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HomeMy WebLinkAbout2001-11-19 City Council (3)City of Palo Alto City Manager’s Report 5 TO:HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT: UTILITIES DATE:NOVEMBER 19, 2001 CMR: 409:01 SUBJECT:APPROVAL OF AMENDMENT NUMBER ONE TO THE DELOITTE AND TOUCHE CONTRACT C9115650 FOR RISK MANAGEMENT SERVICES TO INCREASE THE FUNDING IN THE AMOUNT OF $215,000 TO CONTINUE TO PROVIDE ASSISTANCE IN IMPLEMENTING AN ENERGY RISK MANAGEMENT PROGRAM FOR A TOTAL MAXIMUM COMPENSATION OF $440,000 RECOMMENDATION Staff recommends that Council approve the attached Amendment No. 1 (Attachment A) to the Deloitte and Touche Contract C9115650 for risk management services to extend the contract for a not-to-exceed amount of $105,000 for FY 2001-02; and, contingent on Council approval of the FY 2002-03 budget, for an amount not-to-exceed $110,000 for FY 2002-03. Extension of the contract will be used to continue to provide assistance from Deloitte and Touche to the Utilities Department in implementing a comprehensive energy risk management program. BACKGROUND On April 5, 1999, Council authorized the City Manager to enter in to an agreement with Deloitte and Touche for risk management services (CMR: 186:99). Funds for services were budgeted during FY 1998-99 and FY 1999-00 for a total not to exceed $225,000. Council further delegated the City Manager the authority to extend the contract term as CMR:409:01 Page 1 of 4 needed. Funds for the contract were carried over through FY 2000-01. No additional funds were allocated. DISCUSSION Deloitte and Touche was selected through the City’s Request for Proposal (RFP #109355) process to assist the Utilities Department (CPAU) in the development and implementation of a comprehensive electric and gas risk management program. Deloitte and Touche was selected amongst eight other firms because of their professional approach, talent pool and in-depth knowledge of the relationship between CPAU and the Northern California Power Agency (NCPA). The scope of services under the Deloitte and Touche agreement were to be carried out in three phases, as follows: Phase 1: Phase 2: Phase 3: Review of existing risk management materials and program. Develop suggested risk management plan and senior management training. Assistance with risk management implementation. Deloitte and Touche has completed Phase 1 and Phase 2 and has started Phase 3 of the contract. Tasks to be performed under Phase 3 were broadly defined in the original contract. Such tasks could include review of risk management contrdls and infrastructure and assistance with development of risk management policies and procedures to manage risks such as credit and operational. Services provided by Deloitte and Touche in Phase .3, to date include but are not limited to, the following tasks: Review of NCPA’s risk management systems. Review of CPAU’s commodity pricing policy. Review of CPAU’s Interim Risk Management Policies and Procedures. Development of draft credit risk management guidelines and procedures. High level assessment of CPAU’s risk management program. Review and feedback on various gas and electric supplier contracts. Funds originally allocated for the completion of Phase 3 have been exhausted. Additional funds are needed to continue implementation of Phase 3 tasks. Specific tasks to be carried out in Phase 3 include, but are not limited, to the following: Perform an annual and mid-year review of energy risk management controls, processes, and performance. CMR:409:01 Page 2 of 4 Review and comment on electric and gas short and long-term procurement plans. Review risk management initiatives and proposals. Advise on organizational structure, roles and responsibilities and current and planned support business requirements. As a result of working with the City for over two years, Deloitte and Touche has gained a thorough understanding of CPAU’s gas and electric procurement and hedging operations and the relationship and dynamics between Utilities and other City departments. This makes Deloitte and Touche uniquely qualified in assisting the Utilities Department in carrying out its risk management objectives. RESOURCE IMPACT The required funds ($105,000) for providing energy risk management consulting services for FY 200!-02 are included in the FY 2001-02 budget. Continued work under this contract for FY 2002-03 will be subject to appropriation of required funds for FY 2002- 03 and will not exceed $110,000. POLICY IMPLICATIONS This recommendation is consistent with the Council approved Utilities Strategic Plan Strategy 2: preserve a supply cost advantage compared to the market price. ENVIRONMENTAL REVIEW These services do not constitute a project for the purposes of the California Environmental Quality Act. CMR:409:01 Page 3 of 4 ATTACHMENTS A.Amendment No. 1 To Agreement No. C9115650 Between the City of Palo Alto and Deloitte & Touche LLP. B.Contract No. C9115650 Between the City of Palo Alto and Deloitte & Touche LLP for Risk Management Consulting Services. C.Fee Schedule for Phase 3 Extension (Amendment 1 to A~eement No. C9115650 between City of Palo Alto and Deloitte and Touche LLP) PREPARED BY: DEPARTMENT HEAD: CITY MANAGER APPROVAL: ~esource Planner Jo Assistant City Manager CMR:409:01 Page 4 of 4 AMENDMENT NO. ONE TO AGREEMENT NO. C9115650 BETWEEN THE CITY OF PALO ALTO AND DELOTTE & TOUCHE LLP This Amendment No. One to Agreement No. C91!5650 ("Agreement") is entered into , 2001, by and between the CITY OF PALO ALTO. ("CITY"), and DELOTTE & TOUCHE LLP, a Delaware limited liability partnership located at I000 Wilshire Blvd., Suite 1500, Los Angeles,.CA 90017 ("CONTRACTOR"). RE C I TAL S: WHEREAS, the Agreement was entered into between the parties for the provision of risk management consulting services; and WHEREAS, the parties wish to amend the Agreement; NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the parties agree: SECTION I. Section 4 entitled "COMPENSATION" is hereby amended to read as follows: "4.1 In consideration of the full performance of the Services by CONTRACTOR, CITY will pay CONTRACTOR a total sum not to exceed Four Hundred Forty Thousand Dollars ($440,000) payable within thirty (30) days of submission by CONTRACTOR of its itemized billings, in triplicate, in accordance with the following fee and expense schedule set forth in Exhibit "B". SECTION 2. The following exhibit to the Agreement is hereby amended to read as set forth in the attachment to this Amendment, which is incorporated in full by this reference: a. Exhibit "B" entitled "Rate Schedule" SECTION 3. Except as herein modified, all other provisions of the Agreement, including any exhibits and subsequent amendments thereto, shal! remain in full force and effect. 1011114 syn 0072115 IN WITNESS WHEREOF, the parties have’by their duly authorized representatives executed this Amendment on the date first above written. ATTEST:CITY OF PALO ALTO City Clerk APPROVED AS TO FORM: Senior Asst. City Attorney APPROVED: Assistant City Manager Mayor DELOTTE & TOUCHE LLP By: Name: Title: Director of Administrative Services Taxpayer I.D. No. 12-3891517 Director of Utilities Risk Manager Attachment: EXHIBIT "B":RATE SCHEDULE 011114 syn 0072115 CERTIFICATE OF ACKNOWLEDGMENT (Civil Code § 1189) STATE OF COUNTY OF ) ) ) On , before me, the undersigned, a notary public in and for said County, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature of Notary Public 3011114 syn 0072115 CONTRACT NO .... BETWEEN THE CITY OF PALO ALTO A!qD DELOITTE & TOUCHE LLP~ FOR RISK MA!qAGEMENT CONSULTING SERVICES This-Contract No.isentered into q-! by and between the CITY OF PALO ALTO, a Chartered city a municipal corporation of the State of California ("CITY"), and DELOITTE & TOUCHE LLP, a Delaware limited liability partnership with an office !ocated at I000 Wilshire Boulevard, Suite 1500, Los Angeles, CA 90017 ("CONTRACTOR"). " ..... RECITALS: WHEREAS, CITY desires certain risk.management consulting services ("Services"), as more fully described in Exhibit "A"; and WHEREAS, CITY desires to engage CONTRACTOR, including its personne!, if any, in providing the Services by reason of its qualifications and experience in performing such Services, and CONTRACTOR has offered to provide the Services on the terms and in -the manner set forth herein; NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Contract, the parties agree: SECTION I -TERM 1.1 This Contract will commence on the date of its execution by CITY. The obligation of CONTRACTOR to perform the Services will commence in accordance with the time schedule set forth in Exhibit "A". In the event that the Services are not completed within the specified time schedule on account of CONTRACTOR’s default, CITY’s city manager will have the option of extending the time schedule for any period of time. This provision will not preclude the recovery of damages for delay caused by CONTRACTOR. SECTION 2 CONTPJACTOR QUALIFICATIONS,STATUS, AND DUTIES OF 2.1 CONTRACTOR represents and warrants that it will furnish or cause to be furnished the Services in good faith with due professional care: CONTRACTOR further~represents andwarrants that its personnel charged with the performance of the Services under this Contract are duly licensed or certified by the State of California, to the extent such licensing or certification is required by law to perform the Services. 