HomeMy WebLinkAbout08-18-20 F&A Committee Packet 1
OTAY WATER DISTRICT
FINANCE AND ADMINISTRATION
COMMITTEE MEETING
and
SPECIAL MEETING OF THE BOARD OF DIRECTORS
BY TELECONFERENCE
2554 SWEETWATER SPRINGS BOULEVARD
SPRING VALLEY, CALIFORNIA
TUESDAY
August 18, 2020
12:00 P.M.
This is a District Committee meeting. This meeting is being posted as a special meeting
in order to comply with the Brown Act (Government Code Section §54954.2) in the event that
a quorum of the Board is present. Items will be deliberated, however, no formal board actions
will be taken at this meeting. The committee makes recommendations
to the full board for its consideration and formal action.
AGENDA
1. ROLL CALL
2. PUBLIC PARTICIPATION – OPPORTUNITY FOR MEMBERS OF THE PUBLIC TO
SPEAK TO THE BOARD ON ANY SUBJECT MATTER WITHIN THE BOARD'S JU-
RISDICTION BUT NOT AN ITEM ON TODAY'S AGENDA
In lieu of in-person attendance, members of the public may submit their comments on
agendized and non-agendized items via email at boardsecretary@otaywater.gov.
Public comments submitted will be read into the record at the Committee Meeting and
the public may continue to watch and listen to meetings. The information on how to
watch and listen to the District’s live streaming can be found at this link:
https://otaywater.gov/board-of-directors/agenda-and-minutes/committee-meetings/
DISCUSSION ITEMS
3. APPROVE A ONE-YEAR EXTENSION WITH TEAMAN, RAMIREZ, AND SMITH,
INC., FOR AUDIT SERVICES FOR FISCAL YEAR 2021 (FAKHOURI) [5 minutes]
4. APPROVE THE ISSUANCE OF A PURCHASE ORDER TO DELLEMC IN AN
AMOUNT NOT-TO-EXCEED $140,421.61 FOR NEW ENTERPRISE DATA
STORAGE, BUSINESS SERVER HARDWARE, AND SERVICES TO REPLACE
EXISTING LEGACY EQUIPMENT (KERR) [5 mins]
5. ADJOURNMENT
2
BOARD MEMBERS ATTENDING:
Mitch Thompson, Chair
Mark Robak
All items appearing on this agenda, whether or not expressly listed for action, may be delib-
erated and may be subject to action by the Board.
The Agenda, and any attachments containing written information, are available at the Dis-
trict’s website at www.otaywater.gov. Written changes to any items to be considered at the
open meeting, or to any attachments, will be posted on the District’s website. Copies of the
Agenda and all attachments are also available through the District Secretary by contacting
her at (619) 670-2280.
If you have any disability which would require accommodation in order to enable you to par-
ticipate in this meeting, please call the District Secretary at 670-2280 at least 24 hours prior
to the meeting.
Certification of Posting
I certify that on August 14, 2020 I posted a copy of the foregoing agenda near the reg-
ular meeting place of the Board of Directors of Otay Water District, said time being at least 24
hours in advance of the meeting of the Board of Directors (Government Code Section
§54954.2).
Executed at Spring Valley, California on August 14, 2020.
/s/ Susan Cruz, District Secretary
STAFF REPORT
TYPE MEETING: Regular Board Meeting MEETING DATE: September 2, 2020
SUBMITTED BY: Eid Fakhouri
Finance Manager
PROJECT: DIV. NO. All
APPROVED BY: Kevin Koeppen, Assistant Chief of Finance
Joseph R. Beachem, Chief Financial Officer
Jose Martinez, General Manager
SUBJECT: To Obtain Approval for a One-Year Extension of Audit Services
for Fiscal Year 2021 with Teaman, Ramirez and Smith, Inc.
GENERAL MANAGER’S RECOMMENDATION:
That the Board approve a one-year extension for audit services for
Fiscal Year 2021 with Teaman, Ramirez and Smith, Inc.
COMMITTEE ACTION:
See Attachment A.
PURPOSE:
To request the Board approve a one-year extension for audit services
for Fiscal Year 2021 with Teaman, Ramirez and Smith, Inc.
ANALYSIS:
The District is required to retain the services of an independent
auditing firm each fiscal year to perform an audit of the District’s
financial statements.
The District has had the long standing practice of rotating audit
firms every five years. This practice ensures a fresh perspective
and yet allows for the benefits of a fair amount of continuity. It
AGENDA ITEM 3
2
is common practice in the public sector to retain auditors for a
minimum of a five-year period. This practice is a long standing
recommendation of the Governmental Finance Officers Association
(GFOA) Audit Procurement Best Practice Guide.
