HomeMy WebLinkAbout11-18-2014 C9 Cost Allocation PlanCity of San Luis Obispo, Council Agenda Report, Meeting Date, Item Number
FROM: Wayne Padilla, Finance and Information Technology Director
SUBJECT: APPROVE AGREEMENT FOR CENTRAL SERVICE COST ALLOCATION
PLAN DEVELOPMENT AND LABOR RATE DEVELOPMENT SERVICES
BETWEEN THE CITY AND MAHONEY & ASSOCIATES, LLC.
RECOMMENDATION
Approve the agreement with Mahoney & Associates for a 5 year term to provide annual cost
allocation plan development services and the development of annual labor rates that are used to
bill services to outside entities and grants.
DISCUSSION
On September 2, 2014 the City Council authorized the release of a Request for Proposal
document (RFP) to obtain proposals from qualified firms for the preparation of the annual cost
allocation plan and the annual labor rate calculations. The cost allocation plan is utilized each
year to determine the amount of overhead cost recovery that will be obtained from the City’s
enterprise funds for the administrative, financial, legal, human resource and project support
services that are provided to these programs by various General Fund departments. The
development of a legally defensible basis for apportioning these costs to outside departments is a
critical piece of the City’s annual budget development process.
A separate calculation of the annual labor rates utilizes information obtained during the
development of the cost allocation plan and the results are utilized solely for the purpose of
establishing the amounts to be billed to outside agencies and to certain grant programs for labor
costs. This information does not influence or affect staff salary or benefit proposals nor is it used
during the labor negotiation process.
Background
In response to the RFP, the City received proposals from 5 firms. The pricing proposals provided
by each firm are shown below.
Mahoney CBIZ* Willdan* Matrix** NBS*
1st Year $10,500 $11,660 $14,340 $15,000 $14,880
2nd Year $10,500 $11,660 $14,340 $15,000 $11,450
3rd Year $11,500 $12,010 $14,340 $15,000 $11,450
4th Year $11,500 $12,370 $14,340 $15,000 $11,450
5th Year $11,500 $12,740 $14,340 $15,000 $11,450
$55,500 $60,440 $71,700 $75,000 $60,680
*fee includes travel costs for on-site visits
** Matrix provided a lower bid assuming no on-site visits were made after year 1.
Mahoney & Associates has been successfully preparing the cost allocations for the City in recent
years and provided the most responsive proposal in light of their understanding of the scope of
11/18/14
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AGREEMENT FOR CENTRAL SERVICE COST ALLOCATION PLAN DEVELOPMENT AND LABOR
RATE DEVELOPMENT SERVICES Page 2
work and the fee proposal. Their typical travel costs have been $640 and $664 during the last two
years.
FISCAL IMPACT
The proposed fee for the preparation of the Cost Allocation Plan and the Labor Rates offered by
Mahoney & Associates, including travel costs, is within the $12,000 budgeted for this service in
the Finance & Information Technology Department Budget for the current year.
ALTERNATIVE
Do not approve the use of Mahoney and Associates and recommend another consultant. This
option is an allowable option provided that the fee proposal is less than or equal to the amount
that is budgeted for this service.
ATTACHMENTS
1. Cost Allocation Plan Contract
2. RFP Cost Allocation Plan Spec # 91338
3. Mahoney Proposal
COUNCIL READING FILE
All Proposals are in the Council Reading File
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THIS AGREEMENT is made and entered into in the City of San Luis Obispo on _________________________,
2014, by and between the CITY OF SAN LUIS OBISPO, a municipal corporation, hereinafter referred to as City, and
Mahoney & Associates Consulting, LLC, hereinafter referred to as Consultant.
W I T N E S S E T H:
WHEREAS, on September 3, 2014, City requested proposals for Central Service Cost Allocation Plan and
Labor Rate Development Services per Specification No. 91338.
WHEREAS, pursuant to said request, Consultant submitted a proposal, which was accepted by City for said
services.
NOW THEREFORE, in consideration of their mutual promises, obligations, and covenants hereinafter
contained, the parties hereto agree as follows:
1. TERM. The term of this Agreement shall be for a period of 5 years, from the date this Agreement is
made and entered, as first written above.
2. INCORPORATION BY REFERENCE. City Request for Proposal Document for Specification
No. 91338 and Consultant’s proposal dated September 26, 2014, are hereby incorporated in and made a part of this
Agreement.
3. CITY'S OBLIGATIONS. For providing services as specified in this Agreement, City will pay and
Consultant shall receive therefore compensation as set forth in Exhibit A of this Agreement.
4. CONSULTANT'S OBLIGATIONS. For and in consideration of the payments and agreements
hereinbefore mentioned to be made and performed by City, Consultant agrees with City to do everything required by
this Agreement and as reflected in the Scope of Work shown in Exhibit B.
5. AMENDMENTS. Any amendment, modification, or variation from the terms of this Agreement
shall be in writing and shall be effective only upon approval by the City Manager.
6. INSURANCE REQUIREMENTS. Consultant agrees to provide evidence of insurance coverage in
the amounts listed in Exhibit C and further agrees to maintain said insurance in-force throughout the term of this
agreement.
Attachment 1
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7. COMPLETE AGREEMENT. This written Agreement, including all writings specifically
incorporated herein by reference, shall constitute the complete agreement between the parties hereto. No oral
agreement, understanding, or representation not reduced to writing and specifically incorporated herein shall be of any
force or effect, nor shall any such oral agreement, understanding, or representation be binding upon the parties hereto.
8. NOTICE. All written notices to the parties hereto shall be sent by United States mail, postage
prepaid by registered or certified mail addressed as follows:
City City Clerk
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93401
Consultant Charles Mahoney
1870 Divot Road
Carson, City, Nevada 89701
9. AUTHORITY TO EXECUTE AGREEMENT. Both City and Consultant do covenant that each
individual executing this agreement on behalf of each party is a person duly authorized and empowered to execute
Agreements for such party.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and year first
above written.
ATTEST: CITY OF SAN LUIS OBISPO,
A Municipal Corporation
By: ___________________________
City Clerk City Administrative Officer
APPROVED AS TO FORM: Consultant
By: ___________________________
City Attorney Charles Mahoney
Attachment 1
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Exhibit A
CONSULTING FEES
Mahoney and Associates will design and produce a Full and OMB A-87 Cost Allocation Plans
using our proprietary software and a select number of Labor Rate Calculations as outline in this
proposal for the fees set forth below:
Plan Years 1 & 2: $10,500 per plan year, plus actual travel costs
Plan Years 3, 4 & 5: $11,500 per plan year, plus actual travel costs
TRAVEL EXPENSES
Mahoney and Associates generally make one (1) onsite visit per plan year to interview staff and
collect data. We are available to make additional visits to the City if requested. All travel is
billed at the time of travel at actual travel costs.
BILLING SCHEDULE
Standard billing schedule is 33% after field work (Phase I), 57% upon production of the draft
(Phase II), and the final 10% upon delivery of the final product (Phase III).
ADDITIONAL SERVICES
Additional services can be obtained for the fee of $120 per hour for the Project Manager and
$100 per hour for support consultants. We are happy to provide additional services on a
preauthorized basis for a specified scope of service outside of this proposal.
Attachment 1
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Exhibit B
Scope of Work – Cost Allocation Plan
Deliver a completed Central Service Cost Allocation Plan (full cost) and a version that complies
with the requirements of OMB A-87 by March 15, 2015 using practices commonly utilized in the
preparation of similar plans by others.
After the first year, the fully completed CAPs will be required to be submitted no later than
March 1st. As part of the annual plan preparation process, the following steps are anticipated but
are not intended to be all inclusive or limiting:
1. Each year of the contract, meet with all affected departments –both central service and
those receiving cost allocations to determine the best cost and allocation nexus.
a. Conduct follow up phone calls to finalize discussions and receive follow up
material as required.
2. Incorporate the feedback obtained from the meetings referred to in #1 above into the
preparation of the CAPs.
3. Develop a model for allocating costs in a manner that reflects the appropriate amounts of
allocation based on the nexus between user departments and the central service cost
activity and its costs.
4. Deliver a draft of the CAPs at least 30 days prior to the ultimate completion deadline for
review and comments by city staff.
a. Incorporate all changes requested by city into the final version.
5. Deliver the final version of the CAPs in PDF bound form and electronically by the
deadline.
Scope of Work –Labor Rate Calculations
1. Each year of the contract, meet with all affected departments and:
a. Identify those positions for which labor rates must be calculated.
b. Identify those positions which provide direct oversight to the positions which are
the subject of the labor rate calculation.
2. Using hourly rates and benefit costs provided by the Finance Department, calculate the
costs for each position as appropriate for the labor rate calculation.
3. Where appropriate, utilize information from the CAPs to obtain additional indirect cost
information.
4. Provide an appropriate reporting format for use in providing the labor rate information in
a comprehensive and easy to understand format.
