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HomeMy WebLinkAbout11-12-2015 Administration Committee Agenda Orange County Sanitation District Thursday, November 12, 2015 Regular Meeting of the F' 5:30 P.M. ADMINISTRATION Administration Building COMMITTEE Board Room 10844 Ellis Avenue Fountain Valley, CA 714 593-7433 AGENDA PLEDGE OF ALLEGIANCE: DECLARATION OF QUORUM: PUBLIC COMMENTS: If you wish to address the Board of Directors on any item, please complete a Speaker's Form (located at the table outside of the Board Room) and submit it to the Clerk of the Board or notify the Clerk of the Board the item number on which you want to speak. Speakers will be recognized by the Chairman and are requested to limit comments to three minutes. REPORTS: The Committee Chair and the General Manager may present verbal reports on miscellaneous matters of general interest to the Committee Members. These reports are for information only and require no action by the Committee. REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES: CONSENT CALENDAR: The Consent Calendar Items are considered to be routine and will be enacted, by the Committee, after one motion, without discussion. Any items withdrawn from the Consent Calendar for separate discussion will be conserved in the regular order of business. 1. APPROVAL OF MINUTES (Clerk of the Board) RECOMMENDATION: Approve Minutes of the October 14, 2015, Administration Committee Meeting. 11/1 W15 Administration Committee Agenda Page 1 of 4 2. VAX EMULATOR FOR PROCESS CONTROL SYSTEM, MODERNIZATION & SECURITY IMPROVEMENTS PROJECT (Lorenzo Tyner) RECOMMENDATION: Recommend to the Board of Directors to: A. Authorize a Purchase Order Contract with Quayle Consulting, Inc. for the procurement of Charon-VAX permanent licenses and maintenance in the amount of$338,401; and B. Approve a contingency of 10% ($33,840). 3. MICROSOFT ENTERPRISE LICENSE AGREEMENT (ELA) FOR MICROSOFT ENTERPRISE SOFTWARE LICENSES (Lorenzo Tyner) RECOMMENDATION: Recommend to the Board of Directors to: A. Authorize a Purchase Order with a three-year contract to purchase Microsoft Enterprise licenses under the Microsoft ELA in accordance with Microsoft Volume Enterprise Enrollment — for State and local government, Riverside County Master Licensing Agreement 01E73134, payable annually and with contract expiration date of December 31, 2018 for a total amount not to exceed $874,556.22; and B. Approve a contingency of 15% ($131,183.43). 4. ENTERPRISE INFORMATION MANAGEMENT (EIM) STAFFING SUPPORT (Lorenzo Tyner) RECOMMENDATION: Recommend to the Board of Directors to: A. Approve a Service Contract with Project Partners, Inc. for Enterprise Information Management On-Call Staffing, Specification No. 5-2015-72513D, for a period of January 1, 2016 through December 31, 2016, for a total annual amount not to exceed $121,800 with four one-year renewal options; and B. Approve a contingency of 20% ($24,360). 1111 W15 Administration Committee Agenda Page 2 of 4 5. REPROGRAPHICS AND RELATED SERVICES (Lorenzo Tyner) RECOMMENDATION: Recommend to the Board of Directors to: A. Authorize a Purchase Order Contract with ARC Document Solutions, LLC for reprographics services per County of Orange Master Contract #RCA MA-017-16010366, for one 3-year period (11/04/15 — 11/03/18) for an aggregate amount not to exceed $200,000 per year; and B. Approve the option of two additional one-year renewals for an amount not to exceed $200,000 per year. 6. CONSOLIDATED FINANCIAL REPORT FOR THE FIRST QUARTER ENDED SEPTEMBER 30, 2015 (Lorenzo Tyner) RECOMMENDATION: Recommend to the Board of Directors to: Receive and file Orange County Sanitation District First Quarter Financial Report for the period ended September 30, 2015. NON-CONSENT CALENDAR: 7. ORANGE COUNTY SANITATION DISTRICT COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR) FOR THE YEAR END JUNE 30, 2015. (Lorenzo Tyner) RECOMMENDATION: Recommend to the Board of Directors to: Receive and file the Sanitation District's Comprehensive Annual Financial Report for the year ended June 30, 2015, prepared by staff and audited by McGladrey, Certified Public Accountants, along with the following reports prepared by McGladrey: A. Report to the Administration Committee; and B. Report on Internal Controls; and C. Independent Accountants' Report on Agreed-Upon Procedures Applied to Appropriations Limit Worksheets. 8. OWNER CONTROLLED INSURANCE PROGRAM EXTENSION (Celia Chandler) RECOMMENDATION: Recommend to the Board of Directors to: Approve the purchase of a multi-year extension of the Owner Controlled Insurance Program at a total cost of$725,612 for five policies covering three layers of liability coverage, workers compensation coverage, and pollution coverage, through December 31, 2017. 1111 W15 Administration Committee Agenda Page 3 of 4 INFORMATION ITEMS: 9. STORM WATER CAPTURE (Bob Ghirelli) Presentation by Adam Hutchinson, Recharge Planning Managerat Orange County Water District. CLOSED SESSION: None. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: ADJOURNMENT: The next Administration Committee meeting is scheduled for Wednesday, December 9, 2015 at 5:30 p.m. Accommodations for the Disabled: Meeting Rooms are wheelchair accessible. If you require any special disability related accommodations, please contact the Orange County Sanitation District Clerk of the Board's office at (714)593-7433 at least 72 hours prior to the scheduled meeting. Requests must specify the nature of the disability and the type of accommodation requested. Agenda Posting: In accordance with the requirements of California Government Code Section 54954.2,this agenda has been posted outside the main gate of the Sanitation District's Administration Building located at 10844 Ellis Avenue, Fountain Valley, California, not less than 72 hours prior to the meeting date and time above. All public records relating to each agenda item,including any public records distributed less than 72 hours prior to the meeting to all,or majority of the Board of Directors,are available for public inspection in the office of the Clerk of the Board. Agenda Description: The agenda provides a brief general description of each item of business to be considered or discussed. The recommended action does not indicate what action will be taken. The Board of Directors may take any action which is deemed appropriate. NOTICE TO DIRECTORS: To place items on the agenda for the Committee Meeting, items must be submitted to the Clerk of the Board 14 days before the meeting. Kelly A.Lore Clerk of the Board (714)593-7433 klore(docsd.com For any questions on the agenda, Committee members may contact staff at: General Manager James Herberg (714)593-7300 iherbero(rpocsd.com Assistant General Manager Bob Ghirelli (714)593-7400 rohirelli6ocsd.com Director of Finance and Lorenzo Tyner (714)593-7550 Itvner(rpomd.com Administrative Services Director of Human Resources Celia Chandler 714 593-7202 cchandler omd.com 11/12J15 Administration Committee Agenda Page 4 of 4 ITEM NO. 1 MINUTES OF THE ADMINISTRATION COMMITTEE Orange County Sanitation District Wednesday, October 14, 2015, at 5:30 P.M. A regular meeting of the Administration Committee of the Orange County Sanitation District was called to order by Committee Chair Curry on October 14, 2015, at 5:30 p.m., in the Administration Building of the Orange County Sanitation District. Board Vice-Chair Sebourn led the Flag Salute. A quorum was declared present, as follows: COMMITTEE MEMBERS PRESENT: STAFF PRESENT: Keith Curry, Chair Jim Herberg, General Manager Lucille Kring, Vice-Chair Bob Ghirelli, Assistant General Manager Steven Choi Lorenzo Tyner, Director of Finance Tyler Diep Rob Thompson, Director of Engineering James Ferryman Kelly Lore, Clerk of the Board Jim Katapodis Jennifer Cabral Peter Kim Jim Colston Greg Mills Alfred Garcia Glenn Parker Norbert Gaia John Nielsen, Board Chair Kathy Millea Greg Sebourn, Board Vice-Chair Sharon Yin COMMITTEE MEMBERS ABSENT: Teresa Smith Sal Tinajero OTHERS PRESENT: Brad Hogin, General Counsel PUBLIC COMMENTS: None. REPORT OF COMMITTEE CHAIR: Committee Chair Curry did not provide a report. REPORT OF GENERAL MANAGER: General Manager, Jim Herberg did not provide a report. 10/14/2015 Administration Committee Minutes Page 1 of REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES: Director of Finance and Administrative Services, Lorenzo Tyner did not provide a report. CONSENT CALENDAR: 1. APPROVAL OF MINUTES (Clerk of the Board) MOVED, SECONDED AND DULY CARRIED TO: Approve Minutes of the September 9, 2015, Administration Committee Meeting. AYES: Choi, Diep, Ferryman, Katapodis, Kim, Kring, Mills, Parker, and Sebourn NOES: None ABSTENTIONS: Curry ABSENT: Nielsen, T. Smith and Tinajero 2. COOPERATIVE PROCUREMENT WITH ADMIN MINNESOTA MATERIALS MANAGEMENT DIVISION MINNESOTA WSCA-NASPO MASTER AGREEMENT (Lorenzo Tyner) MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: Authorize purchases of information technology computer and peripheral equipment using the Admin Minnesota Department of Administration, Materials Management Division, Minnesota WSCA-NASPO Master Agreement number MNWNC-115 through the contract expiration date, March 31, 2017 for a total amount not to exceed $500,000, in accordance with Ordinance OCSD47, Section 2.03(B) Cooperative Purchases. AYES: Choi, Curry, Diep, Ferryman, Katapodis, Kim, Kring, Mills, Parker, and Seboum NOES: None ABSTENTIONS: None ABSENT: Nielsen, T. Smith and Tinajero 3. ELECTRONIC RECORDING MEMORANDUM OF UNDERSTANDING COUNTY OF ORANGE CLERK-RECORDER'S OFFICE (Bob Ghirelli) MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: A. Approve the Electronic Recording Memorandum of Understanding (MOU) between the County of Orange and Orange County Sanitation District for 10/14/2015 Administration Committee Minutes Page 2 of the use of the Secure Government to Government (G2G) Portal for a term of five (5) years; and B. Authorize the Clerk of the Board, or her designee, to transmit/record any and all required Orange County Sanitation District real property documents in an electronic format. AYES: Choi, Curry, Diep, Ferryman, Katapodis, Kim, Kring, Mills, Parker, and Seboum NOES: None ABSTENTIONS: None ABSENT: Nielsen, T. Smith and Tinajero 4. GENERAL MANAGER APPROVED PURCHASES (Lorenzo Tyner) MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: Receive and file District purchases made under the General Manager's authority for the period of July 1, 2015—September 30, 2015. AYES: Choi, Curry, Diep, Ferryman, Katapodis, Kim, Kring, Mills, Parker, and Seboum NOES: None ABSTENTIONS: None ABSENT: Nielsen, T. Smith and Tinajero NON-CONSENT CALENDAR: None. INFORMATION ITEMS: 5. BIOSOLIDS PROGRAM (Rob Thompson) Environmental Compliance Manager Jim Colston presented a PowerPoint and a video providing an overall description of the OCSD Biosolids Program; composting facilities and operations; and the history, management and production trends of biosolids. Mr. Colston responded to questions regarding: chemical additives to biosolids; heavy metals in sludge; EPA recycling rules; testing biosolids twice a month for metals; pharmacutical removal in liquid phase; choices of land application farming locations; volumes of solids produced and consumed at IRWD v. OCSD; possibilities of acquiring a land application farm or exporting to another country; crop yields; and classes of biosolids. 10/14/2015 Administration Committee Minutes Page 3 of4 Director Diep departed the meeting at 5:44 p.m. Board Chair Nielsen arrived at the meeting at 5:44 p.m. Engineering Manager, Kathy Millea completed the presentation with a Capital Improvement Update regarding biosolids handling facilities,the Biosolids Master Plan and new opportunities for generating products and more efficient technologies to generate higher quality biosolids. Both referenced a Biosolids display in the Board room, and had buckets of composted biosolids available for the Committee and public to sample. Discussion ensued regarding organic food and the possibility of adding food waste to the digesters, producing gas, that will turn into electricity. Mr. Herberg stated that OCSD has completed bench scale testing to possibly add food waste to the digesters when capacity allows in the future. CLOSED SESSION: None. