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HomeMy WebLinkAbout5/16/2001 - STAFF REPORTS (4) DATE: May 16, 2001 TO: City Council FROM: Director of Finance & Treasurer/Procurement Manager RE: Award of Audit Contract to Conrad &Associates, LLP RECOMMENDATION: It is recommended that the City Council award a contract for outside auditing services to Conrad &Associates, LLP for Fiscal Years ending June 30, 2001, 2002 and 2003 at a maximum fee of $59,500, $61,420 and $73,549, respectively, with an option for two additional years, subject to the annual review of the Director of Finance and City Manager at a price acceptable to both the City and Conrad. SUMMARY: The contract is for 3 years, with an option for an additional 2 years. The first year's cost of$59,500 represents about a 5.6% increase over the current year's cost, and is the first increase in 3 years. Audit services include the financial audit of the City, the Community Redevelopment Agency, and related entities; preparation of the Comprehensive Annual Financial Report (CAFR); grant audits; and preparation of exempt organization tax returns. BACKGROUND: The CPA firm of Conrad &Associates has provided the City with audit services since 1986. The firm's contract was most recently renewed in 1996. That five year contract expired with the completion of the audit for Fiscal Year 1999-2000. In February of this year, the Finance Department and Procurement Division jointly prepared a Request for Proposal for Professional Auditing Services. A total of 15 RFP's were sent out, and the City received 9 responses. A review committee consisting of the Director of Finance &Treasurer, the Procurement Manager, Henry Weiss (former City Librarian), John Falconer (Finance Director for the City of La Quinta), and Lloyd Maryanov (former Mayor and retired CPA)were assembled to review and rank the proposals. The City's Accounting Manager and Audit& Budget Manager participated in the review process, but did not vote. The review criteria was separated into 3 components: Mandatory Elements, Technical Qualifications and Price. To be considered, a firm had to meet the Mandatory Elements of independence and licensing in California, no conflict of interest, adherence to the RFP instructions, and a record of quality audit work. The Technical Qualifications considered a firm's expertise and experience on comparable government engagements, the quality of the firm's personnel to be assigned to the engagement, adequacy of the proposed staffing plan, and the adequacy of sampling techniques, analytical procedures and on-going financial consulting services to cities. Price was considered in the context of total cost, including the actual dollar amount quoted, the number of audit hours to be provided, the seniority and qualifications of the Page 2 Award of Audit Contract engagement team actually providing the hours, and the potential cost impact on City staff. The committee members received copies of all the proposals in mid-April to review on their own, and met on April 25'h to discuss their observations. One of the major issues raised by the committee was whether a new audit firm providing a "fresh look" at the City's financial operations outweighed the value of continuity that would be provided by the incumbent. The committee's ranking method identified Conrad &Associates and Diehl Evans as the top two firms, and both firms were interviewed on May 3`d After the interviews, it was the strong consensus of the review committee that Conrad & Associates was the more qualified firm. Some of the reasons given by the members were Conrad's more experienced personnel, a better understanding of the complexity of the City (e.g., bond issues), dedication of more total hours with a greater percentage of those hours from senior staff, and the acceptance of the City's standard contract, especially in regard to access to the audit workpapers. The issue of a new look versus continuity was decided in Conrad's favor by their proposal to change the partner in charge of the engagement, and to bring in a new Manager who had previous experience in Palm Springs as both a staff and senior auditor. Also, given the complexities that GASB 34 will engender over the next few years, the committee felt that there were considerable advantages to having an audit firm with an existing base of knowledge and experience with the City's books. In terms of price, the two firms are fairly close, as the schedule below shows. Firm Total Hours Audit Cost Per Hour Diehl Evans 725* $51,750 ** $71.38 Conrad 800 59,500 74.38 * Net of clerical hours ** Estimate $3000 for additional items not in RFP In addition, staff estimates that the cost of transitioning to a new audit firm would be between $8000 to $10,000 in additional overtime costs. Including that cost makes the price proposals virtually identical. Conrad's proposal for the third year of the contract includes an estimate of$10,000 for costs associated with the implementation of GASB 34, and anticipates that 120 hours of audit work and schedule preparation will be necessary. However, if less time is needed, the City will be billed only for the actual cost. A more complete discussion of GASB 34 and what it will mean to the City will be scheduled for a study session within the next few months. The City has had a very good working relationship with Conrad &Associates, as evidenced by the 11 consecutive years in which the CAFR received both the Government Finance Officers Association's Certificate of Achievement for Excellence and the California Society of Municipal Finance Officer's award for Outstanding Financial Reporting. We look forward to a continuation of that relationship; and the maintenance and improvement of the City's high standards for financial reporting. 49441 Submitted by: Thomas M. Kanarr Harold Good Director of Finance &Treasurer Procurement Manager Approved David H. Ready City Manager Attachments: Minute Order Standard agreement aA3 CONTRACT SERVICES AGREEMENT FOR Auditing Services THIS CONTRACT SERVICES AGREEMENT (herein "Agreement") , is made and entered into this 16th day of May, 2001 by and between the CITY OF PALM SPRINGS, a municipal corporation, (herein "City") and Conrad & Associates, LLP (herein "Contractor") . The parties hereto agree as follows : 1 . 0 SERVICES OF CONTRACTOR 1 . 