C2A-Issue RFP Audit Services For An Audit Of The City�s Capital Improvement ProjCOMMISSION ITEM SUMMARY
Condensed Title:
Request for Approval to Issue a Request For Proposal (RFP) For Audit Services For the City's
Capital Improvement Projects Administered By The City's Capital Improvement Project Office
and Other City Departments
Key Intended Outcome Supported:
Improve the City's overall financial health and maintain overall bond rating.
Supporting Data (Surveys, Environmental Scan~ etc.): N/A
Item Summary/Recommendation:
The City of Miami Beach (the City) would like to soHcit responses from qualified firms to audit the
City's capital improvement projects as administered by the City's Capital Improvement Projects
Office and the other City Departments. The original engagement will be for a one time audit and
cover a review of a three year period from October 1, 2009 to September 30, 2012.
The City handles a significant amount of capital improvement projects. The majority are
administered under the City Capital Improvement Office. However, other departments such as
the Public Works Department (including the Property Management Division), the Parks and
Recreation Department, and the Convention Center also administer capital improvement projects
within the City.
It is the intent to audit the higher risk capital improvement projects (e.g. Construction projects) as
administered by the City.
THE ADMINISTRATION RECOMMENDS THE ISSUANCE OF THE RFP.
Advisory Board Recommendation;;.:.: ____________________ .
IN/A .. .=J
Financial Information:
Source of Amount
Funds: 1
D 2
3
OBPI Total
Financial Impact Summary: .
City Clerk's Office Legislative Tracking: I Alex Denis, Ext 6641
Si n-Offs:
Department Director Assistant City Manager
MIAMI BEACH
22
Account
AGENDA ITEM
DATE
--
CJ./1
1-ll:r I 5
C9 MIAMI BEACH --=-
TO:
FROM:
DATE:
SUBJECT:
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, WNW.miamibeachfl.gov
COMMISSION MEMORANDUM
Mayor Matti H. Bower and Members of the Ci:y Zom,sion
Kathie G. Brooks, Interim City Manager ;;tfi / ·
January 16, 2013
REQUEST FOR APPROVAL TO AUTHORIZE THE ISSUANCE OF A REQUEST
FOR PROPOSAL (RFP) FOR AUDIT SERVICES OF THE CITY'S CAPITAL
IMPROVEMENT PROJECTS ADMINISTERED BY THE CITY'S CAPITAL
IMPROVEMENT PROJECT OFFICE AND OTHER CITY DEPARTMENTS
ADMINISTRATION RECOMMENDATION
Authorize the issuance of the RFP.
ANALYSIS
The purpose of this one time audit is to examine the City's capital improvement projects as
administered by the Capital Improvement Projects Office and the other City Departments
between October 1, 2009 and September 30, 2012.
BACKGROUND
The City has a Capital Improvement Plan which specifies financing and construction and/or
acquisition for projects and priorities that require significant capital investment for a five year
period. This plan is updated annually and adopted by the City Commission. A capital
project is defined as capital or "in-kind" expenditures of $25,000 or more, resulting in the
acquisition, improvement, or addition to fixed assets in the form of land, buildings, or
improvements more or less permanent in character, and durable equipment with a life
expectancy of at least five years.
The City handles a significant amount of capital improvement projects. The majority are
administered under the City's Capital Improvement Projects (CIP} Office. However, other
departments such as the Public Works Department (including the Property Management
Division), the Parks and Recreation Department, and the Convention Center also administer
capital improvement projects within the City.
The City established the CIP Office in 2001 to serve as a focal point for the planning and
construction management activities associated with the extensive capital projects work being
funded by the authorized General Obligation, Water and Sewer, and Storm Water Bonds
funding at the time. The total value of the City's capital improvement program has grown
23
City Commission Memorandum -Auditing Services for Capital Projects RFP
January 16, 2013
Page2of5
from approximately $400 million to over $1.2-Billion, including about 300 completed projects.
The CIP Office is presently managing over 170 active projects through their project life cycle.
Although the CIP Office has been supported in the past by Program Manager firms (H&S
and URS), those services were gradually reduced and eventually phased out during Fiscal
Year 2008/09. With active projects valued at approximately $700M, the CIP Office will face
its biggest challenge, to advance the majority of these projects, including the recently
acquired Capital Renewal and Replacement projects, to completion within the next five
years.
