Contracting Working Group
Of the
Public Utilities Revenue Bond Oversight Committee

MINUTES

Wednesday, December 10 2007

8:30 a.m. – 9:30 a.m.
1155 Market Street (between 7 & 8th Streets) 4th Floor
San Francisco, CA  94103

1. Call to Order and Roll Call
Chair Patrick Sweetland called the meeting to order at 8:40 a.m. and roll call was taken. Present: Patrick Sweetland, Brian Browne and Stan Jones

2. Discussion and Possible Action Related to Future Work Scope-Audit of WSIP indirect Costs
Mr. Sweetland stated that he received a copy of an email from Mr. Jones regarding the language on the indirect cost survey. Mr. Sweetland asked for Committee members to provide an overview of their progress researching other agencies’ indirect cost structure. Mr. Browne stated that he has identified people at certain agencies to gather information about their indirect costs and cost allocation plans. He stated that he is waiting to receive notification from staff on whether he could distribute the indirect cost worksheet provided to the Committee by the SFPUC Budget Director. Mr. Browne’s concern was that the worksheet may be proprietary. Mr. Browne confirmed that he would contact the agencies now that he has confirmation that the guidelines could be made available to the public.

Mr. Jones stated that he was able to contact four city departments: MUNI, MTA, Recreation & Parks and DPW as well as EBMUD. He stated according to the contacts he spoke with, if a department is receiving Federal Funds, OMB A-87 dictates the guidelines for developing cost allocation plans. He stated that the four agencies all have different rates for facility, project and operational indirect costs, but are generally using the same scheme as the SFPUC by including salaries for determining the overhead rate. Mr. Jones states that his main concern is determining whether or not indirect costs are allowable, allocable and reasonable. Mr. Jones distributed copies of the Rules and Regulations Pertaining to the San Francisco Administrative Code, Chapter 21, Acquisitions of Commodities and Services. He suggested that they get an initial view from a consultant who knows overhead costs, and who has looked over the PUC’s method of allocating indirect costs and determine if a full blown study is needed. Mr. Jones stated that the main purpose for the initial expedited review would to review the methodology, looking at the elements of indirect costs and then determining whether these costs are allowable, allocable and reasonable.

Mr. Sweetland stated that the Subcommittee will advise to expedite a review as they are not operating independently from RBOC. Mr. Jones confirmed that the review should be based on PUC allocation of indirect costs to determine if they are allowable and reasonable; a consultant will render a judgment and conclude if further investigation is needed. Mr. Sweetland asked staff to confirm if an overhead cost study was done already and, if so, he suggested that the consultants use it as a basis for the future review. He confirmed that a review would be based on FY 2006-2007.  Mr. Sweetland stated that he would work on a draft of a scope of work and bring it to the next Subcommittee meeting.

Mike Brown from SFPUC Finance noted that the next issuance of bonds would be likely Summer/Fall 2008 which means RBOC would not receive another infusion of funds for another year. The remaining approximate amount of $75K will need to stretch out until then.

There were no members of the public present for comment.

3. Discussion and Possible Action Related to Scheduling of Next MeetingThe Committee decided to hold the next Contracting Working Group meeting on January 9, 2008, 9:00 a.m. to 10:30 a.m. Mr. Sweetland asked staff to determine the exact location and notify Committee members as soon as it has been confirmed.

4. Adjournment
Mr. Sweetland adjourned the meeting at 9:28 a.m.