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HomeMy WebLinkAbout27 - Professional Services Agreement—Civic Center Audit - CorrespondenceReceived After Agenda Printed November 24, 2015 Item No. 27 From: City Clerk's Office Sent: Monday, November 23, 2015 8:05 PM To: McDonald, Cristal; Mulvey, Jennifer; Rieff, Kim Subject: FW: Professional Services Agreement to perform Capital Program Audit- FOR THE PUBLIC RECORD - From: Denys Oberman Sent: Monday, November 23, 2015 8:05:00 PM (UTC -08:00) Pacific Time (US & Canada) To: Dixon, Diane; Dept - City Council Cc: City Clerk's Office Subject: Professional Services Agreement to perform Capital Program Audit- FOR THE PUBLIC RECORD - Mayor Pro tem Dixon and Members of the City Council: My comments, below, are in connection with the Professional Services Agreement that the City Council is to review at November 24th Council Session in connection with an Audit of the Civic Center project. • Consultant Scope and Selection Process- The City formed a Committee of Council members to spearhead the process compromised of three Council members, properly so. However, the process was turned over to the City Attorney,where a Conflict of Interest resides. The direction, selection and oversight process should remain directly in the hands of the Council Committee. • Audit Objectives and Framework for Consultant Scope - This Audit is of considerable importance to our City ----both relative to the proper disposition and closeout of the material Civic Center project, but as importantly, to assure that policy, controls and processes, and oversight are established that would prevent the repeat of practice in the future. There has been extensive public comment during the course and upon completion of the project which has already surface a number of the areas which should be included in the Audit There is no sound rationale for having a Phase I and Phase II in the Project Scope. The issues are fairly straightforward: ■ Inadequate initial articulation and subsequent monitoring, no management of Project Scope,runaway scope and change orders ■ Budget and schedule not detailed pursuant to the above, or adhered to throughout the course of the project ■ Evidence of any management of the Design process in connection with facility functionality and scale, life cycle cost not apparent ■ Value engineering not apparent, nor incorporation of readily available industry benchmark as relate to various elements of the project ■ Inadequate,perhaps nonexistent contractual direction and oversight, from the Owner to Rep/CM and CM through the Design/construction supply chain ■ No oversight of Contractors, or processes and practices to maintain accountability ■ Project milestones and discipline of progress and budget, percent complete relative to same not in place or managed to in practice ■ City policymakers and staff indifferent to runaway scope, fiscal accountability and therefore no adherence to whatever sound project planning and controls policy may have been resident at the City ■ When the City presented what it stated to be, "Closeout accounting", it was grossly inadequate as was pointed out in extensive public comment and testimony, and still, no follow up or accountability There does not need to be a Phase I and Phase II to accomplish Audit of the Civic Center project. A single Audit effort can readily be structured and accomplished. Should the findings be such that it is in the public interest to consider review of several additional projects to determine the extent to which there has been a Pattern of Practice vs. a "oneoff" , 2-3 additional projects can be audited. ( Marina Park comes to mind) • Consultant Selection ---The Principals of the firm selected have reasonable good, but by no means unique credentials. Was this a QBS(Qualifications based Selection) process? Who else was considered? --Why was it necessary/desirable to select a Consultant in Florida vs. California or other more proximate region? --Was the Consultant specifically evaluated to be free of Conflict, relative to the City, and CWDriver, other key vendors in the project supply chain? Consultant Agreement ---The presentation of the Agreement is vague--- symptomatic of the practices we need to change as a City? --Scope of Work and Work Plan /SOW not presented --Fee presented as Lump Sum(include professional fees and expenses). How much of the Fee is Travel/expense-related---given the Fla location, we would imagine that $50,000 or greater would be the case. What are the underlying Scope assumptions concerning the type and level of Professional effort ---list of staff and vendors to be interviewed, number of site visits,etc. It is of critical importance to the quality of the Audit that the practices be thoroughly vetted and evaluated through interview of City Manager, Dir Public Works, City Attorney,and substantially all staff who had a hand in the project, its administration, evaluation and supervision.lt may also be worthwhile to interview the Mayor, who played a leadership role in project direction and decisions. The same