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R7D-Agreements With External Entities Action Plan To Address Corruption And MiscCOMMISSION ITEM SUMMARY Condensed Title: A Resolution Approving And Authorizing To Negotiate An Agreement with the Miami-Dade County Office Of The Inspector General (MDCOIG), To Authorize The MDCOIG To Provide Independent Investigations Into City Practices And Operations In Order To Prevent And Detect Fraud, Waste, Financial Mismanagement, Employee Misconduct Or Other Abuses. A Resolution Approving And Authorizing To Execute An Agreement In The Not To Exceed Amount Of $45,000, With Miami-Dade County, Florida, On Behalf Of The Miami-Dade County Commission On Ethics And Public Trust, To Develop And Provide A Comprehensive Ethics Training Program For City Employees Who Hold Positions That Are In Regulatory Areas Of The City. Key Intended Outcome Supported: Increase Community Satisfaction with City Services; Increase Resident Satisfaction with Employee Contact; Attract and Maintain a Quality Workforce; and Ensure Expenditure Trends are Sustainable over the Long Term. Supporting Data (Surveys, Environmental Scan, etc.): N/A Item Summary/Recommendation: On April 11, 2012, the FBI arrested five Code Compliance and two Fire Department employees on charges including conspiracy to commit extortion. These arrests and alleged misconduct by a few City employees represent a huge betrayal of the public's trust and of our entire organization. To date, the City Commission has approved actions to address potential corruption and misconduct, including: 1) Reassigning Commander Cardeno from the Police Department to assist the Code Compliance Division in providing day-to-day oversight; 2) Entering an MOU with the FBI; 3) Entering an agreement with Crowe Horwath, LLP to audit the processes of certain regulatory departments/divisions. On June 6, 2012, the City Commission referred the following two additional anti-corruption items to the NCAC: 1) An agreement with the Miami-Dade County Office of the Inspector General (MDCOIG) to provide independent investigations into City practices and operations in order to prevent and detect fraud, waste, financial mismanagement, employee misconduct or other abuses; and 2) An Agreement with the Commission on Ethics to develop and provide comprehensive ethics training to City employees who hold positions that are in regulatory areas. On July 18, 2012, Inspector General Mazzella advised the City that the MDCOIG was not able to provide its services at this time. On November 19,2012, NCAC discussed these items. Mr. Centorino, the Executive Director of the Commission on Ethics made a presentation regarding the Commission's proposed ethics training. Mr. Centorino emphasized that the Commission on Ethics is uniquely qualified to teach the course, since its purpose is to serve as the guardian of the public trust by, among other things, educating public servants as to the required standards of ethical conduct. The Administration is seeking direction from the City Commission on: 1) Whether the Administration should re-contact the IG to determine if the MDCOIG is able to provide its services at this time. In the alternative, whether to pursue a hotline RFP to establish a reporting mechanism by which employees and the public can report unethical, illegal or questionable behavior by City personnel and the hiring of an Anti-Corruption/Chief Compliance Officer who will be responsible to oversee the hotline, follow-up on investigation brought through the hotline or other sources and conduct contract compliance oversight; and 2) Whether to proceed with the ethics training agreement with the Commission on Ethics. In the alternative, whether to pursue ethics training through other third parties such as Barry University, FlU or Miami-Dade College. NCAC (Commissioners Tobin and Libbin present) forwarded the item without recommendation to the City Commission. Financial Information: Source of Funds: Amount 1 $ 45,000 (Ethics) I cs 'l (/!' • /; 2 TBD (MDCOIG) OBPI Total Financial Impact Summary: Clerk's Office Le islative Trackin Rafael E. Granado, City Clerk MIAMI BEACH TBD TBD 458 Account KGB AGENDA ITEM DATE Manager R1D IL-12-r L MIAMI BEACH City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov TO: FROM: DATE: SUBJECT: COMMISSION MEMORANDUM Mayor Matti Herrera Bower and Members of the City Com ission Kathie G. Brooks, Interim City Manager ;q/~ December 12, 2013 / Resolutions Authorizing Agreements with Various External Entities to Assist the City in Implementing the Action Plan to Address Potential Corruption and Misconduct: a. A Resolution Approving And Authorizing The City Manager And City Attorney To Negotiate An Agreement With Miami-Dade County, On Behalf Of The Miami-Dade County Office Of The Inspector General (MDCOIG), To Authorize The MDCOIG To Provide Independent Investigations Into City Practices And Operations In Order To Prevent And Detect Fraud, Waste, Financial Mismanagement, Employee Misconduct Or Other Abuses. b. A Resolution Approving And Authorizing The Mayor And City Clerk To Execute An Agreement In The Not To Exceed Amount Of $45,000, With Miami-Dade County, Florida, On Behalf Of The Miami-Dade County Commission On Ethics And Public Trust, To Develop And Provide A Comprehensive Ethics Training Program For City Employees Who Hold Positions That Are In Regulatory Areas Of The City. ADMINISTRATION REQUEST The Administration is seeking direction from the City Commission regarding the Action Plan to address potential corruption and misconduct. KEY INTENDED OUTCOMES SUPPORTED Increase Community Satisfaction with City Services; Increase Resident Satisfaction with Employee Contact; Attract and Maintain a Quality Workforce; and Ensure Expenditure Trends are Sustainable over the Long Term. BACKGROUND On April11, 2012, five (5) Code Compliance and two (2) Fire Department employees were arrested by the Federal Bureau of Investigations (FBI) on charges including conspiracy to commit extortion. These arrests and alleged misconduct by a few City employees represent a huge betrayal not only of the public's trust -but of our entire organization. Their irresponsible actions have now cast a negative light on the vast majority of our employees, who are hardworking, dedicated men and women committed to our mission of public service. They also paint an unfair picture of the hard work and 459 City Commission Meeting, December 12, 2012 Action Plan To Address Potential Corruption And Misconduct Page 2 efforts by the Mayor and City Commission to provide honest guidance and vision for our community. Subsequently, a five-point approach, intended to support the City in its efforts to root out employee misconduct and corruption, and improve upon or create the necessary processes to prevent this from occurring again was presented. The plan included reassigning Commander Hernan Cardeno from the Police Department to assist the Code Compliance Division in providing day-to-day oversight of the staff. Additionally, a review of Code Compliance cases also began immediately, handled by the City's Internal Audit Division of the Office of Budget and Performance Improvement. The other four proposed actions required Commission consideration and approval. These items were discussed during the May 9, 2012 and June 6, 2012 City Commission meetings. Two (2) of the four (4) items were approved by the City Commission, which are summarized for you here. 1. Resolution No. 2012-27926 (Attachment 1) was passed authorizing the City to enter into a Memorandum of Understanding between the City and the Federal Bureau of Investigation, Miami area corruption task force. 2. Resolution No. 2012-27927 (Attachment 2) was passed authorizing the City to negotiate and execute a professional services agreement with a qualified firm for services related to auditing the processes of certain regulatory departments or divisions. Attached for your reference is a copy of the Professional Services Agreement with Crowe Horwath, LLP for these services, as well as LTC No. 247-2012 from September 28, 2012, (Attachment 3) which provides a status of these services. On June 6, 2012, the City Commission referred two (2) items to the Neighborhood and Community Affairs Committee for further discussion. Those two (2) items are summarized for your review and consideration. 1. Agreement between the Miami-Dade County Office of the Inspector General and the City, to provide independent investigations into City practices and operations in order to prevent and detect fraud, waste, financial mismanagement, employee misconduct or other abuses. Shortly after the news of the arrests, the City reached out to Miami-Dade County Inspector General Christopher R. Mazzella about the possibility of the Miami-Dade County Office of the Inspector General (MDCOIG) providing our City with their services to investigate and review allegations of waste, fraud, abuse, employee misconduct and mismanagement. The MDCOIG was created in 1998 by the Miami-Dade County Commission, through County Ordinance, and has the authority to "review past, present and proposed County and Public Health Trust programs, accounts, records, contracts, and transactions." The MDCOIG investigates allegations of fraud, waste, abuse and misconduct amongst public officials and County employees, as well as contractors and vendors doing business with the County. The Mayor and the former City Manager met with Mr. Mazzella and his staff on April 18, 2012, to discuss the possibility of a formal relationship between his office and our City. The Inspector General was receptive to such an engagement and the basis of an engagement agreement began. To carry out this function, the MDCOIG is empowered with the ability to require the production of documents and records in the possession and control of the County, and has the power to issue subpoenas, where necessary. The MDCOIG can also require 460 City Commission Meeting, December 12, 2012 Action Plan To Address Potential