1 Scope of Services . In compliance with all terms and conditions of this Agreement, the Contractor shall provide those services specified in the "Scope of Services" attached hereto as Exhibit "A" and incorporated herein by this reference, which services may be referred to herein as the "services" or "work" hereunder. As a material inducement to the City entering into this Agreement, Contractor represents and warrants that Contractor is a provider of first class work and services and Contractor is experienced in performing the work and services contemplated herein and, in light of such status and experience, Contractor covenants that it shall follow the highest professional standards in performing the work and services required hereunder and that all materials will be of good quality, fit for the purpose intended. For purposes of this Agreement, the phrase "highest professional standards" shall mean those standards of practice recognized by one or more first-class firms performing similar work under similar circumstances . 1 .2 Contractor' s Proposal . The Scope of Services shall include the Contractor' s proposal or bid which shall be incorporated herein by this reference as though fully set forth herein. In the event of any inconsistency between the terms of such proposal and this Agreement, the terms of this Agreement shall govern. 1 . 3 Compliance with Law. All services rendered hereunder shall be provided in accordance with all ordinances, resolutions, statutes, rules, and regulations of the City and any Federal, State or local governmental agency having jurisdiction in effect at the time service is rendered. FS1\296\099999-3000\29113.1 05/07/01 any 1 . 4 Licenses, Permits, Fees and Assessments . Contractor shall obtain at its sole cost and expense such licenses, permits and approvals as may be required by law for the performance of the services required by this Agreement. Contractor shall have the sole obligation to pay for any fees, assessments and taxes, plus applicable penalties and interest, which may be imposed by law and arise from or are necessary for the Contractor' s performance of the services required by this Agreement, and shall indemnify, defend and hold harmless City against any such fees, assessments, taxes penalties or interest levied, assessed or imposed against City hereunder. 1 .5 Familiarity with Work. By executing this Contract, Contractor warrants that Contractor (a) has thoroughly investigated and considered the scope of services to be performed, (b) has carefully considered how the services should be performed, and (c) fully understands the facilities, difficulties and restrictions attending performance of the services under this Agreement. If the services involve work upon any site, Contractor warrants that Contractor has or will investigate the site and is or will be fully acquainted with the conditions there existing, prior to commencement of services hereunder. Should the Contractor discover any latent or unknown conditions, which will materially affect the performance of the services hereunder, Contractor shall immediately inform the City of such fact and shall not proceed except at Contractor' s risk until written instructions are received from the Contract Officer. 1 . 6 Care of Work. The Contractor shall adopt reasonable methods during the life of the Agreement to furnish continuous protection to the work, and the equipment, materials, papers, documents, plans, studies and/or other components thereof to prevent losses or damages, and shall be responsible for all such damages, to persons or property, until acceptance of the work by City, except such losses or damages as may be caused by City' s own negligence. 1 . 7 Further Responsibilities of Parties . Both parties agree to use reasonable care and diligence to perform their respective obligations under this Agreement. Both parties agree to act in good faith to execute all instruments, prepare all documents and take all actions as may be reasonably necessary to carry out the purposes of this Agreement. Unless hereafter FS1\276\099999-3000\29113.1 05/07/01 2A6 specified, neither party shall be responsible for the service of the other. 1 . 8 Additional Services . City shall have the right at any time during the performance of the services, without invalidating this Agreement, to order extra work beyond that specified in the Scope of Services or make changes by altering, adding to or deducting from said work. No such extra work may be undertaken unless a written order is first given by the Contract Officer to the Contractor, incorporating therein any adjustment in (i) the Contract Sum, and/or (ii) the time to perform this Agreement, which said adjustments are subject to the written approval of the Contractor. Any increase in compensation of five percent (5%) of the Contract Sum or $25, 000, whichever is less; or in the time to perform of one hundred eighty (180) days or less may be approved by the Contract Officer. Any greater increases, taken either separately or cumulatively must be approved by the City Council . It is expressly understood by Contractor that the provisions of this Section shall not apply to services specifically set forth in the Scope of Services or reasonably contemplated therein. Contractor hereby acknowledges that it accepts the risk that the services to be provided pursuant to the Scope of Services may be more costly or time consuming than Contractor anticipates and that Contractor shall not be entitled to additional compensation therefore. 1 . 9 Special Requirements . Additional terms and conditions of this Agreement, if any, which are made a part hereof are set forth in the "Special Requirements" attached hereto as Exhibit "B" and incorporated herein by this reference. In the event of a conflict between the provisions of Exhibit "B" and any other provisions of this Agreement, the provisions of Exhibit "B" shall govern. 2 . 0 COMPENSATION 2 . 1 Contract Sum. For the services rendered pursuant to this Agreement, the Contractor shall be compensated in accordance with the "Schedule of Compensation" attached hereto as Exhibit "C" and incorporated herein by this reference, but not exceeding the maximum contract amount of Exhibit "C" (herein "Contract Sum") , except as provided in Section 1 . 