990312 syn 0071580 2.1.1 CONTRACTOR DISCLAIMS ALL OTHER WARRJiNTIES, EITHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. CONTRACTOR HAS NOT BEEN. ENGAGED TO PROVIDE ANY YEAR 2000 SERVICES SUCH AS ASSESSMENT, CONVERSION OR TESTING. ACCORDINGLY, CONTRACTORIS NOT PROVIDING SUCH SERVICES,- AND tONTRACTOR DOES NOT, AND WILL NOT, REPRESENT,. WARRANT ORPROVIDE ANY ASSURANCES THAT CITY’S SYSTEMS OR ANY OTHER SYSTEMS (INCLUDING, WITHOUT LIMITATION, THESYSTEMSOF CITY’S VENDORS, SERVICE PROVIDERS, CUSTOMERS, OR J.OINT VENTURES IN WHICH CITY HAS AN INVESTMENT OR OTHER THIRD PARTIES) ARE YEAR 2000 COMPLIANT, OR THAT CITY’S PLANS OR THE PLANS OF ANY THIRD PARTIES TO DEAL WITH THE YEAR 2000 ARE SUFFICIENT TO ADDRESS OR CORRECT ANY YEAR 2000 PROBLEMS THAT MIGHT ARISE, OR WITH RESPECT TO ANY OTHER MATTERS RELATING TO THE YEAR 2000. 2.2 In reliance on the representation and warranty set forth" in Section 2.1, CITY hires CONTRACTOR to perform, and CONTRACTOR covenants and agrees that it willfurnish or cause to be furnished, the Services. 2.3 CONTRACTOR will assign Stephen R. Thompson as the project director to have supervisory responsibility for the performance, progress, and execUtion of the Services. If circumstances or conditions subsequent to the execution of this Contract cause the substitution of the project director for any reason, the appointment of a substitute project director will be subject to the prior written approva! of the CITY’s project manager, such approval not to be unreasonably withheld or delayed. 2.4 CONTRACTOR represents and warrants that it will: 2.4.1 Procure all permits and licenses, pay all charges and fees, and give all notices which may be necessary and incident to the due and lawful prosecution of the Services; 2.4.2 Keep itself fully informed of a!l existing and future Federal, State of California, and local laws, ordinances, regulations, orders, and decrees which may affect the performance of the Services; 2.4.3 At all times observe and comply with, and cause its employees and contractors (and consultants), if any, who are assigned to the performance of this Contract to observe and comply with, in all material respects, the laws, ordinances, regulations, orders and decrees mentioned above; and 2.5 Subject to the provisions of this Section 2.5, any final reports first prepared for delivery to the CITY by CONTRACTOR or its contractors, if any, under this Contract (the "De!iverab!es") will become the property of CITY upon full and final payment to CONTRACTOR hereunder and will not be made available to any individual or organization by CONTRACTOR or its contractors, if any, without the prior written approval of the CITY manager, except as may be required by law, regulation, judicia! or administrative process, or in accordance with applicable 990312 syn 0071580 professional standards, or in connection with litigation pertaining hereto. CONTRACTOR has _created, acquired or otherwise has rights. in, and may, in connection with the performance of Services hereunder, employ, provide, m~dify, create, acquire or otherwise obtain rights in, various concepts, ideas, methods, methodo!ogies, procedures, processes, know-how, and techniques (including, without limitation, function, process, system and data models); templates; the generalized features of the structure, sequence and organization of software, user interfaces and screen designs; general purpose consulting and software tools, utilities and routines; and logic, coherence and methods of operation of systems (collectively, the "Contractor Technology").. To the extent that any Contractor Technology is Contained in any of the Deliverables, CONTRACTOR hereby grants the CITY, upon full and final payment to CONTRACTOR hereunder, a royalty-free, fully paid-up, worldwide, non-exclusive license to use such Contractor TechnolOgy in connection with the Deliverables. To the extent that CONTRACTOR utilizes any of its property (including, without limitation, the Contractor Technology or any hardware or software of CONTRACTOR) in connection with the performance of Services hereunder, such property shall remain the property of CONTRACTOR and, except for the license expressly .granted in the preceding paragraph, th~ CITY shall acquire no right or interest in such property. Notwithstanding anything in this Contract to the contrary, the parties acknowledge and agree that (a) CONTRACTOR shall own all right, title, and interest, including, without limitation, al! rights under all copyright, patent and other intellectual property laws, in and to the Contractor Technology, and (b) CONTRACTOR may emp!oy, modify, disc!ose, and otherwise exploit the Contractor Technology (including, without limitation, providing services or creating programming or materials for other clients). CONTRACTOR does not agree to any terms that may be construed as precluding or limiting in any way its right to (a) provide consulting or other services of any kind or nature whatsoever to any person or entity as CONTRACTOR in .its sole discretion deems appropriate or (b) develop for itself, or for others, materials that are competitive with those produced as a result of the services provided hereunder, irrespective of their similarity to the Deliverables. 2.6 CONTRACTOR will provide CITY with twenty-five (25) copies of the De!iverables. 2.7 If CITY requests additiona! copies of the Deliverab!es, CONTRACTOR will provide such additional copies and CITY will compensate CONTRACTOR for its duplication costs. 2.8 CONTRACTOR will be responsible for employing or~ engaging al! persons necessary to perform the Services. AI~ independent contractors of CONTRACTOR will be deemed to be directly controlled and supervised by CONTRACTOR, which wil! be responsible 990312 syn 0071580 fbr their performance. If any employee or independent contractor of CONTRACTOR fails or refuses to carry out the provisions of this Contract or appears to be incompetent or to act in a disorderly or improper manner, the employee or independent contractor will be discharged immediately from further performance under this Contract on demand of the CITY’s pmojech manager. SECTION 3 -DUTIES OF CITY 3.1 CITY wi!l furnish or cause to be furnished the specified services set forth in Exhibit "A" and such other information regarding its requirements as may .be reasonably~ requested by CONTRACTOR. CITY shall cooperate with CONTRACTOR in the performance by CONTRACTOR of its Services hereunder, including, without limitation, providing CONTRACTOR with reasonable facilities and timely access to data, information and personnel of CITY, its suppliers and its customers; provided, however, if any confidential data or information is furnished by CITY to CONTRACTOR, CONTRACTOR shall execute a confidentiality agreement in the form set forth in Exhibit ~E". CITY shall be responsible for the performance of its personnel and agents and for the accuracy and completeness of all data and information provided to CONTRACTOR for purposes of the performance by CONTRACTOR of its Services hereunder. It is understood and agreed that CONTRACTOR’s services may include advice and recommendations, but al! decisions in connection with the implementation of such advice and recommendations shall be the responsibility of, and made by, CITY. In connection with its services hereunder, CONTRACTOR shall be ~entitled to rely on al! decisions and approvals of CITY. CITY acknowledges and agrees that CONTRACTOR is furnishing the Services and the Deliverables solely for the informational purposes and internal use by CITY. CITY further acknowledges and agrees that the Services and Deliverables will not be used by, or circulated, quoted, disclosed, or distributed to, nor shal! reference in any written document to the Services and Deliverables be made to, any other person or entity, except to one or more members of the City Council or the Utilities Advisory Commission, or any of their successors, or as required by applicable law. 3.2 The city manager will represent CITY for all purposes under this Contract. Girish Balachandran is designated as the project manager for the city manager. The project manager will supervise the performance, progress, and execution of the Services, and will be assisted by Jane Ratchye,. the assistant project manager. 