Title
The Board of Water Commissioners for the City of Detroit, Water and Sewerage Department (“DWSD”) authorizes the Director to enter into Contract No. CS-1872, “Compliance Management Services” (“ CMS” ) with Baker Tilly (Consultant), at a cost not-to-exceed $1,699,265.00 for a duration of two (2) calendar years with an option for a one (1) year extension, and also authorizes the Director to take such other action as may be necessary to accomplish the intent of this vote.
Body
Agenda of December 20, 2017
Item No. 17-0187
Proposed Contract No. CS-1872
Project Length: Two (2) calendar years with an option for a one (1) year extension
Amount: Not-To-Exceed $1,699,265.00
TO: The Honorable
Board of Water Commissioners
City of Detroit, Michigan
FROM: Gary Brown, Director
Water and Sewerage Department
RE: Proposed DWSD Contract No. CS-1872
“Compliance Management Services”
MOTION
Upon recommendation of Debra Pospiech, Chief Administrative Officer (“CAO”), the BOWC for DWSD authorizes the Director to enter into Contract No. CS-1872, “ Compliance Management Services” with Baker Tilly (Consultant), at a cost not-to-exceed $1,699,265.00 for a duration of two (2) calendar years with an option for a one (1) year extension, and also authorizes the Director to take such other action as may be necessary to accomplish the intent of this vote.
JUSTIFICATION
The proposed contract is a major component of DWSD’s operational improvement strategy designed to:
Provide BOWC with enhanced oversight of DWSD compliance requirements and operational performance; Protect against fraud, waste, and abuse by enhancing DWSD’s internal capabilities to conduct and report on compliance-related matters;Train, recruit and retain in-house resources capable of performing the compliance services by the time of contract expiration;
Improve service levels provided to customers through enhanced transparency of performance to contracts, standards and third-party requirements;
Promote trust, honesty and integrity.
The scope of work for the CMS function envisions a programmatic approach to review, improve and create compliance and control standards within DWSD. The CMS function is intended to provide a systematic 360° compliance management solution that incorporates operational controls and best practices that will result in improved water and sewer services to DWSD customers in a manner that enhances fiscal responsibility. The CMS scope of services tackles many of the areas where DWSD needs improvement, with the primary objectives set to:
Improve accountability for public funds;
Improve standards and protocols;
Improve internal controls;
Improve adherence to funding and contract rules, regulations and protocols;
Anticipate potential issues that may have been previously unforeseen;
Improve ability to prioritize and resolve issues;
Establish risk mitigation practices.
BACKGROUND
Since the transaction with GLWA, DWSD executive management has made significant strides to improve its service and operations. One area that has not received as much focus is compliance and internal controls.
DWSD receives funding each year from various sources that include rate payers, bonds, governmental entities and donations. The various funding sources each require adherence to specific rules, regulations and protocols. In addition, DWSD holds a significant number of contracts that require a great deal of vendor management and adherence to the promises described in the corresponding legal documents. DWSD is hiring a qualified consultant under the proposed Contract CS-1872 to effectively develop a compliance management function to (a) address the need for improved compliance and internal controls, (b) mitigate high priority risks (c) develop standard operating procedures reflective of best practices industry-wide and (d) provide training for staff to utilize the best practices on a go-forward basis.
The Consultant will formally report to the BOWC on a monthly basis and will report to the CAO on a day-to-day basis.
As summarized below, the CMS will provide services which include, but are not limited to, the following deliverables: 
Risk/Gap Assessment and Assessment of Noncompliance: Perform an initial risk/gap assessment and risk profile for the various departments of DWSD to understand areas of compliance/noncompliance and establish risks basis associated with noncompliance on a prioritized basis.
Set Reporting Objectives: Define reporting objectives within various departments of DWSD using authoritative guidance from industry practice, such as COSO and the Green Book, as well as the Consultant’ s deep experience with utilities.
Develop SOPs & Process Flow Maps: P repare SOPs and process flow maps to document the entirety of the control environment within DWSD. The SOPs and process flow maps shall be based on risk-priority mapping that has been approved by DWSD. Accompanying materials will be developed and utilized to train staff on the use of these techniques. A formal implementation plan will be developed, presented and approved by the BOWC and CAO.
