Title
Contract No. 2300826 effective September 1, 2024 with Willdan Financial Services for Water and Wastewater Service Charges Consultant Services for a cost not to exceed $1,749,250 for an initial term of three (3) years with two optional one-year extensions of $599,810 for year four and $630,080 for year five.
Body
Agenda of: August 28, 2024
Item No.: 2024-264
Amount: $2,979,140
TO: The Honorable
Board of Directors
Great Lakes Water Authority
FROM: Suzanne R. Coffey, P.E.
Chief Executive Officer
Great Lakes Water Authority
DATE: August 23, 2024
RE: Contract No. 2300826 effective September 1, 2024 with Willdan Financial Services for Water and Wastewater Service Charges Consultant Services for a cost not to exceed $1,749,250 for an initial term of three (3) years with two optional one-year extensions of $599,810 for year four and $630,080 for year five.
MOTION
Upon recommendation of Nicolette Bateson, Chief Financial Officer & Treasurer, Board of Directors of the Great Lakes Water Authority authorizes the Chief Executive Officer (CEO) to enter into Contract No. 2300826 effective September 1, 2024 with Willdan Financial Services for Water and Wastewater Service Charges Consultant Services for a cost not to exceed $1,749,250 for an initial term of three (3) years with two optional one-year extensions of $599,810 for year four and $630,080 for year five; and authorizes the CEO to take such action as may be necessary to accomplish the intent of this vote.
BACKGROUND
GLWA has conducted a competitive request for proposal (RFP) process to identify a firm to perform the annual water and wastewater cost of service study and related consulting support services. GLWA received proposals from three firms. All firms met the minimum requirements set forth in the solicitation documents. A cross-functional committee of evaluators and advisors was convened to review and score the proposals. The committee consisted of GLWA team members as well as member partner representatives from communities in Wayne, Oakland and Macomb Counties as well as the City of Detroit. Willdan Financial Services received the highest qualitative score of all three firms and is recommended by the scoring committee based on their written proposal and two oral interviews. A negotiation session related to fees was conducted by GLWA team members and a representative of the member partner community.
JUSTIFICATION
The annual cost of service study is a critical path item in the annual financial planning process and serves as GLWA’s primary mechanism for establishing the annual proposed schedule of charges. Revenue from service charges makes up roughly 97% of the required funding for operations, capital expenditures and debt service for the utility. Wildan Financial Services has the requisite experience and expertise required to complete this crucial service in addition to any related consulting services necessary to execute the strategic financial goals of the utility. Willdan also has the charge-setting methodology expertise to support the collaboration between GLWA and its member partners.
FINANCIAL PLAN IMPACT
The proposed contract encompasses both water and wastewater charges. The value of the proposed contract exceeds the current financial plan in total. When this occurs, a budget amendment is required first by offsetting positive variances and other cost categories and finally by use of unallocated reserves.
The proposed contract with Willdan Financial Services is an operational expense and is budgeted in the Financial Management and Planning Group in the Financial Services Area. See attached table for more information related to the proposed fee structure.
Cost Centers: 884113 - Financial Management & Planning
Expense Types: Contractual Professional Services
Estimated Costs by Year and Related Estimated Total Variance:
Fiscal Year
FY 2025 Adopted Budget $ 117,400
FY 2026 Adopted Budget 272,700
FY 2027 Financial Plan 278,200
FY 2028 Financial Plan 283,800
FY 2029 Financial Plan 289,500
Subsequent Years (Past Current Plan) TBD
Total Financial Plan $ 1,241,600
Not-to-exceed Contract thru FY 2029 2,979,140
Variance ($1,737,540)
Sufficient funds are provided in the financial plan for this contract to begin September 1, 2024. It was expected that there would be a need for a budget amendment in FY 2025 to cover the transition efforts in the first year of the contract. The actual amount was pending the results of the solicitation process.
The estimated cost in the first year is $661,830. GLWA is anticipating a robust transition period for the new consulting firm. For this reason, the budget analysis assumes 2,200 hours of general consulting services in year one of the contract with a reduction in subsequent years to 1,800 hours.
The FY 2025 requested budget amendment will be $544,430 ($661,830 less $117,400).
COMMITTEE REVIEW
This matter was reviewed by the GLWA Audit Committee at its meeting on August 23, 2024. The Audit Committee unanimously recommends that the Board of Directors of the Great Lakes Water Authority authorizes the Chief Executive Officer (CEO) to enter into Contract No. 2300826 effective September 1, 2024 with Willdan Financial Services for Water and Wastewater Service Charges Consultant Services for a cost not to exceed $1,749,250 for an initial term of three (3) years with two optional one-year extensions of $599,810 for year four and $630,080 for year five.
SHARED SERVICES IMPACT
This item does not impact the shared services agreement between GLWA and DWSD.