings, estimates and other Consultant professional services necessary to rectify and correct
the matter to the sole satisfaction of City and to participate in any meeting required with regard
to the correction.
6.17. Prohibited Employment. Consultant will not employ any regular employee of
City while this Agreement is in effect.
6.18. Order of Precedence. In the event of an inconsistency in this Agreement and any
of the attached Exhibits, the terms set forth in this Agreement shall prevail. If, and to the extent
this Agreement incorporates by reference any provision of any document, such provision shall
be deemed a part of this Agreement. Nevertheless, if there is any conflict among the terms and
conditions of this Agreement and those of any such provision or provisions so incorporated by
reference, this Agreement shall govern over the document referenced.
6.19. Costs. Each party shall bear its own costs and fees incurred in the preparation
and negotiation of this Agreement and in the performance of its obligations hereunder except as
expressly provided herein.
6.20. No Third Party Beneficiary Rights. This Agreement is entered into for the sole
benefit of City and Consultant and no other parties are intended to be direct or incidental
beneficiaries of this Agreement and no third party shall have any right in, under or to this
Agreement.
6.21. Headings. Paragraphs and subparagraph headings contained in this Agreement
are included solely for convenience and are not intended to modify, explain or to be a full or
accurate description of the content thereof and shall not in any way affect the meaning or
interpretation of this Agreement.
6.22. Construction. The parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or interpretation arises with
respect to this Agreement, this Agreement shall be construed as if drafted jointly by the parties
and in accordance with its fair meaning. There shall be no presumption or burden of proof
favoring or disfavoring any party by virtue of the authorship of any of the provisions of this
Agreement.
6.23. Amendments. Only a writing executed by the parties hereto or their respective
successors and assigns may amend this Agreement.
6.24. Waiver. The delay or failure of either party at any time to require performance or
compliance by the other of any of its obligations or agreements shall in no way be deemed a
waiver of those rights to require such performance or compliance. No waiver of any provision
of this Agreement shall be effective unless in writing and signed by a duly authorized
representative of the party against whom enforcement of a waiver is sought. The waiver of any
right or remedy in respect to any occurrence or event shall not be deemed a waiver of any right
or remedy in respect to any other occurrence or event, nor shall any waiver constitute a
continuing waiver.
6.25. Severability. If any provision of this Agreement is determined by a court of
competent jurisdiction to be unenforceable in any circumstance, such determination shall not
affect the validity or enforceability of the remaining terms and provisions hereof or of the
offending provision in any other circumstance. Notwithstanding the foregoing, if the value of
this Agreement, based upon the substantial benefit of the bargain for any party, is materially
impaired, which determination made by the presiding court or arbitrator of competent
jurisdiction shall be binding, then both parties agree to substitute such provision(s) through good
faith negotiations.
6.26. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original. All counterparts shall be construed together and
shall constitute one agreement.
6.27. Corporate Authority. The persons executing this Agreement on behalf of the
parties hereto warrant that they are duly authorized to execute this Agreement on behalf of said
parties and that by doing so the parties hereto are formally bound to the provisions of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by
and through their respective authorized officers, as of the date first above written.
CITY OF COSTA MESA,
A municipal corporation
Date:
Chief Executive Officer, City of Costa Mesa
CONSULTANT
Date:
Signature
Name and Title
Social Security or Taxpayer ID Number
APPROVED AS TO FORM:
Date:
City Attorney
APPROVED AS TO INSURANCE:
Date:
Risk Management
APPROVED AS TO CONTENT:
Date:
Project Manager
EXHIBIT A
CONSULTANT'S PROPOSAL
EXHIBIT B
FEESCHEDULE
EXHIBIT C
PROJECT SCHEDULE
EXHIBIT D
CITY COUNCIL POLICY 100-5
SUBJECT
POLICY
EFFECTIVE
PAGE
NUMBER
DATE
DRUG-FREE WORKPLACE
100-5
8-8-89
1 of 3
BACKGROUND
Under the Federal Drug -Free Workplace Act of 1988, passed as part of omnibus drug legislation
enacted November 18, 1988, contractors and grantees of Federal funds must certify that they
will provide drug-free workplaces. At the present time, the City of Costa Mesa, as a sub -grantee
of Federal funds under a variety of programs, is required to abide by this Act. The City Council
has expressed its support of the national effort to eradicate drug abuse through the creation of a
Substance Abuse Committee, institution of a City-wide D.A.R.E. program in all local schools
and other activities in support of a drug-free community. This policy is intended to extend that
effort to contractors and grantees of the City of Costa Mesa in the elimination of dangerous
drugs in the workplace.
PURPOSE
It is the purpose of this Policy to:
1. Clearly state the City of Costa Mesa's commitment to a drug-free society.
2. Set forth guidelines to ensure that public, private, and nonprofit organizations receiving
funds from the City of Costa Mesa share the commitment to a drug-free workplace.
POLICY
The City Manager, under direction by the City Council, shall take the necessary steps to see that
the following provisions are included in all contracts and agreements entered into by the City of
Costa Mesa involving the disbursement of funds.
1. Contractor or Sub -grantee hereby certifies that it will provide a drug-free workplace by:
a. Publishing a statement notifying employees that the unlawful manufacture,
distribution, dispensing, possession, or use of a controlled substance is prohibited in
Contractor's and/or sub -grantee's workplace, specifically the job site or location
included in this contract, and specifying the actions that will be taken against the
employees for violation of such prohibition;
SUBJECT
POLICY
EFFECTIVE
PAGE
NUMBER
DATE
DRUG-FREE WORKPLACE
100-5
8-8-89
2 of 3
b. Establishing a Drug -Free Awareness Program to inform employees about:
1. The dangers of drug abuse in the workplace;
2. Contractor's and/or sub -grantee's policy of maintaining a drug-free workplace;
3. Any available drug counseling, rehabilitation and employee assistance programs;
and
4. The penalties that may be imposed upon employees for drug abuse violations
occurring in the workplace;
c. Making it a requirement that each employee to be engaged in the performance of the
contract be given a copy of the statement required by subparagraph A;
d. Notifying the employee in the statement required by subparagraph 1 A that, as a
condition of employment under the contract, the employee will:
1. Abide by the terms of the statement; and
2. Notify the employer of any criminal drug statute conviction for a violation
occurring in the workplace no later than five (5) days after such conviction;
e. Notifying the City of Costa Mesa within ten (10) days after receiving notice under
subparagraph 1 D 2 from an employee or otherwise receiving the actual notice of
such conviction;
f. Taking one of the following actions within thirty (30) days of receiving notice under
subparagraph 1 D 2 with respect to an employee who is so convicted:
1. Taking appropriate personnel action against such an employee, up to and
including termination; or
2. Requiring such employee to participate satisfactorily in a drug abuse assistance or
rehabilitation program approved for such purposes by a Federal, State, or local
health agency, law enforcement, or other appropriate agency;
SUBJECT
POLICY
EFFECTIVE
PAGE
NUMBER
DATE
DRUG-FREE WORKPLACE
100-5
8-8-89
3 of 3
g. Making a good faith effort to maintain a drug-free workplace through
implementation of subparagraphs 1 A through 1 F, inclusive.
2. Contractor and/or sub -grantee shall be deemed to be in violation of this Policy if the City
of Costa Mesa determines that:
a. Contractor and/or sub -grantee has made a false certification under paragraph 1
above;
b. Contractor and/or sub -grantee has violated the certification by failing to carry out
the requirements of subparagraphs 1 A through 1 G above;
c. Such number of employees of Contractor and/or sub -grantee have been convicted
of violations of criminal drug statutes for violations occurring in the workplace as
to indicate that the contractor and/or sub -grantee has failed to make a good faith
effort to provide a drug-free workplace.
Should any contractor and/or sub -grantee be deemed to be in violation of this Policy
pursuant to the provisions of 2 A, B, and C, a suspension, termination or debarment
proceeding subject to applicable Federal, State, and local laws shall be conducted. Upon
issuance of any final decision under this section requiring debarment of a contractor
and/or sub -grantee, the contractor and/or sub -grantee shall be ineligible for award of any
contract, agreement or grant from the City of Costa Mesa for a period specified in the
decision, not to exceed five (5) years. Upon issuance of any final decision
recommending against debarment of the contractor and/or sub -grantee, the contractor
and/or sub -grantee shall be eligible for compensation as provided by law.
APPENDIX "C"
A. STATEMENT OF WORK: (Narrative of work to be performed)
B. CONSULTANT'S DUTIES AND RESPONSIBILITIES:
C. FEE PROPOSAL
D. WORK PROGRAMJPROJECT SCHEDULE
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Prepared excluslvely for:
CITY OF COSTA MESA
CALIFORNIA
TECHNICAL PROPOSAL OF INDEPENDENTAUDIT SERVICES
TO THE
CITY OF COSTA MESA, CALIFORNIA
RFP#: 012612
Submitted by:
MAYER HOFFMAN McCANN P.C.
2301 DUPONT DR., SUITE 200
IRVINE, CALIFORNIA 92612
March 23, 2012
lLi
CONTACT PERSON -W JENNIFER FARR, SHAREHOLDER
PHONE NO: (949) 474-2020, EXT. 301
FACSIMILE NO: (949) 263-5520
9
EMAIL: jLarr"cbiz.com
?
WEBSITE: www.mhm-pe.com
MAYER HOFFMAN McCANN P.C.
CALIFORNIA LICENSE NO. CORP 5091
Mayan
MAYER HOFFMAN McCANN P.C.
Hoffman FEDERAL IDENTIFICATION NO. 43-1947695
McCann RC.
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Layer Hoffman McCann RC.
An Independent CPA Firm
2301 Dupont Drive, Suite 200
Irvine, California 92612
9494742020 ph
949263-5520 fx
www.mhm-pe.com
March 23, 2012
City of Costa Mesa
Julie Folcik, City Clerk
77 Fair Drive
Costa Mesa, CA 92626
Mayer Hoffman McCann P.C. is pleased to respond to your request to serve as the independent
auditors for the City of Costa Mesa for the fiscal years ending June 30, 2012 through 2014, with
[U optional extensions through 2016.
We are aware that while the City of Costa Mesa has solicited numerous proposals, Mayer
Hoffman McCann P.C. (MHM) would be your best selection for the following reasons which are
"F set forth in greater detail in our proposal:
Mayer Hoffman McCann's past experience auditing the City of Costa Mesa coupled
• with a change in the audit team puts us in a position to provide you a "fresh look" at the
audit while still retaining our institutional knowledge of your organization, your
systems, and your processes. You will spend no time training our staff or accumulating
permanent file records. Additionally, we understand your expectations and have a
LJ proven record of meeting your deadlines and providing excellent customer service.
• MHM takes a proactive leadership role in local government accounting and auditing
issues. We serve on the Government Accounting and Audit Committee of the Cal CPA
Society. MHM audits approximately 80 California municipal clients and are experts in
I E issues of redevelopment agency compliance and OMB Circular A-133 single audit
compliance.
• Mayer Hoffman McCann P.C. is a national CPA firm. In California, Mayer Hoffman
=$ McCann P.C. has offices in Los Angeles, Oxnard, Bakersfield, Irvine, San Diego and
a San Jose. More than 400 accounting and audit professionals serve clients from the
California offices. The government services practice of Mayer Hoffman McCann P.C.
is headquartered in Irvine, California and represents the former CPA practice of Conrad
and Associates, L.L.P.