Corruption And Misconduct Page 3 reports from any County official, County agency or instrumentalities regarding any matter in its jurisdiction; to report on and recommend to County government on whether a particular program, contract or transaction is financially sound, reasonable, necessary or operationally deficient; to conduct random audits; and to provide general oversight of department programs and large-scale construction projects. The MDCOIG has oversight of over 40 county departments, including Aviation, the Seaport, Transit, Housing, Community and Economic Development, Water and Sewer, Solid Waste, Public Works and the Public Health Trust (JMH). Since 2007, the MDCOIG has been serving as the Inspector General for the Miami-Dade County School Board through an lnterlocal Agreement. The MDCOIG's powers do not extend to municipalities. A proposed Agreement between the City and Miami-Dade County, on behalf of the MDCOIG, would authorize the MDCOIG to provide similar services to the City. Staff members from the MDCOIG, City Administration and City Attorney's Office began working to refine a proposed Agreement setting forth the authorized powers and duties of the Inspector General, if contracted to provide these services to our City. (Attachment 4) The following generally describes the role of the Inspector General and the scope of services that were contemplated to be provided through the Agreement, to be further negotiated: • It is intended that the organization and administration of the MDCOIG will be sufficiently independent to assure that no interference or influence external to the MDCOIG adversely affects the independence and objectivity of the Inspector General. The Inspector General considers this an integral component of any engagement with their office. • The MDCOIG may exercise any of the responsibilities, functions and authorities contained in the Agreement upon his or her own initiative. • The Mayor and Commission, City Manager, City Attorney, City's Internal Auditor and Miami Beach Police will cooperate with the MDCOIG to achieve the goals of preventing and detecting fraud, waste, financial mismanagement, employee misconduct or other abuses, and promoting accountability, integrity, economy, and efficiency in government. It was anticipated that, subject to any limitations that may be specifically delineated in the Agreement, the MDCOIG would be authorized by the City to: • Serve as the Inspector General for the City during the term of the Agreement. • Randomly or in response to complaints, conduct any reviews, audits, inspections, investigations or analyses relating to departments; offices; committees; activities; accounts; records; procurement processes (e.g. how bid specifications were established; how the bid process was managed; and the activities of the prospective bidder, its officers, agents and employees, lobbyists, City staff, and elected officials); contracts; transactions; past/present/future programs and agencies of the City; employee compliance with established policies and/or standard operating procedures of the City (including the operations of departments or divisions of the City with regulatory oversight of City/state/federal codes such as, but not limited to, fire, parking, planning and zoning, building, property maintenance, noise, etc.); and allegations of employee misconduct. 461 City Commission Meeting, December 12, 2012 Action Plan To Address Potential Corruption And Misconduct Page4 • Require reports and the production of records from the Mayor, Commission, City Manager, City officers, employees (except any files or reports relating to litigation that are subject to attorney-client or other similar privilege) and entities under contract with the City. • Staff and support a "hotline," that shall be operational throughout the duration of the Agreement, to accept calls from individuals reporting alleged fraud, waste, financial mismanagement, employee misconduct or other abuses. Such hotline shall be advertised by the City. The MDCOIG was not intended to, whenever possible, duplicate the work of the City's Internal Auditor, Miami Beach Police Department Internal Affairs Division, Miami Beach Human Resources Department, City Commission, City Manager and City Attorney, or of the State Attorney's Office or Miami-Dade County Commission on Ethics. The proposed Agreement was for a term of three (3) years from date of execution by all parties, and would have been renewable for an additional term; any additional term would be determined and agreed upon by both parties. On July 18, 2012, Inspector General Christopher Mazzella advised the City that the MDCOIG is not able to provide Inspector General services at this time. The Administration can contact the Inspector General again if the City Commission would like to pursue this again. In the event the MDCOIG will not be able to provide these services, it is imperative that the City continue to pursue every effort to prevent and detect fraud, waste, financial mismanagement, employee misconduct or other abuses. It is important that employees, residents and business owners alike report conduct that is not consistent with the integrity the City expects of our public servants and, when doing so, those reporting such activities must feel confident that their call and concerns will be properly investigated. Likewise, it is beneficial for the City to have available a process to investigate any reported fraud or employee misconduct, such as concerns with the City's procurement and regulatory functions, especially as it relates to matters that may not rise to the level necessitating the FBI's involvement. To that end, in the event the MDCOIG is not able to provide these services, or the Commission desires to explore other avenues, I recommend contracting out for a dedicated hotline reporting service, providing 24-hour toll-free telephonic personal answering, reporting and tracking of compliance concerns to assist in the identification of possible unethical, illegal or questionable behavior. The hotline provides an efficient and independent means of reporting and identifying concerns regarding potential misconduct. These services would be procured through a Request for Proposal (RFP). The features of the proposed hotline would likely include: .. 24/7/365 Call Center; .. Unique toll-free number with customized greeting; .. No call queues ever used. Every Call answered by live operators; .. Online case management for reporting, tracking and analysis; and .. Immediate notification 24 hours-a-day for severe/sensitive situations; .. Online web-reporting for employees. The hotline would provide for the establishment of a reporting mechanism that provides employees, residents and business owners with a means by which to voice their concerns on compliance and other regulatory issues without fear of retribution. 462 City Commission Meeting, December 12, 2012 Action Plan To Address Potential Corruption And Misconduct Page 5 Additionally, I recommend hiring of an Anti-Corruption/Chief Compliance Officer who will be responsible to oversee the ethics hotline, as well as follow up on investigations brought through the hotline or other sources. These types of investigations are currently handled by the City's Human Resources Department, but these investigations take resources from other Human Resources functions. In addition, this position could also include responsibilities for contract compliance oversight. Should the Commission recommend approval of this new position, I would still need to research and identify funding. 2. Agreement with the Miami-Dade County Commission on Ethics And Public Trust, to develop and provide a comprehensive ethics training program for City employees who hold positions that are in regulatory areas of the City. On April13, 2012, immediately following the arrests, the City contacted the Miami-Dade County Commission on Ethics and Public Trust (Commission on Ethics) and spoke to their Executive Director and General Counsel Joseph M. Centorino about having the Commission on Ethics assists the City of Miami Beach with specialized ethics training for all City employees in regulatory functions. On April 19, 2012, Mayor Bower and the former City Manager, along with other City staff, met with several senior-level staff members from the Commission on Ethics, including Mr. Centorino and Deputy General Counsel Miriam Ramos, to discuss this comprehensive ethics training. On April 23, 2012, Michael Murawski, Advocate for the Commission on Ethics had separate and individual meetings with senior-level staff from the City's Code Compliance, Fire, Parking, Organizational Development, and Internal Audit areas to gather additional information and details about the City's past and intended efforts pertaining to training on ethics, particularly for the employees in the regulatory areas of the City. The training that has been discussed with the Commission on Ethics would provide additional, specific and much more in-depth training to all employees who are in a regulatory area of the City. For now, the Commission on Ethics has been asked to first focus on employees in the Code Compliance, Building, Planning, Fire (Inspections) and Parking (Enforcement) areas of the City. It is expected that in the near future, a similar training program will be provided to other City employees. Attached is the proposal submitted by the Commission on Ethics (Attachment 5). The proposal includes: 1. Multiple sessions of intensive and interactive training for all employees and supervisors engaged in the areas of (1) fire inspection; (2) parking enforcement; (3) building inspection; (4) code enforcement; and (5) planning. Each employee would receive approximately 12.5 hours of training. 2. Training for approximately 230 employees. 