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HomeMy WebLinkAbout02082021 City Council Work Session LAYDOWN - Casagranda - Forensic Audit210208 LAYDOWN (Casagranda) 1. Intent and Background: Recent utility billing errors have been discovered amongst a handful of users within the City of Seward Utility Billing. Due to the variety of errors, the City Council has directed administration to hire a certified professional to complete a 3 tier forensic audit of the City of Seward Utility Billing. The forensic audit will focus on examining and investigating every City of Seward utility bill for 4 months. The months to be examined shall be February and March 2019 as well as November and December 2018. The auditor will also investigate transmission line loss, the 2018 electric meter exchange and the fairness of rates and refunds applied to users. The City of Seward utility billing is comprised of three enterprise funds ( Electric, water and sewer). Billings for all utilities are combined in a monthly statement issued by the City's Finance Department. The tariffs for each fund are approved by The Seward City Council. The city administration made an electric policy in 2018 that has since been proven by new administration to be vague and confusing. There are concerns of refunds given to some users and other users that have been erroneously overcharged for several years. All electric utility customers are billed based on meter readings and actual usage. Electric meter readings are collected by drive -by radio frequencies and a handheld collection device. The City of Seward Electric utility bill is comprised of three tariffs on each user's bill (Seward Public Utility (the cost of Seward's electric infrastructure), Cost of Power Adjustment (CEA's bill to Seward) and a customer charge). The Cost of Power Adjustment is a direct pass through of wholesale power purchased from Chugiak Electric Association (CEA) and distributed amongst all electric users, except special contracts.. Transmission line loss is accounted for by totaling the KWH bought vs. KWH sold. The City of Seward discovered a line loss of — — — % in 20— and has found it to decrease to ---% in 20—. In 2018, the city of Seward received and implemented electric meters that were donated from The City of Kodiak to The City of Seward. In 2019, administration reported this exchange was complete. It has recently been brought to Council's attention this exchange is not complete to date. There are approximately 2,900 electric meters read each month. Meters for water and sewer utility customers whose service is metered are read manually. All other water and sewer utility customers are billed at flat monthly rates, referred to as ERU's. ERU's are equivalent residential units that are used to comprise a rate for non residential customers. There are approximately 970 sewer customers and 996 water customers. 2. WHO MAY RESPOND: Only firms or individuals qualified to perform Forensic Audits and have certification in financial forensics (CFF) or as a Certified Fraud Examiner (CFE). The respondent must have been engaged during the last five years in Alaska or elsewhere as independent Forensic Auditors. The individual or firm must be a member of the American Institute of Certified Public Accountants. The firm is not required to maintain an office within the State of Alaska. 3. SUBMISSION AND DEADLINE: 210208 LAYDOWN (Casagranda) Offeror's responding to this RFP are hereby notified that all proposals submitted, and information contained herein and attached thereto will not become public information until selection of the successful auditor/firm. Except as otherwise provided above, no trade secrets or commercial or financial information shall be accepted in confidence unless, and then only to the extent, the City Manager specifically agrees in writing to the contrary. All proposals must be received mailed or hand -delivered by 1:00 p.m. local time on February _, 2021. Four (4) original hard copies and one (1) electronic copy (flash drive or disk) shall be submitted in one package to: Brenda Ballou, City Clerk City of Seward 410 Adams Street PO Box 167 Seward, AK 99664 Forensic Audit Services RFP- Clerk's note: The public opening needs to be scheduled and included in the notice. Questions regarding this RFP should be directed to Brenda Ballou, City Clerk at bballou@citvofseward.net 907-224-4045.. Questions must be received at least five (5) days prior to date fixed for opening of proposals to be given consideration. Prospective respondents are requested to limit their contact with the City regarding the RFP to the person(s) named herein. All offeror's who are furnished a copy of this RFP, but who decide not to offer a proposal to the City of Seward for this project are kindly requested to submit a negative reply. The original proposal shall be placed along with the electronic copy in one sealed envelope bearing the name and address of the respondent and clearly marked with the words "RFP for Forensic Audit Services". 