Ordinance 2020-4325 ORDINANCE NO. 2020-4325
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
ALLOCATION," TO PROVIDE FOR DEDICATED FUNDING FOR THE
ACTIVITIES AND OPERATIONS OF THE CITY'S OFFICE OF
INSPECTOR GENERAL, BASED ON A PERCENTAGE OF THE
CONTRACT AMOUNTS EXPENDED BY THE CITY UNDER CERTAIN
CITY CONTRACTS, AND TO ESTABLISH MANDATORY CONTRACT
PROVISIONS RELATING TO THE INSPECTOR GENERAL'S
REVIEWS, AUDITS, INSPECTIONS AND INVESTIGATIONS OF CITY
CONTRACTS; PROVIDING FOR REPEALER, SEVERABILITY,
CODIFICATION, AND 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 establish a dedicated fund
for the activities and operations of the Office of Inspector General (the "OIG Fund"), with
allocations to the OIG Fund consisting of a specified percentage of the contract
expenditures made under all City contracts, except 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 follows:
CHAPTER 2
ADMINISTRATION
* * *
ARTICLE VI. PROCUREMENT
Sec. 2-378 — Inspector General Contract Fee Allocation.
a. The inspector general may, on a random basis, perform reviews, audits, inspections,
or investigations of any past, present, or proposed city contracts. T-- _ - _
(1) through (15) below, be incorporate_=-----=--'-
shall
-shall consist of one and one half perc=- -._ °-_ = --= -=- - - = -= - = =.-_--= -
"IG contract fc . . = - -=-- - - _=- - - -- -- = - - _ ---- - - - - : All
appropriations of city funding for city contracts shall include an allocation of funding to
the office of inspector general ("OIG") fund, as provided herein. Monies placed in the
OIG fund shall be exclusively dedicated for the operations and activities of the office
of inspector general. and for no other purposes: provided, however, that such monies
shall not be expended, except as approved by the city commission pursuant to a
budgeted appropriation in accordance with Florida law and section 2-256(i) of the city
code.
b. The amount allocated to the OIG fund shall consist of one half of one percent (.5%) of
the contract amounts expended by the city pursuant to all city contracts, including
contract amendments or change orders, except as provided herein. The total amount
allocated to the OIG fund for any individual city contract_shall be capped, and shall not
exceed $50,000. The requirements of this subsection_(b) shall not apply to the
following city contracts:
LU auditing contracts;
21 insurance contracts;
contracts for legal services;
al contracts for financial advisory services;
leases and facility rental agreements;
(6) Ll management agreements;
(7) al revenue-generating contracts, including, without limitation, concession
agreements.
} f purchase orders or other including, without limitation concession
established for formal bids in section 2 366(a) of the city code. typically
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(8) (10)federal, state and local government agreements, including grants;
(9) (11) interlocal agreements;
(10) (12)grant agreements; and
(11) { ) indcpcndcnt contractor agreements; a
{ contracts awardcd pursuant to scction 2-391 of thc city codc, bascd on
a a a a a • ^ 'a a ■ a a ■^ a a •a
Utilized a compctitivc procurcmcnt procc__ "_ _--_ _ _ "__ _ _ _ ; _--�
(12) {15) contracts for emergency purchases pursuant to section 2-396 of the
Gcity code.
Notwithstanding the foregoing, the city commission may by resolution specifically
authorize thc inclusion of thc IG contract fcc in an allocation of funds to the OIG fund for
any contract.
c. 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 sotagificall# exempted from an allocation
of fundina to the.IG contract fcc OIG fund.
d. All city contracts and competitive solicitations shall disclose the requirements of this
section and 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 or on on behalf of the city. T.. "'ay fc
a a a _ :talk a a - 5°2
'- --' •- IC)_ a a a S. 'alaa
_
of thc payment(thc "IG contract fcc"), to be deducted from each progress payment
as the same becomes duc. unless this co _ =_ _ -_--:-- - _-- - _- --== -_ - -
IG contract fcc pursuant to Section 2-378 of the C'----__ __-
or consultant (hcrcinaftcr, the "contractor") shall, in stating its aqrccd prices, be
mindful of the IG contract fcc a - ---=
calculated or adjusted in the proposal or bid form or on bchalf of the city.