Attachment 1
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Exhibit C
INSURANCE REQUIREMENTS
The Contractor shall procure and maintain for the duration of the contract insurance against
claims for injuries to persons or damages to property which may arise from or in connection with
the performance of the work hereunder by the Contractor, its agents, representatives, employees
or subcontractors.
Minimum Scope of Insurance. Coverage shall be at least as broad as:
1. Insurance Services Office Commercial General Liability coverage (occurrence form
CG0001).
2. Insurance Services Office form number CA 0001 (Ed. 1/87) covering Automobile
Liability, code 1 (any auto).
3. Workers' Compensation insurance as required by the State of California and Employer's
Liability Insurance.
4. Errors and Omissions Liability insurance as appropriate to the consultant's profession.
Minimum Limits of Insurance. Contractor shall maintain limits no less than:
1. General Liability: $2,000,000 per occurrence for bodily injury, personal injury and
property damage. If Commercial General Liability or other form with a general aggregate
limit is used, either the general aggregate limit shall apply separately to this
project/location or the general aggregate limit shall be twice the required occurrence
limit.
2. Automobile Liability: $1,000,000 per accident for bodily injury and property damage.
3. Employer's Liability: $1,000,000 per accident for bodily injury or disease.
4. Errors and Omissions Liability: $1,000,000 per occurrence.
Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions must
be declared to and approved by the City. At the option of the City, either: the insurer shall
reduce or eliminate such deductibles or self-insured retentions as respects the City, its
officers, officials, employees and volunteers; or the Contractor shall procure a bond
guaranteeing payment of losses and related investigations, claim administration and
defense expenses.
Other Insurance Provisions. The general liability and automobile liability policies are to
contain, or be endorsed to contain, the following provisions:
1. The City, its officers, officials, employees, agents and volunteers are to be covered as
insureds as respects: liability arising out of activities performed by or on behalf of the
Contractor; products and completed operations of the Contractor; premises owned,
occupied or used by the Contractor; or automobiles owned, leased, hired or borrowed by
the Contractor. The coverage shall contain no special limitations on the scope of
protection afforded to the City, its officers, official, employees, agents or volunteers.
Attachment 1
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2. For any claims related to this project, the Contractor's insurance coverage shall be
primary insurance as respects the City, its officers, officials, employees, agents and
volunteers. Any insurance or self-insurance maintained by the City, its officers, officials,
employees, agents or volunteers shall be excess of the Contractor's insurance and shall
not contribute with it.
3. The Contractor'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.
4. Each insurance policy required by this clause shall be endorsed to state that coverage
shall not be suspended, voided, canceled by either party, reduced in coverage or in limits
except after thirty (30) days' prior written notice by certified mail, return receipt
requested, has been given to the City.
Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best's
rating of no less than A: VII.
Verification of Coverage. Contractor shall furnish the City with a certificate of insurance
showing maintenance of the required insurance coverage. Original endorsements effecting
general liability and automobile liability coverage required by this clause must also be provided.
The endorsements are to be signed by a person authorized by that insurer to bind coverage on its
behalf. All endorsements are to be received and approved by the City before work commences.
Attachment 1
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990 Palm Street San Luis Obispo, CA 93401
Notice Requesting Proposals for
CENTRAL SERVICE COST ALLOCATION PLAN AND LABOR RATE
DEVELOPMENT
Specification No. 91338
The City of San Luis Obispo is requesting proposals from qualified independent consultants for the
preparation of annual central service cost allocation plans (CAP) and the development of annual labor
rates for use in compiling reimbursement and grant application documents pursuant to Specification No.
91338. All proposals must be received by the Finance and IT Department by 3:00 pm on Friday,
October 3, 2014 when they will be opened publicly in the City Hall Council Chambers, 990 Palm Street,
San Luis Obispo, CA 93401.
Proposals received after said time will not be considered. To guard against premature opening, each
proposal shall be submitted to the Finance and IT Department in a sealed envelope plainly marked with
the proposal title, specification number, proposer name, and time and date of the proposal opening.
Proposals shall be submitted using the forms provided in the specification package.
An optional pre-proposal teleconference is tentatively scheduled for 11:00 am on Monday, September
15, 2015 to answer any questions that the prospective bidders may have regarding the City's request for
proposals.
Proposers interested in participating in the pre-proposal teleconference should contact Michelle Bulow of
Finance and Information Technology at mbulow@slocity.org or (805) 781-7521 to receive a conference
line phone number and password and to confirm the date and time.
Finalist interviews have been tentatively scheduled for Thursday, October 30, 2014.
Specification packages and additional information may be obtained on the City of San Luis Obispo’s
website http://www.slocity.org/finance/bids.asp or by contacting Michelle Bulow of Finance &
Information Technology at mbulow@slocity.org or (805) 781-7521.
Attachment 2
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Specification No. 91338
TABLE OF CONTENTS
A. Description of Work 1
Overview
Upcoming Financings
About the City
Central Service Cost Allocation Plan
Labor Rate Calculations
B. General Terms and Conditions 4
Proposal Requirements
Contract Award and Execution
Contract Performance
C. Special Terms and Conditions 9
Contract Term
References
Proposal Content
Proposal Length and Copies
Proposal Evaluation and Selection
Proposal Review and Award Schedule
Pre-proposal Conference
Release of Reports and Information
Copies of Reports and Information
Non-Exclusive Contract
D. Sample Form of Agreement 12
E. Insurance Requirements 14
F. Proposal Submittal Forms 16
Proposal Submittal Summary
References
Attachment 2
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Section A
DESCRIPTION OF WORK
Overview
The City is requesting proposals from qualified firms to fulfill the scope of work specified in this
document for a 5-year term.
It is the City’s policy to establish a long-term, ongoing relationship with our consultant, under
which advice is available at all times as needed. At the end of a contract’s term, it is the city’s
policy to seek formal proposals to ensure that it continues to receive quality professional services at
the best competitive price. The current consultant preparing the central service cost allocation plan
is Mahoney and Associates and they have been invited to submit a proposal.
About the City
Detailed information about the City and its organization is available on our web site at
www.slocity.org.
Oversight of the city’s budget preparation and the work of the consultant preparing the CAP rests
with the Finance Department. Specifically, the Budget Manager and Finance Director share this
oversight responsibility.
Detailed information about the City’s finances and key fiscal policies are available on our web site.
The 2013-2015 Financial Plan and the Financial Plan Supplement along with the 2012-13 fiscal
year Comprehensive Annual Financial Report are the key source documents for this information.
These documents as well as the City’s Cost Allocation Plans are available on the City’s web site
at: www.slocity.org/finance/budget.asp and http://www.slocity.org/finance/reports.asp.
About the City’s Central Service Cost Allocation Plan
The city is a full service municipal agency providing utility billing for water and wastewater
services; business license, transient occupancy tax and utility user tax billing and collection
services; public safety, parks and recreation; finance; legal services; administration; capital project
design and construction oversight. The General Fund operating budget for 2014-15 is $56.8 million.
The Federal Transportation Administration (FTA) is the cognizant agent for the purpose of
complying with Office of Management and Budget (OMB) Circular A-87. The FTA has
determined that the central service cost allocation plan does not require their review.
Historically the city’s central service cost allocation plan is prepared using actual costs from the
most recently audited fiscal year, which causes a two year time lag between that period and the
year in which the costs are utilized in the current budget. This avoids any need for periodic true-up
processes. The city requires the preparation of two CAPs each fiscal year, one which is considered
the full CAP and one which is used to apply overhead costs to federally funded grant programs and
is prepared in compliance with OMB-A87.
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Attachment 2
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Section A
DESCRIPTION OF WORK
About the City’s Labor Rate Calculations
The city has historically prepared labor rate calculations for select positions within each
department for the purpose of determining the average cost with overhead from direct and indirect
sources included in the hourly cost computation. The city no longer desires to prepare these
calculations in-house.
Scope of Work – Cost Allocation Plan
Firms responding to this RFP shall prepare and deliver a completed Central Service Cost
Allocation Plan (full cost) and a version that complies with the requirements of OMB A-87 by
March 15, 2015 using practices commonly utilized in the preparation of similar plans by others.
After the first year, the fully completed CAPs will be required to be submitted no later than March
1st. As part of the annual plan preparation process, the following steps are anticipated but are not
intended to be all inclusive or limiting:
1. Each year of the contract, meet with all affected departments –both central service and
those receiving cost allocations to determine the best cost and allocation nexus.
a. Conduct follow up phone calls to finalize discussions and receive follow up
material as required.
2. Incorporate the feedback obtained from the meetings referred to in #1 above into the
preparation of the CAPs.
3. Develop a model for allocating costs in a manner that reflects the appropriate amounts of
allocation based on the nexus between user departments and the central service cost activity
and its costs.
4. Deliver a draft of the CAPs at least 30 days prior to the ultimate completion deadline for
review and comments by city staff.
a. Incorporate all changes requested by city into the final version.