3. The Commission on Ethics is prepared to design, conduct and conclude the initial training within six months. The proposed sessions include the following over the six (6) months of training, which will be provided through approximately 12.5 hours of training, per employee: 1. Introduction to Ethics -Interactive lecture and discussion led by staff from the Commission on Ethics on public service ethics, governmental organizational culture and professionalism. 463 City Commission Meeting, December 12, 2012 Action Plan To Address Potential Corruption And Misconduct Page6 2. Provide a detailed presentation on the code of ethics requirements for public employees, emphasizing issues such as gifts, conflict of interest, and exploitation provisions particularly relevant to employees engaged in a regulatory role. These will be illustrated with case examples. 3. Presentation and discussion of legal and administrative consequences of illegal and unethical activity by public servants, including the participation of former public employees whose conduct led to termination. 4. Presentation on the laws that govern bribery, including a discussion of illustrative criminal cases from Miami-Dade County and elsewhere. 5. Presentation and discussion on the special integrity challenges presented by the regulatory environment in the City of Miami Beach, including presentations by a retired management level employee of a local government municipality. 6. Interactive group discussion led by staff from the Commission on Ethics on six hypothetical scenarios directly relevant to issues confronting regulatory personnel. 7. Design and implement a "train the trainer" program for supervisory level staff that addresses the need for an on-going strategy necessary for building an ethical organizational culture with oversight controls and in-service ethics training throughout City departments. 8. Video recording of sessions and permission to use and/or edit videos as needed to be used in the City's online training as vignettes. 9. Private and confidential one-on-one sessions to be conducted with all regulatory employees by staff from the Commission on Ethics to discuss and address past and future ethical concerns raised by their personal and professional experiences and providing each of them with an opportunity to suggest changes and/or improvements in the workplace that could help create a stronger ethical climate. 10. The Commission on Ethics will issue a final report summarizing all the training sessions and include recommendations for follow-up training and implementation of long-term management strategies to help prevent future corruption. The cost estimate for the proposed training by the Commission on Ethics is $45,000. Given that there are approximately 230 employees that would participate in all of the trainings described above, the per-person cost for the six month period (12.5 hours per employee) would be approximately $195.65 per employee, or $15.65 per hour of training. By way of background, in 2004, the City developed curriculum and deployment strategies for each of the City's priority training areas, which include: ethics, diversity, sexual harassment, customer service and team building. Course content was developed in consultation with the Human Resources Department, the Miami-Dade Commission on Ethics, the Office of the City Attorney, and other external subject-matter experts. Training in each of these areas was geared specifically to each City department and made available to City staff. By 2008, all employees were required to attend these trainings (employees are required to attend the Ethics course every two years). In addition, in 2011, an online electronic learning system was procured and has been deployed allowing the City to provide access to all employees of these required trainings 24-hours-7-days-a-week. This system was rolled out in May 2012, and allows the City to enhance staff performance with day-to-day operations and assist with scheduling of departments that have non-traditional working hours. Access to our e-learning system is easy using a link located on both the intranet (Fish Tank) and internet. All departments have access to current available courses covering sexual harassment, diversity, and ethics. Additional courses will be made available once developed. 464 City Commission Meeting, December 12, 2012 Action Plan To Address Potential Corruption And Misconduct Page 7 Required courses for all personnel are as follows: • Diversity -every 3 years • Sexual Harassment -every 2 years • Ethics -every 2 years • Teambuilding -every 5 years • Service Excellence/Customer Service Standards-every 3 years Below is the introduction to the Ethics 2012 e-learning workshop available online to all City employees: The Ethics in the Workplace workshop has been developed by the City's Organizational Development Division. In our everyday lives we follow rules and morals that guide us to make decisions. Sometimes though, honoring ethical guidelines is not always easy, as they are often open to interpretation and are ever-changing. We will explore ethical choices and what it takes to be ethical in our behavior. We will go deeper to discover what kinds of personal power we have and how we use this power effectively for ethical behavior. Our goal is to go beyond the basics and create a vibrant environment in which our ethical principles enthusiastically embraced. An ethical workplace will make us stronger personally and professionally, providing for pleasant, meaningful and successful lives. This is a 1-hour course, which also contains short review questions to validate your retention of the information. To complete the course, you must view all slides and answer all questions. In addition to the online option, the City will continue to offer "live" classes for staff who prefer a more traditional learning environment. Additionally, the City has consulted with Barry University in the past to provide external trainers at a fee that ranges from $2,000-2,800 per session, and may opt to pursue this as well, specifically for the ethics workshops. Other local universities such as Florida International University and Miami-Dade College can also be used to provide similar employee training services. The Commission on Ethics also provides free training to municipalities, advisory boards, community councils and private and professional organizations. The two-hour program covers issues pertaining to Conflict of Interest and the Code of Ethics Ordinance. These are Informational sessions intended to increase public awareness of the Ethics Commission and its functions. NEIGHBORHOOD AND COMMUNITY AFFAIRS COMMITTEE The Neighborhood and Community Affairs Committee discussed this item at its November 19, 2012 meeting. Joseph M. Centorino, Executive Director and General Counsel of the Commission on Ethics made a presentation regarding the Commission's proposed specialized ethics training for all City employees in regulatory functions. Mr. Centorino emphasized that the Commission is uniquely qualified to teach the course, since the purpose of the Commission on Ethics is to serve as the guardian of the public trust by, among other things, educating the public, elected and appointed officials and other public servants as to the required standards of ethical conduct. At the conclusion of the discussion the Committee (Commissioners Tobin and Libbin present) forwarded the item without recommendation to the City Commission. 465 City Commission Meeting, December 12, 2012 Action Plan To Address Potential Corruption And Misconduct Page 8 CONCLUSION The Administration is seeking direction from the City Commission on: 1. Whether the Administration should re-contact the Inspector General to determine ifthe MDCOIG is able to provide services at this time. In the alternative, whether to pursue a hotline RFP to establish a reporting mechanism by which employees and the public can report unethical, illegal or questionable behavior by City personnel and the hiring of an Anti-Corruption/Chief Compliance Officer who will be responsible to oversee the hotline, follow-up on investigation brought through the hotline or other sources and conduct contract compliance oversight. 2. Whether to proceed with the agreement with the County Commission on Ethics. In the alternative, whether to pursue ethics training through third parties such as Barry University, Florida International University or Miami-Dade College. Attachments Resolution No. 2012-27926 (Attachment 1) Resolution No. 2012-27927 (Attachment 2) Agreement with Crowe Horwath, LLP and LTC No. 247-2012 (Attachment 3) Draft Scope of Services Inspector General Services (Attachment 4) Commission on Ethics Proposal for City of Miami Beach Ethics Training (Attachment 5) KGB/MAS/REG T:\AGENDA\2012\12-12-12\Action Plan to Address Corruption MEMORANDUM.doc 466 ATTACHMENT 1 RESOLUnON No. 2012-27926 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, APPROVING AND AUTHORIZING THE CITY MANAGER AND CITY CLERK TO EXECUTE A MEMORANDUM OF UNOERST ANDING 8E1WEEN THE CITY, ON BEHALF OF ITS POLICE DEPARTMENT, AND THE FEDERAL BUREAU OF INVESTlGATION, MlAMt AREA CORRUPTION TASK FORCE, FOR THE PURPOSE OF IDENTIFYING AND PROSECunNG PUBUC OFFICIALS AND LAW ENFORCEMENT OFFICERS AT THE FEDERAL. STATE, AND LOCAL LEVELS OF GOVERNMENT INVOLVED IN PUBLIC CORRUPTION THROUGHOUT THE SOUTHERN DISTRICT OF FLORIDA. WHEREAS, the Miami Division of the Federal Bureau of Investigation (FBI) has established the Miami Area Corruption Task Force (MACTF), for the purpose of maximizing inter-agency cooperation and formalize relationships between the participating agencies for policy guidance, planning, training, and pubUclrelations relative to public corruption; and WHEREAS~ the MACTF is comprised of a specialized group of Federal, State, and local investigators and prosecutors responaible for investigating and prosecuting signifiCant public corruption throughout the Southern District of Florida; and WHEREAS, the MACTF enhances the effectiveness of Federal, State and local taw enforcement resources through well-coordinated initiatives, seeking the most effective investigative and prosecution avenues by which to convict and