3.3 If CITY observes or otherwise becomes aware of any default in the performance of CONT~hCTOR~, CITY wil! give written notice thereof to CONTRACTOR in a timely manner. SECTION 4 -COMPENSATION 4.1 In consideration of the full performance of the Services by CONTRACTOR, CITY will pay CONTRACTOR a tota! sum not to exceed Two Hundred Twenty-Five Thousand Do!lars ($225,000) 4 990312 syn 0071580 payable within thirty (30) days of submission by CONTRACTOR of its itemized billings, in triplicate, in accordance with the following fee and expense schedule set forth in Exhibit "B". SECTION 5 -AUDITS 5..1 Upon reasonable prior notice, CONTRACTOR wil! permit CITY to audit, at any reasonable time during the term of this Contract and for three (3) years thereafter, CONTRACTOR’s billing~ records pertaining to amounts bi!led to and paid by the CITY under this Contract. CONTRACTOR further agrees to maintain and retain s~ch records for at least three (3) years after the expiration or earlier termination of this Contract. SECTION 6 -INDEMNITY/LIMITATION ON DAFLAGES 6.1 CONTRACTOR shall protect, indemnify, defendand hold harmless CITY, its Council members, officers, employees and agents from any and all demands, claims, or liability of any nature, in each case solely for death or bodily injury to any person, or real or tangible personal property damage, to the extent directly and proximately caused by CONTRACTOR’S, its officers’, agents’, subcontractors’ or employees’ negligent acts, or willful misconduct in the performance of its obligations under this Contract; provided, however, that if there also is fault on the part of CITY or any entity or individual indentnified hereunder or any entityor individual acting on the CITY’s behalf, the foregoing indemnification shall be on a comparative fault basis. As a condition to the foregoing indemnity obligations, CITY shall provide CONTRACTOR with prompt notice of any claim for which indemnification shall be sought hereunder and shall cooperate in all reasonable respects with CONTRACTOR in connection with any such claim. CONTRACTOR shall be entitled to control the handling of any such claim" and to defend or settle any such claim, in its sole discretion, with counsel of its own choosing. 6.2 Except for CONTRACTOR’S indemnification obligations under Section 6.1, CONTRACTOR shall not be liable to CITY for any claims, liabilities, or expenses relating to its engagement under this Contract for an aggregate amount in excess of one million dollars ($I,000,000) . In no event shal! CONTRACTOR or its personne! be liable for consequential, special, indirect, incidental, punitive or exemplary loss, damage or expense relating to its engagement under this Contract. 6.3 The limitation on liability provisions of this Contract shall apply to the fullest extent of the law, whether in contract, statute, tort (such as negligence) or otherwise and sha!l survive the termination or expiration of this Contract. SECTION 7 -WAIVERS 7.1 The waiver by either party of any breach or violation of any covenant, term, condition or provision of this Contract, or of the provisions of any ordinance or law, will not be 990312 syn 0071580 deemed to be awaiver of any other term, covenant, condition, provisions, ordinance or law, or of any subsequent breach or violation of the same or of any other term, covenant, condition, provision, ordinance or law. The subsequent acceptance by. either party of any fee or other money.~which may become due hereunder wil! not be deemed to be a waiver of any preceding breach or violation by the other party of any term, covenant, condition or provision of this Contract or of any applicable law or ordinance. 7.2 No payment, partial payment, acceptance, or partial acceptance by CITY wil! operate as a waiver on the part of CITY of any of its rights under this Contract. SECTION 8 -INSURANCE 8.1 CONTRACTOR, at its sole cost and expense, will obtaih and maintain, in full force and effect during the term of this Contract, the insurance coverage described in Exhibit "C", insuring not only CONTRACTOR and its independent contractors, if any, but also, with the exception of workers’ compensation, employer’s liability, and professional liability insurance, including CITY as an additional insured concerning CONTRACTOR’s performance under this Contract. 8.2 All insurance coverage required hereunder will be provided through carriers with Best’s Key Rating Guide ratings of A:X or higher whichare admitted to transact insurance business in the State of California. Any and all independent contractors of CONTRACTOR retained to perform Services under this ~Contract will obtain and maintain, in full force and effect during the term of this Contract, identical insurance coverage, naming CITY as an additional insured under such policies as required above. 8.3 Certificates of such insurance, on standard Accord forms, will be filedwith CITY concurrently with the execution of this Contract. The certificates will be subject to the approval of CITY’s risk manager and will provide that the insurance is primary coverage and that the insurance.company will endeavor to provide CITY’s clerk thirty (30) days’ prior written notice of cancellation before such notice shall become effective, and that the City of Palo Alto is included as an additional insured except in policies of workers’ compensation, employer’s liability, and professional liability insurance. Current certificates of such insurance wi!l be kept on file at all times during the term of this Contract with the city clerk. 8.4 The procuring of such required policy or policies of insurance wil! not be construed to limit CONTRACTOR’s liability hereunder nor to fulfil! the indemnification provisions of this Contract. The policy or policies of insurance shall not limit the amount of CONTRACTOR’S liability for any damage, injury, or !oss caused by or directly arising as a result of the Services performed under this Contract, including such damage, injury, or !oss arising after the Contract is terminated or the term has expired. 990312 svn 0071580 SECTION 9 -WORKERS’ COMPENSATION 9.1 CONTP~CTOR, by executing this Contract, certifies that it is aware of the provisions of the Labor Code of the State. of California which require every employer to be insured against liability for workers’ compensation or to undertake self-insurance in accordance with the provisions of that Code, and certifies that it will comply with such provisions, as applicable, before commencing the performance of the Services. SERVICES SECTION I0 -TERMINATION OR SUSPENSION OF CONTRACT OR !0.! The city manager may suspend the performance of the Services, in whole or in part, or terminate this Contract, with or without cause, by giving thirty (30) days’ prior written notice therebf to CONTRACTOR; provided, however, if CONTRACTOR is in default under this Contract, CONTRACTOR shall be entitled to receive thirty (30) days’ prior written notice of the default from CITY and a reasonable opportunity to cure such-default, which period of time shall not exceed thirty (30) days after the receipt of notice by CONTRACTOR. Upon receipt of such notice, CONTRACTOR will immediately discontinue its performance of the Services. 