holds true of the delivery supply chain. The Consultant should also review the Public Comment associated with the project, in particular that associated with the staff's "Closeout Accounting" reporting. A Fee of $200,000 for the Work Plan should be more than sufficient. A travel budget with NTE should be established as part of the proposal, with the Professional Fee a Fixed Fee based on Scope. --There are merits to utilization of a specialized boutique firm for this type of forensic project. The most important would be to have Hands-on Principal involvement working the project. Is a firm Principal going to be actively engaged on the project? ---Terms & Conditions need to be fully stated and exhibited as part of the Agreement • Audit Oversight –The Consultant should report directly into the Committee comprised of members Dixon,Petros and Muldoon, and not through staff • Public Transparency and Accountability—The public should have access to all briefing and deliverables associated with the Audit. We appreciate the Council's consideration of these comments and recommendations . Denys Oberman Linda Klein cc: Citizens with interest in Fiscal responsibility and accountability,various NOTE -Please disregard Confidentiality Notice, below. Regards, Denys H. Oberman, CEO NOBE R MAN Strom F OBERMAN Strategy and Financial Advisors 2600 Michelson Drive, Suite 1700 Irvine, CA 92612 Tel (949) 476-0790 Cell (949) 230-5868 Fax (949) 752-8935 Email: dho(a)-obermanassociates.com CONFIDENTIALITY NOTICE: The documents accompanying this transmission contain confidential information belonging to the sender which is legally privileged. The information is intended only for the use of the individual or entity named above. If you are not the intended recipient, you are hereby notified that any disclosure, copying, distribution or the taking of any action in reliance on the contents of this telecopied information is strictly prohibited. If you have received this transmission in error, please notify us immediately at 9491476-0790 or the electronic address above, to arrange for the return of the document(s) to us. 3 Received After Agenda Printed November 24, 2015 - Item No. 27 From: Laura Curran <lauracurran@me.com> Sent: Monday, November 23, 2015 8:30 PM To: Brown, Leilani Subject: Fwd: Comments: Civic Center Audit - Professional Services Agreement To the City Clerk: Please include in the Public Record related to Item No. 27 on the 11/24/2015 Agenda. Thank you Laura Curran 714 351 7379 Begin forwarded message: From: Laura Curran <lauracurran(c�me.com> Subject: Fwd: Comments: Civic Center Audit - Professional Services Agreement Date: November 23, 2015 8:29:23 PM PST To: Dave Kiff <DKiff(a-)-newportbeachca.gov>, Aaron Harp <aharp ,newportbeachca.gov>, mtorres _newportbeachca.gov Cc: Leilani Brown <LBrown `y.newport-beach.ca.us> To the City Manager and Office of the City Attorney: The City Council is being asked to approve a Civic Center Audit with a cost of over $560,000. However, Professional Services Agreement (PSA) for the Civic Center Audit is problematic, and emblematic of the deficiencies in the City of Newport Beach's process for managing contracts and financial review. This PSA should be pulled from the 11/24/2015 Agenda and rewritten to comply with good management practices for professional agreements and project management. The PSA only includes Terms and Conditions and a minimal scope. Generally an RFQ is converted into a Proposal and Scope of Work which describes how the Project Team will comply with the RFQ, and the qualifications to complete the project. Once a vendor is selected, the Terms and Conditions are included in the PSA, and a Scope of Work is attached which can be updated as needed. Scope of Work Missing: The PSA does not include a Scope of Work which addresses these items identified as required in the RFQ. Without a complete Scope of Work, the 1 Project is poorly defined, and the City has no assurances that the project defined in the RFQ will be delivered. Frankly, the PSA and Civic Center Audit should not be entered into until the Scope of Work, and Project Controls, corresponding at a minimum to the RFQ, are in place. The primary issues are outlined here. Firm Selection 1. The Staff Report does not include a firm ranking or list of criteria used in selection, or scoring thereof, compared to the RFQ. 2. What criteria were used for the selection of R.W. Block? Why was this firm selected over other firms? Without this information, residents cannot ascertain why R.W. Block was chosen. 3. Conflicts of Interest: Has R.W. Block, or the assigned team members performed any work with C.W. Driver? 4. Why was a firm based in FL, with a Project Manager based in Boston, selected? Were no firms in California, a leader in institutional construction projects, considered? 