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

Agenda Item # 10.4
For Council Meeting of: May 4, 2010

CITY OF SANTA ROSA
CITY COUNCIL

TO: MAYOR AND CITY COUNCIL
SUBJECT: CONTRACT EXTENSION – FINANCIAL AUDIT SERVICES
STAFF PRESENTER: JIM WRIGHT, PURCHASING AGENT, FINANCE
DEPARTMENT

AGENDA ACTION: RESOLUTION
_____________________________________________________________________

ISSUE(S)

Shall the City of Santa Rosa extend Contract No. 06-8366 for financial audit services
with Macias Gini & O’Connell LLP, Walnut Creek, California, for a one-year period with
a reduction in rates in the amount of $150,000, and waive competitive bidding and on a
sole source basis, extend the contract for an additional one-year period to the same firm
in the amount of $155,000? Total amount of award is $305,000.

BACKGROUND

1. On March 21, 2006, Request for Proposals (RFP) 05-06-20, solicited by the City of
Santa Rosa for financial audit services, was awarded by the City Council to Macias
Gini & Company LLP for a three-year term through March 31, 2009.

2. Additional services were added and the contract extended through March 31, 2010
in Amendment Numbers 1, 2 and 3, and the name of the firm changed to Macias
Gini & O’Connell LLP.

3. The contract terms state the contract may be extended for one additional one-year
term upon agreement of the contractual parties.

4. The City Council and the Finance Department require outside auditing services to
audit all of the City funds including the Housing Authority and Redevelopment
Agency. In addition, the audit firm is to issue the required opinion letters in order for
the City to satisfy the requirements to issue a ‘single audit” edition of its General
Purpose Financial Statement.

5. Funding for audit services is available in the FY 2009-10 operational budgets of the
various departments that utilize these services, and will be available in future year
budgets when approved by Council.



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ANALYSIS

1. The City performed a comprehensive RFP in 2006 which identified Macias Gini &
Company LLP, now Macias Gini & O’Connell LLP, as offering the best value for
auditing services, of the four firms that submitted proposals, and a contract
award was approved by Council. The performance of Macias Gini & O’Connell
LLP, over the contract term has been satisfactory.

2. Macias Gini & O’Connell LLP, has submitted a request to renew the contract for
an additional two-year period, with a decrease in contract rates. Rates would be

$150,000 for the first one-year period, which is a 5% decrease from current
contract rates, and rates for the second one-year period would be $155,000,
which is a 1% decrease from current contract rates. The current U.S. Bureau of
Labor Statistics All Urban Consumer Price Index (CPI-U) for San
Francisco/Oakland/San Jose indicates a 4% increase over the same period last
year, so the offered contract rates with decreases seem beneficial to the City.

3. The contract was originally bid for up to a five-year term, and the first one-year
extension recommended would be the fifth year of this five-year term. The
second one-year extension recommended would extend the contract for up to a
six-year term, and is an option should the Council consider this second one-year
extension in the best interest of the City. This second one-year extension would
require a waiver of competitive bids, and a sole source award.

4. Staff recommends both one-year extensions as in the best interest of the City
due to what appear to be favorable rates, and in addition for the second one-year
extension, timing purposes. The City is currently configuring and implementing a
new financial software system, and staff is expected to be actively engaged in
learning and integrating this new system well into next fiscal year. To consider
changing auditors would require the City to undergo a comprehensive and time-
consuming request for proposals (RFP) process the middle of next Fiscal Year
2010-11, which could negatively impact the timely and full integration of the new
system. In addition, the consistency offered by having the same auditors during
the transition from the last year of the existing financial system to the first year of
the new system could be hugely beneficial to the City. This consistency in
auditors could identify inconsistencies and problems areas associated with the
transition, and improve the quality of the audit for the first year with the new
financial system.

5. The recommended contract extensions if approved by Council would provide

financial auditing services to the City through March 31, 2012. Staff expects that
for following year auditing services, an RFP would be performed in the middle of
Fiscal Year 2011-12 to allow interested firms to propose financial auditing
services for the City. The timing for this RFP process would be much better than
if performed the middle of next Fiscal Year 2010-11, considering the
considerable staff time involved, assuming the new financial software system will
have been fully integrated.
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6. The City and Macias Gini & O’Connell LLP, entered into an agreement on April 1,
2006, awarded by the City Council. See contract activity chart below:

Award/Amendment Date Description Amount Authorization

Contract Award Apr. 1,
2006
Award
(3-Year Term)
$446,809 City Council
Amendment No. 1 Sept. 26,
2007
Add Services $5,126 Finance
Director
Amendment No. 2 Oct. 8,
2008
Add Services $33,746 City Manager

Amendment No. 3 April 14,
2009
Contract
Extension
(1-Year Term)

$158,315 City Council
Amendment No. 4 Pending Contract
Extension
(1
st
Year)
$150,000
City Council
Amendment No. 4 Pending Contract
Extension
(2
nd
Year)
$155,000
City council

Total Cumulative Value
Pending Amendment No. 4
$948,996



4. The City Purchasing Agent issued Amendment No. 4, in the amount of
$305,000 to extend the contract for an additional two-year term with a decrease

in contract rates. With approval of Amendment No. 4, the cumulative value of the
contract will be $948,996. Under the City’s Contract/Purchase Order
Modification Policy, Amendment No. 4 requires approval by Council.

RECOMMENDATION

This resolution, recommended by the Finance Department, extends Contract No. 06-
8366 for financial audit services with Macias Gini & O’Connell LP, Walnut Creek,
California for a one-year period in an amount of $150,000 with a reduction in rates,
and waives competitive bidding and on a sole source basis, extends the contract for
an additional one-year period to the same firm in the amount of $155,000. Total
amount of award is $305,000. Funding for audit services is available in the FY
2009-10 operational budgets of the various departments that use the services, and
will be available in future budgets when approved by Council.

Author: Jim Wright, x3706
Attachments:

• Amendment No. 4

• Exhibit E
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