“Governmental entities should enter into multi-year agreements of at
least five years in duration when obtaining the services of
independent auditors. Such agreements allow for greater continuity
and help to minimize the potential for disruption in connection with
the independent audit. Multi-year agreements can also help to reduce
audit costs by allowing auditors to recover certain "startup" costs
over several years, rather than over a single year.”
The District’s current auditors, Teaman, Ramirez & Smith, Inc.(TRS),
reached the end of the five-year term in 2018.
On November 7, 2018, the Board of Directors discussed the benefits of
issuing an RFP versus extending the audit services contract with TRS.
The Board weighed the benefit of greater continuity more heavily and
extended the contract with TRS for one (1) year with an option to
extend the contract for one (1) additional year. Retaining TRS in
2018 eliminated the level of effort needed to ramp up and transition
to a new audit firm and kept audit fees stable.
A condition of the extension was that TRS rotate their audit team in
order to bring a certain level of fresh perspective to the audit. In
response to the District’s request, TRS rotated the audit partner,
manager, and audit staff.
Ordinarily, staff would be issuing an RFP this year for audit
services to cover the upcoming five-year period from Fiscal Year 2021
to Fiscal Year 2025. However, due to the extraordinary impact of
COVID-19, staff is recommending a one (1) year additional extension
with TRS for the Fiscal Year 2021 audit.
COVID-19
During this year’s audit, the work performed by TRS and the District
was executed remotely and without face to face contact. Meetings and
interviews were held on-line and documents were submitted through a
secured web-portal while staff avoided unnecessary contact as
directed by state and federal guidelines.
Due to the unknown duration of the pandemic, it’s impact on human
interaction, and the inefficient nature of switching auditors during
a pandemic, staff is recommending that the audit contract be extended
for one (1) additional year.
3
When transitioning to new auditors, there is an increase level of
effort to ensure a smooth transition of knowledge and information to
the new auditors. Staff usually spend an additional week assisting
the new auditors with understanding the internal controls, business
processes, contracts, financial systems, and the chart of accounts.
The duration of the pandemic is still unknown and transitioning
auditors during the pandemic would be less efficient and more costly.
Estimating the cost savings between extending the current contract
with TRS versus issuing an RFP for new auditors is difficult.
However, when we compared the 2014 audit RFP responses, TRS’s current
bid remains 28% less than the District’s 2013 audit fees and 9.2%
less than the second lowest bid received for the 2014 audit.
Therefore, staff is recommending the District retain TRS for one (1)
additional year to provide audit services.
FISCAL IMPACT:
TRS proposed a fee quote of $30,250 (attachment A)for Fiscal Year
2021 audit services. This fee is a 2.54% increase from the $29,500
fee for Fiscal Year 2020.
STRATEGIC GOAL:
The District ensures its continued financial health through long-term
financial planning and debt planning.
LEGAL IMPACT:
Compliance with the laws governing the District.
Attachments:
A) Committee Action
B) TRS Audit Cost Proposal
ATTACHMENT A
SUBJECT/PROJECT:
To Obtain Approval for a One-Year Extension of Audit
Services for Fiscal Year 2021 with Teaman, Ramirez and
Smith, Inc.
COMMITTEE ACTION:
That the Finance and Administration Committee recommend that the Board
approve a one-year extension for audit services for Fiscal Year 2021
with Teaman, Ramirez and Smith, Inc.
NOTE:
The “Committee Action” is written in anticipation of the Committee
moving the item forward for Board approval. This report will be sent
to the Board as a Committee approved item or modified to reflect any
discussion or changes as directed from the Committee prior to
presentation to the full Board.
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Richard A. Teaman, CPA David M. Ramirez, CPA Javier H. Carrillo, CPA Bryan W͘Daugherty, CPA Joshua :͘Calhoun, CPA
4201 Brockton AveŶƵĞ Suite 100Riverside CA 92501 951.274.9500d > 951.274.7828 FAX www.trscpas.com
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STAFF REPORT
TYPE MEETING: Regular Board MEETING DATE: September 2, 2020
PROJECT: P2571 DIV. NO.: ALL
SUBMITTED BY: Michael Kerr, Information Technology Manager
APPROVED BY: Adolfo Segura, Chief, Administrative Services
Jose Martinez, General Manager
SUBJECT: REPLACEMENT OF ENTERPRISE DATA STORAGE AND BUSINESS SERVER
EQUIPMENT
GENERAL MANAGER’S RECOMMENDATION:
That the Board approve the issuance of a purchase order to DellEMC
in an amount not-to-exceed $140,241.61 for new enterprise data
storage and business server hardware and services to replace
existing legacy equipment.