10.2 CONTRACTOR may terminate this Contract or suspend its performance bf the Services bY giving thirty (30) days’ prior written notice thereof to CITY; provided, however, if CITY is in default under this Contract, CITY shall be entitled to receive thirty (30) days" prior written notice of the default from CONTRACTOR and a reasonable opportunity to cure such default, which period of time shall not exceed thirty (30) days after the receipt of notice by CITY. 10.3 Upon such suspension or termination by CITY, CONTRACTOR will be.paid for the Services actually rendered to CITY on or before the effective date of suspension or termination, together with simple interest calculated at the highest legal rate permitted by California law, and payable on all undisputed amounts: 10.4 Upon such suspension or termination, CONTRACTOR will deliver to the city manager immediately any and all copies of the Deliverab!es whether or not further Deliverables are completed. Notwithstanding anything herein to the contrary, CONTRACTOR shall have the right to retain one copy of the Deliverables evidencing its services for the CITY as required by law, regulation, professiona! standards or reasonable business practice. 10.5 The failure of CITY to agree with CONTRACTOR’s independent findings, conclusions, or recommendations, if the same are called for under this Contract, on the basis of differences in matters of judgment, wil! not be construed as a failure on the part of CONTRACTOR to fulfill its obligations under this Contract. 990312 syn 0071580 SECTION I! -ASSIGNMENT ii.i This Contract is for the personal services of .~C0NTRACTOR, therefore, CONTRACTOR will not assign, transfer, convey, or otherwise dispose o~~ this Contract or any right, title or interest in or to the same or any part thereof without the prior written consent of CITY. A consent to one assignment wil! not be deemed to be a consent to any subsequent assignment. Any assignment made without the approval of the city manager will be void and, at the option of the city .manager, this Contract may be terminated. This Contract will not be assignable by operation of law. SECTION 12 -NOTICES 12.1 All notices hereunder will be given in writing and mailed, postage prepaid, by certified mail, addressed as follows: To CITY:Office of the City Clerk City of Palo Alto Post Office Box 10250 Palo Alto, CA 94303 To CONTRACTOR: Attention of the project director at the address of CONTRACTOR recited above SECTION 13 -CONFLICT OF INTEREST 13.~ In accepting this Contract, CONTRACTOR covenants that it presently has no interest, financial or otherwise, which would constitute a conflict of interest under California law or the Palo Alto Municipal Code or applicable professional standards of the American Institute of Certified Public Accountants in any manner or~degree with the performance of the Services. 13.2 CONTRACTOR further covenants that, in the performance of this Contract, it will not employ any centractor or person having such an interest. CONTRACTOR certifies that no person who has or will have any financia! interest under this Contract is an officer or emp!oyee of CITY; this provision will be interpreted in accordance with the applicable provisions of the Palo Alto Municipal Code and the Government Code of the State of California. SECTION 14 NONDISCRIMINATION 14.1 As set forth in the Pa!o Alto Municipal Code, no discrimination will be made in the employment of any person under this Contract because of the age, race,, co!or, nationa! origin, ancestry, religion, disability, sexual preference or gender of that person. If the value of this Contract is, or may be, five thousand dollars ($5,000) or more, CONTRACTOR agrees to meet all requirements of the Palo Alto Municipal Code pertaining to 8990312 syn 0071580 nondiscrimination in emp!oyment, including completing’the requisite form furnished by CITY and set forth in Exhibit "D". 14.2 CONTRACTOR agrees that each contract for servlces with an independent provider wi~l contain a provision substantially as fol!ows: "[Name of Provider] will provide CONTRACTbR with a certificate stating that [Name of Provider] is currently in compliance with al! Federal and State of California laws covering nondiscrimination in employment; and that [Name of Provider] wil! not discriminate in the emp!oyment of any person under this contract because of the age, race, color, national origin, ancestry, religion, disability, sexual preference or gender of such person." 14.3 If CONTRACTOR is found in violation of the nondiscrimination provisions of the State of California Fair Employment Practices Act or similar provisions of Federal law or executive order in the performance of this Contract, it will be in default of this Contract. Thereupon, CITY will have the power to cancel or suspend this Contract, in whole or in part, or to deduct the sum of twenty-five dollars ($25) for each person for each calendar day during which such person.was subjected to acts of discrimination, as damages for breach of contract, or both. Only a finding of the State of California Fair Employment Practices Commission or the equivalent federal agency or officer wil! constitute evidence of a breach of this Contract. 14.4 If CONTRACTOR is in default of the nondiscrimination provisions of this Contract, CONTRACTOR. will be found in material breach of this Contract. Thereupon, CITY will have the power to cancel or suspend this Contract, in whole or in part, or to deduct from the amount payable to CONTRACTOR the sum of two hundred fifty dollars ($250) for each calendar day during which CONTRACTOR is not in compliance with this provision as damages for breach of contract, or both. SECT!ON 15 -MISCELLANEOUS PROVISIONS 15.1 CONTRACTOR represents and warrants that it has knowledge of the requirements of the Americans with Disabilities Act of 1990, and the Government Code and the Health and Safety Code of the State of California, relating to access to public buildings and accommodations for disabled persons, and relating to facilities for disabled persons. CONTRACTOR will comply with or ensure by its advice that compliance with such provisions will be effected in the performance of this Contract. 15.2 This Contract will be governed by the laws of the State of California, excluding its conflicts of law. 990312 svn 0071580 9 15.3 In the.event that an action is brought, the parties agree that trial of such action wil! be vested exclusively in the state courts of California or in the United States District Court for the .Northern District of California in the County of Santa Clara, State of California. ~ 15.4 In any action brought to enforce the provisions of this Contract, each party wil! bear its own lega! costs and .. attorneys’ fees expended in connection with that action. 15.5 This document represents the entire and integrated agreement between, the parties and supersedes all prior negotia- tions, representations, and contracts, either written or oral. This document may be amended only by a written instrument, which is signed by the parties. 15.6 All provisions of this Contract, whether covenants or conditions, will be deemed to be both covenants and conditions. 15.7 The covenants, terms, conditions and provisions of this Contract will apply to, and will bind, the heirs, successors, executors, administrators, assignees, and contractors, as the case may be, of the parties. 15.8 If a court of competent jurisdiction finds or rules that any provision of this Contract or any amendment thereto is void or unenforceable, the unaffected provisions of this Contract and any amendments thereto will remain in full force and effect. 15.9 All exhibits referred to in this Contract and any addenda, appendices, attachments, and schedules which, from time to time, may be referred to in any duly executed amendment hereto are by such reference incorporated in this Contract and will be deemed to be a part of this Contract. 15.10 This Contract may be executed in any number of counterparts, each of which will be an original, but al! of which together will constitute one and the same instrument. 