! • MHM.'s audit team of Jennifer Farr, Engagement Shareholder, Ken Al -Imam,
Technical Review Shareholder, Dean Votava, Engagement Manager, and Ryan
Robinson, Field Manager, have a proven track record in serving California cities,
redevelopment agencies, special districts and housing authorities.
" • In addition to providing extensive local government and other audit and information
technology training for our staff, Mayer Hoffman McCann provides an annual
6n Governmental Accounting Standards Board (GASB) Technical Update each spring for
our clients.
l:J
9 Membedi" UY+Sra�cbsrl UrY'onts�Gnr , 7� �;k>pnd r?adovarit 4�inPJep�xtNt,r{Uec;ounr7n� firms
R. City of Costa Mesa
Page Two
r-
F • We believe our electronic trial balance software and IDEA software gives us a strategic
advantage over our competitors. We have the ability to upload your detailed trial
balance and map it to your financial statements. This allows us to create our own audit
lead schedules, perform analytical reviews, perform ratio analysis and evaluate the data
s= in other ways. Additionally, our new IDEA software allows us to upload data from
your payroll, payables, general ledger, and billing systems to evaluate anomalies in the
data (duplicate invoices, checks written on weekends, etc.). This system provides us
with a new tool for focusing our audit efforts on transactions that could be more
susceptible to fraud.
• Ms. Jennifer Farr, Shareholder and Mr. Ken Al -Imam, Shareholder are authorized
shareholders of Mayer Hoffman and are authorized to bind our Finn in contractual
matters with the City of Costa Mesa. Ms. Farr and Mr. Al -Imam are also authorized to
make representations for the Finn to the City of Costa Mesa.
Mayer Hoffman McCann P.C. thanks the City of Costa Mesa for the opportunity to present our
proposal qualifications and for the opportunity to be appointed as your independent auditors.
Our proposal remains a firm and irrevocable offer for 180 days. I look forward to you contacting
me so that I may answer further any questions which you may have. You may contact me at
mW (949) 474-2020, Ext. 301.
t
E,
Very truly yours,
MAYER HOFFMAN McCANN P.C.
{a7'--
T Jennifer Farr, CPA
Shareholder
REQUEST FOR PROPOSAL
VENDOR APPLICATION FORM
TYPE OF APPLICANT:
❑ NEW x0 CURRENT VENDOR
C
Legal Contractual Name of Corporation: Mayer Hoffman McCann P.C.
t` a
Contact Person for Agreement:
Jennifer Farr
Corporate Mailing Address:
2301 Dungnt Drive 00
R
City, State and Zip Code:
Irvine CA 92612
r€
E -Mail Address: JFarr@cbiz
. com
€w,
Phone: 949-474-2020 X 307
Fax: 949-263-5520
Contact Person for Proposals: Jenni f er Farr
Title: Shareholder
E -Mail Address: JFarr@cbiz.com
Business Telephone: _Same
Business Fax: Same
Li
Is your business: (check one)
d
ii
❑ NONPROFIT CORPORATION FOR PROFIT CORPORATION
Is your business: (check one)
fi
XQ CORPORATION
ElLIMITED LIABILITY PARTNERSHIP
❑ INDIVIDUAL
SOLE PROPRIETORSHIP
❑ PARTNERSHIP
El UNINCORPORATED ASSOCIATION
t,j
Names & Titles of Corporate Board Members
(Also list Names & Titles of persons with written authorization/resolution to sign contracts)
Names Title Phone
See Attached
Federal Tax Identification Number: 43-1947695
City of Costa Mesa Business License Number:
(If none, you must obtain a Costa Mesa Business License upon award of contract.)
City of Costa Mesa Business License Expiration Date:
1 of
Mayer Hoffman McCann P.C.
Board Resolution
The undersigned, being all members of the Board of Directors of Mayer
Hoffman McCann P.C., a Missouri professional corporation 'the Corporation", do
hereby approve and adopt the following resolution:
RESOLVED, that the shareholders of Mayer Hoffman McCann P.C. as
listed below are hereby authorized to sign and execute contracts to provide
professional services on behalf of the Corporation.
1.
Ken AI -Imam
2.
Michael Harrison
3.
Marcus Davis
4.
Michael Gutierrez
5.
Ron Rolwes
pp 6.
Jennifer Farr
7.
Matthew Lenton
8.
Jim Babcock
9.
Benjamin Reyes
10.
Sam Perera
11.
Dana Basney
Li
12. Jeffrey Baumgarten
13. James Comito
14. David Diamond
15. Steve Fanucchi
16. Robert Gellman
17. Mike Lichtenberger
18, Jim Putt
19. Stuart Starr
20. Timothy Willis
21. Laurie Hopkins
IN WITNESS WHEREOF, the undersigned have hereunto subscribed their names
effective as of March 23, 2011.
William L. Hancock
AowardH
,A
.FPaul E, Nation
15
T
Frank Maughan
y ebber
Mark Garten
PROPOSAL OF AUDIT SERVICES
TO THE
CITY OF COSTA MESA
TABLE OF CONTENTS
Section
Page
A
Background and Project Summary
I
B
Methodology and Audit Approach
5
C
Staffing
11
D
Qualifications
17
E
Fee Proposal
21
APPENDIX
Mayer Hoffman McCann P.C. Peer Review Report
Mayer Hoffinan McCann P.C. Peer Review Report—
California Local Government Audit Practice
Accounting Today's 2011 Top 100 Firms
=.i
SECTION A
BACKGROUND AND PROJECT SUMMARY
Our understanding of the objectives and scope of the work to be performed is based upon your
request for proposal.
Based upon the foregoing we understand the objectives and scope of work to be as follows:
1. We will perform an audit examination of the financial statements of the City of Costa
Mesa for the fiscal years ending June 30, 2012 through 2014, with optional extensions
through 2016. Our examination will be conducted in accordance with generally accepted
auditing standards, State Controller audit guidelines, the AICPA Audit and Accounting
Guide, Audits of State and Local Government Units, and the Government Auditing
Standards issued by the Comptroller General of the United States. We will prepare the
financial section of the financial statements. The City will prepare management
discussion and analysis, the introductory section and the statistical section of the report.
We will ensure that the CAFR is prepared in conformity with the most recent edition of
the GAAFR, the GAAFR Update, and subsequent GASB pronouncements. We will be
responsible for copying and binding the report. We will also provide the City with an
electronic copy of the report.
2. For the fiscal year ended June 30, 2012 only, we will perform a financial and compliance
audit of the governmental activities, each major fund and the aggregate remaining fund
information of the Costa Mesa Redevelopment Agency and a financial and compliance
audit of the Successor Agency activities for years subsequent to 2012. Our audit will be
conducted in accordance with auditing standards generally accepted in the United States,
Government Auditing Standards and the Guidelines for Compliance Audits of California
Redevelopment Agencies and Successor Agency guidelines that may be issued in the
future. We will draft and word process the Redevelopment Agency financial statements.
We will provide the City with bound copies of the report and an electronic copy of the
report in years that a report is required by the State Controller's Office.
5. We will perform a financial audit of the Costa Mesa Community Foundation for the year
ended June 30, 2012 and subsequent years. Our audit will be conducted in accordance
with auditing standards generally accepted in the United States, Government Auditing
(Standards. We will draft and word process the Community Foundation financial
,_
3. We will perform a financial audit of the governmental activities, each major fund and the
aggregate remaining fund information of the Costa Mesa Public Financing Authority for
..
the year ended June 30, 2012 and subsequent years. Our audit will be conducted in
accordance with auditing standards generally accepted in the United States, Government
Auditing Standards. We will draft and word process the Public Financing Authority
financial statements. We will provide the City with bound copies of the report and an
electronic copy of the report.
4. We will perform a financial and compliance audit of the governmental activities, each
major fund and the aggregate remaining fund information of the Costa Mesa Housing
Authority for the year ended June 30, 2012 and subsequent years. Our audit will be
conducted in accordance with auditing standards generally accepted in the United States,
Government Auditing Standards and the Guidelines for Compliance Audits of California
Redevelopment Agencies (for low and moderate income housing activities). We will draft
and word process the Housing Authority financial statements. We will provide the City
with bound copies of the report and an electronic copy of the report.
5. We will perform a financial audit of the Costa Mesa Community Foundation for the year
ended June 30, 2012 and subsequent years. Our audit will be conducted in accordance
with auditing standards generally accepted in the United States, Government Auditing
(Standards. We will draft and word process the Community Foundation financial
,_
[' p statements. We will provide the City with bound copies of the report and an electronic
copy of the report.
6. We will perform a financial audit of the Airborne Law Enforcement Services for the year
l ` ended June 30, 2012 through the termination of the entity. Our audit will be conducted in
m, accordance with auditing standards generally accepted in the United States, Government
µ Auditing Standards. We will draft and word process the ABLE financial statements. We
1= will provide the City with bound copies of the report and an electronic copy of the report.
We will perform a "Single Audit" of the City of Costa Mesa in accordance with the
Single Audit Act Amendments of 1996 (Public Law 104-156) and OMB Circular A-133
entitled Audits of States, Local Governments, and Non -Profits Organizations. Our single
audit will cover all federal grants received by the City and its component units either as a
primary or secondary recipient for fiscal year ended June 30, 2012 and subsequent years.
The City will provide to the Auditors the Schedule of Federal Financial Assistance
encompassing all direct and pass-through federal funds received by the City and
component units. We will render our reports on the single audit in accordance with the
single audit requirements. We will copy and bind copies of the report and provide an
electronic copy. We will also prepare the Data Collection Form and process the
electronic filing of the report.
8. We will perform agreed-upon procedures to test and report on the City's Gann Limit for
" € the year ended June 30, 2012 and subsequent years. We will provide the City with
„ E copies of the report.
9. We will test for compliance with AB 2766 and prepare a report on compliance for the
year ended June 30, 2012 and subsequent years. We will provide the City with copies of
the report.
10. We will prepare a letter to the City Council reporting matters dealing with internal
control that meet the threshold of being a significant deficiency or material weakness, as
defined by SAS No. 115. We will immediately report any irregularities or illegal acts that
come to our attention to the City Council.
11. We will also prepare a letter to City management that will provide other
recommendations to the City ensuing from our review of the City's internal control
procedures. This letter will address nonreportable conditions (those constructive
comments not required to be included in the letter of significant deficiencies to City
Council.
12. We will meet with the City Council or a committee of City Council to discuss the results
of the audit.
13. We desire to keep its local government clients abreast of new developments affecting
local government finance. We will also advise City staff of new accounting developments
during the interim/planning stage of each year's audit. We plan on providing additional
client training to our clients in our annual client training conference with respect to new
GASB pronouncements.
14. Finally, we perceive the scope of our work as being advisors to the City of Costa Mesa
regarding generally accepted accounting principles. Throughout the year, Bobby Young,
Finance Director and other finance personnel of the City, will have access to Ms. Farr,
Engagement Partner, Mr. Votava, Engagement Manager, and Mr. Robinson, Engagement
Senior, to seek advice in the application of generally accepted accounting principles, the
establishment and segregation of funds, advice regarding debt issuance, financial
statement preparation and content and other matters relating to the City.
IMPLEMENTATION OF NEW ACCOUNTING STANDARDS
Over the term of the contract, the City will be required to implement the following accounting
standards. Part of our service to you includes consulting on these new auditing standards. A
sampling of significant new GASB pronouncements planned or proposed for local governments
are listed below (already implemented Statements are.not listed):
GASB No. 57 — The major impacts of this Statement are to require that all employers that share
the same OPEB trust administrator must have their actuarial valuations performed as of the same
two year cycle. This Statement also permits an agent employer that has an individual -employer
OPEB plan with fewer than 100 total plan members to use the alternative measurement method,
at its option, regardless of the number of total plan members in the agent multiple -employer
OPEB plan in which it participates. This Statement is required to be effective for fiscal years
ending June 30, 2012.
