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HomeMy WebLinkAbout18 - Citywide Classification & Compensation StudyCITY OF Q SEW PpRr NEWPOR T REACH c9` oaN� City Council Staff Report Agenda Item No. 18 July 10, 2012 TO: HONORABLE MAYOR ANY MEMBERS OF THE CITY COUNCIL FROM: City Manager's Officein%,,_,f Dana Smith, Assistant City Manager 949 - 644 -3002, dsmith @newportbeachca.gov PREPARED BY: Terri L. Cassidy, Human Resources Director APPROVED:�lM, v TITLE: Professional Services Agreement with Fox Lawson and Associates to Conduct a City -wide Classification and Compensation Study ABSTRACT: The City of Newport Beach has never undertaken a city -wide comprehensive classification and compensation study that we know of. The City Manager and City Council have directed significant organizational change over the past several years and further change is anticipated. To provide a framework for classifying and compensating employees appropriately within a solid structure, it is proposed the City execute an agreement with Fox Lawson and Associates to conduct this classification and compensation study and make recommendations to be brought forward to City Council. RECOMMENDATION: Approve and execute the Professional Services Agreement with Fox Lawson and Associates (Attachment A), a Division of Gallagher Benefit Services, Inc. (FLA) to conduct a comprehensive city -wide classification and compensation study, not to exceed $115,000. FUNDING REQUIREMENTS: The current adopted budget includes sufficient funding for this purchase. It will be expensed to the Professional Services account in the Human Resources Department, 0410 -8080. DISCUSSION: All large corporations, private and public, utilize a systematic way to assess and compensate employees. Classification and compensation structures are developed partly in response to state labor laws, partly to stay competitive in the market to attract and retain qualified staff. Job classifications, to which every employee is assigned, Professional Services Agreement with Fox Lawson and Associates to Conduct a City- wide Classification and Compensation Study July 10, 2012 Page 2 define job duties and the parameters by which they are to be performed. Ideally, pay assigned to each classification is based on comparisons with the labor market (external equity) and the value of the job with respect to other positions within the organization (internal equity). For large organizations internal equity is particularly critical to ensuring jobs with similar responsibilities and duties across departments are consistently compensated and create appropriate vertical separation within job series to avoid compaction. The City of Newport Beach has over 250 job classifications for 750 full -time employees, with too many single classifications that are similar in scope and duties. This structure is burdensome and lacks a broad, comprehensive approach. Additionally, it represents old ways of doing business, where one employee is assigned one major function, limiting the City's ability to adjust job assignments in an environment when adaptability and flexibility are critical to promoting change. In the past three years the City has undergone significant organizational restructuring. The Early Retirement Incentive Program in 2010 and layoffs /department mergers in 2011 resulted in shifting duties to a smaller workforce (from 833 positions in 2009 to 750 positions in 2012 (an 11% reduction)). With the downturn in the economy, many private and public organizations have similarly downsized and reassigned job duties to maximize productivity with fewer employees. These actions, coupled with the fact that the City has never undertaken a complete review necessitate that a comprehensive study be conducted. This has been discussed previously with City Council in the course of two prior FY budgets, as well as during several meet and confer briefings. In August 2011, Fox Lawson and Associates was hired to assess the strengths and weaknesses of the City's classification and compensation structure. This assessment was a potential precursor to a full study and was used to determine whether it would be feasible for the City to adopt an entirely new classification structure, based on FLA's proprietary Decision Band TM Methodology (DBM). The DBM tool is a more objective, quantifiable, and comprehensive approach toward classification and compensation. In very simple terms, the DBM method assigns job classifications into one of six bands (A — F) based on the classification's level of decision- making. Each classification is analyzed further and sub - banded based on other measurable factors, such as complexity of work, supervisory authority, and consequences of error. Staff reviewed the merits of the DBM methodology and its applicability to the City's existing system and believe it to be the best approach toward establishing a new classification and compensation system. Concurrent with the preliminary assessment, FLA conducted a review of executive compensation. Executive recruitments for key director level positions conducted within the past three years revealed possible structural inconsistencies in compensation and benefits for that group. To create a valid and defensible classification and compensation system, the City hired FLA to establish the new structure and assign all executive level positions (department directors) a DBM rating. DBM ratings not only Professional Services Agreement with Fox Lawson and Associates to Conduct a City- wide Classification and Compensation Study July 10, 2012 Page 3 ensure an objective evaluation that addresses the compensation inconsistencies, but establishes the framework for applying DBM methodology city -wide. It is anticipated the FLA executive compensation report will be presented for City Council consideration at the first meeting in August. Study Process and Outcomes Given the broad scope and size of the study, it is estimated to take in excess of six months to complete. Since the study will examine nearly all of the City's job classifications, the City's bargaining units will be engaged in the process. Any resulting outcomes that impact classification or compensation (increases or reductions) are subject to meet and confer and will follow the provisions of the Meyers - Milias Brown Act (MMBA). Phase I of the study will include informational meetings to explain the study process and DBM method. During Phase II consultants will meet with employees via occupational panels (small group of employees from certain job classifications to discuss duties and responsibilities), assess job classifications, develop new classification structures, and revise or create new job descriptions. Phase III of the study analyzes the internal alignment and assigns each classification a DBM rating, while Phase IV includes an analysis of pay and benefits through a study of the labor market. Though the study is designed to establish a system of classification and compensation for the City's full -time positions, part -time positions will also be reviewed and any proposed changes in how the City assigns or compensates part -time positions shall be incorporated. Consistent with elements of the City's Council's Compensation Philosophy, Resolution No. 2011 -55, the study will include the following outcomes: • A job evaluation system with a reliable and objective methodology that is internally equitable and consistent across all departments (philosophy #3) • Market competitiveness that includes examination of public and private sector data, as appropriate, and that generally compensates at market median (or within the second and third quartile) (philosophies #1 and #2) • A simplified job classification and pay structure that provides greater management flexibility in job assignments and employee cross training, which will be essential as the City continues to move to a smaller, more efficient organization (philosophy #6) • Job descriptions that are current, reflective of duties performed, and follow best practice guidelines to include descriptive factors that conform to the Americans with Disabilities Act (ADA) Professional Services Agreement with Fox Lawson and Associates to Conduct a City- wide Classification and Compensation Study July 10, 2012 Page 4 Firm Qualifications Fox Lawson and Associates, a Division of Gallagher Benefits Services, Inc., is experienced in conducting comprehensive classification and compensation studies for both the private and public sector. Public sector clients include a host of California cities, counties and special districts, and private sector clients include large and small businesses in a variety of industries (Attachment B). The attached FLA proposal (Exhibit A) outlines the objectives, process and anticipated outcomes of the study. If the Professional Services Agreement with Fox Lawson and Associates is approved, City Manager's Office and Human Resources staff will proceed with implementing the city -wide study as soon as practicable. Upon study conclusion the City Council will be presented with a final report and any corresponding