CIP staff is composed of senior management, project managers with different levels of
experience and responsibility, financial managers, field inspectors, community information
coordinators and administrative personnel.
The projects that CIP is currently managing have agreements for design/build, Construction
Management at Risk, traditional invitations to bid, Job Order Contracting and others. In
addition, CIP has instituted a best value approach to procurement which allows the selection
of contractors and consultants based not only on the cost of the services but also on the
quality of the organization and their ability to perform the work effectively and efficiently.
Other City Departments also provide management of some specialized projects. For
example, the Public Works Department provides construction management for
environmental projects and some utility projects, while the Parks and Recreation Department
provides management of some landscaping projects.
SCOPE OF SERVICES
The proposed audit will focus primarily on the City's capital projects. It should cover the
review of the process the departments utilize to take a capital project from the beginning to
final completion. In addition, it should include a review of capital improvement projects
under the administration of the divisions within the Public Works Department. Internal
controls over these processes should be reviewed for adequacy and effectiveness. The
audit will cover a three year period from October 1, 2009 through September 30, 2012.
Audit procedures should include the following at a minimum:
1. Conduct entrance meetings with key department personnel to become familiar with
operations and implemented internal controls.
2. Review the designated computer system{s).
3. Perform a risk assessment of the capital improvement projects to determine the
City's higher areas of risk. Incorporate testing of these higher risk areas into the
audit program.
4. The Risk Assessment, Audit Program and Sample Size Methodology must be
approved by the City's Internal Audit Division.
5. Determine if policies and procedures exist, are sufficient and are being followed.
6. Review systems of internal controls and segregation of duties for adequacy.
7. Choose a representative sample of closed and open CIP projects during the audit
period of October 1, 2009 through September 30, 2012 and test for the following:
a. Verify that the appropriate bidding process took place and confirm that the
bidder was selected in accordance with City standards. If not, ensure proper
documentation exists in the file stating the reasons for the bidder's selection.
b. Obtain AlAs (Application of Payments) and ensure the progression of the AlA
trades and final billings for consistency. Tie the amounts paid to the
24
City Commission Memorandum-Auditing Services for Capital Projects RFP
January 16, 2013
Page3 of5
contractor to final contract amounts.
c. Confirm that the architectural signoff and lien waivers support invoices
received.
d. Trace funding from City Commission approved appropriations and
grant/project agreements to total project expenditures.
e. Verify that invoices were billed in accordance with the contract.
f. Review selected project funds for unauthorized transfers in and out.
g. Verify that any change orders were appropriate, supported by documentation
and approved in advance.
h. Determine that the appropriate building permits have been issued.
i. For closed projects, confirm that the certificate of occupancy has been
obtained.
j. Trace that tested transactions were correctly entered into the City's Financial
System.
8. The contractor is encouraged to perform electronic data analysis wherever possible
to try to determine the possible existence of any improprieties surrounding the
handling of CIP projects. Greater attention should be given to higher risk areas.
9. Any material findings noted during testing should be immediately reported to the CIP
Director and the City's Internal Auditor.
1 0. The contractor shall prepare an audit report and discuss findings and
recommendations with the relevant parties at the exit conference.
MINIMUM QUALIFICATIONS
The respondent must have experience during the past five years in providing accounting and
auditing services to local governments and in auditing their construction/capital projects. In
addition, the respondent must be independent from the City and its staff. Finally, the
respondent must be able to complete the designated assignment by September 30, 2013.
MINIMUM DOCUMENTATION SUBMITTAL REQUIREMENTS
1. Respondent's Documentation
a. Respondent should list their experience in auditing construction/capital
projects for public agencies during the past five years.
b. Describe the respondent's (local office for national firms) experience in
providing accounting and auditing services to local governments during the
past five years.
c. List and describe any litigation filed against the respondent in the State of
Florida during the last five years. Also, list any terminations, suspensions,
censures, reprimands, probations or similar actions against the respondent
or any member of the respondent's firm by the Florida State Board of
Accountancy in the last five years.
d. The respondent will submit a notarized statement as to their independence
with regard to the City. Similarly, any future potential independence
concerns that may arise related to any sampled construction companies
should be reported immediately to the Internal Audit Division before any
testing is conducted.
e. List at least three (3) client references that may be contacted at the City's
discretion.