GASB No. 60 — The major impacts of this Statement are to provide guidance for certain types of
situations where the government contracts with another party to provide certain government
services. This Statement is required to be effective for fiscal years ending June 30, 2013.
GASB No. 61 — The primary impacts of this Statement are to change the circumstances in which
a potential component unit would be considered for inclusion in the reporting entity of a local
r! government when the primary government does not appoint a voting majority of the potential
component unit's governing body. Such organizations would generally be considered for
inclusion only if they were fiscally dependent upon the primary government and there was a
potential for the unit to provide financial benefits to, or impose financial burdens on, the primary
government. However, this does not preclude a local government from including a potential
-+ component unit that did not meet any of the established criteria for inclusion if, in the
professional judgment of the local government, it would be misleading to exclude that potential
component unit based on the nature and significance of its relationship to the primary
LJ government.
This Statement also amends the criteria for blended component units. To be blended the
following criteria must generally be met: (1) the primary government and the component unit
must have a financial benefit or burden relationship or (2) management (below the level of the
elected officials) of the primary government must have operational responsibility for the
activities of the component unit.
Certain other technical modifications to the reporting entity rules are addressed in this Statement
as well. This Statement is required to be effective for fiscal years ending June 30, 2013.
GASB No. 62 — formally incorporates into the GASB's authoritative literature certain private
sector accounting and financial reporting guidance that were included in the private sector
pronouncements issued on or before November 30, 1989, but which do not conflict with or
e contradict GASB pronouncements. This Statement is required to be effective for fiscal years
ending June 30, 2013.
GASB No. 63 - This Statement renames the Statement of Net Assets as Statement of Net Position
and provides for separate sections after assets and liabilities for deferred inflows and outflows of
resources. This Statement is required to be effective for fiscal years ending June 30, 2013.
} GASB No. 64 — Allows hedge accounting to continue for swap agreements for which the
counterparty is replaced because it committed an act of default or caused a termination event (if
certain specified conditions are met). This Statement is required to be effective for fiscal years
ending June 30, 2012.
GASB Exposure Draft on Certain Deferred Items - Under this proposed new pronouncement,
r`- most deferred revenues, deferred refunding charges, debt issuance costs, the deferred elements of
the proposed new pension standard, and the deferred effects of hedging derivatives, will be
included in the two new sections on the statement of net position that were established by the
s issuance of GASB No. 63.
GASB Pension Project — The GASB has issued an exposure draft proposing major changes that
would affect how local governments report their obligation for pension benefits. Under current
standards, no liability is recognized for a local government's obligation for pension benefits
earned by employees as long as the local government has paid the actuarially determined annual
required contribution (ARC) for funding. Under the changes proposed by the GASB, beginning
with fiscal years ending June 30, 2014, most governments would begin reporting a liability in
their government -wide financial statements in an amount equal to the present value of projected
pension benefits attributable to employee service to date, less the fair value of assets held by the
pension plan as of the balance sheet date. Annual changes in this liability would affect the
determination of pension expense recognized in the government -wide financial statements,
except for certain changes associated with investment market fluctuations and certain actuarial
adjustments.
GASB Project to Consider Requiring Financial Projections in Financial Statements (RSI),-.
The GASB issued a preliminary views document to consider requiring that stated local
governments present five-year projections of cash inflows, cash outflows, and financial
obligations that would accompany their financial statements as required supplementary
information.
SECTION B
METHODOLOGY AND AUDIT APPROACH
The audit approach of Mayer Hoffman McCann P.C. is unique with regard to the following:
• Our firm is sensitive to the priorities and work requirements of our clients. We work
around the schedules of our clients when scheduling segments of the audit or
requesting documentation in order to minimize disruption in the Finance Department.
• Whenever possible, we use accounting support already prepared by the Finance
Department in order to avoid duplication or unnecessary requests for audit supporting
schedules.
• Because of our firm's expertise in local governmental auditing, our staff are trained
and familiar with local government accounting. You will spend no time in training
our personnel.
• Throughout the year we are a resource to our clients in providing accounting advice,
researching technical questions, dealing with tax problems, and helping with other
problems as they arise.
BENEFITS OF MRM AUDIT SOFTWARE
Mayer Hoffman McCann P.C. utilizes Caseware audit software for the electronic organization of
workpapers. We have the ability to accept audit documentation in either hard copy or electronic
format. Caseware allows us the ability to import trial balances that can be provided in either
? € excel or a text document. Some of the benefits of using Caseware trial balance software are as
follows:
• We can create our own lead sheets (for example, a schedule Due to/Due from other
funds). This limits the amount of time City staff spends creating audit schedules.
• We can link CAFR schedules directly to the Caseware trial balances. As a result, we
can provide the City with fund financial statements almost immediately after
receiving the trial balance from the City. Additionally, journal entries are easy to post
to the CAFR schedules and the risk of data entry error is minimized.
• We can provide the City with reports showing the coding of the CAFR schedules for
ease of review by City staff. These reports show each account coded to a specific
CAFR line item as well as journal entries that are posted during the audit.
• Our software automatically generates analytical review reports by account number for
ease of analyzing significant fluxuations between fiscal years.
`'"" • Creating color PDF's of final reports is a seamless process for our audit staff.
k"
• We can provide the City with draft audit reports soon after audit fieldwork is
=' completed.
€ a Additionally, we are excited to utilize our new IDEA software in FY 11(12 that will take source
data from your accounting system and scan the data for anomalies such as duplicate invoices and
r.,
checks written on non -payroll processing or cash disbursement processing days.
�[
F,
INTERNAL CONTROLS AND MANAGEMENT LETTER COMMENTS
During the interim audit for the year ended June 30, 2012, we plan to evaluate internal controls
m:mx
over the following primary transaction areas:
• Cash Receipting at City Hall locations
• Investment Management
• Infrastructure and Capitalization of Assets
• Purchasing
• Accounts Payable and Cash Disbursements Cycle
• Payroll Cycle/Human Resources
• Federal Grant Management
• Information Systems
In future years, we plan to follow up on changes in the above internal control areas and begin to
evaluate additional internal control areas based on risks identified by City Finance Staff, the City
Manager, and City Council. Some examples of additional areas we review are as follows:
Cash receipting at offsite locations:
o Parks and recreation locations
o Police department
o Parking
o Library
o Senior center
o Community center
o Other offsite locations
• Petty cash
• Credit card or Purchasing cards
• Administration of loan programs
• Internal service fund allocations and overhead cost reimbursements
• Debt compliance monitoring procedures
There are three categories of internal control recommendations. We work carefully with City
staff to ensure our classification of indentified weaknesses is correct. The categories are as
follows:
Control deficiency _ these are minor internal control weaknesses that can be communicated
either verbally to City Finance management or in writing, if preferred.
Significant deficiency — these internal control weaknesses must be communicated in
writing.
Material weakness — these internal control weaknesses must be communicated in writing
When formulating internal control recommendations, we obtain a thorough understanding of the
specific circumstances at your City in order to provide a tailored, practical recommendation. We
understand that there is commonly more than one acceptable way to correct an internal control
weakness. We work with City staff to ensure the recommendation is practical to implement.
KEY AUDIT PROCEDURES
Following our appointment as auditors of the City, Ms. Farr, Engagement Shareholder, and Mr,
Votava, Engagement Manager, will meet with Mr. Bobby Young, Finance Director and other key
Finance Department staff for the purpose of planning the audit of the City. Ms. Fan will also
communicate with City Council/Audit Committee during the planning stages of the audit in
accordance with SAS 114. In addition to establishing an effective and efficient communication
link with City personnel, the following will be accomplished:
- Dates for audit field work of the various audit examinations will be finalized.
Arrangements will be made with City personnel for the typing of confirmation requests.
We will determine a materiality level for the financial statements
- We will perform a risk assessment of the City of Costa Mesa
- Review minutes of the City Council
- We will perform tests of investment compliance
- Review important contracts and agreements. We will ensure these agreements have been
properly recorded under Government accounting standards.
Testing of purchase orders and contract management.
Performing testing of cash disbursements to determine adherence to policies and internal
controls
- We will perform an IT risk assessment of the City's information systems used by the
Finance Department.
- Testing the accuracy of water bills
- Performing test of payroll transactions to ensure amounts paid agree to personnel action
forms and that there are no unusual compensation practices
Performing required compliance and internal control testing relating to the federal grant
programs of the City
In September (after the final closing of the books and preparation of final trial balances by City
personnel), we will commence performing our year-end substantive audit. Our final examination
will include tests which we deem necessary, including:
- Confirmation of cash and investment balances.
- Testing of bank reconciliations.
- Testing of GASB 40 investment disclosures.
Testing of allocations of interest income to the various funds.
Examination of support and subsequent receipt (if any) of significant receivable balances.
7
- Analytical review of receivable balances
- Testing of interfund borrowings.
- Examination of interfund transfers and testing of transfers out of restricted funds.
- Performing a search for unrecorded liabilities.
- Testing of significant accrued liability accounts.
- Testing of long term debt balances and debt covenants.
- External verifications of bond compliance through the Electronic Municipal Market
Access (EMMA) database.
- Analytical review of interest expense.
- Consideration of support for compensated absences.
- Testing of actuarial valuations related to OPEB obligations.
- Examination of the valuation of claims and judgments.
[,: - Testing of additions and deletions to capital assets, including infrastructure.
VV
- Analysis of construction in process balances.
- Testing of support for other significant assets and liabilities of the City.
LJ
- Testing for the proper establishment of fund balance restricted, committed, and assigned
balances.
- Review of significant events after year end (through the completion of our audit).
- Review of attorney letters for significant legal matters affecting the City's financial
position.
- Testing of revenues and expenditures and lesser significant asset and liability balances
through analytical procedures and other substantive procedures as necessary.
- In cases where there are sensitive public policy issues, we modify planning materiality in
those areas to perform more extensive auditing procedures
- Procedures with respect to the risk of management override of internal controls
The aforementioned tests are only a few of the tests performed during the examination and by no
means is it meant to be all inclusive. During the audit, Ms. Fan and Mr. Votava will meet with
Mr. Bobby Young to review our audit findings, any adjusting journalentries, and pending audit
H issues.
REDEVELOPMENT AGENCY/SUCESSOR AGENCY AUDIT APPROACH
Recent legislation related to Redevelopment Agencies will have an impact on our approach to
auditing Redevelopment Agency transactions during the audit contract. For the year ended June
30, 2012, we will perform the following procedures:
- Review agreed -upon -procedures report for the dissolution of the redevelopment agency
and Enforceable Obligations schedule.
8
- Review journal entries to move assets and liabilities of the Redevelopment Agency to the
successor agency to ensure they agree with the findings in the above mentioned agreed-
upon -procedures report.
- Testing of transactions recorded prior to January 31, 2012 to determine compliance with
redevelopment law.
- Testing of transactions recorded after January 31, 2012 to determine allowability based on
the approved Enforceable Obligations schedule.
- Review City Council actions and Oversight Committee actions related to the dissolution of
the redevelopment agency.
- Audit the cash, investments, receivables, payables, and long-term liabilities, using similar
procedures noted on the previous page.
- Obtain City attorney guidance on areas that are unclear in the law
- Prepare audited financial statements for the successor agency, if required by the State
Controller's Office.
For fiscal years ending June 30, 2013 and later, our procedures will be modified as follows:
Review activities of the successor agency to ensure they are in compliance with state laws
and regulations.
