BOARD MEETING DATE: June 6, 2008
AGENDA NO. 11

RECOMMENDED ACTIONS:

Authorize the Executive Officer to approve an extension to the Sperry Capital, Inc. contract, for investment consultant services, at a total cost not to exceed $48,000 for a three-year period.
 

Barry R. Wallerstein, D.Env.
Executive Officer

Background

In response to the Orange County bankruptcy, the AQMD conducted an extensive review of its treasury management operations and the risks and benefits associated with investing in a commingled county investment pool. The results of that review lead to the diversification of AQMD investments into non-commingled Specific Purpose Investments (US Agencies, CD’s, Commercial Paper) and into the Local Agency Investment Fund managed by the State Treasurer. This change required the development of an Investment Policy unique to the AQMD, the establishment of the Investment Oversight Committee, and the hiring of an Investment Consultant firm to assist in the administration, compliance, and investment of AQMD funds.

Sperry Capital, Inc. has provided investment consultant services to the AQMD since November 1996. Those services were obtained through the competitive bid process, and Sperry Capital was awarded contracts in November 1996; November 2001; and December 2005. In all three bid solicitations, Sperry Capital’s bid received a high technical score and was considerably less in cost (57%, 68% and 24% respectively) than the next lowest bidder.
 

Proposal

Sperry Capital has provided responsive, knowledgeable support to AQMD’s treasury management program. Sperry Capital has proposed to continue its services at a cost of $48,000 ($16,000/year average) for the three-year period (2009-2011), which represents a $2,217 or 4.8% increase over its current three-year contract amount of $45,783.

This proposal is for a one-time contract extension. Staff would resume the formal competitive bid process, following this proposed extension, to ensure future opportunities for interested qualified firms.

Sole Source Justification

Section VIII.B.2 of the Procurement Policy and Procedure identifies four major provisions under which a sole source award may be justified. This request for a sole source contract extension is made under provision B.2.a.: The cost of labor for preparation of the described documents exceeds the possible savings that could be derived from such detailed documents.

Continuing the services of Sperry Capital, during the current economic slowdown, would be in the best interest of the AQMD by: (1) retaining the services of a very experienced advisory firm; and (2) eliminating the cost associated with going out to bid for a new three-year service agreement. When the proposed increase of $2,217 is compared to the cost of going out to bid (approximately $3,500 in advertising), the staff time necessary to develop and evaluate a new RFP, and our past efforts to outreach to the small number of firms qualified to provide these services, the cost in advertising and staff time more than offsets the increase proposed for continuing these services.
 

Resources

The cost associated with investment consultant services is budgeted annually as part of the AQMD’s Treasury Management program.