recommendations for their consideration, which staff anticipates to occur prior to FY13- 14. ENVIRONMENTAL REVIEW Staff recommends the City Council find this action is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. NOTICING: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). Submitted by: W Dana Smith Assistant City Manager Attachments: A. Professional Services Agreement with Fox Lawson and Associates B. Fox Lawson and Associates Client List ATTACHMENT A PROFESSIONAL SERVICES AGREEMENT WITH FOX LAWSON AND ASSOCIATES, A DIVISION OF GALLAGHER BENEFITS SERVICES, INC. FOR A CITY -WIDE CLASSIFICATION AND COMPENSATION STUDY THIS AGREEMENT FOR PROFESSIONAL SERVICES ( "Agreement') is made and entered into as of this day of July, 2012 ( "Effective Date ") by and between the CITY OF NEWPORT BEACH, a California Municipal Corporation ( "City "), and Fox Lawson and Associates, a Division of Gallagher Benefits Services, Inc., a Delaware corporation ( "Consultant'), whose address is P.O. Box 32985, Phoenix, AZ 85064 -2985 and is made with reference to the following: RECITALS A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. City desires to engage Consultant to conduct a comprehensive city -wide classification and compensation study ( "Project "). C. Consultant possesses the skill, experience, ability, background, certification and knowledge to provide the professional services described in this Agreement. D. The principal member of Consultant for purposes of Project shall be Bruce G. Lawson. E. City has solicited and received a proposal from Consultant, has reviewed the previous experience and evaluated the expertise of Consultant, and desires to retain Consultant to render professional services under the terms and conditions set forth in this Agreement. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. TERM The term of this Agreement shall commence on the Effective Date, and shall terminate on December 31, 2013 unless terminated earlier as set forth herein. 2. SERVICES TO BE PERFORMED City and Consultant acknowledge that the above Recitals are true and correct and are hereby incorporated by reference into this Agreement. Consultant shall diligently perform all the services described in the Scope of Services attached hereto as Exhibit A and incorporated herein by reference ( "Services" or "Work "). The City may elect to delete certain Services within the Scope of Services at its sole discretion. 3. TIME OF PERFORMANCE 3.1 Time is of the essence in the performance of Services under this Agreement and Consultant shall perform the Services in accordance with the schedule included in Exhibit A. In the absence of a specific schedule, the Services shall be performed to completion in a diligent and timely manner. The failure by Consultant to strictly adhere to the schedule set forth in Exhibit A, if any, or perform the Services in a diligent and timely manner may result in termination of this Agreement by City. 3.1.1 Notwithstanding the foregoing, Consultant shall not be responsible for delays due to causes beyond Consultant's reasonable control. However, in the case of any such delay in the Services to be provided for the Project, each party hereby agrees to provide notice within two (2) days of the occurrence causing the delay to the other party so that all delays can be addressed. 3.2 Consultant shall submit all requests for extensions of time for performance in writing to the Project Administrator (as defined in Section 6 below) not later than ten (10) calendar days after the start of the condition that purportedly causes a delay. The Project Administrator shall review all such requests and may grant reasonable time extensions for unforeseeable delays that are beyond Consultant's control. 3.3 For all time periods not specifically set forth herein, Consultant shall respond in the most expedient and appropriate manner under the circumstances, by fax, hand - delivery or mail. 4. COMPENSATION TO CONSULTANT 4.1 City shall pay Consultant for the Services on a time and expense not -to- exceed basis in accordance with the provisions of this Section and the Schedule of Billing Rates or Progress Payments Schedule attached hereto as Exhibit B and incorporated herein by reference. Consultant's compensation for all Work performed in accordance with this Agreement, including all reimbursable items and subconsultant fees, shall not exceed One Hundred Fifteen Thousand Dollars and 00 1100 ($115,000.00) without prior written authorization from City. No billing rate changes shall be made during the term of this Agreement without the prior written approval of City. 4.2 Consultant shall submit monthly invoices to City describing the Work performed the preceding month. Consultant's bills shall include the name of the person who performed the Work, a brief description of the Services performed and /or the specific task in the Scope of Services to which it relates, the date the Services were performed, the number of hours spent on all Work billed on an hourly basis, and a description of any reimbursable expenditures. City shall pay Consultant no later than thirty (30) days after approval of the monthly invoice by City staff. 4.3 City shall reimburse Consultant only for those costs or expenses specifically identified in Exhibit B to this Agreement, or specifically approved in writing in advance by City. 4.4 Consultant shall not receive any compensation for Extra Work performed without the prior written authorization of City. As used herein, "Extra Work" means any Fox Lawson and Associates, a Division of Gallagher Benefits Services, Inc. Page 2 Work that is determined by City to be necessary for the proper completion of the Project, but which is not included within the Scope of Services and which the parties did not reasonably anticipate would be necessary at the execution of this Agreement. Compensation for any authorized Extra Work shall be paid in accordance with the Schedule of Billing Rates as set forth in Exhibit B. 5. PROJECT MANAGER 5.1 Consultant shall designate a Project Manager, who shall coordinate all phases of the Project. This Project Manager shall be available to City at all reasonable times during the Agreement term. Consultant has designated Bruce G. Lawson to be its Project Manager. Consultant shall not remove or reassign the Project Manager or any personnel listed in Exhibit A or assign any new or replacement personnel to the Project without the prior written consent of City. City's approval shall not be unreasonably withheld with respect to the removal or assignment of non -key personnel. 5.2 Consultant, at the sole discretion of City, shall remove from the Project any of its personnel assigned to the performance of Services upon written request of City. Consultant warrants that it will continuously furnish the necessary personnel to complete the Project on a timely basis as contemplated by this Agreement. 5.3 If Consultant is performing inspection services for City, the Project Manager and any other assigned staff shall be equipped with a cellular phone to communicate with City staff. The Project Manager's cellular phone number shall be provided to the City. 6. ADMINISTRATION This Agreement will be administered by the City Manager's Office. Dana Smith, Assistant City Manager or his /her designee, shall be the Project Administrator and shall have the authority to act for City under this Agreement. The Project Administrator or his /her designee shall represent City in all matters pertaining to the Services to be rendered pursuant to this Agreement. 7. CITY'S RESPONSIBILITIES To assist Consultant in the execution of its responsibilities under this Agreement, City agrees to provide access to and upon request of Consultant, one copy of all existing relevant information on file at City. City will provide all such materials in a timely manner so as not to cause delays in Consultant's Work schedule. S. STANDARD OF CARE 8.1 All of the Services shall be performed by Consultant or under Consultant's supervision. Consultant represents that it possesses the professional and technical personnel required to perform the Services required by this Agreement, and that it will perform all Services in a manner commensurate with the highest professional standards. For purposes of this Agreement, the phrase "highest professional standards" shall mean those standards of practice recognized by one (1) or more first - class firms performing similar work under similar circumstances. Fox Lawson and Associates, a Division of Gallagher Benefits Services, Inc. Page 3 8.2 All Services shall be performed by qualified and experienced personnel who are not employed by City. By delivery of completed Work, Consultant certifies that the Work conforms to the requirements of this Agreement; all applicable federal, state and local laws; and the highest professional standard. 8.3 Consultant represents and warrants to City that it has, shall obtain, and shall keep in full force and effect during the term hereof, at its sole cost and expense, all licenses, permits, qualifications, insurance and approvals of whatsoever nature that is legally required of Consultant to practice its profession. Consultant shall maintain a City of Newport Beach business license during the term of this Agreement. 