HomeMy WebLinkAbout5182Contract Number: 5182
Vendor: FCS GROUP
Sub�ect. PSA - Excise Tax Review
Department: Finance
File Class: LEG 12-1
Begin Date: 10/1/2012
End Date:
Review Date:
Vault Date:
Comments •
PROFESSIONAL SERVICES AGREEMENT
The City of Bremerton ("City") and the FCS Group ("ConsultanY'), referred to
collectively as the "Parties," enter mto the followmg Agreement for professional services•
I. Scope: The Consultant agrees to perform the services more specifically descnbed m the
Scope of Work, attached hereto as Exhibrt A, wluch is incorporated by reference herem The
Scope of Work may be modified only pursuant to Section VII G of this Agreement If the Scope
of Work provides for unspecified addrtional services such services shall only be performed upon
the express written request of the City Consultant further represents that the services furnished
under this Agreement will be performed m accordance with generally accepted professional
practices m effect at the time such services are performed
II. Term: The City and the Consultant agree that work will begm on the tasks descnbed in
Exlubrt A immediately upon execuhon of this Agreement.
III. Compensation: In consideration of the services provided pursuant to this Agreement, the
City shall pay Consultant in an amount not to exceed $15,080 plus expenses as outlined in
Exhibrt A Consultant's charges and bills shall conform to the schedule as outlmed m Exlubit A
and mcorporated herem by this reference.
The Consultant shall submit regular billmg statements detailmg work performed and
amount charged on each task or portion thereof The descnptions shall conform to and fall
withm the categones set out m the Scope of Work andlor Fee Schedule Upon receipt of a
conformmg billing statement, the City shall promptly process payment PROVIDED,
HOWEVER, the City reserves the nght to pnontize scoped work and accelerate andlor delay
work tasks under the time frame set forth m Exlubit A
Consultant shall not perform work beyond the Scope of Work, nor shall be compensated
for such work, unless the Scope of Work or amount of compensation is modified pursuant to tlus
Agreement Consultant shall only be compensated for additional services if requested pursuant
to Section I and, if not otherwise provided, such compensation shall be m accordance with
Exhibrt A
If a billmg statement does not conform to this Agreement, the City may withhold
payment until the statement is brought mto comphance Such wrthholdmg does not reheve
Consultant of its obligations under this Agreement
IV. dtelationship of Parties: Consultant represents that it is slcilled m the matters addressed
in the Scope of Work and is performmg independent functions and responsibilities witlun its
field of expertise Consultant and its personnel are mdependent Consultants and not employees
of the City Consultant and its personnel have no authonty to bind the City or to control the
City's employees and other Consultants None of the benefits provided by the City to rts
employees, mcludmg, but not lunited to, compensation, msurance, and unemployment msurance
are available from the City to the employees, agents, representatives, or sub-Consultants of the
Bremerton/FCS Group
Page 1 of 6
Consultant Consultant will be solely and entirely responsible for its acts and for the acts of
Consultant's agents, employees, representatives and sub-Consultants dunng the performance of
this Agreement The City may, dunng the term of tlus Agreement, engage other independent
Consultants to perform the same or similar work �
As an independent Consultant, Consultant is responsible for its own management The
City's admmistrahon and enforcement of this Agreement shall not be deemed an exercise of
managenal control over Consultant or its personnel
As an mdependent Consultant, Consultant is responsible for payment of all taxes and
licensmg fees necessary to perform its obligations under this Agreement These taxes and fees
mclude but are not limited to State mdustnal msurance, Busmess & Occupation, State
professional licensing, and City busmess licensmg If any taxes or fees due the City have been
declared delmquent, the City may withhold the delinquent amount, plus any additional charges
ansmg from the delmquency, from any payments due Consultant
V. Indemnification: Consultant shall defend, mdemmfy and hold the City, its officers,
officials, employees, agents and volunteers harmless from any and all claims, m�unes, damages,
losses or suits, including all legal costs and attorney fees, ansing out of or m connection with the
performance of this Agreement, except for that portion of the mJunes and damages caused by the
City's sole negligence
