HomeMy WebLinkAboutResolution - 2001-R0369 - Consulting Contract To Prepare A User Fee Study - DMG Maximus - 09/27/2001Resolution No. 2001-RO369
September 27, 2001
Item No. 22
RESOLUTION
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK
THAT the Mayor of the City of Lubbock BE and is hereby authorized and
directed to execute for and on behalf of the City of Lubbock, a Contract between the City
of Lubbock and DMG-MAXIMUS to prepare a user fee study for the City of Lubbock,
and all related documents. Said Contract is attached hereto and incorporated in this
resolution as if fully set forth herein and shall be included in the minutes of the City
Council.
Passed by the City Council this 27th day of September , 2001.
ATTEST:
Rebecca Garza
City Secretary
APPROVED AS TO CONTENT:
Richard Burdine
Assistant City Manager
APPROVED AS TO FORM:
",014 410a�zl(�-
William de Haas
Contract Manager/Attorney
Db/Ccdocs/DMGMaximus. UserFeeStudy. res
September 13, 2001
Resolution No. 2001-RO369
September 27, 2001
Item No. 22
AMENDMENT # 1
PROFESSIONAL CONSULTING SERVICES CONTRACT
STATE OF TEXAS §
COUNTY OF LUBBOCK §
This amendment, (the "Amendment"), effective as of September 13, 2001, (the
"Effective Date"), is by and between the City of Lubbock, (the "City"), a Texas Home
-Rule Municipal Corporation, and DMG-MAXIMUS, INC., formerly David M. Griffith
& Associates, Ltd., an Illinois corporation, registered as a foreign corporation in Texas,
with an office located at 13601 Preston Rd., Suite 400W, Dallas, Texas (the "Consultant
WITNESSETH
WHEREAS, the City did enter into an Agreement to Provide Professional
Consulting Services with David M. Griffith & Associates, Ltd.,, now DMG-MAXIMUS,
INC. on October 22, 1998 ("Agreement"), for cost allocation services; and,
WHEREAS, the City requires services additional to the services set forth in the
Agreement and now desires the Consultant to provide cost of services and revenue study
(user fee study) for the General Fund departments; and,
WHEREAS, the Consultant is qualified and desires to provide a cost of services
and revenue study for the City; and,
WHEREAS, the City desires to contract with Consultant to provide a cost of
services and revenue study of General Fund departments of the City of Lubbock ("User
Fee Study"); and,
NOW THEREFORE, for and in consideration of the terms, covenants and
conditions set forth in this Amendment, the City and Consultant hereby agree to amend
the Agreement as follows:
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ARTICLE I
TERM
The term of this Amendment for the User Fee Study commences on the Effective
Date and continues without interruption for a term of six (6) months from and after the
Effective Date. The term may be extended for one (1) additional six (6) month term with
the written consent of both parties. Provided however, the Consultant shall not be liable
for delays in performance that are caused in whole or in part by the City or forces de
majeur. The period for performance shall be extended by the period of delay
contemplated herein.
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ARTICLE II
COMPENSATION
Consultant shall receive a not to exceed amount of Seventy Thousand and no/one
hundred Dollars ($70,000.00) for the User Fee Study. Consultant shall request payments
by submitting a written request to City. Payments shall be made according to the
following schedule: Twenty-five percent (25%) thirty (30) days after the effective date
hereof, twenty-five percent (25%) sixty (60) days after the effective date hereof, twenty-
five percent (25%) ninety (90) days after the effective date hereof and the remaining
twenty-five percent (25%) on delivery and acceptance of the final report. For purposes of
this paragraph, in the absence of written notice by the City to the Consultant within ten
days of the City's receipt of the final report, the final report shall be deemed accepted and
the final payment shall be due and owing to the Consultant.
ARTICLE III
SCOPE OF WORK
Consultant shall provide the services listed and described in Exhibit A, attached
hereto, and made a part of this Amendment.
ARTICLE IV
INSURANCE
A. General. Consultant shall procure and carry, at its sole cost and expense
through the life of this Amendment insurance protection hereinafter specified, in form
and substance satisfactory to the City. City must approve all policies prior to the
commencement of any activities whether performed by the Consultant, subcontractor ,
agents, or third parties. The insurance carrier must be an insurance company authorized
to transact business in the State of Texas and have a Best's Financial rating of A -:VII. A
Certificate of Insurance specifying each and all coverage shall be submitted to City prior
to the execution of this Amendment. All insurance shall be prepared and executed by the
insurance company or it's authorized agents and shall contain an endorsement naming the
City of Lubbock an additional insured on the Commercial General Liability and
Commercial Automobile Liability policies. Written notice of cancellation will be
provided thirty (30) days in advance of cancellation. All insurance, other than Workers'
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Compensation and Professional Liability, shall provide a waiver of subrogation in favor
of the City of Lubbock, and shall contain cross liability and severability clauses.