8 . The method of compensation may include: (i) a lump sum payment upon FS1\276\099999-3000\29113.1 05/07/O1 A A 10 completion, (ii) payment in accordance with the percentage of completion of the services, (iii) payment for time and materials based upon the Contractor' s rates as specified in the Schedule of Compensation, but not exceeding the Contract Sum or (iv) such other methods as may be specified in the Schedule of Compensation. Compensation may include reimbursement for actual and necessary expenditures for reproduction costs, telephone expense, transportation expense approved by the Contract Officer in advance, and no other expenses and only if specified in the Schedule of Compensation. The Contract Sum shall include the attendance of Contractor at all project meetings reasonably deemed necessary by the City; Contractor shall not be entitled to any additional compensation for attending said meetings . 2 .2 Method of Payment. Unless some other method of payment is specified in the Schedule of Compensation, in any month in which Contractor wishes to receive payment, no later than the first (1st) working day of such month, Contractor shall submit to the City in the form approved by the City' s Contract Officer, an invoice for services rendered prior to the date of the invoice. Except as provided in Section 7 . 3, City shall pay Contractor for all expenses stated thereon which are approved by City pursuant to this Agreement no later than the last working day of the month (see Exhibit C) . 3 . 0 PERFORMANCE SCHEDULE 3. 1 Time of Essence. Time is of the essence in the performance of this Agreement. 3 . 2 Schedule of Performance. Contractor shall commence the services pursuant to this Agreement upon receipt of a written notice to proceed and shall perform all services within the time period(s) established in the "Schedule of Performance" attached hereto as Exhibit "D", if any, and incorporated herein by this reference. When requested by the Contractor, extensions to the time period (s) specified in the Schedule of Performance may be approved in writing by the Contract Officer but not exceeding one hundred eighty (180) days cumulatively. 3.3 Force Majeure. The time period (s) specified in the Schedule of Performance for performance of the services rendered pursuant to this Agreement shall be extended because of FS1\276\099999-3000\29113.1 05/07/01 441 rendered pursuant to this Agreement shall be extended because of any delays due to unforeseeable causes beyond the control and without the fault or negligence of the Contractor, including, but not restricted to, acts of God or of the public enemy, unusually severe weather, fires, earthquakes, floods, epidemics, quarantine restrictions, riots, strikes, freight embargoes, wars, litigation, and/or acts of any governmental agency, including the City, if the Contractor shall within ten (10) days of the commencement of such delay notify the Contract Officer in writing of the causes of the delay. The Contract Officer shall ascertain the facts and the extent of delay, and extend the time for performing the services for the period of the enforced delay when and if in the judgment of the Contract Officer such delay is justified. The Contract Officer' s determination shall be final and conclusive upon the parties to this Agreement. In no event shall Contractor be entitled to recover damages against the City for any delay in the performance of this Agreement, however caused, Contractor' s sole remedy being extension of the Agreement pursuant to this Section. 3 . 4 Term. Unless earlier terminated in accordance with Section 7 . 8 of this Agreement, this Agreement shall continue in full force and effect until completion of the services . The term of this agreement shall be for a three-year period to perform professional services for the fiscal years ending June 30, 1996, 1997 and 1998 . 4 . 0 COORDINATION OF WORK 4 . 1 Representative of Contractor. The following principals of Contractor are hereby designated as being the principals and representatives of Contractor authorized to act in its behalf with respect to the work specified herein and make all decisions in connection therewith: Michael A. Harrison, Technical Partner Ken Al-Imam, Engagement Partner It is expressly understood that the experience, knowledge, capability and reputation of the foregoing principals were a substantial inducement for City to enter into this Agreement. Therefore, the foregoing principals shall be responsible during the term of this Agreement for directing all activities of Contractor and devoting sufficient time to personally supervise FS1\276\099999-3000\29113.1 05/07/01 OR the services hereunder. For purposes of this Agreement, the foregoing principals may not be replaced nor may their responsibilities be substantially reduced by Contractor without the express written approval of City. 4 .2 Contract Officer. The Contract Officer shall be the City Manager or such person as may be designated by the City Manager. It shall be the Contractor' s responsibility to assure that the Contract Officer is kept informed of the progress of the performance of the services and the Contractor shall refer any decisions, which must be made by City to the Contract Officer. Unless otherwise specified herein, any approval of City required hereunder shall mean the approval of the Contract Officer. The Contract Officer shall have authority to sign all documents on behalf of the City required hereunder to carry out the terms of this Agreement. 4 .3 Prohibition Against Subcontracting or Assignment. The experience, knowledge, capability and reputation of Contractor, its principals and employees were a substantial inducement for the City to enter into this Agreement. Therefore, Contractor shall not contract with any other entity to perform in whole or in part the services required hereunder without the express written approval of the City. In addition, neither this Agreement nor any interest herein may be transferred, assigned, conveyed, hypothecated or encumbered voluntarily or by operation of law, whether for the benefit of creditors or otherwise, without the prior written approval of City. Transfers restricted hereunder shall include the transfer to any person or group of persons acting in concert of more than twenty five percent (25%) of the present ownership and/or control of Contractor, taking all transfers into account on a cumulative basis . In the event of any such unapproved transfer, including any bankruptcy proceeding, this Agreement shall be void. No approved transfer shall release the Contractor or any surety of Contractor of any liability hereunder without the express consent of City. 4 . 