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: Dr. Choi invited everyone to attend the U.S. Department of Energy Solar Decathlon 2015 at the Great Park in Irvine, October 15-18 from 11 a.m. to 7 p.m. ADJOURNMENT: Committee Chair Curry declared the meeting adjourned at 6:18 p.m. to the next regularly scheduled meeting of THURSDAY November 12, 2015 at 5:30 p.m. Submitted by: Kelly A. Lore Clerk of the Board 10/14/2015 Administration Committee Minutes Page 4 of 4 ADMINISTRATION COMMITTEE Meeting Date TOBE.Or .Dir. 11/12/15 11/18/15 AGENDA REPORT ItemNumber Item Number z Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: VAX EMULATOR FOR PROCESS CONTROL SYSTEM, MODERNIZATION & SECURITY IMPROVEMENTS PROJECT GENERAL MANAGER'S RECOMMENDATION A. Authorize a Purchase Order Contract with Quayle Consulting, Inc. for the procurement of Charon-VAX permanent licenses and maintenance in the amount not to exceed $338,401; and B. Approve a contingency of 10% ($33,840). SUMMARY The Operations and Maintenance Department utilizes Supervisory Control and Data Acquisition (SCADA) systems to provide real-time plant monitoring, automation, alarming and control of treatment processes. SCADA is a highly complex mission critical hardware and software system used to monitor and control the day-to-day operations of the treatment plants and outlying pump stations. Additional Charon VAX software licenses are needed to support the integration of the process control software that are being developed for CIP projects and for adding additional SCADA workstations for staff to better monitor the plants and treatment systems. The software licenses are exclusively distributed through Quale Consulting, Inc. Additional Charon VAX licenses will be procured to support projects and the existing SCADA systems as follows: • A pair of SCADA servers will be added to support the integration of the Sludge Dewatering and Odor Control project at Plant No. 1 (Job No. P1-101), currently in construction. • A pair of SCADA servers will be added to support the integration of a future project, the SCADA System and Network Upgrade project at Plant No. 2 (Job No. P2-107). • Additional SCADA proxy servers will be added to support additional workstations, for current and future projects, that will be added to make the SCADA systems more readily available to staff for better monitoring of the plant treatment processes and pump stations. Page 1 of 3 PRIOR COMMITTEE/BOARD ACTIONS In 2011 - Established the Charon-VAX emulator software product as Orange County Sanitation District's standard for VAX emulators. In 2011 - Awarded a contract to purchase Charon-VAX permanent licenses under Specification No. S-2011-504 for an amount not to exceed $292,217. ADDITIONAL INFORMATION The SCADA system that OCSD utilizes for automation and control of plant treatment processes and collection systems runs on specialized software. Previously, the SCADA software ran on obsolete DEC workstations and servers using the VAX/VMS operating system which were no longer produced; OCSD has addressed the hardware obsolescence issue in 2011 and replaced the obsolete DEC hardware servers and SCADA workstations with of-the-shelf servers and workstations with the use of the CHARON-VAX emulator software. The Charon VAX emulator software application enabled OCSD to preserve the existing SCADA application software and emulate the SCADA software on modern computer equipment. In February 2010, Operations and Maintenance commissioned a study to recommend a solution that will address SCADA server hardware obsolescence. The 'VAX Emulation Product Study" was performed by DLT&V Systems Engineering and recommended the Charon-VAX product. Based on this study, sole source procurements for software licenses were awarded through the CIP process to Quayle Consulting. The software was tested in the commissioning and start-up of the new Plant No. 2 Headworks Replacement Project (Job No. P2-66). The test was successful and additional licenses, servers and workstations were procured to replace the Plant No. 1, Plant No. 2 and Pump Station SCADA systems. Below is a summary of the major procurements of the Charon-VAX licenses in support of the SCADA systems: • Six licenses were procured to support the replacement of obsolete SCADA server hardware. • Two licenses were procured to support the treatment processes installed by the Plant No. 1 Activated Sludge Facility No. 2 project (Job No. P1-102). • Two licenses were procured to support the Solids Thickening and Processing Upgrades at Plant 2 (Job No. P2-89). • Two licenses were procured to support the Electrical SCADA systems added by the Power Monitoring Control system project (Job No. J-33-3). • Ten proxy server licenses were procured to support the replacement of approximately 100 obsolete SCADA workstations for the Plant No. 1, Plant No. 2 and Pump Station SCADA systems. Page 2 of 3 CEQA N/A BUDGET / PURCHASING ORDINANCE COMPLIANCE This request complies with authority levels of the Sanitation District's Purchasing Ordinance. The requested items have been budgeted as follows: • Budget Update FY 2015-16, Section A-20, Capital Equipment Budget detail under Information Technology • Budget Update FY 2015-16, Section A-10, under Project No. P1-101 • Budget Update FY 2015-16, Section A-9, under Project No. P2-107, future projects ATTACHMENT N/A Page 3 of 3 ADMINISTRATION COMMITTEE Meeting Date TOBE.Or .Dir. 11/12/15 11/18/15 AGENDA REPORT Item Item Number 3 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: MICROSOFT ENTERPRISE LICENSE AGREEMENT (ELA)for MICROSOFT ENTERPRISE SOFTWARE LICENSES GENERAL MANAGER'S RECOMMENDATION A. Authorize a Purchase Order with a three-year contract to purchase Microsoft Enterprise licenses under the Microsoft ELA in accordance with Microsoft Volume Enterprise Enrollment—for State and Local government, Riverside County Master Licensing Agreement 01 E73134, payable annually and with contract expiration date of December 31, 2018 for a total amount not to exceed $874,556.22; and B. Approve a contingency of 15% ($131,183.43). SUMMARY OCSD invests in technology to efficiently and economically support OCSD's mission and vision. Each year, plant design and operations become more complex due to changing needs as well as more stringent state and federal regulations and increased risk from security threats. These changes drive an increase in the use of technologies. OCSD's Information Technology division utilizes Microsoft products to run various systems of the plant. These products are under the Microsoft ELA, a volume licensing program for government, education, healthcare, and nonprofit organizations that offer flexible and affordable solutions tailored by organization size and purchasing preference while providing access to technology. Availing of the Microsoft ELA ensures that OCSD receives the best pricing on software purchases and subscriptions while remaining compliant with software license agreements and copyright law. Other benefits include access to the latest versions of software as they are released and centralized license management. The MS ELA includes Windows, MS Office, Server, database, and system management software. By bundling these packages, OCSD receives the lowest possible costs and benefits from a wide range of productivity and system management tools. Staff is requesting contingency of 15% to cover any additional Microsoft licensing during this three-year contract. Page 1 of 2 PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION OCSD is adding Disaster Recovery/Business Continuity and additional security software licensing to this agreement. The Master Agreement allows yearly additions to the base contract. In the event additional licensing is required during the term of this agreement, the requested contingency funds will be used. CEQA N/A BUDGET / PURCHASING ORDINANCE COMPLIANCE This request complies with authority levels of the Sanitation District's Purchasing Ordinance. The items purchased through the process are budgeted in the yearly Joint Operating Budget. ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: Insight MS EA Quote Request Page 2 of 2 Microsoft Enterprise Agreement Date 10/20/2015 ECS + G4 Step Up- Including Yr 3 TU +Visio& Project On Prem Issued Quantity Part# Description Unit Price Ext. Price Subscriptions 640 AAA-11984 EntCloudSuiteGovFromSA ShrdSvr ALNG SubsVL MVL PerUsr $249.96 $ 159,974.40 640 U9S-00019 O365GovE4 ShrdSvr ALNG SU MVL O365GovE3 PerUsr $21.48 $ 13 747.20 1 J51-1-00004 AzureMntryCmmtmntG ShrdSvr ALNG SubsVL MVL Commit 0 $ Provision Additonal Products $ 6 MX3-00117 VSEntwMSDN ALNG [SAI MVL $979.46 $ 5,876.76 2 77D-00111 VSProwMSDN ALNG [SAI MVL $280.50 $ 561.00 2 395-02504 Exch SvrEnt ALNG ISAI MVL $605.06 $ 1,210.12 6 312-02257 Exch SvrStd ALNG rSAJ MVL $105.67 $ 634.62 3 5HU-00216 Sf6Svr ALNG SA MVL $544.57 $ 1,633.71 3 H04-00268 SharePointSvr ALNG SAI MVL $1015.54 $ 3046.62 12 7JQ-00343 SQLSvrEntCore ALNG SA MVL 2Lic CoreLic $2,053.72 $ 24,644.64 4 7NQ-00292 SQLSvrStdCore ALNG ISAI MVL 21-ic CoreLic $535.58 $ 2,142.32 8 126-00196 V$TeamFndtn$vrCAL ALNG SA MVL UsrCAL $66.60 $ 532.80 150 6VC-01254 WlnRmtDskt SrvcsCAL ALNG [SAJ MVL UsrCAL $19.65 $ 2,947.50 43 YJD-01077 CISStd ALNG SA MVL 2Proc $250.42 $ 10,768.06 33 FUD-00938 CISDataCtr ALNG SA MVL 2Proc $1,214.78 $ 40,087.74 50 076-01912 Prjct ALNG SA MVL $97.57 $ 4878.50 5 H30-00238 Pr'ctPro ALNG SA MVL wl Pr'ctSvrCAL $162.62 $ 813.10 15 D87-01159 VisioPm ALNG [SAI MVL $83.47 $ 1,252.05 150 D86-01253 VisioStd ALNG SA MVL $43.18 $ 6,477.00 640 KF5-00002 Offce365 ATP per user $16.08 $ 10291.20 Product-total $291,518.74 Sub-Total Tax $- Shipping No Charge Total Annual Payment $291,518.74 3 Year Total $874 556.22 ADMINISTRATION COMMITTEE Meeting Date TOBE.Or .Dir. 11/12/15 11/18/15 AGENDA REPORT ItemNumber Item Number 4 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: ENTERPRISE INFORMATION MANAGEMENT (EIM) STAFFING SUPPORT GENERAL MANAGER'S RECOMMENDATION A. Authorize a Service Contract with Project Partners, Inc. for Enterprise Information Management On-Call Staffing, Specification No. S-2015-72513D, for a period of January 1, 2016 through December 31, 2016, for a total annual amount not to exceed $121,800 with four one-year renewal options; and B. Approve a contingency of 20% ($24,360). SUMMARY This procurement provides the use of skilled Geographic Information Systems (GIS) Technicians and CAD drafters to Enterprise Information Management's (EIM) CAD and GIS group. EIM group is a division of OCSD's Information Technology Department responsible for facility records management and maintenance. These records include all facility engineering drawings, baseline models in Computer Aided Drafting (CAD) and Geographic Information Systems (GIS) format, specifications, shop drawings, and other project-related documents and data. The EIM group is also responsible for providing technical support in GIS and CAD. Staff is requesting a contingency of 20% due to the number of unplanned work activities that are requested from EIM. One of the primary support functions of EIM is to support the CIP program. Staff resources are allocated based on the schedule of project submittals however, there are many other requests that cannot be planned for and may require extra human resources to complete including field discrepancies, phased CIPs, topographical survey of Treatment Plant No. 1, and sewer transfer support. PRIOR COMMITTEE/BOARD ACTIONS On December 21, 2011 a contract was awarded to Project Partners in the NTE amount of$211,000 with the option to renew for 3 additional one-year periods for on-call GIS and CAD services. Page 1 of 2 ADDITIONAL INFORMATION This procurement was competitively bid with 4 bid packages received. The responsive bids and the bid amounts are listed below. Purchase of Enterprise Information Management (EIM) Staffing Support Bid Date— October 8, 2015 @ 2:00 PM (Pacific) Specification No. S-2015-725BD Bidder Amount of Bid Project Partners, Inc. $121,800.00 International Star $122,400.00 Staff recommends Project Partners, Inc. be awarded a purchase order for providing staff support to EIM CAD and GIS efforts the lowest responsible and responsive bidder. CECIA N/A BUDGET/PURCHASING ORDINANCE COMPLIANCE This request complies with authority levels of the OCSD's Purchasing Ordinance. This item has been budgeted in Capital Improvement Project SP-15 (Geographic Information System). Project contingency funds will be used for this bid. Date of Approval Contract Amount Continaencv 11/18/2015 $121,800 $24,360 ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.com) with the complete agenda package: • Service Contract Page 2 of 2 SERVICES CONTRACT Enterprise Information Management(EIM)Staffing Support 5-2015.725BD THIS CONTRACT is made and entered into, to be effective the date fully executed below by and between ORANGE COUNTY SANITATION DISTRICT having a principal place of business at 10844 Ellis Avenue, Fountain Valley, California, 92708 (hereinafter referred to as "OCSD") and PROJECT PARTNERS, INC. having a principal place of business at 23195 La Cadena Drive, Suite 101, Laguna Hills, CA 92653 (hereinafter referred to as"SERVICE PROVIDER"),collectively referred to as the"Parties". WHEREAS, OCSD desires to retain the services of SERVICE PROVIDER for Enterprise Information(EIM) On-Call Staffing Services as stated in the Scope of Work (attached hereto and incorporated herein by reference as Exhibit"A")"Services"; and WHEREAS, SERVICE PROVIDER represents that it has expertise providing EIM On-Call Staffing services ("Services"). Based on SERVICE PROVIDER's expertise and experience, OCSD wishes to temporarily engage the Services of SERVICE PROVIDER; and WHEREAS, OCSD has chosen SERVICE PROVIDER to conduct Services in accordance with Ordinance No. OCSD-47; and WHEREAS, on November 12, 2015, Administration Committee of the Board of Directors of OCSD, by minute order, authorized execution of this CONTRACT between OCSD and SERVICE PROVIDER; and NOW THEREFORE, in consideration of the promises and mutual benefits exchanged between the Parties, it is mutually agreed as follows: 1. Engagement of SERVICE PROVIDER a. OCSD hereby engages SERVICE PROVIDER to provide Assigned Employees to perform Services and SERVICE PROVIDER accepts the engagement, and agrees to provide the Assigned Employees to perform Services upon the terms and conditions set forth herein. OCSD agrees that it is responsible for managing the work assigned to the Assigned Employees. Notwithstanding the foregoing, the Assigned Employees shall be employees of SERVICE PROVIDER,and SERVICE PROVIDER shall remain the legal employer of the Assigned Employees placed with OCSD for all purposes, including responsibility for (i) hiring,evaluating,rewarding,terminating or disciplining the Assigned Employees; (ii)paying all federal, state, and local labor and employment taxes; and (if)calculation of wages, and unemployment and workers compensation insurance. b. SERVICE PROVIDER, all its employees, officers, independent Service Providers, and/or agents shall only be entitled to the compensation provided for in this CONTRACT and shall not be eligible to receive any other benefits from OCSD. e: SERVICE PROVIDER shall be responsible for providing, at SERVICE PROVIDER's expense,worker's compensation or other insurance as well as all licenses and permits usual or necessary for conducting the Services hereunder. SERVICE PROVIDER hereby indemnifies OCSD for any claims, losses, costs, fees, liabilities, damages or penalties suffered by OCSD arising out of SERVICE PROVIDER's breach of this provision. 