B. Required Coverage. Consultant shall obtain and maintain policies of
insurance throughout the Amendment term in limits specified below.
1. Worker's Compensation. The Consultant shall maintain Workers'
Compensation and Employer's Liability insurance coverage as required by statute or
coverage approved by the City Risk Management Coordinator.
2. Commercial General Liability. The Consultant shall maintain Commercial
General Liability coverage endorsed to include premises/operations, contractual liability,
and independent contractors' and completed operations. The policy shall have a
minimum of One Million and no/100 Dollars ($1,000,000) combined single limit in the
aggregate and per occurrence.
3. Commercial Automobile Liability. The Consultant shall maintain Commercial
Automobile Liability coverage with a minimum of One Million and no/100 Dollars
($1,000,000) combined single for Bodily Injury and Property Damage and shall include
any auto or in the alternative, owned autos, non -owned autos and hired autos.
4. Professional Liability Insurance. The Consultant shall maintain Professional
Liability Insurance coverage with a minimum of One Million and no/100 Dollars
($1,000,000) combined single limit in the aggregate and per claim.
C. Subcontractors. The Consultant shall require each subcontractor with whom
it contracts to provide activities as contemplated by this Amendment, to obtain proof of
insurance coverage as set forth herein, and to provide to Consultant, prior to such person
performing any such activities, a Certificate of Insurance establishing such coverage.
ARTICLE V
EMPLOYMENT OF AGENTS
Consultant may employ or retain agents, consultants, , or third parties, to perform
certain duties of Consultant under this Amendment provided that Consultant is in no
event relieved of any obligation under this Amendment. Any such agents, consultants, or
third parties retained and/or employed by Consultant shall be required to carry, for the
protection and benefit of the City and Consultant and naming said third parties as
additional insureds, insurance as described in Article IV of this Amendment.
ARTICLE VI
CONFIDENTIALITY
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Consultant shall retain all information received from or concerning the City and the
City's business in strictest confidence and shall not reveal such information to third
parties without prior written consent of the City, unless otherwise required by law.
Provided however, this provision shall not apply to:
A. Information that was in Consultant's possession prior to its disclosure by the City;
B. Information that is disclosed by a third party to Consultant where that third party
is not under a duty of confidentiality;
C. Public Information; and
D. Information that is required to be disclosed pursuant to court or administrative
order or subpoena.
ARTICLE VII
NOTICE For purposes of the notice provision of the Agreement, the parties hereby agree
that with respect to the City, the individual identified for purposes of notice shall be
Richard Burdine. The parties further agree that with respect to the Consultant, the
individual identified for notice shall be Mark Epstein.
ARTICLE VIII
MISCELLANEOUS
A. Captions. The captions for the articles and sections in this Amendment are
inserted in this Amendment strictly for the parties' convenience in identifying the
provisions to this Amendment and shall not be given any effect in construing this
Amendment.
B. Assignability. Consultant may not assign this Amendment without the prior
written approval of the City. Provided however, the Consultant may assign its rights,
duties and obligations hereunder and under the Agreement to its parent company,
MAXIMUS, Inc.
C. Successor and Assigns. This Amendment and the Agreement bind and inure
to the benefit of the City, Consultant, and their respective successors, legal
representatives, and assigns.
D. Construction and Venue. This Amendment shall be governed by and
construed in accordance with the laws of the State of Texas. Venue for any action arising
from this Amendment shall lie either in the Federal or State court having jurisdiction for
the subject matter thereof and having jurisdiction for the City.
E. Severability. If any provision of this Amendment is ever held to be invalid or
ineffective by any court of competent jurisdiction with respect to any person or
circumstances, the remainder of this Amendment and the application of such provision to
persons and/or circumstances other than those with respect to which it is held invalid or
ineffective shall not be affected thereby.
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F. Amendment. No amendment, modification, or alteration of the terms of this
Amendment shall be binding unless such amendment, modification, or alteration is in
writing, dated subsequent to this Amendment, and duly executed by the Consultant and
City.
G. Entire Agreement. This Amendment, including Exhibit A hereto and the
Agreement, contain the entire agreements between the City and Consultant, and there are
no other written or oral promises, conditions, warranties, or representations relating to or
affecting the services contemplated by either the Agreement or the Amendment .
