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BOARD MEETING DATE: September 11, 1998 AGENDA NO. 6

PROPOSAL:

Execute Contract for Biennial Audit of Motor Vehicle Registration Revenues for Fiscal Years 1995-96 and 1996-97

SYNOPSIS:

Health and Safety Code Section 44244.1 requires any agency receiving fee revenues to be subject to an audit of each program or project funded at least once every two years. On July 10, 1998 the Board approved the release of an RFP to select an auditor to perform the biennial audit for FYs 1995-96 and 96-97. An evaluation panel of representatives from county and state agencies, local governments, and AQMD Finance staff evaluated the proposals. Staff recommends that the Board execute a contract with the firm of Simpson & Simpson. Local Governments, the MSRC, and AQMD will pay for the cost of their own audits in the amount of $63,400, $10,000, and $2,500 respectively.

COMMITTEE:

Administrative, August 28, 1998, Recommended for Approval

RECOMMENDED ACTION:

Authorize the Chairman to execute a contract with Simpson & Simpson for performance of the biennial audit of Motor Vehicle Registration revenues for FYs 1995-96 and 1996-97 at a total cost not to exceed $75,900.

Barry R. Wallerstein, D.Env.
Acting Executive Officer

Background

AB 2766 was chaptered into law as Health and Safety Code Sections 44220-44247, which were enacted to authorize air pollution control districts to impose fees on motor vehicles. These fees are to be expended specifically for the purpose of mobile source air pollution reduction measures pursuant to the California Clean Air Act of 1988 or the AQMD’s AQMP pursuant to Article 5 of Chapter 5.5 of Part 3 of the Health and Safety Code. Health and Safety Code, Section 44244.1(a) requirements state that any agency receiving fee revenues shall at least once every two years, be subject to an audit of each program or project funded. The audit is to be conducted by an independent auditor selected by the AQMD in accordance with Division 2 (commencing with Section 1100) of the Public Contract Code. This is the third biennial audit of these fee revenues and covers FYs 1995-96 and 1996-97.

Proposal

On July 10, 1998, the Board approved an RFP to conduct the biennial audit of recipients of AB 2766 fee revenues. The audit will cover recipients in all three segments of the AB 2766 fee distribution to determine whether the fee revenues collected in FY 1995-96 and 1996-97 were spent on the reduction of pollution from motor vehicles as described above. The primary purpose of the audit is to set forth an opinion regarding the propriety of the expenditures incurred, not the degree of efficacy in reducing air pollution.

Outreach

In accordance with the AQMD’s consulting and contracting policies, a public notice advertising the RFP and inviting bids was published in the following publications:

Additionally, potential bidders were notified from the Los Angeles County MTA and Cal Trans Directories of Certified Minority, Women, Disadvantaged and Disabled Veterans Business Enterprises; the Inland Area Opportunity Pages Ethnic/Women Business & Professional Directory; AQMD’s own electronic listing of certified minority vendors; and AQMD Purchasing’s mailing list. Copies of the RFP were mailed to the Black and Latino Legislative Caucuses and various minority chambers of commerce and business associations; AQMD Finance’s mailing list and placed on the Internet at AQMD’s Web site [http://www.aqmd.gov, "Business and Job Opportunities" icon] and AQMD’s 24-hour telephone message line for bidders (909) 396-2724.

Bid Evaluation

Five Proposals were received in response to the RFP by the submittal deadline of 1:00 p.m. on August 11, 1998. Proposals were evaluated in two steps based on the bidder’s ability to perform the services specified in the RFP. Proposals were first evaluated using technical criteria, which included technical expertise of the firm, experience of the proposed team in conducting compliance audits involving environmental laws and regulations, project management and technical approach. Step 2 of the evaluation process required an evaluation of the technically qualified proposals using cost and DVBE designation.

Of the five proposals evaluated, three earned scores of 70 points or higher and proceeded to Step 2 for final evaluation. The evaluation results for the bidders are summarized below:

*Bid Amount was for $110,475 minus a discount of $34,575 for a total amount of $75,900

The panel recommended awarding the contract to the firm of Thompson, Cobb, Bazilio & Associates ranked second in the composite score as it represents the best value in technical skills and cost. However, at its August 28, 1998 meeting, the Administrative Committee recommended, based on input and recommendation of AQMD staff, awarding the contract to the lowest cost bid submitted by Simpson & Simpson. Simpson & Simpson performed to an acceptable level on a previous similar contract for AQMD and submitted a substantially lower bid than other proposers. The amount of the contract shall not exceed $75,900.

Panel Composition

Proposals were evaluated and scored by a five-member evaluation panel, consisting of three members representing local and county governments, the Air Resources Board representative on the Mobile Source Air Pollution Reduction Review Committee (MSRC), and one financial analyst from the AQMD. Four panel members are Caucasian, and one is Asian Indian. Of these, two panelists are male and three are female.

Resource Impacts:

The total audit costs including out-of-pocket expenses will be borne by the entities being audited as follows:

• The cost of the audit of the AQMD's portion of motor vehicle registration revenues is $2,500. Sufficient funds are budgeted in FY 1998-99 budget in Finance to cover this cost;

• The cost of the audit of ten projects, The Regional Transit Database Information Exchange, the Zero Emission Vehicle Program, and the Mobile Source Air Pollution Reduction Trust Fund is $10,000 and shall be deducted from the FY 1998-99 revenues subvened to the Mobile Source Air Pollution Reduction Review Fund; and

• The total cost of the audit of local governments is up to a maximum of $63,400. This cost will be borne by the entities being audited in the manner set forth in the audit program guidelines and will be deducted from quarterly fee revenues prior to distribution.

Audit program guidelines for local government recipients of fee revenues under Health and Safety Code Sections 44220-247 were prepared by the AQMD with input from the Technical Advisory Committee Audit Subcommittee of the IAIC, representatives of the Finance Committee of the League of Cities and with CPA firms whose clients include local governments. These audit guidelines were approved by the IAIC, MSRC and by your Board on December 4, 1992 and further revised and approved in November 1994.

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