The City's review or acceptance of any of the work when completed shall not be grounds
to avoid any of these covenants of mdemmfication
Should a court of competent Junsdiction determme that this Agreement is sub�ect to
RCW 4 24 115, then, m the event of liability for damages arismg out of bodily inJury to persons
or damages to property caused by or resulhng from the concurrent negligence of the Consultant
and the City, its officers, officials, employees, agents and volunteers, the Consultant's liability
hereunder shall be only to the extent of the Consultant's negligence
IT IS FURTHER SPECIFICALLY AND EXPRESSLY UNDERSTOOD THAT THE
INDEMNIFICATION PROVIDED HEREIN CONSTITUTES THE CONSULTANT'S
WAIVER OF IMMUNITY LTNDER INDUSTRIAL INSURANCE, TITLE 51 RCW, SOLELY
FOR THE PURPOSES OF THIS INDEMNIFICATION THE PARTIES FURTHER
ACKNOWLEDGE THAT THEY HAVE MUTUALLY NEGOTIATED THIS WAIVER
The provisions of this section shall survive the expiration or termmation of this Agreement
VI. Insurance: The Consultant shall procure and mamtain for the duration of the Agreement,
insurance agamst claims for m�unes to persons or damage to property which may arise from or in
connection with the performance of the work hereunder by the Consultant, rts agents,
representatives, employees, sub-consultants or sub-Consultants
Before beginrung work on the pro�ect descnbed m this Agreement, the Consultant shall
provide a Certificate of Insurance evidencmg•
Bremerton/FCS Group
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1. Automobile Liabilitv msurance with limits no less than $1,000,000 combmed smgle
limit per accident for bodily in�ury and property damage, and
2. Commercial General Liabilitv msurance wntten on an occurrence basis with limits no
less than $1,000,000 combined single limit per occurrence and general aggregate for
personal m�ury, bodily mJury and property damage Coverage shall include but not be
limited to blanket contractual, products/completed operahons/broad form property
damage, explosion, collapse and underground (XCLn if applicable, and employer's
habilrty, and
3. Excess Liabilitv msurance with limrts not less than 1,000,000 limit per occurrence and
aggregate
4. Professional Liabilitv msurance with limits no less than $1,000,000 limit per
occurrence/claim
Any payment of deductible or self msured retention shall be the sole responsibihty of the
Consultant
All required policies shall be provided on an"occurrence" basis except professional
habilrty msurance (if required), which may be provided on a"claims-made" basis
The Crty shall be named as an addihonal insured on the Commercial General Liability
insurance policy, as respects work performed by or on behalf of the Consultant and a copy of an
endorsement that is acceptable to the City, wluch names the City as an additional msured shall be
attached to the Certificate of Insurance The Crty reserves the nght to receive a certified copy of
all the required msurance policies and endorsements The City further reserves the nght to re�ect
any unacceptable policies and/or endorsements
The Consultant's Commercial General Liabihty insurance shall contam a clause statmg
that coverage shall apply separately to each msured agamst whom claim is made or surt is
brought, except with respects to the limits of the msurer's liability
The Consultant's msurance shall be pnmary insurance as respects the City and it shall be
an affirmative obligation upon Consultant to advise the City's Risk Manager by fax at (360) 473-
5161, or by certified mail, return receipt requested to City of Bremerton, attn Risk Management,
345 6 Street, Suite 600, Bremerton, WA 98337 withm two days of the cancellation, suspension
or substantive change of any insurance policy set out herein, and failure to do so shall be
construed to be a breach of this Agreement
The City also reserves its unqualified nght to require at any hme and for any reason,
proof of coverage in the form of a duplicate of the msurance policy with all endorsements as
evidence of coverage
VII. General Conditions:
A Reports and Information When requested by the Crty, Consultant shall furnish
penodic reports and documents on matters covered by this Agreement The reports and
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documents shall be furnished m the hme and form requested Consultant shall mamtam
accountmg records m accordance with Generally Accepted Accountmg Pnnciples (GAAP) to
substantiate all billed amounts
B_ Ownership and Use of Records and Documents Onginal documents, drawmgs,
designs and reports, mcludmg those in electromc format, developed under this Agreement are the
property of the City All wntten mformation submitted by the City to the Consultant m
