title
Selection of External Auditors for Gainesville Regional Utilities (NB)
explanation
Florida Statutes section 218.39 and Gainesville Code of Ordinances section 2-433 require the City Commission to employ an independent certified public accountant, not connected with the government of the City, to audit the accounts maintained and the financial statements prepared by the City for each fiscal year. The City's current contract for professional auditing services expires after completion of all reports associated with the financial audit for the fiscal year ending September 30, 2008.
On September 18, 2008, the City Commission authorized the issuance of a Request for Proposals (RFP) for professional auditing services utilizing the methodology and selection factors recommended by the Audit, Finance and Legislative Committee. As a result, an RFP was publicly issued and provided to interested firms on September 25, 2008. Since City finances are segmented into two major areas, General Government and Gainesville Regional Utilities (GRU), the RFP provided an opportunity for firms to submit a proposal for the General Government segment, the GRU segment and/or both segments combined.
On November 13, 2008, the City received four responses to the General Government segment and three responses to the GRU segment. Each proposal contained a technical qualifications proposal and a separately sealed price proposal. The proposals were evaluated in accordance with criteria set forth in the RFP by staff members of the City Auditor's Office and the respective Finance Departments. Proposals were assigned a composite score on technical and written criteria, excluding the price proposal. Purchasing staff then opened the fee proposals and assigned points to each proposal with higher points given to the lowest submitted fee proposal. Qualified local businesses received an additional five percent of the total evaluation points in accordance with the City's Local Preference Ordinance.
GRU SEGMENT
For the GRU segment, oral presentations/interviews were conducted on January 14, 2009 with the three firms that submitted proposals. Based on the evaluated technical qualifications, written proposals, oral presentations/interviews and fees related to each proposal, we request that the Committee recommend the City Commission approve the following ranking of the proposals received for external auditing services, GRU segment:
Firm Name - - - - - - - - - - - - - - - - - - - - Rank
Ernst and Young, LLP - - - - - - - - - - - - -1
Purvis, Gray and Company - - - - - - - - - -2
Crowe Horwath, LLP - - - - - - - - - - - - - 3
We also request that the Committee recommend the City Commission authorize the City Auditor to execute a professional services contract with the top-ranked firm for the GRU segment for a period of five years, beginning with the fiscal year 2009 audit, with an option to renew for an additional three years, subject to approval of the City Attorney as to form and legality. If, for any reason, an agreement with the first-ranked proposer cannot be reached, the City Auditor will initiate negotiations with the second-ranked firm, continuing through the rankings until an agreement is reached or all proposals are rejected.
GENERAL GOVERNMENT SEGMENT
The evaluation process for the General Government segment was completed in December 2008. On January 15, 2009, the City Commission approved the final ranking of firms and authorized the City Auditor to negotiate and execute a professional services contract with the top ranked firm of Davis, Monk and Company.
fiscal note
The first-ranked firm for the GRU segment, Ernst and Young, LLP, is the incumbent external auditor and has provided excellent service in prior years. Ernst and Young submitted a proposed first-year fee of $156,715, which represents a significant cost increase from the fiscal year 2008 fee of $100,700. During interviews, Ernst and Young indicated that their previous year fees had resulted in significant losses in recent years. One option to be considered in trying to mitigate this first-year increase will be requesting a lower initial fee than proposed with subsequent years increasing at a somewhat higher rate than in the previous contract for external auditing services.
Recommendation
The City Commission: 1) Approve the ranking of the proposals received for external auditing services, GRU segment; 2) authorize the City Auditor to negotiate and execute a professional services contract with the top-ranked firm for the GRU segment for a period of five years beginning with the fiscal year 2009 audit, with an option to renew for an additional three years, subject to approval of the City Attorney as to form and legality; and 3) refer to the Audit, Finance and Legislative Committee the City's current purchasing practice regarding the relative weighting of price and qualitative factors in evaluating proposals for contractual services.