Audit the cash, investments, receivables, payables, and long-term liabilities, using similar
procedures noted above.
- Perform analytical procedures of the revenues and expenses of the successor agency.
- Prepare audited financial statements for the successor agency, if required by the State
Controller's Office
OMB A-133 SINGLE AUDIT PROCEDURES
LJ
As a part of our Single Audit for the years in which the entity expends greater than $500,000 in
federal funding, we would supplement our approach with the following procedures in performing
€ ?
l the single audit. We understand there is an outstanding OMB proposal to increase the Single
Audit threshold to $1,000,000.
• Review all pertinent federal and AICPA publications including recent changes and updates.
• Perform a major program determination based on federal expenditures during the audit period
=j and the results of the last two single audits. This evaluation will involve consideration of the
complexity of the program, prior audit findings, changes in personnel, the competency of
personnel, the extent to which sub -recipients are used, the extent of overview and monitoring
by granting agencies, the extent of recent changes in program requirements, the newness of
the program, the size of the program, and the inherent risk of the program.
• Perform an online search for American Recovery Act Grants that have been awarded to the
District.
• Identify and obtain the major program compliance supplements and all up to date grant
compliance guidance available from the federal granting agency or other sources.
• Review internal controls for each of the 14 applicable compliance areas for each major
program
• Select a sample of transactions to test for each of the 14 applicable compliance areas.
• Test the entity's indirect cost rate, if applicable.
• Review monitoring reports for noncompliance and follow up on the resolution of the
noncompliance, if any.
• Prepare the single audit report and data collection form.
Extent of Samnlin
Our approach for audit sampling will vary depending on the transactions tested. When there are
a significant number of transactions, we will generally use a random sample generator to select a
sample of 40 transactions. At times, we will select the largest transactions in agiven class of
transactions to ensure that all material transactions have been tested. Other times, the audit risk
for a particular class of transactions is such that only certain transactions are susceptible to that
risk. In those cases, we will indentify the transactions at greatest risk, and test thosetransactions.
Timing of the FY 11/12 Audit
Planning meeting
Interim audit
Confirmations and detailed audit plan
Final fieldwork
Report preparation (in office)
Draft reports
Final reports
Meeting with City Council members
End of April
End of April
Early May
Weeks of Sept 3`d, 100' , and 17s'
Week of Sept 24t
By October 19d'
After approval of drafts
As scheduled
Segmentation of the Audit
Professional Hours and Segmentation of Audit
Interim Final Total Percentage
Partner
20
40
60
12%
Manager
30
50
80
16%
Senior Auditor
70
130
200
40%
Staff Auditors
50
110
160
32%
Total 170 330 500 100%
10
SECTION C
STAFFING
The successful outcome of any audit requires personnel with the managerial and technical skills
to perform the work required. The engagement team who will serve the City of Costa Mesa have
served together as a team of professionals on numerous financial audit examinations of local
government entities, including complex governmental agencies.
We believe that efficient administrative management and supervision of the audits is an
extremely critical factor in achieving the desired results for the City Council of the City of Costa
Mesa. In that regard, our proposal organizational structure for providing independent auditing
services is as follows:
City of Costa; Mesa
City Council r
_}
ETQ
ugagemgnt Partner
Jennifer Farr, CPAP MBA
Technical Review Partner
Ken Al -Imam, CPQ
Engagement Manager
Dean'-Votava, CPA
Field Manager ..
RyanRobmson CPA
Staff Auditor
a _
Each of the individuals proposed on the City of Costa Mesa audit work at least 75% of the time
on local government audit engagements.
Resumes of key audit team members are included on the following pages.
Il
California
ROLE ON PROJECT
JENNIFER FARR, CPA, MBA
No.
1998
Ms. Farr will serve as the Engagement Shareholder on this project. She will oversee the project
to ensure all required deadlines are met, provide technical assistance to the audit teams, and
review the final reports before they are released. Ms. Farr is a Certified Public Accountant with
over 15 years experience in local government auditing. Ms. Farr has been a speaker on matters
pertaining to technical issues and new GASB pronouncements. Ms. Farr is also responsible for
the firm -wide training for the Government Services Division of MHM in the area of local
governmental accounting and auditing.
PROFESSIONAL EXPERIENCE
• 15 years - Mayer Hoffman McCann P.C.
(formerly Conrad and Associates, LLP)
• 1 % Years - Ronald Blue and Co.
PROFESSIONAL AFFILIATIONS
• American Institute of Certified Public Accountants
• California Society of Certified Public Accountants
• California Society of Municipal Finance Officers
EDUCATION
• Bachelor of Arts - Business Administration/Accounting (California State University,
Fullerton)
• Bachelor of Arts - English (California State University, Fullerton)
• Masters of Business Administration (California State University, Fullerton)
AUDITS OF SPECIAL DISTRICTS
AUDITS OF CALIFORNIA CITIES
Coachella Valley Assoc of Governments
Inland Empire Utilities Agency
City of Benicia
City of Burbank
Mesa Consolidated Water District
City of Campbell
City of Culver City
Los Angeles Homeless Services Authority
City of Hayward
City of Half Moon Bay
City of Commerce
City of Indian Wells
City of Fountain Valley
City of Mission Viejo
City of Orange
City of Palm Springs
City of Pasadena
City of Rosemead
"f
City of San Bruno
City of Santee
City of Upland.
City of Walnut Creek
City of Whittier
City of West Covina
AUDITS OF SPECIAL DISTRICTS
Coachella Valley Assoc of Governments
Inland Empire Utilities Agency
Irvine Ranch Water District
Orange County Sanitation District
Mesa Consolidated Water District
Moulton Niguel Water District
Vista litigation District
Los Angeles Homeless Services Authority
San Diego Assoc of Governments
Southem California Assoc of Governments
12
SENAL IMAM, CPA
REVIEW SHAREHOLDER
ROLE ON PROJECT
Mr. Al -Imam will serve as the Technical Review Shareholder on the engagement. Mr. Al -Imam is an
active member and past president of CCMA (California Committee on Municipal Accounting). He has
made presentations in public hearings before the Governmental Accounting Standards Board (GASB)
and has been part of the committee contributing to the past two GASB implementation guides.
PROFESSIONAL EXPERIENCE
• 30 Years - Mayer Hoffman McCann P.C.
(formerly Conrad & Associates LLP)
EDUCATION
• Bachelor of Arts - Business Administration (Accounting)
California State University, Fullerton
PROFESSIONAL AFFILIATIONS
• American Institute of Certified Public Accountants
• California Society of Certified Public Accountants
• California Society of Municipal Finance Officers
• Governmental Accounting and Auditing Committee of the
Long Beach/Orange County Chapter of Cal -Society of CPA's
AUDITS OF CALIFORNIA CITIES
City of Torrance
City of Pasadena
City of Costa Mesa
City of Upland
City of Laguna Beach
City of Buena Park
Town of Yucca Valley
City of Carson
City of El Cajon
City of Rialto
City of Rancho Mirage
City of Carlsbad
City of San Marcos
City of La Verne
City of Escondido
City of Lake Forest
AUDITS OF WATER/SEWER AGENCIES
Orange County Sanitation District
Rancho California Water District
Santa Margarita Water District
Coachella Valley Water District
13
City of Newport Beach
City of La Quinta
City of Laguna Hills
City of Santa Ana
City of Downey
City of Norwalk
City of Hemet
City of San Gabriel
City of Gilroy
City of Santee
City of Whittier
City of La Puente
City of Orange
City of Palm Springs
City of Burbank
City of Indian Wells
West Basin Municipal Water District
Eastern Municipal Water District
Cucamonga Valley Water District
Big Bear Regional Wastewater Authority
DEAN VOTA VA, CPA
SENIOR MANAGER
California PA Certificate 64413E
EDUCATION AND EXPERIENCE
• Bachelor of Business Administration Degree (BBA) -
Accounting - University of North Dakota, Grand Forks,
North Dakota
• Over 20 years government auditing experience Mayer
Hoffman McCann P.C. (previously Conrad and Associates,
LLP)
• Member of California Society of CPA's
• Member of American Institute of CPA's
• Associate Member of California Society of Municipal
Finance Officers
Mr. Votava spends the majority of his time managing audits in the local government and grants
area. He has twenty-four years of audit experience. The
E = p types of audits Mr. Votava manages
LP include: financial audits of cities, housing authorities, redevelopment agencies and special districts;
grant specific audits of funds awarded by Federal, state, and county governments; Single Audits in
-1 accordance with OMB Circular A-133; and project specific audits for certain properties owned or
managed by individual housing authorities.
During his twenty-four years of experience, Mr. Votava had managed financial statements audit and
OMB Circular A-133 Single Audits for a number of significant local government entities. Some of
the more significant audit engagements managed by Mr. Votava include the following:
City of Riverside City of San Bernardino
City of Orange City of Costa Mesa
Ci of Santa Ana
City City of Palm Springs
Coachella Valley Water District Santa Margarita Water District
t City of Carlsbad City of Indio
`,,
W Ci of Norwalk
City City of Pomona
He also has significant experience working with federal grant programs typically awarded to local
governments. These federal programs include: Community Development Block Grant; Federal
Asset Forfeiture; Highway Planning and Construction; HOME Program; Section 8 Tenant Based
programs; Section 8 Project Based programs; Low Rent Conventional Housing; and Capital Grants.
Mr. Votava has also performed and managed a variety of other governmental audits including audits
of Job Training Partnership Act (JTPA) service providers, audits of Office of Criminal Justice
Planning Recipients (OCJP), financial and compliance audits performed for the U.S. Department of
Health and Human. Services and the County of Orange alcohol and drug abuse service contractors.
Mr. Votava regularly participates in the activities sponsored by the California Society of Municipal
Finance Officers and has performed as a reviewer of Cities submitting under the CSMFO Award
Program for Excellence in Financing Reporting. He also serves as an instructor at the Mayer
Hoffman McCann P.C. National Governmental Audit Training Courses.
14
t = RYAN ROBINSON, CPA
FIELD MANAGER
° California CPA Certificate No. 105429, July 2009
' ROLE ON PROJECT
Mr. Robinson would serve as the In -Charge of the City of Costa Mesa and performed the annual
audit for the fiscal year ended June 30, 2011. Mr. Robinson has been assigned responsibility to
numerous audits and special assignments. This experience has encompassed financial audits of
governmental entities, compliance audits of grants, audits of nonprofit organizations, and single
audits. Each of the audits included a review of the entity's internal controls, financial
management system and preparation of audited financial statements.
PROFESSIONAL EXPERIENCE
• 5 years - Mayer Hoffman McCann P.C.