2. Assigned Employees a. Assigned Employees are defined as the person or persons employed by the SERVICE PROVIDER and temporarily assigned to OCSD to perform temporary Services as described under this CONTRACT. b. SERVICE PROVIDER shall be responsible for assigning employees as exempt or nonexempt per the Guidelines set by the Federal Government. Exempt employees will not be eligible for overtime nor will their pay be deducted for absences of less than one day. Orange County Sanitation District 1 of 8 Specification No. S-2015-725BD c. OCSD reserves the right to require Assigned Employees to sign an acknowledgement as to their understanding that they are employees of the SERVICE PROVIDER and not of OCSD and that they shall not be entitled to any benefits accorded to those individuals listed on OCSD'S payroll. 3. Work Hours SERVICE PROVIDER's assigned staff will be required to work on site at OCSD's facilities located in Fountain Valley, California. However, at time,fieldwork and/or presentations and meetings may be required at other OCSD facilities or at job site locations away from OCSD. Firm's assigned staff may work up to 8 to 10 hours per day, and up to 4 to 5 days per week. OCSD will only pay for the hours actually worked on site. OCSD does not pay travel time to or from work or time taken for lunch breaks. 4. SERVICE PROVIDER's Representations In the performance of the Services under this CONTRACT, SERVICE PROVIDER shall adhere to the highest fiduciary standards, ethical practices and standards of care and competence. SERVICE PROVIDER agrees to comply with all applicable Federal, State and local laws and regulations. 5. California Department of Industrial Relations(D/R)Rea/strafion and Record of Waves a. To the extent SERVICE PROVIDER's employees and/or SubService Providers who will perform Work during the Contract for which Prevailing Wage Determinations have been issued by the DIR and as more specifically defined under Labor Code Section 1720 at seq, SERVICE PROVIDER and SubService Providers shall comply with the registration requirements of Labor Code Section 1725.5. Pursuant to Labor Code Section 1771.4, the Work is subject to compliance monitoring and enforcement by the DIR. b. The SERVICE PROVIDER and SubService Providers shall maintain accurate payroll records and shall comply with all the provisions of Labor Code Section 1776, and shall submit payroll records to the Labor Commissioner pursuant to Labor Code 1771.4(a)(3). Penalties for non-compliance with the requirements of Section 1776 may be deducted from progress payments per Section 1776. c. Pursuant to Labor Code Section 1776, the SERVICE PROVIDER and SubService Providers shall furnish a copy of all certified payroll records to OCSD and/or general public upon request, provided the public request is made through OCSD, the Division of Apprenticeship Standards or the Division of Labor Enforcement of the Department of Industrial Relations. d. The SERVICE PROVIDER and SubService Provider shall comply with the job site notices posting requirements established by the Labor Commissioner per Title 8, California Code of Regulation Section 16461(e). 6. Billing Rates a. Billing Rates shall be in accordance with the hourly rate as stated in the Bid results(attached hereto and incorporated herein by reference as Exhibit"B".) For purposes of calculating hourly rates, salaries of SERVICE PROVIDER employees performing services under the CONTRACT shall be adjusted annually based on the November CPI of LA-Orange County Index of each year. This rate is from the U.S Department of Labor Statistic, Consumer Price Index — Los Angeles/Orange County Metropolitan Area. The annual salary figures used in calculating hourly rates shall not otherwise be adjusted, regardless of whether any SERVICE PROVIDER employee may have received a salary increase from SERVICE PROVIDER that exceeds the increase in Orange County Sanitation District 2 of 8 Specification No. S-2015-725BD CPI. The first hourly rate escalation will occur January 1, 2017. 7. Invoicing and Payment a. SERVICE PROVIDER shall submit invoices to OCSD'S IT Systems and Operations Manager on a monthly basis for Services performed. SERVICE PROVIDER shall support each invoice with time sheets, approved by OCSD, for Services performed. Invoices shall include the Purchase Order Number and shall be submitted for approval to OCSD at the above-referenced address. After OCSD has approved the invoice, payment will be due within thirty(30)days of receipt of the invoice. b. OCSD shall have fifteen (15) days after the date of invoice receipt to contest in good faith the amounts and items charged. If uncontested amounts remain unpaid for thirty(30)days or more, SERVICE PROVIDER may discontinue Services until such amounts are paid. c. OCSD is required to withhold 7% on all payments made to non-California resident service providers for professional services, rents, leases or royalties paid. Any funds withheld shall be remitted to the California Franchise Tax board on a quarterly basis. Service providers may be exempt from this requirement by their exemption status and submitting the California Form 590 to OCSD's Financial Management Division via regular mail or email to APStaff@ocsd.com. 8. CONTRACT Period a. Services to be provided by SERVICE PROVIDER under this CONTRACT shall commence on January 1, 2016 and run through December 31, 2016. b. OCSD reserves the right to renew this CONTRACT annually for up to four(4)additional one year terms upon approval and written CONTRACT of OCSD and SERVICE PROVIDER. OCSD makes no obligation to extend or renew. All renewals may be exercised through the Amendment or Purchase Order process. 9. Billing Reports SERVICE PROVIDER shall be required to submit a report each month to OCSD'S Manager of the Information Technology that includes Assigned Employee(s) name(s), project number(s), bill rate(s), pay rate(s)and hours worked. 10. Expenses OCSD shall reimburse SERVICE PROVIDER for reasonable out-of-pocket expenses incurred by Assigned Employees required and actually incurred in performing services, provided the SERVICE PROVIDER and/or Assigned Employees have obtained OCSD's prior written approval and submits supporting documentation satisfactory to OCSD. If Assigned Employees are required to travel, they must first obtain SERVICE PROVIDER and OCSD'S written consent.Time spent in local travel to and from home to OCSD'S plant sites shall not be considered time worked and shall not be compensated. 11. Audit Rights SERVICE PROVIDER agrees that,during the term of this CONTRACT and for a period of three(3) years after its termination, OCSD shall have access to and the right to examine any directly pertinent books, documents, and records of SERVICE PROVIDER relating to the invoices submitted by SERVICE PROVIDER pursuant to this CONTRACT. 12. Ownership of Intellectual Property a. SERVICE PROVIDER agrees that all designs, plans, reports, specifications, drawings, schematics,prototypes,models,inventions,and all other information and items made during Orange County Sanitation District 3 of 8 Specification No. S-2015-725BD the course of this CONTRACT and arising from the Services(hereinafter referred to as"New Developments") shall be and are assigned to OCSD as its sole and exclusive property. SERVICE PROVIDER agrees to promptly disclose to OCSD all such New Developments. Upon OCSD'S request,SERVICE PROVIDER agrees to assist OCSD,at OCSD'S expense, to obtain patents or copyrights for such New Developments, including the disclosure of all pertinent information and data with respect thereto, the execution of all applications, specifications, assignments, and all other instruments and papers which OCSD shall deem necessary to apply for and to assign or convey to OCSD, its successors and assigns, the sole and exclusive right, title and interest in such New Developments. SERVICE PROVIDER agrees to obtain or has obtained written assurances from its employees and Contract personnel of their CONTRACT to the terms hereof with regard to New Developments and Confidential Information. b. SERVICE PROVIDER warrants that SERVICE PROVIDER has good title to any New Developments,and the right to assign New Developments to OCSD free of any proprietary rights of any other party or any other encumbrance whatever. 13. Confidentiality and Non-Disclosure a. SERVICE PROVIDER acknowledges that in performing the Services hereunder, OCSD may have to disclose to SERVICE PROVIDER orally and in writing certain confidential information that OCSD considers proprietary and has developed at great expense and effort. As used herein,the term "Confidential Information"means any scientific or technical data, marketing, operating, financial, business or any other information, design, process, procedure, formula or improvement in written, printed, graphic, or electronically recorded materials, that is commercially valuable to OCSD and not generally known in the industry. SERVICE PROVIDER further acknowledges that the Services and any deliverables may incorporate Confidential Information. SERVICE PROVIDER agrees that all items of Confidential Information are proprietary to OCSD and shall remain the sole property of OCSD. b. SERVICE PROVIDER agrees as follows: I. To use the Confidential Information only for the purposes described herein;to not reproduce the Confidential Information; to hold in confidence and protect the confidential Information from dissemination to and use by anyone not a party to this CONTRACT; and to not use the Confidential Information to benefit itself or others. ii. To restrict access to the Confidential Information to personnel of SERVICE PROVIDER who (i) have a need to have such access and (it) have been advised of and have agreed in writing to treat such information in accordance with the terms of this CONTRACT. iii. To return all Confidential Information in SERVICE PROVIDER's possession upon termination of this CONTRACT or upon OCSD'S request,whichever occurs first. iv. To hold in confidence information and materials, if any,developed pursuant to the Services hereunder. c. The provisions of this Paragraph shall survive termination or expiration of this CONTRACT and shall continue for so long as the material remains confidential. 14. Safety OCSD's Safety and Accident Prevention Requirements are located in Appendix A to Exhibit"A". 15. Insurance SERVICE PROVIDER shall purchase and maintain, throughout the life of this CONTRACT, disability insurance as well as other insurance as defined in the Acknowledgement of Insurance Requirements (attached hereto and incorporated herein as Exhibit "C"). SERVICE PROVIDER shall not commence work under this CONTRACT until all required insurance is obtained in a form Orange County Sanitation District 4 of 8 Specification No. S-2015-725BD acceptable to OCSD. Failure to maintain required insurance coverage shall result in termination of this CONTRACT. 