COUNTY OF SAN MATEO

Inter-Departmental Correspondence

County Manager’s Office

DATE:

January 28, 2011

BOARD MEETING DATE:

March 15, 2011

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

TO:

Honorable Board of Supervisors

FROM:

Reyna Farrales, Deputy County Manager

SUBJECT:

Agreement with Macias Gini & O’Connell LLP

RECOMMENDATION:

Adopt a Resolution:

A)

Waiving the Request for Proposals (RFP) process and authorizing the President of the Board to execute an agreement with Macias Gini & O’Connell LLP for the provision of financial audit services for the fiscal years ending June 30, 2011, 2012, 2013 and 2014 for a term of April 1, 2011 through March 31, 2015 in an amount not to exceed $1,531,808; and

B)

Authorizing the County Manager to execute subsequent amendments and minor modifications not to exceed an aggregate of $25,000 and to make minor changes in the types of services and activities provided under the Agreement.

BACKGROUND:

The County Charter (Article VI Section 603) provides that the Board of Supervisors shall have an annual audit made by a certified public accountant and the auditor shall report on the County’s financial transactions and records and the effectiveness of internal controls. The current contract with Macias Gini & O’Connell LLP (MGO) will expire on March 31, 2011. MGO has been the County’s auditor for over ten years.

DISCUSSION:

A Request for Proposal (RFP) for audit services was issued in December 2007 for the same scope of services as the recommended agreement. The RFP was sent to twelve firms and advertised twice in a local newspaper. MGO was the only firm that submitted a proposal. The Grand Jury reviewed the proposal in February 2008, contacted five other Bay Area counties, and found MGO hourly rates, as well as the total hours and distribution across staff levels and projects comparative.

Following the 2007 RFP, the County entered into the current agreement with MGO for the term of April 1, 2008 through March 31, 2011, for the fiscal years ending June 30, 2008, 2009 and 2010. The current agreement contains an option to extend the contract for two additional years, but instead of extending the agreement, the County negotiated the recommended four year agreement with MGO. Staff recommends waiving the RFP process because the Contractor was willing to increase the amount of services provided in the recommended Agreement and reduce the overall cost. Staff will conduct an RFP when the recommended Agreement expires on March 31, 2015.

The benefits of entering into this new agreement are (1) a ten percent annual contract discount that represents $170,200 in total cost savings over the next four years, (2) an increase in the number of programs included in the Single Audit for FY 2011, 2012, 2013 and 2014 (from seven programs in the current agreement to eight programs in the recommended agreement), and (3) an increase in the number of programs included in the Single Audit for FY 2010 (from seven programs to eight programs) at no additional cost. This last provision is reflected in the third amendment to the current 2008 agreement, which the County Manager is prepared to execute if the Board of Supervisors authorizes the recommended agreement.

The term of the recommended agreement is from April 1, 2011 to March 31, 2015, for the fiscal years ending June 30, 2011, 2012, 2013, and 2014, which includes the audit of the County’s financial statements, the Single Audit (with up to eight major programs), and a stand-alone audit of the San Mateo Medical Center. MGO complies with the County’s insurance and contract requirements, including equal benefits, non-discrimination and jury service pay.

Performance Measure(s):

Measure

FY 2009-10
Actual

FY 2010-11
Projected

County submits financial statements to the State on time and attains Certificate of Achievement for Excellence in Financial Reporting for its comprehensive annual financial report (CAFR)

Yes

Yes

County Counsel has reviewed and approved the Agreement and Resolution as to form.

Approval of this action will contribute to Shared Vision 2025 outcome of a Collaborative Community by ensuring that the County of San Mateo’s basic financial statements are audited at the end of each Fiscal Year by a professional team of independent auditors.

FISCAL IMPACT:

Auditors agree to perform the services required under this Agreement for an all-inclusive maximum amount not to exceed the following by fiscal year, for a total of $1,531,808:

• $364,636 for Fiscal Year ending June 30, 2011

• $377,616 for Fiscal Year ending June 30, 2012

• $388,944 for Fiscal Year ending June 30, 2013

• $400,612 for Fiscal Year ending June 30, 2014

The fees for auditing FY 2010-11 represent a 10% decrease from the previous year. Funds will be included each fiscal year in the Grand Jury budget, which is fully funded by the General Fund.