Item R5 O_ IG Contract Fee_First ReadingOrdinances - R5 O
COMMISSION MEMORANDUM
TO:Honorable Mayor and Members of the City Commission
FROM:Raul J. Aguila, City Attorney
DATE:December 11, 2019
First Reading
SUBJECT:AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA, AMENDING CHAPTER 2 OF THE CITY
CODE, ENTITLED ADMINISTRATION, BY AMENDING ARTICLE VI
THEREOF, ENTITLED PROCUREMENT, BY AMENDING DIVISION 3
THEREOF, ENTITLED CONTRACT PROCEDURES, BY CREATING
SECTION 2-378, ENTITLED “INSPECTOR GENERAL CONTRACT FEE,”
TO ESTABLISH AN INSPECTOR GENERAL CONTRACT FEE TO BE
INCORPORATED INTO THE CONTRACT PRICE OF CERTAIN CITY
CONTRACTS, AND TO PROVIDE FOR EXEMPTIONS THEREFROM;
PROVIDING FOR REPEALER, SEVERABILITY, CODIFICATION AND FOR
AN EFFECTIVE DATE.
BACKGROUND/HISTORY
On November 6, 2018, the City's voters approved an amendment to the City Charter, creating
Article IX, which creates the City of Miami Beach Office of Inspector General (“OIG” or “Office
of Inspector General”); establishes the functions of the office; provides the Inspector General
with the power to subpoena witnesses, administer oaths, and require production of records, in
order to conduct its investigations; and provides that the Inspector General's appointment, term,
functions, authority, and powers shall be further established by Ordinance.
On February 23, 2019, the Mayor and City Commission adopted Ordinance No. 2019-4239, to
implement the provisions of the newly created Article IX of the City Charter.
On October 16, 2019, pursuant to Section 2-256(b)(2) of the City Code, the Mayor and
Commission appointed Joseph M. Centorino as the first Inspector General of the City of Miami
Beach.
ANALYSIS
The purpose of the proposed ordinance is to create a framework for a dedicated City funding
source to fund the activities and operations of the Office of the Inspector General. By
dedicating amounts that could only be used for the OIG, the ordinance would provide a
measure of independence and predictability with regard to funding for the OIG.
A draft of the proposed ordinance is attached as an exhibit to this Memorandum. The ordinance
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is similar to the IG Contract fee established by Miami-Dade County pursuant to Section 2-1076
of the County Code, to fund the operations of the County’s inspector general. Miami-Dade
County’s IG contract fee is .25%.
The proposed ordinance would assess an “IG Contract Fee” on certain City contracts and
purchase orders, consisting of a fixed percentage of the total amount of the contract. The
amount would be incorporated within the contract price, and the percentage deducted from each
progress payment to the contractor.
The City’s FY2020 General Fund budget for the Office of Inspector General is approximately
$1.450 million. The Administration estimates that an IG Contract Fee of one half of one percent
(0.5%) would generate approximately $550,000. Accordingly, in order to cover the $1.45 million
budget covered by the General Fund, the ordinance proposes an IG contract fee of 1.50%,
which percentage would generate approximately $1,650,000.
Importantly, the proposed ordinance only provides the mechanism for identifying a
dedicated funding source for the OIG. The actual appropriation of funds for the OIG,
and the final budget for the department, is subject to an annual appropriation by the
City Commission as part of the annual budget process. Accordingly, if the amounts
generated by the IG Contract Fee in any given year are insufficient to fund the budget the City
Commission has proposed for the OIG in the next fiscal year, the City Commission would need
to identify other sources of funding through the annual budget process to make up the
difference. Similarly, if the amounts generated by the IG Contract Fee in any given year exceed
the amounts required to fund the OIG budget in the next fiscal year, such “surplus” amounts
would be carried forward until appropriated by the City Commission. In this regard, it should be
noted that as the IG Contract Fee would only apply after March 1, 2020, there is a ramp up
period, and the IG Contract Fee is unlikely to fully fund the OIG budget in the first two years
following its adoption.
The ordinance includes a number of exemptions for categories of contracts to which an IG
contract fee should not apply, either because of the nature of the contract service being
provided, or because implementation would present challenges. For example, the ordinance
exempts contracts with governmental agencies, including grants that may only be used for
restricted purposes; contracts for specialized services, such as insurance, financial advisory
services, legal, or audit services; contracts or purchase orders under the City’s bid thresholds
(which would make implementation difficult), or “piggyback” contracts where the City’s contract
incorporates the exact terms and conditions of a previously competitively bid contract. Further,
as the assessment is expenditure based, the ordinance clarifies that the IG Contract fee does
not apply to revenue-generating contracts, such as leases, concession agreements, and
management agreements.