connection with the services performed by the Consultant under this Agreement will be
safeguarded by the Consultant to at least the same extent as the Consultant safeguards like
information relatmg to its own busmess If such information is publicly available or is already in
Consultant's possession or known to rt, or is nghtfully obtamed by the Consultant from tlurd
parties, Consultant shall bear no responsibility for its disclosure, madvertent or otherwise
All data, documents, and files created by Consultant or provided to Consultant under this
Agreement may be stored at Consultant's office in Redmond, Waslungton Consultant shall
make such data, documents, and files available to the City upon its request at all reasonable hmes
for the purpose of editmg, modifymg, and updating as necessary unhl such time as the Crty is
capable of stonng such information m the City's offices Duplicate copies of tlus information
shall be provided to the City upon its request, and at reasonable cost
All documents, mcludmg all reports, drawmgs, specificahons, computer software or other
rtems prepared or furnished by Consultant pursuant to this Agreement, are mstruments of service
with respect to the proJect and are the property of the City Any reuse by the City for other than
the specific purpose mtended will be at the City's sole nsk
C Work Performed at Consultant's Risk Consultant shall take all precautions necessary
and shall be responsible for the safety of its employees, agents, and sub-consultants m the
performance of the work hereunder and shall uhlize all protection necessary for that purpose
All work shall be done at Consultant's own nsk, and Consultant shall be responsible for any loss
of or damage to matenals, tools, or other articles used or held for use m connection wrth the
work
D Place of Work The Consultant shall perform the work authonzed under tlus
Agreement at its offices m Redmond, Waslungton Meehngs with the City staff as descnbed m
Exhibit A, Scope of Work, shall take place at the City's offices, or at locations mutually agreed
upon by the parties
E Entire A�reement This Agreement and its Exhibits constitutes the entire agreement
between the Parties, and the Parties acknowledge that there are no other agreements, wntten or
oral, that have not been set forth m the text of tlus Agreement
F Severabilitv Should any part of tlus Agreement be found void, the balance of the
Agreement shall remam in full force and effect.
G Modification This Agreement may only be modified by wntten mstrument signed by
both Parties
Bremerton/FCS Group
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H Wntten Notices All commumcations regardmg tlus Agreement shall be sent to the
parties at the addresses listed below by registered or 1 st class mail, or by personal service, and
shall be deemed sufficiently given if sent to the addressee at the address stated in this Agreement
or such other address as may be hereafter specified in wnhng
City Address Consultant Address
Becky Hasart, Fmancial Services Director Angie Sanchez, FCS Group
City of Bremerton Redmond Town Center Suite D-215
345 6 Street, Suite 600 7525 166` Ave NE
Bremerton, WA 98337 Redmond, WA 98052
I Waiver Failure to enforce any provision of this Agreement shall not be deemed a
waiver of that provision Waiver of any nght or power ansmg out of tlus Agreement shall not be
deemed waiver of any other nght or power
J Non-Waiver of Breach The failure of the City to insist upon stnct performance of any
of the covenants and agreements contamed herein, or to exercise any option herem conferred in
one or more mstances shall not be construed to be a waiver or relmquishment of said covenants,
agreements or options, and the same shall be and remam m full force and effect
K Compliance with Laws Consultant shall comply with all applicable Federal, State,
and local laws m performing its obligations under this Agreement
L Choice of Law and Venue This Agreement shall be mterpreted according to the laws
of the State of Washmgton Any�udicial action to resolve disputes arismg out of tlus Agreement
shall be brought m Kitsap County Supenor Court
M Attornevs' Fees In the event of litigahon to enforce any of the terms or provisions
herem, each party shall pay all its own costs and attorney's fees
N Assignment Any assignment of this agreement by the Contractor wrthout the wntten
consent of the City shall be void
VIII. Nondiscrimination: Consultant shall not discrunmate in employment or services to the
public on the basis of race, color, national ongm, sex, religion, age, mantal status, disability, or
sexual onentation except for employment actions based on bona fide occupational qualification.