• Bachelor of Science, Accounting— Azusa Pacific
University
AUDITS OF CALIFORNIA CITIES
City of Burbank
City of Carson
4saF
City of Costa Mesa
City of Hawaiian Gardens
nF City of Mission Viejo
City of Moreno Valley
� City of Newport Beach
1�i City of Orange
City of Santa Monica
AUDITS OF SPECIAL PURPOSE GOVERNMENTS
Irvine Ranch Water District
Santa Margarita Water District
South Coast Water District
San Diego Association of Governments
Sunline Transit Agency
L.A. County Parks and Open Spaces District
Housing Authority of City of Los Angeles
15
Trainine - All individuals assigned to the City of Costa Mesa audit will have 40 hours of
government specific CPE every year, which is in excess of the required 24 hours for audits of
governmental agencies. All members of the engagement team are current on their CPE
requirements. The following is a listing of continuing professional education for the past four
years for the proposed engagement team:
16
Staff
X
X
X
X
M
Attended by
Dates
CPE Class
Fair
Al_imam
Votava
Robinson
Jan 2008
Risk assessment audit training
X
X
X
X
Jan 2008
Internal controls and fraud protection
X
X
X
X
(
}}
Jan 2008
Accounting and auditing issues of nonprofits
X
X
X
X
e
March 2008
CSMFO annual conference
X
X
X
April 2008
Local government audit training I
X
X
X
X
May 2008
2008 GASB update
X
X
X
X
June 2008
MEM accounting & audit national conference
X
w
July 2008
Local goverment audit training II
X
X
X
X
LI
Jan 2009
2009 Local government audit training I
X
X
X
X
Feb 2009
CSMFO annual conference
X
X
May 2009
2009 GASB update
X
X
X
X
:µt
July 2009
2009 Local government audit training II
X
X
X
X
s
Jan 2010
Fraud training
X
X
X
[,
Jan 2010
Accounting and auditing issues of nonprofits
X
X
X
m�
Jan 2010
2010 Local government audit training I
X
X
X
Feb 2010
CSMFO annual conference
X
X
Ij
June 2010
GASB Update
X
X
X
X
July 2010
2010 Local government audit training II
X
X
X
X
L'i
Jan 2011
Accounting and audit update
X
X
X
X
Jan 2011
Fraud training
X
Feb 2011
CSMFO annual conference
X
X
Apri12011
2011 Local government audit training I
X
X
X
July 2011
2011 Local government audit training II
X
X
X
July 2011
CBIZ MHM Annual Conference
X
X
2011
4 Executive Education Series Classes
X
X
l�
Feb 2012
2012 Local government audit training I
X
X
X
X
Feb 2012
CSMFO annual conference
X
X
X
16
Staff
X
X
X
X
M
SECTION D
QUALIFICATIONS
Mayer Hoffman •McCann P.C. is a National CPA Firm. The firm is independently owned and
operated through its 275 shareholders. The firm began in Kansas City, Missouri in 1954. After
years of steady growth the Firm expanded into a National Practice. Mayer Hoffman McCann
P.C. currently operates from 35 offices throughout the United States and is licensed in all 50
States. Mayer Hoffman McCann P.C. is closely aligned with CBIZ (NYSE:CBZ). The 275
shareholders in 35 Mayer Hoffinan McCann P.C. offices direct the resources of approximately
2000 Accounting and Audit professionals who services the attest clients of Mayer Hoffinan
McCann P.C.
The Western Region Office of Mayer Hoffman McCann P.C. work closely together in servicing
clients and sharing professional resources among offices. Those offices locations are as follows:
•
Irvine California (Government services headquarters)
•
Irvine, California (SEC services headquarters)
•
Los Angeles, California
•
Bakersfield, California
•
Oxnard, California
•
San Diego, California
•
San Jose, California
€i •
Salt Lake City, Utah
i:Pi •
Phoenix, Arizona
•
Tucson, Arizona
The Western Region offices have more than 425 professional accounting and audit personnel
available to the 56 shareholders of Mayer Hoffman McCann P.C. in the ten Western Region
offices.
MHM plans to provide the audit services to the City of Costa Mesa from full-time staff operating
out of our Irvine office. The Irvine office joined MHM on January 1, 2006. This office is the
former CPA practice of Conrad and Associates, L.L.P., a 35 year old CPA firm which has been
nationally and locally recognized for its expertise in governmental accounting and auditing. The
Irvine office is the technical and practice unit designated within MHM for governmental
expertise and training for MHM on a national level. A breakdown of the Irvine Office's
personnel by classification is as follows:
Classification \uuibcq.ul'
Flliplovees
rs...��a nr s
Senior Managers
Managers
Seniors
Staff
:44MjR
Administrative sun ort
Totalpersonnel
All of the Shareholders in the Irvine office focus their efforts on Government auditing.
Approximately 7510 of all work performed out of the Irvine office is Government auditing.
17
INDEPENDENCE
9"r Mayer Hoffman McCann P.C. is independent with respect to the City of Costa Mesa and all
component units as defined by generally accepted auditing standards/the U.S. General
Accounting Office's Government Auditing Standards.
LICENSE TO PRACTICE IN CALIFORNIA
Mayer Hoffman McCann P.C. and all assigned key professional staff are licensed to practice in
California.
QUALITY CONTROL
Mayer Hoffman McCann P.C. is a National CPA Firm and ranked among the top 10 Accounting
Service Providers in the country. MHM adheres to the strict quality control measures and high
professional standards of the Public Company Accounting Oversight Board (PCAOB), the
American Institute of Certified Public Accountants (AICPA), and the California State Board of
Accountancy (as well as other states when applicable). Our Firm is a member of the AICPA's
Center for Public Company's Audit firms, Employee Benefit Plan Audit Quality Center,
Governmental Audit Quality Center and the AICPA's Private Company Practice Section (PCPS).
As a member of the Private Companies Practice Section and PCAOB our audit procedures and
working papers are regularly examined by another CPA firm in the firm -on -firm peer review
program. The most recent Peer Review performed did cover the governmental auditing practice
of this office. In addition, all aspects of the firm's quality control practices have been reviewed,
including the firm's commitment to extensive training programs. In every member firm, each
member of the professional staff must enroll in continuous professional education courses. Each
is required to take at least 120 hours of classes over a three-year period. Courses cover a wide
spectrum of professional and technical subjects, and include Fraud Auditing, Professional Ethics
and Governmental Accounting and Auditing topics to help the practitioner maintain his/her
professional expertise.
111
The results of reviews of the audit work conducted by our California government audit practice
by regulatory agencies indicate that our audit work substantially met the requirements of the
auditing standards, except for one review conducted by the California State Controller with
f respect to Mayer Hoffman McCann P.C.'s financial statement audit that was performed for
the
X City of Bell for the year ended June 30, 2009. We documented our disagreement with the
conclusions of that review in our response to the State Controller's report. In response to the
issues related to the City of Bell, MHM engaged an independent CPA firm to evaluate the quality
Fii of the audit work performed by MHM with respect to its local government audit practice in
California. Carr, Riggs & Ingram, LLC concluded that the audit work performed by MHM with
respect to its local government audit practice in California conformed to professional auditing
standards and our system of quality control. This report has been included in the Appendix
section of this proposal. Additionally, a copy of Mayer Hoffman McCann P.C.'s firm wide
Quality Control Review report is included in this proposal.
18
SIMILAR ENGAGEMENTS WITH OTHER GOVERNMENTAL ENTITIES
.. Mayer Hoffman McCann P.C. has over thirty years of experience in the audits of local
government units (all funds audit examinations of cities including single audits performed under
-° OMB Circular A-133, financial and compliance audits of California Redevelopment Agencies,
audit examinations of public housing authorities, joint powers authorities and special districts).
Among the Cities which the Irvine office of MHM has served during the past two years are the
following:
@ All Funds Examinations of California Cities in (by County)
s -c
Orange County
Orange County, Continued
City of Aliso Viejo
City of Mission Viejo
City of Costa Mesa
City of Newport Beach
City of Fountain Valley
City of Orange
City of Garden Grove
City of Rancho Santa Margarita
City of Laguna Beach
City of Villa Park
Los Angeles County
Los Angeles County, Continued
City of Burbank
City of La Verne
City of Beverly Hills
City of Pasadena
City of Commerce
City of Santa Monica
City of Compton
City of Temple City
City of Culver City
City of Torrance
City of Inglewood
City of West Covina
San Bernardino County
Riverside County
City of Highland
City of Hemet
City of Redlands
City of Indian Wells
City of Upland
City of Indio
City of Santee
City of Rancho Mirage
City of San Marcos
City of Riverside
San Diego County
Other Counties
City of Carlsbad
City of Benicia
City of Escondido
City of Campbell
City of National City
City of Gilroy
City of Santee
City of Half Moon Bay
City of San Marcos
City of Hayward
City of Solana Beach
City of San Bruno
19
CLIENT REFERENCES
The Irvine office of Mayer Hoffman McCann P.C. recently performed the annual audit for the
following client references.
Shareholder/ Approximate
Name of Client/Contact Manager Annual Budget
1. City of Fountain Valley Farr/Inga $75 million
Sherri Holman
Finance Director
(714)593-4501
sherri holmanCUountainvallev org
Annual audit services from 2007-2011 (current client). On March 20, 2012, Fountain Valley
City Council approved a new five year contract starting in 2012.
2. City of Mission Viejo Farr/Robinson
Patricia Brunell
Accounting Manager
(949) 470-3059
Lbranell ci ofmissionvie'`o or
Annual audit services from 2008-2010 and previously from 1999-2003.
3. City of Commerce Farr/Parsons
Vilko Domic
Finance Director
(323) 722-4508
vilkod ci.commerce.ca.us
$80 million
$80 million
Annual audit services from 2006-2011 (current client). Commerce City Council approved a
new five year contract starting in 2011.
4. City of Torrance
Eric Tsao
Finance Director
(310) 618-5850
etsau a?� t�anceca gov
Al-Imam/Dobrenen $375 million
Annual audit services from 1998-2011 (current client).
5. City of Burbank Farr/Lenton
Dino Balos
Manager of Accounting and Audit
(818) 238-5850
db�urbank ca us
Annual audit services from 2006-2011.
20
$800 million
SECTION E
FEE PROPOSAL
The following is a summary or our fixed fee (including out-of-pocket expense) for
performing the audit engagement for the City of Costa Mesar
Description of Services Provided
Estimated
Costs for
Costs for
Shareholder
Hours
FY 11/12
FY 12/13
Audit of the C'
200
$ 19,000
22,040
Pre ration of the CAFR
50
4,750
4,850
Audit & Financial Report of the Costa Mesa
20
1,900
1,940
Comm Foundation
Audit & Financial Report of the Costa Mesa
30
2,850
2,910
Public Financing Authority
Audit & Financial Report of the Costa Mesa
40
3,800
3,880
Hous' Author'
OMB Circular A-133 Single Audit of Federal
40
3,80
3,880
Grants of the C' (b)
Other Reports
20
1,900
1,940
Audit & Financial Report of the Costa Mesa
80
7,600
Redevelopment Agency (a)
Audit & Financial Report of the Airborne Law
20
1,900
1,940
Enforcement Agency ABLE (c)
Total (Not to Exceed)
500
$47,500
43,380
(a) Certain audit costs associated with the Redevelopment Audit have been
x transferred to the City (Successor Agency) in years subsequent to 2012, as there
,.€ will be some ongoing financial statement and compliance auditing required for the
Successor Agency.
(b) The Single Audit fee contemplates 1-2 major programs. Additional major
programs can be tested at $1,500 per program.
(c) Audit fee for ABLE will be eliminated when the audit is no longer required.
A 2% audit fee increase per year would be applicable for each subsequent year.
The following discounted hourly rates by professional staff were used to determine the cost
noted above:
Classification
Standard
Hourly Rate
Discount
Discounted
Hourly Rate
Shareholder
$325
$135
$180
Manager
180
60
120
Senior Auditor
125
25
100
Associate Auditor
95
10
85
21
ONR2rersonLLP
Certified Public Accountants & Consultant,
System Review Report
To the Shareholders of Mayer Hoffman McCann P.C.
and the AICPA National Peer Review Committee
We have reviewed the system of quality control for the accounting and auditing practice of
Mayer Hoffman McCann P.C. (the Firm) applicable to non -SEC issuers in effect for the year
ended April 30, 2011. Our peer review was conducted in accordance with the Standards for
Performing and Reporting on Peer Reviews established by the Peer Review Board of the
American Institute of Certified Public Accountants. The Firm is responsible for designing a
system of quality control and complying with it to provide the Firm with reasonable assurance of
performing and reporting in conformity with applicable professional standards in all material
respects. Our responsibility is to express an opinion on the design of the system of quality
control and the Firm's compliance therewith based on our review. The nature, objectives, scope,
IJ limitations of, and the procedures performed in a System Review are described in the standards
at www.aicpa.org/prsummary.
r'l
As required by the standards, engagements selected for review included engagements
performed under the Government Auditing Standards; audits of employee benefit plans, and
r—v audits performed under FDICIA.