8.4 Consultant shall not be responsible for delay, nor shall Consultant be responsible for damages or be in default or deemed to be in default by reason of strikes, lockouts, accidents, acts of God, or the failure of City to furnish timely information or to approve or disapprove Consultant's Work promptly, or delay or faulty performance by City, contractors, or governmental agencies. �note] 4H: /_1:7M1443y 9.1 To the fullest extent permitted by law, Consultant shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents and employees (collectively, the "Indemnified Parties ") from and against any and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a Claim; collectively, "Claims "), which may arise from or in any manner relate (directly or indirectly) to any breach of the terms and conditions of this Agreement, any Work performed or Services provided under this Agreement including, without limitation, defects in workmanship or materials or Consultant's presence or activities conducted on the Project (including the negligent and /or willful acts, errors and /or omissions of Consultant, its principals, officers, agents, employees, vendors, suppliers, consultants, subcontractors, anyone employed directly or indirectly by any of them or for whose acts they may be liable or any or all of them). 9.2 Notwithstanding the foregoing, nothing herein shall be construed to require Consultant to indemnify the Indemnified Parties from any Claim arising from the sole negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be construed as authorizing any award of attorney's fees in any action on or to enforce the terms of this Agreement. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by the Consultant. 10. INDEPENDENT CONTRACTOR It is understood that City retains Consultant on an independent contractor basis and Consultant is not an agent or employee of City. The manner and means of conducting the Work are under the control of Consultant, except to the extent they are Fox Lawson and Associates, a Division of Gallagher Benefits Services, Inc. Page 4 limited by statute, rule or regulation and the expressed terms of this Agreement. No civil service status or other right of employment shall accrue to Contractor or its employees. Nothing in this Agreement shall be deemed to constitute approval for Consultant or any of Consultant's employees or agents, to be the agents or employees of City. Consultant shall have the responsibility for and control over the means of performing the Work, provided that Consultant is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct Consultant as to the details of the performance of the Work or to exercise a measure of control over Consultant shall mean only that Consultant shall follow the desires of City with respect to the results of the Services. 11. COOPERATION Consultant agrees to work closely and cooperate fully with City's designated Project Administrator and any other agencies that may have jurisdiction or interest in the Work to be performed. City agrees to cooperate with the Consultant on the Project. 12. CITY POLICY Consultant shall discuss and review all matters relating to policy and Project direction with City's Project Administrator in advance of all critical decision points in order to ensure the Project proceeds in a manner consistent with City goals and policies. 13. PROGRESS Consultant is responsible for keeping the Project Administrator and /or his /her duly authorized designee informed on a regular basis regarding the status and progress of the Project, activities performed and planned, and any meetings that have been scheduled or are desired. 14. INSURANCE Without limiting Consultant's indemnification of City, and prior to commencement of Work, Consultant shall obtain, provide and maintain at its own expense during the term of this Agreement or for other periods as specified in this Agreement, policies of insurance of the type, amounts, terms and conditions described in the Insurance Requirements attached hereto as Exhibit C, and incorporated herein by reference. 15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS Except as specifically authorized under this Agreement, the Services to be provided under this Agreement shall not be assigned, transferred contracted or subcontracted out without the prior written approval of City. Any of the following shall be construed as an assignment: The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Consultant, or of the interest of any general partner or joint venturer or syndicate member or cotenant if Consultant is a partnership or joint- venture or syndicate or cotenancy, which shall result in changing the control of Consultant. Control means fifty percent (50 %) or more of the voting power, or Fox Lawson and Associates, a Division of Gallagher Benefits Services, Inc. Page 5 twenty -five percent (25 %) or more of the assets of the corporation, partnership or joint - venture. 16. SUBCONTRACTING The subcontractors authorized by City, if any, to perform Work on this Project are identified in Exhibit A. Consultant shall be fully responsible to City for all acts and omissions of any subcontractor. Nothing in this Agreement shall create any contractual relationship between City and any subcontractor no shall it create any obligation on the part of City to pay or to see to the payment of any monies due to any such subcontractor other than as otherwise required by law. The City is an intended beneficiary of any Work performed by the subcontractor for purposes of establishing a duty of care between the subcontractor and the City. Except as specifically authorized herein, the Services to be provided under this Agreement shall not be otherwise assigned, transferred, contracted or subcontracted out without the prior written approval of City. 17. OWNERSHIP OF DOCUMENTS 17.1 Each and every report, draft, map, record, plan, document and other writing produced (hereinafter "Documents "), prepared or caused to be prepared by Consultant, its officers, employees, agents and subcontractors, in the course of implementing this Agreement, shall become the exclusive property of City, and City shall have the sole right to use such materials in its discretion without further compensation to Consultant or any other party. Consultant shall, at Consultant's expense, provide such Documents to City upon prior written request. 17.2 Documents, including drawings and specifications, prepared by Consultant pursuant to this Agreement are not intended or represented to be suitable for reuse by City or others on any other project. Any use of completed Documents for other projects and any use of incomplete Documents without specific written authorization from Consultant will be at City's sole risk and without liability to Consultant. Further, any and all liability arising out of changes made to Consultant's deliverables under this Agreement by City or persons other than Consultant is waived against Consultant and City assumes full responsibility for such changes unless City has given Consultant prior notice and has received from Consultant written consent for such changes. 18. COMPUTER DELIVERABLES All written documents shall be transmitted to City in formats compatible with Microsoft Office and /or viewable with Adobe Acrobat. 19. CONFIDENTIALITY All Documents, including drafts, preliminary drawings or plans, notes and communications that result from the Services in this Agreement, shall be kept confidential unless City expressly authorizes in writing the release of information. Fox Lawson and Associates, a Division of Gallagher Benefits Services, Inc. Page 6 20. INTELLECTUAL PROPERTY INDEMNITY The Consultant shall defend and indemnify City, its agents, officers, representatives and employees against any and all liability, including costs, for infringement or alleged infringement of any United States' letters patent, trademark, or copyright, including costs, contained in Consultant's Documents provided under this Agreement. 21. RECORDS Consultant shall keep records and invoices in connection with the Services to be performed under this Agreement. Consultant shall maintain complete and accurate records with respect to the costs incurred under this Agreement and any Services, expenditures and disbursements charged to City, for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Consultant under this Agreement. All such records and invoices shall be clearly identifiable. Consultant shall allow a representative of City to examine, audit and make transcripts or copies of such records and invoices during regular business hours. Consultant shall allow inspection of all Work, data, Documents, proceedings and activities related to the Agreement for a period of three (3) years from the date of final payment to Consultant under this Agreement. 