4. SCOPE OF SERVICES: The selected firm shall be retained for the express purpose of: 1. Performing such forensic accounting procedures as are necessary to identify and quantify any and all irregular procedures, policies and practices impacting the accuracy of invoices issued to customers of the City of Seward water, sewer and electric utilities during November and December 2018 and February and March 2019. including the following issues: a. are invoices consistent with applicable tariff provisions? b. are invoices consistent with meter reading records? c. have the classifications of rate payers for billing purposes been correctly and consistently performed? d. has the placement of demand meters been correctly and consistently applied? e. has the calculation of equivalent residential units (ERU's) for purposes of invoicing for water and sewer services been consistently and correctly performed? 210208 LAYDOWN (Casagranda) A comprehensive review of every monthly invoice issued to residential, commercial, and industrial customers during November and December 2018 and February and March 2019 is requested. 2. During the course of the initial investigation the scope of work may be further expanded or altered at the recommendation of the auditor with written approval of the City Council. 3. Following completion of the forensic audit, the auditor shall issue a written report communicating all discovered abnormal activity, past or present, its quantification, cause, and consequence. 4. The auditor shall report its findings to the City Council. 5. It is further expected that the auditor will advise the City Council and recommend to the City Council appropriate actions to prevent further irregular activities relating to invoicing, standard operating procedures for customer billing, and billing policies. 5. TIMEFRAMES: 5.1 RFP Schedule is as follows: Proposals due: March 1, 2021 Proposal Review Completed: March 15th, 2021 Recommendation and Selection: Following March 22nd, 2021 5.2 Term of Contract: All work to be completed within 120 days from award of contract. 6. CONTRACT MANAGEMENT: The contact person for this contract shall be the City Clerk or his / her designee. The selected offeror will identify one person who is to be the contact for this RFP. 7. EVALUATION AND AWARD: 7.1 Selection Criteria The contract will be awarded in the best interest of the City to the offeror who submits a response which is deemed to provide for the highest quality of service at a fair and competitive price which is most advantageous to the City, price and other factors considered. Selection criteria include: Capability to perform the Scope of Work in a timely manner Past Experience in performing similar work. Proposed Hourly Rates It is expected that a decision selecting the successful offeror will be made within four (4) weeks of the closingdateforthereceiptofproposals. Uponconclusionoffinalnegotiationswiththesuccessfulofferor, all Offeror's submitting proposals in response to this RFP will be informed, in writing, of the name of the successful consultant. Selection Procedures: 7.1.1 The City of Seward reserves the right to select based on qualifications, experience in providing similar services elsewhere, the proposal's responsiveness to the Request for Proposals requirements; and to negotiate a contract with the consultant. 7.1.2 Proposals in response to this RFP will be reviewed against the criteria listed above and award of the contract shall be made in accordance with standard purchasing procedures. 210208 LAYDOWN (Casagranda) 7.1.3 The Seward City Council and Seward City Manager and Assistant City Manager will review all proposals. 7.1.4 The City may enter into a contract with the most responsible respondent whose proposal is determined to be in the best interest of the City. 8. ALTERNATIVES AND EXCEPTIONS: The City may accept proposals which take exceptions to any requirements in the RFP, or which offer any alternative to a requirement herein. Any exception or alternative must be clearly delineated and cannot materially affect the substance of the RFP. 9. PROPOSALS: The City will not be liable for costs incurred in the preparation of the responses to the RFP or in connection with any presentation before a selection committee. Proposals submitted must be bound, paginated, indexed and numbered consecutively. Respondents shall submit as their proposal the following: 9.1 Organization and Content: 9.1.1 Letter of Transmittal: A letter of transmittal addressed to Norm Regis, Acting City Manager, which includes a statement by the respondent accepting all terms and conditions and requirements contained in the RFP. The letter should also include a brief discussion of the respondent's background, experience, and ability to perform this contract in accordance with the Scope of Services. Also, to be provided is a listing of clients for whom similar services were performed, and the nature of the project. 9.1.2 Project Understanding: Please provide a written discussion in enough detail to demonstrate an understanding of the contract's scope and the service required. 9.1.3 Experience: Please provide a detailed written summary of the firm's history in similar roles. 9.1.4 Staff Plan: The proposal should state the size of the firm, the size of the firm's forensic governmental audit staff, the location of the office(s) from which the work on this engagement is to be performed and the number and nature of the staff to be employed on this engagement. Please identify key personnel whom the firm may designate to perform forensic audit services for the City of Seward, their certifications, their background, and experience in similar roles. 