HomeMy WebLinkAboutAGENDA REPORT 1999 0317 CC REG ITEM 10JMOORPARK CITY COUNCIL
AGENDA REPORT
TO: The Honorable City Council
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FROM: Donald P. Reynolds Jr., Administrative Services Mgr.
DATE: March 11, 1999, (CC Mtg. 3/17/99)
SUBJECT: Consider Award of Contract for an Indirect Cost /Cost
Allocation Study
SUMMARY
The City Council approved an appropriation of $25,000 to be used
during fiscal year 1998/99 for an indirect cost study and cost
allocation study of City operations. In February staff
solicited bids from six firms specializing in this type of
study, and received one response. Staff is requesting Council
approval to contract with David M. Griffith Maximus Ltd., at a
cost not exceed $17,000.
OVERVIEW AND BACKGROUND
An indirect cost /cost allocation study is used to validate City
charges for service related to the allocation of general support
costs ( "overhead costs ") to various programs, the calculation of
City service rates, and to develop the cost per hour of City
staff. These rates also allow the City to determine the
administrative costs so that all costs are recuperated. The
most consistent application of this cost recovery system is
within the City's planning fee rates. The City's current rates
are based on a 1989 study and the support documentation for the
allocations are now obsolete.
The City Council approved $25,000 in the current budget to
complete a new indirect cost /cost allocation study. This study
would be a comprehensive look at all City cost centers.
Programs such as gas tax and Community Development Block Grant,
will be charged for the cost of supporting the direct services
provided. The City' fee structure will be improved, and all of
the City fees, including Community Development, can be placed on
0061.3 4
Indirect Cost /Cost Allocation Study
Meeting of March 17, 1999
Page 2
an annual review system. In February, the City sent requests for
proposals to six different vendors, and one responded. A copy
of this proposal was previously provided to the Council under
separate cover.
Although the City only received one response, it is from a
reputable company. David M. Griffith Maximus, Ltd. ("DMG") has
been completing these studies for a number of years, and the
methods used have been proven to satisfy the requirements of
both state and federal auditors.
The cost from DMG will be $17,000. This cost includes a two -
phase study to examine first the general support service costs,
then the applicability of these to each program the City
operates. This two tiered approach is much more useful to the
City than the focussed study used in 1989. It will be tested
with federal auditors by the firm, to prove that it meets the
federal cost recovery standards which are also accepted by state
agencies. The cost also includes presentation to Council and
subsequent negotiations and revisions if required. Staff is
requesting a ten percent contingency ($1,700) in case additional
services are required, and to copy and transmit the approved
plan to those interested in reviewing it (e.g., County of
Ventura /HUD, FEMA, the State Gas Tax Auditor, etc.)
Including the contingency of 10 %, the City's $25,000 budget will
be used in this way:
FUNDING SOURCE
LINE ITEM
BUDGET
PROJECTED
General Fund
100.505.0000.000.9199
$
19,000
$ 14,200
Redevelopment
410.510.0000.000.9199
$
5,000
$ 3,750
C.D.B.G.
245.511.0000.000.9199
$
1,000
$ 750
TOTAL
$
25,000
$ 18,700
RECOMMENDATION
That the Council approve the award of contract to David M.
Griffith Maximus, Ltd., for preparation of an Indirect Cost /Cost
Allocation study in the amount of $17,000, plus a ten percent
contingency of $1,700, (for a total of $18,700), and authorize
the City Manager to execute the related contract.