4 Independent Contractor. Neither the City nor any of its employees shall have any control over the manner, mode or means by which Contractor, its agents or employees, perform the services required herein, except as otherwise set forth herein. City shall have no voice in the selection, discharge, supervision or control of Contractor' s employees, servants, representatives or agents, or in fixing their number, compensation or hours of FS1\276\099999-3000\29113.1 05/07/01 W? 9 service. Contractor shall perform all services required herein as an independent contractor of City and shall remain at all times as to City a wholly independent contractor with only such obligations as are consistent with that role. Contractor shall not at any time or in any manner represent that it or any of its agents or employees are agents or employees of City. City shall not in any way or for any purpose become or be deemed to be a partner of Contractor in its business or otherwise or a joint venturer or a member of any joint enterprise with Contractor. 5. 0 INSURANCE, INDEMNIFICATION AND BONDS 5. 1 Insurance. The Contractor shall procure and maintain, at its sole cost and expense, in a form and content satisfactory to City, during the entire term of this Agreement including any extension thereof, the following policies of insurance: (a) Comprehensive General Liability Insurance. A policy of comprehensive general liability insurance written on a per occurrence basis. If the Contract Sum is $25, 000. 00 or less, the policy of insurance shall be written in an amount not less than either (i) a combined single limit of $500, 000 . 00 or (ii) bodily injury limits of $250, 000. 00 per person, $500, 000 . 00 per occurrence and $500, 000. 00 products and completed operations and property damage limits of $100, 000 . 00 per occurrence and $100, 000 . 00 in the aggregate. If the Contract Sum is greater than $25, 000 . 00 but less than or equal to $100, 000. 00, the policy of insurance shall be in an amount not less than either (i) a combined single limit of $1, 000, 000 . 00 for bodily injury, death and property damage or (ii) bodily injury limits of $500, 000 . 00 per person, $1, 000, 000 . 00 per occurrence and $1, 000, 000 . 00 products and completed operations and property damage limits of $500, 000 . 00 per occurrence and $500, 000 . 00 in the aggregate. If the Contract Sum is greater than $100, 000 . 00, the policy of insurance shall be in an amount not less than $5, 000, 000 . 00 combined single limit. (b) Worker' s Compensation Insurance. A policy of worker's compensation insurance in such amount as will fully comply with the laws of the State of California and which shall indemnify, insure and provide legal defense for both the Contractor and the City against any loss, claim or damage arising FS1\276\099999-3000\29113.1 05/07/01 aA /to from any injuries or occupational diseases occurring to any worker employed by or any persons retained by the Contractor in the course of carrying out the work or services contemplated in this Agreement. (c) Automotive Insurance. A policy of comprehensive automobile liability insurance written on a per occurrence basis in an amount not less than either (i) bodily injury liability limits of $250, 000 . 00 per person and $500, 000 . 00 per occurrence and property damage liability limits of $100, 000 . 00 per occurrence and $250, 000 . 00 in the aggregate or (ii) combined single limit liability of $500, 000 . 00 . Said policy shall include coverage for owned, non-owned, leased and hired cars . (d) Additional Insurance. Policies of such other insurance, including professional liability insurance, as may be required in the Special Requirements. All of the above policies of insurance shall be primary insurance and shall name the City, its officers, employees and agents as additional insureds . The insurer shall waive all rights of subrogation and contribution it may have against the City, its officers, employees and agents and their respective insurers . All of said policies of insurance shall provide that said insurance may not be amended or cancelled without providing thirty (30) days prior written notice by registered mail to the City. In the event any of said policies of insurance are cancelled, the Contractor shall, prior to the cancellation date, submit new evidence of insurance in conformance with this Section 5. 1 to the City Clerk. No work or services under this Agreement shall commence until the Contractor has provided the City with Certificates of Insurance or appropriate insurance binders evidencing the above insurance coverages and said Certificates of Insurance or binders are approved by the City. The Contractor agrees that the provisions of this Section 5 . 1 shall not be construed as limiting in any way the extent to which the Contractor may be held responsible for the payment of damages to any persons or property resulting from the Contractor' s activities or the activities of any person or persons for which the Contractor is otherwise responsible. In the event the Contractor subcontracts any portion of the work in compliance with Section 4 . 3 of this Agreement, the FS1\276\099999-3000\29113.1 05/07/01 contract between the Contractor and such subcontractor shall require the subcontractor to maintain the same policies of insurance that the Contractor is required to maintain pursuant to this Section 5. 1 . 