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Home My WebLink AboutStaff Report 2502-4132CITY OF PALO ALTO CITY COUNCIL Special Meeting Monday, March 24, 2025 Council Chambers & Hybrid 5:30 PM Agenda Item 8.Approval of Contract Amendment Number 2 to Contract Number C22183462 with Macias Gini & O'Connell LLP (MGO) to Add $415,071 and Extend the Term for Two Years for External Financial Audit Services; CEQA Status -- Not a Project. City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: City Auditor Meeting Date: March 24, 2025 Report #:2502-4132 TITLE Approval of Contract Amendment Number 2 to Contract Number C22183462 with Macias Gini & O'Connell LLP (MGO) to Add $415,071 and Extend the Term for Two Years for External Financial Audit Services; CEQA Status -- Not a Project. RECOMMENDATION The Office of the City Auditor recommends that City Council approve and authorize the City Manager or their designee to execute Amendment Number 2 to Contract C22183462 with Macias Gini & O'Connell LLP (MGO) for external financial audit services, to add $415,071 and extend the term for two years. This amendment results in a revised total contract not to exceed amount of $1,014,390, for five years of services, from 2022 through March 31, 2027. BACKGROUND The City Charter requires the City Council, through the City Auditor, to engage an independent certified public accounting firm to conduct the annual external financial audit, and report the results of the audit, in writing, to the City Council. MGO has provided the city with external financial audit services since 2017. In October 2021, the City initiated a formal Request for Proposal (RFP) process that encouraged competition from all qualified firms, including MGO, and selected MGO’s proposal for continued services through March 31, 2025. The City Council approved the agreement with MGO on May 2, 20221. Due to the recent appointment of the current City Auditor, and to ensure the City is not in the position of potentially replacing both the City Auditor and External Financial Auditor in the same year, the Office of the City Auditor proposes extending the contract with MGO through fiscal years 2025 and 2026, and conducting another formal Request for Proposal (RFP) process in 2026 for external financial auditing services to commence in FY2027. 1 City Council, May 2, 2022: https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=81841 ANALYSIS FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Vers.: Aug. 5, 2019 Page 1 of 7 AMENDMENT NO. 2 TO CONTRACT NO. C22183462 BETWEEN THE CITY OF PALO ALTO AND MACIAS GINI & O’CONNELL LLP This Amendment No. 2 (this “Amendment”) to Contract No. C22183462 (the “Contract” as defined below) is entered into as of March 17, 2025 by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and MACIAS GINI & O’CONNELL LLP, a Limited Liability Partnership, located at 500 Capitol Mall, Suite 2200 Sacramento, CA 95814 (“CONSULTANT”). CITY and CONSULTANT are referred to collectively as the “Parties” in this Amendment. R E C I T A L S A. The Contract (as defined below) was entered into by and between the Parties hereto for the provision of providing External Audit Services, as detailed therein. B. The Parties now wish to amend the Contract in order to (1) extend the contract term (2) increase Not to Exceed Compensation (3) revise Exhibit C Compensation, and (4) revise Exhibit C-1 Schedule of Rates, as detailed herein. NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the Parties agree: SECTION 1. Definitions. The following definitions shall apply to this Amendment: a. Contract. The term “Contract” shall mean Contract No. C22183462 between CONSULTANT and CITY, dated April 13, 2022 as amended by Amendment No. 1 dated January 22, 2024 and Amendment No. 2 dated March 17, 2025. b. Other Terms. Capitalized terms used and not defined in this Amendment shall have the meanings assigned to such terms in the Contract. SECTION 2. Section 2 “TERM” of the Contract is hereby amended to read as follows: “The term of this Agreement shall be from the date of its full execution through March 31, 2027 unless terminated earlier pursuant to Section 19 (Termination) of this Agreement.” SECTION 3. Section 4_”NOT TO EXCEED COMPENSATION” of the Contract is hereby amended to read as follows: Docusign Envelope ID: C33C9314-809E-4BB0-A68A-611BC4AE55DE Vers.: Aug. 5, 2019 Page 2 of 7 “The compensation to be paid to CONSULTANT for performance of the Services shall be based on the compensation structure detailed in Exhibit C, entitled “COMPENSATION,” including any reimbursable expenses specified therein, and the maximum total compensation shall not exceed Nine Hundred Fifty-Nine Thousand Nine Hundred Six Dollars ($959,906.00). The hourly schedule of rates, if applicable, is set out in Exhibit C-1, entitled “SCHEDULE OF RATES.” Any work performed or expenses incurred for which payment would result in a total exceeding the maximum compensation set forth in this Section 4 shall be at no cost to the CITY. Optional Additional Services Provision (This provision applies only if checked and a not-to- exceed compensation amount for Additional Services is allocated below under this Section 4.) In addition to the not-to-exceed compensation specified above, CITY has set aside the not-to- exceed compensation amount of Fifty-Four Thousand Four Hundred Eighty-Four Dollars ($54,484.00) for the performance of Additional Services (as defined below). The total compensation for performance of the Services, Additional Services and any reimbursable expenses specified in Exhibit C, shall not exceed One Million Fourteen Thousand Three Hundred and Ninety Dollars ($1,014,390), as detailed in Exhibit C. “Additional Services” means any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described at Exhibit A. CITY may elect to, but is not required to, authorize Additional Services up to the maximum amount of compensation