5. Deliver the final version of the CAPs in PDF bound form and electronically by the
deadline.
Scope of Work –Labor Rate Calculations
1. Each year of the contract, meet with all affected departments and:
a. Identify those positions for which labor rates must be calculated.
b. Identify those positions which provide direct oversight to the positions which are
the subject of the labor rate calculation.
2. Using hourly rates and benefit costs provided by the Finance Department, calculate the
costs for each position as appropriate for the labor rate calculation.
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Attachment 2
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Section A
DESCRIPTION OF WORK
3. Where appropriate, utilize information from the CAPs to obtain additional indirect cost
information.
4. Provide an appropriate reporting format for use in providing the labor rate information in a
comprehensive and easy to understand format.
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Attachment 2
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Section B
GENERAL TERMS AND CONDITIONS
PROPOSAL REQUIREMENTS
1. Requirement to Meet All Provisions. Each individual or firm submitting a proposal shall
meet all of the terms, and conditions of the Request for Proposals (RFP) specifications
package. By virtue of its proposal submittal, the bidder acknowledges agreement with and
acceptance of all provisions of the RFP specifications.
2. Proposal Submittal. Each proposal must be submitted in the format described in the RFP
specifications and accompanied by any other required submittals or supplemental materials.
Proposal documents shall be received by the Finance and IT Department no later than 3:00
p.m. on Friday, October 3rd. The submittal package shall include 1 (one) hardcopy version
and a thumb drive containing electronic versions of the documents provided in hardcopy
form. Each electronic document provided on the thumb drive shall be properly labeled with
regard to the order in which it appears in print. The exterior of the submittal package shall
be clearly labeled with the words “Cost Allocation Services proposer name, and time and
date of the proposal opening and Spec. #91338”. No FAX submittals will be accepted. It is
the responsibility of each firm submitting a proposal to ensure that the electronic
document(s) submitted are protected to ensure that no changes can be made to the submittal
once it is in the possession of the city. Attention to the details required by the submittal
process will be part of the overall evaluation and scoring.
3. Insurance Certificate. Each proposal must include a certificate of insurance showing:
a. The insurance carrier and its A.M. Best rating.
b. Scope of coverage and limits.
c. Deductibles and self-insured retention.
The purpose of this submittal is to generally assess the adequacy of the bidder’s insurance
coverage during proposal evaluation; as discussed under paragraph 11 below, endorsements
are not required until contract award. The City’s insurance requirements are detailed in
Section E.
4. Proposal Quotes and Unit Price Extensions. The prices quoted by the proposer must be
entered in figures in the spaces provided on the Proposal Submittal Form.
5. Proposal Withdrawal and Opening. A proposer may withdraw its proposal, without
prejudice prior to the time specified for the proposal opening, by submitting a written request
to the City Clerk for its withdrawal, in which event the proposal will be returned to the
proposer unopened. No proposal received after the time specified or at any place other than
that stated in the "Notice Requesting Proposals" will be considered. All proposals will be
opened and declared publicly.
6. Submittal of One Proposal Only. No individual or business entity of any kind shall be
allowed to make or file, or to be interested in more than one proposal, except as part of an
alternative proposal when specifically requested; however, an individual or business entity
that has submitted a sub-proposal to a proposer submitting a proposal, or who has quoted
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Attachment 2
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Section B
GENERAL TERMS AND CONDITIONS
prices on materials or services to such proposer, is not thereby disqualified from submitting a
sub-proposal or from quoting prices to other proposers submitting proposals.
7. Communications. All timely requests for information submitted in writing will receive a
written response from the City. Telephone communications with City staff are not
encouraged, but will be permitted, if directed to the Director of Finance and Information
Technology, Wayne Padilla. However, any such oral communication shall not be binding on
the City.
CONTRACT AWARD AND EXECUTION
1. Proposal Retention and Award. The City reserves the right to retain all proposals for a
period of 90 days for examination and comparison. The City also reserves the right to waive
non-substantial irregularities in any proposal, to reject any or all proposals, to reject or delete
one part of a proposal and accept the other, except to the extent that proposals are qualified
by specific limitations. See the "special terms and conditions" in Section C of these
specifications for proposal evaluation and contract award criteria.
2. Competency and Responsibility of Bidder. The City reserves full discretion to determine
the competence and responsibility, professionally and/or financially, of proposers. Proposers
will provide, in a timely manner, all information that the City deems necessary to make such
a decision.
3. Contract Requirement. The proposer to whom award is made (Contractor) shall execute a
written contract with the City within ten (10) calendar days after notice of the award has been
sent by mail to it at the address given in its proposal. The contract shall be made in the form
adopted by the City and incorporated in these specifications.
4. Insurance Requirements. The Contractor shall provide proof of insurance in the form,
coverages and amounts specified in Section E of these specifications within 10 (ten) calendar
days after notice of contract award as a precondition to contract execution.
5. Business Tax. The Contractor must have a valid City of San Luis Obispo business tax
certificate before execution of the contract. Additional information regarding the City's
business tax program may be obtained by calling (805) 781-7134.
CONTRACT PERFORMANCE
1. Ability to Perform. The Contractor warrants that it possesses, or has arranged through
subcontracts, all capital and other equipment, labor, materials, and licenses necessary to carry
out and complete the work hereunder in compliance with any and all federal, state, county,
city, and special district laws, ordinances, and regulations.
2. Laws to be Observed. The Contractor shall keep itself fully informed of and shall observe
and comply with all applicable state and federal laws and county and City of San Luis
Obispo ordinances, regulations and adopted codes during its performance of the work.
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Attachment 2
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Section B
GENERAL TERMS AND CONDITIONS
3. Payment of Taxes. The contract prices shall include full compensation for all taxes that the
Contractor is required to pay.
4. Permits and Licenses. The Contractor shall procure all permits and licenses, pay all charges
and fees, and give all notices necessary.
5. Safety Provisions. The Contractor shall conform to the rules and regulations pertaining to
safety established by OSHA and the California Division of Industrial Safety.
6. Public and Employee Safety. Whenever the Contractor's operations create a condition
hazardous to the public or City employees, it shall, at its expense and without cost to the
City, furnish, erect and maintain such fences, temporary railings, barricades, lights, signs and
other devices and take such other protective measures as are necessary to prevent accidents
or damage or injury to the public and employees.
7. Preservation of City Property. The Contractor shall provide and install suitable safeguards,
approved by the City, to protect City property from injury or damage. If City property is
injured or damaged resulting from the Contractor's operations, it shall be replaced or restored
at the Contractor's expense. The facilities shall be replaced or restored to a condition as good
as when the Contractor began work.
8. Immigration Act of 1986. The Contractor warrants on behalf of itself and all subcontractors
engaged for the performance of this work that only persons authorized to work in the United
States pursuant to the Immigration Reform and Control Act of 1986 and other applicable
laws shall be employed in the performance of the work hereunder.
9. Contractor Non-Discrimination. In the performance of this work, the Contractor agrees
that it will not engage in, nor permit such subcontractors as it may employ, to engage in
discrimination in employment of persons because of age, race, color, sex, national origin or
ancestry, sexual orientation, or religion of such persons.
10. Work Delays. Should the Contractor be obstructed or delayed in the work required to be
done hereunder by changes in the work or by any default, act, or omission of the City, or by
strikes, fire, earthquake, or any other Act of God, or by the inability to obtain materials,
equipment, or labor due to federal government restrictions arising out of defense or war
programs, then the time of completion may, at the City's sole option, be extended for such
periods as may be agreed upon by the City and the Contractor. In the event that there is
insufficient time to grant such extensions prior to the completion date of the contract, the
City may, at the time of acceptance of the work, waive liquidated damages that may have
accrued for failure to complete on time, due to any of the above, after hearing evidence as to
the reasons for such delay, and making a finding as to the causes of same.
11. Payment Terms. The City's payment terms are 30 days from the receipt of an original
invoice and acceptance by the City of the materials, supplies, equipment or services provided
by the Contractor (Net 30). Payment may be made from proceeds of the debt issuance if this
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Attachment 2
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Section B
GENERAL TERMS AND CONDITIONS
is customary for the type of financing, but only upon the acceptance and approval by the city
of an original invoice identifying the basis for the fees charged.
12. Inspection. The Contractor shall furnish City with every reasonable opportunity for City to
ascertain that the services of the Contractor are being performed in accordance with the
requirements and intentions of this contract. All work done and all materials furnished, if
any, shall be subject to the City's inspection and approval. The inspection of such work shall
not relieve Contractor of any of its obligations to fulfill its contract requirements. Contractor
agrees to a minimum retention period of all documentation and spreadsheets related to CAPs
prepared for the city of at least 5 years.
13. Audit. The City shall have the option of inspecting and/or auditing all records and other
written materials used by Contractor in preparing its invoices to City as a condition precedent
to any payment to Contractor.