In our opinion, the system of quality control for the accounting and auditing practice of Mayer
'i Hoffman McCann P.C. applicable to non -SEC issuers in effect for the year April 30, 2011, has
been suitably designed and complied with to provide the Firm with reasonable assurance of
performing and reporting in conformity with applicable professional standards in all material
f respects. Firms can receive a rating of pass, pass with deficiency(W) or fail. Mayer Hoffman
McCann P.C. has received a peer review rating of pass.
August 12, 2011
€ 10700 lim=b Dr., Suite 700
!J
Mihpaukee, Wueonnn B276
tel: 414.476.1880
fax: 414.476.7286
[[ dse nnrr YE P� Ir,ian.
ea
A
t.?
Ilk I I INGRAM
CPAs and Advisers
INDEPENDENT ACCOUNTANT'S REPORT
To the Board of Directors of
Mayer Hoffman McCann P.C.
Can,, Biggs & &pram, UZ
4010 N.W. 25th nate
Ga"sieaNll9. Florida 3260&
P.O. Box 13494
GamWlle, Rarida 32604
(352)372.63W
13521375.10 (fox)
v cricpax.rc
We have examined management's assertion regarding the California Municipal
Audit Practice of Mayer Hoffman McCann P.C. that:
"the system of quality control for the accounting and auditing practice
applicable to municipal audits performed by the California offices of Mayer
Hoffman McCann P.C. in effect for the year ended October 31, 2010, has
been designed to meet the requirements of the quality control standards and
requirements set forth in Government Auditing Standards, issued by the
Comptroller General of the United States, referred to as generally accepted
governmental auditing standards (GALAS); U.S. generally accepted auditing
standards (GARS); Office of Management and Budget (OMB) Circular A-133,
Audits of States, Local Governments and Non -Profit Organizations; and the
California Business and Professional Code. The system of quality control
was also complied with during the year ended October 31, 2010, to provide
the firm with reasonable assurance of complying with the applicable
professional standards"
Mayer Hoffman McCann P.C: s management is responsible for the assertion. Our
responsibility is to express an opinion on the assertion based on our
examination.
Our examination was conducted in accordance with attestation standards
established by the American Institute of Certified Public Accountants and,
accordingly, included examining, on a test basis, evidence supporting
management's assertion and performing such other procedures as we
considered necessary in the circumstances. We believe that our examination
provides a reasonable basis for our opinion; however, our examination does not
provide a legal determination on compliance with the requirements of specified
laws, regulations or rules.
In our opinion, management's assertion referred to above is fairly stated, in all
material respects, based on the criteria set forth above.
a Gainesville, Florida
March 3, 2011
r.
5 5 RSM/McGlsdray&PUlensBloomatgtm,Wnn. CArd wrJD.Swddes I.April 1 $1,378.87 .5.60 1 88 1 742 4,895 7,130 1 43. _35 21 1
6 6 Grent Thamton a Chicago Stephen Chipman
THE
2011 accountingmw TOP 100 FIRMS
RANK
REVENUE
PERSONNEL
FEE SPLIT
Year $ % Off-
Part- Profes- Total
(in percent)
11
10 Firm
HeadgParteGsChief. executiveend,......,mo:...._ .ch$.n Ices
nersw psionalr .,.emus.,,,
A&A Tax�f�lAS Oth
1
1 Deloltte §
New York City Barry Selzber Dec $10,938.00 2.01 100
2,883 33,688 45,730
34 21 41 4
:418 1 77A,. 42411
29 ' 27 50 0',
itJ
New.Ycrk City Robert Mornz June SSB 034 00 -2 27 73
2;204 21
3
3 Ernst & Young §
New York City James Turley June $7,100.00 -6.82 77
2,300 17,500 24,600.
42 32 20 6
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Y;a Key and notes: Last year's rankings have been revised based on 2009 revenue provided by firms. Some firms' rankings will therefore differ from those reported last year.
• Firm estimate or projection f Accounting Today estimate 3 Gross revenue NC No change NA Not available/appficable NR Not ranked
1 Renamed from PdcewaterhouseCoopers. Partner and staff figures and related metrics have been restated for current and previous years to exclude global partners/staff
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An Independent CPA Firm
www.cbiz.com www.mhm-pc.com
02011 SourceMedia, Inc. and Accounting Today. All rights reserved. SourceMedta, One State Street Plaza, New York, N.Y. 10004 (800) 367-3989
PROFESSIONAL SERVICES AGREEMENT
CITY OF COSTA MESA
THIS AGREEMENT is made and entered into this 16th day of May, 2012 ("Effective
Date"), by and between the CITY OF COSTA MESA, a municipal corporation ("City"), and
Mayer Hoffman McCann, P.C. ("Consultant").
WITNESSETH:
A. WHEREAS, City proposes to have Consultant perform the services described herein
below; and
B. WHEREAS, Consultant represents that it has that degree of specialized expertise
contemplated within California Government Code, Section 37103, and holds all necessary
licenses to practice and perform the services herein contemplated; and
C. WHEREAS, City and Consultant desire to contract for the specific services described in
Exhibit "A" (the "Project") and desire to set forth their rights, duties and liabilities in connection
with the services to be performed; and
D. WHEREAS, no official or employee of City has a financial interest, within the provisions
of California Government Code, Sections 1090-1092, in the subject matter of this Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and conditions
contained herein, the parties hereby agree as follows:
1.0. SERVICES PROVIDED BY CONSULTANT
1.1. Scope of Services. Consultant shall provide the professional services described in
Consultant's Proposal, a copy of which is attached hereto as Exhibit "A" and incorporated herein
by this reference.
1.2. Professional Practices. All professional services to be provided by Consultant
pursuant to this Agreement shall be provided by personnel experienced in their respective fields
and in a manner consistent with the standards of care, diligence and skill ordinarily exercised by
professional consultants in similar fields and circumstances in accordance with sound
professional practices. It is understood that in the exercise of every aspect of its role, within the
scope of work, consultant will be representing the City of Costa Mesa, and all of its actions,
communications, or other work, during its employment, under this contract is under the direction
of the department. Consultant also warrants that it is familiar with all laws that may affect its
performance of this Agreement and shall advise City of any changes in any laws that may affect
Consultant's performance of this Agreement.
1.3. Performance to Satisfaction of Citv. Consultant agrees to perform all the work to
the complete satisfaction of the City and within the hereinafter specified. Evaluations of the
work will be done by the City Clerk or her designee. If the quality of work is not satisfactory,
City in its discretion has the right to:
(a) Meet with Consultant to review the quality of the work and resolve the
matters of concern;
(b) Require Consultant to repeat the work at no additional fee until it is
satisfactory; and/or
(c) Terminate the Agreement as hereinafter set forth.
1.4. Warranty. Consultant warrants that it shall perform the services required by this
Agreement in compliance with all applicable Federal and California employment laws including,
but not limited to, those laws related to minimum hours and wages; occupational health and
safety; fair employment and employment practices; workers' compensation insurance and safety
in employment; and all other Federal, State and local laws and ordinances applicable to the
services required under this Agreement. Consultant shall indemnify and hold harmless City from
and against all claims, demands, payments, suits, actions, proceedings, and judgments of every
nature and description including attorneys' fees and costs, presented, brought, or recovered
against City for, or on account of any liability under any of the above-mentioned laws, which
may be incurred by reason of Consultant's performance under this Agreement.
1.5. Non-discrimination. In performing this Agreement, Consultant shall not engage
in, nor permit its agents to engage in, discrimination in employment of persons because of their
race, religion, color, national origin, ancestry, age, physical handicap, medical condition, marital
status, sexual gender or sexual orientation, except as permitted pursuant to Section 12940 of the
Government Code.
1.6. Non -Exclusive Agreement. Consultant acknowledges that City may enter into
agreements with other consultants for services similar to the services that are subject to this
Agreement or may have its own employees perform services similar to those services
contemplated by this Agreement.
1.7. Delegation and Assignment. This is a personal service contract, and the duties set
forth herein shall not be delegated or assigned to any person or entity without the prior written
consent of City. Consultant may engage a subcontractor(s) as permitted by law and may employ
other personnel to perform services contemplated by this Agreement at Consultant's sole cost
and expense.
1.8. Confidentiality. Employees of Consultant in the course of their duties may have
access to financial, accounting, statistical, and personnel data of private individuals and
employees of City. Consultant covenants that all data, documents, discussion, or other
information developed or received by Consultant or provided for performance of this Agreement
are deemed confidential and shall not be disclosed by Consultant without written authorization
by City. City shall grant such authorization if disclosure is required by law. All City data shall
be returned to City upon the termination of this Agreement. Consultant's covenant under this
Section shall survive the termination of this Agreement.
2.0. COMPENSATION AND BILLING
2.1. Compensation. As compensation for the provision of services outlined in Exhibit
A and in accordance with this agreement, Consultant shall be paid in accordance with the fees set
forth in Exhibit `B". Consultant's total compensation shall not exceed One hundred thirty-five
thousand one hundred twenty-eight ($135,128.00).
PJ
2.2. Additional Services. Consultant shall not receive compensation for any services
provided outside the scope of services specified by the Response unless the City or the Project
Manager for this Project, prior to Consultant performing the additional services, approves such
additional services in writing. It is specifically understood that oral requests and/or approvals of
such additional services or additional compensation shall be barred and are unenforceable.
2.3. Method of Billing. Consultant may submit invoices to City's Project Manager for
approval on a progress basis, but no more often than monthly. Said invoice shall be based on the
total of all Consultant's services which have been completed to City's sole satisfaction as of the
date the invoice is created. City shall pay Consultant's invoice within forty-five (45) days from
the date City receives said invoice. Each invoice shall describe in detail, the services performed,
the date of performance, and the associated time for completion. Any additional services
approved and performed pursuant to this Agreement shall be designated as "Additional Services"
and shall identify the number of the authorized change order, where applicable, on all invoices.
2.4. Records and Audits. Records of Consultant's services relating to this Agreement
shall be maintained in accordance with generally recognized accounting principles and shall be
made available to City or its Project Manager for inspection and/or audit at mutually convenient
times for a period of three (3) years from the Effective Date.
3.0. TIME OF PERFORMANCE
3.1. Commencement and Completion of Work. The professional services to be
performed pursuant to this Agreement shall commence within five (5) days from the Effective
Date of this Agreement. The Project Schedule may be amended by mutual agreement of the
parties. Failure to commence work in a timely manner and/or diligently pursue work to
completion may be grounds for termination of this Agreement.
3.2. Excusable Delays. Neither party shall be responsible for delays or lack of
performance resulting from acts beyond the reasonable control of the party or parties. Such acts
shall include, but not be limited to, acts of God, fire, strikes, material shortages, compliance with
laws or regulations, riots, acts of war, or any other conditions beyond the reasonable control of a
party.