16. Indemnification SERVICE PROVIDER shall assume all responsibility for damages to property and/or injuries to persons, including accidental death, which may arise out of or be caused by SERVICE PROVIDER's services under this CONTRACT, and/or by its SubService Providers or by anyone directly or indirectly employed by SERVICE PROVIDER, and whether such damage or injury shall accrue or be discovered before or after the termination of the CONTRACT. Except as to the sole active negligence of or willful misconduct of OCSD,SERVICE PROVIDER shall indemnify, protect, defend and hold harmless OCSD, its elected and appointed officials, officers, agents and employees, from and against any and all claims, liabilities, damages or expenses of any nature, including attorneys' fees: (a) for injury to or death of any person or damage to property or interference with the use of property, arising out of or in connection with SERVICE PROVIDER's performance under the CONTRACT, and/or (b) on account of use of any copyrighted or uncopyrighted material, composition, or process, or any patented or unpatented invention, article or appliance, furnished or used under the CONTRACT, and/or (c) on account of any goods and services provided under this CONTRACT. This indemnification provision shall apply to any acts or omissions, willful misconduct, or negligent misconduct, whether active or passive, on the part of SERVICE PROVIDER of or anyone employed by or working under SERVICE PROVIDER. To the maximum extent permitted by law, SERVICE PROVIDER's duty to defend shall apply whether or not such claims, allegations, lawsuits, or proceedings have merit or are meritless, or which involve claims or allegations that any of the parties to be defended were actively, passively,or concurrently negligent, or which otherwise assert that the parties to be defended are responsible, in whole or in part, for any loss, damage, or injury. SERVICE PROVIDER agrees to provide this defense immediately upon written notice from OCSD, and with well qualified, adequately insured, and experienced legal counsel acceptable to OCSD. This section shall survive the expiration or early termination of the CONTRACT. To the fullest extent permitted by law, SERVICE PROVIDER shall indemnify, defend, protect and hold harmless OCSD and all of OCSD's officials, officers, directors, employees, SERVICE FROM DERs, and agents(collectively the"Indemnified Parties"),from any and against any and all claims, damages, liabilities, causes of action, suit, arbitration award, losses, judgments, fines, penalties, costs and expenses (including, without limitation, reasonable attorneys' fees, disbursements and court costs;individually,a"Claim";collectively, "Claims")which may arise from, result from, or are related to SERVICE PROVIDER's negligence, recklessness, or willful misconduct in performing the Services,or any breach or failure of SERVICE PROVIDER to perform its Services contained in this CONTRACT. Notwithstanding the foregoing, nothing herein shall be construed to require SERVICE PROVIDER to indemnify the Indemnified Parties from any Claim arising solely from: (A) the active negligence or willful misconduct of the Indemnified Parties;or (B) a natural disaster or other act of God, such as an earthquake. Exceptions (A) through (B) above shall not apply, and SERVICE PROVIDER shall, to the fullest extent permitted by law, indemnify the Indemnified Parties,from Claims arising from more than one cause if any such cause taken alone would otherwise result in the obligation to indemnify hereunder." 17. Smoking Smoking is only allowed in designated areas. Smoking is not allowed in any building, electrically classified area or process area where methane gas may be present. Lack of compliance with OCSD Smoking policy will be cause for removal of offending personnel from the site, termination of the CONTRACT,or both. Orange County Sanitation District 5 of 8 Specification No. S-2015-725BD is. Wamantees There are no warranties,expressed or implied, except as expressly set forth herein. 19. Conflict of Interest SERVICE PROVIDER affirms that to the best of its knowledge there exists no actual or potential conflict between SERVICE PROVIDER's families, business or financial interest or its Services under this CONTRACT, and in the event of change in either its private interests or Services under this CONTRACT, it will raise with OCSD any question regarding possible conflict of interest which may arise as a result of such change. 20. No Solicitation of Employees No referral fee will be paid to SERVICE PROVIDER for a referral which leads to the employment of the candidate with the OCSD if such employment commences more than ninety(90)days after the date stamp appearing on the candidate's resume submitted by or through SERVICE PROVIDER, unless written extension has been given by OCSD'S Human Resources Department. 21. Termination a. OCSD reserves the right to terminate this CONTRACT, in whole or in part, without cause, at anytime, by written notice to SERVICE PROVIDER. Upon receipt of a termination notice, SERVICE PROVIDER shall immediately discontinue all work under this CONTRACT (unless the notice directs otherwise). OCSD shall thereafter, within thirty (30) days, pay SERVICE PROVIDER for work performed (cost and fee) to the date of termination. SERVICE PROVIDER expressly waives any claim to receive anticipated profits to be earned during the uncompleted portion of the CONTRACT. Such notice of termination shall terminate this CONTRACT and release OCSD from any further fee,cost or claim hereunder by SERVICE PROVIDER other than for work performed to the date of termination. b. OCSD reserves the right to end an assignment with Assigned Employee(s), without or without cause, at any time by notifying SERVICE PROVIDER and SERVICE PROVIDER shall replace the assigned employee if requested by OCSD. In terminating an assignment with one or more Assigned Employee(s), OCSD shall not discriminate on the basis of race, religion, national origin, gender or other unlawful basis. In the event such termination is effected, the Assigned Employee shall immediately discontinue all work under this CONTRACT(unless the notice directs otherwise). c. OCSD may also immediately cancel for default of this CONTRACT in whole or in part by written notice to SERVICE PROVIDER: I. if SERVICE PROVIDER becomes insolvent orfiles a petition underthe Bankruptcy Act;or it. if SERVICE PROVIDER sells its business; or !it. if SERVICE PROVIDER breaches any of the terms of this CONTRACT; or iv. if such breach is capable of cure and if the SERVICE PROVIDER fails to cure the default within thirty(30)days. d. All OCSD property in the possession or control of SERVICE PROVIDER shall be returned by SERVICE PROVIDER to OCSD on demand, or at the termination of this CONTRACT, whichever occurs first. 22. Damage to OCSD's Property Any OCSD property damaged by SERVICE PROVIDER will be subject to repair or replacement by SERVICE PROVIDER at no cost to OCSD. Orange County Sanitation District 6 of 8 Specification No. S-2015-725BD 23. Drug-Free Workplace SERVICE PROVIDER and all its employees and sub-SERVICE PROVIDERS must adhere to the California Drug-Free Workplace Act, Sections 8350 through 8357. 24. Governing Law a. This CONTRACT shall be governed by and interpreted under the laws of the State of California and the Parties submit to jurisdiction in Orange County, in the event any action is brought in connection with this CONTRACT or the performance thereof. b. In the event of a dispute as to the construction or interpretation of this CONTRACT, or any rights or obligations hereunder, the Parties shall first attempt, in good faith, to resolve the dispute by mediation. The Parties shall mutually select a mediator to facilitate the resolution of the dispute. If the Parties are unable to agree on a mediator, the mediation shall be conducted in accordance with the Commercial Mediation Rules of the American Arbitration CONTRACT, through the alternate dispute resolution procedures of Judicial Arbitration through Mediation Services of Orange County("JAMS'),or any similar organization or entity conducting an alternate dispute resolution process. In the event the Parties are unable to timely resolve the dispute through mediation, the issues in dispute shall be submitted to arbitration pursuant to California Code of Civil Procedure, Part 3, Title 9, Sections 1280 at seq. For such purpose, an agreed arbitrator shall be selected, or in the absence of CONTRACT, each party shall select an arbitrator, and those two arbitrators shall select a third. Discovery may be conducted in connection with the arbitration proceeding pursuant to California Code of Civil Procedure Section 1283.05. The arbitrator, or three arbitrators acting as a board, shall take such evidence and make such investigation as deemed appropriate and shall render a written decision on the matter in question. The arbitrator shall decide each and every dispute in accordance with the laws of the State of California. The arbitrator's decision and award shall be subject to review for errors of fact or law in the Superior Court for the County of Orange, with a right of appeal from any judgment issued therein. 25. Modifications This CONTRACT may not be modified, changed or supplemented, nor may any obligations hereunder be waived or extensions of time for performance granted, except by written instrument signed by both Parties. 26. Assignment This CONTRACT and the rights, duties, and obligations hereunder may not be assigned by SERVICE PROVIDER without the prior written consent of OCSD. 27. Partial Invalidity Any provision of this CONTRACT which is found to be invalid or unenforceable shall be ineffective to the extent of such invalidity or unenforceability, and the invalidity or unenforceability of such provision shall not affect the validity or enforceability of the remaining provisions hereof. 28. Nonexclusive CONTRACT This CONTRACT is not exclusive to SERVICE PROVIDER. OCSD reserves the right to enter into similar or like CONTRACTS with other companies. OCSD also makes no guarantee of work to SERVICE PROVIDER. Orange County Sanitation District 7 of 8 Specification No. S-2015-725BD 29. Entire CONTRACT This CONTRACT constitutes the entire CONTRACT of the Parties and supersedes all prior written or oral and all contemporaneous oral CONTRACTS, understandings,and negotiations between the Parties with respect to the subject matter hereof. This CONTRACT is intended by the Parties as the final expression of their CONTRACT and may not be contradicted by evidence of any prior or contemporaneous CONTRACT. 30. Notices All notices under this CONTRACT must be in writing. Written notice shall be delivered by personal service or sent by registered or certified mail, postage prepaid, return receipt requested, or by any other overnight delivery service which delivers to the noticed destination and provides proof of delivery to the sender. Rejection or other refusal to accept or the inability to deliver because of changed addressed or which no notice was given as provided hereunder shall be deemed to be receipt of the notice, demand or request sent. All notices shall be effective when first received at the following addresses: OCSD: Natasha Dubrovski Principal Contracts Administrator Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, CA 92708 SERVICE PROVIDER: Kimo Look CEO Project Partners, Inc. 23195 La Cadena Drive Laguna Hills, CA 92653 IN WITNESS WHEREOF, the Parties have executed this CONTRACT effective as of the date first written above at Fountain Valley, Califomia. ORANGE COUNTY SANITATION DISTRICT Dated: By: Chair Board of Directors Dated: By Clerk of the Board Dated: By Contracts/Purchasing Manager Dated: By Print Name and Title IRS Employers I.D. Number Orange County Sanitation District 8 of 8 Specification No. S-2015-725BD ADMINISTRATION COMMITTEE Meeting Date TOBE.Of Dir. 11/12/15 11/18/15 AGENDA REPORT ItemNumber Item Number s Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: REPROGRAPHICS AND RELATED SERVICES GENERAL MANAGER'S RECOMMENDATION A. Authorize a Purchase Order Contract with ARC Document Solutions, LLC for reprographics services per County of Orange Master Contract #RCA MA-017- 16010366, for one 3-year period (11/04/15— 11/03/18)for an aggregate amount not to exceed $200,000 per year; and B. Approve the option of two additional one-year renewals for an amount not to exceed $200,000 per year. SUMMARY OCSD uses a reprographics fine for the reproduction of plans, scanning and indexing documents to be loaded into the engineering SharePoint site, and a filing and distribution system for the ordering and tracking of plans and specifications for bidding of projects. These tools have enabled OCSD to maintain an optimal bid process incorporating a set of agreed upon procedures and minimum requirements to ensure a smooth bid process. To effectively maintain a smooth bid process for upcoming projects, as well as maintaining reprographics and related services for documentation of construction phase records and engineering specifications, staff recommends that a new purchase order be established with ARC Document Solutions, LLC. Pricing is based on a competitively bid/negotiated Regional Cooperative Agreement (RCA) for Reprographic Services. This contract is available for use in accordance with the terms and conditions and scope of work set forth. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION N/A CEQA N/A Page 1 of 2 BUDGET / PURCHASING ORDINANCE COMPLIANCE This request complies with authority levels of the Sanitation District's Purchasing Ordinance. The items purchased through the process are budgeted in the yearly Joint Operating Budget. ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.com) with the complete agenda package: N/A Page 2 of 2 ADMINISTRATION COMMITTEE Meeting Date TOBE.Or .Dir. 11/12/15 11/18/15 AGENDA REPORT Item Item Number 6 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: CONSOLIDATED FINANCIAL REPORT FOR THE FIRST QUARTER ENDED SEPTEMBER 30, 2015 GENERAL MANAGER'S RECOMMENDATION Receive and file Orange County Sanitation District First Quarter Financial Report for the period ended September 30, 2015. SUMMARY Included in this consolidated report are the following quarterly financial reports for the period ended September 30, 2015: First Quarter Budget Review The Budget Review Summary provides the Directors, staff, and the general public with a comprehensive overview of the financial results of the Sanitation District through the first quarter ended September 30, 2015. • Quarterly Treasurer's Report This section reports on financial portfolio performance with respect to the Sanitation District's funds. Both Long-Term and Liquid Operating Monies Portfolios are summarized. A performance summary table can be found on page 2 of this section. The report also contains information on the U.S. and global economic outlook from the Sanitation District's investment manager, Chandler Asset Management. • Certificates of Participation Quarterly Report The report includes a summary of each outstanding debt issuance and a comparative chart illustrating the COP rate history. PRIOR COMMITTEE/BOARD ACTIONS N/A Page 1 of 3 ADDITIONAL INFORMATION The Quarterly treasurers report section of the Consolidated Quarterly Financial Report is being submitted in accordance with the District's investment policy that requires the report be submitted to the governing body following the end of each quarter and includes the following information: • Performance results in comparison with the 3-month treasury bill index for the liquid operating portfolio (and the Merrill Lynch Corp./Govt. 1-5 Year Bond index for the long term portfolio as identified in the investment policy and the Time- weighted total rate of return for the portfolio for the prior three months, twelve months, year to date, and since inception compared to the Benchmark returns for the same periods: Portfolio Performance Summary Quarter Ended September 30,2015 Liquid Operating Monies(%) Long-Term Operating Monies(%) Total Rate Total Rate of of Return Benchmark') Return Benchmark') 3 Months 0.06 0.01 0.52 0.68 6 Months 0.11 0.02 0.36 0.67 9 Months 0.18 0.02 1.18 1.84 12 Months 0.19 0.02 1.74 2.12 Since inception 30 Sept.95 2.84 2.61 4.71 4.42 • A listing of individual securities held at the end of each reporting period (See the detailed listings of each security contained within the report). • Cost and market values of the portfolios: Liquid Oper. Long-Term Cost $43.8 M $261.5 M MV $43.9 M $262.8 M • Modified duration of the portfolio compared to Benchmark: Liquid Oper. Long-Term B.M. 0.16 2.58 Port. 0.28 2.50 • Dollar change in value of the portfolio for a one-percent (1 %) change in interest rates: Liquid Oper.- $124,376 Long-Term- $6,553,148 • None of the portfolios are currently invested in reverse repurchase agreements. Page 2 of 3 • The percent of the Liquid Operating Monies portfolio maturing within 90 days: 54.0% • Average portfolio credit quality: AA+/Aa 1 • Percent of portfolio with credit ratings below "A" by any rating agency, and a description of such securities: Liquid Portfolio- no exceptions Long Term Portfolio- Percent of portfolio— 1.2% One security-AMRESCO Residential Securities 1999-1 maturing in 6/25/2029. Rated AA+ by S&P, but only BBB by Fitch Ratings. • All investments are in compliance with this policy and the California Government Code, except for the following Lehman Brother holdings that the District is pursuing collection through the bankruptcy court: Lehman Brothers Note-Defaulted $600,000 par value purchased 9/18/2008 Lehman Brothers Note-Defaulted $2,000,000 par value purchased 9/18/2008 Sufficient funds are available for OCSD to meet its operating expenditure requirements for the next six months. ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: • Consolidated Financial Reports for the First Quarter Ended September 30, 2015. NOTE: The Executive Summary from the Comprehensive Quarterly Financial Report for the first quarter ended September 30, 2015 is included in hard copy, the entire report is available on-line at the OCSD website(mn .ocsd.com) with the complete agenda package. Page 3 of 3 Executive Summary Consolidated Financial Reports For the First Quarter Ended September 30, 2015 Included in this consolidated report are the following quarterly financial reports for the period ended September 30, 2015: • First Quarter Budget Review: The Budget Review Summary provides the Directors, staff, and the general public with a comprehensive overview of the financial results of the Sanitation District through the first quarter ended September 30, 2015. Contained within this Budget Review is the budget-to-actual status of the Collections, Treatment and Disposal Operations, the Capital Improvement Program, the Self-Insurance Program, and Debt Service Outlays. Also included is a Capital Assets Schedule as of September 30, 2015. Various detail information can be found in this report. In summary: a) Most major expense categories are anticipated to be at or below budget. b) Total revenues are at 3.1 percent mainly due to the timing of property tax and sewer fee distribution from the County that occurs mostly in the second and fourth quarters. These two revenue sources make up 88.6 percent of the District's total budgeted revenue. Except for Service Fees, Permit Fees, and Property Taxes, all other major revenue sources are currently tracking close to or exceeding revenue estimates. Overall, total revenues are projected to approximate budget at year-end. More detailed information on District revenues is provided within Section 1 — Pages 3 through 5. c) Collection, Treatment and Disposal Costs: As indicated within the Budget Review Summary of this report, the net operating requirements through the first quarter of $34.0 million is currently tracking at 22.8 percent of the $149.3 million budget. In addition, net operating expenses have decreased $1.6 million or 4.5 percent in comparison with the same period last year. Overall, staff expects the total operating costs to remain at budget throughout the remainder of the year. More detailed information on District operating expenses is provided within Section 1- Pages 1 through 3. The total cost per million gallons is approximately $1,974.7 based on flows of 187.1 million gallons per day. This is $70.3 per million gallons, or 3.4 percent lower than the budgeted cost per million gallon per day. A further description of these costs and benchmarking with other agencies is contained within Section 1 — Pages 6 through 8. Page 1 2015-16 First Quarter Review d) The total projected capital outlay cash flow of the Capital Improvement Program (CIP) for FY 2015-16 has been revised to $139.8 million, or 76.8 percent of the board approved cash outlay of$181.9 million. The actual cash outlay spending through the first quarter is $32.0 million, or 17.6 percent of the total budgeted outlay. More detailed information on the CIP budget review can be found in Section 3. • Quarterly Treasurer's Report; This section reports on financial portfolio performance with respect to the Sanitation District's funds. Both Long-Term and Liquid Operating Monies Portfolios are summarized. A performance summary table can be found on page 2 of this section. The report also contains information on the national economic outlook from the Sanitation District's money manager, Chandler Asset Management (Chandler). Chandler reported that the Long-Term Portfolio returned 52 basis points over the quarter, underperforming the Bank of America Merrill Lynch 1-5 year AAA U.S. Corporate and Government Index by 16 basis points, while the Liquid Operating Monies Portfolio returned 6 basis over the quarter, outperforming its benchmark, the three-month Treasury Bill index return of 5 basis points. Chandler further notes that Nonfarm payrolls rose by 142,000 in September, below the consensus forecast of 201,000. Meanwhile, the PCE price index is still running well below the Fed's 2.0% target, at just 0.3% on a year-over-year basis in August. In their view, a rate hike is still possible before year-end, but depending on domestic and global economic data, as well as any potential financial market volatility fueled by a US debt ceiling debate over the next few months, it could be pushed out to 2016. Fed funds futures currently imply that the Fed could remain on hold until March or even June of next year. The Federal Open Market Committee (FOMC) left policy rates unchanged at its September meeting. The Committee cautioned that "recent global economic and financial developments may restrain economic activity."Overall,the Fed's September policy statement was dovish and the outlook for future monetary policy changes remains uncertain. US economic data has been mixed. Over the past three months, payrolls have increased by an average of 167,000 per month, compared to the trailing six-month average of 199,000. In September the unemployment rate was unchanged at 5.1%, but the participation rate edged down and wages were flat. Meanwhile, housing still appears to be a growing source of strength for the US economy. In addition, consumer confidence remains strong, which should bode well for fourth quarter holiday shopping. The manufacturing sector, on the other hand, remains under pressure, largely due to the strength of the US dollar. Second quarter GDP growth was revised upward to an annualized rate of 3.9% from the second estimate of 3.7%. Market participants currently expect annualized GDP growth of about 2.4% in the third quarter, and 2.7% growth in the fourth quarter. Interest rate volatility remains elevated due to continued uncertainty regarding the outlook for global economic growth and the timing of the first fed funds rate hike. Page 2 Executive Summary Yields on 2-year and 10-year Treasury notes declined in September, offsetting increases in August. Mixed US economic data, divergent central bank monetary policies, and concerns about weakening economic growth in China and other emerging markets have influenced interest rates. Economic Outlook The domestic and global economic outlook modestly deteriorated during the third quarter of 2015. On the domestic front the unemployment rate continued to contract and is currently at 5.1% however broader measures of unemployment, as well as the participation rate, remain at levels inconsistent with full employment. The pace of job growth also contracted with the three month moving average of nonfarm payrolls currently at 167k versus 231k at the end of the prior quarter. Second quarter GDP was revised higher to 3.9%, versus 0.6% reading in the first quarter, however the outlook for GDP growth over the balance of the year is tepid. The global economic backdrop remains challenging as the growth outlook in Europe, Japan, and China continues to underwhelm. Commodity prices remain weak placing further downward pressure on inflation metrics, complicating the messaging of the Federal Reserve on normalizing monetary policy. Chandler is forecasting market volatility to remain elevated through the balance of the year. The Federal Reserve will continue to be a contributor to investor angst as Fed communication on a desire to tighten monetary policy conflict with the Fed's dual mandate of full employment and stable prices. Even if the Federal Reserve is able to raise rates later this year or early in 2016, the overall increase in rates will be low and the pace very gradual given the divergence in developed market central bank policies. The recent dislocation in markets, with investment grade credit spreads widening, will likely present some compelling investment opportunities in the coming months. • Quarterly Certificates of Participation (COP) Report The report includes a summary of each outstanding debt issuance and a comparative chart illustrating the COP rate history. Page 3 2015-16 First Quarter Review This Page Intentionally Left Blank Page 4 ADMINISTRATION COMMITTEE Meeting Date TOBd.of Dir. 11/12/15 11/la/15 AGENDA REPORT em Number Iem Numbe Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: ORANGE COUNTY SANITATION DISTRICT COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR) FOR THE YEAR END JUNE 30, 2015. GENERAL MANAGER'S RECOMMENDATION Receive and file the Sanitation District's Comprehensive Annual Financial Report for the year ended June 30, 2015, prepared by staff and audited by McGladrey, Certified Public Accountants, along with the following reports prepared by McGladrey: A. Report to the Administration Committee; and B. Report on Internal Controls; and C. Independent Accountants' Report on Agreed-Upon Procedures Applied to Appropriations Limit Worksheets. SUMMARY The Sanitation District's independent auditors, McGladrey, have completed their examination of the Sanitation District's financial statements for the year ended June 30, 2015, and have issued an unmodified opinion. Each year, the Administration Committee reviews the results of the audit and the corresponding Auditor's report. During their audit, McGladrey, noted no matters involving the internal control over financial reporting and its operations that they consider to be material weakness. McGladrey will attend the meeting to respond to any questions of Directors. Staff has prepared the Comprehensive Annual Financial Report, including the audited financial statements. As the Sanitation District has consistently earned the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association (GFOA), this year's report will be submitted to GFOA for their review. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION N/A Page 1 of 2 ATTACHMENTS The following attechment(s)are included in hard copy,and may also be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package and attachments: • Report to the Administration Committee • Report on Internal Controls • Response to Recommendation from Auditor's Internal Control Report • Independent Accountants' Report on Agreed-Upon Procedures Applied to Appropriations Limit Worksheets • Comprehensive Annual Financial Report for the Year Ended June 30, 2015. (Separately bound document) Page 2 of 2 Orange County Sanitation District Report to the Administration Committee October 23, 2015 McGladrey Assurance-Tax•Consulting McGladrey LLP 18401 Von Kaonan,5"Floor Irvine,CA 92612-8531 • M cG l a d rey 09492556500 F949255.5091 Muw.mcglatlrey.com October 23,2015 Members of the Administration Committee Orange County Sanitation District Fountain Valley, California We are pleased to present this report related to our audit of the financial statements of the Orange County Sanitation District(the District)as of and for the year ended June 30, 2015. This report summarizes certain matters required by professional standards to be communicated to you in your oversight responsibility for the District's financial reporting process. This report is intended solely for the information and use of the Administration Committee,the Board of Directors and management, and is not intended to be, and should not be, used by anyone other than these specified parties. It will be our pleasure to respond to any questions you have about this report. We appreciate the opportunity to continue to be of service to the District. llle- l «11� MemLvr 0 the PSM InbmMlonal neMork of Ind[ neon anounllnq lae and mnmklg fi,nf. Contents Required Communications 1-2 Summary of Significant Accounting Estimates 3-4 Summary of Uncorrected Misstatements 5 Exhibit—Significant Written Communications Between Management and Our Firm Required Communications Generally accepted auditing standards (AU-C 260, The Auditor's Communication With Those Charged With Governance) require the auditor to promote effective two-way communication between the auditor and those charged with governance. Consistent with this requirement,the following summarizes our responsibilities regarding the financial statement audit as well as observations arising from our audit that are significant and relevant to your responsibility to oversee the financial reporting process: Area Comments Our Responsibilities With Our responsibilities under auditing standards generally accepted in Regard to the Financial the United States of America have been described to you in our Statement Audit arrangement letter dated July 27, 2015. Our audit of the financial statements does not relieve management or those charged with governance of their responsibilities,which are also described in that letter. Overview of the Planned We have issued a separate communication regarding the planned Scope and Timing of the scope and timing of our audit and have discussed with you our Financial Statement Audit identification of, and planned audit response to, significant risks of material misstatement. Accounting Policies and Preferability of Accounting Policies and Practices Practices Under generally accepted accounting principles, in certain circumstances, management may select among alternative accounting practices. In our view, in such circumstances, management has selected the preferable accounting practice. Adoption of,or Change in,Accounting Policies Management has the ultimate responsibility for the appropriateness of the accounting policies used by the District. Following is a description of a significant accounting policy or its application that was either initially selected or changed during the year: • Implementation of Government Accounting Standards Board (GASB)Statement No. 68,Accounting and Financial Reporting for Pensions—an amendment of GASB Statement No. 27, and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date—an amendment to GASB Statement No. 68. Significant or Unusual Transactions We did not identify any significant or unusual transactions or significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Management's Judgments and Accounting Estimates Summary information about the process used by management in formulating particularly sensitive accounting estimates and about our conclusions regarding the reasonableness of those estimates is in the attached Summary of Significant Accounting Estimates. 1 Area Comments Audit Adjustments There were no audit adjustments made to the original trial balance presented to us to begin our audit. Uncorrected Misstatements Uncorrected misstatements are summarized in the attached Summary of Uncorrected Misstatements. Disagreements With We encountered no disagreements with management over the Management application of significant accounting principles,the basis for management's judgments on any significant matters,the scope of the audit or significant disclosures to be included in the financial statements. Consultations With Other We are not aware of any consultations management had with other Accountants accountants about accounting or auditing matters. Significant Issues No significant issues arising from the audit were discussed with or Discussed With were the subject of correspondence with management. Management Significant Difficulties We did not encounter any significant difficulties in dealing with Encountered in Performing management during the audit. the Audit Significant Written Copies of material written communications between our Firm and the Communications Between management of the District, including the representation letter Management and Our Firm provided to us by management, are attached in the Exhibit. 2 Orange County Sanitation District Summary of Significant Accounting Estimates Year Ended June 30, 2015 Accounting estimates are an integral part of the preparation of financial statements and are based upon management's current judgment.The process used by management encompasses its knowledge and experience about past and current events, and certain assumptions about future events.You may wish to monitor throughout the year the process used to determine and record these accounting estimates. The following describes the significant accounting estimates reflected in the District's June 30, 2015 financial statements: Basis for Our Conclusions on Management's Reasonableness of Estimate Accounting Policy Estimation Process Estimate Useful Lives of Long- The estimated useful Management We tested the Lived Assets lives of assets determines useful lives reasonableness of generally have the based on past information underlying following ranges: experience, engineer management's sewage collection estimates and industry estimate. Based on our facilities, 50 years; norms. Management procedures,we have sewage treatment reviews for changes in concluded that the facilities,40 years; the useful lives of long- assigned useful lives of sewage disposal lived assets by capital assets are facilities,40 years; and evaluating prominent reasonable. general plant and changes in administrative facilities, circumstances affecting 11.5 years. These capital assets to assets are depreciated determine whether using the straight-line impairment or change method. Construction in the useful life of a in progress is not capital asset has depreciated until ready occurred. for intended use. A capital asset is considered impaired if both the decline in the service utility of the capital asset is large in magnitude and the event or change in circumstances is outside the normal life cycle of the capital asset. 3 Basis for Our Conclusions on Management's Reasonableness of Estimate Accounting Policy Estimation Process Estimate Net Pension Liability Pension plans that Management utilizes We tested the meet the criteria for Orange County reasonableness of the recognition in Employees' Retirement information underlying accordance with GASB System's (OCERS) the actuarial Statement No. 68 are actuaries for its defined evaluations. Based on measured at the net of benefit plan. our procedures,we actuarially determined Management reviewed concluded that the net total pension liabilities and approved the pension liability and fiduciary net plan actuarial assumptions recorded is reasonable. assets. If the total and calculations used pension liabilities to determine the net exceed the fiduciary pension liability and net plan assets, it related components. results in a net pension liability,whereas a net pension asset is recorded if the total pension liability is less than the fiduciary net plan assets. 4 Orange County Sanitation District Summary of Uncorrected Misstatements Year Ended June 30, 2015 Effect-0ebit(Credit) Descdpdon Assets Liabilities Net Position Revenues Expenses Reversed opening equity misstatements $ - $ - $ 2,065,248 $ (869,384) $ (1,195,864) • Unamortized goodwill amortization related to IRWD excess purchase price (905,439) - 1,563,148 - (657,709) • Effects of additional capitalized interest from the prior year 605,875 - (622,250) - 16,375 • Variance in amortization of premium and discounts betyeen straight-line and effective interest methods - 656,595 (1,691,460) - 1,034,865 • Contingent liability for existing lifigadon - (500,000) - 500.000 Total affect (1,171,717) $ (869,384) $ (302,333) Statement of net position effect $ (299,51if4) $ 166,595 $ 142,969 5 Exhibit—Significant Written Communications Between Management and Our Firm Orange County Sanitation District Sawing: 10844 Ellis Avenue,Fountain Valley,0192708 Anaheim 714.962.2411 www.oaewers.com Brea October 23, 2015 Buena Park Cypress McGladrey LLP 18401 Von Kaman Avenue, 5th Floor FountainValley Irvine, CA 92612 Fullerton Garden Grove This representation letter is provided in connection with your audit of the financial statements of the Orange County Sanitation District(the District)as of and for the year Huntington Beach ended June 30, 2015 for the purpose of expressing an opinion on whether the financial rvine statements are presented fairly, in all material respects, in accordance with accounting L.Habra principles generally accepted in the United States of America(U.S. GAAP). We confirm, to the best of our knowledge and belief, that as of October 23, 2015: La Palma Los Alamitos Financial Statements Newport Beach 1. We have fulfilled our responsibilities, as set out in the terms of the audit arrangement letter dated July 27, 2015, for the preparation and fair presentation of the financial Orange statements referred to above in accordance with U.S. GAAP. Placentia 2. We acknowledge our responsibility for the design, implementation and maintenance Santa Ana of internal control relevant to the preparation and fair presentation of financial SealBeach statements that are free from material misstatement,whether due to fraud or error. Stanton 3. We acknowledge our responsibility for the design, implementation and maintenance of internal control to prevent and detect fraud. Tustin 4. Significant assumptions used by us in making accounting estimates, including those Villa Park measured at fair value, are reasonable and reflect our judgment based on our .e knowledge and experience about past and current events, and our assumptions about conditions we expect to exist and courses of action we expect to take. CostaSanit District 5. All events subsequent to the date of the financial statements, and for which U.S. Midway City GAAP requires adjustment or disclosure, have been adjusted or disclosed. sanitary District 6. The effects of all known actual or possible litigation and claims have been accounted Irvine Ranch for and disclosed in accordance with U.S. GAAP. Water District Yorba Linda 7. There are no capital assets that have experienced permanent impairment as Water District indicated in Governmental Accounting Standards Board (GASB)Statement No. 42, Accounting and Financial Reporting for Impairment of Capital Assets and for Insurance Recoveries. 8. The amounts due to the Irvine Ranch Water District of$2,869,329 have been accurately calculated based on the applicable agreements. F' 9. There are no unasserted claims or assessments that our lawyer has advised us are probable of assertion and must be disclosed in accordance with GASB Statement No. 10 or GASB Statement No. 62. To protect public health and the environment by providing effective wastewater collection, treatment,and recycling. McGladrey LLP October 23, 2015 Page 2 10. We have no direct or indirect, legal or moral obligation for any debt of any organization, public or private, that is not disclosed in the financial statements. e r^4e dE Ex+�"c 11, We have complied with all aspects of Contractual agreements that would have a material effect on the financial statements in the event of noncompliance. In connection therewith, we specifically represent that we are responsible for determining that we are not subject to the requirements of the Single Audit Act and U.S. Office of Management and Budget Circular No. A-133, because we have not received, expended or otherwise been the beneficiary of the required amount of federal awards during the period of this audit. 