Implementation of Plan: Implement the approved plan and be accountable for new control functions operating until DWSD resources are trained and transitioned work.
Provide Training: Develop a formal training program to enhance the capabilities of DWSD staff to operate within the new control environment. The CMS will also produce a report which documents the new set of standards created in the above tasks.
Transition In-House: Train current staff, hire staff and transition the work back to DWSD staff before the end of the contract term.
Perform Continuous Evaluation: The CMS function shall perform audits of controls and communicate findings and remediation plans to the BOWC and CAO following the transition to drive continuous improvement into the process.
The CMS program is intended to benefit the customers of DWSD, as well as help the City of Detroit become more operationally effective by improving accountability for use of public funds.
PROCUREMENT METHOD
RFP Issuance:
This was an open competitive bid contract. The Request for Proposals (“RFP”) was advertised during the week of September 12, 2017, on the Michigan Inter-Governmental Trade Network (“MITN”) website. The following sets of data indicate the breadth of advertising the RFP:
Solicitations sent out via MITN - 334.
Firms that downloaded the RFP - 51.
Advertisements placed in periodicals and websites - 8, including the Construction Association of Michigan, McGraw Hill-Dodge, Booker T. Washington Business Association, Michigan Minority Business Development Council, Reed Construction Data, Construction News Corporation, Construction Data Company, and Builders Exchange of Michigan.
Bulletin Issuance:
Three (3) bulletins and one (1) communication were issued during the course of the RFP as follows:
Bulletin No. 1 Provided the Pre-proposal Conference reminder information.
Bulletin No. 2: Provided written responses to questions submitted in writing.
Bulletin No. 3: Provided notice that no further questions were submitted following the pre-proposal conference.
Communication No. 1: Provided the Pre-proposal Conference sign in sheet.
Project Estimate:
The original estimate for this contract was $3 million dollars.
Proposals Received:
On September 29, 2017, proposals were received from three (3) respondents, which, in total, consisted of five (5) team member firms.
Proposals Scored:
There were three members of the Evaluation Committee (“EC”). Each EC member independently reviewed and scored the proposals in accordance with DWSD’s policy. First, the evaluators scored on the technical proposal alone (they were not provided the pricing information until the technical evaluation was completed). Following the technical scoring, the EC was provided the pricing data for review and subsequent scoring. The EC’s final scoring by proponent are as follows:
- - - - -
* Pricing does not include “As-Needed Services” as only one company provided an estimate for this.
** Reflects revised price proposal following interview to increase staffing resources and corresponding hours from $0.9 million to $1.5 million.
The following table indicates the firm’s scores in each category:
Selection and Negotiation:
The EC recommended that Baker Tilly, the number one ranked proposer, be named as the consultant for negotiations on this contract. The initial award letter was issued on November 22, 2017 by DWSD Procurement. DWSD conducted negotiations from November 28, 2017 through November [XX], 2017 finalizing the scope of work, for a final contract price of $1,699,265.00.
Level of Detroit, Disadvantaged and MBE Content:
Twenty-five percent (25.0%) of the work performed under this contract will be performed by George Johnson and Company, as sub-consultant that is a Detroit Based Business and a certified MBE business.
PROJECT TASKS/COSTS:
The contract tasks and costs are as follows:
PROJECT MANAGEMENT STATUS:
A. Start Work Date: Targeted to start work the first week of January, provided BOWC and Financial Review Commission approval in December 2017.
B. Final Completion Date: Two (2) years following the Start Work Date, with option for a one (1) year extension
C. Total Contract Cost: [$1,699,265]
D. Projected Fiscal Year (FY) Contract Expenditures:
E. Proposed DWSD Contract No. CS-1872 is a Revenue funded project.
F. Contract account strings:
1. 5720-20169-484111-617900-900217-10790-0000-000000-01.01.01
2. 5820-20180-494111-617900-900217-15805-0000-000000-01.01.02
G. Contract Purchase Agreement Number: 6001054