set forth for Additional Services in this Section 4. CONSULTANT shall provide Additional Services only by advanced, written authorization from CITY as detailed in this Section. Additional Services, if any, shall be authorized by CITY with a Task Order assigned and authorized by CITY’s Project Manager, as identified in Section 13 (Project Management). Each Task Order shall be in substantially the same form as Exhibit A-1, entitled “PROFESSIONAL SERVICES TASK ORDER”. Each Task Order shall contain a specific scope of services, schedule of performance and maximum compensation amount, in accordance with the provisions of this Agreement. Compensation for Additional Services shall be specified by CITY in the Task Order, based on whichever is lowest: the compensation structure set forth in Exhibit C, the hourly rates set forth in Exhibit C-1, or a negotiated lump sum. To accept a Task Order, CONSULTANT shall sign the Task Order and return it to CITY’s Project Manager within the time specified by the Project Manager, and upon authorization by CITY (defined as counter-signature by the CITY Project Manager), the fully executed Task Order shall become part of this Agreement. The cumulative total compensation to CONSULTANT for all Task Orders authorized under this Agreement shall not exceed the amount of compensation set forth for Additional Services in this Section 4. CONSULTANT shall only be compensated for Additional Services performed under an authorized Task Order and only up to the maximum amount of compensation set forth for Additional Services in this Section 4. Performance of and payment for any Additional Services are subject to all requirements and restrictions in this Agreement.” Docusign Envelope ID: C33C9314-809E-4BB0-A68A-611BC4AE55DE Vers.: Aug. 5, 2019 Page 3 of 7 SECTION 4. The following exhibit(s) to the Contract is/are hereby amended or added, as indicated below, to read as set forth in the attachment(s) to this Amendment, which is/are hereby incorporated in full into this Amendment and into the Contract by this reference: a. Exhibit “C” entitled “Compensation, Amendment No. 2”, AMENDED, REPLACES PREVIOUS, to provide the not to exceed compensation for Basic Audit Services for FY 2025 and FY 2026. b. Exhibit “C-1” entitled “Schedule of Rates, Amendment No. 2”, AMENDED, REPLACES PREVIOUS, to provide the applicable hourly rates for services performed during FY 2025 and FY 2026. SECTION 5. Legal Effect. Except as modified by this Amendment, all other provisions of the Contract, including any exhibits thereto, shall remain in full force and effect. SECTION 6. Incorporation of Recitals. The recitals set forth above are terms of this Amendment and are fully incorporated herein by this reference. (SIGNATURE BLOCK FOLLOWS ON THE NEXT PAGE.) Docusign Envelope ID: C33C9314-809E-4BB0-A68A-611BC4AE55DE Vers.: Aug. 5, 2019 Page 4 of 7 SIGNATURES OF THE PARTIES IN WITNESS WHEREOF, the Parties have by their duly authorized representatives executed this Amendment effective as of the date first above written. CITY OF PALO ALTO City Manager APPROVED AS TO FORM: City Attorney or designee MACIAS GINI & O’CONNELL LLP Officer 1 By: Name: Title: Attachments: EXHIBIT C: “COMPENSATION, AMENDMENT NO. 2” (AMENDED, REPLACES PREVIOUS) EXHIBIT C-1: “SCHEDULE OF RATES, AMENDMENT NO. 2” (AMENDED, REPLACES PREVIOUS) Docusign Envelope ID: C33C9314-809E-4BB0-A68A-611BC4AE55DE David Bullock Partner Vers.: Aug. 5, 2019 Page 5 of 7 EXHIBIT C COMPENSATION, AMENDMENT NO. 2 (AMENDED, REPLACES PREVIOUS) CITY agrees to compensate CONSULTANT for Services performed in accordance with the terms and conditions of this Agreement, and as set forth in the budget schedule below. Compensation shall be calculated based on the rate schedule attached as Exhibit C-1 up to the not to exceed budget amount for each task set forth below. CITY’s Project Manager may approve in writing the transfer of budget amounts between any of the tasks or categories listed below, provided that the total compensation for the Services, including any specified reimbursable expenses, and the total compensation for Additional Services (if any, per Section 4 of the Agreement) do not exceed the amounts set forth in Section 4 of this Agreement. CONSULTANT agrees to complete all Services, any specified reimbursable expenses, and Additional Services (if any, per Section 4), within this/these amount(s). Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth in this Agreement shall be at no cost to the CITY. BUDGET SCHEDULE FISCAL YEAR NOT TO EXCEED AMOUNT Total for Services and Reimbursable Expenses $959,906.00 Maximum Total Compensation $1,014,390.00 Docusign Envelope ID: C33C9314-809E-4BB0-A68A-611BC4AE55DE Vers.: Aug. 5, 2019 Page 6 of 7 REIMBURSABLE EXPENSES CONSULTANT’S ordinary business expenses, such as administrative, overhead, administrative support time/overtime, information systems, software and hardware, photocopying, telecommunications (telephone, internet), in-house printing, insurance and other ordinary business expenses, are included within the scope of payment for Services and are not reimbursable expenses hereunder. Reimbursable expenses, if any are specified as reimbursable under this section, will be reimbursed at actual cost. The expenses (by type, e.g. travel) for which CONSULTANT will be reimbursed are: NONE up to the not-to-exceed amount of: $0.00. Docusign Envelope ID: C33C9314-809E-4BB0-A68A-611BC4AE55DE Vers.: Aug. 5, 2019 Page 7 of 7 EXHIBIT C-1 SCHEDULE OF RATES, AMENDMENT NO. 2 (AMENDED, REPLACES PREVIOUS) Position FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 Partner/Director $ 350 $ 361 $ 371 $382 $393 Manager $ 240 $ 247 $ 255 $263 $271 IT Consultant $ 245 $ 252 $ 260 $268 $276 Auditor In Charge $ 175 $ 180 $ 186 $191 $197 Staff Auditor $ 135 $ 139 $ 143 $147 $151 Support Staff $ 90 $ 93 $ 95 $98 $101 Docusign Envelope ID: C33C9314-809E-4BB0-A68A-611BC4AE55DE