12. We have provided all amendments to the Orange County Employer Retirement System's pension plan, and there were no amendments to the pension plan subsequent to December 31, 2013 valuation date. 13. We have implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions—an amendment of GASB Statement No. 27, and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date—an amendment of GASB Statement No. 68, as discussed in Note 1 to the financial statements. The District has accurately disclosed the effect of adopting the guidance had on its financial position and the changes in net position. 14, We have Completed the process of evaluating the effect that would result from the implementation of GASB pronouncements that were effective for the fiscal year ended June 30, 2015. We believe that the effect on the District's net position and the changes in net position for any new pronouncements would be insignificant. 15. We have informed you of all uncorrected misstatements. As of and for the year ended June 30, 2015, we believe that the effects of the uncorrected misstatements aggregated by you and summarized below are immaterial, both individually and in the aggregate,to the financial statements. For purposes of this representation, we consider items to be material, regardless of their size, if they involve the misstatement or omission of accounting information that, in light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would be changed or influenced by the omission or misstatement. Effect—Debit(Credit) Description Assets Liabilities Net Position Revenues Expenses Reversed opening equity misstatements $ - $ - $ 2.065,248 $ (869.384) $ (1,195,864) • Unamod¢ed goadW,ll amortization related to IRM excess purchase price (905,439) - 1,563,148 - (657.709) • Effects of additional capitalized interest from the prior year 605,875 - (622,250) - 16,375 •Variance in amortization of premium am discounts beevaen straight-line and effective interest methods - 656,595 (1,fi91,460) - 1.034.865 • Contingent liability for existing litigation - (500,000) - 500,000 Total effect (1,171,717) statement of net position effect $ (299.564) $ 156,595 $ 142,959 McGladrey LLP October 23, 2015 Page 3 _ Information Provided 16. We have provided you with: a. Access to all information of which we are aware that is relevant to the preparation and fair presentation of the financial statements such as records, documentation and other matters. b. Additional information that you have requested from us for the purpose of the audit. c. Unrestricted access to persons within the District from whom you determined it necessary to obtain audit evidence. d. Minutes of the meetings of the governing board and committees, or summaries of actions of recent meetings for which minutes have not yet been prepared. 17. All transactions have been recorded in the accounting records and are reflected in the financial statements. 18. We have disclosed to you the results of our assessment of risk that the financial statements may be materially misstated as a result of fraud. 19. We have no knowledge of allegations of fraud or suspected fraud affecting the District's financial statements involving: a. Management. b. Employees who have significant roles in internal control. c. Others where the fraud could have a material effect on the financial statements. 20. We have no knowledge of any allegations of fraud or suspected fraud affecting the District's financial statements received in communications from employees, former employees, analysts, regulators, short sellers or others. 21. We have no knowledge of noncompliance or suspected noncompliance with laws or regulations whose effects were considered when preparing financial statements. 22. We have disclosed to you all known actual or possible litigation and claims whose effects should be considered when preparing the financial statements. 23. We have disclosed to you the identity of the District's related parties and all the related- party relationships and transactions of which we are aware. 24. We are aware of no significant deficiencies, including material weaknesses, in the design or operation of internal controls that could adversely affect the District's ability to record, process, summarize or report financial data. 25. We are aware of no communications from regulatory agencies concerning noncompliance with,or deficiencies in, financial reporting practices. 26, There were no transactions with related parties during the year ended June 30, 2015. McGladrey LLP October 23, 2015 Page 4 a� Supplementary Information INE E1"P 27. With respect to supplementary information presented in relation to the financial statements as a whole: a. We acknowledge our responsibility for the presentation of such information. b. We believe such information, including its form and content, is fairly presented in accordance with U.S. GAAP. c. The methods of measurement or presentation have not changed from those used in the prior period. 28. With respect to management's discussion and analysis, Proportionate Share of the Net Pension Liability, Schedule of District Contributions,and Schedules of Funding Progress presented as required by GASB to supplement the basic financial statements: a. We acknowledge our responsibility for the presentation of such required supplementary information. b. We believe such required supplementary information is measured and presented in accordance with guidelines prescribed by U.S. GAAP. c. The methods of measurement or presentation have not changed from those used in the prior period. 29. During the course of your audit,you may have accumulated records containing data that should be reflected in our books and records.All such data have been so reflected. Accordingly, copies of such records in your possession are no longer needed by us. ORANGE COUNTY SANITATION DISTRICT James Merberg, General Manager Lorenzo Tyner, Q y ctor of Finance and Administrative ervices / r i Mi a White, Controller j Orange County Sanitation District 10844 Pis Avenue,Fountain Valley,CA92708 Anaheim 714.962.2411Buena Park vxm.acsewers.com Brea October 23, 2015 Cypress FountainValley McGladrey LLP FuVerton 18401 Von Karman Avenue, 5th floor Irvine, CA 92612 Garden Grow Huntington Beach In connection with your engagement to perform, in accordance with attestation standards Irvine established by the American Institute of Certified Public Accountants, specified agreed- upon procedures with respect to certain records and transactions of Orange County La Habra Sanitation District(the District)for the year ended June 30, 2015, for the purpose of determining as to whether the District's appropriation limitation calculation was computed La Palma in accordance with Article XIII-B of the Constitution of the State of California, we confirm, LosAlamitos to the best of our knowledge and belief the following representations made to you during the course of your engagement: Newport Beach 1. We understand that we have the responsibility for the appropriation limitation Orange Calculation. Placentia 2. We understand that we have the responsibility for determining that such criteria are Santa Ana i appropriate for our purposes. SealBeach 3. There are no known matters contradicting the appropriation limitation calculation nor Stimton any communication from regulatory agencies affecting the appropriation limitation calculation. Tustin Vila Park 4. We have made available to you all records and related data relevant to the subject matter and the agreed-upon procedures. County of Orange 5. There has been no knowledge of fraud or suspected fraud affecting the entity Costa involving: DistrictSanitary MidwayCity a. Management. IrvineSanitary District Ranch b. Employees who have significant roles in internal control. DistrictWater c. Others where fraud could have a material effect on the appropriation limitation Yoma calculation. District Water 6. We acknowledge our responsibility for the design and implementation of programs and controls to provide reasonable assurance that fraud is prevented and detected. 7. We have no knowledge of any allegations of fraud or suspected fraud affecting the Company received in communications from employees, former employees,analysts, �y regulators or others. 8. We have responded fully to all inquiries made to us by you during your engagement. 9. During the course of your engagement, you may have accumulated records containing data that should be reflected in our books and records. All such data have " been so reflected.Accordingly, copies of such records in your possession are no longer needed by us. To protect public health and the environment by providing effective wastewater collection,treatment,and recycling. McGladrey LLP October 23, 2015 Page 2 ORANGE COUNTY SANITATION DISTRICT rF,�� IXf ENJP �n '//`/'/ James I erberg General Manager Lotenzo Tyner,qWbctor of Finance and Administrativ Services /u- M!*White, r er M6ladrey LLP 18401 Van Kaman, 5m Floor Irvine,CA 92612-8531 O 949.255.6500 F 949.255,5091 = McGladrey wv nncgladnayxom Independent Accountant's Report on Applying Agreed-Upon Procedures Board of Directors Orange County Sanitation District Fountain Valley, California We have performed the procedures enumerated below to the accompanying Appropriations Limit Calculation of the Orange County Sanitation District(the District)for the year ended June 30, 2015. These procedures, which were agreed to by the District and the League of California Cities (as presented in the publication entitled Agreed-Upon Procedures Applied to the Appropriations Limitation Prescribed by Article XIII-B of the California Constitution), were performed solely to assist the District in meeting the requirements of Section 1.5 of Article XIII-B of the California Constitution. The District's management is responsible for the Appropriations Limit Calculation. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those parties specified in this report.Consequently,we make no representation regarding the sufficiency of the procedures described below,either for the purpose for which this report has been requested or for any other purpose. The procedures performed and our findings were as follows: 1. We obtained the completed internal calculations from management and compared the limit and annual adjustment factors included in those calculations to the limit and annual adjustment factors that were adopted by a resolution of the Board of Directors. We also compared the population and inflation options included in the aforementioned worksheets to those that were selected by a recorded vote of the Board of Directors. Finding: No exceptions were noted as a result of our procedures. 2. For the accompanying Appropriations Limit Calculation,we added line A, last year's limit,to line E,total adjustments, and compared the resulting amount to line F, this years limit. Finding: No exceptions were noted as a result of our procedures. 3. We compared the current year information presented in the accompanying Appropriations Limit Calculation to the supporting calculations described in item 1 above. Finding: No exceptions were noted as a result of our procedures. 4. We compared the prior year Appropriations Limit presented in the accompanying Appropriations Limit Calculation to the prior year Appropriations Limit adopted by the Board of Directors for the prior year. Finding: No exceptions were noted as a result of our procedures. 1 MenLerolrl,e PSM IMemubnalnerworkol urlgzrdeM rrmuMryu »dmnfuhlrgfirmi. We were not engaged to and did not conduct an audit, the objective of which would be the expression of an opinion on the accompanying Appropriations Limit Calculation of the District. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. No procedures have been performed with respect to the determination of the appropriations limit for the base year, as defined by Article XIII-B of the California Constitution. This report is intended solely for the information and use of the Board of Directors and management of the District, and is not intended to be, and should not be, used by anyone other than these specified parties. However, this report is a matter of public record and its distribution is not limited. /r/C.