incarcerate individuals involved in public corruption; and WHEREAS, the Miami Beach Police Department's participation in the MACTF is a mutually beneficial partnership that establishes an ongoing relationship between these two law enforcement entities, provides for increased investigative resources end capabilities, improves the effectiveness of the Miami Beach Police Department's law enforcement activities In Investigating public corruption, and demonstrates the FBI's confidence and trust in our Police Department's leadership and investigative staff; and WHEREAS, the City of Miami Beach, on behalf of the Miami Beach Police Department, and the Federal Bureau of lnvestlg,tion, wishes to execute a Memorandum of Understanding, commencing upon the signatures of all parties, and remaining in effect for the duration of the City's participation in the MACTF; and WHEREAS, the Miami Beach Police Department shall appoint a sworn officer on a full time basis to the MACTf to work in conjunction with Federal, State, and local law enforcement personne.l in identifylng, locating and apprehending individuals who are involved in public corruption. NOW. THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA. that the Mayor and City Commission thereby authorize the City Manager and City Clerk to e)(ecute a Memorandum of Understanding between the City of Miami Beach, on behalf of the Miami Beach Police De~rtment, and the Federal Bureau of Investigation, Miami Area Corruption Task Force. ' for the purpose of Identifying and prosecuting public officials and law enforcement officers at the Federal, State and local levels of government involved in public corruption throughout the Southam District of Florida. PASSED and ADOPTED this c,,... day of JIJ"'f: , 2012. 467 t t RESOLUTlON NO .. I 2012-27927 ATTACHMENT 2 l ! A RESOLUTION OF nle MAYOR AND CITY COMMISSION OF TH~ CITY OF MIAMI BEACH, FLORIDA. APPROVING AND AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE A PROFESSIONAL SERVJCES AGREEMENT, IN THE AMOUNT OF $23,000, WITH CROWE HORWATH. LLP, FOR PHASE I SERVICES RELATED TO AUDITING THE PROCESSES OF CERTAIN REGULATORY ClTY DEPARTMENTS OR DIVISIONS. WHEREAS, at its regular meeting on May 9, 2012, the City Commission adopted Resolution No. 2012-27905, waiving, by 517ths vote, the competitive bidding requirement and authortzlng the City Manager to negotiate a professional services agreement with a qualified firm for services related to auditing the processes or certain regulatory departments or divisions in the City; and . WHEREAS, in conjunction with the waiver, the City Commission designated Commissioner Oeede Weithom to work with the City Administration to develop a scope of work for the afore13tated services; and · WHEREAS, once developed, the City Commission directed that the proPQ$8d scope of work be referred to the Finance and Citywide Projects Committee (the Committee) for further discussion, and WHEREAS, at its regular meeting on May 17, 2012, the Committee approved upon the proposed scope of serviCes, and recommended that, notwithstanding the formal waiver·or competitive bidding, the Administration conduct an winfonnal" solicitation process, and which the Administration did, by sending out a request for «Expressions of lnteresr to certain identified firms; and · ' WHEREAS, the finn of Cro'\Ne Horwath, LLP (Crowe) was deemed to be the most qualified firm pursuant to the aforestated informal solicitation process and, accordingly, the City and Crowe have negotiated the attached Professional ServiCEts Agreement for Phase I services, in the not to exceed amount of $23,000, rela1ed to aUditing the processes for certain regulator}' City departments or divisions. NOW, THEREFORE. BE IT RESOLVED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA., that the Mayor and City Commission approve and authorize the I Mayor and City Cieri< to execute a Professional Services Agreement, in the amount of $23,000, with ~~ Crowe Horwath, LLP, for Phase I services related to auditing the processes of certain regulatory City 1. departments or divisions. 468 -~-ll....;.h_-e._ __ __.. 2012. ASTO FORM & lANGUAGE & EXECUTION - AND For t.h11 pu~ of frils Agrooment, Consulbint ~tu-.n '00 dMmed to oo ,. an irl~ent oomctor, and not sJHtgent rJ thi3 City. B o I < All oo~, .~ und~ purnuamtc Amount paid to the r ........ ""'"'M 11"te Riel< l~ll~ll'l Drm, Th\rrl . {305) trrS-7000, 2.1 tn consldemtion of the F&a to be pard to Ckmsufumt by "!he City, Conwtts.rd eMil provlqe ihe ~ and described fn ExhJblt "A" hemfo ·{tile 1'he aforol'nentloood Elod'llblt •g details ·only I ofi.mi Proje-ct-Plan .-n.~,r.:AII fur~ II or tt!E11 Proj~t~ct Plan wlll :00 neQ·ot!m~ to wtth II,. tt taha!ll:'le ~ml:!l1oortt Ccnwlbmfs Servl~. ood any Incident ~o. snan t:ll!l i"l"!mlnim•M !lll"t'l"'l'riem.-..s with the tlmelloo and/or :schedule In Exhibit 1 469 3 The term of this Agl"'*!merrt (Term) shall commence upon execution of this Agreemerrt by all parties hereto, as set forth ln the Effectlve on page 1 hereof, and shall tannlnate six (6} mn,ntt•lll from such Bfedlve Date (unless earlier terminated as otherw!se provided ln this Agreement in). NotiM'!h6tandlng Term provided herein, Consultant shall tn any spaclflc timellnes, achOOules, dates, andlor performance milestones for completion and c!ellvary of the Serv!oos, as e.ame is/are set forth !n timel!ne and/or schedule referenced In Exhtb!t CA" hereto. In conaidemt!on of the Services to be provided, Consultant shan be compensated for Phase I, in the amount of 23,000, as specified In Exhibit "A" hereto. 4.:2 The Ia to be pald upon completion by Consultant and acceptance by tM C!$:Y, of fue .,.. .. , ...... ,....~ .. In Phase I, as attached in Exhibit -5.1 Upon receipt of an acceptable and approved !nvolca, payment(s) shall be made wlli'l!n ihirt)' (30) days ~or thai portion (or those portions} of the ~cea satlsfactcrlly rendered (and referenced In 'fha particular Invoice), Invoices lnclude a detailed description of"tna·sefVioos-(or "portJoos-t'hl:m:Joij ..... --- provkied, and ·shaH oo submitted to fue City at the following address: If the Consultant shall fall to fulfill in a timely manner, or otherw\se v1olates, any of l:htl covenants, egreemams, or stlpula:llons material to this Agreement, the City, through its Cfty Manager, shaH thereupon have ihe right to termlnati'l ihle Agreement for cause, Prior to exercising H:s option to terminate for cause, the City shall notify the Consultant of tts \1\oliit/on of the particular terrn(s) of this Agr86ment, and shall Consultant seven (7) business days to cure such default. lf such defau~ remains uncured after seven (7} .business days, the City may terminate thfa Agrooment Without further oottoo to 470 8.1 Consultant Upon termination, the City shall ba fully discharged from any and all llabllltles, duties, and terms arising out of, or by vlrtue of, this .AQreement Notwffilsta11ding the above, subject to 6. below, the Consu!tant shall not be relieved of liability to the City for suetalned by the City by any breach of the Agreement by the Consultant The C!ty, at Its sole option and discretion, shall he entitled to bring and all lega!fequltab!e adlona thet It deems to be In fts best interest in order to enforce the City's right and remedies agalnst Consultant The City shaH be enti!led fo recover ali costs of such aclions, including reasonable , attorneys' fees subject to the limitation of liability speclfted ln 8. below. lTS C!TY 1\AANAGER, AND FOR THE AT ANY CONSUl.TANJ SUCH TERMINATION~ WHfCH SHAll flfTE!N (1!) DAYS F'Ol.LOW!NG BY THE CONSULTANT OF SUCH NOTICE. IF ntE IS TERM!NATEb fOR BY CITY, SHALL BE FOR ANY SATISFACiORltY UP iO 'rHE OF .TSRMJNA TlON; FOLl.OWlNG WHICH .. .,. .... ,.._._._ BE NiY AND ALl liABILITIES, DU11ES1 ANO n::t:,uc:. AAlSlNG THIS AGREi~MI;NT 'Tl1e CitY also reserves th\7 right to terminate 'the Agree!)lent In the event the Consuf..ant is placed either ln voluntary or Involuntary bankruptcy or makes an assignment for the benefrt of creditors. ln such event, the rtght and obll9atlons for the parties ~hall be the same as providedior ln Secllon 5.2. SECTION 5 Consultant agrees to Indemnify and hold harmtess the City of Miami Beach and ·its offloors, employees, agents, and contractors, from and agalnst any and aH actlons (whether at law or ln equlty), claims, llab!Uoos, losses, and expanses, Including, but not limH:ed to, atlomeys' fees and coats, for persona! or bodily InJury, wrongful deaf!\ loss of or damage to property, \Nhlch may arise or be afleged to have arisen dlrectb' and proxlmataly from the nsgligent acts or Vviltful misconduct of me Consultant, lts officers, employees., agents, contractors, or any oth~r person or.ent\ty acting under Consultant's control or supervision durlng Consultanfs performance of ihe Servtces pursuant to 1hfs Agreement. To that extent, the Consultant shall pay all such claims losses and shall pay all such costs and judgments which rnay Issue from any fa\NSU!t arising from such claims and losses, and shell pay all costs and attorneys' fees by the City ln the of· such claims and !osses, including appeals. The agli*i that one percent (1 %) of the total compensation i:o Consultant for performance of me Services under this Agreement ls the specffic consideration from the City to the Consultant for the Consultant's indemnity agreement. 'The provisions of this Section 6.1 and of th!s lndemnlftcatlon shall survive termination or explrntlon of this Agreement. 