Except as amended herein, the parties hereby affirm the terms and conditions of the
Agreement.
EXECUTED as of the Effective Date hereof.
CITY OF LUBBOCK
WINDY 1�
SITYON, MAYOR
ATTEST:
cpt��� Lr'�S-�
Rebecca Garza
City Secretary
APPROVED AS TO CONTENT:
Richard Burdine
Assistant City Manager
APPROVED AS TO FORM:
William de Haas
Contract Manager/Attorney
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DMG MAXIMUS, INC.
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Resolution No. 2001-80369
EXHIBIT A
COST OF SERVICE/REVENUE STUDY
Cost of Service/Revenue Study
The work program to provide the Cost of Services/Revenue Study for the
General Fund departments is divided into two phases and a total of eight (8)
tasks. The first phase is concerned with the development of the Cost of Services
Analysis itself. The second phase is concerned with the presentation of the
results to the Department staff, City officials, and interested third parties.
Following are descriptions of the eight tasks required for the completion of this
study.
Phase 1 - Development of the Cost of Services Analysis
DMG-MAXIMUS will conduct a cost/revenue analysis to determine the full cost of
services. Following is a breakdown of the first five Tasks.
Task 1. Initiate User Fee Project.
A. Establish City's Priorities and Goals. An initial meeting is held with the City's
management staff to determine the exact parameters of the engagement.
DMG-MAXIMUS staff understand the general goals going into the
engagement; however, having an initial meeting to set and determine goals
ensure that the final product will meet all of the City's expectations.
B. Engagement Briefing_ DMG-MAXIMUS will present a briefing to the
departments concerning the goals of the engagement, the steps to complete
the goals, the time frame the departments can expect, the requests we will
place on the departments and the benefits of the engagement. DMG-
MAXIMUS staff is completely responsible for the gathering of information and
statistics.
The purpose of this meeting is to attain the cooperation and support of the
departments by informing them fully. This can be accomplished as a group or
with each department individually.
C. Establish Contact Individual. The appointment of an individual within the
City's Finance Department is imperative for the smooth flow of any
engagement. This person's involvement is limited to the scheduling of
interviews with key department personnel as deemed necessary by the
consultants, as well as to direct the DMG-MAXIMUS staff to the appropriate
location of documents and data required throughout the engagement. At this
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point in the engagement, a contact person for each department should be
established.
D. Review Organizational Structure. A complete organizational staffing schedule
is crucial to determining the operating costs, including management,
supervisory, clerical and line employees.
E. Review Accounting System. This is a crucial step necessary in order for
DMG-MAXIMUS staff to understand the proper treatment for all expense
items. This step also allows the consultants to familiarize themselves with the
statistics available.
Task 2. Analysis of Potential Fees. Each general fund department that
provides user services will be assessed to determine services for which the City
is currently charging and -potential fee areas not presently being charged. We
would anticipate assessing the potential for fees and levels of possible recovery
of costs in all departments with free potential.
Task 3. Schedule of Current Fees and Charges. Current general fund fees
and charges will be identified and documented. This involves surveying all
general fund departments to determine which are revenue producers for the City.
In addition, the survey further identifies which groups are impacted by fees and
what the current cost of service is based on (e.g., cost, arbitrary assumption of
cost, etc.). This information is used as an aid in identifying the areas of greatest
potential cost recovery. It should be noted that it is not our objective within this
study to restructure existing fee schedules which may be based on a sliding
scale or tiered structure, or to structure fees in areas that a fee does not currently
exist. Our analysis consists of a cost/revenue match -up.
Task 4. Cost/Revenue Analysis of Services.
A. Interview Process. Within this process, each department is analyzed and
functionalized to reflect the various activities being performed within it. This
step is conducted through interviews with key department personnel as well
as in-depth review of documentation of job duties. This procedure also helps
to determine the proper allocation basis for each of the functions identified
within any given department. Narratives utilized within the cost of service
study are produced through this phase.
For each activity which is being reviewed and analyzed, the actual
expenditures must be identified for the period being studied. Any costs
directly billed or charged back must also be considered at this point within the
engagement. At the conclusion of this step, the department expenses are
entered into the software program.
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B. Select Per Unit Basis. Each activity must have a per unit basis (i.e. number of
permits, hours, etc.). In completing this task, the following criteria serves as a
guideline in our selection process.
a. The basis must be accurate.
b. The basis must be defensible.
c. The basis must conform to generally accepted allocation and
unit cost standards.
d. The bases must be consistently applied.