22. WITHHOLDINGS City may withhold payment to Consultant of any disputed sums until satisfaction of the dispute with respect to such payment. Such withholding shall not be deemed to constitute a failure to pay according to the terms of this Agreement. Consultant shall not discontinue Work as a result of such withholding. Consultant shall have an immediate right to appeal to the City Manager or his /her designee with respect to such disputed sums. Consultant shall be entitled to receive interest on any withheld sums at the rate of return that City earned on its investments during the time period, from the date of withholding of any amounts found to have been improperly withheld. 23. ERRORS AND OMISSIONS In the event of errors or omissions that are due to the negligence or professional inexperience of Consultant which result in expense to City greater than what would have resulted if there were not errors or omissions in the Work accomplished by Consultant, the additional design, construction and /or restoration expense shall be borne by Consultant. Nothing in this Section is intended to limit City's rights under the law or any other sections of this Agreement. 24. CITY'S RIGHT TO EMPLOY OTHER CONSULTANTS City reserves the right to employ other Consultants in connection with the Project. Fox Lawson and Associates, a Division of Gallagher Benefits Services, Inc. Page 7 25. CONFLICTS OF INTEREST 25.1 The Consultant or its employees may be subject to the provisions of the California Political Reform Act of 1974 (the "Act "), which (1) requires such persons to disclose any financial interest that may foreseeably be materially affected by the Work performed under this Agreement, and (2) prohibits such persons from making, or participating in making, decisions that will foreseeably financially affect such interest. 25.2 If subject to the Act, Consultant shall conform to all requirements of the Act. Failure to do so constitutes a material breach and is grounds for immediate termination of this Agreement by City. Consultant shall indemnify and hold harmless City for any and all claims for damages resulting from Consultant's violation of this Section. 26. NOTICES 26.1 All notices, demands, requests or approvals, including any change in mailing address, to be given under the terms of this Agreement shall be given in writing, and conclusively shall be deemed served when delivered personally, or on the third business day after the deposit thereof in the United States mail, postage prepaid, first - class mail, addressed as hereinafter provided. All notices, demands, requests or approvals from Consultant to City shall be addressed to City at: Attn: Dana Smith, Assistant City Manager City Manager's Office City of Newport Beach 3300 Newport Boulevard PO Box 1768 Newport Beach, CA 92658 Phone: 949 - 644 -3003 Fax: 949 - 644 -3020 26.2 All notices, demands, requests or approvals from City to Consultant shall be addressed to Consultant at: Attn: Bruce G. Lawson Fox Lawson and Associates, a Division of Gallagher Benefits Services, Inc. P.O. Box 32985 Phoenix, AZ 85064 -2985 Phone: 602 - 840 -1070 Fax: 602 - 840 -1071 27. CLAIMS Unless a shorter time is specified elsewhere in this Agreement, before making its final request for payment under this Agreement, Consultant shall submit to City, in writing, all claims for compensation under or arising out of this Agreement. Consultant's acceptance of the final payment shall constitute a waiver of all claims for compensation under or arising out of this Agreement except those previously made in Fox Lawson and Associates, a Division of Gallagher Benefits Services, Inc. Page 8 writing and identified by Consultant in writing as unsettled at the time of its final request for payment. The Consultant and the City expressly agree that in addition to any claims filing requirements set forth in the Agreement, the Consultant shall be required to file any claim the Consultant may have against the City in strict conformance with the Tort Claims Act (Government Code sections 900 et seq). 28. TERMINATION 28.1 In the event that either party fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, that party shall be deemed in default in the performance of this Agreement. If such default is not cured within a period of two (2) calendar days, or if more than two (2) calendar days are reasonably required to cure the default and the defaulting party fails to give adequate assurance of due performance within two (2) calendar days after receipt of written notice of default, specifying the nature of such default and the steps necessary to cure such default, and thereafter diligently take steps to cure the default, the non - defaulting party may terminate the Agreement forthwith by giving to the defaulting party written notice thereof. 28.2 Notwithstanding the above provisions, City shall have the right, at its sole and absolute discretion and without cause, of terminating this Agreement at any time by giving no less than seven (7) calendar days prior written notice to Consultant. In the event of termination under this Section, City shall pay Consultant for Services satisfactorily performed and costs incurred up to the effective date of termination for which Consultant has not been previously paid. On the effective date of termination, Consultant shall deliver to City all reports, Documents and other information developed or accumulated in the performance of this Agreement, whether in draft or final form. 29. STANDARD PROVISIONS 29.1 Compliance with all Laws. Consultant shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all Work prepared by Consultant shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements and be subject to approval of the Project Administrator and City. 29.2 Waiver. A waiver by either party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 29.3 Integrated Contract. This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties hereto, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. Fox Lawson and Associates, a Division of Gallagher Benefits Services, Inc. Page 9 29.4 Conflicts or Inconsistencies. In the event there are any conflicts or inconsistencies between this Agreement and the Scope of Services or any other attachments attached hereto, the terms of this Agreement shall govern. 29.5 Interpretation. The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either parry by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. 29.6 Amendments. This Agreement may be modified or amended only by a written document executed by both Consultant and City and approved as to form by the City Attorney. 29.7 Severabilitv. If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 29.8 Controlling Law and Venue. The laws of the State of California shall govern this Agreement and all matters relating to it and any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange, State of California. 29.9 Equal Opportunity Employment. Consultant represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex, age or any other impermissible basis under law. 29.10 No Attorney's Fees. In the event of any dispute or legal action arising under this Agreement, the prevailing party shall not be entitled to attorney's fees. 29.11 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original and all of which together shall constitute one (1) and the same instrument. [SIGNATURES ON NEXT PAGE] Fox Lawson and Associates, a Division of Gallagher Benefits Services, Inc. Page 10 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the dates written below. APPROVED AS TO FORM: CITY ATTORNEY'S OFFIC Date: Z: , Aaron C. Harp City Attorney ATTEST: Date: By: Leilani I. Brown City Clerk CITY OF NEWPORT BEACH, A California municipal corporation Date: By: Nancy Gardner Mayor CONSULTANT: Fox Lawson and Associates, a Division of Gallagher Benefits Services, Inc., a Delaware Corporation Date: By: Bruce G. Lawson Managing Director [END OF SIGNATURES] Attachments: Exhibit A — Scope of Services Exhibit B — Schedule of Billing Rates Exhibit C — Insurance Requirements A 12- 00476f.-1 appslcat I cycomlwpdocsld0291 p005100011385. docx Fox Lawson and Associates, a Division of Gallagher Benefits Services, Inc. Page 11 EXHIBIT A SCOPE OF SERVICES [Contractor Firm Name] Page A -1 avle,� Fox Lawson &Associates nr 'r a Division of Gallagher Benefit Services, Inc. Compemation and Hunion Resources Specialises June 22, 2012 Sent via e-mail to: dsmith @newportbeachca.gov Ms. Dana Smith Assistant City Manager City of Newport Beach, CA 3300 Newport Blvd. Newport Beach, CA 92663 P.O. Box 32985 Phoenix, A2 85064 -2985 Phone 60M40 -1070 Fax 602. 