3 471 The Consultant sha!! maTnta!n and carry In fu!! force during the Term, the following Insurance: · · ~. Consurtant General Uabflity, in the amount of $1,000,000; 2. Consultant Professional Ua.bi!!ty, in the amount of $200,000; and 3. Workers Compensation & Employers Uabllity, as required pursuanHo Florida statutes. The Insurance must be fumlshed by Insurance compsm!E~e authorlz&d to do business in the State of F!orlda. All Insurance poUcles must be issued by companies rated no lass than as to management and not than •crass VI" as to strengm by the latest edition of Best's lnsUI'Qnce Guide, published by A.M. Best Company, Oldwlck, New Jersey, or Its equivalent. Consultant shall give the Ccy at least thirty (30) days written notice prior of termination, cance~ati.on or reduction ln .coverage of any ln~urance poUcy required herein, Orlg!nat ~rtlflcates of Insurance must be submttted to th~ City's R.lsk Manager for approval (prior to any worn andlor services comrnenclng) and -wlll be kept on file In the Office of the Risk Manag~r. . · . The Consultant is also solely Tespons!ble for obtainln~ and submlttlng all ln~urance e:ertffi~es for any sub--consultants. . . . Compliance wlth the foregofng requirements .shall not relieve the Consu!tarrt of tile llabllltles and obligations under this Section or under any. other por1}on of this Agraement Consultant shall not commence any vvork and or sarvlces pursuant to this Agre-ement urn!l sll Insurance requl~ under th!s Section has been obtained and -such Insurance has been approved by the City's Risk Manager. SECTION 1 This Agreement shall be construed In .acwrdance w\th the laws of the State of Florida. This Agreement shall be emorceabte 1n Mieml-Dade County, Florida, and If l~al action Is e:.f'-l:.•e:·ct .. ,ru by either party with respect to the enforcement of any or all of the terms or conditions hemin, exclusive venue ior the enforcement of same shall lle in Mlami-Dade County, Flortda. By entering lnto this Agreement Consultant and the City expressly waive any rights either patty may ·nave ·to a trial by jury of any clvlllltlgatlon related to or arising out of th!s Agreement. 472 SECTION 8 Except 'o\'liere It Is Jud!dally determined that Consultant acted with bad faith or Intentional mlsoonduct. and subject to the lndemnfficath:.m obligations of Contractor speclfled In Section 8, neither the City nor Consultant's llabflity and the llablllty of their raspedlve personnel shall not exceed the fees actually paid to Consultant under thls Agreement This limitation of llabUity shall apply to the fullest extend allowed by law, and shall apply to 1any alleged or actual claim, liability or damages, lndud!n~ without llmltatlon, claims, !labilities or damages ·based In negUgenoo or other tort, contract, warranty, fiduciary prlnclpl~s. statute or common taw. This provision shaH survive termination of this Agreement In whole or in part 1111 .,,;;;,,-...-• ..-. .... 9 [INTENTIONALLY DELETED] SECT!ON10 Upon reasonable verbal or written notice to Consultant, and at any time during noonal business hours (I.a. 9AM -5?M, Monday 1hroogh Fr!deys, excluding natlonally recognl.red holldays}, and as as the City Manager may, ln hie/her reasonable discretion and judgrr~nt, necessary, there shall be made aval!abla to the Clty Mahager, and/or such MnMS.!Olnt1-.tru;"'R es the CJt!· Manager may deem to on the City's behaff, to audit, examine, and/ or Inspect, any and all other documents andfor records relating to all matters covered by this Agreement Consultant shall maintain any and aU such records at lts place of buslness at the address sat forth fn the "Notices~ sectlon of Agreement Consultant may retain one oopy of all such documents end/or records and work product for up to seven (1) yearn from termination or expiration of th!s Agreement. 'f0.~ [1NTEN110NALLY 10.3 Consultant shall not subcontract, assign, or transfer all or any portion of any work am:lfor service thls Agreement wililout the. prior wrnten consent of the City Manager, which consent, If given at all, shall be In the Manager's sole judgment and discretion. Nelther this Agreement, nor any term or provision hereof, or right hereunder, shall alilslgneble un!f:lss as approved pursuant to this Section, and any attempt to make .assi9nment (unless approved) shaH be void. 5 473 10.4 Prior to commencement of the thEi Consultant shall tlle a state of Florida Form PUR 7068, SWom Statement under Section 287.133{3)(a) Florida Statute on Public Entity Crimes with the City's Procurement DMsion. 10.6 in connection 'With the performance of the Sarvlces, the· Consultant shalf not discr1mlnate against any employes or e.ppllcam for employment because of race, color, national origtn, rellglon, sex. gender Identity, sexual orientation, dtsablllty, marital a.nd familial status, or age. · 10.6 The Consultant herein agrees governed by aU appUcable Misml-Dada . County Conflict of lntemst and Ethics provlslons, as set forth In Mlami-Dade County Code, and as may .be amended irom time to time; and by City of Mlam1 Beach Charter and Code 1>0me may be amended from tlme to time); both of whlch are . lnrorponrled by reference hereln s.s tf fully set forth herein. !he Consultant povenants ihat lt rxeoontly has no fnterest. and shalt not· acquire any Interest, d!racl or lndlrect!y, whlch could conflict In any manner at \1\itth .the performance of the Services, The C~msultant further covenants that ln the performance of thfs Agreement, no person having any such interest shall knowingly be employed by the Consultant. No member ·of or delegaie to the Congress of the United States shall be admitted to any share or part .of thls Agreement or to any benefits arising there All ·no~coo and communications In .1Mi1!ng required or permitted hereunder, shsfl be deUvered personally to the representatives of the Consultant and the Ctty listed below or may be mailed by U.S. Certlfled 'Mall, return receipt requested, postage pmpaid; or by a nationally reoogntz.ed overnight delivery servlca. Until changed by notice in 'Wrttlng, a!\ such nciices aM communlcailons shaH bs addressed as fo!lONS: TO John W.soor Crovt.e Horwath LLP 401 Ohu>'SN'd. 1100 Ft. Florida, .33301 ro ·Pirt!icla Walker, Chlefflnancia! Officer 1700 Center.Drlve, '3111 Floor Miami ~c.h, Florida 39 · 6 474 Notice. may also be provided to any other designated by the party to re<:etve notice If such alternate address Is provided via U.S. certlfled mai~ ratum receipt requested, hand delivered, or by ovemlght dallvary. In the event an alternate notice address Is properly provided, notice shall be sent to such alternate In addlt1on to any other address which notice would oo unless other delivery Instruction as speclfica!ly provided tor by 1:00 party enlliled to notice. Notlce shaH be deemed given on the day on -Mllch peroona~y seri!ed, or the of r&eal!X by alther certlfled mall or overnight delivery, This Agreement cannot be modtfted or amended \Nlthout the express written consent of the pruiles. No modification, amendment, or alteration of the terms or conditions oontalned herein shall be efredlve unless conta!ned In e wrttten dooument executed with the sa'me formality and of equal dignity herev.Mh. If any term or provlelon of this Agrnament ls held lnvalld or uneuiforooab!a, the remainder of this Agreement shall not be affected and every other term and provision of thls Agreement shall be vaild am:! ernorced to ·the fullest extent permitted by law. The ,City and Consultant agree tills ls the entlre Agreement betWeen the partles. This Agreamerrt supersedes all prior negotiations, correspondence, conversations, agreements or understl'lndin~,Ja applicable to ·the ma:tters contained heraln, and are no commitments, agreemflrns or undemand!ngs ooncem!ng the StJb}eot matter this ft.graement that are not cantalrled In thre dooument T!Ue and paragraph headings are for convenient reference and are not Intended to confer any rights or obligations upon the partles to this Agreement 7 475 ATTEST: By: -; WHE~•~o~ the parties hereto have caused thia Agreement to be as of the date fln.rt entered above. CITY FLORU:>.A 8 476 Exhibit A The purposa of thts project p~nls to detail the speclflc basks and procedures that will be taken as part of flha~ 1-Aud~ planning of Crowe Hol\'ltith LLP's rerowe") engagement w!th the The main objective of phase 1 wl!J be to finalize !he scope and ·objectives ror the audit and ttl develop speelfte audit prooedures to oo parlbmied. Though, Crowe erwls!ons uUllztng their standard opemtlona! and perfum'lanc.a audit approooh, as ou~lned .In thek presentation to the Clty1 that approach was designed to be ffuld so that changes can ba made to meet the spec!flc needs and goals of the City. Crowe's plan fur lis proVIded ~low: Ph~ 1-Audit Plarmlng 1. '&irhJtM CiJtifeNnt:l! The first of the engagement 'Will be to conduct an entrance conference wllh Clty management and other ke~ project stakeho!dern. During The entrance conference Crowe will coordinate the pro1ect tim!ng, !ncludtng schedule-d meetings am:l deliverable due dates. In addition, Crowe wtU determine !he goals ~l!ehed by management whlch \111!1 be as~ during this project Flnatiy, durlflg this mooting, Crowe wm preS1!tnt ihe major tools !hat they envision us!ng durlnQ the engagement lnc:lud!ng a project work plan and P,"'jec't management tools oo that the City and proje<rt stakeholders will stay abreast of the prog~ of the proJect · 2. FtNzJiu Soops tmd Ob}edives In oonjuootlon v.ith M!eml 'Beach, Crowe wm flnailzs the ooope an'd oojootlvea to be audbd. Due to the variable narure of 'the potenl:tal scope and objedfvoo of perlbmiance audlw, Crowe, and Miami Beach, need w have an undersmndlng of the nature end pn:rll!e of the program or procas.S to be audited and the goals of Miami Beach. /A cleat deftr!ltlon of the Audit Scope and Audtt Objedlvoo v.ill bathe prod~ct and OO!lverable fur this step. · Mlaml Beach provlde<l a listing of procesaes end departments. Therefore, Crowe have a praUmlnary 'understanding of the arass the City desires to cover. S~cfficaily, Crowe .\NIH plan to perfoml ·procedures over ths following processes; ·· " Fan Impection process • Fire Pmvlmtion DMsion permitting proceas • Puhll.o Worlrn~pmn.lttl.ngproOll!ll! .. Spocie1 :Master process In addition, iP the 4 processes listed above, the Ctty also has. othm Departrnents/Dhllsions that are desired to be covered for th!s project. These Departments./DMs[ons are as foiiows: ,. Codo CoropllimceDivisioo* .., P~Enfu~llll1Dl'li!JJ.on• • Pl.arm.ing Deprutment As part of th!s task, Crowe w11t worlo; with the City to ensure that the four processes listed above as i:rtltl desired to be part of the project scope. !n addition, Cro'.'