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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 project 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.
3. 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
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
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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 this 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.
e. The provisions of this section shall not apply to any contract entered into prior to klaFeli
April 1, 2020, or to any competitive solicitation issued prior to Mafeli April, 1, 2020,
provided, however. that the contract provisions set forth in subsection (d) may be
incorporated in contracts or competitive solicitations prior to April 1, 2020. at the city
manager's discretion.
SECTION 2. REPEALER.
All ordinances or parts of ordinances in conflict herewith be and the same are
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.
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SECTION 5. EFFECTIVE DATE.
This Ordinance shall take effect on the 25 day of -J4)14-12020.
PASSED AND ADOPTED this IS day of JGhua.' , 2020.
ATTEST:
Dan Gelber, Mayor
?[2crLC�
R fael E. Gra ado, City Clerk
Underline denotes additions
Strikethrough denotes deletions
denotes deletions at Second Reading
Double Underline denotes additions at Second Reading
(Sponsored by Commissioner Mark Samuelian)
���� x "- p APPROVED AS TO
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Ordinances- R5 D
MIAMI BEACH
COMMISSION MEMORANDUM
TO: Honorable Mayor and Members of the City Commission
FROM: Raul J.Aguila, CityAttomey
DATE: January 15,2020
t' 10:20 a.m. Second Reading Public Hearing
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
ALLOCATION," TO PROVIDE FOR DEDICATED FUNDING FOR THE
ACTIVITIES AND OPERATIONS OF THE CITY'S OFFICE OF INSPECTOR
GENERAL, BASED ON A PERCENTAGE OF THE CONTRACT AMOUNTS
EXPENDED BY THE CITY UNDER CERTAIN CITY CONTRACTS, AND TO
ESTABLISH MANDATORY CONTRACT PROVISIONS RELATING TO THE
INSPECTOR GENERAL'S REVIEWS, AUDITS, INSPECTIONS AND
INVESTIGATIONS OF CITY CONTRACTS; PROVIDING FOR REPEALER,
SEVERABILITY, CODIFICATION AND AN EFFECTIVE DATE.
BACKGROUND/HISTORY
The proposed ordinance, sponsored by Commissioner Samuelian, would create a framework
for a dedicated City funding source to fund the activities and operations of the Office of the
Inspector General.
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.
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On December 11, 2019, the Mayor and City Commission approved the proposed ordinance on
first reading and referred the item to the Finance and Economic Resiliency Committee for
further discussion.
At first reading on December 11, 2019, Vice Mayor Richardson suggested that the ordinance
be amended to clarify that the amounts generated for the OIG will be exclusively dedicated
for the activities of the OIG, and that such funds may not be used for any other purpose. In
addition, Commissioner Arriola requested a clarification that the ordinance creates a dedicated
funding source only, and does not provide expenditure authority, as the annual budget for the
OIG shall be determined through the City Commission's annual budget process, in the same
manner as applicable to every other City department.
; s'
On December 18, 2019, the City's General Obligation Bond Oversight Committee considered
the proposed ordinance. The GO Bond Oversight Committee adopted a motion supporting the
proposed ordinance in concept, but urging the City Commission, in its final determination of the
contract percentage to be allocated to the OIG Fund, to select an amount that would minimize
scope impacts to G.O. Bond projects.
The Administration's proposal for the percentage of a contract price to be allocated to the OIG,
including a proposal to minimize scope impacts via a cap on the amount assessed for individual
contracts in excess of$10 million, is discussed more fully below.
ANALYSIS
As noted above, 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 01G. The
proposed ordinance would provide for an allocation to an OIG Fund, based on a fixed
percentage of the contract price of certain City contracts and purchase orders. The ordinance is
similar to the I G 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 I G contract fee is 0.25%.
