Finance and Management Services
www.santa-ana.org/finance
Item # 19
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
August 20, 2024
TOPIC: Indirect Cost Allocation Plan and Internal Service Fund Cost Allocation Methodology Services
AGENDA TITLE
Agreement with Cherry Bekaert Advisory LLC for Indirect Cost Allocation Plan and Internal Service Fund Cost Allocation Methodology Services
RECOMMENDED ACTION
Authorize the City Manager to execute an agreement with Cherry Bekaert Advisory LLC for Indirect Cost Allocation Plan and Internal Service Fund Cost Allocation Methodology Services for a total aggregate amount not to exceed $150,000 for a three-year term beginning August 20, 2024 and expiring August 19, 2027, with a provision for a two- year extension (Agreement No. A-2024-XXX).
GOVERNMENT CODE §84308 APPLIES: Yes
DISCUSSION
The Finance and Management Services Agency (FMSA) oversees the comprehensive cost allocation process, which includes the Indirect Cost Allocation Plan and Internal Service Fund Cost Allocation. The primary purpose of these cost allocation plans is to ensure that the City’s method of identifying and distributing indirect costs and internal service costs is fair, comprehensive, well-documented, and defensible. These cost allocation plans are used for the budget development process and to recover costs through charges to restricted funding sources. In addition, due to the increased scrutiny from state and federal agencies, staff recommends to continue using experienced firms for these services to remain compliant with applicable laws and regulations.
The proposed services include two primary components: an Indirect Cost Allocation Plan (Indirect Costs) and an Internal Service Funds Cost Allocation Methodology. The Indirect Cost Allocation Plan aims to recover the General Fund’s overhead costs of providing indirect support services to operating departments and programs. The Internal Service Funds Cost Allocation Methodology aims to develop a full cost allocation methodology to recover annual operating costs of internal service funds from inter- agency customers.
Indirect Cost Allocation Plan and Internal Service Fund Cost Allocation Methodology Services
August 20, 2024
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Eight firms submitted proposals in response to the Request for Proposal (RFP) No. 24- 059: Revenue & Cost Specialists, LLC, Willdan Financial Services, ClearSource Financial Consulting, Government Consulting Partners, Inc., Maximus US Services, Inc., MGT of America Consulting, LLC, Cherry Bekaert Advisory LLC, and Matrix Consulting Group, Ltd. The selection committee with experience in the related services evaluated proposals.
Based on the Committee’s evaluation and review of references, Cherry Bekaert Advisory LLC was selected as the most qualified firm for Indirect Cost Allocation Plan and Internal Service Fund Cost Allocation Methodology Services. They demonstrated extensive experience in this field with governments of similar size. In addition, the firm demonstrated the ability to work with staff to understand the City’s operations and maximize recovery of indirect costs.
Cherry Bekaert Advisory LLC will provide the following services:
Indirect Costs (General Fund Overhead Support):
•City Attorney
•Office of the City Manager
•Human Resources
•City Clerk
•Finance (Purchasing, Management & Support, Payroll, and Treasury) •Fixed Assets
Internal Service Funds:
•Building Maintenance
•Equipment Maintenance and Replacement
•Self-Insurance ( Worker’s Compensation, General Liability, and Employees Benefit)
•Information & Communication Services
•City Yard Operations (Corporate Yard and Fleet maintenance facility) •Public Works Agency’s Engineering and Administrative Services
ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action.
FISCAL IMPACT
Funding is available in the current FY 2024-25 budget, and funding for the subsequent fiscal year will be included in the proposed budget for City Council consideration.
Indirect Cost Allocation Plan and Internal Service Fund Cost Allocation Methodology Services
August 20, 2024
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Fiscal
Year
Accounting
Unit-Account#
Fund
Description
Accounting Unit, Account
Description
Amount
FY 24-25 01110110-62300 General Fund Finance/Management Services - Accounting
$20,000
FY 24-25 01110100-62300 General Fund Finance/Management Services – Management &
Supt
$10,000
FY 25-26 01110110-62300 General Fund Finance/Management Services - Accounting
$20,000
FY 25-26 01110100-62300 General Fund Finance/Management Services – Management &
Supt
$10,000
FY 26-27 01110110-62300 General Fund Finance/Management Services - Accounting
$20,000
FY 26-27 01110100-62300 General Fund Finance/Management Services – Management &
Supt
$10,000
FY 27-28 01110110-62300 General Fund Finance/Management Services - Accounting
$20,000
FY 27-28 01110100-62300 General Fund Finance/Management Services – Management &
Supt
$10,000
FY 28-29 01110110-62300 General Fund Finance/Management Services - Accounting
$20,000
FY 28-29 01110100-62300 General Fund Finance/Management Services – Management &
Supt
$10,000
Total $150,000
EXHIBIT(S)
1. Agreement
Submitted By: Kathryn Downs, Finance and Management Services Executive Director Approved By: Alvaro Nuñez, City Manager