.'9 wm drill ~wn Into tha Department and Dlvis!ons fisted above to determlr.a whsrt specific process( as), tha Clty cleslras to cover as part of this projacl. Once the ~ have been confirmed, Crowe Will work With the aty to fina!tze ihe project goals and ob}ectlves. The City provided three maln obJectives for the Pro!ect These objact!voo me Usted below: -. Re'iiew organixatlomll ~and fuoolion.a • Review ~divlslo:n process~ (:including uses oftoo'!mo:logy) o Rttview int.en:W controls o Roview d.epart:In!m.tldiviaion operatione 9 477 ., Develop :rwommondl:ltlons on: process itriprovement, lntOJ:rJB.l control~, efficiencies, etc. S. Assess R.Jsk and Stgn.ijfcmlce Performance audlt rfsk, similar tCJ !he risk in flnencla! audits, Is the risk that the auditor wlil not develop appropriate tests or gather sufficient competent svfdemtlal matisr to support findings, conclusions or rooommendatione, crthafthsre w!U ba !ntent!<mal mlsrepresentat!on or fraUd related to the audit scope or obj&ctlves. Crowe wlH assess risk around the audit scope and objectives to assist in tha deslgn of appropriate audit procooum. To determine sign!f!cant risks, Crowe wll! perform Initial lnterviews wlih City management and other key project s1al<ehotdera to determlns what they vlew BS the major Issues or concerns over the processes that part of trds engagement In addition, Crowe wm review previous audlt reports (both internal and extemal) to determine the nature and extent of any flndlngs that relate to or affect the processes and/or departments covered by this project. 4. D.ewlop Atulli Progl't11t1 In a performance audit, the audit must idant1fy the criteria that wUI support the assertlons to be tested as well as determine what the appropriate measurement may be for !he slgnlficant criterion. The tast task of Phase I will be to develop !he specffic procedures to be performed. Utilizing the scope and objoot:lves from tEsk 2 and the risks obtained from task 3, Crowe wm deslgn procedures to analyze the overall structure of each proct:tss along with a control and operational analysis of each pror..ess covered under !his proJect Utill:;:lng li1e risks obtained ln task 3 villi allow EH.!rl!t steps to be focused In areas more elgnlficant to the objectives of the aud!f:. · · Once the audit program Is drafted. Crows wlll provide a draft of the program to the City for review and concwrence. Once the plan is approved, Crowe wm Initiate Phase 2 ofihe engagement Daliv~rab!f>S!Output of Phase ·1 wflt lncll.Uie: ~ Project!Communication Plan detailing • Objecitves ¥ Scope " Audlt.program (I.e. procedures to oo performed) " Reporting protocol • Status report template ,. Escalation and Issue protocol Depafunental ma1erial request letter Expected Phase I time line: 10 478 OFFICE OF THE CITY MANAGER LTC# 247-2012 LETTER TO COMMISSION TO: FROM: DATE: Mayor Matti Herrera Bower and Members of the City Commission Kathie G. Brooks, Interim City Manager /o1~ September 28, 2012 SUBJECT: Report on status of services performed by Crowe Horwath LLP, related to the auditing the processes of certain regulatory departments or divisions. The purpose of this LTC is to update the Mayor and City Commission on the status of the services performed by Crowe Horwath LLP, related to the auditing the processes of certain regulatory departments or divisions. On May 9, 2012, the Mayor and Commission adopted Resolution No. 2012-27905, which waived, by 5/ih vote, the competitive bidding requirement, finding such waiver to be in the best interest of the City, and authorized the City Manager to negotiate and execute a professional services agreement, in an amount not to exceed $150,000, with a qualified firm for services related to auditing the processes of certain regulatory departments or divisions. On July 251h, The City entered into an agreement with Crowe Horwath LLP for phase I of this project in the total amount of $23,000. The purpose of Phase I was to detail the specific tasks and procedures that will be taken as part of the Audit planning of Crowe Horwath LLP's engagement with the City. The main objective of Phase I was to finalize the scope and objectives for the audit and develop specific audit procedures to be performed. On September 5, 2012, Crowe Horwarth LLP, completed the attached Risk Assessment Report as a result of Phase I of the engagement with the City. Furthermore, Crowe Horwath LLP submitted the detailed specific tasks and procedures, timelines, and estimated costs for Phase II of this project. Amendment No.1, to the original contract, which includes the aforementioned Phase II ofthis project, is anticipated to be executed next week. Attachments C: Patricia D. Walker, Chief Financial Officer Raul J. Aguila, Chief Deputy City Attorney Rafael Granado, City Clerk F:\PURC\$ALL\Maria\Contracts\Crowe HOIWBh LLP\L TC for Cro.ve.doc 479 -I ~~ " ·- ~ '_, J' ~, r-;:; GJ ~~ n Q'\ ~ 00 0 Crovve Horwath i r , 1 Audit I Tax I Advisory I Risk I Performance The Unique Alternative to the Big Four® & ..... Pe ,J BE If' , Crowe Horwath. Contents m Crowe Engagement Team m Engagement Approach @ Risk Assessment Process ~ m Interviews Conducted 00 ~ w Major Departmental Functions m Crowe Risk Model * Miami Beach Risk Profile f® Pricing Model by Function woo Phase II Approach woo Next Steps Audit I Tax I Advisory I Risk I Performance The Unique Alternative to the Big Four® © 2011 Crowe Horw.Kh LLP 2 ~ 00 f\) CroNe Horwath. Crowe Engagement Team City Project Manager Matter Expert Audit I Tax 1 Advisory 1 Risk I Performance l Enpgement Partner Project tead Operational Team lead The Unique Alternative to the Big Four4D Technical Partner © 2011 Crowe Horwath LLP 3 "-::::1 0 1..1.. ~ -s c.. ...J w .::: -ru ...J 1 I c::: lrs .... < Gl ~ (.) ... ~ 0 N @ ~ Ill !- . . 1 I Jill . . ~ c::: (I) E ,_ • 0 't: Cl) Cl. - .;:,(. VI a: - ~ &1 ·:; "0 ~ <( - >< (I) !-u -~ -'0 D. ::I ~ .. <( ' :I ' D. 0 c .... 483 ~ 00 ~ Crowe Horwath. Risk Assessment Process iW lliW m m Audit I Tax I Advisory 1 Risk I Performance The Unique Alternative to the Big Four® © 2011 Crowe Horwath LLP 5 Crowe Horwath. The Unique Alternative to the Big Four® I 1 w I WI II! % @l & F ill II! ~ 00 ill M~m~n r :~mAnn II! CJ1 ill II! WI \M \M ...:of"llllltiii .... ~IIP"'a ............ ilf:"lll WI II! ( :nllii""IC LU"'!:III"'"''~ w ll! IVICIII\. ~!JII;;II~I WI WI ll! II! Klcnara Lorner Wi II! T nrn lAnnnou Wi Audit I Tax I I Risk I Performance © 2011 Crowe Horwath LLP 6 ~ 00 0) Crowe Horwath · r I !Ill Ill! ;m ;m .. Ill! .. .. !Ill Ill! ;m =1 Audit I Tax I Advisory I Risk I Performance The Unique Alternative to the ¢ $ @ .. Ill! .. --® 2011 Gro.Ne HO!Wath LLP 7 ~ 00 ....... Crowe Hawath. The Unique Alternative to the Big Four® The Crowe Horwath Risk Model sM Definition of Risk Business risk is an event, action, or failure to act that may adversely affect an organization's ability to achieve its business objectives and successfully implement its strategies. Below is a graphic profile of Crowe's Risk Model, which identifies various types of risk: External Risks Regulatory/Legal Investor Relations Competitor Financial Markets Catastrophic loss Sovereign/Political Information RiskS Product/Service Pricing Performance Measurement Budget & Planning Accounting Information Financial Reporting Access Availability Operations Risk Customer Human Resources Product Development Supply Chain Business Interruption Compliance Performance Audit I Tax l Advisory 1 Risk I Performance Strateqic Risks leadership Alignment Planning Communication Business Model lnteqrity Risks Fraud Authority limit Unauthorized Use Reputation Financial Risks Price liquidity Credit © 2011 Crowe HOIW3th LLP 8 tt. 5 u. .!2> aJ Q) .c. ..... .e Q) 11. ~ ~ ~ 1 ~ ~ ~ X Q) ~ ;::, CT ·c: 0 :::J "F ~ Q) ~ .c. 1- " -·-• 0 .. A. ~ U) ·-m .c u ~ • " Ill ·-u E • ;:JJUI!Jijlli5!S p8SI'8 IJLIJ ·-I -'5 ~------------------------------------~ ~ 488 ~ 00 <0 Crowe Hawath. The Unique Alternative to the Big Four® i@ Significant and Prevalent Ill! illll Ill! Ill! Ill! i@ Large amounts of money flowing through establishments. Lack of segregation of duties and monitoring controls. ill High volume of complaints. Concerns with level of staffing and scheduling. Also, a lack of segregation of duties. ill Large amounts of money flowing through establishments. Lack of segregation of duties and monitoring controls. ill Ambiguous calculation for fee. Calculations not adequately reviewed. Potential for inconsistent calculations and treatment. ill Complaints could have a significant political impact. Large number of complaints are deemed unwarranted. Audit I Tax I Advisory I Risk I Performance © 2011 CrO'olle Hormtf! LLP 10 ~ (Q 0 Crowe Horwath The Unique Alternative to the Big Four® w Prevalent, but less significant @ * Lack of segregation of duties over process. However, low number of complaints and low level of exposure to the City. w Significant, but Less Prevalent m @. ill * High level of enforcement and potential large amount of violations. Adequate coverage and deployment for officers. Good controls over documentation and tracking of tickets. * High profile process, some controls over process with independent master. However, still high risk due to subjective nature of judgments. *' High volume of tows and some negative perception to the public. Some controls including segregation of duties and approvals of tows prior to occurrence. Audit I Tax I Advisory I Risk I Performance © 2011 Crowe Horwath LLP 11 ~ (Q ~ Cf'"0\4W! Horwath. Unique Alternative to the . . . I I I I !!! Significant, but Less Prevalent (continued) Ill! 1111 Higher exposure to the City due to large number of events. Good controls and documentation over review and permitting process. Ill! ~~~~ High dollar amount of funds flowing through process. Good approval controls, good segregation of duties, but limited quality assurance. Ill! Ill! 1111 Established controls over approval