�[waecy LGP Irvine, California/ October 23, 2015 2 Orange County Sanitation District Appropriations Limit Calculation Year Ended June 30,2015 Amount Source A. Last year's limit $ 90,878,266 B. Adjustment factors 1. Population change 1.0070 State Finance 2. Per capita change 0.9977 State Finance Total adjustment[(B.1 x S.2)-1.0) 0.0047 (B.1xB.2) C. Annual adjustment 425,665 (BxA) D. Other adjustments: 1. Loss responsibility(-) - 2. Transfer to private(-) - 3. Transfer to fees(-) - 4. Assumed responsibility(+) Subtotal - E. Total adjustments 425,665 (C+D) F. This year's limit $ 91.303,931 (A+E) 3 ADMINISTRATION COMMITTEE Meeting Dare TOBA.of Dir. 11/12/15 11/1811S AGENDA REPORT Item Number Item Number e Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Celia Chandler, Director of Human Resources SUBJECT: OWNER CONTROLLED INSURANCE PROGRAM EXTENSION GENERAL MANAGER'S RECOMMENDATION Approve the purchase of a multi-year extension of the Owner Controlled Insurance Program at a total cost of $725,612 for five policies covering three layers of liability coverage, workers compensation coverage, and pollution coverage, through December 31, 2017. SUMMARY The Sanitation District began an Owner Controlled Insurance Program (OCIP) in 2008 in order to save money on the insurance costs for large construction projects. The OCIP covers approximately 20 projects. The most recent estimate by the Sanitation District's OCIP Administrator, Aon Risk Services, is that the OCIP is saving the Sanitation District approximately $3 million by buying in bulk as compared to the alternative, which would involve the cost of the contractors and subcontractors each purchasing their own insurance separately. The OCIP will expire in December 31, 2015. Because three large projects have not yet finished, another extension is needed. The OCIP insurers have quoted $725,612 for that extension. That quote includes $100 million in liability limits, and also workers compensation coverage. In addition, pollution insurance is included. The bulk of the construction which is not finished is connected with the project: Sludge Thickening, Dewatering and Odor Control at Plant 1 (P1-101), (almost 90% of the remaining OCIP construction), while much smaller amounts are connected with projects: Sludge Digester Rehabilitation at Plant No. 1 (P1-100) and Solids Thickening and Processing Upgrades (P2-89). Project P1-101, expected to have $124 million in construction value when completed, was started in January 2013. Staff agrees with Aon's belief that there are no options balancing cost effectiveness and risk better than purchasing the extension from the existing insurers. Aon estimates that the cost to the District for contractors to take over the insurance would be over $1 million, if carriers would even agree to do so for projects in progress. Page 1 of 3 PRIOR COMMITTEE/BOARD ACTIONS June 2013 — The Board approved a Professional Services Agreement with Aon Risk Services, Inc. to continue acting as the Broker/Administrator for the OCIP. March 2008 — The Board approved the purchase of insurance policies for a five-year "rolling OCIP", comprising a variety of large Capital Improvement Projects beginning in the following five years. October 2007 — The Board approved a Professional Services Agreement with Aon Risk Services, Inc. to act as the Broker/Administrator for the OCIP. ADDITIONAL INFORMATION In recent years many governmental agencies have started OCIPs as a way of saving money on construction. The Sanitation District hired a consultant in 2007 who recommended that a 'rolling OCIP" would be feasible, and later in 2007 the Sanitation District chose Aon to administer the OCIP. The Board approved a package of insurance policies for the OCIP in 2008, costing around $4 million. The OCIP has contained approximately 20 different Capital Improvement Projects over the years, and the total paid construction value of the projects is approximately $250 million so far. The total projected construction value at the conclusion of the OCIP is expected to be roughly $330 million. Three of the projects, including the largest one of the 20, have not yet finished. Since the OCIP was developed in 2008 the Sanitation District has adjusted its lineup of OCIP projects, including changes to the cost and timing of projects. The OCIP was extended in 2013, through 2015, for $25,000. Insurance companies are very reluctant to write long-term insurance policies because of regulatory restrictions and because of restrictions placed on them by their reinsurers. As a result, the extension was only through 2015. Now another extension is needed. Staff and Aon have explored other options, including the Sanitation District completely self-insuring this risk, partly self-insuring this risk, getting quotes from other insurers, and requiring contractors and subcontractors to supply insurance after December 31, 2015. It is in general very difficult to change insurers for construction that is over 50% complete, and the cost tends to be very high. Staff agrees with Aon that none of these options is as feasible as extending the OCIP as Aon suggests with the existing insurers. CEQA N/A Page 2 of 3 BUDGET/PURCHASING ORDINANCE COMPLIANCE This request complies with authority levels of the Sanitation District's Purchasing Ordinance. This item is not budgeted. As the OCIP supports the Capital Improvement Program (CIP), funds will be identified and transferred from unexpended funds within the total budget. ATTACHMENT The following attachments) maybe viewed on-line at the OCSD website (wwwocsd.corn with the complete agenda package: N/A Page 3 of 3 ADMINISTRATION COMMITTEE Meeting Dare To ad.of DV 12/15 — AGENDA REPORT Item Number Item Number 9 — Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Bob Ghirelli, Assistant General Manager SUBJECT: STORM WATER CAPTURE GENERAL MANAGER'S RECOMMENDATION Information Only. SUMMARY At the Orange County Sanitation District's Strategic Planning Session on October 21, one of the topics brought up was the possibility of capturing and recycling storm water. After discussion regarding OCSD's capacity limits, the various agencies that are responsible for storm water capture and recharge, and a brief update on OCSD's dry weather urban runoff program, it was suggested that the Orange County Water District attend a future meeting to provide a presentation on OCWD's storm water capture efforts. Adam Hutchinson, OCWD's Recharge Planning Manager will be providing an informational presentation at this month's committee meetings. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION N/A CEQA N/A BUDGET/PURCHASING ORDINANCE COMPLIANCE N/A ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.com) with the complete agenda package: N/A Page 1 of 1 ORANGE COUNTY SANITATION DISTRICT Agenda Terminology Glossary Glossary of Terms and Abbreviations AQMD Air Quality Management District ASCE American Society of Civil Engineers BOD Biochemical Oxygen Demand CARB California Air Resources Board CASA California Association of Sanitation Agencies CCTV Closed Circuit Television CEQA California Environmental Quality Act CRWQCB California Regional Water Quality Control Board CWA Clean Water Act CWEA California Water Environment Association EIR Environmental Impact Report EMT Executive Management Team EPA U.S. Environmental Protection Agency FOG Fats, Oils, and Grease FSSD Facilities Support Services Department gpd Gallons per day GWR System Groundwater Replenishment System (also called GWRS) ICS Incident Command System IERP Integrated Emergency Control Plan LOS Level of Service MGD Million gallons per day NACWA National Association of Clean Water Agencies NPDES National Pollutant Discharge Elimination System NWRI National Water Research Institute O&M Operations and Maintenance OCCOG Orange County Council of Governments OCHCA Orange County Health Care Agency OCSD Orange County Sanitation District OCWD Orange County Water District GOBS Ocean Outfall Booster Station OSHA Occupational Safety and Health Administration POTW Publicly Owned Treatment Works ppm Parts per million RFP Request For Proposal RWQCB Regional Water Quality Control Board SARFPA Santa Ana River Flood Protection Agency Glossary of Terms and Abbreviations SARI Santa Ana River Inceptor SARWQCB Santa Ana Regional Water Quality Control Board SAWPA Santa Ana Watershed Project Authority SCADA Supervisory Control and Data Acquisition system SCAP Southern California Alliance of Publicly Owned Treatment Works SCAQMD South Coast Air Quality Management District SOCWA South Orange County Wastewater Authority SSMP Sanitary Sewer Management Plan SSO Sanitary Sewer Overflow SWRCB State Water Resources Control Board TDS Total Dissolved Solids TMDL Total Maximum Daily Load TSS Total Suspended Solids WDR Waste Discharge Requirements WEF Water Environment Federation WERF Water Environment Research Foundation Activated-sludge process — A secondary biological wastewater treatment process where bacteria reproduce at a high rate with the introduction of excess air or oxygen, and consume dissolved nutrients in the wastewater. Benthos — The community of organisms, such as sea stars, worms and shrimp, which live on, in, or near the seabed, also know as the benthic zone. Biochemical Oxygen Demand (BOD)—The amount of oxygen used when organic matter undergoes decomposition by microorganisms. Testing for BOO is done to assess the amount of organic matter in water. Biosolids — Biosolids are nutrient rich organic and highly treated solid materials produced by the wastewater treatment process. This high-quality product can be recycled as a soil amendment on farm land or further processed as an earth-like product for commercial and home gardens to improve and maintain fertile soil and stimulate plant growth. Capital Improvement Program (CIP) — Projects for repair, rehabilitation, and replacement of assets. Also includes treatment improvements, additional capacity, and projects for the support facilities. Coliform bacteria—A group of bacteria found in the intestines of humans and other animals, but also occasionally found elsewhere used as indicators of sewage pollution. E. coli are the most common bacteria in wastewater. Collections system — In wastewater, it is the system of typically underground pipes that receive and convey sanitary wastewater or storm water. Certificate of Participation (COP) —A type of financing where an investor purchases a share of the lease revenues of a program rather than the bond being secured by those revenues. Glossary of Terms and Abbreviations Contaminants of Potential Concern (CPC) — Pharmaceuticals, hormones, and other organic wastewater contaminants. Dilution to Threshold (D1T) — the dilution at which the majority of the people detect the odor becomes the DrT for that air sample. Greenhouse gases — In the order of relative abundance water vapor, carbon dioxide, methane, nitrous oxide, and ozone gases that are considered the cause of global warming ("greenhouse effect"). Groundwater Replenishment (GWR) System — A joint water reclamation project that proactively responds to Southern California's current and future water needs. This joint project between the Orange County Water District and the Orange County Sanitation District provides 70 million gallons a day of drinking quality water to replenish the local groundwater supply. Levels of Service (LOS)—Goals to support environmental and public expectations for performance. NDMA— N-Nitrosodimethylamine is an N-nitrosoamine suspected cancer-causing agent. It has been found in the Groundwater Replenishment System process and is eliminated using hydrogen peroxide with extra ultra-violet treatment. National Biosolids Partnership (NBP) — An alliance of the National Association of Clean Water Agencies (NACWA) and Water Environment Federation (WEF), with advisory support from the U.S. Environmental Protection Agency (EPA). NBP is committed to developing and advancing environmentally sound and sustainable biosolids management practices that go beyond regulatory compliance and promote public participation in order to enhance the credibility of local agency biosolids programs and improved communications that lead to public acceptance. Plume—A visible or measurable concentration of discharge from a stationary source or fixed facility. Publicly-owned Treatment Works (POTW)— Municipal wastewater treatment plant. Santa Ana River Interceptor (SARI) Line — A regional brine line designed to convey 30 million gallons per day (MGD) of non-reclaimable wastewater from the upper Santa Ana River basin to the ocean for disposal, after treatment. Sanitary sewer — Separate sewer systems specifically for the carrying of domestic and industrial wastewater. Combined sewers carry both wastewater and urban run-off. South Coast Air Quality Management District (SCAQMD) — Regional regulatory agency that develops plans and regulations designed to achieve public health standards by reducing emissions from business and industry. Secondary treatment — Biological wastewater treatment, particularly the activated-sludge process, where bacteria and other microorganisms consume dissolved nutrients in wastewater. Sludge—Untreated solid material created by the treatment of wastewater. Total suspended solids (TSS)—The amount of solids floating and in suspension in wastewater. Trickling filter — A biological secondary treatment process in which bacteria and other microorganisms, growing as slime on the surface of rocks or plastic media, consume nutrients in wastewater as it trickles over them. Glossary of Terms and Abbreviations Urban runoff — Water from city streets and domestic properties that carry pollutants into the storm drains, rivers, lakes, and oceans. Wastewater—Any water that enters the sanitary sewer. Watershed —A land area from which water drains to a particular water body. OCSD's service area is in the Santa Ana River Watershed.