15.11 This Contract is s~bject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto Municipal Code. This Contract will terminate without any penalty (a) at the end of any fisca! year in the event that funds are not appropriated for the following fiscal year, or (b) at any time within a fisca! year in the event that funds are only appropriated for a portion of the fiscal year and funds for this Contract are no longer available. This Section 15.11 shall take precedence in the event of a conflict with any other covenant, term, condition, or provision of this Contract. 15.12 Each party and itscounsel have reviewed ~this Agreement. Accordingly, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the construction and interpretation hereof. 10 990312 svn 0071580 15.13 The provisions of California Civil Code section 1511(2), pertaining to force majeure causes excusin~ performance, are incorporated herein by reference. IN WITNESS WHEREOF, the parties hereto have by their duly authorized representatives execm£ed this Contract on the date first above written. ~itk ler~ ~N APPR0yED AS TO FORM: Senior Asst. City Attorney A] ~D : Assi it City .Manager Dlrect~-r of/Administrative Services / / In~uranceC.~eview DELOITTE & TOUCHE LLP Title: ~m~<~- By: Name : Title: Taxpayer Identification No. (Compliance with corp. Code § 313 ~s required if the entity on whose behalf this contract is signed is a corporation. In the alternative, a certified corporate resolution attesting to the signatory authority of the individuals signing in their respective capacities is acceptable) Attachments: EXHIBIT "A" ¯ EXHIBIT "B" : EXHIBIT "C" : EXHIBIT "D" : EXHIBIT "E" : SCOPE OF SERVICES FEE SCHEDULE INSU~CE NONDISCRIMINATION COMPLIANCE FORM CONFIDENTIALITY AGREEMENT ii 990312 syn 0071580 EXHIBIT A: SCOPE OF SERVICES The City of Palo Alto Utilities (CPAU) Depa.,rtment has a nascent risk management progam and wishes to continually enhance it and employ ~idditional sophistication and rigor in the process. This scope of work sets out the tasks that will be completed with this goal in mind as well as the key tasksto be performed for each phase of the work and deliverables associated with each phase- of the work. Scope of Services: The objective is for the CONSULTANT to assist CPAU in developing a framework for energy risk management (for both electricity and natural gas), focusing on financial and administrative risks associated not only with the current operating environment, but also the anticipated risks that the Utilities Department will face as it transitions towards deregulation. The project will consist of the following phases: Phase 1: 1.1 Understand business plans, objectives and strategies 1.2 Review the risks and risk tolerances identified by management 1.3 Review management’s proposed approach for risk management 1.4 Provide comments and suggestions to enhance the proposed risk management approach _Phase 2: 2.1 Assist in identification of risk management infrastructure needs, based upon the results of Phase 1 2.2 Provide suggested modifications to existing draft policies and procedures, as necessary 2.3 Identify risk measurement methods and model/system alternatives 2.4 Develop a suggested risk management implementation plan for management’s consideration In performing the work in Phases 1 and 2, and in developing its comments and recon-u--nendations, CONSULTANT will rely solely on the information CPAU provides concerning transactions, strategies, objectives, controls and organizational structure. Sel~io r 3"Ian agem e~ t Train ing: CONSULTANT will prepare and deliver a training session, up to two days in length, as appropriate, for senior management members of the City and its Utilities Department. The purpose of this session would be to educate key members of management and staffon: o fundamentals of risk management and importance in a utility environment °appropriate use of financial instruments A-1 ¯industry "best practices" in risk management ¯other significant issues relating to controlling transacting activities. Phase 3: This is the implementation phase of’the project. The specific outline of this phase of work is dependent upon the results of Phases 1 and 2. In addition, the level and nature of CONSULTANT’S involvement may vary, depending of the level of assistance desired in implementing the project. For these reasons, the scope of work in this area is broa~tIy defiiaed at this time, but will be detailed at the conclusion of phases 1 and 2 ofthe project ifCPAU decides to assign CONSULTANT tasks in this phase. CPAU reserves the right to proceed with work in this area after the conclusion of Phases 1 and 2. The role of CONSULTANT in this phase could be: ¯.kn advisory role, whereby CONSULTANT provides periodic review ofpro~ess.and serves as a "sounding board" for consultation and support on implementation questions and issues; ¯Greater responsibility for project management and execution of the implementation process; or ¯A hybrid of the two roles described above. If CPAU requests implementation assistance CONSULTANT will provide an estimate of fees and reach an ageement with CPAU prior to performing any such work. Key Tasks: Following are the key work steps associated with phases 1 and 2 of the engagement, and possible tasks that may be included in phase 3. Phase 1 - The objective for Phase 1 will be to review and suggest enhancements to the risk assessment and proposed risk management approach that has been developed by CPAU management. This will consider both power and natural gas activities, implications of operating under deregulation, and the interplay of the NCPA relationship and its impact on the risk management process. As such, CONSULTANT ,,viii: ,Interview key members of management, including Utilities Department, City Manager’s office and A~dministrative Services Department. ¯. Review ~ity organizational stt-ucture includingdecision-making authority relative to commodity purchases. Review management’s identified key business drivers such as growth objectives, forecasts, contribution of Utilities Department to City revenues, debt service requirements, etc. ¯Obtain an overview of significant existing customer contracts and their risk management implications. A-2 Obtain an overview of customer product structures management anticipates providing under deregulation. ¯Obtain an Overview of existing generation and.supply resources (including contracts and generation resources through.the NCPA’ relationship) and their risk management implications. ¯Interview NCPA m~nagement (if necessary) and review documentation of recent NCPA procedural developments toupdate CONSULTANT;s understanding of the NCPA relationship. ¯Review management’s identified sources of market, credit and administrative risk stemming from existing and planned strategies; and their proposed approaches for managing such risks. Review management’s defined risk tolerances based upon the risks and key business drivers they have identified. Obtain a description of the risk measurement methodologies management proposes to employ in the risk management process. Obtain a description of alternative hedging instruments and strategies management proposes to employ in the risk management process. Review CPAU’s internally developed Policies, Procedures, and Practices Document and existing supply procurement processes. Prepa~:e a report containing comments and recommendations concerning the propo.sed risk management process. P1~ase 2 - The objective "for Phase 2 is to assist management in determining that the organization and design of the risk management infrastructure is consistent with the information analyzed in Phase 1 and to prepare CPAU to move forwa~rd with implementation. In this effort, the aim is to meld the Phase 1 results with the work CPAU has already accomplished on policies and procedures. CONSULTANT will: Assist in identification of CPAU’s risk management organizational needs, including functional authorities and responsibilities and se~egation of duties. Based upon the information reviewed and developed during Phase !, and the organizational needs outlined above, review existing draft policies for their consideration of the fo.llowing keyareas: ~Functional authorities and responsibilities ~Permitted and prohibited activities, and qualitative restrictions thereon ~Limit structure ~Teclmiques and measures for managing and mitigating market and credit risk ~Oversight procedures and reporting requirements Prepare comments and edits of existing draft policies based on the results