840.1071 %mwfoxlawson.com Re: Proposal to Conduct a Job Classification and Compensation Study Ladies and Gentlemen: In response to your request, Fox Lawson & Associates, a Division of Gallagher Benefit Services, Inc. (FLA), is pleased to provide the following approach and cost estimate to conduct a job classification and compensation study covering all City positions in approximately 200 current job classifications. The objective of this study will be develop a new job classification structure that is simpler and broader in order to provide both greater flexibility in terms of organizational change and greater opportunity for employees to grow and develop. The study will also include assessment of total compensation through a market compensation and benefits study. Ultimately, the new system should be easier to manage than the current system, as well as provide for appropriate internal alignment of positions and jobs throughout the City organization. The City Council has recently adopted a compensation philosophy. Subsequently, we conducted an executive compensation study, and also assessed the current job classifications to identify potential opportunities to simplify the job classification system. Based on that review, it is clear that there are numerous opportunities to simplify and streamline the job classification system. To accomplish the stated objectives, the project will have three components: Classification, Job Evaluation, and Total Compensation, as follows: Classification is the process of understanding, verifying, and describing the nature and level of work of each job in the organization. This is done by asking employees to describe their work, including the duties, responsibilities, knowledge, skills, physical requirements, and working conditions required for their job. During Phase I of the study, classification data will be collected from existing job descriptions, employee Position Description Questionnaires (PDQs), and individual or group Fox Lawson & Associates a:`✓' LW.. of C.,nnei,<, H<.<n employee interviews to assess the type and level of work performance. This will allow us to outline a proposed classification structure for the City that is consistent with the Compensation Philosophy that has been adopted by the Council. In addition, the classification system will help the City define career progressions for current and future employees. Internal Equity (job Evaluation) - The purpose of job evaluation is to establish the internal worth of all job classes. The basic premise of job evaluation dictates that the more a job is valued internally, the more it should be compensated. Furthermore, it is a valuable tool for slotting classifications into appropriate salary grades when market data are not available for certain classifications, or for classifications that are not benchmarked. Internal equity is established with a formal job evaluation methodology, such as banding, point factoring or whole job ranking. Having implemented a variety of job evaluation methods in hundreds of organizations over the past 30 years, we understand the desire some organization may have to examine alternative job evaluation methods when faced with general classification and compensation challenges. We will work with the City in Phase II to develop and implement a job evaluation methodology such as the Decision BandTm Method that we believe is well suited to the broad job classification concept that the City is seeking. Market Parity (Total Compensation) - The purpose of the compensation study is to ensure that your pay structure and benefits offerings are competitive with the relevant labor markets in which you compete for qualified personnel. We will work with you to identify benchmark organizations and job classifications on which to collect comparable market salary data. We will collect market data through data mining from web - sites, utilizing either currently available data or via a data collection form customized to meet the needs of the City, as necessary to obtain the needed information. If a custom survey is used, our data collection form follows standard compensation guidelines and is an effective and efficient form of collecting salary information. Our questions are posed in a fashion that is easy for participants to answer, as well as being easy to quantify and analyze. Participants can complete our data collection forms in either hardcopy or electronic formats. FLA abides by WorldatWork guidelines in the collection and analysis of pay and benefits data. In order to encourage responses from organizations, we pledge that data provided will be treated as confidential and that only summary or aggregate results will be made public. Consequently, specific responses identified by participants will not be provided to the City. This policy abides by the guidelines set forth by the Federal Trade Commission and the United States Department of justice relative to the Sherman Antitrust Act in regards to the sharing of salary data. -^ Fox Lawson s Associates rIJ1� a Dm,.on of Qll,,K[, Bero& $<rvKes, IM. 2 While we use proven procedures to maximize participation, we ultimately have no control over other organizations' work schedules, and/or their desire or ability to participate in a salary survey. We make no guarantee that we will obtain good data for all jobs from each of the organizations that we invite to participate in the survey. In our experience, we have found that private organizations do not typically participate in smaller, customized surveys sponsored by government organizations. Therefore, with the City's approval, we will draw information from published data in order to provide a representation of the private market. This will assure that accurate and valid private sector data is utilized in a cost efficient manner. If we are able to use available published data, we will use data from our extensive database including published data sources such as Mercer, Towers Watson and other commercially available surveys of public and private sector jobs to obtain market information for the City. For local agencies, we will obtain as much of the information as possible from information provided on their web - sites. We will analyze the market data using standard analytical tools such as regression analysis. In addition, we will integrate the job evaluation results with the labor market survey analysis to develop a salary structure that reflects the proper balance of internal and external equity. During this Phase, the City will be responsible for assisting FLA in selecting organizations to survey and benchmark jobs to include in the survey. In order to accomplish your stated objectives for this compensation system review, we will need to do at least the following: Review of class structures for discussion within a series of occupational focus groups comprised of employees and managers regarding type and level of work performed by employees within the occupational group. Synthesis of best practices, current City structures and occupational panel feedback to result in recommendations for the new class structure. • Development of new or revised job descriptions, including identification of the essential duties for the class, appropriate minimum qualifications, distinguishing characteristics between class levels within a job family or series, and physical requirements in order to comply with the American's with Disabilities Act. • Determination of the appropriate FLSA exemption status for each job classification. Provision of an appropriate job evaluation methodology to assess and maintain internal equity for all job classifications within a broad classification concept, including training for City HR staff so that the City can maintain the system once implemented. Recommendation of an appeal process regarding classification allocation and, if requested, administration of the appeals process (Optional Activity). " Fox Lawson s Associates a Drvioon of GaOagL.. &nefi, Senim, ins Recommendations for methods to implement the findings of the study and options and direction, given current and recommended personnel policies and procedures. Transition plans for implementing the findings of the study. Our recommendations will take into consideration the culture and financial resources of the City. Study Phase SununaI7 Tasks /Deliverables I. Study Initiation • Organization & current employee classification and compensation information collected. • Conduct of employee orientation sessions. [Includes 2 days on site to • Presentation of DBM, FLA's proprietary internal conduct project initiation and equity tool/]E alternatives and decision employee orientation regarding approach to determining internal meetings.] alignment. • Employee communication plan confirmed. • Client communication process confirmed. • Project timetable confirmed. H. Classification Study • Conduct of occupational panels and/or interviews of a sample of [Includes 5 days of employees /managers to assess type and level occupational panels and/or of current work performed within each interviews.] occupational grouping. • Review of current organization material and job descriptions in concert with interview /occupational panel outcomes and best practices to recommend revised class structures. • Based on management feedback, development of updated class structure recommendations for City review. • Development of new or updated job descriptions as desired by the City to conform to approved structure changes, including appropriate competencies for each job classification. • Recommendation of employee allocations. • Analysis of employee appeals as appropriate; this is an optional task and is priced separately. G' j