HomeMy Public PortalAboutExhibit MSD 30P6 - Time and Materials Contracts - Technology Charges Review June, 2011FOR DISCUSSION PURPOSES ONLY www.rubinbrown.com FOR DISCUSSION PURPOSES ONLY
Metropolitan Sewer District (“MSD”)
T&M Contracts – Technology Charges Review
June 2011
Exhibit MSD 30P6
30P684W1
FOR DISCUSSION PURPOSES ONLY FOR DISCUSSION PURPOSES ONLY 2
To carry out these objectives, RubinBrown
executed the following:
Requested and accumulated all invoices for the identified
consultants (3) and consultant contracts
Requested and accumulated the supporting documentation
specifically related to technology charges for all selected
consultants
Interviewed key consultant accounting personnel to
determine technology charge methodology related to their
audited overhead and labor burden reports (“overhead
rates”)
Summarized all technology charge methodologies and
verified they were properly invoiced
Identified potential cost recovery opportunities
The objectives included:
Understanding the methodology used by
consultants that charge technology costs
Performing detailed testing of consultant invoices
that included technology charges to determine
that all costs submitted were properly supported
and accounted for per the contract terms
Accumulating a summary of all cost recovery
opportunities
Presenting the findings and recommendations to
the District for their review
T&M Contracts – Technology Charges Review
Project Objectives and Scope
Based on the results of the Engineering Time and Materials Contract review
completed in February 2011, MSD engaged RubinBrown to review consultant
technology charges observed in that audit for potential cost recovery
opportunities.
FOR DISCUSSION PURPOSES ONLY FOR DISCUSSION PURPOSES ONLY 3
T&M Contracts – Technology Charges Review
Findings
While a few immaterial clerical errors were noted, it does not appear that the three (3) consultants reviewed have
overcharged MSD for technology expenses. In each case, the consultant chose to offer a reduced overhead rate and
separately charge costs associated with technology on a per-hour-invoiced basis. RubinBrown met individually with
each consultant and discussed their methodology to verify it was properly supported and applied correctly for at least
one (1) year within the contract. We presented this information to MSD management on May 19, 2011, at which time it
was determined that additional detailed procedures were not required. The following summarizes our findings for
each of the three consultants which were identified as having technology charges in their invoices.
HDR – Project 90017
Contracted $23.2K for technology
after Amendments ($4.10 per man
hour)
Charged two (2) technology rates
over the life of the contract
Immaterial errors ($) were found
when recalculating technology
charges
Total technology charges were
under contracted budgets
Contracted 161% FAR overhead
rate throughout the project
Parsons – Project 2005122
Contracted $61.5K for technology
after Amendments ($6 per man
hour)
Charged for CADD engineering
software early (pre-2008) in the
contract’s life based on actual usage
Included technology charges in the
overhead rate beginning in early
2008
Total technology charges were
under contracted budgets
Contracted 174% overhead rate
throughout the project
Black and Veatch – Project 2005058
Contracted $31.5K for
technology after Amendments
($6 per man hour)
One small immaterial error ($)
was found when recalculating
technology charges
Total technology charges were
under contracted budgets
Contracted 181% overhead rate
throughout the project
FOR DISCUSSION PURPOSES ONLY FOR DISCUSSION PURPOSES ONLY 4
T&M Contracts – Technology Charges Review
Recommendations
RubinBrown recommends the following items for management’s consideration
related to technology costs associated with engineering consultant contracts:
Specify in the standard contract language the circumstances in which
technology charges are allowable as a reimbursable other direct cost
Require and maintain all supporting documentation stating the purpose and
charge methodology of any technology charges submitted for reimbursement
Consider limiting the rate that MSD will allow for technology charges by
capping the rate
Consider requiring consultants to include all costs associated with technology
within their overhead and labor burden rates in order to streamline and
simplify the overhead and burden rate review process
FOR DISCUSSION PURPOSES ONLY FOR DISCUSSION PURPOSES ONLY