5.2 Indemnification. Contractor agrees to indemnify the City, its officers, agents and employees against, and will hold and save them and each of them harmless from, any and all actions, suits, claims, damages to persons or property, losses, costs, penalties, obligations, errors, omissions or liabilities, (herein "claims or liabilities") that may be asserted or claimed by any person, firm or entity arising out of or in connection with the negligent performance of the work, operations or activities of Contractor, its agents, employees, subcontractors, or invitees, provided for herein, or arising from the negligent acts or omissions of Contractor hereunder, or arising from Contractor' s negligent performance of or failure to perform any term, provision covenant or condition of this Agreement, whether or not there is concurrent passive or active negligence on the part of the City, its officers, agents or employees but excluding such claims or liabilities arising from the sole negligence or willful misconduct of the City, its officers, agents or employees, who are directly responsible to the City, and in connection therewith: (a) Contractor will defend any action or actions filed in connection with any of said claims or liabilities and will pay all costs and expenses, including legal costs and attorneys ' fees incurred in connection therewith; (b) Contractor will promptly pay any judgment rendered against the City, its officers, agents or employees for any such claims or liabilities arising out of or in connection with the negligent performance of or failure to perform such work, operations or activities of Contractor hereunder; and Contractor agrees to save and hold the City, its officers, agents, and employees harmless therefrom; (c) In the event the City, its officers, agents or employees is made a party to any action or proceeding filed or prosecuted against Contractor for such damages or other claims arising out of or in connection with the negligent performance of or failure to perform the work, operation or activities of Contractor hereunder, Contractor agrees to pay to the City, its FS1\276\099999-3000\29113.1 05/07/01 4904 '2 officers, agents or employees, any and all costs and expenses incurred by the City, its officers, agents or employees in such action or proceeding, including but not limited to, legal costs and attorneys ' fees . 5 .3 Performance Bond. Concurrently with execution of this Agreement, Contractor shall deliver to City a performance bond in the sum of the amount of this Agreement, in the form provided by the City Clerk, which secures the faithful performance of this Agreement, unless such requirement is waived by the Contract Officer. The bond shall contain the original notarized signature of an authorized officer of the surety and affixed thereto shall be a certified and current copy of his power of attorney. The bond shall be unconditional and remain in force during the entire term of the Agreement and shall be null and void only if the Contractor promptly and faithfully performs all terms and conditions of this Agreement. 5. 4 Sufficiency of Insurer or Surety. Insurance or bonds required by this Agreement shall be satisfactory only if issued by companies qualified to do business in California, rated "A" or better in the most recent edition of Best Rating Guide, The Key Rating Guide or in the Federal Register, and only if they are of a financial category Class VII or better, unless such requirements are waived by the Director of Administrative Services or designee of the City due to unique circumstances . In the event the Director of Administrative Services determines that the work or services to be performed under this Agreement creates an increased or decreased risk of loss to the City, the Contractor agrees that the minimum limits of the insurance policies and the performance bond required by this Section 5 may be changed accordingly upon receipt of written notice from the Director of Administrative Services; provided that the Contractor shall have the right to appeal a determination of increased coverage by the Director of Administrative Services to the City Council of City within 10 days of receipt of notice from the Director of Administrative Services . 6. 0 RECORDS AND REPORTS 6. 1 Reports. Contractor shall periodically prepare and submit to the Contract Officer such reports concerning the FS1\276\099999-3000\29113.1 05/07/01 9A 413 performance of the services required by this Agreement. Contractor hereby acknowledges that the City is greatly concerned about the cost of work and services to be performed pursuant to this Agreement. For this reason, Contractor agrees that if Contractor becomes aware of any facts, circumstances, techniques, or events that may or will materially increase or decrease the cost of the work or services contemplated herein or, if Contractor is providing design services, the cost of the project being designed, Contractor shall promptly notify the Contract Officer of said fact, circumstance, technique or event and the estimated increased or decreased cost related thereto and, if Contractor is providing design services, the estimated increased or decreased cost estimate for the project being designed. 6.2 Records . Contractor shall keep, and require subcontractors to keep, such books and records as shall be necessary to perform the services required by this Agreement and enable the Contract Officer to evaluate the performance of such services . The Contract Officer shall have full and free access to such books and records at all times during normal business hours of City, including the right to inspect, copy, audit and make records and transcripts from such records . Such records shall be maintained for a period of three (3) years following completion of the services hereunder, and the City shall have access to such records in the event any audit is required. 6.3 Ownership of Documents . All drawings, specifications, reports, records, documents and other materials prepared by Contractor, its employees, subcontractors and agents in the performance of this Agreement shall be the property of City and shall be delivered to City upon request of the Contract Officer or upon the termination of this Agreement, and Contractor shall have no claim for further employment or additional compensation as a result of the exercise by City of its full rights of ownership of the documents and materials hereunder. Any use of such completed documents for other projects and/or use of uncompleted documents without specific written authorization by the Contractor will be at the City' s sole risk and without liability to Contractor, and the City shall indemnify the Contractor for all damages resulting therefrom. Contractor may retain copies of such documents for its own use. Contractor shall have an unrestricted right to use the concepts embodied therein. All subcontractors shall provide for assignment to City FS1\276\099999-3000\29113.1 05/07/01 #1A 1Y of any documents or materials prepared by them, and in the event Contractor fails to secure such assignment, Contractor shall indemnify City for all damages resulting therefrom. City acknowledges that audit work papers prepared by the auditors are property of the auditors . 6. 