process. High volume of applicants and potential for exposure. ~~~~ Established controls over approval process. High volume of applicants and potential for exposure. lfJ Less Significant and Less Prevalent Ill! Ill! ~~~~ Low monetary value and low exposure to the City. Audit I Tax I Advisory I Risk l Performance © 2011 Crowe Horwath LLP 12 ~ (Q f\) Crowe Horwath The Alternative to the Pricing Model by Function IProces I Estimated Cost I IProces -----I Estimated COsfJ Orilinal&y Pmpomd: Additional Pmcet~B~~a Bnduded in A•en•ment: Am PrENBntion Di~slon Awe PI"E'Nerrtion Di'\Asion $ 15,000 Ewnts $ Violations/tines TOIIIIS Valet Public WOO<s l"lAN:Irtm.sri Coi,CUim!ll11t:VJ'Imr~aCt fees S~JE~eial Master Proooos Total ~-Phaa I Dl.::ount on Pro~ Total fiiNa • Ahr Dl.:ount: Audit I Tax I Advisory I Risk I Performance ToW~-Additional~ $ Tob!B feea-ARB Potential Proceaes $ $ $ @J 2011 Crowe Horwath LLP 13 ~ (Q w /Y Crowe Horwath Phase II Approach i1lli % m % tt @ w @ tiD ill {@ ® Audit I Tax I Advisory I Risk I Performance The Unique Alternative to the Big Four® @ 2011 Crowe Horwath LLP 14 Crowe Horwath The Unique Alternative to the Big Four® .. Next Steps w City reviews project plan and provides any input or revisions. f@ City selects processes to be covered by Phase II ~ f@ Execute Engagement Letter for Phase II of project. ~ Audit I Tax I I Risk I Performance © 2011 Crf@f@e HOI'W!Ith llP 15 AMENDMENT NO. 1 TO THE PROFESSIONAL SERVICES AGREEMENT BETWEEN THE CITY OF MIAMI BEACH, FLORIDA AND CROWE HORWATH LLP, DATED JULY 25, 2012 FOR PHASE II SERVICES RELATED TO AUDITING THE PROCESSEESS OF CERTAIN REGULATORY DEPARTMENTS OR DIVISIONS This Amendment No. 1 to the Agreement made and entered this_ day of , 2012, by and between the City of Miami Beach, a Municipal Corporation existing under the laws of the State of Florida (hereinafter referred to as CITY), having its principal offices at 1700 Convention Center Drive, Miami Beach, Florida 33139, and CROWE HORWATH LLP., an Indiana Limited Liability Partnership, whose address is 401 E Las Olas Blvd. Suite 1100, Ft. Lauderdale, Florida 33301 (hereinafter referred to as Consultant). RECITALS WHEREAS, the Mayor and City Commission adopted Resolution No. 2012-27926 on June 6, 2012, approving and authorizing the Mayor and City Clerk to execute a Professional Services Agreement with Consultant for Professional Services for Services Related to Auditing the Processes of Certain Regulatory Departments or divisions (the Agreement); and WHEREAS, the Agreement provides for a Phase I and Phase II scope of services; and WHEREAS, the City and Consultant proceeded with Phase I services (audit planning), in the amount of $23,000, and now wish to proceed with Phase II; and WHEREAS, Section 2.1 of said Agreement states that the scope of services for Phase II of the Project Plan will be negotiated during Phase I and, if the parties agree to proceed with Phase II, it shall be done as an amendment to the Agreement. NOW, THEREFORE, the parties hereto, and in consideration of the mutual promises, covenants, agreements, terms, and conditions herein contained, and other good and valuable consideration, the respect and adequacy are hereby acknowledged, do agree as follows: 1. ABOVE RECITALS The above recitals are true and correct and are incorporated as part of this Amendment No. 1. 2. MODIFICATIONS The Agreement is amended to include the scope of services for Phase II, which services (including the fee and timeline(s), for such services, are attached and incorporated as, respectively, Schedules "A-1", "A-2", and "A-3" to this Agreement. 3. OTHER PROVISIONS. All other provisions of the Agreement, as amended, are unchanged. 4. RATIFICATION. The CITY and Consultant ratify the terms of the Agreement, as amended bythisAmendment No.1. 495 WI11EREOIF. the u.~~. .. ~lj~.~~,~~.~ In their names by their duly 496 'looGI'~''"' this Amendment No. 1 forth CITY BY, ____________________ __ Mayor, CONSULTANT: taken as part of 11- 2 are: • For been given priority state of a format uses nrni"Act~ • For identify document control del1ciEmc:ies nnt-,a.ntll!"l improvement opportunities. Perform verification steps to ensure current processes r~ ... tr. ................. ~ are and Though, we envision utilizing our that ~nr•rn~ City. ll'lfti~ill'llnt execution are to an audit nrn.~~~~ duration of fieldwork that will provide lll.tAkAr~nmniAI"!:: if we are on with of our audit. different This ensures rn.::a.nll:l.n<~~~~r .... ~~:~•r~t and requirements of the AICPA and ul"\ul"\.~. l.;rclwe,·s internal control assessment Is built upon TreaO\IIIav Commission) tl"ii:llmA•wn•l'k areas you have requested using a method and 497 Process Interviews and walkthroughs Our first task for Phase II is to conduct detailed process interviews with all City staff involved in the process being analyzed. In addition, we would perform walkthroughs of each process to observe the process as it occurs. These interviews will be comprehensive in nature and will incorporate as many staff involved in the process as possible to get input on the process from as many employees as feasible. We will analyze the information communicated to us and compare to the other interviews for this process and to the walkthroughs to ensure a consistent process is being communicated. We will note any inconsistencies between the interviews and between our interviews and our walkthrough. During the interviews, we will request additional information related to the current processes as deemed necessary. Documentation Analysis In order to enhance our understanding of the current processes and internal controls of the processes under audit, we will analyze the documentation collected at the entrance conference as well as in the interviews and walkthroughs. Written policies and procedures (if any) will be reviewed during this task along with any forms, checklists, etc ... utilized by staff to assist with the process. These documents will be analyzed for proper controls and compared to the information provided during our interviews and our walkthroughs to determine any differences between the documented process and the actual process being performed. The documentation obtained will also be compared to industry best practice. Based upon the results of our documentation analysis, we may require limited follow-up interviews to verify information compiled during the documentation analysis stage of the project. Document the Process Once we have completed our interviews and reviewed any process documentation, we will draft a high level process flowchart of each process. This flowchart will include any significant controls that exist in the process. We envision using Microsoft Visio to complete the process flowcharts. Process and Control Assessment We will summarize our assessment of the current controls and processes of the functions under audit. This will include an identification of the major functions, job responsibilities, and existing internal controls for each of the areas under analysis. During this section, we will also assess the procedures that existforeachfunction under audit and if these procedures appear to be followed. Based on this assessment, we will identify any process gaps and control weaknesses. In addition, we will identify any repetitive processes or controls that could be leading to inefficiencies. Develop Findings and Recommendations Findings will be developed and written using the standard reporting criteria included in Government Auditing Standards. One of the critical steps to ensuring that Miami Beach receives high quality reports is to verify the facts of all findings that will be presented in our reports. Therefore, before any findings are drafted, we will ensure that the facts surrounding the process or control are understood and agreed upon by us and the City. Reporting Draft Report and Exit Conference We will develop and issue a draft report to Miami Beach for review. We will then plan to conduct an exit conference with Miami Beach. At this meeting will walk through our conclusions, internal control assessment and recommendations to (again) confirm the facts underlying any potential findings. Final Report 498 Based on comments from the Exit Conference and Miami Beach's management review of the draft report, we will revise and finalize the report. We envision our report to include the following sections, but are flexible to modify this structure to meet the Miami Beach's needs: • Executive Summary • Background • Objective, Scope and Methodology • Findings and Recommendations 499 U'l 0 0 EXHIBIT A-2 EXPECTED TIMELIME Nota -Tha green sheded bars for Phase 2 and 3 rapresant lhe Iimeina for Code Compliance, Fila nspection and Parking Eriorcement department assessmer"b. Tha OlliiiQ8 shaded bars IBpi8S8I1t aH othar processes. 