of the steps above. A-3 Based upon the suggested risk management framework, identify alterriative systems available to support those activities and make recommendations. This will include consideration of CPAU’s existing models and systems {from a conceptua! and functional standpoint only, but does not include %uantitative testing or validation of the models or systems). Develop a detailed implementation plan for the risk management pro~am. Phase 3 - As noted above, a specific scope of work for the implementation phase is yet to be defined. However, the types of tasks that may be involved in this phase include: ¯Information system selection, installation and testing ¯Detail design, testing and refinement of operational procedures and management reporting processes ¯Quantitative model validation ¯Development of portfolio modeling techniques and related management training ¯Detail design and refinement of market or credit risk measurement methodologies ¯Development of detail counterparty credit evaluation and rating procedures Timing and Staffing: ’riming, level of staffing and CONSULTANT’S .on-site presence at Pa!o Alto’s offices will be approximately as follows: Project Phase Phase 1 Phase 2 Senior Management "rraining Phase 3 Weeks Number Required of Staff Location Where Work is Performed 2 2-3 Combination of on-site at CPAU’s offices and off-site. 3 - 4 2-3 1 2 TBD TBD Primarily off-site, ~vith on-site visits as needed for meetings and to review work product with management. Preparation primarily off-site, with up to two days of training sessions on-site. The sessions can be scheduled to suit management’s needs. However, to promote organizational "buy-in" to risk management, the sessions should be scheduled to take place duiing Phase 1. To be Determined. Generally implementation ~vork is largely on- site, however certain procedure such as quantitative testing can be done off site. A-4 Deliverables: The deliverables a.ssociated with each phase of the work will be as follows: Project Phase Phase 1 Phase 2 Deliverable A report summarizing CONSULTANT’S comments and recommendations relating to CPAU’s risk assessment and proposed risk management approach. 1. Outline of suggested changes and!or edits to existing draft policies and procedures reflecting CPAU’s organization.al structure and constraints. CONSULTANT’s revie~v and comments would cover at least the following areas: ¯Functional Authorities and Responsibilities ¯Permitted Activities and Qualitative Limitations ¯Limit Setting Structure ¯Valuation Standards. ¯Market and Credit Risk Measurement and Management ¯Risk Monitoring and Oversight. ¯Reporting ¯Coordination with NPCA Risk Management Program Procedures 2. Evaluation and recommendations for systems alternatives to support the risk management structure xvith consideration given to CPAU’s existing models and systems 3. A detailed implementation plan Training A two day verbal training presentation, together with appropriate visual aids and handouts relating to the subject matter and case examples covered. Phase 3 To be determined. A-5 EXHIBIT B: FEE SCHEDULE Fees are based upon the amount of time required at various levels of responsibility, plus actual out-of-pocket expenses (travel, telephone, printing, etc.). The following are the hourly rates for this project: Hourly Rate Partner $350 Senior Manager $300 Manager $265 Staff $160 These rates reflect a discount of approximately 30% from CONSULTANT’s standard hourly rate schedule~ and are subject to change as CONSULTANT’s standard rate schedule changes. Professional fees for the outlined tasks are estimated as follows: Phase 1 $-35,000 Phase 2 55,000 Senior Management Training 7,500 Phase 3 $ ! 00,000 Total $197.500 CONSULTANT will endeavor to keep out-of-pocket expenses to a reasonable level by scheduling travel for on-site visits in a prudent manner and performing ,,vork off-site to the extent possible. Out-of-pocket expenses are additional to the amounts above and are expected be approximately 12 - 15% of total professional fees. This contract maximum not-to-exceed amount is $225,000. For work on Phase 1, Phase 2, and Senior Management Training, total CONSULTANT fees shall not exceed $115,000, subject to the revisions below. No work will be done in Phase 3 until a detailed.scope of‘’vork is completed and CONSULTANT receives CPAU’s written authorization, CONSULTANT’s work in Phases 1 and 2 is based upon the understanding that CPAU management has already performed a risk assessment, developed a proposed risk management approach and drafted risk management policies and procedures for CPAU’s electricity and natural gas activities..As such it is contemplated that CONSULTANT’s work during these phases will entail a review of the risk assessment and related documentation and policies already prepared by management, with the goal of enhancing that work andhelping to advance CPAU toward implementation. If CONSULTANT’s ‘’york were expanded to include performing the ¯ risk assessment and dm,elopit~g the risk management approach (as opposed to reviewing, evaluating and providing recommendations relating to management’s work in this area), or initial drafting of policies orsignificant portions thereof, the above fee ,,vould be subject to revision. As such, during phase 1 CONSULTANT ,,,,’ill make a determination, after having reviewed the work prepared by management, whether the estimated fees set forth above for the completion of Phases 1 and 2 are reasonable, or-whether additional fees or a reallocation of focus are required. No such additional work shall be performed, or additional fees incurred, until CONSULTANT receives CPAU’s written authorization. B-1 EXHIBIT C: INSURANCE Refer to the insurance certificates attached. C-1 VERIFICATION OF INSURANCE We, the undersigned Insurance Brokers, hereby verify that ZC Specialty Insurance Company has issued the following described insurance which is in force as of the date hereof:- PROFESSIONAL INDEMNITY INSURANCE NAME OF ASSURED:DELOITTE & TOUCHE LLP (U.S.A.) and others as more fully described in the Policy. POLICY NO.INSURER PERIOD ZS 97MIN-P100002 ZC Specialty Insurance Company 12:01 a.m. June 1st, 1998 to 12:01 a.m. June 1st, 1999 LIIVIIT:US$1,000,000 (an annual aggregate) CANCELLATION:This policy is non-cancellable during the period shown. SUBJECT TO THE TERMS, CONDITIONS, EXCLUSIONS AND LIMITATIONS OF THE POLICY. This document is furnished as a matter of information only. The issuance of this document does not make the person or organization to whom it is issued an additional Assured, nor does it modify in any manner the contract of insurance between the Assured and the Insurer. Any amendment, change or extension of such contract can only be effected by specific endorsement attached thereto. ISSUED TO:City of Palo Alto, Purchasing and Contract Administration, P.O. Box 10250, Palo Alto, CA 94303 ISSUED AT: DATE: Montreal, Quebec February 25th, 1999 Per: ~ Divisional Executive Director BIinet Inc. 1801 McGi!I College Ave.. Suite 700 ¯ Moncrea!, Que., Canada H3A 2N4 ¯ tel: (514) 288-2273 ¯ fax: (514) 982-5175 PRODUCER AON RISK SERVICES INC OF TWO WORLD TRADE CEIqTER NEW YORK~, N~! 10048 212 -441-2660 INSURED DELOITTE & TOUCHE TEN WESTPORT ROAD DATE (MM/DDfYy} 02/24/99THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER, THIS CERTIFICATE ,DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. COMPANIES AFFORDING COVERAGE COMPANY A TRANSPORTATION INSUPJLNCE CO. USA LLP COMPANY B CONTINENTAL CASUALTY CO. COMPANY WILTON, CT 06897-0820 C TRANSCONTINENTAL INS. CO. COMPANY D INDICATED, NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS. EXCLUSIONS AND CONDITIONS OF SUCH POLICIES¯ LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. POLICY NUMBER I POLICY EFFECTIVE ] POLICY EXP}RATION !DATE (MM/DD/YY}DATE {MM/DD/YY)MM[TS GL166789430 6/01/98 6/01/99 I L%%. TYPE OF INSURANCE G~ ERAL LIABILn-Y ~" }_~.9_]M M ERCIAL GENERAL LIABILrrY ~.__J CLAIMS MADE [~ OCCUR ~OWNER’S & CONTRACTOR’S PROT C AUTOMOBILE LIABILITY~ANY AUTO ALL OWNED AUTOS ~SCHEDULED AUTOS HIRED AUTOS ¯NON-OWNED AUTOS ~tGELIABILITY NY AUTO. I EXCESS LIABILITY~UMBRELLA FORM OTHER THAN UMBRELLA FORM WORKERS COMPENSATION AND EMPLOYERS" LIABILITY THE PROPRIETOR!