14. Interests of Contractor. The Contractor covenants that it presently has no interest, and shall
not acquire any interest—direct, indirect or otherwise—that would conflict in any manner or
degree with the performance of the work hereunder. The Contractor further covenants that,
in the performance of this work, no subcontractor or person having such an interest shall be
employed. The Contractor certifies that no one who has or will have any financial interest in
performing this work is an officer or employee of the City. It is hereby expressly agreed that,
in the performance of the work hereunder, the Contractor shall at all times be deemed an
independent contractor and not an agent or employee of the City.
15. Hold Harmless and Indemnification. The Contractor agrees to defend, indemnify, protect
and hold the City and its agents, officers and employees harmless from and against any
and all claims asserted or liability established for damages or injuries to any person or
property, including injury to the Contractor's employees, agents or officers that arise from
or are connected with or are caused or claimed to be caused by the acts or omissions of the
Contractor, and its agents, officers or employees, in performing the work or services
herein, and all expenses of investigating and defending against same; provided, however,
that the Contractor's duty to indemnify and hold harmless shall not include any claims or
liability arising from the established sole negligence or willful misconduct of the City, its
agents, officers or employees.
16. Contract Assignment. The Contractor shall not assign, transfer, convey or otherwise
dispose of the contract, or its right, title or interest, or its power to execute such a contract to
any individual or business entity of any kind without the previous written consent of the City.
17. Termination. If, during the term of the contract, the City determines that the Contractor is
not faithfully abiding by any term or condition contained herein, the City may notify the
Contractor in writing of such defect or failure to perform. This notice must give the
Contractor a 10 (ten) calendar day notice of time thereafter in which to perform said work or
cure the deficiency. (The City may also terminate the contract for convenience or financial
necessity upon giving Contractor 30 days written notice of such action.)
- 7 -
Attachment 2
C9 - 17
Section B
GENERAL TERMS AND CONDITIONS
If the Contractor has not performed the work or cured the deficiency within the ten days
specified in the notice, such shall constitute a breach of the contract and the City may
terminate the contract immediately by written notice to the Contractor to said effect.
Thereafter, neither party shall have any further duties, obligations, responsibilities, or rights
under the contract except, however, any and all obligations of the Contractor's surety shall
remain in full force and effect, and shall not be extinguished, reduced, or in any manner
waived by the termination thereof.
In said event, the Contractor shall be entitled to the reasonable value of its services
performed from the beginning date in which the breach occurs up to the day it received the
City's Notice of Termination, minus any offset from such payment representing the City's
damages from such breach. "Reasonable value" includes fees or charges for goods or
services as of the last milestone or task satisfactorily delivered or completed by the
Contractor as may be set forth in the Agreement payment schedule; compensation for any
other work, services or goods performed or provided by the Contractor shall be based solely
on the City's assessment of the value of the work-in-progress in completing the overall
workscope.
The City reserves the right to delay any such payment until completion or confirmed
abandonment of the project, as may be determined in the City's sole discretion, so as to
permit a full and complete accounting of costs. In no event, however, shall the Contractor be
entitled to receive in excess of the compensation quoted in its proposal.
- 8 -
Attachment 2
C9 - 18
Section C
SPECIAL TERMS AND CONDITIONS
1. Contract Term. The term of the contract shall be for a period of 5 (five) years.
2. Proposal Content. Your proposal must include the following information:
Submittal Forms
a. Proposal submittal cover letter. (item 1 in submittal)
b. Certificate of insurance. (item 5 in submittal)
c. References from at least three California municipalities for whom you have provided
similar services within the past 2 (two) years. (item 4 in submittal)
Note: For ease of proposal preparation, proposers are asked to prepare their own
proposal submittal forms as long as they contain the information requested below, in the
same order that each item is listed here. .
Qualifications (item 2 in submittal)
a. General qualifications of your firm to prepare central service cost allocation plans and
labor rate calculations.
b. Experience in providing similar services required by the City to comparable California
cities.
c. Description of particular and interesting issues, problems or complications that arose in
previous engagements and how these were resolved.
d. Resumes and responsibilities of the individuals who would be assigned to work with the
City, there home office location, and if possible, identification of who would be the
City’s lead contact.
e. Any other information that would assist us in making this contract award decision.
Compensation (item 6 in submittal)
a. Provide your firm’s philosophy for determining its fees for the services described in the
RFP. Identify the fees associated with the preparation of the annual CAPs and the labor
rate calculations. Note that the city prefers to obtain flat fee proposals but will entertain
other fee proposals if necessary to obtain the best level of service. Regardless, provide
hourly rates for all staff that will be assigned to this engagement. Identify the means by
which the initial annual fees will be inflated to arrive at the fee amount charged in
subsequent years, if applicable.
- 9 -
Attachment 2
C9 - 19
Section C
SPECIAL TERMS AND CONDITIONS
Statement of Litigation, Investigations, Conflicts of Interest and Disqualifications (item 3
in submittal)
a. Statement and explanation of any instances where your firm or anyone proposed to be
assigned to this project has been removed from a project or disqualified from proposing
on a similar scope of work.
b. Any instances in which your firm or anyone assigned to this project was the subject of an
investigation by a state or federal agency related to the work conducted in the preparation
of cost allocation plan. Describe the outcome and status of that investigation.
c. One regular size bag of M&Ms for each proposal reviewer.
3. Proposal Length Format and Copies. Proposals should meet the following guidelines.
a. Proposals should not exceed 15 pages, including attachments and supplemental materials.
The proposal should be prepared simply and economically, providing a straightforward,
concise presentation of the information requested. Please keep marketing material to a
minimum and emphasize factual material.
b. The required font size is 12 point, with minimum left and right margins of one-inch, and
top and bottom margins of 0.7 inches.
c. One (1) copy of the proposal must be submitted. Along with a write protected electronic
version on a thumb drive.
4. Proposal Evaluation and Selection. Proposals will be evaluated by the Director of Finance
based on the following criteria:
a. Understanding of the work required by the City
b. Quality, clarity and responsiveness of the proposal, including attention to form submittal
requirement details
c. Demonstrated competence and professional qualifications necessary for satisfactory
performance of the work required by the City
d. Recent experience in successfully performing similar services for comparable cities
e. Adequacy of internal oversight of investment planning and transaction execution
f. References
g. Background and related experience of the specific individuals to be assigned to this work
h. Proposed compensation
As reflected above, contract award will not be based solely on price, but on a combination of
factors as determined to be in the best interest of the City. After evaluating the proposals and
discussing them further with the finalists or the tentatively selected financial advisor, the City
- 10 -
Attachment 2
C9 - 20
Section C
SPECIAL TERMS AND CONDITIONS
reserves the right to further negotiate the proposed work and/or method and amount of
compensation.
5. Proposal Review and Award Schedule. The following is an outline of the anticipated
schedule for proposal review and contract award:
a. Issue RFP 9/07/14
b. Conduct pre-proposal teleconference 9/15/14
c. Receive proposals 10/03/14
d. Complete proposal evaluation 10/16/14
e. Conduct finalist interviews 10/30/14
f. Finalize award recommendation 11/06/14
g. Execute contract 11/19/14
6. Pre-Proposal Teleconference. To answer any questions that prospective proposers may have
regarding this RFP, an optional pre-proposal teleconference is tentatively scheduled for:
Monday, September 15, 2014
11:00 AM
While not mandatory, proposers are strongly encouraged to participate in this teleconference.
Proposers interested in participating in the pre-proposal teleconference should contact Michelle
Bulow, Administrative Assistant, at (805) 781-7521 or mbulow@slocity.org to receive a
phone number and password and to confirm the date and time.
7. Release of Reports and Information. Any reports, information, data, or other material given
to, prepared by or assembled by the firm as part of the work or services under these
specifications shall be the property of City and shall not be made available to any individual or
organization by the firm without the prior written approval of the City.
8. Copies of Reports and Information. If the City requests additional copies of reports or any
other material in addition to what the firm is required to furnish in limited quantities as part of
the work or services under these specifications, the firm shall provide such additional copies as
are requested, and City shall compensate the firm for the costs of duplicating of such copies at
the firm's direct expense.
9. Non-Exclusive Contract. The City reserves the right to contract with other firms for similar
services during the contract term.
10. Attendance at Meetings and Hearings. As part of the work scope and included in the
contract price is attendance at as many “working” meetings with staff as necessary in
performing work scope tasks. Except for the annual kick-off and working meetings intended
to introduce the consultant’s staff and the city’s work team, launch the yearly work effort,
subsequent meetings may be held via teleconference or Skype when this is a reasonable
means of accomplishing the exchange of information.
- 11 -
Attachment 2
C9 - 21
Section D
SAMPLE FORM OF AGREEMENT
THIS AGREEMENT is made and entered into in the City of San Luis Obispo on
_________________________, 2014, by and between the CITY OF SAN LUIS OBISPO, a municipal corporation,
hereinafter referred to as City, and [ ], hereinafter referred to as Consultant.