IX. Termination: This Agreement shall remam m force until completion and acceptance of
the services, terminated by wntten mstrument upon mutual consent, or by the City of Bremerton
for convenience This Agreement may be immediately terminated for cause by a Party if the
other Party substantially fails to perform through no fault of the termmatmg Party, and the non-
performmg Party does not commence correction of the failure of performance within thirty (30)
days of the terminatmg Party's sendmg nohce to the non-performmg Party. Any Notice by
Consultant shall mclude a report showmg the status of all items listed m the Scope of Work
current through the termmahon date
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If the City receives reimbursement by any federal, state, or other source for work descnbed m
Section I herein, and that fundmg is wrthdrawn, reduced or limited m any way, or the pro�ect is
cancelled or substantially reduced after the execution date of tlus Agreement and pnor to the
completion of the work, the City may summanly terminate tlus Agreement
A Excusable Delays The nght of Consultant to proceed shall not be termmated nor shall
Consultant be charged with liquidated damages for any delays m the complehon of the work due
to 1) any acts of the federal government m controlling, restnctmg, or requisitiomng matenals,
equipment, tools, or labor by reason of war, national defense, or other national emergency, 2)
any acts of the City, its consultants, or other public agencies causmg such delay, and 3) causes
not reasonably foreseeable by the parties at the time of the execution of the Agreement that are
beyond the control and wrthout the fault or negligence of the Consultant, mcludmg, but not
restncted to, acts of God, fires, floods, stnkes, or weather of unusual seventy PROVIDED,
HOWEVER, that the Consultant must promptly notify the City wrthin ten (10) calendar days m
wntmg of the cause of the delay If, on the basis of the facts and the terms of tlus Agreement,
the delay is properly excusable, the City shall, in wntmg, extend the time for completmg the
work for a penod of time commensurate with the penod of excusable delay
B Ri ng ts Upon Termmation In the event of termmation, the City shall pay for all
services performed by the Consultant to the effective date of termination, as descnbed on a final
mvoice submrtted to the City After termmation, the Crty may take possession of all records and
data witlun the Consultant's possession pertairung to this pro�ect wluch may be used by the City
without restnction Any such use not related to the pro�ect wluch Consultant was contracted to
perform shall be without liability or legal exposure to the Consultant
CITY OF BREMERTON
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Approved as to form
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Bremerton Crty Attorney
CONSULTANT
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Crty Clerk
Bremerton/FCS Group
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As part of the City of Bremerton's 2012 Utility Rate Study, FCS GROUP conducted a cursory review
of the uhlrties' state excise tax reportmg practices FCS GROUP idenhfied potential refinements to
the City's reportmg practices that could lower its tax obligations, and suggested that the City
undertake a more comprehensive review of its tax reporting practices This review would provide the
City with a basis for requestmg a refund for past payments from the Washington State Department of
Revenue, as well as guidance for reducing future tax payments Key scope elements of this
additional work mclude
Task 1: Data Collec#ion � Validation
� What: We will work with City staff to gather the data needed for the excise tax review
� How: We will prepare a data request outlinmg the informahon that we will need for the analysis
Upon receiving the requested data, we will review it and follow up with City staff to resolve
outstanding questions and obtam additional mformahon as needed
� Benefits: Our approach to data collection and review mtends to mmimize our demands on staff
time By interactmg with City staff through the process, we aim to ensure that we correctly
mterpret and apply mformation provided by the City
. . . -.. .: .....