4 Release of Documents . The drawings, specifications, reports, records, documents and other materials prepared by Contractor in the performance of services under this Agreement shall not be released publicly without the prior written approval of the Contract Officer. 7 . 0 ENFORCEMENT OF AGREEMENT 7 . 1 California Law. This Agreement shall be construed and interpreted both as to validity and to performance of the parties in accordance with the laws of the State of California. Legal actions concerning any dispute, claim or matter arising out of or in relation to this Agreement shall be instituted in the Superior Court of the County of Riverside, State of California, or any other appropriate court in such county, and Contractor covenants and agrees to submit to the personal jurisdiction of such court in the event of such action. 7 .2 Disputes . In the event of any dispute arising under this Agreement, the injured party shall notify the injuring party in writing of its contentions by submitting a claim therefore . The injured party shall continue performing its obligations hereunder so long as the injuring party commences to cure such default within ten (10) days of service of such notice and completes the cure of such default within forty-five (45) days after service of the notice, or such longer period as may be permitted by the injured party; provided that if the default is an immediate danger to the health, safety and general welfare, such immediate action may be necessary. Compliance with the provisions of this Section shall be a condition precedent to termination of this Agreement for cause and to any legal action, and such compliance shall not be a waiver of any party' s right to take legal action in the event that the dispute is not cured, provided that nothing herein shall limit City' s or the Contractor' s right to terminate this Agreement without cause pursuant to Section 7 . 8 . FS1\276\099999-3000\29113.1 05/07/01 7 .3 Retention of Funds . Contractor hereby authorizes City to deduct from any amount payable to Contractor (whether or not arising out of this Agreement) (i) any amounts the payment of which may be in dispute hereunder or which are necessary to compensate City for any losses, costs, liabilities, or damages suffered by City, and (ii) all amounts for which City may be liable to third parties, by reason of Contractor' s acts or omissions in performing or failing to perform Contractor' s obligation under this Agreement. In the event that any claim is made by a third party, the amount or validity of which is disputed by Contractor, or any indebtedness shall exist which shall appear to be the basis for a claim of lien, City may withhold from any payment due, without liability for interest because of such withholding, an amount sufficient to cover such claim. The failure of City to exercise such right to deduct or to withhold shall not, however, affect the obligations of the Contractor to insure, indemnify, and protect City as elsewhere provided herein. 7 . 4 Waiver. No delay or omission in the exercise of any right or remedy by a nondefaulting party on any default shall impair such right or remedy or be construed as a waiver. A party' s consent to or approval of any act by the other party requiring the party' s consent or approval shall not be deemed to waive or render unnecessary the other party' s consent to or approval of any subsequent act. Any waiver by either party of any default must be in writing and shall not be a waiver of any other default concerning the same or any other provision of this Agreement. 7 . 5 Rights and Remedies are Cumulative. Except with respect to rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the parties are cumulative and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. 7 . 6 Legal Action. In addition to any other rights or remedies, either party may take legal action, in law or in equity, to cure, correct or remedy any default, to recover damages for any default, to compel specific performance of this Agreement, to obtain declaratory or injunctive relief, or to FS1\276\099999-3000\29113.1 05/07/01 A A & obtain any other remedy consistent with the purposes of this Agreement. 7 .7 Liquidated Damages . Since the determination of actual damages for any delay in performance of this Agreement would be extremely difficult or impractical to determine in the event of a breach of this Agreement, the Contractor and its sureties shall be liable for and shall pay to the City the sum of NONE ($ -0- ) as liquidated damages for each working day of delay in the performance of any service required hereunder, as specified in the Schedule of Performance (Exhibit "D") . The City may withhold from any monies payable on account of services performed by the Contractor any accrued liquidated damages . 7 . 8 Termination Prior to Expiration Of Term. This Section shall govern any termination of this Agreement except as specifically provided in the following Section for termination for cause. The City reserves the right to terminate this Agreement at any time, with or without cause, upon thirty (30) days ' written notice to Contractor, except that where termination is due to the fault of the Contractor, the period of notice may be such shorter time as may be determined by the Contract Officer. In addition, the Contractor reserves the right to terminate this Agreement at any time upon, with or without cause, upon sixty (60) days ' written notice to City, except that where termination is due to the fault of the City, the period of notice may be such shorter time as the Contractor may determine. Upon receipt of any notice of termination, Contractor shall immediately cease all services hereunder except such as may be specifically approved by the Contract Officer. Except where the Contractor has initiated termination, the Contractor shall be entitled to compensation for all services rendered prior to the effective date of the notice of termination and for any services authorized by the Contract Officer thereafter in accordance with the Schedule of Compensation or such as may be approved by the Contract Officer, except as provided in Section 7 . 3 . In the event the Contractor has initiated termination, the Contractor shall be entitled to compensation only for the reasonable value of the work product actually produced hereunder. In the event of termination without cause pursuant to this Section, the terminating party need not provide the non-terminating party with the opportunity to cure pursuant to Section 7 .2 . F51\276\099999-3000\29113.1 05/07/01 7 . 