W I T N E S S E T H:
WHEREAS, on September 3, 2014, City requested proposals for Central Service Cost Allocation Plan and
Labor Rate Development Services per Specification No. 91338.
WHEREAS, pursuant to said request, Consultant submitted a proposal, which was accepted by City for said
services.
NOW THEREFORE, in consideration of their mutual promises, obligations, and covenants hereinafter
contained, the parties hereto agree as follows:
1. TERM. The term of this Agreement shall be for a period of 5 years, from the date this Agreement is
made and entered, as first written above.
2. INCORPORATION BY REFERENCE. City Request for Proposal Document for Specification
No. 91338 and Consultant’s proposal dated _________________, are hereby incorporated in and made a part of this
Agreement.
3. CITY'S OBLIGATIONS. For providing services as specified in this Agreement, City will pay and
Consultant shall receive therefore compensation as set forth in Exhibit A of this Agreement.
4. CONSULTANT'S OBLIGATIONS. For and in consideration of the payments and agreements
hereinbefore mentioned to be made and performed by City, Consultant agrees with City to do everything required by
this Agreement.
5. AMENDMENTS. Any amendment, modification, or variation from the terms of this Agreement
shall be in writing and shall be effective only upon approval by the City Manager.
- 12 -
Attachment 2
C9 - 22
Section D
SAMPLE FORM OF AGREEMENT
6. COMPLETE AGREEMENT. This written Agreement, including all writings specifically
incorporated herein by reference, shall constitute the complete agreement between the parties hereto. No oral
agreement, understanding, or representation not reduced to writing and specifically incorporated herein shall be of any
force or effect, nor shall any such oral agreement, understanding, or representation be binding upon the parties hereto.
7. NOTICE. All written notices to the parties hereto shall be sent by United States mail, postage
prepaid by registered or certified mail addressed as follows:
City City Clerk
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93401
Consultant [ ]
[ ]
[ ]
[ ]
8. AUTHORITY TO EXECUTE AGREEMENT. Both City and Consultant do covenant that each
individual executing this agreement on behalf of each party is a person duly authorized and empowered to execute
Agreements for such party.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and year first
above written.
ATTEST: CITY OF SAN LUIS OBISPO,
A Municipal Corporation
By:
City Clerk City Administrative Officer
APPROVED AS TO FORM: Consultant
By:
City Attorney
- 13 -
Attachment 2
C9 - 23
Section E
INSURANCE REQUIREMENTS
The Contractor shall procure and maintain for the duration of the contract insurance against
claims for injuries to persons or damages to property which may arise from or in connection with
the performance of the work hereunder by the Contractor, its agents, representatives, employees
or subcontractors.
Minimum Scope of Insurance. Coverage shall be at least as broad as:
1. Insurance Services Office Commercial General Liability coverage (occurrence form CG
0001).
2. Insurance Services Office form number CA 0001 (Ed. 1/87) covering Automobile Liability,
code 1 (any auto).
3. Workers' Compensation insurance as required by the State of California and Employer's
Liability Insurance.
4. Errors and Omissions Liability insurance as appropriate to the consultant's profession.
Minimum Limits of Insurance. Contractor shall maintain limits no less than:
1. General Liability: $2,000,000 per occurrence for bodily injury, personal injury and property
damage. If Commercial General Liability or other form with a general aggregate limit is
used, either the general aggregate limit shall apply separately to this project/location or the
general aggregate limit shall be twice the required occurrence limit.
2. Automobile Liability: $1,000,000 per accident for bodily injury and property damage.
3. Employer's Liability: $1,000,000 per accident for bodily injury or disease.
4. Errors and Omissions Liability: $1,000,000 per occurrence.
Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions must
be declared to and approved by the City. At the option of the City, either: the insurer
shall reduce or eliminate such deductibles or self-insured retentions as respects the City, its
officers, officials, employees and volunteers; or the Contractor shall procure a bond
guaranteeing payment of losses and related investigations, claim administration and
defense expenses.
Other Insurance Provisions. The general liability and automobile liability policies are to
contain, or be endorsed to contain, the following provisions:
1. The City, its officers, officials, employees, agents and volunteers are to be covered as
insureds as respects: liability arising out of activities performed by or on behalf of the
Contractor; products and completed operations of the Contractor; premises owned, occupied
or used by the Contractor; or automobiles owned, leased, hired or borrowed by the
Contractor. The coverage shall contain no special limitations on the scope of protection
afforded to the City, its officers, official, employees, agents or volunteers.
2. For any claims related to this project, the Contractor's insurance coverage shall be primary
insurance as respects the City, its officers, officials, employees, agents and volunteers. Any
- 14 -
Attachment 2
C9 - 24
Section E
INSURANCE REQUIREMENTS
insurance or self-insurance maintained by the City, its officers, officials, employees, agents
or volunteers shall be excess of the Contractor's insurance and shall not contribute with it.
3. The Contractor'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.
4. Each insurance policy required by this clause shall be endorsed to state that coverage shall
not be suspended, voided, canceled by either party, reduced in coverage or in limits except
after thirty (30) days' prior written notice by certified mail, return receipt requested, has been
given to the City.
Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best's
rating of no less than A: VII.
Verification of Coverage. Contractor shall furnish the City with a certificate of insurance
showing maintenance of the required insurance coverage. Original endorsements effecting
general liability and automobile liability coverage required by this clause must also be provided.
The endorsements are to be signed by a person authorized by that insurer to bind coverage on its
behalf. All endorsements are to be received and approved by the City before work commences.
- 15 -
Attachment 2
C9 - 25
PROPOSAL SUBMITTAL FORM
Financial Advisor Services
The authorized representative identified below declares that she or he:
1. Has carefully examined Specification No. 91338, which is hereby made a part of this proposal.
2. Is thoroughly familiar with its contents.
3. Is authorized to represent the proposing firm.
4. Agrees to perform the work as set forth in this proposal.
Certificate of insurance attached; insurance company’s A.M. Best rating: __________________.
Firm Name and Address
Contact Phone
Authorized Representative
Date
- 16 -
Attachment 2
C9 - 26
REFERENCES
Number of years engaged in providing the services included within the scope of the specifications under the
present business name: .
Describe fully the work completed for 3 (three) California clients within the last 2 years that demonstrate
your ability to provide the services required by the scope of the specifications. Attach additional pages if
required. The City reserves the right to contact each of the references listed for additional information
regarding your firm's qualifications. Below, please provide current contact information for each of these
three clients.
Reference No. 1
Customer Name
Contact Individual
Telephone & FAX number
Street Address
City, State, Zip Code
Description of services provided
including contract amount, when
provided and project outcome
Reference No. 2
Customer Name
Contact Individual
Telephone & FAX number
Street Address
City, State, Zip Code
Description of services provided
including contract amount, when
provided and project outcome
Reference No. 3
Customer Name
Contact Individual
Telephone & FAX number
Street Address
City, State, Zip Code
Description of services provided
including contract amount, when
provided and project outcome
- 17 -
Attachment 2
C9 - 27
City of San Luis Obispo
990 Palm Street San Luis Obispo, CA 93401
ADDENDUM
DATE: September 16, 2014
PROJECT: Central Service Cost Allocation Plan and SPECIFICATION NO. 91338
Labor Rate Development
ADDENDUM NO.: 1
SUBMIT DATE: October 3, 2014
NOTICE TO ALL CONSULTANTS SUBMITTING PROPOSALS:
You are hereby notified of the following changes, clarifications or modifications to the Request
for Proposals. This addendum shall supersede the original Request for Proposals and
subsequent addenda. Wherein this addendum contradicts the original Request for Proposal
and previous addenda, this addendum shall take precedence. All other conditions shall remain
unchanged.
A. CHANGES AND/OR CLARIFICATIONS TO THE NOTICE REQUESTING PROPOSALS:
1.Attached is a FAQ sheet from the pre-proposal teleconference hosted on September 15,
2014. Also attached is an excerpt from the last labor rate calculation prepared by the City
and a sample insurance certificate.
Consultants are required to base their proposal on the Request for Proposals and any
issued addenda.
If you have any questions contact Michelle Bulow at (805) 781-7521 or a mbulow@slocity.org
Attachment 2
C9 - 28
City of San Luis Obispo, Finance and Information Technology, 990 Palm Street, San Luis Obispo, CA, 93401-3249, 805.781.7130, slocity.org
Addendum to the RFP for
Central Service Cost Allocation Plan and Labor Rate Development
Specification # 91338
Responses are being provided to the following questions asked during the pre-proposal phone call
held on September 15, 2014
1) Have we been assigned a cognizant agency?
The Federal Transportation Administration is the city’s cognizant agent but has indicated
that they do not review or evaluate central service cost allocation plans such as the one that
is prepared for the city each year.
2) When did the prior firm last perform on site field work? How long were they on site?