1. ADDITIONAL SCOPE OF SERVICES Scope as set forth in Exhibit A-1 2. PAYMENT AND COMPENSATION EXHIBIT A-3 The scope of services described in this amendment shall be performed for a not-to-exceed amount of $127,000. Invoicing shall be as referenced in the original agreement. Compensation Original Agreement Amendment No. 1 Total Revised Agreement I Process Table 1 Estimated Cost: Originally Proposed: Fire Prewntion Dil.1sion Inspections (night) Permitting (new construction) Code Compliance Dil.1sion Complaints Inspections Violations/fines Parking Enforcement Di~sion Ticketing Tows Valet Public Works Department Permitting Planning Department Permitting Concurrency/Impact fees Special Master Process Total Original Fees-Phase II $23,000 $127,000 $150,000 Discount on Originally Proposed Processes Total Original Fees-After Discount I estimate Range I $ 15,000 12,000 12,000 15,000 14,000 10,000 12,000 10,000 12,000 12,000 14,000 14,000 $ 152,000 (25,000) $ 127,000 501 PARTtES: TERM: TERMINATION: SCOPE! DRAFT SCOPE OF §ERVJCES INSPECTOR GENERAL SERVICES City of Mfami Beaeh ATTACHMENT 4 Miami-Dade Col.llty, on behalf of the Miaml·Dade County Office of the tnspector General (MOCOIG) lhrae (3) years from date of execution by all parties. Renewable for an additional term, as such additional term Is det&rmined and agreed upon by both Parnes. May be terminated for any reason, including convenience, :by either party by thirty (30) day$' written notice to the other party. The term •1nepedcr Generar when standing alone hereinafter shall refer to the Inspector General for the City whOse roie is being fulfilled by the MDCOIG pursuant to the terms of this Agreement. a. Subject to the tlmltationa PfQvided herein, the MDCOIG is authorized to serve at the Inspector General fot the City during the tenn ot this Agreement. b. The organization and administration of the' MDCOIG shall be sufficientiy tndependant to euuta thllt no intelference or influeooa external to the MOCOIG adversely affects the Independence and objectivity cf l1e Inspector GeneraL c. The M[.)C()iG thall have the authority to make inVeStlgatkms of City progrt~ms, acoounts, recorda, ccntraca and transactions as further set forth in thiS Agraement. and the power to I'Dview past, present and pi'OJ)Oied City programs, account&, records, contrac:ts and tranaactiona, as further set forth In this ~. d. The MDCOIG ~I have the !)0\Wilr to require reports and the production of recorda from the Mayor, Commialan, Ciy Manager. City offlce1'8 and employees, C"egardlng any metier within th& jurisdiction of the MDCOIG. Any fifes or rapo.rtar misting to Utigation that are subject to attorney-diem or other privilege shall not be subject to discioslR to the MDCOIG. e. The lnepector General 8hall b& authorized to conduct any rtWiewa, auditA, inspeetione, lnvatigstlona or analyaes relating to departments, oftioea, committees, aetMtlea, programs and agenclel of the City of Miami Bach, Including llMewe of employee compliance with eetabii!Shed policln andJor standard operating procedures of the City. f. lhfa ~ if!d be aut;toriud to ~ any ~. audita, ~oo' or analyMi r8latino to tm o~ns Of , , of the City With regutatory cwnlglt of ely COdU suenat, but not Umlfsd 'PlaMinQ and l;O!'Iing, building, property maintenance. noise, etc., and/or smte or ~ , but not Umited to~ ~building and tim ccdn, ~ PIJA ~enta, ttte., lndudlng review~ of emp&oye compliance with etabllshed poUde6 andlor standard operating procedures for their ;agulatory departments or divllions of the City. Such reviews, audita, inspections or anslysn shall be in accol'darK:e with any Collective Bargaining Rights, Per80nnei Rules, end other Federal end State guidellnas regarding employee rights. 502 g. The MOCOIG may, on a random basis, perform audits, inspections and reviews o1 City cootract&, and shall be deemed the City's designee for any auditS, inspections, and reviews of City conttaets provided for under the tem'ls of those City contracts. h. The MDCOIG shall 1\ave the power to audit, Investigate, monitor, inspect, and review the operations, actlvitlel end performance of the procurement process for contracts, Inducing, but not limited to, how bid apecHk:atlons were established; how the bid proceu was managed; and the activities of the prospective bidder, its officer&, agents and employees, lobbyleta, City staff, and elected offiCials; in order to ensure compliance With the City's estabdshed procurement procedures and any other State, County or City taw or ordll"'8nce relating to procurement that is appllcabfa to the City. I. Notwfthatanding the above, the MOCOIG shall have the power to review and Investigate any dtiz.en's complaints regarding City projects, programs, contracts, transactions, and employee misconduct inolud'lf'lg misconduct by employees involved In ragulatory oversight functions. Such ~ and Investigation shab be In ac:cordllnce with any Collective Bargalnlng Rlghta, Personnel Rules, ancl other Federal and state guidelines f8gardlng empklyee rights. j. The MDCOlG may exercise any of the responaibllitles, functions and authorities contained In the Agreement upon hla « her own Initiative. lc. The MOOOIG shah be notlfled In writing prior to any meeting of an evaluation or MQOtiation commlltee where any matter refating to the procurement of goods or aervicea by the City i& to be cliscuued. 1M,. notice nsqulntld by ttUt aaction ahatl be gWen to the MDCOJG as soon u posalble after a meeting has been leheduled, but in no event later than twenty-four houns prior to the scheduled meeting; said notice may be provided via electronic maH. The MOCOJG may, at hta or her dlscreUon, attend an duly noticed City meetil~ga relating lo the procurement of good~ or aervk:ea as provided herein, and may pose queatlons and rau eoncems eona11tent With the func:tiont, authOrity end powers of the Inspector General. An audio tape recorder Wll be udlzed to record all applicable evaluation and negotiation committee meetings. The Mayor and Commlalon, City Manager, City Atiomey, City's Internal Auditor and Mlaml Beach Pollee Will cooperate with the MOCOIG to ac:hleve the goals of preventing and detecting fraud, waste, financial m1'8management, employee mlaconduct or other abuses, and promoting acc:ountablnty, Integrity, eoanomy, and efl1clency tn govemm11nt. _,. The MDCOIG will not, whenever pouible, duplkate the wOfk of the City's Internal Auditor, Miami Beach Pollee Department Internal Affairs Dlvillon, Miami Beach Human Reloi.H'C)8S DepartmeN, City Commisalcn. City Manager and City Attorney, or of the State Attorney' a omce or Miami-Dade COUnty Commission on Ethics. tt Ia understood. however, that the MCC01G'a audits, investi!Jatlom, inspection& and reviews may from time to time addleN the same or sfmllar lMue• or ~ being reviewed by the aforementioned entities. In 1uch cases, the MCCOIG's eudlts. investigations, lnspec:tlol'l$ and reviews will be conducted separately and Independently from lho8e entltiaa, and upon conclusion, the MOCOIG, Wher& appropriste, Will refer the dlepodon or flnallzatlon of any audit. Investigation, lnapecllon or review to the appropriate City entity for any additional action. REPORTING: The :~OlG shall proVIde an annual report to the City on the pnor year's a~vftles. STAFF & SUPPORT: AI UOCOtG staff to ramaln ataff cfthe MOCOIG City may assign City atd to support MDCOIG FEES: City to proVide offlee spaee and office essentlafs (desks, phones, ete). Flat anntU!II fee for service. Initial annual fee to be negotiated. SlDequent annual budget reque;t to be submitted and approved by the City as part of annual City Budget \'lf'OCl88S. 503 MlAMI·DADB Cot:INn' CoMMISSIOf'lr ON Erma 11: Pl:JBUC TRusT , Mayor and City Commission Miami Beach City Hall 1700 Convention Center Drive Miami Beaeh, FL 33139 May2,2012 fte: Ethics Training Honorable Mayor and City Commissioners: ATTACHMENT 5 In response to the request of the City of Miami Beach, the Miami· Dade Commission on Ethics and Public Trust submits its proposal fur a comprehensive ethics training program for regulatory employees. The attached prognu.n includes multiple sessions of intensive and interactive train.ing for all employees and supervisors enpged in the areas of fire inspection, parking enforcement, building inspection, code enforcement, and plamU.ng, which comprises gproximately 22S staff. We are prepared to conduct and conclude this training within six months of executing a final agreement for eame under mutually agreed upon conditions. We are available to diseuse this proposal further at your convenience and look forward to meeting with you. Cen,torlno Director and General Counsel Miami· Dade Commission on Ethics and Public Trust 504 PROPOSAL FOR CITY OF MIAMI BEACH ETHICS TRAINING The Miami·Dade Commiasion on Ethics and Public Trust eubmite the followiDg- pxoposal for ethics training for 223 City of Miami Beaeh employees and supervisors engaged in regulatory enforcement. This proposal is for an intensive training program to be completed within six months or implementation. Class e should not e:eeed 50. Seaigna: 1) Introduction to Ethics! Interactive Leeture/Discu89ion led by Ethics Commiaaion pe:nonnel focusing on public eerviee ethics, governmental organizational eulture and profaaaionalism.. (1 hr) .2) Detailed presentation of Miam.i· Dade County and City or Miami Beaeh Code of Ethics requirements fur public employees, empba&izi:l.lg gift. oollflict oi interest, and eli.J)loitation provisions particularly relevant to regulatory personnel, illustrated with caae examples. (4 brs) 3) Presentation/Diaeussion of legal and administrative consequeneea or ~callunethical activity by public .;ezvanta, includ.ior participation of a tl'rmer City of Miami Beach official whose xniaconduct led to termination. (1 hr) 4) Preeentation on the law o£ Bribery, including a discussion of illustrative criminal cues from Miami· Dade County and elaewhere. (1 hr) 5) Presentation!Diacuasion On the special intesrity challenges presented by the regulatory environment in Miami Beach, including a presentation by a retired management level employee of a local municipality. (1 br) 6) Interactive group discussion led by Etbies Commission personnel based on 6 hypothetical scenarios directly relevant to :issues confronting regulatory peraotu~el. (2 h:re) 505 7) "Train the trainer" program for supervieory level personnel, addrewg the need fur an ongoing strategy neceasaey fOr building an ethical organintional culture, with overaight controls and in·eerrice ethics trai.l:ring within their ~ deparlznenta. (2 bra) 8) Private, confidential ou-on-one eessions to be conducted with all regulatory emptoye. by Ethice Commiuion ataft' to diseusa and addre• put aDd future ethkal concertuJ raised by their pe:rsonal and professional experience~ with au invitation for them to sugput changes and/or improvemeuta in the workplace that each employee feels would lead to a st:ronger ethical climate. (1/2 hr eaeh) 9) Final Report prepared by Ethies Co'I:DDliasion staff summarizing all traini.ng e&aaiona, 'With reoommendationa b fcllow"Up trainiDr and for implementation of loJlg-te:rm manageD'Ient strategies to prevent &tum co.rruption. ' ..... 506 RESOLUTION TO BE SUBMITTED 507