Finally, the ordinance requires that after March 1, 2020, each competitive solicitation and
covered City contract include mandatory contract language implementing the IG contract fee
and the Office of Inspector General’s powers as a matter of contract. The mandatory contract
language, coupled with the assessment of the IG Contract Fee, would serve to place every
contractor on notice as to the applicability of the OIG to the contract, and to each contractor’s
performance of work on behalf of the City. The contract language would also provide the City
with an additional remedy (i.e., a breach of contract action) for a contractor’s failure to comply
with the broad right of access afforded to the OIG to review, audit, inspect and investigate all
City contracts under the City Charter and City Code.
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Applicable Area
Citywide
Is this a Resident Right to
Know item?
Does this item utilize G.O.
Bond Funds?
Yes No
Legislative Tracking
Office of the City Attorney
Sponsor
Commissioner Mark Samuelian
ATTACHMENTS:
Description
Ordinance
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ORDINANCE NO. 2019-------
AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, AMENDING CHAPTER 2 OF THE
CITY CODE, ENTITLED ADMINISTRATION, BY AMENDING ARTICLE
VI THEREOF, ENTITLED PROCUREMENT, BY AMENDING DIVISION
3 THEREOF, ENTITLED CONTRACT PROCEDURES, BY CREATING
SECTION 2-378, ENTITLED "INSPECTOR GENERAL CONTRACT
FEE," TO ESTABLISH AN INSPECTOR GENERAL CONTRACT FEE
TO BE INCORPORATED INTO THE CONTRACT PRICE OF CERTAIN
CITY CONTRACTS, AND TO PROVIDE FOR EXEMPTIONS
THEREFROM; PROVIDING FOR REPEALER, SEVERABILITY,
CODIFICATION AND FOR AN EFFECTIVE DATE.
WHEREAS, on November 6, 2018, the City's voters approved an amendment to
the City Charter, creating Article IX, which creates the City of Miami Beach Office of
Inspector General; establishes the functions of the office; provides the Inspector General
with the power to subpoena witnesses, administer oaths, and require production of
records, in order to conduct its investigations; and provides that the Inspector General's
appointment, term , functions, authority, and powers shall be further established by
Ordinance; and
WHEREAS, on February 23, 2019, the Mayor and City Commission adopted
Ordinance No. 2019-4239, to implement the provisions of the newly created Article IX of
the City Charter; and
WHEREAS, the Mayor and City Commission desire to create a dedicate funding
source for the Office of Inspector General, by assessing an "IG Contract Fee" consisting
of a fixed percentage of certain City contracts, as provided herein.
NOW, THEREFORE, BE IT ORDAINED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA:
Section 1. That Chapter 2, entitled "Administration," Article VI thereof, entitled
"Procurement," Division 3 thereof, entitled "Contract Procedures," of the Code of the City
of Miami Beach is hereby amended by creating Section 2-378 as fol lows:
ARTICLE VI. PROCUREMENT
CHAPTER2
ADMINISTRATION
* * *
Sec. 2-378 -Inspector General Contract Fee.
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a. The inspector general may. on a random basis. perform reviews. audits.
inspections. or investigations of any past. present. or proposed city contracts.
The cost of random reviews, audits. inspections and investigations shall, except
as provided in subsection (1) through (15) below. be incorporated into the
contract price of all city contracts. and shall consist of one and one half percent
(1.50%) of the contract price (hereinafter the "IG contract fee"). The IG contract
fee shall not apply to the following contracts:
ill auditing contracts;
m insurance contracts;
Q.) contracts for legal services;
ill contracts for financial advisory services;
{fil leases and facility rental agreements;
,{fil concession agreements;
ill management agreements;
.(fil revenue-generating contracts;
{ill purchase orders or other agreements for the purchase of goods and
services under the amount established for formal bids in section 2-366(a)
of the city code. typically referred to as open market purchases;
ilill federal, state and local government agreements. including grants;
LJ..12 interlocal agreements;
f1l) grant agreements; and
11.l} independent contractor agreements; and
!.1...1) contracts awarded pursuant to section 2-391 of the city code, based on
awards by cooperative alliances or public entities that have previously
utilized a competitive procurement process ("piggyback" contracts); and
i.1fil contracts for emergency purchases pursuant to section 2-396 of the City
code.
Notwithstanding the foregoing. the city commission may by resolution specifically
authorize the inclusion of the IG contract fee in any contract.
b. Nothing contained in this subsection shall in any way limit the powers of the
inspector general to perform audits. inspections. reviews and investigations on all city
contracts including, but not limited to. those contracts specifically exempted from the IG
contract fee.