For Lawson & Associates M. Job Evaluation Study • Application of DBTTMM or alternative job evaluation tool in use or otherwise selected to the City's jobs. • Discussion of the internal hierarchy resulting and development of modifications to finalize the job evaluation ratings for use in determining internal equity within the class and pay systems. • Training for HR and management personnel on site or by webinar in the use of the DBT*lM stem. IV. Total Compensation • Labor market confirmed and survey Study participants identified. • Benchmark jobs identified and summarized. • Data collected through a custom survey and from published sources, as appropriate, and verified. • Identification of hard to recruit positions and assessment of the relevance of compensation for recruiting. • Competitive analysis performed of City compensation and benefits. • Diagnostic review of current salary structure to identify opportunities for simplification. • Recommended pay structure or update of existing structure. • Best practices reviewed. • Transition options, next steps /costs outlined. • Compensation guidelines developed. • Draft report. • Quality assurance reviews. • City review and feedback. • Final report and presentation. Deliverables Deliverables include: • New/Revised job classification structure. • New/Revised job descriptions. • Recommended position allocations. New job evaluation system to address issues related to internal equity. • Recommended salary structure. • Recommended changes to the City's benefits program and pay practices Fox Lawson & Associates a U'wison of CalBg6o BrncHs Srmcn.ln< • Recommended salary scales. • Summary report including recommended implementation and maintenance costs and options. In conducting salary studies, we follow professionally accepted compensation principles and practices as outlined by WorldatWork, SHRM, the U.S. Department of Justice and the Federal Trade Commission. We have also authored many articles on various aspects of conducting salary studies; please refer to our website www.foxlawson.com for these specific articles. FLA has comprehensive quality and performance standards. Each deliverable is reviewed by two individuals in the firm for quality control. If clients have issues that need to be addressed, the first contact is the project manager who will attempt to resolve the issues with, as necessary, the assistance of one of the Managing Directors. Project Schedule The schedule following is predicated on an effective start date in later August with completion in approximately five to six months. Project Cost We understand the importance of this study as one of many strategies to address current human resource issues and realize the delicate nature of City spending. Therefore, we have proposed a sensible fee schedule that generates project results destined to add value to the City. It will provide the flexibility necessary to attract, retain, and motivate employees to provide quality services and ensure the system is not an administrative and/or costly burden to the City, now or in the future. We would not like fees to be the major impediment to acquiring the most experienced provider to address these important needs during this unprecedented time period. We would be pleased to explore options that may reduce the fees to fit your budget. Our fees to conduct the project outlined (including out of pocket expenses) will not exceed $115,000. Fox Lawson & Assocmaz a D�iaon o14allayLrr Brreh, 8rv¢cs, hc. FOX LAWSON AND ASSOCIATES QUALIFIED CONSULTANTS BRUCE G. LAWSON, MPA, CCP, IPMA -CP — PROJECT DIRECTOR Mr. Lawson is a Managing Director of the firm. In this capacity, Mr. Lawson serves as the project director and /or technical advisor, providing technical direction and quality assurance. He is responsible for all consulting activities in the areas of job evaluation and compensation, organization analysis, personnel systems and policy development. Mr. Lawson has been directing classification and compensation studies for more than 30 years. Prior to forming Fox Lawson, he spent 15 years with the firm of Ernst & Young LLP where he served as the national director of their public sector compensation consulting practice. He also served as City Manager in two California cities (Los Altos Hills and Belvedere), was the County Administrative Officer in Multnomah County (Portland) Oregon, Assistant City Manager /Personnel Director in Corvallis, Oregon, and Assistant to the City Administrator /Personnel Director in Placentia, CA. Mr. Lawson served on the City of Phoenix (AZ) Public Safety Employees Retirement Board for 12 years. Mr. Lawson has a Master's Degree in Public Administration from the California State University at Fullerton and is a.b.d. in Public Administration from Golden Gate University in San Francisco, and has earned his CCP certification from WorldotWork. He is also an active member of several professional associations including the College & University Professional Association for Human Resources, the International City & County Management Association, International Public Management Association for Human Resources, the Society for Human Resources Management, and WorldotWork.. Mr. Lawson co- authors a monthly compensation article called the CompDoctor'". Bruce is located in Phoenix, AZ. JAMES C. FOX, Ph.D., IPMA- CP — TECHNICAL ADVISOR AND ALTERNATE PROJECT DIRECTOR Dr. Fox is a Managing Director of the firm. In this capacity, he serves as project director and /or technical advisor on all projects, providing technical direction and quality assurance. He is responsible for all consulting activities in the areas of personnel management, job evaluation and compensation, organization and management analysis, executive compensation, and survey research. Dr. Fox has been directing classification and compensation studies for more than 25 years. Prior to forming the firm, he was a Partner in the firm of Ernst & Young LLP and headed up the firm's regional compensation practice, with national responsibility for the public sector compensation practice. Dr. Fox holds both M.A. and Ph.D. Degrees in Sociology from the University of Minnesota. He has been an instructor at Metropolitan State University and the University of Minnesota, and has been a guest lecturer at regional conferences and meetings. He is a member of the Society of Human Resource Management, WorldatWork,where he is on the faculty, and was the Professional Development Coordinator of the Compensation Council of the Twin Cities Personnel Association. He is the Chairman of the Human Resources Committee of the Board of the Northern Star Council of the Boy Scouts, the past Chairman of the Board of Project Pathfinder and is a member of the Ramsey County Personnel Review Board. Dr. Fox co- authors a monthly compensation article called the CompDoctor". Jim is located in St. Paul, MN. HEIDI NELSON, CCP, CBP, IPMA -CP — SENIOR CONSULTANT Ms. Nelson is a Senior Consultant of the firm. She is responsible for leading and conducting compensation consulting projects. She has been conducting compensation studies for our firm for over 20 years andspecializes in base pay compensation, total compensation, survey research, pay administration planning, and executive compensation. Ms. Nelson has worked with all types of organizations, including states, cities, counties, colleges, school districts, universities, special districts, and private sector organizations includingconducting two prior studies for the City of Kansas City. Prior to joining the firm, Ms. Nelson spent 6 years serving in a similar capacity with Ernst & Young. Ms. Nelson attended the University of Minnesota specializing in Business Management and has completed FOX LAWSON AND ASSOCIATES QUALIFIED CONSULTANTS continuing education coursework from the same institution in Industrial Relations, Methodology and Design of Salary Surveys, and Compensation Administration, and has earned her CCP and CBP certifications from WorldotWork. She is a member of the International Public Management Association for Human Resources, and WorldotWork. Heidi is located in St. Paul, MN. MIKE VERDOORN, MA -HRIR, CCP, IPMA -CP— SENIOR CONSULTANT Mr. Verdoorn is a Senior Consultant with the firm. He is responsible for conducting classification and compensation consulting projects. He has been conducting classification and compensation studies for our firm for 6 years and specializes in the areas of classification, job evaluation and compensation, survey research, executivecompensation, and statistical analysis. Mr. Verdoorn has worked with various types of organizations including states, cities, counties, school districts, colleges, universities, specialdistricts, and private sector organizations. Prior to joining the firm Mr. Verdoorn was a compensation analyst with Imation, a computer disk storage manufacturer. Mr. Verdoorn has a Bachelor's Degree in History from the University of Minnesota and a Master's Degree in Human Resources and Industrial Relations from the same institution, and has earned his CCP certification from WorldatWork. He is a member of the