-Field work was last performed between November 2013 and January 2014; the firm was on
site 4 to 5 days.
3) Why has the level of cost allocation resulting from staff work on construction projects been
reduced over the past year?
Historically many construction projects built on behalf of the City had heavy staff
involvement in the areas of design, permitting and construction management. Fewer
qualifying projects are being undertaken at this time, causing the value of staff time that is
allocable to enterprise funds to decline as a result.
4) Are employees that work for the General Fund charged 100% to the General Fund even if
doing work for an Enterprise Fund?
-Yes
5) Can the 15 page limit restriction for the RFP response be waived?
-Yes, we will not penalize anyone for going over the page limit, bearing in mind that the
point of the restriction was to receive focused responses without superfluous content.
6) What is the fee paid to the most recent vendor for the last CAP?
-The fee for the 2012-13 CAP was $11,000, excluding travel expenses.
7) Will we allow for negotiation of the agreement prior to execution?
-Yes, some negotiation is acceptable as long as the timeline for execution is adhered to.
It is the City’s expectation that all internal and external stakeholders with respect to the Cost
Allocation Plan will have an opportunity to participate in the on-site meetings with the consultant.
This is required in order to ensure that they are familiar with the expected outcomes of the process
and are allowed to share their concerns and insights into what constitutes an appropriate nexus
between costs borne by central service General Fund departments and their client departments.
As mentioned during the call, the City is requiring the vendor to provide a calculation of labor rates
for various positions. Provided as an attachment is an excerpt from the last labor rate calculation that
Attachment 2
C9 - 29
was prepared by City staff. The City is not committed to the cost development strategy that is shown
but the results provided by the vendor must reflect techniques and methods of determining
appropriate overhead costs that are common in such calculations.
Attachment 2
C9 - 30
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Attachment 2 C9 - 32
Attachment 2
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Attachment 2 C9 - 34
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Attachment 2 C9 - 35
City of San Luis Obispo, CA
Request for Proposal
Central Service Cost Allocation Plan
& Labor Rate Development
September 26, 2014
1870 Divot Road
Carson City, NV 89701
775-883-3182
www.costplans.com
mahoney@costplans.com
Attachment 3
C9 - 36
Attachment 3
C9 - 37
TABLE OF CONTENTS
Transmittal Letter i.
Section 1
PROPOSAL SUBMITTAL FORM 1
Section 2
QUALIFICATIONS
Firm Qualifications 2
Project Team Resumes
Project Scope 3
6
Project Schedule 10
Section 3
STATEMENT OF LITIGATION, INVESTIGATIONS,
CONFLICTS OF INTEREST AND DISQUALIFICATIONS
11
Section 4
REFERENCES
12
Section 5
CERTIFICATE OF INSURANCE
14
Section 6
COMPENSATION
Consulting Fee 15
Travel Expenses 15
Billing Schedule 15
Additional Services 15
Attachment 3
C9 - 38
Attachment 3
C9 - 39
City of San Luis Obispo, CA
Central Service Cost Allocation Plan
& Labor Rate Development
2
2.
QUALIFICATIONS
FIRM QUALIFICATIONS
Mahoney and Associates Consulting, LLC is qualified to assist the City of San Luis Obispo with
their important engagement. Mahoney and Associates Consulting, LLC was established in
2004 and is centrally located in Carson City, Nevada with a client base consisting of local
governments in the western United States. Our goal has never been to be the largest firm
developing activity based cost allocation plans, but rather a firm that provides consistent,
reliable, personalized service by highly experienced consultants. We strive to provide
exceptional service at a reasonable cost while meeting client expectations, goals and
timeframes.
Our consultants have over 27 years of combined direct experience in all aspects of cost
reporting and cost reimbursement in the field of indirect cost allocation. We have developed
cost allocation plans as well as labor rates for California local governments for the past seven
years. Our team of professionals offers an excellent blend of technical expertise and high-level
policy, program, and fiscal management experience, while providing the personalized service
essential to insure a successful working relationship. Also, our clients have the value-added
experience of working directly with the firm principals who have a vested interest in client
satisfaction while working diligently for every client. With Mahoney and Associates, clients do
not experience the need to “train the new guy” each year when the consultant arrives.
While we are experienced in working with local governments of all sizes (largest budget
exceeding $3.4 billion), we specialize in small to medium sized local governments. We feel the
small to medium size market is where we can have the greatest impact. Smaller local
governments tend to experience the biggest strain as they are expected to act as experts in all
matters but with limited resources. We are committed to skillfully guiding our clients through
the concepts of activity based cost allocation to develop a specialized management tool to
meet the specific needs of the organization. A successful activity based cost allocation model
can provide the City with relevant cost data to determine the full cost of operating City
functions such as business license, billing and collecting, capital project etc. as well as assist
with the reporting and cost analysis to maximize reimbursement from the City’s cognizant
agency, the Federal Transportation Administration.
We take the time to understand each client’s organizational structure and climate and act as a
collaborator to help assist in defining their purpose for developing an activity based cost
allocation plan. Our services do not end with the delivery of the plan documents. We
Attachment 3
C9 - 40
City of San Luis Obispo, CA
Central Service Cost Allocation Plan
& Labor Rate Development
3
appreciate how difficult it is for local governments to stay nimble in the current financial
environment and find most clients require advice and training on how to use the model once it
has been developed. Because of limited budgets, many Finance Directors experience
resistance from their organization and enterprise funds when implementing the model. We
have been successful in acting as an intermediary in gaining acceptance of the model, thereby
taking pressure off the Finance Director. We value input from those that are impacted by the
model and can offer clarification on where and how costs are originating. For example, a
department head can help identify an inappropriate allocation when their department or
enterprise fund does not receive or use certain services or a central service department head
can help to identify areas where the outcome of the model does not reflect the level of service
(lower or higher) to a receiving department. Since the models are fluid, they become more
refined and effective over time. The practice of involving multiple reviewers helps to identify
areas of concern, and bring overall acceptance of the model. Once a potential area of concern
has been brought to our attention, we can offer appropriate solutions that target the issue
without compromising the integrity of the model.
Mahoney and Associates is always available to assist clients with special circumstances.
Recently a client realized an issue regarding rent expense that they did not bring to our
attention until after we issued the draft of their allocation model. The rent expense was booked
to a non central services department and therefore the model couldn’t allocate the cost. We
were asked to advise a client on the best way to correct the problem in the current fiscal year
as well as a remedy for the cost allocation plan. Our recommendation was to distribute the
rent expense to occupants (departments) in the current fiscal year through a journal entry
before the yearend close. As a remedy for the allocation plan, we recommended moving the
expenditure to a “dummy” central service department for allocation purposes, thereby creating
continuity from year to year for the expenditure. At no additional cost, we assisted the client
with analysis and development of the journal entry needed as well as including the additional
central service department in the cost allocation plan.
On occasion we are asked to develop a “spin-off” model for a specific scope of service in
addition to a cost allocation plan. These “spin-off” models have been used for such purposes
as: Federal reimbursement for specific services such as information technology for a program;
validation of rates paid by a local government to a district for services; and to analysis the cost
effectiveness of moving services out of the local government to a newly created special district
or privatization. In each case, we analyze staffing resources, program expenditures and the
related indirect overhead costs to create an independent indirect overhead rate as well as to
analysis the feasibility of inclusion/exclusion in the local government.
PROJECT TEAM RESUMES
Mr. Charles Mahoney, CPA, CPM along with Ms. Marchell Mahoney will comprise the project
team. Mr. Mahoney will act as the primary Project Manager with both consultants actively
involved and conversant in all aspects of the project from inception to completion. Mr.
Mahoney has nearly 30 years of experience in the area of governmental accounting ranging
Attachment 3
C9 - 41
City of San Luis Obispo, CA
Central Service Cost Allocation Plan
& Labor Rate Development
4
from governmental audit to high level administration positions in several governmental
agencies, including 14 years in the area of cost accounting. His primary focus will be to
provide overall project oversight, conduct and manage client interviews, and develop general
plan design and analysis. He will also provide assistance in the areas of model
implementation and cognizant agency negotiations if requested. Mr. Mahoney plans to
contribute 35% to the overall project for the City of San Luis Obispo.
Ms. Mahoney has over 16 years experience as a consultant, beginning her career as an
employee benefit consultant and over the past 11 years working exclusively in the area of cost
allocation. She has partnered with Mr. Mahoney on all Mahoney & Associates clients. Ms.
Mahoney also serves as software development and training expert for the firm. She is
responsible for facilitating routine management of the project and client communication. She
will also be responsible for maintaining the project schedule, all aspects of data management
and analysis, software execution, and document preparation. She will also provide client
training and assistance throughout the document review process to aid the client’s
comprehension of the report format as well as plan design. Ms. Mahoney plans to contribute
65% to the overall project.