A draft of the proposed ordinance, as amended to incorporate feedback provided by the City
Commission at first reading, is attached as an exhibit to this Memorandum. As discussed at first
reading and as reflected in the revised draft of the ordinance, the proposed ordinance only
provides the mechanism for identifying a dedicated funding source for the 01G. 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. If the
amounts generated by the IG Contract Allocation 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 Allocation 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 the OIG budget includes contributions from City's resort tax and enterprise funds, so if the
Page 848 of 1618
OIG Fund balance had a surplus in any given year, the City Commission may elect to use the
OIG Fund balance and reduce the contributions from resort tax or enterprise funds. Ultimately,
the City Commission could also elect to amend the ordinance to change the percent allocation,
or to increase the contract thresholds.
Similar to the Miami-Dade County ordinance, the ordinance includes a number of exemptions
for categories of contracts to which an I G contract allocation should not apply, such as 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, leases, and management agreements, or revenue-generating contracts (as the
allocation to the fund is based on expenditures only).
Finally, the ordinance requires that after April 1, 2020, each competitive solicitation and covered
City contract include mandatory contract language regarding the Office of Inspector General's
audit and investigatory powers as a matter of contract. The mandatory contract language would
serve to place every contractor on notice as to the applicability of the 01G 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.
ANALYSIS SINCE FIRST READING REGARDING PROPOSED PERCENTAGE
The City's FY2020 General Fund budget for the Office of Inspector General is approximately
$1.45 million. The Administration initially estimated that an I G 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 initially proposed a contract
fee of 1.5%.
Since first reading, staff further evaluated the proposed percent allocation, not only by focusing
on historical expenditures, but by taking into account certain anticipated expenditures that were
not fully incorporated in the estimates, including future G.O. Bond projects and
stormwater/resiliency projects. In addition, the Administration considered the impacts on large
capital projects, which could result in individual projects disproportionately contributing to the
OIG Fund. For instance, the 72nd Street Civic Complex, with a budget of $64.4 million, would
generate an OIG contract allocation of$322,000 (@ 0.5%)if no cap is put in place.
The 1G Contract Allocation will be estimated at the beginning of each fiscal year by fund for
each applicable department or capital project and set aside in a contingency account, with the
final amounts contributed to the OIG fund to be based on the actual amounts expended by the
City under covered City contracts in each fiscal year.Through a true-up process taking place at
least annually,the I G Contract Allocation will be recorded as revenue in the new OIG fund.
Accordingly, based on staff's updated projections, and the desire to generate funds to cover the
01 G's $1.45 million General Fund budget while also mitigating major scope impacts on large
projects,the Administration proposes an allocation of one half of one percent (0.5%) of
•
Page 849 of 1618
covered City contracts, provided that there be a cap on individual contracts so that no
allocation would be made to any portion of a contract in excess of$10 million. In other
words, the amount allocated to the OIG Fund for any individual contract shall be
capped and shall not exceed$50,000.
If the City Commission adopts the proposed allocation above (with the cap on
individual contracts), the Administration estimates that approximately $1.5 million
would be generated annually for the OIG Fund.
FINANCIAL INFORMATION
Pursuant to Section 2-12 of the City Code, the proposed ordinance would not result in an
anticipated increase in budgeted revenues or expenditures of the Cityin this fiscal year, or in the
next fiscal year, as this ordinance provides the framework for funding for the Office of Inspector
General based on a percentage of City's contract expenditures, and does not authorize any
specific expenditure or appropriation of funds. Rather, any appropriation of funding for the
Office of Inspector General shall be subject to separate City Commission approval as part of
the annual budget process.
Applicable Area
Citywide
Is this a Resident Right to Does this item utilize G.O.
Know item? Bond Funds?
Yes Yes
Legislative Tracking
Office of the City Attorney
Sponsor
Commissioner Mark Samuelian
ATTACHMENTS:
Description
❑ 2nd Reading Ordinance
Page 850 of 1618