4.0. TERM AND TERMINATION
4.1. Term. This Agreement shall commence on the Effective Date and continue for a
period of three (3) years ending on May 16, 2015, unless previously terminated as provided
herein or as otherwise agreed to in writing by the parties.
4.2. Notice of Termination. The City reserves and has the right and privilege of
canceling, suspending or abandoning the execution of all or any part of the work contemplated
by this Agreement, with or without cause, at any time, by providing written notice to Consultant.
The termination of this Agreement shall be deemed effective upon receipt of the notice of
termination. In the event of such termination, Consultant shall immediately stop rendering
services under this Agreement unless directed otherwise by the City.
3
4.3. Compensation. In the event of termination, City shall pay Consultant for
reasonable costs incurred and professional services satisfactorily performed up to and including
the date of City's written notice of termination. Compensation for work in progress shall be
prorated as to the percentage of work completed as of the effective date of termination in
accordance with the fees set forth herein. In ascertaining the professional services actually
rendered hereunder up to the effective date of termination of this Agreement, consideration shall
be given to both completed work and work in progress, to complete and incomplete drawings,
and to other documents pertaining to the services contemplated herein whether delivered to the
City or in the possession of the Consultant.
4.4. Documents. In the event of termination of this Agreement, all documents
prepared by Consultant in its performance of this Agreement including, but not limited to,
finished or unfinished design, development and construction documents, data studies, drawings,
maps and reports, shall be delivered to the City within ten (10) days of delivery of termination
notice to Consultant, at no cost to City. Any use of uncompleted documents without specific
written authorization from Consultant shall be at City's sole risk and without liability or legal
expense to Consultant.
5.0. INSURANCE
5.1. Minimum Scope and Limits of Insurance. Consultant shall obtain, maintain, and
keep in full force and effect during the life of this Agreement all of the following minimum
scope of insurance coverages with an insurance company admitted to do business in California,
rated "A," Class X, or better in the most recent Best's Ivey Insurance Rating Guide, and
approved by City:
(a) Commercial general liability, including premises -operations,
products/completed operations, broad form property damage, blanket
contractual liability, independent contractors, personal injury or bodily
injury with a policy limit of not less than One Million Dollars
($1,000,000.00), combined single limits, per occurrence. If such insurance
contains a general aggregate limit, it shall apply separately to this
Agreement or shall be twice the required occurrence limit.
(b) Business automobile liability for owned vehicles, hired, and non -owned
vehicles, with a policy limit of not less than One Million Dollars
($1,000,000.00), combined single limits, per occurrence for bodily injury
and property damage.
(c) Workers' compensation insurance as required by the State of California.
Consultant agrees to waive, and to obtain endorsements from its workers'
compensation insurer waiving subrogation rights under its workers'
compensation insurance policy against the City, its officers, agents,
employees, and volunteers arising from work performed by Consultant for
the City and to require each of its subcontractors, if any, to do likewise
under their workers' compensation insurance policies.
(d) Professional errors and omissions ("E&O") liability insurance with policy
limits of not less than One Million Dollars ($1,000,000.00) combined
m
single limits, per occurrence and aggregate. Architects' and engineers'
coverage shall be endorsed to include contractual liability. If the policy is
written as a "claims made" policy, the retro date shall be prior to the start
of the contract work. Consultant shall obtain and maintain, said E&O
liability insurance during the life of this Agreement and for three years
after completion of the work hereunder.
5.2. Endorsements. The commercial general liability insurance policy and business
automobile liability policy shall contain or be endorsed to contain the following provisions:
(a) Additional insureds: "The City of Costa Mesa and its elected and
appointed boards, officers, officials, agents, employees, and volunteers are
additional insureds with respect to: liability arising out of activities
performed by or on behalf of the Consultant pursuant to its contract with
the City; products and completed operations of the Consultant; premises
owned, occupied or used by the Consultant; automobiles owned, leased,
hired, or borrowed by the Consultant.."
(b) Notice: "Said policy shall not terminate, be suspended, or voided, nor
shall it be cancelled, nor the coverage or limits reduced, until thirty (30)
days after written notice is given to City.
(c) Other insurance: "The Consultant's insurance coverage shall be primary
insurance as respects the City of Costa Mesa, its officers, officials, agents,
employees, and volunteers. Any other insurance maintained by the City of
Costa Mesa shall be excess and not contributing with the insurance
provided by this policy."
(d) Any failure to comply with the reporting provisions of the policies shall
not affect coverage provided to the City of Costa Mesa, its officers,
officials, agents, employees, and volunteers.
(e) The Consultant's insurance shall apply separately to each insured against
whom claim is made or suit is brought, except with respect to the limits of
the insurer's liability.
5.3. Deductible or Self Insured Retention. If any of such policies provide for a
deductible or self-insured retention to provide such coverage, the amount of such deductible or
self insured retention shall be approved in advance by City. No policy of insurance issued as to
which the City is an additional insured shall contain a provision which requires that no insured
except the named insured can satisfy any such deductible or self-insured retention.
5.4. Certificates of Insurance: Consultant shall provide to City certificates of
insurance showing the insurance coverages and required endorsements described above, in a
form and content approved by City, prior to performing any services under this Agreement.
5.5. Non -limiting: Nothing in this Section shall be construed as limiting in any way,
the indemnification provision contained in this Agreement, or the extent to which Consultant
may be held responsible for payments of damages to persons or property.
5
6.0. GENERAL PROVISIONS
6.1. Entire Agreement: This Agreement constitutes the entire Agreement between the
parties with respect to any matter referenced herein and supersedes any and all other prior
writings and oral negotiations. This Agreement may be modified only in writing, and signed by
the parties in interest at the time of such modification. The terms of this Agreement shall prevail
over any inconsistent provision in any other contract document appurtenant hereto, including
exhibits to this Agreement.
6.2. Representatives. The Chief Executive Officer or his or her designee shall be the
representative of City for purposes of this Agreement and may issue all consents, approvals,
directives and agreements on behalf of the City, called for by this Agreement, except as
otherwise expressly provided in this Agreement.
Consultant shall designate a representative for purposes of this Agreement who
shall be authorized to issue all consents, approvals, directives and agreements on behalf of
Consultant called for by this Agreement, except as otherwise expressly provided in this
Agreement.
6.3. Project Managers. City shall designate a Project Manager to work directly with
Consultant in the performance of this Agreement.
Consultant shall designate a Project Manager who shall represent it and be its
agent in all consultations with City during the term of this Agreement. Consultant or its Project
Manager shall attend and assist in all coordination meetings called by City.
6.4. Notices: Any notices, documents, correspondence or other communications
concerning this Agreement or the work hereunder may be provided by personal delivery,
facsimile or mail and shall be addressed as set forth below. Such communication shall be
deemed served or delivered: a) at the time of delivery if such communication is sent by personal
delivery; b) at the time of transmission if such communication is sent by facsimile; and c) 48
hours after deposit in the U.S. Mail as reflected by the official U.S. postmark if such
communication is sent through regular United States mail.
IF TO CONSULTANT:
Mayer Hoffman McCann, P.C.
2301 Dupont Drive, Suite 200
Irvine, CA 92612
Tel: 949-474-2020
Fax: 949-263-5520
Attn: Ken Al -Imam
IF TO CITY:
City of Costa Mesa
77 Fair Drive
Costa Mesa, CA 92626
Tel: 714-754-5243
Fax: 714-754-5040
Attn: Bobby Young
6.5. Drug-free Workplace Policy. Consultant shall provide a drug-free workplace by
complying with all provisions set forth in City's Council Policy 100-5, attached hereto as Exhibit
"C" and incorporated herein by reference. Consultant's failure to conform to the requirements
set forth in Council Policy 100-5 shall constitute a material breach of this Agreement and shall
be cause for immediate termination of this Agreement by City.
0
6.6. Attorneys' Fees: In the event that litigation is brought by any party in connection
with this Agreement, the prevailing party shall be entitled to recover from the opposing party all
costs and expenses, including reasonable attorneys' fees, incurred by the prevailing party in the
exercise of any of its rights or remedies hereunder or the enforcement of any of the terms,
conditions, or provisions hereof.
6.7. Governing Law: This Agreement shall be governed by and construed under the
laws of the State of California without giving effect to that body of laws pertaining to conflict of
laws. In the event of any legal action to enforce or interpret this Agreement, the parties hereto
agree that the sole and exclusive venue shall be a court of competent jurisdiction located in
Orange County, California.
6.8. Assignment: Consultant shall not voluntarily or by operation of law assign,
transfer, sublet or encumber all or any part of Consultant's interest in this Agreement without
City's prior written consent. Any attempted assignment, transfer, subletting or encumbrance
shall be void and shall constitute a breach of this Agreement and cause for termination of this
Agreement. Regardless of City's consent, no subletting or assignment shall release Consultant of
Consultant's obligation to perform all other obligations to be performed by Consultant hereunder
for the term of this Agreement.
6.9. Indemnification and Hold Harmless Consultant agrees to defend, indemnify, hold
free and harmless the City, its elected officials, officers, agents and employees, at Consultant's
sole expense, from and against any and all claims, actions, suits or other legal proceedings
brought against the City, its elected officials, officers, agents and employees arising out of the
performance of the Consultant, its employees, and/or authorized subcontractors, of the work
undertaken pursuant to this Agreement. The defense obligation provided for hereunder shall
apply without any advance showing of negligence or wrongdoing by the Consultant, its
employees, and/or authorized subcontractors, but shall be required whenever any claim, action,
complaint, or suit asserts as its basis the negligence, errors, omissions or misconduct of the
Consultant, its employees, and/or authorized subcontractors, and/or whenever any claim, action,
complaint or suit asserts liability against the City, its elected officials, officers, agents and
employees based upon the work performed by the Consultant, its employees, and/or authorized
subcontractors under this Agreement, whether or not the Consultant, its employees, and/or
authorized subcontractors are specifically named or otherwise asserted to be liable.
Notwithstanding the foregoing, the Consultant shall not be liable for the defense or
indemnification of the City for claims, actions, complaints or suits arising out of the sole active
negligence or willful misconduct of the City. This provision shall supersede and replace all other
indemnity provisions contained either in the City's specifications or Consultant's Proposal,
which shall be of no force and effect.
6.10. Independent Contractor. Consultant is and shall be acting at all times as an
independent contractor and not as an employee of City. Consultant shall have no power to incur
any debt, obligation, or liability on behalf of City or otherwise act on behalf of City as an agent.
Neither City nor any of its agents shall have control over the conduct of Consultant or any of
Consultant's employees, except as set forth in this Agreement. Consultant shall not, at any time,
or in any manner, represent that it or any of its or employees are in any manner agents or
employees of City. Consultant shall secure, at its sole expense, and be responsible for any and all
payment of Income Tax, Social Security, State Disability Insurance Compensation,
Unemployment Compensation, and other payroll deductions for Consultant and its officers,
agents, and employees, and all business licenses, if any are required, in connection with the
7
services to be performed hereunder. Consultant shall indemnify and hold City harmless from any
and all taxes, assessments, penalties, and interest asserted against City by reason of the
independent contractor relationship created by this Agreement. Consultant further agrees to
indemnify and hold City harmless from any failure of Consultant to comply with the applicable
worker's compensation laws. City shall have the right to offset against the amount of any fees
due to Consultant under this Agreement any amount due to City from Consultant as a result of
Consultant's failure to promptly pay to City any reimbursement or indemnification arising under
this paragraph.
