Fremont City Council Meeting: 05/06/25 07:00 PM
3300 Capitol Avenue Div/Dept: Finance Department
Fremont, CA 94538 Category: Agreements and Contracts
SCHEDULED
Sponsors:
COUNCIL STAFF REPORT (ID # 5425) DOC ID: 5425
Updated: 4/30/2025 5:01 PM by Susan Gauthier Page 1
COST ALLOCATION SERVICES - Authorization to Execute Agreement for a Citywide Cost Allocation Plan and a Grant Cost Allocation Plan with Capital Accounting Partners, LLC
Contact Persons:
Name: Hein Hein Myat David Persselin
Title: Accounting Manager Finance Director
Div/Dept: Finance Department Finance Department
Phone: 510-494-4602 510-494-4631
E-Mail: [email protected] [email protected]
Executive Summary: The City needs to maintain a Citywide Cost Allocation Plan and a Grant Cost Allocation Plan to determine the full cost of services, allocate indirect costs, and request reimbursement for indirect costs supporting programs and services funded by federal and State grants.
Staff recently issued a request for proposals (RFP) process to solicit proposals from qualified firms. Having reviewed and evaluated the proposals based on the criteria outlined in the RFP, staff recommends that the City Council authorize the City Manager or her designee to execute a five-year service agreement with Capital Accounting Partners, LLC (CAP) for a total amount not to exceed $112,750.
BACKGROUND: The City incurs both direct and indirect costs to provide services. While direct costs can be specifically identified with a particular program, service, or department, indirect costs represent shared administrative and operational expenses that support multiple departments and functions across the City. To ensure that these shared costs are allocated fairly and consistently, the City maintains a cost allocation plan (the Plan) as an ongoing financial management tool. The Plan is an accounting method that allocates indirect costs from Finance, Human Resources, Information Technology, and other centralized services to the departments and programs that utilize these services.
By identifying the full cost of delivering services, the Plan promotes transparency, enhances financial accountability, and helps ensure that City’s resources are appropriately allocated and recovered. The Plan is critical to ensure that the General Fund is reimbursed for the services it provides to other funds. The Plan is also utilized for budgeting, charging other funds for services, user fee analysis, measuring the cost of government services, and requesting reimbursement from federal and State grants.
Two annual cost allocation plans are prepared each year as part of the budget process:
• A Citywide Cost Allocation Plan to set service fees and recover the cost of General Fund administrative and support services from City activities budgeted outside the General Fund; and
• A Grant Cost Allocation Plan to support reimbursement claims for indirect costs associated with programs funded by federal and State grants. Maintaining a cost Council Staff Report (ID # 5425) Meeting of May 6, 2025 Updated: 4/30/2025 5:01 PM by Susan Gauthier Page 2
allocation plan that complies with the Uniform Guidance (2 CFR Part 200) is essential to maximize recovery of allowable indirect costs, comply with audit requirements, and maintain eligibility for current and future grant funding
Capital Accounting Partners, LLC, has provided the Citywide and Grant Cost Allocation services to City for fiscal years ending June 30, 2013, through June 30, 2025. CAP is currently providing similar services to the cities of Glendale, Burbank, Santa Barbara, and the counties of Riverside and Contra Costa.
DISCUSSION/ANALYSIS: As the current cost allocation services agreement with CAP ended on June 30, 2025, staff issued an RFP for cost allocation services in February 2025 and received responses in March 2025 from five firms.
Staff reviewed the proposals based on criteria outlined in the RFP and has determined that continuing with CAP best meets City’s needs. Accordingly, staff recommends that the City Council authorize the City Manager or her designee to execute an agreement with CAP to provide cost allocation services for the fiscal years ending June 30, 2026 through 2030.
FISCAL IMPACT: The recommended agreement includes the full preparation and support of the Citywide and Grant Cost Allocation Plans and provides for a fixed annual fee of $22,550 and a total amount not to exceed $112,750 over the five-year term.
A General Fund appropriation for next year’s cost allocation services will be included in the FY 2025/26 proposed operating budget.
ENVIRONMENTAL REVIEW: Action on this item represents a fiscal, organizational, and/or administrative governmental activity that will not result in physical changes in the environment. Therefore, it is not a project subject to review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15378.
ATTACHMENTS: None.
RECOMMENDATION: Authorize the City Manager or her designee to execute an agreement with CAP to prepare and support the Citywide and Grant Cost Allocation Plans for a fixed fee of $22,550 per fiscal year and a total amount not to exceed $112,750 over the five-year term of the agreement.