International Public Management Association for Human Resources, and WorldotWork. Mike is located in St. Paul, MN. GAIL MERIWEATHER, MBA Ms. Meriweather is an Area Vice President for Human Resources Consulting Services. She will assist with the market analyses and salary structure design. Prior to joining Gallagher in 2001, she was a partner with Burgess & Associates, a consulting firm located in Lenexa, Kansas. She has extensive training and experience in designing and implementing compensation systems including executive compensation, incentives, traditional and alternative rewards. She has assisted clients with job analysis, job evaluations, external market analysis, and salary structure design and administration. Ms. Meriweather provides develops employee handbooks, affirmative action plans, job descriptions, performance management systems and management training programs. She has BA in Business Administration fromthe University of Missouri Kansas City and an MBA from the same institution. Gail is based in our Kansas City, MO office. ANNETTE HOEFER, MBA, CCP Ms. Hoefer is a Senior Consultant. She is responsible for conducting classification and compensation consulting projects. She has been conducting classification and compensation studies for our firm for 5 years and specializes in the areas of classification, job evaluation and compensation, personnel systems and policy development, performance management systems, employee communications, strategy discussions, pay administration planning, and focus group facilitation. Ms. Hoefer has worked with various types of organizations including states, cities, counties, colleges, universities, special districts, and private sector organizations. Prior to joining the firm, Ms. Hoefer worked for 9 years in the same capacity at Lee and Burgess Associates, a consulting firm based in Colorado, and prior to that, had held human resources positions in energy and insurance companies. Ms. Hoefer has a Bachelor's Degree in Business Administration from the University of Iowa and a Master's Degree in Business Administration with an emphasis in Human Resources from same institution, and has earned her CCP certificationfrom WorldatWork. Annette is located in Cedar Rapids, IA. FOX LAWSON AND ASSOCIATES QUALIFIED CONSULTANTS LORI MESSER, MA, CCP Ms. Messer is a Senior Consultant of the firm. She is responsible for conducting classification and compensation consulting projects. Ms. Messer has worked with and for a variety of public and private sector organizations, including states, cities, counties, school districts, colleges, universities, and special districts. Prior to joining the firm, Ms. Messer held a variety of consultative human resources and compensation positions in high tech, distribution, healthcare and local government organizations. Ms. Messer has a Bachelor's Degree in Business Administration from Arizona State University and a Master's Degree in Education from the University of Phoenix. She is also a member of WorldotWork and has earned her CCP certification. Lori is based in Phoenix, AZ, SANDRA SPELLMAN, MPA, IPMA -CP Ms. Spellman is a Senior Consultant with the firm. She is responsible for conducting classification, job evaluation, and human resource process consulting projects. She has been conducting studies for our firm for 4 years and specializes in the areas of classification, communications, human resource strategy and process, and employee and management focus group meetings. Ms. Spellman has worked with various types of organizations including states, cities, counties, colleges and universities, and the federal government. Prior to joining the firm, Ms. Spellman spent 18 years with Ernst & Young's consulting practices where she was responsible for client and internal change management, communications, and training strategies. She has also held state executive and legislative positions addressing a wide range of human resource and related issues. Ms. Spellman has a Bachelor's Degree in Sociology /Political Science from Arizona State University and a Master's Degree in Public Administration with an emphasis in Organizational Development from the same institution. She is a member of several professional associations, including the College & University Professional Association for Human Resources, International Public Management Association for Human Resources, and WorldotWork. Sandy is located in Washington, DC. CHELSEA CHRISTIE, BS -HRIR, CCP, GRP Ms. Christie is a Consulting Associate with the firm. She is responsible for providing supportduring all phases of classification and compensation studies. She has been supporting classification and compensation studies for our firm for 2 years and specializes in the areas of classification, job evaluation and compensation, survey research, and job description preparation. Ms. Christie has worked with various types of organizations including states, cities, counties, school districts, colleges, universities, and special districts. Prior to joining the firm Ms. Christie worked at Aramark as a Student Hiring Manager and also completed a competitive internship with Cargill, Inc. Ms. Christie has a Bachelor's Degree in Human Resources and Industrial Relations, and Insurance /Risk Management from the University of Minnesota, and has earned her CCP certification from WorldotWork. She is a member of the Twin Cities Compensation Network (TCCN) and WorldotWork. Chelsea is located in St. Paul, MN. EXHIBIT B SCHEDULE OF BILLING RATES Fox Lawson and Associates, a Division of Gallagher Benefits Services, Inc. Page B -1 I DESCRIPTION Study Initiation :Cs $10,000 II Classification Study $60,000 III job Evaluation Study $10,000 IV Compensation Study $35,000 Total Cost: $115,000 Includes approximately 11 onsite days during the project devoted to meetings with employee groups, management, and, if appropriate, the City Council. Fox Lawson & Associates a Omdon of ra11 her f3cnck Swiss, Inc. EXHIBIT C 1. INSURANCE REQUIREMENTS — PROFESSIONAL SERVICES 1.1 Provision of Insurance. Without limiting Consultant's indemnification of City, and prior to commencement of Work, Consultant shall obtain, provide and maintain at its own expense during the term of this Agreement, policies of insurance of the type and amounts described below and in a form satisfactory to City. Consultant agrees to provide insurance in accordance with requirements set forth here. If Consultant uses existing coverage to comply and that coverage does not meet these requirements, Consultant agrees to amend, supplement or endorse the existing coverage. 1.2 Acceptable Insurers. All insurance policies shall be issued by an insurance company currently authorized by the Insurance Commissioner to transact business of insurance in the State of California, with an assigned policyholders' Rating of A- (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk Manager. 1.3 Coverage Requirements. 1.3.1 Workers' Compensation Insurance. Consultant shall maintain Workers' Compensation Insurance, statutory limits, and Employers Liability Insurance with limits of at least one million dollars ($1,000,000) each accident for bodily injury by accident and each employee for bodily injury by disease in accordance with the laws of the State of California, Section 3700 of the Labor Code. 1.3.1.1 Consultant shall submit to City, along with the certificate of insurance, a Waiver of Subrogation endorsement in favor of City, its officers, agents, employees and volunteers. 1.3.2 General Liability Insurance. Consultant shall maintain commercial general liability insurance, and if necessary umbrella liability insurance, with coverage at least as broad as provided by Insurance Services Office form CG 00 01, in an amount not less than one million dollars ($1,000,000) per occurrence, two million dollars ($2,000,000) general aggregate. The policy shall cover liability arising from premises, operations, products - completed operations, personal and advertising injury, and liability assumed under an insured contract (including the tort liability of another assumed in a business contract) with no endorsement or modification limiting the scope of coverage for liability assumed under a contract. 1.3.3 Automobile Liability Insurance. Consultant shall maintain automobile insurance at least as broad as Insurance Services Office form CA 00 01 covering bodily injury and property damage for all activities of the Consultant arising out of or in connection with Work to be performed under this Agreement, including coverage for any owned, hired, non -owned or rented vehicles, in an amount not less than one million dollars ($1,000,000) combined single limit each accident. Fox Lawson and Associates, a Division of Gallagher Benefits Services, Inc. Page C -1 1.3.4 Professional Liability (Errors & Omissions) Insurance. Consultant shall maintain professional liability insurance that covers the Services to be performed in connection with this Agreement, in the minimum amount of one million dollars ($1,000,000) per claim and in the aggregate. Any policy inception date, continuity date, or retroactive date must be before the effective date of this agreement and Consultant agrees to maintain continuous coverage through a period no less than three years after completion of the services required by this agreement. 