~INCLPARTNERS/EXECUTIVE OFFICERS ARE:{X I EXCL OTHER BUAI66789444 BUAI66789458 TX PHYSICJLL DAMAGE $500 (COM"P/COLL) WC166789427 DEDU I 6/o1/~8 6/o1/~8 GENERAL AGGREGATE PRODUCTS - COMP/OP AGG PERSONAL & ADV INJURY EACH OCCURRENCE FIRE DAMAGE (Any one fire} MED EXP (Any one person} 3,000,000 2,000,000 1,000,000 1,000,000 1,000,000 10,000 COMBINED SINGLE LIMIT 1,000,000 BODILY INJURY (Per person} BODILY INJURY (Pet accident) PROPERTY DAMAGE $ $ $ $ $ $ AUTO ONLY - EA ACCIDENT OTHER THAN AUTO ONLY: EACH ACCIDENT AGGREGATE EACH OCCURRENCE I AGGREGATE X { WC STATU- OTH-, TORY LIMITS ! ER ELEACH ACCIDENT ELDISEASE- POLICY LIMIT ELDISEASE - EA EMPLOYEE !,000,000 !,000,000 1,000,000 DESCRIPTIONOFOPE~TIONS~OCATIONSNEHICLESISPECIALEEMS Certificate Holder is included as an additional insured as respects work performed under contract. City of Palo .Alto, its officers, agents aAd employees Purchasing and Contract Administration P.O. Box 10250 Palo Alto, CA 94303 SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, THE ISSUING COMPANY WILL ~]~ MAIL 3_._L.0 DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER.NAMED TO THE LEFT, PART II - CERTIFICATION OF NONDISCRIMINATION SECTION 4~ 0 Certification of Nondiscrimination: As suppliers of goods or services to the City of Palo Alto, the firm and individuals listed below certify that they do not discriminate in employment with regards to age, race, color, religion, sex, national origin, ancestry, disability, or sexual preference; that they are in compliance with all Federal, State, and local directives and executive orders regarding nondiscrimination in employment. Firm: Signature: Title:. Da’te: (SIGNATL~ MLIST BE ~E ~ME 81GNATUR~ ~ APP~RS ON SECTION ~5) CITY OF PALO ALTO RFP 109355 PAGE 1 OF 1 EXHIBIT D CERTIFICATE OF ACKNOWLEDGMENT (Civil Code S 1189) STATE OF )~ ~’] SS. COUNTY OF ) On ~/b-~/~/ /~/, before me,~_ a Notary Public in. a~’ for’ said County ’an~ State, .personally appeared ~¢~~/~~--~ " , personally known to me or proved t6 me on the bas~s of satisfactory evidence to be the person(b) whose name(a) is/ar-~ subscribed to the within instrument and ackhowledged to -me that he/s~e/th~y executed the same in his/he~/the%r authorized capacity(ies), and that by his/h~r/th~ir signature(~) on the instrument the person(~ , or the ehtity upon behalf of which the person(~) acted, executed the instrument. WITNESS my hand and official seal. y gnature of Notary Public- 990312 sy.n 0071580 EXHIBIT E CONFIDENTIALITY AGREEMENT This Confidentiality Agreement, dated as of , ("Agreement") is entered into~’between the City of Palo Alto, a chartered city organizedand operating under the laws of the State of California ("the City") and De!oitte & Touche LLP, a Delaware limited liability partnership ("Entity") (each a "Party", but, collectively, "Parties"), in reference to the following facts and circumstances: RECITALS: A. The City has engaged Entity to provide certain risk management consulting services to the City ("Services") B. In connection with the performance of the Services, each Party desires that the fact of such discussions and consideration of any Material (as defined herein) provided by it or on its behalf to the other Party or the other Party’s Representatives (as defined herein) shall be kept confidential. NOW, THEREFORE, in consideration of the foregoing recitals and the agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intendingto be legally bound, agree as follows: ARTICLE I.DEFINITIONS Section I.i Certain Defined Terms. For purposes of this Agreement, the following terms shall have the following meanings, unless the context clearly indicates otherwise: (a) "Representatives" means the partners, principals, officers, directors, employees, legal counsel, financial advisers, accountants, consultants and other agents of a Party or any of its affiliates. (b) "Material" means any and al! information, data, analyses, documents, and materials, in oral, .written, computer- usable, or other tangible or intangible forms, whether in draft or final form, which may include, but is not limited to, discoveries, ideas, know-how, concepts, techniques, maps, designs, specifications, drawings, blueprints, tracings, diagrams, models, samples, spreadsheets, f!ow charts, energy load data, computer programs, disks, diskettes, tapes, marketing plans, customer names and other technical, financial or business information, furnished br made available by a Party or its Representatives to the other Party or its Representatives, and marked or identified as "confidential" or "proprietary information", but does not include information, data, analyses, documents, or materials that (i) are, when furnished, or, thereafter, become generally available to the public other than as a result of a disclosure by the receiving Party or its Representatives in breach hereof, or (2) are already 9903 t 1 svn 0071593 in.the possession of or become available to the receiving Party or its Representatives on a non-confidential basis from a source other than the delivering Party or its Representatives, (3) the receiving Party or its Representatives independently developed them or any of them without a violation of this’Agreement, or (4) are disclosed by the receiving Party or its~.Representat!ves in connection with any judicial or other quasi-judicial proceeding involving the Parties relating to this Agreement or the Services. ARTICLE 2.CONFIDENTIALITY Section 2.1. Confidentiality Obligation. Except as otherwise expressly agreed, in writing, by the other Party, or as required by law, each Party -shall, and shall cause its.. Representatives to, (a) keep confidential for a period of two (2) years after the expiration or earlier termination of this Agreement (i) t~e terms, conditions, or other facts with respect to the electric and natural gas sales forecast data provided in connection with the Services for analytical purposes, and (2) all Material, and (b) use (i) in connection with the Services the facts, terms, and conditions referred to in clause (a) above and (2) all Material solely for the purpose of performing the Services and for no other purpose or use; provided, however, that a Party may disclose the facts, terms, and conditions referred to in clause (a) above, and any-Material, only to those of its Representatives who need to know such information for the purpose of performing the Services if, but only if, prior to being told of such matters or being given access to any Material, such Representatives are each informed of their confidentiality or the proprietary character thereof and the requirements of this Agreement. A Representative shall be deemed informed of the confidentiality thereof if the Material is identified as "confidential" or "proprietary information." Section 2.2 Compelled Disc!osure. (a) If a Party or its Representative becomes subject to a request for information, subpoena, or a requirement of a court of competent jurisdiction, administrative agency or governmental body, or by any law, rule, regulation, subpoena, or any other administrative or legal process, or by applicable regulatory or professional standards, including requests under the California Public Records Act or. Federal Freedom of Information Act, to disc!ose any Materia!, or any part thereof, or any other matter required by Section 2.1 to be kept confidential, such Party (I) to the extent not prohibited by law or reg~!ation will promptly notify the other Party of the existence, terms, and circumstances of such requirement(s) so that the other Party may seek an appropriate protective order or waive compliance with the provisions of this Agreement, and (2) will, and will cause its Representatives to, reasonably cooperate with the other Party in seeking a protective order or other assurance that confidentia! treatment wil! be accorded to the disclosed Material, or any part thereof, or other matter. (b) If a Party that has complied with Section 2.2(a) is 990312 svn 0071593 2 required, after consultation with counsel, to make .disclosure in response to a requirement described in Section 2.2(a), such Party may make such disclosure without liability hereunder notwithstanding the absence of a protective order or waiver of compliance hereunder. If a PaTty is required, after consultation with counsel, to make discAosuge pursuant to a requirement of law or stock exchange.listing agreement, such