COMMITTEE ACTION:
Please see “Attachment A”.
PURPOSE:
To authorize the purchase of data storage and business server
hardware and deployment services necessary to support essential
District enterprise business applications.
ANALYSIS:
The District’s existing enterprise data storage and business
server computing hardware is over six (6) years old and has reached
the end of its manufactured useful life. This hardware combination
is essential to District enterprise computing operations as they
are the platform for applications and services, including Eden
financial and customer information system, Laserfiche document
management system, Cityworks work order system, geographic
information system (GIS), SQL databases, video and data archives,
AGENDA ITEM 4
data recovery, and day-to-day user network connectivity. Industry
best practices recommend storage and server hardware upgrade or
replacement every three to five (3-5) years. Although third-party
support does exist, it is limited, and annual costs will be higher
and replacement parts are not guaranteed to be readily available.
Also, given the lifecycle stage of our hardware, the risk or
likelihood of hardware failure tends to increase. Replacement of
this hardware will continue to support and improve essential
enterprise application performance, reliability, sustain data
growth needs, and leverage the District’s current technology
landscape.
In addition, the current data storage hardware lacks mainstream
functionalities and features that would make the system more
efficient and reliable. Operational and functional improvements of
the proposed data storage hardware include performance monitoring
and reporting; administration features; server operating system
and virtualization interoperability; data cloning, mirroring, and
snapshot features. The latter mentioned feature allows for point-
in-time recovery in the event of a ransomware attack. Other
features include instant backup and recovery; ability to quickly
create virtual operating server environments to test, validate,
and minimize potential issues prior to go-live or production state;
preservation lifecycle or retention cycle policies; real-time
mirroring from storage-to-storage device; and cloud storage
services for additional disaster recovery redundancies. Finally,
the new data storage and server computing hardware will be
centrally managed from one console instead of the classic two
consoles, which is another key efficiency feature to be gained.
The requested data storage and server computing hardware will be
operated and maintained by District staff.
The 2019 – 2022 Strategic Plan identified the need to “Maintain a
reliable, scalable, secure, and high-performing technology
infrastructure to support current and future service needs”; to
achieve this objective, staff conducted an extensive analysis of
current and future storage requirements and developed a list of
specifications. In addition, staff evaluated similar technologies
from other vendors including Cisco, HP, and VMware. However,
DellEMC offered the best fit, unified features, and lowest cost of
ownership.
As a CIP-budgeted planned purchase, staff solicited quotes from
three (3) vendors for the required hardware and services. Based on
functional and network requirements, demonstrations, research, and
cost, staff recommends selecting DellEMC as the overall best fit
and value for the District’s enterprise storage and server
replacement.
Vendor Item
Product
Specification/
Description
Total Price
DellEMC
Direct Hyper-
Converged
Infrastructure (HCI)
DELL EMC
PowerEdge 740XD
(4)
$140,241.61
vCore
Technology
Partners
Direct Hyper-
Converged
Infrastructure (HCI)
DELL EMC
PowerEdge 740XD
(4)
$165,120.02
SIDEPATH,
Inc.
Direct Hyper-
Converged
Infrastructure (HCI)
DELL EMC
PowerEdge 740XD
(4)
$177,917.19
FISCAL IMPACT: Joe Beachem, Chief Financial Officer
Projected purchase is $140,241.61, which will be charged against
the Data Center Network Data Storage and Infrastructure
Enhancements project, CIP P2571. The Project Manager anticipates,
based on financial analysis, that the budget will be sufficient to
support this project. The Finance department has determined that
100 percent of the funding is available from the Replacement Fund.
STRATEGIC GOAL:
These items are in support of the District’s required services and
Strategic Plan, which specifically improve the overall operating
cost.
LEGAL IMPACT:
None.
ATTACHMENTS:
Attachment A – Committee Action Report
ATTACHMENT A
SUBJECT/PROJECT: REPLACEMENT OF ENTERPRISE DATA STORAGE AND BUSINESS SERVER
EQUIPMENT
COMMITTEE ACTION:
The Finance and Administration Committee reviewed this item at a
meeting held on August 18, 2020. The Committee supports
presentation to the full Board for their consideration.
NOTE:
The “Committee Action” is written in anticipation of the Committee
moving the item forward for Board approval. This report will be
sent to the Board as a committee approved item or modified to
reflect any discussion or changes as directed from the committee
prior to presentation to the full Board.