9 Termination for Default of Contractor. I£ termination is due to the failure of the Contractor to fulfill its obligations under this Agreement, City may, after compliance with the provisions of Section 7 .2, take over the work and prosecute the same to completion by contract or otherwise, and the Contractor shall be liable to the extent that the total cost for completion of the services required hereunder exceeds the compensation herein stipulated (provided that the City shall use reasonable efforts to mitigate such damages) , and City may withhold any payments to the Contractor for the purpose of setoff or partial payment of the amounts owed the City as previously stated. 7 . 10 Attorneys ' Fees . If either party to this Agreement is required to initiate or defend or made a party to any action or proceeding in any way connected with this Agreement, the prevailing party in such action or proceeding, in addition to any other relief which may be granted, whether legal or equitable, shall be entitled to reasonable attorney' s fees . Attorney' s fees shall include attorney' s fees on any appeal, and in addition a party entitled to attorney' s fees shall be entitled to all other reasonable costs for investigating such action, taking depositions and discovery and all other necessary costs the court allows which are incurred in such litigation. All such fees shall be deemed to have accrued on commencement of such action and shall be enforceable whether or not such action is prosecuted to judgment. 8 . 0 CITY OFFICERS AND EMPLOYEES : NON-DISCRIMINATION 8 . 1 Non-liability of City Officers and Employees . No officer or employee of the City shall be personally liable to the Contractor, or any successor in interest, in the event of any default or breach by the City or for any amount, which may become due to the Contractor or to its successor, or for breach of any obligation of the terms of this Agreement. 8 .2 Conflict of Interest. No officer or employee of the City shall have any financial interest, direct or indirect, in this Agreement nor shall any such officer or employee participate in any decision relating to the Agreement which effects his financial interest or the financial interest of any corporation, partnership or association in which he is, directly FS1\276\099999-3000\29113.1 05/07/01 a given and will not pay or give any third party any money or other consideration for obtaining this Agreement. 8 . 3 Covenant Against Discrimination. Contractor covenants that, by and for itself, its heirs, executors, assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry in the performance of this Agreement. Contractor shall take affirmative action to insure that applicants are employed and that employees are treated during employment without regard to their race, color, creed, religion, sex, marital status, national origin, or ancestry. 9. 0 MISCELLANEOUS PROVISIONS 9. 1 Notice. Any notice, demand, request, document, consent, approval, or communication either party desires or is required to give to the other party or any other person shall be in writing and either served personally or sent by prepaid, first-class mail, in the case of the City, to the City Manager, CITY OF PALM SPRINGS, P.O. Box 2743, Palm Springs, California 92263, and in the case of the Contractor, to the person at the address designated on the execution page of this Agreement . Either party may change its address by notifying the other party of the change of address in writing. Notice shall be deemed communicated at the time personally delivered or in seventy-two (72) hours from the time of mailing if mailed as provided in this Section. 9 .2 Interpretation. The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of this Agreement or any other rule of construction which might otherwise apply. 9. 3 Integration; Amendment. It is understood that there are no oral agreements between the parties hereto affecting this Agreement and this Agreement supersedes and cancels any and all previous negotiations, arrangements, agreements and understandings, if any, between the parties, and none shall be used to interpret this Agreement. This Agreement may be amended F91\276\099999-3000\29113.1 05/07/01 at any time by the mutual consent of the parties by an instrument in writing. 9. 4 Severability. In the event that any one or more of the phrases, sentences, clauses, paragraphs, or sections contained in this Agreement shall be declared invalid or unenforceable by a valid judgment or decree of a court of competent jurisdiction, such invalidity or unenforceability shall not affect any of the remaining phrases, sentences, clauses, paragraphs, or sections of this Agreement which are hereby declared as severable and shall be interpreted to carry out the intent of the parties hereunder unless the invalid provision is so material that its invalidity deprives either party of the basic benefit of their bargain or renders this Agreement meaningless . 9. 5 Corporate Authority. The persons executing this Agreement on behalf of the parties hereto warrant that (i) such party is duly organized and existing, (ii) they are duly authorized to execute and deliver this Agreement on behalf of said party, (iii) by so executing this Agreement, such party is formally bound to the provisions of this Agreement, and (iv) the entering into this Agreement does not violate any provision of any other Agreement to which said party is bound. FS1\276\099999-3000\29113.1 05/07/01 d24*U IN WITNESS WHEREOF, the parties have executed and entered into this Agreement as of the date first written above. ATTEST: CITY OF PALM SPRINGS, a municipal corporation By: By: City Clerk City Manager APPROVED AS TO FORM: BURKE, WILLIAMS & SORENSEN David J. Aleshire City Attorney CONTRACTOR: By: Name: Ken Al-Imam Title: Partner By: Name: Title : Address : Conrad & Associates, LLP 1100 Main St . , Suite C Irvine, CA 92714 F51\276\099999-3000\29113.1 05/07/01 Rd4W MRY-07-01 MON 15�00 CITY OF FS FINANCE FAX NO. 760 322 8320 P. 02 i IN WITNESS WHEjREOE, the parties have executed and entered into this Agreementlas of the date first written above. ATTEST: i CITY OF PALM SPRINGS, a municipal corporation By: By: City Clerk ` City Manager APPROVED AS TO FORM' BURKE, WILLIAMS & S�RENSEN David J. Aleshire City Attorney CONTRACTOR: f By: Name. Ken Al-Imam Title: Partner BY: Name: Title: Address: Conrad & Associates, LLP 1100 Main St. , Suite C Irvine, CA 92714 FS1\i76\099995-300D\29x13.1 75/0"1/OS hiF1'r'-�^r-2©Di 15 17 954; P.