9.1.5 References: Must provide a list of three references. Please include names, titles, addresses, and telephone numbers as to allow the City to contact these references. The firm shall also provide information on the results of the firm's latest federal or state desk reviews or field reviews of its audits. 210208 LAYDOWN (Casagranda) 9.1.6Service Plan: Provide a detailed itemized plan of proposed services and methods that will be employed to conduct the forensic audit. 9.1.7 ???????? 9.1.8 Services Expected of the City: Define the nature and scope of all services to be provided by the City. 9.1.9 Fee Proposal: The Offeror's proposed price should include information on the hourly billing rates of each person who is expected to work on this project and charges for expenses, if any, such as copies, and faxes. The proposal should also estimate the number of hours anticipated to be required to complete all tasks identified in the Scope of Work. Required Forms to be Submitted with Proposal: Fair Employment Practice Qualifications for Bidders Non -collusive Affidavit Alaska Business License City of Seward Business License application Independence - The firm should provide an affirmative statement that it is independent of the City of Seward as defined by generally accepted accounting standards and the U.S. Comptroller General's Government Auditing Standards. GENERAL REQUIREMENTS AND CONDITIONS Insurance Indemnification: The contractor shall procure and maintain at its own expense, the following insurance: (See Appendix _ for a more detailed explanation of the City's Insurance and Indemnification requirements). Note: Insurance Certificates in accordance with the requirements contained herein must be submitted to the City prior to the issuance of a Purchase Order. 10. CONDITIONS: Respondents to this RFP will be expected to adhere to the following conditions and must make a positive statement to that effect in its proposal submitted: 1. Have personnel/resources reserve enough to assure task continuity. 2. Agree that the resultant contract may be terminated in the event of non- appropriation of funds. 3. Agree to conform to all applicable laws and ordinances and statutes of the Federal Government, State of Alaska and City of Seward, including but not limited to the following: *Civil Rights Act of 1964, as amended *Civil Rights Act of 1991, as amended *The Municipal Code of the City of Seward 4. Agree that if the City cannot in good faith negotiate a written contract within a reasonable time with the selected respondent, the City may unilaterally cancel its selection of that respondent. 5. Agree that periodic payments to the Auditor will be made as agreed upon in the signed contract with the City. 6. Agree that the contract between the City and the respondent shall be governed by and construed in accordance with the laws of the State of Alaska and the ordinances of the City of Seward. 210208 LAYDOWN (Casagranda) 11. EQUAL OPPORTUNITY EMPLOYER: As a condition of doing business with the City, Offerors' must be certified by the City as an Equal Employment Opportunity Employer. The Fair Employment Practice Qualifications for Bidders is enclosed for this purpose and is made an integral part of this proposal. Please complete the form in its entirety and return it, with all necessary attachments and an authorized original signature affixed, with the proposal submitted. 12. TAX STATUS: In accordance with the Municipal Code of the City of Seward, the selected respondent must be current in all tax obligations to the City of Seward. A respondent found to be delinquent in the payment of personal or real property taxes or found to be the owner of an interest of twenty-five percent (25%) or more in a corporation that is delinquent in the payment of personal or real property taxes shall not be considered for RFP award. 13. TAXPAYER'S IDENTIFICATION NUMBER: Each respondent, whether an individual, proprietor, partnership or a non-profit corporation or organization must provide a completed Form W-9 to the City indicating its Taxpayer Identification Number. 14. ADDITIONAL INFORMATION AND REVISIONS TO PROPOSALS: Information may be provided to potential respondents for the purpose of clarification to assure full understanding of, and responsiveness to the Request for Proposals requirements. Prospective respondents shall be afforded fair and equal treatment with respect to access to additional information and revision of proposals. 15. NON -RESPONSIBLE PROPOSER: Pursuant to Seward Code of Ordinance Section 6.10.135, any respondent who is found to have previously held a contract with the City which was terminated for default, or who has previously been involved in litigation with the City as an opponent of the City, may be deemed non -responsible and not eligible for contract award. 16. NO GUARANTEES: This Request for Proposals, and any responses thereto, does not constitute a contract of any kind. The City makes no guarantees with respect to a grant of award and/or contract to any responsible and responsive respondent to this Request for Proposals. 17. BID SECURITY: Because this proposal does not request fixed -price bids, the requirements of a bid security is waived.