The results of this segment of our engagement are input as allocation
units within the software program and also contribute to the development
of the user fee narratives.
C. Incorporate the Full Cost Citywide Cost Allocation Plan. The purpose of this
task is to increase the allocations of unallocated and central service dollars to
City agencies to support determinations of costs for fees and user charges.
When comparing the cost of providing a service with the revenue received
from the fees, the costs need to include not only the expenditures contained
in a department's budget, but the department's share of central service costs
(e.g., payroll, purchasing, data processing, janitorial, etc.). The "full cost"
citywide cost allocation plan, identifies each department's share of central
service costs. These central service costs (indirect costs) will be added to the
department's costs (direct costs) when analyzing the cost of each service
area or activity.
D. Select Most Appropriate Costing Approach. Depending on the availability of
data, type of service and needs of the City, DMG-MAXIMUS utilizes either
the Cost Pool Method (i.e., top down approach) or the Unit Cost Method (i.e.,
bottom up approach) of costing. Both methods are further explained below.
Cost Pool Method - "Top Down Approach". This costing method identifies
comparable revenue and cost pools within a department. The cost pool is
taken down to the lowest level at which valid cost and/or revenue data are
available. An example would be Building Permits where cost, revenue, and
number of permits can be identified at the "total" Building Permit level;
whereas, it may not be possible to identify the cost, revenue and number of
permits for a Building Permit for Storage Facilities with an area between
2,001 and 5,000 square feet. Thus, although the cost to issue a particular
permit is not identified, the direct cost of the total service is known. When the
other costs are added to the direct costs, the full cost of the service is
identified. This full cost can then be compared with the revenue generated
with any necessary fee increases identified. To develop a unit cost figure, the
full cost of the service is then divided by the total number of service units.
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Unit Cost Method - "Bottom Up Approach". This costing method identifies the
cost at the unit activity level where the effort of individuals by activity is
identified. The time spent for a fee activity is determined for each individual or
position with the hourly rate based on using the individuals productive hours.
Productive hours are total hours (usually 2,080) less vacation, holidays, sick
leave, administrative time, etc. With the overhead cost added to the
individual's salary and other direct costs and this full cost divided by
productive hours, a fully loaded hourly rate is determined. This rate is then
multiplied by the time necessary to perform the activity. The resulting cost
can then be compared to the actual fee schedule.
Task 5. Process Cost of Services Study. Utilizing the knowledge and data
obtained through the prior four tasks, the various department fee analyses are
now prepared. A computer run is completed which produces a draft report. A
User Fee Summary schedule is produced by the software, which presents the
cost/revenue analysis on a clear single schedule such that the review process by
City staff can begin.
Phase II - Presentation of Results to the City
The presentation phase is critical to the success of the overall engagement. It
involves three distinct stages. The initial stage is the review of findings and
recommendations with each of the departments. Once the departments are
aware of the methodology and have reviewed our findings for their individual
departments, we proceed to the second stage. This stage is the presentation of
the overall study to City management for their review and concurrence. When
this second stage is completed, then the final stage is the presentation of the
results to the City officials for their consideration. DMG-MAXIMUS will assist the
City with this presentation. DMG-MAXIMUS staff is fully cognizant of the
importance of making a thorough and understandable presentation to City
officials. Our presentation has always met with praise by City officials.
Task 6. Department Review of Initial Study. This segment of the engagement
involves conducting secondary interviews with department representatives to
review the initial results of the Cost of Services/Revenue Analysis and discuss
the revenues and associated costs of each service area. Comments received at
this time are incorporated in the review process.
Task 7. City Management Review of Study. We then present the "draft" report
tot he City Finance and City Managers Office. Together, we will review our
assumptions and the results. Invariably, there are certain changes in the study
that the client requests. After a full discussion of the issues we will enter the
agreed upon changes into the program and finalize the study.
Task 8. Presentation of Results to City Officials. The objective of this final
step is to present a very succinct, straightforward executive summary document
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that clearly summarizes the results of the engagement. Because of this fact,
graphic representations are commonly used within the report.
DMG-MAXIMUS is heavily committed to the full and complete understanding and
satisfaction of any client's management regarding the results of our engagement.
As such, we commonly present the results to the governing body of our client or
provide support during any presentation made by our client to individuals within
its own organization. The City will be required to have its own attorneys
determine the legality of all fee increases based on laws or ordinances of the
City of Lubbock or the State of Texas.
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