25
City Commission Memorandum -Auditing Services for Capital Projects RFP
January 16, 2013
Page 4 of5
2. Project Team Documentation:
Provide a listing of the personnel to be used on the project and their qualifications for
performing the desired work. A resume including education, experience, licenses
and any other pertinent information shall be included for each team member,
including subcontractors to be assigned to each project. These resumes should also
include the assigned partner, manager and the senior for this engagement. These
resumes should include any continuing education received in local governmental
auditing and construction/capital audit engagements.
3. Methodology and Approach:
Describe the respondent's approach to this audit engagement. This should include at
least the following:
• Explain the development of the audit program and the representative
sample.
• List the organization of the audit team and titles of team members and
approximate amount of time each such class of member will spend on the
audit.
• List the names of the partner and manager that will be assigned to this
engagement and the extent of their involvement with this engagement.
• List the proposed schedule for the audit and anticipated completion date.
4. Previous Similar Projects:
A list of a minimum of five similar projects must be submitted. Information at a
minimum should include:
• Client name, address and contact phone number.
• Description of similar scope of services.
• Month and year the project was started and completed.
EVALUATION/SELECTION PROCESS; CRITERIA FOR EVALUATION
The procedure for proposal evaluation and selection is as follows:
1. Request for Proposals issued.
2. Receipt of proposals.
3. Opening and listing of all proposals received.
4. An Evaluation Committee, appointed by the City Manager, shall meet to evaluate
each proposal in accordance with the requirements of this RFP. If further
information is desired, proposers may be requested to make additional written
submissions or oral presentations to the Evaluation Committee.
5. The Evaluation Committee shall recommend to the City Manager the proposal or
proposals acceptance of which the Evaluation Committee deems to be in the best
interest of the City. The Evaluation Committee shall base its recommendation on the
following criteria:
• Firm's Experience in Auditing Services on Similar Type Projects -20 points
26
City Commission Memorandum -Auditing Services for Capital Projects RFP
January 16, 2013
Page 5 of5
• Qualifications of Project Team on Similar Type Projects-20 points
• Methodology and Approach -20 points
• References Provided by Prior Clients -15 points
• Fees -25 points
LOCAL PREFERENCE: The Evaluation Committee will assign an additional five (5)
points to Proposers, which are a Miami Beach-based vendor as defined in the City's
Local Preference Ordinance.
VETERANS PREFERENCE: The Evaluation Committee will assign an additional
five (5) points to Proposers, which are a small business concern owned and
controlled by a veteran(s) or a service-disabled veteran business enterprise, as
defined in the City's Veterans Preference Ordinance.
6. After considering the recommendation(s) of the Evaluation Committee, the City
Manager shall recommend to the City Commission the proposal or proposal's
acceptance of which the City Manager deems to be in the best interest of the City.
7. The City Commission shall consider the City Manager's recommendation(s) in light
of the recommendation(s) and evaluation of the Evaluation Committee and, if
appropriate, approve the City Manager's recommendation(s). The City Commission
may reject City Manager's recommendation(s) and select another proposal or
proposals. In any case, City Commission shall select the proposal or proposals
acceptance of which the City Commission deems to be in the best interest of the
City. The City Commission may also reject all proposals.
8. Negotiations between the selected proposer and the City Manager or designee take
place to arrive at a contract If the City Commission has so directed, the City
Manager may proceed to negotiate a contract with a proposer other than the top-
ranked proposer if the negotiations with the top-ranked proposer fail to produce a
mutually acceptable contract within a reasonable period of time.
9. If the City Commission has so approved, the City Manager or designee after
successful negotiations, will present a contract acceptable to the respective parties
to the City Attorney's office for approval as to form and language, and then to the
Mayor and City Clerk for signature after the selected proposer has done so.
CONCLUSION
The Administration recommends that the Mayor and Commission authorize the issuance of
the RFP for auditing services.
KGB/JJS/
F:\OBPI\$AUD\INTERNAL AUDIT FILES\DOC12-131AUD COMIAudit Services Capital Projects RFP-Memo 3.doc
27