5. How did the choice of a FL/Boston firm impact the cost, due to travel and ability to work collaboratively, due to time differences? Scope for Phase 1 and Phase 2 1. The Audit as proposed includes a Phase 1 and Phase 2. At $11 OK, Phase 1 similar in scope to the RFQ Amount of $100K. 2. Phase 2 provides a Not to Exceed amount of over $450K. Some items proposed for Phase 2 are essentially duplicates of items in Phase 1. The Staff Report does not discuss why a second phase might be required. Travel Expenses: The PSA in Exhibit B states that the Fee is `including all expenses'. Travel appears to be included in the $560K fee. What are estimated costs for travel? Without controls, the travel, based on the agreement, could cover the entire fee, with no $ allocated for Consultant work. z How many trips are anticipated, and what are the approval processes for travel? Is there a designated Which City Staff member has authority to approve travel? Project Methodology 1. How many interviews will be conducted with which team members from City of Newport Beach, CW Driver, and other providers? A range can be specified. 2. What is the R.W. Block's methodology for completing the project? More importantly, what are the firm's qualifications? 3. What are the Project controls? How will work completed be tracked? Who will R.W. Block report to on results? How will these be reported to the public? 4. Is work completed on a Time and Materials basis, or a project basis? Personnel — These items are called for in the RFQ, under Proposed Minimum Qualifications, but could not locate them in the PSA. 1. Statement of Qualifications for the Firm selected. 2. Statement of Qualifications for Audit Team which would be assigned to complete the work. 3. Resume for the Project Manager, Derek Hennessey In Linkedln Mr. Hennessey is listed as a Director at RW Block, based in Boston. Will he be working on the project? 4. Resumes for Work Team 5. List of Hourly Rates by Team Member (Specific Team Members) and by Title Conflict of Interest: The initial proposal for a City Civic Audit called for the Project to be reviewed by a Committee consisting of Mayor Pro Tem Diane Dixon, and Councilmembers Tony Petros and Kevin Muldoon. Per the Staff Report and the PSA, responsibility for selecting the Professional Services Firm appears to have transferred to the City Attorney's office. Since the City Attorney was involved in the original contracts for the Civic Center project, and for subsequent investigations of spending, e.g. expenses incurred by Steve Badum, there appears to be a conflict of interest. City Council needs to take responsibility for this project, and put an independent, non -interested party in place to review and report on the Project Audit. 3 Thank you for your attention to this serious matter. Laura Curran 714 351 7379 Received After Agenda Printed November 24, 2015 Item No. 27 Murillo, Jaime From: LISA NELLESEN <jlnellesen@sbcglobal.net> Sent: Tuesday, November 24, 2015 4:50 PM To: Murillo, Jaime Subject: Fw: No Low Income Housing in Newport Shores --- On Tue, 11/24/15, LISA NELLESEN <Ilnellesen@sbcglobal.net> wrote: > From: LISA NELLESEN <Ilnellesen@sbcglobal.net> > Subject: No Low Income Housing in Newport Shores > To: ddixon@newportbeachca.gov, tpetros@newportbeachca.gov, > dduffield@newportbeachca.gov, kmuldoon@newportbeachca.gov, > edselich@roadrunner.com, speotter@newportbeachca.gov, > keithcurryl@vahoo.com, imurrillo@newportbeachca.gov > Date: Tuesday, November 24, 2015, 4:46 PM City Representatives, > I have been a resident of Newport Beach since 1992, living in Newport > Shores for the past 19 years. Over the years the neighborhood has > slowly improved, but we still have some issues to overcome to bring > our neighborhood up to the standards of Newport Beach. In our area we > have the trailer park at 7402 West Coast Highway, the modular homes in > Newport Sands and the Pine Knot Motel. The trailer park currently > offers low income housing at $1000 per month. As you know, these > properties do not reflect the beautiful city we live in, they are > embarrassing. We also deal with the numerous dog owners who travel > from all over Orange County to bring their dogs to the River Jetties. > These dogs spray our houses and their owners leave full blue bags all > over our neighborhood because they don't want to take them in their > cars. > I am concerned that the Low Income Housing project will be one more > issue the residents of Newport Shores will have to deal with. We are > a family community with permanent residents and hundreds of children. > In the Shores there isn't the constant turnover cycle of residents and > weekly renters you will find on the Peninsula. If the Low Income > housing is approved and the developers are making their profits, I am > concerned it will turn into another bad situation leaving the > residents stuck with one more problem. > Please do not add to our problems, but help us clean up the issues we > are already facing in our neighborhood. > Thank you for your help, > Lisa Carrasco Murillo, Jaime From: Westberg, Rick <WestbergR@richmancapital.com> Sent: Tuesday, November 24, 2015 4:54 PM To: dixon@newportbeachca.gov; Petros, Tony; Duffield, Duffy; Muldoon, Kevin; Peotter, Scott; Selich, Edward; keithcurry1 @yahoo.com; Murillo, Jaime Subject: Good