©2 EXHIBIT "A" SCOPE OF SERVICES CONTRACTORS agree to perform all audits in accordance with generally accepted government auditing standards . The single audit examination of Federal grants will be performed in accordance with OMB Circular A- 128 . The compliance audit of the Redevelopment Agency will be conducted in accordance with the State Controller' s office guidelines . CITY'S OBLIGATIONS . For furnishing services specified in this agreement CITY will pay and CONTRACTORS shall receive the full compensation as set forth in Exhibit C, attached hereto and by reference incorporated herein and made a part hereof. Additionally, CITY agrees to provide CONTRACTOR with supporting schedules, trial balances and reconciliations as necessary to complete the services requested. EXHIBIT "A" TO CONTRACT SERVICES AGREEMENT FS1\276\099999-3000\29113.1 05/07/01 .2 *4 43 EXHIBIT "B" SPECIAL REQUIREMENTS CONTRACTOR shall maintain professional liability coverage in an amount not less than $1, 000, 000 per occurrence and $1, 000, 000 in the aggregate. Requirement for Performance bond under Section 5 .3 is waived. EXHIBIT "B" TO CONTRACT SERVICES AGREEMENT FS1\276\099999-3000\29113.1 05/07/01 EXHIBIT "C" SCHEDULE OF COMPENSATION HOURLY RATES AND MAXIMUM FEE The following is a summary of the total cost (including expenses) of services for the City of Palm Springs for the years ended June 30, 2000 through 2003 . Estimated Not to Exceed Amount Description of Services Hours Year Ended June 30 2001 2002 2003 1 . Audit of the City of Palm Springs (exclud- Ing CAFR preparation) 276 $17, 580 18, 242 18, 925 2 . CAFR preparation and editing 100 8, 000 8, 240 8, 487 3 . Financial and compliance audit of Redevelopment Agency 100 8, 000 8, 240 8, 487 4 . Audit of the Palm Springs Public Financing Authority 120 9, 600 9, 888 10, 185 5. Audit of the Palm Springs Public Facilities Corp- Oration 24 1, 920 1, 978 2, 037 6. A-133 Single Audit of Grant Programs a) FAA 80 6, 400 6, 592 6, 790 b) CDBG 24 1, 920 1, 978 2, 037 c) DOJ 24 1, 920 1, 978 2, 037 d) All other grants 16 1, 280 1, 318 1, 358 144 11, 520 11, 866 12, 222 7 . GASB *34 Implementation 120 - - 10, 000 Subtotal 884 56, 620 58, 454 70, 343 Other Services 8 . Preparation of State Controllers Reports a) Palm Springs PFA 14 1, 120 1, 154 1, 189 b) Palm Springs PFC 6 480 494 590 9. Preparation of Exempt Organization tax returns Palm Springs PFC 10 800 824 849 10 .Agreed-upon Procedures GANN Limit 6 480 494 509 920 59, 500 61, 420 73, 549 EXHIBIT "C" TO CONTRACT SERVICES AGREEMENT �� �� FS1\276\099999-3000\29113.1 05/07/01 EXHIBIT C, continued A summary of hourly rates in effect for fiscal 2001 for services outside the scope of the above fixed amounts . Classification Hourly Rate Partners $190 Managers 115 Supervisor 100 Senior Accountant 85 Staff Accountant 75 Payment Schedule: Contractor shall submit a monthly billing based on the percentage of audit work completed. After approval of the City' s Director of Finance, said invoice shall be paid within 30 days . The final payment shall be held until the completion and delivery of all final reports and schedules . EXHIBIT " TO CONTRACT SERVICESS AGREEMENT FS1/276/099999-3000/29113.1 05/07/1 EXHIBIT "D" SCHEDULE OF PERFORMANCE The contractor shall have drafts of the final reports and recommendations to management available for review by the Finance Director by the following dates : City of Palm Springs November 9 Public Facilities Corp September 28 Public Financing Authority November 16 Redevelopment Agency November 9 A-133 Single Audit December 14 Entrance Conferences, Progress Reporting and Exit Conferences An entrance conference shall be scheduled prior to beginning interim fieldwork. Progress reports are to be submitted on at least a monthly basis to the Finance Director. An exit conference to summarize the results of fieldwork and to review significant findings shall be held on the last day of fieldwork or within 1 week thereafter. Final Reports The Finance Department shall complete their review of the draft report as expeditiously as possible. This process is not expected to exceed one week. During that period, the contractor shall be available for any meetings that may be necessary to discuss the drafts . Once all issues for discussion are resolved, the final signed report shall be delivered to the Finance Director within ten working days but not later than the following dates : Redevelopment Agency December 3 City of Palm Springs December 3 Public Facilities Corp. December 10 Public Financing Authority December 10 A-133 Single Audit December 31 EXHIBIT "D" TO CONTRACT SERVICES AGREEMENT �� FS1\276\099999-3000\29113.1 05/07/01 MINUTE ORDER NO. 6846 AWARDING A CONTRACT TO CONRAD & ASSOCIATES TO 'PERFORM THE CITY'S JUNE 30, 2001, JUNE 30, 2002, AND JUNE 30, 2003 FINANCIAL AUDIT INCLUDING COMPILATION AND PREPARATION OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT AT A MAXIMUM FEE OF $59,500, $61,420 AND $73,549, RESPECTIVELY, WITH AN OPTION TO PROVIDE THE SAME SERVICES FOR TWO (2) ADDITIONAL YEARS, SUBJECT TO THE ANNUAL REVIEW AND RECOMMENDATION OF THE DIRECTOR OF FINANCE, THE SATISFACTORY NEGOTIATION OF TERMS (INCLUDING A PRICE ACCEPTABLE TO BOTH THE CITY OF PALM SPRINGS AND CONRAD), THE APPROVAL OF THE PALM SPRINGS CITY COUNCIL AND THE ANNUAL AVAILABILITY OF AN APPROPRIATION. ------------------ I HEREBY CERTIFY that this Minute Order, awarding a contract to Conrad & Associates to perform the City's June 30, 2001, June 30, 2Q02, and June 30, 2003 Financial Audit including compilation and preparation of the Comprehensive Annual Financial Report at a maximum fee of $59,500, $61,420 and $73,549, respectively, with an option to provide the same services for two (2) additional years, subject to the annual review and recommendation of the Director of Finance, the satisfactory negotiation of terms (including a price acceptable to both the City of Palm Springs and Conrad), the approval of the Palm Springs City Council and the annual availability of an appropriation, was adopted by the City Council of the City of Palm Springs, California, in a meeting thereof held on the 16th day of May, 2001. PATRICIA A. SANDERS City Clerk