6.11. PERS Eli ig bility Indemnification. In the event that Consultant or any employee,
agent, or subcontractor of Consultant providing services under this Agreement claims or is
determined by a court of competent jurisdiction or the California Public Employees Retirement
System (PERS) to be eligible for enrollment in PERS as an employee of the City, Consultant
shall indemnify, defend, and hold harmless City for the payment of any employee and/or
employer contributions for PERS benefits on behalf of Consultant or its employees, agents, or
subcontractors, as well as for the payment of any penalties and interest on such contributions,
which would otherwise be the responsibility of City.
Notwithstanding any other agency, state or federal policy, rule, regulation, law or
ordinance to the contrary, Consultant and any of its employees, agents, and subcontractors
providing service under this Agreement shall not qualify for or become entitled to, and hereby
agree to waive any claims to, any compensation, benefit, or any incident of employment by City,
including but not limited to eligibility to enroll in PERS as an employee of City and entitlement
to any contribution to be paid by City for employer contribution and/or employee contributions
for PERS benefits.
6.12. Coo erp atiol7. In the event any claim or action is brought against City relating to
Consultant's performance or services rendered under this Agreement, Consultant shall render
any reasonable assistance and cooperation which City might require.
6.13. Ownership of Documents. All findings, reports, documents, information and data
including, but not limited to, computer tapes or discs, files and tapes furnished or prepared by
Consultant or any of its subcontractors in the course of performance of this Agreement, shall be
and remain the sole property of City. Consultant agrees that any such documents or information
shall not be made available to any individual or organization without the prior consent of City.
Any use of such documents for other projects not contemplated by this Agreement, and any use
of incomplete documents, shall be at the sole risk of City and without liability or legal exposure
to Consultant. City shall indemnify and hold harmless Consultant from all claims, damages,
losses, and expenses, including attorneys' fees, arising out of or resulting from City's use of such
documents for other projects not contemplated by this Agreement or use of incomplete
documents furnished by Consultant. Consultant shall deliver to City any findings, reports,
documents, information, data, in any form, including but not limited to, computer tapes, discs,
files audio tapes or any other Project related items as requested by City or its authorized
representative, at no additional cost to the City.
6.14. Public Records Act Disclosure: Consultant has been advised and is aware that all
reports, documents, information and data including, but not limited to, computer tapes, discs or
files furnished or prepared by Consultant, or any of its subcontractors, and provided to City may
be subject to public disclosure as required by the California Public Records Act (California
Government Code Section 6250 et. seq.). Exceptions to public disclosure may be those
N.
documents or information that qualify as trade secrets, as that term is defined in the California
Government Code Section 6254.7, and of which Consultant informs City of such trade secret.
The City will endeavor to maintain as confidential all information obtained by it that is
designated as a trade secret. The City shall not, in any way, be liable or responsible for the
disclosure of any trade secret including, without limitation, those records so marked if disclosure
is deemed to be required by law or by order of the Court.
6.15. Conflict of Interest. Consultant and its officers, employees, associates and
subconsultants, if any, will comply with all conflict of interest statutes of the State of California
applicable to Consultant's services under this agreement, including, but not limited to, the
Political Reform Act (Government Code Sections 81000, et seq.) and Government Code Section
1090. During the term of this Agreement, Consultant and its officers, employees, associates and
subconsultants shall not, without the prior written approval of the City Representative, perform
work for another person or entity for whom Consultant is not currently performing work that
would require Consultant or one of its officers, employees, associates or subconsultants to
abstain from a decision under this Agreement pursuant to a conflict of interest statute.
6.16. Responsibility for Errors. Consultant shall be responsible for its work and results
under this Agreement. Consultant, when requested, shall furnish clarification and/or explanation
as may be required by the City's representative, regarding any services rendered under this
Agreement at no additional cost to City. In the event that an error or omission attributable to
Consultant occurs, then Consultant shall, at no cost to City, provide all necessary design
drawings, estimates and other Consultant professional services necessary to rectify and correct
the matter to the sole satisfaction of City and to participate in any meeting required with regard
to the correction.
6.17. Prohibited Employment. Consultant will not employ any regular employee of
City while this Agreement is in effect.
6.18. Order of Precedence. In the event of an inconsistency in this Agreement and any
of the attached Exhibits, the terms set forth in this Agreement shall prevail. If, and to the extent
this Agreement incorporates by reference any provision of any document, such provision shall be
deemed a part of this Agreement. Nevertheless, if there is any conflict among the terms and
conditions of this Agreement and those of any such provision or provisions so incorporated by
reference, this Agreement shall govern over the document referenced.
6.19. Costs. Each party shall bear its own costs and fees incurred in the preparation and
negotiation of this Agreement and in the performance of its obligations hereunder except as
expressly provided herein.
6.20. No Third Party Beneficiary Rights. This Agreement is entered into for the sole
benefit of City and Consultant and no other parties are intended to be direct or incidental
beneficiaries of this Agreement and no third party shall have any right in, under or to this
Agreement.
6.21. Headings. Paragraphs and subparagraph headings contained in this Agreement
are included solely for convenience and are not intended to modify, explain or to be a full or
accurate description of the content thereof and shall not in any way affect the meaning or
interpretation of this Agreement.
9
6.22. Construction. The parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or interpretation arises with
respect to this Agreement, this Agreement shall be construed as if drafted jointly by the parties
and in accordance with its fair meaning. There shall be no presumption or burden of proof
favoring or disfavoring any party by virtue of the authorship of any of the provisions of this
Agreement.
6.23. Amendments. Only writing executed by the parties hereto or their respective
successors and assigns may amend this Agreement.
6.24. Waiver. The delay or failure of either party at any time to require performance or
compliance by the other of any of its obligations or agreements shall in no way be deemed a
waiver of those rights to require such performance or compliance. No waiver of any provision of
this Agreement shall be effective unless in writing and signed by a duly authorized representative
of the party against whom enforcement of a waiver is sought. The waiver of any right or remedy
in respect to any occurrence or event shall not be deemed a waiver of any right or remedy in
respect to any other occurrence or event, nor shall any waiver constitute a continuing waiver.
6.25. Severability. If any provision of this Agreement is determined by a court of
competent jurisdiction to be unenforceable in any circumstance, such determination shall not
affect the validity or enforceability of the remaining terms and provisions hereof or of the
offending provision in any other circumstance. Notwithstanding the foregoing, if the value of
this Agreement, based upon the substantial benefit of the bargain for any party, is materially
impaired, which determination made by the presiding court or arbitrator of competent
jurisdiction shall be binding, then both parties agree to substitute such provision(s) through good
faith negotiations.
6.26. Counterparts. This Agreement maybe executed in one or more counterparts, each
of which shall be deemed an original. All counterparts shall be construed together and shall
constitute one agreement.
6.27. Corporate Authority. The persons executing this Agreement on behalf of the
parties hereto warrant that they are duly authorized to execute this Agreement on behalf of said
parties and that by doing so the parties hereto are formally bound to the provisions of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by
and through their respective authorized officers, as of the date first above written.
CITY OF COSTA MESA,
A municipal corporation
Chief Executive Officer
City of Costa Mesa
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Date:
CONSULTANT
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Date:
Signature
Name and Title
Social Security or Taxpayer ID Number
APPROVED AS TO FORM:
Date:
City Attorney
APPROVED AS TO INSURANCE:
Date:
Risk Management
APPROVED AS TO CONTENT:
Date:
Finance & I.T. Director/Project Manager
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EXHIBIT A
CONSULTANT'S PROPOSAL
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FEESCHEDULE
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EXHIBIT C
CITY COUNCIL POLICY 100-5
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DRUG-FREE WORKPLACE
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BACKGROUND
Under the Federal Drug -Free Workplace Act of 1988, passed as part of omnibus drug legislation
enacted November 18, 1988, contractors and grantees of Federal funds must certify that they will
provide drug-free workplaces. At the present time, the City of Costa Mesa, as a sub -grantee of
Federal funds under a variety of programs, is required to abide by this Act. The City Council has
expressed its support of the national effort to eradicate drug abuse through the creation of a
Substance Abuse Committee, institution of a City-wide D.A.R.E. program in all local schools
and other activities in support of a drug-free community. This policy is intended to extend that
effort to contractors and grantees of the City of Costa Mesa in the elimination of dangerous drugs
in the workplace.
PURPOSE
It is the purpose of this Policy to:
1. Clearly state the City of Costa Mesa's commitment to a drug-free society.
2. Set forth guidelines to ensure that public, private, and nonprofit organizations receiving
funds from the City of Costa Mesa share the commitment to a drug-free workplace.
POLICY
The City Manager, under direction by the City Council, shall take the necessary steps to see that
the following provisions are included in all contracts and agreements entered into by the City of
Costa Mesa involving the disbursement of funds.
1. Contractor or Sub -grantee hereby certifies that it will provide a drug-free workplace by:
a. Publishing a statement notifying employees that the unlawful manufacture,
distribution, dispensing, possession, or use of a controlled substance is prohibited in
Contractor's and/or sub -grantee's workplace,
included in this contract, and specifying the
employees for violation of such prohibition;
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specifically the job site or location
actions that will be taken against the
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b. Establishing a Drug -Free Awareness Program to inform employees about:
1. The dangers of drug abuse in the workplace;
2. Contractor's and/or sub -grantee's policy of maintaining a drug-free workplace;
3. Any available drug counseling, rehabilitation and employee assistance programs;
and
4. The penalties that may be imposed upon employees for drug abuse violations
occurring in the workplace;
c. Malting it a requirement that each employee to be engaged in the performance of the
contract be given a copy of the statement required by subparagraph A;
d. Notifying the employee in the statement required by subparagraph 1 A that, as a
condition of employment under the contract, the employee will:
1. Abide by the terms of the statement; and
2. Notify the employer of any criminal drug statute conviction for a violation
occurring in the workplace no later than five (5) days after such conviction;
e. Notifying the City of Costa Mesa within ten (10) days after receiving notice under
subparagraph 1 D 2 from an employee or otherwise receiving the actual notice of
such conviction;
f. Taking one of the following actions within thirty (30) days of receiving notice under
subparagraph 1 D 2 with respect to an employee who is so convicted:
1. Taking appropriate personnel action against such an employee, up to and
including termination; or
2. Requiring such employee to participate satisfactorily in a drug abuse assistance or
rehabilitation program approved for such purposes by a Federal, State, or local
health agency, law enforcement, or other appropriate agency;
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g. Malting a good faith effort to maintain a drug-free workplace through implementation
of subparagraphs 1 A through I F, inclusive.
2. Contractor and/or sub -grantee shall be deemed to be in violation of this Policy if the City
of Costa Mesa determines that:
a. Contractor and/or sub -grantee has made a false certification under paragraph 1
above;
b. Contractor and/or sub -grantee has violated the certification by failing to carry out
the requirements of subparagraphs 1 A through 1 G above;
c. Such number of employees of Contractor and/or sub -grantee have been convicted
of violations of criminal drug statutes for violations occurring in the workplace as
to indicate that the contractor and/or sub -grantee has failed to make a good faith
effort to provide a drug-free workplace.
3. Should any contractor and/or sub -grantee be deemed to be in violation of this Policy
pursuant to the provisions of 2 A, B, and C, a suspension, termination or debarment
proceeding subject to applicable Federal, State, and local laws shall be conducted. Upon
issuance of any final decision under this section requiring debarment of a contractor
and/or sub -grantee, the contractor and/or sub -grantee shall be ineligible for award of any
contract, agreement or grant from the City of Costa Mesa for a period specified in the
decision, not to exceed five (5) years. Upon issuance of any final decision
recommending against debarment of the contractor and/or sub -grantee, the contractor
and/or sub -grantee shall be eligible for compensation as provided by law.
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