Project, maybe... Flawed Process, YES Esteemed City Council Members, I am a board member for the Newport Shores Community Association. I am a home owner in Newport Shores and operate my business in Cannery Village. I also happen to develop housing, including low income housing similar to what is currently being proposed for city funding. I have read the developer's proposal and have a material understanding of the business of affordable housing, operational aspects of supportive housing and development process. Aside from the merits of the proposed low income housing project, I must report to you on the lack of meaningful community engagement. The staff report neglects to include any mention of outreach or neighborhood communication and the developer's revised proposal includes a section summarizing their "outreach" on page 70 that embellishes to a point of simply being inaccurate. "Conversations with board members" were far from productive engagement -- in fact most board members including myself remain completely unaware of any such contact. Our board did not discuss the project in September or November, as portrayed. Until very recently there has been no indication of imminent action by city council. The referenced 11/12 outreach meeting at Cappy's was neither well noticed nor to my knowledge well attended; and I, like most nextdoor.com<http://nextdoor.com> members only became aware of the "2nd" community meeting at Cappy's the same day of the event. The very proposal dated 11/12 you're voting on tonight contains no responsiveness to any community concerns or requests drawn from this so called outreach. After knowledge of this development exploded over social media nearly 1 week ago members of our neighborhood were able to scramble, request and coordinate a last minute informational meeting with the developer last night, the night before the project is agendized for council approval. The belated nature of this dialogue has resulted in fear, emotion and mistrust. Frankly, having attended the emergency "outreach" meeting last night on the eve of approval, I saw misinformed neighbors deeply suspicious of the developers, the project and city authorities. Last night the developer did offer some solutions to community concerns. It is unclear how these hip shots will be documented or implemented. I would consider allowing the developer more time to rework their proposal so that council, the community and the developer share a common understanding -- albeit one everyone might not agree with. Rick Westberg Sent from my iPhone Received After Agenda Printed November 24, 2015 Item No. 27 From: Kiff, Dave Sent: Tuesday, November 24, 2015 1:57 PM To: City Clerk's Office Subject: FW: Audit of the Civic Center project For the record. From: George Lesley [mailto•GLeslevCc glesley cpa com] Sent: Tuesday, November 24, 2015 12:50 PM To: Dept - City Council Subject: Audit of the Civic Center project I am amazed that the Council is proposing to spend $613,000 of our money on auditing the Civic Center project. According to Mr. Kiff's newsletter, the $613,000 is to "complete" the audit ---thereby suggesting that the City has already spent money on this. Do you seriously believe that the City will receive upwards of $613,000 of value in this "audit"? I am very skeptical of the motives and of the value to the City....more specifically to the citizens of Newport Beach. I expect a very specific and detailed explanation inlay terms, of why the Council believes that an additional $613,000 ( or any amount for that matter) should be spent for this proposed audit/completion of this audit of the Civic Center. I have read previously that the City wanted to compare costs of the Civic Center project to similar project elsewhere. I doubt that a consultant can compare our Civic Center project to other projects because it included so many different elements. Furthermore, it seems highly unlikely the City of Newport Beach will be undertaking a project of this magnitude and complexity again in the future. At the beginning of the current fiscal year Mayor Selich itemized a number of improvements projects the City would like to undertake. But there were inadequate funds to undertake them all. I expect an explanation of which City projects will be cancelled in order to pay $617,000 for this proposed audit. See you tonight. George M. Lesley glesley@glesley-cpa.com *Please note my email address has changed to glesley@glesley-cpa.com Unless the above message ("this message") expressly provides that the statements contained therein ("the statement s") are intended to constitute written tax advice within the meaning of IRS Circular 230 §10.37, the sender intends by this message to communicate general information for discussion purposes only, and you should not, therefore, inter pret the statements to be written tax advice or rely on the statements for any purpose. The sender will conclude that you have understood and acknowledged this important cautionary notice unless you communicate to the sender any questions you may have in a direct electronic reply