� What: We will review the City's current methodology for calculatmg state excise taxes
� How: This task focuses on reviewing the City's supporting tax worksheets to determme potential
areas of overpayment and underpayment It will include a review of applicable legal references
withm the Revised Code of Washmgton (RCW) and Washington Admmistrahve Code (WAC),
and will focus on how revenues are categorized for tax reporting purposes
� Benefits: This review mtends to venfy that the City is takmg advantage of the vanous
deductions and exemptions allowed under the RCW and WAC, and may result in future tax
savmgs for the City It will also identify any areas of potential underpayment, which the City can
correct to mitigate future tax liabilities
Task 3 Allocatian af V�astewater Revenues
♦ What: Establishes a defensible basis for allocating wastewater utility revenues between
"collection" and "related business activities" for the purpose of tax reportmg
� How: This task will mclude an allocation of sewer assets between functions of service, and will
rely on City staff to identify "collection mams" and "transmission mams" based on the cunently
accepted de�mtion resultmg from a 2001 lawsuit filed by the City of Spokane against the
Washmgton State Department of Revenue It will also mclude an allocation of system costs
between funchonal categories as a proxy to revenues
� Benefits: This analytical exercise will help City staff allocate its wastewater revenue between
functional categories m a manner consistent with its costs The allocation of sewer mams
between collection and transmission is not a straightforward process, and from our mirial review
it appears that the City may only be splittmg wastewater revenues between collection and
treatment This task will provide the City with a basis for identifying the transmission
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component of sewer mains, which will likely lead to a more favorable split of revenues for tax
purposes
Task 4 Reconciliation of Past PaLrments
� What: FCS GROUP will estimate the cumulative overpayment or underpayment over the period
currently within the statute of limitations
� How: FCS GROUP will estimate the City's historical tax obligations based on mformation
collected for and developed m Tasks 2 and 3, and reconcile the City's actual tax payments
agamst those obligations to determme the net tax refund or liability (before interest and
penalties) This task will mclude development of supplementary schedules to support a refund
request to the Department of Revenue The statute of limitations would allow this reconciliation
to cover payments made smce January 1, 2008 if the refund request is �led by December 31,
2012 FCS GROUP will summarize the preliminary findings of the reconciliation and provide
supportmg detail to City staff
� Benefits: An estimate of the cumulative overpayment or underpayment can mform the City's
decision to pursue (or not pursue) a refund claim with the Department of Revenue To facilitate
an efficient audit process, the schedules developed as part of this task will be in a format
consistent with the format used by the Department of Revenue m its audits
Task 5• Audit Sup_porf
� What: FCS GROUP will work with the Department of Revenue on the City's behalf to move the
City's refund claim through the audit process
� How: Upon receivmg the City's approval, FCS GROUP will submrt the preliminary audrt
schedules to the Department of Revenue to of�cially begm the audit process FCS GROUP will
represent the City during the audit process, workmg with the auditor as needed to move the
City's claim through the audit process
� Benefits: FCS GROUP has represented over 20 cities and districts in audits with the Department
of Revenue, and has considerable experience worlang with the auditors By assummg this role,
we have been able to reduce the incremental demands on client staff that result from such audits
. . �. ��» � s' •.
� What: FCS GROUP will prepare a techmcal memorandum documenhng study methodology,
�ndings, and recommendations
� Benefits: This memorandum would provide the City wrth supportmg documentation for rts
excise tax reporting, and guide City staff in future updates
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Bas�c Elements
Task 1— Data Collechon & Val�dat�on
Task 2— Review of Tax Reportmg Methodology
Task 3— Allocat�on of Wastewater Revenues
Task 4— Reconcil�at�on of Past Payments
Task 5 — Audd Support
Task 6 — Documentation
2 Hourly Bdbng Rates y'
Labor Hours Bv Coiisultant
Pnncipal Pro�ect Consultant
0
0
0
0
0
4
4
� § 5200 , <"
2 $280
8 $1,120
24 $3,360
20 $2,800
40 $5,600
8 $1,920
102 $15,08(
$140 y ,` ,