Party may make such disclosure without ~iability hereunder, but will use reasonable efforts to consult with the otherParty and to inform the other Party of the required disc!osure prior to making such disc!osure. In the event any such disclosure is required, only that portion of the Material which such Party is required to disclose shall be furnished, and such Party shall exercise all reasonable efforts to ensure that confidential treatment will be accorded the Material. Section 2.3 Ownership and Return of Material. All Material shall be and remain the property of the Party providing it. Nothing in this Agreement shall be construed as granting any rights in or to the Material to the Party or its. Representatives receiving it. Upon the written request of a Party, all Material, including all copies thereof, shall be promptly returned to the requesting Party ordestroyed. If any Material is destroyed, such destruction shall be certified, in writing, by the Party destroying or causing the destruction to the requesting Party. Entity shall have the right to retain any summaries, analyses, notes or extracts prepared or caused to be prepared by it which are based on or contain portions of the City’s Material evidencing its Services to the City; provided, however, Entity shall maintain the confidentiality of the City’s Material in accordance with the terms ofthis Agreement and applicable law, and this obligation shall survive the expiration or termination of this Agreement. Section 2.4 Responsibility for Representatives. Each Party will be responsible for any breach of this Agreement by its Representatives. ARTICLE 3.MISCELLANEOUS Section 3.1 Enforcement. The Parties agree that irreparable damage may occur if this Agreement were not performed in accordance with its terms or were otherwise breached. Accordingly, a Party wil! be entitled to seek an injunction or injunctions to prevent breaches~ of this Agreement and to enforce specifically its provisions in any court of competent jurisdiction, in addition to any other remedy to which the Party may be entitled by law or in equity. Section 3.2 Entire Agreement.This Agreement Constitutes the entire understanding of the Parties with respect to the subject matter hereof. This Agreement may be amended only by an agreement, in writing, executed by ~the Parties. Section 3.3 Severabilitv. If any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable, the remaining provisions shall remain in full force 990312 syn 0071593 3 and effect. It is declared to be the intention of th’e Parties that they would have.executed the remaining provisions without including any that may be held unenforceable. Section 3.4 Headings. Descriptive headings are for convenience only and will.-not contro! or affect the meaning or construction of any provision of this Agreement. Section 3.5 Counterparts. This Agreement may be executed in two or more counterparts, each such executed counterpart being an origina! instrument but together constituting one agreement. " Section 3.6 Notices. Any notices, consents, requests, instructions, approvals and other communications required or permitted to be given, served or delivered pursuant t9 this Agreement shall be deemed to have been given, served or delivered (a) on the second business day after being deposited in the United States mail, registered or certified and with proper postage prepaid, (b) on the first business day after being deposited with Federal Express or any other recognized overnight courier services w~th proper fees prepaid or (c) on the business day on which it is sent and received by fax (provided it is received during normal business hours; otherwise, on the next business day), If to Entity:DELOITTE & TOUCHE LLP Capital Markets Group I000 Wilshire Boulevard Los Angeles, CA 90017 Phone: (213) 688-0800 Fax: (213) 888-0100 If to the City:CITY OF PALO ALTO 250 Hamilton Avenue P. O. Box 10250 Pa!o Alto, California 94303 .Phone: (650) 329-2!71 Fax: (650) 329-2646 Attn: Senior Asst. City Attorney or to such other address or fax number as any party may, from time to time, designate in a written notice given in a like manner. Section 3.7 Successors and Assigns. This Agreement shall be binding upon, and inure to the benefit of, the Parties and their respective successors and~ assigns, but shal! not be assignable by either Party without the prior written consent of the other Party. Section 3.8. Choice of Law. This Agreement will be governed by and construed and enforced in accordance with the laws of the State of California, without giving effect to the conflict of laws principles thereof. 990312 svn 0071593 Section 3.9. Term. This Agreement shall be for a two-. year term, unless earlier terminated by a party on ninety (90) days’ prior written notice. Section 3.10. Advice of Counsel. Each Party and its counsel have reviewed this Agreement. Accordingly, the normal rule of construction to the e£fech that any ambiguities are tO be resolved against the drafting party shall not be employed in the construction and interpretation hereof. IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their respectibe duly authorized representatives as of the date first written above. ~X: APPROVE~ AS TO IFORM : . Senior Asst. City Attorney APPROVED : _ z ~ / Direct’of Ut~ii~ies DELOITTE & TOUCHE LLP Its: ~ 7~T~-~’ CITY OF PALO ALTO Name.: ~ ~_~~ Its: 6~ity M~naqe~ (Compliance with Corp. Code § 313 is required if the e~tity on whose behalf this contract is signed is a corporation. In the alternative, a certified corporate resolution attesting to the signatory authority of the individuals signing in their respective capacities is acceptable) 990312 syn 0071593 CERTIFICATE OF ACKNOWLEDGMENT (Civil Code S 1189) STATE OF CALIF~ORNIA [ Notary~lic in~ for said County and State, personally appeared ~’ o~% t~he bas£s of ~atlsfactory ~e to be the person~ whos~ name(~) is/~ subscribed to the within instrument and acknowledged to me that he/~/t~ executed -the same in his/~~ authorized capacity~), and that by his/~/t~ signature~) on the instrument the person~, or the entity upon behalf of which the person(~ acted, executed the instrument. WITNESS my .hand and official seal. -~_.~_ Comm. ?1084830 "~-~ NOTARY PUBLIC- CA’ IFOR~IIA~Los Angeles Counl,/ sygnature of/Notary Public / STATE OF CALIFORNIA COUNTY OF On , , before me, , a Notary Public in and for sai8 County and State, personally appeared , personally known to me or proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that-by his/her/their signature(s) on the instrument the person(s), .or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature of Notary Public 990312 svn 0071593 6 Attachment C Exhibit B: Fee Schedule for Phase 3 Extension (Amendment I to Agreement No. C9115650 between City of Palo Alto and Deloitte and Touche LLP) The following fees are for work to be performed in Phase 3 under the extension of the contract between CPAU and Deloitte and Touche dated March 16, 1999. The fees for Phase 3 tasks are estimated between $119,000 - $185,000, plus out-of-pocket expenses, subject to th~ overall engagement fee and expense limitations per the contract. The following are Deloitte and Touche’s current hourly rates for Phase 3 tasks: Hourly Rate Parmer $430 Senior Manager $350 Manager $310 Staff $200 The hourly rates reflect a discount of approximately 30% from CONSULTANT’s standard hourly rate schedule, and are subject to change as CONSULTANT’s standard rate schedule changes. Professional fees for the tasks to be completed in Phase 3 are estimated as follows: Professional Fee Estimate Task 1A Energy Risk Management Program Assessment - Annual Review Task 1B Energy Risk Management Program Assessment - Mid Year Review Task 2 General Energy Risk Management Project Tasks Total $70,000 $35,000 $80,000 $185,000 CONSULTANT will endeavor to keep out-of-pocket expenses to a reasonable level by scheduling travel for on-site visits in a prudent manner and performing work off-site to the extent possible. Out- of-pocket expenses are additional to the amounts above and are expected to be approximately 12-15% of total professional fees. This contract maximum not-to-exceed amount is $215,000. No work will be done in Phase 3 until a detailed scope of work is completed and CONSULTANT receives CPAU’s written authorization.