Charles Mahoney, CPA, Primary Project Manager
Mr. Charles Mahoney launched Mahoney & Associates Consulting, LLC in 2004. Mahoney &
Associates is known as a leading company which is of superior product quality and continued
customer satisfaction. Mr. Mahoney was formerly the regional manager of the rocky mountian
states region for a large consulting firm. He has developed hundreds of cost allocation plans
for major counties, cities, and public retirement programs. Some of the cost plan
engagements Mr. Mahoney performed are: City of Billings (MT), Carson City, (NV), City of
Monterey (CA), City of Seaside (CA), City of Sparks (NV), Clark County (NV), Douglas County
(NV), Medford Oregon (OR), Regional Transportation Commission (NV), Southern Nevada
Health District (NV), San Francisco Superior Courts (CA), City of Roseville including the water
department (CA), Adams County (CO), Pueblo County (CO), Garfield County (CO), City of
Colorado Springs (CO), and the Colorado Student Loan Association.
His extensive background at the management level for local and state governments, including
Jefferson County Colorado and the State of Colorado, supports Mr. Mahoney’s knowledge as
a consultant. At the State of Colorado, he worked for the Department of Human Services
training local county departments on random moment sampling, cost allocation of
administrative costs and federal requirements. He also worked with local counties to enhance
the flow of information between the state and counties. He made amendments to the Federal
public assistance cost allocation plan (PACAP) for the State of Colorado as necessary,
processed and controlled the monthly cost allocation of indirect administrative costs, and
prepared the monthly and quarterly financial statements that tracked the allocation of the
indirect administrative costs for 63 Colorado counties.
His governmental experience included the position of the Management Administrator at
Jefferson County Colorado where he was responsible for the budget preparation and fiscal
Attachment 3
C9 - 42
City of San Luis Obispo, CA
Central Service Cost Allocation Plan
& Labor Rate Development
5
responsibilities for $40 million dollars which consisted of 40% state funds, 40% federal funds,
and 20% county funds. The Community Development Department, which managed federal
grants for CDBG and CSBG, would request guidance, assistance, and recommendations in
matters surrounding the financial management of these two Federal programs. He has been
through multiple years of audits by independent audit firms as well as state and federal
auditors.
Early in Mr. Mahoney’s career he worked for a national public accounting firm and a small
regional account firm, gaining experience in the areas of governmental audit and taxation. Mr.
Mahoney is a Certified Public Accountant. He has a BS degree in accounting and a minor in
economics from Regis University, Denver, Colorado.
Marchell Mahoney, Project Manager
Ms. Marchell Mahoney has 11 years of direct experience developing and reviewing cost
allocation plans for city and county governments and has a solid understanding of the Circular
OMB A-87. She has extensive working knowledge of the sophisticated cost allocation
software used by Mahoney and Associates and is lead consultant in the area of client software
training. She is also taken on the roll of Director of Software Development. She has been
instrumental in the design, testing and implementation of the next generation of cost allocation
software utilizing a web-based client portal approach.
Ms. Mahoney prepared cost allocation plans for major counties and cities. Some of the cost
plan engagements Ms. Mahoney has performed are: Clark County (NV), Douglas County,(NV),
Storey County (NV), City of Seaside (CA), City of Monterey (CA), City of San Luis Obispo
(CA), City of Billings (MT), Carson City, (NV), City of Sparks (NV), City of Medford (OR),
Southern Nevada Health District (NV), and the Regional Transportation Commission (NV).
Before joining Mahoney & Associates Consulting, LLC she spent ten years working in area of
taxation in the preparation of individual, partnership, and corporate income tax returns. She
has excellent knowledge in the area of compliance with State and Federal requirements.
Ms. Mahoney also has a strong background in research and marketing working as a consultant
for a major employee benefit consulting firm. She gained experience in research and
development of self-funded health insurance programs for Cities, Counties and Associations.
She was responsible for maintaining plan documents, obtaining and analyzing bid proposals
from insurance carriers, employee benefit presentations and open enrollment documents and
benefit rate development.
Ms. Mahoney has a BS in Business Administration from Montana State University.
Attachment 3
C9 - 43
City of San Luis Obispo, CA
Central Service Cost Allocation Plan
& Labor Rate Development
6
PROJECT SCOPE
The City of San Luis Obispo officials recognize the need to identify all overhead type costs
incurred by the City and to report these full costs concurrent with the development and
preparation of Full and OMB A-87 compliant Cost Allocation Plan (CAP) as well as fully
burdened labor rates. Mahoney and Associates has successfully completed four plan years
with the City and is fully versed in the City’s availability of reports and other statistical data as
well as the City’s relationship with the cognizant agency, the Federal Transportation
Administration.
The result of our analysis will be to maximize overhead costs assignable for services provided
by the City and will be compliant with Federal and State grant reporting which is synonymous
with OMB A-87 cost reporting and the Handbook of Cost Plan Procedures for California
Counties and California Constitution, Proposition 218.
Mahoney & Associates in conjunction with the City’s departments will develop an overhead
cost allocation model that calculates the full costs of providing services and fully burdened
labor rates for select positions. We make every effort to minimize City staff resources and plan
for variables from year to year while creating a clear understanding of cost recovery of various
City services. The requirements of the model shall allow for:
The ability to continuously update the model and overhead cost allocation plan from year to year to
accommodate organizational growth, development, or changes;
Allow for the addition or removal of direct and overhead costs so that the overhead cost allocation plan may
be developed from a simple plan to a progressively more inclusive plan which would allow for an annual
update for specific purposes;
Review of the current department and organization structure, functions, costs, allocation bases, and
methodology to be used in the preparation of the Plan;
The addition of hypothetical service area information for future services, enhancements, and the ability to
calculate the estimated costs of providing the service under consideration (scenario and “what if” analyses).
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PROPOSED WORK PLAN
Phase I
1. Organization Review:
Generally, Mahoney and Associates requests the official financial statement,
organizational chart and any pertinent or relevant allocation documents used by the
client to conduct a preliminary review and identify areas for further discussion as they
relate to the model. Since we are already familiar with the City of San Luis Obispo, our
focus would be to identify potential changes in structure that would impact the model.
2. Define Purpose and Potential Uses of the Cost Allocation Model:
Mahoney and Associates will work with the City project team to review current purpose
and goals of the cost allocation model as well as point out other areas of consideration.
The review will include a discussion of the current and new potential Central Service
Departments to establish the chart of accounts for the purpose of the City cost
allocation model. Throughout the process we will also address any grantee (receivers
of costs) concerns that may have arisen since the publishing of the previous plan and
advise on alternative methodology to alleviate the issue.
The establishment of the chart of accounts involves reviewing and classifying possible
organizational units as a “central service” department as well as identifying departments
that administer any federal and state programs and to separately establish the
administrative overhead functions of these departments for indirect cost allocation
purposes. This assures that both central services overhead and departmental
administrative costs are reflected as indirect costs and properly distributed to all
program services of the department.
3. Conduct Central Service Department Interviews:
Mahoney and Associates will conduct a separate detailed interview with each Central
Service department identified. The interview will comprise of the following:
a. Determine nature and extent services provided by of central service departments:
A comprehensive review of the department with the unit head and other
appropriate personnel to specifically identify the various functional activities
performed within each unit and the specific departments receiving or benefiting
from those activities.
Mahoney and Associates will guide the conversation to insure all services are
identified at the lowest reasonable activity level in order to calculate the full costs
consistent with OMB A-87 regulations and Proposition 218.
b. Determine appropriate statistical data for allocating functional activity costs.
The interview process discussed above includes a review of record-keeping
practices as it is critical to identify reliable and meaningful bases for allocating
functional activity costs. This will also ensure that costs are allocated on a
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reasonable and equitable basis. Where the desired statistical data is not
available, recommendations will be made concerning the method(s) for compiling
such data for future use. Considerable effort will be made to select appropriate
allocation bases to maximize indirect cost recoveries and accuracy of financial
information while minimizing staff resources required for data collection.
The City will be responsible for compiling the agreed upon raw statistical data,
however, Mahoney and Associates will manage the coordination of collecting
data from City departments with the appointed liaison.
c. Perform a cost analysis of the central service organizational unit.
Review and prepared a worksheet reflecting the total expenditures of the unit as
reported on the City’s official financial statements. Separately identify the salary
costs and related personnel costs, and the non-salary line item costs to the
specific functional activities identified in the task (b) above. Prepare a Salary and
Wage Analysis worksheet for the unit if necessary to divide cost among the
functional activities.
Phase II
1. Develop Cost Allocation Model and Indirect Cost Rate Proposal:
Upon collection of statistical data and organizational unit interviews, Mahoney and
Associates will develop the cost allocation model using our sophisticated cost allocation
software utilizing a double-step down allocation approach. Mahoney and Associates will
maintain close contact with the City project team and make recommendations as
necessary.
Cost allocation model development:
a. Allocation of functional cost activities of each Central Service Organizational Unit.