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c. All city contracts and competitive solicitations shall include the following
contract language:
1. Pursuant to Section 2-256 of the code of the city of Miami Beach. the city has
established the Office of the Inspector General which may, on a random basis,
perform reviews. audits. inspections and investigations on all city contracts.
throughout the duration of said contracts. This random audit is separate and
distinct from any other audit performed by on on behalf of the city. To pay for the
functions of the Office of Inspector General, all payments to be made under this
contract will be assessed one and one half percent (1 .50%) of the total amount of
the payment (the "IG contract fee"), to be deducted from each progress payment
as the same becomes due. unless this contract is exempt from the payment of the
IG contract fee pursuant to Section 2-378 of the City Code. The contractor, vendor.
or consultant (hereinafter. the "contractor") shall, in stating its agreed prices, be
mindful of the IG contract fee assessment, which will not be separately identified.
calculated or adjusted in the proposal or bid form.
2. The Office of the Inspector General is authorized to investigate city affairs and
empowered to review past, present and proposed city programs. accounts.
records, contracts and transactions. In addition, the Inspector General has the
power to subpoena witnesses, administer oaths. require the production of
witnesses and monitor city projects and programs. Monitoring of an existing city
project or program may include a report concerning whether the pro ject is on time,
within budget and in conformance with the contract documents and applicable law.
The Inspector General shall have the power to audit, investigate. monitor. oversee,
inspect and review operations. activities. performance and procurement process
including but not limited to project design , bid specifications, (bid/proposal)
submittals, activities of the contractor, its officers, agents and employees,
lobbyists, city staff and elected officials to ensure compliance with the contract
documents and to detect fraud and corruption.
~ Upon ten ( 10) days written notice to the contractor. the contractor shall make all
requested records and documents available to the Inspector General for inspection
and copying. The Inspector General is empowered to retain the services of
independent private sector auditors to audit. investigate, monitor. oversee. inspect
and review operations activities. performance and procurement process including
but not limited to project design , bid specifications, (bid/proposal) submittals.
activities of the contractor. its officers, agents and employees, lobbyists, city staff
and elected officials to ensure compliance with the contract documents and to
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detect fraud and corruption.
4. The Inspector General shall have the right to inspect and copy all documents and
records in the contractor's possession, custody or control which in the Inspector
General's sole judgment, pertain to performance of the contract. including, but not
limited to original estimate files. change order estimate files. worksheets. proposals
and agreements from and with successful subcontractors and suppliers, all project-
related correspondence. memoranda. instructions. financial documents.
construction documents. (bid/proposal) and contract documents, back-change
documents, all documents and records which involve cash, trade or volume
discounts, insurance proceeds. rebates, or dividends received, payroll and
personnel records and supporting documentation for the aforesaid documents and
records.
5. The contractor shall make available at its office at all reasonable times the records,
materials. and other evidence regarding the acquisition (bid preparation) and
performance of this contract, for examination. audit, or reproduction, until three (3)
years after final payment under this contract or for any longer period required by
statute or by other clauses of this contract. In addition:
i. If this contract is completely or partially terminated, the contractor shall
make available records relating to the work terminated until three (3) years
after any resulting final termination settlement; and
ii. The contractor shall make available records relating to appeals or to
litigation or the settlement of claims arising under or relating to this contract
until such appeals, litigation. or claims are finally resolved.
6. The provisions in this section shall apply to the contractor. its officers. agents.
employees, subcontractors and suppliers. The contractor shall incorporate the
provisions in th is section in all subcontracts and all other agreements executed by
the contractor in connection with the performance of this contract.
7. Nothing in this section shall impair any independent right to the city to conduct
audits or investigative activities. The provisions of this section are neither intended
nor shall they be construed to impose any liability on the City by the contractor or
third parties.
d. The provisions of this section shall not apply to any contract entered into prior to
March 1, 2020, or to any competitive solicitation issued prior to March 1, 2020.
SECTION 2. REPEALER.
All ordinances or parts of ordinances in conflict herewith be and the same are
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hereby repealed.
SECTION 3. SEVERABILITY.
If any section, subsection, clause or provision of this Ordinance is held invalid, the
remainder shall not be affected by such invalidity. portions of this ordinance.
SECTION 4. CODIFICATION.
It is the intention of the Mayor and City Commission of the City of Miami Beach,
and it is hereby ordained that the provisions of this ordinance shall become and be made
a part of the Miami Beach City Code. The sections of this ordinance may be renumbered
or relettered to accomplish such intention, and the word "ordinance" may be changed to
"section," "article," or other appropriate word.
SECTION 5. EFFECTIVE DATE.
This Ordinance shall take effect on the 1st day of February, 2020.
PASSED AND ADOPTED this __ day of ______ , 2019.
ATTEST:
Rafael E. Granado, City Clerk
Underline denotes additions
Strikethrough denotes deletions
Dan Gelber, Mayor
DeEJ81s Strikstt=:lmEJ§h denotes deletions at Second Reading
(Sponsored by Commissioner Mark Samuelian)
5
APPROVED AS TO
FORM & LANGUAGE
0 & GXEC(UTION ~ .. JK. \-. ,z-J-1'\
City Attorney fl# Dote .
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