1.4 Other Insurance Requirements. The policies are to contain, or be endorsed to contain, the following provisions: 1.4.1 Waiver of Subrogation. All insurance coverage maintained or procured pursuant to this agreement shall be endorsed to waive subrogation against City, its elected or appointed officers, agents, officials, employees and volunteers or shall specifically allow Consultant or others providing insurance evidence in compliance with these requirements to waive their right of recovery prior to a loss. Consultant hereby waives its own right of recovery against City, and shall require similar written express waivers from each of its subconsultants. 1.4.2 Additional Insured Status. All liability policies including general liability, excess liability, pollution liability, and automobile liability, but not including professional liability, shall provide or be endorsed to provide that City and its officers, officials, employees, and agents shall be included as insureds under such policies. 1.4.3 Primary and Non Contributory. All liability coverage shall apply on a primary basis and shall not require contribution from any insurance or self- insurance maintained by City. 1.4.4 Notice of Cancellation. All policies shall provide City with thirty (30) days notice of cancellation (except for nonpayment for which ten (10) days notice is required) or nonrenewal of coverage for each required coverage. 1.5 Additional Agreements Between the Parties. The parties hereby agree to the following: 1.5.1 Evidence of Insurance. Consultant shall provide certificates of insurance to City as evidence of the insurance coverage required herein, along with a waiver of subrogation endorsement for workers' compensation and other endorsements as specified herein for each coverage. Insurance certificates and endorsement must be approved by City's Risk Manager prior to commencement of performance. Current certification of insurance shall be kept on file with City at all times during the term of this Agreement. City reserves the right to require complete, certified copies of all required insurance policies, at any time. 1.5.2 City's Right to Revise Requirements. The City reserves the right at any time during the term of the Agreement to change the amounts and types of insurance required by giving the Consultant sixty (60) days advance written notice of Fox Lawson and Associates, a Division of Gallagher Benefits Services, Inc. Page C -2 such change. If such change results in substantial additional cost to the Consultant, the City and Consultant may renegotiate Consultant's compensation. 1.5.3 Enforcement of Agreement Provisions. Consultant acknowledges and agrees that any actual or alleged failure on the part of the City to inform Consultant of non - compliance with any requirement imposes no additional obligations on the City nor does it waive any rights hereunder. 1.5.4 Requirements not Limiting. Requirements of specific coverage features or limits contained in this Section are not intended as a limitation on coverage, limits or other requirements, or a waiver of any coverage normally provided by any insurance. Specific reference to a given coverage feature is for purposes of clarification only as it pertains to a given issue and is not intended by any party or insured to be all inclusive, or to the exclusion of other coverage, or a waiver of any type. 1.5.5 Self- insured Retentions. Any self- insured retentions must be declared to and approved by City. City reserves the right to require that self- insured retentions be eliminated, lowered, or replaced by a deductible. Self- insurance will not be considered to comply with these requirements unless approved by City. 1.5.6 City Remedies for Non Compliance If Consultant or any subconsultant fails to provide and maintain insurance as required herein, then City shall have the right but not the obligation, to purchase such insurance, to terminate this agreement, or to suspend Consultant's right to proceed until proper evidence of insurance is provided. Any amounts paid by City shall, at City's sole option, be deducted from amounts payable to Consultant or reimbursed by Consultant upon demand. 1.5.7 Timely Notice of Claims. Consultant shall give City prompt and timely notice of claims made or suits instituted that arise out of or result from Consultant's performance under this Agreement, and that involve or may involve coverage under any of the required liability policies. 1.5.8 Consultant's Insurance. Consultant shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the Work. Fox Lawson and Associates, a Division of Gallagher Benefits Services, Inc. Page C -3 ATTACHMENT B Fox Lawson and Associations, a Division of Gallagher Benefits Services Inc. Client List Public Sector— California (partial list) Cities • City of Beverly Hills • City of Carlsbad • City of Carson • City of Davis • City of Desert Hot Springs • City of Encinitas • City of Fremont • City of Fresno • City of Hanford City of Healdsburg • City of Hercules City of Larkspur City of Mountain View • City of Newport Beach • City of Oceanside City of Orinda • City of Palo Alto • City of Rancho Cucamonga City of Sacramento City of San Clemente • City of San Francisco • City of San Jose City of San Jose Redevelopment Agency • City of San Ramon • City of Santa Ana • City of Santa Cruz • City of Walnut Creek City of West Hollywood • Town of Windsor Counties • Alameda County Office of Education - Oakland • California State Association of Counties • Contra Costa County • El Dorado County • Kern County, CA - Bakersfield, CA Los Angeles County Department of Health Services • Los Angeles County Office of the Chief Administrative Officer • Los Angeles Free Clinic • Marin County • Monterey County • Sacramento County • San Francisco County Santa Cruz County Colleges • University of CA, Berkley • University of California at Los Angeles (UCLA) Public Schools • Beverly Hills Unified School District • Coachella Valley Water District • Compton Unified School District • Elk Grove Unified School District • Los Angeles Unified School District • Orange Unified School District • Sacramento City Unified School District Santa Clara Valley Transportation Authority Santa Clara Valley Water District • Yuba City Unified School District Other • Association of Bay Area Governments - Oakland, CA Contra Costa Retirement Assoc CSAC — Excess Insurance Authority • Desert Hospital — Palm Springs • Irvine Ranch Water District - Irvine, CA • Law Firm of Carroll, Burdick, & McDonough • Long Beach Transit • Los Angeles City Housing Authority - Los Angeles, CA • Los Angeles Regional Family Planning Council, Inc. The Law Office of Mark Merin • Menlo Park Fire District North County Transit District • Orange County Fire Authority - Orange, CA Orange County Superior Court Orange County Transit Authority Orange County Water District - Fox Lawson and Associations, a Division of Gallagher Benefits Services Inc. Private Sector (partial list) Advertising and Public Relations • Carmichael Lynch • MIVA • Shark Radio Young and Laramore Business and Professional Services • Calence • CASHFLOW Technologies, Inc. • CAT Auctions • Corvu Technologies • Grant Thornton, LLP • Great Clips • IC Systems • JUUT Salonspa • Maxsys, Inc • Med Management • Meritex Enterprises • Nelson, Tietz & Hoye • PDW • PriceWaterhouseCoopers • Space Center Enterprises • Tesseract Group • The Registry • The Structure Group • Value Rx Communication • Industrial Motion, Inc. Construction • Kraus - Anderson Companies Engineers, Architects and Planners • Bonestroo, Rosene, Anderlik & Associates • Moore Engineering • Olsson Associates • Schafer, Kline, and Warren, Inc. • Willdan Associates Finance Banking and Insurance • Anchor Bancorp • Blue Cross /Blue Shield of Minnesota • J.G. Kinnard & Co. • Little Six, Inc, MN • Mark Twain Bancshares • Midwest Security • Olympic Financial • Tucson Federal Credit Union • United Healthcare Corporation Client List Food and Agriculture • GFI America • Michael Foods, Inc. Gamina /Entertainment/Hosoitality • Black Angus Steakhouse • Burke Williams Spa • Southwest Casino • Sportsman's Recipes • Win -River Casino Manufacturing • Andersen Corporation • Appleton Paper • BMC Industries Inc. • Computype • Cretex • Dahlberg, Inc. • Douglas Machine, Inc. • Dura Supreme • Federal Mogul Corporation • Lake Region Manufacturing Co. • LubeTech • Magnequench International, Inc. • Micro Dynamics • Mobile Mini • Prosthetic Laboratories • Tescom • Tioga, Inc • Valspar Corporation Pharmaceuticals • CIMA Labs • Collagen Corporation Retail and Wholesale Trade • Kohl's Department Stores • Marshall Field's • Northern Hydraulics, Inc. • Schneiderman's • Target Stores Transportation and Communication • Badlands Power Fuels, Inc • Frontier Communications • Matanuska Telephone Association, AK • Northwest Airlines • Southwestern Bell Telephone Company • Sprint