Separately allocate each functional activity cost to the other organizational
units of the City that benefits from or receive services from the central service
unit. Allocations are based on the statistical data identified and compiled
during the central service department Interview above. These same functional
cost groupings will be appropriately allocated to benefiting departments and
programs.
b. Identify disallowed OMB A-87 costs.
Under OMB A-87 regulations, some costs are specifically disallowed for
Federal grant reimbursement. These costs are will be identified as separate
line items for easy recognition and will be disallowed in the OMB A-87 cost
allocation plan.
c. Summarize the allocated costs by receiving department.
A summary of costs allocated is prepared to reflect the allocable costs of
each central service department to each operating or receiver department.
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d. Compute cost allocation model.
Compute the Full and OMB A-87 cost allocation plans and complete plan
documents in draft form and presented to the City for review and comment on
or before February 15th. Mahoney and Associates encourages all of our
clients to share the draft of the document with central service departments to
get their feedback during this time period. Any necessary revisions or
changes are made before the plan is finalized and published. Plan documents
include the following:
1. Table of Contents
2. Certificate of Cost Allocation Plan
3. Summary of Costs Allocated
4. Schedule of Indirect Cost Rates
5. Central Services Departmental Costs by Functional Activity
6. Full Cost by organization level (Fund, Department or Division)
7. Narrative Descriptions of the Nature and Extent of each central service department
and functional activities.
Select Labor Rate Calculation:
a. Conduct interview with affected departments
Identify positions to be included in the labor rates
Identify positions that provide supervision or oversight to the identified positions
b. Compute Indirect Rate
Calculate costs by positions using hourly rates and benefits costs provided by the
Finance Department
Phase III
1. Prepare Final Plan Documents:
Once approval has been received, Mahoney and Associates will prepare final plan
documents of the Cost Plan and Labor Rates. We will provide one electronic (PDF)
copy and one bound copy of each plan to the City on or before March 15th.
2. On-going Technical Assistance:
Mahoney and Associates has been and will be happy to assist the City in facilitating an
understanding of the plan and its implications going forward. We will provide on-going
technical assistance concerning the approach and methodology of the cost allocation
process for up to one year after the end of the contract.
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3. Negotiate Project Approval:
Meet with review agencies and or city departments, if necessary, to negotiate
acceptance of the submitted plan(s). All questions raised by review agencies will be
addressed and all aspects of the plan will be supported.
Please note that this does not include assistance to the City to defend questioned costs
as a result of errors or discrepancies found upon review of the City’s books or records
that were relied upon during this project. And, it does not include questioned costs that
may emanate as a result of interpretation and position that the City may want to
maintain and defend.
PROJECT SCHEDULE
The City has requested a project completion date of March 15, 2015, including a draft of the
model by February 15, 2015. Mahoney and Associates is committed to meeting our client’s
completion timeline and will assign firm resources as necessary to meet or exceed the project
schedule.
We are committed to meeting the agreed upon deadlines but timely completion is highly
dependent upon the responsiveness of City staff in regards to a successful collection of
necessary data. Mahoney and Associates requests the City to appoint a staff member to act as
a liaison between the City and the consultant for the project. The liaison would help facilitate
communication between staff and the consultant and to assist in data collection from City staff
to ensure deadlines are met. The liaison would also assist with the document review and to
communicate any concerns that may arise during the project to the consultant.
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3.
STATEMENT OF LITIGATION, INVESTIGATIONS, CONFLICTS OF
INTEREST AND DISQUALIFICATIONS
a) Mahoney and Associates nor any person associated with Mahoney and Associates has
been removed from a project or disqualified from proposing on a similar scope of work.
b) Mahoney and Associates nor any person associated with Mahoney and Associates
been the subject of an investigation by a state or federal agency related to the work
conducted in the preparation of cost allocation plans.
c) We have graciously supplied both regular and peanut M&Ms to be enjoyed by the
reviewers and staff. Hopefully we have supplied enough for everyone’s preference.
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4.
REFERENCES
REFERENCES
Number of years engaged in providing the services included within the scope of the specifications
under the present business name: 11 YEARS.
Describe fully the work completed for 3 (three) California clients within the last 2 years that demonstrate your ability to provide
the services required by the scope of the specifications. Attach additional pages if required. The City reserves the right to
contact each of the references listed for additional information regarding your firm’s qualifications. Below, please provide
current contact information for each of these three clients.
note: THE FOLLOWING CLIENT REFERENCES ARE PROPRIETARY AND CONFIDENTIAL
TO PUBLIC OR PRIVATE REQUESTS
Reference No. 1
Customer Name City of San Luis Obispo, CA
Contact Individual Wayne Padilla
Telephone Number (805) 781-7125
Email Address wpadilla@slocity.org
Street Address 990 Palm Street
City, State, Zip Code San Luis Obispo, CA 93401
Description of services provided including
contract amount, when provided and
project outcome
Full and OMB A-87 Cost Allocation Plans for the past 4 plan
years.
Reference No. 2
Customer Name City of Seaside, CA
Contact Individual Daphne Hodgson, Deputy City Manager - Administrative
Services
Telephone Number (831) 899-6718
Email Address dhodgson@ci.seaside.ca.us
Street Address 440 Harcourt Avenue
City, State, Zip Code Seaside, CA 93955
Description of services provided including
contract amount, when provided and
project outcome
Full, OMB A-87 Cost Allocation Plans and Indirect Rate
Cost Proposal for the past 6 plan years. The Scope of
Work was expanded to include Public Works in the cost
allocation plans for the past 4 years.
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Reference No. 3
Customer Name City of Monterey, CA
Contact Individual Julie Porter
Telephone Number (831) 646-3724
Email Address Porter@ci.monterey.ca.us
Street Address 735 Pacific Street
City, State, Zip Code Monterey, CA 93940
Description of services provided including
contract amount, when provided and
project outcome
Full, OMB A-87 Cost Allocation Plans and Indirect Rate
Cost Proposal for the past 7 plan years.
Reference No. 4
Customer Name City of Billings, MT
Contact Individual Patrick Webber, Finance Director
Telephone Number 406-657-8209
Email Address WeberP@ci.billings.mt.us
Street Address 210 North 27th Street
City, State, Zip Code Billings, MT 59101
Description of services provided including
contract amount, when provided and
project outcome
Full Cost Allocation Plan for the past 14 plan years.
Reference No. 5
Customer Name Clark County, NV
Contact Individual Mark Gamett, CPA, Manager of Accounting Services
Telephone Number (702) 455-3323
Email Address c1210mdg@co.clark.nv.us
Street Address 500 South Grand Central Parkway
City, State, Zip Code Las Vegas, NV 89155
Description of services provided including
contract amount, when provided and
project outcome
Full, OMB A-87 and Information Technology Cost Allocation
Plans for the past 9 plan years.
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5.
CERTIFICATE OF INSURANCE
Mahoney and Associates also
carries other insurance as
follows:
Errors and Omissions Liability
Insurance*:
$500,000 per occurrence
$500,000 Aggregate
*Our risk exposure does not warrant the
levels of insurance required by the City of
San Luis Obispo.
Workers Compensation*:
N/A
*We do not currently employ staff that would
require Workers’ Compensation insurance;
however we would certainly obtain coverage
if we expanded our staffing levels.
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6.
COMPENSATION
Mahoney and Associates prefers to use a flat consulting fee plus travel expenses so as to not
nickel and dime our clients over the duration of an engagement. Fees are set based on our
experience of the past 11 years performing cost analysis. We strive to offer exceptional service
at a reasonable fee and at the same time maintaining our own firm’s financial survivability.
As we have a working knowledge of the City of San Luis Obispo, we feel we can offer our
services at a discount from our previous contract with City.
Our only variable is travel since it is impossible to determine how prices will rise or fall over a
five year time span. When we do travel, we are very conscious and make our travel
arrangement judiciously. If necessary, we are willing to negotiate a travel allowance.
CONSULTING FEES
Mahoney and Associates will design and produce a Full and OMB A-87 Cost Allocation Plans
using our proprietary software and a select number of Labor Rate Calculations as outline in
this proposal for the fees set forth below:
Plan Years 1 & 2: $10,500 per plan year, plus actual travel costs
Plan Years 3, 4 & 5: $11,500 per plan year, plus actual travel costs
TRAVEL EXPENSES
Mahoney and Associates generally make one (1) onsite visit per plan year to interview staff
and collect data. We are available to make additional visits to the City if requested. All travel
is billed at the time of travel at actual travel costs.
BILLING SCHEDULE
Standard billing schedule is 33% after field work (Phase I), 57% upon production of the draft
(Phase II), and the final 10% upon delivery of the final product (Phase III).
ADDITIONAL SERVICES
Additional services can be obtained for the fee of $120 per hour for the Project Manager and
$100 per hour for support consultants. We are happy to provide additional services on a pre-
authorized basis for a specified scope of service outside of this proposal.
This proposal is a firm and irrevocable offer for ninety (90) days.
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